Exhibit 10.1

 

OFFICE LEASE

 

by and between

 

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New York corporation,
for the benefit of the Real Estate Account

 

(“Landlord”)

 

and

 

HALLMARK FINANCIAL SERVICES, INC.

 

(“Tenant”)

 

Dated as of

 

______________________, 2018

 

 

 

 

Office lease

 

THIS OFFICE LEASE (this “Lease”) is made between Teachers Insurance and Annuity
Association of America, a New York corporation, for the benefit of the Real
Estate Account (“Landlord”), and the Tenant described in Item 1 of the Basic
Lease Provisions.

 

LEASE OF PREMISES

 

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, subject
to all of the terms and conditions set forth herein, those certain premises (the
“Premises”) described in Item 3 of the Basic Lease Provisions and as shown in
the drawing attached hereto as Exhibit A-1. The Premises are located in the
Building described in Item 2 of the Basic Lease Provisions. The Building is
located on that certain land (the “Land”) more particularly described on Exhibit
A-2 attached hereto, which is also improved with landscaping and other
improvements, fixtures and common areas and appurtenances now or hereafter
placed, constructed or erected on the Land (sometimes referred to herein as the
“Property”). The term “Centre” shall mean the Building, the Land, the other
office buildings, the parking garages and the land owned by Landlord located
between LBJ Freeway, the Dallas North Tollway, Harvest Hill Lane and Noel Road.

 

BASIC LEASE PROVISIONS

 

1.           Tenant: Hallmark Financial Services, Inc., a Nevada corporation
 (“Tenant”)       2.                     Building: Two Lincoln Centre
5420 LBJ Freeway
Dallas, Texas 75240       3.                     Description of Premises: Suites
1010 and 1100 (the “1100 Premises”) and Suite 380 (the “380 Premises”)        
Rentable Area of Premises: Approximately 50,172 square feet of Rentable Area;
the 1100 Premises contains approximately 47,172 square feet of Rentable Area and
the 380 Premises contains approximately 3,000 square feet of Rentable Area      
  Rentable Area of Building: Approximately 612,462 square feet (subject to
Paragraph 18)       4.                     Tenant’s Proportionate Share: 7.70%
(47,172 rsf / 612,462 rsf) (See Paragraph 3) (Tenant’s Proportionate Share is
calculated based on the number of square feet of Rentable Area in the 1100
Premises only)       5.                     Base Rent: (See Paragraph 2)

1100 Premises

Lease Months Annual Base Rent/RSF Monthly Base Rent 1 – 24 $31.00 $121,861.00*
25 – 36 $31.50 $123,826.50 37 – 48 $32.00 $125,792.00 49 – 60 $32.50 $127,757.50
61 – 72 $33.00 $129,723.00 73 – 84 $33.50 $131,688.50 85 – 96 $34.00 $133,654.00
97 – 108 $34.50 $135,619.50 109 – 120 $35.00 $137,585.00 121 – 132 $35.50
$139,550.50 133 – 144 $36.00 $141,516.00 145 – 156 $36.50 $143,481.50

 

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*Base Rent for the 1100 Premises during Lease Months 1 through 12 will be
conditionally abated in accordance with Paragraph 20(ff). 380 Premises

Lease Months Annual Base Rent/RSF Monthly Base Rent 1 – 60 $17.00 $4,250.00* 61
– 72 $17.25 $4,312.50 73 – 84 $17.50 $4,375.00 85 – 96 $17.75 $4,437.50 97 – 108
$18.00 $4,500.00 109 – 120 $18.25 $4,562.50 121 – 132 $18.50 $4,625.00 133 – 144
$18.75 $4,687.50 145 – 156 $19.00 $4,750.00

*Base Rent for the 380 Premises during Lease Months 1 through 48 will be
conditionally abated in accordance with Paragraph 20(ff).

6.  Base Rent Installment Payable
Upon Execution: $126,111.00       7.                     Security Deposit
Payable Upon Execution: $148,231.50, in cash  (See Paragraph 2(c))      
8.                     Base Year for Operating Expenses: Calendar year 2019 (See
Paragraph 3)       9.                     Initial Term: One hundred fifty-six
(156) Lease Months, commencing on the Commencement Date and ending on the last
day of the 156th Lease Month.  The term "Lease Month" means each calendar month
during the Term (and if the Commencement Date does not occur on the first day of
a calendar month, the period from the Commencement Date to the first day of the
next calendar month shall be included in the first Lease Month for which Base
Rent is payable.  (See Paragraph 1)       10.                  Commencement
Date: June 1, 2019       11.                  Expiration Date: May 31, 2032    
  12.                  Broker(s) (See Paragraph 19(k)):           Landlord’s
Broker: Cushman & Wakefield of Texas, Inc.         Tenant’s Broker: CBRE, Inc.

 

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13.  Number of Parking Spaces: Two hundred fifty-one (251) unreserved parking
spaces in the east and west parking garages serving the Centre (the "Garage
Spaces") at $75.00 per Garage Space per month (plus tax).  Tenant may convert up
to twelve (12) unreserved Garage Spaces to reserved spaces in the parking garage
located beneath the Building at $150.00 per reserved space per month (plus
tax).  Tenant may convert up to twenty-five (25) of the Garage Spaces to
reserved spaces in the Centre's east or west parking garage at $150.00 per space
per month.  So long as there is no event of default that remains uncured beyond
any applicable notice and cure period, the rental for the unreserved Garage
Spaces will be abated during the Initial Term.  Following such event of default,
upon notice by Landlord, rental for the unreserved Garage Spaces will commence
effective on the date of Tenant's event of default.  (See Paragraph 18).        
14.                  Addresses for Notices:           To:  TENANT:

Prior to occupancy of the Premises:

Hallmark Financial Services, Inc.
777 Main Street, Suite 1000
Fort Worth, TX 76102                         Attn: Jeff Passmore, Senior Vice
President & Chief Accounting Officer

To: LANDLORD:

Property Management Office:

Teachers Insurance and Annuity Association of
America for the benefit of the Real Estate Account
Attn: Property Manager
5430 LBJ Freeway, Suite 200
Dallas, Texas 75240

 

With copy to:

 

Cushman & Wakefield of Texas, Inc. 
2101 Cedar Springs, Suite 900
Dallas, TX  75201
Attn: Senior Managing Director, D/FW Lead, Investor Services

 

 

 

       

After occupancy of the Premises:

Hallmark Financial Services, Inc.
777 Main Street, Suite 1000
Fort Worth, TX 76102

Attn: Jeff Passmore, Senior Vice President & Chief Accounting Officer

With respect to any default notice, a copy must be sent on the same date and by
the same method as sent to Landlord to:

Munsch Hardt Kopf & Harr, P.C.
Attn:  Ian M. Fairchild
3800 Lincoln Plaza
500 N. Akard Street
Dallas, Texas   75201-6659

 

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15.  Address for Payment of Rent:

All payments payable under this Lease shall be sent to Landlord at:

 

TIAA-CREF Lincoln Centre #6239 Collection
P. O. Box 840029
Dallas, Texas 75284

or to such other address as Landlord may designate in writing.

 

      16.                  Guarantor: None       17.                  Tenant
Improvement Allowance: Up to $3,386,610.00 (See Exhibit B)      
18.                  The “State” is the state, commonwealth, district or
jurisdiction in which the Building is located.  

 

This Lease consists of the foregoing introductory paragraphs and Basic Lease
Provisions, the provisions of the Standard Lease Provisions (the “Standard Lease
Provisions”) (consisting of Paragraph 1 through Paragraph 20 which follow) and
the following exhibits and addenda, all of which are incorporated herein by this
reference:

 

Exhibit A-1 Floor Plan of the Premises Exhibit A-2 Legal Description of the
Property Exhibit B-1 Landlord Work Letter Exhibit B-2 Tenant Work Letter Exhibit
C Building Rules and Regulations Exhibit D Form Tenant Estoppel Certificate
Exhibit E Tenant’s Commencement Letter Exhibit F Renewal Option Exhibit G Right
of First Refusal Exhibit H Reduction Option Exhibit I Termination Option Exhibit
J Signage Exhibit K Rooftop Rights Exhibit L Temporary Space

 

In the event of any conflict between the provisions of the Basic Lease
Provisions and the provisions of the Standard Lease Provisions, the Standard
Lease Provisions shall control.

 

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STANDARD LEASE PROVISIONS

 

1.                   TERM; REMEASUREMENT; BENEFICIAL OCCUPANCY

 

(a)                 The Initial Term of this Lease and the Rent (defined below)
shall commence on June 1, 2019 (the “Commencement Date”). Unless earlier
terminated in accordance with the provisions hereof, the Initial Term of this
Lease shall be the period shown in Item 9 of the Basic Lease Provisions. As used
herein, “Lease Term” shall mean the Initial Term referred to in Item 9 of the
Basic Lease Provisions, subject to any extension of the Initial Term hereof
exercised in accordance with the terms and conditions expressly set forth herein
(the “Expiration Date”). Unless Landlord is terminating this Lease prior to the
Expiration Date in accordance with the provisions hereof, Landlord shall not be
required to provide notice to Tenant of the Expiration Date. This Lease shall be
a binding contractual obligation effective upon execution hereof by Landlord and
Tenant, notwithstanding the later commencement of the Initial Term of this
Lease.

 

(b)                The Premises will be delivered to Tenant when the Turnover
Work has been Substantially Completed, such date being the “Possession Date”.
Landlord estimates that the Possession Date will occur on or before November 1,
2018 (the “Estimated Possession Date”). If the Possession Date is delayed or
otherwise does not occur on the Estimated Possession Date, this Lease shall not
be void or voidable, nor shall Landlord be liable to Tenant for any loss or
damage resulting therefrom; however, (i) if the Possession Date does not occur
on or before November 1, 2018 for any reason other than force majeure or Tenant
Delays, the Commencement Date shall be delayed one day for each day that the
Possession Date does not occur, and (ii) if the Possession Date occurs on or
after December 1, 2018, the Commencement Date shall be delayed two days for each
day following December 1, 2018 that the Possession Date does not occur. The
terms “Turnover Work” and “Substantial Completion” or “Substantially Completed”
are defined in the attached Exhibit B-1 Landlord Work Letter. “Tenant Delays”
consist of those delays defined in Exhibit B-1.

 

(c)                 Within ten (10) days following Landlord’s written request
therefor, Landlord shall prepare and deliver to Tenant, Tenant’s Commencement
Letter in the form of Exhibit E attached hereto (the “Commencement Letter”),
which Tenant shall acknowledge by executing a copy and returning it to Landlord.
If Tenant fails to sign and return the Commencement Letter to Landlord within
ten (10) days of its receipt from Landlord, the Commencement Letter as sent by
Landlord shall be deemed to have correctly set forth the Commencement Date and
the other matters addressed in the Commencement Letter. Failure of Landlord to
send the Commencement Letter shall have no effect on the Commencement Date.

 

(d)                Landlord and Tenant stipulate and agree that the square feet
of Rentable Area in the Premises and Building are correct and shall not be
remeasured; provided, within thirty (30) days following substantial completion
of the Turnover Work, the Premises shall be measured, at Landlord’s cost, by an
engineer or architect reasonably satisfactory to both parties using the Standard
Method for Measuring Floor Area in Office Buildings, ANSI/BOMA Z65.1-2010,
Method B (the “BOMA Method”), and Tenant shall be entitled, at Tenant’s cost, to
verify such measurements using the BOMA Method prior to commencement of the
Tenant Finish Work (defined on Exhibit B-2). The area stipulated herein shall be
fully applicable and binding on the parties until after such time as the
required measurement is effected, following which event the new measurements, if
they differ from those herein set forth, shall be applicable. In addition, if
additional space is added to the Premises during the Lease Term, such additional
space shall be measured in accordance with the BOMA methodology then used by
Landlord.

 

(e)                 Tenant may occupy the Premises sixty (60) days prior to the
Commencement Date for the purpose of installing Tenant’s furniture, fixtures,
and equipment in the Premises (“Early Possession Period”). Tenant’s occupancy of
the Premises during the Early Possession Period will be subject to all of
Tenant’s obligations under this Lease (except that Tenant will not be obligated
to pay Base Rent, Tenant’s Proportionate Share of Electrical Costs, or Tenant’s
Proportionate Share of Operating Expenses during such early occupancy). In
addition, Tenant may occupy the Premises thirty (30) days prior to the
Commencement Date for the purpose of conducting business therefrom (“Beneficial
Occupancy Period”). Tenant’s occupancy of the Premises during the Beneficial
Occupancy Period will be subject to all of Tenant’s obligations under this
Lease, including Tenant’s obligation to pay Tenant’s Proportionate Share of
Electrical Costs (except that Tenant will not be obligated to pay Base Rent or
Tenant’s Proportionate Share of Operating Expenses during such early occupancy).
Tenant shall provide Landlord with copies of certificates of insurance,
complying in all respects with the terms of this Lease for all insurance
required to be provided hereunder prior to entering the Premises. Tenant hereby
releases and discharges Landlord, its contractors, agents, employees and manager
from and against any and all claims of loss, damage or injury to persons or
property, including without limitation any product inventory, which is alleged
to have occurred during the Early Possession Period or the Beneficial Occupancy
Period. Landlord makes no representation or warranty about safety of the
Premises during the Early Possession Period or the Beneficial Occupancy Period,
as construction and other activities will be ongoing.

 

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2.                   BASE RENT AND SECURITY DEPOSIT

 

(a)                 Tenant agrees to pay during each month of the Lease Term as
Base Rent (“Base Rent”) for the Premises the sums shown for such periods in Item
5 of the Basic Lease Provisions.

 

(b)                Except as expressly provided to the contrary herein, Base
Rent shall be payable in consecutive monthly installments, in advance, without
demand, deduction or offset, commencing on the Commencement Date and continuing
on the first day of each Lease Month thereafter until the expiration of the
Lease Term. The first full monthly installment of Base Rent shall be payable
upon Tenant’s execution of this Lease and applied, with regard to the 1100
Premises, to Base Rent for Lease Month 13, and, with regard to the 380 Premises,
to Base Rent for Lease Month 49. The obligation of Tenant to pay Rent and other
sums to Landlord and the obligations of Landlord under this Lease are
independent obligations. If the Commencement Date is a day other than the first
day of a calendar month, or the Lease Term expires on a day other than the last
day of a calendar month, then the Rent for such partial month shall be
calculated on a per diem basis. In the event Landlord delivers possession of the
Premises to Tenant prior to the Commencement Date, Tenant agrees it shall be
bound by and subject to all terms, covenants, conditions and obligations of this
Lease during the period between the date possession is delivered and the
Commencement Date, other than the payment of Base Rent, in the same manner as if
delivery had occurred on the Commencement Date.

 

(c)                 Within five (5) business days after Landlord’s delivery of
the fully executed Lease, Tenant has paid or will pay Landlord the security
deposit (the “Security Deposit”) in Item 7 of the Basic Lease Provisions as
security for the performance of the provisions hereof by Tenant, if applicable.
Landlord shall not be required to keep the Security Deposit separate from its
general funds and Tenant shall not be entitled to interest thereon.

 

If an event of default occurs that is not cured within any applicable notice and
cure period, including, without limitation, the provisions relating to the
payment of Rent or the cleaning and restoration of the Premises upon the
termination of this Lease, or amounts which Landlord may be entitled to recover
pursuant to the terms hereof, Landlord may, but shall not be required to, use,
apply or retain all or any part of the Security Deposit (i) for the payment of
any Rent or any other sum in default, (ii) for the payment of any other amount
which Landlord may spend or become obligated to spend by reason of Tenant’s
event of default hereunder, or (iii) to compensate Landlord for any other loss
or damage which Landlord may suffer by reason of Tenant’s event of default
hereunder, including, without limitation, costs and reasonable attorneys’ fees
incurred by Landlord to recover possession of the Premises following an event of
default by Tenant hereunder. The use or application of the Security Deposit or
any portion thereof shall not prevent Landlord from exercising any other right
or remedy provided hereunder or under any Law and shall not be construed as
liquidated damages. Notwithstanding anything in this Lease or under Texas law to
the contrary, Tenant hereby waives Section 93.004 - 93.011 of the Texas Property
Code as such sections of the Texas Property Code relate to the Security Deposit
under this Lease.

 

If any portion of the Security Deposit is so used or applied, Tenant shall,
within ten (10) business days after demand therefor, deposit cash with Landlord
in an amount sufficient to restore the Security Deposit to the appropriate
amount, as determined hereunder. If Tenant shall fully perform every provision
of this Lease to be performed by it, the Security Deposit or any balance thereof
shall be returned to Tenant (or, at Landlord’s option, to the last assignee of
Tenant’s interest hereunder) within thirty (30) days following the expiration of
the Lease Term; provided, however, that Landlord may retain the Security Deposit
until such time as any amount due from Tenant in accordance with Paragraph 3
below has been determined and paid to Landlord in full. Tenant also waives all
provisions of law, now or hereafter in force, which provide that Landlord may
claim from a security deposit only those sums reasonably necessary to remedy
defaults in the payment of rent, to repair damage caused by Tenant or to clean
and restore the Premises, it being agreed that Landlord may, in addition, claim
those sums reasonably necessary to compensate Landlord for any other loss or
damage, foreseeable or unforeseeable, caused by the act or omission of Tenant or
any Tenant Affiliates (as defined in Paragraph 6(g)(i) below).

 

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(d)                The parties agree that for all purposes hereunder the
Premises shall be stipulated to contain the number of square feet of Rentable
Area described in Item 3 of the Basic Lease Provisions. Upon the request of
Landlord during any extension or renewal of the Initial Term, Landlord’s space
planner shall verify the exact number of square feet of Rentable Area in the
Premises. If during any extension or renewal of the Initial Term there is a
variation from the number of square feet specified in Item 3 of the Basic Lease
Provisions, Landlord and Tenant shall execute an amendment to this Lease for the
purpose of making appropriate adjustments to the Base Rent, the Security
Deposit, Tenant’s Proportionate Share and such other provisions hereof as shall
be appropriate under the circumstances.

 

3.                   ADDITIONAL RENT

 

(a)                 If Operating Expenses (defined below) for any calendar year
during the Lease Term exceed Base Operating Expenses (defined below), Tenant
shall pay to Landlord as additional rent (“Additional Rent”) an amount equal to
Tenant’s Proportionate Share (defined below) of such excess. In addition to
payment of Tenant’s Proportionate Share of Operating Expenses, Tenant shall also
pay to Landlord as part of Additional Rent, Tenant's Proportionate Share of
Electrical Costs (defined below).

 

(b)                “Tenant’s Proportionate Share” is, subject to the provisions
of Paragraph 19, the percentage number described in Item 4 of the Basic Lease
Provisions. Tenant’s Proportionate Share represents, subject to the provisions
of Paragraph 19, a fraction, the numerator of which is the number of square feet
of Rentable Area in the Premises and the denominator of which is the number of
square feet of Rentable Area for lease to third parties in the Building, as
determined by Landlord pursuant to Paragraph 19.

 

(c)                 “Base Operating Expenses” means all Operating Expenses
incurred or payable by Landlord during the calendar year specified as Tenant’s
Base Year in Item 8 of the Basic Lease Provisions.

 

(d)                “Operating Expenses” means all costs, expenses and
obligations incurred or payable by Landlord in connection with the operation,
ownership, management, repair or maintenance of the Property plus all operating
expenses of the Exterior Common Areas (defined below), exclusive of Electrical
Costs (defined below) during or allocable to the Lease Term, including without
limitation, the following:

 

(i)                  All real property taxes, assessments, license fees,
excises, levies, charges, assessments, both general and special assessments, or
impositions and other similar governmental ad valorem or other charges
(including the franchise tax set forth in V.T.C.A. Tax Code Section 171.0001 et
seq., as the same may be amended or recodified from time to time) levied on or
attributable to the Property or its ownership, operation or transfer, and all
taxes, charges, assessments or similar impositions imposed in lieu of the same
(collectively, “Real Estate Taxes”). If Real Estate Taxes are not assessed
separately for the Centre, but rather are assessed as part of a larger parcel
owned by Landlord, Landlord will apportion Real Estate Taxes to the Centre based
on the assessed value of the Centre as a percentage of the assessed value of the
entire tax parcel. Margin taxes will be included in the Base Year. The amount of
margin taxes included in the Operating Expenses in any year will not exceed
Landlord’s gross margin tax obligation for such year multiplied by a percentage,
the numerator of which is Landlord’s gross revenue from the Centre in such year
and the denominator of which is Landlord’s gross revenue from all sources. Real
Estate Taxes shall also include all taxes, assessments, license fees, excises,
levies, charges or similar impositions imposed by any governmental agency,
district, authority or political subdivision (A) on any interest of Landlord,
any mortgagee of Landlord or any interest of Tenant in the Property, the
Premises, or on the occupancy or use of space in the Property or the Premises;
(B) for the provision of amenities, services or rights of use, whether or not
exclusive, public, quasi-public or otherwise made available on a shared use
basis, including amenities, services or rights of use such as fire protection,
police protection, street, sidewalk, lighting, sewer or road maintenance, refuse
removal or janitorial services or for any other service, without regard to
whether such services were formerly provided by governmental or
quasi-governmental agencies to property owners or occupants at no cost or at
minimal cost; and (C) related to any transportation plan, fund or system
instituted within the geographic area of the Centre or otherwise applicable to
the Premises, the Property, the Centre or any portion thereof. Real Estate Taxes
shall also include for any year, the amount of all fees, costs and expenses
(including reasonable attorneys’ fees) paid by Landlord during such year in
seeking or obtaining any refund or reduction of Real Estate Taxes. Real Estate
Taxes shall expressly include any tax, assessment or similar charge on the rents
or profits from the Premises or Building levied against Landlord and/or the
Property in lieu of other real estate taxes on the Property or otherwise as a
result of property tax reform in the State of Texas, but shall not otherwise
include any estate, inheritance, successor, transfer, gift, corporation or
income tax imposed by the State or federal government on Landlord.

 

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(ii)                The cost of services and utilities other than Electrical
Costs (including taxes and other charges incurred in connection therewith)
provided to the Premises, the Property or the Centre, including, without
limitation, water, gas, sewer, waste disposal, telephone and cable television
facilities, fuel, supplies, equipment, tools, materials, service contracts,
janitorial services, waste and refuse disposal, window cleaning, maintenance and
repair of services areas, gardening and landscaping; insurance, including, but
not limited to, public liability, fire, property damage, wind, hurricane,
terrorism, rental loss, rent continuation, boiler machinery, business
interruption, contractual indemnification and All Risk or Causes of
Loss  Special Form coverage insurance for up to the full replacement cost of the
Property and such other insurance as is customarily carried by operators of
other similar Class-A office buildings in the Lower Tollway submarket, to the
extent carried by Landlord in its reasonable discretion, and the deductible
portion of any insured loss otherwise covered by such insurance; the cost of
compensation, including employment, welfare and social security taxes, paid
vacation days, disability, pension, medical and other fringe benefits of all
persons (including independent contractors) who directly perform services
connected with the operation, maintenance, repair or replacement of the
Property; any association assessments, costs, dues and/or expenses relating to
the Property, personal property taxes on and maintenance and repair of equipment
and other personal property directly used in connection with the operation,
maintenance or repair of the Property; repair and replacement of window
coverings provided by Landlord in the premises of tenants in the Property; such
reasonable auditors’ fees and legal fees as are incurred in connection with the
operation, maintenance or repair of the Property; a property management fee
(which fee may be imputed if Landlord has internalized management or otherwise
acts as its own property manager) (not to exceed three percent (3%) of the gross
revenues of the Centre); the maintenance of any easements or ground leases
benefiting the Property, whether by Landlord or by an independent contractor; a
reasonable allowance for depreciation of personal property used in the
operation, maintenance or repair of the Property; license, permit and inspection
fees; all costs and expenses required by any governmental or quasi-governmental
authority or by applicable law, for any reason, including capital improvements,
whether capitalized or not, and the cost of any capital improvements made to the
Property by Landlord that improve life-safety systems or reduce operating
expenses, such costs to be amortized over the useful life thereof as determined
in accordance with GAAP (hereinafter defined), and the costs to replace items
which Landlord would be obligated to maintain under the Lease (such costs to be
amortized over the useful life thereof as determined in accordance with GAAP),
together with interest thereon at the rate of eight percent per annum or such
higher rate as may have been paid by Landlord on funds borrowed for the purpose
of funding such improvements); the cost of air conditioning, heating,
ventilating, plumbing, elevator maintenance and repair (to include the
replacement of components) and other mechanical and electrical systems repair
and maintenance; sign maintenance; and Common Area (defined below) repair,
operation and maintenance; the reasonable cost for temporary lobby displays and
events commensurate with the operation of a similar class building, and the cost
of providing security services, if any, reasonably deemed appropriate by
Landlord.

 

(iii)              As used herein, the term “Exterior Common Areas” means that
portion of the Property (and other tracts of real property comprising the
Centre) which are not located within the Building (or other building in the
Centre) and which are provided and maintained for the common use and benefit of
Landlord and tenants of the Building (or the Centre) generally and the
employees, invitees and licensees of Landlord and such tenants; including
without limitation, all parking areas (enclosed or otherwise) and all streets,
sidewalks, walkways, and landscaped areas.

 

(iv)               The following items shall be excluded from Operating
Expenses:

 

(A)               Promotional expenditures, leasing commissions, attorneys’
fees, costs and disbursements and other expenses incurred in connection with
marketing and leasing space in the Property, resolving disputes with present or
past tenants in Building, renovating or improving vacant space in the Property
for tenants or prospective tenants of the Property;

 

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(B)               costs (including permit, license and inspection fees) incurred
in renovating or otherwise improving or decorating, painting or redecorating
space for tenants or vacant space;

 

(C)               Landlord’s costs of any services sold to tenants for which
Landlord is entitled to be reimbursed by such tenants as an additional charge or
rental over and above the Base Rent and Operating Expenses payable under the
lease with such tenant or other occupant;

 

(D)               any depreciation or amortization of the Property except as
expressly permitted herein;

 

(E)                costs incurred due to a violation of Law (defined below) by
Landlord or Landlord’s employees, agents, contractors or invitees or a violation
of any terms of a lease by Landlord or another tenant relating to the Property;

 

(F)                interest on debt or amortization payments on any mortgages or
deeds of trust or any other debt for borrowed money and rental under any ground
or underlying lease or leases;

 

(G)               all items and services for which Tenant or other tenants
reimburse Landlord outside of Operating Expenses;

 

(H)               repairs or other work occasioned by fire, windstorm or other
work paid for through insurance or condemnation proceeds (excluding any
deductible);

 

(I)                  expenditures for capital improvements, capital alterations
or replacements, capital equipment, and capital tools, except for amortization
of the cost, together with interest at the actual rate paid by Landlord, of
furnishing and installing capital investment items that are: (i) primarily for
the purpose of reducing Operating Expenses or avoiding increases in Operating
Expenses (provided Landlord reasonably estimates at the time of installing or
furnishing the capital investment item that the reduction in, or avoidance of,
Operating Expenses resulting from the capital investment item will equal or
exceed the amortization cost of the capital item); or (ii) required by
applicable Laws not in effect or applicable to the Centre on the date of this
Lease. All such costs will be amortized over the useful life of the capital
investment items with the useful life and amortization schedule being determined
in accordance with general accepted accounting principles, consistently applied
(“GAAP”), not to exceed ten (10) years;

 

(J)                 legal expenses incurred for (i) negotiating lease terms for
prospective tenants, (ii) negotiating termination or extension of leases with
existing tenants, (iii) proceedings against any other specific tenant relating
solely to the collection of rent or other sums due to Landlord from such tenant,
or (iv) the development and/or construction of the Property;

 

(K)               repairs directly resulting from any defect in the original
design or construction of the Property;

 

(L)                Specific costs billed to and to be paid by specific tenants
(other than Tenant);

 

(M)              Repairs or other work occasioned by fire, windstorm, or other
casualty of an insurable nature or by exercise of the right of eminent domain;

 

(N)               Expenses in connection with services or other benefits of a
type which are not provided Tenant but which are provided to another tenant or
occupant;

 

(O)               Overhead and profit increment paid to subsidiaries or
affiliates of Landlord for services on or to the Property, to the extent only
that the costs of such services exceed competitive costs of such services were
they not so rendered by a subsidiary or affiliate;

 

 9 

 

(P)        Any compensation paid to clerks, attendants, or other persons in
commercial concessions operated by Landlord;

(Q)        Costs of sculpture, paintings, or works of art;

(R)        Costs of correcting structural and other defects in the construction
of the Building (including, without limitation, latent defects) or in the Centre
equipment;

(S)        Wages, salaries, or other compensation of any kind or nature paid to
any executive employees above grade of property manager;

(T)        Rentals and other related expenses incurred in leasing air
conditioning systems, elevators, or other equipment ordinarily considered to be
of a capital nature, except equipment which is used in providing janitorial
services and which is not affixed to the Building;

(U)        State, local, or federal personal or corporate income taxes measured
by the income of Landlord from all sources or from sources other than rent
alone, estate and inheritance taxes, succession and transfer taxes and interest
on taxes and penalties resulting from failure to pay Real Estate Taxes. Further,
the amount of tax expenses paid by Tenant and attributable to tenant
improvements, or tax expenses in connection with other alterations, additions,
substitutions, and improvements done by or for the tenants or directly received
by Landlord from such other tenants;

(V)        Expenses and costs relating in a way whatsoever to the
identification, testing, monitoring, control, encapsulation, removal,
replacement, repair and abatement of asbestos, polychlorinated biphenyl’s or any
other Hazardous Material within, under, on or otherwise part of the Centre,
except to the extent brought into the Centre by Tenant or Tenant’s employees,
agents, contractors or invitees;

(W)        Landlord’s insurance for personal property which is not located in
the Centre nor exclusively used in connection therewith;

(X)        Costs, including permit, license, and inspection costs, incurred with
respect to the installation of leasehold improvements made for new tenants in
the Building or incurred in renovating or otherwise improving, decorating,
painting, or redecorating space leased by or available for leasing to other
tenants or occupants of the Building;

(Y)        Landlord’s general corporate overhead and administrative (including
travel and entertainment) expenses not relating to the Centre management;

(Z)        The purchase and installation costs of signs in or on the Centre
identifying the owner of the Centre or any tenant of the Centre, except the main
directory;

(AA)           Electric power costs for which any tenant directly contracts (by
separate meter or otherwise) with the local public service company;

(BB)           Tax and/or assessment penalties and interest and late charges
incurred as a result of Landlord’s negligence or inability or unwillingness or
failure for any reason to make such payments when due;

 

(CC)           All costs and expenses incurred in connection with or relating to
any retail space in the Centre to the extent there is a direct charge for such
costs and expenses to such retail space tenants;

 

(DD)          Any reserve for operating costs until funds are actually disbursed
from such reserve for payment of actual operating costs and not for bad debt or
uncollected rent;

 

(EE)            All costs incurred in connection with the sale, financing,
refinancing, mortgaging or other change in ownership or interest in the Centre
or any portion thereof;

 

 10 

 

 

(FF)            Landlord’s or Centre’s charitable or political contributions;

 

(GG)          Costs incurred as a result of Landlord’s or its employees’,
agents, contractors’ or invitees’ gross negligence or willful misconduct;

 

(HH)          Legal, accounting, consulting or other services fees or expenses
other than those which benefit the Centre tenants generally, such as Real Estate
Tax disputes;

 

(II)             All expenses related to the defense of Landlord’s title to the
Centre or any portion thereof;

 

(JJ)            Any cost which would entity Landlord to a “double recovery” of
any other costs for which Landlord is directly reimbursed;

 

(KK)         Any flowers, balloons or other gifts provided to any entity
including, without limitation, Tenant;

 

(LL)           Any entertainment, travel, dining or other expenses for any
purpose;

 

(MM)        Costs of any magazine, newspaper, trade, association or other
subscription or membership, other than the Centre’s annual membership dues in
the local Building Owners and Managers Association;

 

(NN)          Costs to relocate any tenants; and

 

(OO)          Any rental, imputed rental or associated expenses for any
management office space that exceeds 2,500 rentable square feet.

