Exhibit 10.9

LEASE

THIS LEASE (“Lease”) is entered into as of the 6th day of July, 2006 (the
“Effective Date”), by and between NK IV TECH, LTD., a Texas limited partnership
(“Landlord”) and TESCO CORPORATION (US), a Deleware corporation (“Tenant”).

W I T N E S S E T H:

ARTICLE I.

1.01. INTRODUCTORY PROVISIONS AND DEFINITIONS.

The Lease provisions set forth in this Section 1.01 in summary form are solely
to facilitate convenient reference by the parties. If there is any conflict
between this Section and any other provisions of this Lease, the latter shall
control. For purposes of this lease the following terms shall have the meanings
set forth opposite the term.

 

(a)    Project and Building Name and Address:    Sam Houston Technology Center
(the Project, as more particularly described in Section 2.01 hereof), which
includes the building containing approximately fifty-seven thousand three
hundred fifteen (57,315) square feet of Rentable Area with an address of 3993
West Sam Houston Parkway North, Houston, Texas 77043 (the “Building”). (b)   
Premises:    Approximately 26,549 square feet of Rentable Area commonly referred
to as Suite 100 of the Sam Houston Technology Center Building as shown on
Exhibit “A” hereto. (c)    Initial Term:    The period of eighty-four (84)
months beginning on the Commencement Date and ending on the Expiration Date,
subject to Article 3. (d)    Commencement Date:    The first to occur of: (i)
two hundred fifty-five (255) days after the Effective Date, subject to extension
for the occurrence after the Effective Date of “Landlord Delays” (defined in
Section 3.03) and up to forty-five (45) days of “Unavoidable Delays” (defined in
Section 3.02); or (ii) four (4) months after the date that Tenant first occupies
all or part of the Premises for the Permitted Use. (e)    Expiration Date:   
Eighty-four (84) months after the Commencement Date. (f)    Base Rent for the
Initial Term:   

 

     Annual Base Rent
per sf Rentable
Area    Monthly Base Rent
for 26,549 sf
Rentable Area

Mos. 1-60

   $ 17.50    $ 38.717

Mos. 61-84

   $ 18.00    $ 39,824

 

(g)   

Base Operating Expense

for the Project:

   Base Year 2006 Operating Expenses calculated on a per square foot of Rentable
Area basis.

 

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(h)    Tenant’s Initial Pro Rata Share:    46.32 % (based on the number of
square feet of Rentable Area set forth in Section 1.01 (a) and (b) above) (i)   
Permitted Use:    General Office Use. (j)    Brokers:    Grubb & Ellis Company
(for Tenant)       Moody Rambin Interests Inc. (for Landlord) (k)    Addresses
for Notices:    TO: Tenant       c/o Tesco Corporation (US)       3993 West Sam
Houston Parkway North, Suite 100       Houston, Texas 77043       Attention:
Legal Counsel       TO: Landlord       NK IV TECH, LTD.       c/o Moody Rambin
Interests, Inc.       1455 West Loop South, Suite 700       Houston, Texas 77098
      With a Copy to:       NK IV TECH, LTD.       800 Bering Drive, Suite 350
      Houston, Texas 77057       Attention: Kirk Pfeffer (l)    Business Day:   
The term business day shall mean each weekday, Monday through Friday, inclusive,
excluding holidays. The term holiday shall mean each of New Year’s Day, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. (m)   
Guarantor    None (n)    Security Deposit:    None

 

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(o)    List of Exhibits:    Exhibit “A”   -    Floor Plans       Exhibit “A-1”  
-   

Right of Refusal Space and OEG

Refusal Space

      Exhibit “B”   -    Land       Exhibit “C”   -    Leasehold Improvements   
   Exhibit “C-1”   -   

Building Standard and Shell

Condition

      Exhibit “D”   -    Parking       Exhibit “D-1”   -    Parking Plan      
Exhibit “E”   -    Rules and Regulations       Exhibit “F-1”   -   

Monument Sign Elevation,

Location and Criteria

      Exhibit “F-2”   -    Building Facade Sign Criteria       Exhibit “F-3”  
   Porte Cochere Conceptual Design       Exhibit “G”   -   

Exclusions from Operating

Expenses

ARTICLE 2

2.01. PREMISES.

Landlord hereby leases, lets and demises unto Tenant, and Tenant hereby leases
and rents from Landlord, upon and subject to the provisions of this Lease, the
Rentable Area of the Premises in the Building located on the tract of land
(“Land”) situated in Harris County, Texas and more particularly described on
Exhibit “B” attached hereto and incorporated herein for all purposes (the
Building, the Land, the parking areas (including covered and uncovered parking
areas) and all “Common Areas” (hereinafter defined) being hereinafter
collectively referred to as the “Project”), TO HAVE AND TO HOLD said Premises
for the Term, and further grants to Tenant the non-exclusive right along with
other tenants, their employees and invitees to use the parking areas (subject to
the terms set forth in Exhibit “D” hereto and any exclusive parking rights from
time to time granted by Landlord), walkways, driveways and other common areas of
the Project (collectively, the “Common Areas”), subject to the provisions of
this Lease. Such space so leased to Tenant is herein called the “Premises” and
is reflected on the floor plans (“Floor Plans”) of the Building attached hereto
as Exhibit “A”. The exact square footage of the Premises shall be calculated by
Landlord’s architect at completion of construction of the leasehold improvements
and shall be measured in accordance with the most recently published BOMA
standard “ANSI Z65.1-1996” as interpreted by written guidance published by BOMA
entitled “Answers to 26 Key Questions About the ANSI/BOMA Standard for Measuring
Floor Area in Office Buildings”; provided that in no event shall the Premises
contain less than 26,500 square feet of Rentable Area without the prior written
consent of Landlord. The “Rentable Area” of the Premises shall be an amount
equal to the sum of (i) the square footage as so measured plus (ii) two percent
(2%) of the square footage as so measured. If, after such measurement, the
actual rentable square footage of the Initial Premises is found to be different
than the number of rentable square feet identified above in this Section 1.01
(b), Landlord and Tenant shall execute and deliver an amendment to the Lease
setting forth the actual Rentable Area of the Premises. The Landlord and Tenant
hereby stipulate and agree that, for all purposes under this Lease the Rentable
Area of the Building shall equal fifty-seven thousand three hundred fifteen
(57,315) square feet.

2.02. IMPROVEMENTS.

All installations now or hereafter placed on the Premises in excess of Building
Standard items as determined by Landlord and as set forth in Exhibit “C” shall
be for Tenant’s account and at Tenant’s cost (and Tenant shall pay ad valorem
taxes and increased insurance thereon, to the extent such amounts are reasonably
ascertainable by Landlord and can be demonstrated to Tenant), which costs shall
be payable by Tenant to Landlord as additional rent hereunder promptly upon
being invoiced therefore, and failure by Tenant to pay same in full within
thirty (30) days shall constitute an Event of Default by Tenant hereunder giving
rise to all remedies available to Landlord under this Lease and at law for
non-payment of Rent. “Building Standard”

 

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shall mean the type, brand, quantity or quality of materials, equipment,
finishes, services, insurance coverages, methods, scheduling, and usages
Landlord designates as of the Effective Date to be standard for the Building or
the Project, including without limitation those described a s Building Standard
in Exhibit “C-1” attached hereto. Landlord may make changes to the Building
Standard after the Effective Date provided the change does not materially reduce
or diminish the quality of the Project or its use as general office space.

ARTICLE 3

3.01. TERM.

This Lease shall be effective as of the Effective Date hereinabove first set
forth and will continue in full force and effect until the expiration or
termination of this Lease. The period during which Tenant is required to pay
rent hereunder, which is to begin on the Commencement Date and expire on the
Expiration Date, subject to any renewals, modifications or terminations pursuant
to the terms of this Lease, is herein called the “Term”.

3.02. LANDLORD’S TENDER DATE.

The date Landlord tenders possession of the Premises to Tenant for commencement
of construction of the leasehold improvements pursuant to Exhibit “C” is herein
called the “Landlord’s Tender Date”, which shall be no later than two
(2) business days after Tenant provides a copy of the “Building Permit” (as
defined in Exhibit “C” hereto) required for construction of the leasehold
improvements described in the “Approved Drawings” to be approved by Landlord and
Tenant as set forth in Exhibit “C” hereto. If Landlord is unable to tender
possession of the Premises to Tenant on the estimated Landlord’s Tender Date set
forth in Exhibit “C” due to “Unavoidable Delays” in Landlord’s performance
and/or “Tenant Delays” (defined below), Landlord shall not be liable for any
claims or damages in connection with such failure to tender possession. As used
herein the term “Unavoidable Delays” shall mean delays that result from
inability reasonably to obtain labor, materials, equipment, or supplies, or by
reason of circumstances directly or indirectly the result of any state of war or
national or local emergency, or by reason of any laws, rules, orders,
regulations, action, non-action, or requirements of any governmental authority
now or hereafter in force (including each day from the date that the Approved
Drawings are submitted to the City of Houston for permitting until the Building
Permit is issued), or by reason of strikes or riots, or by reason of accidents
in, or damage to, the Premises, or by the reason of any other comparable cause
beyond the reasonable control of the party hereunder from whom performance is
required, whether it be Landlord or Tenant. Delays resulting from delay or
failure on the part of Tenant in furnishing information, work, plans, drawings
or other matters required of Tenant in Exhibit “C” are herein called “Tenant
Delays”.

3.03. LATE POSSESSION.

No Tenant Delays shall delay the Commencement Date. Delays which are the result
of: (i) Landlord’s failure to approve or provide comments to plans, construction
drawings, construction contracts or other documents requiring review, comment
and/or approval by Landlord as set forth in Exhibit “C” hereto within ten
(10) business days in the aggregate from the time delivered to Landlord until
Landlord takes the required action with respect to all such instruments; and
(ii) Landlord’s failure to otherwise timely perform its other obligations
pursuant to Exhibit “C” hereto or to timely tender possession of the Premises on
Landlord’s Tender Date (except to the extent such tender is delayed by Tenant
Delays or Unavoidable Delays); are herein called “Landlord Delays” and shall
extend the Commencement Date. Unavoidable Delays shall extend the Commencement
Date to the extent, but only to the extent set forth in Section 1.01 (d) above.

3.04. EARLY POSSESSION.

Landlord shall tender possession of the Premises to Tenant in “Shell Condition”
as set forth in Exhibit “C” hereto at the time required in Section 3.02 above.
Tenant’s possession of all or any part of the Premises after Landlord’s Tender
Date and prior to the Commencement Date shall be subject to all of the
provisions of this Lease except payment of Rent. If Tenant enters into
possession of the Premises prior to Landlord’s Tender Date for purposes other
than the Permitted Use, then such possession for the period prior to Landlord’s
Tender Date shall be subject to all provisions of this Lease excluding the
payment of Rent, provided that no such early entry shall be permitted without
Landlord’s prior written consent or operate to change the Expiration Date
provided for herein.

 

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3.05. CERTIFICATE OF COMMENCEMENT DATE AND EXPIRATION DATE.

Upon request by either Landlord or Tenant, both parties shall execute and
deliver a certificate setting forth the actual Commencement Date and Expiration
Date.

3.06. ACCEPTANCE LETTER.

Before the entry into possession of the Premises by Tenant, Tenant shall furnish
to Landlord a letter accepting the condition of the Premises or specifying any
area that is not acceptable. If Tenant enters and accepts possession, Tenant
shall be deemed to have accepted the condition of the Premises without Landlord
having any obligation to do further work.

ARTICLE 4

4.01. RENT.

Tenant, in consideration for this Lease and the leasing of the Premises for the
Term, agrees to pay to Landlord without deduction or set-off as rent, except as
may be expressly set forth in this Lease, the Rent, in monthly installments for
each calendar month during the Term. Rent is payable in advance and without
demand, on the first day of each calendar month during the Term. If the
Commencement Date or Expiration Date is other than the first day of a month,
Tenant shall be required to pay only a pro rata portion of the monthly
installment of Rent for the first partial month of the Term or last partial
month of the Term, as the case may be. Notwithstanding any provision expressed
or implied in this Lease to the contrary, the first full month of Base Rent
shall be due and payable Landlord at the same time that the Improvement
Allowance is due and payable to Tenant.

