Exhibit 10.4
 
 
PHOENIX TOWER
 
LEASE AGREEMENT
 
between
 
PEAK PHOENIX TOWER, L.P. ("LANDLORD")
 
and
 
PERMIAN MUD SERVICE, INC. ("TENANT")
 
Date:  April 28, 2005
 

 
TABLE OF CONTENTS
 

   
Page
     
I.
 
1
1.1
LEASED PREMISES.
2
II.
 
4
2.1
TERM.
4
2.2
USE.
4
2.3
INITIAL LEASEHOLD IMPROVEMENTS.
5
2.4
SURVIVAL.
5
2.5
INTENTIONALLY DELETED.
5
III.
 
5
3.1
RENTAL PAYMENTS.
5
3.2
BASE RENTAL.
6
3.3
SECURITY DEPOSIT.
13
IV.
 
13
4.1
SERVICES TO BE FURNISHED BY LANDLORD.
13
4.2
KEYS AND LOCKS.
18
4.3
WINDOW COVERINGS.
18
4.4
GRAPHICS.
18
4.5
REPAIRS BY LANDLORD.
19
4.6
PEACEFUL ENJOYMENT.
19
4.7
NO WARRANTIES.
19
4.8
FORCE MAJEURE.
20
4.9
COMMUNICATIONS EQUIPMENT.
20
V.
 
23
5.1
PAYMENTS BY TENANT.
23
5.2
DAMAGE TO PROJECT.
23
5.3
CARE OF THE LEASED PREMISES.
23
5.4
ASSIGNMENT AND SUBLETTING.
24
5.5
ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.
29
5.6
LEGAL USE AND VIOLATIONS OF INSURANCE COVERAGE.
31
5.7
LEGAL REQUIREMENTS; RULES OF THE PROJECT.
32
5.8
RIGHTS RESERVED BY LANDLORD.
33
5.9
NUISANCE.
34
5.10
SUBORDINATION.
34
5.11
ESTOPPEL CERTIFICATE.
35
5.12
TENANT'S REMEDIES.
35
5.13
NAME OF BUILDING AND PROJECT.
35
VI.
 
35
6.1
CONDEMNATION.
35
6.2
DAMAGES FROM CERTAIN CAUSES.
36
6.3
INTENTIONALLY DELETED.
36
     

 
i
 
 

   
Page
     
6.4
HOLDING OVER.
37
6.5
CASUALTY.
37
6.6
ATTORNEYS' FEES.
38
6.7
ASSIGNMENTS BY LANDLORD.
38
6.8
DEFAULT BY TENANT.
38
6.9
INSOLVENCY OR BANKRUPTCY.
41
6.10
NON-WAIVER.
42
6.11
CASUALTY INSURANCE.
42
6.12
LIABILITY INSURANCE.
42
6.13
HOLD HARMLESS.
43
6.14
WAIVER OF SUBROGATION RIGHTS.
43
6.15
PARKING.
43
6.16
SEVERABILITY
45
6.17
NOTICES.
45
6.18
SUCCESSORS.
46
6.19
ENTIRETY.
46
6.20
FINANCIAL STATEMENTS.
46
6.21
AMENDMENTS.
46
6.22
MISCELLANEOUS.
47
6.23
EXCLUSIVE USE.
48
6.24
BROKERS.
49
6.25
VACATING THE LEASED PREMISES.
49
VII.
 
49
7.1
RENEWAL OPTIONS.
49
7.2
RIGHT OF REFUSAL.
52

EXHIBITS

A
- Description of Land
B
- Floor Plan of Leased Premises
C-1
- Tenant Improvements Work Schedule
C-2
- Schedule of Building Standard Improvements
D
- Certificate of Commencement Date and Rent Commencement Date
E
- Project Rules & Regulations
F
- Exclusive Use Provision
G
- Expansion Space
H
- Technical Standards

 
 
ii

 
INDEX
 
DEFINED TERMS
 
 
TERM
PAGE
   
Access Card Request Form
18
Access Equipment
18
Actual Tenant
27
Additional Construction Costs
See Exhibit C-1
Additional Contractor
See Exhibit C-1
Additional Electrical Equipment
15
Additional Equipment
22
Affiliate
25
Annual Reconciliation Payment
8
Assigned Space
28
Assignee
28
Base Rental
6
Base Rental Adjustment
7
Base Rental Rate
6
Basic Cost Component
7
Basic Costs
8
Bid Documents
See Exhibit C-1
Bidding Contractors
See Exhibit C-1
Broker
49
Building
2
Building Operating Hours
13
Building Standard
See Exhibit C-1
Building Standard Improvements
See Exhibit C-2
Building Standard Rated Electrical Design Load
14
Building Standard Services
13
Business Days
47
Champions
24
Champions Assignment
28
Commencement Date
See Exhibit C-1
Common Areas
3
Communications Equipment
20
Company
24
Construction Allowance
See Exhibit C-1
Construction Contract
See Exhibit C-1
Construction Cost
See Exhibit C-1
Construction Date
See Exhibit C-1
Control
25
Costs
33
Effective Date
1
Eighth Month's Rent
13
Election
52
   

 
iii

 
TERM
PAGE
   
Election Notice
50
Environmental Laws
32
Essential Services
17
Estimated Construction Cost
See Exhibit C-1
Event of Default
38
Evidence Date
See Exhibit C-1
Expansion Space
52
Expense Stop
50
First Renewal Option
49
First Renewal Term
49
Garage
2
General Common Areas
3
Governmental Authority
32
Hazardous Materials
32
Holidays
14
Initial Leased Premises
See Exhibit C-1
Initial Term
4
Intent Notice
50
Interest Rate
6
Interruption
17
Land
2
Landlord
1
Lease
1
Lease Month
6
Lease Year
7
Leased Premises
2
Legal Requirements
32
Market Base Rental Rate
51
Net Rentable Area
2
New Champions Lease
28
New Site
20
Notice
25
Offer
52
Operating Expenses
8
Outside Contractor
29
Parking Permits
44
Parking Rental
44
Partial Assignment
28
PCB
32
Permitted Affiliate
24
Project
2
Project Rules
32
Refusal Election Period
53
Refusal Expense Stop
54
Refusal Notice
52
   

 
iv

 
TERM
PAGE
   
Refusal Space
52
Refusal Space Rental Commencement Date
54
Release
33
Remaining Allowance
See Exhibit C-1
Renewal Option
49
Renewal Options
49
Renewal Term
49
Renewal Terms
49
Rent
6
Rent Commencement Date
4
Reportable Quantity
33
Reserved Permits
43
Revised Bid Documents
See Exhibit C-1
Right of Refusal
52
Satellite Rent
23
Second Renewal Option
49
Second Renewal Term
50
Security Cards
18
Security Deposit
13
Service Areas
2
Successor
34
Superior Rights
52
Technical Standards
21
Tenant
1
Tenant Architect
See Exhibit C-1
Tenant Contractor
See Exhibit C-1
Tenant Engineering Drawings
See Exhibit C-1
Tenant Improvements
See Exhibit C-1
Tenant Working Drawings
See Exhibit C-1
Term
4
Unassigned Permits
43
Untenantable
17
Usable Area
3

 

 
v
 
 

LEASE AGREEMENT
 
THE STATE OF TEXAS
 
COUNTY OF HARRIS

 
THIS LEASE AGREEMENT (this "Lease") is made and entered into as of April 28,
2005 (the "Effective Date") between PEAK PHOENIX TOWER, L.P. ("Landlord"), and
PERMIAN MUD SERVICE, INC., a Texas corporation ("Tenant").
 
W I T N E S S E T H:
 
In consideration of the sum of Ten Dollars ($10.00) and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
each in consideration of the duties, covenants and obligations of the other
hereunder, Landlord and Tenant hereby agree as follows:
 
SUMMARY OF PRIMARY TERMS
 
I.
 
Base Rental (Section 3.2(a)): Tenant shall pay as the Base Rental an annual
amount equal to the product of (x) the Base Rental Rate (defined in Section
3.2(a)) for the applicable Lease Month (defined in Section 3.2(a)) identified
below, multiplied by (y) the number of square feet of Net Rentable Area
comprising the Leased Premises:
 
Lease Months
Base Rental
Rate
1 through 7
$0.00
8 through 45
$15.00
46 through 69
$16.75
70 through 120
$18.75

Basic Cost Component (Section 3.2(b)(i)):  Actual Basic Costs for the Base Year.
 
Base Year:  2005.
 
Commencement Date (Exhibit C-1): The date of delivery to Tenant of the Leased
Premises in its current, as-is condition.
 
Construction Allowance (Exhibit C-1): $35.00 per square foot of Net Rentable
Area contained in the Leased Premises (or $1,805,370.00).
 
Expiration Date (Section 2.1): The date ten (10) years after the Rent
Commencement Date.
 

 
1
 
 

Leased Premises (Section 1.1): 51,582 square feet of Net Rentable Area on Levels
27 and 28 of the Building.
 
Net Rentable Area of the Building (Section 1.1): 618,578 square feet of Net
Rentable Area.
 
Parking Permits (Section 6.15): One hundred eighty (180) Parking Permits, one
hundred sixty-five (165) of which shall be Unassigned Permits and fifteen (15)
of which shall be Reserved Permits.
 
Rent Commencement Date (Section 2.1):  August 1, 2005.
 
1.1           LEASED PREMISES.  Subject to and upon the terms, provisions and
conditions hereinafter set forth, Landlord does hereby lease to Tenant and
Tenant does hereby lease from Landlord those certain premises (the "Leased
Premises") in the building commonly referred to as Phoenix Tower as of the date
hereof (the "Building") located in Houston, Texas on the land (the "Land")
described on Exhibit A (the Building, the Land, the Garage [defined below], and
all additional improvements and additional facilities now or hereafter located
on the Land that serve the Building or the tenants of the Building hereinafter
referred to as the "Project"), such Leased Premises being more particularly
described as follows:
 
Fifty-one thousand five hundred eighty-two (51,582) square feet of Net Rentable
Area (defined below) located on Levels 27 and 28 of the Building as reflected on
the floor plans of such Leased Premises attached hereto as Exhibit B.
 
"Garage" shall mean the parking garage located under the Building which serves
the Building.
 
"Net Rentable Area" shall mean the area or areas of space within the Building
determined as follows:  (i) Net Rentable Area in the case of a full floor leased
to a single tenant is determined by measuring from the inside surface of the
outer pane of glass and extensions of the plane thereof in non-glass areas to
the inside surface of the opposite outer pane of glass and extensions of the
plane thereof in non-glass areas and shall include all areas enclosed by such
surfaces, excluding only Service Areas (defined below) and General Common Areas
(defined below), plus an allocation of the square footage of the General Common
Areas, and (ii) Net Rentable Area in the case of a floor leased to more than one
tenant (i.e., a multi-tenant floor) shall include the total square footage of
all floor areas enclosed by the inside surface of the outer pane of glass and
extensions of the plane thereof in non-glass areas and by demising walls
(measured from the inside surface of demising walls), excluding only Service
Areas and General Common Areas, plus an allocation of the square footage of the
Common Areas (defined below) and the General Common Areas.  In determining Net
Rentable Area pursuant to (i) and (ii) above, no deduction from Net Rentable
Area shall be made for columns or projections necessary to the Building.
 
"Service Areas" shall mean the total square footage within vertical penetrations
such as (and measured from the midpoint of the walls enclosing) Building stairs,
elevator shafts,  fire towers, flues, vents, stacks, vertical pipe shafts, and
vertical ducts; however, structural
 

 
2
 
 

columns are not included in Service Areas.  Areas for the specific use of Tenant
or other tenants of the Project or installed at the request of Tenant or other
tenants such as special stairs or elevators are not included within the
definition of Service Areas.
 
"General Common Areas" shall mean the total square footage within (and measured
from the midpoint of the walls enclosing or from the inside surface of the outer
pane of glass enclosing, or extensions of the plane thereof in non-glass areas)
the Building's elevator machine rooms, main mechanical rooms, loading dock
facilities, telephone switch rooms, main electrical rooms, public lobbies
(including the main floor lobby of the Building), engineering, security, postal
and cleaning areas, and other areas not leased or held for lease within the
Building but which are necessary or desirable for the proper utilization of the
Building or to provide customary services to the Building.  The allocation of
the square footage of the General Common Areas referred to in this Section 1.1
shall be equal to the total square footage of the General Common Areas
multiplied by a fraction, the numerator of which is the Net Rentable Area of the
Leased Premises (excluding the allocation of the General Common Areas) and the
denominator of which is the total of all Net Rentable Area of space leased or
held for lease as office space or retail space contained in the Building
(excluding the allocation of the General Common Areas).
 
"Common Areas" shall mean the total square footage of all areas within (and
measured from the midpoint of the walls enclosing or inside surface of the outer
pane of glass enclosing) public corridors, elevator foyers, rest rooms,
mechanical rooms, janitor closets, telephone, electrical and equipment rooms,
and other similar facilities for the use of all tenants on the floor on which
the Leased Premises are located.  The allocation of the square footage of the
Common Areas shall be equal to the total square footage of the Common Areas on
said floor multiplied by a fraction, the numerator of which is the Net Rentable
Area of the portion of the Leased Premises (excluding the allocations of General
Common Areas and Common Areas) located on said floor and the denominator of
which is the total of all Net Rentable Area on said floor (excluding the
allocations of General Common Areas and Common Areas).
 
"Usable Area" shall mean (A) in the case of a full floor leased entirely by a
single tenant, the Net Rentable Area of the floor area minus the allocation of
General Common Areas (it being agreed that Common Areas are included in the
calculations of Usable Area in the case of a full floor leased entirely by a
single tenant), and (B) in the case of a floor not leased entirely by one
tenant, the Net Rentable Area of the floor area minus the allocation of General
Common Areas and Common Areas which were included in Net Rentable Area pursuant
to this Section 1.1.
 
The Net Rentable Area in the Leased Premises is hereby stipulated for all
purposes hereof to be 51,582 square feet as of the Effective Date (and such
amount shall not be adjusted as a result of minor variations resulting from
actual construction and completion of the Leased Premises for occupancy so long
as such work is done in accordance with the terms and provisions of this
Lease).  The Net Rentable Area in the Building is stipulated to be 618,578
square feet.  The foregoing stipulations of the Net Rentable Area in the Leased
Premises and Building shall apply even if the Net Rentable Area in the Leased
Premises and Building, if calculated in accordance with the foregoing
definition, would result in a higher or lower calculation.
 

 
3
 
 

II.
 
2.1           TERM.
 
(a)           Subject to and upon the terms and conditions set forth herein, or
in any exhibit or addendum attached hereto, the term of this Lease shall
commence as to the Initial Leased Premises on the Commencement Date (as defined
in Exhibit C-1) and shall expire as to the entire Leased Premises (including any
space added to the Leased Premises after the Commencement Date, including,
without limitation, pursuant to Section 7.2 hereof) at 6:00 P.M. on the day
immediately preceding the same date of the one hundred twentieth (120th)
calendar month after the Rent Commencement Date (the "Initial Term").  The
Initial Term may be extended pursuant to Section 7.1 hereof (the Initial Term
and, to the extent renewed and extended, the Renewal Term [defined in Section
7.1] are hereinafter collectively called the "Term").
 
As used in this Lease, "Rent Commencement Date" shall mean August 1, 2005.
 
(b)           After the Rent Commencement Date, Landlord shall submit to Tenant
and Tenant shall execute and deliver to Landlord within ten (10) days of
Tenant's receipt thereof from Landlord, a declaration (in the form attached as
Exhibit D) to confirm the date upon which the Commencement Date and the Rent
Commencement Date occurred.  Tenant shall have ten (10) days after receipt of
such declaration to give written notice to Landlord objecting to the
declaration, failing which Tenant shall be deemed to have agreed the declaration
is correct and Tenant shall be required to execute the declaration within ten
(10) days after the expiration of such previous ten (10) day period.  If Tenant
objects to such declaration within such ten (10) day period, Landlord and Tenant
shall work together to resolve their differences.  After such differences have
been resolved, Landlord and Tenant shall execute the corrected declaration.  All
payments of Base Rental as adjusted by the Base Rental Adjustment (each as
defined in Article III), Parking Rental (defined in Section 6.15) and all other
payments required of Tenant herein shall be made as and when required herein,
notwithstanding any unresolved objections to the declaration.  All such payments
shall be based upon Landlord's determination of the Rent Commencement Date of
which Landlord will notify Tenant until such objections have been finally
resolved, whereupon any overpayment or any underpayment theretofore made shall
be adjusted by reducing or increasing, as the case may be, the next installment
of Base Rental coming due by the amount of such overpayment or underpayment, as
applicable (and no interest or penalty shall be applied thereto).
 
2.2           USE.  The Leased Premises are to be used and occupied by Tenant
solely for general office purposes consistent with the uses of first class
high-rise office buildings in metropolitan Houston, Texas, and for no other
purpose.  Notwithstanding anything to the contrary in this Lease, the Leased
Premises shall not be used for any purpose which would (i) adversely affect the
appearance of the Project, (ii) be visible from the exterior of, or the public
areas of, the Project, (iii) adversely affect ventilation in other areas of the
Project (including without limitation, the creation of offensive odors), (iv)
create unreasonable elevator loads, (v) cause structural loads to be exceeded,
(vi) create unreasonable noise levels, (vii) otherwise unreasonably interfere
with Project operations or other tenants of the Project, (viii) violate Legal
Requirements (defined in Section 5.7 hereof), or (ix) violate, or cause a
violation of, the
 

 
4
 
 

Exclusive Use provision described in Section 6.23 hereof and set forth on
Exhibit F attached hereto and incorporated herein for all purposes.  In all
events, Tenant shall not engage in any activity which is not in keeping with the
first-class standards of the Project.
 
Without limiting the foregoing, Tenant agrees that Tenant will not use any part
of the Leased Premises for the following uses:  health care services, telephone
or telegraph agency, radio, television or other communication station,
employment agency, public restaurant or bar, retail, wholesale or discount shop
for sale of merchandise, retail service shop, school or classroom (except as
incidental to office uses but not as the principal use thereof), or governmental
or quasi-governmental bureau, department or agency.
 
2.3           INITIAL LEASEHOLD IMPROVEMENTS.  Landlord and Tenant each shall
comply with the provisions of the Tenant Improvements Work Schedule attached
hereto as Exhibit C-1.
 
2.4           SURVIVAL.  Any claim, cause of action, liability or obligation
arising during the Term and under the provisions hereof in favor of a party
hereto and against or obligating the other party hereto shall survive the
expiration or any earlier termination of this Lease.
 
2.5           INTENTIONALLY DELETED.
 
III.
 
3.1           RENTAL PAYMENTS.
 
(a)           Commencing on the Rent Commencement Date and continuing thereafter
throughout the Term, Tenant hereby agrees to pay Base Rental (defined in Section
3.2) as adjusted by the Base Rental Adjustment (defined in Section 3.2) in
accordance with this Section 3.1 and Section 3.2.  Base Rental as adjusted by
the Base Rental Adjustment (excluding the Annual Reconciliation Payment [defined
in Section 3.2 below]) shall be due and payable in twelve (12) equal monthly
installments on the first day of each calendar month during the Term (subject to
the provisions of subsection (b) below), and Tenant hereby agrees to so pay such
rent monthly in advance and without demand to Landlord's address in Section 6.17
(or such other address as may be designated in writing by Landlord from time to
time).  Notwithstanding the foregoing, Base Rental for the eighth (8th) Lease
Month shall be paid to Landlord on the Effective Date as provided in Section 3.3
below.  Parking Rental shall be due and payable in accordance with this Section
3.1 and Section 6.15.
 
(b)           If the Rent Commencement Date is other than the first day of a
calendar month or if this Lease expires or terminates on other than the last day
of a calendar month, then the installments of Base Rental and Parking Rental for
such month or months shall be prorated and the installment or installments so
prorated shall be paid in advance.  Said installments for such prorated month or
months shall be calculated by multiplying the equal monthly installment by a
fraction, the numerator of which shall be the number of days of the Term
occurring during said commencement or expiration month, as the case may be, and
the denominator of which shall
 

 
5
 
 

be the number of days in said month.  Landlord and Tenant hereby agree that the
provisions of this Section 3.1(b) shall survive the expiration or termination of
this Lease.
 
(c)           Tenant agrees to pay all rent and other sums of money as shall
become due from and payable by Tenant to Landlord under this Lease
(collectively, the "Rent") at the times and in the manner provided in this
Lease, without abatement, notice, demand, set-off or counterclaim.  All Rent in
addition to Base Rental shall constitute additional rental under this Lease and
Landlord shall be entitled to exercise the same rights and remedies provided for
in this Lease for the nonpayment of any Rent.  All Rent owed by Tenant to
Landlord under this Lease shall bear interest from the date due until payment is
received at the rate (the "Interest Rate") equal to the lesser of (i) a per
annum rate equal to the "prime rate" or "base rate" announced by The Chase
Manhattan Bank or its successor, from time to time (or if the "prime rate" or
"base rate" is discontinued, the rate announced by such bank as that being
charged to its most creditworthy commercial borrowers), plus five percent (5%),
or (ii) the maximum contract interest rate per annum allowed by law.
 
(d)           If Tenant fails to pay any regular monthly installment of Rent by
the fifth (5th) day of the month in which the installment is due, or any other
sum or money owed to Landlord within five (5) days after such sums are due and
owing to Landlord, Tenant shall pay a late charge equal to the greater of (i)
$250.00, or (ii) an amount equal to five percent (5%) of the amount due, for
each and every thirty (30) day period that said amount remains unpaid (but in no
event shall the amount of such late charge exceed an amount based upon the
highest legally permissible contract rate chargeable at any time by Landlord
under the circumstances) to compensate Landlord for the administrative expenses
incurred.  Should Tenant make a partial payment of past due amounts, the amount
of such partial payment shall be applied first to reduce all accrued and unpaid
late charges, in inverse order of maturity, and then to reduce all other past
due amounts, in inverse order of their maturity.
 
3.2           BASE RENTAL.
 
(a)           Tenant hereby agrees to pay as the base annual rental ("Base
Rental") for the lease and use of the Leased Premises, an annual amount equal to
product of (x) the annual base rental rate identified below ("Base Rental Rate")
for the applicable Lease Month (defined below) identified below, multiplied by
(y) the number of square feet of Net Rentable Area comprising the Leased
Premises, subject to increase pursuant to subsection (b) below:
 
Lease Month
Base Rental Rate
1 through 7
0.00
8 through 45
$15.00
46 through 69
$16.75
70 through 120
$18.75

As used herein, "Lease Month" means each of twelve (12) one-month periods during
a Lease Year (defined below) with the first (1st) Lease Month commencing on the
Rent
 

 
6
 
 

Commencement Date and expiring on the day immediately preceding the same day of
the next calendar month and with each subsequent Lease Month commencing upon the
expiration of the prior Lease Month and expiring on the day immediately
preceding the same day of the next calendar month.  The term "Lease Year" means
a period of one (1) year, with the first (1st) Lease Year commencing on the Rent
Commencement Date and expiring on the day immediately preceding the first (1st)
anniversary of the Rent Commencement Date and with each subsequent Lease Year
commencing upon the expiration of the prior Lease Year.
 
From and after the expiration of the Initial Term (to the extent Tenant renews
and extends this Lease pursuant to Section 7.1), Tenant agrees to pay Base
Rental for the Leased Premises at the Base Rental Rate determined in accordance
with the provisions of Section 7.1.
 
(b)           The Base Rental payable under subsection (a) shall be adjusted
from time to time in accordance with the following provisions (any such
adjustment hereinafter the "Base Rental Adjustment"):
 
(i)           Base Rental includes a component (the "Basic Cost Component")
attributable to Basic Costs (hereinafter defined) equal to actual Basic Costs
per square foot of Net Rentable Area in the Leased Premises for the Base
Year.  Prior to January 1 of each calendar year during the Term after the
calendar year in which the Rent Commencement Date occurs, or as soon thereafter
as reasonably practical, Landlord shall provide an estimate of Basic Costs for
the forthcoming calendar year.  Tenant shall pay Base Rental for such
forthcoming calendar year equal to the Base Rental set forth in subsection (a)
above for such time period adjusted upward by an amount equal to the product of
(A) the difference between the Basic Cost Component and the coming calendar
year's estimated Basic Costs per square foot of Net Rentable Area in the
Building, multiplied by (B) the Net Rentable Area of the Leased Premises.
 
(ii)           By June 1 of each calendar year during Tenant's occupancy, or as
soon thereafter as reasonably practical, Landlord shall furnish to Tenant a
statement of Basic Costs for the previous calendar year or partial calendar
year, as applicable, occurring during the Term.  If actual Basic Costs for such
calendar year or partial calendar year, as applicable, are greater than
Landlord's estimate thereof pursuant to clause (i) above, Tenant shall be
obligated to pay to Landlord within thirty (30) days of the delivery of such
statement a lump sum payment (which payment shall be deemed a payment of Rent
hereunder for all purposes) equal to the product of (x) the Net Rentable Area in
the Leased Premises, multiplied by (y) the amount by which actual Basic Costs
per square foot of Net Rentable Area in the Building exceed Landlord's estimate
thereof for such calendar year or partial calendar year, as applicable.  If
actual Basic Costs for such calendar year or partial calendar year, as
applicable, are less than Landlord's estimate thereof pursuant to clause (i)
above, Landlord shall promptly after delivery of such statement make a lump sum
payment to Tenant (or at Landlord's option, Landlord may credit such lump sum
amount against remaining Base Rental installments for the current calendar year)
equal to the product of (A) the Net Rentable Area in the Leased Premises,
multiplied by (B) the amount by which estimated Basic Costs per square foot of
Net Rentable Area in the Building exceed the actual amount thereof (to the
extent such excess was actually paid by Tenant, but in no event shall such
payment or credit be in an
 

 
7
 
 

amount which would result in Tenant paying Base Rental for the applicable
calendar year in an amount less than the annual Base Rental specified in
subsection (a) above).  The effect of this reconciliation payment (the "Annual
Reconciliation Payment") is that Tenant will pay during the Term its
proportionate share (as defined in clause (iii) below) of Basic Costs increases
over the Basic Cost Component, and no more.  The provisions of this subsection
(ii) shall survive the expiration or earlier termination of this Lease.
 
(iii)           All increases in Basic Costs shall be paid by Tenant in the
proportion that the Net Rentable Area of the Leased Premises bears to
ninety-five percent (95%) of the total Net Rentable Area of the space leased or
held for lease in the Building, or to the total Net Rentable Area of space
leased in the Building (if such total leased area is greater than ninety-five
percent (95%) of the total Net Rentable Area of space leased or held for lease
in the Building).
 
(iv)           Nothing contained in this subsection (b) shall be construed at
any time so as to reduce the annual Base Rental payable hereunder below the
amount set forth in subsection (a) above.
 
(c)           "Basic Costs" as that term is used herein, shall consist of all
Operating Expenses (defined below) of the Project as reasonably allocated by
Landlord, computed on an accrual basis and determined in accordance with
generally accepted accounting principles consistently applied.  "Operating
Expenses" as that term is used herein, shall mean all expenses and costs (but
excluding charges separately paid by other tenants of the Project or other third
parties other than through the payment of its share of operating expenses) of
every kind and nature that Landlord shall pay or become obligated to pay because
of or in connection with the ownership, maintenance, repair, and operation of
the Project, including but not limited to, the following:
 
(i)           Wages, salaries, fees and all related expenses (including, without
limitation, taxes, insurance, burdens and benefits and costs incurred in
providing same) of all personnel engaged in the operation, maintenance, repair
and access control of the Project and personnel who provide traffic control
relating to ingress and egress to and from the Garage and surrounding public
streets (excluding, however, executive personnel of Landlord [but including the
senior property manager, even if an executive of Landlord], and employees senior
to the senior property manager, senior controller and senior engineer), which
amounts shall be appropriately allocated with respect to personnel engaged on
other projects in addition to the Project.
 
(ii)           Cost of all supplies, tools, equipment and materials, whether
purchased or leased, used in the operation, maintenance, repair and/or access
control of the Project.
 
(iii)           Cost of utilities for the Project, including but not limited to,
water, steam, sewer, waste disposal, gas and electricity, and power for heating,
lighting, air conditioning and ventilating the Project (including all Common
Areas, General Common Areas and Service Areas).
 

 
8
 
 

(iv)           A net management fee paid to the property manager for the
management of the Project of three percent (3%) of the gross revenues of the
Project (excluding any Parking Rental paid by Tenant to Landlord) for such
calendar year;  (provided, however, in lieu thereof, Landlord may charge Tenant
separately, and not as a part of Basic Costs, for a management fee contribution
of three percent (3%) of the Base Rental and the Base Rental Adjustment payable
by Tenant for such calendar year) and the cost of all maintenance and service
agreements for the Project and the equipment therein, including but not limited
to, access control service, window cleaning, traffic control, janitorial
service, landscape maintenance, and elevator maintenance.  If Landlord so elects
to charge Tenant separately for a management fee contribution (and not as a part
of Basic Costs) as provided in the parenthetical of the immediately preceding
sentence, the Basic Cost Component set forth in Section 3.2(b)(i) of this Lease
shall be reduced by an amount equal to Tenant's pro rata share of such
management fee on a Net Rentable Area basis and, consequently, the Base Rental
Rate set forth in Section 3.2(a) of this Lease shall also be reduced by an
amount equal to Tenant's pro rata share of such management fee on a Net Rentable
Area basis.
 
(v)           Legal and accounting costs for the Project (but not for the
operation of Landlord as an entity), including a reasonable allocation of
off-site costs, together with the costs of annual audits of the Project
operating costs by certified public accountants (if such audits are performed).
 
(vi)           Cost of all insurance relating to the Project, including but not
limited to, fire and extended coverage insurance, rental loss or abatement
insurance, and casualty and liability insurance applicable to the Project and
Landlord's personal property used in connection therewith, plus the cost of all
deductible payments made by Landlord in connection therewith.
 
(vii)           Cost of repairs, replacements and general maintenance (excluding
repairs, replacements and general maintenance paid for with proceeds of
insurance or condemnation or by third parties).
 
(viii)                      Any and all common area maintenance costs related to
public areas, including without limitation, sidewalks and landscaping for the
Project.
 
(ix)           All taxes, assessments and governmental charges, whether or not
directly paid by Landlord, whether federal, state, county or municipal and
whether they be by taxing districts or any Governmental Authority (defined in
Section 5.7 hereof) presently taxing the Project or by others subsequently
created, attributable to the Project or its operation, but excluding, however,
taxes and assessments attributable to the personal property of tenants, federal
and state taxes on income, death taxes, franchise taxes, and any taxes imposed
or measured on or by the income of Landlord from the operation of the Project or
imposed in connection with any change of ownership of the Project; provided,
however, if the taxing authorities do not separately assess the Project,
Landlord may make a reasonable allocation of the taxes, assessments or charges
to give effect to this sentence, and provided further, however, that if at any
time during the Term, the present method of taxation or assessment shall be so
changed that the whole or any
 

 
9
 
 

part of the taxes, assessments, levies, impositions or charges now levied,
assessed or imposed on real estate and the improvements thereon shall be
discontinued and as a substitute therefor, or in lieu of or in addition thereto,
taxes, assessments, levies, impositions or charges shall be levied, assessed or
imposed, wholly or partially, as a capital levy or otherwise, on the rents
received from the Project or the rents reserved herein or any part thereof, then
such substitute or additional taxes, assessments, levies, impositions or
charges, to the extent so levied, assessed or imposed with respect to the
Project, shall be deemed to be included within Operating
Expenses.  Consultation, accounting and legal fees and other fees and costs
resulting from any challenge of tax assessments as reasonably allocated by
Landlord also shall be included in Operating Expenses.  Tenant hereby waives any
and all rights under Legal Requirements to an administrative or judicial review
of any determination of the appraised value of the Project, including without
limitation, any rights available under the Texas Tax Code (as amended).  It is
agreed that Tenant will be responsible for ad valorem taxes on its personal
property and on the value of the leasehold improvements in the Leased Premises
to the extent that the same exceed Building Standard Improvements (defined in
Exhibit C-2) (and if the taxing authorities do not separately assess Tenant's
leasehold improvements, Landlord may make a reasonable allocation of the ad
valorem taxes allocated to the Project to give effect to this sentence).  All
taxes, assessments and governmental charges shall be included in Operating
Expenses in the calendar year in which such taxes, assessments or governmental
charges are levied, assessed or imposed without regard to when such taxes,
assessments or governmental charges are payable; provided, however, in the case
of special taxes and assessments which may be payable in installments, only the
amount of each installment accruing during a calendar year shall be included in
the Operating Expenses for such year.
 
(x)           Amortization of the cost, together with reasonable financing
charges, of furnishing and installing capital investment items which (a) are
primarily for the purpose of (i) reducing Operating Expenses or avoiding
increases in Operating Expenses in Landlord's good faith estimate, but only to
the extent of the actual savings achieved thereby, as reasonably estimated by
Landlord in good faith, or (ii) promoting safety, or (b) may be required by
Legal Requirements (except for the ADA [defined in Section 5.7] and other
accessibility laws) that are enacted after the date of this Lease or that are
due to legal interpretations that take effect after the date of this Lease
(Landlord and Tenant acknowledging that Operating Expenses, including the Basic
Cost Component, will include costs incurred by Landlord as part of its ongoing
program to cause the Building to comply with applicable accessibility
laws).  All such costs shall be amortized over the shorter of the useful life of
the capital investment items or the useful life of such reduction in savings
with the useful life and amortization schedule being determined in accordance
with generally accepted accounting principles (in no event to extend beyond the
remaining useful life of the Project).
 
(xi)           Costs of licenses, permits and inspection fees related to the
Project.
 
(xii)           Cost of an office in the Building maintained for management of
the Project.
 

 
10
 
 

Anything in the foregoing provisions hereof to the contrary notwithstanding,
Operating Expenses shall not include the following:
 
(a)           Leasing commissions, attorneys' fees, costs, disbursements and
other expenses incurred in connection with negotiations for leases with tenants,
other occupants, or prospective tenants or other occupants of the Project, or
similar costs incurred in connection with disputes with tenants, other
occupants, or prospective tenants or other occupants of the Project.
 
(b)           Non-cash items, such as deductions for depreciation or
obsolescence of the Project and the Project equipment, or interest on capital
invested (except as provided in clause (x) above).
 
(c)           Payments of principal and interest or other finance charges made
on any debt (except as provided in clause (x) above), and rental payments made
under any ground or underlying lease or leases, except to the extent that a
portion of such payments is expressly for ad valorem/real estate taxes or
insurance premiums on the Project.
 
(d)           Costs incurred by Landlord in the sale, financing, refinancing,
mortgaging, selling or change of ownership of the Project, including brokerage
commissions, attorneys' and accountants' fees, closing costs, title insurance
premiums, transfer taxes and interest charges.
 
(e)           Costs which are to be capitalized in accordance with generally
accepted accounting principles not included under Section 3.2(c)(i) through
(xii).
 
(f)           Costs and expenses attributable to the initial construction of the
Project.
 
(g)           Any penalty charges incurred by Landlord due to Landlord's late
payment of taxes, utility bills or other amounts included in Operating Expenses
except to the extent Landlord was contesting the payment of any such item in
good faith.
 
(h)           Allowances and other costs and expenses incurred in fixturing,
furnishing, renovating or otherwise improving, decorating or redecorating space
for tenants or prospective tenants of the Building, or vacant leasable space in
the Building (including permit, license and inspection costs but excluding
normal maintenance, repair and replacement costs).
 
(i)           Cost of any political or charitable donations or contributions.
 
(j)           Any bad debt loss, rent loss or reserves for bad debts.
 

 
11
 
 

(k)           Costs incurred by Landlord in the sale, financing, refinancing,
mortgaging, selling or change of ownership of the Project, including brokerage
commissions, attorneys' and accountants' fees, closing costs, title insurance
premiums, transfer taxes and interest charges.
 
(l)           Landlord's general corporate overhead relating solely to the
internal organization and function of Landlord as a business entity (i.e.,
trustee's fees and partnership organizational expenses) (as opposed to the
maintenance, ownership and operation of the Project).
 
