exhibit_10-2asip.htm




Exhibit 10.2







[***Indicates omitted material that is the subject of a confidential treatment request filed separately with the Commission.]







SUBLEASE












THIS SUBLEASE (the “Sublease”) is made and entered into as of the 7th day of July, 2012 (“Effective Date”) between Mannatech, Incorporated, a Texas corporation ("Sublessor"), with its principal place of business at 600 S. Royal Lane, Suite 200, Coppell, Texas 75019 and Integrated Distribution and Logistics Direct, LLC (d/b/a SPE Express), an Arizona limited liability company (“Subtenant”), with its principal place of business at 1610 N. Kolb Rd., Tucson, AZ 85715.







RECITALS







A.           Sublessor operates a distribution center in connection with its primary business located at 445 S. Royal Lane, Ste. 800 Coppell, Texas 75019.  Sublessor and Subtenant have entered into that certain Asset Purchase Agreement dated as of July 7, 2012 for certain assets pertaining to the distribution operations on this same date (the “Asset Purchase Agreement”).







B.           Subtenant is in the business of fulfillment, shipping, distribution and logistical services. Pursuant to the closing of the Asset Purchase Agreement, Sublessee is entering into a Services Agreement with Sublessor, this same date, to provide the same for Sublessor’s North American fulfillment, shipping, distribution and logistical needs (the “Services Agreement”).







C.           Subtenant desires to sublease and use the Leased Premises (as defined below) for its distribution operations, and to effectuate its obligations under the Services Agreement pursuant to the terms thereof.







AGREEMENT







1. PREMISES: In accordance with that certain Lease Agreement dated May 29, 1997 between Sublessor and MEPC Quorum Properties II, Incorporated predecessor in interest to Texas Dugan Limited Partnership (“Landlord”), as amended November 6, 1997, September 22, 2005 and March 18, 2011 to date ( the “Prime Lease”), Sublessor leases from Landlord certain premises containing approximately 74,476 square feet in the aggregate ("Leased Premises”) in the building located at 445 S. Royal Lane, Ste. 800 Coppell, TX 75019. The Leased Premises are further described in the Prime Lease, a copy of which is attached hereto as Exhibit A and is incorporated by reference herein.







2. DEMISE: In accordance with this Sublease, Sublessor hereby subleases to Subtenant, and Subtenant


hereby subleases from Sublessor, 73,036 square feet of the Leased Premises (“Subleased Premises”). The actual Subleased Premises is located within that portion of the Leased Premises identified by hatching on Exhibit B attached hereto.  Subtenant is subleasing all of the Leased Premises except for 1,440 square feet (the “Reserved Space”), as identified on Exhibit B.  Subject to the terms of the Prime Lease, at no additional charge to Subtenant (except such charges as may be included in Operating Costs in accordance with the terms of the Prime Lease), Subtenant shall have the right to use all associated common areas and shall have such other use and access rights as may be necessary for the exercise of its rights and the performance of its obligations hereunder, including, but not limited to, access to electrical, phone and data rooms, existing phone and data wiring infrastructure, and restrooms.







3. SUBLEASE: This Sublease is subject and subordinate to the Prime Lease and to the matters to which the Prime Lease is or shall be subject and subordinate.









  





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4. TERM: The term of this Sublease shall commence July 7, 2012, and shall expire on


March 19, 2018 (the "Term"), unless sooner terminated in accordance with this Sublease.







5. PRIME LEASE: The Prime Lease is incorporated herein by reference so that, except to the extent that


certain provisions of the Prime Lease are inapplicable or modified by this Sublease, or excluded below, each and every term, covenant and condition of the Prime Lease binding or inuring to the benefit of Landlord shall, in respect of the Sublease, bind or inure to the benefit of Sublessor, and each and every term, covenant and condition of the Prime Lease binding or inuring to the benefit of lessee thereunder shall, in respect to the Sublease, bind or inure to the benefit of Subtenant, with the same force and effect as if such terms, covenants and conditions were completely set forth in the Sublease, and as if the words “Lessor(s)” and “Lessee(s)”, or words of similar import, wherever the same appear in the Prime Lease, were construed to mean, respectively, “Sublessor” and “Subtenant” in the Sublease, and as if the words “Leased Premises”, “Premises”, “Leased Property”, or words of similar import, wherever the same appear in the Prime Lease, were construed to mean “Subleased Premises” in the Sublease, and as if the word


“Lease,” or words of similar import, wherever the same appear in the Prime Lease, were construed to mean the “Sublease.” If any of the express provisions of the Sublease shall conflict with any of the provisions of the Prime Lease incorporated by reference herein, such conflict shall be resolved in every instance in favor of the express provisions of the Sublease. Notwithstanding the foregoing or anything to the contrary contained herein, Subtenant shall not have the right to exercise any renewal options, expansion options, rights of first offer or similar rights set forth in the Prime Lease.







6. RENT: Subtenant shall pay a portion of the total rent paid by Sublessor, including base rent, additional


costs and other charges (collectively referred to herein as "Rent"), and excluding the Reserved Space, as set forth according to the following schedule:








	
i.  

	
First Year Post Effective Date








	
a.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the first month after the effective date;








	
b.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the second month following the effective date;








	
c.  

	
*** of the base rent and utilities and miscellaneous costs  required by the Prime Lease in the third month following the effective date;








	
d.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the fourth month following the effective date;








	
e.  

	
*** of the base rent and utilities and miscellaneous costs  required by the Prime Lease in the fifth month following the effective date;








	
f.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the sixth month following the effective date;








	
g.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the seventh month following the effective date;








	
h.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the eighth month following the effective date;








	
i.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the ninth month following the effective date;








	
j.  

	
*** of the baser rent and utilities and miscellaneous costs required by the Prime Lease in the tenth month following the effective date;








	
k.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the eleventh month following the effective date; and then








	
l.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the twelfth month following the effective date.














  





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ii.  

	
Acceleration of Rent Due:  Notwithstanding the foregoing, in the event that Subtenant is able to secure additional clients for its distribution business for the unused portion of the demised premises more rapidly than the above schedule, the Subtenant shall pay additional base rent and utilities and miscellaneous costs in direct proportion to the amount of spaced utilized, rounded up to the nearest fifth percentile according to the above payment schedule.  Sublessor and Subtenant shall each designate a representative to determine the amount of space utilized.  If the representatives are unable to agree on the amount of space utilized, the Parties agree that rent will be paid based on the mid-point of the difference between each representative’s estimated usage rounded to the nearest fifth percentile in the above payment schedule.













	
iii.  

	
Each Successive Year Thereafter Post Effective Date:  After the expiration of the twelfth month post Effective Date, Subtenant shall be responsible for one-hundred percent (100%), excluding the Reserved Space, of the base rent and utilities and miscellaneous costs for each successive month following the one year anniversary of the closing.













	
iv.  

	
Procedure for Paying Rent:  Sublessor shall invoice Subtenant on the first day of each month for the previous month’s rent, utilities, and miscellaneous costs.  Subtenant shall remit rent to Sublessor in the form of a credit applied as an offset against the invoice for services rendered to Sublessor by Subtenant under the Services Agreement. If the credit does not completely offset the total amount owed by Sublessor, Sublessor shall remit the balance due in accordance with the terms of the Services Agreement. If the credit is in excess of what is owed under the invoice for services, Subtenant shall remit the balance owed to Sublessor under this Sublease within 10 days from the date of the invoice issued by Sublessor to Subtenant for rent.  In the event that the parties are no longer operating under the Services Agreement, payment of rent will be made in a manner agreed upon by the parties.












7. PERFORMANCE BY SUBLESSOR: Any obligations of Sublessor which are contained in the Sublease by the incorporation by reference of the provisions of the Prime Lease shall be observed or performed by Sublessor using reasonable efforts to cause the Landlord to observe and/or perform the same (which obligations include, without limitation, services to be provided by Landlord and restoration of damaged property), and Sublessor shall diligently enforce its rights to cause such observance or performance. Subtenant shall not in any event have any rights in respect of the Subleased Premises greater than Sublessor’s right with respect thereto under the Prime Lease.







8. NO BREACH OF PRIME LEASE:  Subtenant shall not do any act which may constitute a breach or violation of any term, covenant or condition of the Prime Lease by the lessee thereunder, whether or not such act or thing is permitted under the provisions of the Sublease. Sublessor shall not do or permit to be done any act which may constitute a breach or violation of any term, covenant or condition of the Prime Lease, including without limitation untimely payment of any obligation due from Sublessor to Landlord.







9. NO PRIVITY OF ESTATE: Nothing contained in the Sublease shall be construed to create privity of


estate or of contract between Subtenant and the Landlord.







10. RELEASES: Subtenant hereby releases the Landlord or anyone claiming through or under the


Landlord by way of subrogation or otherwise to the extent that Sublessor, as tenant, released the Landlord pursuant to the terms of the Prime Lease, and/or the Landlord was relieved of liability or responsibility pursuant to the provisions of the Prime Lease, and Subtenant will cause its insurance carriers to include any clauses or endorsements in favor of the Landlord which Sublessor is required to provide pursuant to the provisions of the Prime Lease with respect to the Subleased Premises.









  





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11. USE: Subtenant shall use and occupy the Subleased Premises solely for distribution, shipping, and logistical purposes and all lawful uses incidental thereto. Any other activities not specifically mentioned above regarding the use and occupancy of the Subleased Premises are subject to the prior written approval of Sublessor and Landlord.







12. CONDITION OF SUBLEASED PREMISES: Subtenant is leasing the Subleased Premises in its "as


is," "where is" condition on the date hereof.  Notwithstanding the foregoing, Sublessor represents that the Leased Premises (including systems, apparatus and appliances) are in working order as of the Effective Date.







13. CONSENT AND APPROVALS: Sublessor shall reasonably cooperate to seek Landlord's consent to any matter under the Prime Lease as may be reasonably requested by Subtenant.







14. NOTICES: Any notice, report, statement, approval, consent, designation, demand or request to be given under this Sublease shall be effective when made in writing, deposited for mailing with the United States Postal Service or with a recognized overnight delivery service and addressed to Sublessor or Subtenant at the following addresses:







SUBTENANT:


Integrated Distribution and Logistics Direct, LLC


Attn:   Mich Bayley                                           


1610 N. Kolb Rd.


Tucson, AZ 85715












SUBLESSOR:


Mannatech, Incorporated


Attn: Chief Financial Officer                                                      


600 S. Royal Lane, Suite 200


Coppell, Texas 75019







With a copy to:


Attn: Chief Legal Officer (at same address)







Sublessor shall promptly give written notice to Subtenant of (i) all claims, demands or controversies by or with the Landlord under the Prime Lease, and (ii) any events which require that Sublessor give notice to Landlord under the Prime Lease, which would materially affect Subtenant's rights or obligations hereunder.







15. TERMINATION: If for any reason the Prime Lease shall terminate prior to the expiration of the Sublease Term, this Sublease shall thereupon be terminated and Sublessor shall have no liability whatsoever to Subtenant by reason thereof (unless the termination occurred as a result of Sublessor's default or breach under the Prime Lease).







16. ASSIGNMENT AND SUBLETTING: Subtenant shall not sublet the Subleased Premises or any part


thereof or assign the Sublease or otherwise encumber or dispose of its interest therein without Sublessor’s and Landlord’s prior written consent in each instance, which consent may be withheld in Sublessor’s and/or Landlord’s sole discretion, except that Subtenant shall have the right, without Sublessor’s or Landlord’s consent, to assign this Sublease to any entity that controls, is controlled by, or under common control with Subtenant.









  





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17. INSURANCE: Subtenant shall, throughout the Term of this Sublease, maintain for the Subleased


Premises comparable insurance coverage as required of Sublessor under the Prime Lease. Such insurance shall, in addition to complying with the requirements of the Prime Lease, name Sublessor as an additional insured.







18. DEFAULT: The default provisions set forth in the Prime Lease are incorporated herein by reference,


provided that Subtenant shall have a ten (10) day notice and cure period for monetary default and a thirty (30) day notice and cure period for non-monetary default (unless such non-monetary default is not capable of cure within thirty (30) days, in which case Subtenant shall have a reasonable period of time in which to effect a cure, so long as Subtenant diligently prosecutes the cure to completion).  Notwithstanding the provisions of the Prime Lease, should Subtenant become insolvent; admit in writing that its inability to pay its debts; make a general assignment for the benefit of creditors; commence any case, proceeding or other action seeking to have an order for relief entered on its behalf as a debtor or to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or of any substantial part of its property; or take any action to authorize or in contemplation of any of the actions set forth above, Sublessor shall have the immediate right to terminate this Sublease.







19.  CROSS DEFAULT WITH ASSET PURHCASE AGREEMENT AND SERVICES AGREEMENT:  An event of default under the Asset Purchase Agreement and/or the Services Agreement will constitute and event of default under this Sublease, unless such default is remedied by the defaulting party in accordance with the terms thereof or is waived by the non-breaching party.







20. BROKERAGE: Each party represents and warrants to the other that no broker or other person had any part, or was instrumental in any way, in bringing about the Sublease.  Each party agrees to indemnify, defend and hold harmless the other from and against any claims made by any broker or other person (other than Broker) for a brokerage commission, finder’s fee, or similar compensation, by reason of or in connection with the Sublease, and any loss, liability, damage, cost and expense (including, without limitation, reasonable attorney’s fees) which may be incurred in connection with such claims if such other broker or other person (other than Broker) claims to have had dealings with such party. Sublessor shall be responsible for all payments due to Broker in connection with this Sublease pursuant to separate written agreements.







21. WAIVER OF JURY TRIAL AND RIGHT TO COUNTERCLAIM: Each party hereby waives all right to trial by jury in any action, proceeding or counterclaim arising out of or in any way connected with the Sublease, the relationship of Sublessor and Subtenant, the Subleased Premises and the use and occupancy thereof, and any claim of injury or damages.







22. MODIFICATIONS: The Sublease cannot be changed orally or in any manner other than by a written


agreement executed by both parties. Sublessor shall not amend the Prime Lease with respect to any material provision that would materially affect Subtenant's rights or obligations hereunder without Subtenant's prior written consent.







23. SUCCESSORS AND ASSIGNS: The provisions of the Sublease, except as herein otherwise specifically provided, shall extend to, bind and inure to the benefit of the parties hereto and their respective personal representatives, heirs, successors and permitted assigns.







24. INTERPRETATION: This Sublease shall be governed by and construed in accordance with the laws of the state in which the Subleased Premises are located. If any provision of the Sublease or application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, the remainder of the Sublease and the application of that provision to other persons or circumstances shall not be affected but rather shall be enforced to the extent permitted by law. The captions and headings are solely for convenience of reference and shall be construed without regard to any presumption or other rule requiring construction against the party causing the Sublease to be drafted.









  





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25. AUTHORITY: Each party represents and warrants that the undersigned has the full right, power and authority to execute this Sublease on behalf of the party indicated.







26. QUIET ENJOYMENT: Sublessor warrants that, upon payment of the Rent, as defined herein, and performance of all obligations, covenants and agreements of Subtenant hereunder, Subtenant shall peaceably and quietly have, hold and enjoy the Subleased Premises during the Sublease Term, subject however to the provisions of this Sublease.







27. PARKING: Subject to the terms and conditions of the Prime Lease, Sublessor shall, at no cost to


Subtenant, allow Subtenant the use of such parking as is made available to Sublessor under the Prime Lease with respect to the Subleased Premises.







28. LANDLORD’S CONSENT: This Sublease is expressly contingent upon and shall not be effective until receipt of Landlord’s approval and execution of the Landlord’s Consent attached hereto as Exhibit C and incorporated herein by this reference.







29.  MISCELANEOUS








	
i.  

	
Transition Period for Storage:  Sublessor and Subtenant agree that Sublessor shall have a period of 120 days from the Effective Date to remove any remaining property or assets in the Subleased Premises that were not part of the “Asset Purchase Agreement.”








	
ii.  

	
Subleased Premises to be used for Disaster Relief:  Sublessor and Subtenant agree that for a period of 12 months from the Effective Date, Sublessor has the right to utilize a portion of the Subleased Premises in the event that a Catastrophic Event renders Sublessor’s current corporate office (address noted above) inoperable for an extended period of time.  Subtenant agrees to provide Sublessor with enough space for up to 25 computers for all essential employees necessary for the day to day operations of Sublessor’s business for an interim period of time until Sublessor finds a permanent facility for those essential employees. For purposes of this Sublease, the term “Catastrophic Event” means a force majeure event defined under the Prime Lease and/or any event damaging or affecting the Sublessor’s internal computer systems.








	
iii.  

	
Removal of Installed Equipment:  Sublessor and Subtenant agree that at the expiration of this Sublease, Subtenant shall remove any and all warehouse equipment Subtenant has installed.








	
iv.  

	
Expiration of the Prime Lease: Upon the expiration of the Prime Lease, If Sublessor determines that it does not want to exercise its right to renew the Prime Lease, Subtenant will have the right to negotiate directly with the Landlord for the terms of a new lease for the Premises.








	
v.  

	
Repair of HVAC Units:  Sublessor agrees to repair the HVAC units identified in the Engineer’s Report, attached as Exhibit D, at its sole cost within one hundred twenty (120) days of the Effective Date.












30. COUNTERPARTS: This Sublease may be executed in multiple counterparts. Facsimile signatures shall be deemed originals.







31. PRIME LEASE: Sublessor has, and on the Effective Date will have, performed in all material respects the obligations required to be performed by it pursuant to Prime Lease, including timely payment of all amounts owed thereunder. Sublessor has not waived any material right under the Prime Lease.  The Prime Lease is fully enforceable by Sublessor in accordance with its stated terms.  No party to the Prime Lease has committed a breach, or act or permitted or causal omission that, with the passage of time or giving of notice, would constitute a breach thereunder.














  





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IN WITNESS WHEREOF, Sublessor and Subtenant have hereunto executed the Sublease as of the day and year first above written.







SUBLESSOR:


MANNATECH, INCORPORATED







By: /s/ Robert A. Sinnott


[Signature]


Name: Robert A. Sinnott


Title: CEO/CSO


Date: June 29, 2012







SUBTENANT:


INTEGRATED DISTRIBUTION AND LOGISTICS DIRECT, LLC







By: /s/ Michael K. Bayley


[Signature]


Name: Michael K. Bayley


Title: President and CEO


Date: July 2, 2012
































Exhibit A – Prime Lease


Exhibit B – Subleased Premises


Exhibit C – Landlord Consent


Exhibit D – Engineer’s Report


































  





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EXHIBIT A


PRIME LEASE






COMMERCIAL LEASE AGREEMENT


 


                           MEPC QUORUM PROPERTIES II INC.,


 


                                     as LANDLORD,


 


                                         and


 


                                   MANNATECH, INC.


 


                                      as TENANT


 


                           pertaining to 74,476 square feet


                    in Freeport North Industrial Park [Phase III]


                                    Coppell, Texas


 


________________________________________________________________________


 


                              COMMERCIAL LEASE AGREEMENT


 


     THIS COMMERCIAL LEASE AGREEMENT (this LEASE) is made and entered into by


and between MEPC QUORUM PROPERTIES II INC., a Delaware corporation (LANDLORD),


and MANNATECH, INC., a Texas corporation (TENANT).


 


     1.   PREMISES/LEASE TERM.  In consideration of the mutual obligations of


Landlord and Tenant set forth herein, Landlord leases to Tenant, and Tenant


hereby takes from Landlord, approximately 74,476 square feet (the PREMISES) in


the Building (hereinafter defined) to be constructed by Landlord on an


approximate 27.8 acre tract of land located in the Freeport North Industrial


Park, City of Coppell, Dallas County, Texas, as more particularly described on


EXHIBIT "A" attached hereto and incorporated herein by reference (the LAND)


and illustrated and illustrated on the Site Plan (herein so called) attached


hereto as EXHIBIT "C" and incorporated herein by reference, together with the


non-exclusive use of all rights, privileges, easements, appurtenances, and


amenities belonging to or in any way pertaining to the Project (hereinafter


defined) for a term (the LEASE TERM or the TERM OF THIS LEASE) beginning on


the Commencement Date (hereinafter defined) and ending at 11:59 p.m. on the


last day of the month that is one hundred twenty (120) complete calendar


months after the Rent Commencement Date (hereinafter defined). If the Rent


Commencement Date occurs on the first day of a calendar month, then the month


in which the Rent Commencement Date occurs shall be the first complete


calendar month after the occurrence of the Rent Commencement Date for purposes


of determining such one hundred twenty (120) complete calendar month period.


That portion of the Land upon which the Building (and its appurtenances) are


constructed, the Building (including the Premises comprising a part thereof)


and any other improvements constructed by or on behalf of Landlord on such


portion of the Land are collectively referred to herein as the PROJECT. The


Project is further described by illustration on the Site Plan.


 


     2.   IMPROVEMENTS TO BE CONSTRUCTED BY LANDLORD.


 




 





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          A.   BUILDING. Landlord agrees to construct on the Land an


approximate 297,902 square foot warehouse building structure (the BUILDING)


containing the features generally described on EXHIBIT "B" attached hereto and


incorporated herein by reference and generally situated as shown on the Site


Plan (herein so called) attached hereto as EXHIBIT "C" and incorporated herein


by reference. Landlord agrees to construct the Building in a good and


workmanlike manner.


 


          B.   CONSTRUCTION COSTS. Subject to the terms of this paragraph,


Landlord will pay all costs of constructing the Building and any other


improvements described on EXHIBIT "B". Notwithstanding the preceding sentence,


Tenant shall be responsible for the following:


 


               (1) If Landlord performs, at Tenant's request, any work over


     and above the work generally described on EXHIBIT "B" (herein, the


     ADDITIONAL WORK), the Additional Work together with the cost of preparing


     plans and specifications for same will be at Tenant's expense. Landlord


     will not be obligated to perform any such Additional Work until Tenant


     pays Landlord ten percent (10%) of the estimated cost of the Additional


     Work, as estimated by Landlord, with the actual cost of the Additional


     Work, less the initial payment by Tenant, being due within ten (10) days


     after substantial completion of the Additional Work.


 


               (2) All costs or expenses incurred or suffered by Landlord that


     are caused by Tenant Delays. A TENANT DELAY(S) shall mean any delay in


     the completion of the Building or any delay in the occurrence of the


     Commencement Date caused by a Tenant Party, any delay resulting from the


     installation by Tenant or any Tenant Party of any property or equipment


     of Tenant in or on the Premises prior to the Commencement Date, any delay


     resulting from any request by Tenant for any change or modification to


     the plans and specifications for the Building, any delay caused by any


     Additional Work requested by Tenant, and any delay due to interference by


     Tenant or any Tenant Party with Landlord's engineers, consultants,


     contractors or otherwise. As used in this Lease, a TENANT PARTY shall


     mean one or more of Tenant, its agents, employees, officers, partners or


     contractors.


 


 




 





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     3.   COMMENCEMENT DATE/ACCEPTANCE OF PREMISES.


 


          A.   COMMENCEMENT DATE. The COMMENCEMENT DATE shall be the date upon


which Landlord's architect reasonably determines that construction of the


Building shell has progressed to a point sufficient to allow Tenant to enter


the Premises and perform any finish work Tenant requires in the Premises (such


to be subject to Paragraph 6 below), provided that this date shall be adjusted


backward (I.E., to an earlier date) by one (1) day for each day that a Tenant


Delay exists. Subject to Tenant Delays and Force Majeure, Landlord agrees to


use reasonable efforts to cause the Commencement Date to occur by October 13,


1997. Tenant's entry into the Premises for purposes of commencing such finish


work shall constitute Tenant's acknowledgement that (i) it has inspected and


accepts the Building and the Project, (ii) the Premises is suitable for the


purpose for which it is leased, subject to completion by Tenant of any finish


work Tenant requires, (iii) the Building and the Project are in good and


satisfactory condition, and (iv) no representations as to the repair of the


Premises or the Project, nor promises to alter, remodel or improve the


Premises or the Project which have been made by Landlord remain unsatisfied.


Upon determination of the actual Commencement Date and Tenant's entry into the


Premises, Tenant agrees to execute an Acceptance of Premises Memorandum in the


form attached hereto and made a part hereof as EXHIBIT "E"; provided, however,


that Tenant's failure to execute the Acceptance of Premises Memorandum will


not delay the occurrence of the Commencement Date.


 


     4.   RENT.


 


          A.   BASE MONTHLY RENT. Tenant agrees to pay to Landlord rent for


the Premises, in advance, as follows (BASE MONTHLY RENT):


 


     -    Beginning on the Rent Commencement Date and continuing through the


          last day of the sixtieth (60th) complete calendar month after the


          month in which the Rent Commencement Date occurs, $20,170.58 per month


          ($242,046.96 on an annualized basis); and


 


     -    Beginning on the first day of the sixty-first (61st) calendar month


          after the month in which the Rent Commencement Date occurs, and


          continuing through the remainder of the Lease Term, $23,273.75 per


          month ($279,285 on an annualized basis).