 

(e)                 Operating Expenses for any calendar year during which actual
occupancy of the Property is less than ninety-five percent (95%) of the Rentable
Area of the Property shall be appropriately adjusted to reflect ninety-five
percent (95%) occupancy of the existing Rentable Area of the Property during
such period. In determining Operating Expenses, if any services or utilities are
separately charged to tenants of the Property or others, Operating Expenses
shall be adjusted by Landlord to reflect the amount of expense which would have
been incurred for such services or utilities on a full time basis for normal
Property operating hours. Operating Expenses for the Tenant’s Base Year for
Operating Expenses (as defined in Item 8 of the Basic Lease Provisions) shall
not include Operating Expenses attributable to temporary market-wide labor-rate
increases and/or utility rate increases due to extraordinary circumstances,
including, but not limited to Force Majeure, conservation surcharges, boycotts,
embargoes, or other shortages. In the event (i) the Commencement Date shall be a
date other than January 1, (ii) the date fixed for the expiration of the Lease
Term shall be a date other than December 31, (iii) of any early termination of
this Lease, or (iv) of any increase or decrease in the size of the Premises,
then in each such event, an appropriate adjustment in the application of this
Paragraph 3 shall, subject to the provisions of this Lease, be made to reflect
such event on a basis determined by Landlord to be consistent with the
principles underlying the provisions of this Paragraph 3. In addition, Landlord
shall have the right, from time to time, to equitably allocate and prorate some
or all of the Operating Expenses among different tenants and/or different
buildings of the Centre and/or on a building-by-building basis (the “Cost
Pools”), adjusting Tenant’s Proportionate Share as to each of the separately
allocated costs based on the ratio of the Rentable Area of the Premises to the
Rentable Area of all of the premises to which such costs are allocated.
Notwithstanding the foregoing provisions of this Paragraph 3, Landlord will not
require Tenant to pay Operating Expenses for the 380 Premises.

 

(f)                  The term “Electrical Costs” shall mean the aggregate cost
of electricity to the Building reduced by the cost of any extraordinary
electrical use by other tenants of the Building where such costs are charged to
such tenants. The calculation of Electrical Costs is based on Standard Building
Capacity (defined in Section 7(a)(viii). Landlord may from time to time deliver
to Tenant an invoice for such pro rata share of Electrical Costs and Tenant
shall make payment of such amount to Landlord within three (3) days of delivery
of the invoice. Landlord, from time to time, shall also have the option to make
a good faith estimate of Tenant’s pro rata share of the Electrical Costs for
each upcoming year and, upon thirty (30) days’ written notice to Tenant, may
require the monthly payment of Base Rent to be adjusted in accordance with such
estimate. Any amounts paid based on such an estimate shall be subject to
adjustment as hereafter provided in Paragraph 3(g) (applied to Electrical Costs)
when actual Electrical Costs are available for such year. Within a reasonable
period after the end of each calendar year, Landlord shall furnish Tenant a
statement indicating in reasonable detail the Electrical Costs for such period
and the parties shall, within thirty (30) days thereafter, make any payment or
allowance necessary to adjust Tenant’s estimated payments to Tenant’s actual
share of such excess as indicated by such annual statement. Any payment due
Landlord shall be payable by Tenant within thirty (30) days of written notice
from Landlord. Any amount due Tenant shall be credited against installments next
becoming due under this Paragraph 3(f) or refunded to Tenant, if requested by
Tenant.

 

 11 

 

 

(g)                Prior to the commencement of each calendar year of the Lease
Term following the Commencement Date, Landlord shall have the right to give to
Tenant a written estimate of Tenant’s Proportionate Share of excess Operating
Expenses, if any, for the Property for the ensuing year. Tenant shall pay such
estimated amount to Landlord in equal monthly installments, in advance on the
first day of each month. Landlord may adjust its estimate by notice to Tenant at
any time during the applicable calendar year if actual Operating Expenses are
substantially different from the estimate, and thereafter payments by Tenant
under this subparagraph 3(g) adjust accordingly. Within a reasonable period
after the end of each calendar year, Landlord shall deliver to Tenant a
statement indicating in reasonable detail the actual excess Operating Expenses
for the prior calendar year. If the estimated payments made by Tenant during the
prior calendar year exceed Tenant’s Proportionate Share of actual excess
Operating Expenses for that year, Landlord shall credit the difference against
the next ensuing installments of estimated payments by Tenant hereunder. If the
estimated payments made by Tenant during the prior calendar year are less than
Tenant’s Proportionate Share of actual excess Operating Expenses for that year,
Tenant shall pay, as Additional Rent, the amount of the difference to Landlord
in cash within thirty (30) days after delivery of any invoice therefor by
Landlord accompanied by a statement of the actual excess Operating Expenses for
that year. Tenant’s obligation to pay Tenant’s pro rata share of the excess
Operating Expenses survives the termination or expiration of this Lease.

 

(h)                All capital levies or other taxes assessed or imposed on
Landlord upon the rents payable to Landlord under this Lease and any excise,
transaction, sales or privilege tax, assessment, levy or charge measured by or
based, in whole or in part, upon such rents from the Premises and/or the
Property or any portion thereof shall be paid by Tenant to Landlord monthly in
estimated installments or upon demand, at the option of Landlord, as additional
rent to be allocated to monthly Operating Expenses.

 

(i)                  Tenant shall pay ten (10) days before delinquency, all
taxes and assessments (i) levied against any personal property, Alterations,
tenant improvements or trade fixtures of Tenant in or about the Premises,
(ii) based upon this Lease or any document to which Tenant is a party creating
or transferring an interest in this Lease or an estate in all or any portion of
the Premises, and (iii) levied for any business, professional, or occupational
license fees. If any such taxes or assessments are levied against Landlord or
Landlord’s property or if the assessed value of the Property is increased by the
inclusion therein of a value placed upon such personal property or trade
fixtures, Tenant shall upon demand reimburse Landlord for the taxes and
assessments so levied against Landlord, or such taxes, levies and assessments
resulting from such increase in assessed value. To the extent that any such
taxes are not separately assessed or billed to Tenant, Tenant shall pay the
amount thereof as invoiced to Tenant by Landlord.

 

(j)                  Any delay or failure of Landlord in (i) delivering any
estimate or statement described in this Paragraph 3, or (ii) computing or
billing Tenant’s Proportionate Share of excess Operating Expenses or Electrical
Costs shall not constitute a waiver of its right to require an increase in Rent,
or in any way impair the continuing obligations of Tenant under this Paragraph
3. Tenant, an officer of Tenant or Tenant's certified public accountant (but
(a) in no event shall Tenant hire or employ an accounting firm or any other
person to audit Landlord as set forth under this Paragraph who is compensated or
paid for such audit on a contingency basis and (b) if Tenant hires or employs an
independent party to perform such audit, then upon request of Landlord, Tenant
shall provide Landlord with a copy of the engagement letter [which may be
redacted as to the hourly rate being charged] or a certified statement by the
party performing the audit that such audit is not being performed on a
contingency basis) shall have the right after reasonable notice and at
reasonable times to inspect Landlord's accounting records at Landlord's office.
Within fifteen (15) business days of Tenant’s written notice to Landlord of its
desire to review Landlord’s books and records, Landlord shall make available to
Tenant a full and complete copy of the Building’s general ledger, and all
escalation worksheets and their supporting documentation for the applicable
calendar year. If, after the review of such documentation, Tenant desires
additional information of Landlord’s books and records including but not limited
to, invoices paid by Landlord or service contracts, Landlord shall reasonably
cooperate with Tenant.  Tenant, Tenant’s employees and agents, may make and
retain photo copies of such records provided that Tenant keeps such copies
confidential and does not show or distribute such copies to any other tenants in
the Building. The auditor's report reflecting the results of Tenant's audit
shall be delivered to Landlord following the completion thereof. If the Tenant's
audit reveals an overstatement of Tenant's Proportionate Share of the excess
Operating Expenses or Electrical Costs by more than five percent (5%) in the
aggregate for the calendar year in question, then Landlord will promptly
reimburse Tenant for all reasonable and actual out-of-pocket costs incurred by
Tenant in connection with Tenant's audit, up to $5,000; otherwise, Tenant shall
be solely responsible for the payment of all costs of Tenant's audit unless
Landlord delivers written notice of Landlord's dispute of the results of
Tenant's audit within 30 days following the conclusion thereof. If Landlord
timely delivers notice of a dispute of the results of Tenant's audit, then
Landlord may elect to conduct a certification as to the proper amount of excess
Operating Expenses and Electrical Costs and the amount due to or payable by
Tenant, which certification shall be made by an independent certified public
accountant mutually agreed to by Landlord and Tenant. If Landlord and Tenant
cannot mutually agree to an independent certified public accountant, then the
parties agree that Landlord shall choose an independent certified public
accountant to conduct the certification as to the proper amount of Tenant's
Proportionate Share of excess Operating Expenses and Electrical Costs due by
Tenant for the period in question; provided, however, such certified public
accountant shall not be the accountant who conducted Landlord's initial
calculation of excess Operating Expenses and Electrical Costs to which Tenant is
now objecting or affiliated with or employed by the same accounting firm as such
accountant. Such certification shall be final and conclusive as to all parties
("Final Certification"). If the Final Certification reveals an overstatement of
Tenant's Proportionate Share of the excess Operating Expenses or Electrical
Costs by more than five percent (5%) in the aggregate for the calendar year in
question, then Landlord shall promptly reimburse Tenant for all reasonable and
actual out-of-pocket costs incurred by Tenant in connection with Tenant's
initial audit as provided above; otherwise, Tenant shall be solely responsible
for the payment of all costs of Tenant's initial audit. If the Final
Certification reflects that Tenant's Proportionate Share of excess Operating
Expenses and Electrical Costs were overcharged or undercharged in the audited
calendar year, then Tenant shall pay to Landlord the amount of any underpayment
or, if applicable, Landlord shall pay to Tenant the amount of any overpayment,
in each case payment shall be made within thirty (30) days after receipt of
Tenant's audit report. Tenant waives the right to dispute any matter relating to
the calculation of excess Operating Expenses, Electrical Costs, or other
Additional Rent under this Paragraph 3 if any claim or dispute is not asserted
in writing to Landlord within one hundred eighty (180) days after delivery to
Tenant of the reconciliation statement with respect to excess Operating Expenses
and Electrical Costs. Notwithstanding the preceding sentence, if the Final
Certification for any calendar year reveals that Tenant's Proportionate Share of
excess Operating Expenses and Electrical Costs were overstated for such calendar
year in excess of five percent (5%) and Tenant did not conduct an audit during
the previous calendar year, then Tenant may conduct an audit of Landlord's
accounting records for the previous calendar year (only), by providing at least
thirty (30) days’ notice to Landlord; such audit shall be subject to the terms
of this Paragraph 3(j). In no event may any review or audit by Tenant cover
periods before the Commencement Date. Notwithstanding the foregoing, Tenant
shall maintain strict confidentiality of all of Landlord's accounting records
and shall not disclose the same to any other person or entity except for
Tenant's professional advisory representatives (such as Tenant's employees,
accountants, advisors, attorneys and consultants) with a need to know such
accounting information, who agree to similarly maintain the confidentiality of
such financial information.

 

 12 

 

 

(k)                Even though the Lease Term has expired and Tenant has vacated
the Premises, when the final determination, provided that it is made within
three hundred sixty five (365) days after the end of the current calendar year,
is made of Tenant’s Proportionate Share of excess Operating Expenses and
Electrical Costs for the year in which this Lease terminates, Tenant shall
immediately pay any increase due over the estimated Operating Expenses and
Electrical Costs paid, and conversely, any overpayment made by Tenant shall be
promptly refunded to Tenant by Landlord.

 

(l)                  Landlord and Tenant agree that each provision of this Lease
for determining charges, amounts, and Additional Rent payments by Tenant is
commercially reasonable, and as to each such charge or amount, constitutes a
“method by which the charge is to be computed” for purposes of Section 93.012
(Assessment of Charges) of the Texas Property Code, as such section now exists
or as it may be hereafter amended or succeeded.

 

(m)               The Base Rent, Additional Rent, late fees, and other amounts
required to be paid by Tenant to Landlord hereunder (including the excess
Operating Expenses) are sometimes collectively referred to as, and shall
constitute, “Rent”.

 

(n)                For purposes of determining Tenant’s Proportionate Share of
excess Operating Expenses, Controllable Operating Expenses (defined below) for
any calendar year will be deemed not to increase over the amount of Controllable
Operating Expenses during the Base Year by more than 5% per year, on a
cumulative, compounding basis. The term “Controllable Operating Expenses” means
all Operating Expenses except costs and expenses for taxes, insurance, and
utilities, costs to Landlord resulting from compliance with applicable Laws not
in effect or applicable to the Property as of the Commencement Date, any
increases in expenses resulting from government-mandated wage increases, and any
other cost outside the reasonable control of Landlord.

 

(o)                Tenant’s obligation to pay Tenant’s Proportionate Share of
Operating Expenses during the first twelve (12) Lease Months of the Initial Term
shall be conditionally abated in accordance with Paragraph 20(ff).

 

4.                   IMPROVEMENTS AND ALTERATIONS

 

(a)                 Except as otherwise provided in this Lease, Landlord shall
deliver the Premises to Tenant, and Tenant agrees to accept the Premises from
Landlord in its existing “AS-IS”, “WHERE-IS” and “WITH ALL FAULTS” condition,
and Landlord shall have no obligation to refurbish or otherwise improve the
Premises throughout the Lease Term; provided, however, and notwithstanding the
foregoing to the contrary, Landlord’s sole construction obligation under this
Lease is set forth in the Landlord Work Letter attached hereto as Exhibit B-1.

 

(b)                Any alterations, additions, or improvements made by or on
behalf of Tenant to the Premises (“Alterations”) shall be subject to Landlord’s
prior written consent, except that no consent is required for any interior,
non-structural Alteration(s) that costs less than $50,000, that does not affect
Building systems and does not require issuance of any governmental permit.
Landlord’s consent shall not be unreasonably withheld, conditioned or delayed
with respect to proposed Alterations requiring Landlord's consent, that
(i) comply with all applicable laws, ordinances, rules and regulations; (ii) are
compatible with the Building and its mechanical, electrical, HVAC and life
safety systems; (iii) will not interfere with the use and occupancy of any other
portion of the Building by any other tenant or their invitees; (iv) do not
affect the structural portions of the Building; and, (v) do not and will not,
whether alone or taken together with other improvements, require the
construction of any other improvements or alterations within the Building.
Tenant shall cause, at its sole cost and expense, all Alterations to comply with
insurance requirements and with Laws and shall construct, at its sole cost and
expense, any alteration or modification required by Laws as a result of any
Alterations, except as otherwise expressly provided for herein. Except as
otherwise provided for herein, all Alterations shall be constructed at Tenant’s
sole cost and expense, in a first class and good and workmanlike manner by
contractors reasonably acceptable to Landlord and only good grades of materials
shall be used. All plans and specifications for any Alterations shall be
submitted to Landlord for its approval in accordance with the terms of this
subsection (b). If Landlord fails to respond to Tenant's request for approval of
the plans and specifications within ten (10) business days following (i)
Tenant's written request therefor, and (ii) Landlord's receipt of Tenant's plans
and specifications for any Alterations, then Tenant shall provide Landlord
written notice of such failure. Landlord’s time period to respond with regard to
any revisions to such plans and specifications shall be reduced to five (5)
business day, unless Landlord requires that such plans be reviewed by a third
party (e.g., the Building engineer), in which event such review period shall
remain ten (10) business days. In no event will Landlord's failure to respond to
Tenant's request for approval be deemed to approve any Alterations. Landlord
does not require Tenant to use union labor. Landlord may monitor construction of
the Alterations. Landlord is not obligated to monitor such construction, but may
for its own benefit. There shall be no fee, mark-up, or any other charges by
Landlord, direct or indirect, in connection with the Tenant Finish Work or
Alterations during the Lease Term, except that, with respect to Alterations,
Tenant shall reimburse Landlord for its actual and reasonable third (3rd) party
out-of-pocket costs incurred by Landlord in connection with its review of
Tenant’s plans and specifications.  Tenant has no obligation to utilize Landlord
for construction management services nor any obligation to pay a fee to Landlord
for construction management services throughout the Lease Term provided Tenant
holds the construction contract and performs the Tenant Finish Work and
Alterations in accordance with Landlord’s rules and regulations. Tenant shall
not be responsible for any additional Building charges including but not limited
to, freight elevator usage during normal Building hours, operator’s cost unless
coordination is needed, loading dock fees during the Building’s normal dock
operating hours, security guard charges unless needed, utility charges or any
tap-in charges for connecting supplemental air conditioning or sprinklers that
are required during construction of the Premises, in connection with Tenant’s
construction or move-in, or in connection with the construction of Alterations.
Landlord’s right to review plans and specifications and to monitor construction
shall be solely for its own benefit, and Landlord shall have no duty to see that
such plans and specifications or construction comply with applicable laws,
codes, rules and regulations. Landlord may require that all life safety related
work and all mechanical, electrical, plumbing and roof related work be performed
by contractors designated by Landlord. Landlord shall have the right, in its
sole discretion, to instruct Tenant to remove those improvements or Alterations
from the Premises which (i) were not approved in advance by Landlord, (ii) were
not built in conformance with the plans and specifications approved by Landlord,
or (iii) were specified in writing for removal by Landlord at the time of its
approval. In addition, Landlord will not obligate Tenant to remove its phone or
data cabling. Unless communicated in writing by Landlord at time of its
approval, Tenant shall not be required to remove special-use improvements in the
Premises, which include without limitation, any supplemental HVAC units
exclusively serving the Premises, UPS systems, and generators. Alterations not
required to be removed will, at expiration of this Lease, become the property of
Landlord. If upon the termination of this Lease Landlord requires Tenant to
remove any or all of such Alterations from the Premises, then Tenant, at
Tenant’s sole cost and expense, shall promptly remove such Alterations and
improvements and Tenant shall repair and restore the Premises to its original
condition as of the Commencement Date, reasonable wear and tear and damages
caused by casualty, condemnation or Landlord or its employees’, agents’, or
contractors’ gross negligence or willful misconduct excepted. Tenant shall
provide Landlord with the identities and mailing addresses of all persons
performing work or supplying materials, prior to beginning such construction,
and Landlord may post on and about the Premises notices of non-responsibility
pursuant to applicable law. Tenant shall assure payment for the completion of
all work free and clear of liens and shall provide certificates of insurance for
worker’s compensation and other coverage in amounts and from an insurance
company reasonably satisfactory to Landlord protecting Landlord against
liability for bodily injury or property damage during construction. Upon
completion of any Alterations and upon Landlord’s reasonable request, Tenant
shall deliver to Landlord sworn statements setting forth the names of all
contractors and subcontractors who did work on the Alterations and final lien
waivers from all such contractors and subcontractors. Additionally, upon
completion of any Alteration, Tenant shall provide Landlord, at Tenant’s
expense, with a complete set of plans in reproducible form and specifications
reflecting the actual conditions of the Alterations, together with a copy of
such plans on diskette in the AutoCAD format or such other format as may then be
in common use for computer assisted design purposes. Tenant shall pay to
Landlord, as additional rent, the reasonable, out-of-pocket costs of Landlord’s
engineers and other consultants for review of all plans, specifications and
working drawings for the Alterations and for the incorporation of such
Alterations in the Landlord’s master Building drawings, within ten (10) business
days after Tenant’s receipt of invoices either from Landlord or such
consultants.

 

 13 

 

 

(c)                 Tenant shall keep the Premises, the Building and the
Property free from any and all liens arising out of any Alterations, work
performed, materials furnished, or obligations incurred by or for Tenant, except
to the extent that such work was performed or materials furnished on Landlord’s
or Landlord’s employees, contractors or agents behalf. In the event that Tenant
shall not, within twenty (20) days following the imposition of any such lien,
cause the same to be released of record by payment or posting of a bond in a
form and issued by a surety reasonably acceptable to Landlord, Landlord shall
have the right, but not the obligation, to cause such lien to be released by
such means as it shall reasonably deem proper (including payment of or defense
against the claim giving rise to such lien); in such case, Tenant shall
reimburse Landlord for all amounts so paid by Landlord in connection therewith,
together with all of Landlord’s out-of-pocket costs and expenses, with interest
thereon at the Default Rate (defined below) and Tenant shall indemnify and
defend each and all of the Landlord Indemnitees (defined below) against any
damages, losses or costs arising out of any such claim. Tenant’s indemnification
of Landlord contained in this Paragraph shall survive the expiration or earlier
termination of this Lease. Such rights of Landlord shall be in addition to all
other remedies provided herein or by law.

 

(d)                NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR
ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT, OR TO
ANYONE HOLDING THE PREMISES THROUGH OR UNDER TENANT, AND THAT NO MECHANICS’ OR
OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT
THE INTEREST OF LANDLORD IN THE PREMISES, THE BUILDING OR THE PROPERTY.

 

5.                   REPAIRS

 

(a)                 Landlord’s obligation with respect to repair as part of
Basic Services shall be limited to (i) the structural portions of the Building,
(ii) the exterior walls of the Building, including, without limitation, glass
and glazing, (iii) the roof, (iv) mechanical, electrical, plumbing and life
safety systems [except for any lavatory, shower, toilet, wash basin and kitchen
facilities that serve Tenant exclusively and any supplemental heating and air
conditioning systems (including all plumbing connected to said facilities or
systems)], (v) Common Areas, and (vi) exterior and structural portions and the
mechanical and utility systems and equipment of the Building and Centre (which
do not solely serve one tenant’s space). Landlord shall maintain the same in
good condition and repair. Landlord shall not be deemed to have breached any
obligation with respect to the condition of any part of the Property unless
Tenant has given to Landlord written notice of any required repair and Landlord
has not made such repair within a reasonable time following the receipt by
Landlord of such notice. The foregoing notwithstanding: (i) Landlord shall not
be required to repair damage to any of the foregoing to the extent caused by the
acts or omissions of Tenant or it agents, employees or contractors, except to
the extent covered by insurance carried by Landlord; and (ii) the obligations of
Landlord pertaining to damage or destruction by casualty shall be governed by
the provisions of Paragraph 9. Landlord shall have the right but not the
obligation to undertake work of repair that Tenant is required to perform under
this Lease and that Tenant fails or refuses to perform in a timely and efficient
manner. All costs incurred by Landlord in performing any such repair for the
account of Tenant shall be repaid by Tenant to Landlord upon demand, together
with an administration fee equal to ten percent (10%) of such costs. Except as
expressly provided in Paragraph 9 of this Lease, there shall be no abatement of
Rent and no liability of Landlord by reason of any injury to or interference
with Tenant’s business arising from the making of any repairs, alterations or
improvements in or to any portion of the Premises, the Building or the Centre.
Tenant waives the right to make repairs at Landlord’s expense under any law,
statute or ordinance now or hereafter in effect.

 

 14 

 

 

(b)                Tenant, at its expense, (i) shall keep the Premises and all
fixtures contained therein in a safe, clean and neat condition, and (ii) shall
bear the cost of maintenance and repair, by contractors approved by Landlord, of
all facilities which are not expressly required to be maintained or repaired by
Landlord and which are located in the Premises, including, without limitation,
lavatory, shower, toilet, wash basin and kitchen facilities, and supplemental
heating and air conditioning systems (including all plumbing connected to said
facilities or systems installed by or on behalf of Tenant or existing in the
Premises at the time of Landlord’s delivery of the Premises to Tenant). Tenant
shall make all repairs to the Premises not required to be made by Landlord under
subparagraph (a) above with replacements of any materials to be made by use of
materials of equal or better quality. Tenant shall do all decorating,
remodeling, alteration and painting required by Tenant during the Lease Term.
Tenant shall pay for the cost of any repairs to the Premises, the Building or
the Centre made necessary by any gross negligence or willful misconduct of
Tenant or any of its assignees, subtenants, employees or their respective
agents, representatives, or contractors, except to the extent caused in whole or
in part by or the result of LL’s or LL’s employees’, agents’ or contractors’
gross negligence. If Tenant fails to make such repairs or replacements within
fifteen (15) days after written notice from Landlord, Landlord may at its option
make such repairs or replacements, and Tenant shall within thirty (30) days
after written demand pay Landlord for the cost thereof, together with an
administration fee equal to ten percent (10%) of such costs.

 

(c)                 Upon the expiration or earlier termination of this Lease,
Tenant shall surrender the Premises in a safe, clean and neat condition, normal
wear and tear and damages caused by casualty, condemnation or Landlord or its
employees’, agents’, or contractors’ gross negligence or willful misconduct
excepted. Except as otherwise set forth in Paragraph 4(b) of this Lease, Tenant
shall remove from the Premises any trade fixtures, furnishings and other
personal property of Tenant. Tenant may remove above Building-standard fixtures
installed by Tenant to serve the Premises, such as any raised floor system, UPS
Systems, backup generators, and supplemental HVAC units, or any other fixtures
or equipment necessary to operate Tenant’s business. If Tenant makes such
election, then Tenant shall repair all damage caused by such removal. In
addition to all other rights Landlord may have, in the event Tenant does not so
remove any such fixtures, furnishings or personal property, Tenant shall be
deemed to have abandoned the same, in which case Landlord may store or dispose
of the same at Tenant’s expense, appropriate the same for itself, and/or sell
the same in its discretion.

 

6.                   USE OF PREMISES

 

(a)                 Tenant shall use the Premises only for general,
administrative and executive offices, all uses ancillary to general office uses,
including a conference center, printing center, seminar/training rooms, and
pantry and food service areas (but limited to Tenant’s by employees only), and
all other lawful ancillary uses incidental thereto, and shall not use the
Premises or permit the Premises to be used for any other purpose. Landlord shall
have the right to deny its consent to any change in the permitted use of the
Premises in its sole and absolute discretion. Landlord represents that, as of
the date of this Lease, it is the fee simple owner of the Centre.

 

 15 

 

 

(b)                Tenant shall not at any time use or occupy the Premises, or
permit any act or omission in or about the Premises in violation of any law,
statute, ordinance or any governmental rule, regulation or order (collectively,
“Law” or “Laws”) and Tenant shall, upon written notice from Landlord,
discontinue any unique use of the Premises which is declared by any governmental
authority to be a violation of Law. If any Law shall, by reason of the nature of
Tenant’s use or occupancy of the Premises, impose any duty upon Tenant or
Landlord with respect to (i) modification or other maintenance of the Premises,
the Building or the Centre, or (ii) the use, Alteration or occupancy thereof,
Tenant shall comply with such Law at Tenant’s sole cost and expense. Landlord
represents to Tenant that, as of the date of this Lease, the Building is in
material compliance with the provisions of the Americans With Disabilities Act
of 1990 (as amended) (the "ADA") and the Texas Architectural Barriers Act (as
amended) [Tex. Rev. Civ. Stat. Ann. Art. 9102 ] (the "TABA"); if, subsequent to
the date of this Lease, the Building is not in compliance with the ADA or the
TABA for any reason other than Tenant's particular use of the Premises, any
Alteration performed by or at the request of Tenant (including the Tenant Finish
Work), or as the result of any act or omission by a Tenant Party, Landlord will
remedy such default at no expense to Tenant. This Lease shall be subject to and
Tenant shall comply with all financing documents encumbering the Building or the
Centre and all covenants, conditions and restrictions affecting the Premises,
the Building or the Centre, including, but not limited to, Tenant’s execution of
any subordination agreements requested by a mortgagee (which for purposes of
this Lease includes any lender or grantee under a deed of trust) of the
Premises, the Building or the Property.

 

(c)                 Tenant shall not at any time use or occupy the Premises in
violation of the certificates of occupancy issued for or restrictive covenants
pertaining to the Building or the Premises, and in the event that any
architectural control committee or department of the state or the city or county
in which the Centre is located shall at any time contend or declare that the
Premises are used or occupied in violation of such certificate or certificates
of occupancy or restrictive covenants, Tenant shall, upon five (5) days’ notice
from Landlord or any such governmental agency, immediately discontinue such use
of the Premises (and otherwise promptly commence remedying such violation). The
failure by Tenant to discontinue such use within any applicable notice and cure
period shall be considered an event of default under this Lease and Landlord
shall have the right to exercise any and all rights and remedies provided herein
or by Law. Any statement in this Lease of the nature of the business to be
conducted by Tenant in the Premises shall not be deemed or construed to
constitute a representation or guaranty by Landlord that such business is or
will continue to be lawful or permissible under any certificate of occupancy
issued for the Building or the Premises, or otherwise permitted by Law.

 

(d)                Tenant shall not do or permit to be done anything which may
invalidate or increase the cost of any fire, All Risk, Causes of Loss – Special
Form or other insurance policy covering the Building, the Property and/or
property located therein and shall comply with all rules, orders, regulations
and requirements of the appropriate fire codes and ordinances or any other
organization performing a similar function. In addition to all other remedies of
Landlord, Landlord may require Tenant, within thirty (30) days after written
demand, to reimburse Landlord for the full amount of any additional premiums
charged for such policy or policies by reason of Tenant’s failure to comply with
the provisions of this Paragraph 6.

 

(e)                 Tenant shall not in any way unreasonably interfere with the
rights or quiet enjoyment of other tenants or occupants of the Premises, the
Building or the Centre. Tenant shall not use or allow the Premises to be used
for any improper, immoral, unlawful or objectionable purpose, nor shall Tenant
cause, maintain, or permit any nuisance in, on or about the Premises, the
Building or the Centre. Tenant shall not place weight upon any portion of the
Premises exceeding the structural floor load (per square foot of area) which
such area was designated (and is permitted by Law) to carry or otherwise use any
Building system in excess of its capacity or in any other manner which may
damage such system or the Building. Tenant shall not create within the Premises
a working environment with a density of greater than the lesser of (i) five (5)
persons per 1,000 square feet of Rentable Area, or (ii) the maximum density
permitted by Law. Business machines and mechanical equipment shall be placed and
maintained by Tenant, at Tenant’s expense, in locations and in settings
sufficient in Landlord’s reasonable judgment to absorb and prevent vibration,
noise and annoyance. Tenant shall not commit or suffer to be committed any waste
in, on, upon or about the Premises, the Building, the Property or the Centre.

 

(f)                  Tenant shall take all reasonable steps necessary to
adequately secure the Premises from unlawful intrusion, theft, fire and other
hazards, and shall keep and maintain any and all security devices in or on the
Premises in good working order, including, but not limited to, exterior door
locks for the Premises and smoke detectors and burglar alarms located within the
Premises and shall reasonably cooperate with Landlord and other tenants in the
Building and the Centre with respect to access control and other safety matters.

