Exhibit 10.1


 


OFFICE LEASE


 


BETWEEN


 


CRESCENT 1301 MCKINNEY, L.P.


 


A DELAWARE LIMITED PARTNERSHIP


 


(“LANDLORD”)


 


AND


 


KEY ENERGY SERVICES, INC.,


 


A MARYLAND CORPORATION


 


(“TENANT”)


 


 





















 


TABLE OF CONTENTS


 


	
  1.

  	
  Basic Lease Information

  	
   

  
	
  2.

  	
  Lease
  Grant

  	
   

  
	
  3.

  	
  Term; Adjustment of Commencement Date; Early
  Access

  	
   

  
	
  4.

  	
  Rent

  	
   

  
	
  5.

  	
  Tenant’s Use of Premises

  	
   

  
	
  6.

  	
  Security
  Deposit

  	
   

  
	
  7.

  	
  Services Furnished by Landlord

  	
   

  
	
  8.

  	
  Use of Electrical Services by Tenant

  	
   

  
	
  9.

  	
  Repairs and Alterations

  	
   

  
	
  10.

  	
  Entry
  by Landlord

  	
   

  
	
  11.

  	
  Assignment and Subletting

  	
   

  
	
  12.

  	
  Liens

  	
   

  
	
  13.

  	
  Indemnity

  	
   

  
	
  14.

  	
  Insurance

  	
   

  
	
  15.

  	
  Mutual Waiver of Subrogation

  	
   

  
	
  16.

  	
  Casualty
  Damage

  	
   

  
	
  17.

  	
  Condemnation

  	
   

  
	
  18.

  	
  Events
  of Default

  	
   

  
	
  19.

  	
  Remedies

  	
   

  
	
  20.

  	
  Limitation of Liability

  	
   

  
	
  21.

  	
  No
  Waiver

  	
   

  
	
  22.

  	
  Tenant’s Right to Possession

  	
   

  
	
  23.

  	
  Relocation

  	
   

  
	
  24.

  	
  Holding
  Over

  	
   

  
	
  25.

  	
  Subordination to Mortgages; Estoppel
  Certificate

  	
   

  
	
  26.

  	
  Attorneys’
  Fees

  	
   

  
	
  27.

  	
  Notice

  	
   

  
	
  28.

  	
  Reserved
  Rights

  	
   

  
	
  29.

  	
  Surrender of Premises

  	
   

  
	
  30.

  	
  Hazardous Materials

  	
   

  
	
  31.

  	
  Miscellaneous

  	
   

  



 


EXHIBITS AND RIDERS:


 


	
  EXHIBIT
  A-1

  	
  OUTLINE
  AND LOCATION OF PREMISES

  	
   

  
	
  EXHIBIT
  A-2

  	
  LEGAL
  DESCRIPTION OF PROPERTY

  	
   

  
	
  EXHIBIT
  B

  	
  RULES
  AND REGULATIONS

  	
   

  
	
  EXHIBIT
  C

  	
  COMMENCEMENT
  LETTER

  	
   

  
	
  EXHIBIT
  D

  	
  WORK
  LETTER

  	
   

  
	
  EXHIBIT
  E

  	
  PARKING
  AGREEMENT

  	
   

  
	
  EXHIBIT
  F

  	
  FORM
  OF LETTER OF CREDIT

  	
   

  
	
  EXHIBIT
  G

  	
  HVAC
  SPECIFICATIONS

  	
   

  
	
  EXHIBIT
  H

  	
  CLEANING
  SPECIFICATIONS

  	
   

  
	
  EXHIBIT
  I

  	
  SUBORDINATION,
  NON-DISTURBANCE & ATTORNMENT AGREEMENT

  	
   

  



 


	
  RIDER
  NO. 1

  	
  OPTION
  TO EXTEND

  	
   

  
	
  RIDER
  NO. 2

  	
  OPTION
  TO EXPAND

  	
   

  
	
  RIDER
  NO. 3

  	
  MUST
  TAKE SPACE

  	
   

  
	
  RIDER
  NO. 4

  	
  SUBORDINATED
  PREFERENTIAL RIGHT TO LEASE

  	
   

  



 


i





















 


OFFICE LEASE


 


This Office
Lease (this “Lease”) is entered into by
and between CRESCENT 1301 MCKINNEY, L.P., a Delaware limited partnership (“Landlord”), and KEY ENERGY SERVICES, INC., a Maryland
corporation (“Tenant”), and shall be
effective as of the date set forth below Landlord’s signature (the “Effective Date”).


 


1.             Basic Lease Information.  The key business terms used in this Lease are
defined as follows:


 


A.            “Building”:  The
building located at 1301 McKinney, Houston, Texas.


 


B.            “Rentable Square Footage of the Building” is agreed and
stipulated to be 1,218,459 square feet.


 


C.            “Premises”:  The
area shown on Exhibit
A-1 to this Lease.  The
Premises are located on floor 18 of the Building and known as suite number
1800.  The “Rentable
Square Footage of the Premises” is deemed to be 25,137 square
feet.  If the Premises include, now or
hereafter, one or more floors in their entirety, all corridors and restroom
facilities located on such full floor(s) shall be considered part of the
Premises.  Landlord and Tenant stipulate
and agree that the Rentable Square Footage of the Building and the Rentable
Square Footage of the Premises are correct and shall not be remeasured.


 


D.            “Base Rent”:


 




	
   

  	
   

  	
  Annual Rate of

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Base Rent Per

  	
   

  	
  Monthly

  	
   

  
	
  Period

  	
   

  	
  Square Foot

  	
   

  	
  Base Rent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 15,
  2005 to June 14, 2011

  	
   

  	
  $

  	
  11.50

  	
   

  	
  $

  	
  24,089.63

  	
  **

  
	
  June 15,
  2011 to June 14, 2016

  	
   

  	
  $

  	
  12.50

  	
   

  	
  $

  	
  26,184.38

  	
   

  






 










**  Provided that Tenant is not
in monetary default under this Lease beyond any applicable notice and/or cure
period, the monthly Base Rent and OE Payment for each of the initial 6 months
of the Term shall be abated (the “Rent Abatement Period”).


 


E.             “Tenant’s Pro Rata Share”:  The percentage equal to the Rentable Square
Footage of the Premises divided by the Rentable Square Footage of the Building.


 


F.             “Term”:  The period
of approximately 126 months starting on the Commencement Date, subject to the
provisions of Article
3.


 


G.            “Commencement Date”: December 15, 2005.


 


H.            “Security Deposit”: 
Letter of Credit in the amount of $1,325,976.75 issued in accordance
with Article 6.


 


I.              “Guarantor(s)”: N/A.


 


J.             “Business Day(s)”: 
Monday through Friday of each week, exclusive of New Year’s Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, the day after
Thanksgiving and Christmas Day (“Holidays”).  Landlord may designate additional Holidays,
provided that the additional Holidays are commonly recognized by the majority
of other office buildings in the area where the Building is located.


 


K.            “Law(s)”:  All
applicable statutes, codes, ordinances, orders, rules and regulations of any
municipal or governmental entity, now or hereafter adopted, including the
Americans with Disabilities Act and any other law pertaining to disabilities
and architectural barriers (collectively, “ADA”),
and all laws pertaining to the environment, including the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
§9601 et seq. (“CERCLA”), and all restrictive
covenants existing of record and all rules and requirements of any existing
association or improvement district affecting the Property.


 


1





















 


L.            “Normal Business Hours”: 
7:30 A.M. to 6:00 P.M. on Business Days and 9:00 A.M. to 1:00 P.M.
on Saturdays, exclusive of Holidays.


 


M.           “Notice Addresses”:


 


Tenant:  On or after the Commencement Date, notices
shall be sent to Tenant at the Premises. 
Prior to the Commencement Date, notices shall be sent to Tenant at the
following address:


 


	
  Key Energy Services, Inc.

  6 Desta Drive, Suite 4400

  Midland, Texas 79705

  Attn: General Counsel

  

  Fax: 432-571-7531

  Phone: 432-620-0300

  	
   

  	
  With a copy to:
Porter & Hedges, L.L.P.

  700 Louisiana 35th Floor

  Houston, Texas  77002

  Attn:  Jack G. Wise

  Phone: 713-226-0615

  Fax:  713-226-0215

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landlord:

  	
   

  	
  With a copy
  to:

  	
   

  	
  And to:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landlord:

  	
   

  	
  And to:

  	
   

  	
  With a copy to Property Manager:

  
	
  Crescent HC Investors, L.P.

  Attn:  Legal Department

  777 Main Street

  Suite 2100

  Fort Worth, TX  76102-5325

  	
   

  	
  Crescent Real Estate Equities

  Attn:  Sr. VP, Asset Management &
  Leasing

  2000 Post Oak Boulevard

  Suite 1950

  Houston, Texas  77056

  	
   

  	
  Crescent Property Services, Inc.

  Attn:  Property Manager

  909 Fannin, Suite 100

  Houston, Texas  77010

  



 


N.            “Rent” (defined in Section 4.A) is payable to the
order of Crescent 1301 McKinney, L.P. at the following address: P.O. Box                            ,
or by wire transfer to Bank of America, Dallas, Texas, ABA#111-0000-25,
Crescent 1301 McKinney, L.P., Account #                            , Key Energy Services, Inc., 1301
McKinney.


 


O.            “Other Defined Terms”: 
In addition to the terms defined above, an index of the other defined
terms used in the text of this Lease is set forth below, with a cross-reference
to the paragraph in this Lease in which the definition of such term can be
found:


 


	
  Additional
  Rent

  	
   

  	
  4.A

  
	
  Affiliate

  	
   

  	
  11.E

  
	
  Alterations

  	
   

  	
  9.C(1)

  
	
  Audit
  Election Period

  	
   

  	
  4.G

  
	
  Cable

  	
   

  	
  9.A

  
	
  Claims

  	
   

  	
  13

  
	
  Collateral

  	
   

  	
  19.E

  
	
   

  	
   

  	
   

  
	
  Common Areas

  	
   

  	
  2

  
	
  Completion
  Estimate

  	
   

  	
  16.B

  
	
  Complex

  	
   

  	
  2

  
	
  Contamination

  	
   

  	
  30.C

  
	
  Costs of
  Reletting

  	
   

  	
  19.B(2)

  
	
  Force
  Majeure

  	
   

  	
  31.C

  
	
  Hazardous
  Material

  	
   

  	
  30.C

  
	
  Hourly HVAC
  Charge

  	
   

  	
  7.A(2)

  
	
  Landlord
  Parties

  	
   

  	
  13

  
	
  Landlord
  Termination Date

  	
   

  	
  11.B

  
	
   

  	
   

  	
   

  
	
  Landlord’s
  Rental Damages

  	
   

  	
  19.B(2)

  
	
  Leasehold
  Improvements

  	
   

  	
  29

  
	
  Minor
  Alterations

  	
   

  	
  9.C(1)

  
	
  Monetary
  Default

  	
   

  	
  18.A

  
	
   

  	
   

  	
   

  
	
  Mortgage

  	
   

  	
  25

  
	
  Mortgagee

  	
   

  	
  25

  
	
  OE Payment

  	
   

  	
  4.B

  
	
  Operating
  Expenses

  	
   

  	
  4.D

  
	
  Permitted
  Transfer

  	
   

  	
  11.E

  
	
  Permitted
  Use

  	
   

  	
  5.A

  
	
  Prime Rate

  	
   

  	
  19.B(2)

  
	
  Property

  	
   

  	
  2

  
	
  Provider

  	
   

  	
  7.C

  
	
  Relocated
  Premises

  	
   

  	
  23

  
	
  Relocation
  Date

  	
   

  	
  23

  
	
  Rent

  	
   

  	
  4.A

  
	
  Service
  Failure

  	
   

  	
  7.B

  
	
  Special
  Installations

  	
   

  	
  29

  
	
  Substantial
  Completion

  	
   

  	
  Work Letter

  
	
  Taking

  	
   

  	
  17

  
	
  Tenant
  Parties

  	
   

  	
  13

  
	
  Tenant’s
  Insurance

  	
   

  	
  14.A

  
	
  Tenant’s
  Property

  	
   

  	
  14.A

  
	
  Tenant’s
  Removable Property

  	
   

  	
  29

  
	
  Time
  Sensitive Default

  	
   

  	
  18.B

  
	
  Transfer

  	
   

  	
  11.A

  



 


2





















 


2.             Lease
Grant.  Landlord
leases the Premises to Tenant and Tenant leases the Premises from Landlord,
together with the right in common with others to use any portions of the
Property (defined below) that are designated by Landlord for the common use of
tenants and others, such as sidewalks, common corridors, vending areas, lobby
areas and, with respect to multi-tenant floors, restrooms and elevator foyers
(the “Common Areas“).  “Property“
means the Building and the parcel(s) of land on which it is located as more
fully described on Exhibit A-2, together with all other buildings and
improvements located thereon; and the Building garage(s) and other improvements
serving the Building, if any, and the parcel(s) of land on which they are
located.  As used herein, the term “Complex“ means the buildings currently known as 1
Houston Center, 2 Houston Center and 4 Houston Center, the building located at
1301 McKinney Avenue, Houston, Texas, the land on which each of those buildings
is located, and the building garage(s) that are associated with each of those
buildings.


 


3.             Term; Adjustment of Commencement Date; Early Access.


 


A.            Term.  This Lease shall govern the relationship
between Landlord and Tenant with respect to the Premises from the Effective
Date through the last day of the Term specified in Section 1.G (the “Expiration
Date”), unless terminated early in accordance with this
Lease.  The Term of this Lease (as specified
in Section 1.G)
shall commence on the “Commencement
Date”, which shall be December 15, 2005.  Landlord shall deliver possession of the
Premises to the Contractor selected pursuant to the work letter agreement (the “Work Letter”) attached as Exhibit D,
on or before April 15, 2005 (the “Premises Delivery Date”), for the
construction of “Landlord’s Initial Work” and the “Landlord Work” (as such
terms are defined in the Work Letter) within the Premises pursuant to the Work
Letter.  If Landlord is delayed in
delivering possession of the Premises due to any reason, such delay shall not
be a default by Landlord, render this Lease void or voidable, or otherwise
render Landlord liable for damages; provided, however, that in the event
Landlord does not deliver possession of the Premises to the Contractor on or
before April 15, 2005, then Tenant shall have the right, as its sole remedy, to
terminate this Lease upon written notice to Landlord given at any time after
such date and prior to such delivery of the Premises to the Contractor.  Promptly after the Commencement Date,
Landlord and Tenant shall enter into a commencement letter agreement
substantially in the form attached as Exhibit C.  If
such commencement letter is not executed by Tenant within 30 days after delivery
of same by Landlord, then Tenant shall be deemed to have agreed with the
matters set forth therein. 
Notwithstanding any other provision of this Lease to the contrary, if
the Expiration Date would otherwise occur on a date other than the last day of
a calendar month, then the Term shall be automatically extended to include, and
the Expiration Date shall be, the last day of such calendar month.


 


B.            Acceptance of Premises.  The Premises are accepted by Tenant in “as is”
condition and configuration subject to (1) all applicable provisions of Exhibit D of this Lease, and (2)
Landlord’s repair obligations under Section
10.B., and (3) any latent defects in the Premises of which Tenant
notifies Landlord within 1 year after the Commencement Date (other than work
performed by Tenant Parties [defined below]). 
TENANT
HEREBY AGREES THAT THE PREMISES ARE IN GOOD ORDER AND SATISFACTORY CONDITION
AND THAT, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS LEASE, THERE ARE NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, BY LANDLORD
REGARDING THE PREMISES, THE BUILDING OR THE PROPERTY.


 


C.            Early Access.  Following the Effective Date, Tenant’s
contractors may, upon advance written notice to Landlord, enter the Premises
(and the Must-Take Space and/or the Expansion Space if either or both of such
spaces are elected to be taken by Tenant under the terms of Rider Nos. 2 and/or 3, as applicable, on or after the Effective
Date and on or before December 15, 2005) for the purpose of performing work in
preparation for Tenant’s move-in (including, without limitation, installation
of furniture, fixtures and equipment) provided that (i) such work by Tenant’s
contractors during the prosecution of Landlord’s Initial Work and the Landlord
Work is conducted in a manner as to not unreasonably interfere with Landlord’s
Initial Work and the Landlord Work occurring in or around the Premises, and
(ii) prior to any such entry, Tenant’s contractors shall provide Landlord with
certificates of insurance or other evidence of insurance reasonably acceptable
to Landlord.  Commencing on the date of
Substantial Completion (defined in the Work Letter) of the Landlord Work, and
continuing through the Commencement Date, Tenant shall be permitted access to
the Premises for the purpose of installing furniture, equipment or other
personal property in the Premises, and conducting Tenant’s business activities in the Premises once the Premises
are suitable for lawful occupancy.  All early access to the Premises shall be
subject to the terms and conditions of


 


3





















 


this Lease except that Tenant
shall pay no Rent (defined in Section 4.A) for such early access even if Tenant has
occupied the Premises for the purpose of conducting business.


 


4.             Rent.


 


A.            Payments.  As consideration for this Lease, commencing
on the Commencement Date, Tenant shall pay Landlord, without any demand, setoff
or deduction (other than
abatement as specified herein) the total amount due for
the Term of (1) Base Rent, (2) Additional Rent (defined below), and (3) a
management fee as specified hereinbelow (all of which are sometimes
collectively referred to as “Rent“).  “Additional
Rent“ means the OE Payment and all other sums (exclusive of Base
Rent) that Tenant is required to pay Landlord under this Lease.  The management fee component of Rent shall
equal 3% of the sum of Base Rent and the OE Payment.  Tenant shall pay and be liable for all
rental, sales and use taxes (but excluding income taxes), if any, imposed upon
or measured by Rent under applicable Law. 
The monthly Base Rent and the OE Payment shall be due and payable in
advance on the first day of each calendar month without notice or demand.  Further, provided that Tenant is
not in monetary default under this Lease beyond any applicable notice and/or
cure period, the monthly Base Rent and OE Payment shall be abated for the Rent
Abatement Period specified in Section 1.D.  All other items of Rent shall be due and
payable by Tenant on or before 30 days after billing by Landlord.  All payments of Rent shall be by good and
sufficient check or by other means (such as automatic debit or electronic
transfer) acceptable to Landlord.  If the
Term commences on a day other than the first day of a calendar month, the
monthly Base Rent and the OE Payment for the month shall be prorated on a daily
basis based on a 360 day calendar year. 
Landlord’s acceptance of less than the correct amount of Rent shall be
considered a payment on account of the earliest Rent due, and such acceptance
shall not constitute a waiver of the remaining unpaid balance.  No endorsement or statement on a check or
letter accompanying a check or payment shall be considered an accord and
satisfaction, and either party may accept such check or payment without such
acceptance being considered a waiver of any rights such party may have under
this Lease or applicable Law.  Tenant’s
covenant to pay Rent is independent of every other covenant in this Lease.


 


B.            Payment of
Operating Expenses. 
Tenant shall pay Tenant’s Pro Rata Share of the Operating Expenses (the “OE Payment“) for each calendar year during the
Term.  Notwithstanding the foregoing,
Tenant’s Pro Rata Share of Controllable Expenses (defined below) shall not
increase by more than 5%
over Tenant’s Pro Rata Share of Controllable Expenses in the previous calendar
year.  The term “Controllable Expenses”
means all Operating Expenses excluding expenses relating to the cost of utility
rates, labor costs of security services and janitorial services due to
increases in the minimum wage, insurance, and real estate taxes and
assessments.  On or about January 1 of
each calendar year, Landlord shall provide Tenant with a detailed good faith
estimate of the OE Payment for such calendar year during the Term.  On or before the first day of each month,
Tenant shall pay to Landlord a monthly installment equal to one-twelfth of
Landlord’s estimate of the OE Payment. 
If Landlord determines that its good faith estimate of the OE Payment
was incorrect, Landlord may provide Tenant with a revised estimate but not more
than twice per calendar year.  After its
receipt of the revised estimate, Tenant’s monthly payments shall be based upon
the revised estimate.  Landlord shall
make reasonable efforts to provide the estimate on or before January 15 of each
year.  If Landlord does not provide
Tenant with an estimate of the OE Payment by January 1 of a calendar year,
Tenant shall continue to pay monthly installments based on the most recent
estimate(s) until Landlord provides Tenant with the new estimate.  Upon delivery of the new estimate, an
adjustment shall be made for any month for which Tenant paid monthly
installments based on the same year’s prior incorrect estimate(s).  Tenant shall pay Landlord the amount of any
underpayment within 30 days after receipt of the new estimate.  Any overpayment shall be credited against the
next sums due and owing by Tenant or, if no further Rent is due, refunded
directly to Tenant within 30 days of determination.  The obligation of Tenant to pay the OE
Payment as provided herein shall survive the expiration or earlier termination
of this Lease.