 


          B.   ADDITIONAL RENT. Tenant agrees to reimburse Landlord for


Tenant's Proportionate Share (hereinafter defined) of (i) Real Property Taxes


(hereinafter defined), (ii) Landlord's actual cost of obtaining and


maintaining Landlord's Insurance (hereinafter defined), and (iii) the actual


cost of any maintenance performed by Landlord under Paragraph 12A(2) below or


which, in Landlord's reasonable discretion, is for the benefit of the Project


as a whole and not reasonably allocable to any specific tenant or tenants


(collectively, the ADJUSTMENTS). During each month of the term of this Lease,


on the same day that Base Monthly Rent is due hereunder, Tenant shall pay to


Landlord as additional Rent an amount equal to 1/12 of Tenant's Proportionate


Share of the estimated total annual cost of the Adjustments, as determined by


Landlord. Tenant authorizes Landlord to use such funds to pay such costs. The


initial monthly payments of Adjustments are based upon Landlord's good faith


estimates for the current Lease Year (hereinafter defined) and shall be


increased or decreased each Lease Year to reflect the projected actual cost of


all Adjustments. If Tenant's total payments are less than Tenant's


Proportionate Share of the actual costs of all such items, Tenant shall pay


the difference to Landlord within ten (10) days after demand. If the total


payments of Tenant are more than Tenant's Proportionate Share of the actual


costs of all such items, Landlord shall notify Tenant of such and retain such


excess and credit it against Tenant's next. monthly estimated payments of


Adjustments. The amount of the Base Monthly Rent and the estimated monthly


payments (based upon a complete calendar month) of Tenant's Proportionate


Share of the Adjustments for the Lease Year in which the date of this Lease


occurs are as follows:


 


 


 


   (1)  Base Monthly Rent                  $20,170.58


   (2)  Real Property Taxes                  $3,723.80


   (3)  Insurance                                   $310.32


   (4)  Maintenance                             $620.63


                                          ----------


   Initial Monthly Payment Total      $24,825.33


                                          ----------


                                          ----------


 


 




 





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     TENANT'S PROPORTIONATE SHARE, as used in this Lease, shall mean a


fraction, the numerator of which is the number of square feet of rentable area


contained in the Premises and the denominator of which is the entire number of


square feet of rentable area contained in the Building (as to costs which do


not materially vary based on the occupancy of the Building) or is the entire


rented area contained in the Building (as to costs which do materially vary


based on the occupancy of the Building). If the Project is part of a larger


development constructed by Landlord on the Land (the DEVELOPMENT) and the


Building and one or more other buildings on parts of the Development other


than the Project share the benefit of or may properly be allocated a portion


of any expense, Landlord shall reasonably allocate any such expense among the


Building and such other building(s) prior to applying Tenant's Proportionate


Share to such expense.


 


          C.   PAYMENT OF RENT. Base Monthly Rent and Adjustments shall be due


and payable, in advance, beginning on that date which is ninety (90) days


after the Commencement Date (the RENT COMMENCEMENT DATE); provided that one


(1) full installment of Base Monthly Rent and Adjustments totalling $24,825.33


is due and payable on the date of this Lease, such to be applied to the first


installment of Base Monthly Rent and Adjustments due on the Rent Commencement


Date and thereafter applied to Base Monthly Rent and Adjustments until fully


applied. Any installment of Base Monthly Rent or Adjustments due for any


fractional calendar month shall be prorated based upon the actual number of


days in that month. If the Rent Commencement Date occurs on the first day of a


calendar month, then the month in which the Rent Commencement Date occurs


shall be the first complete calendar month after the occurrence of the Rent


Commencement Date for purposes of determining the date upon which Base Monthly


Rent adjusts. As used in this Lease, RENT shall mean the Base Monthly Rent and


all other amounts provided for in this Lease to be paid by Tenant to Landlord,


all of which shall constitute rental in consideration for this Lease and the


leasing of the Premises. All Rent (hereinafter defined) 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 in Paragraph 32 hereof


or to such other person or at such other address as Landlord may from time to


time designate in writing. Rent shall be paid without notice, demand,


abatement, deduction or offset (unless expressly provided for elsewhere in


this Lease) and shall be a covenant of Tenant independent of any obligation of


Landlord under this Lease. Tenant's obligation to pay any installment of Rent


shall not be deemed satisfied until such installment of Rent has actually been


received by Landlord.


 


          D.   AUDIT OF ADJUSTMENTS. Within ninety (90) days after the end of


each Lease Year, Landlord will provide to Tenant a statement of Adjustments


paid by Landlord for the just ended Lease Year. Tenant may at any time within


thirty (30) days after its receipt of Landlord's statement, but in any event


upon ten (10) days advance written notice to Landlord, audit, inspect and copy


the books and records of Landlord with respect to the Adjustments and make any


written objections Tenant may have to Landlord's determination of same.


Landlord shall cooperate with Tenant in providing Tenant reasonable access to


its books and records during normal business hours for this purpose. If the


results of any inspection or audit show an overcharge to Tenant of more than


five percent (5%) of the actual amount of Adjustments owed by Tenant, then


Landlord shall pay the reasonable costs of such audit (assuming the audit is


performed by a third party unaffiliated with Tenant and not including the


travel, meal or incidental expenses of the auditor), and Landlord shall credit


or refund to Tenant any overcharge of such items as discovered by the


inspection or audit within thirty (30) days of completion of such inspection


or audit. In the event such audit discloses an overcharge to Tenant of up to


but no more than five percent, there will be no credit or refund to Tenant,


and Tenant will pay the cost of the audit. In the event such audit discloses


an undercharge of Adjustments billed to Tenant, Tenant shall pay Landlord the


amount of such undercharge within thirty (30) days of the completion of such


audit and the cost of the audit. In the event Landlord disputes the amount of


Adjustments or Tenant's Proportionate Share thereof, as determined by Tenant's


audit, Landlord shall have a period of thirty (30) days from its receipt of


Tenant's audit results to have its own independent auditor inspect Tenant's


audit and the books and records pertaining to the Adjustments and deliver the


results thereof to Tenant. Landlord's failure to conduct such an audit and


deliver the results thereof to Tenant within such thirty (30) day period shall


constitute acceptance by Landlord of the results of Tenant's audit.  If


Landlord delivers Tenant Landlord's audit within such thirty (30) day period,


Tenant shall have thirty (30) days to review and object to the results


thereof. The results of Landlord's audit shall be conclusive and binding upon


Tenant unless Tenant objects in writing, such objections to be specific, to


such results within such thirty (30) day period.


 


          E.   LEASE YEAR. A LEASE YEAR shall mean a twelve (12) month period


commencing each January 1st and ending on the following December 31st;


provided, however, Landlord may from time to time (but no more often than once


every eighteen (18) months) change the twelve (12) month period designated as


a Lease Year by notice thereof to Tenant, in which event the obligations of


Tenant measured by Lease Years shall be prorated as appropriate during any


 


 




 





11











 






Lease Year of less than twelve (12) months based on the number of days in any


such Lease Year divided by 365; and provided, further, the first and last


Lease Years and all obligations of Tenant measured by such Lease Years, shall


be prorated as appropriate based upon the number of days in the applicable


Lease Year during the term of this Lease divided by 365.


 


          F.   INTEREST ON DELINQUENT RENT. Any Rent due from Tenant to


Landlord which is not paid when due shall bear interest from and after the


expiration of any applicable cure or grace period until paid at the lower of


(i) eighteen percent (18%) per annum or (ii) the highest rate from time to


time allowed by applicable law, from the date such payment is due until paid,


but the payment of such interest shall not excuse or cure the default. This


provision for default interest shall be in addition to all of Landlord's other


rights and remedies hereunder or at law or equity and shall not be construed


as liquidated damages or as limiting Landlord's remedies in any manner. Any


assessed default interest will be additional Rent owed hereunder.


 


     5.   COMPLIANCE WITH LAWS.  Tenant shall comply with all Applicable Laws


in connection with Tenant's use and occupancy of the Premises and Tenant's


performance of its obligations under this Lease, all at Tenant's expense.  As


used herein the term APPLICABLE LAWS means and includes any and all federal,


state and local laws, ordinances, orders, deed restrictions (specifically


including the Declaration of Protective Covenants dated May 18, 1995 and


recorded in Volume 95098, Page 924, ET SEQ. of the Official Public Records of


Real Property in Dallas County, Texas (as amended, modified, supplemented,


restated and assigned from time to time, the DECLARATION)), easements of


record, rules, and regulations of all governmental bodies (state, federal, and


municipal) applicable to or having jurisdiction over the use, occupancy,


operation and maintenance of the Project, including without limitation, the


Americans With Disabilities Act of 1990, as amended from time to time (ADA),


and Environmental Laws (hereinafter defined), as such may be amended or


modified from time to time. Notwithstanding the above, if any improvement,


modification or alteration of the Premises or the Project, or any portion


thereof, is required to bring same into compliance with the ADA, or any other


Applicable Laws, and (i) Tenant is not otherwise expressly responsible for


such improvement, modification or alteration under this Lease, (ii) the


necessity for such improvement, modification or alteration was not caused, in


whole or in part, by Tenant or any Tenant Party, and (iii) the necessity for


such improvement, modification or alteration was not due to the specific use


of the Premises by Tenant, then Landlord will undertake such improvement,


modification or alteration and the cost thereof will be charged back to (A)


Tenant to the extent that the improvement, modification or alteration affects


only or is totally within the Premises, and (B) all tenants of the Project,


including Tenant, to the extent that the improvement, modification or


alteration affects the Project as a whole and not any one tenant's particular


leased premises, with each tenant paying its Proportionate Share thereof. Such


costs will be charged over the useful life of the subject improvement,


modification or alteration, as determined under generally accepted accounting


principles, with the assumption that the only portion of such expense


chargeable for any one Lease Year will be a fraction of such expense, the


numerator of which is one and the denominator of which is the estimated useful


life of the improvement, modification or alteration.


 


     6.   ALTERATIONS AND IMPROVEMENTS BY TENANT.


 


          A.   CONDITIONS PRECEDENT TO ALL ALTERATIONS AND IMPROVEMENTS.


Except as expressly permitted by this Paragraph 6, or unless otherwise agreed


to in writing between Landlord and Tenant, Tenant may not make or permit any


alterations, improvements, or additions in or to the Premises or the Project


without Landlord's prior written consent. All alterations and improvements


desired by Tenant are subject to the following conditions/requirements:


 


               (1)  Subject to subparagraph 6B below, all alterations,


     improvements and additions will be at the sole cost and expense of Tenant;


 


               (2)  All alterations, improvements and additions in and to the


     Premises requested by Tenant must be made in accordance with plans and


     specifications first approved in writing by Landlord;


 


               (3)  Tenant's contractors and subcontractors are subject to


     Landlord's prior approval. In addition, each of Tenant's contractor(s) and


     subcontractor(s) must deliver evidence satisfactory to Landlord that the


     insurance specified on EXHIBIT "F" (attached hereto and incorporated herein


     by reference) is in force prior to commencing work;


 


 




 





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               (4)  All alterations, improvements and additions made by Tenant


     must comply with all Applicable Laws including, specifically, the ADA,


     and applicable building permits and certificates of occupancy. Landlord's


     approval of Tenant's plans and specifications for the alterations or


     improvements will not act as a confirmation or agreement by Landlord that


     the improvements and alterations comply with Applicable Laws;


 


               (5)  Tenant must deliver to Landlord evidence that Tenant has


     obtained all necessary governmental permits and approvals for the


     improvements, alterations and additions prior to starting any work;


 


               (6)  All alterations, improvements and additions must be done


     in a good and workmanlike manner so as not to damage or alter the primary


     structure or structural qualities or the utility or other systems of the


     Premises or the Building and is subject to approval by Landlord during


     and after construction, in its sole discretion. Tenant agrees to meet


     with Landlord's project manager, who for purposes of this Lease shall be


     Rob Ahmuty until further notice, as deemed reasonably necessary by such


     project manager during any construction by Tenant pursuant to this


     Paragraph 6 so that Landlord can evaluate the progress of such work and


     its impact on the remainder of the Project;


 


               (7)  Lien releases from each of Tenant's contractor(s) and


     subcontractor(s) satisfactory to Landlord must be submitted to Landlord


     within thirty (30) days after completion of the work performed by the


     contractor(s) or subcontractor(s); and


 


               (8)  Tenant shall be solely responsible for the safety and


     security of all equipment and property installed or placed in, on or


     about the Premises by Tenant or any Tenant Party.


 


          B.   FINISH ALLOWANCE. Notwithstanding subparagraph 6A(1) above,


Landlord grants Tenant an allowance in the amount of $223,425 (the FINISH


ALLOWANCE) to be utilized by Tenant in performing alterations and improvements


to the Premises to "finish-out" the Premises. Any improvements or alterations


performed by Tenant and paid for out of the Finish Allowance, including


without limitation, any work related thereto such as design, engineering, and


construction management services, is referred to herein as the TENANT FINISH


WORK. Landlord will pay such invoices up to, but not in excess of, the Finish


Allowance conditioned upon:


 


               (1)  Tenant shall submit all invoices received in connection


     with the Tenant Finish Work to Landlord for payment not less than fifteen


     (15) days prior to the due date of such invoice. Landlord, at its option,


     will not be obligated to pay any invoice not received by such date; and


 


               (2)  Landlord having reasonably satisfied itself that all


     conditions/requirements set forth in subparagraph 6A above have been


     satisfied; and


 


               (3)  Landlord having inspected and approved of the work for


     which payment is sought, such approval not to be unreasonably withheld,


     conditioned or delayed; and


 


               (4)  The Finish Allowance may not be used or allocated for any


     materials or property, or for the labor incurred in constructing or


     installing same, that would be characterized as Tenant's Property under


     subparagraph 6C below, it being the intention of both parties hereto


     that, without limiting subparagraph 6D below, all improvements and


     alterations paid for with the Finish Allowance will in all events and


     circumstances be Landlord's property.


 


     Any decision to pay or not pay any invoice will be made within ten (10)


business days after receiving the subject invoice, provided, however, that


Landlord may further condition such approval upon the satisfaction of any of


the conditions/requirements of Paragraph 6A or this Paragraph 6B that may not


have been satisfied within such ten (10) day period (I.E., lien waivers).


Failure to disapprove of an invoice within such ten (10) day period shall


constitute approval thereof. All invoices will be paid within fifteen (15)


days after Landlord has approved the invoice and is satisfied that all


conditions and requirements set forth in Paragraph 6A and this Paragraph 6B


have been satisfied. All cost and expenses incurred by Tenant in making any


alterations or improvements to the Premises or the Project in excess of the


Finish Allowance will be Tenant's sole cost and expense. If the Finish


Allowance has not been fully utilized within one (1) year


 


 




 





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after the Commencement Date, and provided that Tenant is not then in default


under this Lease, the remaining balance will be applied to Base Monthly Rent


and Adjustments until the Finish Allowance is exhausted. At the end of such


year, Landlord will provide Tenant with a written accounting of the balance,


if any, of the Finish Allowance.


 


          C.   TENANT'S PROPERTY. Tenant, at its own cost and expense, may


erect such shelves, racks, bins and trade fixtures (collectively, TENANT'S


PROPERTY) within the Premises as it desires and without Landlord's prior


consent provided that (a) such items do not alter the basic character of the


Premises or the Building; (b) such items do not overload or damage the


Premises or the Building or the utility or other systems serving same; (c)


such items may be removed without material injury to the Premises and the


Building; and (d) the construction, erection or installation thereof complies


with all Applicable Laws, applicable building permits and certificates of


occupancy; and (e) provided that Tenant's installation of Tenant's Property


prior to the Commencement Date will be subject to Paragraph 5B above. All of


Tenant's Property shall remain the property of Tenant and shall be removed on


or before the earlier to occur of the date of termination of this Lease or


Tenant's vacating of the Premises. Tenant shall promptly repair any damage to


the Project or the Premises caused by the removal of any of Tenant's Property.


Any of Tenant's Property not so removed and any other property of Tenant not


removed prior to the termination of this Lease or Tenant's vacating of the


Premises shall thereupon be conclusively presumed to have been abandoned by


Tenant, and Landlord may, at its option, take over possession of any and all


of the foregoing and either (i) declare the same to be the property of


Landlord by written notice to Tenant at the address provided herein or (ii) at


the sole cost and expense of Tenant, remove, store, and/or dispose of the same


or any part thereof, all at Tenant's cost, in any manner that Landlord shall


choose without incurring liability to Tenant or any other person.


 


          D.   LANDLORD'S PROPERTY/RESTORATION OF PREMISES BY TENANT. Except


as provided in Paragraph 6C above, all alterations, additions, and


improvements made to, or fixtures or other improvements placed in or on, the


Premises, whether temporary or permanent in character are a part of the


Premises and are the property of Landlord when they are made to or placed in


or on the Premises, without compensation to Tenant; provided that, at


Landlord's option, upon the termination of this Lease, Landlord may require


Tenant, at Tenant's cost, to remove any improvements, other than the Tenant


Finish Work, made to the Premises or Project by Tenant and restore the


Premises to substantially the condition it was in upon the completion of the


Tenant Finish Work, reasonable wear and tear excepted; and further provided


that, if Tenant first properly requested and Landlord gave its consent to such


improvements, Landlord must make such election at the time of giving such


consent.


 


          E.   INDEMNITY. Tenant hereby indemnifies and holds Landlord


harmless from any claims, demands, actions, losses, and damages arising from


activities of Tenant or any Tenant Party, or any of their invitees, in


connection with any alterations, improvements or additions made or contracted


for by Tenant.


 


     7.   USE. Subject to Applicable Laws, the Premises shall be used only for


the purpose of general office, manufacturing, receiving, storing, shipping and


selling (other than retail) products, materials and merchandise made and/or


distributed by Tenant, and for such other lawful purposes as may be incidental


thereto. Provided that such use is permitted by Applicable Laws, any


manufacturing performed by Tenant at the Premises shall be limited to the


manufacture and/or assembly of pharmaceutical, diet supplement and/or other


human health related products. Outside storage, including without limitation,


storage of trucks and other vehicles, is prohibited without Landlord's prior


written consent. Tenant shall not permit any objectionable or unpleasant


odors, smoke, dust, gas, noise or vibrations to emanate from the Premises, nor


take any other action that would constitute a health or environmental hazard


or nuisance or that would disturb, interfere with, or endanger Landlord or the


occupant of any other land or buildings in the vicinity of the Project or any


other tenant of the Project. Tenant's use of the Premises must in any event


comply with all Applicable Laws including, without limitation, the Declaration


and Applicable Laws.  TENANT SHALL MAKE ITS OWN DETERMINATIONS AS TO THE


SUITABILITY OF THE PREMISES FOR ITS INTENDED USE. BY ENTERING INTO THIS LEASE,


TENANT REPRESENTS AND WARRANTS THAT IT HAS INVESTIGATED AND SATISFIED ITSELF


AS TO WHETHER OR NOT APPLICABLE LAWS PERMIT ITS INTENDED USE OF THE PREMISES


AND THAT TENANT IS RELYING SOLELY UPON SUCH INVESTIGATIONS, AND NOT UPON AND


REPRESENTATIONS OF LANDLORD, IN ENTERING INTO THIS LEASE. If Tenant's


particular use of the Premises requires that additional improvements or


modifications be made to the Premises or the Project by Landlord so that the


Premises and the Project complies in all respects with Applicable Laws, Tenant


shall be solely responsible for such costs.


 


 




 





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     8.   HAZARDOUS MATERIALS.


 


          A.   HAZARDOUS MATERIALS DEFINED. As used in this Lease, the term


HAZARDOUS MATERIALS means and includes (i) any hazardous, toxic or dangerous


waste, substance or material, as defined for purposes of the Comprehensive


Environmental Response Compensation and Liability Act of 1980, as amended, the


Resource Conservation and Recovery Act of 1976, as amended, or any other


Applicable Laws applicable to the Premises and establishing liability,


standards, or regulating or requiring action as to the industrial hygiene,


use, generation, treatment, discharge, spillage, storage, uncontrolled loss,


seepage, filtration, disposal, removal, or existence of a hazardous, toxic or


dangerous waste, substance or material (collectively, ENVIRONMENTAL LAWS) and


(ii) any waste, substance or material which, even if not so regulated, is


known to pose a hazard to the health and safety of persons or property,


specifically including, without limitation, oil and petroleum products and


by-products and asbestos.


 


          B.   PROHIBITION OF HAZARDOUS MATERIALS/TENANT'S LIABILITY. Except


for Hazardous Materials that are used only as an incidental part of Tenant's


day-to-day business operations and not as an integral part thereof (E.G., fuel


for forklifts and similar equipment, office supplies, cleaning solvents),


Tenant may not use, treat, handle, store, generate, dispose of or release or


cause or permit any Tenant Party, or any of their invitees, to use, handle,


store, generate, treat, dispose of or release, in, on, under or from the


Premises or the Project any Hazardous Materials. Without limiting any of the


above:


 


                    (1)  Tenant covenants and agrees that it shall at its own


     expense procure, maintain in effect and comply with all conditions of any


     and all permits, licenses and other governmental and regulatory approvals


     required for Tenant's use of the Premises and any operations or conduct


     of Tenant involving the use, handling, generation, treatment, storage,


     disposal, management or release of any Hazardous Materials. Tenant shall


     cause any and all Hazardous Materials that are to be removed from the


     Premises to be transported solely by duly licensed haulers and to duly


     licensed facilities for final disposal of such Hazardous Materials.


     Tenant shall in all respects, handle, treat, deal with and manage any


     and all Hazardous Materials in, on, under or about the Premises as a


     result of the actions, conduct or any part of the business operations of


     Tenant or any Tenant Party, or any of their invitees, in complete


     conformity with all Applicable Laws and prudent industry practices


     regarding the management of such Hazardous Materials. All reporting


     obligations relating to Hazardous Materials in, on, under or about the


     Premises as a result of the actions, conduct or any part of the business


     operations of Tenant or any Tenant Party, or any of their invitees, are


     solely the responsibility of Tenant. Upon expiration or earlier


     termination of this Lease, Tenant covenants and agrees to cause all


     Hazardous Materials existing in, on, or under the Premises to be removed


     from the Premises and transported for use, storage or disposal in


     accordance and in compliance with all Applicable Laws. In addition, and


     unless Landlord instructs Tenant otherwise, at the expiration of the term


     of this Lease, Tenant shall remove all tanks or fixtures which were


     placed on the Premises by or on behalf of Tenant or any Tenant Party


     during the term of this Lease and which contain, have contained or are


     contaminated with, Hazardous Materials;


 


                    (2)  Tenant shall immediately notify Landlord in writing


     of (i) any Tenant Release (hereinafter defined), (ii) any enforcement,


     clean-up, removal or other governmental or regulatory action instituted,


     completed or threatened against Tenant, the Premises, the Project, or any


     part thereof pursuant to any Applicable Laws; (iii) any claim made or


     threatened by any person against Tenant, Landlord, the Premises, or the


     Project relating to damage, contribution, cost recovery, compensation,


     loss or injury resulting from or claimed to result from any Hazardous


     Materials, and (iv) any reports made to any environmental agency arising


     out of or in connection with any Hazardous Materials in, on or about or


     under the Premises or with respect to any Hazardous Materials removed


     from the Premises, including, any complaints, notices, warnings, reports


     or asserted violations in connection therewith. Tenant shall also provide


     to Landlord, as promptly, as possible, and in any event within five (5)


     business days after Tenant first received or sent the same, with copies


     of all claims, reports, complaints, notices, warnings or asserted


     violations relating in any way to the Premises or Tenant's use thereof.


     Tenant shall not take any remedial action in response to the presence of


     any Hazardous Materials in/on, about or under the Premises, nor enter


     into any settlement agreement, consent, decree or other compromise in


     respect to any claims relating to or in any way connected with the


     Premises without first notifying Landlord of Tenant's intention to do so


     and affording Landlord ample opportunity to appear, intervene or


     otherwise appropriately assert and protect Landlord's interest with


     respect thereto;


 


 




 





15











 






 


                    (3)  Tenant shall indemnify, at Landlord's option, defend


     (with counsel reasonably acceptable to Landlord), protect and hold


     Landlord and each of Landlord's officers, directors, partners, employees,


     agents, attorneys, successors and assigns free and harmless from and


     against any and all claims, liabilities, damages, costs, penalties,


     forfeitures, losses or expenses (including attorneys' fees) for death or


     injury to any person or damage to any property whatsoever (including


     water tables and atmosphere) arising or resulting in whole or in part,


     directly or indirectly, from the presence, release or discharge of


     Hazardous Materials in, on, under, upon or from the Premises to the


     extent that such presence, release or discharge was caused or permitted


     by Tenant or any Tenant Party, or any of their invitees, or from the


     transportation or disposal of Hazardous Materials to or from the Premises


     or the Project by Tenant or any Tenant Party, or any of their invitees


     (herein, a TENANT RELEASE).  Tenant's obligations hereunder shall


     include, without limitation, and whether foreseeable or unforeseeable,


     all costs of any required or necessary repairs, clean-up or


     detoxification or decontamination of the Premises or the Project and any


     other land contaminated or adversely effected by the Tenant Release and


     the presence and implementation of any closure, remedial action or other


     required plans in connection therewith, and shall survive the expiration


     of or early termination of this Lease;


 


                    (4)  Landlord may at any time commission an environmental


     audit of the Premises or the Project. If it is determined that a Tenant


     Release has in fact occurred, then, without limitation of any other remedy


     Landlord may have hereunder, Tenant shall reimburse the actual costs of the


     testing to Landlord on demand as additional Rent.


 


                    (5)  Tenant shall execute affidavits, representations, and


     the like from time to time at Landlord's request concerning Tenant's


     actual knowledge and belief regarding the presence of Hazardous Materials


     in, on or under the Premises.


 


          C.   ENVIRONMENTAL STUDIES. Landlord represents that, except as set


forth in any written studies or reports provided to Tenant, Landlord has no


actual knowledge of any adverse environmental conditions affecting the Land;


provided. however, that Landlord makes no representations or warranties


regarding the truth or accuracy of the environmental reports so provided and


Tenant shall rely upon such reports, if at all, at Tenant's sole risk.


 


          D.   SURVIVAL.  The respective covenants, rights and obligations of


Landlord and Tenant under this Paragraph 8 shall survive the expiration or


earlier termination of this Lease.