(m)           Leasing commissions, attorneys' fees, costs, disbursements and
other expenses incurred in connection with negotiations for leases with tenants,
other occupants, or prospective tenants or other occupants of the Project, or
similar costs incurred in connection with disputes with tenants, other
occupants, or prospective tenants or other occupants of the Project.
 
(n)           All amounts which would otherwise be included in Operating
Expenses which are paid to any affiliate of Landlord to the extent the costs of
such services exceed the amount which would have been paid in the absence of
such relationship for similar services of comparable level, quality and
frequency rendered by persons of similar skill, competence and experience (but
Operating Expenses shall include any such amounts specifically provided for or
permitted in this Lease [including without limitation, the sums permitted
pursuant to subsections (i) and (iv) above] for which the provisions of this
Lease shall control).
 
(d)           If an Annual Reconciliation Payment is due by Tenant to Landlord
with respect to the immediately preceding calendar year pursuant to Section
3.2(b)(ii) above, Tenant, at its sole cost and expense, shall have the right (to
be exercised by giving notice to Landlord within sixty (60) days after receipt
of the statement of Basic Costs for such previous calendar year) to audit and/or
inspect Landlord's books and records pertaining only to items affecting Basic
Costs for such preceding calendar year; provided that such audit and/or
inspection must be commenced and concluded by December 31 of the year following
the year to which any such disputed item relates; and provided further that such
audit and/or inspection does not unreasonably interfere with the conduct of
Landlord's business.  Notwithstanding the foregoing, if Tenant elects to audit
and/or inspect Landlord's books and records to the extent permitted above,
Landlord, in its sole discretion, may elect to furnish Tenant a copy of an audit
prepared by an independent certified public accountant in lieu of Tenant
performing the aforementioned audit and/or review.
 
(e)           Notwithstanding any other provision herein to the contrary, it is
agreed that in the event the Net Rentable Area of space leased or held for lease
in the Building is not fully occupied or provided fully with Building Standard
Services during any partial year or any full calendar year, Basic Costs which
vary with occupancy shall be computed for such year as though the Net Rentable
Area of space leased or held for lease in the Building had been fully occupied
and provided with Building Standard Services.
 

 
12
 
 

(f)           Notwithstanding anything herein to the contrary, all income
received by Landlord on account of the operations of the Parking Garage shall be
applied to offset the costs of operating the Parking Garage which are included
in Operating Expenses.
 
3.3           SECURITY DEPOSIT.  Tenant hereby agrees to pay to Landlord on the
Effective Date, in cash or by certified check, a sum equal to the Base Rental
payment for the eighth (8th) Lease Month (the "Eighth Month's Rent") equal in
amount to $64,477.50 (the "Security Deposit").  Tenant hereby grants to Landlord
a security interest in the Security Deposit.  Upon the occurrence of an Event of
Default, Landlord, from time to time, without prejudice to any other remedy, may
use the Security Deposit to the extent necessary to make good any arrears of
Base Rental, Base Rental Adjustment, Parking Rental or to pay any other sums
owed to Landlord, including any sums described in Section 6.8 or to pay the cost
of any damage, injury, expense, or liability caused by any default by Tenant
under this Lease.  Landlord shall have, and Landlord expressly retains and
preserves, all rights of setoff and recoupment and any and all similar remedies
available under applicable laws or in equity.  To the extent an Event of Default
has not occurred under this Lease, that portion of the Security Deposit equal to
the Eighth Month's Rent (to the extent such portion of the Security Deposit has
not otherwise been applied by Landlord pursuant to this Section 3.3) shall be
applied by Landlord to Base Rental due by Tenant on the first day of the eighth
(8th) Lease Month.  If an Event of Default has not occurred, any remaining
balance of the Security Deposit held by Landlord pursuant to this Section 3.3
shall be returned by Landlord to Tenant within a reasonable period of time after
the termination or expiration of this Lease.  The Security Deposit shall not be
considered an advance payment of rental or a measure of Landlord's damages in
case of a default by Tenant.  Tenant shall not be entitled to receive and shall
not receive any interest on the Security Deposit, and Landlord may commingle the
same with other monies of Landlord.  In the event Landlord applies the Security
Deposit or any portion thereof to the payment of any sum described above and
this Lease is not terminated, Tenant immediately shall deposit with Landlord an
amount of money equal to the amount so applied and such amount shall be deemed
to be part of the Security Deposit.
 
IV.
 
4.1           SERVICES TO BE FURNISHED BY LANDLORD.
 
(a)           Landlord shall furnish Tenant during Tenant's occupancy of the
Leased Premises the following Building  standard services (the "Building
Standard Services") so long as an Event of Default has not occurred:
 
(i)           Subject to Legal Requirements, common use rest rooms with hot and
cold domestic water at locations provided for general use of other tenants in
the Building.
 
(ii)           Central heat and air conditioning in season, subject to
curtailment as required by Legal Requirements.  Landlord shall furnish such
service to Tenant between the hours (the "Building Operating Hours") of 7:00
A.M. and 6:00 P.M., Monday through Friday, and 7:00 A.M. and 1:00 P.M.,
Saturday, excluding the following holidays (or the day observed in lieu thereof
by the government of the United States):  New Year's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day and such other
holidays as may be designated by prior written notice by Landlord (collectively,
the "Holidays").
 

 
13
 
 

Upon request of Tenant made in accordance with the Project Rules (defined in
Section 5.7), Landlord will furnish air conditioning, ventilating and heating at
times other than Building Operating Hours, in which event Tenant shall pay
Landlord the then current charges incurred by Landlord to provide such
services.  As of the Effective Date, the after hour HVAC charge is $35.00 per
hour per floor; however such charge is subject to increase by Landlord based
upon actual increases in costs that Landlord may incur.
 
(iii)           Routine maintenance and electric lighting service for all Common
Areas on floors on which the Leased Premises are located not leased entirely by
Tenant, General Common Areas and Service Areas of the Building.
 
(iv)           Janitorial service on a five (5) day per week basis (excluding
the Holidays); provided, however, if Tenant's leasehold improvements (including
floor coverings) are other than Building Standard Improvements, include a
lunchroom, coffee bar or other similar facility for its employees or otherwise
require special or additional cleaning in excess of the Building Standard
Services, Tenant shall pay the actual additional cleaning cost, if any, incurred
by Landlord as the result thereof plus a charge equal to five percent (5%) of
such additional costs for administrative cost recovery.
 
(v)           Sufficient electrical capacity transformed to a panel box located
in the core of each floor of the Leased Premises for (A) machines of low
electrical consumption at standard voltage (120 volts, single-phase) to the
extent that the total consumption of said machines of low electrical consumption
does not exceed three and twenty-five hundredths (3.25) watts per square foot of
Rentable Area, and (B) lighting and equipment at high voltage (277 volts,
single-phase) to the extent that the consumption of said lighting and equipment
does not exceed two (2) watts per square foot of Usable Area (each such rated
electrical design load to be hereinafter referred to as the "Building Standard
Rated Electrical Design Load").
 
Should Tenant's non-linear electrical load (created by equipment such as
personal computers, television sets, laser printers, copiers or other electronic
devices connected to the power system) result in harmonic distortion conditions
which cause any adverse effects in the Project, including but not limited to,
deration of any transformer, distribution stepdown transformer failures,
overheating or melting of neutral conductors, or malfunctioning of various
electronic components, Tenant acknowledges that Tenant, at Tenant's sole cost,
shall be obligated to eliminate such harmonic distortion conditions and to
repair any damage which results from such harmonic distortion within thirty (30)
days of Landlord's request.  If Tenant fails to eliminate such harmonic
distortion and repair such damage caused thereby within such thirty (30) day
period, Landlord, at its option, may make such corrections deemed necessary by
Landlord to eliminate such harmonic distortion and make such repairs, and Tenant
shall pay to Landlord on demand Landlord's cost thereof plus a charge equal to
ten percent (10%) of such costs for administrative cost recovery.
 

 
14
 
 

Tenant shall cause Tenant's electrical system serving any equipment producing
non-linear electrical loads to be designed to accommodate such non-linear
electrical loads, including but not limited to, over-sizing neutral conductors,
derating transformers and/or providing power line filters.  The Tenant Working
Drawings (defined in Exhibit C-1) shall include a calculation of Tenant's fully
connected design load with and without demand factors and shall indicate the
number of watts of un-metered and sub-metered loads.
 
If Tenant's electrical equipment and lighting require electrical circuits,
transformers or other additional equipment in excess of Tenant's pro rata share
of the Building's electrical or HVAC systems (which additional equipment shall
be hereinafter referred to as the "Additional Electrical Equipment"), Tenant may
(at Tenant's cost, including the cost to design, install, maintain and replace
the Additional Electrical
 
Equipment [including the meters]) install the same, provided such installation
is compatible with existing Building systems, will not compromise Landlord's
ability to provide services to Tenant or other tenants of the Building and will
not be burdensome to the Project or to Landlord, in Landlord's opinion, and
Tenant shall pay all operating costs related to that requirement (including,
without limitation, the cost of electricity, water or other services consumed
through, or in connection with, the Additional Electrical Equipment).
 
The method of design and installation of any Additional Electrical Equipment
(including any related meter) required by Tenant shall be subject to the prior
written approval of Landlord and shall be performed by Landlord at Tenant's sole
cost (including a charge equal to five percent (5%) of such cost for the review
and installation of such Additional Electrical Equipment for administrative cost
recovery).
 
Tenant shall pay to Landlord the cost of electricity consumed in excess of the
Building Standard Rated Electrical Design Load as determined by meter, or if not
metered, as otherwise reasonably estimated by Landlord, plus any actual
accounting expenses incurred by Landlord in connection with the metering
thereof.  Landlord may cause the entire Leased Premises to be separately metered
(at Tenant's expense, including, without limitation, the cost of installing,
maintaining, repairing and replacing such meters to the extent necessary), in
which event Tenant shall pay the actual cost of electricity consumed by Tenant.
 
If the Leased Premises are separately metered, Tenant shall pay the actual cost
of electricity consumed by Tenant and the Basic Cost Component set forth in
Section 3.2(b)(i) of this Lease shall be reduced by an amount equal to Tenant's
pro rata share on a Net Rentable Areas basis of the cost of providing Building
Standard electrical service to all areas of the Project leased or held for lease
for office or retail purposes (but not to Common Areas, General Common Areas or
Service Areas in the Project) and, consequently, the Base Rental Rate set forth
in Section 3.2(a) of this Lease shall also be reduced by an amount equal to
Tenant's pro rata share of such costs on a Net Rentable Area basis.
 
(vi)           All Building Standard (defined in Exhibit C-1) fluorescent bulb
replacement in all areas of the Project and all incandescent bulb replacement in
the Common Areas on floors on which the Leased Premises are located not leased
entirely by Tenant, General Common Areas and Service Areas.
 

 
15
 
 

(vii)           Perimeter access control for the Project during hours other than
Building Operating Hours; PROVIDED, HOWEVER, LANDLORD SHALL HAVE NO
RESPONSIBILITY TO PREVENT, AND SHALL NOT BE LIABLE TO TENANT, ITS AGENTS,
EMPLOYEES, CONTRACTORS, VISITORS OR INVITEES FOR, LOSSES DUE TO THEFT OR
BURGLARY, OR FOR DAMAGES OR INJURY TO PERSONS OR PROPERTY DONE BY PERSONS
GAINING ACCESS TO THE LEASED PREMISES OR THE PROJECT, AND TENANT HEREBY RELEASES
LANDLORD FROM ALL LIABILITY FOR SUCH LOSSES, DAMAGES OR INJURY, EVEN IF CAUSED
BY LANDLORD'S NEGLIGENCE.  Tenant shall cooperate fully in Landlord's efforts to
maintain access control in the Building and shall follow all regulations
promulgated by Landlord with respect thereto.
 
(viii)          Non-exclusive multiple cab passenger elevator service to the
Leased Premises during Building Operating Hours, with passenger elevator service
to the
 
Leased Premises by at least one (1) cab twenty-four (24) hours per day, and
non-exclusive freight elevator service to the Leased Premises during Building
Operating Hours with such freight elevator service available at other times upon
reasonable prior notice (however, all of the foregoing shall be subject to
temporary cessation for ordinary repair and maintenance and during times when
life safety systems override normal Building operating systems).
 
In the event Tenant desires Landlord to provide any of the aforementioned
services (including heating and air-conditioning) in amounts in excess of
Building Standard Services or in addition to the Building Operating Hours, and
provided such services are compatible with existing Building systems, will not
compromise Landlord's ability to provide services to Tenant or other tenants of
the Building and are not burdensome to the Project or to Landlord, in Landlord's
opinion, and so long as an Event of Default is not in existence, Landlord may
elect (but is not required) to provide such excess or additional services and
Tenant shall pay Landlord as additional rent hereunder the cost of providing
such excess or additional services, including without limitation, design,
metering, installation and operating costs plus a charge equal to five percent
(5%) of such costs for administrative cost recovery.
 
(b)           To the extent the services described in Section 4.1(a) require
electricity, water, gas, steam or other utility services supplied by public
utilities, Landlord's covenants hereunder shall impose on Landlord only the
obligation to use its good faith, reasonable efforts to cause the applicable
public utilities to furnish the same.  Landlord shall not be responsible for,
and shall have no liability with respect to, the quality or condition of any
services provided by such public utilities.
 
(c)           If any of the services described in Section 4.1(a) or any of the
machinery or equipment in the Project should cease to function properly or in
accordance with the requirements therefor described in Section 4.1(a), break
down or be intentionally turned off for testing or maintenance purposes
(provided such services shall not be intentionally turned off for testing or
maintenance purposes except in the case of any situation Landlord reasonably
determines to be an emergency without reasonable prior notice to Tenant, and, in
the case of electricity, such electricity shall not be intentionally turned off
without seventy-two (72) hours prior notice), Tenant shall have no claim for
abatement or reduction of Rent or damages, nor shall Tenant be relieved of its
obligations under this Lease, nor shall such condition be construed as an
eviction of Tenant; provided, however, if:
 

 
16
 
 

(i)           there occurs an interruption in the HVAC, electricity, water or
elevator services (the "Essential Services") to the Building or Leased Premises
not caused by Tenant (collectively, an "Interruption");
 
(ii)           such Interruption renders more than one thousand (1,000) square
feet of Net Rentable Area in the Leased Premises Untenantable (defined below);
and
 
(iii)           such Interruption continues to render more than one thousand
(1,000) square feet of Net Rentable Area in the Leased Premises Untenantable for
three (3) consecutive days,
 
then, the Rent (including charges for a pro rata portion of the Parking Permits
applicable to Tenant but only to the extent Tenant does not use such Parking
Permits) shall abate as to that portion of the Leased Premises that is rendered
Untenantable.  The abatement shall commence upon the expiration of the third
(3rd) day and continue for so long as the Interruption exists; provided,
however, if the Interruption renders more than fifty percent (50%) of the Leased
Premises Untenantable for one hundred twenty (120) consecutive days, Tenant
shall have the right thereafter to terminate this Lease during the period such
Interruption shall continue to exist, in which event Tenant will be relieved of
all obligations arising after such date hereunder.
 
In addition, if all or any portion of the Leased Premises is rendered
Untenantable by reason of Landlord's entry into or occupation of the Leased
Premises for the purpose of making repairs required of Landlord under this
Lease, and such Untenantability continues after the delivery of written notice
to Landlord, then from and after the delivery of such written notice until the
cause of such Untenantability is eliminated, (i) Rent (other than Parking
Rental) with respect to that portion of the Leased Premises rendered
Untenantable shall abate and (ii) Parking Rental shall abate for a pro rata
portion of the Parking Permits then leased by Tenant (such pro rata portion to
be equal to the ratio of (A) the Net Rentable Area of the Leased Premises
rendered Untenantable, divided by (B) the total Net Rentable Area then leased by
Tenant), but only to the extent Tenant does not use such Parking Permits.
 
In consideration of the terms of this Section 4.1(c), Tenant waives all rights
Tenant may have at law or in equity, including any rights Tenant may have
arising from implied warranties of suitability, to abate Rent or terminate this
Lease under circumstances other than as provided by this Section 4.1(c); and
Landlord agrees to use diligent efforts to restore the services described in
Section 4.1(a) and to promptly repair said equipment or machinery.  In addition,
if such Untenantability arises from a casualty or condemnation, then Sections
6.1 and 6.5 shall apply instead of this Section 4.1(c).
 
As used in this Lease, the term "Untenantable" shall mean the condition whereby
Tenant is not reasonably able to use the Leased Premises or any portion thereof
for the conduct of its business in accordance with customary practices of
comparable tenants in buildings comparable to the Building.
 

 
17
 
 

4.2           KEYS AND LOCKS.  Landlord shall furnish Tenant with twenty (20)
keys for each Building Standard corridor door serving the Leased Premises.  In
addition, should Tenant choose to install additional security access equipment
for entry to the Leased Premises, Landlord shall program and provide to Tenant
security cards (the "Security Cards") to permit Tenant and its employees access
through any corridor door to the Leased Premises.  Such security cards shall
grant access to the Building, the Leased Premises and the Garage only in a
manner consistent with, and to those individuals listed on, an access card
request form to be supplied by Landlord to Tenant (the "Access Card Request
Form").  Tenant may limit the access of individual recipients of the Security
Cards by requesting such on the Access Card Request Form.
 
Additional keys or security cards (collectively, the "Access Equipment") shall
be furnished by Landlord at Tenant's written request, at a charge by Landlord
equal to Ten Dollars and no/100 ($10.00) for each key or card.  All Access
Equipment furnished to Tenant by Landlord shall remain the property of
Landlord.  Subject to the following sentence, no additional locks shall be
allowed on any door of the Leased Premises and Tenant shall not make or permit
to be made any duplicate Access Equipment, except those furnished by
Landlord.  Notwithstanding the foregoing, Tenant, at its sole cost and expense,
shall have the right to change or replace any locks within the Leased Premises
(and any corresponding keys) or place additional locks within the Leased
Premises provided such locks conform to the Building key system and Landlord is
provided keys therefor.  Upon termination of this Lease, Tenant shall surrender
to Landlord all Access Equipment to the Leased Premises, including, without
limitation, the keys to any locks on doors entering or within the Leased
Premises, and Tenant shall give to Landlord the combination(s) for all safes,
safe cabinets and vault doors, if any, in the Leased Premises.
 
4.3           WINDOW COVERINGS.  Landlord shall provide and install Building
Standard interior window coverings on all exterior windows in the Building as
Building Standard Improvements.  Tenant agrees to use the Building Standard
window coverings on all exterior windows of the Building.  Tenant shall not
place or maintain any window coverings, blinds or drapes on any exterior window
(other than those supplied by Landlord) without Landlord's prior written
approval which Landlord shall have the right to grant or withhold in its
absolute and sole discretion.  Tenant acknowledges that breach of this covenant
will directly and adversely affect the exterior appearance of the Project and
the operation of the heating, ventilating and air conditioning systems.
 
4.4           GRAPHICS.  Landlord shall provide and install Tenant's name and
suite numerals adjacent to the main entrance door to the Leased Premises.  All
such letters and numerals shall be in the Building Standard graphics.  All
graphics of Tenant visible in or from public corridors, elevator cabs or other
public areas shall be Building Standard graphics and subject to Landlord's prior
written approval in its sole and absolute discretion.  Landlord also will be
responsible for the initial installation of (1) Tenant's name and suite number
in the Building directory located in the lobby on Floor 1 of the Building and
(2) Tenant’s name (up to a maximum of two (2) individual names) and suite number
in the building directory located in the sky lobby on Floor 9 of the
Building.  Landlord shall not be liable for any inconvenience or damage
occurring as the result of any error or omission in any directory or
graphics.  In addition, for as long as an Event of Default has not occurred and
is continuing, Tenant leases and occupies
 

 
18
 
 

at least a full floor in the Building (occupancy by a subtenant shall not
constitute occupancy by Tenant), Tenant shall be permitted, at Tenant's sole
cost and expense, to install its name on a sign on the south side of the
Building, provided Landlord approves the size, design, location, configuration,
and all other aspects of any such sign in its sole discretion.  Tenant shall
have no right to install any signage on the concrete apron of the Building or in
any other location except as expressly set forth in this Lease.  Landlord
reserves the right from time to time during the Term to (i) grant exterior
identification signs to other tenants of the Building or Project and (ii)
reasonably alter the location of Tenant's signage including, without limitation,
to another side of the Building.  Upon the expiration or earlier termination of
this Lease, or in the event the conditions of this Section 4.4 no longer are
satisfied, Tenant, at its sole cost and expense, shall remove all such signage
for which such conditions are no longer satisfied and make all necessary repairs
to the Building so as to return the Building to its original condition.  If
Tenant fails to complete such removal within thirty (30) days after Landlord's
request, Landlord then shall have the right to remove all such signage and
restore the Building, in which case Tenant shall reimburse Landlord for all
costs incurred plus an amount equal to ten percent (10%) of such costs for
Landlord's administrative cost recovery.  If any signage requires utilities,
such as electrical lighting, Landlord must first approve the design,
installation and use of such utilities in Landlord's sole discretion and Tenant
shall pay, at its sole cost and expense, all costs and expenses associated with
the design, installation and use of any such utilities.  Tenant's rights under
this Section 4.4 may only be assigned to a Permitted Assignee only for as long
as the conditions of this Section continue to be satisfied.  In addition,
Tenant's rights under this Section 4.4 shall be subject to any exclusive or
superior rights of any other tenants of the Building existing as of the date
hereof.  No other assignment or sublease of such rights shall be permitted
hereunder.
 
4.5           REPAIRS BY LANDLORD.  Landlord shall be required only to make such
improvements, repairs or replacements as may be required for normal maintenance
of the Leased Premises, and such additional maintenance as may be necessary
because of damage by persons other than Tenant, its agents, employees, invitees
or visitors. The obligation of Landlord to maintain and repair the Leased
Premises shall be limited to the Building Standard Improvements.  Landlord shall
not otherwise be obligated to make improvements to, or repairs of, the Leased
Premises.  All leasehold improvements other than the Building Standard
Improvements will be maintained by Tenant or, at Tenant's request, by Landlord
at Tenant's expense which shall be an amount equal to Landlord's actual cost
plus an additional charge of five percent (5%) of such cost for administrative
cost recovery.
 
4.6           PEACEFUL ENJOYMENT.  Tenant shall, and may peacefully have, hold
and enjoy the Leased Premises, subject to the other terms hereof, provided that
Tenant pays the Rent herein recited and performs all of Tenant's covenants and
agreements herein contained.  It is understood and agreed that this covenant and
any and all other covenants of Landlord contained in this Lease shall be binding
upon Landlord and its successors only with respect to breaches occurring during
its and their respective ownerships of Landlord's interest hereunder.
 
4.7           NO WARRANTIES.  LANDLORD'S DUTIES AND WARRANTIES ARE LIMITED TO
THOSE EXPRESSLY STATED IN THIS LEASE AND SHALL NOT INCLUDE ANY IMPLIED DUTIES OR
IMPLIED WARRANTIES, NOW OR IN THE FUTURE.  NO REPRESENTATIONS OR WARRANTIES HAVE
BEEN MADE BY
 

 
19
 
 

LANDLORD OTHER THAN THOSE CONTAINED IN THIS LEASE.  OTHER THAN THOSE WARRANTIES
EXPRESSLY STATED IN THIS LEASE, IF ANY, TENANT HEREBY WAIVES ANY AND ALL
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED PREMISES WHICH MAY
EXIST BY OPERATION OF LAW OR IN EQUITY, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF HABITABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
 
4.8           FORCE MAJEURE.  Landlord and Tenant shall be excused for the
period of any delay and shall not be deemed in default with respect to the
performance of any of the terms, covenants and conditions of this Lease when
prevented from so doing by a cause or causes beyond Landlord's or Tenant's
control, respectively, which shall include without limitation, all labor
disputes, governmental regulations or controls, fire or other casualty,
inability to obtain any materials or services, or acts of God; provided,
however, in no event shall the foregoing excuse Tenant from, or delay the due
date of, any payment obligations under this Lease unless otherwise expressly
provided in this Lease.
 
4.9           COMMUNICATIONS EQUIPMENT.
 
(a)           Tenant, at Tenant's sole cost and expense, shall have the
non-exclusive right to install no more than two (2) satellite communication
dishes each not to exceed three (3) feet in diameter (the "Communications
Equipment") in a location on the roof of the Building, the Adjacent Garage, or
other areas in the Project designated by Landlord in its sole discretion, so
long as the location does not materially and adversely affect the intended
operation of the Communications Equipment; provided, however, all Communications
Equipment must be utilized by Tenant in the conduct of its
business.  Additionally, the rights granted to Tenant pursuant to this Section
4.10 shall not be assignable by Tenant, except that the rights under this
Section 4.10 shall be assignable to a Permitted Affiliate (as defined in Section
5.4(a) below) to whom Company assigns its entire interest under this Lease in
accordance with the provisions of said Section 5.4(a).
 
(b)           Landlord reserves the right to require Tenant from time to time to
relocate any of the Communications Equipment to a new location or locations in
the Project designated by Landlord (each a "New Site") by furnishing at least
ninety (90) days prior written notice (unless such relocation is required by
Legal Requirements, in which event such notice may be thirty (30) days),
provided that any New Site does not materially and adversely affect the intended
operation of the Communications Equipment.  If Landlord requires Tenant to
relocate any of the Communications Equipment to a New Site pursuant to the
provisions of this Section 4.10, then in such event (but only in such event)
Landlord shall reimburse Tenant for the reasonable actual costs incurred by
Tenant to physically move Tenant's Communications Equipment from the previous
location to the New Site (unless such relocation is required by Legal
Requirements, in which event the costs of such relocation shall be borne by
Tenant) within thirty (30) days of receipt of an invoice and supporting
documentation therefor.
 
(c)           Any costs incurred by Landlord associated with Tenant's
installation, operation, utilization, replacement, maintenance and/or removal of
the Communications Equipment shall be at Tenant's expense (other than costs
which result from any relocation of the Communications Equipment required by
Landlord).  The Communications Equipment must be
 

 
20
 
 

(i) designed, installed and operated in complete compliance with all Legal
Requirements, and (ii) installed and operated so as not to adversely affect or
impact structural, mechanical, electrical, elevator, or other systems of or
serving the Building, Project or the Adjacent Garage or customary telephone
service for the Building, Project or the Adjacent Garage and so as not to cause
injury to persons or property.
 
(d)           Tenant shall be permitted to undertake the installation of its
Communications Equipment, subject to the provisions of Section 5.5 of the Lease
(including without limitation Landlord's approval of the qualifications of
Tenant’s contractors, which approval shall not be unreasonably withheld).  Any
such work conducted in connection with the installation of the Communications
Equipment must be done in accordance with Section 5.5 and the Project Rules or
any other reasonable regulations promulgated by Landlord pertaining
to construction in or on the Building or the Adjacent Garage by all third party
contractors of the same or similar trades.
 
(e)           Subject to the Project Rules and other reasonable rules relating
to Building security and safety that may be promulgated by Landlord pertaining
to access by tenants to the roof of the Building and Adjacent Garage and
provided Tenant does not unreasonably disturb any other tenants of the Building
and Adjacent Garage, Tenant and Tenant's contractors shall have reasonable
access to the Communications Equipment for purposes of operating, servicing,
repairing or otherwise maintaining said equipment.
 
(f)           TENANT HEREBY INDEMNIFIES AND HOLDS LANDLORD HARMLESS FROM ALL
COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES AND COSTS OF SUIT),
LOSSES, DAMAGES OR LIABILITIES ARISING OUT OF THE DESIGN, INSTALLATION,
OPERATION, MAINTENANCE, USE, AND REMOVAL BY TENANT OF THE COMMUNICATIONS
EQUIPMENT AND THE ADDITIONAL EQUIPMENT, EXCEPT TO THE EXTENT CAUSED BY
LANDLORD'S NEGLIGENCE.
 
(g)           Nothing contained in this Section 4.10 shall be deemed to prohibit
or restrict any other individual or entity, including without limitation
Landlord or any other tenant of the Building or Project, from installing
communications equipment in the Project or to use the roof of the Building or
the Adjacent Garage for any other purpose.
 
(h)           Tenant agrees to reimburse Landlord for all reasonable,
out-of-pocket costs and expenses incurred by Landlord pursuant to this Section
4.10 within thirty (30) days after receipt by Tenant of an invoice therefor from
Landlord.
 
(i)           Tenant agrees that the installation, operation and maintenance of
the Communications Equipment at all times, and at Tenant's expense, shall comply
with such technical standards (including, without limitation, technical
standards relating to frequency compatibility, radio interference protection,
antenna type and location, and physical installation) attached hereto as
Exhibit H (the "Technical Standards").  Landlord shall have the right to change
the Technical Standards from time to time without the consent of Tenant if any
such change is determined by Landlord as necessary (a) to comply with Legal
Requirements, or (b) for the safety or care of all or any portion of the
Project, the Adjacent Garage, or any portion
 

 
21
 
 

thereof.  If any new Technical Standards established by Landlord shall require
that Tenant modify or revise the then existing installation, operation or
maintenance of the Communications Equipment, Tenant shall make such
modifications or revisions within a reasonable time thereafter.  Additionally,
the access to, and installation, maintenance and operation of, the
Communications Equipment must at all times be in strict compliance with all
Legal Requirements and with the Project Rules.
 
(j)           If, in the reasonable judgment of Landlord, any electrical,
electromagnetic, radio frequency or other interference shall result from the
operation of the Communications Equipment, Tenant agrees to shut down Tenant's
equipment upon ten (10) days prior notice to Tenant; provided, however if an
emergency situation exists which could result in injury to persons or material
damage to property, as determined by Landlord in its reasonable discretion,
Landlord, after verbally notifying Tenant or its representatives, may shut down
Tenant's equipment immediately; provided, further, however, Landlord and Tenant
shall work together in good faith to resolve any such interference and, to the
extent feasible, locate an alternative site for such interfering Communications
Equipment (provided that any relocation shall be at Tenant's sole cost and
expense).  Tenant shall indemnify and hold harmless Landlord from all expenses,
costs, damages, loss, claims or other liabilities arising out of said
shutdown.  Tenant agrees to cease operations (except for intermittent testing on
a schedule approved by Landlord) until the interference has been corrected to
the satisfaction of Landlord.  If such interference has not been corrected
within thirty (30) days, Landlord, at its sole option, either may terminate
Tenant's rights under this Section 4.10 forthwith, or may require that Tenant
immediately remove the Communications Equipment causing such interference.
 
(k)           At Tenant's own cost and expense, and by use of a contractor or
contractors approved in writing by Landlord, Tenant shall keep the
Communications Equipment in a good condition and shall perform all repairs and
improvements to the Communications Equipment required by Legal Requirements.  If
Tenant fails to commence any such repairs or improvements to the Communications
Equipment within ten (10) days after written notice from Landlord, and
thereafter diligently proceed with such repair until completion, Landlord, at
its option, may make such repair or any replacement reasonably deemed necessary
by Landlord, and Tenant shall pay to Landlord the actual cost thereof, plus a
charge equal to fifteen percent (15%) for administrative cost recovery, within
thirty (30) days after receipt of an invoice therefor.  Landlord shall have no
obligation to license, maintain, operate or safeguard the Communications
Equipment.
 
(l)           Landlord hereby grants to Tenant the right to install (at Tenant's
sole cost and expense) any additional equipment required to operate the
Communications Equipment and to connect the Communications Equipment to Tenant's
other machinery and equipment located in the Leased Premises (e.g., conduits and
cables) in the shafts, ducts, chases and utility closets located in the core of
the Building (subject to Landlord's review and approval of the amount and
location of such equipment [which approval may be withheld in Landlord's
reasonable discretion]) (the "Additional Equipment") which Additional Equipment
shall be deemed a part of the Communications Equipment for all purposes of this
Section 4.10; provided, however, (i) that the use of such space in the Building
core by Tenant (except customary chases for cabling) cannot adversely affect the
marketability of the remaining space on any floor of the Building as reasonably
determined by Landlord, (ii) to the extent any such Additional Equipment
occupies
 

 
22
 
 

space (other than space in customary chases for the Building Shell) that would
have otherwise been net rentable area on a floor of the Building, such space
shall be included within the Net Rentable Area of the Leased Premises and Tenant
shall be obligated to pay (x) Base Rental as to such space at the market rate
per square foot of Net Rentable Area for the office space or storage space, as
applicable, on the applicable floor as reasonably agreed to by Landlord and
Tenant and (y) to the extent such space is not located in the core of the
Building, Base Rental Adjustment, and (iii) Tenant shall be obligated to
reimburse Landlord for all reasonable costs incurred by Landlord associated with
Landlord's review of the plans for the Additional Equipment and with Tenant's
installation, operation, utilization, replacement, maintenance and removal of
such Additional Equipment.
 
(m)           Tenant hereby agrees to pay throughout the Term for one dish other
than the Direct TV dish $50.00 per linear foot diameter of such dish (the
"Satellite Rent") as additional rental for the use of areas in the Project
designated by Landlord for the location of the Communications Equipment.  The
Satellite Rent shall be due and payable, without offset, counterclaim, notice or
demand, pursuant to the provisions of Section 3.1 hereof.  No Satellite Rent
shall be paid for the Direct TV dish.
 
V.
 
5.1           PAYMENTS BY TENANT.  Tenant shall pay all Rent at the times and in
the manner herein provided.  Any failure by Tenant to pay Rent shall give rise
to the rights and remedies provided in Section 6.8.
 
5.2           DAMAGE TO PROJECT.  Subject to the provisions of Section 6.14, at
Tenant's own cost and expense, and by use of a contractor or contractors
approved in writing by Landlord, Tenant shall repair or replace in accordance
with all Legal Requirements any damage or injury done to the Leased Premises or
the Project, or any portion thereof, caused by Tenant or Tenant's agents,
employees, invitees or visitors, which repairs or replacements must be made to
the same or as good a condition as existed prior to such injury or damage;
provided, however, Landlord, at its option, may make such repairs or
replacements, and Tenant shall repay Landlord on demand the actual cost thereof
(plus a charge equal to five percent (5%) of such costs for administrative cost
recovery).
 
5.3           CARE OF THE LEASED PREMISES.  Subject to the provisions of Section
4.5, at Tenant's own cost and expense, and by use of a contractor or contractors
approved in writing by Landlord, Tenant shall keep the Leased Premises and all
leasehold improvements in a good and presentable condition, at least similar to
the condition as of the Rent Commencement Date, normal wear and tear excepted,
and shall perform all repairs and improvements required by any Legal
Requirement.  If Tenant fails to commence any such repairs to the Leased
Premises and the leasehold improvements within ten (10) days after written
notice from Landlord, and thereafter diligently proceed with such repair until
completion, Landlord, at its option, may make such repair or any replacement
deemed necessary by Landlord, and Tenant shall pay to Landlord within ten (10)
days after demand Landlord's cost thereof plus a charge equal to ten percent
(10%) of such costs for administrative cost recovery.  Tenant shall not commit
or allow its agents, employees or contractors to commit any waste or damage on
any portion of the Leased Premises or Project.  Upon the expiration or any
earlier termination of this
 

 
23
 
 

Lease, Tenant shall deliver up said Leased Premises to Landlord in as good a
condition as such premises existed on the date of initial occupancy of the
Leased Premises, ordinary wear and tear, damage by fire or other casualty and
repairs for which Landlord is responsible excepted.  Upon the expiration or
termination of this Lease, Landlord shall have the right to re-enter and resume
possession immediately of the Leased Premises and Tenant's leasehold
improvements.
 