 


C.            Reconciliation of
Operating Expenses. 
Within 120 days after the end of each calendar year (with such date to
be reasonably extended for circumstances beyond Landlord’s control), Landlord
shall furnish Tenant with a reasonably detailed statement of the actual
Operating Expenses and the OE Payment for such calendar year.  If the most recent estimated OE Payment paid
by Tenant for such calendar year is more than the actual OE Payment for such
calendar year, Landlord shall apply any overpayment by Tenant against Rent due
or next becoming due; provided, if the Term expires before the determination of
the overpayment, Landlord shall, within 30 days of determination, refund any overpayment
to Tenant after first deducting the amount of Rent due.  If


 


4





















 


the most recent estimated OE
Payment paid by Tenant for the prior calendar year is less than the actual OE
Payment for such year, Tenant shall pay Landlord, within 30 days after its
receipt of the statement of Operating Expenses and the OE Payment, any
underpayment for the prior calendar year.


 


D.            Operating Expenses
Defined.  “Operating Expenses“ means all costs and expenses
incurred or accrued in each calendar year in connection with the ownership,
operation, maintenance, management, repair and protection of the Property which
are directly attributable or reasonably allocable to the Building, including
Landlord’s personal property used in connection with the Property and including
all costs and expenditures relating to the following:


 


(1)           Operation,
maintenance, repair and replacements of any part of the Property, including the
mechanical, electrical, plumbing, HVAC, vertical transportation, fire
prevention and warning and access control systems; materials and supplies (such
as light bulbs and ballasts); equipment and tools; floor, wall and window
coverings; personal property; required or beneficial easements; and related
service agreements and rental expenses.


 


(2)           Administrative
and management costs, including accounting, information and professional
services (except for negotiations and disputes with specific tenants not
affecting other parties); management office(s); and wages, salaries, benefits,
reimbursable expenses and taxes (or allocations thereof) for full and part time
personnel involved in operation, maintenance and management at or below the
level of General Manager for the Complex.


 


(3)           Janitorial
service; window cleaning; waste disposal; gas, water and sewer and other
utility charges (including add-ons); and landscaping, including all applicable
tools and supplies.


 


(4)           Property,
liability and other insurance coverages carried by Landlord, including
deductibles or risk retention and a proportionate allocation of the cost of
blanket insurance policies maintained by Landlord and/or its Affiliates
(defined below).


 


(5)           Real
estate taxes, assessments, business taxes, excises, property association dues,
fees, levies, charges and other taxes of every kind and nature whatsoever,
general and special, extraordinary and ordinary, foreseen and unforeseen,
including interest on installment payments, which may be levied or assessed
against or arise in connection with ownership, use, occupancy, rental,
operation or possession of the Property (including personal property taxes for
property that is owned by Landlord and used in connection with the operation,
maintenance and repair of the Property), or substituted, in whole or in part,
for a tax previously in existence by any taxing authority, or assessed in lieu
of a tax increase, or paid as rent under any ground lease.  Real estate taxes do not include Landlord’s
income, franchise or estate taxes (except to the extent such excluded taxes are
assessed in lieu of taxes included above).


 


(6)           Compliance
with Laws which are amended, become effective, or are interpreted or enforced
differently, after the date of this Lease; including license, permit and
inspection fees (but not in duplication of capital expenditures amortized as
provided in Section
4.D(9)); and all expenses and fees, including attorneys’ fees and
court or other venue of dispute resolution costs, incurred in negotiating or
contesting real estate taxes or the validity and/or applicability of any
governmental enactments which may affect Operating Expenses; provided Landlord
shall credit against Operating Expenses any refunds received from such
negotiations or contests to the extent originally included in Operating
Expenses (less Landlord’s actual costs).


 


(7)           Building
safety services, to the extent provided or contracted for by Landlord.


 


(8)           Goods
and services purchased from Landlord’s subsidiaries and Affiliates to the
extent the cost of same is generally consistent with rates charged by unaffiliated
third parties for similar goods and services.


 


(9)           Amortization
of capital expenditures incurred: (a) to conform with Laws which are amended,
become effective, or are interpreted or enforced differently, after the date of
this Lease; provided, however, all capital expenditures made in order to
conform to or comply with ADA shall be included in Operating Expenses provided
such capital expenditures are made for revisions or changes to ADA after the
date of this Lease; (b) to provide or maintain building standards (other than
building standard tenant improvements); or (c) with the intention of promoting
safety or


 


5





















 


reducing or controlling increases in
Operating Expenses, such as lighting retrofit and installation of energy
management systems (limited to the amount of actual savings realized as
estimated reasonably and in good faith by Landlord’s Building engineer).  Such expenditures shall be amortized
uniformly over the following periods of time (together with interest on the
unamortized balance at the Prime Rate (defined in Section 19.B) as of the date
incurred plus 2%):  for building
improvements, the shorter of 10 years or the estimated useful life of the
improvement; and for all other items, 3 years for expenditures under $50,000
and 5 years for expenditures in excess of $50,000, to the extent the foregoing
is in accordance with sound real estate accounting principles consistently
applied.


 


(10)         Electrical
services used in the operation, maintenance and use of the Property; sales,
use, excise and other taxes assessed by governmental authorities on electrical
services supplied to the Property.


 


E.             Exclusions from
Operating Expenses. 
Operating Expenses exclude the following expenditures:


 


(1)           Leasing
commissions, attorneys’ fees and other expenses related to leasing tenant space
and constructing improvements for the benefit of other tenants or other
occupants of vacant space;


 


(2)           Goods
and services furnished to an individual tenant of the Building which are above
building standard and which are separately reimbursable directly to Landlord in
addition to the OE Payment.


 


(3)           Repairs,
replacements and general maintenance paid by insurance proceeds or condemnation
proceeds.


 


(4)           Except
as provided in Section
4.D(9), depreciation, amortization, interest payments on any
encumbrances on the Property and the cost of capital improvements or additions.


 


(5)           Costs
of installing any specialty service, such as an observatory, broadcasting
facility, luncheon club, or athletic or recreational club.


 


(6)           Expenses
for repairs or maintenance related to the Property which have been reimbursed
to Landlord pursuant to warranties or service contracts.


 


(7)           Costs
(other than maintenance costs) of any art work (such as sculptures or
paintings) used to decorate the Building.


 


(8)           Payments
of principal and/or interest on debt or amortization payments on any mortgage
or mortgages executed by Landlord covering the Building, the Premises or
Parking Facilities (or any portion thereof), rental concessions or negative
cash flow guaranties, and rental payments under any ground or underlying leases
or lease;


 


(9)           All
items and services for which Tenant reimburses Landlord and pays third persons.


 


(10)         Expenses incurred in
leasing or procuring new tenants, including advertising and marketing expenses
and expenses for preparation of leases or renovating space for new tenants,
rent allowances, lease takeover costs, payment of moving costs and similar
costs and expenses.


 


(11)         Costs
incurred as a result of an intentional tort by Landlord or its agents.


 


(12)         Legal, auditing,
consulting and professional fees paid or incurred in connection with
negotiations for financings, refinancings or sales of the Property.


 


(13)         Rental
of items which if purchased would constitute a capital expenditure which could
not be included in Operating Expenses pursuant to Section 4.D(9) above.


 


(14)         Costs
for which Landlord has been compensated by a management fee.


 


6





















 


(15)         Salaries
of officers and executives of Landlord, except as included in Section 4.D(2).


 


(16)         Any rental and any
associated costs, either actual or not, for Landlord’s or Landlord’s managing
agent’s leasing office.


 


(17)         Landlord’s
general corporate overhead and general administrative expenses.


 


(18)         Costs
arising from Landlord’s charitable or political contributions.


 


(19)         Leasing
commissions, attorney’s fees, costs and disbursements and other expenses
incurred in connection with negotiations or disputes with other tenants, other
occupants or prospective tenants or other occupants; and legal fees incurred in
connection with this Lease or the operation of the Building that do not result
in a reduction of Operating Expenses.


 


(20)         Costs,
penalties and fines incurred due to the violation by Landlord or any other tenant of
the Building of Laws, or the terms and conditions of any lease pertaining to
the Building, except such as may be incurred by Landlord in contesting in good
faith the alleged violation.


 


(21)         Compensation
paid to clerks, attendants or other persons in commercial concessions other
than the Parking Facilities (such as a snack bar, restaurant or newsstand).


 


(22)         Expenses
incurred in leasing or procuring new tenants, including advertising and marketing
expenses and expenses for preparation of leases or renovating space for new
tenants, rent allowances, lease takeover costs, payment of moving costs and
similar costs and expenses.


 


(23)         Salaries
of officers and executives of Landlord, except as included in Section 4.D(2).


 


(24)         Costs
incurred in the operation of the Parking Facilities or other parking facility
serving the Building.


 


(25)         Any
other expense or cost which under sound real estate accounting principles
consistently applied would not be considered a normal maintenance or operating
expense of the Building.


 


F.             Proration of
Operating Expenses; Adjustments.  If Landlord incurs Operating Expenses for the
Property together with one or more other buildings or properties, whether
pursuant to a reciprocal easement agreement, common area agreement or
otherwise, the shared costs and expenses shall be equitably prorated and
apportioned by Landlord between the Property and the other buildings or
properties. If the Building is not 95% occupied during any calendar year or
partial calendar year or if Landlord is not supplying services to 95% of the
total Rentable Square Footage of the Building at any time during a calendar
year or partial calendar year, Operating Expenses shall be determined as if the
Building had been 95% occupied and Landlord had been supplying services to 95%
of the Rentable Square Footage of the Building during that calendar year.  The extrapolation of Operating Expenses under
this Section shall be performed by Landlord by adjusting the cost of those
components of Operating Expenses that are impacted by changes in the occupancy
of the Building.  Notwithstanding the
above, Tenant shall only be required to pay actual Operating Expenses incurred
by Landlord.


 


G.            Audit Rights.  Within 120 days after Landlord furnishes its
statement of actual Operating Expenses for any calendar year (the “Audit Election Period“), Tenant may, at its expense,
elect to audit Landlord’s Operating Expenses for such calendar year only,
subject to the following conditions:  (1)
there is no uncured event of default under this Lease; (2) the audit shall be
prepared by an independent certified public accounting firm of recognized
local, regional, or national standing; (3) in no event shall any audit be
performed by a firm retained on a “contingency fee” basis; (4) the audit shall
commence within 30 days after Landlord makes Landlord’s books and records
available to Tenant’s auditor at Landlord’s management office in the Building
and shall conclude within 90 days after commencement, provided that Landlord
has cooperated with Tenant and Tenant’s auditor’s reasonable requests;
(5) the audit shall be conducted during Landlord’s normal business hours
at the location where Landlord maintains its books and records and shall not unreasonably
interfere with the conduct of Landlord’s business; and (6) Tenant and its
accounting


 


7





















 


firm shall treat any audit in a
confidential manner and shall each execute Landlord’s confidentiality agreement
for Landlord’s benefit prior to commencing the audit.  This paragraph shall not be construed to
limit, suspend, or abate Tenant’s obligation to pay Rent when due, including
the OE Payment.  If the audit proves that
Landlord’s calculation of Tenant’s Pro Rata Share of Operating Expenses for the
calendar year under inspection was overstated by more than five percent (5%),
then, after verification, Landlord shall pay Tenant’s actual reasonable
out-of-pocket audit and inspection fees applicable to the review of said
calendar year statement within thirty (30) days after receipt of Tenant’s
invoice therefor.  Landlord shall credit
any overpayment determined by the final approved audit report against the next
Rent due and owing by Tenant or, if no further Rent is due, refund such
overpayment directly to Tenant within 30 days of determination.  Likewise, Tenant shall pay Landlord any
underpayment determined by the final approved audit report within 30 days of
determination.  The foregoing obligations
shall survive the expiration or termination of this Lease.  If Tenant does not give written notice of its
election to audit Landlord’s Operating Expenses during the Audit Election
Period, Landlord’s Operating Expenses for the applicable calendar year shall be
deemed approved for all purposes, and Tenant shall have no further right to
review or contest the same.  Provided
however, if any audit determines that Tenant has been overcharged by more than
five percent (5%), Tenant’s audit rights shall extend back to previous two
lease years.  The right to audit granted
hereunder is personal to the initial Tenant named in this Lease and to any
assignee under a Permitted Transfer (defined below) and shall not be available
to any subtenant under a sublease of the Premises.


 


5.             Tenant’s Use of Premises.


 


A.            Permitted Uses.  The Premises shall be used only for general
office use (the “Permitted Use“) and for no
other use whatsoever.  Tenant shall not
use or permit the use of the Premises for any purpose which is illegal, creates
obnoxious odors (including tobacco smoke), noises or vibrations, is dangerous
to persons or property, could increase Landlord’s insurance costs, or which, in
Landlord’s reasonable opinion, unreasonably disturbs any other tenants of the
Building or interferes with the operation or maintenance of the Property.  Except as provided below, the following uses
are expressly prohibited in the Premises: 
schools, government offices or agencies; collection agencies; credit
unions; data processing, telemarketing or reservation centers; medical
treatment and health care (but not administrative offices for such companies);
radio, television or other telecommunications broadcasting; restaurants and
other retail; customer service offices of a public utility company; or any other
purpose which would, in Landlord’s reasonable opinion, impair the reputation or
quality of the Building, overburden any of the Building systems, Common Areas
or parking facilities, impair Landlord’s efforts to lease space or otherwise
interfere with the operation of the Property. 
Notwithstanding the foregoing, the following ancillary uses are
permitted in the Premises only so long as they do not, in the aggregate, occupy
more than 25% of the Rentable Square Footage of the Premises or any single
floor (whichever is less):  (A) the
following services provided by Tenant exclusively to its employees:  schools, training and other educational
services; credit unions; and similar employee services; and (B) the following
services directly and exclusively supporting Tenant’s business:  telemarketing; reservations; storage; data
processing; debt collection; and similar support services.


 


B.            Compliance with
Laws.  Tenant shall
comply with all Laws regarding the operation of Tenant’s business and the use,
condition, configuration and occupancy of the Premises and the use of the
Common Areas.  Tenant, within 10 days
after receipt, shall provide Landlord with copies of any notices Tenant
receives regarding a violation or alleged or potential violation of any
Laws.  Tenant shall comply with the rules
and regulations of the Building attached as Exhibit B and such other
reasonable rules and regulations (or modifications thereto which shall be
consistently applied) adopted by Landlord from time to time.  Such rules and regulations will be applied in
an equitable manner as reasonably determined by Landlord.  Tenant shall also cause its agents,
contractors, subcontractors, employees, customers, and subtenants to comply
with all rules and regulations.


 


C.            Tenant’s Security
Responsibilities. 
Tenant shall (1) lock the doors to the Premises and take other
reasonable steps to secure the Premises and the personal property of all Tenant
Parties (defined in Article 13)
and any of Tenant’s transferees, contractors or licensees in the Common Areas
and parking facilities of the Building and Property, from unlawful intrusion,
theft, fire and other hazards; (2) keep and maintain in good working order all
security and safety devices installed in the Premises by or for the benefit of
Tenant (such as locks, smoke detectors and burglar alarms); and (3) cooperate
with Landlord and other tenants in the Building on Building safety
matters.  Tenant acknowledges that any
security or safety measures employed by Landlord are for the


 


8





















 


protection of Landlord’s own
interests; that Landlord is not a guarantor of the security or safety of the
Tenant Parties or their property; and that such security and safety matters are
the responsibility of Tenant and the local law enforcement authorities.  Landlord shall maintain such security
measures in and about the Building as are reasonably consistent with a majority
of the Class A buildings in the Houston Central Business District, taking into
account comparable size, age, design and quality.


 


6.             Security Deposit.


 


A.            Letter of Credit.  In order to guarantee the obligations of
Tenant under this Lease and as the Security Deposit hereunder, Tenant shall
deliver to Landlord within 5 days after the Effective Date an irrevocable,
unconditional letter of credit in the amount of $1,325,976.75 (the “Letter
of Credit”).  The
Letter of Credit shall be for a minimum period of one year, addressed to
Landlord (and/or any other beneficiary designated by Landlord), issued in a
form and substance similar to that attached hereto as Exhibit F
and by a financial institution approved by Landlord, in Landlord’s sole
discretion, and shall be transferable one or more times by Landlord without the
consent of Tenant.  At least thirty (30)
days prior to the expiration of the Letter of Credit, Tenant shall provide to
Landlord, a substitute Letter of Credit issued in a form and substance similar
to the Letter of Credit, for the minimum duration of one year.  Landlord agrees to reimburse Tenant, upon
Tenant’s request, any and all commercially reasonable processing fees charged
by the issuing bank in connection with the Letter of Credit that arise due to:
(1) Landlord’s sale or transfer of all or any portion of the Building or
Property and the need for modification of the Letter of Credit in connection
therewith; or (2) the addition, deletion, or modification of any beneficiary
under the Letter of Credit.  The bank
issuing the Letter of Credit shall have banking offices in the city in which
the Building is located, at which offices the Letter of Credit may be
drawn.  Tenant agrees that Landlord may,
from time to time while an event of default by Tenant exists after notice and
opportunity to cure (if applicable) and remains uncured, draw and receive payment
under the Letter of Credit of the entire amount thereof at such time, and any
such amounts received by Landlord shall be held by Landlord and applied in
accordance with this Lease in the manner specified in Section 6.B.  Landlord shall at all times during the Term,
hold a letter of credit in the amount described above.  Notwithstanding anything contained herein or
in the Letter of Credit to the contrary, Landlord shall return the Letter of
Credit to Tenant (and no further Letter of Credit or other form of Security
Deposit shall be required of Tenant hereunder) promptly following the
occurrence of both of the following:


 


(i)            Tenant’s
audited financial statements prepared in accordance with generally accepted
accounting principles consistently applied, show an amount for shareholders’
equity (or “net worth”) exceeding $500,000,000; and


 


(ii)           Tenant
has filed with the U.S. Securities & Exchange Commission in accordance with
applicable Law Tenant’s Form 10-K for the year ending December 31, 2003.


 


B.            Security Deposit.  The Security Deposit in the form of the
Letter of Credit shall be delivered by Tenant to Landlord as specified in Section 6.A and shall be held by Landlord
as security for the performance of Tenant’s obligations under this Lease.  The Security Deposit is not an advance
payment of Rent or a measure of Tenant’s liability for damages.  Landlord may, from time to time while an
event of default by Tenant exists after notice and opportunity to cure (if
applicable) and remains uncured, without prejudice to any other remedy, draw on
the Letter of Credit as therein provided and use all or a portion of the funds
thereby received to satisfy past due Rent, cure any uncured default by Tenant,
or repay Landlord for damages and charges for which Tenant is legally liable
under this Lease or resulting from Tenant’s breach of this Lease.  If Landlord so draws on the Letter of Credit,
Tenant shall on demand restore the face amount of the Letter of Credit to its
original amount and such use by Landlord of the funds drawn from the Letter of
Credit shall not constitute a cure of the existing event of default until such
time as the entire amount owing to Landlord is paid in full and the Letter of
Credit face amount is fully restored. 
Provided that Tenant has performed all of its obligations hereunder,
Landlord shall return the original Letter of Credit (subject to any prior
drafts thereon) to Tenant within 30 days after the later to occur of: (A) the
date Tenant surrenders possession of the Premises to Landlord in accordance
with this Lease; or (B) the Expiration Date; provided, however, that
Tenant does hereby authorize Landlord to withhold from any funds held by
Landlord hereunder as the Security Deposit all amounts allowed by Law and the
amount reasonably anticipated by Landlord to be owed by Tenant as a result of
an underpayment of the OE Payment for the final year of the Term.  To the fullest extent permitted by applicable
Law, Tenant agrees that the provisions of this Article 6 shall supersede and replace all statutory rights of


 


9





















 


Tenant under applicable Law
regarding the retention, application or return of security deposits.  If Landlord transfers its interest in the
Premises, Landlord shall assign the Security Deposit to the transferee and,
following the assignment and the delivery to Tenant of an acknowledgement of
the transferee’s responsibility for the Security Deposit if required by Law,
Landlord shall have no further liability for the return of the Security Deposit.  Landlord shall not be required to keep the
funds constituting the Security Deposit (i.e., any funds received by Landlord
as a result of a draft on the Letter of Credit) separate from its other
accounts.


 


7.             Services Furnished by Landlord.


 


A.            Standard Services.  Subject to the provisions of this Lease,
Landlord agrees to furnish (or cause a third party provider to furnish) the
following services to Tenant during the Term:


 


(1)           Water
service for use in the lavatories on each floor on which the Premises are
located.


 


(2)           Heat
and air conditioning in season during Normal Business Hours, at such
temperatures and in such amounts as required by governmental authority or and
in such amounts as specified in Exhibit G.  Tenant, upon such notice as is reasonably
required by Landlord, and subject to the capacity of the Building systems, may
request HVAC service during hours other than Normal Business Hours.  Tenant shall pay Landlord for such additional
service at a rate equal to $12.50 per requested hour of operation per air
handler (the “Hourly
HVAC Charge“).  Landlord
shall have the right, upon 30 days prior written notice to Tenant, to adjust
the Hourly HVAC Charge from time to time, but not more than once per calendar
year, based upon increases in HVAC costs, which costs include utilities, taxes,
surcharges, labor, equipment, maintenance and repair.


 


(3)           Maintenance
and repair of the Property as described in Section 9.B.


 


(4)           Janitorial
service five days per week (excluding Holidays), in accordance with the janitorial
specifications set forth on Exhibit H.  If Tenant’s use of the Premises, floor
covering or other improvements requires special services in excess of the
standard services for the Building as reflected on Exhibit H, Tenant shall pay the
additional cost attributable to the special services.