 


     9.   SIGNAGE. Any signage Tenant desires for the Premises shall be


subject to Landlord's written approval and shall be submitted to Landlord for


approval prior to the Commencement Date of this Lease. Tenant shall repair,


paint and/or replace the building facia surface to which its signs are


attached upon vacation of the Premises, or the removal or alteration of its


signage. Tenant shall not (i) make any changes to the exterior of the


Building, (ii) install any exterior lights, decorations, balloons, flags,


pennants, banners or painting, or (iii) erect or install any signs, windows or


door lettering, placards, decorations or advertising media of any type which


can be viewed from the exterior of the Building, without Landlord's prior


written consent. All signs, decorations, advertising media, blinds, draperies


and other window treatment or bars or other security installations visible


from outside the Building shall conform in all respects to the criteria


established by Landlord and Applicable Laws.


 


     10.  TAXES.


 


          A.   REAL PROPERTY TAXES. Subject to reimbursement by Tenant as


provided in Paragraph 4B above, Landlord shall pay all taxes, assessments and


governmental charges of any kind and nature and all assessments due to deed


restrictions and/or owner or community associations (collectively referred to


herein as REAL PROPERTY TAXES), that accrue against the Project, or any part


thereof. If at any time during the term of this Lease, there shall be levied,


assessed or unposed on Landlord a capital levy or other tax directly on the


Rent received under this Lease and/or a franchise tax, gross receipts tax (but


not a typical or customary state or federal income tax), assessment, levy or


charge measured by or based, in whole or in part, upon Rent paid under this


Lease, then all such taxes, assessments, levies or charges, or the part


thereof so measured or based, shall be deemed to be included within the term


REAL PROPERTY TAXES for the purposes hereof. Landlord shall have the right to


employ a tax consulting firm to attempt to assure a fair tax burden on the


Project and the Premises within the applicable taxing jurisdiction. Tenant


agrees to pay its Proportionate


 


 




 





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Share of the cost of such consultant as additional Rent.


 


          B.   PERSONAL PROPERTY TAXES. Tenant shall be liable for all taxes


levied or assessed against Tenant's Property and any other personal property


or fixtures placed or installed in the Premises or the Project by or on behalf


of Tenant. If any such taxes are levied or assessed against Landlord or


Landlord's property and (i) Landlord pays the same, or (ii) the assessed value


of Landlord's property is increased by inclusion of such personal property and


fixtures and Landlord pays the increased taxes, then, Tenant shall pay to


Landlord such taxes within ten (10) days after demand. If Tenant later


contests such taxes and is successful in abating or reducing all or a portion


of same, and provided that Tenant has, in fact, reimbursed Landlord for the


taxes paid by Landlord, Landlord will return to Tenant the amount by which


such taxes were reduced or abated, up to the amount Tenant reimbursed Landlord.


 


     11.  UTILITIES. Landlord agrees to provide water, sewer and gas utility


lines to the outside of the exterior walls of the Building and electricity


service to be provided to a transformer located at the Project. Tenant shall


pay for all utilities servicing the Premises, including, without limitation


water, gas, heat, light, power, telephone, sewer, sprinkler charges and other


utilities and services used on or at the Premises, together with any taxes,


penalties, surcharges or the like pertaining to the Tenant's use of the


Premises, and any maintenance charges for utilities. Tenant shall pay its


Proportionate Share of all charges for jointly metered and common area


utilities as additional Rent. Landlord shall not be liable for any


interruption or failure of utility service at the Premises and all Rent owed


pursuant to the terms of this Lease shall continue to be due notwithstanding


such interruption.


 


     12.  REPAIRS AND MAINTENANCE.


 


          A.   LANDLORD'S OBLIGATION TO REPAIR AND MAINTAIN.


 


                    (1) Landlord, at its own cost and expense, shall maintain


     the structural soundness of the Building's roof, foundation and exterior


     walls in good repair, except for reasonable wear and tear and except for


     damage caused by any act or omission of Tenant or any Tenant Party or


     their invitees. Landlord may elect to repair any damage caused by Tenant


     or any Tenant Party or their invitees, and if Landlord so elects, Tenant


     shall pay Landlord the cost or anticipated cost of such repair on demand,


     subject to Paragraph 13C hereof. The term WALLS as used herein shall not


     include windows, glass or plate glass, doors, special store fronts or


     office entries. Tenant shall promptly give Landlord written notice of any


     defect or need for repairs, after which Landlord shall have reasonable


     opportunity to repair same or cure such defect.


 


                    (2)  Landlord shall maintain or cause to be maintained all


     exterior painting, parking areas (inclusive of striping) and landscaped


     areas of the Project and utility lines outside the exterior walls of the


     Building in good condition and repair, other than those areas that are


     expressly Tenant's obligations under Paragraph 12B below. Tenant shall


     reimburse Landlord for Tenant's Proportionate Share of any costs incurred


     by Landlord under this paragraph, net of the Adjustments being escrowed


     monthly for maintenance under Paragraph 4B above.  Notwithstanding any of


     the above, if it is determined that any specific repair or maintenance


     otherwise required to be performed by Landlord under this subparagraph is


     caused solely by Tenant, any Tenant Party or any of their invitees,


     Tenant shall be solely responsible for the cost of such repair or


     maintenance and such shall be paid to Landlord outside of and in addition


     to the Adjustments. All such amounts payable under this subparagraph


     shall be owed to Landlord as additional Rent.


 


                    (3) In the event the Building or the Premises is damaged


     or becomes out of repair and such is the obligation of Landlord to repair


     or maintain hereunder, Tenant shall provided prompt written notice to


     Landlord thereof stating the nature of the needed repairs. Landlord will


     then have thirty (30) days to make any necessary repairs or such longer


     time as is reasonably necessary with the exercise of due diligence if


     such repairs cannot reasonably be completed in thirty (30) days.


     Additionally, in the event of an emergency, defined for purposes of this


     subparagraph as a condition that if allowed to continue to exist without


     repair would result in damage, injury or death to property or person, and


     assuming that it is not reasonably feasible for Tenant to give the


     required notice to Landlord, then Tenant may make such repairs as are


     reasonably necessary to prevent further immediate damage or injury to


     person or property; provided that Tenant gives Landlord prompt written


     notice of the nature of the emergency and the action taken by Tenant. In


     such event, Landlord shall reimburse


 


 




 





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Tenant within thirty (30) days of invoice for the actual costs of such


repairs made by Tenant.


 


          B.   TENANT'S OBLIGATION TO REPAIR AND MAINTAIN. Except only for


maintenance, repair and replacement performed by Landlord pursuant to


Paragraph 12A hereof, Tenant, at its own cost and expense, shall maintain in


good condition and promptly make all necessary repairs and replacements to


(i) all parts of the Premises, (ii) all utility lines and appurtenances from


the exterior walls of the Building to and within the Premises, and (iii) any


and all overhead doors, loading docks, loading dock levelers and loading


dock equipment.  Additionally, Tenant shall maintain the walkways, parking


areas and facilities, driveways and alleys located within the Adjacent Area,


as illustrated on EXHIBIT "C" attached hereto, in a reasonably clean and


sanitary condition. Tenant, at its own cost and expense, shall enter into a


regularly scheduled preventive maintenance/service contract with a


maintenance contractor approved by Landlord for servicing all hot water,


heating and air conditioning systems and equipment within the Premises; which


service contract must include all services suggested by the equipment


manufacturer in its operations/maintenance manual and must become effective


within thirty (30) days of the date Tenant takes possession of the Premises.


 


     Landlord reserves the right to perform any of Tenant's obligations set


forth under this paragraph including utility line maintenance and any other


items that are otherwise Tenant's obligations under this paragraph to the


extent that Tenant fails to perform its obligations thereunder within the


time frames set forth in Paragraph 18F. In such event, Landlord shall be


entitled to an administrative fee of ten percent (10%) of the costs and


expense of all of the foregoing, and Tenant shall be liable for the cost and


expense of such repair, replacement, maintenance and other such items, as


well as the administrative fee.


 


     13.  INSURANCE.


 


          A.   LANDLORD'S INSURANCE. Landlord shall maintain insurance


covering the Building (except that Landlord shall not be required to insure


any part of the partitions, fixtures, additions and other improvements that


may have been constructed, erected or installed in or about the Premises or


for the benefit of, or by or for Tenant, including, without limitation, the


Tenant Finish Work) in an amount not less than one hundred percent (100%) of


the replacement cost thereof insuring against the perils of Fire, Lightning,


Extended Coverage, Vandalism and Malicious Mischief (collectively, LANDLORD'S


INSURANCE).


 


          B.   TENANT'S INSURANCE. Tenant, at its own expense, shall maintain


during the term of this Lease a policy or policies of worker's compensation


(or its equivalent provided such is approved by Landlord, such not to be


unreasonably withheld) and commercial general liability insurance, including


personal injury and property damage, with contractual liability endorsement,


in the amount of Five Hundred Thousand Dollars ($500,000.00) for property


damages and One Million Dollars ($1,000,000.00) per occurrence for personal


injuries or deaths of persons occurring in or about the Premises and the


Project; provided, such limits may be adjusted upward in Landlord's


reasonable discretion based upon inflation or upon the type of business


conducted by Tenant in the Premises. Said policies shall (i) name Landlord as


an additional insured and insure Landlord's contingent liability under this


Lease (except for the worker's compensation policy, which instead shall


include waiver of subrogation endorsement in favor of Landlord), (ii) be


issued on an occurrence (not claims made) basis, (iii) be issued by an


insurance company which is acceptable to Landlord, and (iv) provide that said


insurance shall not be cancelled unless thirty (30) days prior written notice


shall have been given to Landlord. In addition to the above, Tenant shall


maintain insurance insuring the interest of Tenant and covering all of


Tenant's property and all partitions, fixtures, additions and other


improvements that may have been constructed, erected or installed in or about


the Premises or for the benefit of, or by or for Tenant, inclusive of the


Tenant Finish Work, and covering all contents of the Premises, in an amount


not less than one hundred percent (100%) of the replacement cost thereof


insuring against the perils of Fire, Lightning, Extended Coverage, Vandalism


and Malicious Mischief. Said policy or policies or certificates thereof shall


be delivered to Landlord by Tenant upon commencement of the term of the Lease


and at least thirty (30) days prior to the effective date of each renewal of


said insurance.


 


     Tenant will not permit the Premises to be used for any purpose or in any


manner that would (i) void the insurance thereon, (ii) increase the insurance


risk, or (iii) cause the disallowance of any sprinkler credits, including


without limitation, use of the Premises for the receipt, storage or handling


of any product, material or merchandise that is explosive or highly


inflammable. If any increase in the cost of any insurance on the Premises or


the Building is caused by Tenant's use of the Premises, or because Tenant


vacates the Premises, then Tenant shall pay the amount of such increase to Landlord upon demand.


 




 





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          C.   WAIVER OF SUBROGATION. NOTWITHSTANDING ANY OTHER PROVISION OF


THIS LEASE, LANDLORD AND TENANT HEREBY WAIVE ANY RIGHTS EACH MAY HAVE AGAINST


THE OTHER ON ACCOUNT OF ANY LOSS OR DAMAGE OCCASIONED TO LANDLORD OR TENANT,


AS THE CASE MAY BE (WHETHER OR NOT SUCH LOSS OR DAMAGE IS CAUSED BY THE FAULT


OR SOLE OR CONCURRENT NEGLIGENCE OF, WITH RESPECT TO LOSS OR DAMAGE TO THE


PROPERTY OF TENANT, LANDLORD OR ANY LANDLORD PARTY, OR, WITH RESPECT TO ANY


LOSS OF DAMAGE TO ANY PROPERTY OF LANDLORD, OF TENANT, ANY TENANT PARTY OR


ANY OF THEIR INVITEES), TO THEIR RESPECTIVE PROPERTY, THE PREMISES, ITS


CONTENTS OR TO ANY OTHER PORTION OF THE BUILDING OR THE PROJECT ARISING FROM


ANY RISK THAT WOULD BE COVERED BY ANY INSURANCE REQUIRED TO BE CARRIED UNDER


THIS LEASE (WHETHER OR SUCH INSURANCE IS ACTUALLY CARRIED OR MAINTAINED), OR


OTHERWISE CARRIED BY THE WAIVING PARTY (BUT, AS TO ANY SUCH INSURANCE


OTHERWISE CARRIED, ONLY TO THE EXTENT OF SUCH INSURANCE PROCEEDS ACTUALLY


RECOVERED).  THE PARTIES HERETO EACH, ON BEHALF OF THEIR RESPECTIVE INSURANCE


COMPANIES INSURING THE PROPERTY OF EITHER LANDLORD OR TENANT AGAINST ANY SUCH


LOSS, WAIVE ANY RIGHT OF SUBROGATION THAT IT MAY HAVE AGAINST LANDLORD OR


TENANT, AS THE CASE MAY BE. EACH PARTY TO THIS LEASE AGREES IMMEDIATELY TO


GIVE TO EACH SUCH INSURANCE COMPANY WRITTEN NOTIFICATION OF THE TERMS OF THE


MUTUAL WAIVERS CONTAINED IN THIS PARAGRAPH, AND TO HAVE SAID INSURANCE


POLICIES PROPERLY ENDORSED, IF NECESSARY, TO PREVENT THE INVALIDATION OF SAID


INSURANCE COVERAGES BY REASON OF SAID WAIVERS.


 


     14.  LIABILITY/INDEMNIFICATION.


 


          A.   LANDLORD'S LIABILITY AND INDEMNITY.


 


                    (1)  RELEASE FROM LIABILITY. Except as otherwise


     expressly provided in this Lease, neither Landlord nor any Landlord


     Party (hereinafter defined) will be liable to Tenant or any Tenant Party


     or any of their invitees for any death or injury to person or damage to


     property on or about the Premises or the Project caused by or arising


     out of, in whole or in part, (i) the negligence of, or act or omission


     of, Tenant or any Tenant Party or any of their invitees, (ii) the


     Premises or the Project becoming out of repair, (iii) the leakage of


     gas, oil, water or steam or by electricity emanating from any part of


     the Premises or the Project, or (iv) any other cause, unless and then


     only to the extent such death or injury to person or damage to property


     is due to the negligence or willful misconduct of Landlord or any


     Landlord Party. As used in this Paragraph 14, a LANDLORD PARTY shall


     mean one or more of Landlord's officers, partners, shareholders,


     employees, agents or contractors.


 


                    (2)  LANDLORD'S INDEMNITY OF TENANT. Except for any


     claims, rights of recovery and causes of action that Tenant has


     expressly herein waived or released or for which Landlord is not


     responsible hereunder, Landlord shall indemnify and hold Tenant and each


     Tenant Party harmless from and against any and all fines, suits, losses,


     costs, liabilities, claims, demands, actions and judgments of every kind


     and character, including reasonable court costs and attorneys fees,


     suffered by, recovered from, or asserted against Tenant or any Tenant


     Party for any injury or death to any person or damage to any property


     in, on, or about the Premises or the Project to the extent, and only to


     the extent, that such death or injury to person or damage to property is


     caused by the negligence or willful misconduct of Landlord or any


     Landlord Party. Upon the occurrence of an event which Landlord is


     required to indemnify Tenant against, and upon demand by Tenant,


     Landlord shall employ counsel reasonably acceptable to Tenant and defend


     Tenant against any liability for such event, all at Landlord's cost.


 


          B.   TENANT'S INDEMNITY. Except for any claims, rights of recovery


and causes of action that Landlord has expressly herein waived or released or


for which Tenant is not responsible hereunder, Tenant shall indemnify and


hold Landlord and each Landlord Party harmless from and against any and all


fines, suits, losses, costs, liabilities, claims, demands, actions and


judgments of every kind and character, including reasonable court costs and


attorneys fees, suffered by, recovered from, or asserted against Landlord or


any Landlord Party (i) arising by reason of any breach, violation or


 


 




 





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non-performance by Tenant of any term, provision, covenant, condition or


agreement to be performed or abided by Tenant hereunder, (ii) arising on


account of death, injury or damage to person or property in, on, or about the


Premises or the Project when such death, injury or damage is caused or arises


out of the negligence or willful misconduct of Tenant, any Tenant Party or


any of their invitees, and (iii) with respect to any action brought by a


Tenant Party or any invitee of Tenant or any Tenant Party, arising out of any


matter for which neither Landlord nor any Landlord Party is liable or


responsible hereunder. Upon the occurrence of an event which Tenant is


required to indemnify Landlord or a Landlord Party against, and upon demand


by Landlord, Tenant shall employ counsel reasonably acceptable to Landlord


and defend Landlord or such Landlord Party against any liability for such


event, all at Tenant's cost.


 


          C.   LIABILITY FOR ACTS OF TENANT AND LANDLORD PARTIES. The


individual(s) executing this Lease on behalf of Landlord or Tenant, as


applicable, are doing so in their representative capacity only, solely as a


representative of Landlord or Tenant, as applicable, and any liability to


Landlord or any Landlord Party or Tenant or any Tenant Party arising or


resulting hereunder based upon the actions of such individual(s) or any other


Landlord Party or Tenant Party, as applicable, shall merely be that of


Landlord (as to any Landlord Party) or Tenant (as to any Tenant Party) and


not such individual(s) or Landlord Party or Tenant Party.


 


          D.   SURVIVAL. The releases, indemnities and covenants of Landlord


and Tenant in this Paragraph 14 are in addition to, and not in limitation of,


any other indemnities made by Landlord or Tenant elsewhere in this Lease. The


provisions of this Section 14 shall survive the expiration or termination of


this Lease with respect to any claims or liability arising out of events


occurring prior to such expiration or termination.


 


     15.  CASUALTY.


 


          A.   TERMINATION OF LEASE. If the Premises should be damaged or


destroyed by fire or other peril, Tenant immediately shall give written


notice to Landlord. If: (i) the Building should be totally destroyed by any


peril not covered by the insurance to be provided by Landlord under Paragraph


13A above; or if (ii) the Premises should be so damaged thereby that, in


Landlord's estimation, rebuilding or repairs cannot be completed within one


hundred eighty (180) days after the date of such damage; or if (iii) the


Premises should be so damaged thereby that, in Landlord's estimation,


rebuilding or repairs of the portion thereof required to be insured by


Landlord can be substantially completed within one hundred eighty (180) days


after the date of such damage, but the insurance proceeds available to


Landlord will not, in Landlord's estimation, be sufficient to complete such


rebuilding or repairs (due to such insurance proceeds being applied to


mortgage debt or otherwise) and Landlord is either unable or unwilling to


advance sufficient funds to complete such rebuilding or repairs; then in any


of such events this Lease shall cease and terminate as if and to the extent


the effective date of such termination had been the date originally scheduled


for the expiration of the term of this Lease, and the Rent shall be abated


during the previously unexpired term of this Lease, effective upon the date


of the occurrence of such damage. Landlord's determinations under this


paragraph must be made in writing to Tenant within forty-five (45) days after


the subject casualty.


 


          B.   RESTORATION OF PREMISES BY LANDLORD. Subject to the provisions


of Section 15.A above, if the Premises should be damaged by any peril covered


by the insurance to be provided by Landlord under Paragraph 13A above, and in


Landlord's estimation, rebuilding or repairs of the portion thereof required


to be insured by Landlord can be substantially completed within one hundred


eighty (180) days after the date of such damage, this Lease shall not


terminate, and Landlord shall restore the Premises to substantially its


previous condition, except that Landlord shall not be required to rebuild,


repair or replace any part of the partitions, fixtures, additions and other


improvements that may have been constructed, erected or installed in, or


about the Premises or for the benefit of, or by or for Tenant. During any


period of rebuilding, repair and restoration, Landlord shall allow Tenant a


reasonable reduction in Rent based upon, among other things, the adverse


effect such casualty and restoration have on Tenant's business operations.


Subject to Force Majeure, if such repairs and rebuilding of the Premises have


not been substantially completed within one hundred eighty (180) days after


the date of such damage, Tenant, as Tenant's exclusive remedy, may give


Landlord notice of Tenant's intention to terminate the Lease effective as of


the date specified in such notice, which date shall be not less that thirty


(30) days after the notice. If the repairs and rebuilding have not been


substantially completed by the date specified in such notice, Tenant, as


Tenant's exclusive remedy, may immediately terminate this Lease by delivering


written notice of termination to Landlord, in which event the rights and


obligations hereunder shall cease and terminate as if and to the extent the


effective date of such termination had been the date originally scheduled for


the expiration of the term 


 




  





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of this Lease, and Rent shall be abated during the previously unexpired term of this


Lease, effective upon the date of the termination.


 



     16.  CONDEMNATION.




 


          A.   MATERIAL TAKING. If any portion of the Premises or the


Project is taken for any public or quasi-public use under governmental law,


ordinance or regulation, or by right of eminent domain, or by private


purchase in lieu thereof and the taking materially interferes with the use of


the Premises for the purpose for which they were leased to Tenant or causes


the Premises or the exclusive parking area designated for Tenant to be in


noncompliance with Applicable Laws, then within thirty (30) days after such


taking Landlord shall notify Tenant as to whether or not Landlord will


reconstitute the Premises or the Project such that the Premises or the


Project once again complies with Applicable Laws or replicate the Premises or


the Project to substantially the condition it was in prior to such taking, as


applicable, within one hundred eighty (180) days after such taking.  If


Landlord notifies Tenant that it will not replicate or reconstitute the


Premises or the Project, as applicable, or otherwise fails to complete the


reconstitution or replication within one hundred eighty (180) days after such


taking, then this Lease shall terminate and the Rent shall be abated during


the unexpired portion of this Lease, effective as of the date of such taking.


If Landlord notifies Tenant that it will replicate or reconstitute the


Premises or the Project, as applicable, then this Lease shall not terminate


but Rent accruing after the date of such taking shall be reduced to such


extent as may be fair and reasonable under all of the circumstances (which


may include a abatement of all Rent), effective as of the date of such taking


until the Premises or the Project as applicable, is fully reconstituted or


replicated, at which time Rent will again adjust to the amounts set forth in


Paragraph 4.


 


          B.   OTHER TAKING. With respect to any taking not covered by


Paragraph 16A above, this Lease shall not terminate, but the Rent payable


hereunder during the unexpired portion of this Lease shall be reduced to such


extent as may be fair and reasonable under all of the circumstances,


effective as of the date of such taking.


 


          C.   CONDEMNATION PROCEEDS. All compensation awarded in connection


with or as a result of any eminent domain or condemnation proceedings shall


be the property of Landlord, and Tenant hereby assigns any interest in any


such award to Landlord; provided, however, Landlord shall have no interest in


any award made to Tenant for loss of business or goodwill or for the taking


of Tenant's fixtures and improvements, if a separate award for such items is


made to Tenant or reasonably allocable to Tenant for the taking of Tenant's


fixtures and improvements that Tenant would be permitted to remove upon


termination of this Lease.


 


     17.  ASSIGNMENT AND SUBLETTING.


 


          A.   PROHIBITION ON ASSIGNMENT AND SUBLETTING. Tenant shall not


have the right to assign, sublet, transfer or encumber this Lease, or any


interest therein, without the prior written consent of Landlord.  Any


attempted assignment, subletting, transfer or encumbrance by Tenant in


violation of the terms and covenants of this paragraph shall be void. If


Tenant requests Landlord's consent to an assignment of this Lease or


subletting of all or a part of the Premises, it shall submit to Landlord, in


writing, the name of the proposed assignee or subtenant, the commencement


date of such assignment or subletting, the nature and character of the


business of the proposed assignee or subtenant and the proposed rates, terms


and other pertinent conditions of such assignment or subletting. Upon receipt


of a request for consent to an assignment or subletting, and unless such


request pertains to an assignment or sublease governed by Paragraph 17B


below, Landlord shall have the option (to be exercised within thirty (30)


days from the submission of Tenant's written request) to (i) cancel this


Lease (or the applicable portion thereof as to a partial subletting) as of


the commencement date stated in the above-mentioned notice of subletting or


assignment, unless Tenant withdraws the proposal to sublet or assign within


ten (10) days after Landlord's notice of cancellation is given, (ii) permit


such assignment or subletting, or (iii) reasonably withhold its consent to


such assignment or subletting. If Landlord elects to cancel this Lease and


Tenant does not withdraw the proposal to sublet or assign, then the term of


this Lease (as to the applicable portion of the Premises), and the tenancy


and occupancy of the applicable portion of the Premises by Tenant hereunder,


shall cease, terminate, expire, and come to an end as if the cancellation


date was the original termination date of this Lease with respect to the


applicable portion of the Premises. In the event Landlord consents to a


proposed assignment or subletting and the rent due and payable by any such


assignee or sublessee under any such permitted assignment or sublease (or a


combination of the rent payable under such assignment or sublease plus any


bonus or any


 


 




 





21











 






 


other consideration therefor or any payment, incident thereto) exceeds the


Base Monthly Rent payable under Paragraph 3 of this Lease for the applicable


space, net of Tenant's actual reasonable costs incurred in connection with


such assignment or subletting (E.G., attorneys' fees, marketing costs (but


not Tenant's internal costs)) and net of any finish out allowance granted by


Tenant in connection with any assignment or sublease not in excess of market


(E.G., Tenant may not recover any finish out allowance in excess of that


which would granted to a similarly situated tenant for similar space in


similar properties in the Dallas/Fort Worth area), Tenant shall pay to


Landlord all such excess rent and other excess consideration within ten (10)


days following receipt thereof by Tenant, whether or not such assignment or


subletting pertains to an assignment or subletting permitted under Paragraph


17B below.


 


          B.   PERMITTED ASSIGNMENTS/SUBLEASES. Notwithstanding the


provisions of Paragraph 17A, Tenant may, without the consent of Landlord, at


any time assign or otherwise transfer this Lease or any portion thereof to


any Affiliate (hereinafter defined); or any Corporation resulting from the


consolidation or merger of Tenant into or with any other entity; or to any


person, firm, entity or corporation acquiring a majority of Tenant's issued


and outstanding capital stock or substantially all of Tenant's assets. As


used herein, the term AFFILIATE shall mean a person or entity, corporate or


otherwise, that directly or indirectly through one or more intermediaries,


controls or is controlled by, or is under common control with Tenant. The


term CONTROL means the right and power, direct or indirect, to direct or


cause the direction of the management and policies of a person or business


entity, corporation or otherwise, through ownership or voting securities, by


contract or otherwise; provided, however, that in the event of an assignment,


the assignee shall assume in writing the terms and conditions set forth


herein to be observed and performed by the Tenant in a form reasonably


approved by Landlord. A sublease or assignment pursuant to this Paragraph 17B


shall not be subject to Landlord's recapture rights set forth in Paragraph


17A above.