5.4           ASSIGNMENT AND SUBLETTING.
 
(a)           Except as provided in the immediately following paragraph or in
Section 5.4(b), Tenant shall not, without Landlord's prior written consent
(which may be withheld in Landlord's absolute discretion), (i) assign, convey,
mortgage, pledge, encumber, or otherwise transfer (whether voluntarily, by
operation of law, or otherwise) this Lease or any interest hereunder; (ii) allow
any lien to be placed upon Tenant's interest hereunder; (iii) sublet the Leased
Premises or any part thereof; or (iv) permit the use or occupancy of the Leased
Premises or any part thereof by any one other than Tenant or a Permitted
Affiliate (defined below) of Tenant.  Any attempt to consummate any of the
foregoing without Landlord's consent shall be of no force or effect and shall be
an Event of Default under this Lease.  For purposes hereof, (A)  the transfer of
the ownership or voting rights in a controlling interest of the voting stock of
Tenant (if Tenant is a corporation), (B) the transfer of a general partnership
interest or the transfer of twenty-five percent (25%) of the limited partnership
interests in Tenant (if Tenant is a partnership), (C) the transfer of a
controlling interest or the transfer of twenty-five percent (25%) of the member
interests in Tenant (if Tenant is a limited liability company), (D) the merger
or consolidation of Tenant with or into any other corporation or entity, or (E)
a sale or transfer of fifty percent (50%) or more of Tenant's assets, at any
time throughout the Term shall be deemed to be an assignment of this Lease.
 
Notwithstanding the provisions of the first sentence of this subsection (a), the
consent of Landlord need not be obtained if the assignment or subletting is to
one of the following Affiliates (defined below) of Permian Mud Service, Inc.
("Company"):  (i) Champion Technologies, Inc. ("Champions"), (ii) Johnson &
Lindley, Inc., (iii) Densimix, Inc., (iv) Corsicana Technologies, Inc., and (v)
Dwight Vorpahl/Eastham, Meyer & Vorphal; so long as (1) the assignee or
sublessee is engaged in a business customarily acceptable for a tenant in a
first class high-rise office building in Houston, Texas, (2) any assignee shall
assume all of the obligations of Company under this Lease, (3) at the time of
such assignment or subletting, this Lease is in full force and effect and there
is no Event of Default then continuing under this Lease on the part of Tenant,
and (4) the assignee's or sublessee's proposed use of the Leased Premises is not
in violation of this Lease (such Affiliate of Company complying with clauses
(1), (2), (3) and (4), hereinafter a "Permitted Affiliate").  At least ten (10)
days prior to the effective date of any such assignment or sublease to a
Permitted Affiliate, Tenant agrees to furnish Landlord with notice of such
assignment or sublease and copies of the instruments effecting any such
assignment or sublease and financial statements of such Permitted
Affiliate.  Additionally, within thirty (30) days after the effective date of
any such assignment or sublease to a Permitted Affiliate, Tenant agrees to
furnish Landlord with copies of the fully executed instruments effecting any
such assignment or sublease and documentation establishing Tenant's satisfaction
of the requirements set forth above applicable to any such sublease or
assignment.  Any such assignee of Tenant must assume and agree in writing to
fully perform and observe all of the obligations and agreements of Tenant under
this Lease and any such sublessee shall sublease
 

 
24
 
 

such portion of the Leased Premises subject to the provisions of this
Lease.  Except to the extent expressly provided below, no such assignment or
subletting shall relieve Company, any other tenant, or any guarantor of this
Lease of any covenants or obligations under this Lease or any such guaranty and
Company, any other tenant, and any guarantors of this Lease shall remain fully
liable hereunder and thereunder.  Notwithstanding anything to the contrary set
forth in this Lease, the rights granted to Company under this paragraph of
subsection (a) as to assignments and subleases to Permitted Affiliates shall not
be assignable by Company, shall inure only to the benefit of Company and shall
not be enforceable by any assignee or sublessee of Company.
 
As used herein, "Affiliate" shall mean any person or entity controlling,
controlled by, or under common control with, another person or
entity.  "Control" as used herein means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such controlled person or entity (the ownership, directly or indirectly, of at
least fifty-one percent (51%) of the voting securities of, or possession of the
right to vote, in the ordinary direction of its affairs, at least fifty-one
percent (51%) of the voting interest in, any person or entity shall be presumed
to constitute such control).
 
(b)           Notwithstanding the provisions of Section 5.4(a) above, Tenant
shall be permitted to sublease the Leased Premises or assign its interest in
this Lease after Tenant initially occupies the Leased Premises subject to the
provisions of this Section 5.4(b).  If Tenant should desire to assign this Lease
or sublet the Leased Premises or any part thereof, Tenant shall give Landlord
written notice (which shall specify the proposed economic terms and duration of
the proposed sublease or assignment and shall contain information concerning the
business, reputation and creditworthiness of the proposed sublessee or assignee
as shall be sufficient to allow Landlord to form a commercially reasonable
judgment with respect thereto) of Tenant's desire to sublease or assign at least
thirty (30) days in advance of the date on which Tenant desires to make such
sublease or assignment (the "Notice").  Landlord then shall have fifteen (15)
days following receipt of such Notice within which to notify Tenant in writing
that Landlord elects, in its sole and absolute discretion, to (i) permit Tenant
to assign this Lease or sublet such space subject to Landlord's approval of the
assignee or sublessee, or (ii) terminate this Lease as to the space so affected
as of the date so specified by Tenant (and as to option (ii) only Tenant will be
relieved of all further obligations hereunder as to such terminated space).  If
Landlord should fail to notify Tenant in writing of such election within said
fifteen (15) day period, Landlord shall be deemed to have elected option
(i).  If Landlord elects, or is deemed to have elected, option (i), Landlord
shall not unreasonably withhold such consent to such sublessee or assignee if
(1) any such sublessee or assignee is creditworthy as determined by Landlord and
is of a character, kind and type customarily found in first-class office
buildings in Houston, Texas, (2) such sublease or assignment does not violate
any lease agreement with any other tenant or potential tenant with which
Landlord has entered into a lease or a letter of intent (as applicable) in the
Project, and (3) the use of the Leased Premises by such proposed assignee or
sublessee is permitted under this Lease.  Without limiting the foregoing, in no
event shall the following be considered as suitable assignees or sublessees
under this subsection (b):  any governmental body, agency or bureau (of the
United States, any state, county, municipality or any subdivision thereof); any
foreign government or subdivision thereof; any health care professional or
health care service organization; schools or similar organizations; employment
agencies; radio, television or other communication stations; restaurants; and
retailers offering retail services from the Leased Premises.  If Landlord
elects, or is deemed to have elected, option (i) and fails to
 

 
25
 
 

approve or disapprove any such sublessee or assignee within ten (10) days
following Landlord's election or deemed election of option (i), such sublessee
or assignee and the proposed sublease or assignment shall be deemed
disapproved.  If Landlord elects, or is deemed to have elected, option (i) and
the proposed sublessee or assignee is approved by Landlord, the following shall
apply to the sublease or assignment (and shall be conditions thereto):
 
(1)           Each sublessee or assignee shall fully observe all covenants of
this Lease, including without limitation, the provisions of Section 2.2 of this
Lease, and no consent by Landlord to an assignment or sublease shall be deemed
in any manner to be a consent to (A) a use not permitted under Section 2.2, or
(B) an assignment by Tenant of any rights which are otherwise not assignable
pursuant to other provisions of this Lease;
 
(2)           At the time of any such assignment or subletting, this Lease is in
full force and effect and there is no breach under this Lease on the part of
Tenant;
 
(3)           Any such assignment or subletting shall be subject to all the
terms, covenants and conditions of this Lease and any assignee must assume in
writing all the rights and obligations of the assignor hereunder;
 
(4)           If the aggregate rental, bonus or other consideration paid by the
assignee or sublessee of any such space (and to the extent any rental is abated
under the applicable sublease, such abated rental shall not be considered as
paid by the sublessee) exceeds the sum of (A) the Base Rental as adjusted by the
Base Rental Adjustment paid to Landlord for such space during the applicable
period, plus (B) the reasonable out-of-pocket third party costs and expenses
actually incurred by Tenant under or in connection with such sublease or
assignment for (x) broker's commissions paid by Tenant with regard to the
transfer, (y) reasonable legal fees with regard to the transfer, and (z)
expenses of finishing out or renovation of the space involved (but specifically
excluding any charges payable to partners, shareholders or employees of Tenant
in connection with such sublease or assignment), then fifty percent (50%) of
such excess shall be paid to Landlord within fifteen (15) days after receipt by
Tenant together with all consideration received in connection with such
assignment.  With any payment made by Tenant to Landlord under this clause (4),
Tenant shall furnish Landlord with an accounting prepared and certified to by
Tenant of its determination of the sums owed to Landlord hereunder;
 
(5)           No assignment or subletting by Tenant shall relieve Tenant or any
guarantor of this Lease of any obligations or covenants under this Lease or any
such guaranty and Tenant and any guarantor of this Lease shall remain fully
liable hereunder or thereunder (as applicable); and
 
(6)           A copy of the original sublease or assignment (and all amendments
thereto) shall be delivered to Landlord within fifteen (15) days from the
effective date thereof.
 

 
26
 
 

If the proposed sublessee or assignee is approved by Landlord and Tenant fails
to enter into the sublease or assignment with the approved sublessee or assignee
within one hundred eighty (180) days after the date Tenant submitted its
proposal to Landlord, then Landlord's approval of the proposed sublease or
assignment shall be deemed null and void and Tenant must comply again with all
of the conditions of this Section 5.4.
 
(c)           If, in accordance with this Section 5.4, the Leased Premises or
any part thereof is sublet or occupied by other than Tenant or this Lease is
assigned, Landlord, during the continuance of a breach under this Lease on the
part of Tenant, if any, may collect rent from the subtenant, assignee or
occupant, and apply the net amount collected to Rent due by Tenant to Landlord
under this Lease, and Tenant hereby authorizes and directs any such assignee or
sublessee to make such payments of rent direct to Landlord upon receipt of
notice from Landlord.  Additionally, Landlord is authorized and empowered, on
behalf of Tenant, to endorse the name of Tenant upon any check, draft, or other
instrument payable to Tenant evidencing payment of rent, or any part thereof,
and to receive and apply the proceeds therefrom in accordance with the terms of
this Lease. No such subletting, assignment, occupancy, or collection shall be
deemed (i) a waiver of any of Tenant's covenants contained in this Lease, (ii) a
release of any guarantor of this Lease from further performance of its covenants
under such guaranty, (iii) a release of Tenant from further performance by
Tenant of its covenants under this Lease, or (iv) a waiver of any of Landlord's
other rights hereunder.
 
(d)           Notwithstanding the giving by Landlord of its consent to any
sublease or assignment with respect to the Leased Premises, no sublessee or
assignee may exercise any renewal options, expansion options, rights of first
offer or similar rights under this Lease except (x) in accordance with a
separate written agreement entered into directly between such sublessee or
assignee and Landlord, or (y) the expansion options and the renewal options may
be exercised by any permitted assignee (but not a sublessee) of Tenant's entire
interest under this Lease that is a Permitted Affiliate, provided in the event
of clauses (x) or (y) Tenant continues to be liable for the performance of all
obligations hereunder, as increased or otherwise affected by the exercise of
such rights.  Tenant may not exercise any renewal options, expansion options,
rights of first offer or similar rights under this Lease if Tenant has assigned
all of its interest in this Lease to other than a Permitted Affiliate.
 
(e)           Any attempted assignment or sublease by Tenant in violation of the
terms and covenants hereof shall be void and shall be an Event of Default under
this Lease.  Any consent by Landlord to a particular assignment or sublease
shall not constitute Landlord's consent to any other or subsequent assignment or
sublease, and any proposed sublease or assignment by a sublessee of Tenant shall
be subject to the provisions hereof as if it were a proposed sublease or
assignment by Tenant.
 
(f)           In any subletting undertaken by Tenant, Tenant shall diligently
seek to obtain not less than fair market rental value for the space so
sublet.  In any assignment of this Lease in whole or in part, Tenant shall seek
to obtain from the assignee consideration reflecting a value of not less than
fair market rental value for the space subject to such
assignment.  Notwithstanding anything to the contrary contained in this Section
5.4, Tenant shall not be permitted to sublease any portion of the Leased
Premises or assign this Lease to (i) any person or entity that is actually a
tenant of the Building at the time the Notice is furnished to Landlord (an
"Actual Tenant"), or (ii) any Affiliate of an Actual Tenant if such Affiliate
intends to use a significant portion of the Leased Premises subject to such
assignment or sublease for purposes of
 

 
27
 
 

the conduct of the business then being conducted by the Actual Tenant in its
leased premises or such Affiliate is entering into such assignment or sublease
as a means to circumvent the provisions of clause (i) above, unless Landlord is
unable to furnish the amount of space in the Building desired by the proposed
assignee or sublessee at the time of the proposed effective date of the proposed
sublease or assignment.
 
(g)           Any improvements, additions, or alterations to the Building or the
Project that are required by Legal Requirements, or are reasonably deemed
necessary or appropriate by Landlord, as a result of any subletting or
assignment hereunder, shall be installed and provided without cost or expense to
Landlord.
 
(h)           If, during the Term of this Lease, Company assigns this Lease in
connection with the one-time sale or other disposition by Company of Company's
ownership interests in Champions (and not with respect to any other Affiliate of
Company or any other entity) to a third-party purchaser (an "Assignee") in
accordance with Paragraph 5.4(a) above (the "Champions Assignment"), Landlord
shall not unreasonably withhold its consent to a release of Company from any
further liability under this Lease accruing after the effective date of the
Champions Assignment provided (i) the Assignee shall have had a tangible and
verifiable net worth equal to or greater than Company's net worth as of the date
of this Lease for at least twelve (12) consecutive months immediately preceding
the effective date of the Champions Assignment, and (ii) the terms and
conditions of Section 5.4(i) are complied with if there is a partial assignment
of this Lease to Champions.
 
(i)           Notwithstanding anything to the contrary provided herein, if,
during the Term of this Lease, Company desires to partially assign this Lease as
to a portion (and not all) of the Leased Premises (the "Partial Assignment"),
Landlord shall not unreasonably withhold its consent to a release of Company
from any further liability under this Lease accruing after the effective date of
the Partial Assignment with respect to such portion of the Leased Premises,
provided Company and Assignee comply with the following terms and conditions:
 
(i)           Assignee shall have had a tangible and verifiable net worth equal
to or greater than Company's net worth as of the date of this Lease for at least
twelve (12) consecutive months immediately preceding the effective date of the
Partial Assignment;
 
(ii)           the Partial Assignment shall be in connection with the one-time
sale or other disposition by Company of Company's ownership interests in
Champions (and not with respect to any other Affiliate of Company or any other
entity) to an Assignee;
 
(iii)           Assignee shall enter into a new lease (the "New Champions
Lease") with Landlord, in form and content substantially equivalent to this
Lease and reasonably acceptable to Landlord and Tenant, including renewal rights
but excluding any expansion right, right of first refusal, or any other right to
expand its premises, for the portion of the Leased Premises desired to be
assigned to Assignee by Company (the "Assigned Space");
 

 
28
 
 

(iv)           Company shall execute an amendment to this Lease whereby the
Leased Premises shall be decreased by the Assigned Space and Company shall agree
to reimburse Landlord, within ten (10) days after receipt by Company of an
invoice therefor, for all reasonable costs actually incurred by Landlord in
connection with demising the Assigned Space from the remaining portion of the
Leased Premises and reconfiguring both the Assigned Space and the remaining
portion of the Leased Premises as separate and independent leasable spaces in
the Building, including any improvements necessary to cause both spaces to
comply with applicable laws, all in a manner reasonably acceptable to Landlord
in all respects; and
 
(v)           Tenant shall be obligated to pay Landlord for all reasonable costs
(including, without limitation, legal fees) actually incurred by Landlord in
connection with the Partial Assignment and the preparation of all documents
necessary for such assignment, including but not limited to the New Champions
Lease between Landlord and Assignee and the amendment of this Lease as
contemplated in the immediately preceding subsection.
 
5.5           ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.
 
(a)           Tenant shall not permit the Leased Premises to be used for any
purpose other than that stated in Section 2.2 hereof, or make or allow to be
made any alterations, physical additions or improvements in or to the Leased
Premises, or place signs on or in the Leased Premises which are visible from
outside the Leased Premises, without first obtaining the prior written consent
of Landlord (which consent may be withheld in Landlord's sole
discretion).  Notwithstanding the foregoing, Landlord will not unreasonably
withhold its consent to alterations, physical additions or changes to the Leased
Premises that do not adversely affect the Building structural, mechanical,
electrical, plumbing, heating, ventilating, air conditioning, life safety or
other base Building improvements or systems, provided such changes (i) are not
visible from the exterior of the Leased Premises or the Building, (ii) do not
affect the exterior of the Building, the structure of the Building or any public
areas of the Project, (iii) do not violate any provision of this Lease, (iv) do
not violate any Legal Requirements, and (v) will not interfere with the use and
occupancy of any other portion of the Project by any other tenant or occupant of
the Project.  If Landlord consents to said alterations, improvements, or
additions, or placement of signs, Landlord may impose such conditions with
respect thereto as are reasonably appropriate, including without limitation,
requiring Tenant to furnish Landlord with security for the payment of all costs
to be incurred in connection with such work, insurance against liabilities which
may arise out of such work, plans and specifications, and permits for such
work.  Tenant's plans and specifications and construction means and methods
shall be subject to Landlord's written approval.  Tenant shall furnish to
Landlord any documents and information requested by Landlord in connection with
the exercise of its rights hereunder.  Landlord may hire outside consultants to
review such documents and information furnished to Landlord and Tenant shall
reimburse Landlord for the cost thereof, including reasonable attorneys' fees,
within thirty (30) days after demand.
 
(b)           The work necessary to make any permitted alterations,
improve­ments, or additions to the Leased Premises shall be done at Tenant's
expense by contractors approved in writing by Landlord (each such contractor
hereinafter referred to as an "Outside Contractor") or,
 

 
29
 
 

at Tenant's election, by Landlord (without cost or expense to Landlord).  If
Landlord performs any such work, upon completion of such work Tenant shall pay
Landlord a fee for Landlord's supervision and administration of such work equal
to five percent (5%) of the cost of such work.  All work performed by an Outside
Contractor shall be performed in a good and workmanlike manner and in compliance
with all Legal Requirements, Landlord's requirements (including without
limitation Paragraph 5 of Exhibit C-1), with the provisions of this Section 5.5
and all applicable Project Rules.  Tenant shall give Landlord at least ten (10)
days prior written notice before the commencement of any work pursuant to this
Section 5.5.  Additionally, it shall be Tenant's responsibility to ensure that
the Outside Contractor shall (i) conduct its work in such a manner so as not to
unreasonably interfere with any other construction occurring on or in the
Project or with the transaction of business in the Project; (ii) comply with
such reasonable rules and regulations applicable to all work being performed in
the Project as may be promulgated from time to time by Landlord; (iii) maintain
such insurance and bonds in full force and effect as may be reasonably requested
by Landlord or as required by Legal Requirements; and (iv) be responsible for
reaching agreement with Landlord as to the terms and conditions for all
contractor items relating to conducting its work.  As a condition precedent to
Landlord's approving the Outside Contractor pursuant hereto, Tenant and the
Outside Contractor shall deliver to Landlord such assurances or instruments as
Landlord may reasonably require to evidence the Outside Contractor's compliance
or agreement to comply with the provisions of clauses (i), (ii), (iii), and (iv)
of this subsection (b).  Landlord retains the right to make periodic inspections
to assure conformity of the work of the Outside Contractor with the
aforementioned rules and regulations and with the plans and specifications
approved by Landlord.  Within thirty (30) days after substantial completion of
any work by Tenant, Tenant, at Tenant's cost and expense, shall furnish Landlord
"as-built" drawings of such work and shall cause the architect(s) and/or
engineer(s) that performed in connection with the work to prepare a report, in
form and substance acceptable to Landlord, for the benefit of Landlord,
certifying to the compliance of the work constructed by any Outside Contractor
with the plans and specifications approved by Landlord. Each Outside Contractor
shall not perform and, upon the request of Landlord, whether written or oral,
each Outside Contractor shall cease to perform, any activity that is
unreasonably disruptive to the conduct of business within the Project or other
tenants or occupants of the Project.
 
(c)           Any and all such alterations, physical additions or improvements,
when made to the Leased Premises by Tenant or on Tenant's behalf, shall at once
become the property of Landlord and shall be surrendered to Landlord upon the
termination of this Lease by lapse of time or otherwise; provided, however, this
sentence shall not apply to movable equipment or furniture owned by Tenant.  If
Tenant fails to remove such movables upon termination of this Lease, Landlord
may have the same removed and any resulting damage repaired at Tenant's
expense.  In such event, such movables will automatically become the property of
Landlord and may be disposed of by Landlord in its sole discretion, without any
right of reimbursement therefor to Tenant.
 
(d)           Tenant shall not allow any liens to be filed against the Leased
Premises or the Project in connection with the installation of Tenant's
improvements in, or any repair or alteration work to, the Leased Premises
performed by Tenant or an Outside Contractor; provided Tenant shall not be
responsible for liens filed in connection with any work performed by Landlord in
the Leased Premises.  If any such liens shall be filed, Tenant shall cause the
same to
 

 
30
 
 

be released within ten (10) days after the filing thereof by bonding or other
method acceptable to Landlord; provided, however, this sentence shall not apply
to movable equipment or furniture owned by Tenant.  If Tenant shall fail to
timely cancel or discharge said lien or liens as required above, Landlord, at
its sole option, may cancel or discharge the same and Tenant shall pay to
Landlord upon demand, Landlord's cost thereof plus a charge equal to ten percent
(10%) of such costs for administrative cost recovery.  Upon completion of any
such work, Tenant shall deliver to Landlord evidence of payment, contractors'
affidavits and full and final waivers of all liens for, labor, services, or
material.  Tenant shall indemnify and hold harmless Landlord from all losses,
costs, damages, claims and expenses (including reasonable attorneys' fees and
costs of suits actually incurred), liabilities or causes of action arising out
of or relating to any alterations, additions or improvements that Tenant or any
Outside Contractor makes to the Leased Premises, including any occasioned by the
filing of any mechanic's, materialman's, construction or other liens or claims
(and all costs or expenses associated therewith) asserted, filed or arising out
of any such work, provided Tenant shall not be responsible for liens filed in
connection with any work performed by Landlord in the Leased Premises.  All
materialmen, contractors, artisans, mechanics, laborers and other parties
hereafter contracting with Tenant for the furnishing of any labor, services,
materials, supplies or equipment with respect to any portion of the Leased
Premises are hereby charged with notice that they must look solely to Tenant for
payment of same and Tenant's purchase orders, contracts and subcontracts in
connection therewith must clearly state this requirement.  Landlord shall have
the right at all times to post and keep posted on the Leased Premises any
notices permitted or required by Legal Requirements, or that Landlord shall deem
proper for the protection of Landlord, the Leased Premises, the Project and any
other party having an interest therein, from liens.  Without limiting the
generality of the foregoing, Tenant shall repair or cause to be repaired at its
expense all damage caused by any Outside Contractor, its subcontractors or their
employees.  Tenant shall reimburse Landlord for any costs incurred by Landlord
to repair any damage caused by any Outside Contractor or any costs incurred by
Landlord in requiring any Outside Contractor's compliance with the rules and
regulations.  Additionally, Tenant shall reimburse Landlord for the reasonable
costs Landlord may incur to have an engineer review all mechanical, structural,
electrical, plumbing and life safety systems installed by any Outside
Contractor.
 
(e)           Tenant agrees specifically that no food, soft drink or other
vending machine will be installed within the Leased Premises without Landlord's
prior written approval; provided, however, such approval shall not be withheld
provided (i) the use of such machines are restricted to Tenant's employees and
clients, and (ii) Landlord approves the location, visibility and condition
thereof.
 
5.6           LEGAL USE AND VIOLATIONS OF INSURANCE COVERAGE.  Tenant shall not
occupy or use the Leased Premises, or permit any portion of the Leased Premises
to be occupied or used, for any business or purpose other than that stated in
Section 2.2 hereof, or for any business or purpose which is unlawful,
disreputable or deemed to be extra-hazardous on account of fire, which creates
noxious or offensive odors emanating from the Leased Premises, or generates
chemicals or hazardous substances.  Tenant shall not use, operate or maintain
the Leased Premises in such manner that any of the rates for any insurance
carried by Landlord or any other owner or occupant of premises in the Building
shall thereby be increased, or in such manner as will affect or cause a
cancellation of any such insurance policy.
 

 
31
 
 

5.7           LEGAL REQUIREMENTS; RULES OF THE PROJECT.
 
(a)           As used in this Lease, "Legal Requirements" shall mean any
applicable law, statute, ordinance, order, rule, regulation, decree or
requirement of a Governmental Authority, and "Governmental Authority" shall mean
the United States, the state, county, city and political subdivisions in which
the Project is located or which exercise jurisdiction over the Project, and any
agency, department, commission, board, bureau or instrumentality of any of them
which exercise jurisdiction over the Project.  Tenant shall comply with (and
shall indemnify Landlord for Tenant's failure to comply with), and shall cause
its employees, contractors and agents to comply with, and shall use commercially
reasonable efforts to cause its customers, visitors and invitees to comply with,
all Legal Requirements relating to the use, condition or occupancy of the Leased
Premises (including, without limitation, the Americans with Disabilities Act,
all Legal Requirements applicable to Tenant's business and operations in the
Leased Premises and all orders and requirements imposed by any Health Officer,
Fire Marshall, Building Inspector or other Governmental Authority) and with the
rules of the Project adopted by Landlord from time to time for the safety, care
and cleanliness of the Leased Premises and the Project and for preservation of
good order therein (the "Project Rules").  In the event of any conflict between
the provisions of this Lease and the Project Rules, the provisions of this Lease
shall control.  The initial Project Rules are attached hereto as Exhibit E.
 
(b)           Without limiting the provisions of subsection (a) above, Tenant
shall comply with all applicable Legal Requirements regarding health, safety or
the environment (the "Environmental Laws"), including without limitation the
application for and maintenance of all required permits, the submittal of all
notices and reports, proper labeling, training and recordkeeping, and timely and
appropriate response to any Release (defined below) or other discharge of a
substance under Environmental Laws.  In no way limiting the generality of the
foregoing, Tenant shall not cause or permit its employees, agents or contractors
to cause the use (except for minimal quantities of any substance which
technically could be considered a Hazardous Material [defined below] provided
(i) such substance is of a type and is held only in a quantity normally used by
tenants in connection with the occupancy or operation of office space in
first-class office buildings in metropolitan Houston, Texas [such as normal
office waste, pest control products, and cleaning fluids, and with respect to
automobiles parked in the Garage only, motor fuel and oil in such automobiles],
(ii) such Hazardous Material does not endanger the health or safety of any
person on or about the Leased Premises or the Project, (iii) Tenant complies
with all Legal Requirements applicable to such Hazardous Material, and (iv) it
is understood and agreed that with regard to such Hazardous Material, the
obligations of Tenant in this Section 5.7 shall apply [including without
limitation, Tenant's obligation to clean up, remove, restore or take other
remedial action with respect to any such Hazardous Material] even though Tenant
is permitted pursuant to this parenthetical to cause such substance to be used
in the Leased Premises subject to the limitations set forth above), generation,
storage, Release or disposal in or about the Leased Premises or the Project of
any substances, materials or wastes subject to regulation under Legal
Requirements from time to time in effect concerning hazardous, toxic or
radioactive materials (collectively, the "Hazardous Materials"), unless Tenant
shall have received Landlord's prior written consent, which consent Landlord may
withhold or revoke at any time in its sole discretion.  Additionally, except as
may be present on the Effective Date, Tenant shall not permit to be present upon
the Leased Premises, or contained in any transformers or other equipment
thereon, any PCB's.  "PCB" means any oil or other substance
 

 
32
 
 

containing polychlorinated biphenyl (as defined in 40 CFR 761.3).  Tenant,
except as may be present on the Effective Date, shall not permit any asbestos,
or any structures, fixtures, equipment or other objects or materials containing
asbestos on the Leased Premises.  Tenant shall immediately notify Landlord of
the presence of any Reportable Quantity (defined below) of a Hazardous Material
on or about the Leased Premises.  As used in this Lease, "Reportable Quantity"
shall mean that amount defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Federal Water Pollution
Control Act, as amended, pertinent regulations thereunder or other relevant
Environmental Laws.
 
Tenant shall indemnify, protect, defend (with counsel reasonably approved by
Landlord) and hold Landlord, and the directors, officers, shareholders,
employees and agents of Landlord, harmless from any and all obligations, claims,
administrative proceedings, judgments, damages, fines, costs, and liabilities,
including reasonable attorneys' fees incurred in enforcing this Section 5.7(b),
performance on Tenant's behalf, or collecting any sums due hereunder,
(collectively, the "Costs") that arise directly or indirectly from or in
connection with the presence, suspected presence, Release (defined below), or
suspected Release of Hazardous Materials arising out of, in connection with, or
by reason of the action or inaction of Tenant, or Tenant's officers, directors,
partners, agents, employees, contractors, subtenants, invitees and visitors.  As
used in this Lease, "Release" shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, or disposing into the environment (including the abandonment or
discarding of barrels, containers and other closed receptacles).  If Landlord
incurs any Costs, Tenant shall pay to Landlord the amount thereof upon
demand.  Without limiting the generality of the foregoing, there shall be
included in Costs, capital, operating, and maintenance costs incurred in
connection with any investigation or monitoring of site conditions, any clean
up, containment, remedial, removal or restoration work required or performed by
any federal, state or local governmental agency or political subdivision or
performed by any nongovernmental entity or person.
 
(c)           Landlord, at its cost and expense (which cost and expense shall be
included in Operating Expenses pursuant to Section 3.2 (c)), shall comply with
all Legal Requirements relating to the base Building to the extent the failure
to so comply will materially and adversely affect Tenant's use or occupancy of
the Leased Premises for the purposes intended in Section 2.2 (subject to
Landlord's right, in good faith, to contest any such Legal Requirement), except
to the extent that any such Legal Requirement relates to a tenant's (including
Tenant's, as provided in Section 5.7(a) hereof) obligation under its lease or
other third party (e.g., if it relates to a tenant's leased premises), in which
case Landlord shall exercise reasonable efforts to cause compliance by such
tenant or other third party.  Without limiting the foregoing, Tenant shall be
solely responsible for compliance with all Legal Requirements with respect to
all areas within the Leased Premises (including, without limitation, all
restrooms located therein).
 
5.8           RIGHTS RESERVED BY LANDLORD.   Tenant shall permit Landlord or its
agents or representatives to enter into and upon any part of the Leased Premises
at all reasonable hours, accompanied by a representative of Tenant and upon
reasonable notice (except for emergencies and routine cleaning for which such
entry may be made at any time, without a representative of Tenant and without
notice) to inspect same, clean or make repairs, alterations or additions thereto
and to show same to prospective tenants, mortgagees and purchasers as Landlord
may deem necessary or desirable (but as to prospective tenants, only during the
last
 

 
33
 
 

nine (9) months of the Term or such earlier date if Tenant has waived its right
to, or provided notice to Landlord that it will not, exercise the Renewal Option
pursuant to Section 7.1, or such earlier date if an Event of Default is then in
existence).  Additionally, Landlord shall have the right from time to time,
without unreasonable interference with Tenant's use of or access to the Leased
Premises, to decorate and to make repairs, alterations, additions, changes or
improvements, whether structural or otherwise, in and about the Project, or any
part thereof, to enter upon the Leased Premises therefor, and to alter or
relocate entrances, passageways, doors, corridors, elevators, stairs, rest
rooms, or other General Common Areas, Service Areas or  Common Areas, and during
the continuance of such work, to temporarily close doors, entryways, public
space and corridors in the Building.  Tenant shall not be entitled to any
abatement or reduction of any sums due under this Lease by reason of the
foregoing activities, nor shall such activities be construed to be an eviction
of Tenant, a default by Landlord hereunder, or a breach of the covenant of quiet
enjoyment.  In any event, any such entry shall be accomplished as expeditiously
as reasonably possible and in a manner so as to minimize the interference to
Tenant to the extent reasonably possible.
 
5.9           NUISANCE.  Tenant shall conduct its business and control its
agents, employees, invitees, contractors and visitors in such a manner as not to
create any nuisance, or interfere with, annoy or disturb any other tenant or
Landlord in its operation of the Project.
 
5.10         SUBORDINATION.   This Lease is subject and subordinate to each
ground or land lease which may now or hereafter cover all or any part of the
Project and to each mortgage or deed of trust which may now or hereafter
encumber all or any portion of the Project and to all renewals, modifications,
consolidations, replacements and extensions thereof. This Section 5.10 shall be
self-operative and no further instrument of subordination need be required by
any mortgagee or lessor.  Tenant, however, upon Landlord's request, shall
execute promptly any appropriate certificate or instrument in confirmation of
such subordination.  Tenant hereby constitutes and appoints Landlord as Tenant's
attorney in fact to execute any such certificate or instrument for and on behalf
of Tenant in the event Tenant fails to execute such certificate or instrument
within ten (10) days following Landlord's request.  In the event of the
enforcement by the lessor under any such ground or land lease or the trustee,
the mortgagee or the beneficiary under any such mortgage or deed of trust of the
remedies provided for by law or by such ground or land lease, mortgage or deed
of trust, Tenant, upon request of any person or party succeeding to the interest
of Landlord as a result of such enforcement (collectively, "Successor"),
automatically  will become the tenant of such Successor without change in the
terms or other provisions of this Lease; provided, however, that such Successor
shall not be (a) subject to any credits, offsets, defenses or claims which
Tenant may have against any prior landlord, (b) bound by any payment of Rent for
more than one (1) month in advance, except prepayments in the nature of security
for the performance by Tenant of its obligations under this Lease, (c) bound by
any amendment or modification of this Lease made after the applicable ground or
land lease, mortgage or deed of trust is placed against the Project (and Tenant
has been given notice thereof) without the written consent of such trustee,
mortgagee, beneficiary or landlord, (d) liable for any act, omission, neglect or
default of any prior landlord, or (e) required to make any capital improvements
to the Project or the Leased Premises which Landlord may have agreed to make but
had not completed.  Notwithstanding the foregoing, the holder of any ground or
land lease that may affect all or any portion of the Project or the holder of
any mortgage or deed of trust
 

 
34
 
 

that may encumber all or any portion of the Project may elect at any time to
cause their interest in the Project to be subordinate and junior to Tenant's
interest under this Lease by filing an instrument in the real property records
of Harris County, Texas effecting such election and providing Tenant with notice
of such election.
 
5.11           ESTOPPEL CERTIFICATE.  Within ten (10) days after Landlord's
request, Tenant will execute an estoppel certificate certifying as to such facts
(if true) as Landlord (or mortgagees, ground or land lessors or proposed
purchasers of the Project) may reasonably request (including, in the case of
mortgagees or ground or land lessors, reasonable notice and cure
provisions).  Failure to deliver such estoppel certificate within such ten (10)
day period shall be deemed Tenant's agreement to and acknowledgment of the
statements contained therein.
 
5.12           TENANT'S REMEDIES.  Tenant specifically agrees to look solely to
Landlord's (or its successors') interest in the Project for the recovery of any
judgment from Landlord, it being agreed that Landlord (and if Landlord is a
partnership, its partners [direct or indirect, general or limited], or if
Landlord is a corporation, its directors, officers or any successors in
interest) shall never be personally liable for any such judgment.
 
5.13           NAME OF BUILDING AND PROJECT.  Tenant shall not utilize the name
of the Building or the Project for any purpose whatsoever, except to identify
the location of the Leased Premises in Tenant's address.  Landlord shall have
the right to change the name of the Building or the Project or the design or
construction thereof whenever Landlord, in its sole discretion, deems it
appropriate without any liability to Tenant and without any consent of Tenant
being necessary.
 
VI.
 