 


(5)           Elevator
service, subject to proper authorization and Landlord’s policies and procedures
for use of the elevator(s) in the Building.


 


(6)           Exterior
window washing at such intervals as determined by Landlord, but not less than
one time per year.


 


(7)           Electricity
to the Premises for general office use, in accordance with and subject to the
terms and conditions in Article 8.


 


(8)           Landlord
shall provide a Building standard directory in an area designated by Landlord
with the names and suite numbers of tenants of the Building, including the name
of Tenant and Tenant’s departments located in the Building.  During the Term, Landlord shall periodically
update Tenant’s designations on the Building directory at Tenant’s request, at
Tenant’s sole cost and expense. 
Landlord, at Landlord’s expense, shall add Tenant’s name and departments
to the directory board before Tenant’s occupancy of the Premises.


 


(9)           Replacement
of building standard light bulbs and ballasts within the Premises.


 


(10)         Pest
control services in a quantity and quality at least equal to that of similar
Class A office buildings in the Central Business District of Houston, Texas,
taking into account comparable size, age, design and quality.


 


B.            Service Interruptions.  For purposes of this Lease, a “Service Failure“ shall mean any interruption, suspension
or termination of services being provided to Tenant by Landlord or by
third-party providers, whether engaged by Tenant or pursuant to arrangements by
such providers with Landlord, which are due to (1) the application of Laws; (2)
the failure, interruption or malfunctioning of any electrical or mechanical
equipment, utility or other service to the Building or Property; (3) the
performance of repairs, maintenance, improvements or alterations; or (4) the
occurrence of any other event or cause whether or not within the reasonable
control of Landlord.  No Service Failure
shall render Landlord liable to Tenant, constitute a constructive eviction of
Tenant,


 


10





















 


give rise to an abatement of
Rent, or relieve Tenant from the obligation to fulfill any covenant or
agreement, except as expressly specified herein.  Commencing on the 7th consecutive day of any
Service Failure within Landlord’s control, (unless the Service Failure is
caused by a fire or other casualty, in which event Article 16 controls), Tenant shall, as its sole remedy, be
entitled to an equitable diminution of Rent (including the OE Payment) based
upon the pro rata portion of the Premises which is rendered not usable by
Tenant for the Permitted Use, except to the extent such Service Failure is
caused by a Tenant Party.  If the Service
Failure renders the Premises not usable by Tenant for the Permitted Use, and is
not cured within 180 days after Landlord’s receipt of Tenant’s written notice
of Service Failure, then Tenant, at its option, upon written notice to Landlord
prior to the expiration of such 180-day period, may terminate this Lease and
all of its obligations for the remaining balance of the Term, and any renewals
or extensions thereof, whichever shall be applicable, and the parties hereto
shall be relieved of all liabilities and obligations hereunder (other than
those which expressly survive termination) as of the date of Tenant’s written
notice of termination pursuant to this Section
7.B.  In no event shall
Landlord be liable to Tenant for any loss or damage, including the theft of
Tenant’s Property (defined in Article 14), arising out of or in connection with any
Service Failure or the failure of any Building safety services, personnel or
equipment.


 


C.            Third Party
Services.  If Tenant
desires any service which Landlord has not specifically agreed to provide in
this Lease, such as private security systems or telecommunications services
serving the Premises, Tenant shall procure such service directly from a
reputable third party service provider (“Provider“)
for Tenant’s own account.  Tenant shall
require each Provider to comply with the Building’s rules and regulations, all
Laws, and Landlord’s reasonable policies and practices for the Building.  Tenant acknowledges Landlord’s current policy
that requires all Providers utilizing any area of the Property outside the
Premises to be approved by Landlord and to enter into a written agreement
acceptable to Landlord prior to gaining access to, or making any installations
in or through, such area.  Accordingly,
Tenant shall give Landlord written notice sufficient for such purposes.


 


8.             Use of Electrical Services by Tenant.


 


A.            Landlord’s
Electrical Service. 
Subject to the terms of this Lease, Landlord shall furnish to the
Premises, in the risers on the floors on which the Premises is located for
distribution by Tenant, electrical service of no less than 4.0 watts per square
foot of Rentable Square Footage of connected load for low voltage consumption
to operate customary office machines and other equipment of similar low
electrical consumption and no less than 2.0 watts per square foot of Rentable
Square Footage of connected load for lighting (“Building Standard Electrical Service”).
Landlord may, at any time and from time to time, calculate Tenant’s actual
electrical consumption in the Premises by a survey conducted by a reputable
consultant selected by Landlord, all at Landlord’s expense.  The cost of any electrical consumption in
excess of Building Standard Electrical Service shall be paid by Tenant in
accordance with Section
8.D.  The furnishing of
electrical services to the Premises shall be subject to the rules, regulations
and practices of the supplier of such electricity and of any municipal or other
governmental authority regulating the business of providing electrical utility
service.


 


B.            Selection of
Electrical Service Provider. 
Landlord shall have and retain the sole right to select the provider of
electrical services to the Building and/or the Property.  To the fullest extent permitted by Law,
Landlord shall have the continuing right to change such utility provider.  All charges and expenses incurred by Landlord
due to any such changes in electrical services, including maintenance, repairs,
installation and related costs, shall be included in the electrical services
costs referenced in Section 4.D(10), unless paid directly by Tenant.


 


C.            Submetering.  Landlord shall have the continuing right,
upon 30 days written notice, to install a submeter for the Premises at Tenant’s
expense if Tenant installs in the Premises any electrical equipment (e.g.,
mainframe computers or supplemental HVAC unit) using greater than single-phase
electrical power or exceeding the parameters of Building Standard Electrical
Service.  If submetering is installed for
such equipment hereunder, Landlord may charge for Tenant’s actual electrical
consumption monthly in arrears for the kilowatt hours used, a rate per kilowatt
hour equal to that charged to Landlord by the provider of electrical service to
the Building during the same period of time (plus, to the fullest extent
permitted by applicable Laws, an administrative fee equal to 10% of such
charge), except as to electricity directly purchased by Tenant from third party
providers after obtaining Landlord’s consent to the same.  In the event Landlord is unable to


 


11





















 


determine the exact kilowatt
hourly charge during the period of time, Landlord shall use the average
kilowatt hourly charge to the Building for the first billing cycle ending after
the period of time in question.  Even if
such equipment in the Premises is submetered pursuant hereto, Tenant shall
remain obligated to pay Tenant’s Pro Rata Share of the cost of electrical
services as provided in Section 4.B, except that Tenant shall be entitled to a
credit against electrical services costs equal to that portion of the amounts
actually paid by Tenant separately and directly to Landlord which are
attributable to building standard electrical services submetered to the
Premises.


 


D.            Excess Electrical
Service.  Tenant’s use
of electrical service shall not exceed Building Standard Electrical Service.  If Tenant requests permission to consume
excess electrical service, Landlord may refuse to consent or may condition
consent upon conditions that Landlord reasonably elects (including the
installation of utility service upgrades, meters, submeters, air handlers or
cooling units).  The costs of any
approved additional consumption (to the extent permitted by Law), installation
and maintenance shall be paid by Tenant.


 


9.             Repairs and Alterations.


 


A.            Tenant’s Repair
Obligations.  Tenant
shall keep the Premises in good condition and repair, ordinary wear and tear
excepted.  Tenant’s repair obligations
include, without limitation, repairs to: 
(1) floor covering and/or raised flooring; (2) interior partitions; (3)
doors; (4) the interior side of demising walls; (5) electronic, phone and data
cabling and related equipment (collectively, “Cable“)
that is installed by or for the benefit of Tenant whether located in the
Premises or in other portions of the Building; (6) supplemental air
conditioning units, private showers and kitchens, including hot water heaters,
plumbing, dishwashers, ice machines and similar facilities serving Tenant
exclusively; (7) phone rooms used exclusively by Tenant; (8) Alterations
(defined below) performed by contractors retained by Tenant, including related
HVAC balancing; and (9) all of Tenant’s furnishings, trade fixtures, equipment
and inventory.  Prior to performing any
such repair obligation, Tenant shall give written notice to Landlord describing
the necessary maintenance or repair. 
Upon receipt of such notice, Landlord may elect either to perform any of
the maintenance or repair obligations specified in such notice, or require that
Tenant perform such obligations by using contractors approved by Landlord.  All work shall be performed at Tenant’s
expense in accordance with the rules and procedures described in Section 9.C
below.  If Tenant fails to make any
repairs to the Premises for more than 15 days after notice from Landlord
(although notice shall not be required if there is an emergency), Landlord may,
in addition to any other remedy available to Landlord, make the repairs, and
Tenant shall pay to Landlord the reasonable cost of the repairs within 30 days
after receipt of an invoice, together with an administrative charge in an
amount equal to 10% of the cost of the repairs.


 


B.            Landlord’s Repair
Obligations.  Landlord
shall keep and maintain in good repair and working order and make repairs to
and perform maintenance upon:  (1)
structural elements of the Building; (2) standard mechanical (including HVAC),
electrical, plumbing and fire/life safety systems serving the Building
generally; (3) Common Areas; (4) the roof of the Building; (5) exterior windows
of the Building; and (6) elevators serving the Building.  Landlord shall promptly make repairs (taking
into account the nature and urgency of the repair) for which Landlord is
responsible.  If any of the foregoing
maintenance or repair is necessitated due to the acts or omissions of any Tenant
Party (defined in Article
13), Tenant shall pay the costs of such repairs or maintenance to
Landlord within 30 days after receipt of an invoice, together with an
administrative charge in an amount equal to 10% of the cost of the repairs.


 


C.            Alterations.


 


(1)           When Consent Is Required.  Tenant shall not make alterations, additions
or improvements to the Premises or install any Cable in the Premises or other
portions of the Building (collectively, “Alterations“)
without first obtaining the written consent of Landlord in each instance.  However, Landlord’s consent shall not be
required for any Alteration that satisfies all of the following criteria (a “Minor Alteration“): 
(a) is of a cosmetic nature such as painting, wallpapering, hanging
pictures and installing carpeting; (b) is not visible from outside the Premises
or Building; (c) will not affect the systems or structure of the Building; and
(d) does not require work to be performed inside the walls.


 


(2)           Requirements For All Alterations, Including Minor Alterations.  Prior to starting work on any Alteration,
Tenant shall furnish to Landlord for review and approval, such


 


12





















 


approval not to be unreasonably withheld:
plans and specifications; names of proposed contractors (provided that Landlord
may designate specific contractors with respect to Building systems); copies of
contracts; necessary permits and approvals; evidence of contractors’ and
subcontractors’ insurance.  Changes to
the plans and specifications must also be submitted to Landlord for its
approval, such approval not to be unreasonably withheld.  Some of the foregoing requirements may be
waived by Landlord for the performance of specific Minor Alterations; provided
that such waiver is obtained in writing prior
to the commencement of such Minor Alterations.  Landlord’s waiver on one occasion shall not
waive Landlord’s right to enforce such requirements on any other occasion.  Alterations shall be constructed in a good
and workmanlike manner using materials of a quality that is at least equal to
the quality designated by Landlord as the minimum standard for the
Building.  Landlord may designate
reasonable rules, regulations and procedures for the performance of Alterations
in the Building and, to the extent reasonably necessary to avoid disruption to
the occupants of the Building, shall have the right to designate the time when
Alterations may be performed.  Tenant
shall reimburse Landlord within 30 days after receipt of an invoice for
out-of-pocket sums paid by Landlord for third party examination of Tenant’s
plans for Alterations.  In addition,
within 30 days after receipt of an invoice from Landlord, Tenant shall pay to
Landlord a fee equal to 3% of the total cost of such Alterations for Landlord’s
oversight and coordination of any Alterations; provided, however, that if no
oversight or coordination services are requested of Landlord then no such fee
shall be charged.  No later than 30 days
after completion of the Alterations, Tenant shall furnish “as-built” plans
(which shall not be required for Minor Alterations), completion affidavits,
full and final waivers of liens, receipts and bills covering all labor and
materials.  Tenant shall assure that the
Alterations comply with all insurance requirements and Laws.


 


(3)           Landlord’s Liability For Alterations.  Landlord’s approval of an Alteration shall
not be a representation by Landlord that the Alteration complies with
applicable Laws or will be adequate for Tenant’s use.  Tenant acknowledges that Landlord is not an
architect or engineer, and that the Alterations will be designed and/or
constructed using independent architects, engineers and contractors.  Accordingly, Landlord does not guarantee or
warrant that the applicable construction documents will comply with Laws or be
free from errors or omissions, or that the Alterations will be free from
defects, and Landlord will have no liability therefor.


 


10.           Entry by Landlord.  Landlord, its agents, contractors and
representatives may enter the Premises to inspect or show the Premises, to
clean and make repairs, alterations or additions to the Premises, and to
conduct or facilitate repairs, alterations or additions to any portion of the
Building, including other tenants’ premises. 
However, provided there is no uncured event of default under this Lease,
any exhibition of the Premises to prospective tenants prior to the last 12
months of the Term shall be subject to Tenant’s prior consent, which shall not
be unreasonably withheld.  Except in
emergencies or to provide janitorial and other Building services after Normal
Business Hours, Landlord shall provide Tenant with reasonable prior notice of
entry into the Premises, which may be given orally.  Landlord shall have the right to temporarily
close all or a portion of the Premises to perform repairs, alterations and
additions, if reasonably necessary for the protection and safety of Tenant and
its employees.  Except in emergencies,
Landlord will not close the Premises if the work can reasonably be completed on
weekends and after Normal Business Hours; provided, however, that Landlord is
not required to conduct work on weekends or after Normal Business Hours if such
work can be conducted without closing the Premises or causing any material
disruption to Tenant’s business operations. 
Entry by Landlord for any such purposes shall not constitute a
constructive eviction or entitle Tenant to an abatement or reduction of Rent.


 


11.           Assignment and Subletting.


 


A.            Landlord’s Consent
Required.  Subject to
the remaining provisions of this Article 11, but notwithstanding anything to the contrary
contained elsewhere in this Lease, Tenant shall not assign, transfer or
encumber any interest in this Lease (either absolutely or collaterally) or
sublease or allow any third party to use any portion of the Premises (collectively
or individually, a “Transfer“) without
the prior written consent of Landlord, which consent shall not be unreasonably
withheld.  Without limitation, Tenant
agrees that Landlord’s consent shall not be considered unreasonably withheld
if:  (1) the proposed transferee’s
financial condition does not meet the criteria Landlord uses to select Building
tenants having similar leasehold obligations; (2) the proposed transferee is
(a) a governmental organization or (b) a present occupant of the Property as to
which Landlord is engaged in active lease negotiations for other premises in
the Building, which negotiations began prior to any active negotiations between
Tenant and such occupant (“active” meaning that Landlord and such proposed
transferee have both submitted a written proposal/counter-proposal


 


13





















 


to each other); (3) any uncured
event of default exists under this Lease (or a condition exists which, with the
passage of time or giving of notice, would become an event of default); (4) any
portion of the Building or Premises would likely become subject to additional
or different Laws as a consequence of the proposed Transfer; (5) the proposed
transferee’s use of the Premises conflicts with the Permitted Use or any
exclusive usage rights granted to any other tenant in the Building; (6) the
use, nature, business, activities or reputation in the business community of
the proposed transferee (or its principals, employees or invitees) does not
meet Landlord’s standards for Building tenants; (7) either the Transfer or
any consideration payable to Landlord in connection therewith adversely affects
the real estate investment trust qualification tests applicable to Landlord or
its Affiliates; or (8) the proposed transferee is involved in litigation with
Landlord or any of its Affiliates. 
Tenant shall not be entitled to receive monetary damages based upon a
claim that Landlord unreasonably withheld its consent to a proposed Transfer and
Tenant’s sole remedy shall be an action to enforce any such provision through
specific performance or declaratory judgment. 
Any attempted Transfer in violation of this Article is voidable at
Landlord’s option.


 


B.            Consent
Parameters/Requirements. 
As part of Tenant’s request for, and as a condition to, Landlord’s
consent to a Transfer, Tenant shall provide Landlord with financial statements
for the proposed transferee, a complete copy (unexecuted) of the proposed
assignment or sublease and other contractual documents, and such other
information as Landlord may reasonably request. 
Following receipt of such information, Landlord shall either:  (1) consent to the Transfer or reasonably
refuse to consent to the Transfer, or (2) exercise its right to terminate this
Lease with respect to the portion of the Premises and for the term that Tenant
is proposing to assign or sublet.  Any
such termination shall be effective on the proposed effective date of the
Transfer for which Tenant requested consent (“Landlord
Termination Date”).  In the event Landlord elects option (2)
above, Landlord shall provide written notice to Tenant of its election to
terminate this Lease (“Landlord’s
Termination Notice”). 
Tenant shall have the right to withdraw its request for Landlord’s
consent to the proposed Transfer (“Withdrawal Right”), provided Tenant exercises
such Withdrawal Right within 5 Business Days after receipt of Landlord’s
Termination Notice.  If Tenant timely
exercises its Withdrawal Right, the Lease shall continue in full force and
effect as if Tenant had not requested Landlord’s consent to the proposed
Transfer and Landlord’s Termination Notice shall thereby be rendered moot.  In the event the Landlord termination right
is exercised and not rendered moot, then Tenant shall vacate such portion of
the Premises by the Landlord Termination Date and upon Tenant’s vacating such
portion of the Premises, the rent and other charges payable shall be
proportionately reduced.  Consent by
Landlord to one or more Transfer(s) shall not operate as a waiver of Landlord’s
rights to approve any subsequent Transfers. 
In no event shall any Transfer or Permitted Transfer release or relieve
Tenant from any obligation under this Lease, nor shall the acceptance of Rent
from any assignee, subtenant or occupant constitute a waiver or release of
Tenant from any of its obligations or liabilities under this Lease.  Tenant shall pay Landlord a review fee of
$500 for Landlord’s review of any Permitted Transfer or requested Transfer.


 


C.            Payment to
Landlord.  If the
aggregate consideration paid to a Tenant Party for a Transfer exceeds that
payable by Tenant under this Lease (prorated according to the transferred
interest), Tenant shall pay Landlord 50% of such excess (after deducting
therefrom reasonable leasing commissions, reasonable costs of tenant
improvements paid to unaffiliated third parties and any other concessions
provided in connection with the Transfer, with proof of same provided to
Landlord).  Tenant shall pay Landlord for
Landlord’s share of any excess within 30 days after Tenant’s receipt of such
excess consideration. If any uncured event of default exists under this Lease
(or a condition exists which, with the passage of time or giving of notice,
would become an event of default), Landlord may require that all sublease
payments be made directly to Landlord, in which case Tenant shall receive a
credit against Rent in the amount of any payments received, but not to exceed
the amount payable by Tenant under this Lease.


 


D.            Change in Control
of Tenant.  Except for
a Permitted Transfer, if Tenant is a corporation, limited liability company,
partnership, or similar entity, and if the entity which owns or controls a
majority of the voting shares/rights in Tenant at any time sells or disposes of
such majority of voting shares/rights, or changes its identity for any reason
(including a merger, consolidation or reorganization), such change of ownership
or control shall constitute a Transfer. 
The foregoing shall not apply so long as, both before and after the
Transfer, Tenant is an entity whose outstanding stock is listed on a recognized
U.S. securities exchange, or if at least 80% of its voting stock is owned by
another entity, the voting stock of which is so listed; provided, however, that
Tenant shall give Landlord written notice at least 30 days prior to the
effective date of such change in ownership or control.


 


14





















 


E.             No Consent
Required.  Tenant may
assign its entire interest under this Lease to its Affiliate (defined below) or
to a successor to Tenant by purchase, merger, consolidation or reorganization
without the consent of Landlord, provided that all of the following conditions
are satisfied in Landlord’s reasonable discretion (a “Permitted Transfer“): 
(1) no uncured event of default exists under this Lease; (2) Tenant’s
successor shall own all or substantially all of the assets of Tenant; (3) such
Affiliate or Tenant’s successor shall have a net worth which is at least equal
to the greater of Tenant’s net worth at the date of this Lease or Tenant’s net
worth as of the day prior to the proposed purchase, merger, consolidation or
reorganization; (4) no portion of the Building or Premises would likely become
subject to additional or different Laws as a consequence of the proposed
Transfer; (5) such Affiliate’s or Tenant’s successor’s use of the Premises
shall not conflict with the Permitted Use or any exclusive usage rights granted
to any other tenant in the Building; (6) neither the Transfer nor any
consideration payable to Landlord in connection therewith adversely affects the
real estate investment trust (or pension fund or other ownership vehicle)
qualification tests applicable to Landlord or its Affiliates; (7) such
Affiliate or Tenant’s successor is not then involved in litigation with Landlord
or any of Landlord’s Affiliates; and (8) Tenant shall give Landlord written
notice at least 30 days prior to the effective date of the proposed Transfer,
along with all applicable documentation and other information necessary for
Landlord to determine that the requirements of this Section 11.E have been
satisfied, including if applicable, the qualification of such proposed
transferee as an Affiliate of Tenant. 
The term “Affiliate“ means any person
or entity controlling, controlled by or under common control with Tenant or
Landlord, as applicable.  If requested by
Landlord, the Affiliate of Tenant or Tenant’s successor shall sign a
commercially reasonable form of assumption agreement.