 


          C.   ASSIGNMENTS IN BANKRUPTCY.


 


                    (1)  If this Lease is assigned to any person or entity


     pursuant to the provisions of the Bankruptcy Code, 11 U.S.C. Section 101


     et. seq. (the BANKRUPTCY CODE), any and all monies or other


     consideration payable or otherwise to be delivered in connection with


     such assignment shall be paid or delivered to Landlord, shall be and


     remain the exclusive property of Landlord and shall not constitute


     property of Tenant or of the estate of Tenant within the meaning of the


     Bankruptcy Code. Any and all monies or other considerations constituting


     Landlord's property under the preceding sentence not paid or delivered


     to Landlord shall be held in trust for the benefit of Landlord and be


     promptly paid or delivered to Landlord.


 


                    (2)  Any person or entity to which this Lease is assigned


     pursuant to the provisions of the Bankruptcy Code, shall be deemed,


     without further act or deed, to have assumed all of the obligations


     arising under this Lease on and after the date of such assignment. Any


     such assignee shall upon demand execute and deliver to Landlord an


     instrument confirming such assumption.


 


          D.   EFFECT OF ASSIGNMENT. Any assignee, sublessee or transferee of


Tenant's interest in this Lease (all such assignees, sublessees and


transferees being hereinafter referred to as TRANSFEREES), by assuming


Tenant's obligations hereunder, shall assume liability to Landlord for all


amounts paid to persons other than Landlord by such Transferees in


contravention of this Paragraph 17. No assignment, subletting or other


transfer, whether consented to by Landlord or not or permitted hereunder


shall relieve the Tenant named herein of any liability hereunder for the


obligations of the "Tenant". If an event of default occurs while the Premises


or any part thereof are assigned or sublet, then Landlord, in addition to any


other remedies herein provided, or provided by law, may collect directly from


such Transferee all rents payable to the Tenant and apply such rent against


any sum due Landlord hereunder. No such collection shall be construed to


constitute a novation or a release of Tenant from the further performance of


Tenant's obligations hereunder.


 


     18.  DEFAULT BY TENANT. The following events (herein individually


referred to as EVENT OF DEFAULT) each shall be deemed to be events of default


by Tenant under this Lease:


 


          A.   Tenant shall fail to pay any installment of the Rent herein


reserved when due, or any other payment or reimbursement to Landlord required


herein when due, and such failure shall continue for a period of ten (10) days


after receipt of written notice from Landlord; provided, however, that an


event of default will occur without any


 


 


 




 





22











 






 


obligation of Landlord to deliver any notice if Landlord has given Tenant


written notice under this Paragraph 18A on two (2) or more occasions during


the twelve (12) month period preceding the current failure by Tenant to


timely pay Rent (though Tenant in such instances is granted a five (5) day


grace period from the date upon which the subject payment was due).


 


          B.   Tenant or any guarantor of the Tenant's obligations hereunder


shall (i) become insolvent; (ii) admit in writing its inability to pay its


debts; (iii) make a general assignment for the benefit of creditors; (iv)


commence any case, proceeding or other action seeking to have an order for


relief entered on its behalf as a debtor or to adjudicate it a bankrupt or


insolvent, or seeking reorganization, arrangement, adjustment, liquidation,


dissolution or composition of it or its debts under any law relating to


bankruptcy, insolvency, reorganization or relief of debtors or seeking


appointment of a receiver, trustee, custodian or other similar official for


it or for all or of any substantial part of its property; or (v) take any


action to authorize or in contemplation of any of the actions set forth above


in this paragraph.


 


          C.   Any case, proceeding or other action against the Tenant or any


guarantor of the Tenant's obligations hereunder shall be commenced seeking


(i) to have an order for relief entered against it as debtor or to adjudicate


it a bankrupt or insolvent; (ii) reorganization, arrangement, adjustment,


liquidation, dissolution or composition of it or its debts under any law


relating to bankruptcy, insolvency, reorganization or relief of debtors;


(iii) appointment of a receiver, trustee, custodian or other similar official


for it or for all or any substantial part of its property, and such case,


proceeding or other action (a) results in the entry of an order for relief


against it which it is not fully stayed within seven (7) business days after


the entry thereof or (b) shall remain undismissed for a period of forty-five


(45) days.


 


          D.   OMITTED.


 


          E.   Tenant shall fail to discharge any lien placed upon the


Premises or the Project in violation of Paragraph 28 hereof within sixty (60)


days after any such lien or encumbrance is filed against the Premises or the


Project; provided, however, that if Tenant in good faith disputes such lien,


Tenant may contest the lien without being in default hereunder provided that


Tenant bonds the lien to Landlord's reasonable satisfaction and the lien is


in any event removed or extinguished no later than one hundred and twenty


(120) days after filing.


 


          F.   Tenant shall fail to comply with any other terms in this Lease


other than those for which an event of default has been described in this


Paragraph 18, and such failure is not cured within thirty (30) days after


written notice thereof to Tenant, such notice to specify the nature of the


default and the action required to cure same, or if such failure cannot


reasonably be cured in thirty (30) days, such time as is reasonable under the


circumstances, not to exceed ninety (90) days, and provided that Tenant must


diligently proceed to cure the default.


 


     19.  LANDLORD'S REMEDIES. Upon the occurrence of any event of default


specified in this Lease, Landlord, at its option, may exercise one (1) or


more of the following remedies, in addition to all other rights and remedies


provided at law or in equity.


 


          A.   Landlord may, without judicial process, terminate this Lease


(whereupon all obligations and liabilities of Landlord hereunder shall


terminate) and without further notice repossess the Premises without having


any liability therefor (including specifically any liability or duty under


Section 93.002 of the Texas Property Code which is specifically superseded by


this Paragraph 19A) and be entitled to recover all loss and damage Landlord


may suffer by reason of such termination, whether through inability to relet


the Premises on satisfactory terms or otherwise, including without


limitation, accrued Rent and interest thereon, accrued late charges and


interest thereon, the unamortized cost of the Tenant Finish Work made at


Landlord's expense pursuant to Paragraph 2 hereof or otherwise, broker's fees


and commissions, attorneys' fees, moving allowance and any other costs


incurred by Landlord in connection with making or executing this Lease, the


cost of recovering the Premises and the costs of reletting the Premises


(including without limitation advertising costs, brokerage fees, leasing


commissions, reasonable attorneys' fees and refurbishing costs). If such


termination is caused by the failure to pay Rent, Landlord may elect, by


sending written notice thereof to Tenant, to receive liquidated damages in an


amount equal to the product of (i) the sum of the all Rent and other charges


payable hereunder for the month during which this Lease is terminated


multiplied by (ii) the lesser of (x) the product of sixty percent (60%)


multiplied by the number of full calendar months which would have remained in


the term of this Lease but for such termination or (y) twenty-four (24). Such


liquidated damages shall be in lieu of the payment of loss and


 


 




 





23











 






 


damage accruing after the date of such termination, but shall not be in lieu


of or reduce in any way any amounts or damages payable by Tenant to Landlord


and accruing prior to the date of termination, which for all purpose shall


include, but not be limited to, accrued Rent and interest thereon, late


charges and interest thereon the unamortized cost of the Tenant Finish Work,


broker's fees and commissions, attorneys' fees, any moving allowances and any


other costs incurred by Landlord in connection with making or executing this


Lease. Nothing contained in this Lease shall limit or prejudice the right of


Landlord to prove for and obtain in proceedings for bankruptcy or insolvency


by reason of the termination of this Lease, an amount equal to the maximum


allowed by any statute or rule of law in effect at the time when, and


governing the proceedings in which, the damages are to be proved, whether the


amount be greater, equal to, or less than the amount of the loss or damages


referred to above.


 


          B.   Landlord may, without judicial process, immediately terminate


Tenant's right of possession of the Premises by delivering to Tenant written


notice of such termination (whereupon all obligations and liability of


Landlord hereunder shall terminate), but not terminate this Lease, and,


without notice or demand, enter upon the Premises or any part thereof and


take absolute possession of the same, expel or remove Tenant and any other


person or entity who may be occupying the Premises, by force if necessary,


change the locks, without having any liability therefor (including


specifically any liability or duty under Section 93.002 of the Texas Property


Code which is specifically superseded by this Paragraph 19B) and at


Landlord's option, Landlord may relet the Premises or any part thereof for


such terms and such rents as Landlord may in its sole discretion elect. In


the event of a termination of Tenant's possession of the Premises under this


Part B and notwithstanding anything in Section 93.002 of the Texas Property


Code to the contrary, Landlord shall have no obligation whatsoever to tender


to Tenant a key for new locks installed in the Premises and Tenant shall have


no further right to possession of the Premises. In the event Landlord shall


elect so to relet, then rent received by Landlord from such reletting shall


be applied first, to the payment of any indebtedness other than Rent due


hereunder from Tenant to Landlord (in such order as Landlord shall


designate), second, to the payment of any cost of such reletting, including,


without limitation, refurbishing costs, reasonable attorneys' fees,


advertising costs, brokerage fees and leasing commissions, and third, to the


payment of Rent due and unpaid hereunder (in such order as Landlord shall


designate), and Tenant shall satisfy and pay any deficiency upon demand


thereof from time to time. No re-entry or taking of possession of the


Premises by Landlord pursuant to this Paragraph 19B shall be construed as an


election on Landlord's part to terminate this Lease unless a written notice


of such termination is given to Tenant pursuant to Paragraph 19A above and,


notwithstanding any such reletting without termination, Landlord may at any


time thereafter elect to terminate this Lease for such previous breach. If


Landlord relets the Premises, either before or after the termination of this


Lease for a rental rate greater than the Rent provided in this Lease, then


for that portion of the Premises that is subject to such new lease, all such


excess rentals shall be and remain the exclusive property of Landlord, and


Tenant shall not be, at any time, entitled to recover said excess rental.


 


          C.   Landlord may, without judicial process enter upon the


Premises, by force if necessary, without having any civil or criminal


liability therefor (including specifically any liability or duty under


Section 93.002 of the Texas Property Code which is superseded by this


Paragraph 19C), 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 effecting compliance with Tenant's


obligations under this Lease plus an administrative fee equal to ten percent


(10%) of the amount of such reimbursement. Tenant further agrees that


Landlord shall not be liable for any damages resulting to Tenant from such


action, whether caused by the negligence of Landlord or otherwise.


 


          D.   Any repossession of or re-entering on the Premises by Landlord


under this Article shall be without liability or responsibility for damages


to Tenant. No repossession of or re-entering upon the Premises or any part


thereof pursuant to Paragraphs 19B or 19C or otherwise and no reletting of


the Premises or any part thereof pursuant to Paragraph 19B shall relieve


Tenant or any guarantor of its liabilities and obligations hereunder, all of


which shall survive such repossession or re-entering. In the event of any


such repossession of or re-entering upon the Premises or any part thereof by


reason of the occurrence of an event of default Tenant will continue to pay


to Landlord Rent required to be paid by Tenant.


 


          E.   No right or remedy herein conferred upon or reserved to


Landlord is intended to be exclusive of any other right or remedy, and each


and every right and remedy shall be cumulative and in addition to any other


right or remedy given hereunder or now or hereafter existing at law or in


equity or by statute. In addition to the other remedies provided in this


 




  





24











  






Lease, Landlord shall be entitled, to the extent permitted by applicable law,


to injunctive relief in case of the violation, or attempted or threatened


violation, of any of the covenants, agreements conditions or provisions


of this Lease, or to a decree compelling performance of any of the covenants,


agreements, conditions or provisions of this Lease, or to any other remedy


allowed to Landlord at law or in equity. Tenant shall indemnify and hold 


Landlord harmless from any and all costs, expenses (including reasonable


attorneys' fees), claims and causes of action arising from or in connection


with any default by Tenant under this Lease.


 


     F.   If Landlord repossesses the Premises pursuant to the authority


herein granted or provided at law or in equity, then Landlord shall have the


right to (i) keep in place and use or (ii) remove and store all of the


furniture, fixtures and equipment at the Premises, including that which is


owned by or leased to Tenant at all times prior to any foreclosure thereon by


Landlord or repossession thereof by any lessor thereof or third party having


a superior lien thereon. Landlord also shall have the right to relinquish


possession of all or any portion of such furniture, fixtures, equipment and


other property to any person (CLAIMANT) who presents to Landlord a copy of


any instrument represented 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 or legality of said instrument. The rights of Landlord


herein stated shall be in addition to any and all other rights that 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.


 


          G.   To the extent required under Texas law, Landlord agrees to use


reasonable efforts to mitigate any of its damages arising from the occurrence


of an event of default by Tenant involving Tenant's abandonment of the


Premises. Tenant agrees that this requirement to use reasonable efforts will


have been satisfied by Landlord: (i) notifying its leasing agent of the


availability of the Premises for rent, and (ii) showing the Premises to


prospective tenants who request to see the Premises and to prospective


tenants referred to Landlord by Tenant. In no event shall Landlord be deemed


not to have mitigated its damages if Landlord chooses to lease some or all of


other space in the Building or the Project or, as applicable, the


Development, to a prospective tenant, rather than some or all of the Premises.


 


     20.  DEFAULT BY LANDLORD AND TENANT'S REMEDIES. If Landlord fails to


perform any of its obligations hereunder within thirty (30) days after


written notice from Tenant specifying such failure, or if such obligations


cannot reasonably be accomplished in thirty (30) days, Landlord has not


commenced performance within such thirty (30) day period and thereafter


diligently prosecutes performance through completion, Tenant's exclusive


remedy shall be an action for actual damages. In no event shall Landlord be


liable to Tenant for consequential, punitive or special damages (or any


similar types of damages) by reason of a failure to perform (or a default) by


Landlord hereunder or otherwise. Unless and until Landlord fails to so cure


any default after such notice, Tenant shall not have any remedy or cause of


action by reason thereof. All obligations of Landlord hereunder will be


construed as covenants, not conditions; and all such obligations will be


binding upon Landlord only during the period of its ownership of the Premises


and not thereafter. The term "Landlord" shall mean only the owner, for the


time being, of the Premises, and in the event of the transfer by such owner


of its interest in the Premises, such owner shall thereupon be released and


discharged from all covenants and obligations of the Landlord thereafter


accruing, but such covenants and obligations shall be binding during the term


of this Lease upon each new owner for the duration of such owner's ownership.


Notwithstanding any provisions of this Lease to the contrary, the liability of


Landlord to Tenant for any default by Landlord under the terms of this Lease


shall be limited to Landlord's interest in the Project, and Tenant agrees to


look solely to Landlord's interest in the Project and for recovery of any


judgment from Landlord, it being intended and agreed that Landlord shall not


be personally liable for any judgment or deficiency.


 


     21.  BANKRUPTCY.


 


          A.   Notwithstanding anything in this Lease to the contrary, all


amounts payable by Tenant to or on behalf of Landlord under this Lease,


whether or not expressly denominated as Rent, shall constitute rent for the


purposes of Section 502(b)(6) of the Bankruptcy Code.


 


          B.   This a contract under which applicable law excuses Landlord


from accepting performance from (or rendering performance to) any person or


entity other than Tenant within the meaning of Sections 365(c) and 365 (e)(2)


of the Bankruptcy Code.


 


     22.  SECURITY DEPOSIT. Tenant agrees to deposit with Landlord on the


date hereof an amount equal to


 


 




 





25











 






 


$24,825.33 which shall be held by Landlord, without obligation for interest,


as security for the performance of Tenant's obligations under this Lease, it


being expressly understood and agreed that this deposit is not an advance


rental deposit or a measure of Landlord's damages in case of Tenant's


default. Upon each occurrence of an event of default by Tenant, Landlord may


use all or part of the deposit to pay past due Rent or other payments due


Landlord under this Lease, and the cost of any other damage, injury, expense


or liability caused by such event of default without prejudice to any other


remedy provided herein or provided by law. On demand, Tenant shall pay


Landlord the amount that will restore the security deposit to its original


amount. The security deposit shall be deemed the property of Landlord, but


any remaining balance of such deposit shall be returned by Landlord to Tenant


when Tenant's obligations under this Lease have been fulfilled and this Lease


terminated, all in accordance with Applicable Laws.


 


     23.  WAIVER OF SECURITY INTEREST. Landlord hereby waives and negates any


and all contractual liens and security interests, statutory liens and


security interests or constitutional liens and security interests arising by


operation of law or otherwise to which Landlord might now or hereafter be


entitled on all property of Tenant now owned or hereafter placed in or upon


the Premises (except for judgment liens which may hereafter arise in favor of


Landlord).


 


     24.  SURRENDER UPON TERMINATION. At the termination of this Lease, by


its expiration or otherwise, Tenant immediately shall deliver possession of


the Premises to Landlord in good condition and repair and with all repairs


and maintenance required herein to be performed by Tenant completed,


including, without limitation, repairs and maintenance of all heating and air


conditioning systems and equipment therein, reasonable wear and tear and


damage due to fire or other casualty excepted. All obligations of Tenant


hereunder not fully performed as of the expiration or earlier termination of


the term of this Lease shall survive the expiration or earlier termination of


the term hereof.


 


     25.  HOLDING OVER. If, for any reason, Tenant retains possession of the


Premises after the expiration or termination of this Lease, unless the


parties hereto otherwise agree in writing, such possession shall be subject


to termination by either Landlord or Tenant at any time upon not less than


ten (10) days advance written notice, and all of the other terms and


provisions of this Lease shall be applicable during such period, except that


Tenant shall pay Landlord from time to time, upon demand, as rental for the


period of such possession, an amount equal to 150% of the Base Monthly Rent


in effect on the termination date, computed on a daily basis for each day of


such period. No holding over by Tenant, whether with or without consent of


Landlord, shall operate to extend this Lease except as otherwise expressly


provided. The preceding provisions of this Paragraph 25 shall not be


construed as consent for Tenant to retain possession of the Premises in the


absence of written consent thereto by Landlord. In addition to the above,


Tenant shall be liable to Landlord for Landlord's actual damages resulting as


a result of any holdover by Tenant.


 


     26.  QUIET ENJOYMENT. Landlord covenants that on or before the


Commencement Date it will have good title to the Premises, free and clear of


all liens and encumbrances, excepting only the lien for current taxes not yet


due, such mortgage or mortgages as are permitted by the terms of this Lease,


zoning ordinances and other building and fire ordinances and governmental


regulations relating to the use of such property, and easements, restrictions


and other conditions of record. Landlord agrees that so long as Tenant pays


all amounts due hereunder and performs all other covenants and agreements


herein set forth, Tenant shall peaceably and quietly have, hold and enjoy the


Premises for the term of this Lease without hindrance or molestation from


Landlord, subject to the terms and provisions of this Lease.


 


     27.  ENTRY BY LANDLORD. Landlord and Landlord's agents and


representatives shall have the right to enter the Premises at any reasonable


time during business hours, to inspect the Premises and to make such repairs


as may be required or permitted pursuant to this Lease or to make such


repairs or installations as are necessary for other tenants in the Building.


During the period that is six (6) months prior to the end of the term of this


Lease, upon telephonic notice to Tenant, Landlord and Landlord's


representatives may enter the Premises during business hours for the purpose


of showing the Premises. In addition, Landlord shall have the right to erect


a suitable sign on the Premises stating the Premises are available. Landlord


shall also have the right (but not the obligation) to enter the Premises at


any time, and by force if necessary, in the case of an emergency. Tenant


shall notify Landlord in writing at least thirty (30) days prior to vacating


the Premises and shall arrange to meet with Landlord for a joint inspection


of the Premises prior to vacating. If Tenant fails to give such notice or to


arrange for such inspection, then Landlord's inspection of the Premises shall


be deemed correct for the purpose of determining Tenant's responsibility for


repairs and restoration of the Premises.


 


 




 





26











 






 


     28.  MECHANICS LIENS. Tenant has no authority, express or implied, to


create or place any lien or encumbrance of any kind or nature whatsoever


upon, or in any manner to bind the interest of Landlord or Tenant in the


Premises or the Project or to charge the Rent payable hereunder for any claim


in favor of any person dealing with Tenant, including those who may furnish


materials or perform labor for any construction or repairs. Tenant covenants


and agrees that it will pay or cause to be paid all sums legally due and


payable by it on account of any labor performed or materials furnished in


connection with any work performed at the Premises or the Project and that it


will indemnify and hold Landlord harmless from and against any and all loss,


cost or expense based on or arising out of asserted claims or liens against


the leasehold estate or against the right, title and interest of Landlord in


the Premises or the Project or under the terms of this Lease. Tenant agrees


to give Landlord immediate written notice of the placing of any lien or


encumbrance against the Premises or the Project.


 


     29.  WAIVER. No waiver by either party hereto of any provision of this


Lease or of any default, event of default or breach by the other shall be


deemed to be a waiver of any other provision of this Lease, or of any


subsequent default, event of default or breach by such party of the same or


any other provision. A party's consent to or approval of any act by the other


that requires such approval or consent shall not be deemed to render


unnecessary the obtaining of such consent to or approval of any subsequent


act of such party. No act or thing done by Landlord or Landlord's agents


during the term of this Lease shall be deemed an acceptance of a surrender of


the Premises, unless done in writing signed by Landlord. The delivery of the


keys to any employee or agent of Landlord shall not operate as a termination


of this Lease or a surrender of the Premises. The acceptance of any Rent by


Landlord following a default, event of default or breach of this Lease by


Tenant shall not constitute a waiver by Landlord of such default, event of


default or breach or any other default, event of default or breach unless


such waiver is expressly stated in writing and signed by Landlord.


 


     30.  SUBORDINATION. Conditioned upon the beneficiary of any mortgages


and/or deeds of trust now existing or hereafter placed upon the Premises


entering into an agreement (herein an ATTORNMENT AGREEMENT) with Tenant in


which such beneficiary agrees not to disturb the possession and other rights


of Tenant under this Lease so long as Tenant is not in default in the


performance of its obligations hereunder, and, in the event of the


acquisition of title by such beneficiary through foreclosure proceedings or a


deed in lieu of foreclosure, to accept Tenant as tenant of the Premises under


the terms and conditions of this Lease, Tenant accepts this Lease subject and


subordinate to any mortgages and/or deeds of trust now or hereafter


constituting a lien or charge upon the Premises, provided, however, that if


the mortgagee, trustee, or holder of any such mortgage or deed of trust


elects to have Tenant's interest in this Lease superior to any such


instrument, then by notice to Tenant from such mortgagee, trustee or holder,


this Lease shall be deemed superior to such lien, whether this Lease was


executed before or after said mortgage or deed of trust.  Subject to the


foregoing, Tenant, at any time hereafter on demand, shall execute any


instruments, releases or other documents that may be required by any


mortgagee for the purpose of subjecting and subordinating this Lease to the


lien of any such mortgage.  For purposes of this section, Landlord will be


deemed to have satisfied the condition of obtaining an Attornment Agreement


if the form thereof required by the mortgagee is a type of form that is


customarily given by institutional lenders, provided that Tenant shall have


the right to attempt to negotiate more favorable terms.


 


     31.  TENANT ESTOPPELS.  Tenant agrees, from time to time, within ten


(10) days after request of Landlord to deliver to Landlord, or Landlord's


designee, a certificate of occupancy and an estoppel certificate stating that


this Lease is in full force and effect, the date to which Rent has been paid,


the unexpired term of this Lease and such other factual matters pertaining to


this Lease as may be requested by Landlord. It is understood and agreed that


Tenant's obligation to furnish such estoppel certificates in a timely fashion


is a material inducement for Landlord's execution of this Lease.


 


     32.  NOTICES. All notices, requests, approvals, and other communications


required or permitted to be delivered under this Lease must be in writing and


are effective (i) on the business day sent if sent by telecopier during


normal business hours and the sending telecopier generates a written


confirmation of sending, (ii) the next business day after delivery to a


nationally-recognized-overnight-courier service for prepaid overnight


delivery; (iii) if orderly delivery of the mail is not then disrupted or


threatened, in which event some method of delivery other than the mail must


be used, three (3) days after being deposited in the United States mail,


certified, return receipt requested, postage prepaid; or (iv) upon actual


receipt by the addressee if delivered personally or by any method other than


by telecopier (with written confirmation),


nationally-recognize-overnight-courier service, or mail, in each instance


addressed to Landlord or Tenant,


 


 




 





27











 






 


as the case may be, addressed:


 


     if to Landlord, as follows:


 


                                   MEPC Quorum Properties II Inc.


                                   15303 Dallas Parkway, Suite 100, LB 10


                                   Dallas, Texas 75248


                                   Attn: Property Manager


                                   Telecopy: (972) 851-7012


 


     and, if to Tenant, as follows:


 


                                   Mannatech, Inc.


                                   600 S. Royal Lane


                                   Suite 200


                                   Coppell, Texas 75019


                                   Attn: Ronald E. Kozak


                                   Telecopy: (972) 471-7389


 


or to such other address or to the attention of such other person as shall be


designated by the applicable party and on fifteen (15) days notice from time to


time in writing and sent in accordance herewith.


 


     33.  PARKING. Tenant and its employees, customers and licensees shall


have the exclusive right to use any parking areas that have been specifically


designated for such exclusive use by Landlord on the Site Plan, subject to


(i) all rules and regulations promulgated by Landlord in its reasonable


discretion, and (ii) rights of ingress and egress of other lessees of the


Project or the Development, as applicable. Tenant and its employees,


customers and licensees shall not have the right to use any parking area that


are from time to time specifically designated by Landlord for exclusive use


by another lessee, except to the extent necessary for ingress and egress.