6.1           CONDEMNATION.
 
(a)           If the Leased Premises or a portion of the Building that results
in there being no access to the Leased Premises shall be taken or condemned (or
sold in lieu thereof) for any public purpose to such an extent as to render the
Leased Premises untenantable, either party shall have the right to terminate
this Lease by giving notice of such election to terminate to the other party
within ten (10) days from the date of such condemnation or taking (or sale in
lieu thereof), which termination shall be effective on the date of the transfer
of possession of the Leased Premises or such portion of the Building to the
condemning authority.  If only a portion thereof shall be so taken so as not to
render the remainder untenantable, this Lease shall not terminate, and Base
Rental shall be diminished by an equitable amount (based upon the square footage
of Net Rentable Area so taken) and Landlord shall, to the extent practicable,
restore the Leased Premises so that the remaining portion of the Leased Premises
shall be partitioned off from the portion so taken or condemned; however,
Landlord shall be obligated to restore or rebuild the damaged property only to
the extent the holder of any mortgage or deed of trust or the landlord under any
ground lease makes the proceeds of such taking available to Landlord for the
purposes of rebuilding and restoration, or if no mortgage or ground lease then
affects the Project, then only to the extent of the net proceeds of such taking;
provided, however, if such proceeds are insufficient for the restoration
Landlord is obligated to make pursuant to this Section 6.1 and
 

 
35
 
 

Landlord elects (in its sole discretion) not to restore the damaged property in
accordance with the provisions of this Section 6.1 and such election not to make
such restoration results in the Leased Premises being untenantable, Landlord
shall furnish notice thereof to Tenant and Tenant shall have the right to
terminate this Lease within thirty (30) days after receipt of such notice from
Landlord (failing which, Tenant shall have waived its right to so terminate this
Lease pursuant to this sentence).  If all or substantially all of the Project
(whether or not the Leased Premises are affected), or a portion of the Project
(whether or not the Leased Premises are affected) as to cause the remainder of
the Project not to be economically feasible to operate, as reasonably determined
by Landlord, should be taken or condemned (or sold in lieu thereof) for any
public purpose, then this Lease, at the option of Landlord upon the giving of
notice to Tenant within ten (10) days from the date of such condemnation or
taking (or sale in lieu thereof), shall cease and terminate effective on the
date of the transfer of possession of the Leased Premises to the condemning
authority.  If this Lease is terminated in accordance with this Section 6.1(a),
Base Rental shall be apportioned on a per diem basis and shall be payable
through the effective date of the termination.  All proceeds from any taking or
condemnation (or sale in lieu thereof) of the Leased Premises or any portion of
the Project shall belong to and be paid to Landlord, and Tenant shall not be
entitled to any portion of such award (except that Tenant shall have all rights
permitted under the laws of the State of Texas to appear, claim and prove in
proceedings relative to such taking the value of any fixtures, furnishings, and
other personal property which are taken but which under the terms of this Lease
Tenant is permitted to remove at the end of the Term, the unamortized cost [such
costs having been amortized on a straight line basis over the Term excluding any
renewal terms] of Tenant's leasehold improvements which are taken that Tenant is
not permitted to remove at the end of the Term and which were installed solely
at Tenant's expense [i.e., not paid for by Landlord or purchased with allowances
provided by Landlord], and  relocation and moving expenses, but not the value of
Tenant's leasehold estate created by this Lease and only so long as such claims
in no way diminish the award Landlord receives from the condemning authority).
 
(b)           In the event of any taking or condemnation for any public purpose
of the Leased Premises or any portion thereof occurs for one hundred eighty
(180) days or less, then it shall be deemed a temporary taking, this Lease shall
continue in full force and effect, Landlord shall be under no obligation to make
any repairs or alterations, and at Landlord's option either (i) there shall be
no abatement of Base Rental and all proceeds of such taking relating to the Term
occurring during such taking shall belong to Tenant, or (ii) Base Rental shall
be diminished by an equitable amount (based upon the square footage of Net
Rentable Area so taken) for the period of time the Leased Premises are so taken
and Landlord shall be entitled to the proceeds of such taking.
 
6.2           DAMAGES FROM CERTAIN CAUSES.  Landlord shall not be liable or
responsible to Tenant for any loss or damage to any property or person
occasioned by theft, fire, casualty, vandalism, acts of God, public enemy,
injunction, riot, strike, inability to procure materials, insurrection, war,
court order, requisition or order of governmental body or authority, or for any
other causes beyond Landlord's reasonable control, or for any damage or
inconvenience which may arise through repair or alteration of the Leased
Premises or the Project.  All goods, property or personal effects stored or
placed by Tenant in or about the Project shall be at the sole risk of Tenant.
 
6.3           INTENTIONALLY DELETED.
 

 
36
 
 

6.4           HOLDING OVER.  In the event of holding over by Tenant after
expiration or termination of this Lease without the consent of Landlord, Tenant
shall be deemed a tenant at will and shall pay, as Base Rental for each month or
any part thereof of any such holdover period, the greater of (a) one hundred
fifty percent (150%) of the Base Rental and Base Rental Adjustment which Tenant
was obligated to pay for the month immediately preceding the end of the Term, or
(b) one hundred fifty percent (150%) of the prevailing market rent for the
Leased Premises (as reasonably determined by Landlord) (plus any additional rent
provided for under this Lease).  No holding over by Tenant after the Term shall
operate to extend the Term.  Additionally, in the event of any unauthorized
holding over by Tenant in excess of thirty (30) days, Tenant shall indemnify
Landlord against (i) all claims for damages by any other lessee to whom Landlord
may have leased all or any part of the Leased Premises covered hereby, and (ii)
all other losses, costs and expenses, including reasonable attorneys' fees,
incurred by Landlord by reason of such holding over.  Any holding over with the
consent of Landlord in writing shall thereafter constitute this Lease a lease
from month to month.
 
6.5           CASUALTY.  In the event of a fire or other casualty in the Leased
Premises, Tenant shall promptly give notice thereof to Landlord.  If the Leased
Premises shall be destroyed by fire or other casualty so as to render the Leased
Premises untenantable in whole or in part, Base Rental shall abate equitably
thereafter as to the portion of the Leased Premises rendered untenantable (based
upon the square footage of the Net Rentable Area rendered untenantable) until
the earlier to occur of (i) sixty (60) days after the date Tenant is permitted
to commence repair of its leasehold improvements for the portion of the Leased
Premises so damaged, or (ii) the date the Leased Premises are made
tenantable.  Landlord agrees to commence and prosecute repair of the Building
Standard Improvements promptly and with all due diligence, and Tenant agrees to
commence and prosecute repair of its leasehold improvements promptly and with
all due diligence, subject in each case to delays for insurance adjustments and
delays caused by matters beyond the applicable party's control, zoning laws and
building codes then in effect, and to the termination rights set forth
below.  In the event any portion of the Project is damaged by fire or other
casualty, and if such damage is such that Landlord cannot reasonably be expected
to substantially complete its repair work within two hundred seventy (270) days
after the date of casualty, as reasonably estimated by a responsible contractor
selected by Landlord, then Landlord shall have the right to terminate this Lease
and all Rent owing under this Lease up to the time of such destruction or
termination shall be paid by Tenant and thenceforth this Lease shall cease and
come to an end.  Landlord shall give Tenant written notice of its decisions,
estimates or elections under this Section 6.5 within sixty (60) days after any
such damage or destruction.  In the event any portion of the Leased Premises is
damaged by fire or other casualty, and if such damage is such that Landlord
cannot reasonably be expected to substantially complete its repair work of the
Building Standard Improvements within the Leased Premises within two hundred
seventy (270) days after the date of the casualty to the extent necessary to
allow Tenant to commence repair of its leasehold improvements, as reasonably
estimated by a responsible contractor selected by Landlord, and Landlord has not
terminated this Lease as herein provided, then Tenant shall have the right,
within thirty (30) days after Landlord delivers the estimate to Tenant of time
to restore, to terminate this Lease.  Notwithstanding anything to the contrary
contained in this Section 6.5, if at the time of any substantial damage to the
Project, less than one (1) year remains in the Term, then Landlord, at
Landlord's sole option, shall have the right to terminate this
Lease.  Additionally,
 

 
37
 
 

notwithstanding anything to the contrary contained in this Section 6.5, (a)
Landlord shall be obligated to restore or rebuild (i) the damaged property only
to the extent of the net insurance proceeds made available to Landlord for
restoration or rebuilding by the holder of any mortgage or deed of trust or
lessor under any ground lease; provided, however, if such proceeds are
insufficient for the restoration Landlord is obligated to make pursuant to this
Section 6.5 and Landlord elects (in its sole discretion) not to restore the
damaged property in accordance with the requirements of clause (ii) below and
such election not to make such restoration results in the Leased Premises being
untenantable, Landlord shall furnish notice thereof to Tenant and Tenant shall
have the right to terminate this Lease within thirty (30) days after receipt of
such notice from Landlord (failing which, Tenant shall have waived its right to
so terminate this Lease pursuant to clause (i)), and (ii) only the portion of
the Leased Premises that consists of Building Standard Improvements and only to
the condition that existed immediately prior to the casualty, and nothing herein
shall be construed to obligate Landlord under any circumstances to repair or
restore any of Tenant's leasehold improvements in excess of Building Standard
Improvements, and (b) if the Leased Premises, the Project, or any portion
thereof shall be damaged through the negligence or willful misconduct of Tenant
or any of its agents, employees or invitees, the cost of any repairs made by
Landlord not covered by insurance proceeds received by Landlord shall be paid by
Tenant and Rent shall continue unabated.
 
6.6           ATTORNEYS' FEES.  In the event Tenant or Landlord defaults in the
performance of any of the terms, covenants, agreements or conditions contained
in this Lease and the nondefaulting party places the enforcement of this Lease,
or any part thereof, or the collection of any sums due, or to become due
hereunder, or recovery of the possession of the Leased Premises, in the hands of
an attorney, or files suit upon the same, the defaulting party agrees, to the
extent permitted by applicable law, to pay the nondefaulting party all
reasonable attorneys' fees incurred by the nondefaulting party if such suit is
successful.  In addition, if Tenant requests any consent of Landlord to any
assignment or sublease, or otherwise requests any consent or other action on the
part of Landlord, and Landlord deems it necessary for any documents to be
prepared or reviewed by its counsel, Tenant shall pay all reasonable attorneys'
fees and expenses incurred by Landlord in connection therewith.
 
6.7           ASSIGNMENTS BY LANDLORD.  Landlord shall have the right to
transfer and assign, in whole or in part, all of its rights and obligations
hereunder and in the Project and property referred to herein, and in such event
and upon its transferee's assumption of Landlord's obligations thereafter
accruing hereunder (any such transferee to have the benefit of, and be subject
to, the provisions of Section 4.6 and Section 5.12), no further liability or
obligation shall thereafter accrue against Landlord hereunder.  Upon request by
Landlord, Tenant agrees to execute a certificate certifying such facts (if true)
as Landlord may reasonably require in connection with any such assignment by
Landlord.
 
6.8           DEFAULT BY TENANT.  The occurrence of any of the following events
and the expiration of any grace periods hereafter described shall constitute an
"Event of Default" under this Lease on the part of Tenant:
 
(a)           Tenant shall fail to pay any sum to be paid by Tenant under this
Lease, and such failure shall continue for five (5) days after the date such
payment is due;
 

 
38
 
 

(b)           Tenant shall assign its interest in this Lease or sublet any
portion of the Leased Premises except as permitted in this Lease or Tenant shall
otherwise breach the provisions of Section 5.4 of this Lease;
 
(c)           a breach shall be made in the performance of any of the other
covenants or conditions which Tenant is required to observe and to perform
(other than those referred to in subsections (a) and (b) above), and such breach
shall continue for fifteen (15) days after notice from Landlord of such breach
(unless with respect to any default which cannot be cured within fifteen (15)
days due to causes beyond Tenant's reasonable control, Tenant, in good faith,
after receiving such notice, shall have commenced and thereafter shall continue
diligently to perform all action necessary to cure such default);
 
(d)           if Tenant or any guarantor of this Lease is a corporation, Tenant
or any such guarantor shall cease to exist as a corporation in good standing in
the state of its incorporation, or, if Tenant or any guarantor of this Lease is
a partnership or other entity, Tenant or any such guarantor shall be dissolved
or otherwise liquidated;
 
(e)           if the interest of Tenant under this Lease shall be subjected to
any attachment, execution, levy or other judicial seizure pursuant to any order
or decree entered against Tenant in any legal proceeding that is not stayed (so
as to prevent seizure) pending appeal and such order or decree is not vacated or
bonded against so as to prevent seizure upon the earlier to occur of (aa)
fifteen (15) days prior to the sale of such interest pursuant to such order or
decree, or (bb) thirty (30) days after entry of the order;
 
(f)           subject to any delay caused by Landlord, Tenant shall fail or
refuse to move into or take possession of the Leased Premises within fifteen
(15) days after the Rent Commencement Date; or
 
(g)           if a breach occurs under, or any guarantor of this Lease neglects
or fails to perform or observe, any covenant, term, provision, or condition
contained in any such guaranty of this Lease.
 
If an Event of Default on the part of Tenant shall have occurred under this
Lease, then or at any time thereafter while such Event of Default continues,
Landlord, at Landlord's option, may have any one or more of the following
described remedies in addition to all other rights and remedies provided at law
or in equity:
 
(i)           Landlord, with or without terminating this Lease, may immediately
or at any time thereafter re-enter the Leased Premises and correct or repair any
condition which shall constitute a failure on Tenant's part to keep, observe,
perform, satisfy or abide by any term, condition, covenant, agreement or
obligation of this Lease and Tenant shall fully reimburse and compensate
Landlord on demand for the costs incurred by Landlord in doing so; or
 
(ii)           Landlord may terminate this Lease and forthwith repossess the
Leased Premises and remove all persons or property therefrom, and be entitled to
recover forthwith as damages a sum of money equal to the total of (A) the cost
of recovering the
 

 
39
 
 

Leased Premises (including, without limitation, attorneys' fees and costs of
suit), (B) the cost as reasonably estimated by Landlord of any alterations of,
or repairs to, the Leased Premises which are necessary or proper to prepare the
same for reletting, (C) the unpaid Rent owed at the time of termination, plus
interest thereon from due date at the Interest Rate, (D) the present value of
the balance of the Rent for the remainder of the Term less the present value of
the fair market rental value (and in computing the fair market rental value the
factors taken into account shall include without limitation the market rental
concessions and the time necessary to relet the Leased Premises) of the Leased
Premises for said period (in each case using a discount rate of eight percent
(8%) per annum), and (E) any other sum of money and damages owed by Tenant to
Landlord; or
 
(iii)           Landlord may terminate Tenant's right of possession (but not
this Lease) and may repossess the Leased Premises by forcible entry or detainer
suit or otherwise without demand or notice of any kind to Tenant and without
terminating this Lease, and remove all persons or property therefrom, using such
force as may be necessary (Tenant hereby waiving any claim by reason of such
reentry, repossession or removal or by issuance of any distress warrant or writ
of sequestration), in which event Landlord may (but shall be under no obligation
to do so unless required by law), relet the Leased Premises or any part thereof
for the account of Tenant for such rent and upon such terms as shall be
satisfactory to Landlord (however, to the extent Landlord is so required by law
to relet the Leased Premises, Landlord shall be under no obligation to relet the
Leased Premises or any portion thereof in preference to any other space in the
Project or on terms unsatisfactory to Landlord).  For the purpose of such
reletting Landlord is authorized to decorate or to make any repairs, changes,
alterations or additions in or to the Leased Premises, or provide leasing
inducements or brokerage commissions that may be necessary or convenient, and
(A) if Landlord shall fail or refuse to relet the Leased Premises, or (B) if
relet and a sufficient sum shall not be realized from such reletting (after
paying the unpaid amounts due hereunder earned but unpaid at the time of
reletting plus interest thereon at the Interest Rate, the cost of recovering
possession [including, without limitation, attorneys' fees and costs of suit],
all of the costs and expenses of such decorations, repairs, changes, alterations
and additions and all other expenses of such reletting [including, without
limitation, leasing inducements and brokerage commission] and of the collection
of the rent accruing therefrom) to satisfy the Rent provided for in this Lease
to be paid, then Tenant shall pay to Landlord as damages a sum equal to the
amount of the rental reserved in this Lease for such period or periods or, if
the Leased Premises have been relet, Tenant shall satisfy and pay any such
deficiency upon demand therefor from time to time as the same accrues or becomes
due.  Tenant agrees that Landlord may file suit to recover any sums falling due
under the terms of this Section 6.8 from time to time on one or more occasions
without Landlord being obligated to wait until expiration of the Term, and no
delivery or recovery of any portion due Landlord hereunder shall be any defense
in any action to recover any amount not theretofore reduced to judgment in favor
of Landlord, nor shall such reletting be construed as an election on the part of
Landlord to terminate this Lease unless a written notice of such intention be
given to Tenant by Landlord.  Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect to terminate this Lease
for such previous breach.  If Landlord re-enters the Leased Premises or
terminates
 

 
40
 
 

this Lease pursuant to any of the provisions of this Lease, Tenant hereby waives
all claims for damages which may be caused by such re-entry or termination by
Landlord.  No such re-entry or termination shall be considered or construed to
be a forcible entry; or
 
(iv)           Landlord is entitled and is hereby authorized, without any
further notice to Tenant whatsoever, to enter upon the Leased Premises by use of
a master key, a duplicate key, picking the locks, or other peaceable means, and
to change, alter, and/or modify the door locks on all entry doors of the Leased
Premises, thereby excluding Tenant, and its officers, principals, agents,
employees, visitors and representatives therefrom.  In the event that Landlord
has either terminated Tenant's right of possession to the Leased Premises
pursuant to the foregoing provisions of this Lease, or has terminated this Lease
by reason of the Event of Default, Landlord shall not thereafter be obligated to
provide Tenant with a key to the Leased Premises at any time; provided, however,
that in any such instance, during Landlord's normal business hours and at the
convenience of Landlord, and upon the written request of Tenant accompanied by
such written waivers and releases as Landlord may require, Landlord will escort
Tenant or its authorized personnel to the Leased Premises to retrieve any
personal belongings or other property of Tenant not subject to Landlord's liens
available under applicable laws.  If Landlord elects to exclude Tenant from the
Leased Premises without permanently repossessing the Leased Premises or
terminating this Lease pursuant to the foregoing provisions of this Lease, then
Landlord (at any time prior to permanent repossession or termination) shall not
be obligated to provide Tenant a key to re-enter the Leased Premises until such
time as all delinquent Rent has been paid in full and all other Events of
Default, if any, have been completely cured to Landlord's satisfaction, and
Landlord has been given assurance reasonably satisfactory to Landlord evidencing
Tenant's ability to satisfy its remaining obligations under this Lease.  During
any such temporary period of exclusion, Landlord will, during Landlord's regular
business hours and at Landlord's convenience, upon written request by Tenant,
escort Tenant or its authorized personnel to the Leased Premises to retrieve
personal belongings of Tenant or its employees, and such other property of
Tenant as is not subject to Landlord's liens available under applicable
laws.  The provisions hereof shall override and control any conflicting
provisions of Section 93.002 of the Texas Property Code (as amended).
 
6.9           INSOLVENCY OR BANKRUPTCY.   The appointment of a receiver to take
possession of all or substantially all of the assets of Tenant or any guarantor
of any of Tenant's obligations under this Lease, or any general assignment by
Tenant for the benefit of creditors, or any action taken or suffered by Tenant
or any such guarantor under any insolvency, bankruptcy, or reorganization act,
other than an involuntary proceeding that is dismissed or bonded against within
twenty (20) days after the filing thereof, shall at Landlord's option,
constitute a breach of this Lease by Tenant.  Upon the happening of any such
event or at any time thereafter, this Lease shall terminate five (5) days after
notice of termination from Landlord to Tenant.  In no event shall this Lease be
assigned or assignable by voluntary or involuntary bankruptcy or a proceeding in
lieu thereof and, in no event shall this Lease or any rights or privileges
hereunder be an asset of Tenant or any such guarantor under any bankruptcy,
insolvency, or reorganization proceeding.
 

 
41
 
 

6.10           NON-WAIVER.   No failure or delay of Landlord in any one instance
to exercise any remedy or power given it herein or to insist upon strict
performance by Tenant of any obligation imposed on it herein in any other
instance shall constitute a waiver or a modification of the terms hereof by
Landlord in any one instance or any right it has herein to demand strict
compliance with the terms hereof by Tenant in any other instance.  Additionally,
no express written waiver by Landlord shall affect any condition other than the
condition specified in such express written waiver and only for the time and in
the manner specifically stated.  A receipt by Landlord of any Rent with
knowledge of the breach of any covenant or agreement contained in this Lease
shall not be deemed a waiver of such breach, and no waiver by Landlord of any
provision of this Lease shall be deemed to have been made unless expressed in
writing and signed by Landlord.  No payment by Tenant or receipt by Landlord of
a lesser amount than the Rent due under this Lease shall be deemed to be other
than an account of the earliest Rent due hereunder, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment as Rent
be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
Rent or pursue any other remedy in this Lease provided.  No course of conduct
between Landlord and Tenant, and no acceptance of the keys to or possession of
the Leased Premises before the termination of the Term by Landlord or any
employee of Landlord shall constitute a waiver of any such breach or of any
term, covenant or condition of this Lease or operate as a surrender of this
Lease.  All of the remedies permitted or available to Landlord under this Lease,
or at law or in equity, shall be cumulative and not alternative and the exercise
of any such right or remedy shall not constitute a waiver or election of
remedies with respect to any other permitted or available right or remedy.
 
6.11           CASUALTY INSURANCE.   Landlord shall maintain fire and extended
coverage insurance on the entire Project (excluding leasehold improvements and
the personal property of tenants) and on the Building Standard Improvements in
amounts desired by Landlord.  Said insurance shall be maintained at the expense
of Landlord (which expense is to be included in Operating Expenses) with an
insurance company authorized to insure properties in the State of Texas.  All
payments for losses thereunder shall be made solely to Landlord.  If the annual
premiums to Landlord for such casualty insurance exceed the standard premium
rates because of the nature of Tenant's operations, contents or improvements
beyond Building Standard Improvements or because the same result in
extra-hazardous exposure, then Tenant shall upon receipt of copies of
appropriate premium invoices promptly reimburse Landlord for such increases in
such premiums.  Tenant shall maintain at its expense fire and extended coverage
insurance on the full insurable value of all of the leasehold improvements and
Tenant's personal property, including removable trade fixtures, located in the
Leased Premises and on the full insurable value of all additions and
improvements (including fixtures) made by Tenant and not required to be insured
by Landlord above.  Within ten (10) days following request of Landlord, Tenant
shall deliver to Landlord a duly executed certificate of insurance reflecting
Tenant's maintenance of the insurance required under this Section 6.11.
 
6.12           LIABILITY INSURANCE.   Landlord and Tenant each shall maintain
separate policies of commercial general liability insurance with the premiums
thereon fully paid in advance, issued by and binding upon an insurance company
authorized to transact business in Texas and of good financial standing, such
insurance to afford minimum protection of not less than $2,000,000.00 in respect
of bodily injury or death and/or property damage in respect of any
 

 
42
 
 

one occurrence; provided, however, that Tenant shall carry such greater limits
of coverage as Landlord may reasonably request from time to time so long as
Landlord maintains similar limits of coverage.  Such policy of insurance
maintained by Tenant shall name Tenant and Landlord as named insureds thereunder
and shall name Landlord's property manager and all mortgagees and lessors of
Landlord, of which Tenant has been notified, as additional named insureds, all
as their respective interests may appear.  Within ten (10) days following
request of Landlord, Tenant shall deliver to Landlord a duly executed
certificate of insurance reflecting Tenant's maintenance of the insurance
required under this Section 6.12.
 
6.13           HOLD HARMLESS.  Except as otherwise expressly provided in this
Lease to the contrary, Landlord shall not be liable to Tenant, or to Tenant's
agents, servants or employees for any damage to person or property caused by the
negligence or intentional torts of Tenant, or its agents, servants or employees,
and Tenant agrees to indemnify and hold Landlord harmless from all liability and
claims for any such damage.  Except as otherwise expressly provided in this
Lease to the contrary, Tenant shall not be liable to Landlord, or to Landlord's
agents, servants or employees for any damage to person or property caused by the
negligence or intentional torts of Landlord, or its agents, servants or
employees, and Landlord agrees to indemnify and hold Tenant harmless from all
liability and claims for any such damage.
 
6.14           WAIVER OF SUBROGATION RIGHTS.  ANYTHING IN THIS LEASE TO THE
CONTRARY NOTWITHSTANDING, LANDLORD AND TENANT EACH HEREBY WAIVES ANY AND ALL
RIGHTS OF RECOVERY, CLAIM, ACTION OR CAUSE-OF-ACTION, AGAINST THE OTHER, ITS
AGENTS (INCLUDING PARTNERS, BOTH GENERAL AND LIMITED), OFFICERS, DIRECTORS,
SHAREHOLDERS, CUSTOMERS, INVITEES, OR EMPLOYEES, FOR ANY LOSS OR DAMAGE THAT MAY
OCCUR TO THE LEASED PREMISES, OR ANY IMPROVEMENTS THERETO, OR THE PROJECT OF
WHICH THE LEASED PREMISES ARE A PART, OR ANY IMPROVEMENTS THEREON, OR ANY
PERSONAL PROPERTY OF SUCH PARTY THEREIN, BY REASON OF FIRE, THE ELEMENTS OR ANY
OTHER CAUSE WHICH IS OR IS REQUIRED TO BE INSURED AGAINST UNDER THE INSURANCE
POLICIES REFERRED TO IN SECTION 6.11 HEREOF, REGARDLESS OF CAUSE OR ORIGIN,
INCLUDING NEGLIGENCE OF THE OTHER PARTY HERETO, ITS AGENTS, PARTNERS,
SHAREHOLDERS, OFFICERS, DIRECTORS, CUSTOMERS, INVITEES OR EMPLOYEES, AND
COVENANTS THAT NO INSURER SHALL HOLD ANY RIGHT OF SUBROGATION AGAINST SUCH OTHER
PARTY.  EACH OF LANDLORD AND TENANT SHALL ADVISE INSURERS OF THE FOREGOING
WAIVER AND SUCH WAIVER SHALL BE A PART OF EACH POLICY MAINTAINED BY EACH OF
THEM.
 
6.15           PARKING.
 
(a)           At all times during the Term, Landlord agrees to furnish and
Tenant agrees to pay for and lease, permits to park up to one hundred sixty-five
(165) vehicles on an unassigned basis (the "Unassigned Permits") in the Garage
and fifteen (15) reserved spaces designated by Landlord from time to time in the
Garage ("Reserved Permits").  No specific spaces in the Garage are to be
assigned to Tenant for the Unassigned Permits, but Landlord may designate the
area in which the vehicles with Unassigned Permits may be parked, which
designations may change from time to time.  Additionally, Landlord will
designate a specific
 

 
43
 
 

space in the Garage for each Reserved Permit, if any, to be issued by Landlord
to Tenant as provided herein, which designated space may be changed by Landlord
from time to time.  Landlord will issue to Tenant the aforesaid number of
parking stickers and/or cards each of which will authorize parking in the Garage
of a vehicle on which the sticker is displayed, or Landlord will provide a
reasonable alternative means of identifying and controlling vehicles authorized
to be parked in the Garage.
 
(b)           As rental ("Parking Rental") for the Unassigned Permits and the
Reserved Permits (collectively, the "Parking Permits"), Tenant covenants and
agrees to pay Landlord commencing on the Rent Commencement Date and continuing
thereafter throughout the Term, as additional rental hereunder, the prevailing
market rate (as may be determined by Landlord from time to time in its sole
discretion) for such Parking Permits in comparable garages in metropolitan
Houston, Texas, which rate is as of the Effective Date deemed to be (1) during
the Initial Term, (i) the sum of $15.00 per month (plus any applicable sales
tax) for each of the Unassigned Permits to be issued by Landlord as herein
provided, and (ii) the sum of $25.00 per month (plus any applicable sales tax)
for each of the Reserved Permits to be issued by Landlord as herein provided,
and (2) during the Renewal Term (if applicable), the amount determined in
accordance with Section 7.1 plus any applicable sales tax for each of the
Parking Permits to be issued by Landlord as herein provided, such sums to be
payable monthly in advance on the first day of each and every month during the
Term, and a pro rata portion of such sum shall be payable for any partial
calendar month in the event this Lease commences (or ends) on a date other than
the first (or last) day of a calendar month.  Tenant's obligation to pay the
Parking Rental shall be considered an obligation to pay Rent for all purposes
hereunder and shall be secured in like manner as is Tenant's obligation to pay
Rent.  Notwithstanding anything to the contrary provided herein, the Parking
Rental as to one hundred thirty-five (135) of the Unassigned Permits only shall
abate from the Rent Commencement Date through and until the expiration of the
Initial Term.
 
(c)           If the parking spaces covered by the Parking Permits are not
available to Tenant during any portion of the Term due to causes beyond the
reasonable control of Landlord (including without limitation, as the result of a
casualty or condemnation) this Lease shall continue without abatement of Rent
and Landlord shall use reasonable efforts to make available to Tenant sufficient
substitute unassigned parking spaces (in the amount of those spaces not
available to Tenant) within a one (1) mile radius of the Project, until the
parking spaces covered by the Parking Permits are made available to Tenant.  The
substitute parking spaces shall be provided to Tenant at a rental rate not to
exceed the rate Tenant would have paid had the parking spaces covered by the
Parking Permits been so available to Tenant in the Garage.  Landlord shall use
its reasonable efforts to ensure that the parking spaces covered by the Parking
Permits are available to Tenant throughout the Term.
 
(d)           Landlord or the operator of the Garage may make, modify and
enforce reasonable rules and regulations relating to the parking of vehicles in
the Garage, and Tenant shall abide by such rules and regulations and shall
exercise reasonable efforts to cause its employees and invitees to abide by such
rules and regulations.  Additionally, Landlord reserves the right to alter the
size of the Garage.
 

 
44
 
 

(e)           Should additional space be added to the Leased Premises through
the exercise of Tenant's Right of Refusal pursuant to Section 7.2 hereof,
Landlord agrees to make available to Tenant throughout the remainder of the
Term, and Tenant agrees to take and lease, Unassigned Permits upon the same
terms and conditions set forth above, inclusive of Section 6.15(a); provided,
however, Tenant shall only be entitled to lease from Landlord, and Landlord
shall only be required to lease to Tenant, Unassigned Permits in the ratio of
two and eight-tenths (2.8) vehicles for each one thousand (1,000) square feet of
Net Rentable Area contained in the Refusal Space and the Parking Rental for such
additional Unassigned Permits shall be the then prevailing market rate (as may
be determined by Landlord from time to time in its sole discretion) for such
additional Unassigned Permits in comparable garages in metropolitan Houston,
Texas.
 
(f)           Landlord shall provide a validation stamp or other similar device
by which Tenant may provide to Tenant's visitors, invitees, and guests (but not
employees or owners of Tenant) up to one (1) hour of parking in the Garage at no
cost to Tenant.
 
6.16        SEVERABILITY.   If any term or provision of this Lease, or the
application thereof to any person or circumstance shall to any extent be invalid
or unenforceable, the remainder of this Lease, or the application of such
provision to persons or circumstances other than those as to which it is invalid
or unenforceable, shall not be affected thereby.  Each provision of this Lease
shall be valid and shall be enforceable to the extent permitted by law.
 
6.17        NOTICES.  All notices, demands, consents and approvals which may or
are required to be given by either party to the other hereunder shall be in
writing and shall be given by personal delivery, by an overnight courier, or by
deposit in the United States mail, certified, postage prepaid and addressed to
the party to be notified at the address for such party specified below, or to
such other place as the party to be notified may from time to time designate by
at least fifteen (15) days' notice to the notifying party.  Notice deposited in
the mail in the manner hereinabove described shall be deemed to have been fully
given and received (unless otherwise stated in the Lease) on the third (3rd) day
after it is so deposited whether or not actually received.  Notice given in any
other manner shall be deemed given and received only if and when received by the
party to be notified.
 
If to Landlord:
 
Peak Phoenix Tower, L.P.
9595 Wilshire Boulevard, Suite 710
Beverly Hills, California  90212
Attn:  Managing Director
 
With a copy to:
Hines Interests Limited Partnership
3200 Southwest Freeway, Suite 100
Houston, Texas  77027
Attn:  Property Manager

 

 
45
 
 

 
If to Tenant prior
to the Rent
Commencement Date:
 
Permian Mud Service, Inc.
P.O. Box 27727
Houston, Texas  77227-7727
Attn:
Christopher B. Johnson
 
If to Tenant on
or after the Rent
Commencement Date:
Permian Mud Service, Inc.
3200 Southwest Freeway, Suite 2700
Houston, Texas  77027
Attn:
Christopher B. Johnson

 
Additionally, each of Landlord and Tenant may designate up to three (3)
additional addresses to which copies of all notices shall be sent.  Furthermore,
Tenant agrees to send copies of all notices required or permitted to be given to
Landlord under this Section 6.17 to each lessor under any ground or land lease
covering all or any portion of the Project and to each holder of a mortgage or
deed of trust encumbering all or any portion of the Project that notifies Tenant
in writing of its interest and the address to which notices are to be
sent.  Tenant hereby appoints as an agent to receive the service of all
dispossessory or distraint proceedings and notices thereunder the person in
charge of or occupying the Leased Premises at the time, and, if no person shall
be in charge of or occupying the same, then such service may be made by
attaching the same on the main entrance of the Leased Premises.
 
6.18           SUCCESSORS.  This Lease shall be binding upon and inure to the
benefit of Landlord, its successors and assigns, and shall be binding upon and
inure to the benefit of Tenant, its successors and, to the extent assignment may
be approved by Landlord hereunder, Tenant's assigns.
 
6.19           ENTIRETY.  This instrument and any attached addenda or exhibits
signed by the parties hereto constitute the entire agreement between Landlord
and Tenant.  No prior or contemporaneous promises, inducements, representations
or agreements, oral or otherwise, between the parties hereto not embodied herein
shall be binding or have any force or effect.  Tenant will make no claim on
account of any representations whatsoever, whether made by any renting agent,
broker, officer or other representative of Landlord or which may be contained in
any circular, prospectus or advertisement relating to the Leased Premises or the
Project, or otherwise, unless the same is specifically set forth in this Lease.
 
6.20           FINANCIAL STATEMENTS.  If Landlord intends to sell all or any
portion of the Building or the Project (or any interest therein), or obtain a
loan secured by the Building or the Project (or any interest therein), then
Tenant shall, within fifteen (15) days of Landlord's written request, furnish
Landlord with financial statements, dated no earlier than one (1) year before
such request, certified as accurate by Tenant, or, if available, audited
financial statements prepared by an independent certified public accountant with
copies of the auditor's statement, reflecting Tenant's then current financial
condition, or the financial condition of the individuals comprising Tenant, in
such form and detail as Landlord may reasonably request.
 
6.21           AMENDMENTS.  This Lease may not be altered, changed or amended,
except by an instrument in writing, signed by both parties hereto.
 

 
46
 
 

6.22           MISCELLANEOUS.
 
(a)           This Lease is declared to be a Texas contract, and all of the
terms hereof shall be construed according to the laws of the State of Texas.
 
(b)           If Tenant is a corporation, partnership or other entity, Tenant
warrants that all consents or approvals required of third parties (including but
not limited to its Board of Directors or partners, to the extent applicable) for
the execution, delivery and performance of this Lease have been obtained and
that Tenant has the right and authority to enter into and perform its covenants
contained in this Lease.  Likewise, if Landlord is a corporation, partnership or
other entity, Landlord warrants that all consents or approvals required of third
parties (including but not limited to its Board of Directors or partners) for
the execution, delivery and performance of this Lease have been obtained and
that Landlord has the right and authority to enter into and perform its
covenants contained in this Lease.
 
(c)           Wherever in this Lease there is imposed upon Landlord the
obligation to use best or reasonable efforts or due diligence, Landlord shall be
required to do so only to the extent the same is economically feasible and
otherwise will not impose upon Landlord extreme financial or other burdens.
 
(d)           Time is of the essence in this Lease.
 
(e)           The terms and provisions of Exhibits A through H, inclusive,
attached hereto are hereby made a part hereof for all purposes.
 
(f)           Landlord and Tenant hereby waive trial by jury in any action,
proceeding or counterclaim brought by Landlord or Tenant against the other or
any matter whatsoever arising out of or in any way connected with this Lease,
the relationship of Landlord to Tenant, the use or occupancy of the Leased
Premises by Tenant or any person claiming through or under Tenant, any claim of
injury or damage, and any emergency or other statutory remedy; provided,
however, the foregoing waiver shall not apply to any action for personal injury
or property damage.  If Landlord commences any summary or other proceeding for
nonpayment of Rent or the recovery of possession of the Leased Premises, Tenant
shall not interpose any counterclaim of whatever nature or description in any
such proceeding, unless the failure to raise the same would constitute a waiver
thereof.
 