 

 16 

 

 

(g)                As used herein, the term “Hazardous Material” means any
(a) oil or any other petroleum-based substance, flammable substances,
explosives, radioactive materials, hazardous wastes or substances, toxic wastes
or substances or any other wastes, materials or pollutants which (i) pose a
hazard to the Property or the Centre or to persons on or about the Property or
the Centre or (ii) cause the Property or the Centre to be in violation of any
Laws; (b) asbestos in any form, urea formaldehyde foam insulation, transformers
or other equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls, or radon gas; (c) chemical, material or substance
defined as or included in the definition of “hazardous substances”, “hazardous
wastes”, “hazardous materials”, “extremely hazardous waste”, “restricted
hazardous waste”, or “toxic substances” or words of similar import under any
applicable local, state or federal law or under the regulations adopted or
publications promulgated pursuant thereto, including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. §9601, et seq.; the Hazardous Materials Transportation Act,
as amended, 49 U.S.C. §1801, et seq.; the Federal Water Pollution Control Act,
as amended, 33 U.S.C. §1251, et seq.; the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. §6901, et seq.; the Safe Drinking Water Act, as
amended, 42 U.S.C. §300, et seq.; the Toxic Substances Control Act, as amended,
15 U.S.C. §2601, et seq.; the Federal Hazardous Substances Control Act, as
amended, 15 U.S.C. §1261, et seq.; and the Occupational Safety and Health Act,
as amended, 29 U.S.C. §651, et seq.; (d) other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
authority or may or could pose a hazard to the health and safety of the
occupants of the Property or the Centre or the owners and/or occupants of
property adjacent to or surrounding the Centre, or any other Person coming upon
the Centre or adjacent property; and (e) other chemicals, materials or
substances which may or could pose a hazard to the environment. The term
“Permitted Hazardous Materials” shall mean Hazardous Materials which are
contained in ordinary office supplies of a type and in quantities typically used
in the ordinary course of business within executive offices of similar size in
the comparable office buildings, but only if and to the extent that such
supplies are transported, stored and used in full compliance with all applicable
laws, ordinances, orders, rules and regulations and otherwise in a safe and
prudent manner. Hazardous Materials which are contained in ordinary office
supplies but which are transported, stored and used in a manner which is not in
full compliance with all applicable laws, ordinances, orders, rules and
regulations or which is not in any respect safe and prudent shall not be deemed
to be “Permitted Hazardous Materials” for the purposes of this Lease. If
Hazardous Materials in violation of Laws, friable asbestos or PCBs are
discovered in the Premises while Tenant is performing the Tenant Finish Work,
Landlord will remove such Hazardous Materials, asbestos and/or PCBs and
remediate in accordance with applicable Laws at Landlord's expense and not as an
Operating Expense or as a cost applied against the Allowance (defined in Exhibit
B-2). To Landlord’s current actual knowledge, without independent investigation
or inquiry, Landlord has not received written notice from any applicable
governmental authority that the Premises or the Centre are in violation of any
applicable Law related to Hazardous Materials. Landlord represents and warrants
that, as of the date of this Lease, it has no knowledge of any Hazardous
Materials in, on or under the Centre which are in violation of applicable Laws.

 

(h)                Tenant, its assignees, subtenants, and their respective
agents, servants, employees, representatives and contractors (collectively
referred to herein as “Tenant Affiliates”) shall not cause or permit any
Hazardous Material to be brought upon, kept or used in or about the Premises by
Tenant or by Tenant Affiliates without the prior written consent of Landlord
(which may be granted, conditioned or withheld in the sole discretion of
Landlord), save and except only for Permitted Hazardous Materials, which Tenant
or Tenant Affiliates may bring, store and use in reasonable quantities for their
intended use in the Premises, but only in full compliance with all applicable
laws, ordinances, orders, rules and regulations. On or before the expiration or
earlier termination of this Lease, Tenant shall remove from the Premises all
Hazardous Materials (including, without limitation, Permitted Hazardous
Materials), regardless of whether such Hazardous Materials are present in
concentrations which require removal under applicable laws, except to the extent
that such Hazardous Materials were present in the Premises as of the
Commencement Date and were not brought onto the Premises by Tenant or Tenant
Affiliates.

 

(i)                  Except to the extent caused by or the result of Landlord’s
or Landlord’s employees’, agents’, or contractors’ gross negligence or willful
misconduct, Tenant agrees to indemnify, defend and hold Landlord and its
Affiliates (defined below) harmless for, from and against any and all claims,
actions, administrative proceedings (including informal proceedings), judgments,
damages, punitive damages, penalties, fines, costs, liabilities, interest or
losses, including reasonable attorneys’ fees and expenses, court costs,
consultant fees, and expert fees, together with all other costs and expenses of
any kind or nature that arise during or after the Lease Term directly or
indirectly from or in connection with the presence, suspected presence, or
release of any Hazardous Material in or into the air, soil, surface water or
groundwater at, on, about, under or within the Premises, or any portion thereof
caused by Tenant or Tenant Affiliates. Landlord waives any claims that it may
have against Tenant related to any Hazardous Materials in, on or under the
Premises and the Centre prior to the date of this Lease. Landlord waives any
claims that it may have against Tenant related to any Hazardous Materials in, on
or under the Premises and the Centre prior to the date of this Lease to the
extent the same is not located at the Premises or the Centre due to the act or
omission of Tenant or any Tenant Affiliate.

 

 17 

 

 

(j)                  In the event any investigation or monitoring of site
conditions or any clean-up, containment, restoration, removal or other remedial
work (collectively, the “Remedial Work”) is required under any applicable
federal, state or local Law, by any judicial order, or by any governmental
entity as the result of operations or activities upon, or any use or occupancy
of any portion of the Premises by Tenant or Tenant Affiliates, Landlord shall
perform or cause to be performed the Remedial Work in compliance with such Law
or order at Tenant’s sole cost and expense. All Remedial Work shall be performed
by one or more contractors, selected and approved by Landlord, which approval
shall not be unreasonably withheld, conditioned or delayed and under the
supervision of a consulting engineer, selected by Tenant and approved in advance
in writing by Landlord. All costs and expenses of such Remedial Work shall be
paid by Tenant, including, without limitation, the charges of such
contractor(s), the consulting engineer, and Landlord’s reasonable attorneys’
fees and costs incurred in connection with monitoring or review of such Remedial
Work.

 

(k)                Each of the covenants and agreements of Tenant set forth in
this Paragraph 6(g) shall survive the expiration or earlier termination of this
Lease.

 

7.                   UTILITIES AND SERVICES

 

(a)                 Landlord shall furnish, or cause to be furnished to the
Premises, the utilities and services described in this Paragraph 7(a)
(collectively the “Basic Services”):

 

(i)                  Tepid water at those points of supply provided for general
use of other tenants in the Building;

 

(ii)                During Business Hours, Monday through Friday, and Saturday
during Business Hours, central heat and air conditioning in season, at such
temperatures and in such amounts as are considered standard for comparable
Class-A office buildings in the Lower Tollway submarket or as may be permitted
or controlled by applicable laws, ordinances, rules and regulations;

 

(iii)              Maintenance, repairs, structural and exterior maintenance
(including, without limitation, exterior glass and glazing), painting and
electric lighting service for all Common Areas of the Building in the manner and
to the extent standard for comparable Class-A office buildings in the Lower
Tollway submarket, subject to the limitation contained in Paragraph 5(a) above;

 

(iv)               Janitorial service on a five (5) day week basis, excluding
Holidays (provided, following the written request of Tenant, Landlord shall
cause such services to be performed after 8 p.m. on weekdays, excluding
Holidays);

 

(v)                Electrical Services as follows:

 

(A)               Landlord will provide the necessary facilities to supply (i)
two (2) watts per square foot of usable area within the Premises, at 277 volts,
for Tenant's fluorescent lighting and (ii) four (4) watts per square foot of
usable area within the Premises, at 120 volts, for Tenant's receptacle/equipment
loads (excluding Tenant's dedicated circuits). Collectively, Tenant's lighting
and receptacle/equipment shall not have an electrical design load greater than
an average of six (6) watts per square foot of usable area within the Premises
("Standard Building Capacity").

 

 18 

 

 

(B)               The electrical facilities in the Building available for
Tenant's use are (i) 277/480 volts, 3 phase, for large equipment loads and
fluorescent lighting; and (ii) 120/208 volts, 3 phase, for small equipment loads
and incandescent lighting. Tenant shall notify Landlord, in writing, of any
equipment that has a rated electrical load greater than 500 watts and/or that
requires a service voltage other than 120 volts, and Landlord's written approval
shall be required with respect to the installation of any such high electrical
consumption equipment in the Premises.

 

(vi)               All Building standard fluorescent bulb replacement for
Building standard fixtures in the Premises and fluorescent and incandescent bulb
replacement in the Common Areas.

 

(vii)             Public elevator service on a 24/7 basis, 365 days per year
(provided that Landlord may reasonably limit the number of operating elevators
during non-Building Hours) and a freight elevator serving the floors on which
the Premises are situated, during Building Hours and other reasonable hours
designated by Landlord.

 

(b)                Landlord shall provide to Tenant at Tenant’s sole cost and
expense (and subject to the limitations hereinafter set forth) the following
extra services (collectively the “Extra Services”):

 

(i)                  Such extra cleaning and janitorial services requested by
Tenant, and agreed to by Landlord, for special improvements or Alterations;

 

(ii)                Subject to Paragraph 7(d) below, additional air conditioning
and ventilating capacity required by reason of any electrical, data processing
or other equipment or facilities or services required to support the same, in
excess of that typically provided by the Building;

 

(iii)              Maintaining and replacing lamps, bulbs, and ballasts in the
Premises other than as listed in subparagraph (a) above;

 

(iv)               Heating, ventilation, air conditioning or extra electrical
service provided by Landlord to Tenant (i) during hours other than Business
Hours, (ii) on Saturdays (after Business Hours), Sundays, or Holidays, said
heating, ventilation and air conditioning or extra service to be furnished
solely upon the prior written request of Tenant given with such advance notice
as Landlord may reasonably require; Tenant shall pay to Landlord Landlord’s
standard charge for overtime HVAC on an hourly basis (which is currently $50.00
per hour per floor, with a two (2) hour minimum); and

 

(v)                Any Basic Service in amounts determined by Landlord to exceed
the amounts required to be provided above, but only if Landlord elects to
provide such additional or excess service. Tenant shall pay Landlord the cost of
providing such additional services (or an amount equal to Landlord’s reasonable
estimate of such cost, if the actual cost is not readily ascertainable) together
with an administration fee equal to ten percent (10%) of such cost, within ten
(10) days following presentation of an invoice therefore by Landlord to Tenant.
The cost chargeable to Tenant for all extra services shall constitute Additional
Rent.

 

(c)                 Tenant agrees to cooperate fully at all times with Landlord
and to comply with all regulations and requirements which Landlord may from time
to time prescribe for the use of the utilities and Basic Services described
herein. Landlord agrees to apply such regulations and requirements in a
non-discriminatory manner. Landlord shall not be liable to Tenant for the
failure of any other tenant, or its assignees, subtenants, employees, or their
respective invitees, licensees, agents or other representatives to comply with
such regulations and requirements. The term “Business Hours” shall be deemed to
be Monday through Friday from 8:00 A.M. to 6:00 P.M. and Saturday from 8:00 A.M.
to 1:00 P.M., excepting Holidays. The term “Holidays” shall be deemed to mean
and include New Year’s Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.

 

(d)                Tenant may install sub-metered supplemental heating,
ventilation, air conditioning to serve the Premises in accordance with the
provisions of Paragraph 4(b).

 

 19 

 

 

(e)                 If Tenant requires utilities in excess of Standard Building
Capacity or services in quantities greater than or at times other than that
generally furnished by Landlord as set forth above, Tenant shall pay to
Landlord, upon receipt of a written statement therefor, Landlord’s actual charge
for such use. In the event that Tenant shall require additional electric
current, water or gas for use in the Premises and if, in Landlord’s reasonable
judgment, such excess requirements cannot be furnished unless additional risers,
conduits, feeders, switchboards and/or appurtenances are installed in the
Building, subject to the conditions stated below, Landlord shall proceed to
install the same at the sole cost of Tenant, payable within thirty (30) days
after written demand. The installation of such facilities shall be conditioned
upon Landlord’s consent, and a determination that the installation and use
thereof (i) shall be permitted by applicable Law and insurance regulations,
(ii) shall not cause permanent damage or injury to the Building or adversely
affect the value of the Building or the Property, and (iii) shall not cause or
create a dangerous or hazardous condition or unreasonably interfere with or
disturb other tenants in the Building. Subject to the foregoing, Landlord shall,
upon reasonable prior notice by Tenant, furnish to the Premises additional
heating, air conditioning and/or cleaning services upon such reasonable terms
and conditions as shall be determined by Landlord, including payment of
Landlord’s charge therefor. In the case of any additional utilities or services
to be provided hereunder, Landlord may require a separate meter to be installed
so as to measure the amount of such additional utilities or services. The cost
of installation, maintenance and repair thereof shall be paid by Tenant upon
demand. Notwithstanding the foregoing, Landlord shall have the right to contract
with any utility provider it deems appropriate to provide utilities to the
Centre.

 

(f)                  Except to the extent caused by Landlord or Landlord’s
employees’, agents’, or contractors’ gross negligence or willful misconduct,
Landlord shall not be liable for, and Tenant shall not be entitled to, any
damages, abatement or reduction of Rent, or other liability by reason of any
failure to furnish any services or utilities described herein for any reason
when such failure is occasioned in whole or in part by repairs, improvements or
mechanical breakdowns or by the act or default of Tenant or other parties that
is not cured within any applicable notice and cure period or by an event of
Force Majeure or any other cause beyond Landlord’s control. Landlord shall be
entitled to cooperate with the energy conservation efforts of governmental
agencies or utility suppliers. Except as otherwise provided in this Paragraph
7(f), no such failure, stoppage or interruption of any such utility or service
shall be construed as an eviction of Tenant, nor shall the same relieve Tenant
from any obligation to perform any covenant or agreement under this Lease. In
the event of any failure, stoppage or interruption thereof, Landlord shall use
reasonable efforts to attempt to restore all services promptly. Tenant agrees to
provide Landlord with prompt written notice (the “Service Interruption Notice”)
upon the occurrence of any Service Interruption that results in Tenant vacating
the Premises or any part thereof, due to such Service Interruption. The Service
Interruption Notice must specify the part of the Premises Tenant is vacating (if
Tenant is not vacating the entire Premises). Subject to Sections 9 and 10 of
this Lease, if any cessation or interruption of any Basic Services (other than
the service set forth in Paragraph 7(a)(iv)) which results solely from
Landlord's negligence or intentional misconduct, or the restoration of which is
within Landlord’s reasonable control (a “Service Interruption”), renders any
portion of the Premises untenantable or inaccessible, and the Premises (or the
untenantable or inaccessible portion thereof) are not used by Tenant for more
than 5 consecutive business days after the Service Interruption Notice, then
Base Rent abates proportionately, commencing on the day following such 5
business-day period and continuing for the period that the Premises (or the
applicable portion thereof) are untenantable or inaccessible and are not used by
Tenant. No representation is made by Landlord with respect to the adequacy or
fitness of the Building’s ventilating, air conditioning or other systems to
maintain temperatures as may be required for the operation of any computer, data
processing or other special equipment of Tenant.

 

(g)                Landlord reserves the right from time to time to make
reasonable and nondiscriminatory modifications to the above standards for Basic
Services and Extra Services.

 

(h)                Landlord shall provide Tenant with access to two (2), 4”
cable risers for telecommunications installation in the Premises. Landlord will
provide Tenant with sufficient unobstructed, secure shaft space from the telecom
“Point of Entry” room in the Building to the Premises and from the Premises to
the roof for its telecommunications with the conduits to be capable of running
in diverse points of entry to the Premises.

 

8.                   NON-LIABILITY AND INDEMNIFICATION; INSURANCE

 

(a)                 Landlord shall not be liable for any injury, loss or damage
suffered by Tenant or to any person or property occurring or incurred in or
about the Premises, the Property or the Centre from any cause, EXCEPT TO THE
EXTENT SUCH LIABILITIES ARE CAUSED BY THE NEGLIGENCE OR WILLFUL MISCONDUCT OF
ANY LANDLORD INDEMNITEE (DEFINED BELOW). Except as specified in the prior
sentence but subject to Paragraph 8(f), neither Landlord nor any of its
partners, officers, trustees, affiliates, directors, employees, contractors,
agents or representatives (collectively, “Affiliates”), shall be liable for and
there shall be no abatement of Rent (except in the event of a casualty loss or a
condemnation as set forth in Paragraph 9 and Paragraph 10 of this Lease) for
(i) any damage to Tenant’s property stored with or entrusted to Affiliates of
Landlord, or (ii) loss of or damage to any property by theft or any other
wrongful or illegal act, or (iii) business interruption or loss of use of the
Premises, or (iv) any injury or damage to persons or property resulting from
fire, explosion, falling plaster, steam, gas, electricity, water or rain which
may leak from any part of the Building or the Property or from the pipes,
appliances, appurtenances or plumbing works therein or from the roof, street or
sub-surface or from any other place or resulting from dampness or any other
cause whatsoever or from the acts or omissions of other tenants, occupants or
other visitors to the Building or the Property or from any other cause
whatsoever, or (v) any diminution or shutting off of light, air or view by any
structure which may be erected on lands adjacent to the Building, whether within
or outside of the Property, or (vi) any latent or other defect in the Premises,
the Building or the Property. Tenant shall give prompt notice to Landlord in the
event of (i) the occurrence of a fire or accident in the Premises or in the
Building, or (ii) the discovery of a defect therein or in the fixtures or
equipment thereof. This Paragraph 8(a) shall survive the expiration or earlier
termination of this Lease.

 

 20 

 

 

(b)                Subject to Paragraph 8(f), Tenant hereby agrees to indemnify,
protect, defend and hold harmless Landlord and its designated property
management company, and their respective partners, members, affiliates and
subsidiaries, and all of their respective officers, trustees, directors,
shareholders, employees, servants, partners, representatives, insurers and
agents (collectively, “Landlord Indemnitees”) for, from and against all
liabilities, claims, fines, penalties, costs, damages or injuries to persons,
damages to property, losses, liens, causes of action, suits, judgments and
expenses (including court costs, attorneys’ fees, expert witness fees and costs
of investigation), of any nature, kind or description of any person or entity,
directly or indirectly arising out of, caused by, or resulting from (in whole or
part) (1) Tenant’s construction of, or use, occupancy or enjoyment of, the
Premises, (2) any activity, work or other things done, permitted or suffered by
Tenant and its agents and employees in or about the Premises, (3) any breach or
default in the performance of any of Tenant’s obligations under this Lease,
(4) any act, omission, negligence or willful misconduct of Tenant or any of its
agents, contractors, employees, business invitees or licensees (the “Tenant
Parties”), or (5) any damage to Tenant’s property, or the property of Tenant’s
agents, employees, contractors, business invitees or licensees, located in or
about the Premises (collectively, “Liabilities”); EXCEPT TO THE EXTENT SUCH
LIABILITIES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY LANDLORD PARTY. This Paragraph 8(b) shall survive the
expiration or earlier termination of this Lease.

 

(c)                 Subject to Paragraph 8(f), Tenant shall not be liable for,
and Landlord agrees to indemnify, protect, defend and hold harmless the Tenant
Parties for, from and against all Liabilities of any nature, kind or description
of any person or entity, directly or indirectly arising out of, caused by, or
resulting from (in whole or part) any activity, work or other things done,
permitted or suffered by Landlord in the common areas of the Centre EXCEPT TO
THE EXTENT SUCH LIABILITIES ARE CAUSED BY THE NEGLIGENCE OR WILLFUL MISCONDUCT
OF ANY TENANT PARTY. This Paragraph 8(c) shall survive the expiration or earlier
termination of this Lease. IT IS THE INTENT OF LANDLORD AND TENANT THAT THE
PROVISIONS OF PARAGRAPHS 8(b) AND 8(c) COMPLY WITH THE CONTRIBUTORY NEGLIGENCE
PRINCIPLES OF THE STATE OF TEXAS.

 

(d)                Each party shall promptly advise the other in writing of any
action, administrative or legal proceeding or investigation as to which the
foregoing indemnifications may apply, and such party, at its sole expense, shall
assume on behalf of each and every indemnified party and conduct with due
diligence and in good faith the defense thereof with counsel reasonably
satisfactory to the indemnified party; provided, however, that any indemnified
party shall have the right, at its option, to be represented therein by advisory
counsel of its own selection and at its own expense. In the event of failure by
either party to fully perform in accordance with this Paragraph, the indemnified
party, at its option, and without relieving the other of its obligations
hereunder, may so perform, but all costs and expenses so incurred by the
indemnified party in that event shall be reimbursed by the other party, together
with interest on the same from the date any such expense was paid by the
indemnified party until reimbursed by the other, at the rate of interest
provided to be paid on judgments, by the law of the jurisdiction to which the
interpretation of this Lease is subject. The indemnifications provided in
Paragraphs 8(b) and 8(c) shall not be limited to damages, compensation or
benefits payable under insurance policies, workers' compensation acts,
disability benefit acts or other employees' benefit acts.

 

 21 

 

 

(e)                 Insurance.

 

(i)                  Tenant at all times during the Lease Term shall, at its own
expense, keep in full force and effect (A) commercial general liability
insurance written on the most current form of ISO CG 00 01 (occurrence basis) or
its equivalent, having a minimum each occurrence limit of $1,000,000, a minimum
general aggregate limit of $2,000,000, and shall include provision for
contractual liability coverage insuring Tenant for the performance of its
indemnity obligations set forth in this Paragraph 8 and in Paragraph 6(g)(ii) of
this Lease, with an Excess Limits (Umbrella) Policy in the amount of $5,000,000,
(B) worker’s compensation insurance to the statutory limit, if any, and
employer’s liability insurance in amounts not less than $500,000 bodily injury
per accident/$500,000 disease each employee/$500,000 disease policy limit, and
$1,000,000 in the aggregate, (C) All Risk or Causes of Loss - Special Form
property insurance, including fire and extended coverage, sprinkler leakage
(including earthquake, sprinkler leakage), vandalism, malicious mischief, wind
and/or hurricane coverage, and earthquake and flood coverage, covering full
replacement value of all of Tenant’s personal property, trade fixtures and
improvements in the Premises, (D) business automobile liability insurance
written on an occurrence basis, including coverage for owned, non-owned, and
hired autos, such policy having a minimum limit of $1,000,000 per accident, and
(E) such additional insurance coverages or other policy limits as Landlord
reasonably requires. Landlord, its designated property management firm and all
Landlord Indemnitees shall be named additional insureds on each of said policies
(excluding the worker’s compensation policy) and said policies shall be issued
by an insurance company or companies authorized to do business in the State and
which have policyholder ratings not lower than “A-” and financial ratings not
lower than “IX” in Best’s Insurance Guide (latest edition in effect as of the
date of this Lease and subsequently in effect as of the date of renewal of the
required policies). BOTH OF LANDLORD’S AND TENANT’S POLICIES SHALL ALSO INCLUDE
A WAIVER OF SUBROGATION PROVISION OR ENDORSEMENT IN FAVOR OF THE OTHER PARTY.
TENANT’S POLICIES SHALL INCLUDE AN ENDORSEMENT PROVIDING THAT LANDLORD SHALL
RECEIVE THIRTY (30) DAYS PRIOR WRITTEN NOTICE OF ANY CANCELLATION OF,
NON-RENEWAL OF, REDUCTION OF COVERAGE OR MATERIAL CHANGE IN COVERAGE ON SAID
POLICIES. In addition, all policies of Tenant shall be endorsed to be primary,
with the policies of all Landlord Indemnitees being excess, secondary and
non-contributing. Tenant hereby waives its right of recovery against any
Landlord Indemnitee of any amounts paid by Tenant or on Tenant’s behalf to
satisfy applicable worker’s compensation laws. The policies or duly executed
certificates showing the material terms for the same, together with satisfactory
evidence of the payment of the premiums therefor, shall be deposited with
Landlord on the date Tenant first occupies the Premises and upon renewals of
such policies not less than fifteen (15) days prior to the expiration of the
term of such coverage. Tenant shall have the right to comply with the insurance
requirements through blanket or umbrella policies.

 

(ii)                It is expressly understood and agreed that the coverages
required represent Landlord’s minimum requirements and such are not to be
construed to void or limit Tenant’s obligations contained in this Lease,
including without limitation Tenant’s indemnity obligations hereunder. Neither
shall (A) the insolvency, bankruptcy or failure of any insurance company
carrying Tenant, (B) the failure of any insurance company to pay claims
occurring nor (C) any exclusion from or insufficiency of coverage be held to
affect, negate or waive any of Tenant’s indemnity obligations under this
Paragraph 8 and Paragraph 6(g)(ii) or any other provision of this Lease. With
respect to insurance coverages, except worker’s compensation, maintained
hereunder by Tenant and insurance coverages separately obtained by Landlord, all
insurance coverages afforded by policies of insurance maintained by Tenant shall
be primary insurance as such coverages apply to Landlord, and such insurance
coverages separately maintained by Landlord shall be excess, and Tenant shall
have its insurance policies so endorsed. The amount of liability insurance under
insurance policies maintained by Tenant shall not be reduced by the existence of
insurance coverage under policies separately maintained by Landlord. Tenant
shall be solely responsible for any premiums, assessments, penalties, deductible
assumptions, retentions, audits, retrospective adjustments or any other kind of
payment due under its policies. Tenant shall increase the amounts of insurance
or the insurance coverages as Landlord may reasonably request from time to time.

 

(iii)              Tenant’s occupancy of the Premises without delivering the
certificates of insurance shall not constitute a waiver of Tenant’s obligations
to provide the required coverages. If Tenant provides to Landlord a certificate
that does not evidence the coverages required herein, or that is faulty in any
respect, such shall not constitute a waiver of Tenant’s obligations to provide
the proper insurance.

 

 22 

 

 

(iv)               Throughout the Lease Term, Landlord agrees to maintain
(i) All Risk or Causes of Loss – Special Form property insurance covering fire
and extended coverage insurance, and, at Landlord’s option, earthquake damage
coverage, terrorism coverage, wind and hurricane coverage, and such additional
property insurance coverage as Landlord deems appropriate, on the insurable
portions of Building and the remainder of the Centre in an amount not less than
the fair replacement value thereof, subject to reasonable deductibles,
consistent with similar quality buildings in Dallas, Texas; (ii) boiler and
machinery insurance amounts and with deductibles that would be considered
standard for similar class office building in the metropolitan area in which the
Premises is located; and (iii) commercial general liability insurance with a
combined single limit coverage of at least $1,000,000.00 per occurrence. All
such insurance shall be obtained from insurers Landlord reasonably believes to
be financially responsible in light of the risks being insured. The premiums for
any such insurance shall be a part of Operating Expenses.

 

(v)                Tenant shall cause all of its contractors, subcontractors,
suppliers, telecommunications service providers, moving companies and other
entities providing services to or performing work for Tenant (collectively,
“Service Providers”) to deliver evidence satisfactory to Landlord that the
insurance specified in Schedule 1 to Exhibit B-1 is in force prior to entering
the Centre. If any Service Provider does not comply with the insurance
requirements, Landlord may obtain the required insurance on behalf of the
Service Provider, and Tenant shall pay to Landlord as Additional Rent the cost
thereof.

 

(f)                  Mutual Waivers of Subrogation. Landlord, Tenant, and all
parties claiming under them, each mutually release and discharge each other from
responsibility for that portion of any loss or damage paid or reimbursed by an
insurer of Landlord or Tenant under any fire, extended coverage or other
property insurance policy maintained by Tenant with respect to its Premises or
by Landlord with respect to the Building or the Centre (or which would have been
paid had the insurance required to be maintained hereunder been in full force
and effect), no matter how caused, including negligence, and each waives any
right of recovery from the other including, but not limited to, claims for
contribution or indemnity, which might otherwise exist on account thereof. Any
fire, extended coverage or property insurance policy maintained by Tenant with
respect to the Premises, or Landlord with respect to the Building or the Centre,
shall contain, in the case of Tenant’s policies, a waiver of subrogation
provision or endorsement in favor of Landlord, and in the case of Landlord’s
policies, a waiver of subrogation provision or endorsement in favor of Tenant,
or, in the event that such insurers cannot or shall not include or attach such
waiver of subrogation provision or endorsement, Tenant and Landlord shall obtain
the approval and consent of their respective insurers, in writing, to the terms
of this Lease. Tenant and Landlord agree to indemnify, protect, defend and hold
harmless each other and their respective Indemnitees from and against any claim,
suit or cause of action asserted or brought by the other’s insurers for, on
behalf of, or in the name of the other, including, but not limited to, claims
for contribution, indemnity or subrogation, brought in contravention of this
paragraph. The mutual releases, discharges and waivers contained in this
provision shall apply EVEN IF THE LOSS OR DAMAGE TO WHICH THIS PROVISION APPLIES
IS CAUSED SOLELY OR IN PART BY THE NEGLIGENCE OF LANDLORD OR TENANT. The
foregoing waiver shall be effective even if either or both parties fail to carry
the insurance required herein.

 

(g)                Adjustment of Claims. Tenant shall cooperate with Landlord
and Landlord’s insurers in the adjustment of any insurance claim pertaining to
the Building or the Centre or Landlord’s use thereof.

 

(h)                Increase in Landlord’s Insurance Costs. Tenant agrees to pay
to Landlord any increase in premiums for Landlord’s insurance policies resulting
from Tenant’s use or occupancy of the Premises.

 

(i)                  Failure to Maintain Insurance. Any failure of Tenant to
obtain and maintain the insurance policies and coverages required hereunder or
failure by Tenant to meet any of the insurance requirements of this Lease shall
constitute an event of default hereunder, and such failure shall entitle
Landlord to pursue, exercise or obtain any of the remedies provided for in
Paragraph 12(b), and Tenant shall be solely responsible for any loss suffered by
Landlord as a result of such failure. In the event of failure by Tenant to
maintain the insurance policies and coverages required by this Lease or to meet
any of the insurance requirements of this Lease, Landlord, at its option, and
without relieving Tenant of its obligations hereunder, may obtain said insurance
policies and coverages or perform any other insurance obligation of Tenant, but
all costs and expenses incurred by Landlord in obtaining such insurance or
performing Tenant’s insurance obligations shall be reimbursed by Tenant to
Landlord, together with interest on same from the date any such cost or expense
was paid by Landlord until reimbursed by Tenant, at the rate of interest
provided to be paid on judgments, by the law of the jurisdiction to which the
interpretation of this Lease is subject.

 

 23 

 

 

9.                   FIRE OR CASUALTY

 

(a)                 Subject to the provisions of this Paragraph 9, in the event
the Premises, or access thereto, is wholly or partially destroyed by fire or
other casualty, Landlord shall, as soon as reasonably practicable, deliver to
Tenant Landlord's estimate of the time needed to repair the damage (the “Repair
Notice”). Landlord will provide the Repair Notice in no more than 60 days after
the date of the fire or casualty. To the extent permitted by applicable laws and
covenants, conditions and restrictions then applicable to the Property and
subject to the other provisions of this Paragraph 9, Landlord shall rebuild,
repair or restore the Premises and access thereto to substantially the same
condition as existing immediately prior to such destruction (excluding Tenant's
Alterations, trade fixtures, equipment and personal property, which Tenant shall
be required to restore) and this Lease shall continue in full force and effect.
Notwithstanding the foregoing, (i) Landlord's obligation to rebuild, repair or
restore the Premises shall not apply to any personal property or above-standard
tenant improvements except that, provided Tenant advances the cost thereof,
Landlord will restore the internal stairwell in the Premises, and (ii) Landlord
shall have no obligation whatsoever to rebuild, repair or restore the Premises
with respect to any damage or destruction occurring during the last twelve (12)
months of the term of this Lease or any extension of the term. If Landlord
determines not to rebuild, repair or restore the Premises with respect to damage
or destruction during the last 12 months of the term of this Lease (as it may be
extended), it will give Tenant written notice of such decision and Tenant may
thereafter terminate this Lease, without penalty, by giving Landlord written
notice within 30 days after receipt of such notice by Landlord; Rent shall abate
reasonably and equitably as of the date of the casualty.