Landlord shall not be responsible for enforcing Tenant's parking rights


against any third parties. Tenant agrees not to use more spaces than so


provided.


 


     34.  OPTION TO RENEW.


 


          A.   If Tenant is not in default under this Lease at the time of the


exercise of this option or at the commencement of the applicable Lease Term


extension, Tenant is granted the option (the OPTION) to extend the Lease Term


for one (1) extension term of five (5) years commencing on the next day after


the expiration of the initial Lease Term by giving Landlord all extension


notice at least nine (9) months, but not more than twelve (12) months, prior


to the expiration of the initial Lease Term. Tenant's lease of the Premises


during the extended Lease Term will be upon the same terms as in the Lease


for the initial Lease Term, except that (i) Base Monthly Rent will adjust on


the first day of the extended Lease Term to the Market Rate (defined below),


and (ii) during the extended Lease Term Tenant will have no further options


or rights to extend the Lease Term.


 


          B.   Within thirty (30) days after Landlord receives Tenant's written


notice of its exercise of the Option, Landlord shall deliver a notice to Tenant


(the MARKET RATE NOTICE) specifying the Market Rate for the extended Lease Term,


such to be based upon Landlord's reasonable and good-faith determination of


rents being charged for comparable space in similar properties in the


Freeport North Industrial Park, Coppell, Texas, for terms commensurate with


the extended Lease Term and for tenants similarly situated. Tenant shall have


fifteen (15) days (the EXAMINATION PERIOD) from its receipt of the Market


Rate Notice to accept or reject Landlord's designation of the Market Rate. If


Tenant accepts Landlord's designation of the Market Rate, the MARKET RATE


will be as set forth in the Market Rate Notice, and Tenant's election to


exercise the Option shall be irrevocable. If Tenant fails to accept in


writing Landlord's designation of the Market Rate set forth in the Market


Rate Notice during the Examination Period, Tenant shall be deemed to have


rejected Landlord's designation of the Market Rate.  If Tenant rejects or is


deemed to have rejected Landlord's designation of the Market Rate and


Landlord and Tenant cannot agree in writing on the Market Rate within the


earlier to occur of (i) fifteen (15) days after the date Landlord receives


Tenant's written rejection of Landlord's designation of


 


 




 





28











 






 


the Market Rate set forth in the Market Rate Notice, or (ii) fifteen (15)


days after the expiration of the Tenant is deemed to have rejected Landlord's


designation of the Market Rate as set forth in the Market Rate Notice (in


either of such instances, the NEGOTIATION PERIOD), then Tenant will be deemed


to have elected to revoke its exercise of the Option, and this Lease will


expire in accordance with Paragraph 1 above.


 


          C.   Tenant may not assign the Option to any assignee (except an


Affiliate) or sublessee of this Lease. No sublessee and no assignee (except an


Affiliate) may exercise the Option.


 


          D.   If the Lease Term is extended under this Paragraph 34, Landlord


shall prepare, and Landlord and Tenant will execute and deliver an amendment


to the Lease extending the Lease Term within fifteen (15) days after the


Market Rate is determined but in no event later than the date that the


applicable extension term commences; 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 Option or the obligations of the parties during the


extended Lease Term.


 


     35.  RIGHT OF FIRST REFUSAL ON ADJACENT SPACE.


 


          A.   If at any time during the first three (3) years of the Lease


Term Landlord receives a bona fide offer from a third party (the THIRD PARTY


OFFER) for the lease of that space shown on the Site Plan as the Refusal


Space, such consisting of approximately 24,600 square feet, or any portion


thereof, that Landlord wants to accept, and conditioned upon Tenant not then


being in default hereunder, Landlord will first provide Tenant with written


notice (the REFUSAL NOTICE) thereof. Tenant will have seven (7) business days


(the REFUSAL PERIOD) from the date it receives the Refusal Notice to elect to


lease all, but not less than all, of the Refusal Space. If Tenant has not


notified Landlord in writing of such election prior to the expiration of the


Refusal Period, then Tenant shall be deemed to have elected not to lease the


Refusal Space. If Tenant timely and properly elects to lease the Refusal


Space, such lease, shall be on the same terms and conditions for the


Premises, as defined in Paragraph 1 above, provided that Base Monthly Rent


and Adjustments shall be increased proportionately and further provided that


the Work Allowance for the Refusal Space shall be an amount equal to the


product of $3.00 per square foot of the actual Refusal Space multiplied by a


fraction, the numerator of which is the number of months then remaining in


the Lease Term (without giving effect to any option to extend the Lease Term)


and the denominator of which is 122. Tenant's election to lease the Refusal


Space shall be irrevocable once given and from and after the date thereof,


the term PREMISES shall mean and include not only the Premises as defined in


Paragraph 1 above, but also the Refusal Space.


 


          B.   In the event Tenant does not elect (or is deemed to have not


elected) to lease the Refusal Space, Landlord shall have a period of two


hundred seventy (270) days from the date the Refusal Period expires (the


MARKETING PERIOD) to market the Refusal Space, or any portion thereof, for


lease on terms wholly within Landlord's discretion and during which period


Landlord will not have any obligations to Tenant under this Paragraph 35. If


Landlord has not entered into a binding lease with a third party during the


Marketing Period, the right of first refusal set forth in this Paragraph 35


shall again become effective and Landlord may not lease the Refusal Space, or


any portion thereof, without compliance with this Paragraph 35; provided,


however, that all rights of Tenant in and under this Paragraph 35 shall in


any event expire on that date which is the third anniversary of the date of


this Lease if not exercised by Tenant prior to such time.


 


          C.   Tenant may not assign its rights under this Paragraph 35 to


any assignee or sublessee of this Lease, nor may any sublessee or assignee


have any rights under this Paragraph 35.


 


          D.   If Tenant leases the Refusal Space, Landlord shall prepare,


and Landlord and Tenant will execute and deliver an amendment to the Lease


confirming the lease of the Refusal Space and the new Base Monthly Rent and


Adjustments; provided, however, that the failure of the parties to enter into


such an amendment will not affect the validity of Tenant's lease of the


Refusal Space or the obligations of the parties with respect thereto.


 


     36.  MISCELLANEOUS.


 


          A.   REQUIRED CONSENT. To the extent the approval or consent is


required of any party hereto, such party agrees that such consent or approval


may not be unreasonably withheld, delayed or conditioned unless the provision


 


 




 





29











 






 


where the requirement for such consent or approval is imposed includes an


express statement that such approval or consent may be withheld in such


party's sole discretion.


 


          B.   FINANCIAL STATEMENTS. During each Lease Year, and upon written


request by Landlord, Tenant shall provide to Landlord true, correct and complete


copies of Tenant's year end financial statements and quarterly, non-audited,


balance sheets certified by the chief financial officer (or its equivalent) of


Tenant.


 


          C.   CONFIDENTIALITY. Tenant shall keep the terms and provisions of


this Lease confidential at all times and not disclose the terms and provisions


hereof to any party without Landlord's prior written consent, which may be


withheld by Landlord in its sole discretion. Landlord hereby consents to the


disclosure of the terms and provisions of this Lease to employees of Tenant,


Tenant's attorneys and to any financial institution Tenant is seeking financing


from in connection with this Lease and/or Tenant's operations at the Premises.


The terms of this paragraph and Tenant's agreement thereto are a material


inducement to Landlord entering into this Lease, and Tenant agrees that Landlord


may be severely damaged by a breach of this paragraph and the confidentiality


obligations herein contained. Tenant agrees that in the event of a breach of


this paragraph, Landlord may, in addition to any other remedies it may have


under this Lease or at law or equity, seek injunctive relief against Tenant


and/or recover damages from Tenant.


 


          D.   HEADINGS/GENDER. Words of any gender used in this Lease shall


be held and construed to include any other gender, and words in the singular


number shall be held to include the plural, unless the context otherwise


requires. The captions inserted in this Lease are for convenience only and in


no way define, limit or otherwise describe the scope or intent of this Lease,


or any provision hereof, or in any way affect the interpretation of this


Lease.


 


          E.   RUN WITH THE LAND. The terms, provisions and covenants and


conditions contained in this Lease shall run with the land and shall apply to,


inure to the benefit of, and be binding upon, the parties hereto and upon their


respective heirs, executors, personal representatives, legal representatives,


successor and assigns, except as otherwise herein expressly provided.  Landlord


shall have the right to transfer and assign, in whole or in part, its rights and


obligations in the Premises, Building and/or Project that are the subject of


this Lease. Each party agrees to furnish to the other, promptly upon demand,


a corporate resolution, proof of due authorization by partners, or other


appropriate documentation evidencing the due authorization of such party to


enter into this Lease.


 


          F.   ORGANIZATION AND AUTHORITY.


 


               (i) Tenant represents and warrants to Landlord that (i) Tenant is


     a duly organized and existing Texas corporation and has the full right and


     authority to enter into this Lease and to perform all of its obligations


     hereunder, (ii) all requisite authorizing actions have been taken by Tenant


     in connection with the entering into of this Lease, and (iii) each of the


     persons signing this Lease on behalf of Tenant is authorized to do so. Upon


     request by Landlord, Tenant will provide a certified copy of the


     resolutions of the board of directors of Tenant authorizing the entering


     into of this Lease by Tenant and the execution hereof by the persons who


     sign this Lease on behalf of Tenant;


 


               (ii) Landlord represents and warrants to Tenant that (i) Landlord


     is a duly organized and existing Delaware corporation and has the full


     right and authority to enter into this Lease and to perform all of its


     obligations hereunder, (ii) all requisite authorizing actions have been


     taken by Landlord in connection with the entering into of this Lease, and


     (iii) each of the persons signing this Lease on behalf of Landlord is


     authorized to do so. Upon request by Tenant, Landlord will provide a


     certified copy of the resolutions of the board of directors of Landlord


     authorizing the entering into of this Lease by Landlord and the execution


     hereof by the persons who sign this Lease on behalf of Landlord.


 


          G.   RECORDING. Tenant may not record this Lease or any memorandum


thereof.


 


          H.   ENTIRE AGREEMENT. This Lease constitutes the entire


understanding and agreement of the Landlord and Tenant with respect to the


subject matter of this Lease, and contains all of the covenants and


agreements of Landlord and Tenant with respect thereto. Landlord and Tenant


each acknowledge that no representations, inducements, promises or


agreements, oral or written, have been made by Landlord or Tenant, or anyone


acting on behalf of Landlord or Tenant, which are not contained herein, and


any prior agreements, promises, negotiations, or representations not


expressly


 


 




 





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set forth in this Lease are of no force or effect. This Lease may not be


altered, changed or amended except by all instrument in writing signed by


both parties hereto.


 


          I.   FORCE MAJEURE. As used in this Lease, FORCE MAJEURE shall mean


a delay caused by reason of fire, acts of God, unreasonable delays in


transportation, embargo, weather (I.E., rain and rain related conditions,


humidity, temperature, wind, etc.), strike, other labor disputes,


governmental preemption of priorities or other controls in connection with a


national or other public emergency, governmental delays in permitting, delays


caused by any governmental disapproval of, or required revisions to, the


Finish Plans, or shortages of fuel, supplies or labor or any similar cause


not within Landlord's reasonable control.  Landlord shall not be held


responsible for delays in the performance of its obligations hereunder caused


by Force Majeure, and such delays shall be excluded from the computation of


the time allowed for the performance of such obligations. It is expressly


agreed that the number of delay days may include not only the day or days


upon which the event of Force Majeure occurred but the number of days


thereafter that work could not resume due to the occurrence of such event of


Force Majeure. By way of example only, rain on a Sunday, which is not


scheduled as a normal work day, may prevent work for several days thereafter


due to mud conditions.


 


          J.   SEVERABILITY. If any clause or provision of this Lease is


illegal, invalid, or unenforceable under present or future laws effective


during the term of this Lease, then and in that event, it is the intention of


the parties hereto that the remainder of this Lease shall not be affected


thereby, and it is also the intention of the parties to this Lease that in


lieu of each clause or provision of this Lease that is illegal, invalid or


unenforceable, there be added, as a part of this Lease, a clause or provision


as similar in terms to such illegal, invalid or unenforceable clause or


provision as may be possible and be legal, valid and enforceable.


 


          K.   DATE OF LEASE. All references in this Lease to "the date


hereof" or similar references shall be deemed to refer to the last date, in


point of time, on which all parties hereto have executed this Lease.


 


          L.   BROKERS.


 


                    (1) Tenant represents and warrants that, except for The


     Amend Group (BROKER), Tenant has not dealt with any broker, agent or other


     person in connection with this transaction and that, except for Broker, no


     broker, agent or other person brought about this transaction through the


     acts of or employment by Tenant, and, except with respect to any commission


     or fee owed to Broker, Tenant agrees to indemnify and hold Landlord


     harmless from and against any claims by any broker, agent or other person


     claiming a commission or other form of compensation by virtue of having


     dealt with Tenant with regard to this leasing transaction.


 


                    (2)  Landlord represents and warrants that, except for


     Broker, Landlord has not dealt with any broker, agent or other person in


     connection with this transaction and that, except for Broker, no broker,


     agent or other person brought about this transaction through the acts of


     or employment by Landlord. Landlord has agreed to pay Broker a commission


     pursuant to a separate written agreement between Landlord and Broker, and


     Landlord agrees to indemnify and hold Tenant harmless from and against any


     claims by Broker or any broker, agent or other person claiming a commission


     or other form of compensation by virtue of having dealt with Landlord with


     regard to this leasing transaction.


 


          M.   COUNTERPARTS. This Lease may be executed in counterparts, each


being deemed an original, but together constituting only one instrument.


 


          N.   TIME FOR PERFORMANCE. TIME IS OF THE ESSENCE WITH RESPECT TO ALL


PERFORMANCE OBLIGATIONS CONTAINED IN THIS LEASE.


 


          O.   ATTORNEYS FEES. In the event it becomes necessary for either


party hereto to file a suit to enforce this Lease or any provisions contained


herein, the party prevailing in such action shall be entitled to recover, in


addition to all other remedies or damages, reasonable attorneys fees incurred


in such suit.


 


          P.   LAW GOVERNING. This Lease shall be construed and interpreted in


accordance with the laws of the


 


 




 





31











 






 


State of Texas and the obligations of the parties hereto are and shall be


performable in, and venue for any claim or cause of action shall reside in,


Dallas County, Texas.


 


          Q.   AMENDMENTS. This Lease may not be modified or amended, except


by an agreement in writing signed by Landlord and Tenant. The parties may


waive any of the conditions contained herein or any of the obligations of the


other party hereunder, but any such waiver shall be effective only if in


writing and signed by the party waiving such conditions or obligations,


except as specifically set forth herein.


 


     EXECUTED BY Landlord, this 29TH day of MAY, 1997.


 


                                       MEPC QUORUM PROPERTIES II INC., a


                                       Delaware corporation


 


 


                                       By: /s/ PETER JOHNSON


                                          ----------------------------------


                                       Name:   PETER JOHNSON


                                            --------------------------------


                                       Title:  Executive Vice President


                                             -------------------------------


 


 


                                       By: /s/ DAVID L. CARLSON


                                          ----------------------------------


                                       Name:   DAVID L. CARLSON


                                            --------------------------------


                                       Title:  Vice President


                                             -------------------------------


 


 


     EXECUTED BY Tenant, this 29TH day of MAY, 1997.


 


                                       MANNATECH, INC., a Texas corporation


 


 


                                       By: /s/ CHARLES E. FIORETTI


                                          ----------------------------------


                                       Name:   CHARLES E. FIORETTI


                                            --------------------------------


                                       Title:  Chairman of the Board


                                             -------------------------------


 


 


 


EXHIBITS:


 


Exhibit A: Legal Description of 28 Acre Tract


Exhibit B: Shell Building Construction Features


Exhibit C: Site Plan


Exhibit D: Omitted


Exhibit E: Acceptance of Premises Memorandum


Exhibit F: Contractor Insurance Requirements


 


 


 




 





32











 






 


                                 EXHIBIT "A"


 


                    LEGAL DESCRIPTION OF 28 ACRE TRACT


 


Being a tract or parcel of land situated in the William S. Payne Survey,


Abstract No. 1140 and the C. S. Dunnagan Survey, Abstract No. 1655, City of


Coppell, Dallas County, Dallas, Texas, same being a portion of "Freeport


North", a Preliminary-Final Plat recorded in Volume 84203, Page 1835, Dallas


County Plat Records, same also being all of that certain 27.8527 acre Tract 5


conveyed to T/E Freeport North Land, Ltd. by instrument of record in Volume


94222, Page 1168, Dallas County Deed Records, said tract being more


particularly described by metes and bounds as follows:


 


BEGINING at a 1/2 inch iron rod set in the Easterly line of that certain


157.929 acre tract of land conveyed to San Antonio Savings Association, F.A.


by instrument of record in Volume 92104, Page 4313, Dallas County Deed


Records, same being in the Northwesterly corner of said 27.8527 acre tract,


same being in the Southerly line of Northpoint Drive, 80 feet wide, from


which a 1/2 inch iron rod found bears North 00 degrees 13 minutes 53 seconds


West, 80.21 feet;


 


THENCE, along said Southerly line, South 89 degrees 45 minutes 41 seconds


East, 1268.29 feet to a 1/2 inch iron rod set for corner;


 


THENCE, continuing along said Southerly line, South 28 degrees 41 minutes 54


seconds East, 14.50 feet to a 1/2 inch iron rod set for corner in the


Westerly line of Royal Lane, 100 feet wide;


 


THENCE, along said Westerly line the following five (5) courses:


 


     1)  81.48 feet along the arc of a non-tangent curve to the right having


         a radius of 950.00 feet, a central angle of 04 degrees 54 minutes 51


         seconds and a chord bearing and distance of South 35 degrees 16 minutes


         31 seconds West, 81.45 feet to a 1/2 inch iron rod set for a point of


         tangency;


 


     2)  South 37 degrees 43 minutes 57 seconds West, 170.92 feet to a 1/2


         inch iron rod set for the beginning of a curve;


 


     3)  684.33 feet along the arc of a tangent curve to the left having a


         radius of 1050.00, a central angle of 37 degrees 20 minutes 31 seconds


         and a chord bearing and distance of South 19 degrees 03 minutes 41


         seconds West, 672.28 feet to a 1/2 inch iron rod set for a point of


         tangency;


 


     4)  South 00 degrees 23 minutes 26 seconds West, 279.79 feet to a 1/2


         inch iron rod set for corner;


 


     5)  South 45 degrees 23 minutes 26 seconds West, 21.21 feet to a 1/2


         inch iron rod set for corner in the Northerly line of Gateview


         Boulevard, 60 feet wide;


 



THENCE, departing said Westerly line and along said Northerly line the




following four (4) courses:


 


     1)  North 89 degrees 36 minutes 34 seconds West, 150.17 feet to a 1/2


         inch iron rod set for the beginning of a curve;


 


     2)  299.43 feet along the arc of a tangent curve to the left having a


         radius of 530.00 feet, a central angle of 32 degrees 22 minutes 11


         seconds and a chord bearing and distance of South 74 degrees 12


         minutes 20 seconds West, 295.46 feet to a 1/2 inch iron rod set for


         a point of reverse curvature;


 


     3)  262.43 feet along the arc of a tangent curve to the right having a


         radius of 470.00 feet, a central angle of 32 degrees 00 minutes 00


         seconds and a chord bearing and distance of South 74 degrees 01 minutes


         15 seconds West, 259.10 feet to a 1/2 inch iron rod set for a point


         of tangency;


 


     4)  North 89 degrees 58 minutes 45 seconds West, 199.72 feet to a 1/2


         inch iron rod set for corner in the common line of said 157.929 acre


         tract and said 27.8527 acre tract;


 


THENCE along said common line, North 00 degrees 02 minutes 58 seconds East,


305.12 feet to a 5/8 inch iron rod found for corner:


 


THENCE continuing along said common line, North 00 degrees 13 minutes 53


seconds West, 995.31 feet to the POINT OF BEGINNING and CONTAINING 27.8527


acres, 1,213,263 square feet, more or less, of land area within these metes


and bounds.


 


 




 





33











 






 


                                   MANNATECH


 


                                   EXHIBIT B


 


                     SHELL BUILDING CONSTRUCTION FEATURES


 


 


SHELL BUILDING CONSTRUCTION FEATURES


 


  -   Painted exterior concrete tilt wall construction


  -   30' Clear Height to the bottom of the roof joist


  -   40' x 41' column bay dimensions


  -   Four-ply built-up roof system


  -   6" thick reinforced concrete floor slab


  -   6" thick reinforced concrete truck paving


  -   5" thick reinforced concrete car parking


  -   ESFR fire sprinkler system


  -   (9) 9' x 10' Vertical lift overhead doors


  -   (5) 30,000 CFM Rooftop exhaust fans


  -   4' x 4' skylights


  -   The building Fire Pump Room (approx. 12' x 18') is located


       within this lease space


 


 


 


CLARIFICATIONS AND EXCLUSIONS


 


  -   Fire alarm, security, and/or phone systems excluded


  -   In-rack fire sprinklers or modifications to overhead system excluded


  -   Dumpster/compactor power and/or screening excluded


  -   Draft curtains or modifications/additions to smoke removal


       system are excluded


 




 





34











 






 


         EXHIBIT "C"


 


                                  [FLOORPLAN]


 




 





35











 






 


                                   EXHIBIT "D"


 


                                     OMITTED


 


 




 





36











 






 


                                   EXHIBIT "E"


 


                        ACCEPTANCE OF PREMISES MEMORANDUM


 


          This memorandum is being executed pursuant to the Commercial Lease


Agreement (the LEASE) executed on the ___ day of ______, 1997, between MEPC


QUORUM PROPERTIES II INC., a Delaware corporation (LANDLORD), and MANNATECH,


INC., a TEXAS (TENANT).


 


Landlord and Tenant hereby agree that:


 


1.   Tenant acknowledges that (i) it has inspected and accepts the Building and


     the Project, (ii) the Premises is suitable for the purpose for which it is


     leased, subject to completion by Tenant of any finish work Tenant requires,


     (iii) the Building and the Project are in good and satisfactory condition,


     and (iv) no representations as to the repair of the Premises or the


     Project, nor promises to alter, remodel or improve the Premises or the


     Project which have been made by Landlord remain unsatisfied.


 


2.   The Commencement Date of the Lease is the ____ day of _________, 199__.


 


3.   The Rent Commencement Date of the Lease is the ____ day of _______, 199__.


 


4.   The expiration date of the Lease is the ____ day of _________, 1997___.


 


5.   All capitalized terms not defined herein shall have the meaning assigned to


     them in the Lease.


 


Agreed and Executed this ___ day of _______, 1997.


 


LANDLORD                                   TENANT


 


MEPC QUORUM PROPERTIES II INC.,            MANNATECH, INC., a TEXAS corporation


     a Delaware corporation


 


 


By:                                        By:


   ------------------------------             ------------------------------


   Name:                                      Name:


        -------------------------                  -------------------------


   Title:                                     Title:


         ------------------------                   ------------------------


 


 


 


 


By:


   ------------------------------


   Name:


        -------------------------


   Title:


         ------------------------


 


 




 





37











 






 


                                   EXHIBIT "F"


 


 


                        CONTRACTOR INSURANCE REQUIREMENTS


 


All contractors, subcontractors, suppliers, service providers, moving companies,


and others performing work of any type for Tenant at the Premises shall:


 


     -    carry the insurance listed below with companies acceptable to


          Landlord; and


 


     -    furnish Certificates of Insurance to Landlord evidencing required


          coverages at least ten (10) days prior to entry in the Premises and


          Renewal Certificates at least thirty (30) days prior to the expiration


          dates of Certificates previously furnished.


 


Certificates of Insurance must provide for thirty (30) days' prior written


notice of cancellation or material change to Landlord.


 


(1)  WORKERS COMPENSATION: Statutory workers compensation insurance covering


     full liability under applicable Workers Compensation Laws at the required


     statutory limits.


 


(2)  EMPLOYERS' LIABILITY: Employers' liability insurance with the following


     minimum limits of liability:


 


          $100,000  Each Accident


          $500,000  Disease-Policy Limit


          $100,000  Disease-Each Employee


 


 


(3)  COMMERCIAL GENERAL LIABILITY: This insurance policy must:


 


     (a)  Be written on a standard liability policy form (sometimes known as


          commercial general liability insurance) BUT WITHOUT exclusionary


          endorsements that may delete coverage for products/completed


          operations, personal and advertising injury, blanket contractual,


          fire legal liability, or medical payments.


 


     (b)  Be endorsed to provide that:


 


          -    aggregate limits, if any, apply separately to each of the


               insured's jobs or projects away from premises owned by or rented


               to the insured;


 


          -    the insurance is primary and non-contributory to any insurance


               provided by Landlord; and


 


          -    include the following minimum limits:


 


               $1,000,000     General Aggregate


               $1,000,000     Products-Completed Operations Aggregate


               $1,000,000     Personal & Advertising Injury


               $1,000,000     Each Occurrence


               $   50,000     Fire Damage (Any one fire)


               $    5,000     Medical Expense (Any one person)


 


 


(4)  AUTOMOBILE LIABILITY: Automobile liability insurance for claims of


     ownership, maintenance, or use of owned, non-owned, and hired motor


     vehicles at, upon, or away from the Premises with the following minimum


     limits:


 


                 $500,000     Combined Single Limit Bodily Injury and Property


                              Damage per Occurrence


 


 




 





38











 






 


(5)  EXCESS LIABILITY: Following form excess liability insurance with coverages


     at least as broad as the required commercial general liability insurance


     with the following minimum limits:


 


               $1,000,000     Each Occurrence


               $2,000,000     Aggregate


 


 


(6)  GENERAL REQUIREMENTS: All policies must be:


 


     -    written on an occurrence basis and not on a claims-made basis;


 


     -    endorsed to name as additional insureds Landlord, and its respective


          officers, directors, employees, agents, partners, and assigns;


 


     -    endorsed to waive any rights of subrogation against Landlord and its


          respective officers, directors, employees, agents, partners, and


          assigns; and


 


     -    primary and non-contributing with, and not in excess of, any other


          insurance available to Tenant and Landlord (or any other entity


          named as an additional insured).