4.02. PAYMENT OF RENT.

As used in this Lease, “Rent” shall mean the Base Rent, the Operating Expense
reimbursements pursuant to Section 5.01, the parking charges, if any, pursuant
to Exhibit “D”, and all other amounts provided for in this Lease to be paid by
Tenant, all of which shall constitute rental in consideration for this Lease and
the leasing of the Premises. The Rent shall be paid at the times and in the
amounts provided for herein in legal tender of the United States of America to
Landlord at the address specified above or to such other person or at such other
address as Landlord may from time to time designate in writing. The Rent shall
be paid without notice, demand, abatement, deduction, or offset except as may be
expressly set forth in this Lease. Landlord shall, at its option, have the right
to collect from Tenant, five cents ($.05) for each dollar ($1.00) of each
installment of Rent which is not received on or before its due date, and Tenant
agrees to pay such amount immediately on demand as liquidated damages to cover
the additional costs of collecting and processing such late payments. Any
payment which is less than the amount of Rent then due shall constitute a
payment made on account thereof, the parties hereto agreeing that the Landlord’s
acceptance of that payment shall not alter or impair the Landlord’s rights under
this Lease to be paid all of such amounts then due, or in other respect. Tenant
acknowledges that the late payment by Tenant to Landlord of Rent due hereunder
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain. Such costs include,
but are not limited to, processing and accounting charges, and such late charges
represent a fair and reasonable estimate of the cost that Landlord will incur by
reason of the late payment by Tenant. Notwithstanding the foregoing, on the
first occasion of Tenant’s failure to timely pay Rent, Landlord shall give
Tenant written notice and ten (10) days to cure the default before imposition of
any penalty.

 

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ARTICLE 5

5.01. OPERATING EXPENSE REIMBURSEMENT.

In the event that Operating Expenses (defined in Section 5.02 hereof) of the
Project during any calendar year of the Term after the year 2006 shall exceed
the Base Operating Expense for the Project, Tenant shall pay to Landlord
Tenant’s Pro Rata Share of the Actual Operating Expense Increase (hereinafter
defined). Tenant’s Pro Rata Share at the Effective Date is set forth in
Section 1.01(h) above and shall not change unless the Rentable Area of the
Premises shall be increased or decreased after the Commencement Date by
amendment to this Lease or the square footage of Rentable Area of the Project
shall change (for example, pursuant to Article 10 or 11). Subject to the
immediately preceding sentence, Tenant’s Pro Rata Share shall be equal to the
percentage of the total Building Rentable Area included in the Rentable Area of
the Premises. Rentable Area of the Premises and the Building shall be computed
in accordance with Section 2.01. Landlord shall use good faith efforts to
provide to Tenant the Estimated Operating Expense Increase beginning in December
2006 (for the calendar year 2007) and any subsequent calendar year at least
thirty (30) days prior to the commencement of such calendar year. In addition to
the Base Rent, Tenant shall pay in advance on the first day of each calendar
month beginning January 2007 and monthly thereafter during the Term,
installments equal to 1/12th of Tenant’s Pro Rata Share of the Estimated
Operating Expense Increase. In the event Landlord delivers notice of the
Estimated Operating Expense Increase after the particular calendar year has
already commenced, then thirty (30) days after Landlord has provided Tenant with
written notice of such Estimated Operating Expense Increase, Landlord shall also
be entitled to require Tenant to pay concurrently with the next installment of
Base Rent due under the Lease the amount by which (i) the product of one-twelfth
(1/12th) of the amount of the Estimated Operating Expense Increase for such
calendar year times the number of calendar months in such year which have
already wholly or partially expired exceeds (ii) the Estimated Operating Expense
Increase which has previously been paid by Tenant with respect to such calendar
year. At any time and from time to time during the Term, Landlord shall have the
right, upon written notice to Tenant, to change the amount of the Estimated
Operating Expense Increase payable by Tenant hereunder to reflect more
accurately, in the reasonable, good faith judgment of Landlord, the Actual
Operating Expense Increase, such change to be effective with the next
installment of Base Rent due at least thirty (30) days after receipt by Tenant
of Landlord’s notice. Within one hundred twenty (120) days after the end of each
calendar year during Tenant’s occupancy, Landlord shall furnish to Tenant a
statement of the Actual Operating Expense Increase for the immediately preceding
calendar year, which statement shall specify the various types of Operating
Expenses and set forth Landlord’s calculations of Tenant’s Pro Rata Share of the
Actual Operating Expense Increase. If Tenant’s Pro Rata Share of the Estimated
Operating Expense Increase paid to Landlord during the previous calendar year
exceeds Tenant’s Pro Rata Share of the Actual Operating Expense Increase, then
Landlord shall, at its option, either refund the difference to Tenant at the
time Landlord furnishes the statement of the Actual Operating Expense Increase
or credit the amount overpaid by Tenant to Tenant’s Pro Rata Share of the
Estimated Operating Expense Increase for the next calendar year. If Tenant’s Pro
Rata Share of the Estimated Operating Expense Increase paid to Landlord during
the previous calendar year is less than Tenant’s Pro Rata Share of the Actual
Operating Expense Increase, then within thirty (30) days after Landlord
furnishes such statement to Tenant, Tenant shall make a lump sum payment to
Landlord equal to Tenant’s Pro Rata Share of the positive difference between the
Actual Operating Expense Increase and the Estimated Operating Expense Increase
theretofore paid by Tenant. The “Estimated Operating Expense Increase” shall
equal Landlord’s estimate of Operating Expenses for the applicable calendar
year, less the Base Operating Expense for the Project. Landlord’s statement of
the Estimated Operating Expense Increase shall control for the year specified in
such statement and for each succeeding year during the Term until Landlord
provides a new statement of the Estimated Operating Expense Increase. The
“Actual Operating Expense Increase” shall equal the actual Operating Expenses
for the applicable calendar year, less the Base Operating Expense.

5.02. OPERATING EXPENSES.

The term “Operating Expenses” shall mean and include those amounts, expenses,
and costs of whatsoever nature that Landlord incurs because of or in connection
with the ownership, operation, management, repair, or maintenance of the Project
and Landlord’s personal property used in connection therewith. Operating
Expenses shall be determined on an accrual basis in accordance with generally
accepted accounting principles consistently applied and shall include, without
limitation, the following:

(a) Wages, salaries, fees, related taxes, insurance, benefits, and reimbursable
expenses of all personnel engaged in operating, repairing, and maintaining the
Project and providing traffic control about the

 

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Project; provided, however, that if during the Term such personnel are also
working on other projects being operated by Landlord, their wages, salaries,
fees and related expenses shall be allocated by Landlord in good faith among all
of such projects and only that portion of such expenses allocable to the Project
shall be included as an “Operating Expense.”

(b) Cost of all supplies and materials used in operating, repairing, and
maintaining the Project, including without limitation those costs incurred
pursuant to Section 8.03 hereof.

(c) Cost of all utilities for the Project, including, without limitation, water,
electricity, gas, fuel oil, lighting, heating, ventilating and air conditioning
(“HVAC”), excluding electricity, HVAC and any other utility separately metered
to the Premises and the premises of other tenants in the Building which shall be
separately paid for by Tenant and such other tenants.

(d) Cost of all maintenance, security (if any), cleaning of the outside surface
of exterior windows, landscaping, repair, and other similar service agreements
for the Project and the equipment and other personal property of Landlord
therein and thereon used in connection with the operation, management, repair or
maintenance of the Project.

(e) Cost of all insurance relating to the Project and its occupancy or
operations, including but not limited to (i) the cost of rent loss and casualty
and liability insurance applicable to the Project or Landlord’s personal
property used in connection with the operation of the Project, (ii) the cost of
business interruption insurance in such amounts as will reimburse Landlord for
all losses of earnings and other income attributable to the ownership and
operation of the Project, and (iii) the cost of insurance against such perils
and occurrences as are commonly insured against by prudent landlords.

(f) All taxes, assessments, and governmental charges and fees of whatsoever
nature, whether now existing or subsequently created, attributable to the
Project or its occupancy or operation, excluding only franchise and income taxes
of Landlord (but not excluding such franchise or income taxes to the extent
imposed or increased after the year 2005 wholly or partially in lieu of real
estate, ad valorem or similar taxes or in lieu of an increase in real estate, ad
valorem or similar taxes), and including all such taxes whether assessed to or
paid by Landlord or third parties, but excluding such taxes to the extent, if
any, that Tenant, any other tenant of the Project, or any other party
specifically reimburses Landlord therefore (other than through the payment of
Operating Expense reimbursements). If a tax or excise on rents, revenues or
receipts from the Project or this Lease, or other tax however described,
including a franchise tax, margin tax, business tax or any other tax (except any
estate, inheritance, capital stock, income or excess profits tax imposed upon
Landlord) is levied or assessed against Landlord by any lawful taxing authority
on account of Landlord’s interest in the Project, this Lease or the rents,
revenues, receipts or other charges hereunder, as a substitute in whole or in
part, or in addition to real estate, ad valorem, or similar taxes, or is imposed
in order to fund, in whole or in part, education costs for the State of Texas,
Tenant agrees that the amount of such tax or excise shall be included in
Operating Expenses. In the event any such tax or excise is levied or assessed
directly against Tenant, then Tenant shall be responsible for and shall pay same
at such times and in such manner as the taxing authority shall require.

(g) Costs of repairs to and maintenance of the Project, including without
limitation those costs incurred pursuant to Section 8.03 hereof, but excluding
any such costs as are paid by the proceeds of insurance, by Tenant, other
tenants, or by other third parties.

(h) A management fee for management services rendered in connection with the
Project.

(i) Amortization of the cost of capital investment items which are installed
primarily to reduce Operating Expenses for the benefit of all of the Project’s
tenants or which may be required by any governmental authority. All such costs,
including interest costs, shall be amortized over the reasonable life of the
capital investment items, with the reasonable life and amortization schedule
being determined by Landlord according to generally accepted accounting
principles, but in no event to extend beyond the reasonable life of the
Building.

 

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(j) Landlord’s central accounting costs, and legal, appraisal, and other such
third party fees relating to the operation of the Project.

(k) The fair market rental value of the property manager’s office, if any, in
the Building, which office shall be of a size reasonably appropriate for the
management of the Project.

(l) Janitorial or cleaning service for any public portions of the Project (i.e.,
excluding Tenant’s Premises and the leased premises of any other tenant in the
Building).

Notwithstanding the foregoing provisions of this Section 5.02, “Operating
Expenses” shall not include the items set forth on Exhibit “G” hereto, except to
the extent otherwise set forth in such Exhibit.

5.03. PRORATION AND ADJUSTMENT OF OPERATING EXPENSES.

If this Lease commences on other than the first day of a calendar year, or if
this Lease expires on other than the last day of a calendar year, then the
Operating Expenses for all of such calendar year shall be prorated according to
the portion of the Term that occurs during such calendar year. If at any time
the Building is not fully occupied or Landlord is not supplying all services to
all portions of the Building during an entire calendar year, then Operating
Expenses shall be adjusted as though the Building had been 100% occupied and
Landlord were supplying all services to all portions of the Building during the
entire calendar year.

5.04 CALCULATION OF CHARGES. Landlord and Tenant agree that the provisions of
this Lease for determining Rent, Operating Expenses, Tenant’s Pro Rata Share of
Operating Expenses and all other charges payable by Tenant (including, without
limitation, charges under Article 5 of this Lease), are commercially reasonable
and set forth the amount of such charges or the method by which such charges are
to be computed in compliance with Section 93.012 of the Texas Property Code, as
such Section now exists or may hereafter be amended or succeeded.