 

(b)                Landlord may elect to terminate this Lease in any of the
following cases of damage or destruction to the Premises, the Building or the
Property: (i) where the cost of rebuilding, repairing and restoring
(collectively, “Restoration”) of the Building or the Property, would, regardless
of the lack of damage to the Premises or access thereto, in the reasonable
opinion of Landlord, exceed twenty percent (20%) of the then replacement cost of
the Building, which Landlord elects not to restore; (ii) where, in the case of
any damage or destruction to any portion of the Building or the Property by
uninsured casualty, the cost of Restoration of the Building or the Property, in
the reasonable opinion of Landlord, exceeds $500,000, and Landlord elects not to
restore; or (iii) where, in the case of any damage or destruction to the
Premises or access thereto by uninsured casualty, the cost of Restoration of the
Premises or access thereto, in the reasonable opinion of Landlord, exceeds
twenty percent (20%) of the replacement cost of the Premises; or (iv) if
Landlord has not obtained appropriate zoning approvals for reconstruction of the
Property, Building or Premises. Any such termination shall be made by thirty
(30) days’ prior written notice to Tenant given within ninety (90) days of the
date of such damage or destruction. If this Lease is not terminated by Landlord
and as the result of any damage or destruction, the Premises, or a portion
thereof, are rendered untenantable, the Base Rent shall abate reasonably during
the period of Restoration (based upon the extent to which such damage and
Restoration materially interfere with Tenant’s business in the Premises). This
Lease shall be considered an express agreement governing any case of damage to
or destruction of the Premises, the Building or the Property. This Lease sets
forth the terms and conditions upon which this Lease may terminate in the event
of any damage or destruction.

 

(c)                 Notwithstanding anything in this Paragraph 9 to the
contrary, (i) if Landlord, in its Repair Notice, estimates that the damage
caused by the casualty cannot be repaired within one hundred eighty (180) days
after the date of the casualty or (ii) if Landlord, in its Repair Notice,
estimates that the damage caused by the casualty cannot be repaired within
thirty (30) days after the date of the casualty that occurs during the last
twelve (12) months of the Lease Term, then Tenant shall have the right and
option to terminate this Lease without penalty, by giving written notice to
Landlord at any time within thirty (30) days after receipt of the Repair Notice,
in which case Rent shall abate reasonably and equitably as of the date of the
casualty (based upon the extent to which such damage and Restoration render
portions of the Premises untenantable) until the effective date of termination.

 

(d)                If this Lease is not terminated as a result of the damage and
Landlord does not substantially complete its repair and restoration within 90
days after the expiration of the time estimated by Landlord to be necessary to
complete same, subject to any Tenant Delays, and the repair and restoration is
not complete at the time Tenant gives its notice of termination, then Tenant may
terminate this Lease by giving notice to Landlord within thirty (30) days after
the last day of the 90 day period.

 

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10.                EMINENT DOMAIN

 

(a)                 In the event the whole of the Premises, the Building or the
Centre shall be taken under the power of eminent domain, or sold to prevent the
exercise thereof (collectively, a “Taking”), this Lease shall automatically
terminate as of the date of such Taking.

 

(b)                In the event that (A) there is a taking or condemnation or
sale in lieu thereof of (i) all or substantially all of the Premises, Building
or the Centre or (ii) any portion of the Premises, the Building or the Centre
which results in Tenant being unable to use the remainder of the Premises in
substantially the same way that Tenant used the Premises immediately prior to
such taking, condemnation or sale in lieu thereof (“Partial Taking”), or (B)
there is a temporary taking which results in Tenant being unable to use a
substantial portion of the Premises for a period of twenty (20) consecutive days
(“Temporary Taking” collectively with the Partial Taking and Taking, a “Taking
Event”), either Landlord or Tenant may terminate this Lease by delivering
written notice thereof to the other within ten (10) business days after the
Taking Event, condemnation or sale in lieu thereof. For purposes of this Lease,
the date of Taking Event shall be the earlier of the date of transfer of title
resulting from such or the date of transfer of possession resulting from such
Taking Event.

 

(c)                 In the event that a portion of the Premises is so taken and
this Lease is not terminated, Landlord shall, to the extent of proceeds paid to
Landlord as a result of the Taking Event, with reasonable diligence, use
commercially reasonable efforts to proceed to restore (to the extent permitted
by Law and covenants, conditions and restrictions then applicable to the Centre)
the Premises (other than Tenant’s personal property and fixtures, and tenant
improvements) to a complete, functioning unit. In such case, Rent shall be
reduced proportionately based on the portion of the Premises so taken. In the
event of a Temporary Taking, Tenant shall be entitled to receive the entire
award allocable to the Temporary Taking of the Premises. Except as provided
herein, Tenant shall not assert any claim against Landlord or the condemning
authority for, and hereby assigns to Landlord, any compensation in connection
with any such Taking Event, and Landlord shall be entitled to receive the entire
amount of any award therefor, without deduction for any estate or interest of
Tenant, provided that Landlord shall not make any claim for Tenant’s personal
property, fixtures, Tenant’s lost profits and revenues, or for Tenant’s
relocation or moving expenses. Nothing contained in this Paragraph 10 shall be
deemed to give Landlord any interest in, or prevent Tenant from seeking any
award against the condemning authority for the Taking of personal property,
fixtures, above standard tenant improvements of Tenant or for relocation or
moving expenses recoverable by Tenant from the condemning authority. This
Paragraph 10 shall be Tenant’s sole and exclusive remedy in the event of a
Taking. This Lease sets forth the terms and conditions upon which this Lease may
terminate in the event of a Taking.

 

11.                ASSIGNMENT AND SUBLETTING

 

(a)                 Tenant shall not directly or indirectly, voluntarily or
involuntarily, by operation of law or otherwise, assign, sublet, mortgage or
otherwise encumber all or any portion of its interest in this Lease or in the
Premises or grant any license for any person other than Tenant or its employees
to use or occupy the Premises or any part thereof without obtaining the prior
written consent of Landlord, which consent shall not be unreasonably withheld,
delayed or conditioned. Any such attempted assignment, subletting, license,
mortgage, other encumbrance or other use or occupancy without the consent of
Landlord shall, at Landlord’s option, be null and void and of no effect. Any
mortgage, or encumbrance of all or any portion of Tenant’s interest in this
Lease or in the Premises and any grant of a license for any person other than
Tenant or its employees to use or occupy the Premises or any part thereof shall
be deemed to be an “assignment” of this Lease.

 

(b)                No assignment or subletting shall relieve Tenant of its
obligation to pay the Rent and to perform all of the other obligations to be
performed by Tenant hereunder. The acceptance of Rent by Landlord from any other
person shall not be deemed to be a waiver by Landlord of any provision of this
Lease or to be a consent to any subletting or assignment. Consent by Landlord to
one subletting or assignment shall not be deemed to constitute a consent to any
other or subsequent attempted subletting or assignment. If Tenant desires at any
time to assign this Lease or to sublet the Premises or any portion thereof, it
shall first notify Landlord of its desire to do so and shall submit in writing
to Landlord all pertinent information relating to the proposed assignee or
sublessee, all pertinent information relating to the proposed assignment or
sublease, and all such financial information as Landlord may reasonably request
concerning the Tenant and proposed assignee or subtenant (the "A/S Notice"). Any
assignment or sublease shall be expressly subject to the terms and conditions of
this Lease.

 

 25 

 

 

(c)                 Except for transfers to Permitted Transferees, Landlord has
a period of twenty (20) days after Landlord’s receipt of the A/S Notice to
notify Tenant that Landlord elects, in Landlord’s sole discretion, to:

 

(i)                  if Tenant requests to assign this Lease or sublease (i) the
entire 1100 Premises or all of the eleventh (11th) floor of the Building or (ii)
for all or substantially all of the Lease Term, terminate this Lease as to the
space that is the subject of the A/S Notice as of the date specified by Tenant
in the A/S Notice; or

 

(ii)                consent to the assignment or sublease; or

 

(iii)              refuse to consent to Tenant's assignment or sublease of that
space and to continue this Lease in effect.

 

If Landlord does not notify Tenant of Landlord's election within the 20-day
period, Landlord will notify Tenant in writing. If Landlord does not notify
Tenant of Landlord’s election within ten (10) days following Landlord’s receipt
of such notice and the notice conspicuously states, “IF YOU DO NOT MAIL YOUR
APPROVAL OR DISAPPROVAL OF THE REQUESTED TRANSFER WITHIN 10 DAYS AFTER YOU
RECEIVE THIS REQUEST FOR CONSENT, YOUR APPROVAL OF THIS TRANSFER WILL BE DEEMED
GIVEN,” then Landlord shall be deemed to have approved such request. If Landlord
elects to terminate this Lease as provided under option (i), Tenant has 5 days
following receipt of Landlord’ s notice to terminate within which to rescind its
notice of its proposed assignment or sublease and avoid a termination of this
Lease.

 

(d)                Tenant acknowledges that it shall be reasonable for Landlord
to withhold its consent to a proposed assignment or sublease in any of the
following instances:

 

(i)                  The assignee or sublessee (or any affiliate of the assignee
or sublessee) is not, in Landlord’s reasonable opinion, sufficiently
creditworthy to perform the obligations such assignee or sublessee will have
under this Lease;

 

(ii)                The intended use of the Premises by the assignee or
sublessee is not for general office use;

 

(iii)              The intended use of the Premises by the assignee or sublessee
would materially increase the pedestrian or vehicular traffic to the Premises or
the Building;

 

(iv)               Occupancy of the Premises by the assignee or sublessee would,
in the good faith judgment of Landlord, violate any agreement binding upon
Landlord, the Building or the Centre with regard to the identity of tenants,
usage in the Building, or similar matters;

 

(v)                The assignee or sublessee (or any affiliate of the assignee
or sublessee) is then negotiating with Landlord or has negotiated with Landlord
within the previous ninety (90) days, or is a current tenant or subtenant within
the Building or Centre and Landlord has comparable space of comparable size in
the Building or the Centre for lease;

 

(vi)               The identity or business reputation of the assignee or
sublessee will, in the good faith judgment of Landlord, tend to damage the
goodwill or reputation of the Building or Centre;

 

(vii)             the proposed sublease would result in more than two subleases
of portions of the Premises being in effect at any one time during the Lease
Term; or

 

(viii)           In the case of a sublease, the subtenant has not acknowledged
that the Lease controls over any inconsistent provision in the sublease.

 

The foregoing criteria shall not exclude any other reasonable basis for Landlord
to refuse its consent to such assignment or sublease. Notwithstanding any
contrary provision of this Lease, if Tenant or any proposed assignee or
sublessee claims that Landlord has unreasonably withheld its consent to a
proposed assignment or sublease or otherwise has breached its obligations under
this Paragraph 11, their sole remedy shall be to seek a declaratory judgment
and/or injunctive relief without any monetary damages, and, with respect
thereto, Tenant, on behalf of itself and, to the extent permitted by law, such
proposed assignee/sublessee, hereby waives all other remedies against Landlord,
including, without limitation, the right to seek monetary damages or to
terminate this Lease.

 

 26 

 

 

(e)                 If any Tenant is a corporation, partnership or other entity
that is not publicly traded on a recognized national stock exchange, any
transaction or series of related or unrelated transactions (including, without
limitation, any dissolution, merger, consolidation or other reorganization, any
withdrawal or admission of a partner or change in a partner’s interest, or any
issuance, sale, gift, transfer or redemption of any capital stock of or
ownership interest in such entity, whether voluntary, involuntary or by
operation of law, or any combination of any of the foregoing transactions)
resulting in the transfer of control of such Tenant, shall be deemed to be an
assignment of this Lease subject to the provisions of this Section 11. The term
“control” as used in this Section 11(e) means the power to directly or
indirectly direct or cause the direction of the management or policies of
Tenant. Any transfer of control of a subtenant which is a corporation or other
entity shall be deemed an assignment of any sublease. Notwithstanding anything
to the contrary in this Section 11(e), if the original Tenant under this Lease
is a corporation, partnership or other entity, a change or series of changes in
ownership of stock or other ownership interests which would result in direct or
indirect change in ownership of less than fifty percent (50%) of the outstanding
stock of or other ownership interests in such Tenant as of the date of the
execution and delivery of this Lease shall not be considered a change of
control.

 

(f)                  Notwithstanding any assignment or subletting, Tenant and
any guarantor or surety of Tenant’s obligations under this Lease shall at all
times during the Initial Term and any subsequent renewals or extensions remain
fully responsible and liable for the payment of the rent and for compliance with
all of Tenant’s other obligations under this Lease. In the event that the Rent
due and payable by a sublessee or assignee (or a combination of the rental
payable under such sublease or assignment, plus any bonus or other consideration
therefor or incident thereto) exceeds the Rent payable under this Lease, then
Tenant shall be bound and obligated to pay Landlord, as additional rent
hereunder, one-half of all such excess Rent and other excess consideration
specifically tied to the value of the space and not dedicated to any of Tenant’s
furniture, fixtures, or equipment (less the costs reasonably incurred by Tenant
with unaffiliated third parties in connection with such transfer (i.e.,
brokerage commissions and tenant finish work and after deducting all reasonable
and actual expenses associated with such assignment or sublease) within ten (10)
days following receipt thereof by Tenant; provided, if an event of default
exists that is not cured within any applicable notice and cure period, then
Tenant shall be bound and obligated to pay Landlord, as additional rent
hereunder, all of such excess Rent and other excess consideration.

 

(g)                If this Lease is assigned or if the Premises is subleased
(whether in whole or in part), or in the event of the mortgage or pledge of
Tenant’s leasehold interest, or grant of any concession or license within the
Premises, or if the Premises are occupied in whole or in part by anyone other
than Tenant, then upon a default by Tenant hereunder that is not cured within
any applicable notice and cure period Landlord may collect Rent from the
assignee, sublessee, mortgagee, pledgee, concessionee or licensee or other
occupant and, except to the extent set forth in the preceding paragraph, apply
the amount collected to the next Rent payable hereunder; and all such Rent
collected by Tenant shall be held in deposit for Landlord and promptly forwarded
to Landlord. No such transaction or collection of Rent or application thereof by
Landlord, however, shall be deemed a waiver of these provisions or a release of
Tenant from the further performance by Tenant of its covenants, duties, or
obligations hereunder.

 

(h)                If Tenant effects an assignment or sublease or requests the
consent of Landlord to any proposed assignment or sublease, then Tenant shall,
upon demand, pay Landlord a non-refundable administrative fee of Seven Hundred
Fifty Dollars ($750.00), plus any reasonable attorneys’ and paralegal fees and
costs incurred by Landlord in connection with such assignment or sublease or
request for consent. Acceptance of the Seven Hundred Fifty Dollars ($750.00)
administrative fee and/or reimbursement of Landlord’s attorneys’ and paralegal
fees shall in no event obligate Landlord to consent to any proposed assignment
or sublease.

 

(i)                  Notwithstanding any provision of this Lease to the
contrary, in the event this Lease is assigned to any person or entity pursuant
to the provisions of the Bankruptcy Code, any and all monies or other
consideration payable or otherwise to be delivered in connection with such
assignment shall be paid or delivered to Landlord, shall be and remain the
exclusive property of Landlord and shall not constitute the property of Tenant
or Tenant’s estate within the meaning of the Bankruptcy Code. All such money and
other consideration not paid or delivered to Landlord shall be held in trust for
the benefit of Landlord and shall be promptly paid or delivered to Landlord.

 

 27 

 

 

(j)                  The joint and several liability of the Tenant named herein
and any immediate and remote successor-in-interest of Tenant (by assignment or
otherwise), and the due performance of the obligations of this Lease on Tenant’s
part to be performed or observed, shall not in any way be discharged, released
or impaired by any (a) agreement that modifies any of the rights or obligations
of the parties under this Lease, (b) stipulation that extends the time within
which an obligation under this Lease is to be performed, (c) waiver of the
performance of an obligation required under this Lease, or (d) failure to
enforce any of the obligations set forth in this Lease.

 

(k)                If Tenant is any form of partnership, a withdrawal or change,
voluntary, involuntary or by operation of law of any partner, or the dissolution
of the partnership, shall be deemed a voluntary assignment. If Tenant consists
of more than one (1) person, a purported assignment, voluntary or involuntary or
by operation of law from one (1) person to the other shall be deemed a voluntary
assignment. If Tenant is a corporation or limited liability entity, any
dissolution, merger, consolidation or other reorganization of Tenant, or sale or
other transfer of a controlling percentage of the ownership interest of Tenant,
or the sale of at least twenty-five percent (25%) of the value of the assets of
Tenant shall be deemed a voluntary assignment.

 

(l)                  Notwithstanding anything to the contrary in this Paragraph
11, Tenant may assign this Lease or sublet all or a part of the Premises (a
“Permitted Transfer”) to the following types of entities (a “Permitted
Transferee”) without the written consent of Landlord:

 

(i)                  any person or entity which, directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with Tenant;

 

(ii)                any corporation, limited partnership, limited liability
partnership, limited liability company or other business entity in which or with
which Tenant, or its corporate successors or assigns, is merged or consolidated,
in accordance with applicable statutory provisions governing merger and
consolidation of business entities, so long as (A) Tenant’s obligations
hereunder are assumed by the entity surviving such merger or created by such
consolidation; and (B) the Tangible Net Worth of the surviving or created entity
is not less than the Tangible Net Worth of Tenant as of the date hereof; or

 

(iii)              any corporation, limited partnership, limited liability
partnership, limited liability company or other business entity acquiring all or
substantially all of Tenant’s assets if such entity’s Tangible Net Worth after
such acquisition is not less than the Tangible Net Worth of Tenant as of the
date hereof.

 

Tenant shall promptly notify Landlord of any such Permitted Transfer. Tenant
shall remain liable for the performance of all of the obligations of Tenant
hereunder, or if Tenant no longer exists because of a merger, consolidation, or
acquisition, the surviving or acquiring entity shall expressly assume in writing
the obligations of Tenant hereunder. Additionally, the Permitted Transferee
shall comply with all of the terms and conditions of this Lease, including the
Permitted Use, and the use of the Premises by the Permitted Transferee may not
violate any other agreements affecting the Premises, the Building, the Centre,
Landlord or other tenants of the Centre. No later than 30 days after the
effective date of any Permitted Transfer, Tenant agrees to furnish Landlord with
(A) copies of the instrument effecting any of the foregoing Transfers, (B)
documentation establishing Tenant’s satisfaction of the requirements set forth
above applicable to any such Transfer, and (C) evidence of insurance as required
under this Lease with respect to the Permitted Transferee. The occurrence of a
Permitted Transfer shall not waive Landlord’s rights as to any subsequent
transfers. “Tangible Net Worth” means the excess of total assets over total
liabilities, in each case as determined in accordance with GAAP, excluding,
however, from the determination of total assets all assets which would be
classified as intangible assets under GAAP including goodwill, licenses,
patents, trademarks, trade names, copyrights, and franchises. Any subsequent
transfer by a Permitted Transferee shall be subject to the terms of this
Paragraph 11.

 

12.                DEFAULT

 

(a)                 Events of Default. The occurrence of any one or more of the
following events shall constitute an “event of default” or “default” (herein so
called) under this Lease by Tenant:

 

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(i)                  Tenant shall fail to pay Rent or any other rental or sums
payable by Tenant hereunder within five (5) business days after Landlord
notifies Tenant in writing of such nonpayment; provided, however, Landlord shall
only be obligated to provide such written notice to Tenant one (1) time within
any calendar year and in the event Tenant fails to timely pay Rent or any other
sums for a second time during any calendar year, then Tenant shall be in default
for such late payment and Landlord shall have no obligation or duty to provide
notice of such non-payment to Tenant prior to declaring an event of default
under this Lease;

 

(ii)                the failure by Tenant to observe or perform any of the
express or implied covenants or provisions of this Lease to be observed or
performed by Tenant, other than monetary failures as specified in
Paragraph 12(a)(i) above, where such failure shall continue for a period of
thirty (30) days after written notice thereof from Landlord to Tenant; provided,
however, that if the nature of Tenant’s default is such that more than thirty
(30) days are reasonably required for its cure, then Tenant shall not be deemed
to be in default if Tenant shall commence such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion;

 

(iii)              the making by Tenant of any general assignment for the
benefit of creditors,

 

(iv)               the filing by or against Tenant of a petition to have Tenant
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless, in the case of a petition filed against
Tenant, the same is dismissed within sixty (60) days),

 

(v)                the appointment of a trustee or receiver to take possession
of substantially all of Tenant’s assets located at the Premises or of Tenant’s
interest in this Lease, where possession is not restored to Tenant within sixty
(60) days,

 

(vi)               the attachment, execution or other judicial seizure of
substantially all of Tenant’s assets located at the Premises or of Tenant’s
interest in this Lease where such seizure is not discharged within sixty (60)
days;

 

(vii)             any material representation or warranty made by Tenant or any
other document delivered in connection with the execution and delivery of this
Lease or pursuant to this Lease proves to be incorrect in any material respect;
or

 

(viii)           Tenant shall be liquidated or dissolved or shall begin
proceedings towards its liquidation or dissolution.

 

(b)                Landlord’s Remedies; Termination. In the event of any event
of default by Tenant, in addition to any other remedies available to Landlord
under this Lease, at law or in equity, Landlord may at its option pursue any one
or more of the following remedies, without any notice or demand to the extent
permitted by Law:

 

(i)                  Landlord may enter the Premises without terminating this
Lease and perform any covenant or agreement or cure any condition creating or
giving rise to an event of default under this Lease and Tenant shall pay to
Landlord on demand, as additional rent, the amount expended by Landlord in
performing such covenants or agreements or satisfying or observing such
condition. Landlord, or its agents or employees, shall have the right to enter
the Premises, and such entry and such performance shall not terminate this Lease
or constitute an eviction of Tenant.

 

(ii)                Landlord may terminate this Lease by written notice to
Tenant (and not otherwise) or Landlord may terminate Tenant’s right of
possession without terminating this Lease. In either of such events Tenant shall
surrender possession of and vacate the Premises promptly and deliver possession
thereof to Landlord, and Tenant hereby grants to Landlord full and free license
to enter the Premises, in whole or in part, with or without process of law and
to expel or remove Tenant and any other person, firm or entity who may be
occupying the Premises or any part thereof and remove any and all property
therefrom, using such lawful force as may be necessary.

 

 29 

 

 

(iii)              In the event Landlord elects to re-enter or take possession
of the Premises after Tenant’s default, with or without terminating this Lease,
Landlord may change locks or alter security devices and lock out, expel or
remove Tenant and any other person who may be occupying all or any part of the
Premises without being liable for any claim for damages.

 

(iv)               Notwithstanding anything herein to the contrary, if Landlord
terminates Tenant’s right to possession without terminating this Lease after an
event of default, Landlord shall, if required by Law, use commercially
reasonable efforts to relet the Premises and mitigate damage as set forth in
Paragraph 12(c) below.

 

(v)                Notwithstanding any prior election by Landlord to not
terminate this Lease, Landlord may at any time, including subsequent to any
re-entry or taking of possession of the Premises as allowed hereinabove, elect
to terminate this Lease. Tenant shall be liable for and shall promptly pay to
Landlord the amount of all Base Rent and other sums of money due under this
Lease as may have accrued as of the date of termination. Tenant shall also
promptly pay to Landlord, as agreed and liquidated damages, an amount of money
equal to the Base Rent and other amounts due for the remaining portion of the
Lease Term (had such term not been terminated by Landlord prior to the
expiration of the Lease Term), less the fair rental value of the Premises for
the residue of the Lease Term, both discounted to their present value based upon
an interest rate of eight percent (8%) per annum. In determining fair rental
value, Landlord shall be entitled to take into account the time and expenses
necessary to obtain a replacement tenant or tenants, including lost rental
revenues and anticipated expenses hereinafter described relating to recovery,
preparation and reletting of the Premises. If Landlord elects to relet the
Premises, or any portion thereof, before presentation of proof of such
liquidated damages, the amount of rent reserved upon such reletting shall be
deemed prima facie evidence of the fair rental value of the portion of the
Premises so relet.

 

Landlord and Tenant agree that because of the difficulty or impossibility of
determining Landlord’s damages from the loss of anticipated Additional Rent and
other lease charges from the Tenant, there shall be included as a component of
Tenant’s annual total rent obligation (for the calculation of Landlord’s
remedies), an amount equal to the average monthly Additional Rent paid by Tenant
for the twelve (12) full calendar months immediately preceding the event of
default (or such lesser period of the term if the event of default occurs prior
to the twelfth (12th) full calendar month of the term) multiplied by the number
of months remaining in the Lease Term.

 

(vi)               In addition to any sum provided to be paid above, Tenant
shall also be liable for and shall promptly pay to Landlord all broker’s fees
incurred by Landlord in connection with any reletting of the whole or any part
of the Premises, the costs of removing and storing Tenant’s or any other
occupant’s property, the cost of repairing, altering, remodeling, renovating or
otherwise putting the Premises into a condition acceptable to a new tenant or
tenants, the cost of removal and replacement of Tenant’s signage and all
reasonable expenses by Landlord in enforcing Landlord’s remedies, including
reasonable attorneys’ fees.

 

(vii)             Landlord may apply Tenant’s Security Deposit to the extent
necessary to make good any rent arrearage, to pay the cost of remedying Tenant’s
default or to reimburse Landlord for expenditures made or damages suffered as a
consequence of Tenant’s default, without prejudice to any other remedies
Landlord may have under this Lease. Following any such application of the
Security Deposit, Tenant shall pay to Landlord on demand the amount so applied
in order to restore the Security Deposit to its original amount.

 

(c)                 Mitigation of Damages.

 

(i)                  In the event of a default under the Lease, Landlord and
Tenant shall each use commercially reasonable efforts to mitigate any damages
resulting from a default of the other party under this Lease.

 

(ii)                Landlord’s obligation to mitigate damages after a default by
Tenant shall be satisfied in full if Landlord undertakes to lease the Premises
to another tenant (a “Substitute Tenant”) in accordance with the following
criteria:

 

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(A)               Landlord shall have no obligation to solicit or entertain
negotiations with any other prospective tenant for the Premises until Landlord
obtains full and complete possession of the Premises including, without
limitation, the final and unappealable legal right to relet the Premises free of
any claim of Tenant.

 

(B)               Landlord shall not be obligated to offer the Premises to a
Substitute Tenant when other premises in the Centre suitable for that
prospective tenant’s use are available.

 

(C)               Landlord shall not be obligated to lease the Premises to a
Substitute Tenant for a rental less than the current fair market rental then
prevailing for similar space, nor shall Landlord be obligated to enter into a
new lease under other terms and conditions that are unacceptable to Landlord
under Landlord’s then current leasing policies for comparable space.

 

(D)               Landlord shall not be obligated to enter into a lease with any
proposed tenant whose use would:

 

a.                    Disrupt the tenant mix or balance of the Centre;

 

b.                   Violate any restriction, covenant, or requirement contained
in the lease of another tenant of the Centre;

 

c.                    Adversely affect the reputation of the Centre; or

 

d.                   Be incompatible with the operation of the Centre.

 

(E)                Landlord shall not be obligated to enter into a lease with
any proposed Substitute Tenant (a “Substitute Lease”) which does not have, in
Landlord’s reasonable opinion, sufficient financial resources or operating
experience to operate the Premises in a first-class manner.

 

(F)                Landlord shall not be required to expend any amount of money
to alter, remodel, or otherwise make the Premises suitable for use by a proposed
Substitute Tenant unless:

 

a.                    Tenant pays any such sum to Landlord in advance of
Landlord’s execution of a Substitute Lease with such Substitute Tenant (which
payment shall not be in lieu of any damages or other sums to which Landlord may
be entitled as a result of Tenant’s default under this Lease); or

 

b.                   Landlord, in Landlord’s reasonable discretion, determines
that any such expenditure is financially justified in connection with entering
into any such Substitute Lease.

 

(iii)              Upon compliance with the above criteria regarding the
releasing of the Premises after a default by Tenant, Landlord shall be deemed to
have fully satisfied Landlord’s obligation to mitigate damages under this Lease
and under any law or judicial ruling in effect on the date of this Lease or at
the time of Tenant’s default, and Tenant waives and releases, to the fullest
extent legally permissible, any right to assert in any action by Landlord to
enforce the terms of this Lease, any defense, counterclaim, or rights of setoff
or recoupment respecting the mitigation of damages by Landlord, unless and to
the extent Landlord maliciously or in bad faith fails to act in accordance with
the requirements of this Paragraph 12(c).

 

(iv)               Tenant’s right to seek damages from Landlord as a result of a
default by Landlord under this Lease shall be conditioned on Tenant taking all
commercially reasonable actions reasonably required, under the circumstances, to
minimize any loss or damage to Tenant’s property or business, or to any of
Tenant’s officers, employees, agents, invitees, or other third parties that may
be caused by any such default of Landlord.

 

 31 

 

 

(d)                Landlord’s Remedies; Re-Entry Rights. No re-entry or taking
possession of the Premises by Landlord pursuant to this Paragraph 12(d), and no
acceptance of surrender of the Premises or other action on Landlord’s part,
shall be construed as an election to terminate this Lease unless a written
notice of such intention be given to Tenant or unless the termination thereof be
decreed by a court of competent jurisdiction.

 

(e)                 Landlord’s Right to Perform. Except as specifically provided
otherwise in this Lease, all covenants and agreements by Tenant under this Lease
shall be performed by Tenant at Tenant’s sole cost and expense and without any
abatement or offset of Rent. If Tenant shall fail to pay any sum of money (other
than Base Rent) or perform any other act on its part to be paid or performed
hereunder and such failure shall continue for three (3) days with respect to
monetary obligations (or ten (10) days with respect to non-monetary obligations,
except in case of emergencies, in which such case, such shorter period of time
as is reasonable under the circumstances) after Tenant’s receipt of written
notice thereof from Landlord, Landlord may, without waiving or releasing Tenant
from any of Tenant’s obligations, make such payment or perform such other act on
behalf of Tenant. All sums so paid by Landlord and all necessary incidental
costs incurred by Landlord in performing such other acts shall be payable by
Tenant to Landlord within five (5) days after demand therefor as Additional
Rent.

 

(f)                  Interest. If any monthly installment of Rent or Operating
Expenses, or any other amount payable by Tenant hereunder is not received by
Landlord by the date when due, it shall bear interest at the Default Rate from
the date due until paid. All interest, and any late charges imposed pursuant to
Paragraph 12(g) below, shall be considered Additional Rent due from Tenant to
Landlord under the terms of this Lease. The term “Default Rate” as used in this
Lease shall mean the lesser of (A) the rate announced from time to time by Wells
Fargo Bank or, if Wells Fargo Bank ceases to exist or ceases to publish such
rate, then the rate announced from time to time by the largest (as measured by
deposits) chartered bank operating in the State, as its “prime rate” or
“reference rate”, plus five percent (5%), or (B) the maximum rate of interest
permitted by Law.