 


 




 





39











 






 


                 FIRST AMENDMENT TO COMMERCIAL LEASE AGREEMENT


 


     THIS FIRST AMENDMENT TO COMMERCIAL LEASE AGREEMENT (this "AMENDMENT") is


entered into by and between MEPC QUORUM PROPERTIES II INC., a Delaware


corporation (LANDLORD) and MANNATECH, INC., a Texas corporation (TENANT)


effective as of November 6, 1997.


 


     A.   Landlord and Tenant have heretofore entered into a Commercial Lease


Agreement (the LEASE) pursuant to which Landlord leased to Tenant


approximately 74,476 square feet in the Building (as defined in the Lease)


located on the Land described on EXHIBIT "A" attached to the Lease and


located in the Freeport North Industrial Park, Coppell, Texas;


 


     B.   Landlord and Tenant now wish to amend the Lease.


 


     NOW THEREFORE, for good and valuable consideration, the receipt and


sufficiency of which being hereby acknowledged, Landlord and Tenant hereby


agree as follows:


 


     1.   COMMENCEMENT DATE. Landlord and Tenant agree that the COMMENCEMENT


DATE, as that term is used in the Lease, as amended hereby, shall be October


27, 1997.


 


     2.   IMPROVEMENTS/TENANT FINISH. Paragraph 2 of the Lease shall be, and


hereby is, deleted and replaced with the following Paragraph 2:


 


          "2.  IMPROVEMENTS TO BE CONSTRUCTED BY LANDLORD


 


               A.   BUILDING. Landlord agrees to construct on the Land an


     approximate 297,902 square foot warehouse building structure (the BUILDING)


     containing the features generally described on EXHIBIT "B" attached hereto


     and incorporated herein by reference and generally situated as shown on the


     Site Plan (herein so called) attached hereto as EXHIBIT "C" and


     incorporated herein by reference.


 


               B.   TENANT FINISH.  Landlord agrees to construct within the


     Premises the improvements described in the plans and specifications


     prepared by Meinhardt & Quintana (ARCHITECT) and set forth on EXHIBIT "G"


     attached hereto and incorporated herein by reference (collectively, the


     FINISH PLANS). The improvements to be constructed pursuant to the Finish


     Plans are collectively referred to herein as the TENANT FINISH WORK). The


     Building, the Tenant Finish Work and any other improvements constructed by


     Landlord on the Land from time to time, whether pursuant to this Lease or


     otherwise, are collectively referred to herein as the IMPROVEMENTS.


 




 





40











 






               C.   CONSTRUCTION COSTS. Subject to the terms of this paragraph,


     Landlord will pay (i) the cost of all Tenant Finish Work up to, but not in


     excess of the $220,928.00 (the WORK ALLOWANCE), which includes any costs


     incurred by Landlord in connection with the preparation of the Finish


     Plans, and (ii) the cost of constructing the Building and any other


     improvements described on EXHIBIT "B". Notwithstanding the preceding


     sentence, Tenant shall be responsible for the following:


 


                         (1)  If prior to commencement of the Tenant Finish Work


          Landlord determines that the actual cost of the Tenant Finish Work


          will exceed the Work Allowance, or if during construction the actual


          cost of the Tenant Finish Work exceeds the Work Allowance, Landlord


          will not be obligated to commence the Tenant Finish Work or continue


          its construction until it receives from Tenant ten percent (10%) of


          the estimated cost by which such amount is in excess, in Landlord's


          estimation, of the Work Allowance, with the actual amount of such


          excess, less the initial payment by Tenant, being due on the Rent


          Commencement Date.


 


                         (2)  If Tenant requests any redrawing of the Finish


          Plans, Tenant will be responsible for the costs of any redrawing of


          such plans in connection with such change(s) and shall reimburse


          Landlord for such costs upon demand.


 


                         (3)  If Landlord performs, at Tenant's request, any


          work over and above the work generally described in the Finish Plans


          or described on EXHIBIT "B" (herein, the ADDITIONAL WORK), including


          any additional work which has been approved by written change order


          or work order, then, subject to the exhaustion of the Work Allowance,


          the Additional Work together with the cost of preparing plans and


          specifications for same will be at Tenant's expense. Landlord will not


          be obligated to perform any such Additional Work until Tenant pays


          Landlord ten percent (10%) of the estimated cost


          of the Additional Work, as estimated by Landlord, with the actual cost


          of the Additional Work, less the initial payment by Tenant, being due


          on the Rent Commencement Date.


 


                         (4)  All costs or expenses incurred or suffered by


          Landlord that are caused by Tenant Delays. A TENANT DELAY(S) shall


          mean any delay in the completion of the Improvements or any delay in


          the occurrence of the Commencement Date caused by a Tenant Party,


          including, without limitation, any delay resulting from the


          installation by Tenant or any Tenant Party of any property or


          equipment of Tenant in or on the Premises prior to the Rent


          Commencement Date, any delay resulting from any request by Tenant for


          any change or modification to the Finish Plans, any delay caused by


          any Additional Work requested by Tenant, and any delay due to


          interference by Tenant or any Tenant Party with Landlord's engineers,


          consultants, contractors or otherwise. As used in this Lease, a TENANT


          PARTY shall mean one or more of Tenant, its agents, employees,


          officers, partners or contractors.


 




 





41











 






     Additionally, Landlord shall receive an administration fee in the total


     amount of 2.50% of the total construction costs of the Tenant Finish Work,


     as determined by the general contract for the Tenant Finish Work, as same


     may be modified by work or change orders.  Such fee shall be charged


     against the Work Allowance upon the entering into of such general contract


     and at the time the cost of any Additional Work is determined. If there is


     no remaining balance of the Work Allowance at any time the administration


     fee is owed, such shall be paid by Tenant upon demand. Lastly, all


     oversight costs charged by Architect in connection with the Tenant Finish


     Work shall be charged against the Work Allowance until exhausted and


     thereafter paid by Tenant upon demand.


 


               D.  MANNER OF CONSTRUCTION. Landlord agrees to construct the


     Improvements in a good and workmanlike manner.


 


               E.  OWNERSHIP OF IMPROVEMENTS.  All Tenant Finish Work and the


     other Improvements constructed by or on behalf of Landlord shall at all


     times be the sole property of Landlord."


 


     3.   RENT COMMENCEMENT/ACCEPTANCE OF PREMISES. Paragraph 3 of the Lease


shall be, and hereby is, deleted and replaced with the following:


 


     "3.  RENT COMMENCEMENT DATE/ACCEPTANCE OF PREMISES.


 


               A.  RENT COMMENCEMENT DATE. The RENT COMMENCEMENT DATE shall be


     the earlier to occur of (i) ninety (90) days after the Commencement Date,


     or (ii) the date Tenant takes possession or commences use of the Premises


     for any purpose other than merely to perform any work that may be permitted


     under Paragraph 6 below.


 


               B.  ACCEPTANCE OF PREMISES. Not less than five (5) days prior to


     the date Landlord estimates the Tenant Finish Work will be substantially


     complete Landlord will notify Tenant of the estimated date that the Tenant


     Finish Work will be substantially completed.  The term SUBSTANTIALLY


     COMPLETED or SUBSTANTIALLY COMPLETE as used herein, means that, in the


     reasonable opinion of Landlord's architect, the Tenant Finish Work has been


     completed in substantial accordance with the Finish Plans and that the


     Premises is in good and satisfactory condition, subject only to completion


     of minor punch list items.  Upon receipt of Landlord's notification, Tenant


     shall verbally notify Landlord of the date Tenant intends to make its


     walk-through inspection of the Premises, such date to be on the date


     specified in Landlord's notice for the Tenant Finish Work to be


     substantially complete or within three (3) days prior to that date.


     Landlord and Landlord's architect shall accompany Tenant on the


     walk-through inspection so as to mutually determine the punch list of


     items to be completed or repaired by Landlord within a reasonable time


     after the date of the walk-through inspection (the PUNCH LIST). At the


     conclusion of the walk-through inspection, Tenant will be deemed to have


     acknowledged that, subject only to Landlord's completion of the Punch List,


     (i) it has inspected and accepts the Premises and the Project, (ii) the


     Premises is suitable for the purpose for which it is leased, (iii) the


     Premises and the Project are in good and satisfactory condition, and


     (iv) no representations as to the repair of the Premises or the Project,


     nor promises to alter, remodel or improve the Premises or the Project which


     have been made by Landlord remain unsatisfied. At the conclusion of the


     walk-through inspection Tenant further agrees to execute an Acceptance of


     Premises Memorandum in the form attached hereto and made a part hereof as


     EXHIBIT "E", whereupon possession of the Premises will be delivered to


     Tenant and Tenant will be deemed to have accepted the Premises, and Tenant


 


 




 





42











 






 


     may thereafter occupy the Premises.  Tenant's failure to conduct a


     walk-through inspection or execute the Acceptance of Premises Memorandum


     will not delay the occurrence of the Rent Commencement Date."


 


     4.   PAYMENT OF RENT. Paragraph 4C of the Lease shall be, and hereby is,


deleted and replaced with the following:


 


          "C. PAYMENT OF RENT. Base Monthly Rent and Adjustments shall be due


     and payable, in advance, beginning on the Rent Commencement Date; provided


     that one (1) full installment of Base Monthly Rent and Adjustments totaling


     $24,825.33 is due and payable on the date of this Lease, such to be applied


     to the first installment of Base Monthly Rent and Adjustments due on the


     Rent Commencement Date and thereafter applied to Base Monthly Rent and


     Adjustments until fully applied.  Any installment of Base Monthly Rent or


     Adjustments due for any fractional calendar month shall be prorated based


     upon the actual number of days in that month. If the Rent Commencement Date


     occurs on the first day of a calendar month, then the month in which the


     Rent Commencement Date occurs shall be the first complete calendar month


     after the occurrence of the Rent Commencement Date for purposes of


     determining the date upon which Base Monthly Rent adjusts. As used in this


     Lease, RENT shall mean the Base Monthly Rent and all other amounts provided


     for in this Lease to be paid by Tenant to Landlord, all of which shall


     constitute rental in consideration for this Lease and the leasing of the


     Premises. All Rent (hereinafter defined) 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 in Paragraph 32 hereof or to


     such other person or at such other address as Landlord may from time to


     time designate in writing. Rent shall be paid without notice, demand,


     abatement, deduction or offset (unless expressly provided for elsewhere in


     this Lease) and shall be a covenant of Tenant independent of any obligation


     of Landlord under this Lease. Tenant's obligation to pay any installment


     of Rent shall not be deemed satisfied until such installment of Rent has


     actually been received by Landlord."


 


     5.   IMPROVEMENTS/ALTERATIONS BY TENANT. Paragraphs 6A, 6B, and 6C of


the Lease shall be, and hereby are, deleted and replaced with the following:


 


               "A.  AFTER COMMENCEMENT DATE. Except as expressly permitted by


     this Paragraph 6, Tenant may not make or permit any alterations,


     improvements, or additions in or to the Premises without Landlord's prior


     written consent. All alterations and improvements desired by Tenant are


     subject to the following conditions:


 


                         (1)  All alterations, improvements and additions will


          be at the sole cost and expense of Tenant;


 


                         (2)  All alterations, improvements and additions in and


          to the Premises requested by Tenant must be made in accordance with


          plans and specifications first approved in writing by Landlord;


 


                         (3)  Tenant's contractors and subcontractors are


          subject to Landlord's prior approval. In addition, each of Tenant's


          contractor(s) and subcontractor(s) must deliver evidence satisfactory


          to Landlord that the insurance specified on EXHIBIT "F" (attached


          hereto and incorporated herein by reference) is in force prior to


          commencing work;


 


                         (4)  All alterations, improvements and additions made


          by Tenant must comply with all Applicable Laws including,


          specifically, the ADA, and applicable building permits and


          certificates of occupancy. Landlord's approval of Tenant's plans and


          specifications for the alterations or improvements will not act as a


          confirmation or agreement by Landlord that the improvements and


          alterations comply with Applicable Laws;


 


                         (5)  Tenant must deliver to Landlord evidence that


          Tenant has obtained all necessary governmental permits and approvals


          for the improvements, alterations and additions prior to starting any


          work;


 


                         (6)  All alterations, improvements and additions must


          be done in a good and workmanlike manner so as not to damage or alter


          the primary structure or structural qualities or the utility or other


          systems of the Premises or the Building and is subject to approval by


          Landlord during and after construction, in its sole discretion;


 


 




 





43











 






 


                         (7)  Lien releases from each of Tenant's contractor(s)


          and subcontractor(s) must be submitted to Landlord within ten (10)


          days after completion of the work performed by the contractor(s) or


          subcontractor(s); and


 


                         (8) Tenant shall be solely responsible for the safety


          and security of all equipment and property installed or placed in, on


          or about the Premises by a Tenant Party.


 


               B. PRIOR TO THE RENT COMMENCEMENT DATE. Prior to the Rent


     Commencement Date, and upon written request by Tenant, Tenant and its


     contractors may enter the Premises so that Tenant may perform other work


     and decorations Tenant wants in the Premises. This license to enter prior


     to the Rent Commencement Date is subject to the conditions set forth in


     Paragraph 6A above and, in addition, the following conditions:


 


                         (9)  Tenant's contractor(s) must work in harmony and


          not interfere with Landlord's contractors and subcontractors; and


 


                         (10) Landlord may revoke this license if the entry


          causes interference with the construction of the Improvements and


          Tenant does not immediately cease such interference (or cause its


          contractors to immediately cease such interference, as the case may


          be) after receipt of notice from Landlord, which notice may be


          verbal. Any such interference may be deemed a Tenant Delay.


 


               C.   TENANT'S PROPERTY. Tenant, at its own cost and expense, may


     erect such shelves, racks, bins and trade fixtures (collectively, TENANT'S


     PROPERTY) within the Premises as it desires and without Landlord's prior


     consent provided that (a) such items do not alter the basic character of


     the Premises or the Building; (b) such items do not overload or damage the


     Premises or the Building or the utility or other systems serving same; (c)


     such items may be removed without material injury to the Premises and the


     Building; and (d) the construction, erection or installation thereof


     complies with all Applicable Laws, applicable building permits and


     certificates of occupancy; and (e) provided that Tenant's installation of


     Tenant's Property prior to the Rent Commencement Date will be subject to


     Paragraph 6B above. All of Tenant's Property shall remain the property of


     Tenant and shall be removed on or before the earlier to occur of the date


     of termination of this Lease or Tenant's vacating of the Premises. Tenant


     shall promptly repair any damage to the Project or the Premises caused by


     the removal of any of Tenant's Property. Any of Tenant's Property not so


     removed and any other property of Tenant not removed prior to the


     termination of this Lease or Tenant's vacating of the Premises shall


     thereupon be conclusively presumed to have been abandoned by Tenant, and


     Landlord may, at its option, take over possession of any and all of the


     foregoing and either (i) declare the same to be the property of Landlord


     by written notice to Tenant at the address provided herein or (ii) at the


     sole cost and expense of Tenant, remove, store, and/or dispose of the same


     or any part thereof all at Tenant's cost, in any manner that Landlord shall


     choose without incurring liability to Tenant or any other person."


 


     6.   EXHIBITS. EXHIBIT "E" to the Lease shall be, and hereby is, deleted


and replaced with EXHIBIT "E" as attached to this Amendment. The Lease shall


be, and hereby is, further amended to add as EXHIBIT "G" thereto the Finish


Plans attached to this Amendment as EXHIBIT "G". EXHIBITS "A"-"D" and "F" are


omitted from this Amendment.


 


     7.   COUNTERPARTS. This Amendment may be executed in counterparts.


Facsimile signatures will have the same effect as originals.


 


     8.   RATIFICATION. The Lease, as amended hereby, is ratified and


confirmed by the parties as being in full force and effect. To the extent of


any conflict between the terms of the Lease and this Amendment, this


Amendment shall govern. All capitalized terms herein shall have the same


meaning as set forth in the Lease unless otherwise noted herein. This


Amendment is binding on the parties and their successors and assigns.


 


     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment


effective as of the latter of the two dates set forth below.


 


               LANDLORD:      MEPC QUORUM PROPERTIES INC., a Delaware


                              corporation


 


 


                              By: /s/ Ab Atkins


                                 ---------------------------------


 


 




 





44











 






 


                              Name:     Ab ATKINS


                                   -------------------------------


                              Title:  SENIOR VICE PRESIDENT


                                    ------------------------------


 


                              By: /s/ Peter Johnson


                                 ---------------------------------


 


                              Name:     PETER JOHNSON


                                   -------------------------------


                              Title:  SENIOR VICE PRESIDENT


                                    ------------------------------


 


               TENANT:        MANNATECH, INC. a Texas corporation


                              By: /s/ (Illegible)


                                 ---------------------------------


                              Name:


                                   -------------------------------


                              Title: C.O.O.


                                    ------------------------------


 


 




 





45











 






 


                               EXHIBITS "A" - "D"


 


                                    OMITTED


 


 




 





46











 






 


                                  EXHIBIT "E"


 


                       ACCEPTANCE OF PREMISES MEMORANDUM


 


     This memorandum is being executed pursuant to the Commercial Lease


Agreement (the LEASE) executed on the _____ day of____________,1999, between


MEPC QUORUM PROPERTIES II INC., a Delaware corporation (LANDLORD), and


MANNATECH, INC., a Texas corporation (TENANT).


 


Landlord and Tenant hereby agree that:


 


1.   Except for the Punch List Items (as shown on the attached Punch List),


     Landlord has fully completed the construction work required under the


     terms of the Lease and the Finish Plans attached thereto. Landlord will use


     reasonable efforts to complete the Punch List Items within thirty (30) days


     after the date hereof.


 


2.   Tenant acknowledges that, subject to the Punch List Items, (i) it has


     inspected and accepts the Premises, (ii) the buildings and improvements


     comprising the same are suitable for the purpose for which the Premises are


     leased, (iii) the Premises are in good and satisfactory condition, and (iv)


     no representations as to the repair of the Premises, nor promises to alter,


     remodel or improve the Premises which have been made by Landlord remain


     unsatisfied.


 


3.   The Rent Commencement Date of the Lease is the ____ day of ___________,


     199___.


 


4.   The expiration date of the Lease is the ____ day of__________, _____.


 


5.   All capitalized terms not defined herein shall have the meaning assigned to


     them in the Lease.


 


Agreed and Executed this ______day of ______________, 1998.


 


               LANDLORD                           TENANT


 


     MEPC QUORUM PROPERTIES II INC.,    MANNATECH, INC., a Texas corporation


     a Delaware corporation             a Texas corporation


 


 


     By:                                By:


        --------------------------         --------------------------------


     Name:                              Name:


          ------------------------           ------------------------------


     Title:                             Title:


           -----------------------            -----------------------------


 


 


 


 


     By:


        --------------------------


     Name:


          ------------------------


     Title:


           -----------------------


 




 





47











 






 


                                  EXHIBIT "F"


                                    OMITTED


 




 





48











 






 


                                  EXHIBIT "G"


 


         Attached hereto are the site plans for the leased property.


 


 




  





49











  












 


LEASE ABSTRACT


 



	  	  	  
	
LEASE AMENDMENT:

	  	
Second Amendment


	
ABSTRACT PREPARED BY:

	  	
Gallini and Lester


	
LANDLORD:

	  	
TEXAS DUGAN LIMITED PARTNERSHIP


	
PROPERTY NAME:

	  	
Freeport III


	
TENANT NAME:

	  	
MANNATECH INCORPORATED


	
TENANT CONTACT:

	  	
Rick Leonard


	
TENANT PHONE:

	  	
972-471-1561


	
ADDRESS:

	  	
445 South Royal Lane, Suite 800, Coppell, TX 75019


	
TENANT SQ.FT.

	  	
74,476


	
LEASE EXECUTION DATE:

	  	  
	
TYPE OF LEASE:

	  	
RENEWAL


	  	  
	
LEASE TERM IN MONTHS:

	  	
122


	
COMMENCEMENT:

	  	
20-Jan-07


	
EXPIRATION:

	  	
19-Mar-17


	
RENEWAL OPTIONS:

	  	
2 five year options at market rate







 



	
  

	
RENT:







 



	  	  	  	  	  	  	  	  	  
	
Year


[Missing Graphic Reference]

	
  

	
Dates:


[Missing Graphic Reference]

	
  

	
Amount per month


[Missing Graphic Reference]

	
  

	
Amount per year


[Missing Graphic Reference]

	
  

	
Annual PSF


[Missing Graphic Reference]


	
0

	
  

	
01/20/2007-03/19/2007

	
  

	
$0.00 per month

	
  

	  	
  

	  
	
1-3

	
  

	
03/20/2007-03/19/2010

	
  

	
$23,273.75 per month

	
  

	
$279,285.00

	
  

	
$3.75


	
2-5

	
  

	
03/20/2010-03/19/2012

	
  

	
$23,894.38 per month

	
  

	
$286,732.56

	
  

	
$3.85


	
6-10

	
  

	
03/20/2012-03/19/2017

	
  

	
$25,135.65 per month

	
  

	
$301,627.80

	
  

	
$4.05







 



	  	  	  	  	  
	
SECURITY DEPOSIT:

	
  

	
$24,825.33

	
  

	  
	
EXPENSES:

	
  

	
Tenant pays all expenses

	
  

	  
	
TENANT IMPROVEMENT ALLOWANCE

	
  

	
$37,238.00

	
  

	  





 


OPTIONS:


 


Expansion: To take adjacent space, if exercised in years 1-5 of term


 



	  	  	  	  	  	  	  
	
Year


[Missing Graphic Reference]

	
  

	
Dates:


[Missing Graphic Reference]

	
  

	
Annual PSF for


less than 20%


office finish


[Missing Graphic Reference]

	
  

	  
	
1-3

	
  

	
01/20/2007-01/19/2010

	
  

	
$3.75

	
  

	  
	
2-5

	
  

	
01/20/2010-01/19/2012

	
  

	
$3.85

	
  

	  
	
6-10

	
  

	
03/20/2012 - 03/19/2017

	
  

	
$4.05

	
  

	  
	  	  	  	  
	
Year


[Missing Graphic Reference]

	
  

	
Dates:


[Missing Graphic Reference]

	
  

	
Annual PSF for


over 20%


office finish


[Missing Graphic Reference]

	
  

	  
	
1-3

	
  

	
01/20/2007-01/19/2010

	
  

	
$4.15

	
  

	  
	
2-5

	
  

	
01/20/2010-01/19/2012

	
  

	
$4.25

	
  

	  
	
6-10

	
  

	
03/20/2012 - 03/19/2017

	
  

	
$4.40

	
  

	  





 


Expansion: To take adjacent space, if exercised in years 6-10 of term rate will be at market


 



	  	  	  
	
Cancellation if Tenant has not exercised Expansion Option:


	  	
  

	
Tenant has right to cancel at 62nd month on 12 months notice.


	
Cancellation fee:

	
  

	
$105,290.45 plus unamortized tenant finish allowance of $18,619.00


	  
	
Cancellation if Tenant has exercised Expansion Option:


	  	
  

	
Tenant has right to cancel at 62nd month on 12 months notice.


	
Cancellation fee:

	
  

	
$86,761.45 plus unamortized tenant finish allowance of $18,619.00







 


 




 





50











 






 


SECOND AMENDMENT TO LEASE


 


THIS SECOND AMENDMENT TO LEASE is made as of this day of g^WW’/- 2005, by and between TEXAS DUGAN LIMITED PARTNERSHIP, a Delaware limited partnership (hereinafter referred to as “Landlord”) and’ MANNATECH INCORPORATED (previously identified as Mannatech, Inc., as Tenant), a Texas corporation (hereinafter referred to as “Tenant”).


 


WITNESSETH:


 


WHEREAS, MEPC Quorum Properties II Inc. and Tenant entered into that certain Commercial Lease Agreement dated May 29, 1997; as amended by that certain First Amendment to Lease Agreement dated November 6, 1997 (hereinafter collectively referred to as the “Lease”) for the lease of approximately 74,476 square feet of space (hereinafter the “Leased Premises”) in a building commonly known as Freeport HI (the “Building”) located at 445 South Royal Lane, Suite 800, Coppell, Texas 75019, and within Freeport North Industrial Park (the “Park”), which space is more particularly described in the Lease; and


 


WHEREAS, Texas Dugan Limited Partnership succeeded to the interest of the landlord under the Lease and is the Landlord with respect to the Leased Premises; and


 


WHEREAS. Landlord and Tenant desire to enter into a second amendment to the Lease to extend the term of the Lease upon the terms and conditions set forth herein (the “Second Amendment to Lease”).


 


NOW, THEREFORE, for and in consideration of Ten and No/100 Dollars ($10.00) and other good and valuable consideration paid by Landlord and Tenant to one another, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree to amend the Lease as follows:


 


1. Incorporation of Recitals. The above recitals are hereby incorporated into this Amendment as if fully set forth herein.


 


2. Premises/Lease Term. Effective as of January 20, 2007 (the “Effective Date”) the term of the Lease is hereby extended through midnight on March 19, 2017 (the “Extension Term”) with an option of early termination as set forth in Article 9 hereof.


 


3. Improvements To Be Constructed by Landlord. Section 2 of the Lease is deleted in its entirety and is replaced with the following:


 


“A. Landlord’s Obligations. Tenant has personally inspected the Leased Premises and accepts the same “AS IS” without representation or warranty by Landlord of any kind and with the understanding that Landlord shall have no responsibility with respect thereto except to construct and install within the Leased Premises, in a good and workmanlike manner, hereinafter referred to as the “Tenant Improvements”.