ARTICLE 6

6.01. USE.

Tenant shall use and occupy the Premises only for the Permitted Use set forth in
Section 1.01, and for no other purposes. Tenant shall not use or permit the
Premises to be used for any unlawful purpose or in any unlawful manner, and
shall comply with all federal, state, and local governmental laws, ordinances,
orders, rules and regulations applicable to the Premises, the Project, and the
occupancy thereof and Tenant shall give prompt written notice to Landlord of any
notification to Tenant of any claimed violation thereof. Tenant shall not do or
permit anything to be done in or about the Premises, nor bring or keep anything
therein which will in any way increase the existing rate of or affect any fire
or other insurance upon the Project or any of its contents, or cause
cancellation of any insurance policy covering the Project or any part thereof or
any of its contents. Tenant shall not do or permit anything to be done in or
about the Premises and/or Project which will in any way obstruct or interfere
with the rights of other tenants or occupants of the Project or injure or annoy
them. Tenant shall not permit any nuisance in, on or about the Premises. Tenant
shall not commit or suffer to be committed any waste in or upon the Premises.

ARTICLE 7

7.01. LANDLORD’S SERVICES.

Provided there is no uncured Event of Default hereunder by Tenant, Landlord
shall, at Landlord’s expense except as provided to the contrary in this Lease,
furnish to Tenant the following services:

(a) Normal and customary routine maintenance and cleaning for all public,
structural, and exterior portions of the Project according to Landlord’s
standards.

 

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(b) Electric lighting service for all public portions of the Project (i.e,.
excluding Tenant’s Premises and the leased premises of any other tenant in the
Building).

(c) All Building Standard fluorescent bulb replacement in all areas and all
incandescent bulb replacement in public areas.

(d) The Building’s electricity supply capacity is 2,000 amp, 3-phase 4 conductor
277/480 volt power. Tenant and Landlord shall agree on the capacity to be
available to the Premises in the Approved Drawings to be prepared and approved
as set forth in Exhibit “C” hereto.

7.02. ADDITIONAL SERVICE COST.

Tenant shall pay Landlord, upon 30 days written notice, the actual costs
incurred by Landlord in performing or providing non-standard maintenance,
security (if any), or other services or requirements of Tenant or in performing
any services required as a result of any Non-Building Standard installations in
the Premises by Tenant.

7.03. INTERRUPTION OF SERVICES.

Any failure or defect in Landlord’s hereinabove described services shall not be
construed as an eviction of Tenant, nor entitle Tenant to any reduction,
abatement, offset, or refund of Rent or to any damages from Landlord. Landlord
shall not be in breach or default under this Lease, provided Landlord uses
reasonable diligence to restore any such failure or defect after Landlord
receives written notice thereof.

7.04 TENANT’S ELECTRICITY / OTHER UTILITIES.

(a) Landlord shall cause an electric current meter to be installed for the
Premises to measure the amount of electric current consumed by Tenant. Tenant
shall contract with an electrical service provider of Tenant’s choosing and
shall pay all charges for electrical service to the Premises (including all
lighting and HVAC in the Premises) directly to the electrical service provider.
The cost of such meter and of the installation, maintenance and repair thereof
shall be paid for by Tenant. If a separate meter is not installed or Landlord is
prevented from installing a separate meter by operation of law or other cause
beyond Landlord’s control, such costs for electric current will be established
by an estimate made by the utility company, electrical engineer, or a qualified
independent consultant, which estimate shall be binding on Tenant, and Tenant
shall pay the cost of its electrical current use to Landlord when Landlord
charges Tenant therefor, but not more often than monthly.

(b) Landlord, at its option, may cause a water meter, gas meter or similar
devices to be installed on the Premises so as to measure the amount of water
and/or gas consumed by Tenant. The cost of any such meters and of the
installation, maintenance and repair thereof shall be paid for by Tenant and
Tenant shall pay all charges for separately metered water and/or gas consumption
at the Premises directly to the service provider. If a separate meter is not
installed, the charges for such utilities shall be included in Operating
Expenses.

7.05 CLEANING THE PREMISES, REFUSE AND SEWAGE.

Tenant shall, at its own cost and expense, provide janitorial and cleaning
service within the Premises, and shall keep and maintain the Premises in clean
condition. Tenant agrees not to keep any trash, garbage, waste or other refuse
at the Premises except in sanitary containers. Tenant will remove any and all
trash, garbage, waste or refuse from the Premises and the Project. Tenant shall
not use the existing sewage disposal system servicing the Premises for the
disposal of anything except sanitary sewage. Neither Tenant nor any Tenant
Parties shall cause the sewage disposal system servicing the Project to become
obstructed.

 

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7.06. KEYS AND LOCKS.

Tenant shall furnish to Landlord three (3) keys for each door entering the
Premises. Additional keys will be furnished by Tenant (provided Landlord pays
Tenant’s actual out-of-pocket cost). No additional locks shall be allowed on any
door of the Premises without Landlord’s permission. Upon termination of this
Lease, Tenant shall surrender to Landlord all keys to the Premises, and give to
Landlord an explanation of the combination of all locks for safes, safe cabinets
and vault doors, if any, in the Premises.

7.07. SIGNS AND PORTE COCHERE.

Landlord shall provide and install all letters and numerals on entrance doors in
or at the Premises. All such letters and numerals are to be Building Standard
graphics, and no other letters, numbers, or signage shall be used or permitted
on the Premises without the prior written consent of Landlord, except that
Tenant shall have the right to the signage and the right to construct the porte
cochere as set forth below, subject to all ordinances and regulations of the
City of Houston and Harris County and the Harris County Toll Road Authority:

(a) Tenant shall be entitled to a single band sign on the grade level monument
signage on the Frontage Road of the West Sam Houston Parkway (on a non-exclusive
basis along with other tenants) in accordance with the criteria set forth on
Exhibit “F-1” attached hereto, with sign fabrication and installation at
Tenant’s expense which shall be paid for by Tenant either as a charge against
the Improvement Allowance described in Exhibit “C” attached hereto, or at
Tenant’s option from separate funds paid by Tenant to Landlord upon demand by
Landlord. The maintenance and repair of Tenant’s sign shall be paid for by
Tenant.

(b) Tenant shall be permitted to install building facade signage on the exterior
facade of the Premises at the main entrance to Tenant’s Premises, mutually
acceptable to both Landlord and Tenant using channel block lettering consistent
with the criteria set forth on Exhibit “F-2” attached hereto, with sign
fabrication and installation at Tenant’s expense which shall be paid for by
Tenant either as a charge against the Improvement Allowance described in Exhibit
“C” attached hereto, or at Tenant’s option from separate funds paid by Tenant to
Landlord upon demand by Landlord. The maintenance and repair of Tenant’s sign
shall be paid for by Tenant.

(c) Tenant shall be permitted to construct and install a porte cochere at the
main entrance to Tenant’s Premises, in accordance with the conceptual design and
finishes (to the extent such finishes are specified) as set forth on Exhibit
“F-3” attached hereto. Changes to the final design, materials, or finishes
inconsistent with the conceptual design must be mutually acceptable to both
Landlord and Tenant, and Landlord and Tenant agree to act in good faith in
considering and determining such matters. The construction and installation of
such porte cochere will be at Tenant’s expense, which shall be paid for by
Tenant either as a charge against the Improvement Allowance described in Exhibit
“C” attached hereto, or at Tenant’s option from separate funds paid by Tenant.
The maintenance and repair of such porte cochere shall be paid for by Tenant.

The signage rights set forth in paragraphs (a) and (b) above shall not be
assignable by Tenant and in the event Tenant assigns or subleases all or part of
the Premises (any such assignment or subleasing being subject to Article 14
hereof), the assignee or sublessee thereof shall not be entitled to such signage
rights, unless Landlord expressly agrees thereto. Landlord shall charge Tenant
separately for the maintenance and repairs associated with its sign and the cost
of electricity supplied to the sign (if ascertainable by separate metering or
submetering), all of such charges being considered as additional Rent and being
due and payable within ten (10) days after invoice therefore.

 

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ARTICLE 8

8.01. ALTERATIONS.

Tenant shall make no alterations, installations, additions, or improvements in
or to the Premises or place signs on the Premises which are visible from outside
the Premises, without Landlord’s prior written consent. All alterations,
installations, additions or improvements, other than moveable furniture and
moveable trade fixtures, made by Tenant to the Premises with Landlord’s prior
written consent, shall remain upon and be surrendered with the Premises and
become the property of Landlord at the expiration or termination of this Lease
or the termination of Tenant’s right to possession of the Premises; provided,
however, that Landlord may require Tenant, at Tenant’s cost, to remove any or
all alterations, installations, additions or improvements that are made without
Landlord’s prior written consent or that Landlord designates, at the time of
giving its consent thereto, to be removed upon the expiration or termination of
this Lease or the termination of Tenant’s right to possession of the Premises.
All work performed by Tenant with respect to the Premises shall (a) be performed
so as not to alter the exterior appearance of the Building, (b) be preformed by
a contractor approved in writing by Landlord, (c) be performed so as not to
adversely affect the structure or safety of the Building, (d) comply with all
building, safety, fire, and other codes and governmental and insurance
requirements, (e) be performed so as not to result in any usage in excess of
Building Standard of water, electricity, gas, HVAC (either during or after such
work) unless prior written arrangements reasonably satisfactory to Landlord are
made with respect thereto, (f) be completed promptly and in a good and
workmanlike manner, and (g) be performed in such a manner that no valid
mechanic’s, materialman’s, or other similar liens attached to Tenant’s leasehold
estate and in no event shall Tenant permit, or be authorized to permit, any such
liens (valid or alleged) or other claims to be asserted against Landlord or
Landlord’s rights, estates, and interests with respect to the Project or this
Lease. In all events, Tenant shall not be entitled to perform any work unless
and until Tenant has obtained and furnished to Landlord an appropriate workman’s
compensation policy covering all workmen and a general liability policy naming
Landlord as a co-insured with policy limits not less than $1,000,000. Landlord
may require, at Tenant’s sole cost and expense, a lien and completion bond in an
amount equal to the estimated cost of any improvements, additions or alterations
in the Premises which have been approved by Landlord.

8.02. REMOVAL OF TRADE FIXTURES AND PERSONAL PROPERTY.

Tenant agrees to remove all of its trade fixtures, unattached personal property,
signage within the Premises, wiring, cabling, phone systems and
telecommunication facilities located in the Premises, on or before the date of
expiration or termination of the Term, and shall promptly reimburse Landlord for
the cost of repairing all damage done to the Premises or the Project by such
removal and the cost of restoring the Premises to their original condition,
reasonable wear and tear excepted, after such removal.

8.03. REPAIRS BY LANDLORD.

Landlord shall repair and maintain the Common Areas and the structural portions
of the Project, including the Building Standard plumbing (exclusive of tenant
kitchens and coffee bars), HVAC and electrical systems installed or furnished by
Landlord, and all areas of the Project for the common non-exclusive use of all
tenants in the Project, unless such maintenance and repairs are caused in part
(and then only as to such part) or in whole by the act, neglect, or omission of
any duty by the Tenant, its agents, servants, employees or invitees, or unless
such maintenance or repairs are otherwise herein provided to be made by Tenant.
Landlord shall not be liable for any failure to make such repairs or to perform
any maintenance unless such failure shall persist for an unreasonable time after
written notice of the need of such repairs or maintenance is given to Landlord
by Tenant and Landlord has failed to commence to make such repairs or
maintenance or if after commencing Landlord fails to compete such repairs or
maintenance within a reasonable period of time. Landlord shall not be liable for
any damages, compensation or claim for loss of the use of the whole or any part
of the Premises or Tenant’s personal property, or any inconvenience, loss of
business, or annoyance arising from any such repair and/or maintenance performed
by Landlord hereunder, except for damage resulting from Landlord’s, its agent’s,
contractor’s, or employee’s negligence or willful misconduct. Landlord reserves
the right to make such repairs, changes, alterations, additions, or

 

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improvements in or to any portion of the Project and the fixtures and equipment
thereof as it may deem necessary or desirable so long as such changes,
alterations, additions, or improvements do not prevent Tenant from occupying the
Premises for the Permitted Use hereunder. Notwithstanding the foregoing,
additional maintenance and repairs which may be necessary because of damage
caused by casualty and/or condemnation (and any responsibility or liability of
Landlord therefore) shall be governed by Article 10 and Article 11 of this
Lease, respectively.