 

(g)                Late Charges. Tenant acknowledges that, in addition to
interest costs, the late payments by Tenant to Landlord of any monthly
installment of Base Rent, Additional Rent or other sums due 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
other costs include, without limitation, processing, administrative and
accounting charges and late charges that may be imposed on Landlord by the terms
of any mortgage, deed to secure debt, deed of trust or related loan documents
encumbering the Premises, the Building or the Centre. Accordingly, if any
monthly installment of Base Rent, Additional Rent or any other amount payable by
Tenant hereunder is not received by Landlord by the due date thereof, Tenant
shall pay to Landlord an additional sum of five percent (5%) of the overdue
amount as a late charge, but in no event more than the maximum late charge
allowed by law. The parties agree that such late charge represents a fair and
reasonable estimate of the costs that Landlord will incur by reason of any late
payment as hereinabove referred to by Tenant, and the payment of late charges
and interest are distinct and separate in that the payment of interest is to
compensate Landlord for the use of Landlord’s money by Tenant, while the payment
of late charges is to compensate Landlord for Landlord’s processing,
administrative and other costs incurred by Landlord as a result of Tenant’s
delinquent payments. Acceptance of a late charge or interest shall not
constitute a waiver of Tenant’s default with respect to the overdue amount or
prevent Landlord from exercising any of the other rights and remedies available
to Landlord under this Lease or at law or in equity now or hereafter in effect.
Landlord agrees to waive interest and late charges with regard to the first
delinquent installment of Rent due hereunder, in any calendar year, provided
that Landlord receives such amount in full within five (5) business days after
written notice from Landlord.

 

(h)                Rights and Remedies Cumulative. All rights, options and
remedies of Landlord contained in this Paragraph 12 and elsewhere in this Lease
shall be construed and held to be cumulative, and no one of them shall be
exclusive of the other, and Landlord shall have the right to pursue any one or
all of such remedies or any other remedy or relief which may be provided by law
or in equity, whether or not stated in this Lease. Nothing in this Paragraph 12
shall be deemed to limit or otherwise affect Tenant’s indemnification of
Landlord pursuant to any provision of this Lease.

 

(i)                  Tenant’s Waiver of Redemption. Tenant hereby waives and
surrenders for itself and all those claiming under it, including creditors of
all kinds, (i) any right and privilege which it or any of them may have under
any present or future law to redeem any of the Premises or to have a continuance
of this Lease after termination of this Lease or of Tenant’s right of occupancy
or possession pursuant to any court order or any provision hereof, and (ii) the
benefits of any present or future law which exempts property from liability for
debt or for distress for Rent.

 

 32 

 

 

(j)                  Costs Upon Default and Litigation. Tenant shall pay to
Landlord and its mortgagees as Additional Rent all the expenses incurred by
Landlord or its mortgagees in connection with any default by Tenant hereunder or
the exercise of any remedy by reason of any default by Tenant hereunder,
including reasonable attorneys’ fees and expenses. If Landlord or its mortgagees
shall be made a party to any litigation commenced against Tenant or any
litigation pertaining to this Lease or the Premises, at the option of Landlord
and/or its mortgagees, Tenant, at its expense, shall provide Landlord and/or its
mortgagees with counsel approved by Landlord and/or its mortgagees and shall pay
all costs incurred or paid by Landlord and/or its mortgagees in connection with
such litigation.

 

(k)                Damages. Except for any damages which Landlord may suffer
because of Tenant’s holding over in the Premises 60 days following the
expiration of the Lease Term or any default under Paragraph 6 (for which
Landlord may recover consequential damages from Tenant), the liability of Tenant
to Landlord for any monetary damages arising from any default by Tenant under
the terms of this Lease shall be limited to Landlord’s actual direct, but not
consequential damages therefor. Nothing in this Paragraph 12(k) shall affect or
limit Landlord’s rights to file legal actions to recover possession of the
Premises, or for injunctive relief against Tenant, or any other non-monetary
relief as provided in Paragraph 12.

 

13.                ACCESS; CONSTRUCTION

 

(a)                 Landlord reserves from the leasehold estate hereunder, in
addition to all other rights reserved by Landlord under this Lease, the right to
use the roof and exterior walls of the Premises and the area beneath, adjacent
to and above the Premises. Landlord also reserves the right to install, use,
maintain, repair, replace and relocate equipment, machinery, meters, pipes,
ducts, plumbing, conduits and wiring through the Premises, which serve other
portions of the Building or the Centre in a manner and in locations which do not
unreasonably interfere with Tenant’s use of the Premises. In addition, Landlord
shall have free access to any and all mechanical installations of Landlord or
Tenant, including, without limitation, machine rooms, telephone rooms and
electrical closets. Tenant agrees that there shall be no construction of
partitions or other obstructions which materially interfere with or which
threaten to materially interfere with Landlord’s free access thereto, or
materially interfere with the moving of Landlord’s equipment to or from the
enclosures containing said installations.

 

(b)                Landlord shall at all reasonable times, during normal
business hours and after one (1) business day prior notice (except in an
emergency), have the right to enter the Premises to inspect the same, to supply
janitorial service and any other service to be provided by Landlord to Tenant
hereunder, to exhibit the Premises to prospective purchasers, lenders or tenants
(only in the last twelve (12) months of the Lease Term), to post notices of
non-responsibility, to alter, improve, restore, rebuild or repair the Premises
or any other portion of the Building, or to do any other act permitted or
contemplated to be done by Landlord hereunder, all without being deemed guilty
of an eviction of Tenant and without liability for abatement of Rent or
otherwise and provided that for any entry into Tenant’s server or data room,
Tenant shall have the right to accompany Landlord. For such purposes, Landlord
may also erect scaffolding and other necessary structures where reasonably
required by the character of the work to be performed. Landlord shall conduct
all such inspections and/or improvements, alterations and repairs so as to
minimize, to the extent reasonably practical and without material additional
expense to Landlord, any interruption of or interference with the business of
Tenant.

 

(c)                 For each of such purposes, Landlord shall at all times have
and retain a key with which to unlock all of the doors in, upon and about the
Premises (excluding Tenant’s vaults and safes, access to which shall be provided
by Tenant upon Landlord’s reasonable request). Landlord shall have the right to
use any and all means which Landlord may reasonably deem proper in an emergency
in order to obtain entry to the Premises or any portion thereof, and Landlord
shall have the right, at any time during the Lease Term, to provide whatever
access control measures it deems reasonably necessary to the Centre, without any
interruption or abatement in the payment of Rent by Tenant. Any entry into the
Premises obtained by Landlord by any of such means shall not under any
circumstances be construed to be a forcible or unlawful entry into, or a
detainer of, the Premises, or any eviction of Tenant from the Premises or any
portion thereof. No provision of this Lease shall be construed as obligating
Landlord to perform any repairs, Alterations or decorations to the Premises or
the Centre except as otherwise expressly agreed to be performed by Landlord
pursuant to the provisions of this Lease. Landlord shall use commercially
reasonable efforts to minimize interference with Tenant’s use of or access to
the Premises in connection with the exercise of its rights under this Paragraph
13(c).

 

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14.                BANKRUPTCY

 

(a)                 If at any time on or before the Commencement Date there
shall be filed by or against Tenant in any court, tribunal, administrative
agency or any other forum having jurisdiction, pursuant to any applicable law,
either of the United States or of any state, a petition in bankruptcy or
insolvency or for reorganization or for the appointment of a receiver, trustee
or conservator of all or a portion of Tenant’s property, or if Tenant makes an
assignment for the benefit of creditors, this Lease shall ipso facto be canceled
and terminated and in such event neither Tenant nor any person claiming through
or under Tenant or by virtue of any applicable law or by an order of any court,
tribunal, administrative agency or any other forum having jurisdiction, shall be
entitled to possession of the Premises and Landlord, in addition to the other
rights and remedies given by Paragraph 12 hereof or by virtue of any other
provision contained in this Lease or by virtue of any applicable law, may retain
as damages any Rent, Security Deposit or moneys received by it from Tenant or
others on behalf of Tenant.

 

(b)                If, after the Commencement Date, or if at any time during the
term of this Lease, there shall be filed against Tenant in any court, tribunal,
administrative agency or any other forum having jurisdiction, pursuant to any
applicable law, either of the United States or of any state, a petition in
bankruptcy or insolvency or for reorganization or for the appointment of a
receiver, trustee or conservator of all or a portion of Tenant’s property, and
the same is not dismissed after sixty (60) calendar days, or if Tenant makes an
assignment for the benefit of creditors, this Lease, at the option of Landlord
exercised within a reasonable time after notice of the happening of any one or
more of such events, may be canceled and terminated and in such event neither
Tenant nor any person claiming through or under Tenant or by virtue of any
statute or of an order of any court shall be entitled to possession or to remain
in possession of the Premises, but shall forthwith quit and surrender the
Premises, and Landlord, in addition to the other rights and remedies granted by
Paragraph 12 hereof or by virtue of any other provision contained in this Lease
or by virtue of any applicable law, may retain as damages any Rent, Security
Deposit or moneys received by it from Tenant or others on behalf of Tenant.

 

15.                SUBSTITUTION OF PREMISES

 

Subject to the conditions specified in this Paragraph 15, if, at any time during
the Lease Term, the Premises contains less than 32,383 square feet of Rentable
Area, Landlord reserves the right without Tenant’s consent, on thirty (30) days’
prior written notice to Tenant, to substitute other premises within the Centre
for the Premises (the “Substituted Premises”). In each such case, the
substituted premises shall (a) contain at least substantially the same Rentable
Area as the Premises, (b) contain substantially similar tenant improvements, and
(c) be made available to Tenant at the then current rental rate for such space;
(d) shall be on the 6th floor or higher in the Building; (e) contain stairwell
signage option between floors if the Substituted Premises are located on more
than one (1) floor; and (f) have elevator exposure, which in no event, shall
exceed the per square foot rental rate for the Premises in effect under this
Lease for the Premises at the time of such substitution. Landlord shall pay all
reasonable relocation expenses of Tenant incidental to such substitution of
premises, including phone and data/cabling, moving expenses, replenishment of
Tenant’s existing stock of on-hand address-specific imprinted items, including
letterhead.

 

16.                SUBORDINATION; ATTORNMENT; ESTOPPEL CERTIFICATES

 

(a)                 Tenant agrees that this Lease and the rights of Tenant
hereunder shall be subject and subordinate to any and all deeds to secure debt,
deeds of trust, security interests, mortgages, master leases, ground leases or
other security documents and any and all modifications, renewals, extensions,
consolidations and replacements thereof (collectively, “Security Documents”)
which now or hereafter constitute a lien upon or affect the Property, the
Building or the Premises. Such subordination shall be effective without the
necessity of the execution by Tenant of any additional document for the purpose
of evidencing or effecting such subordination. In addition, Landlord shall have
the right to subordinate or cause to be subordinated any such Security Documents
to this Lease and in such case, in the event of the termination or transfer of
Landlord’s estate or interest in the Property by reason of any termination or
foreclosure of any such Security Documents, Tenant shall, notwithstanding such
subordination, attorn to and become the Tenant of the successor-in-interest to
Landlord at the option of such successor-in-interest. Furthermore, Tenant shall
within fifteen (15) days of written demand therefor execute any instruments or
other documents which may be required by Landlord or the holder of any Security
Document and specifically shall execute, acknowledge and deliver within
fifteen (15) days of demand therefor a subordination of lease or subordination
of deed of trust or mortgage, in the form required by the holder of the Security
Document requesting the document; the failure to do so by Tenant within such
time period shall be a default hereunder; provided, however, the new landlord or
the holder of any Security Document shall agree that Tenant’s quiet enjoyment of
the Premises shall not be disturbed as long as Tenant is not in default under
this Lease beyond any applicable notice and cure period. Landlord shall use
reasonable efforts to obtain a subordination, non-disturbance and attornment
agreement from the holder of any existing Security Document, and Landlord shall
use reasonable efforts to obtain a subordination, non-disturbance and attornment
agreement from any future holder of a Security Document in a form reasonably
acceptable to Tenant and such holder; however, Landlord’s failure to obtain such
agreement shall not constitute a default by Landlord hereunder or prohibit the
mortgaging of the Building; and further provided that any costs associated with
obtaining such subordination, non-disturbance and attornment agreement shall be
paid by Tenant within 15 days after Landlord’s written request therefor.

 

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(b)                If any proceeding is brought for default under any ground or
master lease to which this Lease is subject or in the event of foreclosure or
the exercise of the power of sale under any mortgage, deed of trust or other
Security Document made by Landlord covering the Premises, at the election of
such ground lessor, master lessor or purchaser at foreclosure, Tenant shall
attorn to and recognize the same as Landlord under this Lease, provided such
successor expressly agrees in writing to be bound to all future obligations by
the terms of this Lease, and if so requested, Tenant shall enter into a new
lease with that successor on the same terms and conditions as are contained in
this Lease (for the unexpired term of this Lease then remaining). Tenant hereby
waives its rights under any current or future law which gives or purports to
give Tenant any right to terminate or otherwise adversely affect this Lease and
the obligations of Tenant hereunder in the event of any such foreclosure
proceeding or sale.

 

(c)                 Intentionally Omitted.

 

(d)                Tenant shall, upon not less than ten (10) days’ prior notice
by Landlord, execute, acknowledge and deliver to Landlord a statement in writing
certifying to those facts for which certification has been requested by Landlord
or any current or prospective purchaser, holder of any Security Document, ground
lessor or master lessor, including, but without limitation, that (i) 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 stating the
modifications), (ii) the dates to which the Base Rent, Additional Rent and other
charges hereunder have been paid, if any, and (iii) whether or not to the best
knowledge of Tenant, Landlord is in default in the performance of any covenant,
agreement or condition contained in this Lease and, if so, specifying each such
default of which Tenant may have knowledge. The form of the statement attached
hereto as Exhibit D is hereby approved by Tenant for use pursuant to this
subparagraph (d); however, at Landlord’s option, Landlord shall have the right
to use other forms for such purpose. Tenant’s failure to execute and deliver
such statement within such time shall, at the option of Landlord, constitute a
default under this Lease and, in any event, shall be conclusive upon Tenant that
this Lease is in full force and effect without modification except as may be
represented by Landlord in any such certificate prepared by Landlord and
delivered to Tenant for execution. Any statement delivered pursuant to this
Paragraph 16 may be relied upon by any prospective purchaser of the fee of the
Building or the Property or any mortgagee, ground lessor or other like
encumbrances thereof or any assignee of any such encumbrance upon the Building
or the Property.

 

17.                SALE BY LANDLORD; TENANT’S REMEDIES; NONRECOURSE LIABILITY

 

(a)                 In the event of a sale or conveyance by Landlord of the
Building or the Property, Landlord shall be released from any and all liability
under this Lease, provided that such new owner assumes all of Landlord’s
obligations hereunder. If the Security Deposit has been deposited by Tenant to
Landlord prior to such sale or conveyance, Landlord shall transfer the Security
Deposit to the purchaser, and upon delivery to Tenant of notice thereof,
Landlord shall be discharged from any further liability in reference thereto.

 

(b)                Landlord shall not be in default of any obligation of
Landlord hereunder unless Landlord fails to perform any of its obligations under
this Lease within thirty (30) days after receipt of written notice of such
failure from Tenant; provided, however, that if the nature of Landlord’s
obligation is such that more than thirty (30) days are required for its
performance, Landlord shall not be in default if Landlord commences to cure such
default within the thirty (30) day period and thereafter diligently prosecutes
the same to completion. All obligations of Landlord under this Lease will be
binding upon Landlord only during the period of its ownership of the Property
and not thereafter. All obligations of Landlord hereunder shall be construed as
covenants, not conditions; and, except as may be otherwise expressly provided in
this Lease, Tenant may not terminate this Lease for breach of Landlord’s
obligations hereunder.

 

 35 

 

 

(c)                 Notwithstanding anything contained in this Lease to the
contrary, the obligations of Landlord under this Lease (including any actual or
alleged breach or default by Landlord) do not constitute personal obligations of
the individual partners, directors, officers, trustees, members or shareholders
of Landlord or Landlord’s members or partners, and Tenant shall not seek
recourse against the individual partners, directors, officers, trustees, members
or shareholders of Landlord or against Landlord’s members or partners or against
any other persons or entities having any interest in Landlord, or against any of
their personal assets for satisfaction of any liability with respect to this
Lease. Any liability of Landlord for a default by Landlord under this Lease, or
a breach by Landlord of any of its obligations under the Lease, shall be limited
solely to its interest in the Property, and in no event shall any personal
liability be asserted against Landlord in connection with this Lease nor shall
any recourse be had to any other property or assets of Landlord, its partners,
directors, officers, trustees, members, shareholders or any other persons or
entities having any interest in Landlord. Tenant’s sole and exclusive remedy for
a default or breach of this Lease by Landlord shall be either (i) an action for
damages, or (ii) an action for injunctive relief; Tenant hereby waiving and
agreeing that Tenant shall have no offset rights or right to terminate this
Lease on account of any breach or default by Landlord under this Lease. Under no
circumstances whatsoever shall Landlord ever be liable for punitive,
consequential or special damages under this Lease and Tenant waives any rights
it may have to such damages under this Lease in the event of a breach or default
by Landlord under this Lease.

 

(d)                As a condition to the effectiveness of any notice of default
given by Tenant to Landlord, Tenant shall also concurrently give such notice
under the provisions of Paragraph 17(b) to each beneficiary under a Security
Document encumbering the Property of whom Tenant has received written notice
(such notice to specify the address of the beneficiary). In the event Landlord
shall fail to cure any breach or default within the time period specified in
subparagraph (b), then prior to the pursuit of any remedy therefor by Tenant,
each such beneficiary shall have an additional thirty (30) days within which to
cure such default, or if such default cannot reasonably be cured within such
period, then each such beneficiary shall have such additional time as shall be
necessary to cure such default, provided that within such thirty (30) day
period, such beneficiary has promptly commenced and is diligently pursuing the
remedies available to it which are necessary to cure such default (including,
without limitation, as appropriate, commencement of foreclosure proceedings).

 

18.                PARKING; ENTRY CARDS

 

(a)                 Tenant shall have the right to the nonexclusive use of the
number of parking spaces located in the parking areas of the Centre specified in
Item 13 of the Basic Lease Provisions for the parking of operational motor
vehicles used by Tenant, its officers and employees only. Landlord reserves the
right, at any time upon written notice to Tenant, to designate the location of
Tenant’s parking spaces as determined by Landlord in its reasonable discretion.
The use of such spaces shall be subject to the rules and regulations adopted by
Landlord from time to time for the use of the parking areas. Landlord further
reserves the right to make such changes to the parking system as Landlord may
reasonably deem necessary or reasonable from time to time; i.e., Landlord may
provide for one or a combination of parking systems, including, without
limitation, self-parking, single or double stall parking spaces, and valet
assisted parking. Except as otherwise expressly agreed to in this Lease, Tenant
agrees that Tenant, its officers and employees shall not be entitled to park in
any reserved or specially assigned areas designated by Landlord from time to
time in the Centre’s parking areas. Landlord may require execution of an
agreement with respect to the use of such parking areas by Tenant and/or its
officers and employees in form reasonably satisfactory to Landlord as a
condition of any such use by Tenant, its officers and employees. A default by
Tenant, its officers or employees in the payment of such charges, the compliance
with such rules and regulations, or the performance of such agreement(s) shall
constitute a default by Tenant hereunder. Tenant shall not permit or allow any
vehicles that belong to or are controlled by Tenant or Tenant’s officers,
employees, suppliers, shippers, customers or invitees to be loaded, unloaded or
parked in areas other than those designated by Landlord for such activities. If
Tenant permits or allows any of the prohibited activities described in this
Paragraph, then Landlord shall have the right, without notice, in addition to
such other rights and remedies that it may have, to remove or tow away the
vehicle involved and charge the cost to Tenant, which cost shall be immediately
payable upon demand by Landlord.

 

(b)                Landlord shall be entitled to utilize whatever access device
Landlord deems necessary (including but not limited to the issuance of parking
stickers or access cards), to assure that only those persons who have contracted
to use spaces in a parking garage located in or about the Centre (the “Parking
Garage”) are using the parking spaces therein. Landlord currently limits access
to the Parking Garage through the use of a parking entry card system, the cards
for which shall be provided by Landlord. These cards are different from and do
not, without a specific request from Tenant, entitle the holder thereof to an
after-hours entry card to the Building (pursuant to the terms of Paragraph
18(c). Prior to the Commencement Date, Landlord, at Landlord’s sole cost, agrees
to provide to Tenant two hundred fifty-one (251) parking entry cards. Tenant
further agrees to surrender all parking entry cards in its possession upon the
expiration or earlier termination of this Lease. Landlord shall be entitled to
cancel any lost or stolen cards of which it becomes aware. Tenant shall promptly
notify Landlord of any lost or stolen cards. Tenant shall pay Landlord for each
additional card(s) or for each replacement card(s) for any card(s) lost by or
stolen from Tenant, in such amount as Landlord shall, from time to time
determine, the present charge for such lost or stolen cards being $50.00 per
card. Tenant acknowledges that the parking entry card may also be the same as
the master entry card used for access to the Building during other than normal
business hours, and to the extent the cards are the same, agrees that the
provisions of Paragraph 18(c) shall also be applicable. In the event Tenant, its
agents or employees wrongfully park in any of the Parking Garage's spaces,
Landlord shall be entitled and is hereby authorized to have any such vehicle
towed away, at Tenant's sole risk and expense, and Landlord is further
authorized to impose upon Tenant a penalty of $25.00 for each such occurrence.
Tenant hereby agrees to pay all amounts falling due hereunder within thirty (30)
days after written demand by Landlord, and the failure to pay any such amount
shall additionally be deemed an event of default hereunder and under the Lease,
entitling Landlord to all of its rights and remedies hereunder and thereunder.

 

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(c)                 Landlord shall provide limited access to the Building before
and after normal business hours in the form of special limited access entry
cards ("Entry Cards") for Tenant and its employees. An Entry Card shall not
automatically qualify Tenant or any of its employees for an access card to the
Parking Garage. Prior to the Commencement Date, Landlord, at Landlord’s sole
cost, agrees to provide Tenant with up to, but not in excess of, two hundred
fifty-one (251) Entry Cards. However, Tenant shall pay Landlord for any
additional or replacement cards, in such amount as Landlord shall, from time to
time, determine. The current cost required for a replacement card and an
additional card is $50.00 per card. Landlord shall be entitled to cancel (by
computer entry) any lost or stolen cards of which it becomes aware. Tenant shall
promptly notify Landlord of any lost or stolen cards. Landlord shall have no
liability to Tenant, its employees, agents, invitees, or licensees for losses
due to theft or burglary, or for damages committed by unauthorized persons on
the Premises; and neither shall Landlord be required to insure against any such
losses. Tenant shall cooperate fully in Landlord's efforts to maintain security
in the Building and shall follow all regulations promulgated by Landlord with
respect thereto. Tenant further agrees to surrender all Entry Cards in its
possession upon the expiration or earlier termination of this Lease.

 

19.                COMMON AREAS

 

(a)                 Subject to subparagraph (b) below and the remaining
provisions of this Lease, Tenant shall have the non-exclusive right, in common
with others, to the use of such entrances, lobbies, fire vestibules, restrooms
(excluding restrooms on any full floors leased by a tenant), mechanical areas,
ground floor corridors, elevators and elevator foyers, electrical and janitorial
closets, telephone and equipment rooms, loading and unloading areas, the
Property’s plaza areas, if any, ramps, drives, stairs, and similar access ways
and service ways and other common areas and facilities in and adjacent to the
Building and the Property as are designated from time to time by Landlord for
the general nonexclusive use of Landlord, Tenant and the other tenants of the
Property and their respective employees, agents, representatives, licensees and
invitees (“Common Areas”). The use of such Common Areas shall be subject to the
rules and regulations contained herein and the provisions of any covenants,
conditions and restrictions affecting the Building or the Property. Tenant shall
keep all of the Common Areas free and clear of any obstructions created or
permitted by Tenant or resulting from Tenant’s operations, and shall use the
Common Areas only for normal activities, parking and ingress and egress by
Tenant and its employees, agents, representatives, licensees and invitees to and
from the Premises, the Building or the Property. If, in the reasonable opinion
of Landlord, unauthorized persons are using the Common Areas by reason of the
presence of Tenant in the Premises, Tenant, upon demand of Landlord, shall
correct such situation by appropriate action or proceedings against all such
unauthorized persons. Nothing herein shall affect the rights of Landlord at any
time to remove any such unauthorized persons from said areas or to prevent the
use of any of said areas by unauthorized persons. Landlord reserves the right to
make such changes, alterations, additions, deletions, improvements, repairs or
replacements in or to the Building, the Property (including the Premises), the
Centre and the Common Areas as Landlord may reasonably deem necessary or
desirable, including, without limitation, constructing new buildings and making
changes in the location, size, shape and number of driveways, entrances, parking
spaces, parking areas, loading areas, landscaped areas and walkways; provided,
however, that (i) there shall be no unreasonable permanent obstruction of access
to or use of the Premises resulting therefrom and the same shall not materially
increase Tenant’s obligations or materially impair its rights hereunder, and
(ii) Landlord shall use commercially reasonable efforts to minimize any
interruption with Tenant’s use of the Premises. Notwithstanding any provision of
this Lease to the contrary, the Common Areas shall not in any event be deemed to
be a portion of or included within the Premises leased to Tenant and the
Premises shall not be deemed to be a portion of the Common Areas. This Lease is
granted subject to the terms hereof, the rights and interests of third parties
under existing liens, ground leases, easements and encumbrances affecting such
property, all zoning regulations, rules, ordinances, building restrictions and
other laws and regulations now in effect or hereafter adopted by any
governmental authority having jurisdiction over the Property or any part
thereof.

 

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(b)                Notwithstanding any provision of this Lease to the contrary,
Landlord specifically reserves the right to redefine the terms “Centre” and
“Property” for purposes of allocating and calculating Operating Expenses so as
to include or exclude areas as Landlord shall from time to time determine or
specify (and any such determination or specification shall be without prejudice
to Landlord’s right to revise thereafter such determination or specification).
In addition, Landlord shall have the right to contract or otherwise arrange for
amenities, services or utilities (the cost of which is included within Operating
Expenses) to be on a common or shared basis to both the Property (i.e., the area
with respect to which Operating Expenses are determined) and other portions of
the Centre, so long as the basis on which the cost of such amenities, services
or utilities is allocated to the Property is determined on an arms-length basis
or some other basis reasonably determined by Landlord and provided, however,
that there shall not be a material increase in Tenant’s costs or obligations
hereunder as a result thereof. In the case where the definition of the Property
or the Centre is revised for purposes of the allocation or determination of
Operating Expenses, Tenant’s Proportionate Share shall be appropriately revised.
The Rentable Area of the Property and the Centre is subject to adjustment by
Landlord from time to time to reflect any remeasurement thereof by Landlord’s
architect, at Landlord’s request, and/or as a result of any additions or
deletions to any of the buildings in the Centre as designated by Landlord.
Landlord shall have the sole right to determine which portions of the Centre and
other areas, if any, shall be served by common management, operation,
maintenance and repair. Landlord shall have the exclusive rights to the airspace
above and around, and the subsurface below, the Premises and other portions of
the Building and the Centre.

 

20.                MISCELLANEOUS

 

(a)                 Attorneys’ Fees. In the event of any legal action or
proceeding brought by either party against the other arising out of this Lease,
the prevailing party shall be entitled to recover reasonable attorneys’ fees and
costs (including, without limitation, court costs and expert witness fees)
incurred in such action. Such amounts shall be included in any judgment rendered
in any such action or proceeding.

 

(b)                Waiver. No waiver by Landlord of any provision of this Lease
or of any breach by Tenant hereunder shall be deemed to be a waiver of any other
provision hereof, or of any subsequent breach by Tenant. Landlord’s consent to
or approval of any act by Tenant requiring Landlord’s consent or approval under
this Lease shall not be deemed to render unnecessary the obtaining of Landlord’s
consent to or approval of any subsequent act of Tenant. No act or thing done by
Landlord or Landlord’s agents during the term of this Lease shall be deemed an
acceptance of a surrender of the Premises, unless in writing signed by Landlord.
The delivery of the keys to any employee or agent of Landlord shall not operate
as a termination of the Lease or a surrender of the Premises. The acceptance of
any Rent by Landlord following a breach of this Lease by Tenant shall not
constitute a waiver by Landlord of such breach or any other breach unless such
waiver is expressly stated in a writing signed by Landlord.

 

(c)                 Notices. Any notice, demand, request, consent, approval,
disapproval or certificate (“Notice”) required or desired to be given under this
Lease shall be in writing and given by certified mail, return receipt requested,
by personal delivery or by a nationally recognized overnight delivery service
(such as Federal Express or UPS) providing a receipt for delivery. Notices may
not be given by facsimile. The date of giving any Notice shall be deemed to be
the date upon which delivery is actually made by one of the methods described in
this Section 20(c) (or attempted if said delivery is refused or rejected). If a
Notice is received on a Saturday, Sunday or legal holiday, it shall be deemed
received on the next business day. All notices, demands, requests, consents,
approvals, disapprovals, or certificates shall be addressed at the address
specified in Item 14 of the Basic Lease Provisions or to such other addresses as
may be specified by written notice from Landlord to Tenant and if to Tenant, at
the Premises. Either party may change its address by giving reasonable advance
written Notice of its new address in accordance with the methods described in
this Paragraph; provided, however, no notice of either party’s change of address
shall be effective until fifteen (15) days after the addressee’s actual receipt
thereof. For the purpose of this Lease, Landlord or Tenant’s counsel may provide
Notices to Landlord or Tenant on behalf of Landlord or Tenant and such notices
shall be binding on the other party as if such notices have been provided
directly by Landlord or Tenant.

 

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(d)                Access Control. Landlord shall be the sole determinant of the
type and amount of any access control or courtesy guard services to be provided
to the Property, if any. IN ALL EVENTS, LANDLORD SHALL NOT BE LIABLE TO TENANT,
AND TENANT HEREBY WAIVES ANY CLAIM AGAINST LANDLORD, FOR (I) ANY UNAUTHORIZED OR
CRIMINAL ENTRY OF THIRD PARTIES INTO THE PREMISES, THE BUILDING, THE PROPERTY OR
THE CENTRE, (II) ANY DAMAGE TO PERSONS, OR (III) ANY LOSS OF PROPERTY IN AND
ABOUT THE PREMISES, THE BUILDING, THE PROPERTY OR THE CENTRE, BY OR FROM ANY
UNAUTHORIZED OR CRIMINAL ACTS OF THIRD PARTIES, REGARDLESS OF ANY ACTION,
INACTION, FAILURE, BREAKDOWN, MALFUNCTION AND/OR INSUFFICIENCY OF THE ACCESS
CONTROL OR COURTESY GUARD SERVICES PROVIDED BY LANDLORD, IF ANY, EXCEPT TO THE
EXTENT ARISING DUE TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE LANDLORD
PARTIES. Tenant shall provide such supplemental security services and shall
install within the Premises such supplemental security equipment, systems and
procedures as may reasonably be required for the protection of its employees and
invitees, provided that Tenant shall coordinate such services and equipment with
any security provided by Landlord. The determination of the extent to which such
supplemental security equipment, systems and procedures are reasonably required
shall be made in the sole judgment, and shall be the sole responsibility, of
Tenant. Tenant acknowledges that it has neither received nor relied upon any
representation or warranty made by or on behalf of Landlord with respect to the
safety or security of the Premises or the Property or any part thereof or the
extent or effectiveness of any security measures or procedures now or hereafter
provided by Landlord, and further acknowledges that Tenant has made its own
independent determinations with respect to all such matters.