(g)           If any right granted in this Lease or other provisions of this
Lease is subject to the rule against perpetuities and the same shall not occur
or shall not have vested on the date that is twenty-one (21) years after the
death of the last to die of all now living descendants of Gerald R. Ford, James
E. Carter, Jr., Ronald W. Reagan, George H. W. Bush and William J. Clinton, all
of whom are former Presidents of the United States of America, then such right
or provisions shall terminate as of such date.
 
(h)           Except to the extent expressly provided to the contrary in this
Lease, all references to days in this Lease shall refer to calendar days.  All
references to "Business Days" in this Lease shall refer to days (other than
Saturdays and Sundays) that national banks are open for business in Houston,
Texas.
 

 
47
 
 

(i)           Tenant agrees not to record this Lease.  Additionally, Tenant
shall use reasonable efforts to not disclose the terms of this Lease to any
third party except consultants, accountants, insurance agents and legal counsel
of Tenant, any assignee of Tenant's interest in this Lease or sublessee of
Tenant, as required by Legal Requirements, or for financial reporting purposes.
 
(j)           This Lease may be executed in multiple counterparts, each of which
shall constitute an original instrument, but all of which shall constitute one
and the same agreement.
 
(k)           This Lease shall not be deemed or construed to create or establish
any relationship (other than that of landlord and tenant) or partnership or
joint venture or similar relationship or agreement between Landlord and Tenant
hereunder.
 
(l)           Submission of this instrument for examination or signature by
Tenant does not constitute a reservation of or an option for lease, and it is
not effective as a lease or otherwise until execution and delivery by both
Landlord and Tenant.
 
(m)           The voluntary or other surrender or termination of this Lease by
Tenant and/or Landlord shall not work a merger, but, at Landlord's sole option,
shall either terminate all existing subleases or subtenancies or shall operate
as an assignment to Landlord of all such subleases or subtenancies.
 
(n)           Waiver of Rights Under Section 93.012 of the Texas Property
Code.  Landlord and Tenant are knowledgeable and experienced in commercial
transactions and hereby agree that the provisions of this Lease for determining
charges, amounts and additional rent payable by Tenant (including, without
limitation, payments under Section 3.2 of this Lease) are commercially
reasonable and valid even though such methods may not state a precise
mathematical formula for determining such charges.  ACCORDINGLY, TENANT
VOLUNTARILY AND KNOWINGLY WAIVES ALL RIGHTS AND BENEFITS OF TENANT UNDER SECTION
93.012, ENTITLED "ASSESSMENT OF CHARGES", OF THE TEXAS PROPERTY CODE, AS ENACTED
BY HOUSE BILL 2186, 77TH LEGISLATURE, AS SUCH SECTION NOW EXISTS OR AS MAY BE
HEREAFTER AMENDED OR SUCCEEDED.
 
6.23           EXCLUSIVE USE.
 
(a)           All space in the Building, including without limitation the Leased
Premises, is subject to the use restriction contained in Paragraph 10 of Rider
No. 1 to that certain Lease Agreement covering certain space in the Building (as
is more particularly described in such Lease Agreement) by and between Landlord,
as landlord, and Morgan Stanley DW Inc. f/k/a Dean Witter Reynolds, Inc., as
tenant, a copy of which use restriction is attached hereto as Exhibit F.  Under
said restriction, Tenant may not, and Tenant hereby represents, covenants and
warrants that it shall not, use any portion of the Leased Premises for the
retail or discount sale of stocks or bonds unless such use shall constitute,
generate and/or account for less than fifteen percent (15%) of the revenue
generated by the business activities conducted in the Leased Premises.
 

 
48
 
 

(b)           Tenant hereby (i) acknowledges the existence, content and nature
of said use restriction (including, without limitation, that it accepts the
Leased Premises subject thereto), and (ii) represents, covenants and warrants
that it shall not solicit or cause to be solicited (for purposes of employment)
any employee or agent of Morgan Stanley DW Inc. f/k/a Dean Witter Reynolds, Inc.
for employment in the Leased Premises as a stock broker; and Tenant hereby
further agrees to indemnify and hold harmless Landlord, its partners, directors,
officers, representatives, agents, servants and employees from any and all
claims or liabilities whatsoever, however asserted or arising, related in anyway
to (x) said use restriction or any violation (whether alleged or actual) thereof
by (or caused by) Tenant, or (y) the prohibition on solicitation set forth in
subparagraph (ii) immediately above.
 
6.24           BROKERS.   Except for the commission payable to Transwestern
Commercial Services ("Broker"), which commission is payable by Landlord pursuant
to a separate agreement by and between Landlord and Broker,  Tenant hereby
warrants and represents that it has not dealt with any brokers or intermediaries
entitled to any compensation in connection with this Lease or Tenant's occupancy
of space in the Leased Premises.  Each party hereby agrees to hold the other
party, its partners and representatives harmless from any and all claims,
liabilities, costs and expenses (including reasonable attorneys' fees) arising
from any claim for any commissions or other fees by any broker or agent acting
or purporting to have acted on behalf of such party.
 
6.25           VACATING THE LEASED PREMISES.   If no portion of the Leased
Premises is occupied by Tenant or its permitted assignee or sublessee for longer
than one hundred eighty (180) consecutive days, even though Tenant continues to
pay the stipulated Rent under this Lease with respect thereto, and Tenant or its
permitted assignee or subtenant fails to re-occupy the same within sixty (60)
days after notice from Landlord, then from and after the expiration of said
sixty (60) day notice period, Landlord may terminate this Lease as to the Leased
Premises, without declaring Tenant in default under this Lease, by delivering
written notice to Tenant and Landlord and Tenant shall have no further
obligations under this Lease.  Space which is vacated on account of
condemnation, fire or other casualty or bona fide remodeling shall not be deemed
unoccupied for purposes of this Section 6.26.  In no event shall anything
contained herein be deemed a waiver by Landlord of its rights under Section 6.8
of this Lease upon the occurrence of an Event of Default.
 
VII.
 
7.1           RENEWAL OPTIONS.
 
(a)           So long as an Event of Default is not then continuing and subject
to the provisions of this Section 7.1, Tenant is hereby granted two (2)
successive options (the first such option, the "First Renewal Option" and the
second such option, the "Second Renewal Option," each individually, a "Renewal
Option," and such options collectively, the "Renewal Options") to renew the
Initial Term as to all (but not part) of the Leased Premises (including, except
as provided in Section 7.2, any space added to the Leased Premises pursuant to
Section 7.2) for a period of five (5) years each (each individually, a "Renewal
Term" and collectively, the "Renewal Terms"), but in no event to exceed a
maximum period in the aggregate of ten (10) additional years.  The first Renewal
Term (the "First Renewal Term") shall commence at the
 

 
49
 
 

expiration of the Initial Term and the second Renewal Term (the "Second Renewal
Term") shall commence at the expiration of the First Renewal Term.  Tenant must
furnish Landlord with written notice of its intent to exercise the Renewal
Option no later than eleven (11) months prior to the expiration of the Initial
Term or the First Renewal Term, as applicable (the "Intent Notice").  If Tenant
timely delivers the Intent Notice to Landlord, Landlord shall no later than ten
(10) months prior to the expiration of the Initial Term or the First Renewal
Term, as applicable, deliver to Tenant written notice of the Market Base Rental
Rate (defined below) as of the commencement of the applicable Renewal Term and
the Parking Rental for the Parking Permits (if applicable pursuant to subsection
(b)(iii) below).  If Tenant timely furnished the Intent Notice to Landlord as
provided above, Tenant may exercise the applicable Renewal Option by delivering
written notice of such election (the "Election Notice") to Landlord no later
than thirty (30) days after receipt of Landlord's notice of the Market Base
Rental Rate.  If Tenant timely delivers the Intent Notice and the Election
Notice to Landlord, but at any time prior to the commencement of the applicable
Renewal Term an Event of Default has occurred, Landlord, at its sole option
during the continuance of such Event of Default, may terminate Tenant's election
to exercise such Renewal Option and such Renewal Option and the subsequent
Renewal Option (if any) shall expire and thereafter shall not be exercisable by
Tenant and Tenant shall have waived forever its right to renew and extend the
Term.  If Tenant fails to timely exercise the applicable Renewal Option by
failing to timely deliver the Intent Notice or the Election Notice as provided
above, the applicable Renewal Option and the subsequent Renewal Option (if any)
shall terminate automatically, and Tenant shall have waived forever its right to
renew and extend the Term.
 
(b)           The renewal of this Lease pursuant to the exercise of the Renewal
Option shall be upon the same terms and conditions of this Lease (including,
without limitation, Tenant's obligation to pay the Base Rental Adjustment),
except:
 
(i)           the Base Rental Rate for the Leased Premises during the applicable
Renewal Term shall be the sum of (A) ninety-five percent (95%) of the Market
Base Rental Rate for such Renewal Term as of the commencement of the Renewal
Term, plus (B) the Basic Cost Component for such Renewal Term (as adjusted by
clause (ii) below); however, in no event shall the Base Rental Rate during such
Renewal Term be less than the Base Rental Rate (as adjusted pursuant to Section
3.2(b)(i) of this Lease) Tenant is obligated to pay under this Lease immediately
prior to the commencement of such Renewal Term.  The Base Rental Rate during
such Renewal Term shall be subject to increase as provided in Section 3.2(b) of
this Lease and Tenant shall be obligated to pay the Base Rental Adjustment
pursuant to Section 3.2(b) of this Lease (taking into account the adjusted Basic
Cost Component pursuant to clause (ii) below);
 
(ii)           the Basic Cost Component (as defined in Section 3.2(b)(i) of this
Lease) shall be amended for the applicable Renewal Term to equal the Expense
Stop (defined below).  As used in this clause (ii), "Expense Stop" shall mean
Landlord's determination of the Basic Costs (on a per square foot of Net
Rentable Area basis) for the calendar year in which such Renewal Term commences;
 
(iii)           at the time of the Tenant's exercise of a Renewal Option, if
Landlord is charging any tenants then entering into leases for office space in
the Building
 

 
50
 
 

for parking spaces in the Garage, Tenant shall pay Landlord, as Parking Rental,
a monthly amount equal to the rates charged by Landlord or the operator of the
Garage for parking in such location (taking into account whether such parking
spaces are for regular or executive parking spaces) for monthly contract parking
in the Garage multiplied by the number of Parking Permits leased by Tenant
pursuant to this Lease, which Parking Rental shall be payable as provided in
Section 6.15(b) of this Lease;
 
(iv)           Tenant shall have no option to renew this Lease beyond the First
Renewal Term if Tenant fails to exercise the Second Renewal Option as provided
above, or, in any event, beyond the Second Renewal Term; and
 
(v)           the leasehold improvements will be provided in their then-existing
condition (on an "as is" basis) at the time the applicable Renewal Term
commences and Tenant shall not be entitled to any construction, buildout or
other allowances with respect to the Leased Premises during such Renewal Term.
 
(c)           As used in this Lease, "Market Base Rental Rate" shall mean
Landlord's determination of the market annual net rental rate (exclusive of
expense pass through additions, whether characterized as such or not, and
exclusive of any portion of "base rentals" attributable to expenses or to an
"expense stop") per square foot of Net Rentable Area for the applicable space
and for the time period as to which such rate is being determined, that a
willing tenant would pay and a willing landlord would accept, in arm's length
bona fide negotiations (taking into consideration all relevant factors
including, without limitation, the following factors: rent being charged in
other first-class office buildings located in Houston, Texas, for leases then
being entered into for comparable space to the Leased Premises in the comparable
elevator bank for which the Market Base Rental Rate is being determined;
location, quality, amenities, age and reputation of the buildings in which the
space being compared is located; use and size of the space under comparison;
location and/or floor level of the subject space and any comparison space within
their respective buildings, including view, elevator lobby exposure, etc.;
definition of "net rentable area" applicable to the spaces; distinction (if any)
between "gross" and "net" rental rates and type, base year or dollar amount for
escalation purposes (both operating costs and real estate taxes) if the
comparison is on a "gross" lease basis; any other adjustments (including through
use of an index) to base rental; extent of services provided or to be provided;
extent and condition of leasehold improvements in the subject space and in any
comparison space; cost to tenant of relocating from the subject space to any
alternative space or savings from not moving to alternative space; abatements
pertaining to the subject space and to any comparison space (including with
respect to base rental, operating expenses and/or real estate taxes); inclusion
of parking charges in rental, if applicable; lease takeovers/assumptions by the
landlord of the comparison space, if applicable; moving allowances granted, if
any; relocation allowances granted, if any; club memberships granted, if any;
construction, refurbishment and repainting allowances granted, if any; any other
concessions or inducements; term or length of lease of subject space and of any
comparison space; overall creditworthiness of Tenant and lessees in comparable
space; the time the particular rental rate under consideration was agreed upon
and became or is to become effective; and payment of a leasing commission, fees,
bonuses or other compensation whether to Tenant's representatives or to
Landlord, or to any person or entity affiliated with Tenant or Landlord, or
otherwise).  Landlord and Tenant agree that bona fide written offers to lease
comparable space located in the Building from third parties may be used as a
factor in determining the Market Base Rental Rate.
 

 
51
 
 

(d)           Tenant may not assign the Renewal Option and no sublessee or
assignee of Tenant may exercise the Renewal Option except as expressly provided
for under Section 5.4(d) of this Lease.
 
7.2           RIGHT OF REFUSAL.
 
(a)           Landlord hereby grants to Tenant an ongoing right of refusal (the
"Right of Refusal") during the Term to include under this Lease all or any
portion of the space which consists of the entirety of Floor 25 of the Building,
approximately 10,363 square feet of Net Rentable Area on Floor 29 of the
Building and approximately 16,451 square feet of Net Rentable Area on Floor 30
of the Building, as identified on Exhibit G attached hereto, not already a part
of the Leased Premises at the time of such election (the "Expansion Space"),
subject to and upon the terms and conditions set forth in this Section
7.2.  Notwithstanding anything to the contrary contained in this Lease, the
Right of Refusal shall not apply to, and Landlord shall not be obligated to
comply with this Section 7.2 with respect to, any Expansion Space for which the
Refusal Space Rental Commencement Date (defined below) would occur later than
nine (9) months prior to the expiration of the Term.
 
(b)           Notwithstanding anything to the contrary contained herein,
Tenant's Right of Refusal is and shall be subject and subordinate to any renewal
rights, expansion rights, rights of refusal, rights of offer or similar rights
or options (i) now held by any tenant occupying space in the Building, or (ii)
hereafter granted to any tenant occupying any space in the Building under a
lease (and any extensions or renewals thereof or substitutions therefor) with
respect to which (x) Tenant had the right (as Tenant received the Refusal Notice
[defined below] with respect thereto from Landlord) but did not timely exercise
its Right of Refusal, or (y) Tenant would have had the right to exercise the
Right of Refusal except for the existence of an Event of Default (the "Superior
Rights").
 
(c)           Subject to the provisions of subsections (a) and (b) above, if at
any time during the Term (i) (A) Landlord has received a bona fide offer from
another prospective new tenant desirous of leasing all or any portion of the
Expansion Space which Landlord is willing and intends to accept, or (B) Landlord
makes a bona fide proposal to another prospective new tenant for the lease of
all or a portion of the Expansion Space (the applicable offer hereinafter the
"Offer"), and this Lease is then in full force and effect and an Event of
Default is not then in existence under this Lease, then Landlord shall offer to
Tenant in writing (the "Refusal Notice") the right to include all (and not a
portion) of that portion of the Expansion Space subject to the applicable Offer
(such portion of the Expansion Space subject to the applicable Offer,
hereinafter the "Refusal Space") as a part of the Leased Premises under this
Lease upon all of the terms and conditions of this Lease except as otherwise set
forth below.  The Refusal Notice shall identify the Refusal Space, the term the
Refusal Space is available for lease by Tenant, the date upon which the Refusal
Space is expected to be delivered, the Market Base Rental Rate for such Refusal
Space as of the date the Refusal Space is scheduled to be delivered to Tenant
and whether parking rental is payable with respect to any parking permits
contained in such Offer.  Tenant shall exercise its Right of Refusal (the
"Election"), if at all, provided an Event of Default is not then in existence,
by delivering written notice to Landlord within ten (10) days after the date the
Refusal Notice is received by Tenant (the "Refusal Election Period").
 

 
52
 
 

At any time during the Refusal Election Period and prior to Landlord's receipt
of the Election, Landlord may have discussions with other prospective tenants
with respect to the Refusal Space.  The Right of Refusal with respect to each
portion of the Expansion Space is a continuing right; however, if Tenant does
not exercise such Right of Refusal prior to the expiration of the Refusal
Election Period, or fails to deliver written notice of the Election as provided
above, Tenant shall be deemed to have not exercised the Right of Refusal as to
the applicable Refusal Space and Landlord may thereafter lease all of the
applicable Refusal Space to any tenant without regard to Tenant's rights under
this Section 7.2.  Notwithstanding the foregoing, if Tenant does not exercise,
or is deemed not to have exercised, the Right of Refusal prior to the expiration
of the Refusal Election Period and subsequently Landlord does not lease the
applicable Refusal Space within six (6) months after the expiration of such
Refusal Election Period, Landlord shall again comply with this Section 7.2 prior
to entering into a lease for the Refusal Space with another
tenant.  Notwithstanding the foregoing, the provisions of the Right of Refusal
shall continue to be in effect as to the portion, if any, of the then existing
Expansion Space not covered by the Offer (subject to the other provisions
hereof).  If such Refusal Space is leased to a tenant and, thereafter during the
Term, such tenant does not renew or extend its lease or enter into a new lease
and such space is again available and subject to an Offer, Tenant's Right of
Refusal shall be applicable thereto subject to the provisions of subsections (a)
and (b) and this subsection (c).  If Tenant timely gives notice of its Election
but at any time at or after such Election and prior to the addition of such
space to the Leased Premises, an Event of Default has occurred, Landlord, at its
sole option during the continuance of such Event of Default, may terminate
Tenant's Election and the Right of Refusal with respect to the Refusal Space
shall expire and thereafter the Right of Refusal shall not be exercisable by
Tenant as to such Refusal Space, and Landlord shall be free to lease such
Refusal Space or any portion thereof without restriction pursuant to this
Section 7.2.
 
(d)           The Refusal Space leased by Tenant pursuant to this Section 7.2
shall be leased on and subject to the following terms and conditions:
 
(i)           The Base Rental Rate for such Refusal Space shall be the sum of
(A) the Market Base Rental Rate contained in the Refusal Notice, plus (B) the
Basic Cost Component determined in accordance with the following paragraph,
provided that during a Renewal Term (if Tenant exercises the Renewal Option in
accordance with Section 7.1), occurring after the date the Refusal Space is
added to the Leased Premises, that the Base Rental Rate during the Renewal Term
shall be determined in accordance with Section 7.1.  Tenant shall be obligated
to pay the Base Rental Adjustment as to the Refusal Space leased by Tenant in
accordance with Section 3.2(b) of this Lease (taking into account the adjusted
Basic Cost Component as to the Refusal Space as provided below) and, without
limiting the foregoing, the Base Rental Rate shall be subject to increase
thereafter during the Term as provided in Section 3.2(b) of this Lease (as
modified below).
 

 
53
 
 

The Basic Cost Component (as defined in Section 3.2(b)(i) of this Lease) shall
be amended for the Initial Term as to the applicable Refusal Space only to equal
the Refusal Expense Stop (defined below) for such Refusal Space.  As used in
this clause (i), "Refusal Expense Stop" as to any Refusal Space shall mean
Landlord's determination of the Basic Costs (on a per square foot of Net
Rentable Area basis) for the calendar year in which the Refusal Space Rental
Commencement Date occurs as to such Refusal Space.
 
(ii)           Any space for which Tenant elects to exercise its Right of
Refusal under this Section 7.2 shall become part of the Leased Premises (but not
the Initial Leased Premises) and, except to the extent expressly provided to the
contrary in this Section 7.2 (including, without limitation, this subsection
(d)), shall be subject to the terms of this Lease applicable thereto, without
modification, and the term of this Lease shall commence for such Refusal Space
upon the earlier to occur of (x) the first date of use or occupancy of all or
any portion of the Refusal Space by Tenant for the purpose of conducting its
business, or (y) sixty (60) days after the date such space is delivered to
Tenant in an "as is" broom clean condition (the "Refusal Space Rental
Commencement Date").  Landlord shall not be obligated to make any improvements
to the Refusal Space and Tenant shall not be entitled to any construction,
buildout or other allowance with respect thereto.
 
(iii)           The term of this Lease shall expire for the Refusal Space upon
the expiration of the Term for the Initial Leased Premises, unless as the result
of Superior Rights such space is not available to be leased to Tenant through
the expiration of the Term for the Initial Leased Premises (in which event such
shorter term specified in the Refusal Notice shall apply to the Refusal
Space).  In no event shall this Lease continue in force and effect as to the
Refusal Space beyond the termination of this Lease as to the Initial Leased
Premises.
 
(e)           Upon the exercise of any Right of Refusal pursuant to the terms
hereof, Tenant and Landlord shall execute an amendment to this Lease in a form
mutually agreed to by Landlord and Tenant, each acting reasonably, which
amendment shall delineate and describe the portions of the space added to this
Lease thereby and otherwise appropriately memorialize the Election.
 
(f)           Notwithstanding anything to the contrary contained in this Lease,
Tenant may not assign a Right of Refusal and no sublessee or assignee of Tenant
may exercise a Right of Refusal, in either event except as provided for under
Section 5.4(d) of this Lease.
 
(g)           Landlord shall not be liable for failure to give possession of any
Refusal Space by reason of any holding over or retention of possession by any
previous tenants or occupants of same, nor shall such failure impair the
validity of this Lease.  However, Landlord does agree to use reasonable
diligence to deliver possession of the applicable Refusal Space in accordance
with the provisions of this Section 7.2.
 

 
54
 
 

In Witness Whereof, the parties hereto have executed this Lease as of the
Effective Date.
 
LANDLORD:
 
PEAK PHOENIX TOWER, L.P.,
a Texas limited partnership
 
By:           Peak Holdings, Inc.,
a Texas corporation,
its general partner

 
By: /s/ D. Gregory Scott
Name: D. Gregory Scott
Title: President

 
TENANT:
 
PERMIAN MUD SERVICE, INC.,
a Texas corporation
 

By: /s/ Steven J. Lindley
Name: Steven J. Lindley
Title: President

 
55
 
 

EXHIBIT A
 
DESCRIPTION OF LAND
 
(PHOENIX TOWER)
 
Description of a 2.1840 acre tract of land (95,134 square feet) being out of Lot
Eight (8) of the J.B. Sydnor Addition and a portion of a called 30,416 square
foot tract as recorded in Volume 6327, Page 144 of the Harris County Deed
Records and a portion of a called 66,983 square foot tract as recorded in Volume
6327, Page 156 of the Harris County Deed Records, situated in the A.C. Reynolds
Survey, Abstract No. 61, in the City of Houston, Harris County, Texas, said
2.1840 acre tract of land being more particularly described by metes and bounds
as follows with bearings being referenced to the Texas State Plane Coordinate
System, South Central Zone:
 
BEGINNING at a 60 penny nail found in the Northerly right-of-way line of U.S.
Highway 59 (Southwest Freeway, 360 feet wide) and at the Southeast corner of a
called 32,745 square foot tract as recorded in Volume 8315, Page 142 of the
Harris County Deed Records, said point also being the Southwest corner of said
66,983 square foot tract and the herein described tract;
 
THENCE N 12 deg. 18 min. 43 sec. W, along the East line of said 32,745 square
foot tract and the West line of said 66,983 square foot tract, a distance of
370.00 feet to an "X" cut in concrete found in the South line of the Partial
Replat of Greenway Plaza, Section One (1) as recorded in Volume 180, Page 1 of
the Harris County Map Records, said point being the Northwest corner of the
herein described tract;
 
THENCE N 77 deg. 41 min. 17 sec. E, along the South line of said Partial Replat
of Greenway Plaza, Section One (1), a distance of 256.35 feet to an "X" cut in
concrete found in the arc of a curve to the right, said point being in the
Westerly right-of-way line of Buffalo Speedway (107 feet wide), and being the
Northeast corner of the herein described tract;
 
THENCE Southeasterly along the Westerly right-of-way line of said Buffalo
Speedway and the arc of said curve to the right having a radius of 5,672.65
feet, a central angle of 03 deg. 18 min. 11 sec., a chord bearing S 12 deg. 55
min. 12 sec. E, 326.99 feet, a total arc distance of 327.04 feet to an "X" cut
in concrete found marking the Northeast cut back corner for the intersection of
the Westerly right-of-way line of said Buffalo Speedway and the Northerly
right-of-way line of said U.S. Highway 59;
 
THENCE S 33 deg. 17 min. 52 sec. W, along the cut back line, a distance of 61.50
feet to a 5/8 inch iron rod found in the Northerly right-of-way line of said
U.S. Highway 59 and marking the Southwest cut back corner of said intersection;
 
THENCE S 77 deg. 41 min. 10 sec. W, along the Northerly right-of-way line of
said U.S. Highway 59, a distance of 215.87 feet to the POINT OF BEGINNING and
containing 2.1840 acres of land.
 

 
A-1
 
 

EXHIBIT B

FLOOR PLAN OF LEASED PREMISES
 

 
B-1
 
 

[exb-27thfloor.gif]

 
 
B-2
 
 

[exb-28thfloor.gif]
 
 
B-3
 
 

EXHIBIT C-1
 
TENANT IMPROVEMENTS WORK SCHEDULE
 
1.           Plan Preparation Schedule.
 
(a)           For purposes of this Exhibit C-1 the terms identified below shall
have the following meanings:
 
"Initial Leased Premises" shall mean the Leased Premises as of the Effective
Date (and therefore does not include any space added to the Leased Premises
after the Effective Date).
 
"Building Standard" shall mean such materials and improvements as are currently
being used by Landlord in the base Building and the Building Standard
Improvements, or materials of comparable quality as may be substituted therefor
by Landlord.  The Tenant Improvements must include the Building Standard
Improvements (at Tenant's cost, subject to the provisions of Paragraph 2(a)
below) and other materials reasonably approved by Landlord.
 
"Tenant Architect" shall mean O'Neill Hill and Associates, which Tenant
Architect is hereby approved by Landlord and shall be employed by Tenant (at
Tenant's cost) for the preparation of the Tenant Working Drawings (excluding the
Tenant Engineering Drawings).
 
"Tenant Working Drawings" shall refer to complete sets of plans and
specifications (at least three sets of prints and one set of reproducible
copies) prepared by Tenant Architect (subject to the provisions of Paragraph
1(b) below as to the Tenant Engineering Drawings if applicable) and approved by
Landlord in the form of working drawings identifying the Tenant Improvements for
the Initial Leased Premises, including complete sets of detailed architectural,
structural, mechanical, electrical and plumbing working drawings for any and all
improvements desired by Tenant in the Initial Leased Premises (including the
Tenant Engineering Drawings).  The Tenant Working Drawings shall include such
written instructions or specifications as may be necessary or required to, and
otherwise be in form and substance sufficient to, obtain a bid and secure a
building permit from the City of Houston for said improvements to commence in
due course.  Landlord shall not be obligated to, and does not, make any
warranties to Tenant with respect to the Tenant Improvements, nor shall Landlord
be responsible for any of the warranties from the contractors to Tenant.  The
Tenant Working Drawings shall be consistent with the Project.  The Tenant
Working Drawings shall be complete and shall show the full detailed scope of all
work to be performed in the Initial Leased Premises, all of which work must be
in compliance with Legal Requirements.
 
"Tenant Engineering Drawings" shall mean complete sets of fully coordinated
Tenant Working Drawings for the structural, mechanical, electrical and plumbing
aspects of the Tenant Improvements.
 

 
C-1-1
 
 

"Bidding Contractors" shall mean at least two (2) contractor selected by Tenant
(subject to Landlord's approval) and two (2) contractors selected by Landlord to
be included in the bid process for the Tenant Improvements.
 
"Tenant Improvements" shall mean all leasehold improvements initially desired by
Tenant to be placed in the Initial Leased Premises pursuant to the Construction
Contract (defined below).
 
"Tenant Contractor" shall mean the Bidding Contractor selected by Tenant as the
general contractor for the construction of the Tenant Improvements.
 
(b)           Tenant shall cause the Tenant Working Drawings to be prepared by
Tenant Architect; provided, however, the Tenant Engineering Drawings (if
necessary) shall be prepared by engineers selected by Landlord.  Tenant
Architect shall be responsible for the complete coordination of all
architectural and engineering documents, including without limitation, the
Tenant Working Drawings.  The cost of preparing the Tenant Working Drawings,
including the Tenant Engineering Drawings (if applicable), and any changes or
revisions thereto, shall be paid by Tenant.  The Tenant Improvements to be
installed in the Initial Leased Premises must comply with applicable laws, which
shall be Tenant's responsibility.
 
Upon completion of the Tenant Working Drawings (including the Tenant Engineering
Drawings) and all subsequent revisions thereto, Tenant shall deliver the Tenant
Working Drawings or revisions, as applicable, to Landlord for its review and
approval.  Tenant must deliver the Tenant Working Drawings to Landlord no later
than May 15, 2005. Landlord agrees to review the Tenant Working Drawings (and
all subsequent revisions thereto) and to respond to Tenant within five (5)
Business Days of receipt of the Tenant Working Drawings (or any revisions
thereto) from Tenant, which response shall contain Landlord's approval or
sufficient detail to explain Landlord's objections (if any) to such Tenant
Working Drawings.  If Landlord fails to respond to Tenant within such five (5)
Business Day period, such Tenant Working Drawings shall be deemed approved by
Landlord.
 
(c)           Upon completion of the Tenant Working Drawings, Tenant will submit
the completed Tenant Working Drawings (the "Bid Documents") for pricing to the
Bidding Contractors subject to Landlord's approval rights as provided
above.  Upon receipt of the bids from the Bidding Contractors, Tenant shall
resolve changes to the Bid Documents necessary to obtain a building permit,
achieve cost savings or otherwise coordinate with the Bidding Contractor
selected by Tenant as the Tenant Contractor (and all such changes shall be
subject to Landlord's review and approval, which shall not be unreasonably
withheld).  Tenant shall cause the revised Bid Documents (the "Revised Bid
Documents") to be completed and delivered stamped or labeled as "Issued For
Construction."
 
(d)           Tenant shall be responsible for the actions and omissions of its
consultants, employees, architects, engineers, agents, subcontractors and
contractors (including without limitation, the Tenant Architect and Tenant
Contractor), including without limitation, the costs of any repairs to the
Tenant Improvements work or the Project which become necessary due to their
activities within the Initial Leased Premises or the Project.
 

 
C-1-2
 
 

2.           Tenant Improvements Construction.
 
(a)           Upon delivery of the Initial Leased Premises, Tenant shall
administer the construction of the Tenant Improvements in accordance with the
Revised Bid Documents and the construction of the Tenant Improvements shall be
carried out by the Tenant Contractor.  Tenant shall enter into a construction
contract with the Tenant Contractor (the "Construction Contract") and shall be
obligated for all payments due to the Tenant Contractor under the Construction
Contract.  Notwithstanding anything to the contrary contained herein, in no
event shall Landlord be obligated under this Exhibit C-1 for any sums due in
connection with the Construction Contract or the installation of the Tenant
Improvements (except as provided in Paragraph 6 below).
 
(b)           After Landlord approves the Tenant Working Drawings, Tenant may
make changes in the Tenant Improvements only if Tenant signs a change request
for the change and agrees to pay all costs resulting from such change, and then
only if Landlord approves the change by signing the change request within two
(2) Business Days following receipt thereof by Landlord (which approval shall
not be unreasonably withheld or delayed).  As used in this Exhibit C-1, the
terms "Tenant Working Drawings," "Bid Documents" and "Revised Bid Documents"
include all changes thereto made pursuant to this subparagraph (b).  If Landlord
fails to inform Tenant that Landlord will not be signing any change request
within such two (2) Business Day period following Landlord's receipt thereof,
such change request (and the corresponding change) shall be deemed approved by
Landlord.
 
(c)           Within five (5) days of Landlord's request, Tenant shall furnish
Landlord with a written list of Tenant's authorized construction representatives
for the Tenant Improvements.  Only the authorized construction representatives
on that list are authorized to (i) approve or change the Tenant Working Drawings
(including the Tenant Engineering Drawings) or the Revised Bid Documents, (ii)
sign any change order, receipt or other document on behalf of Tenant related to
the Tenant Improvements, or (iii) take any other action with respect to the
construction of the Tenant Improvements permitted to be taken by Tenant
hereunder.  Tenant, from time to time, may change or add to the list of
authorized construction representatives by giving Landlord written notice of the
addition or change.
 
(d)           LANDLORD SHALL MAKE NO WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT TO THE TENANT IMPROVEMENTS WORK.  ALL IMPLIED WARRANTIES WITH RESPECT
THERETO,  INCLUDING BUT NOT LIMITED TO THOSE OF MERCHANTABILITY AND FITNESS FOR
A PARTICULAR PURPOSE, ARE EXPRESSLY NEGATED AND WAIVED.  WITHOUT LIMITING THE
FOREGOING, LANDLORD SHALL NOT BE RESPONSIBLE FOR FAILURE OF THE TENANT
IMPROVEMENTS WORK.  ADDITIONALLY, LANDLORD SHALL NOT BE OBLIGATED TO, AND DOES
NOT, MAKE ANY WARRANTIES AND COVENANTS WITH RESPECT TO THE WORK NOR SHALL
LANDLORD BE OBLIGATED FOR ANY OF THE WARRANTIES FROM THE TENANT CONTRACTOR TO
TENANT.
 
(e)           Unless Landlord agrees otherwise, the Tenant Contractor and the
subcontractors shall not have access to the Initial Leased Premises, or be
allowed to commence work therein, until such space has been vacated, the
Construction Contract has been executed,
 

 
C-1-3
 
 

and all authorizations required pursuant to Legal Requirements have been
obtained, at which time such access shall be granted subject to the reasonable
rules and regulations promulgated by Landlord from time to time governing such
contractors.
 
(f)           At Tenant's option, Tenant may choose to bid the fee and general
conditions in order to select a general contractor prior to the completion of
the Tenant Working Drawings.  With prior approval of the Landlord, the Tenant
Contractor may acquire a demolition permit and begin demolition of the existing
interior space prior to completion of the Tenant Working Drawings, and before a
building permit is secured for the new construction.  The final Tenant Working
Drawings will still be submitted to the Landlord for review and approval before
any new construction begins.
 
3.           Communication Equipment.  It shall be the sole responsibility of
Tenant to order, arrange, pay for, and otherwise have installed at the sole cost
and expense of Tenant, any communication equipment (including without limitation
any telephone and data equipment or any wiring in connection therewith) desired
or required as a part of the Tenant Improvements.
 
4.           Commencement Date.
 
(a)           As used in this Lease, "Commencement Date" shall mean the date of
delivery to Tenant of the Leased Premises in its current, as-is condition.
 
(b)           Notwithstanding anything to the contrary set forth in this Lease,
if the Commencement Date is delayed for any reason (including without
limitation, the failure by any current tenant or occupant of any portion of the
Initial Leased Premises to vacate any portion of the Initial Leased Premises),
Landlord shall not be liable or responsible for any claims, damages or
liabilities in connection therewith or by reason thereof, nor shall such delay
constitute a default by Landlord hereunder.  Notwithstanding the foregoing, the
Term shall not commence as to the Initial Leased Premises until the Commencement
Date occurs, and the Base Rental provided for herein shall not commence to be
payable until the Rent Commencement Date.
 
5.           Additional Contractor.  Any contractor employed by Tenant or its
contractors (an "Additional Contractor") to perform any other work that is not
to be completed by the Tenant Contractor as contemplated by the Construction
Contract in connection with the Initial Leased Premises prior to the Rent
Commencement Date shall be subject to the following provisions:
 
(a)           Tenant shall obtain the prior written consent of Landlord as to
the qualifications of the Additional Contractor to be used by Tenant, which
approval shall not be unreasonably withheld or delayed.
 