8.04. REPAIRS BY TENANT.

By taking possession of the Premises, Tenant shall be deemed to have accepted
the Premises as being in good, sanitary order, condition and repair. Tenant
hereby waives any and all warranties, express or implied, as to the Premises,
including, without limitation, the implied warranty of suitability of the
Premises for Tenant’s intended use. Tenant shall, at Tenant’s sole cost and
expense, keep the Premises in good condition and repair, damage thereto from
causes beyond the reasonable control of Tenant and ordinary wear and tear
excepted. Tenant shall, upon the expiration or sooner termination of this Lease,
surrender the Premises to the Landlord in good condition, ordinary wear and tear
and damage from causes beyond the reasonable control of Tenant excepted. Any
injury or damage to the Premises or Project, or the appurtenances or fixtures
thereof, caused by or resulting from the act, omission or neglect of Tenant or
Tenant’s employees, servants, agents, invitees, assignees, or subtenants shall
be repaired or replaced by Tenant, or at Landlord’s option by Landlord, at the
expense of Tenant. If Tenant fails to maintain the Premises or fails to repair
or replace any damage to the Premises or Project resulting from the negligence
or intentional act of Tenant, its employees, servants, agents, invitees,
assignees or subtenants, Landlord may, but shall not be obligated to cause such
maintenance, repair or replacement to be done, as Landlord deems necessary, and
Tenant shall pay to Landlord within thirty (30) days all reasonable costs
related thereto, plus a charge for Landlord’s overhead of five percent (5%) of
such cost.

ARTICLE 9

9.01. LANDLORD’S INSURANCE.

Landlord shall maintain all-risk property insurance at replacement cost value on
Landlord’s personal property in the Project and replacement cost value of the
Premises and Project [up to replacement of the Shell Condition and all
improvements and installations in the Premises paid for with the Improvement
Allowance under this Lease and all improvements made with similar allowances
paid by Landlord to other tenants in the Project with respect to their leased
premises (collectively the “Allowance Improvements” whether referring to the
Tenant and the Premises or the Project and all tenants therein), but excluding
all installations and improvements in the Premises or Project in excess of the
Shell Condition and Allowance Improvements. Landlord shall also; (i) obtain
(prior to occupancy of the Premises by Tenant for the Permitted Use) and
maintain basic flood insurance through the federal flood insurance program (if
available on the Project); (ii) loss of rent insurance; and (iii) liability
insurance; all in such amounts and with such coverages as are determined from
time to time by Landlord. Insurance required hereunder shall be issued by and
binding upon a solvent insurance company authorized to do business in the state
of Texas which has a rating issued by an organization regularly engaged in
rating insurance companies (including specifically A.M. Best & Company) of not
less than “A”. To the extent of the liabilities assumed under this Lease,
Landlord shall name Tenant as additional insured on all such insurance policies
other than loss of rent insurance (such additional insured status to be included
prior to Landlord’s Tender Date), and shall provide waiver of subrogation on all
insurance policies to the extent set forth in Section 9.03 below. Landlord shall
use reasonable efforts to obtain the flood insurance coverage and provide a
certificate evidencing such coverage and the amount thereof to Tenant prior to
the Landlord’s Tender Date, but if Landlord is unable to obtain such coverage by
such date, Landlord shall obtain same as soon as reasonably possible thereafter.
Except as set forth in the preceding sentence, Landlord shall deliver to Tenant
certificates evidencing the existence and amounts of all insurance prior to
Landlord’s Tender Date. No policy shall be cancelable or subject to reduction of
coverage except after thirty (30) days prior written notice to Tenant.

 

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9.02. TENANT’S INSURANCE.

Tenant shall, at Tenant’s expense, fully insure its property located in the
Premises (including all-risk property insurance at replacement cost value on the
installations and improvements in the Premises in excess of the Allowance
Improvements) against fire and other casualty and shall maintain Commercial
General Liability Insurance with combined limits of at least $2,000,000.00
general aggregate and $1,000,000.00 per occurrence. To the extent of liabilities
and responsibilities assumed under this Lease, Tenant shall cause Landlord to be
named as an additional insured under such public liability insurance policy and
the fire and casualty insurance policy which Tenant is required to maintain with
respect to Tenant’s property located in the Premises. Insurance required
hereunder shall be issued by and binding upon a solvent insurance company
authorized to do business in the state of Texas which has a rating issued by an
organization regularly engaged in rating insurance companies (including
specifically A.M. Best & Company) of not less than “A”. To the extent of
Tenant’s personal property and the liabilities assumed under this Lease,
Tenant’s insurance policy shall be primary without contribution from any
insurance carried by Landlord. Tenant shall deliver to Landlord, prior to
commencement of construction of improvements in the Premises pursuant to Exhibit
“C” hereto, certificates evidencing the existence and amounts of such insurance.
No policy shall be cancelable or subject to reduction of coverage except after
thirty (30) days prior written notice to Landlord.

9.03. WAIVER OF LIABILITY AND SUBROGATION.

In regards all property, whether real or personal, of Tenant and/or Landlord,
whenever (a) any loss, cost, damage or expense resulting from fire, explosion or
any other casualty or occurrence is incurred by either of the parties to this
Lease in connection with the Premises or the Project, and (b) such party is then
covered (or is required to be covered under the foregoing provisions of this
Article 9) in whole or in part by insurance with respect to such loss, cost,
damage or expense, then the party so insured (or required to be insured) hereby
releases the other party from any liability it may have on account of such loss,
cost, damage or expense to the extent of such insurance coverage in place or
required to be in place, regardless of cause or origin of such loss or damage,
including, without limitation, the SOLE, JOINT, OR CONCURRENT NEGLIGENCE, SOLE,
JOINT, OR CONCURRENT GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR OTHER FAULT OF
EITHER OR BOTH OF THE PARTIES HERETO AND THEIR RESPECTIVE AGENTS, SERVANTS,
EMPLOYEES, OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS, ARCHITECTS, CONTRACTORS,
SUBCONTRACTORS, ATTORNEYS, CUSTOMERS, AND INVITEES, and waives any right of
subrogation which might otherwise exist in or accrue to any person on account
thereof; provided, however, that such release of liability shall not be
operative in any case where the effect thereof is to invalidate such insurance
coverage or increase the cost thereof; provided that in the case of increased
cost, the other party shall have the right, within thirty (30) days following
written notice, to pay such increased cost, thereupon keeping such release and
waiver in full force and effect. Landlord and Tenant shall use their respective
best efforts to obtain such a release and waiver of subrogation from their
respective insurance carriers and shall immediately notify the other of any
failure to obtain or maintain the same.

9.04. WAIVER OF LIABILITY AND INDEMNITY.

Landlord, its agents and employees, shall not be liable for any injury to or
death of persons or for any loss of or damage to property of Tenant or of
others, regardless of whether such property is entrusted to employees of the
Project, or such loss or damage is occasioned by casualty, theft, or any other
cause of whatsoever nature, unless caused by the willful misconduct or
negligence of Landlord, its officer’s, employees, agents, contractors,
subcontractors, invitees, permittees, guests, or representatives, excluding
“Tenant Parties” defined below, (collectively “Landlord Parties”). In no event
shall Landlord be liable as the result of the acts or omissions of Tenant
Parties or any other tenant of the Project. Landlord shall not be liable for any
damage to or theft of personal property upon the Premises or damage to or theft
of automobiles or other vehicles of Tenant Parties on the Project. Other than
liabilities for property as listed above in 9.03, Tenant hereby indemnifies and
holds Landlord harmless from and against any and all claims arising from
Tenant’s use of the Premises, for the conduct of its business, or from any
activity, work, or

 

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other thing done, permitted, or suffered by Tenant on or about the Project or
due to the willful misconduct or negligence of, the Tenant, or any officer,
agent, employee, guest, invitee, contractor or subcontractor of Tenant
(collectively “Tenant Parties”) and from and against all costs, attorneys’ fees,
expenses and liabilities incurred in or related to any such claim or any action
or proceeding brought thereon, unless caused by the willful misconduct or
negligence of Landlord Parties.

ARTICLE 10

10.01. CASUALTY.

(a) If the Premises or Project, or any portion of either, shall be damaged by
fire or other casualty covered by the insurance carried by Landlord hereunder,
and the cost of repairing such damage shall not be greater than thirty percent
(30%) of the then full replacement cost of the Project, then, subject to the
following provisions of this Article, Landlord shall repair the Premises and/or
Project to substantially the same condition as existed immediately prior to such
fire or other casualty with respect to the Shell Condition and Allowance
Improvements and, to the extent and only to the extent Tenant’s insurance
proceeds are made available to Landlord and are sufficient therefore, the repair
and restoration of improvements and installations in excess of the Shell
Condition and Allowance Improvements (such required level of repair and
restoration being herein called the “Required Condition”).

(b) If the Premises or Project shall be damaged to an extent greater than thirty
percent (30%) of the then full replacement cost of the Project then Landlord
shall have the option to either (i) repair or reconstruct the same to the
Required Condition, or (ii) terminate this Lease by so notifying Tenant within
one hundred twenty (120) days after the date of such fire or other casualty,
such termination to be effective as of the date of such notice.

(c) The Rent required to be paid hereunder shall be abated in proportion to the
portions of the Premises, if any, which are rendered untenantable by fire or
other casualty hereunder until repairs of the Premises to the required Condition
are completed, or if the Premises are not repaired, until the termination date
hereunder. Other than such Rent abatement, no damages, compensation or claim
shall be payable by Landlord for loss of the use of the whole or any part of the
Premises, Tenant’s personal property, or any inconvenience, loss of business, or
annoyance arising from any such repair and reconstruction. If the damage results
from default or negligence of Tenant, its agents, employees, licensees or
invitees, then Tenant shall not be entitled to any abatement or reduction of any
Rent or other sums due hereunder. If this Lease is terminated as provided in
10.01(b) above, all Rent shall be apportioned and paid up to the termination
date. Landlord shall not be required to repair or replace any furniture,
furnishings or other personal property, which Tenant may be entitled to remove
from the Premises or any property constructed and installed by or for Tenant
pursuant to Section 8.01 hereof or any installations and improvements in excess
of the Allowance Improvements, except to the extent Tenant’s insurance proceeds
are made available to Landlord and are sufficient to repair and restore
improvements and installations in excess of the Allowance Improvements.

10.02. END OF TERM CASUALTY.

Notwithstanding anything to the contrary in this Article, Landlord shall not
have any obligation whatsoever to repair, reconstruct or restore the Premises or
the Project when the damage resulting from any casualty covered under this
Article occurs during the last twelve (12) months of the Initial Term (unless
Tenant has timely exercised its right of renewal granted in this Lease) or any
renewal of the Term hereof, and the cost to repair, reconstruct or restore the
Premises to the Required Condition would exceed five percent (5%) of the then
full replacement cost of the Project.

 

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ARTICLE 11

11.01. CONDEMNATION.

If all or substantially all of the Premises be taken by virtue of eminent domain
or for any public or quasi-public use or purpose, this Lease and the estate
hereby granted shall terminate on the date the condemning authority takes
possession. If only a part of the Premises is so taken, or if a portion of the
Project not including the Premises is taken, this Lease and the estate hereby
granted shall, at the election of Landlord, either: (i) terminate on the date
the condemning authority takes possession by giving notice thereof to Tenant
within thirty (30) days prior to the date of such taking of possession; or
(ii) continue in full force and effect as to that part of the Premises not so
taken, and the Base Rent shall be reduced (from and after the date of such
taking of possession) in the proportion that the number of square feet of the
Premises so taken, if any, bears to the total number of square feet contained in
the Premises immediately prior to the taking.