 

(e)                 Storage. Any storage space at any time leased to Tenant
hereunder shall be used exclusively for storage. Notwithstanding any other
provision of this Lease to the contrary, (i) Landlord shall have no obligation
to provide heating, cleaning, water or air conditioning therefor, and
(ii) Landlord shall be obligated to provide to such storage space only such
electricity as will, in Landlord’s judgment, be adequate to light said space as
storage space.

 

(f)                  Holding Over. If Tenant retains possession of the Premises
after the termination or expiration of the Lease Term, then Tenant shall, at
Landlord's election become a tenant at sufferance (and not a tenant at will),
such possession shall be subject to immediate termination by Landlord at any
time, and all of the other terms and provisions of this Lease (excluding any
expansion or renewal option or other similar right or option) shall be
applicable during such holdover period, except that Tenant shall pay Landlord
from time to time, upon demand, as Base Rent for the first three (3) months of
the holdover period, an amount equal to one hundred twenty-five percent (125%)
the Base Rent in effect at the expiration date, and, thereafter, one hundred
fifty percent (150%) of the Base Rent in effect at the expiration date, in each
case computed on a monthly basis for each month or part thereof during such
holding over. All other payments (including payment of Additional Rent) shall
continue under the terms of this Lease. If any unauthorized holding over
continues for more than 90 days after the expiration or termination of this
Lease and such holding over delays or prevents Landlord from delivering
possession of all or a part of the Premises to another tenant or from commencing
work to make all or part of the Premises available to another tenant, Tenant
shall be liable for all damages incurred by Landlord as a result of such holding
over. No holding over by Tenant, whether with or without consent of Landlord,
shall operate to extend this Lease except as otherwise expressly provided, and
this Paragraph shall not be construed as consent for Tenant to retain possession
of the Premises.

 

(g)                Condition of Premises. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
IN THIS LEASE, LANDLORD HEREBY DISCLAIMS ANY EXPRESS OR IMPLIED REPRESENTATION
OR WARRANTY THAT THE PREMISES ARE SUITABLE FOR TENANT’S INTENDED PURPOSE OR USE,
WHICH DISCLAIMER IS HEREBY ACKNOWLEDGED BY TENANT. THE TAKING OF POSSESSION BY
TENANT SHALL BE CONCLUSIVE EVIDENCE THAT TENANT:

 

(i)                  ACCEPTS THE PREMISES, THE BUILDING AND LEASEHOLD
IMPROVEMENTS AS SUITABLE FOR THE PURPOSES FOR WHICH THE PREMISES WERE LEASED;

 

 39 

 

 

(ii)                ACCEPTS THE PREMISES, THE BUILDING AND THE CENTRE AS BEING
IN GOOD AND SATISFACTORY CONDITION, EXCEPT FOR LATENT DEFECTS IDENTIFIED TO
LANDLORD IN WRITING WITHIN 180 DAYS FOLLOWING THE POSSESSION DATE AND AS
OTHERWISE PROVIDED HEREIN;

 

(iii)              WAIVES ANY DEFECTS IN THE PREMISES AND ITS APPURTENANCES
EXISTING NOW OR IN THE FUTURE, EXCEPT THAT TENANT’S TAKING OF POSSESSION SHALL
NOT BE DEEMED TO WAIVE LANDLORD’S COMPLETION OF MINOR FINISH WORK ITEMS THAT DO
NOT INTERFERE WITH TENANT’S OCCUPANCY OF THE PREMISES OR AS A WAIVER OF
LANDLORD’S REPAIR, MAINTENANCE AND REPLACEMENT OBLIGATIONS HEREUNDER; AND

 

(iv)               WAIVES ALL CLAIMS BASED ON ANY IMPLIED WARRANTY OF
SUITABILITY OR HABITABILITY.

 

(h)                Quiet Possession. Provided that no default has occurred and
remains uncured beyond any applicable notice and cure period, Tenant shall have
quiet possession of the Premises for the term hereof without hindrance or
ejection by any person lawfully claiming under Landlord, subject to the
provisions of this Lease and to the provisions of any (i) covenants, conditions
and restrictions, (ii) master lease, or (iii) Security Documents to which this
Lease is subordinate or may be subordinated.

 

(i)                  Matters of Record. Except as otherwise provided herein,
this Lease and Tenant’s rights hereunder are subject and subordinate to all
matters affecting Landlord’s title to the Property recorded in the Real Property
Records of the County in which the Property is located, prior to and subsequent
to the date hereof, including, without limitation, all covenants, conditions and
restrictions. Tenant agrees for itself and all persons in possession or holding
under it that it will comply with and not violate any such covenants, conditions
and restrictions or other matters of record. Landlord reserves the right, from
time to time, to grant such easements, rights and dedications as Landlord
reasonably deems necessary or desirable, and to cause the recordation of parcel
maps and covenants, conditions and restrictions affecting the Premises, the
Building or the Centre, as long as such easements, rights, dedications, maps,
and covenants, conditions and restrictions do not materially interfere with the
use, occupancy of and access to and from the Premises by Tenant. At Landlord’s
request, Tenant shall join in the execution of any of the aforementioned
documents.

 

(j)                  Successors and Assigns. Except as otherwise provided in
this Lease, all of the covenants, conditions and provisions of this Lease shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns. Tenant shall
attorn to each purchaser, successor or assignee of Landlord.

 

(k)                Brokers. Tenant warrants that it has had no dealings with any
real estate broker or agent in connection with the negotiation of this Lease,
excepting only the brokers named in Item 12 of the Basic Lease Provisions and
that it knows of no other real estate broker or agent who is or might be
entitled to a commission in connection with this Lease. Tenant hereby agrees to
indemnify, defend and hold Landlord harmless for, from and against all claims
for any brokerage commissions, finders’ fees or similar payments by any persons
other than those listed in Item 12 of the Basic Lease Provisions and all costs,
expenses and liabilities incurred in connection with such claims, including
reasonable attorneys’ fees and costs. Landlord warrants that it has had no
dealings with any real estate broker or agent in connection with the negotiation
of this Lease, excepting only the brokers named in Item 12 of the Basic Lease
Provisions and that it knows of no other real estate broker or agent who is or
might be entitled to a commission in connection with this Lease. Landlord hereby
agrees to indemnify, defend and hold Tenant harmless the other party from and
against all claims for any brokerage commissions, finders’ fees or similar
payments by any persons claiming a commission through Landlord and all costs,
expenses and liabilities incurred in connection with such claims, including
reasonable attorneys’ fees and costs.

 

(l)                  Centre or Building Name and Signage. Landlord shall have
the right at any time to install, affix and maintain any and all signs on the
exterior and on the interior of the Centre or Building as Landlord may, in
Landlord’s sole discretion, desire. Tenant shall not use the name of the Centre
or Building or use pictures or illustrations of the Centre or Building in
advertising or other publicity or for any purpose other than as the address of
the business to be conducted by Tenant in the Premises, without the prior
written consent of Landlord. Additionally, Landlord shall have the exclusive
right at all times during the Lease Term to change, modify, add to or otherwise
alter the name, number, or designation of the Building and/or the Centre, and
Landlord shall not be liable for claims or damages of any kind which may be
attributed thereto or result therefrom.

 

 40 

 

 

(m)               Examination of Lease. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or
option for lease, and it is not effective as a lease or otherwise until
execution by and delivery to both Landlord and Tenant.

 

(n)                Time. Time is of the essence of this Lease and each and all
of its provisions.

 

(o)                Defined Terms and Marginal Headings. The words “Landlord” and
“Tenant” as used herein shall include the plural as well as the singular and for
purposes of Articles 5, 7, 13 and 19, the term Landlord shall include Landlord,
its employees, contractors and agents. The marginal headings and titles to the
articles of this Lease are not a part of this Lease and shall have no effect
upon the construction or interpretation of any part hereof.

 

(p)                Conflict of Laws; Prior Agreements; Separability. This Lease
shall be governed by and construed pursuant to the laws of the State. This Lease
contains all of the agreements of the parties hereto with respect to any matter
covered or mentioned in this Lease. No prior agreement, understanding or
representation pertaining to any such matter shall be effective for any purpose.
No provision of this Lease may be amended or added to except by an agreement in
writing signed by the parties hereto or their respective successors in interest.
The illegality, invalidity or unenforceability of any provision of this Lease
shall in no way impair or invalidate any other provision of this Lease, and such
remaining provisions shall remain in full force and effect.

 

(q)                Authority. If Tenant is a corporation or limited liability
company, each individual executing this Lease on behalf of Tenant hereby
covenants and warrants that Tenant is a duly authorized and existing corporation
or limited liability company, that Tenant has and is qualified to do business in
the State, that the corporation or limited liability company has full right and
authority to enter into this Lease, and that each person signing on behalf of
the corporation is authorized to do so. If Tenant is a partnership or trust,
each individual executing this Lease on behalf of Tenant hereby covenants and
warrants that he is duly authorized to execute and deliver this Lease on behalf
of Tenant in accordance with the terms of such entity’s partnership or trust
agreement. Tenant shall provide Landlord on demand with such evidence of such
authority as Landlord shall reasonably request, including, without limitation,
resolutions, certificates and opinions of counsel. This Lease shall not be
construed to create a partnership, joint venture or similar relationship or
arrangement between Landlord and Tenant hereunder.

 

(r)                  Joint and Several Liability. If two or more individuals,
corporations, partnerships or other business associations (or any combination of
two or more thereof) shall sign this Lease as Tenant, the liability of each such
individual, corporation, partnership or other business association to pay Rent
and perform all other obligations hereunder shall be deemed to be joint and
several, and all notices, payments and agreements given or made by, with or to
any one of such individuals, corporations, partnerships or other business
associations shall be deemed to have been given or made by, with or to all of
them. In like manner, if Tenant shall be a partnership or other business
association, the members of which are, by virtue of statute or federal law,
subject to personal liability, then the liability of each such member shall be
joint and several.

 

(s)                 Rental Allocation. For purposes of Section 467 of the
Internal Revenue Code of 1986, as amended from time to time, Landlord and Tenant
hereby agree to allocate all Rent to the period in which payment is due, or if
later, the period in which Rent is paid.

 

(t)                  Rules and Regulations. Tenant agrees to comply with all
rules and regulations of the Building and the Centre imposed by Landlord as set
forth on Exhibit C attached hereto, as the same may be changed from time to time
upon reasonable notice to Tenant (collectively, the “Rules and Regulations”),
provided that such Rules and Regulations, and such additional Rules and
Regulations as Landlord may adopt from time to time, are adopted by Landlord in
a reasonable, non-discriminatory manner, are enforced in a non-discriminatory
manner, and do not materially and adversely interfere with Tenant’s use,
occupancy or access to the Premises, including, without limitation, parking or
materially increase Tenant’s obligations or impair Tenant’s rights under this
Lease. Landlord shall not be liable to Tenant for the failure of any other
tenant or any of its assignees, subtenants, or their respective agents,
employees, representatives, invitees or licensees to conform to such Rules and
Regulations.

 

 41 

 

 

(u)                Joint Product. This Agreement is the result of arms-length
negotiations between Landlord and Tenant and their respective attorneys.
Accordingly, neither party shall be deemed to be the author of this Lease and
this Lease shall not be construed against either party.

 

(v)                Financial Statements. Upon Landlord’s written request, Tenant
shall promptly furnish Landlord, from time to time, with the most current
audited financial statements prepared in accordance with generally accepted
accounting principles, certified by Tenant to be true and correct, reflecting
Tenant’s then current financial condition.

 

(w)               Force Majeure. Any prevention, delay or stoppage due to
strikes, lockouts, labor disputes, acts of God, acts of war, terrorism,
terrorist activities, inability to obtain services, labor, or materials or
reasonable substitutes therefore, governmental actions, civil commotions, fire,
flood, earthquake or other casualty, and other causes beyond the reasonable
control of the party obligated to perform, except with respect to the
obligations imposed with regard to Rent and other charges to be paid by Tenant
pursuant to this Lease and except as to Tenant’s obligations under Article 6 and
Article 8 of this Lease and Section 20(f) of this Lease (collectively, a “Force
Majeure”), notwithstanding anything to the contrary contained in this Lease,
shall excuse the performance of such party for a period equal to any such
prevention, delay or stoppage and, therefore, if this Lease specifies a time
period for performance of an obligation of either party, that time period shall
be extended by the period of any delay in such party’s performance caused by a
Force Majeure.

 

(x)                Counterparts. This Lease may be executed in several
counterparts, each of which shall be deemed an original, and all of which shall
constitute but one and the same instrument.

 

(y)                APPRAISED VALUE. TENANT HEREBY WAIVES ALL RIGHTS TO PROTEST
THE APPRAISED VALUE OF THE PROPERTY OR TO APPEAL THE SAME AND ALL RIGHTS TO
RECEIVE NOTICES OF REAPPRAISALS AS SET FORTH IN SECTIONS 41.413 AND 42.015 OF
THE TEXAS TAX CODE.

 

(z)                 DECEPTIVE TRADE PRACTICES. TENANT HEREBY WAIVES ALL ITS
RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES – CONSUMER PROTECTION ACT,
SECTION 17.41 ET. SEQ. OF THE TEXAS BUSINESS AND COMMERCE CODE, A LAW THAT GIVES
CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF
TENANT’S OWN SELECTION, TENANT VOLUNTARILY CONSENTS TO THIS WAIVER.

 

(aa)              Waiver of Right to Jury Trial. Landlord and Tenant waive their
respective rights to trial by jury of any contract or tort claim, counterclaim,
cross-complaint, or cause of action in any action, proceeding, or hearing
brought by either party against the other on any matter arising out of or in any
way connected with this Lease, the relationship of Landlord and Tenant, or
Tenant’s use or occupancy of the Premises, including without limitation any
claim of injury or damage or the enforcement of any remedy under any current or
future law, statute, regulation, code, or ordinance.

 

(bb)             Office and Communications Services. Landlord has advised Tenant
that certain office and communications services may be offered to tenants of the
Building by a concessionaire under contract to Landlord (“Provider”). Tenant
shall be permitted to contract with Provider for the provision of any or all of
such services on such terms and conditions as Tenant and Provider may agree.
Tenant acknowledges and agrees that: (i) Landlord has made no warranty or
representation to Tenant with respect to the availability of any such services,
or the quality, reliability or suitability thereof; (ii) the Provider is not
acting as the agent or representative of Landlord in the provision of such
services, and Landlord shall have no liability or responsibility for any failure
or inadequacy of such services, or any equipment or facilities used in the
furnishing thereof, or any act or omission of Provider, or its agents,
employees, representatives, officers or contractors; (iii) Landlord shall have
no responsibility or liability for the installation, alteration, repair,
maintenance, furnishing, operation, adjustment or removal of any such services,
equipment or facilities; and (iv) any contract or other agreement between Tenant
and Provider shall be independent of this Lease, the obligations of Tenant
hereunder, and the rights of Landlord hereunder, and, without limiting the
foregoing, no default or failure of Provider with respect to any such services,
equipment or facilities, or under any contract or agreement relating thereto,
shall have any effect on this Lease or give to Tenant any offset or defense to
the full and timely performance of its obligations hereunder, or entitle Tenant
to any abatement of rent or additional rent or any other payment required to be
made by Tenant hereunder, or constitute any accrual or constructive eviction of
Tenant, or otherwise give rise to any other claim of any nature against
Landlord.

 

 42 

 

 

(cc)              OFAC Compliance.

 

(i)                  Certification. Tenant certifies, represents, warrants and
covenants that:

 

(A)               It is not acting and will not act, directly or indirectly, for
or on behalf of any person, group, entity, or nation named by any Executive
Order or the United States Treasury Department as a terrorist, “Specially
Designated National and Blocked Person”, or other banned or blocked person,
entity, nation or transaction pursuant to any law, order, rule, or regulation
that is enforced or administered by the Office of Foreign Assets Control; and

 

(B)               It is not engaged in this transaction, directly or indirectly
on behalf of, or instigating or facilitating this transaction, directly or
indirectly on behalf of, any such person, group, entity or nation.

 

(ii)                Indemnity. Tenant hereby agrees to defend (with counsel
reasonably acceptable to Landlord), indemnify and hold harmless Landlord and the
Landlord Indemnitees from and against any and all Claims arising from or related
to any such breach of the foregoing certifications, representations, warranties
and covenants.

 

(dd)             No Easement for Light, Air and View. This Lease conveys to
Tenant no rights for any light, air or view. No diminution of light, air or
view, or any impairment of the visibility of the Premises from inside or outside
the Building, by any structure or other object that may hereafter be erected
(whether or not by Landlord) shall entitle Tenant to any reduction of Rent under
this Lease, constitute an actual or constructive eviction of Tenant, result in
any liability of Landlord to Tenant, or in any other way affect this Lease or
Tenant’s obligations hereunder.

 

(ee)              Non-Disclosure of Lease Terms. Tenant agrees that the terms of
this Lease are confidential and constitute proprietary information of Landlord,
and that disclosure of the terms hereof could adversely affect the ability of
Landlord to negotiate with other tenants. Tenant hereby agrees that Tenant and
its partners, officers, directors, employees, agents, real estate brokers and
sales persons and attorneys shall not disclose the terms of this Lease to any
other person without Landlord’s prior written consent, except to any accountants
of Tenant in connection with the preparation of Tenant’s financial statements or
tax returns, to an assignee of this Lease or subtenant of the Premises, or to an
entity or person to whom disclosure is required by applicable law or in
connection with any action brought to enforce this Lease. Neither party shall
issue or make any public announcement, press release or other public disclosure
regarding this Lease or its subject matter or the parties without the other
party’s prior written consent, except for any such disclosure that is, either
required for a party to comply with its rights and obligations under the Lease,
or which in the opinion of the disclosing party's counsel, required by law or
the rules of a stock exchange on which the securities of the disclosing party
are listed. In the event a party is, in the opinion of its counsel, required to
make a public disclosure by law or the rules of a stock exchange on which its
securities are listed, such party shall submit the proposed disclosure in
writing to the other party at least five (5) days prior to the date of
disclosure for an opportunity to comment thereon.

 

(ff)               Inducement Recapture in Event of Default. Any agreement by
Landlord for free or abated rent (the “Inducement Provisions”) shall be deemed
conditioned upon Tenant’s full and faithful performance of all of the terms,
covenants and conditions of this Lease to be performed or observed by Tenant
during the term hereof as the same may be extended. Upon the occurrence of an
event of default (as defined in Paragraph 12) of this Lease by Tenant and
Landlord’s election to terminate this Lease as a result thereof, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and the unamortized portion of any free or abated
rent given or paid by Landlord under such an Inducement Provision shall be
immediately due and payable by Tenant to Landlord, and recoverable by Landlord,
as additional rent due under this Lease. The acceptance by Landlord of rent or
the cure of the event of default which initiated the operation of this
Paragraph 20(ff) shall not be deemed a waiver by Landlord of the provisions of
this Paragraph 20(ff) unless specifically so stated in writing by Landlord at
the time of such acceptance.

 

 43 

 

 

(gg)             ERISA. Tenant is not an “employee benefit plan” as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”),
which is subject to Title I of ERISA, or a “plan” as defined in
Section 4975(e)(1) of the Internal Revenue Code of 1986, which is subject to
Section 4975 of the Internal Revenue Code of 1986; and (b) the assets of Tenant
do not constitute “plan assets” of one or more such plans for purposes of Title
I of ERISA or Section 4975 of the Internal Revenue Code of 1986; and (c) Tenant
is not a “governmental plan” within the meaning of Section 3(32) of ERISA, and
assets of Tenant do not constitute plan assets of one or more such plans; or
(d) transactions by or with Tenant are not in violation of state statutes
applicable to Tenant regulating investments of and fiduciary obligations with
respect to governmental plans.

 

(hh)             Limitation on Liability. Notwithstanding anything contained in
this Lease or in any other document executed in connection with the transaction
contemplated hereby to the contrary and without limitation of Paragraph 17(c)
hereof, any liability of Landlord shall be satisfied solely from Landlord's
equity interest in the Property and in no event against any other assets of the
Landlord, or Landlord's officers or directors. The provisions of this
Paragraph 20(hh) will survive the expiration or earlier termination of this
Lease.

 

(ii)                Conference Center. Subject to availability and Landlord’s
policies and procedures in connection therewith, during the Lease Term, Tenant
may utilize the Centre’s Tenant Conference Center up to two (2) days per month,
at no additional cost to Tenant; however, Tenant shall be responsible for all
set up and clean-up costs in connection with Tenant’s use of the Centre’s Tenant
Conference Center.

 

(jj)                Elevator Access. Following the written request of Tenant,
Landlord will modify the elevators serving the floors on which the Premises are
located to limit access to any floor fully occupied by Tenant by programming
such elevators to require an access card issued by Landlord to access such fully
occupied floor.

 

(kk)             Signage. For so long as Tenant leases at least 50,000 square
feet of Rentable Area in the Building (including the 380 Premises), Tenant shall
be allowed the following signage bearing the corporate identification and logo
for “Hallmark Financial Services” (as more fully described on Exhibit J attached
hereto):

 

(i)                  one (1) sign located on the top level of the Building,
non-vision panel of the west side of the east wing of the Building in the
location shown and identified on Exhibit J (provided, Landlord and Tenant
acknowledge and agree that (x) the signage shown on Exhibit J is for
identification purposes only and may not extend beyond the spandrel glass and
(y) such signage shall not exceed the height of the signage for Northwestern
Mutual (which Landlord believes to be approximately 78” tall));

 

(ii)                elevator lobbies of all full floors in the Building leased
and occupied by Tenant; and

 

(iii)              one (1) sign on the currently existing multi-tenant Building
monument sign located under the porte-cochere at the main entrance of Two/Three
Lincoln Centre.

 

Tenant is solely responsible for the cost of procurement and installation of
Tenant’s signage (but such cost may be paid out of the Allowance); the design of
Tenant’s exterior and monument signage must be consistent with the design of
other Building exterior and monument signage and is subject to Landlord’s
approval in its reasonable discretion and approval by all applicable
governmental authorities. Tenant may exercise its right to monument and exterior
Building signage at any time thirty (30) days prior to the Commencement Date and
prior to the date that is 365 days after the Commencement Date (“Signage
Deadline”). If Tenant has not installed its monument signage or its exterior
Building signage in accordance with this Paragraph 20(kk) prior to the Signage
Deadline, Tenant’s right to such signage is automatically waived. In addition to
costs of procurement and installation of Tenant’s signage, Tenant, at its sole
cost must remove its signage and restore all damage resulting therefrom upon the
sooner of the expiration or termination of this Lease or the termination of
Tenant’s right to such signage under the terms hereof. Landlord, at no
additional cost to Tenant will provide Tenant with a listing in the Building’s
electronic directory, which shall include any subtenants, affiliates or
assignees. Signage at the Premises is at Tenant’s sole cost, which may be
applied against the Allowance; provided, Landlord, at Landlord’s sole cost, will
provide Building-standard suite identification signage for the portion of the
1100 Premises located in Suite 1010 of the Building.

 

 44 

 

 

(ll)                Convenience Stairs. Subject to compliance with all
applicable Laws, Tenant, at its sole cost and expense, may elect to use the fire
stairs between the 10th and 11th floors of the Building to serve as convenience
stairs between the floors on which the Premises is located. Tenant may install a
security system in connection therewith, which security system must (i) comply
with all applicable Laws, (ii) integrate into Landlord’s existing security
system serving the Building, and (iii) permit the fire stairs to be used as an
emergency exit for the entire Building to the extent required by applicable Law.
Tenant may also, at its sole cost and expense, make cosmetic Alterations and
provide branding elements to customize such fire stairs with Landlord’s prior
approval, which may not be unreasonably withheld, conditioned or delayed, so
long as the same do not adversely or materially affect the Building’s structure
or the Building’s systems and the same comply with all applicable Laws.

 

(mm)         Rooftop Equipment. Landlord grants Tenant a non-revocable license
during the Lease Term, but subject to space availability, to install, operate,
and maintain on that portion of the Building roof depicted on Exhibit K to this
Lease, at Tenant’s sole cost and risk, satellite antenna dishes/earth satellite
dishes (not to exceed 5 feet in diameter) and related equipment and facilities,
including, without limitation, whip antenna necessary cabling to portions of the
Premises through available riser space in the Building (collectively, the
“Satellite Dish Equipment”), subject to the following conditions:

 

(i)                  Prior to installation, Tenant must obtain Landlord’s
approval (in its sole discretion), of plans and specifications for all Satellite
Dish Equipment, including, without limitation, the type, size, height, weight,
location, and method of attachment of each individual piece of Satellite Dish
Equipment. Tenant acknowledges that Landlord will disapprove the installation of
any Satellite Dish Equipment (including the initial installation) if Landlord
determines that: (1) the installation or operation of the Satellite Dish
Equipment will adversely affect the structural integrity of the Building, the
operation of any of the Building systems, or the operation of any other
telecommunications equipment on the roof of Building or elsewhere in the Centre;
(2) that any roof top mounted unit, alone or when considered together with other
existing roof-top mounted units owned by others, would negatively impact the
overall aesthetics of the Building; or (3) at the time of the intended
installation of the Satellite Dish Equipment, no space is available on the roof
or elsewhere in the Building.

 

(ii)                Tenant shall bear all costs to install, maintain, operate,
and repair the Satellite Dish Equipment, which costs include, without
limitation, (1) any structural modifications needed to support the Satellite
Dish Equipment, (2) any screens or other improvements Landlord may reasonably
require to protect the aesthetic quality of the Building, (3) any fences that
Landlord may require for safety reasons, and (4) all costs associated with any
necessary tests to resolve any and all interference attributable to the
Satellite Dish Equipment.

 

(iii)              Prior to installation, Tenant shall:

 

(A)               submit to Landlord and obtain Landlord’s approval (in its
reasonable discretion), of plans and specifications for all Satellite Dish
Equipment and any other information reasonably required by Landlord; Landlord
agrees to provide Tenant with reasonable detail concerning any disapproval of
such plans and specifications; and

 

(B)               obtain all necessary approvals for the Satellite Dish
Equipment from the Federal Communications Commission, and any other governmental
agency having jurisdiction over the installation or use of the Satellite Dish
Equipment.

 

(iv)               Installation of the Satellite Dish Equipment on the roof of
the Building must be performed so as not to void any applicable roof warranty.
Landlord may, in its sole discretion, require that any roof installation be
performed in the presence of Landlord’s roof consultant, and Tenant shall pay
the fees, if any, of Landlord’s roof consultant. Cables and transmission lines
must be routed, anchored, and attached in accordance with good industry
practices. The Satellite Dish Equipment must be identified with permanently
marked, weatherproof tags at the following locations: (1) each antenna bracket;
(2) at the transmission line Building entry point; (3) at the interior wall feed
through or any other transmission line exit point; and (4) at any transmitter
combiner, duplexer, or multi-fed receive port. In addition, all Tenant telephone
blocks, demarcs, and cables must be clearly identified with Tenant’s name.
Tenant shall match nearly as possible the color of any antennas to the existing
façade of the Building.

 

 45 

 

 

(v)                Tenant shall:

 

(A)               unless otherwise approved by Landlord, install the Satellite
Dish Equipment during regular business hours for the Centre, as reasonably
specified by Landlord;

 

(B)               deliver to Landlord accurate “as-built” plans for all
Satellite Dish Equipment installed by Tenant within 20 days after completion of
each installation and update the “as-built plans” as needed to reflect changes
to the Satellite Dish Equipment made by Tenant;

 

(C)               operate all Satellite Dish Equipment only for the purpose of
intercompany communications;

 

(D)               not use any of the Satellite Dish Equipment to provide
telecommunications services to any party other than Tenant or its affiliates;

 

(E)                promptly repair, to Landlord’s reasonable satisfaction, any
damage to the Land or Building (including the roof and riser space) caused by
the installation, use, or removal of any Satellite Dish Equipment;

 

(F)                keep and maintain all Satellite Dish Equipment in good
condition and repair at all times;

 

(G)               not interfere with any other persons operating other
telecommunications equipment at the Centre as of the date of the installation of
the Satellite Dish Equipment; and

 

(H)               follow Landlord’s Technical Site Standards set forth on
Schedule 1 to Exhibit K, with no exceptions.

 

(vi)               If Landlord gives notice to Tenant stating that Tenant’s use
of the Satellite Dish Equipment (including the addition of any equipment and any
malfunction or misuse of the Satellite Dish Equipment or any equipment installed
by or on behalf of Tenant or otherwise) is: (1) interfering with any other
telecommunications equipment owned by Landlord or any other tenant in the Centre
that was in use as of the date of the installation of the Satellite Dish
Equipment, or (2) damaging or threatening to damage the Premises, the Building,
any system serving the Building, or any radio or telecommunication equipment at
the Centre, then Tenant shall immediately cease operations of the Satellite Dish
Equipment. Tenant may not thereafter recommence using the Satellite Dish
Equipment until Tenant satisfies Landlord, in Landlord’s reasonable discretion,
that Tenant’s use of the Satellite Dish Equipment will no longer interfere with
any other telecommunications equipment owned by Landlord or any other tenant in
the Centre that was in use as of the date of the installation of the Satellite
Dish Equipment, or damage the Premises, the Building, any system serving the
Building, or any radio or telecommunication equipment at the Building.

 

(vii)             Tenant shall indemnify, defend, and hold harmless Landlord
from and against any and all Claims incurred by or asserted against Landlord and
arising out of or related to the installation, operation, use, maintenance, or
removal of any of the Satellite Dish Equipment, EVEN IF SUCH CLAIMS ARE CAUSED
SOLELY OR IN PART BY THE NEGLIGENCE OF ANY LANDLORD INDEMNITEE, BUT NOT TO THE
EXTENT SUCH LIABILITIES ARE CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF ANY SUCH LANDLORD INDEMNITEE.

 

 46 

 

 

(viii)           Upon the expiration of this Lease, Tenant, at Tenant’s expense,
shall promptly remove all Satellite Dish Equipment and repair and restore all
damage to the Building and the Centre, to Landlord’s reasonable satisfaction.

 

(ix)               Tenant acknowledges that it has been offered the opportunity
to inspect the Land and the Building roof and riser space, and having performed
such inspections as Tenant deems appropriate, accepts them in their respective
“AS IS” conditions. Landlord makes no, and Tenant waives and releases Landlord
from any, representations and warranties about the condition or availability of
the Land, the Building roof and riser space or their suitability for the
installation and operation of any Satellite Dish Equipment.

 

(nn)             Access. Subject to the Building rules and regulations and the
other provisions of this Lease, Tenant will be provided access to the Premises
24 hours per day, seven days per week. If such access is unavailable due to
force majeure or any other reason beyond Landlord’s control (including
construction performed by parties other than Landlord which prohibits such
access), Landlord shall not be in default under this Paragraph 20(nn).