(b)           It shall be Tenant's responsibility to ensure that the Additional
Contractor shall (i) conduct its work in such a manner so as not to unreasonably
interfere with any other construction  occurring on or in the Building or the
Initial Leased Premises; (ii) comply with such reasonable rules and regulations
applicable to all work being performed in the Building and uniformly
administered as may be promulgated from time to time by Landlord; (iii) maintain
such insurance and bonds in full force and effect as may be reasonably requested
by Landlord or
 

 
C-1-4
 
 

as required by Legal Requirements; and (iv) be responsible for reaching
agreement with Landlord, as to the terms and conditions for all contractor items
relating to conducting its work.  As a condition precedent to Landlord's
approving the Additional Contractor pursuant hereto, Tenant and the Additional
Contractor shall deliver to Landlord such assurances or instruments as Landlord
may reasonably require to evidence the Additional Contractor's compliance or
agreement to comply with the provisions of clauses (i), (ii), (iii) and (iv)
hereof.  Upon Landlord's approval of the Additional Contractor, subject to the
terms hereof, the Additional Contractor may enter the Initial Leased Premises to
perform its work.  Landlord retains the right to make periodic inspections to
assure conformity of the work of the Additional Contractor with the
aforementioned rules and regulations and with the plans and specifications
approved by Landlord.
 
(c)           Tenant shall indemnify and hold harmless Landlord from and against
any and all losses, damages, costs (including costs of suits and attorneys'
fees), liabilities, or causes of action arising out of or relating to the work
of the Additional Contractor, including but not limited to mechanic's,
materialman's, construction or other liens or claims (and all costs or expenses
associated therewith) asserted, filed or arising out of any such work.  All
materialmen, contractors, artisans, mechanics, laborers and other parties
hereafter contracting with Tenant for the furnishing of any labor, services,
materials, supplies or equipment with respect to any portion of the Initial
Leased Premises are hereby charged with notice that they must look solely to
Tenant for payment of same and Tenant's purchase orders, contracts and
subcontracts in connection therewith must clearly state this
requirement.  Without limiting the generality of the foregoing, Tenant shall
repair or cause to be repaired at its expense all damage caused by the
Additional Contractor, its subcontractors or their employees.  Tenant shall
reimburse Landlord for costs incurred by Landlord to repair any damage caused by
the Additional Contractor or any costs incurred by Landlord in requiring the
Additional Contractor's compliance with the rules and
regulations.  Additionally, Tenant shall reimburse Landlord for the costs
Landlord may incur to have the base Building engineer review all mechanical,
electrical, plumbing and life safety systems installed by the Additional
Contractor.
 
(d)           Tenant, at Tenant's sole cost and expense, shall cause Tenant's
architect(s) and/or engineer(s) to prepare a report, in form and substance
acceptable to Landlord, for the benefit of Landlord, certifying to the
substantial compliance of the work constructed by the Tenant Contractor and the
Additional Contractor with the plans and specifications approved by Landlord and
submit to Landlord "as built" drawings of the work (including, without
limitation, computer-generated mechanical, electrical, structural and
architectural CAD files).
 
(e)           The Additional Contractor shall not perform and, upon the request
of Landlord, whether written or oral, the Additional Contractor shall cease to
perform, any activity that is disruptive to the conduct of business within the
Project.
 
6.           Construction Allowance.
 
(a)           Provided a default by Tenant is not in existence, Landlord shall
pay Tenant the product of (x) Thirty-five and No/100 Dollars ($35.00),
multiplied by (y) the square feet of Net Rentable Area comprising the Initial
Leased Premises as of the Commencement Date, in accordance with, and subject to
the provisions of, this Paragraph 6 (the "Construction
 

 
C-1-5
 
 

Allowance").  Landlord agrees to disburse the Construction Allowance to Tenant
as such sums are due and payable by Tenant to the Tenant Contractor for the
construction of the Tenant Improvements provided the following procedures are
satisfied by Tenant: (a) Tenant submits a written request to Landlord at least
ten (10) days in advance of the date Tenant requests the funds to be disbursed
itemizing the sums to be paid and the work or items covered by such payment,
provided that in no event may Tenant submit any such request more than one (1)
time in any thirty (30) day period; and (b) Tenant must furnish lien waivers
from the Tenant Architect, Tenant Contractor and all Additional Contractors for
the sums to be disbursed as to the completed work.  Such lien waivers (other
than the final lien waiver) may be provided by Tenant in arrears but prior to
the submission of the next funding request by Tenant.
 
(b)           If the Construction Cost determined as of the date the
Construction Contract with the Tenant Contractor has been signed (the "Estimated
Construction Cost") is less than the amount of the Construction Allowance,
thereafter Landlord agrees to reimburse Tenant or pay directly on Tenant's
direction from the Construction Allowance the Additional Construction Costs
(defined below) provided (1) Landlord shall not be obligated to disburse any
such sums more than once every thirty (30) days and any such disbursement must
be simultaneous with the applicable disbursement to the Tenant Contractor
provided above, and (2) the amount of such Additional Construction Costs then
requested by Tenant does not exceed the difference between the (x) the
Construction Allowance and (y) the sum of the Construction Cost for the Tenant
Improvements determined as of the date of such disbursement plus any sums
previously disbursed by Landlord for Additional Construction Costs.  As used
herein, "Additional Construction Costs" shall mean the following costs (to the
extent not included in the Construction Cost):  (w) all reasonable out-of-pocket
costs for the preparation of the Tenant Working Drawings (including the Tenant
Engineering Drawings), interior design and finish schedule plans, drawings and
specifications (including any as built drawings), and all other space plans and
plans and specifications for the Tenant Improvements, (x) all reasonable
out-of-pocket costs of obtaining building permits and other necessary
authorizations from the applicable governmental authorities and the payment and
performance bond for the Tenant Contractor, (y) the reasonable out-of-pocket
expenses of moving to the Initial Leased Premises, and (z) all other reasonable
out-of-pocket costs of procuring and installing the Tenant Improvements
(including communication equipment) in the Initial Leased Premises.  Tenant must
submit reasonable documentation to Landlord supporting such reimbursement or
payment at least ten (10) days prior to the proposed
disbursement.  Notwithstanding anything to the contrary contained in this Lease,
in no event is Landlord obligated to disburse amounts for the Additional
Construction Costs to the extent Landlord reasonably believes that the sum of
the Construction Cost, the sums previously disbursed by Landlord for Additional
Construction Costs and the Additional Construction Costs requested may exceed
the Construction Allowance.
 
(c)           If the Construction Allowance has not been fully disbursed as of
the date the last payment is paid to the Tenant Contractor under the
Construction Contract (the "Construction Date"), then the unused amount of the
Construction Allowance (the "Remaining Allowance") shall be (1) first disbursed
to Tenant for any remaining Additional Construction Costs from which the
Construction Allowance has not previously been disbursed within ten (10) days
after receipt by Landlord of a receipt therefor or other documentation
reasonably satisfactory to Landlord evidencing the payment of such amounts by
Tenant (which evidence must be forwarded to Landlord within thirty (30) days
after the Construction Date (the "Evidence
 

 
C-1-6
 
 

Date"), and (2) to the extent the Remaining Allowance (if any) is not disbursed
to Tenant pursuant to clause (1) above, then such remaining portion of the
Remaining Allowance (if any) shall not be disbursed to Tenant and instead shall
be held by Landlord to reimburse Tenant for any third-party out-of-pocket costs
it may incur in improving the Leased Premises after June 1, 2011 pursuant to
Section 5.5 of the Lease, provided such reimbursement shall only be to the
extent of the remaining portion of the Remaining Allowance (if any).  As used
herein, "Construction Cost" shall mean the aggregate amount of sums due to the
Tenant Contractor under the Construction Contract for the construction of the
Tenant Improvements in the Initial Leased Premises.  Notwithstanding anything to
the contrary contained herein, in no event shall Landlord be obligated under
this Paragraph 6 for an amount in excess of the Construction Allowance.
 
7.           Additional Space.  With respect to space added to the Initial
Leased Premises after the Commencement Date, Tenant must install at its cost, in
connection with the construction of its leasehold improvements therein, the
Building Standard Improvements.  Additionally, Tenant shall be obligated to
furnish to Landlord for its approval (which approval shall not be unreasonably
withheld) Tenant Working Drawings for any leasehold improvements Tenant desires
to install in space added to the Leased Premises after the Commencement Date and
to otherwise comply with the provisions of Section 5.5 of this Lease.
 
8.           Time is of the Essence.  It is stipulated that time is of the
essence in connection with Tenant's and Landlord's compliance with the terms of
this Exhibit C-1.
 

 
C-1-7
 
 

EXHIBIT C-2
 
SCHEDULE OF BUILDING STANDARD IMPROVEMENTS
 
"Building Standard Improvements" shall mean the following leasehold
improvements:
 
Partitions
One (1) lineal foot of Building Standard type II partition per twelve (12)
square feet of Net Rentable Area leased outside the core area in the case of a
full floor tenant and the Usable Area for a tenant on a partial floor.  All
required partitions will be 5/8" gypsum board, painted with Building Standard
colors to be provided by Landlord.
   
Ceilings
A random fissured, mineral fiber, 2U x 2U lay-in tile supported by an exposed
"fine line" grid throughout the Leased Premises.
   
Lighting Fixtures
One (1) 2' x 4' recessed 3 tube fluorescent lighting fixture with anodized
aluminum 18 cell parabolic shaped louvers, including initial lamping, per one
hundred (100) square feet of Net Rentable Area.
   
Duplex Electric Outlets
One (1) duplex wall-mounted convenience outlet for each one hundred twenty (120)
square feet of Net Rentable Area.
   
Telephone Outlets
One (1) telephone wall outlet for each two hundred ten (210) square feet of Net
Rentable Area.
   
Floor Covering
Building Standard commercial grade carpeting throughout the Leased Premises.
   
Doors
One (1) full height, solid core door with a metal frame and lever handle latch
set hardware per three hundred (300) square feet of Net Rentable Area.
   
Light Switches
One (1) single pole light switch for each three hundred (300) square feet of Net
Rentable Area.  Group switching will be provided in open areas.
   
Window Coverings
One inch (1") horizontal aluminum slat mini-blinds for exterior windows
throughout the Leased Premises.
   
Fire Sprinkler Heads
Ceiling mounted fire sprinkler heads throughout the Leased Premises to conform
with light hazard occupancy fire protection system design criteria up to one
sprinkler per 125 square feet of Net Rentable Area.

 
C-2-1
 
 

EXHIBIT D
 
CERTIFICATE OF COMMENCEMENT DATE AND RENT COMMENCEMENT DATE
 
 ______________, 20__
 
Peak Phoenix Tower, L.P.
c/o Hines Interests Limited Partnership
3200 Southwest Freeway, Suite 100
Houston, Texas  77027
Attn: Property Manager

Gentlemen:
 
Please refer to that certain Lease Agreement (the "Lease") dated
_____________________ by and between Peak Phoenix Tower, L.P., a Texas limited
partnership ("Landlord") and the undersigned ("Tenant"), covering office space
(the "Leased Premises") in the office building project commonly known as Phoenix
Tower located in Harris County, Texas.  Capitalized terms not defined herein
shall have the meaning given to such terms in the Lease.  The undersigned hereby
certifies, acknowledges and represents the following to you, all as of the date
hereof:
 
1.           The Commencement Date for all purposes under the Lease is
_______________.
 
2.           The Rent Commencement Date for all purposes under the Lease is
_______________.
 
3.           The Expiration Date for all purposes under the Lease is
_______________.
 
4.           The Lease has not been amended except as may be set forth at the
end of this letter.
 
The undersigned hereby agrees that this certificate may be relied upon by
Landlord and its lenders and partners, as well as their respective successors
and assigns.
 

 
Very truly yours,
 
 
TENANT:
 
 
By:
 
Name:
 
Title:
 

 
Amendments to Lease:
 

 
D-1
 
 

AGREED AND ACCEPTED
 
this _____ day of ______________, 20___.
 
LANDLORD:
 
 
 
By:
 
Name:
 
Title:
 

 
D-2
 
 

EXHIBIT E
 
PROJECT RULES & REGULATIONS
 
1.
Sidewalks, doorways, skyways, vestibules, halls, stairways, elevator lobbies and
other similar areas of the Building shall not be used for the storage of
materials or disposal of trash, be obstructed by tenants or Landlord, or be used
by tenants or Landlord for any purpose other than ingress or egress of the
tenant's leased areas or the Building.

 
2.
Plumbing fixtures and appliances shall be used only for the purposes for which
they are designed, and no sweepings, rubbish, rags or other unsuitable materials
shall be disposed into them. Damage resulting to any such fixtures proven to
result from misuse by a tenant, and not by Landlord's cleaning contractors
responsible for cleaning the tenant's leased area and the Building, shall be the
liability of said tenant.

 
3.
No signs, advertisements, graphics or notices shall be painted or affixed on or
to any windows, doors or other part of the building visible in or from public
corridors, or from outside the Building  without  Landlord's (or Landlord's
property manager's) prior written approval. No part of the Project may be
defaced by tenants.

 
4.
Movement in or out of the Building of furniture, office equipment, or any other
bulky or heavy materials shall be restricted to such hours as Landlord (or
Landlord's property manager) shall reasonably designate. Please refer to the
Move-In Policy and the Move-Out Policy for detailed information and
requirements.  (Contact the Management Office for a current copy.)  Landlord (or
Landlord's property manager) will determine the method and routing of the
movement of said items so as to ensure the safety of all persons and property
concerned and Tenant shall be responsible for all costs and expenses associated
therewith.  Scheduling and advance written notice of intent to move such items
must be made to the Landlord (or Landlord's property manager) at least
twenty-four (24) hours before the time of such move.

 
For movement in or out of the Building of portable items which do not require
use of dollies or other moving equipment, notice to Landlord (or Landlord's
property manager) shall not be required.
 
5.
All deliveries (including messenger deliveries but excluding deliveries of small
hand carried parcels) to a tenant's leased premises shall be made through the
freight elevators. Passenger elevators are to be used only for the movement of
persons. Delivery vehicles shall be permitted only in such areas as are
designated by Landlord, from time to time, for deliveries to the Building.
Absolutely no carts or dollies are allowed through the main entrances of the
Building or on passenger elevators without the prior written consent of Landlord
(or Landlord's property manager).

 
6.
After-hours removal of hand carried items must be accompanied by an "Equipment
Removal Form" or "Property Pass" [to be provided by Landlord (or Landlord's
property manager)]. A letter signed by an authorized representative of a tenant
on such tenant's letterhead will also be acceptable. A list of persons
authorized to sign the Equipment

 

 
E-1
 
 

Removal Form or Property Pass (and any amendments thereto) will be furnished by
each tenant to Landlord and Landlord shall be entitled to rely thereon. Each
tenant shall have the right to amend such list from time to time upon written
notice to Landlord (or Landlord's property manager).
 
7.
Landlord (or Landlord's property manager) shall have the authority to approve
the proposed weight and location of any safes and heavy furniture and equipment,
which shall in all cases, stand on supporting devices approved by Landlord in
order to distribute the weight.

 
8.
Corridor doors which lead to common areas of the Building (other than doors
opening into the elevator lobby on floors leased entirely to a tenant) shall be
kept closed at all times.

 
9.
Each tenant shall cooperate with Landlord (and Landlord's property manager) in
keeping its leased area neat and clean. No tenant shall employ any person for
the purpose of such cleaning other than the Building's cleaning and maintenance
personnel without prior approval of Landlord (or Landlord's property manager).

 
10.
All freight elevator lobbies are to be kept neat and clean. The disposal of
trash or storage of materials in these areas is prohibited.

 
11.
Tenants shall not tamper with or attempt to adjust temperature control
thermostats in their leased premises and shall not use any additional methods of
heating or air-conditioning. Landlord shall promptly respond to each tenant's
notices as to, and Landlord (or Landlord's property manager) shall adjust
thermostats as required to maintain, the Building standard temperature. Each
tenant shall use reasonable efforts to keep all window blinds down and tilted at
a 45-degree angle toward the street to help maintain comfortable room
temperatures and conserve energy.

 
12.
Each tenant will comply with all access control procedures necessary both during
business hours and after hours and on weekends. Landlord will provide each
tenant with prior notice of such access control procedures and any changes
thereto promptly.

 
13.
Tenants are requested to lock all office doors leading to corridors and to turn
out all lights at the close of their working day; provided, however, that no
tenant shall be responsible to ensure that Landlord's cleaning contractor locks
doors and turns out lights after cleaning the tenant's leased premises.

 
14.
All requests for overtime air conditioning or heating must be submitted in
writing to Landlord (or Landlord's property manager) by an authorized
representative of the tenant. A list of persons authorized to request such
overtime services (and any amendments thereto) will be furnished by the tenant
to Landlord and Landlord shall be entitled to rely thereon. Any such request
must be made by 4:00 p.m. on the day desired for weekday requests, by 2:00 p.m.
Friday for weekend requests and by 2:00 p.m. on the preceding Business Day for
holiday requests. Requests made after that time may result in an additional
charge to such tenant, if acted upon by Landlord, but Landlord is in no event
obligated to act on untimely requests.

 

 
E-2
 
 
 
 
15.
No flammable or explosive fluids or materials shall be kept or used within the
Building except in areas approved by Landlord, and each tenant shall comply with
all applicable building and fire codes relating thereto.

 
16.
Tenants may not make any modifications, alterations, additions or repairs to
their leased premises and may not install any furniture, fixtures or equipment
in their leased premises which is in violation of any applicable building and/or
fire code governing their leased premises or the Project. The tenant must obtain
prior approval from Landlord (or Landlord's property manager) of any such
alterations, modifications and additions and shall deliver "as built" plans
therefore to Landlord (or Landlord's property manager), upon completion, except
as otherwise permitted in the tenant's lease. Such alterations include, but are
not limited to, any communication equipment and associated wiring which must
meet fire code. The contractor conducting the modifications and additions must
be a licensed contractor, is subject to all rules and regulations of Landlord
(and Landlord's property manager) while performing work in the Building and must
obtain all necessary permits and approvals prior to commencing the modifications
and additions.

 
17.
Except as provided in the Lease, no vending machines of any type shall be
allowed in tenant space without the prior written consent of Landlord (or
Landlord's property manager).

 
18.
All locks for doors in each tenant's leased areas shall be Building Standard
except as otherwise permitted by Landlord, and no tenant shall place any
additional lock or locks on any door in its leased area without Landlord's (or
Landlord's property manager's) written consent except as otherwise permitted in
such tenant's lease. All requests for duplicate keys shall be made to Landlord
(or Landlord's property manager).

 
19.
No tenant shall interfere in any way with other tenants' (or their visitors')
quiet enjoyment of their leased premises.

 
20.
Landlord (or Landlord's property manager) will not be liable or responsible for
lost or stolen money, jewelry or other personal property from any tenant's
leased area or public areas of the Building or Project.

 
21.
No machinery of any kind other than normal office equipment shall be operated by
any tenant in its leased area without the prior written consent of Landlord (or
Landlord's property manager).

 
22.
Canvassing, peddling, soliciting and distribution of handbills in the Building
(except for activities within a tenant's leased premises which involve only such
tenant's employees) is prohibited. Each tenant is requested to notify Landlord
(or Landlord's property manager) if such activities occur.

 
23.
Approval by Landlord (or Landlord's property manager) will be required for the
following:

 

 
E-3
 
 

A.
Access to Building mechanical, telephone or electrical rooms (e.g., GTE or
Southwestern Bell Telephone employees).

 
 
B.
After-hours freight elevator use.

 
 
C.
After-hours building access by tenant's contractors. Please note that the tenant
will be responsible for contacting Landlord's property manager in advance for
clearance of such tenant contractors.

 
24.
All tenants will refer all contractors, contractors' representatives and
installation technicians tendering any service to them to Landlord for
Landlord's supervision, approval and control before the performance of any
contractual services. This provision shall apply to all work performed in the
Building (other than work under contract for installation or maintenance of
security equipment or banking equipment), including, but not limited to,
installation of telephones, telegraph equipment, electrical devices and
attachments, and any and all installations of every nature affecting floors,
walls, woodwork, trim, windows, ceilings, equipment and any other physical
portion of the Building.

 
25.
Per City of Houston Code of Ordinances, Article 9 of Chapter 21, the public
places within the Building are to be smoke free. This includes but is not
limited to the lobbies, elevators, stairwells, restroom facilities, and garage,
plaza and breezeway entrances. In addition, the Building shall be a non-smoking
building, with no smoking in the Leased Premises or in any other area of the
Building, including the exterior portions thereof, provided that Landlord may
provide for a smoking area, in which case Tenant shall ensure that its employees
smoke only in such smoking area.

 
26.
Each tenant and his contractors are responsible for removal of trash resulting
from large deliveries or move-ins. Such trash must be removed from the Building
and Building facilities may not be used for dumping. If such trash is not
promptly removed, Landlord (or Landlord's property manager) may cause such trash
to be removed at the tenant's sole cost and expense plus a reasonable additional
charge to be determined by Landlord to cover Landlord's administrative costs in
connection with such removal.

 
27.
Tenants may not install, leave or store equipment, supplies, furniture or trash
in the common areas of the Building (i.e., outside their leased premises).

 
28.
Each tenant shall provide Landlord's property manager with names and telephone
numbers of individuals who should be contacted in an emergency.

 
29.
Tenants shall comply with the Building life safety program established by
Landlord (or by Landlord's property manager), including without limitation fire
drills, training programs and fire warden staffing procedures, and shall
exercise all reasonable efforts to cause all tenant employees, invitees and
guests to comply with such program.

 
30.
To insure orderly operation of the Building, no ice, mineral or other water,
towels, newspapers, etc., shall be delivered to any leased area except by
persons appointed or approved by Landlord in writing.

 

 
E-4
 
 

31.
Should a tenant require telegraphic, telephonic, annunciator or other
communication service, Landlord will direct the electricians where and how wires
are to be introduced and placed and none shall be introduced or placed except as
Landlord shall approve. Electric current shall not be used for space heaters,
cooking (other than microwave ovens or coffee makers) or heating devices or
similar appliances without Landlord's prior written permission.

 
32.
Nothing shall be swept or thrown into the corridors, halls, elevator shafts or
stairways.

 
33.
No portion of any tenant's leased area shall at any time be used or occupied as
sleeping or lodging quarters, nor shall personnel occupancy loads exceed limits
reasonably established by Landlord for the Building.

 
34.
No vehicles, bicycles, motorcycles, birds, fish, or other type of animals
(except wheelchairs or Seeing Eye dogs) shall be brought into or kept in, on or
about any tenant's area or any portion of the building without Landlord's prior
written permission.

 
35.
The carrying of firearms of any kind in any leased premises, the building in
which such premises are situated, any related garage or any related complex of
buildings of which the foregoing are a part, or any sidewalks, drives or other
common areas related to any of the foregoing, is prohibited except in the case
of unconcealed firearms carried by licensed security personnel hired or
contracted for by tenants for security of their premises as permitted by such
tenants' leases or otherwise consented to by Landlord in writing.

 
36.
Landlord reserves the right to rescind any of these rules and regulations and to
make such other and further rules and regulations as, in its reasonable
judgment, shall, from time to time, be required for the safety, protection, care
and cleanliness of the Project, the operation thereof, the preservation of good
order therein and the protection and comfort of the tenants and their agents,
employees and invitees.  Such rules and regulations, when made and written
notice thereof is given to Tenant, shall be binding upon it in like manner as if
originally herein prescribed.

 

 
E-5
 
 

EXHIBIT F
 
EXCLUSIVE USE PROVISION
 
10.           Exclusive Use.  Landlord covenants that all other leases for space
in the Building which are executed after the date hereof shall prohibit the use
of any portion of said leased premises for the retail or discount sale of stocks
or bonds, if such business activities constitute fifteen percent (15%) or more
of the revenues generated by the business activities conducted in said leased
premises.  This covenant and the use restrictions imposed pursuant hereto shall
become null and void on the date Morgan Stanley DW Inc. f/k/a Dean Witter
Reynolds Inc. ceases to occupy any portion of the Premises.  The rights granted
under this Section 10 are personal to Tenant and may not be assigned or
subleased.
 
 

 
  F-1
 
 

EXHIBIT G
 
EXPANSION SPACE
 
 
 
 G-1
 
 

[exg-25thfloor.gif]
 

[exg-29thfloor.gif]
 

 
[exg-30thfloor.gif]

 
 
 
 

EXHIBIT H
 
TECHNICAL STANDARDS
 
I.
General
     
All users shall furnish the following to Manager prior to installation of any
equipment:
       
(i)
Site application.
 
(ii)
Copies of FCC licenses/construction permits.
 
(iii)
Accurate block diagrams showing operating frequencies, all system components
(active or passive) with gains and losses in DB, along with power levels.
 
(iv)
Copies of manufacturers' equipment specifications.
     
The following will not be permitted at the Project without the written consent
of Manager, which consent shall not be unreasonably withheld.
       
1)
Any equipment without FCC type acceptance.
 
2)
Add-on power amplifiers.
 
3)
"Hybrid" equipment with different manufacturers' RF strips.
 
4)
Open rack mounted receivers and transmitters.
 
5)
Equipment with crystal oscillator modules which have not been temperature
compensated.
 
6)
Digital/analog hybriding in exciters, unless type-accepted.
 
7)
Equipment which does not conform to FCC Rules and Regulations.
 
8)
Non-continuous duty rated transmitters used in continuous duty applications.
 
9)
Transmitter outputs without a harmonic filter and antenna matching circuitry.
 
10)
Change in operating frequency(ies).
 
11)
Equipment not designed for high-density site applications.
 
12)
Ferrite devices looking directly at an antenna.
 
13)
Nickel plated connectors.
 
14)
Cascaded receiver multicouplers/preamps.
 
15)
Active or passive devices "buried" in a ceiling.
     
II.
Radio Frequency Interference Protective Devices
       
In general, the following minimum specifications will apply:
       
30-76 MHZ
   
Isolators - minimum of 20 DB with bandpass cavity
   
TX output cavity - minimum of 20 DB rejection @ plus or minus 5 MHZ
       
130-174 MHZ
   
Isolators - minimum of 30 DB with bandpass cavity

 
H-1
 
 

 
406-512 MHZ
   
Isolators - minimum of 90 DB with bandpass cavity
       
806-866 MHZ
   
Isolators - minimum of 90 DB with bandpass cavity
       
866 MHZ - as determined by Manager
 
It should be emphasized that the above specifications are minimum requirements.
Additional protective devices may be required based upon evaluation of the
following information:
         
Theoretical TX mixes, particularly second and third order
   
Antenna location and type
   
Combiner/multicoupler configurations
   
Transmitter specifications
   
Receiver specifications
   
Historical problems
   
Transmitter to transmitter isolation
   
Transmitter to antenna isolation
   
Transmitter to receiver isolation
   
Calculated level of IM products
   
Transmitter output power
   
Transmitter ERP
   
Spectrum analyzer measurements
   
VSWR measurements
   
Existing cavity selectivity
     
III.
Antennas
       
1)
Mounted only on posts or other specified mount and only one per mount unless
authorized in writing.
 
2)
All mounting hardware galvanized or non-corroding metal.
 
3)
Tagged with weatherproof labels showing manufacturer, model, frequency range,
and owner.
 
4)
Bonded with copper braid to building ground system (when ground cable is
installed by Owner).
 
5)
Connections to be taped with stretch vinyl tape (Scotch #33 or equivalent) and
Scotchkoted (including booted pigtails).
 
6)
Must meet manufacturer's VSWR specifications.
 
7)
Antennas with corroded elements must be repaired or replaced.
 
8)
Must be DC grounded type, or have the appropriate lightning protection as
determined by Manager.
 
9)
Unless otherwise authorized by Manager, all antennas must be encased in
fiberglass radomes and be painted or impregnated with a color designated by
Manager as the standard antenna color for aesthetic uniformity.

 
H-2
 
 

 
10)
Mounting pipes must be duct such that they do not extend above the antenna
mounting sleeve.
     
IV.
Antenna Mounts
       
1)
No welding or drilling on mounts will be permitted.
 
2)
2" or greater heavy wall aluminum or galvanized mounting pipes must be used.
 
3)
Any corroded hardware must be replaced.
     
V.
Cable
       
1)
All antenna lines to be jacketed heliax (or equivalent), ½" or greater.
 
2)
No kinked or cracked cable.
 
3)
Any cable fasteners exposed to weather must be nylon ultraviolet resistant type
or stainless steel.
 
4)
All transmit interconnecting cables/jumpers must be solid copper outer conductor
(½" superflex or equivalent), not to exceed 8' in length.
 
5)
All receiver intercabling must be 100% shielded coax.
 
6)
All receiver cabling must be run in troughs or PVC conduit.
 
7)
All inside cable must be run in troughs where provided.
 
8)
All unused lines must be tagged at both ends showing termination points.
 
9)
All AC line cords must be 3 conductor with grounding plugs.
 
10)
Transmission lines must be tied to antenna mounting posts.
 
11)
Where no troughs or cable trays exist, all cable must be tied at not less than
3' intervals.
 
12)
All antenna transmission lines shall be grounded at both the antenna and
equipment ends, with the appropriate grounding kits.
     
VI.
Connectors
       
1)
Must be teflon filled, UHF or N type, including chassis/bulkhead connectors.
 
2)
Must be properly fabricated (soldered if applicable) if field installed.
 
3)
Must be taped or Scotchkoted at least 4" onto jacket if exposed to weather.
 
4)
Male pins must be proper length.
 
5)
Female contacts may not be spread.
 
6)
Connectors must be plier tight as opposed to hand tight.
 
7)
Must be silver plated or brass.
 
8)
Must be electrically and mechanically equivalent to OEM connectors.
     
VII.
Receivers
       
1)
No RF preamps permitted in front end unless authorized by Manager.
 
2)
All shields must be in place.
 
3)
VHF and up must use helical resonator front ends.
 
4)
Must meet manufacturer's specifications, particularly with regard to bandwidth,
discriminator swing and symmetry, and spurious responses.

 
H-3
 
 

 

 
5)
Crystal filters/preselectors/cavities must be installed in RX legs where
appropriate.
 
6)
All repeater tone squelch circuitry must use "AND" logic.
     
VIII.
Transmitters
       
1)
Must meet original manufacturer's specifications.
 
2)
All shields must be in place.
 
3)
Must have a visual indication of transmitter operation.
 
4)
Must be tagged with Lessee's name, equipment model number, serial number, and
operating frequency(ies).
 
5)
All low level, pre-driver and driver stages in exiter must be shielded.
 
6)
All power amplifiers must be shielded.
 
7)
Output power may not exceed 150 watts.
     
IX.
Combiners/Multicouplers
       
1)
Shall at all times meet manufacturer's specifications
 
2)
Must be tuned using manufacturer approved procedures.
 
3)
Must provide a minimum of 55 DB transmitter to transmitter isolation.
 
4)
All power detectors and monitoring devices must not look directly at an antenna.
     
X.
Cabinets
       
1)
All cabinets must be bonded together and to the Owner's ground system (when
available).
 
2)
All doors must be on or closed.
 
3)
All non-original holes larger than 1" must be covered with copper screen or
solid metal plates.
     
XI.
Installation Procedures
       
1)
Installation may take place only after Manager has been notified of the date and
time, and only during normal working hours unless otherwise authorized.
 
2)
Equipment may not be operated until the installation has been approved by
Manager, which approval shall not be unreasonably withheld.
     
XII.
Maintenance/Tuning Procedures
       
1)
All external indictor lamps/leds must be working.
 
2)
Equipment parameters must meet manufacturers' specifications.
 
3)
All cover, shield, and rack fasteners must be in place and securely tightened.
 
4)
Local speakers must be turned off except during service.
     

 
H-4
 
 

XIII.
FCC Licensing
       
1)
All FCC licenses must be current.
     
XV.
Interference Diagnosing Procedures
       
1)
All licensees must cooperate in a timely fashion with Manager when called upon
to investigate a source of interference, whether or not it can be conclusively
proven that their equipment is involved.
     
XIV.
Miscellaneous
       
1)
Window blinds must be kept closed to minimize sun heating.
 
2)
All installations must be maintained in a neat and orderly manner.
 
3)
Doors to equipment and antenna spaces shall be closed and locked at all times.
 
4)
Access to equipment and antennas shall be by authorized personnel only, and only
for purposes of installation, service or maintenance.
     

 

 
H-5
 
 

FIRST AMENDMENT TO LEASE AGREEMENT

THIS FIRST AMENDMENT TO LEASE AGREEMENT (this "Amendment") is made and entered
into on the 16th day of October, 2007 (the "Effective Date") by and between FSP
PHOENIX TOWER LIMITED PARTNERSHIP, a Texas limited partnership ("Landlord"), and
PERMIAN MUD SERVICE, INC., a Texas corporation ("Tenant").

WITNESSETH:

WHEREAS, Peak Phoenix Tower, L.P., a Texas limited partnership ("Original
Landlord"), and Tenant entered into that certain Lease Agreement dated as of
April 28, 2005 (the "Original Lease") with respect to the lease of approximately
51,582 square feet of Net Rentable Area on Levels 27 and 28 (the "Leased
Premises") in the office building known as Phoenix Tower in Houston, Texas (the
"Building");

WHEREAS, Landlord is the successor in interest to Original Landlord; and

WHEREAS, Landlord and Tenant now desire to amend the Lease to extend the term of
the Lease, expand the Leased Premises and to modify certain other provisions of
the Lease as set forth herein but not otherwise.

NOW, THEREFORE, for and in consideration of Ten and No/100 Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and confessed, Landlord and Tenant, intending to be and
being legally bound, do hereby agree as follows:

1.           Defined Terms.

All capitalized terms used herein and not defined herein shall have the meaning
set forth in the Lease.

2.           Extension of Term.

Pursuant to the Lease, the Term of the Lease expires on July 31, 2015.  Landlord
and Tenant have agreed to extend the Term of the Lease subject to the terms and
conditions contained in this Amendment.  Article I and Section 2.1 of the Lease
shall be amended to provide that the Term of the Lease as to all of the Leased
Premises shall be extended and such extended term (the "Extended Term") shall
commence on August 1, 2015 (the "Extension Date"), and shall expire as to the
entire Leased Premises at 6:00 P.M. on February 28, 2018 (the "Expiration
Date").  The extension of the Term pursuant to this Paragraph 2 shall be upon
the same terms and conditions contained in the Lease, except as modified in this
Amendment, including without limitation, Tenant's obligations to pay Base
Rental, Tenant's Basic Cost and Tenant's Basic Cost Adjustment in accordance
with Article III of the Lease, as amended by this Amendment.

 
1
 
 
 
3.           Expansion of Leased Premises.

(a)           Commencing on September 1, 2007 (the "Expansion Date"), the Leased
Premises shall be automatically expanded to include approximately twenty-six
thousand seventy-two (26,072) square feet of Net Rentable Area on Level 25 of
the Building, as shown on Exhibit A attached hereto and made a part hereof (the
"First Amendment Expansion Premises"); provided that, the Expansion Date shall
occur (if at all) no earlier than the date upon which the Washington Mutual
Lease Amendment (defined in Paragraph 10 hereof) has been executed, as set forth
in Paragraph 10 of this Amendment.  Upon the Expansion Date, the Leased Premises
shall contain a total of seventy-seven thousand six hundred fifty-four (77,654)
square feet of Net Rentable Area.

(b)           The First Amendment Expansion Premises shall be added to and
become part of the Leased Premises for all purposes of the Lease without any
further action on behalf of Landlord or Tenant and shall be subject to all of
the terms and conditions of the Lease applicable to the Leased Premises,
including, without limitation, Tenant's obligation to pay Base Rental and
Tenant's Basic Cost Adjustment in accordance with Article III of the Lease,
subject to the modifications contained in this Amendment.

(c)           The lease term for all of the First Amendment Expansion Premises
shall commence upon the Expansion Date and shall expire on the date upon which
the Lease expires as to the remainder of the Leased Premises, as extended by
this Amendment.