11.02. CONDEMNATION AWARD.

Landlord shall be entitled to the whole of any and all awards which may be paid
or made in connection with any such taking, except that Tenant shall be entitled
to make a separate claim with the condemning authority for (a) any moving
expenses incurred by Tenant as a result of such condemnation and (b) any
relocation costs incurred by Tenant.

ARTICLE 12

12.01. ENTRY.

Landlord, its agents, employees, and representatives, shall have the right to
enter the Premises at any time upon reasonable notice to Tenant under the
circumstances (no notice shall be required in the case of routine maintenance
during normal business hours and no notice shall be required in the case of any
emergency) for any purpose which Landlord may reasonably deem necessary for the
operation and maintenance of the Project, including, without limitation, the
exhibiting of the Premises to prospective purchasers, or mortgagees. Landlord,
its agents, employees, and representatives, shall have the right, pursuant to
Section 17.14, to exhibit the Premises to prospective tenants.

ARTICLE 13

13.01. SUBORDINATION.

This Lease is and shall be subject and subordinate to any and all ground or
similar leases affecting the Project, all mortgages which may now or hereafter
encumber or affect the Project and to all renewals, modifications,
consolidations, replacements and extensions of any such leases and/or mortgages;
provided, however, that at the option of any Underlying Party (hereinafter
defined), this Lease shall be superior to the lease or mortgage of such
Underlying Party. The provisions of this Section 13.01 shall be self-operative
and shall require no further consent or agreement by Tenant or any Underlying
Party, but upon request of Landlord or any such Underlying Party Tenant shall,
at Tenant’s expense, execute within ten (10) business days any appropriate
certificate or instrument that Landlord or such Underlying Party may reasonably
request confirming such subordination. As used in this Lease, the term
“Underlying Party” shall mean the holder of the lessor’s interest under any
ground or similar lease of all or part of the Building and/or the mortgagee or
purchaser at foreclosure with respect to any mortgage of all or part of the
Building. Tenant agrees that any Underlying Party may unilaterally subordinate
its mortgage or lease to this Lease at any time by filing a notice of such
subordination in the Official Public Records of Real Property of the county
where the Building is located.

13.02. ATTORNMENT.

In the event of the termination of any ground or similar lease affecting the
Project or the enforcement by the trustee or the beneficiary under any mortgage
or deed of trust of remedies provided by law or by such

 

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mortgage or deed of trust, Tenant will, upon request of any person or party
succeeding to the interest of Landlord as the result of such termination or
enforcement, automatically become the Tenant of such successor in interest
without change in the terms or other provisions of this Lease; provided,
however, that such successor in interest shall, after written notice to Tenant
of the existence of such ground or similar lease affecting the Project or
mortgage or deed of trust or of such other succession to the interest of
Landlord, not be bound by (a) any payment of Rent made after the date of such
notice for more than one month in advance, or (b) any amendment or modification
of this Lease made after the date of such notice without the written consent of
such trustee or such beneficiary or such successor in interest. Upon reasonable
request by any such successor in interest, Tenant shall execute and deliver an
instrument or instruments confirming the attornment provided for herein.

13.03. QUIET ENJOYMENT.

Tenant, on paying the Rent and keeping and performing the conditions and
covenants herein contained, shall and may peaceably and quietly enjoy the
Premises for the Term, subject to all applicable laws and ordinances, applicable
insurance requirements and regulations, and the provisions of this Lease.

ARTICLE 14

14.01. ASSIGNMENT.

Tenant shall not assign or in any manner transfer this Lease or any estate or
interest herein, or sublet the Premises or any part thereof, or grant any
license, concession or other right of occupancy of any portion of the Premises
without the prior written consent of Landlord. If Tenant desires at any time to
enter into an assignment of this Lease or a sublease of the Premises or any
portion thereof, Tenant shall give written notice to Landlord of its desire to
do so, which notice shall contain (a) the name of the proposed assignee or
subtenant, (b) the nature of the proposed assignee’s or subtenant’s business to
be carried on in the Premises, (c) the terms and provisions of the proposed
assignment or sublease, and (d) resumes, business plans, references, financial
information, and other information as Landlord may reasonably request concerning
the proposed assignee or subtenant. If Tenant is a limited liability company,
corporation, partnership or other entity, and if at any time during the term of
this Lease or any renewal or extension hereof, the person or persons who own a
majority of either the outstanding voting interest or all outstanding ownership
interests of Tenant at the time of execution of this Lease cease to own a
majority of such interest (except as a result of transfers by devise or descent
or sale, merger, or consolidation with an entity with a net worth in excess of
Tenant’s net worth), the loss of a majority of such interest shall not be deemed
an assignment of this Lease by Tenant, if after such change in majority
ownership, Tenant continues to have a net worth equal to or in excess of
Tenant’s net worth prior to such change. The previous sentence shall not apply,
however, if Tenant is a corporation and at the time of the execution of this
Lease or of such transfer the outstanding voting shares of capital stock of
Tenant are listed on a recognized security exchange or over the counter market.

14.02. CONTINUED LIABILITY.

Tenant shall, despite any permitted assignment or sublease, remain directly and
primarily liable for the performance of all of the covenants, duties, and
obligations of Tenant hereunder and Landlord shall be permitted to enforce the
provisions of this Lease against Tenant or any assignee or sublessee without
demand upon or proceeding in any way against any other person. Moreover, in the
event that the rental due and payable by a sublessee (or a combination of the
rental payable under such sublease, plus any bonus or other consideration
thereof incident thereto) exceeds the Rent payable under this Lease, or if with
respect to a permitted assignment, permitted license, or other transfer by
Tenant permitted by Landlord, the consideration payable to Tenant by the
assignee, licensee or other transferee exceeds Rent payable under this Lease,
then Tenant shall be bound and obligated to pay Landlord all of such excess
rental and other excess consideration within ten (10) days following receipt
thereof by Tenant from such sublessee, assignee, licensee or other transferee,
as the case may be.

 

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14.03. CONSENT.

Consent by Landlord to a particular assignment or sublease shall not be deemed a
consent to any other or subsequent transaction. If this Lease is assigned or if
the Premises are subleased without the permission of Landlord, then Landlord may
nevertheless collect rent from the assignee or sublessee and apply the net
amount collected to the Rent payable hereunder, but no such transaction or
collection of rent or application thereof by Landlord shall be deemed a waiver
of any provision hereof or a release of Tenant from the performance by Tenant of
its obligations hereunder.

14.04. TRANSFER BY LANDLORD.

In the event of the transfer and assignment by Landlord of its interest in this
Lease and in the Project to a person expressly assuming Landlord’s obligations
under this Lease, Landlord shall thereby be released from any further
obligations hereunder, and Tenant agrees to look solely to such successor in
interest of the Landlord for performance of such obligations, subject to the
following: Any security given by Tenant to secure performance of Tenant’s
obligations hereunder or any advance Rent paid by Tenant to Landlord, must be
assigned and transferred or credited by Landlord to such successor in interest,
and upon such assignment and transfer or credit, Landlord shall thereby be
discharged of any further obligation relating thereto.

ARTICLE 15

15.01. DEFAULT BY TENANT.

Each of the following shall constitute an “Event of Default” by Tenant:

(a) The failure of Tenant to pay the Base Rent, any other installment of Rent,
or any part thereof when due; provided that on the first occasion of Tenant’s
failure to timely pay Rent, Landlord shall give Tenant written notice of such
failure and if such failure is cured within ten (10) days after such notice is
given, no Event of Default will be deemed to have occurred;

(b) Tenant shall fail to fulfill or perform, in whole or in part, any of its
obligations under this Lease (other than the payment of Rent) and such failure
or non-performance shall continue for a period of fifteen (15) days after
written notice thereof has been given by Landlord to Tenant;

(c) The entry of a decree or order by a court having jurisdiction adjudging
Tenant to be bankrupt or insolvent or approving as properly filed a petition
seeking reorganization of Tenant under the National Bankruptcy Act, or any other
similar applicable Federal or State law, or a decree or order of a court having
jurisdiction for the appointment of a receiver or liquidator or a trustee or
assignee in bankruptcy or insolvency of Tenant or its property or for the
winding up or liquidation of its affairs; or Tenant shall institute proceedings
to be adjudicated a voluntary bankrupt or shall consent to the filing of any
bankruptcy, reorganization, receivership or other proceeding against Tenant, or
any such proceedings shall be instituted against Tenant and the same shall not
be vacated within ninety (90) days after the same are commenced; or Tenant shall
make an assignment for the benefit of Tenant’s creditors or admit in writing
Tenant’s inability to pay the debts of Tenant generally as they may become due;

(d) Tenant shall do or permit to be done anything which creates a lien upon the
Premises or any portion of the Project; and

(e) Tenant shall fail to initiate and diligently prosecute construction of
improvements in accord with the Approved Drawings within fifteen (15) days after
Tenant obtains a Building Permit or shall, after occupying the Premises, desert
or vacate, or commence to desert or vacate, the Premises or any substantial
portion of the Premises, or shall remove or attempt to remove, without the prior
written consent of Landlord, all or a substantial value of Tenant’s personal
property from the Premises.

 

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15.02. RIGHTS UPON DEFAULT BY TENANT.

(a) This Lease and the term and estate hereby granted and the demise hereby made
are subject to the limitation that if and whenever there shall occur any Event
of Default, as enumerated above, Landlord may, at Landlord’s option, without any
notice or demand whatsoever (any such notice and demand being expressly waived
by Tenant) in addition to any other remedy or right given hereunder or by law or
equity do any one or more of the following:

(1) Terminate this Lease by written notice to Tenant, in which event Tenant
shall immediately surrender possession of the Premises to Landlord;

(2) Terminate Tenant’s right to possession of the Premises under this Lease
without terminating the Lease itself, by written notice to Tenant, in which
event Tenant shall immediately surrender possession of the Premises to Landlord;

(3) Enter upon and take possession of the Premises and expel or remove Tenant
and any other occupant therefrom, with or without having terminated this Lease;

(4) Alter locks and other security devices at the Premises with or without
having terminated this Lease or Tenant’s right to possession under the Lease;

(5) Upon the occurrence of an Event of Default described in subsection (b) of
Section 15.01, Landlord shall have the right to enter upon the Premises without
being liable for prosecution or any claim for damages therefore, and do whatever
Tenant is obligated to do under the terms of this Lease; and Tenant agrees to
reimburse Landlord on demand for any expenses which Landlord may incur in thus
effecting compliance with Tenant’s obligations under this Lease, and Tenant
further agrees that Landlord shall not be liable for any damages resulting to
Tenant from such action.

(b) Exercise by Landlord of any one or more remedies hereunder granted or
otherwise available shall not be deemed to be an acceptance of surrender of the
Premises by Tenant, whether by agreement or by operation of law, it being
understood that such surrender can be effected only by the written agreement of
Landlord and Tenant. No such alteration of locks or other security devices and
no removal or other exercise of dominion by Landlord over the property of Tenant
or others at the Premises shall be deemed unauthorized or constitute a
conversion, Tenant hereby consenting, after any Event of Default, to the
aforesaid exercise of dominion over Tenant’s property within the Premises. All
claims for damages by reason of such re-entry and/or repossession and/or
alteration of locks or other security devices are hereby waived, unless caused
by the willful misconduct or gross negligence of Landlord, it’s officer’s,
employees, agents, contractors, invitees, permittees, guests, or
representatives, as are all claims for damages by reason of any distress
warrant, forcible detainer proceedings, sequestration proceedings or other legal
process. Tenant agrees that any re-entry by Landlord may be pursuant to a
judgment obtained in forcible detainer proceedings or other legal proceedings or
without the necessity for any legal proceedings, as Landlord may elect, and
Landlord shall not be liable in trespass or otherwise.