 

(oo)             Generator. Landlord grants to Tenant a license during the Lease
Term (the "Generator License") to install, operate, and maintain in an area
mutually agreed upon by Landlord and Tenant (the "Generator Area"), at Tenant's
sole cost and expense, a generator facility, including the associated
technology, switchgear, fuel storage, and enclosures related thereto
(collectively, the "Generator"). All references to the Premises shall include
the Generator Area. The Generator License includes the right to connect to,
access and use the relevant electric utility facilities at the Building. The
Generator License is subject to the following conditions:

 

(i)                  Installation of the Generator shall be pursuant to plans
and specifications which shall be subject to the prior written approval of
Landlord (which shall not be unreasonably withheld) of the type, size and height
of the Generator as well as the manner of installation of the Generator
(including the manner in which any cables are run between the Generator and the
Building). Tenant acknowledges that Landlord may disapprove the installation of
any Generator (including the initial installation) if Landlord determines, in
its reasonable discretion, that the installation or operation of the Generator
will materially adversely affect the operation of any of the Building’s systems
or the operation of any other equipment elsewhere in the Building. Without
limiting the foregoing, Landlord may require Tenant to install reasonable
decorative screening and fencing around the Generator.

 

(ii)                Tenant shall bear all costs to install, maintain, operate,
replace and repair the Generator in compliance with all applicable Laws, which
costs include, without limitation, (i) any structural modifications required to
support the Generator, (ii) any screens or other improvements Landlord may
reasonably require to protect the aesthetic quality of the Building, (iii) any
fences that Landlord may reasonably require for safety reasons, (iv) any
enclosures or other safety measures required by applicable Laws, and (v) the
cost of all utilities consumed in the operation of the Generator.

 

(iii)              Prior to commencement of installation, Tenant shall submit to
Landlord and obtain Landlord's approval of plans and specifications for the
Generator, and any other information reasonably required by Landlord. Landlord's
approval of Tenant's plans and specifications shall not be deemed a
representation by Landlord that the plans and specifications comply with law or
industry standards, nor is Landlord's approval a representation by Landlord of
the adequacy of the mechanical design or proper operation of the Generator.

 

(iv)               Prior to commencement of installation, Tenant, at its sole
cost and expense, shall obtain all necessary governmental and regulatory
approvals for the installation and use of the Generator from each governmental
agency having jurisdiction over the installation or use of the Generator. Tenant
may not install or operate the Generator until Tenant has obtained and submitted
to Landlord copies of all such necessary permits and approvals.

 

(v)                Tenant's use of the Generator shall comply with all
applicable Laws.

 

 47 

 

 

(vi)               All utility lines must be routed, anchored, buried and/or
attached in accordance with good industry practices. The Generator must be
identified with permanently marked, weatherproof tags at the following
locations: (i) prominently on the exterior frame of each piece of the Generator;
(ii) at the transmission line Building entry point; and (iii) at the interior
wall feed through or any other transmission line exit point.

 

(vii)             Tenant shall:

 

(A)               promptly repair, to Landlord's reasonable satisfaction, any
damage to the Building or the adjacent area caused by the installation, use, or
removal of the Generator;

 

(B)               keep and maintain the Generator in good condition and repair
at all times;

 

(C)               operate the Generator only for Tenant's use and benefit;

 

(D)               take all necessary action (including installation of
additional insulation) to minimize vibrations and sound disturbance in the
Building resulting from the operation of the Generator; and

 

(E)                perform testing of the Generator pursuant to a testing plan
which shall be subject to Landlord's prior written approval and after Normal
Building Hours.

 

(viii)           The installation of the Generator, as well as all repairs or
alterations to the Generator, or replacements of the Generator, must be
performed by contractors approved by Landlord in its reasonable discretion.

 

(ix)               Landlord shall have no obligation to provide any services,
including, without limitation, electric current, to the Generator.

 

(x)                Upon the expiration or earlier termination of this Lease,
Tenant, at Tenant's expense, shall promptly remove the Generator and repair and
restore all damage to the Building and adjacent area caused by the removal.

 

(xi)               Tenant has thoroughly inspected the Generator Area and
accepts it in its "AS-IS" condition. Landlord makes no, and Tenant waives and
releases Landlord from any, representations and warranties about the condition
or suitability of the Generator Area or the Building for the installation and
operation of the Generator.

 

(xii)             Within 90 days after installation of the Generator, Tenant, at
its cost, shall deliver to Landlord, either: (i) 2 reproducible copies of
"as-built" plans and specifications (1/8" scale), or (ii) "as-built" plans and
specifications in electronic CAD format reasonably acceptable to Landlord
showing the location of the Generator and all equipment installed in connection
therewith.

 

(pp)             10th Floor. Prior to the Commencement Date, Landlord, at its
sole cost and expense, will update the restrooms and common corridor on the 10th
floor of the Building to Building-standard finishes, complying with the ADA and
applicable Laws.

 

(qq)             Intentionally Omitted.

 

(rr)               Mail Carts. Tenant shall have the right to use mail carts in
the freight elevators of the Building, subject to the terms and conditions of
this Lease and any rules and regulations affecting the Centre.

 

(ss)               Temporary Premises. As an accommodation to Tenant, Tenant
shall have the exclusive right to use temporarily, and Landlord will provide to
Tenant on a temporary basis, Suites 350 and 390, consisting of approximately
8,503 square feet of Rentable Area, and located on the 3rd floor within the
building located at 5430 LBJ Freeway, Dallas, Texas 75240, as more particularly
shown on the attached Exhibit L (the “Temporary Premises”) for the purpose of
storing Tenant’s furniture. The Temporary Premises shall be made available to
Tenant promptly after the Possession Date, on an “AS IS, WHERE IS” basis, and
Landlord shall have no obligation to refurbish or make any improvements or
alterations of any nature in the Temporary Premises or provide any improvement
allowance with respect thereto. Tenant's lease of the Temporary Premises shall
be on and subject to all of the terms and conditions of this Lease, except that
(a) Tenant shall not be obligated pay Base Rent or Additional Rent or Electrical
Costs for the Temporary Premises, provided Tenant shall be responsible for
paying the costs of any after-hours HVAC or other additional services pursuant
to this Lease; (b) Tenant shall have no right to renew or extend the Lease Term
with respect to the Temporary Premises; (c) Tenant shall not make any
Alterations to the Temporary Premises without the consent of Landlord; (d)
furnishings and equipment may be installed in the Temporary Premises provided
such items may be removed without injury or damage to the Temporary Premises;
(e) Tenant shall be expressly prohibited from assigning or subleasing any or all
of the Temporary Premises or any interest therein; (f) Tenant shall permit
Landlord or its agents, at any time, with reasonable prior notice to Tenant or
charge therefor to Landlord, to enter the Temporary Premises to exhibit the same
to prospective tenants; and (g) Tenant further agrees to cooperate with Landlord
in connection with Landlord's exercise of Landlord's rights of entry under this
Paragraph 20(ss). Tenant, at its sole cost and expense, will be responsible for
obtaining telephone, cable and other services as needed for the operation of the
Temporary Premises. Tenant's rights in this Paragraph 20(ss) to use the
Temporary Premises shall terminate on, and Tenant shall vacate the Temporary
Premises no later than five business days after the Commencement Date. Tenant's
failure to surrender the Temporary Premises in accordance with the terms of this
Lease on or before the fifth business day after the Commencement Date for the
Premises shall be subject to the holdover provisions of Paragraph 20(f).
Notwithstanding the foregoing provisions of this Paragraph 20(ss), upon thirty
(30) days prior written notice to Tenant, Landlord may relocate the Temporary
Premises to other space in the Centre at Tenant’s sole cost and expense. Tenant
shall pay any amounts incurred by Landlord in connection therewith within thirty
(30) days following Landlord’s delivery of an invoice therefor.

 

 48 

 

 

SIGNATURE PAGE TO OFFICE LEASE
BY AND BETWEEN
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA,
A NEW YORK CORPORATION, FOR THE BENEFIT OF THE REAL ESTATE ACCOUNT, AS LANDLORD,
AND HALLMARK FINANCIAL SERVICES, INC., AS TENANT

 

IN WITNESS WHEREOF, the parties have executed this Lease to be effective as of
the Date of this Lease.

 

“LANDLORD”:   “TENANT”:           TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF
AMERICA, a New York corporation, for the benefit of the Real Estate Account  

HALLMARK FINANCIAL SERVICES, INC., 

a Nevada corporation           By:     By:   Name:       Name:     Title:      
Title:    

  

 49 

 

 

EXHIBIT A-1

 

FLOOR PLAN OF THE PREMISES

 

[image_003.jpg] 

 

 A-1-1 

 

 

EXHIBIT A-1 (cont.)

 

 [image_004.jpg] 

 

 

 A-1-2 

 

 

EXHIBIT A-1 (cont.)

 

[image_005.jpg] 

 

 A-1-3 

 

 

EXHIBIT A-2

 

LEGAL DESCRIPTION OF THE PROPERTY

 

BUILDING ONE

 

Being a tract of land situated in the Isaiah Park Survey, Abstract No. 1144,
Dallas County, Texas and being part of the City of Dallas Block 7000, and being
more particularly described as follows:

 

BEGINNING at the intersection of the South line of IH-635 (variable width) and
the West line of Noel Road (60 ft. R.O.W.); Thence along said West line of Noel
Road and along a circular curve to the right having a beginning tangent of South
25E 53’ 11” East, a central angle of 25E 57’ 41”, a radius of 50.00 ft., a
tangent length of 11.53 ft. and an arc length of 22.66 ft. to the end of said
circular curve to the right;

 

THENCE South 0E 04’ 30” West along said West line of Noel Road a distance of
414.27 ft. to a point for a corner;

 

THENCE North 89E 55’ 30” West departing said West line of Noel Road a distance
of 260.03 ft. to a point for a corner;

 

THENCE North 0E 01’ 56” East a distance of 89.08 ft. to a point for a corner;

 

THENCE South 89E 47’ 55” West a distance of 279.59 ft. to a point for a corner;

 

THENCE South 89E 54’ 25” West a distance of 109.46 ft. to a point for a corner;

 

THENCE North 0E 02’ 56” West a distance of 145.00 ft. to a point for a corner;

 

THENCE North 36E 29’ 54” West a distance of 52.74 ft. to a point for the
beginning of a circular curve to the left;

 

THENCE along said circular curve to the left having a beginning tangent bearing
of South 75E 26’ 44” West, a central angel of 34E 51’ 45”, a radius of 550.0
ft., a tangent length of 172.69 ft. and an arc length of 334.66 ft. to a point
of compound circular curvature;

 

THENCE along said compound curve having a beginning tangent bearing of South 40E
34’ 59” West, a central angle of 43E 42’ 32”, a radius of 425.0 ft., a tangent
length of 170.46 ft. and an arc length of 324.22 ft. to end of said curve to the
left;

 

THENCE South 89E 53’ 54” West a distance of 60.57 ft. to a point for a corner;

 

THENCE North 18E 17’ 28” West a distance of 151.56 ft. to a point for a corner;

 

THENCE North 24E 50’ 40” West a distance of 163.64 ft. to a point in said South
line of IH-635 for a corner;

 

THENCE North 67E 20’ 10” East along said South line of IH-635 a distance of 95.0
ft. to a point for a corner;

 

THENCE continuing along said South line of IH-635 North 51E 20’ 10” East a
distance of 263.0 ft. to a point for a corner;

 

THENCE continuing along said South line of IH-635 North 64E 20’ 10” East a
distance of 249.78 ft. to a point for a corner;

 

 A-2-1 

 

 

THENCE continuing along said South line of IH-635 North 80E 20’ 10” East a
distance of 201.10 ft. to a point for a corner;

 

THENCE continuing along said South line of IH-635 South 89E 57’ 10” East a
distance of 517.62 ft. to the Point of Beginning and containing 8.2064 Acres
(357,471 sq. ft.) of land.

 

BUILDING TWO

 

Being a tract of land situated in the Isaiah Park Survey, Abstract No. 1144,
Dallas County, Texas and being part of the City of Dallas Block 7000, and being
more particularly described as follows:

 

BEGINNING at the intersection of the South line of IH-635 (variable width) and
the West line of Noel Road (60 ft. R.O.W.); Thence along said West line of Noel
Road and along a circular curve to the right having a beginning tangent of South
25E 53' 11" East, a central angle of 25E 57' 41", a radius of 50.00 ft., a
tangent length of 11.53 ft. and an arc length of 22.66 ft. to the end of said
circular curve to the right; Thence South 00E 04' 30" West along said West line
of Noel Road a distance of 691.65 ft. to the True Point of Beginning:

 

THENCE South 00E 04' 30" West continuing along said West line of Noel Road a
distance of 235.33 ft. to a point for a corner;

 

THENCE North 89E 55' 30" West leaving said West line of Noel Road a distance of
241.80 ft. to a point for a corner;

 

THENCE South 00E 04' 30" West a distance of 15.30 ft. to a point for a corner;

 

THENCE North 89E 55' 30" West a distance of 36.76 ft. to a point for a corner;

 

THENCE South 00E 04' 30" West a distance of 38.41 ft. to a point for a corner;

 

THENCE North 89E 55' 30" West a distance of 57.00 ft. to a point for a corner;

 

THENCE North 00E 04' 30" East a distance of 6.3 ft. to a point for a corner;

 

THENCE North 89E 55' 30" West a distance of 28.14 ft. to a point for a corner;

 

THENCE South 0E 04' 30" West a distance of 7.5 ft. to an iron rod for a corner;

 

THENCE North 89E 55' 30" West a distance of 16.2 ft. to an iron rod for a
corner;

 

THENCE North 0E 04' 30" East a distance of 7.5 ft. to an iron rod for a corner;

 

THENCE North 89E 55' 30" West a distance of 191.5 ft. to an iron rod for a
corner;

 

THENCE South 00E 04' 30" West a distance of 18.0 ft. to a point for a corner;

 

THENCE North 89E 55' 30" West a distance of 82.0 ft. to a point for a corner;

 

THENCE North 00E 04' 30" East a distance of 24.5 ft. to a point for a corner;

 

THENCE North 89E 55' 30" West a distance of 32.10 ft. to a point for a corner;

 

THENCE North 00E 04' 30" East a distance of 31.00 ft. to a point for a corner;

 

 A-2-2 

 

 

THENCE North 89E 55' 30" West a distance of 157.5 ft. to a point for a corner;

 

THENCE South 0E 04' 30" West a distance of 13.4 ft. to an iron rod for a corner;

 

THENCE North 89E 55' 30" West a distance of 27.6 ft. to an iron rod for a
corner;

 

THENCE North 0E 04' 30" East a distance of 13.4 ft. to an iron rod for a corner;

 

THENCE North 89E 55' 30" West a distance of 100.29 ft. to an iron rod for a
corner;

 

THENCE South 00E 04' 30" West a distance of 135.38 ft. to a point for a corner;

 

THENCE South 73E 05' 00" West a distance of 86.27 ft. to a point in the East
line of a 100 ft. Dallas Power & Light Company R.O.W. for a corner;

 

THENCE North 16E 55' 00" West along said East line of 100 ft. Dallas Power &
Light Company R.O.W. a distance of 465.82 ft. to a point for a corner;

 

THENCE South 89E 55' 30" East a distance of 562.31 ft. to a point for a corner;

 

THENCE North 30E 04' 30" East a distance of 57.58 ft. to a point for a corner;

 

THENCE South 89E 55' 30" East a distance of 62.95 ft. to a point for a corner;

 

THENCE South 30E 04' 30" West a distance of 57.58 ft. to a point for a corner;

 

THENCE South 89E 55' 30" East a distance of 294.93 ft. to a point for a corner;

 

THENCE South 00E 04' 30" West a distance of 39.65 ft. to a point for a corner;

 

THENCE South 89E 55' 30" East a distance of 269.33 ft. to the True Point of
Beginning and containing 8.0410 Acres (350,266 sq. ft.) of land.

 

BUILDING THREE

 

Being a tract of land situated in the Isaiah Park Survey, Abstract No. 1144,
Dallas County, Texas and being part of the City of Dallas Block 7000, and being
more particularly described as follows:

 

BEGINNING at the intersection of the South line of IH-635 (variable width) and
the West line of Noel Road (60 ft. R.O.W.); Thence along said West line of Noel
Road and along a circular curve to the right having a beginning tangent bearing
of South 25E 53' 11" East, a central angle of 25E 57' 41", a radius of 50.00
ft., a tangent length of 11.53 ft. and an arc length of 22.66 ft. to the end of
said circular curve to the right; Thence South 00E 04' 30" West along said West
line of Noel Road a distance of 926.98 ft. to the TRUE POINT OF BEGINNING;

 

THENCE South 00E 04' 30" West continuing along said West line of Noel Road a
distance of 181.21 ft. to a point for a corner;

 

THENCE South 37E 25' 55" West a distance of 7.95 ft. to an iron rod set in the
North line of Harvest Hill Road (60 ft. R.O.W.) for a corner;

 

THENCE South 74E 47' 20" West along said North line of Harvest Hill Road a
distance of 826.08 ft. to an iron rod set for the beginning of a circular curve
to the right;

 

 A-2-3 

 

 

THENCE along said circular curve to the right having a beginning tangent bearing
of South 74E 47' 20" West, a central angle of 07E 33' 56", a radius of 1243.24
ft., a tangent length of 82.20 ft., and an arc length of 164.16 ft. along said
North R.O.W. line of Harvest Hill Road;

 

THENCE North 53E 45' 23" West a distance of 14.71 ft., to an iron rod set in the
East line of a 100 ft. Dallas Power & Light Company R.O.W.;

 

THENCE North 16E 55' 00" West along said East line of 100 ft. Dallas Power &
Light Company R.O.W. a distance of 270.66 ft., to an iron rod set for a corner;

 

THENCE North 73E 05' 00" East a distance of 86.27 ft. to an iron rod set for a
corner;

 

THENCE North 00E 04' 30" East a distance of 135.38 ft. to an iron rod set for a
corner;

 

THENCE South 89E 55' 30" East a distance of 100.29 ft. to an iron rod set for a
corner;

 

THENCE South 0E 04' 30" West a distance of 13.4 ft. to an iron rod for a corner;

 

THENCE South 89E 55' 30" East a distance of 27.6 ft. to an iron rod for a
corner;

 

THENCE North 0E 04' 30" East a distance of 13.4 ft. to an iron rod for a corner;

 

THENCE South 89E 55' 30" East a distance of 157.5 ft. to an iron rod for a
corner;

 

THENCE South 00E 04' 30" West a distance of 31.00 ft. to an iron rod set for a
corner;

 

THENCE South 89E 55' 30" East a distance of 32.10 ft. to an iron rod set for a
corner;

 

THENCE South 00E 04' 30" West a distance of 24.5 ft. to an iron rod set for a
corner;

 

THENCE South 89E 55' 30" East a distance of 82.0 ft. to an iron rod set for a
corner;

 

THENCE North 00E 04' 30" East a distance of 18.0 ft. to an iron rod set for a
corner;

 

THENCE South 89E 55' 30" East a distance of 191.5 ft. to an iron rod set for a
corner;

 

THENCE South 0E 04' 30" West a distance of 7.5 ft. to an iron rod for a corner;

 

THENCE South 89E 55' 30" East a distance of 16.2 ft. to an iron rod for a
corner;

 

THENCE North 0E 04' 30" East a distance of 7.5 ft. to an iron rod for a corner;

 

THENCE South 89E 55' 30" East a distance of 28.14 ft. to an iron rod for a
corner;

 

THENCE South 00E 04' 30" West a distance of 6.3 ft. to an iron rod set for a
corner;

 

THENCE South 89E 55' 30" East a distance of 57.00 ft. to an iron rod set for a
corner;

 

THENCE North 00E 04' 30" East a distance of 38.41 ft. to an iron rod set for a
corner;

 

THENCE South 89E 55' 30" East a distance of 36.76 ft. to an iron rod set for a
corner;

 

THENCE North 00E 04' 30" East a distance of 15.30 ft. to an iron rod set for a
corner;

 

THENCE South 89E 55' 30" East a distance of 241.80 ft. to the TRUE POINT OF
BEGINNING and containing 6.8002 acres (296,216 sq. ft.) of land.

 

 A-2-4 

 

 

EXHIBIT B-1

 

LANDLORD WORK LETTER

 

A.                  TURNOVER WORK. Landlord, at its sole cost and expense, shall
construct or cause to be constructed the “Turnover Work” (herein so called)
identified on Schedule 2 to this Exhibit B-1. The term “Substantially Complete”
and any derivations thereof mean the Turnover Work in the Premises are
substantially completed (as reasonably determined by Landlord). Substantial
Completion shall have occurred even though minor details of construction,
decoration, landscaping and mechanical adjustments remain to be completed by
Landlord.

 

B.                   TENANT DELAYS. If Landlord is delayed in substantially
completing the Turnover Work as a result of any of the following ("Tenant
Delay(s)"):

 

(1)                Tenant's failure to promptly and timely furnish any
information required by Landlord;

 

(2)                Tenant's request for materials, finishes, or installations
other than Landlord's Building standard items or for long lead items; or

 

(3)                because Tenant fails to attend any meeting with Landlord, the
architect, any design professional, or any contractor, or their respective
employees or representatives, as may be required or scheduled hereunder or
otherwise necessary in connection with the performance of the Turnover Work; or

 

(4)                because a Tenant Party otherwise delays completion of the
Turnover Work;

 

then the date of Substantial Completion is accelerated by the number of days of
Tenant Delays.

 

C.                   EARLY ENTRY. Upon request by Tenant, Landlord shall permit
Tenant and its contractors to enter the Premises prior to Substantial Completion
of the Turnover Work, in order that Tenant may perform the Tenant Finish Work
(defined on Exhibit B-2) while Landlord's contractors are working (an "Early
Entry"). This license to enter prior to Substantial Completion of Turnover Work
is subject to the following conditions:

 

(1)                Tenant's contractor(s) must work in harmony and not interfere
with Landlord's contractors and subcontractors;

 

(2)                prior to commencement of the work by Tenant's contractor(s),
Tenant must deliver evidence to Landlord of compliance with the requirements of
Paragraph 8; and

 

(3)                Tenant is subject to all terms of this Lease other than the
obligation to pay Base Rent and Tenant's share of electricity and Operating
Expenses.

 

Landlord may revoke this license upon forty-eight (48) hours' notice to Tenant
if the entry causes disharmony or interference with the Turnover Work.

 

NO LANDLORD INDEMNITEE IS LIABLE IN ANY WAY FOR ANY INJURY, LOSS, OR DAMAGE THAT
OCCURS TO ANY OF TENANT'S DECORATIONS OR INSTALLATIONS MADE PRIOR TO SUBSTANTIAL
COMPLETION OF THE TURNOVER WORK, THE ENTRY BEING SOLELY AT TENANT'S RISK. TENANT
SHALL INDEMNIFY, DEFEND, AND HOLD LANDLORD INDEMNITEES HARMLESS FROM ANY CLAIMS
ARISING FROM ACTIVITIES OF TENANT'S CONTRACTORS, WORKERS, AND MECHANICS, EVEN IF
DUE IN WHOLE OR IN PART TO THE NEGLIGENCE OR STRICT LIABILITY OF ANY LANDLORD
INDEMNITEE.

 

D.                  PROJECT ENGINEER. Landlord shall use the fire alarm,
mechanical, electrical, and plumbing engineer(s) of record for the Centre in
connection with any Turnover Work affecting the Building's fire alarm,
mechanical, electrical, or plumbing systems.

 

 B-1-1 

 

 

E.                   PUNCHLIST. Landlord will notify Tenant in writing ten (10)
days prior to the date Landlord anticipates the Possession Date will occur (the
“Possession Notice”). Within three (3) business days after the date of the
Possession Notice, Landlord and Tenant mutually agree upon a date to meet and
inspect the Premises. Tenant shall reasonably specify any part of the Turnover
Work that is not Substantially Complete by delivering a punchlist to Landlord on
the next business day after the date of the inspection. Landlord shall correct
the items shown on the punchlist that are not Substantially Complete with
reasonable due diligence and will have access to the Premises to do so.

 

 B-1-2 

 

 

schedule 1

 

a.Tenant’s Service Providers shall, at each party's own expense, maintain
insurance as set forth below. Each Service Provider shall maintain the following
insurance at all times when the Service Provider performs work in or delivers to
the Centre:

 

1.Commercial general liability insurance written on the most current form of ISO
CG 00 01 (occurrence basis) or its equivalent, have a minimum each occurrence
limit of $1,000,000, a minimum general aggregate limit of $2,000,000, and not
exclude this Lease from the definition of “Insured Contract” under the
contractual liability provisions;

 

2.Workers' compensation insurance complying with statutory requirements of the
State of Texas and employers liability insurance in amounts not less than
$500,000 bodily injury per accident/$500,000 disease each employee/$500,000
disease policy limit;

 

3.Business automobile insurance for claims arising out of ownership,
maintenance, or use of owned, non-owned, and hired motor vehicles at, upon, or
away from the Centre. The minimum limits must be $1,000,000 each occurrence;

 

4.Excess/umbrella liability insurance, applying on at least a "following form"
(or primary) basis, in excess of commercial general liability, employers
liability, and business automobile liability, with a minimum limit of $3,000,000
each occurrence and aggregate, where applicable; and

 

5.       Such additional insurance coverages or other policy limits as Landlord
reasonably requires.

 

B.Landlord, Landlord’s designated property management firm and all Landlord
Indemnitees shall be named additional insureds on each of said policies
(excluding the worker’s compensation policy) and said policies shall be issued
by an insurance company or companies authorized to do business in the State and
which have policyholder ratings not lower than “A-” and financial ratings not
lower than “IX” in Best’s Insurance Guide (latest edition in effect as of the
date of this Lease and subsequently in effect as of the date of renewal of the
required policies). EACH OF SAID POLICIES SHALL ALSO INCLUDE A WAIVER OF
SUBROGATION PROVISION OR ENDORSEMENT IN FAVOR OF LANDLORD AND THE LANDLORD
INDEMNITEES, AND AN ENDORSEMENT PROVIDING THAT LANDLORD SHALL RECEIVE THIRTY
(30) DAYS PRIOR WRITTEN NOTICE OF ANY CANCELLATION OF, NON-RENEWAL OF, REDUCTION
OF COVERAGE OR MATERIAL CHANGE IN COVERAGE ON SAID POLICIES. In addition, all
policies of the Service Providers shall be endorsed to be primary, with the
policies of all Landlord Indemnitees being excess, secondary and
non-contributing. Each Service Provider hereby waives its right of recovery
against any Landlord Indemnitee of any amounts paid by it or on its behalf to
satisfy applicable worker’s compensation laws. The policies or duly executed
certificates showing the material terms for the same, together with satisfactory
evidence of the payment of the premiums therefor, shall be deposited with
Landlord on the date each Service Provider first enters the Centre and upon
renewals of such policies not less than fifteen (15) days prior to the
expiration of the term of such coverage. If certificates are supplied rather
than the policies themselves, each Service Provider shall allow Landlord, at all
reasonable times, to inspect its policies of insurance required herein.

 

C.With respect to insurance coverages, except worker’s compensation, maintained
hereunder by each Service Provider and insurance coverages separately obtained
by Landlord, all insurance coverages afforded by policies of insurance
maintained by each Service Provider shall be primary insurance as such coverages
apply to Landlord, and such insurance coverages separately maintained by
Landlord shall be excess, and each Service Provider shall have its insurance
policies so endorsed. The amount of liability insurance under insurance policies
maintained by each Service Provider shall not be reduced by the existence of
insurance coverage under policies separately maintained by Landlord. Each
Service Provider shall be solely responsible for any premiums, assessments,
penalties, deductible assumptions, retentions, audits, retrospective adjustments
or any other kind of payment due under its policies. Each Service Provider shall
increase the amounts of insurance or the insurance coverages as Landlord may
reasonably request from time to time.

 

 B-1-3 

 

 

SCHEDULE 2

 

1.Deliver the base mechanical, electrical, plumbing, and HVAC systems serving
the Premises in good working order.

 

2.Deliver electrical service to the electrical closets on the 10th floor and the
11th floor, with 120/208-volt power panels, transformers, and circuit breakers
in place.

 

3.Provide connection “stub outs” for vent and tepid water at all wet columns on
the 10th floor and the 11th floor for use by Tenant.

 

4.Provide connection points on the 10th floor and the 11th floor for the fire
alarm system, which shall be installed, operating, and tested in accordance with
applicable Law.

 

5.Deliver the common corridors, multi-tenant corridors, and common elevator
lobbies serving the 10th floor of the Building in compliance with the ADA, the
TABA, Building Code, City Code, and all other applicable Laws.

 

6.Deliver the restrooms serving the 10th floor and the 11th floor of the
Building in compliance with the ADA, the TABA, Building Code, City Code and all
other applicable Laws.

 

7.Delivery of the Premises free of all Hazardous Materials in violation of
applicable Law (including mold), including insulation on steam pipes, piping
within columns, and within any under floor distribution systems.

 

 B-1-4 

 

 

EXHIBIT B-2

 

TENANT WORK LETTER

 

A.PLANS AND SPECIFICATIONS. Tenant shall submit to Landlord at least 30 days
prior to commencement of any remodeling in the Premises complete initial plans
and specifications (the “Initial Construction Documents”) for the remodeling of
the Premises. The Initial Construction Documents must include detailed plans and
specifications for the construction of the improvements called for under this
Exhibit in accordance with all applicable Laws and sufficient to accommodate
Tenant’s Permitted Density, including without limitation:

 

1.General Notes Sheet

 

2.Demolition Plan

 

3.New Construction Plan with details of all new improvements

 

4.Finishes Plan

 

5.Electrical, Mechanical and Plumbing Plan

 

Within 10 days after receipt of the Initial Construction Documents, Landlord
shall deliver to Tenant a notice either approving or disapproving them. Any
disapproval must specify in reasonable detail the reasons for the disapproval.
If Tenant does not receive a notice from Landlord disapproving the Initial
Construction Documents within the 10-day period, Landlord is deemed to approve
the Initial Construction Documents. If Landlord disapproves the Initial
Construction Documents, Tenant shall revise them to conform to Landlord’s
objections and deliver complete copies of the revised Initial Construction
Documents to Landlord. If upon providing its approval, the Landlord does not
communicate in writing its requirement for Tenant to restore any of the
improvements at the expiration of the Lease Term, then at the expiration of the
Lease Term or earlier termination thereof, the Tenant shall not have no
obligation to restore any of the improvements, which are included in the Initial
Construction Documents, to the original condition prior to construction. In
addition to the construction allowance, the Landlord will reimburse Tenant up to
$5,017.20 (the "Test Fit Allowance") for costs incurred in preparation of an
initial "test fit" drawing with up to two (2) revisions.

 

The approved Initial Construction Documents are referred to as the “Construction
Documents” and all work to be performed by Tenant pursuant to the Construction
Documents is referred to as the “Tenant Finish Work”. Landlord’s approval of the
Construction Documents is not a warranty that the Construction Documents comply
with applicable Laws.

 

B.TENANT FINISH WORK.

 

1.Tenant shall have the right to select its own architect. Tenant will hold the
contract and manage its construction. Tenant may elect to retain a construction
or project manager of its choice.

 

2.Prior to commencing the Tenant Finish Work, Tenant shall competitively bid the
Tenant Finish Work to at least three general contractors mutually approved by
Landlord and Tenant. Sub-contractor selections shall not be subject to
Landlord’s approval, except as otherwise provided in this Lease. Tenant shall
promptly provide Landlord with copies of each of bids received for the Tenant
Finish Work and Landlord shall be allowed to review such submitted bids.
Landlord and Tenant shall have five business days after receipt and delivery of
the last of the three bids to mutually agree upon which (if any) of the bids
will be accepted for the Tenant Finish Work.