 


B. Construction Drawings. Cost Statement and Allowance.


 


(1) Promptly following the date hereof, Tenant will work with Landlord’s space planner to develop a space plan for the Leased Premises that is reasonably acceptable to Landlord (the “Space Plan”). Tenant shall deliver the Space Plan to Landlord within ten (10) days after the date of this Lease. Within twenty (20) days after Landlord’s receipt of the Space Plan, Landlord shall prepare and submit to Tenant (i) a set of construction drawings (the “CD’s”) covering all work to be performed by Landlord in constructing the Tenant Improvements in accordance with the Space Plan, and (ii) a statement of the cost to construct and install the Tenant Improvements (the “Cost Statement”). Tenant acknowledges and agrees that (A) the Cost Statement shall include design fees and a fee payable to the project’s general contractor, and (B) such general contractor may be comprised of a subsidiary, affiliate or employees of Landlord. Tenant shall have five (5) days after receipt of the CD’s and the Cost Statement in which to review both the CD’s and the Cost Statement and to give Landlord written notice of Tenant’s approval of the CD’s or its requested changes thereto. Tenant shall have no right to request any changes to the CD’s that would materially alter the exterior appearance or basic nature of the Building or the Building systems. If Tenant fails to approve or request changes to the CD’s within ten (10) days after its receipt thereof, then Tenant shall be deemed to have approved the CD’s and the Cost Statement and the same shall thereupon be final. If Tenant requests any changes to the CD’s, Landlord shall make those changes which are reasonably requested by Tenant and shall within ten (10) days of its receipt of such request submit the revised portion of the CD’s (and, to the extent applicable, the revised Cost Statement) to Tenant. Tenant shall have an additional five (5) business days to review the revised CD’s (the “Revision Review Period”) and shall not unreasonably disapprove the revised portions of the CD’s unless Landlord has unreasonably failed to incorporate reasonable comments of Tenant and, subject to the foregoing, the CD’s and the Cost Statement, as modified by said revisions, shall be deemed to be final upon the submission of said revisions to Tenant unless Tenant objects, in writing prior to the end of the Revision Review Period, Tenant shall at all times in its review of the CD’s and the Cost Statement, and of any revisions thereto, act reasonably and in good faith. Without limiting the foregoing, Tenant agrees to confirm Tenant’s consent to the CD’s and acknowledge the Cost Statement in writing within three (3) days following Landlord’s written request therefore.


 




 





51











 






 


(2) Tenant shall be responsible for the cost to construct and install the Tenant Improvements only to the extent that the Cost Statement, taking into account any increases or decreases resulting from any Change Orders (as hereinafter defined), exceeds Thirty Seven Thousand Two Hundred Thirty Eight and 00/100 Dollars (537,238.00) (the “Allowance”). If, following Tenant’s approval (or deemed approval) of the CD’s, the Cost Statement shows that the cost to construct and install the Tenant Improvements will exceed the Allowance, Tenant shall deliver to Landlord, within ten (10) days following Landlord’s written request, an amount equal to one-half (1/2) of such excess. Following Substantial Completion (as hereinafter defined) of the Tenant Improvements and acceptance by Tenant, which shall not be unreasonably withheld. Tenant shall pay to Landlord the difference between the Cost Statement (taking into account any increases or decreases resulting from any Change Orders) and the Allowance within ten (10) days of Landlord’s request therefor. Tenant’s failure to deliver the payments required in this paragraph shall entitle Landlord to stop the construction and installation of the Tenant Improvements until such payment is received, and any resulting delay shall constitute a Tenant Delay (as hereinafter defined) hereunder. In addition, all delinquent payments shall accrue interest at 15% per annum. Upon Substantial Completion of the Tenant Improvements, a representative of Landlord and a representative of Tenant together shall inspect the Leased Premises and generate a punchlist of defective or uncompleted items relating to the completion of construction of the Tenant Improvements. Tenant may withhold one hundred fifty percent (150%) of the cost of the uncompleted items identified on the punchlist, without penalty or delinquency charge, pending satisfactory resolution of any outstanding items contained in the punchlist. If the Allowance exceeds the Cost Statement (taking into account any increases or decreases resulting from any Change Orders), such savings shall be the property of Landlord.


 


C. Completion. Landlord shall use commercially reasonable speed and diligence to complete the Tenant Improvements. On the Effective Date Tenant shall be deemed to have accepted the Leased Premises and that the condition of the Leased Premises and the Building was at the time satisfactory and in conformity with the provisions of this Lease in all respects, subject to any punchlist items. Tenant acknowledges that Landlord will be constructing the Tenant Improvements to the Leased Premises during normal business hours and agrees to cooperate with Landlord so as not to interfere with Landlord’s completion of the Tenant Improvements. For purposes of this Amendment “Substantial Completion” (or any grammatical variation thereof) shall mean completion of construction of the Tenant Improvements, subject only to punchlist items to be identified by Landlord and Tenant in a joint inspection of the Leased Premises.


 


D. Change Orders. Tenant shall have the right to request changes to the CD’s at any time following the date hereof by way of written change order (each, a “Change Order”, and collectively, “Change Orders”). Provided such Change Order is reasonably acceptable to Landlord, Landlord shall prepare and submit promptly to Tenant a memorandum setting forth the impact on cost and schedule resulting from said Change Order (the “Change Order Memorandum of Agreement”). Tenant shall, within three (3) days following Tenant’s receipt of the Change Order Memorandum of Agreement, either (a) execute and return the Change Order Memorandum of Agreement to Landlord, or (b) retract its request for the Change Order. At Landlord’s option, Tenant shall pay to Landlord (or Landlord’s designee), within ten (10) days following Landlord’s request, any reasonable increase in the cost to construct the Tenant Improvements resulting from the Change Order, as set forth in the Change Order Memorandum of Agreement. Landlord shall not be obligated to commence any work set forth in a Change Order until such time as Tenant has delivered to Landlord the Change Order Memorandum of Agreement executed by Tenant and, if applicable, Tenant has paid Landlord in full for said Change Order.”


 


4. Rent. Section 4 of the Lease is hereby amended as follows:


 


A. Base Monthly Rent. Section 4A of the Lease is hereby amended to provide that Tenant shall pay to Landlord the Base Monthly Rent, in advance, without deduction or offset, beginning on the Effective Date and on or before the first day of each and every calendar month thereafter during the Extension Term as set forth below:


 



	  	  	  	  	  	  
	
01/20/2007-03/19/2007

	
  

	
$0.00 per year

	
  

	
$ 0.00 per month

	
*


	
03/20/2007-03/19/2010

	
  

	
$279,285.00 per year

	
  

	
$23,273.75 per month

	  
	
03/20/2010-03/19/2012

	
  

	
$286,732.60 per year

	
  

	
$23,894.38 per month

	  
	
03/20/2012-03/19/2017

	
  

	
$301,627.80 per year

	
  

	
$25,135.65 per month

	  





 


“‘Monthly Rental Installments shall be abated during Months ] through 2 of the Lease Term but Tenant shall be responsible for Tenant’s Proportionate Share of Adjustments.


 


B. Additional Rent. The first sentence of Section 4(B) is deleted in its entirety and replaced with the following:


 


“Tenant agrees to reimburse Landlord for Tenant’s Proportionate Share of (i) Real Property Taxes, (ii) Landlord’s actual cost of obtaining and maintaining Landlord’s Insurance, (iii) the actual cost of any maintenance performed by Landlord under Paragraph 12A(2) of the Lease or which, in Landlord’s reasonable discretion, is for the benefit of the Project as a whole and not reasonably allocable to any specific tenant or tenants, and (iv) management fees (such management fees shall not exceed 3% of the total gross revenue of the Building) (collectively, the “Adjustments”).


 




 





52











 






 


5. Indemnity. Section 6(F) of the Lease is hereby deleted and replaced with the following provision:


 


“Tenant hereby indemnifies and holds Landlord harmless from any claims, demands, actions, losses, and damages arising from activities of Tenant or any Tenant Party, or any of their invitees, in connection with any alterations, improvements or additions made or contracted by Tenant.


 


Landlord hereby indemnifies and holds Tenant harmless from any claims, demands, actions, losses and damages arising from work performed by its contractors and/or subcontractors, as the case may be, in connection with Section 2 of this Second Amendment to Lease, except to the extent that any work is performed at the request of the Tenant outside the scope of the Allowances.”


 


6. Notices. Section 32 of the Lease is hereby amended to reflect Landlord’s current addresses for notices and payments as follows:


 



	  	  	  
	
Landlord:

	
  

	
Texas Dugan Limited Partnership


	  	
  

	
c/o Duke Realty Corporation


5495 Belt Line Road, Suite 360


Dallas, Texas 75254


Attn: Senior Property Manager


	  	  
	
With a copy to:

	
  

	
Duke Realty Corporation


3950 Shackleford Road, Suite 300


Duluth, Georgia 30096-8268


Attn: Legal Department - TX Market


	  	  
	
With Payments to:

	
  

	
Texas Dugan Limited Partnership


75 Remittance Drive, Suite 1493


Chicago, IL 60675-1493


	  	  
	
Tenant (following occupancy):

	
  

	
Mannatech Incorporated


445 South Royal Lane Suite 800


Coppell, Texas 75019


Attn: Jeff Bourgoyne, Senior Vice President


	  	  
	
With a copy to:

	
  

	
Mannatech Incorporated


600 South Royal Lane Suite 400


Coppell, Texas 75019


Attn: General Counsel







 


7. Option to Renew. The Option to Renew as set forth in Section 34 of the Lease is hereby deleted in its entirety and is replaced with the following:


 


A. Grant and Exercise of Option. Provided that (i) no default has occurred and is then continuing; (ii) the credit worthiness of Tenant is then reasonably acceptable to Landlord using reasonably accepted business judgment and practices in determining such creditworthiness; and (iii) Tenant originally named herein remains in possession of and has been continuously operating in the entire Leased Premises throughout the term immediately preceding the Extension Term (as defined below); however, this requirement will be waived by Landlord if Landlord has approved a sublease of less than fifty percent (50%) of the Leased Premises as indicated in Paragraph 16 of the Lease, Tenant shall have the option to extend the Lease Term for two (2) additional periods of five (5) years each (the “Extension Term(s)”). Each Extension Term shall be upon the same terms and conditions contained in the Lease except (x) this provision giving two (2) extension options shall be amended to reflect the remaining options to extend, if any, and (y) any improvement allowances or other concessions applicable to the Leased Premises under the Lease shall not apply to the Extension Term, and (z) the Minimum Annual Rent shall be adjusted as set forth below (the “Rent Adjustment”). Tenant shall exercise each option by (i) delivering to Landlord, no later than six (6) months prior to the expiration of the preceding term, written notice of Tenant’s desire to extend the Lease Term, Tenant’s failure to timely exercise such option shall be deemed a waiver of such option and any succeeding option. Landlord shall notify Tenant of the amount of the Rent Adjustment no later than ninety (90) days prior to the commencement of the Extension Term. Tenant shall be deemed to have rejected the Rent Adjustment if it fails to deliver to Landlord a written objection thereto within ten (10) business days after receipt thereof. If Tenant properly exercises its option to extend. Landlord and Tenant shall execute an amendment to the Lease (or, at Landlord’s option, a new lease on the form then in use for the Building) reflecting the terms and conditions of the Extension Term within thirty (30) days after Tenant’s acceptance (or deemed acceptance) of the Rent Adjustment.


 




 





53











 






 


B. Rent Adjustment. The Minimum Annual Rent for the applicable Extension Term shall be an amount equal to the Minimum Annual Rent then being quoted by Landlord to prospective renewal tenants of the Building for space of comparable size and quality and with similar or equivalent improvements as are found in the Building, and if none, then in similar buildings in the vicinity; provided, however, that in no event shall the Minimum Annual Rent during any Extension Term be less than the highest Minimum Annual Rent payable during the immediately preceding term. The Monthly Rental Installments shall be an amount equal to one-twelfth (1/12) of the Minimum Annual Rent for the Extension Term and shall be paid at the same time and in the same manner as provided in the Lease.


 


8. Right of First Refusal on Adjacent Space. The Right of First Refusal as set forth in Section 35 of the Lease is deleted in its entirety and replaced with the following Right of First Offer:


 


“35. Right of First Offer.


 


A Provided that (i) no default has occurred and is then continuing, (ii) the creditworthiness of Tenant is then reasonably acceptable to Landlord, and (iii) Tenant originally named herein or its Permitted Transferee remains in possession of and has been continuously operating in the entire Leased Premises throughout the Lease Term, and subject to any rights of other tenants to the Offer Space (as defined herein) and Landlord’s right to renew or extend the lease term of any other tenant with respect to the portion of the Offer Space now or hereafter leased by such other tenant, Landlord shall, before entering into a lease with a third party for any space in the Building that becomes vacant (the “Offer Space”), notify Tenant in writing of the availability of the Offer Space for leasing and setting forth the terms and conditions upon which Landlord is willing to lease the Offer Space to Tenant (“Landlord’s Notice”). Tenant shall have five (5) business days from its receipt of Landlord’s Notice to deliver to Landlord a written notice agreeing to lease the Offer Space on the terms and conditions contained in Landlord’s Notice (“Tenant’s Acceptance”). In the event Tenant fails to deliver Tenant’s Acceptance to Landlord within said five (5)-business day period, such failure shall be conclusively deemed a rejection of the Offer Space and a waiver by Tenant of this right of first offer, whereupon, except as provided in (c) below, Tenant shall have no further rights with respect to the Offer Space and Landlord shall be free to lease the Offer Space to a third party.


 


B. The term for the Offer Space (the “Offer Space Term”) shall be coterminous with the term for the then existing Leased Premises (the “Existing Premises”); provided, however, that the minimum term for the Offer Space shall be five (5) years and the term for the Existing Premises shall be extended, if necessary, to be coterminous with the term for the Offer Space. If the Lease Term for the Existing Premises is extended as provided above, the Minimum Annual Rent for such extension term shall be an amount equal to the Minimum Annual Rent then being quoted by Landlord to prospective renewing tenants of the Building for space of comparable size and quality and with similar or equivalent improvements as are found in the Building, and if none, then in similar buildings in the vicinity; provided, however, that in no event shall the Minimum Annual Rent during such extension term be less than the highest Minimum Annual Rent payable during the immediately preceding term. The Minimum Annual Rent for the Offer Space shall be as set forth below:


 


(i) If Tenant exercises its right of first offer during years one (1) through five (5) of the Extended Term, the Minimum Annual Rent for the Offer Space shall be as follows:


 


(A) In the event the Offer Space contains less than twenty percent (20%) of office space, then during the Offer Space Term, the Minimum Annual Rent for the Offer Space shall be payable at the rates set forth below:


 



	  	  	  
	
01/20/2007 - 01/19/2010

	  	
$3.75, per rentable square foot of the Offer Space


	
01/20/2010-01/19/2012

	  	
$3.85 per rentable square foot of the Offer Space


	
01/20/2012 - 01/19/2017

	  	
$4.05 per rentable square foot of the Offer Space; or







 


(B) In the event the Offer Space contains twenty percent (20%) or more of office space, then the Minimum Annual Rent for the Offer Space shall be as follows:


 



	  	  	  
	
01/20/2007 - 01/19/2010

	  	
$4.15 per rentable square foot of the Offer Space


	
01/20/2010-01/19/2012

	  	
$4.25 per rentable square foot of the Offer Space


	
01/20/2012 - 01/19/2017

	  	
$4.40 per rentable square foot of the Offer Space







 


(ii) If Tenant exercises its right of first offer during years six (6) through ten (10) of the Extended Term, the Minimum Annual Rent for the Offer Space shall be an amount equal to the Minimum Annual Rent then being quoted by Landlord to prospective renewing tenants of the Building for space of comparable size and quality and with similar or equivalent improvements as are found in the Building, and if none, then in similar buildings in the Park; provided, however, that in no event shall the Minimum Annual Rent during this Extended Term be less than the highest Minimum Annual Rent payable during the immediately preceding term.


 




 





54











 






 


C. If Tenant properly exercises the right of first offer, Landlord and Tenant shall enter into an amendment to this Lease adding the Offer Space to the Premises upon the terms and conditions set forth herein and making such other modifications to this Lease as are appropriate under the circumstances. If Tenant shall fail to enter into such amendment within ten (10) days following Tenant’s Acceptance, then Landlord may terminate this right of first offer by notifying Tenant in writing, in which event Tenant shall have no further rights with respect to the Offer Space and Landlord shall be free to lease the Offer Space to a third party. This right of first offer shall be an ongoing right of first offer, which shall mean that if Tenant waives its right of first offer pursuant to subsection (a) above and all of the Offer Space is subsequently leased to a third party (“New Tenant”), Landlord shall not lease the Offer Space to a third party (other than the New Tenant) without notifying Tenant of the availability of the Offer Space, in which case Tenant shall again have a right of first offer to lease the Offer Space in accordance with this Section 35.”


 


9. Option to Terminate. Provided that (a) no default has occurred and is then continuing, and (b) Tenant originally named herein remains in possession of and has been continuously operating in the entire Premises throughout the Lease Term, however, this requirement will be waived by Landlord if Landlord has approved a sublease of less than fifty percent (50%) of the Leased Premises as indicated in Paragraph 16 of the Lease, then Tenant shall have the following termination rights:


 


(a) If Tenant has not exercised its Right of First Offer as set forth above. Tenant shall have a one time right to terminate the Lease effective as of the end of the sixty-second (62nd) month from the Effective Date. In order to exercise such termination right, Tenant shall notify Landlord of such exercise in writing at least twelve (12) months prior to the effective date of such termination, and together with such notice, Tenant shall deliver to Landlord, as an agreed upon termination fee, an amount equal to One Hundred Five Thousand Two Hundred Ninety and 45/100 Dollars ($105,290.45). Such payment is made in consideration for Landlord’s grant of this option to terminate to compensate Landlord for rental and other concessions given to Tenant and for other good and valuable consideration. The termination fee does not constitute payment of rent to Landlord. If Tenant fails to notify Landlord by the deadline set forth above, Tenant shall have waived Tenant’s termination right for the remainder of the term of the Lease and any extensions thereof. In the event Tenant exercises the Right of First Offer as set forth above, this option to terminate shall thereafter be void and of no further force or effect; or


 


(b) If Tenant has exercised its right of first offer as set forth above prior to the end of the 50th month of the Extension Term, Tenant shall have the right to terminate this Lease effective as of the end of the fifth (5th) anniversary of the commencement date of the Offer Space on the terms and conditions set forth below. In order to exercise such termination right, Tenant shall notify Landlord of such exercise in writing at least twelve (12) months prior to the effective date of such termination, and together with such notice, Tenant shall deliver to Landlord, as an agreed upon termination fee, an amount equal to Eighty-Six Thousand Seven Hundred Sixty-One and 45/100 Dollars ($86,761.45) plus the unamortized portion of any tenant finish improvements. Such payment is made in consideration for Landlord’s grant of this option to terminate to compensate Landlord for rental and other concessions given to Tenant and for other good and valuable consideration. The termination fee does not constitute payment of rent to Landlord. If Tenant fails to notify Landlord by the deadline set forth above, Tenant shall have waived Tenant’s termination right for the remainder of the term of the Lease and any extensions thereof.


 


10. Brokers. Section 36L of the Lease is deleted in its entirely and is replaced with the following:


 


Except for Gallini & Lester Corporate Realty Services, whose commission shall be paid by Landlord, Landlord and Tenant each represent and warrant to the other that neither party has engaged or had any conversations or negotiations with any broker, finder or other third party concerning the matters set forth in this Amendment who would be entitled to any commission or fee based on the execution of this Amendment. Landlord and Tenant each hereby indemnifies the other against and from any claims for any brokerage commissions and all costs, expenses and liabilities in connection therewith, including, without limitation, reasonable attorneys’ fees and expenses, for any breach of the foregoing. The foregoing indemnification shall survive the termination of the Lease for any reason.


 


11. Except as expressly modified by this Second Amendment to Lease, all provisions, terms and conditions of the Lease shall remain in full force and effect.


 


12. This Second Amendment to Lease is ratified and confirmed by the parties as being in full force and effect. To the extent of any conflict between the terms of the Lease and this Second Amendment to Lease, this Second Amendment shall govern. All terms herein shall have the same meaning as set forth in the Lease unless otherwise noted herein.


 


13. This Second Amendment to Lease shall not be of any legal effect or consequence unless signed by Landlord and Tenant, and once signed by Landlord and Tenant it shall be binding upon and inure to the benefit of Landlord, Tenant, and their respective legal representatives, successors and assigns. This Second Amendment to Lease may be executed in counterparts, including facsimile counterparts, with the same force and effectiveness as if it were executed in one complete document.


 


14. This Second Amendment to Lease has been executed and shall be construed under the laws of the State of Texas.


 


[Execution signatures contained on the following page]


 




 





55











 






 


IN WITNESS WHEREOF, the undersigned have caused this Second Amendment To Lease to be executed under seal and delivered as of the day and year first above written.


 



	  	  	  	  	  
	
LANDLORD:


	  
	
TEXAS DUGAN LIMITED PARTNERSHIP,


a Delaware limited partnership


	  	  
	
By:

	  	
DUGAN GENERAL PARTNER LLC,


a Delaware limited liability company, its general partner


	  	  	  
	  	  	
By:

	  	
DUGAN TEXAS LLC,


a Delaware limited liability company, its sole member


	  	  	  
	  	  	
By:

	  	
DUKE REALTY LIMITED PARTNERSHIP,


an Indiana limited partnership, its Manager


	  	  	  
	  	  	
By:

	  	
DUKE REALTY CORPORATION,


an Indiana corporation, its General Partner


	  	  
	  	  	
TENANT:


	  	  
	  	  	
MANNATECH, INC.,


a Texas corporation


	  	  	  
	  	  	
By:

	  	
/s/    TERRY L. PERSINGER        


	  	  	
Name:

	  	
Terry L. Persinger


	  	  	
Title:

	  	
President


	  	  
	  	  	
ATTEST:


	  	  	  
	  	  	
By:

	  	
/s/    BETTINA SIMON        


	  	  	
Name:

	  	
Bettina Simon


	  	  	
Title:

	  	
Sr. VP & General Counsel


	  	  
	  	  	
[Corporate Seal]







 


END OF EXECUTION SIGNATURES


 


 




  





56











  






 




PHG/AS/kc


 


03116/11


 


 


THIRD LEASE AMENDMENT


 







THIS THIRD  LEASE  AMENDMENT (the "Amendment") is executed  as of the _18th_ day of March,   2011,   by  and  between   TEXAS   DUGAN   LIMITED   PARTNERSHIP,  a  Delaware   limited partnership  ("Landlord"),  and  MANNATECH INCORPORATED (previously  identified  as  Mannatech, Inc.), a Texas corporation ("Tenant").


 


   WITNESSETH:







WHEREAS,  MEPC Quorum  Properties II Inc., as predecessor  in interest to Landlord, and Tenant entered  into a Commercial  Lease Agreement  dated May 29, 1997, as amended  by a First Amendment  to Commercial  Lease Agreement dated November 6, 1997 (the "First Lease Amendment"), and by a Second Amendment   to   Commercial    Lease   Agreement    dated   September    22,   2005   (the   "Second   Lease Amendment"),  (collectively,   the  "Lease"),   whereby   Tenant   leases   from  Landlord   certain   premises consisting of approximately  74,476 rentable square feet of space (the "Premises")  located in a building commonly  known as Freeport III (the "Building''), located at 445 South Royal Lane, Suite 800, Coppell, Texas 75019 within Freeport North Industrial Park (the "Park"); and


 


WHEREAS, Landlord and Tenant desire to extend the Lease Term; and


 


WHEREAS, Landlord and Tenant desire to amend certain  provisions of the Lease to reflect such extension and any other changes to the Lease;


 


NOW, THEREFORE, in consideration of the  foregoing  premises,  the mutual  covenants  herein contained and each act performed hereunder by the parties, Landlord and Tenant hereby enter into this Amendment.







1. Incorporation of Recitals.                                          The above recitals are hereby incorporated into this Amendment as if fully set forth herein.







2. Extension of Term.                                The Lease Term is hereby extended through March 31, 2018.


 


3. Amendment of Section 2.                                                    Improvements to be Constructed by Landlord.  Commencing April 1, 2011, Section 2 of the Lease is hereby amended by incorporating the following:


 


"Tenant is currently in possession  of the Premises and accepts the same "AS IS" without representation  or warranty by Landlord of any kind."







4.           Amendment of Section 4.   Rent      Commencing  April  1, 2011, Section 4 of the Lease is hereby amended to provide that Tenant shall pay to Landlord the following Base Monthly Rent:







April 1, 2011 – April 30, 2011                                                                                   $6,889.03 per month


May 1, 2011 – December 31, 2011                                                                           $23,894.38 per month


January 1, 2012 – March 31, 2018                                                                           $19,674.08 per month







 




  





57











  











 


5.           Amendment of Section 19.   Landlord’s Remedies.   Section 19 of the Lease is hereby amended by incorporating the following additional subsection:


 







 


"G.  As consideration for Tenant's performance under this Lease, Tenant acknowledges that the Rent under this Amendment is reduced conditionally over the remainder of the initial Extension Term (as defined in the Second Lease Amendment).   In the event Tenant defaults under the terms of the Lease and/or this Amendment and fails to cure within any applicable cure period, then (i) the total sum of such Rent so conditionally excused shall become immediately due and payable; and (ii) Tenant's obligation to pay Rent shall automatically revert to the un­ amended amounts of the original Rent set forth in this Lease prior to this Amendment, which shall apply thereafter in lieu of the amounts set forth in this Amendment."