(d)           As used herein, "First Amendment Expansion Premises I" shall mean
the portion of the First Amendment Expansion Premises containing seventeen
thousand two hundred eighty-six (17,286) square feet of Net Rentable Area, and
"First Amendment Expansion Premises II" shall mean the portion of the First
Amendment Expansion Premises containing eight thousand seven hundred eighty-six
thousand (8,786) square feet of Net Rentable Area.  First Amendment Expansion
Premises I and First Amendment Expansion Premises II collectively make up the
First Amendment Expansion Premises.
 
(e)           As used herein, the "Existing Premises" shall mean the Leased
Premises excluding the First Amendment Expansion Premises.
 
4.           Rent; Conversion to Net Lease.

Landlord and Tenant have agreed to convert the Lease from a "gross lease" to a
"net lease."  Commencing on the Expansion Date as to all of the Leased Premises
(including the First Amendment Expansion Premises), Tenant's Base Rental,
Tenant's Basic Cost and Tenant's Basic Cost Adjustment shall be determined in
accordance with the provisions of this Paragraph 4, payable in accordance with
the timing and procedures applicable thereto pursuant to Article III of the
Lease, and the Lease shall be amended as follows:

 
2
 
 

(a)           With respect to the First Amendment Expansion Premises I, subject
to this Paragraph 4, from the Expansion Date through and until February 28,
2008, Tenant shall be obligated to pay as Base Rental for the lease and use of
the First Amendment Expansion Premises I an annual amount equal to the product
of (x) $13.20, multiplied by (y) the number of square feet of Net Rentable Area
comprising the First Amendment Expansion Premises I, and no Tenant's Basic Cost
or Tenant's Basic Cost Adjustment shall be payable as to First Amendment
Expansion Premises I only during this time only.
 
Thereafter, Tenant shall be obligated to pay as the Base Rental for the lease
and use of the First Amendment Expansion Premises I an annual amount equal to
the product of (x) the Base Rental Rate for the period set forth below,
multiplied by (y) the number of square feet of Net Rentable Area comprising the
First Amendment Expansion Premises I:

 
Period
Base Rental Rate
       
March 1, 2008 - April 30, 2011
$12.00
 
May 1, 2011 - April 30, 2016
$15.00
 
May 1, 2016 - Expiration Date
$17.00

In addition to the Base Rental for the First Amendment Expansion Premises I,
commencing on March 1, 2008, Tenant shall be obligated to pay Tenant's Basic
Cost and Tenant's Basic Cost Adjustment in accordance with Article III of the
Lease, as amended by this Amendment.

(b)           With respect to the First Amendment Expansion Premises II, subject
to this Paragraph 4, from the Expansion Date and continuing through and until
the Expiration Date, Tenant shall be obligated to pay as the Base Rental for the
lease and use of the First Amendment Expansion Premises II an annual amount
equal to the product of (x) the Base Rental Rate for the period set forth below,
multiplied by (y) the number of square feet of Net Rentable Area comprising the
First Amendment Expansion Premises II:
 

 
Period
Base Rental Rate
       
Expansion Date – August 30, 2008
$0.00
 
September 1, 2008 - April 30, 2011
$13.57
 
May 1, 2011 - April 30, 2016
$16.57
 
May 1, 2016 - Expiration Date
$18.57

In addition to the Base Rental for the First Amendment Expansion Premises II,
Tenant shall be obligated to pay Tenant's Basic Costs and Tenant's Basic Cost
Adjustment in accordance with Article III of the Lease, as amended by this
Amendment.

(c)           With respect to the Existing Premises, subject to this Paragraph
4, commencing on the September 1, 2007, Tenant shall be obligated to pay as the
Base Rental for the lease and use of the Existing Premises an annual amount
equal to the product of (x) the Base Rental Rate for the period set forth below,
multiplied by (y) the number of square feet of Net Rentable Area comprising the
Existing Premises:
 
3

 

 
Period
Base Rental Rate
       
September 1, 2007 -  April 30, 2009
$6.77
 
May 1, 2009 - April 30, 2011
$8.52
 
May 1, 2011 - July 31, 2015
$10.52
 
August 1, 2015 -  April 30, 2016
$15.00
 
May 1, 2016 - Expiration Date
$17.00

(d)           The definitions of "Base Year" and "Basic Cost Component"
contained in Article I of the Lease are hereby deleted in their entirety.
 
(e)           The fifth (5th) sentence of Section 2.1(b) shall be amended by
deleting the phrase "Base Rental as adjusted by the Base Rental Adjustment (each
as defined in Article III)" and substituting "Base Rental (defined in Section
3.2), Tenant's Basic Cost (defined in Section 3.3), Tenant's Basic Cost
Adjustment (each as defined in Section 3.4)" therefor.
 
(f)           The first (1st) two (2) sentences of Section 3.1(a) of the Lease
shall be deleted in their entirety and the following substituted therefor:
 
"Commencing on the Rent Commencement Date and continuing thereafter throughout
the Term, Tenant hereby agrees to pay Base Rental in accordance with this
Section 3.1 and Section 3.2, Tenant's Basic Cost in accordance with this Section
3.1 and Section 3.3, and Tenant's Basic Cost Adjustment in accordance with this
Section 3.1 and Section 3.4.  Base Rental and Tenant's Basic Cost shall be due
and payable in twelve (12) equal monthly installments, subject to adjustment in
accordance with Section 3.4, on the first day of each calendar month during the
Term (subject to the provisions of subsection (b) below), and Tenant hereby
agrees to so pay such rent monthly in advance and without demand to Landlord's
address in Section 6.17 (or such other address as may be designated in writing
by Landlord from time to time)."
 
(g)           Section 3.1(b) of the Lease shall be amended as follows:
 
 
i.
The phrase "Tenant's Basic Cost" shall be inserted after the words "Base Rental"
in the first sentence thereof; and

 
 
ii.
The following sentences shall be inserted immediately prior to the last sentence
thereof:

 
"If the Term commences or expires on other than the first day of a calendar
year, Tenant's Basic Cost Adjustment shall be prorated for such commencement or
expiration year, as the case may be, by multiplying Tenant's Basic Cost
Adjustment by a fraction, the numerator of which shall be the number of days of
the Term occurring during the commencement or expiration year, as the case may
be, and the denominator of which shall be the number of days in said year.  The
calculation described in Section 3.4(c) shall be made as soon as possible after
the termination of this Lease."
 

 
4
 
 
 
(h)           The first (1st) sentence of Section 3.1(c) of the Lease shall be
amended by inserting the following after the word "rent" in the first (1st) line
thereof:
 
"(including, without limitation, Base Rental, Parking Rental and Tenant's Basic
Cost, as adjusted by Tenant's Basic Cost Adjustment)"
 
(i)           Section 3.2 of the Lease is hereby amended as follows:
 
 
i.
Section 3.2(a) of the Lease is hereby amended in accordance with Paragraph 4(b)
above.

 
 
ii.
Section 3.2(b) of the Lease is hereby deleted in its entirety and is of no
further force or effect.

 
 
iii.
Section 3.2(c) of the Lease is hereby amended to be Section 3.3(c) and inserted
in Section 3.3 as amended herein.  All references to Section 3.2(c) in the Lease
shall be amended to be Section 3.3(c).

 
 
iv.
The reference to "Section 3.2(c)(i) through (xii)" in Section 3.2(c)(e), which
shall now be Section 3.3(c)(e), shall be amended to be "Section 3.3(c)(i)
through (xii)."

 
 
v.
Section 3.2(c)(iv) of the Lease, which shall now be Section 3.3(c)(iv), shall be
deleted in its entirety and the following substituted therefor:

 
"A net management fee paid to the property manager for the management of the
Project of three percent (3%) of the gross revenues of the Project (excluding
Parking Rental paid by Tenant to Landlord) for such calendar year; (provided,
however, in lieu thereof, Landlord may charge Tenant separately, and not as a
part of Basic Costs, for a management fee contribution of three percent (3%) of
the Base Rental, Tenant's Basic Costs and Tenant's Basic Cost Adjustment payable
by Tenant for such calendar year, herein called the “Management Fee
Contribution”) and the cost of all maintenance and service agreements for the
Project and the equipment therein, including but not limited to, access control
service, window cleaning, traffic control, janitorial service, landscape
maintenance, and elevator maintenance.  If Landlord so elects to charge Tenant
separately for a management fee contribution (and not as a part of Basic Costs)
as provided in the parenthetical of the immediately preceding sentence, Basic
Costs set forth in this Lease shall be reduced by an amount equal to Tenant's
pro rata share of such management fee on a Net Rentable Area basis."
 

 
5
 
 

vi.           Section 3.2(d) of the Lease is hereby amended to be Section 3.4(d)
of the Lease and inserted in Section 3.4 as added to the Lease herein.  The
reference to "Section 3.2(b)(ii)" in the first sentence thereof shall be amended
to be "Section 3.4(c)".  All references to Section 3.2(d) in the Lease shall be
amended to be Section 3.4(d).
 
 
vii.
Section 3.2(e) of the Lease is hereby amended to be Section 3.3(d) and inserted
in Section 3.3 as amended herein.  All references to Section 3.2(e) in the Lease
shall be amended to be Section 3.3(d).

 
(j)           Section 3.3 of the Lease is hereby amended to be Section 3.5 of
the Lease.  All references to "Section 3.3" in the Lease shall be amended to be
"Section 3.5".
 
(k)           The following shall be inserted in the Lease as Sections 3.3(a)
and 3.3(b) as amended herein:
 
"3.3           TENANT'S BASIC COST.
 
(a)           "Estimated Basic Costs," as that term is used herein, for any
particular calendar year shall be the Basic Costs (defined below) for such
calendar year as estimated by Landlord prior to the commencement of such
calendar year, which annual estimate may be adjusted, from time to time, by
Landlord pursuant to Section 3.4(c).

(b)           "Tenant's Basic Cost," as that term is used herein, shall be
computed on a calendar year basis and shall mean Tenant's Percentage Share
(defined in Section 3.4(b)) of the Estimated Basic Costs."

(l)           The following shall be inserted in the Lease as Sections 3.4(a),
3.4(b) and 3.4(c):
 
"3.4           TENANT'S BASIC COST ADJUSTMENT.

(a)           If the actual Basic Costs for any calendar year during the Term
exceeds the Estimated Basic Costs for such calendar year, Tenant shall pay to
Landlord, as additional Rent for such calendar year, an amount ("Tenant's Basic
Cost Adjustment") equal to Tenant's Percentage Share (defined below) of the
difference between the actual Basic Costs for that calendar year and the
Estimated Basic Costs for that calendar year.

(b)           For purposes of determining Tenant's Percentage Share of Estimated
Basic Costs and Tenant's Basic Cost Adjustment, "Tenant's Percentage Share"
shall mean that percentage found by dividing the Net Rentable Area of the Leased
Premises by the greater of (i) ninety-five percent (95%) of the total Net
Rentable Area of the space leased or held for lease in the Building, or (ii) the
total Net Rentable Area actually leased in the Building.

 
6
 
 

(c)           No later than June 1 of each calendar year during Tenant's
occupancy, or as soon thereafter as reasonably practicable, Landlord shall
provide Tenant a statement of the actual Basic Costs for the previous calendar
year or partial calendar year, as applicable, occurring during the Term.  If the
actual Basic Costs for such calendar year or partial calendar year, as
applicable, exceeds Estimated Basic Costs for such calendar year or partial
calendar year, as applicable, Tenant shall pay the Tenant's Basic Cost
Adjustment to Landlord within thirty (30) days of the delivery of an invoice
therefor (the "Annual Reconciliation Payment").  If Estimated Basic Costs
exceeds actual Basic Costs for such calendar year or partial calendar year, as
applicable, then, within thirty (30) days of sending the annual statement,
Landlord, at its option, shall either pay to Tenant or credit against the Base
Rental next coming due the excess of Tenant's Percentage Share of Estimated
Basic Costs actually paid by Tenant over Tenant's Percentage Share of actual
Basic Costs for such calendar year or partial calendar year, as applicable.  At
the time Landlord delivers such statements, or at any time thereafter but no
more than twice during each calendar year, Landlord also may deliver to Tenant a
revised Estimated Basic Costs statement for the current calendar year, in which
case, Tenant's Basic Cost for such calendar year shall be adjusted accordingly,
effective as of the date of the next regularly scheduled monthly payment of Base
Rental due hereunder that is due at least thirty (30) days after the date of
such statement so that the remaining monthly payments of Tenant's Basic Cost, as
adjusted, when added to the payments of Tenant's Basic Cost already made, will
be equal to the amount of Tenant's Basic Cost for such calendar year or partial
calendar year, as applicable, as determined by using Landlord's revised
Estimated Basic Costs."

(m)           Section 4.1(a)(iv) of the Lease shall be amended by deleting the
phrase "Basic Cost Component set forth in Section 3.2(b)(i)" and substituting
the phrase "Tenant's Basic Cost" therefor.
 
(n)           Section 5.4(b)(4) of the Lease shall be amended by deleting the
phrase "Base Rental as adjusted by the Base Rental Adjustment" therein and
substituting the phrase "Base Rental and Tenant's Basic Cost (as adjusted by
Tenant's Basic Cost Adjustment)" therefor.
 
(o)           Section 6.4 of the Lease shall be amended by deleting the phrase
"Base Rental and Base Rental Adjustment" therein and substituting the phrase
"Base Rental and Tenant's Basic Cost (as adjusted by Tenant's Basic Cost
Adjustment)" therefor.
 
5.           Parking.

(a)           As of the Expansion Date, the Section 6.15(a) and Section 6.15(b)
of the Lease shall be deleted in their entirety and the following substituted
therefor:
 

 
7
 
 

    "(a)           At all times during the Term, Landlord agrees to furnish and
Tenant agrees to pay for and lease, permits to park up to two hundred thirty-six
(236) vehicles on an unassigned basis (the "Unassigned Permits") in the Garage
and fifteen (15) reserved spaces designated by Landlord from time to time in the
Garage ("Reserved Permits").  No specific spaces in the Garage are to be
assigned to Tenant for the Unassigned Permits, but Landlord may designate the
area in which the vehicles with Unassigned Permits may be parked, which
designations may change from time to time.  Additionally, Landlord will
designate a specific space in the Garage for each Reserved Permit, if any, to be
issued by Landlord to Tenant as provided herein, which designated space may be
changed by Landlord from time to time.  Landlord will issue to Tenant the
aforesaid number of parking stickers and/or cards each of which will authorize
parking in the Garage of a vehicle on which the sticker is displayed, or
Landlord will provide a reasonable alternative means of identifying and
controlling vehicles authorized to be parked in the Garage.  Notwithstanding the
foregoing, Landlord shall have the right to relocate up to thirty-eight (38) of
the Unassigned Permits leased pursuant to this paragraph to the Camden Garage
upon thirty (30) days written notice to Tenant, and the Parking Rental for such
relocated Unassigned Permits shall be the then prevailing market rate (as may be
determined by Landlord from time to time in its sole discretion) for such
additional Unassigned Permits in comparable garages in metropolitan Houston,
Texas.
 

(b)           As rental ("Parking Rental") for the Unassigned Permits and the
Reserved Permits (collectively, the "Parking Permits"), Tenant covenants and
agrees to pay Landlord commencing on the Rent Commencement Date and continuing
thereafter throughout the Term, as additional rental hereunder, the prevailing
market rate (as may be determined by Landlord from time to time in its sole
discretion) for such Parking Permits in comparable garages in metropolitan
Houston, Texas, which rate is as of the Effective Date deemed to be (i) the sum
of $45.00 per month (plus any applicable sales tax) for each of the Unassigned
Permits to be issued by Landlord as herein provided, and (ii) the sum of $75.00
per month (plus any applicable sales tax) for each of the Reserved Permits to be
issued by Landlord as herein provided, such sums to be payable monthly in
advance on the first day of each and every month during the Term, and a pro rata
portion of such sum shall be payable for any partial calendar month in the event
the Lease commences (or ends) on a date other than the first (or last) day of a
calendar month.  Tenant's obligation to pay the Parking Rental shall be
considered an obligation to pay Rent for all purposes hereunder and shall be
secured in like manner as is Tenant's obligation to pay Rent.  Notwithstanding
anything to the contrary provided herein, (i) the Parking Rental as to
eighty-one (81) of the Unassigned Permits only shall abate from September 1,
2007 through and until December 31, 2007, and (ii) the Parking Rental as to one
hundred sixty-five (165) of the Unassigned Permits only shall be the sum of
$15.00 per month (plus any applicable sales tax) and the Parking Rental as to
the Reserved Permits shall be the sum of $25.00 per month (plus any applicable
sales tax) through July 31, 2015; commencing on August 1, 2015 the Parking
Rental for such Unassigned Permits and the Reserved Permits shall be at the
prevailing market rate as set forth in the first sentence of this Section
6.15(b)."

(b)           As of the Expansion Date, the following sentence shall be added to
the end of Section 6.15(e):
 

 
8
 
 

"Notwithstanding the foregoing, Landlord shall have the right to relocate any
Unassigned Permits leased pursuant to this paragraph above the ratio of 2.4
vehicles for each one thousand (1,000) square feet of Net Rentable Area
contained in the Refusal Space to the Camden Garage upon thirty (30) days
written notice to Tenant."
 
6.           Renewal Options.  As of the Expansion Date, Sections 7.1(a) and (b)
of the Lease shall be amended and restated in their entirety as follows:

"(a)           So long as an Event of Default is not then continuing and subject
to the provisions of this Section 7.1, Tenant is hereby granted two (2)
successive options (the first such option, the "First Renewal Option" and the
second such option, the "Second Renewal Option," each individually, a "Renewal
Option," and such options collectively, the "Renewal Options") to renew the
Initial Term as to all (but not part) of the Leased Premises (including, except
as provided in Section 7.2, any space added to the Leased Premises pursuant to
Section 7.2 for a period of five (5) years each (each individually, a "Renewal
Term" and collectively, the "Renewal Terms"), but in no event to exceed a
maximum period in the aggregate of ten (10) additional years.  The first Renewal
Term (the "First Renewal Term") shall commence at the expiration of the Initial
Term and the second Renewal Term (the "Second Renewal Term") shall commence at
the expiration of the First Renewal Term.  Tenant must furnish Landlord with
written notice of its intent to exercise the Renewal Option no later than eleven
(11) months prior to the expiration of the Initial Term or the First Renewal
Term, as applicable (the "Intent Notice").  If Tenant timely delivers the Intent
Notice to Landlord, Landlord shall no later than ten (10) months prior to the
expiration of the Initial Term or the First Renewal Term, as applicable, deliver
to Tenant written notice of the Market Base Rental Rate (defined below) as of
the commencement of the applicable Renewal Term and the Parking Rental for the
Parking Permits (if applicable pursuant to subsection (b)(ii) below).  If Tenant
timely furnished the Intent Notice to Landlord as provided above, Tenant may
exercise the applicable Renewal Option by delivering written notice of such
election (the "Election Notice") to Landlord no later than thirty (30) days
after receipt of Landlord's notice of the Market Base Rental Rate.  If Tenant
timely delivers the Intent Notice and the Election Notice to Landlord, but at
any time prior to the commencement of the applicable Renewal Term an Event of
Default has occurred, Landlord, at its sole option during the continuance of
such Event of Default, may terminate Tenant's election to exercise such Renewal
Option and such Renewal Option and the subsequent Renewal Option (if any) shall
expire and thereafter shall not be exercisable by Tenant and Tenant shall have
waived forever its right to renew and extend the Term.  If Tenant fails to
timely exercise the applicable Renewal Option by failing to timely deliver the
Intent Notice or the Election Notice as provided above, the applicable Renewal
Option and the subsequent Renewal Option (if any) shall terminate automatically,
and Tenant shall have waived forever its right to renew and extend the Term.

(b)           The renewal of this Lease pursuant to the exercise of the Renewal
Option shall be upon the same terms and conditions of this Lease (including,
without limitation, Tenant's obligation to pay Tenant's Basic Cost and Tenant's
Basic Cost Adjustment), except:
 
 
i.
the Base Rental Rate for the Leased Premises during the applicable Renewal Term
shall be ninety-five percent (95%) of the Market Base Rental Rate for such
Renewal Term as of the commencement of the Renewal Term; however, in no event
shall the Base Rental Rate during such Renewal Term

 

 
9
 
 

be less than the Base Rental Rate Tenant is obligated to pay under this Lease
immediately prior to the commencement of such Renewal Term.  Tenant shall be
obligated to pay the Tenant's Basic Cost and Tenant's Basic Cost Adjustment
pursuant to Article III of this Lease;
 
 
ii.
at the time of the Tenant's exercise of a Renewal Option, if Landlord is
charging any tenants then entering into leases for office space in the Building
for parking spaces in the Garage, Tenant shall pay Landlord, as Parking Rental,
a monthly amount equal to the rates charged by Landlord or the operator of the
Garage for parking in such location (taking into account whether such parking
spaces are for regular or executive parking spaces) for monthly contract parking
in the Garage multiplied by the number of Parking Permits leased by Tenant
pursuant to this Lease, which Parking Rental shall be payable as provided in
Section 6.15(b) of this Lease;

 
 
iii.
Tenant shall have no option to renew this Lease beyond the First Renewal Term if
Tenant fails to exercise the Second Renewal Option as provided above, or, in any
event, beyond the Second Renewal Term; and

 
 
iv.
the leasehold improvements will be provided in their then-existing condition (on
an "as is" basis) at the time the applicable Renewal Term commences and Tenant
shall not be entitled to any construction, buildout or other allowances with
respect to the Leased Premises during such Renewal Term."

 
7.           Right of Refusal.  As of the Expansion Date, Sections 7.2(a), (b)
and (d) of the Lease shall be amended and restated in their entirety as follows:

"(a)           Landlord hereby grants to Tenant an ongoing right of refusal (the
"Right of Refusal") during the Term to include under this Lease all or any
portion of the space which consists of the entirety of Floor 24, Floor 26 and
Floor 29 and approximately 16,451 square feet of Net Rentable Area on Floor 30
of the Building as identified on Exhibit C attached hereto, not already a part
of the Leased Premises at the time of such election (the "Expansion Space"),
subject to and upon the terms and conditions set forth in this Section
7.2.  Notwithstanding anything to the contrary contained in this Lease, the
Right of Refusal shall not apply to, and Landlord shall not be obligated to
comply with this Section 7.2 with respect to, any Expansion Space for which the
Refusal Space Rental Commencement Date (defined below) would occur later than
nine (9) months prior to the expiration of the Term.

(b)           Notwithstanding anything to the contrary contained herein,
Tenant's Right of Refusal is and shall be subject and subordinate to any renewal
rights, expansion rights, rights of refusal, rights of offer or similar rights
or options (i) now held by any tenant occupying space in the Building, or (ii)
hereafter granted to any tenant occupying any space in the Building under a
lease (and any extensions or renewals thereof or substitutions therefor) with
respect to which (x) Tenant had the right (as Tenant received the Refusal Notice
[defined below] with respect thereto from Landlord) but did not timely exercise
its Right of Refusal, or (y) Tenant would have had the right to exercise the
Right of Refusal except for the existence of an Event of Default (the "Superior
Rights").

 
10
 
 

(d)           The Refusal Space leased by Tenant pursuant to this Section 7.2
shall be leased on and subject to the following terms and conditions:

 
i.
The Base Rental Rate for such Refusal Space shall be the Market Base Rental Rate
contained in the Refusal Notice, provided that during a Renewal Term (if Tenant
exercises the Renewal Option in accordance with Section 7.1, occurring after the
date the Refusal Space is added to the Leased Premises, that the Base Rental
Rate during the Renewal Term shall be determined in accordance with Section
7.1.  Tenant shall be obligated to pay Tenant's Basic Cost and Basic Cost
Adjustment as to the Refusal Space leased by Tenant in accordance with Article
III of this Lease.

 
 
ii.
Any space for which Tenant elects to exercise its Right of Refusal under this
Section 7.2 shall become part of the Leased Premises (but not the Initial Leased
Premises) and, except to the extent expressly provided to the contrary in this
Section 7.2 (including, without limitation, this subsection (d)), shall be
subject to the terms of this Lease applicable thereto, and the term of this
Lease shall commence for such Refusal Space upon the earlier to occur of (x) the
first date of use or occupancy of all or any portion of the Refusal Space by
Tenant for the purpose of conducting its business, or (y) sixty (60) days after
the date such space is delivered to Tenant in an "as is" broom clean condition
(the "Refusal Space Rental Commencement Date").  Landlord shall not be obligated
to make any improvements to the Refusal Space and Tenant shall not be entitled
to any construction, buildout or other allowance with respect thereto.

 
 
iii.
The term of this Lease shall expire for the Refusal Space upon the expiration of
the Term for the Initial Leased Premises, unless as the result of Superior
Rights such space is not available to be leased to Tenant through the expiration
of the Term for the Initial Leased Premises (in which event such shorter term
specified in the Refusal Notice shall apply to the Refusal Space).  In no event
shall the Lease continue in force and effect as to the Refusal Space beyond the
termination of the Lease as to the Initial Leased Premises."

 
8.           Rooftop Cooling System.

Landlord and Tenant acknowledge and agree that Landlord will make available to
Tenant space on the roof of the Building containing approximately fifty-three
(53) square feet for purposes of the installation and use of an independent
cooling system, which exact location Landlord shall identify in its sole
discretion.  Such independent cooling system shall be considered "Additional
Electrical Equipment" as such term is defined in Section 4.1(v) of the Lease,
and the installation, use and maintenance of such equipment shall comply with
all the terms of the Lease related thereto.  Commencing on the Expansion Date,
Tenant shall pay a monthly amount equal to Five Hundred Thirty and No/100
Dollars ($530.00) in the manner required for the payment of Rent under the
Lease.  Upon termination of the Lease, Tenant shall be required to remove the
cooling system and related equipment at its sole cost.

 
11
 
 

9.           Condition of First Amendment Expansion Premises.

Tenant has made a complete examination and inspection of the First Amendment
Expansion Premises and accepts the same in its current condition, as-is, without
recourse to Landlord, and Landlord shall have no obligation to complete any
improvements to the First Amendment Expansion Premises or to provide any
allowances with respect thereto.  ADDITIONALLY, LANDLORD SHALL MAKE NO
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASEHOLD IMPROVEMENTS IN
THE FIRST AMENDMENT EXPANSION PREMISES.  ALL IMPLIED WARRANTIES WITH RESPECT
THERETO, INCLUDING BUT NOT LIMITED TO THOSE OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, ARE EXPRESSLY NEGATED AND WAIVED.

10.           Contingency.

Landlord and Tenant expressly agree that this Agreement is subject to and
contingent upon Landlord and Washington Mutual Bank, a federal association
("WaMu"), entering into that certain Fifth Amendment to Lease Agreement ("WaMu
Lease Amendment"), whereby WaMu's lease of the First Amendment Expansion
Premises is terminated, on terms satisfactory to Landlord in its sole
discretion.  If the WaMu Lease Amendment is not fully executed and delivered by
each of Landlord and WaMu, each acting in their sole discretion, within
forty-five (45) days after the Effective Date, this Amendment shall terminate
automatically and be of no further force and effect.

11.           Mold.

Tenant, at its sole cost and expense, will regularly monitor the Leased Premises
for the presence of mold or any conditions that reasonably can be expected to
give rise to mold, such as by way of example but not limitation, water damage,
mold growth, repeated complaints of respiratory ailments or eye irritation by
persons occupying the Leased Premises or any notice from a governmental
authority of complaints of indoor air quality at the Leased Premises.  If Tenant
discovers the existence of any mold or conditions referred to above, Tenant will
notify Landlord and retain an industrial hygienist or other professional mold
consultant to conduct an inspection and prepare a report for Tenant and
Landlord.  If the inspection report concludes that mold is present in the Leased
Premises and such presence is not due to actions, omissions or negligence of
Landlord, Tenant will be responsible for the cost of such inspection and the
cost of remediation.  If the inspection report concludes that mold is present in
the Leased Premises due to actions, omissions or negligence of Landlord,
Landlord will be responsible for the cost of such inspection and the cost of
remediation to the extent of Landlord’s responsibility for the presence of mold
at or within the Leased Premises. Any  remediation plan will be subject to the
approval of Landlord, which approval will not be unreasonably withheld or
delayed.  If the inspection report concludes that mold is present in the Leased
Premises, Tenant will hire a contractor that specializes in mold remediation to
prepare a remediation plan for the Leased Premises.  Upon Landlord’s approval of
the plan, the contractor will promptly carry out the work contemplated in

 
12
 
 

the plan in accordance with applicable laws.  To the extent required by
applicable state or local health or safety requirements, occupants and visitors
to the Leased Premises will be notified of the conditions and the schedule for
the remediation. Landlord will have a reasonable opportunity to inspect the
remediated portion of the Leased Premises after completion of the remediation.
The contractor performing the remediation will provide a written certification
to Landlord and Tenant that the remediation has been completed in accordance
with applicable laws.

12.           OFAC.

(a)           Background:  Pursuant to United States Presidential Executive
Order 13224, entitled "Blocking Property and Prohibiting Transactions with
Persons Who Commit, Threaten to Commit, or Support Terrorism" (the "Executive
Order"), and other related regulations, statutes and executive orders of the
Office of Foreign Assets Control ("OFAC") of the U.S. Department of the
Treasury, U.S. persons and entities are prohibited from transacting business
with persons or entities who, from time to time, are determined to have
committed, or to pose a risk of committing or supporting terrorist acts,
narcotics trafficking, money laundering and related crimes.  Those persons and
entities are identified on a list of Specially Designated Nationals and Blocked
Persons (the "List"), published and regulated by OFAC.  The names, including
aliases, of these persons or entities ("Blocked Persons") are updated
frequently.  In addition, OFAC enforces other Executive Orders which, from time
to time, impose restrictions on transactions with, or involving, certain
countries.

(b)           Certification:  Tenant represents and warrants that (i) neither
Tenant nor any person or entity that directly owns 10% or greater equity
interest in it nor any of its officers, directors or managing members is a
person or entity with whom U.S. persons or entities are restricted from doing
business under regulations of OFAC (including those named on OFAC’s Blocked
Persons List) or under the Executive Order or other governmental action; (ii)
Tenant is not acting, directly or indirectly, for or on behalf of any person,
group, entity or nation named by any Executive Order or the U.S. Department of
the Treasury as a terrorist, a Blocked Person on the List, or other banned or
blocked person, group, entity, nation or transaction pursuant to any law, order,
rule or regulation that is enforced or administered by OFAC and that 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; (iii) Tenant's activities do not
violate the International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001 or the regulations or orders promulgated thereunder (as
amended from time to time, the "Money Laundering Act"); and (iv) throughout the
Term of the Lease, Tenant shall comply with the Executive Order and the Money
Laundering Act.

13.           Notices.

Effective as of the Effective Date, Section 6.17 of the Lease shall be amended
by deleting the Landlord notice addresses in their entirety and substituting the
following therefor:
 
13

 
If to Landlord:
 
FSP Phoenix Tower Limited Partnership
c/o Franklin Street Properties Corp.
401 Edgewater Place, Suite 200
Wakefield, MA 01880-6210
Attn:  Asset Manager
 
With a copy to:
Hines Interests Limited Partnership
3200 Southwest Freeway, Suite 1200
Houston, Texas  77027
Attn:  Property Manager

14.           Brokerage Commissions.

Landlord and Tenant each warrant to the other that it has not dealt with any
broker or agent in connection with the negotiation or execution of this
Amendment other than Newmark Knight Frank, whose commissions shall be paid by
Landlord pursuant to separate written agreement.  Tenant and Landlord shall each
indemnify the other against all costs, expenses, attorneys’ fees, and other
liability for commissions or other compensation claimed by any other broker or
agent claiming the same by, through, or under the indemnifying party.

15.           Full Force and Effect.

In the event any of the terms of the Lease conflict with the terms of this
Amendment, the terms of this Amendment shall control.  Except as amended hereby,
all terms and conditions of the Lease shall remain in full force and effect, and
Landlord and Tenant hereby ratify and confirm the Lease as amended hereby.  The
Lease, as amended herein, constitutes the entire agreement between the parties
hereto and no further modification of the Lease shall be binding unless
evidenced by an agreement in writing signed by Landlord and Tenant.

16.           Counterparts.

This Amendment may be executed in multiple counterparts, each of which shall
constitute an original instrument, but all of which shall constitute one and the
same agreement.

[END OF PAGE; SIGNATURE PAGE FOLLOWS.]

 
14
 
 

EXECUTED as of the Effective Date set forth above.

LANDLORD:

FSP PHOENIX TOWER LIMITED PARTNERSHIP,a Texas limited partnership

 
By:           FSP Property Management LLC,
a Massachusetts limited liability company,
its asset manager

By: /s/ Leo H. Daley Jr.    
Name:  Leo H. Daley Jr.    
Title: VP - Regional Director 

TENANT:

PERMIAN MUD SERVICE, INC.,
a Texas corporation

By:/s/ Steven J. Lindley    
Name: Steven J. Lindley    
Title: President            

 
15
 
 

EXHIBIT A

FIRST AMENDMENT EXPANSION PREMISES

26,072 NRA
 
 
[exa-level25.gif]
 

 
16 
 
 
 
EXHIBIT B-1

TENANT IMPROVEMENTS WORK SCHEDULE
 
The provisions of this Exhibit B-1 shall apply to any and all alterations or
physical additions to the Leased Premises (including the First Amendment
Expansion Premises).  All alterations and physical additions to the Leased
Premises (including the First Amendment Expansion Premises) shall be done at
Tenant's sole cost and expense, except as specifically provided in Article III
of this Exhibit B-1, and are herein called the "Tenant Improvements".  The
Tenant Improvements must include the Building Standard Improvements.  "Building
Standard" shall mean such materials and improvements as are currently being used
by Landlord in the base Building and the Building Standard Improvements (as
defined in Exhibit B-2 attached hereto), or materials of comparable quality as
may be substituted therefor by Landlord.  Capitalized terms used herein that are
not defined herein shall have the same meaning given to such terms in the Lease.
 
Article I

Landlord and Tenant Pre-Construction Obligations

1.
Tenant Space Plan.  If Tenant desires to undertake the Tenant Improvements,
Tenant will deliver to Landlord a detailed space plan containing the information
described in Article V of this Exhibit B-1, together with other relevant
information and written instructions relating thereto (said space plan and other
information and instructions being herein called the "Tenant Space Plan").

2.
Landlord Review.  Landlord will review the Tenant Space Plan to confirm that the
Tenant Improvements contemplated thereby (i) conforms with or exceeds the
standards of the Project and the requirements listed in Article V of this
Exhibit B-1, and (ii) will not impair the structural, mechanical, electrical or
plumbing integrity of the Project.  Landlord shall either approve or disapprove
the Tenant Space Plan within fifteen (15) days after the date Landlord receives
the Tenant Space Plan.  If Landlord does not approve the Tenant Space Plan,
Landlord will inform Tenant in writing of its objections and Tenant will revise
the same and deliver a corrected version to Landlord for its approval within ten
(10) days after the date Tenant receives Landlord's disapproval notice.  The
approval and revision process for the revised Tenant Space Plan shall be the
same as described in the previous two sentences.

3.
Tenant Working Drawings.  After the Tenant Space Plan has been approved by
Landlord, Tenant shall cause working drawings (the "Tenant Working Drawings") of
the Tenant Improvements to be prepared and shall deliver the same to Landlord
for its approval within ten (10) days after the date of Landlord's approval of
the Tenant Space Plans.  The Tenant Working Drawings shall consist of complete
sets of plans and specifications, including detailed architectural, structural,
mechanical, electrical and plumbing plans for the Tenant Improvements.  The
Tenant Working Drawings shall be substantially consistent with the Tenant Space
Plan without any material changes.  The Tenant Working Drawings shall be
prepared at Tenant's expense by architects and engineers selected by Tenant and
approved by Landlord.  The approval process for the Tenant Working Drawings
shall be identical to the approval process for the Tenant Space Plan described
in paragraph 2 of this Article I.