 


12.           Liens.  Tenant shall not permit mechanic’s or other
liens to be placed upon the Property, Premises or Tenant’s leasehold interest
in connection with any work or service done or purportedly done by or for the
benefit of Tenant.  If a lien is so
placed, Tenant shall, within 10 days of notice from Landlord of the filing of
the lien, fully discharge the lien by settling the claim which resulted in the
lien or by bonding or insuring over the lien in the manner prescribed by the
applicable lien Law.  If Tenant fails to
discharge the lien, then, in addition to any other right or remedy of Landlord,
Landlord may bond or insure over the lien or otherwise discharge the lien.  Tenant shall, within 30 days after receipt of
an invoice from Landlord, reimburse Landlord for any amount paid by Landlord,
including reasonable attorneys’ fees, to bond or insure over the lien or
discharge the lien.


 


13.           Indemnity.  Subject to Article 15, Tenant shall hold
Landlord, its trustees, Affiliates, subsidiaries, members, principals,
beneficiaries, partners, officers, directors, shareholders, employees,
Mortgagee(s) (defined in Article 25) and agents (including the manager of the
Property) (collectively, “Landlord Parties“)
harmless from, and indemnify and defend such parties against, all liabilities,
obligations, damages, penalties, claims, actions, costs, charges and expenses,
including reasonable attorneys’ fees and other professional fees that may be
imposed upon, incurred by or asserted against any of such indemnified parties
(each a “Claim” and collectively “Claims“) that arise out of or in connection with any
damage or injury occurring in the Premises, EVEN
IF SUCH LIABILITIES ARE CAUSED SOLELY OR IN PART BY THE ORDINARY NEGLIGENCE OF
A LANDLORD PARTY, BUT NOT TO THE EXTENT SUCH LIABILITIES ARE CAUSED BY THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A LANDLORD PARTY.  Subject to Articles 9.B, 15 and 20,
Landlord shall hold Tenant, its trustees, members, principals, beneficiaries,
partners, officers, directors, shareholders, employees and agents
(collectively, “Tenant Parties“) harmless
from, and indemnify and defend such parties against, all Claims that arise out
of or in connection with any damage or injury occurring in or on the Property
(excluding the Premises), to the same extent the Tenant Parties would have been
covered had they been named as additional insureds on the commercial general
liability insurance policy required to be carried by Landlord under this Lease,
EVEN IF SUCH LIABILITIES ARE CAUSED SOLELY OR
IN PART BY THE ORDINARY NEGLIGENCE OF TENANT, BUT NOT TO THE EXTENT SUCH LIABILITIES
ARE CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF TENANT.


 


14.           Insurance.


 


A.            Tenant’s Insurance.  Tenant shall maintain the following insurance
(“Tenant’s Insurance“), at its
sole cost and expense:  (1) commercial
general liability insurance applicable to the Premises and its appurtenances
providing, on an occurrence basis, a per occurrence limit of no less than
$1,000,000; (2) causes of loss-special form (formerly “all risk”) property
insurance, including flood, covering all above building standard leasehold
improvements and Tenant’s trade fixtures, equipment, furniture and other
personal property within the Premises (“Tenant’s
Property“)


 


15





















 


in the amount of the full
replacement cost thereof; (3) business income (formerly “business interruption”)
insurance written on an actual loss sustained form or with sufficient limits to
address reasonably anticipated business interruption losses; (4) business
automobile liability insurance to cover all owned, hired and nonowned
automobiles owned or operated by Tenant providing a minimum combined single
limit of $1,000,000; (5) workers’ compensation insurance as required by the
state in which the Premises is located and in amounts as may be required by applicable
statute (provided, however, if no workers’ compensation insurance is
statutorily required, Tenant shall carry workers’ compensation insurance in a
minimum amount of $500,000); (6) employer’s liability insurance in an amount of
at least $500,000 per occurrence; and (7) umbrella liability insurance that
follows form in excess of the limits specified in (1), (4) and (6) above,
of no less than $4,000,000 per occurrence and in the aggregate.  Any company underwriting any of Tenant’s
Insurance shall have, according to A.M. Best Insurance Guide, a Best’s
rating of not less than A- and a Financial Size Category of not less than
VIII.  All commercial general liability,
business automobile liability and umbrella liability insurance policies shall
name Landlord (or any successor), Landlord’s property manager, Landlord’s
Mortgagee (if any), and their respective members, principals, beneficiaries,
partners, officers, directors, employees, and agents, and other designees of
Landlord as the interest of such designees shall appear, as “additional
insureds” and shall be primary with Landlord’s policy being secondary and
noncontributory.  If any aggregate limit
is reduced because of losses paid to below 75% of the limit required by this
Lease, Tenant will notify Landlord in writing within 10 days of the date of
reduction.  All policies of Tenant’s
Insurance shall contain endorsements that the insurer(s) shall give Landlord
and its designees at least 30 days’ advance written notice of any change,
cancellation, termination or lapse of insurance.  Tenant shall provide Landlord with a
certificate of insurance and all required endorsements evidencing Tenant’s
Insurance prior to the earlier to occur of the Commencement Date or the date
Tenant is provided access to the Premises for any reason, and upon renewals at
least 10 days prior to the expiration of the insurance coverage.  All of Tenant’s Insurance policies,
endorsements and certificates will be on forms and with deductibles and
self-insured retention, if any, reasonably acceptable to Landlord.  The limits of Tenant’s insurance shall not
limit Tenant’s liability under this Lease.


 


B.            Landlord’s
Insurance.  Landlord
shall maintain:  (1) commercial general
liability insurance applicable to the Property which provides, on an occurrence
basis, a minimum combined single limit of no less than $5,000,000 (coverage in
excess of $1,000,000 may be provided by way of an umbrella/excess liability
policy); and (2) causes of loss-special form (formerly “all risk”) property
insurance on the Building in the amount of the replacement cost thereof, as
reasonably estimated by Landlord.  The
foregoing insurance and any other insurance carried by Landlord may be effected
by a policy or policies of blanket insurance and shall be for the sole benefit
of Landlord and under Landlord’s sole control. 
Consequently, Tenant shall have no right or claim to any proceeds
thereof or any other rights thereunder.


 


15.           Mutual Waiver of Subrogation.  Notwithstanding anything in this Lease to the
contrary, Tenant waives, and shall cause its insurance carrier(s) and any other
party claiming through or under such carrier(s), by way of subrogation or
otherwise, to waive any and all rights of recovery, Claim, action or causes of
action against all Landlord Parties for any loss or damage to Tenant’s
business, any loss of use of the Premises, and any loss, theft or damage to
Tenant’s Property (including Tenant’s automobiles or the contents thereof), INCLUDING ALL RIGHTS
(BY WAY OF SUBROGATION OR OTHERWISE) OF RECOVERY, CLAIMS, ACTIONS OR CAUSES OF
ACTION ARISING OUT OF THE NEGLIGENCE OF ANY LANDLORD PARTY, which
loss or damage is (or would have been, had the insurance required by this Lease
been maintained) covered by insurance. 
In addition, Landlord waives, and shall cause its insurance carrier(s)
and any other party claiming through or under such carrier(s), by way of
subrogation or otherwise, to waive, any and all rights of recovery, Claim,
action or causes of action against all Tenant Parties for any loss of or damage
to or loss of use of the Building, any additions or improvements to the
Building, or any contents thereof, INCLUDING ALL RIGHTS (BY WAY OF SUBROGATION
OR OTHERWISE) OF RECOVERY, CLAIMS, ACTIONS OR CAUSES OF ACTION ARISING OUT OF
THE NEGLIGENCE OF ANY TENANT PARTY, which loss or damage is (or
would have been, had the insurance required by this Lease been maintained)
covered by insurance.


 


16.           Casualty Damage.


 


A.            Repair or
Termination by Landlord. 
If all or any part of the Premises are damaged by fire or other
casualty, Tenant shall immediately notify Landlord in writing.  Landlord shall have the right to terminate
this Lease if:  (1) the Building shall be
damaged so that, in Landlord’s judgment, substantial alteration or
reconstruction of the Building shall be required (whether or not


 


16





















 


the Premises have been
damaged); (2) Landlord is not permitted by Law to rebuild the Building in
substantially the same form as existed before the fire or casualty;
(3) the Premises have been materially damaged and there is less than 2
years of the Term remaining on the date of the casualty; (4) any Mortgagee
requires that the insurance proceeds be applied to the payment of the mortgage
debt; or (5) an uninsured loss of the Building occurs notwithstanding Landlord’s
compliance with Section
14.B above.  Landlord may
exercise its right to terminate this Lease by notifying Tenant in writing
within 90 days after the date of the casualty. 
If Landlord does not terminate this Lease under this Section 16.A,
Landlord shall commence and proceed with reasonable diligence to repair and
restore the Building and/or the Premises to substantially the same condition as
existed immediately prior to the date of damage; provided, however, that Landlord
shall only be required to reconstruct building standard leasehold improvements
existing in the Premises as of the date of damage, and Tenant shall be required
to pay the cost for restoring any other leasehold improvements.  However, in no event shall Landlord be
required to spend more than the insurance proceeds received by Landlord.


 


B.            Timing for Repair;
Termination by Either Party. 
If all or any portion of the Premises is damaged as a result of fire or
other casualty, Landlord shall, with reasonable promptness, cause an architect
or general contractor selected by Landlord to provide Landlord and Tenant with
a written estimate of the amount of time required to substantially complete the
repair and restoration of the Premises, using standard working methods (“Completion Estimate“). 
If the Completion Estimate indicates that the Premises cannot be made
tenantable within 210 days from the date of damage, then regardless of anything
in Section 16.A
above to the contrary, either party shall have the right to terminate this
Lease by giving written notice to the other of such election within 10 days
after receipt of the Completion Estimate. 
Tenant, however, shall not have the right to terminate this Lease if the
fire or casualty was caused by the negligence or intentional misconduct of any
of the Tenant Parties.  If neither party
terminates this Lease under this Section 16.B, then Landlord shall repair and restore the
Premises in accordance with, and subject to the limitations of, Section 16.A.


 


C.            Abatement.  In the event a material portion of the
Premises is damaged as a result of a fire or other casualty, the Base Rent
shall abate for the portion of the Premises that is damaged and not usable by
Tenant until substantial completion of the repairs and restoration required to
be made by Landlord pursuant to Section 16.A.  Tenant,
however, shall not be entitled to such abatement if the fire or other casualty
was caused by the negligence or intentional misconduct of any of the Tenant
Parties.  Landlord shall not be liable
for any loss or damage to Tenant’s Property or to the business of Tenant
resulting in any way from the fire or other casualty or from the repair and
restoration of the damage.  Landlord and
Tenant hereby waive the provisions of any Law relating to the matters addressed
in this Article, and agree that their respective rights for damage to or
destruction of the Premises shall be those specifically provided in this Lease.


 


17.           Condemnation. 
Either party may terminate this Lease if the whole or any material part
of the Premises are taken or condemned for any public or quasi-public use under
Law, by eminent domain or private purchase in lieu thereof (a “Taking“). 
Landlord or Tenant shall also have the right to terminate this Lease if
there is a Taking of any portion of the Building or Property which would leave
the remainder of the Building unsuitable for use as an office building in a
manner comparable to the Building’s use prior to the Taking.  In order to exercise its right to terminate
this Lease under this Article 17, Landlord or Tenant, as the case may be, must
provide written notice of termination to the other within 45 days after the
terminating party first receives notice of the Taking.  Any such termination shall be effective as of
the date the physical taking of the Premises or the portion of the Building or
Property occurs.  If this Lease is not
terminated, the Rentable Square Footage of the Building, the Rentable Square
Footage of the Premises and Tenant’s Pro Rata Share shall, if applicable, be
appropriately adjusted by Landlord.  In
addition, Base Rent for any portion of the Premises taken or condemned shall be
abated during the unexpired Term effective when the physical taking of the
portion of the Premises occurs.  All
compensation awarded for a Taking, or sale proceeds, shall be the property of
Landlord, any right to receive compensation or proceeds being expressly waived
by Tenant.  However, Tenant may file a
separate claim at its sole cost and expense for Tenant’s Property (excluding above
building standard leasehold improvements) and Tenant’s reasonable relocation
expenses, provided the filing of such claim does not diminish the award which
would otherwise be receivable by Landlord.


 


18.           Events of Default.  Tenant shall be considered to be in default
under this Lease upon the occurrence of any of the following events of default:


 


17





















 


A.            Tenant’s
failure to pay when due all or any portion of the Rent (“Monetary Default“) provided that the first two such
failures during any consecutive 12 month period shall not be an event of
default if Tenant pays the amount due within 5 days after written notice from
Landlord.


 


B.            Tenant’s
failure to perform any of the obligations of Tenant in the manner set forth in Articles  14, 23, 23 or 25 (a “Time Sensitive Default“).


 


C.            Tenant’s
failure (other than a Monetary Default or a Time Sensitive Default) to comply
with any term, provision or covenant of this Lease, if the failure is not cured
within 20 days after written notice to Tenant. 
However, if Tenant’s failure to comply cannot reasonably be cured within
20 days, Tenant shall be allowed additional time as is reasonably necessary to
cure the failure so long as:  (1) Tenant
commences to cure the failure within the 20 day period following Landlord’s
initial written notice, and (2) Tenant diligently pursues a course of action
that will cure the failure and bring Tenant back into compliance with this
Lease.  However, if Tenant’s failure to
comply creates a hazardous condition, the failure must be cured immediately
upon notice to Tenant.  In addition, if
Landlord provides Tenant with notice of Tenant’s failure to comply with the
same specific term, provision or covenant of this Lease on more than two (2)
occasions during any 12 month period, Tenant’s subsequent violation of the same
term, provision or covenant shall, at Landlord’s option, be deemed an incurable
event of default by Tenant.


 


D.            Tenant
or any Guarantor becomes insolvent, files a petition for protection under the
U.S. Bankruptcy Code (or similar Law) or a petition is filed against Tenant or
any Guarantor under such Laws and is not dismissed within 45 days after the
date of such filing, makes a transfer in fraud of creditors or makes an
assignment for the benefit of creditors, or admits in writing its inability to
pay its debts when due.


 


E.             The
leasehold estate is taken by process or operation of Law.


 


F.             Tenant
is in default beyond any notice and cure period under any other lease or
agreement with Landlord, including any lease or agreement for parking.


 


19.           Remedies.


 


A.            Landlord’s
Remedies.  Upon any
default, Landlord shall have the right without notice or demand (except as
provided in Article
18) to pursue any of its rights and remedies at Law or in equity,
including any one or more of the following remedies:


 


(1)           Terminate
this Lease;


 


(2)           Re-enter
the Premises, change locks, alter security devices and lock out Tenant or
terminate Tenant’s right of possession of the Premises without terminating this
Lease;


 


(3)           Remove
and store, at Tenant’s expense, all the property in the Premises using such
lawful force as may be necessary;


 


(4)           Cure
such event of default for Tenant at Tenant’s expense (plus a 15% administrative
fee);


 


(5)           Withhold
or suspend payment of sums Landlord would otherwise be obligated to pay to
Tenant under this Lease or any other agreement;


 


(6)           Require
all future payments to be made by cashier’s check, money order or wire transfer
after the first time any check is returned for insufficient funds, or the
second time any sum due hereunder is more than five (5) days late;


 


(7)           Apply
any Security Deposit as permitted under this Lease; and/or


 


(8)           Recover
such other amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by applicable Law, including any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant’s failure to perform its obligations under this Lease or which in the
ordinary course of events would be likely to result therefrom.


 


18





















 


B.            Measure of Damages.


 


(1)           Calculation.  If Landlord either terminates this Lease or
terminates Tenant’s right to possession of the Premises, Tenant shall
immediately surrender and vacate the Premises and pay Landlord on demand:  (a) all Rent accrued through the end of the
month in which the termination becomes effective; (b) interest on all unpaid
Rent from the date due at a rate equal to the lesser of 18% per annum or the
highest interest rate permitted by applicable Law; (c) all expenses reasonably
incurred by Landlord in enforcing its rights and remedies under this Lease,
including all reasonable legal expenses; (d) Costs of Reletting (defined
below); and (e) all Landlord’s Rental Damages (defined below).  In the event that Landlord relets the
Premises for an amount greater than the Rent due during the Term, Tenant shall
not receive a credit for any such excess.


 


(2)           Definitions.  “Costs
of Reletting“ shall include commercially reasonable costs,
losses and expenses incurred by Landlord in reletting all or any portion of the
Premises including, without limitation, the cost of removing and storing Tenant’s
furniture, trade fixtures, equipment, inventory or other property, repairing
and/or demolishing the Premises, removing and/or replacing Tenant’s signage and
other fixtures, making the Premises ready for a new tenant, including the cost
of advertising, commissions, architectural fees, legal fees and leasehold
improvements, and any allowances and/or concessions provided by Landlord.  “Landlord’s
Rental Damages“ shall mean the total Rent which Landlord would
have received under this Lease (had Tenant made all such Lease payments as
required) for the remainder of the Term minus the fair rental value of the
Premises for the same period, or, if the Premises are relet, the actual rental
value (not to exceed the Rent due during the Term), both discounted to present
value at the Prime Rate (defined below) in effect upon the date of
determination.  For purposes hereof, the “Prime Rate“ shall be the per annum interest rate
publicly announced by a federally insured bank selected by Landlord in the
state in which the Building is located as such bank’s prime or base rate.


 


(3)           Landlord’s Alternative Calculation.  Because future market rental rates, and the
costs or time involved in reletting may be uncertain and difficult to determine
at the time of Tenant’s default, the parties agree that Landlord may in its
sole discretion elect to recover, in lieu of calculating damages under Section 19.B(1)(d)
and (e)
above (but without limiting damages under Section  19.B(1)(a)
and (b)
above), the sum of (a) the unamortized portion of all costs, losses and
expenses incurred by Landlord as a result of entering into the Lease, and
(b) twenty five percent (25%) of the total nominal Rent which Landlord
would have received under this Lease (had Tenant made all such Rent payments as
required) for the remainder of the Term, which the parties agree is a fair and
reasonable estimate of Landlord’s Rental Damages and the Costs of Reletting.


 


C.            Tenant Not
Relieved from Liabilities. 
Unless expressly provided in this Lease, the repossession or re-entering
of all or any part of the Premises shall not relieve Tenant of its liabilities and
obligations under this Lease.  In
addition, Tenant shall not be relieved of its liabilities under this Lease, nor
be entitled to any damages hereunder, based upon minor or immaterial errors in
the exercise of Landlord’s remedies.  No
right or remedy of Landlord shall be exclusive of any other right or
remedy.  Each right and remedy shall be
cumulative and in addition to any other right and remedy now or subsequently
available to Landlord at Law or in equity. 
If Tenant fails to pay any amount when due hereunder, Landlord shall be
entitled to receive interest on any unpaid item of Rent at a rate equal to the
lesser of 18% per annum or the highest rate permitted by Law.  In addition, if Tenant fails to pay any item
or installment of Rent when due, Tenant shall pay Landlord an administrative
fee equal to 5% of the past due Rent. 
However, in no event shall the charges permitted under this Section 19.C
or elsewhere in this Lease, to the extent they are considered interest under
applicable Law, exceed the maximum lawful rate of interest.  If any payment by Tenant of an amount deemed
to be interest results in Tenant having paid any interest in excess of that
permitted by Law, then it is the express intent of Landlord and Tenant that all
such excess amounts theretofore collected by Landlord be credited against the
other amounts owing by Tenant under this Lease. 
Receipt by Landlord of Tenant’s keys to the Premises shall not
constitute an acceptance or surrender of the Premises.  NOTWITHSTANDING ANY OTHER PROVISION OF THIS LEASE TO THE CONTRARY,
TENANT SHALL HOLD LANDLORD PARTIES HARMLESS FROM AND INDEMNIFY AND DEFEND SUCH
PARTIES AGAINST, ALL CLAIMS THAT ARISE OUT OF OR IN CONNECTION WITH A BREACH OF
THIS LEASE, SPECIFICALLY INCLUDING ANY VIOLATION OF APPLICABLE LAWS OR
CONTAMINATION (DEFINED IN ARTICLE 30) CAUSED BY A TENANT PARTY.


 


D.            Mitigation of
Damages.  Upon
termination of Tenant’s right to possess the Premises, Landlord shall, only to
the extent required by Law, use objectively reasonable efforts to mitigate


 


19





















 


damages by reletting the
Premises.  Landlord shall not be deemed
to have failed to do so if Landlord refuses to lease the Premises to a
prospective new tenant with respect to whom Landlord would be entitled to
withhold its consent pursuant to Section 11.A, or who (1) is a parent, subsidiary or other
Affiliate of Tenant; (2) is not acceptable to any Mortgagee of Landlord; (3)
requires improvements to the Premises to be made at Landlord’s expense; or (4)
is unwilling to accept lease terms then proposed by Landlord, including:  (a) leasing for a shorter or longer term than
remains under this Lease; (b) re-configuring or combining the Premises with
other space, (c) taking all or only a part of the Premises; and/or (d) changing
the use of the Premises.  Notwithstanding
Landlord’s duty to mitigate its damages as provided herein, Landlord shall not
be obligated (i) to give any priority to reletting Tenant’s space in connection
with its leasing of space in the Building or any complex of which the Building
is a part, or (ii) to accept below market rental rates for the Premises or any
rate that would negatively impact the market rates for the Building.  To the extent that Landlord is required by
applicable Law to mitigate damages, Tenant must plead and prove by clear and
convincing evidence that Landlord failed to so mitigate in accordance with the
provisions of this Section 19.D, and that such failure resulted in an avoidable
and quantifiable detriment to Tenant.