 

3.Landlord shall provide to Tenant a construction allowance not to exceed
$3,386,610.00 (the “Allowance”) to be applied toward the Actual Cost of the
Tenant Finish Work. Landlord shall pay to Tenant, or upon Tenant’s written
request, to Tenant’s general contractor, the Allowance in multiple disbursements
(but not more than once in any calendar month) following the receipt by Landlord
of the following items from Tenant’s Construction Representative (defined
below): (a) a request for payment, (b) final or partial lien waivers, as the
case may be, from all persons performing work or supplying or fabricating
materials for the Tenant Finish Work, fully executed, acknowledged and in
recordable form, and (c) the architect’s certification that the Tenant Finish
Work for which reimbursement has been requested has been finally completed,
including (with respect to the last application for payment only) any punch-list
items, on the appropriate AIA form or another form approved by Landlord, and,
with respect to the disbursement of the last 10% of the Allowance, (1) the
permanent certificate of occupancy issued for the Premises, (2) Tenant’s
occupancy of the Premises, and (3) delivery of the architectural “as-built plan
for the Tenant Finish Work as constructed (as set forth above) to Landlord’s
construction representative (set forth below) (a “Completed Application for
Payment”). Landlord shall pay the amount requested in the applicable Completed
Application for Payment to Tenant within 30 days following Tenant’s submission
of the Completed Application for Payment. If, however, the Completed Application
for Payment is incomplete or incorrect, Landlord’s payment of such request shall
be deferred until 30 days following Landlord’s receipt of the Completed
Application for Payment. Notwithstanding anything to the contrary contained in
this Exhibit, Landlord shall not be obligated to make any disbursement of the
Allowance during the pendency of any of the following: (A) Landlord has received
written notice of any unpaid claims relating to any portion of the Tenant Finish
Work or materials in connection therewith, other than claims which will be paid
in full from such disbursement, (B) there is an unbonded lien outstanding
against the Building or the Premises or Tenant’s interest therein by reason of
work done, or claimed to have been done, or materials supplied or specifically
fabricated, claimed to have been supplied or specifically fabricated, to or for
Tenant or the Premises, (C) the conditions to the advance of the Allowance are
not satisfied, or (D) an event of default by Tenant exists The Allowance must be
used (that is, the Tenant Finish Work must be fully complete and the Allowance
disbursed) by March 31, 2021 or shall be deemed forfeited with no further
obligation by Landlord with respect thereto, time being of the essence with
respect thereto.

 

 B-2-1 

 

 

4.The term “Actual Cost” means the cost of all labor and materials and all hard
and soft costs relating to the Tenant Finish Work, together with a construction
management fee of 1% of the hard construction costs to be paid to Landlord’s
construction manager (provided, such amount shall not exceed 1% of the
Allowance) and a construction management fee of 3% of the total construction
costs to be paid to Tenant’s construction manager). The following costs will not
be included in the “Soft Cost Allowance” definition herein: interior
improvements, architectural and engineering fees, construction management fees,
all signage costs, permitting fees, and asbestos testing. The Allowance may be
utilized to pay for all interior improvements, architectural and engineering
fees, construction management fees and project management fees, all signage
costs, permitting fees, and asbestos testing. Tenant may apply up to
$1,153,956.00 of the Allowance (the “Soft Cost Allowance”) toward the soft costs
portion of the Actual Cost of Tenant Finish Work, including without limitation,
voice and data cabling costs, moving costs, audio/visual equipment costs,
security/access costs, generator costs, other consultant fees (other than
architect fees, engineer fees and project management fees), server costs, and
infrastructure costs. Of the Soft Cost Allowance, $501,720.00 may be applied
against the cost of Tenant’s furniture, fixtures, and equipment, including
procurement and installation. Additionally, Tenant may apply up to $250,860.00
of the Allowance against Base Rent as the same comes due under the Lease.

 

5.Tenant, at its cost and risk (subject to application of the Allowance by
Landlord), shall construct or cause to be constructed the Tenant Finish Work in
substantial accordance with the Construction Documents. Tenant shall allow
Landlord access to the Premises at all times to inspect the Tenant Finish Work.
Landlord has no obligation to inspect the Tenant Finish Work. No inspection by
Landlord of the Tenant Finish Work is a warranty that the Tenant Finish Work
complies with the Construction Documents or any applicable Laws.

 

 B-2-2 

 

 

C.CONSTRUCTION REPRESENTATIVES. Landlord’s and Tenant’s representatives for
coordination of construction and approval of change orders will be as follows,
provided that either party may change its representative upon written notice to
the other:

  

Landlord’s Representative: Scott Stovall     c/o Cushman & Wakefield of Texas,
Inc.     5430 LBJ Freeway, Suite 200     Dallas, TX 75240     Telephone:        
      Tenant’s Representative: Tarek Timol     c/o Hallmark Financial Services,
Inc.    

777 Main Street, Suite 1000

Fort Worth, Texas 76102

    Telephone:       

D.LANDLORD DELAYS. If Tenant is delayed in substantially completing the Tenant
Finish Work as a result of any of the following (“Landlord Delay(s)”):

 

1.Any violations of applicable Law related to the Building in existing prior to
the Possession Date; or

 

2.because a Landlord Indemnitee otherwise delays completion of the Tenant Finish
Work;

 

then the Commencement Date is postponed by the number of days of Landlord
Delays.

 

E.GENERAL.

 

1.Any changes to the Construction Documents must first be submitted to Landlord
for review and approval, which shall not be unreasonably withheld, conditioned
or delayed in connection with non-structural alterations that do not affect the
Building’s systems, prior to the work reflected in such amended Construction
Documents being undertaken by Tenant. Landlord shall provide a written response
to changes to the Construction Documents within five (5) business days following
receipt thereof.

 

2.Workmanship and materials to be used in the Tenant Finish Work shall be at
least Building-standard. Any approval by Landlord of the Construction Documents
shall not in any way constitute a representation or warranty of Landlord as to
the adequacy of sufficiency of the Construction Documents; such approval shall
merely be the consent of Landlord as may be required hereunder in connection
with the Tenant Finish Work in accordance with the Construction Documents under
the terms of the Lease.

 

3.Tenant shall perform the Tenant Finish Work consistent with Building Rules and
Regulations, in a manner to minimize noise and other interference with tenants
of the Centre and shall remove all trash and debris from the Premises on a daily
basis.

 

4.Upon completion of the construction of Tenant Finish Work, Tenant shall
promptly restore any area of the Centre damaged as a result of Tenant’s
construction of the Tenant Finish Work to the condition existing prior to the
commencement of such construction.

 

5.Any entry upon the Premises by Tenant and its agents and contractors shall be
deemed to be under all of the terms, the covenants provisions and conditions of
the Lease, excepting only the covenant to pay Rent for the Premises. All of
Tenant’s materials, work, installations and decorations of any nature brought
upon or installed in the Premises before the Commencement Date shall be at
Tenant’s risk, and neither Landlord nor any party acting on Landlord’s behalf
shall be responsible for any damage thereto or loss or destruction thereof.

 

 B-2-3 

 

 

6.Tenant shall be required to use Landlord’s designated mechanical, electrical
and plumbing contractors and fire alarm contractor. Landlord shall designate
from time to time (i) the mechanical, electrical and plumbing engineers of
record for the Centre, and (ii) the fire alarm contractor of record for the
Centre.

 

7.All contractors, subcontractors, suppliers, service providers, moving
companies, and others performing work of any type for Tenant in the Centre shall
comply with the insurance provisions contained in this Lease.

 

8.Landlord shall provide priority use the Building freight elevators serving the
10th and 11th floors at no additional cost during Tenant’s construction of the
Tenant Finish Work.

 

9.During Tenant’s construction of the Tenant Finish Work, Landlord, at no cost
to Tenant, shall furnish temporary power and HVAC to the Premises. During the
construction period, there shall not be any “tap in” charges for Tenant
connecting to supplemental air conditioners, sprinklers, and other Building
systems.

 

10.During Tenant’s construction of the Tenant Finish Work, Landlord shall
provide power during Business Hours at no cost to Tenant prior to the
Commencement Date, except Tenant shall be responsible for Tenant’s Proportionate
Share of Electricity Costs during the Beneficial Occupancy Period.

 

11.Landlord shall provide, at no expense to Tenant, electric power, water,
during Tenant’s construction of the Tenant Finish Work. Tenant shall not be
responsible for any additional Building charges, including, but not limited to,
freight elevator usage during Building Hours, operator’s cost unless
coordination is needed, loading dock fees during the Building’s normal dock
operating hours, or security guard charges unless needed.

 

 B-2-4 

 

 

EXHIBIT C

 

BUILDING RULES AND REGULATIONS

 

1.                   Sidewalks, doorways, vestibules, halls, stairways, and
similar areas shall not be obstructed nor shall refuse, furniture, boxes or
other items be placed therein by Tenant or its officers, agents, servants, and
employees, or used for any purpose other than ingress and egress to and from the
leased premises, or for going from one part of the Building to another part of
the Building. Canvassing, soliciting and peddling in the Building are
prohibited.

 

2.                   Plumbing fixtures and appliances shall be used only for the
purposes for which constructed and no unsuitable material shall be placed
therein.

 

3.                   No signs, directories, posters, advertisements, or notices
shall be painted or affixed on or to any of the windows or doors, or in
corridors or other parts of the Building except in such color, size and style
and in such places as shall be first approved in writing by Landlord in its
reasonable discretion, which shall not be withheld, conditioned or delayed.
Landlord shall have the right to remove all unapproved signs without notice to
Tenant, at the expense of Tenant.

 

4.                   Tenants shall not do, or permit anything to be done in or
about the Building, or bring or keep anything therein, that will in any way
increase the rate of fire or other insurance on the Building, or on property
kept therein or otherwise increase the possibility of fire or other casualty.

 

5.                   Landlord shall have the power to prescribe the weight and
position of heavy equipment or objects which may overstress any portion of the
floor. All damage done to the Building by the improper placing of such heavy
items will be repaired at the sole expense of the responsible Tenant.

 

6.                   A Tenant shall notify the Building manager when safes or
other heavy equipment are to be taken in or out of the Building, and the moving
shall be done after written permission is obtained from Landlord on such
conditions as Landlord shall require.

 

7.                   Corridor doors, when not in use, shall be kept closed.

 

8.                   All deliveries must be made via the service entrance and
service elevator. Landlord’s written approval must be obtained for any delivery
after normal working hours.

 

9.                   Each Tenant shall cooperate with Landlord’s employees in
keeping their leased premises neat and clean.

 

10.                Tenants shall not cause or permit any improper noises in the
Building, or allow any unpleasant odors to emanate from the leased premises, or
otherwise interfere, injure or annoy in any way other tenants, or persons having
business with them.

 

11.                No animals shall be brought into or kept in or about the
Building, except guide dogs or similar support animals accompanying persons who
are physically disabled.

 

12.                All Common Areas at the Centre are smoke-free. This includes
all exterior building entrances, lobbies, garage lobbies, hallways, restrooms,
elevators and fire stairwells. Additionally, pipe and/or cigar smoking is not
permitted inside the building.

 

13.                When conditions are such that Tenant must dispose of crates,
boxes, etc., it will be the responsibility of Tenant to dispose of same prior
to, or after the hours of 7:30 a.m. and 5:30 p.m., respectively.

 

14.                No machinery of any kind, other than ordinary office machines
such as computers, copiers and calculators, shall be operated on the leased
premises without the prior written consent of Landlord, nor shall a tenant use
or keep in the Building any flammable or explosive fluid or substance (including
Christmas trees and ornaments, or any illuminating materials). No space heaters
or fans shall be operated in the Building.

 

 C-1 

 

 

15.                No bicycles, motorcycles or similar vehicles will be allowed
in the Building.

 

16.                No nails, hooks or screws shall be driven into or inserted in
any part of the Building except as approved by Landlord.

 

17.                Landlord has the right to evacuate the Building in the event
of an emergency or catastrophe.

 

18.                No food and/or beverages shall be sold from Tenant’s office
without the prior written approval of the Building manager.

 

19.                No additional locks shall be placed upon any doors without
the prior written consent of Landlord. All necessary keys shall be furnished by
Landlord, and the same shall be surrendered upon termination of this lease, and
Tenant shall then give Landlord or his agent an explanation of the combination
of all locks on the doors or vaults. Tenant shall initially be given two (2)
keys to the leased premises by Landlord. No duplicates of such keys shall be
made by Tenants. Additional keys shall be obtained only from Landlord, at a fee
to be determined by Landlord. No dead bolt locks are allowed.

 

20.                Tenants will not locate furnishings or cabinets adjacent to
mechanical or electrical access panels or over air conditioning outlets so as to
prevent operating personnel from servicing such units as routine or emergency
access may require. Cost of moving such furnishing for Landlord’s access will be
the Tenant’s responsibility. The lighting and air conditioning equipment of the
Building will remain the exclusive charge of the Building designated personnel.

 

21.                Tenant shall comply with parking rules and regulations as may
be posted or distributed from time to time.

 

22.                No portion of the Building shall be used for the purpose of
lodging rooms.

 

23.                Tenant is responsible for their vendor’s insurance. A sample
vendor insurance document is available from the management office. Tenant must
submit proper vendor insurance 24 hours in advance before a vendor will be
allowed to work or deliver to the premises.

 

24.                Prior written approval, which shall be at Landlord’s sole
discretion, must be obtained for installation of window shades, blinds or any
other window treatment of any kind whatsoever. Landlord will control all
internal lighting that may be visible from the exterior of the Building and
shall have the right to change any unapproved lighting, without notice to
Tenant, at Tenant’s expense.

 

25.                No Tenant shall make any changes or alterations to any
portion of the Building without Landlord’s prior written approval, which may be
given on such conditions as Landlord may elect. All such work shall be done by
Landlord or by contractors and/or workmen approved by Landlord, working under
Landlord’s supervision.

 

26.                Tenants shall provide Plexiglas or other pads for all chairs
mounted on rollers or casters.

 

27.                Landlord reserves the right to rescind any of these rules and
make such other and further rules and regulations as in its judgment shall from
time to time be necessary or advisable for the operations of the Building, which
rules shall be binding upon each Tenant upon delivery to such Tenant of notice
thereof in writing.

 

28.                Pursuant to Section 30.07, Texas State Penal Code (trespass
by license holder with an openly carried handgun), a person licensed under
Subchapter H, Chapter 411, Government Code (handgun licensing law), may not
enter this property with a firearm that is carried openly.

 

 C-2 

 

 

EXHIBIT D

 

FORM TENANT ESTOPPEL CERTIFICATE

 

TO:____________ (“Landlord”)
____________
____________

 

and:
_____________ (“Third Party”)
_____________
_____________

 

Re:Property Address:
Lease Date: _________________
Between ________________________________________, Landlord and
____________________________________, Tenant
Square Footage Leased: _______________________
Suite No. __________
Floor: _____________

 

The undersigned tenant (“Tenant”) hereby certifies to Third Party and Landlord
as follows:

 

1.                   The above-described Lease has not been canceled, modified,
assigned, extended or amended except __________________________________.

 

2.                   Base Rent has been paid to the first day of the current
month and all additional rent has been paid and collected in a current manner.
There is no prepaid rent except $__________, and the amount of the security
deposit is $____________.

 

3.                   Base Rent is currently payable in the amount of $
____________ monthly exclusive of Tenant’s Proportionate Share of Operating
Expenses.

 

4.                   The Lease terminates on ___________, 20__ subject to any
renewal option(s) set forth in the Lease.

 

5.                   All work to be performed for Tenant under the Lease has
been performed as required and has been accepted by Tenant, except
____________________________________________________________________.

 

6.                   The Lease is: (a) in full force and effect; (b) to Tenant’s
actual knowledge, free from default; and (c) to Tenant’s actual knowledge,
Tenant has no claims against the Landlord or offsets against rent.

 

7.                   The Base Year for Operating Expenses, as defined in the
said Lease, is _____________________.

 

8.                   The undersigned has no right or option pursuant to the said
Lease or otherwise to purchase all or any part of the Premises or the Building
of which the Premises are a part.

 

9.                   There are no other agreements written or oral between the
undersigned and the Landlord with respect to the Lease and/or the Premises and
Building.

 

10.                The statements contained herein may be relied upon by the
Landlord and by any prospective purchaser of the property of which the Premises
is a part and its mortgage lender.

 

If a blank in this document is not filled in, the blank will be deemed to read
“none”.

 

 D-1 

 

 

If Tenant is a corporation, the undersigned signatory is a duly appointed
Officer of the corporation.

 

  Dated this _____ day of _______, 20__.           Tenant:                      
        By:       Name:         Title:  

 

 D-2 

 

 

EXHIBIT E

 

TENANT’S COMMENCEMENT LETTER

 

To:____________________________ (“Landlord”)

 

Date:____________________________

 

Tenant’s Commencement Letter

 

____________________________________

 

The undersigned, as the Tenant under that certain Office Lease (the “Lease”)
dated ______________, made and entered into between ____________________, a
__________________ as Landlord, and the undersigned, as Tenant, hereby certifies
that:

 

1.The undersigned has accepted possession and entered into occupancy of the
Premises described in the Lease.

 

2.The Commencement Date of the Lease was ________________.

 

3.The expiration date of the Lease is __________________.

 

4.The Lease is in full force and effect and has not been modified or amended.

 

5.Landlord has performed all of its obligations to improve the Premises for
occupancy by the undersigned.

 

  Very truly yours,           ,   a _______________________________            
      By:         Name:            Title:    

 

 E-1 

 

 

EXHIBIT F

 

RENEWAL OPTION

 

This Exhibit “F” (“Renewal Exhibit”) describes and specifies the option, granted
by Landlord to Tenant to extend and renew this Lease. Provided that, at the time
in question, this Lease is then in full force and effect and there is no event
of default under this Lease which remains uncured following any applicable
notice and cure period, Tenant shall have the option (“Option”) to renew this
Lease as follows:

 

1.       For purposes of this Renewal Exhibit, all terms defined in the Lease
will be utilized herein without further definition. Terms specifically
applicable to this Renewal Exhibit shall have the meaning specified in this
Renewal Exhibit and shall be delineated by initial capital letters.

 

2.       Tenant may, by notifying Landlord of its election in writing not less
than nine (9) months nor more than twelve (12) months prior to the end of the
Lease Term (the “Renewal Notice”), renew this Lease for (i) two (2) additional
terms of five (5) years each or (ii) one (1) additional term of ten (10) years
(as elected by Tenant and as applicable, “Renewal Term”) beginning on the date
next following the expiration date of the Initial Term. The Renewal Notice must
elect either option (i) or (ii) above. If Tenant fails to make such election in
the Renewal Notice, Tenant will be deemed to have elected option (i).

 

3.       The renewal of this Lease will be upon the same terms, covenants, and
conditions applicable during the Lease Term, as provided in the Lease, except
that (a) the Base Rent payable during the Renewal Term shall be an amount equal
to the existing “market rental rate” (as defined below) as of the date on which
the Renewal Term commences, (b) the defined term “Lease Term” shall be deemed to
include the “Renewal Term”, and (c) no further renewal option shall apply to the
Renewal Term. In addition, Base Rent shall continue to be adjusted as provided
in Paragraph 3 of the Lease.

 

4.       Within 30 days after Landlord receives the Renewal Notice, Landlord
shall deliver a notice to Tenant specifying the Market Rental Rate (the "Market
Rental Rate Notice"). The term "Market Rental Rate" means the prevailing fair
market rent and other applicable terms nine (9) months prior to the commencement
of the applicable Renewal Term for renewing tenants of similar credit standing
as Tenant in comparable space with equivalent quality, size, utility and
location, similar to the Premises for the length of the Renewal Term during the
same period, for comparable buildings in the Lower Tollway Class A office
submarket. Tenant shall notify Landlord within 15 days after the date of the
Market Rental Rate Notice whether it approves Landlord's designation of Market
Rental Rate (the "Response Notice"), and if Tenant does not timely give a
Response Notice, Tenant is deemed to reject the Market Rental Rate specified in
the Market Rental Rate Notice. If Tenant gives a valid Response Notice that it
disapproves of Landlord's designation of Market Rental Rate, then Landlord and
Tenant shall negotiate in good faith for a period of 30 days after the date of
the Response Notice to reach agreement on the Market Rental Rate. If Landlord
and Tenant do not reach agreement on the Market Rental Rate within the 30-day
period, then Tenant, as its sole remedy, may revoke its exercise notice by
delivering a "Revocation Notice" (herein so called) to Landlord within 5 days
after the end of the 30-day negotiation period.

 

5.       The failure of Tenant to exercise the Option herein granted within the
time period set forth herein shall constitute a waiver and termination of such
Option. In addition, any termination of this Lease during the Lease Term or any
assignment, subletting, or other transfer by Tenant, whether or not with the
approval of Landlord, shall terminate the Option contained in this Renewal
Exhibit.

 

6.       If Tenant rejects Landlord’s determination of the Market Rental Rate
and timely notifies Landlord thereof, Tenant may, in its notice to Landlord,
require that the determination of the Market Rental Rate be made by brokers (and
if Tenant makes such election, Tenant shall be deemed to have irrevocably
renewed the Lease Term, subject only to the determination of the Market Rental
Rate as provided below). In such event, within ten days thereafter, each party
shall select a qualified commercial real estate broker with at least ten years'
experience in leasing property and buildings in the city or submarket in which
the Premises are located. The two brokers shall give their opinion of Market
Rental Rate within 20 days after their retention. In the event the opinions of
the two brokers differ and, after good faith efforts over the succeeding 20-day
period, they cannot mutually agree, the brokers shall immediately and jointly
appoint a third broker with the qualifications specified above. This third
broker shall immediately (within five days) choose either the determination of
Landlord’s broker or Tenant’s broker and such choice of this third broker shall
be final and binding on Landlord and Tenant. Each party shall pay its own costs
for its real estate broker. Following the determination of the Market Rental
Rate by the brokers, the parties shall equally share the costs of any third
broker. The parties shall immediately execute an amendment as set forth above.
If Tenant fails to timely notify Landlord in writing that Tenant accepts or
rejects Landlord’s determination of the Market Rental Rate, time being of the
essence with respect thereto, Tenant’s rights under this Exhibit shall terminate
and Tenant shall have no right to renew this Lease.

 

 F-1 

 

 

7.       Should Tenant elect to arbitrate and should the arbitration not have
been concluded prior to the expiration of the Initial Term, Tenant shall pay
Base Rent and Additional Rent to Landlord after such Initial Term expiration,
including Base Rent adjusted to reflect the Market Rental Rate as Landlord has
so determined. If the amount of the Market Rental Rate as determined by
arbitration is greater than or less than Landlord's determination, then any
adjustment required to correct the amount previously paid shall be made by
payment by the appropriate party within thirty (30) days after such
determination of the Market Rental Rate.

 

 F-2 

 

 

EXHIBIT G

 

Right of First REFUSAL

 

1.                   If during the Lease Term any of the remaining space on the
10th floor of the Building or any space on the 9th or 12th floors of the
Building that is contiguous to the Premises is available for lease and Landlord
receives a third party offer covering all of the essential terms (collectively,
the “Third Party Terms”) for a lease of any of such space (the applicable space
available for lease being the “First Refusal Space”), which offer Landlord is
willing to accept, then Landlord shall deliver a notice to Tenant (the “First
Refusal Notice”) offering to lease the First Refusal Space to Tenant under the
Third Party Terms. As used in this Exhibit G only, the term “available for
lease” means that the First Refusal Space is not then subject to any existing
rights of third parties, including rights of first refusal, expansion rights,
extension rights, options to lease, or other rights nor subject to renewal by
tenants in the Building as of the date of this Lease, regardless whether their
leases contain options to renew as of the date of the Lease.

 

2.                   Tenant may elect to lease the First Refusal Space under the
Third Party Terms by delivering a notice (the “Response Notice”) to Landlord
within 5 business days after the date of the First Refusal Notice. If (i)
Landlord does not receive the Response Notice within the 5 business day period
or (ii) in the Response Notice Tenant elects not to lease the First Refusal
Space under the Third Party Terms, then Tenant is deemed to waive its right to
lease the First Refusal Space and Tenant has no further rights under this
Exhibit G with regard to the applicable First Refusal Space. Notwithstanding the
foregoing, however, if Landlord does not then execute a lease for the First
Refusal Space with any third party within 120 days of the First Refusal Notice
or in the event that the Landlord changes the economic terms presented in the
First Refusal Notice by five (5%) or more in favor of the prospective tenant,
then in either event this Exhibit G, and the parties' rights and obligations
hereunder, will be reinstated in their entirety.

 

3.                   If Tenant timely delivers a Response Notice electing to
lease First Refusal Space under the Third Party Terms, then Landlord shall
prepare, and Landlord and Tenant shall promptly execute and deliver, an
appropriate amendment to the Lease adding the First Refusal Space to the
Premises upon the terms specified in this Exhibit G.

 

4.                   Landlord is not obligated to offer the First Refusal Space
to Tenant, and Tenant may not exercise its option to lease the First Refusal
Space, if (i) an event of default is then outstanding beyond any applicable
notice and cure period, or (ii) Tenant has assigned this Lease or sublet more
than 35% of the Premises except to a Permitted Transferee.

 

5.                   Notwithstanding the terms of this Exhibit G, if Tenant
exercises its right under this Exhibit G on or before November 30, 2020, subject
to availability, regardless of whether there is a bond-fide third party offer,
Tenant shall lease such First Refusal Space on the same terms and conditions as
are applicable to the initial Premises; Landlord will provide parking at a ratio
of 5 Garage Spaces per 1,000 square feet of Rentable Area, and the rental for
such unreserved Garage Spaces shall be abated during the Initial Term; Base Rent
for the First Refusal Space will be the same Base Rent as applicable to the
initial Premises under this Lease and shall be coterminous with the initial
Premises under this Lease and Landlord will provide the abated base rent and an
allowance, equal to the abated Base Rent and the Allowance of the Lease,
prorated based on the number of Lease Months remaining in the Initial Term on
the effective date of such expansion, divided by 144 (the Initial Term for which
Base Rent is payable).

 

 G-1 

 

 

EXHIBIT H

 

REDUCTION OPTION

 

1.                   Provided that (i) this Lease is in full force and effect;
and (ii) no event of default exists under this Lease that remains uncured beyond
any applicable notice and cure period either on the date Tenant exercises its
Contraction Option (as hereinafter defined) or on the Contraction Date (as
hereinafter defined), (iii) Landlord and Tenant enter into an amendment to
expand the 1100 Premises by at least 3,000 square feet of Rentable Area (the
“Additional Premises’), and (iv) Tenant delivers Tenant’s prior written notice
to Landlord of its intention to terminate (the “Contraction Notice”), at least
30 days prior to the Contraction Date, Tenant shall have the option
(“Contraction Option”) to terminate this Lease as of the Contraction Date with
respect to the 380 Premises (“Contraction Premises”). As used herein, the
“Contraction Date” shall mean the date on which the Premises are expanded to
contain the Additional Premises. Tenant shall pay all Rent due to and through
the Contraction Date and shall surrender the Contraction Premises to Landlord on
or before the Contraction Date in the manner and in the condition provided for
in this Lease. Tenant’s failure to satisfy its obligation to vacate the
Contraction Premises in accordance with this Exhibit H shall constitute an event
of default and a holdover under this Lease, entitling Landlord to any and all
remedies under this Lease, at law and/or in equity and to holdover rent pursuant
to Paragraph 20(f).

 

2.       Tenant shall permit Landlord or its agents, at any time on and after
the date Tenant delivers the Contraction Notice to Landlord, and without notice
or charge therefore to Landlord and without diminution of Rent to enter the
Contraction Premises to exhibit the same to prospective tenants with one (1)
business day notice on and after the date Tenant delivers the Contraction Notice
to Landlord.

 

3.       If Tenant exercises its Contraction Option pursuant to this Exhibit H,
then effective upon the Contraction Date, (i) the Contraction Premises shall be
deleted from the definition of Premises; (ii) the square feet of Rentable Area
of the Premises shall be reduced accordingly by the square feet of Rentable Area
contained in the Contraction Premises; and (iii) the annual Base Rent shall be
decreased proportionately. This Contraction Option shall automatically terminate
if Tenant does not deliver a Contraction Notice in accordance with the time
periods set forth in Section 1 or upon Tenant’s exercise of the Contraction
Option. In addition, the Contraction Option is personal with respect to Hallmark
Financial Services, Inc. or any Permitted Transferee.

 

4.       On or before the Contraction Date, Tenant shall surrender to Landlord
all keys to any locks or doors entering or within the Contraction Premises that
are not also used to access the remaining Premises, and give to Landlord the
explanation of the combination of all locks for safes, safe cabinets and vault
doors, if any, in the Contraction Premises. Within three business days prior to
the Contraction Date, Tenant shall provide to Landlord a list with the name of
each employee of Tenant who will retain a key or access card to the Premises. On
and after the Contraction Date, Landlord shall have the right to (i) make any
adjustments to the access privileges associated with the keys and access cards
to be retained by the employees of Tenant identified on such list as are
necessary to terminate Tenant’s access to the Contraction Premises and (ii)
terminate the access privileges to any keys and access cards provided to any
employees of Tenant that Tenant fails to identify as required by this Section 4.

 

 H-1 

 

 

EXHIBIT I

 

TERMINATION OPTION

 

1.       Tenant shall have the one-time option to terminate this Lease (the
"Termination Option") as of the last day of the 96th Lease Month (the
"Termination Date"). Tenant may exercise the Termination Option by delivering
written notice (the "Termination Notice") at least 12 months prior to the
Termination Date. If Tenant elects to exercise the Termination Option, then
Tenant shall pay a fee to Landlord (the "Termination Fee") in an amount equal to
the unamortized portion of all transaction costs incurred by Landlord in
connection with this Lease (including the commissions paid to Landlord’s broker
and Tenant’s broker and the Allowance), which amount shall accrue interest at 8%
per annum and be amortized over the portion of the Lease Term for which Base
Rent is payable plus 6 months' Base Rent (calculated at $34.50 per RSF with
regard to the 1100 Premises and $18.00 per RSF with regard to the 380 Premises).
One half of the Termination Fee is due and payable with the Termination Notice;
the other half must be paid at least 30 days before the Termination Date. The
Termination Fee is Rent under the terms of this Lease; Tenant's failure to pay
any portion of the Termination Fee when due will entitle Landlord, without
further notice to Tenant, to exercise any of its rights hereunder.

 

2.       Tenant may not exercise the Termination Option if there is an event of
default under this Lease on the date of the Termination Notice that remains
uncured beyond any applicable notice and cure period.

 

3.       Tenant’s election to exercise the Termination Option, as evidenced by
delivery of the Termination Notice, is non-revocable by Tenant; the Lease
automatically terminates on the Termination Date. No termination under this
Exhibit I affects any then outstanding liabilities of Landlord or Tenant under
this Lease.

 

 I-1 

 

 

EXHIBIT J

 

SIGNAGE

 

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 J-1 

 

 

EXHIBIT K

 

ROOFTOP RIGHTS

 

 K-1 

 

 

EXHIBIT L

 

TEMPORARY PREMISES

 

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 L-1 

 

 

EXHIBIT L (CONT.)

 

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 L-2