(c)(i) In the event Landlord elects to terminate this Lease by reason of an
Event of Default, then notwithstanding such termination, the Tenant shall be
liable for and shall pay to the Landlord, at the address specified in
Section 1.01(a) above, the sum of all Rent accrued to the date of such
termination, plus, as damages, (i) the cost of recovering, re-renting, and
reasonable remodeling the Premises and (ii) an amount equal to the total of the
Rent provided in this Lease for the remaining portion of the Term of the Lease
(had such Term not been terminated by Landlord prior to the Expiration Date
stated in Section 3.01), less the reasonable rental value of the Premises for
such period, such amount to be discounted to present value at the rate of six
percent (6%) per annum.

 

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(ii) In the event Landlord elects to terminate this Lease by reason of an Event
of Default, in lieu of exercising the right of Landlord under the preceding
subparagraph (i), Landlord may instead hold Tenant liable for all Rent accrued
to the date of such termination, plus such Rent as would otherwise have been
required to be paid by Tenant to Landlord during the period following
termination of the Term measured from the date of such termination by Landlord
until the Expiration Date stated in Section 3.01 (had Landlord not elected to
terminate the Lease on account of such Event of Default) diminished by any net
sums thereafter received by Landlord through reletting the Premises during said
period (after deducting expenses incurred by Landlord as provided in
Section 15.03 hereof). Actions to collect amounts due by Tenant as provided for
in this paragraph may be brought from time to time by Landlord during the
aforesaid period, on one or more occasions, without the necessity of Landlord’s
waiting until expiration of such period; and in no event shall Tenant be
entitled to any excess of rent obtained by reletting over and above the rent
provided for in this Lease. If Landlord elects to exercise the remedy prescribed
in this subparagraph (ii), this election shall in no way prejudice Landlord’s
right at any time thereafter to cancel said election in favor of the remedy
prescribed in the foregoing subparagraph (i).

(d) In the event that Landlord elects to repossess the Premises without
terminating the Lease, then Tenant shall be liable for and shall pay to Landlord
at the address specified in Section 1.01(a) above, all Rent accrued to the date
of such repossession, plus Rent required to be paid by Tenant to Landlord during
the remainder of the Term until the Expiration Date of the Term as stated in
Section 3.01, diminished by any net sums thereafter received by Landlord through
reletting the Premises during said period (after deducting expenses incurred by
Landlord as provided in Section 15.03). Actions to collect amounts due by Tenant
as provided in this paragraph may be brought from time to time by Landlord
during the aforesaid period, on one or more occasions, without the necessity of
Landlord’s waiting until expiration of the Term and in no event shall Tenant be
entitled to any excess of any rent obtained by reletting over and above the Rent
provided for in this Lease.

(e) Upon the occurrence of an Event of Default, Tenant shall in addition to all
other sums owed to Landlord, pay to Landlord an amount equal to the unamortized
dollar amount of all “concessions” provided to Tenant in connection with this
Lease, including, but not limited to, rental concessions, above standard tenant
improvements, relocation allowances, cash payments, any other unamortized tenant
improvements, and the like. Such concessions shall be deemed amortized in equal
amounts on a straight-line monthly basis for each of the months of the Initial
Term in which Base Rent is actually paid by Tenant The foregoing shall not,
however, act to limit in any manner the damages or remedies to which Landlord
may be entitled under this Lease or by law, but shall act only as a
reimbursement of such concessions as may have been provided to Tenant as an
incentive to enter into this Lease.

15.03. EXPENSE OF REPOSSESSION.

It is further agreed that, in addition to payments required pursuant to
Section 15.02 above, Tenant shall compensate Landlord for all expenses incurred
by Landlord in repossession (including among other expenses, the total amount of
any increase in insurance premiums caused by the vacancy of the Premises), all
expenses incurred by Landlord in reletting (including among other expenses,
repairs, remodeling, replacements, advertisements and brokerage fees), and all
losses reasonably incurred by Landlord as a direct or indirect result of
Tenant’s default.

15.04. CUMULATIVE REMEDIES.

Landlord may restrain or enjoin any breach or threatened breach of any covenant,
duty or obligation of Tenant herein contained without the necessity of proving
the inadequacy of any legal remedy or irreparable harm. The remedies of Landlord
hereunder shall be deemed cumulative and not exclusive of each other.

 

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15.05. ATTORNEY’S FEES.

In the event either party shall employ an attorney to present, enforce or defend
any rights or remedies hereunder, the non-prevailing party agrees to pay any
reasonable attorney’s fees incurred by the prevailing party in such connection.

15.06. INTEREST.

All late payments of Rent, costs or other amounts due from Tenant under this
Lease shall bear interest from the date due until paid at the lesser of: (i) the
maximum non-usurious rate of interest at which Tenant may legally contract in
Texas; or (ii) the Prime Rate of interest as quoted in the Money Rates table of
the Wall Street Journal on the date such amount becomes due plus four percent
(4%) per annum.

15.07. INTENTIONALLY OMITTED

15.08. LANDLORD’S CONTRACTUAL SECURITY INTEREST.

In addition to the statutory landlord’s lien, Tenant hereby grants to Landlord
and Landlord shall have at all times, a valid security interest to secure
payment of all Rents and other sums of money becoming due hereunder from Tenant,
and to secure payment of any damages or loss which Landlord may suffer by reason
of the breach by Tenant of any covenant, agreement or condition contained
herein, upon all goods, wares, equipment, fixtures, furniture, improvements and
other personal property of Tenant presently, or which may hereafter be, situated
on the Premises, and all proceeds there from, and such property shall not be
removed without the written consent of Landlord. Landlord shall have the rights
and remedies of a secured party as set forth in the Texas Uniform Commercial
Code. Upon the occurrence of an Event of Default by Tenant, Landlord may, in
addition to any other remedies provided herein, enter upon the Premises and take
possession of any and all goods, wares, equipment, fixtures, furniture,
improvements and other personal property of Tenant situated on the Premises,
without liability for trespass or conversion, and sell the same at public or
private sale, with or without having such property at the sale, after giving
Tenant reasonable notice of the time and place of any public sale or of the time
after which any private sale is to be made, at which sale the Landlord or its
assigns may purchase unless otherwise prohibited by law. Unless otherwise
provided by law, and without intending to exclude any other manner of giving
Tenant reasonable notice, the requirement of reasonable notice shall be met if
such notice is given in the manner prescribed in this Lease at least ten
(10) days before the time of sale. Any sale made pursuant to the provision of
the paragraph shall be deemed to have been a public sale conducted in
commercially reasonable manner if held on the Premises or where the property is
located after the time, place and method of sale and a general description of
the types of property to be sold have been advertised in a daily newspaper
published in the county in which the property is located for five
(5) consecutive days before the date of the sale. The proceeds from any such
disposition, less any and all expenses connected with the taking of possession,
holding and selling of the property (including reasonable attorney’s fees and
legal expenses), shall be applied as a credit against the indebtedness secured
by the security interest granted in this paragraph. Any surplus shall be paid to
Tenant or as otherwise required by law, the Tenant shall pay any deficiencies
forthwith. Upon request by Landlord, Tenant agrees to execute and deliver to
Landlord a financing statement in form sufficient to perfect the security
interest of Landlord in the aforementioned property and proceeds thereof under
the provision of the Uniform Commercial Code (or corresponding state statute or
statutes) in force in the applicable State. Landlord and Tenant agree that a
carbon, photographic or other reproduction of this Lease is sufficient as, and
may be filed as, a financing statement.

15.09. USE AND STORAGE OF PERSONAL PROPERTY. In the event that Landlord shall
have taken possession of the Premises pursuant to the authority herein granted,
then Landlord shall have the right to keep in place and use all of the
furniture, fixtures and equipment at the Premises, including that which is owned
by or lease to Tenant, at all times prior to any foreclosure thereon by Landlord
or repossession thereof by any lessor thereof or third party having a lien
thereon. Landlord shall also have the right to remove from the Premises (without
the necessity of obtaining a distress warrant, writ of

 

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sequestration or other legal process) all or any portion of such furniture,
fixtures, equipment and other property located thereon and place same in storage
at any premises within the county where the building is located, including
premises owned by Landlord or an affiliate of Landlord, and in such event,
Tenant shall be liable to Landlord for costs incurred by Landlord in connection
with such removal and storage and shall indemnify and hold Landlord harmless
from all loss, damage, costs, expense and liability in connection with such
removal and storage. Landlord shall also have the right to relinquish possession
of all or any portion of such furniture, fixtures, equipment and other property
to any person (“Claimant”) claiming to be entitled to possession thereof who
presents to Landlord a copy of any instrument represented to Landlord by
Claimant to have been executed by Tenant (or any predecessor of Tenant) granting
Claimant the right under various circumstances to take possession of such
furniture; fixtures, equipment or other property, without the necessity on the
part of Landlord to inquire into the authenticity of said instrument copy or
Tenant’s (or Tenant’s predecessor’s) signature thereon and without the necessity
of Landlord’s making any nature of investigation or inquiry as to the validity
of the factual or legal basis upon which Claimant purports to act; and Tenant
agrees to indemnify and hold Landlord harmless from all cost, expense, loss,
damage and liability incident to Landlord’s relinquishment of possession of all
or any portion of such furniture, fixtures, equipment or other property to
Claimant. The rights of Landlord herein stated shall be in addition to any and
all other rights which Landlord has or may hereafter have at law or in equity,
and Tenant stipulates and agrees that the rights herein granted Landlord are
commercially reasonable.

15.10. DEFAULT BY LANDLORD.

In the event of a default or breach by Landlord under this Lease, then Tenant
shall be entitled to such rights and remedies as may be available to Tenant at
law or in equity.

ARTICLE 16

16.01. HAZARDOUS WASTE.

Tenant hereby represents and warrants to Landlord the following:

(a) Tenant shall not cause or permit any Hazardous Substances to be used,
stored, generated, or disposed of on, in or about the Premises by Tenant,
Tenant’s agents, employees, contractors, or invitees without first obtaining
Landlord’s written consent. If Hazardous Substances are used, stored, generated,
or disposed of on, in or about the Premises, or if the Premises become
contaminated in any manner, Tenant shall indemnify and hold harmless the
Landlord (and its agents and employees) for any and all claims, damages, fines,
judgments, penalties, costs, liabilities, or losses (including, without
limitation, a decrease in value of the premises or the land or building of which
they are a part, damages caused by loss or restriction of rentable or usable
space, damages caused by adverse impact on marketing of the space, and any and
all sums paid for settlement of claims, attorneys’ fees, consultant, and expert
fees) arising during or after the Term and arising as a result of any use,
storage, generation or disposal of any Hazardous Substance or any contamination
by Tenant. This indemnification includes, without limitation, any and all costs
incurred because of any investigation of the site or any cleanup, removal, or
restoration mandated by a federal, state, or local agency or political
subdivision. If the Tenant causes or permits the presence of any Hazardous
Substance on the Premises that results in contamination, Tenant shall promptly,
at its sole expense, take any and all necessary actions to return the Premises
to the condition existing prior to the presence of any such Hazardous Substance
on the Premises. Tenant shall first obtain Landlord’s approval for any such
remedial action.

(b) As used herein, “Hazardous Substance” means any substance that is toxic,
ignitable, reactive, or corrosive regardless whether same is regulated by any
local government, the State of Texas, or the United States Government.
“Hazardous Substance” includes, but is not limited to any toxic or hazardous
substance and any and all material or substances that are defined as “hazardous
waste,” “extremely hazardous waste,” or a “hazardous substance” pursuant to
state, federal or local governmental law. “Hazardous Substance” includes but is
not restricted to asbestos, polychlorobiphenyls

 

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(“PCBs”), petroleum and petroleum products. “Hazardous Substance” shall not
include substances such as printing cartridges or fluids, cleaning products or
other substances of types and in quantities typically used in offices occupied
for the Permitted Use.

ARTICLE 17

17.01. SUBSTITUTE PREMISES.

[DELETED]

17.02. ESTOPPEL LETTERS.

Tenant will, at such reasonable time or times as Landlord may request and at
Tenant’s cost (provided such cost is reasonable), execute and acknowledge a
certificate stating whether this Lease is in full force and effect, whether any
amendments or modifications exist, whether there are any defaults hereunder, and
containing such other related information as may be reasonably requested.