 


E.             Landlord’s Lien.  Landlord hereby waives any lien it may now
have or may hereafter acquire on any of Tenant’s furniture, fixtures, equipment
or personal property.


 


F.             Landlord
Defaults and Tenant Remedies.  Landlord shall be in default under this Lease
in the event Landlord has not begun and pursued with reasonable diligence the
cure of any failure of Landlord to meet its obligations under this Lease within
thirty (30) days of the receipt by Landlord of written notice from Tenant of
Landlord’s alleged failure to perform. 
In no event shall Tenant have the right to terminate or rescind this
Lease as a result of Landlord’s default. 
Tenant waives such remedies of termination or rescission (except as
otherwise specifically provided for in this Lease) and agrees that Tenant’s
remedies for default under this Lease and for breach of any promise or
inducement are limited to a suit for damages and/or injunction, and are
specifically subject to Section 3.B and Article 20.  In addition, Tenant shall, prior to the exercise
of any such remedies, provide each Mortgagee and each lessor under a ground
lease relative to the Property (in each instance, only as to those entities of
which Tenant has notice of their interest) with written notice and reasonable
time to cure any default by Landlord.


 


20.           Limitation of Liability.  Notwithstanding anything to the contrary
contained in this Lease, the liability of Landlord (and of any successor
Landlord) to Tenant (or any person or entity claiming by, through or under
Tenant) shall be limited to the interest of Landlord in the Property.  Tenant shall look solely to Landlord’s
interest in the Property for the recovery of any judgment or award against
Landlord.  No Landlord Party shall be
personally liable for any judgment or deficiency.  Before filing suit for an alleged default by
Landlord, Tenant shall give Landlord and the Mortgagee(s) (defined in Article 25)
whom Tenant has been notified hold Mortgages (defined in Article 25)
on the Property, Building or Premises, notice and reasonable time to cure the
alleged default.  Tenant hereby waives
all claims against all Landlord Parties for consequential, special or punitive
damages allegedly suffered by any Tenant Parties, including lost profits and business
interruption.


 


21.           No
Waiver.  Neither party’s
failure to declare a default immediately upon its occurrence or delay in taking
action for a default shall constitute a waiver of the default, nor shall it
constitute an estoppel.  Neither party’s
failure to enforce its rights for a default shall constitute a waiver of that
party’s rights regarding any subsequent default.


 


22.           Tenant’s Right to Possession.  Provided Tenant pays the Rent and fully
performs all of its other covenants and agreements under this Lease, Tenant
shall have the right to peacefully occupy the Premises without hindrance from
Landlord or any person lawfully claiming through Landlord, subject to the terms
of this Lease and applicable Law.  This
covenant and all other covenants of Landlord shall be binding upon Landlord and
its successors only during its or their respective periods of ownership of the
Building, and shall not be a personal covenant of any Landlord Parties.


 


23.           Relocation. 
[Intentionally Omitted].


 


24.           Holding Over. 
Except for any permitted occupancy by Tenant under Article 29,
if Tenant or any party claiming by, through or under Tenant fails to surrender
the Premises at the expiration or earlier termination of this Lease, the
continued occupancy of the Premises shall be that of a tenancy at sufferance.  Tenant shall pay an amount (on a per month
basis without reduction for partial


 


20





















 


months during the holdover) equal to 150% of the sum of the Base Rent
and the OE Payment due for the period immediately preceding the holdover.  Tenant shall otherwise continue to be subject
to all of Tenant’s obligations under this Lease.  No holdover by Tenant or payment by Tenant
after the expiration or early termination of this Lease shall be construed to
extend the Term or prevent Landlord from immediate recovery of possession of
the Premises by summary proceedings or otherwise.  In addition to the payment of the amounts
provided above, if Landlord is unable to deliver possession of the Premises to
a new tenant, or to perform improvements for a new tenant, as a result of
Tenant’s holdover and Tenant fails to vacate the Premises within 15 days after
Landlord notifies Tenant of Landlord’s inability to deliver possession, or
perform improvements, such failure shall constitute a Time Sensitive Default
hereunder; and notwithstanding any other provision of this Lease to the
contrary, TENANT
SHALL BE LIABLE TO LANDLORD FOR, AND SHALL PROTECT LANDLORD FROM AND INDEMNIFY
AND DEFEND LANDLORD AGAINST, ALL LOSSES AND DAMAGES, INCLUDING ANY CLAIMS MADE
BY ANY SUCCEEDING TENANT RESULTING FROM SUCH FAILURE TO VACATE, AND ANY
CONSEQUENTIAL DAMAGES THAT LANDLORD SUFFERS FROM THE HOLDOVER (THE “HOLDOVER
DAMAGES”); PROVIDED, HOWEVER, THAT FOR THE FIRST 30 DAYS OF ANY SUCH
HOLDOVER TENANT SHALL NOT BE LIABLE FOR THE HOLDOVER DAMAGES.


 


25.           Subordination to Mortgages; Estoppel Certificate.  Tenant accepts this Lease subject and
subordinate to any mortgage(s), deed(s) of trust, ground lease(s) or other
lien(s) now or subsequently affecting the Premises, the Building or the
Property, and to renewals, modifications, refinancings and extensions thereof
(collectively, a “Mortgage“).  The party having the benefit of a Mortgage
shall be referred to as a “Mortgagee.”  This clause shall be self-operative, but upon
request from a Mortgagee, Tenant shall execute a commercially reasonable
subordination agreement in favor of the Mortgagee.  In lieu of having the Mortgage be superior to
this Lease, a Mortgagee shall have the right at any time to subordinate its
Mortgage to this Lease.  If requested by
a successor-in-interest to all or a part of Landlord’s interest in this Lease,
Tenant shall, without charge, attorn to the successor-in-interest.  However, in the event of attornment after a
foreclosure sale or deed in lieu of foreclosure, no purchaser at such sale,
grantee of such deed, or immediate transferee from such purchaser or grantee
shall be: (A) liable for any act, omission or default of Landlord; (B) subject
to any offsets or defenses which Tenant might have against Landlord or subject
to exercise of a right of termination by Tenant that matures prior to the date
Mortgagee takes title (other than a right of termination previously arising
under either Article
16
or 17);
(C) liable for or bound by any Base Rent or Additional Rent which Tenant might
have paid for more than the current month to Landlord; (D) liable for or
obligated to cure any defaults of Landlord which occurred prior to the time
that Mortgagee succeeded to the interest of Landlord under this Lease; (E)
liable, bound or responsible for or with respect to the retention, application
and/or return to Tenant of any security deposit or cleaning deposit paid to
Landlord under this Lease, whether or not still held by Landlord, unless and
until Mortgagee has actually received for its own account the full amount of
such security deposit or cleaning deposit, or (F) liable for or bound by any
agreement of Landlord with respect to the completion of any improvements to the
Property or Premises or for the payment or reimbursement to Tenant of any
contribution to the cost of the completion of any such improvements; or (G)
bound by any modification, amendment, surrender or termination of this Lease
without Mortgagee’s written consent. 
Tenant shall, within 10 Business Days after receipt of a written request
from Landlord, execute and deliver an estoppel certificate to those parties as
are reasonably requested by Landlord (including a Mortgagee or prospective
purchaser).  The estoppel certificate
shall include a statement certifying that this Lease is unmodified (except as
identified in the estoppel certificate) and in full force and effect,
describing the dates to which Rent and other charges have been paid,
representing that, to the best of Tenant’s knowledge, there is no default (or
stating with specificity the nature of the alleged default) and certifying
other matters with respect to this Lease that may reasonably be requested.  Tenant’s failure to provide any estoppel
certificate within the 10 Business Day period specified above, and the
continuation of such failure for a period of 5 days after Landlord delivers a
second written notice requesting same, shall constitute a Time Sensitive
Default under this Lease.  Landlord
agrees to deliver to Tenant the Subordination, Non-Disturbance & Attornment
Agreement (“SNDA”)
set forth in Exhibit I with
respect to the Premises executed by Mortgagee within ninety (90) days from the
date of this Lease; should Landlord fail to so deliver the SNDA within such
90-day period, then Tenant shall have the right, as its sole remedy, to
terminate this Lease upon written notice to Landlord given at any time after
such date and prior to delivery of the SNDA.


 


26.           Attorneys’ Fees. 
If either party institutes a suit against the other for violation of or
to enforce any covenant or condition of this Lease, or if either party
intervenes in any suit in which the


 


21





















 


other is a party to enforce or protect its interest or rights, the
prevailing party shall be entitled to all of its costs and expenses, including
reasonable attorneys’ fees.


 


27.           Notice.  If a demand, request, approval, consent or
notice (collectively, a “notice”) shall or
may be given to either party by the other, the notice shall be in writing and
delivered by hand or sent by registered or certified mail with return receipt
requested, or sent by overnight or same day courier service, or sent by
facsimile, at the party’s respective Notice Address(es) set forth in Article 1,
except that if Tenant has vacated the Premises (or if the Notice Address for
Tenant is other than the Premises, and Tenant has vacated such address) without
providing Landlord a new Notice Address, Landlord may serve notice in any
manner described in this Article or in any other manner permitted by Law.  Each notice shall be deemed to have been
received or given on the earlier to occur of actual delivery (which, in the
case of delivery by facsimile, shall be deemed to occur at the time of delivery
indicated on the electronic confirmation of the facsimile) or the date on which
delivery is first refused, or, if Tenant has vacated the Premises or the other
Notice Address of Tenant without providing a new Notice Address, three (3) days
after notice is deposited in the U.S. mail or with a courier service in the
manner described above.  Either party
may, at any time, change its Notice Address by giving the other party written
notice of the new address in the manner described in this Article.


 


28.           Reserved Rights. 
This Lease does not grant any rights to light or air over or about the
Building.  Landlord excepts and reserves
exclusively to itself the use of:  (A)
roofs, (B) telephone, electrical and janitorial closets, (C) equipment
rooms, Building risers or similar areas that are used by Landlord for the
provision of Building services, (D) rights to the land and improvements below
the floor of the Premises, (E) the improvements and air rights above the
Premises, (F) the improvements and air rights outside the demising walls of the
Premises, (G) the areas within the Premises used for the installation of
utility lines and other installations serving occupants of the Building, and
(H) any other areas designated from time to time by Landlord as service areas
of the Building.  Tenant shall not have
the right to install or operate any equipment producing radio frequencies,
electrical or electromagnetic output or other signals, noise or emissions in or
from the Building without the prior written consent of Landlord.  To the extent permitted by applicable Law,
Landlord reserves the right to restrict and control the use of such
equipment.  Landlord has the right to
change the Building’s name or address. 
Landlord also has the right to make such other changes to the Property
and Building as Landlord deems appropriate, provided the changes do not
materially affect Tenant’s ability to use the Premises for the Permitted
Use.  Landlord shall also have the right
(but not the obligation) to temporarily close the Building if Landlord
reasonably determines that there is an imminent danger of significant damage to
the Building or of personal injury to Landlord’s employees or the occupants of
the Building.  The circumstances under
which Landlord may temporarily close the Building shall include, without
limitation, electrical interruptions, hurricanes and civil disturbances.  A closure of the Building under such
circumstances shall not constitute a constructive eviction nor entitle Tenant
to an abatement or reduction of Rent.


 


29.           Surrender of Premises.  All improvements to the Premises
(collectively, “Leasehold Improvements“)
shall be owned by Landlord and shall remain upon the Premises without
compensation to Tenant.  At the
expiration or earlier termination of this Lease or Tenant’s right of
possession, Tenant shall remove Tenant’s Removable Property (defined below)
from the Premises, and quit and surrender the Premises to Landlord, broom
clean, and in good order, condition and repair, ordinary wear and tear
excepted.  As used herein, the term “Tenant’s Removable Property“ shall mean: (A) any
Leasehold Improvements that are installed by or for the benefit of Tenant and
which are specifically designated by Landlord and Tenant for removal in writing
at or prior to the time of installation (“Special
Installations“); and (B) Tenant’s personal property.  If Tenant fails to remove any of Tenant’s
Removable Property (other than Special Installations which Landlord has
designated to remain in the Premises) within 5 Business Days after the
termination of this Lease or of Tenant’s right to possession, Landlord, at
Tenant’s sole cost and expense, shall be entitled (but not obligated) to remove
and store Tenant’s Removable Property. 
Landlord shall not be responsible for the value, preservation or
safekeeping of Tenant’s Removable Property. 
Tenant shall pay Landlord, upon demand, the expenses and storage charges
incurred for Tenant’s Removable Property. 
To the fullest extent permitted by applicable Law, any unused portion of
Tenant’s Security Deposit may be applied to offset Landlord’s costs set forth
in the preceding sentence.  In addition,
if Tenant fails to remove Tenant’s Removable Property from the Premises or
storage, as the case may be, within 30 days after written notice, Landlord may
deem all or any part of Tenant’s Removable Property to be abandoned, and title
to Tenant’s Removable Property (except with respect to any Hazardous Material
[defined in Article 30])
shall be deemed to be immediately vested in Landlord.  Except for


 


22





















 


Special Installations designated by Landlord to remain in the Premises,
Tenant’s Removable Property shall be removed by Tenant before the Expiration
Date; provided that upon Landlord’s prior written consent (which must be
requested by Tenant at least 30 days in advance of the Expiration Date and
which shall not be unreasonably withheld), Tenant may remain in the Premises
for up to 5 Business Days after the Expiration Date for the sole purpose of
removing Tenant’s Removable Property. 
Tenant’s possession of the Premises for such purpose shall be subject to
all of the terms and conditions of this Lease, including the obligation to pay
Base Rent and the OE Payment on a per diem basis at the rate in effect for the
last month of the Term.  In the event
this Lease is terminated prior to the Expiration Date, Tenant’s Removable
Property (except for Special Installations designated by Landlord to remain in
the Premises) shall be removed by Tenant on or before such earlier date of
termination.  Tenant shall repair damage
caused by the installation or removal of Tenant’s Removable Property.


 


30.           Hazardous Materials.


 


A.            Restrictions.  No Hazardous Material (defined below) (except
for de minimis quantities of household cleaning products and office supplies
used in the ordinary course of Tenant’s business at the Premises and that are
used, kept and disposed of in compliance with Laws) shall be brought upon,
used, kept or disposed of in or about the Premises or the Property by any
Tenant Parties or any of Tenant’s transferees, contractors or licensees without
Landlord’s prior written consent, which consent may be withheld in Landlord’s
sole and absolute discretion.  Tenant’s
request for such consent shall include a representation and warranty by Tenant
that the Hazardous Material in question (1) is necessary in the ordinary course
of Tenant’s business, and (2) shall be used, kept and disposed of in compliance
with all Laws.  Tenant shall, at its
expense, monitor the Premises for the presence of Hazardous Materials or
conditions which may reasonably give rise to Contamination (defined below) and
promptly notify Landlord if it suspects Contamination in the Premises.


 


B.            Remediation.  If Contamination occurs as a result of an act
or omission of any Tenant Party, Tenant shall, at its expense, promptly take
all actions necessary to comply with Laws and to return the Premises, the
Building, the Property and/or any adjoining or affected property to its
condition prior to such Contamination, subject to Landlord’s prior written
approval of Tenant’s proposed methods, times and procedures for
remediation.  Tenant shall provide
Landlord reasonably satisfactory evidence that such actions shall not adversely
affect any Landlord Party or property. 
Landlord may require that a representative of Landlord be present during
any such actions and/or that such actions be taken after Normal Business Hours.
If Tenant fails to take and diligently prosecute any necessary remediation
actions within 30 days after written notice from Landlord or an authorized
governmental agency (or any shorter period required by any governmental agency)
that such remediation is required, Landlord may take such actions and Tenant
shall reimburse Landlord therefor, plus a 10% administrative fee, within 30
days of Landlord’s invoice.


 


C.            Definitions.  For purposes of this Article 30,
a “Hazardous Material“ is any
substance (1) the presence of which requires, or may hereafter require,
notification, investigation or remediation under any Laws; (2) which is now or
hereafter defined, listed or regulated by any governmental authority as a “hazardous
waste”, “extremely hazardous waste”, “solid waste”, “toxic substance”, “hazardous
substance”, “hazardous material” or “regulated substance”, or otherwise
regulated under any Laws; or (3) which is now or hereafter considered a
biological contaminant or which could adversely impact air quality, including
mold, fungi and other bacterial agents.  “Contamination“ means the existence or any release or
disposal of a Hazardous Material in, on, under, at or from the Premises, the
Building or the Property which may result in any liability, fine, use
restriction, cost recovery lien, remediation requirement, or other government
or private party action or imposition affecting any Landlord Party. For
purposes of this Lease, claims arising from Contamination shall include
diminution in value, restrictions on use, adverse impact on leasing space, and
all costs of site investigation, remediation, removal and restoration work,
including response costs under CERCLA and similar statutes.


 


D.            Reports, Surveys
and Acceptance of Premises. 
All current surveys or reports prepared for the Property regarding the
presence of Hazardous Materials (if any) in the Building are available for
inspection by Tenant in the office of the Property manager.  With respect to Hazardous Materials, Tenant
hereby (1) accepts full responsibility for reviewing any such surveys and
reports and satisfying itself prior to the execution of this Lease as to the
acceptability of the Premises under Section 3.B above, and (2)
acknowledges and agrees that this provision satisfies all notice


 


23





















 


requirements under applicable
Law.  In the event Tenant performs or
causes to be performed any test on or within the Premises for the purpose of
determining the presence of a Hazardous Material, Tenant shall obtain Landlord’s
prior written consent and use a vendor approved by Landlord for such
testing.  In addition, Tenant shall
provide to Landlord a copy of such test within 10 days of Tenant’s
receipt.  Landlord represents that, to
Landlord’s current and actual knowledge without further inquiry, and except as
specified in the reports or surveys described above, the Premises contains no
reportable quantities of any Hazardous Material, the removal or remediation of
which is required by Laws in effect at the time of execution of this Lease.


 


31.           Miscellaneous.


 


A.            Governing Law;
Jurisdiction and Venue; Severability; Paragraph Headings.  This Lease and the rights and obligations of
the parties shall be interpreted, construed and enforced in accordance with the
Laws of the state in which the Property is located.  All obligations under this Lease are
performable in the county or other jurisdiction where the Property is located,
which shall be venue for all legal actions. 
If any term or provision of this Lease shall be invalid or
unenforceable, then such term or provision shall be automatically reformed to
the extent necessary to render such term or provision enforceable, without the
necessity of execution of any amendment or new document.  The remainder of this Lease shall not be
affected, and each remaining and reformed provision of this Lease shall be
valid and enforced to the fullest extent permitted by Law.  The headings and titles to the Articles and
Sections of this Lease are for convenience only and shall have no effect on the
interpretation of any part of this Lease. 
The words “include”, “including” and similar words will not be construed
restrictively to limit or exclude other items not listed.


 


B.            Recording.  Tenant shall not record this Lease or any
memorandum without Landlord’s prior written consent.


 


C.            Force Majeure.  Whenever a period of time is prescribed for
the taking of an action by Landlord or Tenant, the period of time for the
performance of such action shall be extended by the number of days that the
performance is actually delayed due to strikes, acts of God, shortages of labor
or materials, war, terrorist attacks (including bio-chemical attacks), civil
disturbances and other causes beyond the reasonable control of the performing
party (“Force Majeure“).  However, events of Force Majeure shall not
extend any period of time for the payment of Rent or other sums payable by
either party or any period of time for the written exercise of an option or
right by either party.


 


D.            Transferability;
Release of Landlord. 
Landlord shall have the right to transfer and assign, in whole or in
part, all of its rights and obligations under this Lease and in the Building
and/or Property, and upon such transfer Landlord shall be released from any
further obligations hereunder, and Tenant agrees to look solely to the
successor in interest of Landlord for the performance of such obligations.


 


E.             Brokers.  Tenant represents that it has dealt directly
with and only with Partners Commercial Realty, L.P. d/b/a NAI Houston (whose
commission shall be paid by Landlord pursuant to a separate written agreement)
in connection with this Lease.  TENANT AND LANDLORD
SHALL EACH INDEMNIFY THE OTHER AGAINST ALL COSTS, EXPENSES, ATTORNEYS’ FEES,
LIENS AND OTHER LIABILITY FOR COMMISSIONS OR OTHER COMPENSATION CLAIMED BY ANY
BROKER OR AGENT CLAIMING THE SAME BY, THROUGH OR UNDER THE INDEMNIFYING PARTY,
OTHER THAN THE BROKER(S) SPECIFICALLY IDENTIFIED ABOVE.