6.           Amendment of Section 32.   Section 32 of the Lease is hereby amended to reflect Landlord’s current address for notices and payments as follows:


 







 








	
  

	
"Landlord:

	
Texas Dugan Limited Partnership c/o Duke Realty Corporation







Attn:           Texas Market                      Vice President,


                      Asset Management & Customer Service


                      14241 Dallas Parkway, Suite 1000


                      Dallas, Texas 75254


 


             With a


             Copy to:          Texas Dugan Limited Partnership


                Attn: Texas Market Attorney


                  14241 Dallas Parkway, Suite 1000


                  Dallas, Texas 75254


 


With


                  Payments to:     Texas Dugan Limited Partnership


                     75 Remittance Drive, Suite 1493


                     Chicago, Illinois 60675-1493"







7.           Amendment of Section 34.  Option to Renew.  Section 34 (b} of the Lease (as amended by the Second Lease Amendment) is hereby deleted in its entirety and the following is substituted in lieu thereof:


 


“(b)           Rent Adjustment.   The minimum annual Rent for the Extension Term shall be an amount equal to the minimum annual Rent then being quoted by Landlord to prospective renewing tenants of the Building for space of comparable size and quality and with similar or equivalent improvements as are found in the Building, and if none, then in similar buildings in the vicinity; provided, however, that in no event shall the minimum annual Rent during the first Extension Term be less than Four Dollars and Five Cents ($4.05) per square foot of the Premises and during the second Extension Term be less than the highest minimum annual Rent payable during the immediately preceding term.  The Base Monthly Rent shall be an amount equal to one-twelfth (1/12) of the minimum annual Rent for the Extension Term and shall be paid at the same time and in the same manner as provided in the Lease.”


 









  





58











  






 


8.           Amendment of Section 34.   Miscellaneous.   Section 34 of the Lease is hereby amended by adding the following additional subsections:


 


“R           Patriot Act.    Each of Landlord and Tenant, each as to itself, hereby represents its compliance and its agreement to continue to comply with all applicable anti-money laundering laws, including, without limitation, the USA Patriot Act, and the laws administered by the United States Treasury Department’s Office of Foreign Assets Control, including without limitation, Executive Order 13224 (“Executive Order”).  Each of Landlord and Tenant further represents (such representation to be true throughout the Lease Term) (i) that it is not, and it is not owned or controlled directly or indirectly by any person or entity, on the SDN List published by the United States Treasury Department’s Office of Foreign Assets Control and (ii) that it is not a person otherwise identified by government or legal authority as a person with whom a U.S. Person is prohibited from transacting business.  As of the date hereof, a list of such designations and the text for the Executive Order are published under the internet website address www.ustreas.gov/offices/enforcement/ofac.







 


9.           Amendment of Section 35.   Right of First Offer.   Section 35 of the Lease is hereby deleted in its entirety and shall be of no further force or effect.


 







10.           Amendment of Section 9 of Second Lease Amendment.  Option to Terminate. Section 9 of the Second Lease Amendment is hereby deleted in its entirety and shall be of no further force or effect


 







11.           Broker.   Tenant represents and warrants that, except for Duke Realty Services, LLC representing Landlord and Jones Lang LaSalle Americas, Inc. representing Tenant, no other real estate broker or brokers were involved in the negotiation and execution of this Amendment.  Tenant shall indemnify  Landlord  and  hold  it  harmless  from  any  and  all  liability  for  the  breach  of  any  such representation and warranty on its part and shall pay any compensation to any other broker or person who may be deemed or held to be entitled thereto.


 







12.           Representations.








	
(a)  

	
Tenant hereby represents that (i) Tenant is duly organized, validly existing and in good







standing (if applicable) in accordance with the laws of the State under which it was organized; (ii) Tenant is authorized to do business in the State where the Building is located; and (iii) the individual(s) executing and delivering this Amendment on behalf of Tenant has been properly authorized to do so, and such execution and delivery shall bind Tenant to its terms.







(b) Landlord hereby represents that (i) Landlord is duly organized, validly existing and in good standing (if applicable) in accordance with the laws of the State under which it was organized; (ii) Landlord is authorized to do business in the State where the Building is located; and (iii) the individual(s) executing and delivering this Amendment on behalf of Landlord has been properly authorized to do so, and such execution and delivery shall bind Landlord to its terms.


 







13.           Examination of Amendment.   Submission of this instrument for examination or signature to Tenant does not constitute  a  reservation or option, and  it is not effective until execution  by and delivery to both Landlord and Tenant.


 









  





59











  






 


     14.            Definitions.   Except as otherwise  provided herein, the capitalized  terms used in this Amendment shall have the definitions set forth in the Lease.


 







15.            Incorporation.   This .Amendment shall be incorporated into and made a part of the Lease, and all provisions of the Lease not expressly modified or amended hereby shall remain in full force and effect.












[SIGNATURES CONTAINED ON THE FOLLOWING PAGE]




 




  





60











  






 


IN WITNESS  WHEREOF,  the parties  have caused  this Amendment  to be executed  on the day and year first written above.


 







LANDLORD:


 







TEXAS  DUGAN LIMITED  PARTNERSHIP, a


 


Delaware  limited partnership


 








	
  

	
By: Dugan General Partner LLC, a Delaware limited liability company, its Sole General Partner







 








	
  

	
By: Dugan Texas LLC, a Delaware limited liability company, its Sole Member







 







By: Duke Realty Limited Partnership, an


 


Indiana limited partnership authorized  to do business in the State of Texas under the name Duke Indiana Realty Limited Partnership, its Manager


 



	
  

	
By: Duke Realty Corporation, an Indiana corporation  authorized  to do business in the State of Texas under the name Indiana Duke Realty Corporation, its General  Partner







 







Dated:  March 18, 2011                                            


                                                                                 


                                                        Senior Vice President


 







                            TENANT:


 







                   MANNATECH INCORPORATED, a Texas corporation


 







Dated: March 18, 2011                                                                                       




 


                                           


                         Printed: Steve Fenstermacher


                                              Title: CEO & CFO


 


 








  





61











  















EXHIBIT B


SUBLEASED PREMISES


 





 


 


 


 




  





62











  










EXHIBIT C


LANDLORD’S CONSENT









05/04/12







 


CONSENT AND ACCEPTANCE







 







 


TEXAS DUGAN LIMITED PARTNERSHIP, a Delaware limited partnership, as Landlord under the Prime Lease, hereby consents to the Sublease of the Prime Lease as set forth above; provided, however, that such Sublease does not affect or release any liability of Sublessor under the terms and obligations of the Prime Lease.


 


This Consent and Acceptance of the foregoing Sublease shall not constitute a consent by Landlord to any further subletting or assignments of the entire or any portion of the Leased Premises.


 


This Consent and Acceptance does not constitute approval by Landlord of any of the provisions of the Sublease, or agreement thereto or therewith, but only approval of the sublet of the Subleased Premises to Subtenant.


 


Notwithstanding anything to the contrary in the Sublease, in no event shall Landlord be deemed to be in privity of contract with Subtenant or owe any obligation or duty to Subtenant under the Prime Lease or Sublease, any duties of Landlord under the Prime Lease are required by law being in favor of, for the benefit of, and enforceable soley by Sublessor.


 



	
 

	
"LANDLORD"







 


                  TEXAS DUGAN LIMITED PARTNERSHIP,


                                                                           a Delaware limited partnership


 



	
  

	
By:

	
Dugan General Partner LLC, a Delaware limited liability company, its Sole General Partner







 








	
  

	
By:

	
Dugan Texas LLC, a Delaware limited liability company, its Sole Member







 


                                                            By: Duke Realty Limited Partnership, an Indiana limited partnership authorized to do business in the State of Texas under the name Duke                                             Indiana Realty Limited Partnership, its Manager 


 



	
  

	
By: Duke Realty Corporation, an Indiana corporation authorized to do business in the State of Texas under the name












                              





                                                                                       


                                             Senior Vice President


Dated:            06/11/12 






 




  





63










 






EXHIBIT D


ENGINEER’S REPORT






 





 


 


500 S. Kealy St.


Lewisville, TX. 75057


972-221-4373


TACLA001216C


 


 


Bill To:                                                      Work Address:


National Property Inspections


2201 Hazy Meadows                                             445 S. Royal Ln. Suite #800


Flower Mound, TX. 75028                                           Coppell, TX. 75019


 


Date of inspection 2/10/11 – Invoice #229370


 


Work to be performed: Inspect 12 HVAC systems


 


All systems appear to have had ongoing maintenance and over all conditions are good. They do have some age on them but repairs have been kept up. A typical lifetime of a roof top unit in our region is 15-20 years and is dependent upon proper maintenance.


 

 



	
System Number

	
1

	
 

	
 

	
 


	
Make

	
 

	
York

	
 

	
 


	
Model

	
 

	
D6CG036N04046C

	
 

	
 


	
Serial

	
 

	
NME_42987

	
 

	
 


	
Size

	
 

	
3

	
 

	
 


	
Age

	
 

	
1996

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 


	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 


	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 


	
Blower Motor Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 2 Bearings

	
 

	
N/A

	
 

	
 


	
Blower Contactor

	
 

	
Good

	
1 pole

	
 


	
Compressor 1 Contactor

	
 

	
Good

	
3 pole

	
 


	
Compressor 2 Contactor

	
 

	
N/A

	
 

	
 


	
Heat Exchanger

	
 

	
Good

	
 

	
 


	
Belt

	
 

	
N/A

	
 

	
 


	
Notes:

	
(2) 14x20x1, (1) 14x25x1 Filters/Clean


	
 

	
 


	
 

	
 System appears to have been maintained


	
 

	
 Cooling ΔT 20 ̊


	
 

	
 No recommended repairs needed












 

 


 

 




 





64











 






 

 


 

 


 

 



	
System Number

	
2

	
 

	
 

	
 


	
Make

	
 

	
York

	
 

	
 


	
Model

	
 

	
D3CG120N16546JSD

	
 

	
 


	
Serial

	
 

	
NHFM101456

	
 

	
 


	
Size

	
 

	
10

	
 

	
 


	
Age

	
 

	
1997

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 


	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 


	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 


	
Blower Motor Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 


	
Blower Contactor

	
 

	
Pitted

	
2 pole

	
Needs Replaced


	
Compressor 1 Contactor

	
 

	
Good

	
3 pole

	
 


	
Compressor 2 Contactor

	
 

	
Good

	
3 pole

	
 


	
Heat Exchanger

	
 

	
BAD

	
See Pictures

	
Needs Replaced


	
Belt

	
 

	
1 – A56

	
Worn

	
Needs Replaced


	
Notes:

	
 (4) 18x24x2 Filters/Dirty


	
 

	
 Heat exchanger needs replaced * Holes


	
 

	
 


 (1) A56 Belt needs replaced


 


	
 

	
 Cooling ΔT 27 ̊


	


	
 System appears to have been maintained


 


 


 


 


 


 


 


 


 


 


 







 







 




 





65











 






 

 



	
System Number

	
3

	
 

	
 

	
 


	
Make

	
 

	
York

	
 

	
 


	
Model

	
 

	
D3CG120N16546JSD

	
 

	
 


	
Serial

	
 

	
NLFM126111

	
 

	
 


	
Size

	
 

	
10

	
 

	
 


	
Age

	
 

	
1997

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 


	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 


	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 


	
Blower Motor Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 


	
Blower Contactor

	
 

	
Good

	
2 pole

	
 


	
Compressor 1 Contactor

	
 

	
Good

	
3 pole

	
 


	
Compressor 2 Contactor

	
 

	
Good

	
3 pole

	
 


	
Heat Exchanger

	
 

	
Good

	
 

	
 


	
Belt

	
 

	
1 – A56

	
Good

	
 


	
Notes:

	
 (2) 16x24x2, (2)18x24x2 Filters/Dirty


	
 

	
 


	
 

	
 


	
 

	
 Cooling ΔT 21 ̊


	
 

	
 System appears to have been maintained

















 




 





66











 






 

 



	
System Number

	
4

	
 

	
 

	
 


	
Make

	
 

	
York

	
 

	
 


	
Model

	
 

	
D3CG120N16546JSD

	
 

	
 


	
Serial

	
 

	
NHFM101472

	
 

	
 


	
Size

	
 

	
10

	
 

	
 


	
Age

	
 

	
1997

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 


	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 


	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 


	
Blower Motor Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 


	
Blower Contactor

	
 

	
Good

	
2 pole

	
 


	
Compressor 1 Contactor

	
 

	
Good

	
3 pole

	
 


	
Compressor 2 Contactor

	
 

	
Good

	
3 pole

	
 


	
Heat Exchanger

	
 

	
Good

	
 

	
 


	
Belt

	
 

	
1 – A56

	
Good

	
 


	
Notes:

	
 (2) 16x24x2, (2)18x24x2 Filters/Clean


	
 

	
 Drain line is dislocated


	
 

	
 


	
 

	
 Cooling ΔT 23 ̊


	
 

	
 System appears to have been maintained















 




 





67











 






 




 



	
System Number

	
5

	
 

	
 

	
 


	
Make

	
 

	
York

	
 

	
 


	
Model

	
 

	
D1CG300N24046D

	
 

	
 


	
Serial

	
 

	
NMFM132880

	
 

	
 


	
Size

	
 

	
25

	
 

	
 


	
Age

	
 

	
1997

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 


	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 


	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 


	
Blower Motor Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Contactor

	
 

	
Good

	
2 pole

	
 


	
CDFM 2 Contactor

	
 

	
Good

	
2 pole

	
 


	
Blower Contactor

	
 

	
Good

	
3 pole

	
 


	
Compressor 1 Contactor

	
 

	
Good

	
3 pole

	
 


	
Compressor 2 Contactor

	
 

	
Good

	
3 pole

	
 


	
Compressor 3 Contactor

	
 

	
Good

	
3 pole

	
 


	
Heat Exchanger

	
 

	
Good

	
 

	
 


	
Belt

	
 

	
2-BX83

	
Good

	
 


	
Notes:

	
 (6) 16x20x2, (3) 14x20x2 Filters/Dirty


	
 

	
 


 (1) Fan Blade out of balance


 


	
 

	
 Needs Ignition Module Replaced


	
 

	
 Cooling ΔT 24 ̊


	
 

	
 System appears to have been maintained















 


 




 





68











 






 

 



	
System Number

	
6

	
 

	
 

	
 


	
Make

	
 

	
York

	
 

	
 


	
Model

	
 

	
D1CG300N240460

	
 

	
 


	
Serial

	
 

	
NMFM132879

	
 

	
 


	
Size

	
 

	
25

	
 

	
 


	
Age

	
 

	
1997

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 


	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 


	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 


	
Blower Motor Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Contactor

	
 

	
Good

	
2 pole

	
 


	
CDFM 2 Contactor

	
 

	
Good

	
2 pole

	
 


	
Blower Contactor

	
 

	
Good

	
3 pole

	
 


	
Compressor 1 Contactor

	
 

	
Good

	
3 pole

	
 


	
Compressor 2 Contactor

	
 

	
Good

	
3 pole

	
 


	
Compressor 3 Contactor

	
 

	
Good

	
3 pole

	
 


	
Compressor 4 Contactor

	
 

	
Good

	
3 pole

	
 


	
Heat Exchanger

	
 

	
Good

	
 

	
 


	
Belt

	
 

	
2-BX83

	
Good

	
 


	
Notes:

	
 (6) 16x20x2, (3) 14x20x2 Filters/Dirty


	
 

	
 


	
 

	
 


	
 

	
 Cooling ΔT 22 ̊


	
 

	
 System appears to have been maintained







 





 


 




 





69











 






 

 



	
System Number

	
7

	
 

	
 

	
 


	
Make

	
 

	
York

	
 

	
 


	
Model

	
 

	
D1CG300N240460

	
 

	
 


	
Serial

	
 

	
NMFM136203

	
 

	
 


	
Size

	
 

	
25

	
 

	
 


	
Age

	
 

	
1997

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 


	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 


	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 


	
Blower Motor Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Contactor

	
 

	
Good

	
2 pole

	
 


	
CDFM 2 Contactor

	
 

	
Good

	
2 pole

	
 


	
Blower Contactor

	
 

	
Good

	
2 pole

	
 


	
Compressor 1 Contactor

	
 

	
BAD

	
3 pole

	
Needs Replaced


	
Compressor 2 Contactor

	
 

	
BAD

	
3 pole

	
Needs Replaced


	
Compressor 3 Contactor

	
 

	
BAD

	
3 pole

	
Needs Replaced


	
Compressor 4 Contactor

	
 

	
Good

	
3 pole

	
 


	
Heat Exchanger

	
 

	
Good

	
 

	
 


	
Belt

	
 

	
2-BX83

	
Good

	
 


	
Notes:

	
  (6) 16x20x2, (3) 14x20x2 Filters/Dirty


	
 

	
 


	
 

	
 


	
 

	
 Cooling ΔT 22 ̊


	
 

	
 System appears to have been maintained







 





 


 




 





70











 








 



	
System Number

	
8

	
 

	
 

	
 


	
Make

	
 

	
York

	
 

	
 


	
Model

	
 

	
D1CG300N240460

	
 

	
 


	
Serial

	
 

	
NMFM132878

	
 

	
 


	
Size

	
 

	
25

	
 

	
 


	
Age

	
 

	
1997

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 


	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 


	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 


	
Blower Motor Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Contactor

	
 

	
Good

	
2 pole

	
 


	
CDFM 2 Contactor

	
 

	
Good

	
2 pole

	
 


	
Blower Contactor

	
 

	
Good

	
3 pole

	
 


	
Compressor 1 Contactor

	
 

	
Good

	
3 pole

	
 


	
Compressor 2 Contactor

	
 

	
Good

	
3 pole

	
 


	
Compressor 3 Contactor

	
 

	
Good

	
3 pole

	
 


	
Compressor 4 Contactor

	
 

	
Good

	
3 pole

	
 


	
Heat Exchanger

	
 

	
Good

	
 

	
 


	
Belt

	
 

	
2-BX83

	
Good

	
 


	
Notes:

	
  (6) 16x20x2, (3) 14x20x2 Filters/Dirty


	
 

	
 


	
 

	
 


	
 

	
 Cooling ΔT 24 ̊


	
 

	
 System appears to have been maintained















 


 




 





71











 






 


 



	
System Number

	
9

	
 

	
 

	
 


	
Make

	
 

	
York

	
 

	
 


	
Model

	
 

	
D3CG120N16546JSD

	
 

	
 


	
Serial

	
 

	
NHFM101454

	
 

	
 


	
Size

	
 

	
10

	
 

	
 


	
Age

	
 

	
1997

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 


	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 


	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 


	
Blower Motor Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 


	
Blower Contactor

	
 

	
Good

	
2 pole

	
 


	
Compressor 1 Contactor

	
 

	
Good

	
3 pole

	
 


	
Compressor 2 Contactor

	
 

	
Good

	
3 pole

	
 


	
Heat Exchanger

	
 

	
Good

	
 

	
 


	
Belt

	
 

	
1-A56

	
Good

	
 


	
Notes:

	
 (2) 16x24x2, (2)18x24x2 Filters/Dirty


	
 

	
 


	
 

	
 


	
 

	
 Cooling ΔT 19 ̊


	
 

	
 System appears to have been maintained















 


 




 





72











 






 

 



	
System Number

	
10

	
 

	
 

	
 


	
Make

	
 

	
Carrier

	
 

	
 


	
Model

	
 

	
48TMD008-A-601

	
 

	
 


	
Serial

	
 

	
1903G30553

	
 

	
 


	
Size

	
 

	
8

	
 

	
 


	
Age

	
 

	
2003

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Condenser Coil

	
 

	
Straight/Clean

	
 

	
 


	
Evaporator Coil

	
 

	
Straight/Clean

	
 

	
 


	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 


	
Blower Motor Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 


	
Blower Contactor

	
 

	
Good

	
2 pole

	
 


	
Compressor 1 Contactor

	
 

	
Good

	
2 pole

	
 


	
Compressor 2 Contactor

	
 

	
Good

	
2 pole

	
 


	
Heat Exchanger

	
 

	
Good

	
 

	
 


	
Belt

	
 

	
1-A48

	
Good

	
 


	
Notes:

	
 (4) 16x20x2 Filters/Clean


	
 

	
 


	
 

	
 


	
 

	
 Cooling ΔT 23 ̊


	
 

	
 System appears to have been maintained















 




 





73











 






 

 



	
System Number

	
11

	
 

	
 

	
 


	
Make

	
 

	
Lennox

	
 

	
 


	
Model

	
 

	
HS29-036-2P

	
 

	
 


	
Serial

	
 

	
5803D8167

	
 

	
 


	
Size

	
 

	
3

	
 

	
 


	
Age

	
 

	
2003

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Condenser Coil

	
 

	
Straight/Clean

	
 

	
 


	
Evaporator Coil

	
 

	
Straight/Clean

	
 

	
 


	
Blower Wheel Bearings

	
 

	
N/A

	
 

	
 


	
Blower Motor Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 2 Bearings

	
 

	
N/A

	
 

	
 


	
Blower Contactor

	
 

	
AHU

	
 

	
 


	
Compressor 1 Contactor

	
 

	
Good

	
1 pole

	
 


	
Compressor 2 Contactor

	
 

	
N/A

	
 

	
 


	
Heat Exchanger

	
 

	
N/A

	
 

	
 


	
Belt

	
 

	
N/A

	
 

	
 


	
Notes:

	
 


 (1) 20x20x1 Filter/Clean


 


	
 

	
 AHU M#CB29M-41-1P, S#5803D01657


	
 

	
Compressor is pulling locked rotor amps and needs replaced


	
 

	
 


	
 

	
 


	
 

	
 Cooling ΔT SYSTEM DOWN ̊


	
 

	
 System appears to have been maintained

















 




 





74











 






 

 



	
System Number

	
12

	
 

	
 

	
 


	
Make

	
 

	
Carrier

	
 

	
 


	
Model

	
 

	
48TMD028-611BA

	
 

	
 


	
Serial

	
 

	
2707U19776

	
 

	
 


	
Size

	
 

	
25

	
 

	
 


	
Age

	
 

	
2007

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Condenser Coil

	
 

	
Straight/Clean

	
 

	
 


	
Evaporator Coil

	
 

	
Straight/Clean

	
 

	
 


	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 


	
Blower Motor Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 3 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 4 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 5 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 6 Bearings

	
 

	
Good

	
 

	
 


	
CDFM 1 Contactor

	
 

	
Good

	
2 pole

	
 


	
CDFM 2 Contactor

	
 

	
Good

	
2 pole

	
 


	
CDFM 3 Contactor

	
 

	
Good

	
2 pole

	
 


	
CDFM 4 Contactor

	
 

	
Good

	
2 pole

	
 


	
CDFM 5 Contactor

	
 

	
Good

	
2 pole

	
 


	
CDFM 6 Contactor

	
 

	
Good

	
2 pole

	
 


	
Blower Contactor

	
 

	
Good

	
3 pole

	
 


	
All Compressor Contactors

	
 

	
Good

	
3 pole

	
 


	
Heat Exchanger

	
 

	
Good

	
 

	
 


	
Belt

	
 

	
2-B47

	
Good

	
 


	
 

	
 

	
 

	
 

	
 


	
Notes:

	
 

	
 

	
 

	
 


	
 

	
 (4) 16x20x2, (4) 20x20x2 Filters/Dirty


	
 

	
 System was fully functional as of 2/23/2012 with no signs of problems at the time of the inspection. Uncertain of problem that kept the system from operating on previous inspections. Problem was apparently fixed by other contractor.


	
 

	
 


	
 

	
 


	
 

	
 

















 




 





75











 






 

 


Additional Work Recommended



	
System #

	
 

	
Recommended Work

	
 

	
Cost

	
 


	
1

	
 

	
None

	
 

	
 

	
 


	
2

	
 

	
Replace Air Filters

	
 

	
$40.55

	
 


	
 

	
 

	
Replace Blower Contactor

	
 

	
$161.94

	
 


	
 

	
 

	
Replace A56 Belt

	
 

	
$62.95

	
 


	
 

	
 

	
Replace Heat Exchanger

	
 

	
$6,064.00

	
 


	
 

	
 

	
***Alternate / Replace Unit***

	
 

	
 

	
$12,804.00


	
 

	
 

	
 

	
 

	
$6,329.44

	
Subtotal #2


	
3

	
 

	
Replace Air Filters

	
 

	
$40.55

	
 


	
4

	
 

	
Replace Air Filters

	
 

	
$40.55

	
 


	
 

	
 

	
Repair Drain Line

	
 

	
$126.30

	
 


	
 

	
 

	
 

	
 

	
$166.85

	
Subtotal #4


	
5

	
 

	
Replace Air Filters

	
 

	
$40.55

	
 


	
 

	
 

	
Replace Fan Blade

	
 

	
$237.82

	
 


	
 

	
 

	
Replace Ignition Module

	
 

	
$623.20

	
 


	
 

	
 

	
 

	
 

	
$901.57

	
Subtotal #5


	
6

	
 

	
Replace Air Filters

	
 

	
$40.55

	
 


	
7

	
 

	
Replace Air Filters

	
 

	
$40.55

	
 


	
 

	
 

	
Replace Contactor

	
 

	
$180.08

	
 


	
 

	
 

	
Replace Contactor

	
 

	
$180.08

	
 


	
 

	
 

	
Replace Contactor

	
 

	
$180.08

	
 


	
 

	
 

	
 

	
 

	
$580.79

	
Subtotal #7


	
8

	
 

	
Replace Air Filters

	
 

	
$40.55

	
 


	
9

	
 

	
Replace Air Filters

	
 

	
$40.55

	
 


	
10

	
 

	
None

	
 

	
 

	
 


	
11

	
 

	
Replace Outdoor Unit 3Ton/3phase

	
$4,905.65

	
 


	
12

	
 

	
Replace Air Filters

	
 

	
$64.59

	
 


	
 

	
 

	
 

	
 

	
 

	
 

















 

 






  





76