17.03. HOLDOVER.

If Tenant shall remain in possession of the Premises after the expiration or
earlier termination of this Lease, Tenant shall pay as rent an amount equal to
two hundred percent (200%) of the daily rental rate prevailing on the date of
such termination or expiration (computed on the basis of a thirty (30) day
month). The remaining in possession by Tenant or the acceptance by Landlord of
the payment of said rent shall not be construed as an extension or renewal of
this Lease. The rental payable to Landlord under this Section shall not be
deemed to be in lieu of any damages or other remedy to which Landlord may be
entitled by virtue of Tenant’s holding over.

17.04. SURRENDER.

Upon the expiration or earlier termination of the Lease, Tenant shall peacefully
quit and surrender the Premises in broom clean condition and in good order and
condition, excepting ordinary wear and tear, but subject to Sections 8.01 and
8.02 hereof. Tenant shall also cause all exposed electrical wires, plumbing, and
utilities to be capped.

17.05. NOTICE.

Except as otherwise herein provided, any statement, notice, or other
communication which Landlord or Tenant may desire or be required to give to the
other shall be in writing and shall be deemed properly given if mailed by first
class United States mail, postage prepaid, registered or certified with return
receipt requested, or by delivering same in person or by courier to the intended
addressee. Notice so mailed shall be effective upon the expiration of three
(3) business days after its deposit. Notice given in any other manner shall be
effective only if and when received by the addressee. For purposes of notice,
the addresses of the parties shall be as set forth in the opening provisions of
this Lease and/or Section 1.01 hereof. Either party shall have the right to
change its address for notice hereunder to any other location within the United
States by the giving of thirty (30) days’ notice to the other party in the
manner set forth hereinabove.

17.06. RULES AND REGULATIONS.

Tenant, as well as any assignee or sublessee approved by Landlord, will comply
with the rules of the Project adopted by Landlord, which are set forth in
Exhibit “E” attached hereto and made a part hereof for all purposes. Landlord
shall have the right to change such Rules and Regulations or to amend them in
any reasonable manner, all of which changes and amendments will be sent by
Landlord to Tenant in writing and shall be thereafter binding upon, carried out
and observed by Tenant. Tenant shall further be responsible for the compliance
with such Rules and Regulations by the employees, servants, agents and invitees
of Tenant.

 

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17.07. LANDLORD’S LIABILITY.

Tenant specifically agrees to look solely to Landlord’s interest in the Project
for the recovery of any judgment from Landlord, it being agreed that Landlord
shall never be personally liable for any such judgment. The provision contained
in the foregoing sentence is not intended to, and shall not, limit any right
that Tenant might otherwise have to obtain injunctive relief against Landlord or
Landlord’s successors in interest, or any other action not involving the
personal liability of Landlord to respond in monetary damages from assets other
than Landlord’s interest in the Project or any suit or action in connection with
enforcement or collection of amounts which may become owing or payable under or
on account of insurance maintained by Landlord.

17.08. INABILITY TO PERFORM.

If, by reason of inability reasonably to obtain and utilize labor, materials,
equipment, or supplies, or by reason of circumstances directly or indirectly the
result of any state of war or national or local emergency, or by reason of any
laws, rules, orders, regulations, action, non-action, or requirements of any
governmental authority now or hereafter in force, or by reason of strikes or
riots, or by reason of accidents in, damage to, or the making of repairs,
replacements, or improvements to the Project or the Premises, or any of the
equipment of either, or by the reason of any other cause beyond the reasonable
control of Landlord, Landlord shall be unable to perform or shall be delayed in
the performance of any obligation hereunder, then this Lease and the obligation
of Tenant to pay the Base Rent or additional items of Rent and to perform and
comply with all of the other covenants and agreements hereunder shall be abated
for the duration of such inability of Landlord to perform to the extent and such
inability results in Tenant’s inability to reasonably utilize the Premises for
the purpose set forth herein. Landlord shall exercise due diligence in
undertaking to remedy such inability to perform or delay in performance with all
reasonable dispatch, but shall not be required to adjust a labor dispute against
its will.

17.09. TENANT AUTHORIZATION.

If Tenant signs as a corporation, each of the persons executing this Lease on
behalf of Tenant represents and warrants that Tenant is a duly organized and
existing corporation, that Tenant has and is qualified to do business in Texas,
that the corporation has full right and authority to enter into this Lease, and
that all persons signing on behalf of the corporation were authorized to do so
by appropriate corporate actions. If Tenant is a general partnership, limited
partnership, trust, or other legal entity, each individual executing this Lease
on behalf of said entity represents and warrants that he or she is duly
authorized to execute this Lease on behalf of such entity and in accordance with
such entity’s governing instruments, and that this Lease is binding upon such
entity. Upon the Landlord’s request, Tenant shall furnish Landlord with proper
proof of due authorization for Tenant’s execution of this Lease as Landlord
shall require.

17.10. BROKER.

Tenant and Landlord each represents and warrants to the other that Tenant and
Landlord, respectively, have dealt with, and only with, the entities or persons
listed as Brokers in Section 1.01(j) above as real estate brokers in connection
with this Lease, and that, insofar as Tenant and Landlord, respectively, knows,
no other broker negotiated this Lease or is entitled to any commission in
connection herewith. Landlord has agreed pursuant to a separate agreement with
such Brokers to pay a commission in connection with this Lease. Landlord, as to
any commission covered by such agreement with the Brokers, and Tenant and
Landlord, respectively, as to any claims outside of such agreement, shall
indemnify and hold harmless the other from and against all claims (and costs of
defending against and such claims) of any broker or similar parties claiming by,
through, or under Tenant and Landlord, respectively, in connection with this
Lease.

17.11. MEMORANDUM OF LEASE.

Without the prior written consent of Landlord (which may be granted or withheld
in Landlord’s sole discretion), Tenant shall not record this Lease or a
memorandum or other instrument with respect to this Lease.

 

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17.12. PARKING.

Tenant shall be permitted to use, on a non-exclusive basis certain parking
spaces during the Term as more fully provided for in Exhibit “D” hereto. Use of
the parking spaces is subject to such rules and regulations governing the use as
Landlord may from time to time prescribe, including the designation of specific
areas in which automobiles owned by Tenant, its employees, agents and invitees
shall be part. Tenant shall furnish to Landlord upon request a complete list of
license numbers and physical description of all automobiles operated by Tenant,
and its employees.

17.13. TAXES ON TENANT’S PROPERTY.

Tenant shall be liable for all taxes levied or assessed against personal
property, furniture or fixtures placed by Tenant on the Premises if such taxes
for which Tenant is liable are levied or assessed against Landlord or Landlord’s
property and if Landlord elects to pay the same, or if the assessed value of the
Project is increased by the inclusion of personal property, furniture or
fixtures, placed by Tenant on the Premises, and Landlord elects to pay the taxes
based on such increase, Tenant shall pay to Landlord within 10 business days of
notice and demand, that part of such taxes for which Tenant is primarily liable
hereunder, and, if such taxes are delinquent, together with interest thereon
until paid at the rate set forth in Section 15.06 hereof.

17.14. LANDLORD’S RIGHTS IN EVENT OF NON-RENEWAL.

During the last one hundred eighty (180) days of the Term, Landlord or any
person authorized by Landlord, with written notice to Tenant, may during normal
business hours, exhibit the same to prospective tenants, and place in or about
the Premises at such places as may be determined by Landlord and Tenant, “For
Rent” signs or notices. Such entry or actions permitted herein shall not
constitute eviction of Tenant.

17.15. JOINT AND SEVERAL LIABILITY.

If there is more than one Tenant, the obligations hereunder imposed upon Tenant
shall be joint and several. If there is a guarantor of the obligations hereunder
imposed upon Tenant, there shall be a joint and several obligation of Tenant and
such guarantor, and Landlord shall not be required to first proceed against
Tenant before proceeding against such guarantor, nor shall any such guarantor be
released from its guaranty for any reason whatsoever.

17.16. COUNTERCLAIM AND JURY TRIAL.

[DELETED]

17.17. TIME OF ESSENCE.

Time is of the essence of this Lease and all of its provisions in which
performance is a factor.

17.18. ENTIRE AGREEMENT.

This Lease, including Exhibits “A” through “G” (including “A-1”, “C-1”, “D-1”,
“F-1” and “F-2”) and Supplements, if any, attached hereto (which Exhibits and
Supplements are hereby incorporated herein and shall constitute a portion
hereof), contains the entire agreement between Landlord and Tenant with respect
to the subject matter hereof.

17.19. AMENDMENT.

Any agreement hereafter made between Landlord and Tenant shall be ineffective to
modify, release or otherwise affect this Lease, in whole or in part, unless such
agreement is in writing and signed by the party to be bound thereby.

17.20. SEVERABILITY.

If any term or provision of this Lease shall, to any extent, be held invalid or
unenforceable by a final judgment of a court of competent jurisdiction, the
remainder of this Lease shall not be affected thereby.

 

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17.21. SUCCESSORS.

Subject to the limitations and conditions set forth elsewhere herein, this Lease
shall bind and inure to the benefit of the respective heirs, legal
representatives, successors, and assigns of the parties hereto. All rights,
powers, privileges, immunities, and duties of Landlord under this Lease,
including, but not limited to, any notices required or permitted to be delivered
by Landlord to Tenant hereunder, may, at Landlord’s option, be exercised or
performed by Landlord’s agent or attorney.

17.22. CAPTIONS.

The captions in this Lease are inserted only as a matter of convenience and for
reference only and they in no way define, limit, or describe the scope of this
Lease or the intent of any provisions hereof.

17.23. NUMBER AND GENDER.

All genders used in this Lease shall include the other genders, the singular
shall include the plural, and the plural shall include the singular, whenever
and as often as may be appropriate.

17.24. GOVERNING LAW.

This Lease shall be governed by and construed in accordance with the laws of the
State of Texas.

17.25. CONFIDENTIALITY.

Although Landlord and Tenant acknowledge that this Lease may be disclosed to
certain persons such as the parties’ attorneys, architects, designers, space
planners, contractors, brokers, lenders, prospective lenders, future purchasers
and prospective purchasers of the Project and other necessary persons as
contemplated in this Lease (collectively, the “Necessary Parties”), Landlord and
Tenant agree to keep the terms hereof confidential and to restrict, to the
maximum extent reasonably possible, access to and knowledge of such terms.
Specifically, and not by way of limitation of the foregoing, Landlord and Tenant
each agree not to disclose the terms hereof to any other tenants in the
Building, any real estate brokers or agents, or any competitors of Landlord or
Tenant. Landlord and Tenant each agree to obtain a written agreement to abide by
the terms of this Section from each Necessary Party to whom the terms of this
Lease are disclosed, prior to such disclosure. The above agreements and terms
shall not be binding upon the Landlord or the Tenant or its respective agents,
attorneys or other Necessary Parties as above described if such compliance would
be in violation of any applicable law, court order, subpoena and/or other
judicial exercise.

17.26. RENEWAL OPTION.

So long as there is then no uncured Event of Default by Tenant under this Lease
and there have not been two or more monetary events of default by Tenant during
the Initial Term, Tenant shall have the option to renew this Lease (the “Renewal
Option”) for one (1) additional term of five (5) years (the “Renewal Period”) by
delivery of written notice of the exercise of such Renewal Option to Landlord
(the “Renewal Notice”) no earlier than twelve (12) months nor later than nine
(9) months prior to the expiration of the Initial Term. In the event that Tenant
does not timely and properly exercise Tenant’s Renewal Option, all rights of
renewal set forth in this Section, shall terminate and be of no further force or
effect. Tenant must exercise the Renewal Option as to all of the then existing
Premises. The Renewal Period shall be on the same terms and conditions as are
provided in this Lease, except that the Base Rent for the Renewal Period shall
be equal to the Fair Market Value Rental (defined in Section 17.27 below) as of
the date of the Fair Market Value Rental Notice, and there shall be no
Improvement Allowance. If the Lease Term is extended pursuant to Tenant’s
exercise of the Renewal Option, Landlord shall prepare, and Landlord and Tenant
will execute and deliver an amendment to this Lease extending the Term and
specifying the new Base Rent as the Fair Market Value Rental; provided, however,
that the failure of the parties to enter into such an amendment will not affect
the validity of Tenant’s exercise of the Renewal Option or the obligations of
the parties during the Renewal Period.