 


F.             Authority; Joint
and Several Liability. 
Landlord covenants, warrants and represents that each individual
executing, attesting and/or delivering this Lease on behalf of Landlord is
authorized to do so on behalf of Landlord, this Lease is binding upon and
enforceable against Landlord, and Landlord is duly organized and legally
existing in the state of its organization and is qualified to do business in
the state in which the Premises are located. 
Similarly, Tenant covenants, warrants and represents that each
individual executing, attesting and/or delivering this Lease on behalf of
Tenant is authorized to do so on behalf of Tenant, this Lease is binding upon
and enforceable against Tenant; and Tenant is duly organized and legally existing
in the state of its organization and is qualified to do business in the state
in which the Premises are located.  If
there is more than one Tenant, or if Tenant is comprised of more than one party
or entity, the obligations imposed upon Tenant shall be joint and several
obligations of all the parties and entities. 
Notices, payments and agreements given or made by, with or to any one
person or entity shall be deemed to have been given or made by, with and to all
of them.


 


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G.            Time is of the
Essence; Relationship; Successors and Assigns.  Time is of the essence with respect to Tenant’s
performance of its obligations and the exercise of any expansion, renewal or
extension rights or other options granted to Tenant.  This Lease shall create only the relationship
of landlord and tenant between the parties, and not a partnership, joint
venture or any other relationship.  This
Lease and the covenants and conditions in this Lease shall inure only to the
benefit of and be binding only upon Landlord and Tenant and their permitted
successors and assigns.


 


H.            Survival of
Obligations.  The
expiration of the Term, whether by lapse of time or otherwise, shall not
relieve either party of any obligations which accrued prior to or which may
continue to accrue after the expiration or early termination of this
Lease.  Without limiting the scope of the
prior sentence, it is agreed that Tenant’s obligations under Sections 4.A,
4.B,
and 4.C,
and under Articles
6,  8,
12, 13, 19, 23, 29 and 30 shall
survive the expiration or early termination of this Lease.


 


I.              Binding Effect.  Landlord has delivered a copy of this Lease
to Tenant for Tenant’s review only, and the delivery of it does not constitute
an offer to Tenant or an option.  This
Lease shall not be effective against any party hereto until an original copy of
this Lease has been signed by such party and delivered to the other party.


 


J.             Full Agreement;
Amendments.  This
Lease contains the parties’ entire agreement regarding the subject matter
hereof.  All understandings, discussions,
and agreements previously made between the parties, written or oral, are
superseded by this Lease, and neither party is relying upon any warranty,
statement or representation not contained in this Lease.  This Lease may be modified only by a written
agreement signed by Landlord and Tenant. 
The exhibits and riders attached hereto are incorporated herein and made
a part of this Lease for all purposes.


 


K.            Tax Waiver.  Tenant waives all rights pursuant to all Laws
to contest any taxes or other levies or protest appraised values or receive
notice of reappraisal regarding the Property (including Landlord’s personalty),
irrespective of whether Landlord contests same.


 


L.            Method of
Calculation.  Tenant
is knowledgeable and experienced in commercial transactions and does hereby
acknowledge and agree that the provisions of this Lease for determining charges
and amounts payable by Tenant are commercially reasonable and valid and
constitute satisfactory methods for determining such charges and amounts as
required by Section 93.012 of the Texas Property Code


 


M.           Downtown Club Memberships.  Promptly following Tenant’s written request
given within 12 months of the Commencement Date, Landlord agrees to pay directly
to the Downtown Club (f/k/a Houston Center Club) (the “Club”) on behalf of
Tenant the initiation fees in connection with up to 20 memberships to the Club
(“Memberships”).  The Memberships shall be activated promptly
following Tenant’s written request (or as soon thereafter as practicable),
subject to the prior approval of the Club, and shall revert back to Landlord
upon the expiration or earlier termination of this Lease.  Other than the initiation fees, all monthly
dues and charges (including applicable state and local taxes) incurred by
Tenant or any other person in connection with the use of such memberships shall
be solely the responsibility of Tenant. 
Use of the foregoing memberships shall be subject to the Club rules and
regulations and the continued existence of the Club.


 


[Signatures Appear on the Following Page]


 


25





















 


Landlord and
Tenant have executed this Lease as of the Effective Date specified below
Landlord’s signature.


 


	
   

  	
  LANDLORD:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CRESCENT 1301 McKINNEY, L.P.,

  	
   

  
	
   

  	
  a Delaware
  limited partnership

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Crescent
  1301 GP, LLC,

  	
   

  
	
   

  	
   

  	
  a Delaware
  limited liability company,

  	
   

  
	
   

  	
   

  	
  its General
  Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert
  H. Boykin, Jr.

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   Robert
  H. Boykin, Jr.

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
     Senior
  Vice President Leasing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Effective
  Date:

  	
    January
  20, 2005

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  KEY ENERGY SERVICES, INC., a Maryland

  corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard
  J. Alario

  	
   

  
	
   

  	
  Name:

  	
  Richard J.
  Alario

  	
   

  
	
   

  	
  Title:

  	
   President
  and CEO

  	
   

  
														



 


26





















 


EXHIBIT A-1


 


OUTLINE AND LOCATION OF PREMISES


 





 


A-1-i





















 


EXHIBIT A-2


 


LEGAL DESCRIPTION OF PROPERTY


 


Block 130, S.S.B.B., an addition in the City of Houston, Harris County,
Texas; together with easements as set forth in Agreement Respecting Spans and
Reciprocal Easements as set forth in instruments recorded under Clerk’s File
Nos. G-774701 and G-774702 and amended by instruments recorded under Clerk’s
File Nos. K-620925, K661820, M-455735 and M-455738 of the Real Property Records
of Harris County, Texas; and together with air rights as set forth and
reflected and referenced in Deeds from the City of Houston as recorded under
Clerk’s File Nos. E-118604 and F-012313 of the real property records of Harris
County, Texas; and together with the rights as set forth in Parking Agreement
recorded under Clerk’s File No. K-620922 of the Real Property Records of Harris
County, Texas.


 


A-2-i





















 


EXHIBIT B


 


RULES AND REGULATIONS


 


1.             On Saturdays, Sundays and Holidays, and on
other days between the hours of 6:00 P.M. and 8:00 A.M. the following day, or
such other hours as Landlord shall determine from time to time, access to the
Building and/or to the passageways, entrances, exits, shipping areas, halls,
corridors, elevators or stairways and other areas in the Building may be restricted
and access gained by use of a key to the outside doors of the Building, or
pursuant to such security procedures Landlord may from time to time
impose.  All such areas, and all roofs,
are not for use of the general public and Landlord shall in all cases retain
the right to control and prevent access thereto by all persons whose presence
in the judgment of Landlord shall be prejudicial to the safety, character,
reputation and interests of the Building and its tenants provided, however,
that nothing herein contained shall be construed to prevent such access to
persons with whom Tenant deals in the normal course of Tenant’s business unless
such persons are engaged in activities which are illegal or violate these
Rules.  No Tenant and no employee or
invitee of Tenant shall enter into areas reserved for the exclusive use of
Landlord, its employees or invitees. 
Tenant shall keep doors to corridors and lobbies closed except when
persons are entering or leaving.


 


2.             Tenant shall not paint, display, inscribe,
maintain or affix any sign, placard, picture, advertisement, name, notice,
lettering or direction on any part of the outside or inside of the Building, or
on any part of the inside of the Premises which can be seen from the outside of
the Premises, without the prior consent of Landlord, and then only such name or
names or matter and in such color, size, style, character and material as may
be first approved by Landlord in writing. 
Landlord shall prescribe the suite number and identification sign for
the Premises (which shall be prepared and installed by Landlord at Tenant’s
expense).  Landlord reserves the right to
remove at Tenant’s expense all matter not so installed or approved without
notice to Tenant.


 


3.             Tenant shall not in any manner use the
name of the Building for any purpose other than that of the business address of
the Tenant, or use any picture or likeness of the Building, in any letterheads,
envelopes, circulars, notices, advertisements, containers or wrapping material
without Landlord’s express consent in writing.


 


4.             Tenant shall not place anything or allow
anything to be placed in the Premises near the glass of any door, partition,
wall or window which may be unsightly from outside the Premises, and Tenant
shall not place or permit to be placed any article of any kind on any
window ledge or on the exterior walls. 
Blinds, shades awnings or other forms of inside or outside window
ventilators or similar devices, shall not be placed in or about the outside
windows in the Premises except to the extent, if any, that the character,
shape, color, material and make thereof is first approved by the Landlord.


 


5.             Furniture, freight and other large or
heavy articles, and all other deliveries may be brought into the Building only
at times and in the manner designated by Landlord, and always at the Tenant’s
sole responsibility and risk.  Landlord
may impose reasonable charges for use of freight elevators after or before
normal business hours.  All damage done
to the Building by moving or maintaining such furniture, freight or articles
shall be repaired by Landlord at Tenant’s expense.  Landlord may inspect items brought into the
Building or Premises with respect to weight or dangerous nature.  Landlord may require that all furniture,
equipment, cartons and similar articles removed from the Premises or the
Building be listed and a removal permit therefor first be obtained from
Landlord.  Tenant shall not take or
permit to be taken in or out of other entrances or elevators of the Building,
any item normally taken, or which Landlord otherwise reasonably requires to be
taken, in or out through service doors or on freight elevators.  Tenant shall not allow anything to remain in
or obstruct in any way, any lobby, corridor, sidewalk, passageway, entrance,
exit, hall, stairway, shipping area, or other such area.  Tenant shall move all supplies, furniture and
equipment as soon as received directly to the Premises, and shall move all such
items and waste (other than waste customarily removed by Building employees)
that are at any time being taken from the Premises directly to the areas
designated for disposal.  Any hand-carts
used at the Building shall have rubber wheels.


 


6.             Tenant shall not overload any floor or
part thereof in the Premises, or Building, including any public corridors or
elevators therein bringing in or removing any large or heavy articles, and
Landlord may direct and control the location of safes and all other heavy
articles and require


 


B-i





















 


supplementary supports at Tenant’s expense of
such material and dimensions as Landlord may deem necessary to properly
distribute the weight.


 


7.             Tenant shall not attach or permit to be
attached additional locks or similar devices to any door or window, change
existing locks or the mechanism thereof, or make or permit to be made any keys
for any door other than those provided by Landlord.  If more than two keys for one lock are
desired, Landlord will provide them upon payment therefor by Tenant.  Tenant, upon termination of its tenancy,
shall deliver to the Landlord all keys of offices, rooms and toilet rooms which
have been furnished Tenant or which the Tenant shall have had made, and in the
event of loss of any keys so furnished shall pay Landlord therefor.  Notwithstanding the above, Landlord shall
provide Tenant up to 60 keys and/or card keys to access the Premises and
Building at no charge. Additional keys and card keys shall be provided, at
Landlord’s cost, if and when Tenant leases additional space in the Building.


 


8.             If Tenant desires signal, communication,
alarm or other utility or similar service connections installed or changed,
Tenant shall not install or change the same without the prior approval of
Landlord, and then only under Landlord’s supervision at Tenant’s expense.  Tenant shall not install in the Premises any
equipment which requires more electric current than as specified in Section 7.A of this Lease.


 


9.             Tenant shall not obtain for use upon the
Premises ice, drinking water, towel, janitor and other similar services, except
from persons approved by the Landlord. 
Any person engaged by Tenant to provide janitor or other services shall
be subject to direction by the manager or security personnel of the Building.


 


10.           The toilet rooms, urinals, wash bowls and other
such apparatus shall not be used for any purpose other than that for which they
were constructed and no foreign substance of any kind whatsoever shall be
thrown therein and the expense of any breakage, stoppage or damage resulting
from the violation of this Rule shall be borne by the tenant who, or whose
employees or invitees shall have caused it.


 


11.           The janitorial closets, utility closets,
telephone closets, broom closets, electrical closets, storage closets, and
other such closets, rooms and areas shall be used only for the purposes and in
the manner designated by Landlord, and may not be used by tenants, or their
contractors, agents, employees, or other parties without Landlord’s prior
written consent.


 


12.           Landlord reserves the right to exclude or
expel from the Building any person who, in the judgment of Landlord, is
intoxicated or under the influence of liquor or drugs, or who shall in any
manner do any act in violation of any of these Rules.  Tenant shall not at any time manufacture,
sell, use or give away, any spirituous, fermented, intoxicating or alcoholic
liquors on the Premises, nor permit any of the same to occur (except in
connection with occasional social or business events conducted in the Premises
which do not violate any Laws nor bother or annoy any other tenants).  Tenant shall not at any time sell, purchase
or give away, food in any form by or to any of Tenant’s agents or employees or
any other parties on the Premises, nor permit any of the same to occur (other
than in lunch rooms or kitchens for employees as may be permitted or installed
by Landlord, which does not violate any laws or bother or annoy any other
tenant).


 


13.           Tenant shall not make any room-to-room
canvass to solicit business or information or to distribute any article or
material to or from other tenants or occupants of the Building and shall not
exhibit, sell or offer to sell, use, rent or exchange any products or services
in or from the Premises unless ordinarily embraced within the Tenant’s use of
the Premises specified in the Lease.


 


14.           Tenant shall not waste electricity, water,
heat or air conditioning or other utilities or services, and agrees to
cooperate fully with Landlord to assure the most effective and energy efficient
operation of the Building and shall not allow the adjustment (except by
Landlord’s authorized Building personnel) of any controls.  Tenant shall keep corridor doors closed and
shall not open any windows, except that if the air circulation shall not be in
operation, windows which are openable may be opened with Landlord’s consent.


 


15.           Tenant shall conduct no auction, fire or “going
out of business sale” or bankruptcy sale in or from the Premises, and such
prohibition shall apply to Tenant’s creditors.


 


B-ii





















 


16.           Tenant shall cooperate and comply with any
reasonable safety or security programs, including fire drills and air raid
drills, and the appointment of “fire wardens” developed by Landlord for the
Building, or required by Law.  Before
leaving the Premises unattended, Tenant shall close and securely lock all doors
or other means of entry to the Premises and shut off all lights and water
faucets in the Premises (except heat to the extent necessary to prevent the
freezing or bursting of pipes).


 


17.           Tenant will comply with all municipal,
county, state, federal or other government laws, statutes, codes, regulations
and other requirements, including without limitation, environmental, health,
safety and police requirements and regulations respecting the Premises, now or
hereafter in force, at its sole cost, and will not use the Premises for any
immoral purposes.


 


18.           Tenant shall not (a) carry on any business,
activity or service except those ordinarily embraced within the permitted use
of the Premises specified in the Lease and more particularly, but without
limiting the generality of the foregoing, shall not (b) install or operate any
internal combustion engine, boiler, machinery, refrigerating (except a
refrigerator in the kitchen or employee break room), heating or air
conditioning equipment in or about the Premises, (c) use the Premises for
housing, lodging or sleeping purposes or for the washing of clothes, (d) place
any radio or television antennae other than inside of the Premises, (e) operate
or permit to be operated any musical or sound producing instrument or device
which may be heard outside the Premises, (f) use any source of power other than
electricity, (g) operate any electrical or other device from which may emanate
electrical or other waves which may interfere with or impair radio, television,
microwave, or other broadcasting or reception from or in the Building or
elsewhere, (h) bring or permit any bicycle or other vehicle, or dog (except in
the company of a blind person or except where specifically permitted) or other
animal or bird in the Building, (i) make or permit objectionable noise or
odor to emanate from the Premises, (j) do anything in or about the Premises
tending to create or maintain a nuisance or do any act tending to injure the reputation
of the Building, (k) throw or permit to be thrown or dropped any article from
any window or other opening in the Building, (l) use or permit upon the
Premises anything that will knowingly invalidate or increase the rate of
insurance on any policies of insurance now or hereafter carried on the Building
or violate the certificates of occupancy issued for the premises or the
Building, (m) use the Premises for any purpose, or permit upon the Premises
anything, that may be dangerous to persons or property (including but not
limited to flammable oils, fluids, paints, chemicals, firearms or any explosive
articles or materials) nor (n) do or permit anything to be done upon the
Premises in any way tending to disturb any other tenant at the Building or the occupants
of neighboring property.


 


19.           If the Building shall now or hereafter
contain a building garage, parking structure or other parking area or facility,
the following Rules shall apply in such areas or facilities:


 


(a)           Parking shall be
available in areas designated generally for tenant parking, for such daily or
monthly charges as Landlord may establish from time to time.  Except as specified in Exhibit E of this
Lease, parking for Tenant and its employees and visitors shall be on a “first
come, first served,” unassigned basis, with Landlord and other tenants at the
Building, and their employees and visitors, and other persons to whom Landlord
shall grant the right or who shall otherwise have the right to use the same,
all subject to these Rules, as the same may be amended or supplemented, and
applied on a non-discriminatory basis. 
Notwithstanding the foregoing to the contrary, Landlord reserves the
right to assign specific spaces, and to reserve spaces for visitors, small
cars, handicapped individuals, and other tenants, visitors of tenants or other
persons, and Tenant and its employees and visitors shall not park in any such
assigned or reserved spaces.  Landlord
may restrict or prohibit full size vans and other large vehicles.


 


(b)           In case of any violation
of these provisions, Landlord may refuse to permit the violator to park, and
may remove the vehicle owned or driven by the violator from the Building
without liability whatsoever, at such violator’s risk and expense.  Landlord reserves the right to close all or a
portion of the parking areas or facilities in order to make repairs or perform
maintenance services, or to alter, modify, re-stripe or renovate the same, or
if required by casualty, strike, condemnation, act of God, Law or governmental
requirement, or any other reason beyond Landlord’s reasonable control.  In the event access is denied for any reason,
any monthly parking charges shall be abated to the extent access is denied, as
Tenant’s sole recourse.  Tenant
acknowledges that such parking areas or facilities may be operated by an
independent contractor not affiliated with Landlord, and Tenant acknowledges
that in such event, Landlord shall have no liability for claims arising through
acts or omissions of such independent contractor, if such contractor is
reputable.


 


B-iii





















 


(c)           Hours of operation of
the manned cashier’s booth in the garage shall be 6 A.M. to 8 P.M., Monday
through Friday, and 9:00 A.M. to 1:00 P.M. on Saturdays, or such other hours as
may be reasonably established by Landlord or its parking operator from time to
time.  However, Tenant and its employees
holding valid garage access key-cards (or similar devices) shall be entitled to
garage access 24 hours per day, 7 days per week, except to the extent access is
restricted or prohibited by reason of casualty, condemnation, acts of God,
governmental regulation or restriction, or other event of Force Majeure.  Cars must be parked entirely within the stall
lines, and only small cars may be parked in areas reserved for small cars; all
directional signs and arrows must be observed; the speed limit shall be 5 miles
per hour; spaces reserved for handicapped parking must be used only by vehicles
properly designated; every parker is required to park and lock his own car;
washing, waxing, cleaning or servicing of any vehicle is prohibited; parking
spaces may be used only for parking automobiles; parking is prohibited in
areas: (i) not striped or designated for parking, (ii) aisles, (iii) where “no parking”
signs are posted, (iv) on ramps, and (v) loading areas and other specially
designated areas.  Delivery trucks and
vehicles shall use only those areas designated therefor.


 


B-iv





















 


EXHIBIT C


 


COMMENCEMENT LETTER


 


Re:          Office
Lease dated                    ,
200      (the “Lease”),
between CRESCENT 1301 MCKINNEY, L.P., (“Landlord”)
and KEY ENERGY SERVICES, INC. (“Tenant”) for the
Premises, the Rentable Square Footage of which is 25,137, located on floor 18 of
the Building.  Unless otherwise
specified, all capitalized terms used herein shall have the same meanings as in
the Lease.


 


Landlord and Tenant agree that:


 


1.             Landlord has fully completed all Landlord
Work required under the terms of the Lease, if any.


 


2.             Tenant has accepted possession of the
Premises.  The Premises are usable by
Tenant as intended; Landlord has no further obligation to perform any Landlord
Work or other construction, and Tenant acknowledges that both the Building and
the Premises are satisfactory in all respects.


 


3.             The Commencement Date of the Lease is                    ,
200      .


 


4.             The Expiration Date of the Lease is the
last day of                      ,
       .


 


5.             Tenant’s Address at the Premises after the
Commencement Date is:


 


	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attention:

  	
   

  	
   

  
	
  Phone:

  	
   

  	
   

  
	
  Fax:

  	
   

  	
   

  
					



 


All other terms and conditions of the Lease are ratified and
acknowledged to be unchanged.


 


EXECUTED as of                   ,
200      .


 


{ATTACH
APPROPRIATE SIGNATURES}


 


C-i





















 


EXHIBIT D


 


WORK
LETTER


 


This Work Letter is attached as an Exhibit to an Office Lease (the “Lease”) between CRESCENT 1301 MCKINNEY, L.P., as
Landlord, and KEY ENERGY SERVICES, INC., as Tenant, for the Premises, the
Rentable Square Footage of which is 25,137, located on floor 18 of the
Building.  Unless otherwise specified,
all capitalized terms used in this Work Letter shall have the same meanings as
in the Lease.  In the event of any
conflict between the Lease and this Work Letter, the latter shall control.