 
17
 
 

Article II

Selection of a Contractor and Construction of Tenant Improvements

 
1.
Bid Letting.  Tenant shall promptly submit the approved Tenant Working Drawings
to Landlord's contractor (the "Building Contractor") and, if Tenant chooses, to
any other reputable contractor(s) selected by Tenant and reasonably agreed to by
Landlord (the "Tenant Contractor(s) ") for pricing.   Within twenty (20) days of
the date Tenant submits the bid proposals to the contractor(s), Tenant shall
review the bid proposals and construction schedules received by such date.

 
2.
Selection of Bid.  Tenant may negotiate with the Tenant Contractor(s) and
Landlord agrees to assist Tenant in its negotiation with the Building
Contractor, but in any event Tenant shall accept one of the bids and enter into
a contract with the selected contractor within five (5) days after the date
Tenant receives the bid proposals.  Tenant agrees to notify Landlord promptly of
its decision.

 
3.
Building Contractor - Construction Coordination.  If Tenant accepts the Building
Contractor's bid, then Landlord shall supervise and manage construction and
completion of the Tenant Improvements by the Building Contractor in accordance
with the Tenant Working Drawings; provided, however, Landlord shall not be
required to install any portion of the Tenant Improvements which does not
conform to any applicable regulations, laws, ordinances, codes or rules.  Such
conformity shall be the obligation of Tenant.

 
4.
Tenant Contractor - Construction Coordination.

 
 
(a)
If Tenant accepts a Tenant Contractor's bid, then the Tenant Contractor shall
(and its contract shall so provide):

 
 
(i)
conduct its work in such a manner so as not to unreasonably interfere with other
tenants, Project operations, or any other construction occurring on or in the
Project or the Leased Premises;

 
 
(ii)
execute a set of and comply with the Contractor Rules and Regulations attached
hereto as Exhibit B-3 and comply with all additional rules and regulations
relating to construction activities in or on the Project as may be reasonably
promulgated from time to time and uniformly enforced by Landlord or its agents;

 
 
(iii)
maintain such insurance and bonds in force and effect as may be reasonably
requested by Landlord or as required by applicable law (but in any event said
bonds shall be in amounts equal to the full value or cost of the work being done
by the Tenant Contractor); and

 

 
18
 
 

 
(iv)
be responsible for reaching an agreement with Landlord and its agents as to the
terms and conditions for all contractor items relating to the conducting of its
work including, but not limited to, those matters relating to hoisting, systems
interfacing, use of temporary utilities, storage of materials, access to the
Leased Premises and the Project and the purchase and return of Building Standard
as well as other reusable materials.

 
 
(b)
Landlord shall have the right to approve all subcontractors to be used by the
Tenant Contractor, which approval shall not be unreasonably withheld as long as
such subcontractors satisfy the requirements of this paragraph 4.

 
 
(c)
As a condition precedent to Landlord permitting the Tenant Contractor to
commence the Tenant Improvements, Tenant and the Tenant Contractor shall deliver
to Landlord such assurances or instruments as may be reasonably requested by
Landlord to evidence the Tenant Contractor's and its subcontractor's compliance
or agreement to comply with the provisions of this paragraph 4.

 
5.
Tenant Contractor - Hold Harmless.  Tenant shall indemnify and hold harmless
Landlord, its agents, contractors (including Building Contractor) and any
mortgagee of Landlord from and against any and all losses, damages, costs
(including costs of suit and attorneys' fees), liabilities or causes of action
for injury to, or death of, any person, for damage to any property and for
mechanic's, materialmen's or other liens or claims arising out of or in
connection with the work done by Tenant Contractor (and Tenant Contractor's
subcontractors and sub-subcontractors) under its contract with Tenant.

6.
Tenant Contractor - Mechanic's and Materialmen's Liens.  Tenant shall notify in
writing all materialmen, contractors, artisans, mechanics, laborers and other
parties hereafter contracting with Tenant for the furnishing of any labor,
services, materials, supplies or equipment with respect to any portion of the
Leased Premises that they must look solely to Tenant for payment for same and
shall simultaneously send copies of all such notifications to Landlord for its
review.  Should any mechanic's or other liens be filed against any portion of
the Project, including the Leased Premises, by reason of Tenant's or Tenant
Contractor's acts or omissions or because of a claim against Tenant or Tenant
Contractor, Tenant shall inform Landlord of such lien immediately and cause the
same to be canceled or discharged of record by bond or otherwise within twenty
(20) days after receipt of notice by Tenant.  If Tenant fails to cancel or
discharge the lien within said twenty (20) day period, Landlord may, at its sole
option, cancel or discharge the same and upon Landlord's demand, Tenant shall
promptly reimburse Landlord for all costs (including attorneys' fees) incurred
in canceling or discharging such liens.

7.
Construction Management Fee; Payment of Landlord.  Tenant shall be responsible
for paying to Landlord a construction management fee equal to five percent (5%)
of the cost of the Tenant Improvements.  Tenant shall pay to Landlord all
amounts payable by Tenant pursuant to this Exhibit B-1 within ten (10) days
after billing by Landlord.  Statements or invoices may be rendered by Landlord
during the progress of the Tenant Improvements so as to enable Tenant to pay the
Building Contractor, subject to the terms of Article III of this Exhibit B-1,
without advancing Landlord's funds to pay the cost of the Tenant Improvements.

 
19
 
 

8.
Default.  The failure by Tenant to comply with the provisions of paragraphs 4,
5, 6 or 7 of this Article II shall constitute a default by Tenant under the
terms of Section 6.8 of the Lease and Landlord shall have the benefit of all
remedies provided for in the Lease.

9.
Change Orders. Tenant may authorize changes in the Tenant Improvements; provided
that any changes must meet the criteria set forth in Article I of this Exhibit
B-1.  Tenant shall also be responsible for any delays or additional costs caused
by such change orders.

10.
As-Built Plans and Certificate of Occupancy.  Upon completion of the Tenant
Improvements, Tenant shall deliver to Landlord a copy of the as-built plans and
specifications for the Tenant Improvements in both electronic and hard copy
format, and (if required pursuant to applicable laws, codes, rules and
regulations) a permanent, unconditional certificate of occupancy issued by the
City of Houston with respect to the Tenant Improvements, within thirty (30) days
of completing the same.  Upon receipt, Landlord will transfer such plans to
Landlord's master plans at a cost to be borne by Tenant.

Article III

Monetary Matters

 
1.
Landlord's Contribution.  Tenant shall be responsible for all costs and expenses
incurred in connection with the Tenant Improvements, including those costs and
expenses associated with the preparation of architectural and engineering
plans.  However, Landlord shall pay an amount equal to Thirty and No/100 Dollars
($30.00) per square foot of Net Rentable Area contained in the First Amendment
Expansion Premises and an amount equal to Two Dollars and 67/100 ($2.67) per
square foot of Net Rentable Area contained in the Existing Premises ("Landlord's
Contribution") for the costs of the Tenant Improvements, including relocation
costs, architectural fees and construction management fees, in accordance with
the provisions of this Article III; provided that, Tenant shall not have the
right to use Landlord's Contribution for furniture, fixtures or equipment.  In
addition to the Landlord's Contribution, Landlord shall pay an amount equal to
Ten Cents ($0.10) per square foot of Net Rentable Area contained in the First
Amendment Expansion Premises for the reimbursement of costs associated with test
fitting the First Amendment Expansion Premises.  Landlord shall also provide, at
its sole cost and expense, new ceiling tile which will be stacked on the floor
of the First Amendment Expansion Premises for use by Tenant.  Up to One Hundred
Eighty Thousand and No/100 Dollars ($180,000.00) of Landlord's Contribution may
be applied towards Tenant's payment of Base Rental first coming due for the
First Amendment Expansion Premises.

 
2.
Payment of Building Contractor.  If Tenant elects to have the Building
Contractor construct the Tenant Improvements, Landlord shall pay to the Building
Contractor the Landlord's Contribution as it becomes due.  Once the Landlord's
Contribution has been paid in full by Landlord, Tenant shall pay all remaining
costs and expenses incurred in connection with the Tenant Improvements.

 

 
20
 
 

3.
Payment of Tenant Contractor.  If Tenant elects to have Tenant Contractor
construct the Tenant Improvements, Tenant shall pay all billed costs as
construction progresses and Landlord shall, upon presentation by Tenant of proof
of payment reasonably acceptable to Landlord (including, but not limited to,
paid invoices, copies of cancelled checks and lien waivers), pay to Tenant a
portion of Landlord's Contribution equal to the amount paid by Tenant to Tenant
Contractor; however, in no event shall Landlord be required to pay to Tenant an
amount in the aggregate greater than Landlord's Contribution.

 
4.
Unpaid Amounts.  If any portion of Landlord's Contribution remains unpaid after
the Tenant Improvements have been completed or by December 31, 2012, such unpaid
amount shall be retained by Landlord.

 
Article IV

Minimum Information Required of Tenant Space Plan

 
Tenant shall provide to Landlord a Tenant Space Plan that contains
architectural, mechanical, electrical and plumbing plans prepared and stamped by
a licensed architect or engineer, as the case may be, indicating:
 
1.           Location and type of all partitions.
 
2.           Location and types of all doors indicating hardware and providing a
keying schedule.
 
3.           Location and type of glass partitions, windows, doors, and framing.
 
4.
Location of telephone equipment room accompanied by a signed approval of the
telephone company.

 
5.           Critical dimensions necessary for construction.
 
6.
Location, circuit number and specifications of all electrical devices, outlets,
switches, telephone outlets, etc.

 
7.           Location and type of all lighting and access control systems.
 
8.
Location and type of equipment that will require special electrical
requirements.  Provide manufacturers' specifications for use and operation.

 
9.           An electrical load analysis for all electrical services.
 
10.
Location, weight per square foot and description of any exceptionally heavy
equipment or filing system exceeding 50 psf live load.

 
11.           Location, type and specifications of the HVAC distribution systems
and controls.
 
12.
Requirements for special air conditioning or ventilation, including equipment
placement, specifications and calculations provided by a professional engineer
to confirm existing building conditions will not be adversely affected by the
addition of any proposed equipment.

 
13.           Type and color of floor covering.
 
14.           Location, type and color of wall covering.
 
15.           Location, type and color of paint and/or finishes.
 

 
21
 
 

16.           Location and type of plumbing, including special sprinklering
requirements.
 
17.           Location and type of kitchen equipment.
 
Details Showing:
 
1.           All millwork with verified dimensions and dimensions of all
equipment to be built-in.
 
2.           Corridor entrances.
 
3.
Bracing or support of special walls, glass partitions, etc., if desired.  If not
included with the Tenant Space Plan, the Building architect will design, at
Tenant's expense, all support or bracing required.

 
[End of Page]
 

 
22
 
 

EXHIBIT B-2
 
SCHEDULE OF BUILDING STANDARD IMPROVEMENTS
 
"Building Standard Improvements" shall mean the following leasehold
improvements:
 
Item
Manufacturer
Description
     
Head Track
Raco
PR-21
     
Mullion Cap
Raco
PR-1 Bronze
     
Cove Base
Roppe
93 black/brown; 2.5" no toe
     
Ceiling Tile
Armstrong (NEW)
584B Fissured 2'x2' – White
 
Armstrong
2'x2' Cortega Minatone #2195 – White
 
USG
2'x2' #56704 – White
     
Ceiling Grid
Armstrong
Silhouette – White
 
Chicago
Suspended metallic T-grid – White
     
Doors
Buell Door Company
103-7/8" x 35.75"x1.75" solid core, white ash, premortized
     
Door Frame
VT Industries
Bronze anodized aluminum
     
Door Hinge
Stanley
#F179-US26 – Chrome
     
Door Closure
Yale
#3283 – Bronze
     
Door Lockset
Sargent (NEW)
8255LNB26 MORTISE
 
Yale (OLD – Not Used)
MOR8707-US32 with Corbin cylinder – Chrome
Door Latchset
Sargent (NEW)
8215LNB26 MORTISE PASSAGE
 
Yale (OLD – Not Used)
MOR-8701-32  (Passage type set
Door Stop
TrimCo
1211 Polished Chrome – Floor Mount
 
Ives Schlage
407 1/2 B26 – Wall Mount
Window Blinds
Levelor
1" #64 Aluminum - Riviera
     
Light Fixtures
Lightolier (NEW)
QHE2GPFOP317 High Efficiency Indirect 3 lamp fixture
 
Lithonia
2PM4GD332-18D-277-ES-APB 2'X4' 18 cell parabolic
Exit Light
McPhilben LED Edge-Lit
ER45VX Single & Double Sided

 
23
 
 

Item
Manufacturer
Description
 
Prescolite (OLD)
EX1R-277-TM for single sided
 
Prescolite (OLD)
EX2R-277-TM for double sided
 
New LEC type submitted for ownership approval – 6/2007
 
Elevator Lobby Lighting
Icaro
Artemide
     
Lamps
Sylvania
FO32/735/ECO/RS Octron
     
Outlets
Leviton
Decora 16252-W duplex; white
     
Switches
Leviton
Decora 5601-2W white rocker with frame
 
Pass & Semour
26011GRY gray rocker switch
     
Wall Plates
Leviton
Decora 80401-W white
 
Leviton
Decora 80401-Gry gray
Motion Sensors
Leviton
       
HVAC Grilles
Metalaire
2'x2' Series 700 Model PCS-AB-5
     
Thermostat Covers
Powers
192-352E
     
Thermostats
Powers
192-2030; DA stats are on all interior spaces, RA stats are on all exterior
spaces.
     
Level 9 Seating Area
Sofas
Brayton Ebony on maple, grade 12 with Design Tex 1598-902 fabric
       
Chairs
Brayton Ebony on maple with Architex Circa 1914 fabric
       
Table
Nucraft 30"x30"x24" black matte on walnut with Rossa Perrino granite insert.
       
Bench
Nucraft 72"x20"x18" black matte on walnut with Architex Circa 1914 fabric
       
Carpet
Shaw Baronet; style 50791; Shadow Grey
 
Border Carpet
Shaw Scepter; style 50391; Thunder
 
Accent Carpet
Shaw Scepter; style 50391; Saffron
     

 
24
 
 

Item
Manufacturer
Description
Level 9 & 1
Elevator Lobby Carpet
Karastan Tribeca KC106; 314 Rocco
     
Level 9 Dining Area
Carpet
Constatine Gesture Tile C139J27 Black
       
Base
Allstate #47
     
Elevator Panels
Accutrac
Architex Tech III T925; Brentano Metal Burlap #2577-04.
     
Elevator Cab
Carpet
Karastan Haussmann Blvd. KC102; 00314 Rue De Londres
     
Elevator Lobbies
Wall Covering (CURRENTLY BEING CHANGED)
DesignTex Infinity; stock 5323803
 
Carpet
Atlas-Via Cortina; MT161137A; Grey and Peach
 
Border Carpet
Atlas-Aubrege; S-169371; Grey
     
Common Corridors
Wall covering
DesignTex Gamine; stock 6168804
 
Carpet
Atlas-Via Cortina; MT161137A; Grey and Peach
     
Women's Restroom
Koroseal
Desert Sand Silk 5921-27
     
Men's Restroom
Koroseal
Desert Sand Silk 5921-27
     
Janitor Sink
Sink
   
Faucet
       
Lavatory
Sink
Kohler Caxton 2210-0
 
Faucet (CURRENTLY BEING CHANGED to hands-free type)
Speakman Commander SC3044-D75 polished chrome with blade handles.
 
Insulation
 
Front Skirt
Bocar model C500 R trap wrap vinyl p-trap kit white.
 
Wilsonart #6257 (419) Natural Aluminum (Brushed).
     
Soap Dispenser
         
Paper Towel Dispenser
Bobrick
B-43944 Contura
     
Waste Receptacle
Bobrick
B-277 Contura
     

 
25
 
 

Item
Manufacturer
Description
Partitions
Metpar
Ceiling Hung Forum
 
Hardware
Sanymetal # 2018 and 2019 for concealed latch and handle.(no logo)
     
Toilet Tissue Dispenser
Bobrick
B-2840
     
Toilet Seat Cover Dispenser
Bobrick
B-221
     
Urinal
Bowl
Kohler Burdon Lite 4960-T-0
 
Flush Valve
Sloan Royal 186-1
     
Water Fountain
 
Elkay Model EBFATL-8 two station wall mount stainless steel cabinet.
     
Water Closet
Bowl
Kohler Kingston 4330-0
 
Seat
Bemis 1955C white
 
Flush Valve
Sloan Royal 110
     
Sanitary Napkin Dispenser
         
Ceramic Tile
     
Walls
American Olean Dusty Rose A-76
 
Walls
American Olean Sepia A-49
 
Floor
American Olean White Pepper A-12
 
Grout
Coffee
     
Floor VCT
Solid Pattern
Armstrong Standard Excelon # 51928 Willow Green.
 
Border Pattern
Armstrong Standard Excelon #51906 Teal.
     
Fire Extinguisher Cabinet
J.L Industries
Model 2026, recessed, white cabinet.
     
Fire Extinguishers
         
Fire System Strobes
Notifier
Gentex Commander Series HS 24; White
     
Sprinkler Heads
Reliable
Model G4a Recessed Sprinkler.
     
Signage
As directed Management
       
Keys
SCHLAGE
EVEREST D123 (Restricted)

 

 
26
 
 

EXHIBIT B-3
 
CONSTRUCTION RULES & REGULATIONS
 
I.
INTRODUCTION

The intent of these Rules and Regulations is to establish working criteria for
all construction and/or maintenance activity that may take place at the
Property.
 
II.
WORK APPROVAL

All drawings, contractors, subcontractors and material must be approved though
the Property Management Office prior to the start of work.
 
III.
PERMITS/CERTIFICATES

Prior to a tenant space being scheduled for renovation or demolition, a permit
is required by the City Building Department.  In order to comply with City
Ordinance and Texas Department of Health rules, a Building asbestos inspection
will be mandatory.  As part of the submitted plans to the city in order to
obtain a permit, it is now required an asbestos survey be submitted, which must
be performed by the owner approved licensed asbestos inspector.  All Building
materials that may be impacted as part of the renovation or demolition process
are to be sampled.

 
1.
In response to Senate Bill SB-509, Contact Property Management Office for
approved licensed asbestos inspector.

 
2.
Supply results of the test to Property Management Office.

Permits and Licenses necessary for the completion of work shall be secured and
paid for by the Contractor.  A copy of all permits will be posted at all times
in a readily accessible area at the construction site.  Upon completion of work,
the contractor shall immediately supply to Landlord the following items:
 

 
1.
Certificate of Occupancy

 
2.
Operations and Maintenance Manuals, when applicable

 
3.
As-Built drawings in electronic and hard copy format

 
4.
Copies of all permits related to the jobs

 
5.
MSDS Binder

 
6.
NEBB Certified Air Balance Reports, as approved and accepted by the Property
Management Office

 
7.
Full Releases of Liens

 
27
 
 

A copy of these Rules and Regulations, acknowledged and accepted by the General
Contractor, must be posted on the job site in a manner allowing easy access by
all workers.  It is the General Contractor's responsibility to instruct all
subcontractor workers to familiarize themselves with these rules.
 
IV.
INSURANCE

Prior to the commencement of work, Contractor shall provide Landlord a
certificate of insurance in compliance with the requirements outlined in
Schedule 1, attached to this Exhibit B-3, for themselves and each of the
subcontractors.
 
V.
CONSTRUCTION SCHEDULES

Prior to commencement of work, the architect / contractor shall prepare and
submit a project schedule to the Property Management Office.  The schedule must
be in the Microsoft Project format and indicate material lead times and the
start and finish dates of each trade.  The architect / contractor shall keep the
schedule current, as required by the conditions of the work.
 
VI.
WORKERS' CONDUCT/CONSTRUCTION PRACTICES

The General Contractor and all subcontractors are required to comply with all
base Building specifications.  A copy of the base Building specifications can be
reviewed at the Property Management Office by appointment.
 
If any work is found to not comply with the aforementioned specifications, the
Contractor will be responsible for making the necessary changes in order to
comply.  Any such changes that are made will be at the Contractor's expense.

No alcohol, drugs or persons under the influence are admissible on the premises
at any time.

Pursuant to the City of Houston Tobacco Smoking Ordinance, there will be no
smoking permitted in the Building.

No abusive language, actions or radios will be permitted.  It will be the
responsibility of the General Contractor to enforce this regulation on a
continual basis.

Contractor shall confine the use of the premises to the designated construction
work area so as not to disturb other tenants in the Building.

 
28
 
 

Workers in an occupied lease space must wear a uniform that clearly identifies
their employer.

The carrying of firearms of any kind in any leased premises, the Building of
which such premises are situated, any related garage, or any related complex of
buildings of which the foregoing are in part, or any sidewalks, drives, or other
common areas related to any of the foregoing, is prohibited except in the case
of unconcealed firearms carried by licensed security personnel hired or
contracted for by tenants for security of their premises as permitted by such
tenants for security of their premises as permitted by such tenants leases or
otherwise consented to by Landlord in writing.

 
a.
Noisy Work

Any work that has the potential to disrupt normal business activity must be
performed outside Building Operating Hours.  Examples of this type of work
include, but are not limited to, the following:

 
1)
Drilling or cutting of concrete floors or structural members

 
2)
Any work in which machine noise or vibration may disrupt normal office
procedures

 
3)
Material stocking, demolition and trash removal

 
4)
Any work requiring access to occupied tenant space; in such cases, please allow
ample time for coordination with affected tenant

 
b.
Common Areas

Contractor will take necessary precautions to protect existing property, (i.e.
walls, wall coverings, carpet, floors, furniture and fixtures) and shall repair
or replace, without cost to Landlord, any damage that may occur as a result of
construction work.

 
c.
Dusty Work

Contractor will notify the Property Management Office prior to commencement of
extremely dusty work (i.e. sheet rock cutting, sanding, extensive sweeping,
etc.) so that arrangements may be made for additional filtering capacity on the
affected HVAC equipment.  Contractor will absorb the costs associated with
additional filtering and returning the equipment to its original working order
(i.e. coil cleaning and filter change-out).  Contractor is responsible for the
removal of all construction-related trash.  Any special accommodations should be
coordinated with the Property Management Office.

 
d.
Sanitary Facilities

Sanitary facilities will be furnished to Contractor by Landlord.  Contractor
shall use only those facilities especially designated by the Property Management
Office.

 
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e.
Clean Up

Contractors shall at all times keep the site free from the accumulation of waste
material and debris.  Upon completion of work, tools, scaffolding, surplus
materials and debris shall be removed and the site left "broom clean".  The
Building's rest room facilities are not to be used for the cleaning of tools or
paint materials.

Any and all existing materials removed and not reused in the reconstruction,
except as directed by the Property Management Office, shall be disposed of by
the General Contractor as waste or unwanted material.  Materials that may be
reused should be referred to the Property Management Office prior to
disposition.

All projects must be swept / vacuumed, trash properly disposed of, and the
materials organized on a daily basis.  The final cleanup by the General
Contractor shall encompass corridor and lease space light fixtures, walls,
floors, windows, sills, mini blinds, cabinets, counters, HVAC diffusers or
grilles, or blank off plates, mechanical / electrical rooms, rest rooms and/or
any area associated with the project.  If Landlord is forced to clean the job
site, a justified value, including but not limited to a management fee not to
exceed five percent (5%) of the actual costs thereof, will be deducted from the
contract or billed in addition thereto.

VII.
Summary of Indoor Air Quality Requirements and Recommendations During
Construction

 
REQUIRED PRACTICES OF THE CONTRACTOR:

 
1.
Provide documentation on product specifications having the potential for
chemical emission (for example, paints, epoxies, sealants, adhesives, varnishes,
etc.).  Provide a detailed schedule, including dates / times, of the demolition
and application of such products.

 
2.
In addition to the existing air handling unit filter bank, a "construction"
filter will be added to each unit on the floor and within the construction
area.  See Building engineer for specifications of filter media.

VIII.       ASBESTOS

Some material used in the construction of the Building contains asbestos. These
materials are present in certain limited areas.  You should assume the work your
company will perform in the Building may potentially damage, disturb or erode
the material unless you have been given specific information to the
contrary.  Specific information can be obtained from the Property Management
Office.  Contractor is required, at all times, to comply with all safety laws
and regulations of all governmental bodies, including, but not limited to,
regulations of OSHA and the EPA.

Contractor will ensure that all materials used in current construction or
remodeling are free of asbestos containing materials.  Contractor will provide
MSDS information for all

 
30
 
 

materials used and will provide a letter to property manager certifying all
materials used are free of asbestos containing materials.

IX.           ELECTRICAL PANEL CHANGES

All additional electrical circuits, panels and associated metering devices will
be appropriately marked as to the area and or equipment serviced by the
circuit(s) in question.  Electrical panel schedules shall be completed and
approved by the Property Management Office.  All electrical panels, junction or
pull boxes which have covers or doors removed, or any new electrical panels that
are installed, shall be fully covered, closed or replaced.

X.           HVAC

 
a.
Buildout Requirements

The mechanical contractor shall deliver to Landlord a certified air balance
report, which will verify air flow delivery per the construction drawing and be
able to demonstrate to Landlord that all thermostats function correctly and are
properly calibrated, and that the system performs in a manner acceptable to the
Property Management Office.  Any air balance report will not be considered
acceptable until approved by the Property Management Office.

The contractor shall perform a complete balance of the air handler and all
associated zones noting air velocity in CFM for each zone outlet, and the total
AHU air velocity (pre and post construction) in CFM as obtained via traversing
all of the main supply ducts in the mechanical room.  The air balance for the
new tenant shall not adversely affect the surrounding tenants.

All flex ducts must be externally insulated and cannot exceed six feet in
length.  Duct tap cut-outs not used shall be covered with a duct plate and
insulation.

The contractor is responsible for the proper function of all zone thermostats
and EMS sensors and, if required, the removal and safe storage of all
thermostats and EMS temperature sensors during the course of the
construction.  If the construction requires the relocation of thermostat(s) to
an adjacent office, this shall be coordinated with the Building engineering
department at the Contractor's expense.

 
b.
Air Handler Operation During Construction

Requests for overtime HVAC shall be made in writing by the tenant.

The Contractor is responsible for confirming the status of the HVAC system prior
to conducting any work potentially impacted by the HVAC system status (ex. spray
painting).

 
31
 
 

LANDLORD WILL NOT BE RESPONSIBLE FOR ANY DAMAGE RESULTING FROM THE OPERATING
STATUS OF THE HVAC SYSTEM REGARDLESS OF WRITTEN REQUESTS FOR OPERATION DURING
SPECIFIED TIMES.

The Contractor shall not place air handler units in hand operating mode.

XI.           FLOOR PENETRATIONS

All floor penetrations must be x-rayed prior to coring.  All floor cores shall
be caulked, cemented or filled (immediately upon coring or discovery) with
materials that are fire rated and match specifications of the original floor
composition.  The Property Management Office must approve any variance in
advance.

XII.          WELDING / CUTTING TORCH USE

At no time is any welding, cutting torch or any open flame tool to be used in
the Building without prior approval from Management. If approval is granted, the
Contractor must coordinate the timing with the Management Office and Engineering
Manager and must have an appropriate fire extinguisher present in the work area
at all times that the equipment is in use.

XIII.        USE OF VARNISHES / LACQUER IN THE BUILDING

No varnishes, lacquers or odor producing products are to be used in the Building
without prior approval of the Management Office.  It is recommended that this
type of work be done off premises.

XIV.        LIGHT BULBS AND BALLASTS

Contractor is responsible for insuring that all light fixtures in the work area
are working properly and are fully operational and cleaned upon job
completion.  This includes replacement of tubes, bulbs and ballasts (in the same
color and style as those existing) as required in light fixtures that are
replaced, added or repositioned.

XV.         LOCK AND KEY WAYS

Only Building Standard locks and keyways are to be installed in the leased
premises.

XVI.        HAZARDOUS MATERIALS

Hazardous materials may not be brought onto, or stored, on the premises unless
written permission is obtained from the Property Management Office.  Permission
will not be given unless such material is properly stored in appropriate
containers, (i.e., flammable liquid cabinet), and all required permits are
obtained from the City of Houston.  Hazardous materials include, but are not
limited to, the following:

 
32
 
 

Flammable
Liquids                                                     Combustible Metals
Cryogenics                                                         Oxidizing
Agents
Pressurized Gases                                                      Flammable
Solids
Liquefied Gases                                                        
Radioactive Materials/Explosives

Contractor shall provide to the Property Management Office, prior to the start
of construction, a complete MSDS binder for all chemicals used on the job.

Contractor is responsible for the proper use and disposal of all hazardous
material used or generated from the construction.

XVII.       PHONE / CABLE IDENTIFICATION

All phone and data cables must be securely tagged with the tenant's name and
suite number at the original location and every location where it crosses a
corridor wall or adjacent tenant wall.

XVIII.      PENETRATION

All penetrations of piping, duct work, conduits, etc., through wall partitions
and doors shall be fire sealed to the Landlord's satisfaction in order to
maintain the integrity of the structure's fire safety rating.

XIX.        WATER AND ELECTRICITY DURING CONSTRUCTION

Sources of water and electricity will be furnished in reasonable quantities for
use in lighting, for portable power tools, as drinking water, as water for
testing and other such common uses during construction, without cost to the
Contractor.  Contractor shall make all connections, furnish any necessary
extensions and remove all connections and extensions upon completion of the
work.

XX.         METERING

All additional electrical panels, air conditioning units and equipment connected
to domestic or condenser water systems must be metered.

XXI.        SALVAGE ITEMS

All reusable, Building Standard items for Owner's future use must be removed to
the storage staging area specified by the Property Management Office.  Masonite
shall be used to protect flooring while transporting materials to storage
areas.  This activity shall be coordinated with the Property Management Office.

 
a.
Doors

 
33
 
 

Remove and box all door hardware from existing doors and transport to the
storage staging area.  Transport all re-usable Building doors that are in good
condition to the storage staging area.  All others should be
discarded.  Transport all re-usable wood faced doors to the storage staging
area.

 
b.
Door Frames

Separate incomplete door frames sets by LH, RH & Top Track and transport to the
storage staging area.  All door frames, which are bent, cut, modified or painted
a non-Building Standard color, should be discarded.  Complete door frames shall
be disassembled, bound, labeled as to swing and transported to the storage
staging area.

 
c.
Top Track & Window Track/Framing

All top track which is bent, deeply scratched, painted and cut shorter than 8',
should be discarded.  All window track and framing should be discarded.

 
d.
Ductwork / Air Distribution Devices / Electrical Duct Reheats

All ductwork shall be discarded.  All air distribution devices (i.e.,
diffusers/strip diffusers, circular non-insulated hard duct, troffers, etc.)
that are irreversibly bent, split open, or custom made are to be discarded.  All
others shall be transported to the storage staging area.  All electrical reheats
shall be transported to the storage staging area.

 
e.
Lights

All light fixtures that are bent, deeply scratched or painted shall be
discarded.  All light fixtures lenses (without bases) which are scratched shall
be discarded.  All good fixtures shall be transported to the storage staging
area.

Light bulbs and ballasts that are fully operational shall be transported to the
storage staging area.

 
f.
Restroom Partitions & Hardware

All rest room hardware and partitions that are reusable will be salvaged and
shall be transported to the storage staging area.

 
g.
Ceiling Tile / Grid work

All Building Standard ceiling tiles, which are not chipped, painted or cracked
shall be transported to the storage staging area.  All others shall be
discarded.

 
h.
Miscellaneous

All items not identified above shall be brought to the attention of the Property
Management Office to determine disposition.

 
34
 
 

XXII.     SECURITY

 
a.
Building Access

Any and all access after Building Operating Hours must be approved and
coordinated through the Property Management Office.  No exceptions.  Any access
cards or keys issued to the Contractor or his representatives shall be returned
upon completion of the final punchlist.  All non-returned / lost keys and/or
cards will be charged to the Contractor at $20.00 per card and any costs
involved in order to rekey the space.

 
b.
Freight Elevators

All construction materials, tools and trash are to be transferred to and from
the work area via the freight elevators.  Propping of the freight elevator doors
is prohibited.  Under no circumstances shall the passenger elevators be used for
the purpose of moving tools, materials, equipment or trash.  All construction
personnel are restricted from using passenger elevators.  Use of the freight
elevators during Building Operating Hours will be on a first come, first serve
basis.  All after hours use must be scheduled through the Property Management
Office.

 
c.
Special Elevator Services:

Any work or repair which necessitates:

 
1.
Access to the top of an elevator cab.

 
2.
Utilization of the cab to perform special services.

 
3.
Special security device installation on any elevator servicing a floor must be
scheduled through the Property Management Office.

Allow sufficient time for the Property Management Office to arrange with the
elevator service contractor to provide personnel to perform the requested
service.  Under no circumstances should an individual Contractor or Tenant
permit their personnel to utilize the elevator facilities for any purpose other
than to transport materials and/or personnel.  Tenant and/or Contractor will be
responsible for any extra costs incurred in these arrangements.

XXIII.      LIFE SAFETY

Twenty four (24) hour notice must be submitted to the Property Management Office
for approval for any work involving MEP, sprinkler, fire safety or security
systems.

The Contractor shall coordinate all fire alarm system and fire sprinkler system
related work with the Property Management Office.  None of the aforementioned
work shall commence until appropriate measures have been taken, and approved, to
assure that no false alarms will occur, that adequate Building protection shall
be maintained and that all proper agencies have been notified of the shutdown
parameters.  Contractor shall be responsible for insuring restoration of such
systems to normal operations immediately

 
35
 
 

following completion of the work, including notification to the Property
Management Office that the system is restored.

During construction, the Contractor shall contact the Property Management Office
to minimize the potential for false alarms.

 
a.
Draining / Filling of Sprinkler Lines

Any work that will involve the draining of a sprinkler line or otherwise affect
the Building's sprinkler system must be approved by the management office.  A
Building engineer will assist with any draining / filling.  In all instances
where this is done, the system will not be left inoperable overnight.

All sprinkler work on multi-tenant floors must be done after hours.  All
precautions must be taken to avoid unpleasant odors spreading in the Building.

 
b.
Fire Alarm System

The Contractor must contact the Property Management Office or engineering staff
prior to performing any work involving welding, use of a cutting torch,
sprinkler system modification or any job that would interfere with the fire
alarm system, or cause a false alarm.  Any cost associated with false alarms
caused by a Contractor, or his Subcontractor, shall be absorbed by the
Contractor.

 
c.
Deliveries

All deliveries and/or pickups made by Contractors or Vendors must be made
through the loading dock office.

A FULLY COMPLETED AND SIGNED COPY OF THESE RULES AND REGULATIONS MUST BE
RETURNED TO THE PROPERTY MANAGEMENT OFFICE, PRIOR TO THE COMMENCEMENT OF WORK.
ACKNOWLEDGMENT AND ACCEPTANCE

_____________________________________                                            ________________________
Acknowledged and Accepted by the
Contractor                                             Date

_____________________________________                                            ________________________
Name (Please
print)                                                                                                Title

_____________________________________
Company Name (Please print)

 
36
 
 

List of All Participating Contractors:
 

 
COMPANY NAME
CONTACT NAME
PHONE #
 
1.
     
 
2.
     
 
3.
     
 
4.
     
 
5.
     
 
6.
     
 
7.
     
 
8.
     
 
9.
     
 
10.
     
 
11.
     

 
37
 
 

SCHEDULE 1
 
CONTRACTOR AND SUBCONTRACTOR INSURANCE REQUIREMENTS
 
Prior to inception of all operations, all General Contractors and Subcontractors
must supply a vendor's certificate of insurance with the following criteria as a
minimum:

COVERAGE
LIMIT OF LIABILITY
Commercial General Liability
$1,000,000 per occurrence combined, Single limit bodily injury and property
damage and $2,000,000 general aggregate.
   
Commercial Auto Liability
$3,000,000 per occurrence combined, Single limit bodily injury and property
damage.
   
Worker's Compensation
Minimum required by law
   
Employer's Liability
$500,000 per accident

NAMED AS ADDITIONAL INSURED:
FSP Phoenix Tower Limited Partnership, Hines Interests Limited Partnership
Wording to be used on certificate:  "FSP Phoenix Tower Limited Partnership and
Hines Interests Limited Partnership are additional insureds as their interests
may appear with respect to general liability".

 
38
 
 

EXHIBIT C

EXPANSION SPACE

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39
 
 
 
 
EXPANSION SPACE
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40