 

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17.27. FAIR MARKET VALUE RENTAL.

(a) As used in this Lease, “Fair Market Value Rental” means the prevailing
rental rate being charged per square foot of Rentable Area per year in
comparable office buildings in the suburban Houston, Texas area for renewal
leases of comparable space consisting of at least 10,000 but no more than 30,000
square feet of Rentable Area (taking into account the use, locale, floor level
within the building, definition of rentable area, lease term, commencement date,
when the comparable rate was contracted for, the number and cost of parking
spaces, leasehold improvements existing or to be provided, quality, age, and
location of the comparable building, extent of services provided, distinction
between “gross” and “net” lease, base year or other amount allowed by Landlord
for payment of building operating expenses, expense stop, rental and the time
the particular rental under consideration became or is to become effective,
brokerage fees and cash concessions, refurbishment and other allowances);
provided that if less than five (5) such lease transactions involving at least
10,000 but no more than 30,000 square feet of Rentable Area have been completed
within the preceding twelve (12) month period, then the five (5) most reasonably
comparable lease transactions completed within the preceding twelve (12) month
period shall be used. If Fair Market Value Rental is to be determined pursuant
to the provisions of this Lease, within ten (10) days after Landlord receives
the Renewal Notice triggering the determination of Fair Market Value Rental,
Landlord shall deliver a notice to Tenant in writing of Landlord’s good faith
determination of the Fair Market Value Rental (the “Fair Market Value Rental
Notice”) specifying Landlord’s determination of the Fair Market Value Rental
applicable as of the date of the Fair Market Value Rental Notice, and Tenant
shall have a period of fifteen (15) days after receipt of such notice (the
“Tenant Review Period”) to make one of the following elections by written notice
(the “Final Notice”) to Landlord:

(1) accept Landlord’s determination of the Fair Market Value Rental; or

(2) object to Landlord’s determination of the Fair Market Value Rental, in which
event the determination of the Fair Market Value Rental shall be determined in
accordance with the provisions set forth in Section 17.27(b) below.

(b) Failure of Tenant to deliver the Final Notice within such fifteen (15) day
Tenant Review Period shall conclusively be deemed its election of
Section 17.27(a)(1), but if Tenant provides a Final Notice objecting as set
forth in Section 17.27(a)(2), then the Fair Market Value Rental shall be
determined in accordance with the following terms and provisions:

(1) Within five (5) days after the expiration of the Tenant Review Period
(assuming that Landlord and Tenant cannot agree on the Fair Market Value Rental
during the Tenant Review Period), Landlord and Tenant shall each select an
appraiser of its choice and give the other written notice of such appraiser’s
name, address and telephone number. If either party fails to timely deliver to
the other party written notice of such party’s selected appraiser, such party
shall have no further right to select an appraiser and the determination of Fair
Market Value Rental by the single appraiser timely selected shall be the Fair
Market Value Rental for purposes hereof.

(2) The two (2) selected appraisers shall attempt to mutually determine the Fair
Market Value Rental applicable as of the date of the Fair Market Value Rental
Notice, and, if the two (2) selected appraisers agree on the Fair Market Value
Rental, then the Fair Market Value Rental shall be as determined by the two
(2) selected appraisers. If the two (2) selected appraisers cannot agree on the
Fair Market Value Rental within twenty (20) days after the Tenant Review Period,
then the two (2) selected appraisers shall immediately select another individual
as a third appraiser, and shall furnish Landlord and Tenant written notice of
such appraiser’s name, address and telephone number. All appraisers selected
shall be appraisers who hold the MAI designation from the American Institute of
Real Estate Appraisers, unless Landlord and Tenant shall otherwise agree in
writing, each having at least five (5) years’ experience in the appraisal of
commercial office buildings and leases in the Houston Metropolitan Area.

 

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(3) Each of the three (3) selected appraisers shall then individually determine
the Fair Market Value Rental applicable as of the date of the Fair Market Value
Rental Notice within ten (10) days after the selection of the third appraiser
and the then applicable Fair Market Value Rental shall be the average of the
closest two (2) of the three (3) appraisals, and the three (3) appraisers shall
notify Landlord and Tenant as to their determination, which amount shall be the
applicable Fair Market Value Rental.

(4) All fees, costs and expenses incurred in connection with obtaining the
appraisals and the procedure set forth in this paragraph shall be shared equally
by Landlord and Tenant; however, Landlord and Tenant shall each bear their own
attorneys’ fees incurred with respect to this procedure.

17.28. RIGHT OF REFUSAL.

(a) As used herein, the term “Right of Refusal Space” shall mean and refer to
all portions of the Rentable Area of the Building other than the Premises, such
Right of Refusal Space being shown on page 1 of Exhibit “A-1” attached hereto by
cross-hatching and being designated Preferential Lease 30,767 NRA (containing
approximately 30,767 square feet of Rentable Area). After Landlord has initially
leased the Right of Refusal Space to one or more tenants other than the Tenant
hereunder (the “First Lease(s)), and subject to the rights of such other tenants
(including without limitation all renewal and extension rights) under the First
Lease(s), and further subject to the right of refusal of OEG, L.L.C. (“OEG”) to
the space shown by cross-hatching on page 2 of Exhibit “A-1” and being
designated Preferential Lease 7,689 NRA (containing approximately 7,689 square
feet of Rentable Area and being herein referred to as the “OEG Refusal Space”),
and further provided that at such time: (i) there does not exist an uncured
Event of Default under the Lease by Tenant and there have not been two or more
monetary events of default by Tenant during the Initial Term; (ii) Tenant’s
financial condition is of the same or better quality as it was on the Effective
Date of the Lease, as reasonably determined by Landlord; (iii) Tenant has not
subleased or assigned any portion of the Premises; (iv) the bona fide offer to
lease described below contains a rent commencement date which is to occur at
least one year prior to the then scheduled expiration of this Lease; and
(v) Tenant’s Renewal Option has not terminated; then upon receipt by Tenant from
Landlord of the “Right of Refusal Notice” (defined below); Tenant shall have an
option during the Term of the Lease (the “Refusal Option”) to lease the Right of
Refusal Space on the terms and conditions set forth in this Section. After the
Effective Date of this Lease and the execution of the First Lease with respect
to each portion of the Right of Refusal Space and until the earlier of the
exercise of the Right of Refusal, the termination of the Right of Refusal or the
termination of the Lease, Landlord shall be obligated to deliver written notice
(the “Right of Refusal Notice”) to Tenant containing the terms of any bona fide
offer by a third party to lease all or part of the Right of Refusal Space
(excluding any renewal, expansion or other exercise of rights under any First
Lease), which offer contains a rent commencement date which is to occur at least
one year prior to the then scheduled expiration of this Lease, and which offer
Landlord is willing to accept. Within seven (7) business days following Tenant’s
receipt of the Right of Refusal Notice (or in the case of any Right of Refusal
Notice as to all or any part of the OEG Refusal Space, within 7 days after
Landlord notifies Tenant in writing that OEG has failed to exercise its prior
right to lease such space), Tenant shall either (i) notify Landlord in writing
that Tenant is electing not to exercise the Refusal Option; or (ii) notify
Landlord in writing that Tenant is exercising its Refusal Option. If Tenant
elects not to exercise the Refusal Option or fails to timely exercise its
Refusal Option, then Landlord shall have the right for a period of six
(6) months to lease the applicable portion of the Right of Refusal Space to the
proposed tenant or any affiliate thereof in accordance with the terms set forth
in the Right of Refusal Notice or on terms which are not materially less
favorable to Landlord. If Landlord fails during such six month period to so
lease the applicable space (or if so leased, at such time as such lease
terminates), such space shall once again be a part of the Right of Refusal Space
and shall be subject to Tenant’s rights under

 

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this Section. In the event Tenant elects to exercise the Refusal Option, the
lease of the Right of Refusal Space designated in the Right of Refusal Notice
shall be on the same terms and conditions as are set forth in the Right of
Refusal Notice, except that the applicable lease term shall be coterminous with
the Term of this Lease (including the Renewal Option above) and any and all
leasehold improvements and/or allowances existing or to be provided,
refurbishment allowances, rental abatement and other benefits as are set forth
in the Right of Refusal Notice shall be adjusted to reflect any difference
between the term of the proposed third party lease in the Right of Refusal
Notice as compared to the Term of this Lease (as extended if applicable as set
forth hereinbelow). In the event Tenant elects to exercise the Refusal Option,
Landlord shall provide to Tenant within ten (10) business days after Landlord’s
receipt of Tenant’s exercise of the Right of Refusal an appropriate amendment to
the Lease setting forth the terms applicable to the Right of Refusal Space and
Tenant shall execute such amendment (the “Amendment”) within ten (10) days after
receipt thereof. Rent shall commence upon the first to occur of: (i) the rent
commencement date as set forth in the third party offer as supplemented by the
Right of Refusal Notice; or (ii) thirty days (30) after the date of execution of
the Amendment. In the event that Tenant intends to exercise its Refusal Option
at any time during the last twenty-four (24) months of the Initial Term, then as
a condition to the effectiveness of such exercise, and provided Tenant’s Renewal
Option has not terminated, Tenant and Landlord will enter an extension of the
Term of the Lease applicable to the Premises and the Right of Refusal Space for
a period of time that will be sixty (60) months from the rent commencement date
applicable to the Right of Refusal Space.

(b) Tenant’s right to exercise the Refusal Option under this Exhibit shall
terminate following the occurrence of any of the following events: (a) a
termination of Tenant’s right to occupy all or any portion of the Premises;
(b) Tenant sublets or assigns any portion of the Premises or this Lease;
(c) Tenant abandons any portion of the Premises; and/or (d) the expiration or
earlier termination of the Lease.

17.28. TENANT’S TERMINATION RIGHT.

Provided that there is no uncured Event of Default by Tenant, Tenant shall have
the right to terminate this Lease in its entirety as to all but not part of the
Premises effective as of the end of the sixtieth (60th) month of the Initial
Term of this Lease (the “Termination Date”) by giving Landlord written notice
(the “Termination Notice”) of such termination at least nine (9) months prior to
the Termination Date and paying Landlord the termination payment at the time
such Termination Notice is given (“Termination Payment”) which shall be equal to
the sum of: (a) the unamortized portion (as of the Termination Date) of the sum
of the lease brokerage commissions and the Improvement Allowance with respect to
this Lease, based on the amortization of such sum in equal monthly installments
over the eighty-four (84) month portion of the Initial Term of this Lease
occurring after the Commencement Date at an assumed interest rate of ten percent
(10%) per annum; plus (b) three (3) months Rent. Tenant’s right to terminate
this Lease shall itself terminate if Tenant fails to timely exercise such right
as provided in this Section, time being of the essence with respect to Tenant’s
exercise thereof. Notwithstanding the foregoing, Tenant’s termination of this
Lease pursuant to this Section shall, at Landlord’s option, have no force and
effect if as of the designated Termination Date there exists an uncured Event of
Default under the Lease by Tenant.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this Lease as
of the day and year first above written.

 

LANDLORD

NK IV TECH, LTD.,

a Texas limited partnership

   

TENANT

TESCO CORPORATION (US),

a Deleware corporation

By:   KMP VENTURES, LLC         a Texas limited liability company     By:   /s/
Michael Kearney   Its: Sole General Partner    

Name: Michael Kearney

Title: CFO

 

  By:   /s/ Kirk M. Pfeffer  

Name: Kirk M. Pfeffer

Title: President

 

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