 


1.             Landlord’s Initial Work.  Landlord shall, at its sole cost and expense
(without the application of any portion of the Construction Allowance to such
costs), construct, install and complete the following described work in the
Premises (collectively, “Landlord’s
Initial Work”) at substantially the same time that the “Landlord
Work” (as herein defined) is constructed, installed and completed:


 


(a)           upgrade the existing restrooms on floor 18
of the Building to fully comply with ADA as in effect on the Effective Date of
the Lease, or provide a unisex restroom on floor 18;


 


(b)           be responsible for ADA compliance of the
push buttons in the elevator lobby on floor 18 of the Building;


 


(c)           abate any Hazardous
Materials, including asbestos-containing materials, located within the Premises
as may be required by Laws in effect as of the Effective Date of the Lease,
within the time frames and parameters required by such Laws; and


 


(d)           replace or repair any
damaged building standard window coverings within the Premises existing as of
the Effective Date of the Lease.


 


2.             Construction
Documents.


 


(a)           Landlord’s Work.  The following provisions shall govern the
preparation of the construction documents relating to the construction of
leasehold improvements desired by Tenant to be constructed in the Premises (the
“Landlord Work”)
which is in addition to Landlord’s Initial Work described in Paragraph 1 above.


 


(b)           Tenant’s Information.  Within 10 days after the Effective Date of
the Lease, Tenant shall submit to Landlord the name of a representative of
Tenant who has been designated as the person responsible for receiving all
information from and delivering all information (“Tenant’s
Information”) to Landlord relating to the Landlord Work.


 


(c)           Construction Documents.  Following Landlord’s execution of the Lease
and receipt of Tenant’s Information, Tenant’s designated
architectural/engineering firm shall prepare and submit to Landlord all
finished and detailed architectural drawings and specifications, including
mechanical, electrical and plumbing drawings (the “Construction
Documents”).  Landlord (or
its designated representative) reserves the right to reasonably designate the
location(s) of all of Tenant’s mechanical, electrical or other equipment and
the manner in which such equipment will be connected to Building systems.


 


(d)           Approved Construction Documents.  Within 5 Business Days after receipt,
Landlord shall (i) approve and return the Construction Documents to Tenant, or
(ii) provide Tenant Landlord’s written requested changes to the Construction
Documents, in which event Tenant shall have the Construction Documents revised
(as Landlord deems appropriate) and resubmitted to Landlord for approval within
5 Business Days after receipt.  If
Landlord fails to request changes within such 5 Business Day period, Landlord
shall be deemed to have approved the Construction Documents.  Upon Landlord’s approval, the Construction
Documents shall become the “Approved Construction Documents.”


 


3.             Pricing and Bids.  Landlord shall solicit and receive
competitive bids on the Approved Construction Documents from at least three (3)
qualified general contractors, which contractors shall be agreed upon mutually
by Landlord and Tenant from Landlord’s list of qualified


 


D-i





















 


general contractors for the Complex.  Landlord shall furnish to Tenant upon receipt
the bids on the Approved Construction Documents as submitted by the bidding
general contractors.  Promptly
thereafter, Tenant shall advise Landlord in writing as to which of the bidding
contractors Tenant would have Landlord select to construct the Landlord Work
and, subject to Landlord’s reasonable approval, Landlord shall select and
engage the bidding contractor so indicated by Tenant (the “Contractor”).


 


4.             Construction.


 


(a)           General Terms. 
Subject to the terms of this Work Letter, Landlord agrees to cause
Landlord’s Initial Work and the Landlord Work to be constructed and installed
in the Premises in a good and workmanlike manner in accordance with the
Approved Construction Documents.  Tenant
acknowledges that Landlord is not an architect or engineer, and that the
Landlord Work will be designed and performed by independent architects, engineers
and contractors.  Accordingly, Landlord
does not guarantee or warrant that the Approved Construction Documents will
comply with Laws or be free from errors or omissions, nor that the Landlord
Work will be free from defects, and Landlord will have no liability therefor.  In the event of such errors, omissions or
defects, and upon Tenant’s written request, Landlord will use commercially
reasonable efforts to cause the Contractor to honor and comply with any
applicable warranties.  In addition,
Landlord’s approval of the Construction Documents or the Landlord Work shall
not be interpreted to waive or otherwise modify the terms and provisions of the
Lease.  Except with respect to the
economic terms set forth in Paragraph 5 of this Work Letter, the terms and provisions
contained in this Work Letter shall survive the completion of the Landlord Work
and shall govern in all applicable circumstances arising under the Lease
throughout the term of the Lease, including the construction of future
improvements in the Premises.


 


(b)           Substantial Completion.  The Landlord Work shall be deemed to be “Substantially Complete” on the date that all Landlord
Work (other than any details of construction, mechanical adjustment or any
other similar matter, the noncompletion of which does not materially interfere
with Tenant’s use or occupancy of the Premises) has been performed.  Time is of the essence in connection with the
obligations of Landlord and Tenant under this Work Letter.  Except as hereinbelow expressly provided,
Landlord shall not be liable or responsible for any claims incurred (or
alleged) by Tenant due to any delay in achieving Substantial Completion for any
reason.  Tenant’s sole and exclusive
remedy for any delay by Landlord or its Contractor in achieving Substantial
Completion as a direct result of Landlord Delay (as defined below) shall be the
day-for-day extension of the rental abatement period specified in Section 1.D of the Lease for each day
of Landlord Delay resulting in delay of Substantial Completion of the Landlord
Work.  “Landlord
Delay” means any act or omission of Landlord or its agents or
employees that actually delays the Substantial Completion of the Landlord Work,
including:  (i) Landlord’s failure to
furnish information or approvals within any time period specified in this Work
Letter or elsewhere in the Lease, including the failure to prepare or approve
preliminary or final plans by any applicable due date specified herein; or (ii)
changes requested or made by Landlord to previously approved plans and
specifications, provided that Tenant has advised Landlord in writing within 5
Business Days of any act or omission of Landlord that Tenant considers to
constitute Landlord Delay.


 


5.             Costs.


 


(a)           Construction
Allowance.  Landlord will provide a
construction allowance not to exceed $40.00 multiplied by the Rentable Square
Footage of the Premises (the “Construction Allowance”),
toward the cost of (i) all space planning, design, consulting or review
services and construction drawings, (ii) extension of electrical wiring from
Landlord’s designated location(s) to the Premises, (iii) purchasing and
installing all building equipment for the Premises (including any submeters and
other above building standard electrical equipment approved by Landlord), (iv)
required metering, re-circuiting or re-wiring for metering, equipment rental,
engineering design services, consulting services, studies, construction
services, cost of billing and collections, (v) materials and labor, (vi)
furniture to be installed and utilized in the Premises, not to exceed in the aggregate
$5.00 multiplied by the Rentable Square Footage of the Premises, (vii) an
asbestos survey of the Premises if required by applicable Law, shall all be
included in the cost of the Landlord Work and may be paid out of the
Construction Allowance, to the extent sufficient funds are available for such
purpose, (viii) data and telecommunication cabling, (ix) fees for Tenant’s
outside project manager, and (x) Tenant’s relocation costs [Items (i) through
(x) collectively being deemed within the scope of the Landlord Work].  Tenant acknowledges that an asbestos survey
will probably be


 


D-ii





















 


required by applicable Law and that the time
required for such asbestos survey should be incorporated in Tenant’s
construction planning.  Notwithstanding
the foregoing, commencing on the Commencement Date, Tenant may elect, upon 30
days’ written notice to Landlord of its election, to apply all or any unused
portion of the Construction Allowance, up to a maximum of $5.00 multiplied by
the square feet of Rentable Square Footage of the Premises, towards a credit
against Base Rent spread over the initial Term of the Lease.


 


(b)           Payment of Construction Allowance. 
Payments shall be made directly to the Contractor
performing the Landlord Work.  Landlord shall make progress payments
to the Contractor out of the Construction Allowance in 3 installments.  The first installment in the amount of 1/3 of
the Construction Allowance (less 10% retainage) shall be paid within 30 days
after Landlord’s receipt of Contractor’s written request which has been
approved by Tenant and Landlord, which request may be made after the first
third of construction of the Landlord Work has been completed.  The second installment in the amount of 1/3 of
the Construction Allowance (less 10% retainage) shall be paid within 30 days
after Landlord’s receipt of Contractor’s written request which has been
approved by Tenant and Landlord, which request may be made after the second
third of the construction of the Landlord Work has been completed.  The final installment in the amount of the
balance of the Construction Allowance due Contractor shall be paid when the
requirements in Paragraph 5(b)(ii) below are fulfilled.


 


(i)            Additional Conditions for Payment.  Notwithstanding any provision
contained in this Work Letter to the contrary, Landlord shall not be obligated
to make any payment to Contractor if any one or more of the following
conditions exist:  (a) Tenant is in
default in the performance of any of its obligations under this Work Letter or
a default exists under the Lease; or (b) any part of such payment is
attributable to work which is defective or not performed in accordance with the
Approved Construction Documents, as determined by Landlord; provided, however,
that such payment shall be made as to the part of the requested payment
attributable to work which is performed in accordance with the Approved
Construction Documents and is not defective.


 


(ii)           Payment of Final Application for Payment.  Landlord shall not be obligated to
make the final installment until the last to occur of (a) Landlord’s
receipt from Tenant or Contractor of an architect’s certificate of substantial
completion certifying that the Landlord Work has been completed in accordance
with all applicable Law and the Approved Construction Documents,
(b) Landlord’s receipt of final invoices marked paid or other evidence
reasonably satisfactory to Landlord confirming the total amount expended by
Tenant or Contractor for the Landlord Work, (c) Landlord’s approval of the
Landlord Work as having been completed in accordance with the Approved
Construction Documents, which approval shall not be unreasonably withheld, (d)
Landlord’s receipt of final lien waivers in a form reasonably acceptable to
Landlord, covering the release of all mechanics’ and materialmen’s liens or
potential mechanic’s and materialmen’s liens that could arise from the
construction of the Landlord Work from Contractor and each person entitled to a
lien under applicable Law by virtue of contributing to the Landlord Work,
(e) Landlord’s receipt of an affidavit from Tenant and Tenant’s contractor
that such final lien waivers include and cover all materials and services for
which a lien could be filed, provided that Tenant may, if any subcontractor or
supplier refuses to furnish a lien waiver in full, furnish a surety bond
satisfactory to Landlord to indemnify Landlord, its successors and assigns,
against any mechanics’ or materialmen’s lien, (f) Landlord’s receipt of final
as-built plans and specifications in a form satisfactory to Landlord and
certified by Tenant’s architect or engineer as accurately and completely
depicting the Premises, and (g) 35 days have elapsed from the last day of the
month in which the Landlord Work is completed including “punch-list” items, and
no affidavit as required by applicable Law has been


 


D-iii





















 


filed against the
Premises (or Tenant’s interests therein), or the Building, or notice of a claim
has been delivered to Tenant or Landlord, as a result of the Landlord Work.


 


(c)           Special Leasehold Allowance.  At Tenant’s election, Landlord shall
contribute an additional sum not to exceed $5.00 multiplied by the Rentable
Square Footage of the Premises (the “Special Leasehold Allowance”)
toward any items listed in Paragraph 5(a)
above.  The amount of the Special
Leasehold Allowance actually utilized by Tenant shall be amortized as
additional Base Rent over the initial Term at 10% per annum, in the same manner
as a loan having equal monthly payments of principal and interest.  Tenant’s election to use all or a portion of
the Special Leasehold Allowance shall be made by written notice to Landlord
given no later than 30 days after substantial completion of the Landlord
Work.  Within 10 days after Landlord’s
request, Tenant shall execute and return an amendment modifying the Base Rent
accordingly.  If Tenant fails timely (i)
to make its election regarding utilization of the Special Leasehold Allowance
or (ii) to execute and return the required lease amendment, then Landlord shall
automatically be released from its obligation to contribute the Special
Leasehold Allowance, whereupon Tenant shall promptly pay any cost overruns over
and above the Construction Allowance. 
If, for any reason, less than all of the Term remains at the time the
required lease amendment is executed and returned to Landlord, then Tenant
shall, upon demand, promptly pay all amortization payments (including interest)
which would have been payable for the elapsed portion of the Term through the
month in which such lease amendment is actually so executed and returned.  Any failure, beyond any applicable cure
period, by Tenant to make any payments required under the foregoing provisions
shall constitute a material event of default under the Lease.


 


(d)           Costs Above Allowances.  The cost of all installations and
improvements over and above the allowances herein provided shall be for Tenant’s
account and at Tenant’s cost, which cost shall be payable by Tenant to Landlord
as additional Rent within 30 days after receipt of an invoice therefor.  Tenant’s failure to pay such cost shall
constitute an event of default under the Lease.


 


6.             ADA Compliance.  Landlord shall, as an Operating Expense, be
responsible for ADA compliance for the core areas of the Building (including
elevators, Common Areas and service areas), the Property’s parking facilities
and all points of access into the Property. 
Except for the items specified in Paragraph
1 above, Tenant shall, at its expense, be responsible for ADA
compliance in the Premises, excluding restrooms.  Landlord shall not be responsible for
determining whether Tenant is a public accommodation under ADA or whether the
Approved Construction Documents comply with ADA requirements.  Such determinations, if desired by Tenant,
shall be the sole responsibility of Tenant. 
Landlord’s approval of the Approved Construction Documents shall not be
deemed a statement of compliance with applicable Laws, nor of the accuracy,
adequacy, appropriateness, functionality or quality of the improvements to be
made according to the Approved Construction Documents.


 


7.             Landlord’s
Oversight and Coordination. 
Construction of the Landlord Work shall be subject to oversight and
coordination by Landlord, but such oversight and coordination shall not subject
Landlord to any liability to Tenant, Tenant’s contractors or any other
person.  Landlord has the right to
inspect construction of the Landlord Work from time to time.  However, Tenant shall not be required
hereunder to pay any construction management fee to Landlord or its agents so
long as Tenant oversees the construction of the Landlord Work.


 


D-iv





















 


EXHIBIT E


 


PARKING
AGREEMENT


 


This Parking Agreement (the “Agreement”)
is attached as an Exhibit to an Office Lease (the “Lease”)
between CRESCENT 1301 McKINNEY, L.P., as Landlord, and KEY ENERGY SERVICES,
INC., as Tenant, for Premises, the Rentable Square Footage of which is 25,137,
located on floor 18 of the Building. 
Unless otherwise specified, all capitalized terms used in this Agreement
shall have the same meanings as in the Lease. 
In the event of any conflict between the Lease and this Agreement, the
latter shall control.


 


1.             Within 30 days after the Commencement Date
(and with respect to any future permits, within 30 days after the delivery of
additional Rentable Square Footage applicable to such future permits), Tenant
may elect to take, by giving Landlord written notice within such 30 day period,
and Landlord shall then provide, (A)
up to 2 reserved permits allowing access to reserved spaces in the Building
Garage, (B) up to 10 reserved permits allowing access to reserved spaces in, at
Landlord’s option, Houston Center Garage 1 and/or 5 Houston Center Garage, (B)
up to 13 unreserved permits allowing access to unreserved spaces in, at
Landlord’s option, Houston Center Garage 1, and/or 5 Houston Center Garage and
(C) up to 25 unreserved permits allowing access to unreserved spaces in, at
Landlord’s option, Houston Center Garage 1, 5 Houston Center Garage, and/or
First City Tower Garage.  Additionally,
Tenant may elect to take, by giving Landlord 30 days’ written notice, and
Landlord shall then provide, up to 20 month-to-month unreserved permits
allowing access to unreserved spaces in, at Landlord’s option, Houston
Center Garage 1, 5 Houston Center Garage, and/or First City Tower Garage, with
priority over non-Houston Center tenant parkers.  During the initial Term (and, if applicable,
during any renewal or extension term of this Lease), Tenant shall pay Landlord’s
quoted monthly contract rate (as reasonably set from time to time) for each unreserved and reserved permit,
plus any taxes thereon.  The current
monthly contract rate for such permits $280.00 per permit for reserved permits,
$175.00 per permit for
unreserved permits in the Building Garage and 5 Houston Center Garage, and
$155.00 per permit for unreserved permits in the Houston Center Garage 1 and
First City Tower Garage. 
Tenant’s failure to pay for any of the above-referenced parking permits
shall be an event of default under the Lease, subject to cure provisions for
monetary default as specified in the Lease. 
Notwithstanding the foregoing, provided that Tenant is not in default under
the Lease beyond any applicable notice and/or cure period, the following shall
apply:


 


(a)           During the initial 12
months of the Term of the Lease, Tenant’s parking charges for up to 12 reserved
permits shall be abated 100%, and thereafter, such parking charges shall be at
Landlord’s quoted monthly contract rate (as reasonably set from time to time)
for each reserved permit,
plus any taxes thereon; and


 


(b)           During the Rent
Abatement Period specified in Section 1.D
of the Lease, Tenant’s parking charges for up to 50 unreserved permits shall be
abated 100%, and during the 48 consecutive months of the Term thereafter (the “Parking Charge Abatement Period”),
the parking charges for up to 50 unreserved permits taken by Tenant shall be
abated by 50% of Landlord’s quoted monthly contract rate (plus any taxes
thereon); further, provided that Tenant is not in default under the Lease
beyond any applicable notice and/or cure period, during the 24 consecutive
months of the Term following the Parking Charge Abatement Period, the parking
charges for up to 50 unreserved permits taken by Tenant shall be abated by 35%
of Landlord’s quoted monthly contract rate (plus any taxes thereon).


 


2.             Tenant may permanently return, all or any,
of the parking permits that it has timely elected to take by giving Landlord 30
days written notice of the effective date of the return.  Upon such effective date, Landlord’s
obligation to provide, and Tenant’s obligation to pay for, such returned
permits shall terminate.  Prior to such
effective date, Tenant shall return any key-card, sticker, or other
identification or entrance enabling device provided by Landlord.  Landlord shall have no obligation to provide
Tenant, and Tenant shall have no right to, any parking permits that are
returned or that Tenant does not timely elect to take.  Tenant shall have the right to add and
subtract parking permits within the allocation above from time to time as
needed.  Notwithstanding the foregoing,
during the first 36 months after


 


E - i





















 


the
Commencement Date, Tenant may decrease or increase (up to the aforesaid
maximum) the number of permits to be used and paid for by Tenant, from time to
time, upon at least 30 days written notice to Landlord, and any such decrease
will not be irrevocable except to the extent in effect at the end of such first
36 months.


 


3.             Tenant shall at all times comply with all
Laws respecting the use of the parking facilities which Landlord provides for
the use of tenants and occupants of the Building (the “Parking Facilities”).  Landlord reserves the right to adopt, modify,
and enforce reasonable rules and regulations governing the use of the Parking
Facilities from time to time including any key-card, sticker, or other
identification or entrance systems and hours of operations.  Landlord may refuse to permit any person who
violates such rules and regulations to park in the Parking Facilities, and any
violation of the rules and regulations shall subject the automobile in question
to removal from the Parking Facilities.


 


4.             Tenant may validate visitor parking by
such method or methods as Landlord may approve, at the validation rate from
time to time generally applicable to visitor parking.  Unless specified to the contrary above, the
parking spaces for the parking permits provided hereunder shall be provided on
an unreserved, “first-come, first-served” basis.  Tenant acknowledges that Landlord has
arranged or may arrange for the Parking Facilities to be operated by an
independent contractor, not affiliated with Landlord.  In such event, Tenant acknowledges that
Landlord shall have no liability for claims arising through acts or omissions
of such independent contractor.  Except
for intentional acts or gross negligence, Landlord shall have no liability
whatsoever for any damage to vehicles or any other items located in or about
the Parking Facilities, nor for any personal injuries or death arising out of
any matter relating to the Parking Facilities, and in all events, Tenant agrees
to seek recovery from its insurance carrier and to require Tenant’s employees
to seek recovery from their respective insurance carriers for payment of any
losses sustained in connection with any use of the Parking Facilities.  Tenant hereby waives on behalf of its
insurance carriers all rights of subrogation against Landlord or Landlord’s
agents.  Landlord reserves the right to
assign specific parking spaces, and to reserve parking spaces for visitors,
small cars, handicapped persons and for other tenants, guests of tenants or
other parties, with assigned and/or reserved spaces.  Such reserved spaces may be relocated as
determined by Landlord from time to time, and Tenant and persons designated by
Tenant hereunder shall not park in any such assigned or reserved parking spaces.  Landlord also reserves the right to close all
or any portion of the Parking Facilities, at its discretion or if required by
casualty, strike, condemnation, repair, alteration, act of God, Laws, or other
reason beyond Landlord’s reasonable control; provided, however, that except for
matters beyond Landlord’s reasonable control, any such closure shall be
temporary in nature.  If Tenant’s use of
any parking permit is precluded for any reason, Tenant’s sole remedy for any
period during which Tenant’s use of any parking permit is precluded shall be
abatement of parking charges for such precluded permits.  Tenant shall not assign its rights under this
Agreement except in connection with a Permitted Transfer.


 


5.             Except as may be expressly set forth to
the contrary in Paragraph
1 of this Agreement, if Tenant fails to pay any charges for parking
permits as provided herein, or otherwise defaults in its performance of any of
the terms or conditions of this Agreement beyond any applicable sure periods,
such default shall constitute an event of default under the Lease, and in
addition to any rights or remedies available to Landlord in the event of a
default under the Lease, Landlord shall have the right to remove any vehicles
from the Parking Facilities.  In addition,
any default under the Lease shall constitute a default under this Agreement.


 


6.             Tenant acknowledges and agrees that to the
fullest extent permitted by Law, Landlord shall not be responsible for any loss
or damage to Tenant or Tenant’s property (including without limitation, any
loss or damage to Tenant’s automobiles or the contents thereof due to theft,
vandalism, or accident) arising from or related to Tenant’s use of the Parking
Facilities or exercise of any rights under this Agreement, whether or not such
loss or damage results from Landlord’s active negligence or negligent
omission.  The limitation on Landlord’s
liability under the preceding sentence shall not apply, however, to loss or
damage arising directly from Landlord’s gross negligence or willful misconduct.


 


E - ii





















 


7.             Without limiting the provisions of Paragraph 6
above, Tenant hereby voluntarily releases, discharges, waives, and relinquishes
any and all actions or causes of action for personal injury or property damage
occurring to Tenant arising as a result of using the Parking Facilities, or any
activities incidental thereto, wherever or however the same may occur, and
further agrees that Tenant will not prosecute any claim for personal injury or
property damage against Landlord or any of its officers, agents, servants, or
employees for any such cause of action. 
It is the intention of Tenant by this instrument, to exempt and relieve
Landlord from liability for personal injury or property damage caused by
negligence.


 


8.             Tenant acknowledges that it has read the
provisions of Paragraph
7 above, has been fully and completely advised of the potential
dangers of parking in the Parking Facilities, and is fully aware of the legal
consequences of this instrument.


 


E - iii





















 


EXHIBIT F


 


FORM OF LETTER OF CREDIT


Irrevocable Standby Letter of Credit No.          


 


	
  Place and
  Date of Issue:

  	
   

  	
  Date and
  Place of Expiry:

  
	
               ,
  Texas,
                ,
  2005

  	
   

  	
            ,
  200     in
            ,

  



 


 


	
  Applicant:

  	
   

  	
   

  
	
  Key Energy
  Services, Inc.

  	
   

  	
   

  
	
                           

  	
   

  	
   

  
	
                           

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Beneficiary:

  	
   

  	
  Amount: USD
  $1,325,976.75

  
	
  Crescent HC
  Investors, L.P.

  	
   

  	
   

  
	
  777 Main
  Street, Suite 2100

  	
   

  	
   

  
	
  Fort Worth,
  Texas 76102

  	
   

  	
   

  
	
  Attn: David
  M. Dean

  	
   

  	
   

  



 


Gentlemen:


 


We hereby
establish our Irrevocable Letter of Credit in your favor available by
Beneficiary’s sight drafts drawn on                         
accompanied by the original of this Letter of Credit and the following
document:


 


Written statement executed by any officer of the general partner of
Crescent HC Investors, L.P. that (i) an event of default by Tenant exists under
that certain Office Lease between Tenant and Crescent HC Investors, L.P., dated
                        ,
2005 (as amended to date, the “Lease”), and (ii) such default exists
beyond any applicable cure period provided in the Lease for such default, if
any.


 


Special
Conditions:


 


Draft must be
marked: “Drawn under                       
Letter of Credit No.                .”


 


We hereby engage
with you that all drafts drawn under and in compliance with all the terms and
conditions of this Letter of Credit will be duly honored if drawn and presented
for payment between the hours of 8:00 am and 4:00 pm Monday through Friday on a
day when                             
is open for business at                            ,
             ,
Texas                 
on or before the expiration of this Letter of Credit.


 


This Letter of
Credit is subject to the Uniform Customs and Practice for Documentary Credits
(1993 Revisions), International Chamber of Commerce Publication 500, as the
same may be revised from time to time.


 


This Letter of
Credit may be transferred by Beneficiary to one or more subsequent owners of
the real property which is the subject of the Lease.


 


	
   

  	
   

  	
  (Name of
  Bank)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Vice
  President

  



 


F - i





















 


EXHIBIT G


 


HVAC Specifications


 


[To be provided within 60 days
of lease execution]


 


G - i





















 


EXHIBIT H


 


Cleaning
Specifications


 


[To be provided within 60 days
of lease execution]


 


H - i





















 


EXHIBIT I


 


 


FORM OF
SUBORDINATION NON-DISTURBANCE

AND ATTORNMENT AGREEMENT


 


MORGAN STANLEY MORTGAGE CAPITAL INC. 

(Lender)


 


- and -


 


 


[                                 ]

(Tenant)


 










SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT










 


Dated:


 


Location:


 


Section :


Block:


Lot:


County:


 


PREPARED BY AND UPON


 


RECORDATION RETURN TO:


 


Cadwalader, Wickersham & Taft LLP

100 Maiden Lane

New York, New York 10038

Attention: John M. Zizzo, Esq.


 


File No.: 

Title No.:


 


 


SUBORDINATION, NON DISTURBANCE AND ATTORNMENT
AGREEMENT


 


THIS SUBORDINATION, NON DISTURBANCE AND ATTORNMENT AGREEMENT (this “Agreement”) is made as of the          
day of                        , 20      
by and between MORGAN STANLEY MORTGAGE
CAPITAL INC., a New York corporation, (together with its successors
and assigns, the “Lender”), whose address for
all purposes hereunder is 1221 Avenue of the Americas, 27th Floor,
New York, New York  10020 and [                                                                                 ], having an address at [                                                                                                            ] (“Tenant”).


 


RECITALS:


 


A.            Lender has made a loan in the
approximate amount of $              
(the “Loan”) to Landlord (defined below), which
Loan is given pursuant to the terms and conditions of that certain Loan
Agreement dated                            , 20      ,
between Lender and Landlord (the “Loan Agreement”).  The Loan is evidenced by a certain Promissory
Note dated                            , 20     ,
given by Landlord to Lender (the “Note”)
and secured by a certain [Mortgage][Deed of Trust]


 


I
- i





















 


and Security Agreement dated                            , 20     ,
given by Landlord to Lender (the “Mortgage”),
which encumbers the fee estate of Landlord in certain premises described in Exhibit
A attached hereto (the “Property”);


 


B.            Tenant occupies a portion of the
Property under and pursuant to the provisions of a certain lease dated                            ,         
between                              , as landlord (“Landlord”) and Tenant, as tenant (the “Lease”); and


 


C.            Tenant has agreed to subordinate the
Lease to the Mortgage and to the lien thereof and Lender has agreed to grant
non-disturbance to Tenant under the Lease on the terms and conditions
hereinafter set forth.


 


AGREEMENT:


 


For good and valuable
consideration, Tenant and Lender agree as follows:


 


1.             Subordination. 
Tenant agrees that the Lease and all of the terms, covenants and
provisions thereof and all rights, remedies and options of Tenant thereunder
are and shall at all times continue to be subject and subordinate in all
respects to the Mortgage and to the lien thereof and all terms, covenants and
conditions set forth in the Mortgage and the Loan Agreement including without
limitation all renewals, increases, modifications, spreaders, consolidations,
replacements and extensions thereof and to all sums secured thereby with the
same force and effect as if the Mortgage and Loan Agreement had been executed,
delivered and (in the case of the Mortgage) recorded prior to the execution and
delivery of the Lease.


 


2.             Non-Disturbance. 
Lender agrees that if any action or proceeding is commenced by Lender
for the foreclosure of the Mortgage or the sale of the Property, Tenant shall
not be named as a party therein unless such joinder shall be required by law;
provided, however, such joinder shall not result in the termination of the
Lease or disturb the Tenant’s possession or use of the premises demised
thereunder, and the sale of the Property in any such action or proceeding shall
be made subject to all rights of Tenant under the Lease except as set forth in Section 3
below, provided that at the time of the commencement of any such action or
proceeding or at the time of any such sale or exercise of any such other rights
(a) the term of the Lease shall have commenced pursuant to the provisions
thereof, (b) Tenant shall be in possession of the premises demised under the
Lease, (c) the Lease shall be in full force and effect and (d) Tenant shall not
be in default under any of the terms, covenants or conditions of the Lease or
of this Agreement on Tenant’s part to be observed or performed beyond the
expiration of any applicable notice or grace periods.


 


3.             Attornment. 
Lender and Tenant agree that upon the conveyance of the Property by
reason of the foreclosure of the Mortgage or the acceptance of a deed or
assignment in lieu of foreclosure or otherwise, the Lease shall not be
terminated or affected thereby (at the option of the transferee of the Property
(the “Transferee”) if the conditions set forth in Section 2
above have not been met at the time of such transfer) but shall continue in
full force and effect as a direct lease between the Transferee and Tenant upon
all of the terms, covenants and conditions set forth in the Lease and in that
event, Tenant agrees to attorn to the Transferee and the Transferee shall
accept such attornment, but the Transferee shall not be (a) obligated to
complete any construction work required to be done by Landlord pursuant to the
provisions of the Lease or to reimburse Tenant for any construction work done
by Tenant, (b) liable (i) for Landlord’s failure to perform any of its
obligations under the Lease which have accrued prior to the date on which the
Transferee shall become the owner of the Property, or (ii) for any act or
omission of Landlord, whether prior to or after such foreclosure or sale, (c)
required to make any repairs to the Property or to the premises demised under
the Lease required as a result of fire, or other casualty or by reason of condemnation
unless the Transferee shall be obligated under the Lease to make such repairs
and limited to the extent Transferee shall have received sufficient casualty
insurance proceeds or condemnation awards to finance the completion of such
repairs, (d) required to make any capital improvements to the Property or to
the premises demised under the Lease which Landlord may have agreed to make,
but had not completed, or to perform or provide any services not related to
possession or quiet enjoyment of the premises demised under the Lease, (e)
subject to any offsets, defenses, abatements or counterclaims which shall have
accrued to Tenant against Landlord prior to the date upon which the Transferee
shall become the owner of the Property, (f) liable for the return of rental
security deposits, if any, paid by Tenant to Landlord in accordance with the
Lease unless such sums are


 


I
- ii





















 


actually
received by the Transferee, (g) bound by any payment of rents, additional rents
or other sums which Tenant may have paid more than one (1) month in advance to
any prior Landlord unless (i) such sums are actually received by the Transferee
or (ii) such prepayment shall have been expressly approved of by the
Transferee, (h) bound to make any payment to Tenant which was required under
the Lease, or otherwise, to be made prior to the time the Transferee succeeded
to Landlord’s interest, (i) bound by any agreement amending, modifying or
terminating the Lease made without the Lender’s prior written consent prior to
the time the Transferee succeeded to Landlord’s interest or (j) bound by any
assignment of the Lease or sublease of the Property, or any portion thereof,
made prior to the time the Transferee succeeded to Landlord’s interest other
than if pursuant to the provisions of the Lease.


 


4.             Notice
to Tenant.  After notice is given to Tenant by Lender
that the Landlord is in default under the Loan, the Note and the Mortgage and
that the rentals under the Lease should be paid to Lender pursuant to the terms
of the assignment of leases and rents executed and delivered by Landlord to
Lender in connection therewith, Tenant shall thereafter pay to Lender or as
directed by the Lender, all rentals and all other monies due or to become due
to Landlord under the Lease and Landlord hereby expressly authorizes Tenant to
make such payments to Lender and hereby releases and discharges Tenant from any
liability to Landlord on account of any such payments.


 


5.             Lender’s
Consent.  Tenant shall not, without obtaining the prior
written consent of Lender, (a) enter into any agreement amending, modifying or
terminating the Lease, (b) prepay any of the rents, additional rents or other
sums due under the Lease for more than one (1) month in advance of the due dates
thereof, (c) voluntarily surrender the premises demised under the Lease or
terminate the Lease without cause or shorten the term thereof, or (d) assign
the Lease or sublet the premises demised under the Lease or any part thereof;
and any such amendment, modification, termination, prepayment, voluntary
surrender, assignment or subletting, without Lender’s prior consent, shall not
be binding upon Lender.


 


6.             Lender
to Receive Notices.  Tenant shall provide Lender with copies of
all written notices sent to Landlord pursuant to the Lease simultaneously with
the transmission of such notices to the Landlord.  Tenant shall notify Lender of any default by
Landlord under the Lease which would entitle Tenant to cancel the Lease or to
an abatement of the rents, additional rents or other sums payable thereunder,
and agrees that, notwithstanding any provisions of the Lease to the contrary,
no notice of cancellation thereof or of such an abatement shall be effective
unless Lender shall have received notice of default giving rise to such
cancellation or abatement and shall have failed within sixty (60) days after
receipt of such notice to cure such default, or if such default cannot be cured
within sixty (60) days, shall have failed within sixty (60) days after receipt
of such notice to commence and thereafter diligently pursue any action
necessary to cure such default.


 


7.             Notices. 
All notices or other written communications hereunder shall be deemed to
have been properly given (i) upon delivery, if delivered in person or by
facsimile transmission with receipt acknowledged by the recipient thereof and
confirmed by telephone by sender, (ii) one (1) Business Day (hereinafter
defined) after having been deposited for overnight delivery with any reputable
overnight courier service, or (iii) three (3) Business Days after having been
deposited in any post office or mail depository regularly maintained by the
U.S. Postal Service and sent by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:


 


	
   

  	
  If to Tenant:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attention: 

  
	
   

  	
  Facsimile No. 

  
	
   

  	
   

  
	
   

  	
  If to Lender:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attention: 

  
	
   

  	
  Facsimile No. 

  



 


I - iii





















 


	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  Cadwalader, Wickersham &
  Taft LLP

  
	
   

  	
  100 Maiden Lane

  
	
   

  	
  New York, New York 10038

  
	
   

  	
  Attention: John M. Zizzo,
  Esq.

  
	
   

  	
  Facsimile No. (212) 504-6666

  



 


or addressed as such party may from time to time designate by written
notice to the other parties.  For
purposes of this Section, the term “Business Day”
shall mean a day on which commercial banks are not authorized or required by
law to close in New York, New York.


 


Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.


 


8.             Joint
and Several Liability.
 If Tenant consists of more than one
person, the obligations and liabilities of each such person hereunder shall be
joint and several.  This Agreement shall
be binding upon and inure to the benefit of Lender and Tenant and their
respective successors and assigns.


 


9.             Definitions. 
The term “Lender” as used herein shall include the
successors and assigns of Lender and any person, party or entity which shall
become the owner of the Property by reason of a foreclosure of the Mortgage or
the acceptance of a deed or assignment in lieu of foreclosure or
otherwise.  The term “Landlord” as used herein shall mean and
include the present landlord under the Lease and such landlord’s predecessors
and successors in interest under the Lease, but shall not mean or include Lender.  The term “Property”
as used herein shall mean the Property, the improvements now or hereafter
located thereon and the estates therein encumbered by the Mortgage.


 


10.          No
Oral Modifications.  This Agreement may not be modified in any
manner or terminated except by an instrument in writing executed by the parties
hereto.


 


11.          Governing
Law.  This Agreement shall be deemed to be a
contract entered into pursuant to the laws of the State where the Property is
located and shall in all respects be governed, construed, applied and enforced
in accordance with the laws of the State where the Property is located.


 


12.          Inapplicable
Provisions.  If any term, covenant or condition of this
Agreement is held to be invalid, illegal or unenforceable in any respect, this
Agreement shall be construed without such provision.


 


13.          Duplicate
Originals; Counterparts.  This Agreement may be executed
in any number of duplicate originals and each duplicate original shall be
deemed to be an original.  This Agreement
may be executed in several counterparts, each of which counterparts shall be
deemed an original instrument and all of which together shall constitute a
single Agreement.  The failure of any
party hereto to execute this Agreement, or any counterpart hereof, shall not relieve
the other signatories from their obligations hereunder.


 


14.          Number
and Gender.  Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.


 


15.          Transfer
of Loan.  Lender may sell, transfer and deliver the
Note and assign the Mortgage, this Agreement and the other documents executed
in connection therewith to one or more investors in the secondary mortgage
market (“Investors”). 
In connection with such sale, Lender may retain or assign responsibility
for servicing the Loan, including the Note, the Mortgage, this Agreement and
the other documents executed in connection therewith, or may delegate some or
all of such responsibility and/or obligations to a servicer including, but not
limited to, any subservicer or master servicer, on behalf of the
Investors.  All references to Lender
herein shall refer to and include any such servicer to the extent applicable.


 


16.          Further
Acts.  Tenant will, at the cost of Tenant, and
without expense to Lender, do, execute, acknowledge and deliver all and every
such further acts and assurances as Lender shall,


 


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from time
to time, require, for the better assuring and confirming unto Lender the
property and rights hereby intended now or hereafter so to be, or for carrying
out the intention or facilitating the performance of the terms of this
Agreement or for filing, registering or recording this Agreement, or for
complying with all applicable laws.


 


17.          Limitations
on Lender’s Liability.  Tenant acknowledges that Lender is obligated
only to Landlord to make the Loan upon the terms and subject to the conditions
set forth in the Loan Agreement.  In no
event shall Lender or any purchaser of the Property at foreclosure sale or any
grantee of the Property named in a deed-in-lieu of foreclosure, nor any heir,
legal representative, successor, or assignee of Lender or any such purchaser or
grantee (collectively the Lender, such purchaser, grantee, heir, legal
representative, successor or assignee, the “Subsequent Landlord”)
have any personal liability for the obligations of Landlord under the Lease and
should the Subsequent Landlord succeed to the interests of the Landlord under
the Lease, Tenant shall look only to the estate and property of any such
Subsequent Landlord in the Property for the satisfaction of Tenant’s remedies
for the collection of a judgment (or other judicial process) requiring the
payment of money in the event of any default by any Subsequent Landlord as
landlord under the Lease, and no other property or assets of any Subsequent
Landlord shall be subject to levy, execution or other enforcement procedure for
the satisfaction of Tenant’s remedies under or with respect to the Lease;
provided, however, that the Tenant may exercise any other right or remedy
provided thereby or by law in the event of any failure by Subsequent Landlord
to perform any such material obligation.


 


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IN WITNESS WHEREOF, Lender and
Tenant have duly executed this Agreement as of the date first above written.


 


 


	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MORGAN STANLEY MORTGAGE

  LENDING INC., a New York corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
						



 


I
- vi





















 


The undersigned accepts and agrees to

the provisions of Section 4 hereof:


 


 


	
  LANDLORD:

  
	
   

  
	
   

  
	
   

  	
  , a

  
	
   

  	
   

  
	
   

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
				



 


ACKNOWLEDGMENTS


 


[INSERT STATE SPECIFIC ACKNOWLEDGMENT]


 


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EXHIBIT A


 


LEGAL DESCRIPTION


 


I
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RIDER NO. 1


 


OPTION TO EXTEND


 


A.            Renewal Period.  Tenant may, at its option, extend the Term for
two renewal periods of five years each (the “Renewal Period”)
by written notice to Landlord (the “Renewal Notice”)
given no earlier than 18 nor later than 12 months prior to the expiration of
the Term (or the prior Renewal Period, as applicable), provided that at the
time of such notice and at the commencement of such Renewal Period, (i) Tenant
remains in occupancy of at least 50% of the Premises, and (ii) no uncured event
of default exists under the Lease.  The
Base Rent payable during the Renewal Period shall be at 95% of the Market
Rental Rate (defined below) for the Premises. 
Except as provided in this Rider No. 1,
all terms and conditions of the Lease shall continue to apply during the Renewal
Period.


 


B.            Acceptance.  Within 30 days of the Renewal Notice,
Landlord shall notify Tenant of the Base Rent for such Renewal Period (the “Rental
Notice”).  If
Tenant is not willing to accept the terms set forth in the Rental Notice, then
the parties will negotiate in good faith and attempt to reach an agreement
within 30 days after the date of the Rental Notice (the “Negotiation Deadline”).  At any time prior to the Negotiation
Deadline, Tenant may accept the terms set forth in the Rental Notice (or as negotiated)
by written notice (the “Acceptance
Notice”), or reject the terms set forth in the Renewal Notice
(and as negotiated) by written notice (the “Rejection Notice”), received by Landlord
prior to the Negotiation Deadline.  If
Tenant timely delivers its Acceptance Notice, Tenant shall, within 15 days
after receipt of a mutually agreed upon lease amendment containing the terms
set forth in the Rental Notice, execute such lease amendment confirming the
Base Rent and other terms applicable during the Renewal Period.  If Tenant (i) timely delivers its Rejection
Notice or (ii) fails timely to execute and return the required lease amendment,
then this Option to Extend shall automatically expire and be of no further force
or effect.  In addition, this Option to
Extend shall terminate upon assignment of this Lease or subletting of all or
any part of the Premises, except in the case of a Permitted Transfer.  If Landlord and Tenant cannot agree to the
Base Rent for the Renewal Period on or before the Negotiation Deadline, then
Tenant shall have an additional 7 days from the Negotiation Deadline within
which Tenant shall have the option to either (1) elect to have such dispute
resolved by arbitration pursuant to this Rider
No. 1 by giving the Landlord written notice (“Arbitration Notice”)
of its election within such 7-day period or (2) withdraw its exercise of the
Option to Extend by giving the Landlord written notice of its election to so
withdraw within such 7-day period, in which event the Lease shall expire on the
Expiration Date.  If within such 7-day
period Tenant does not exercise its option to have such dispute resolved by
arbitration, then Tenant shall be deemed to have rejected the final written
proposal for the Market Rental Rate given by Landlord during the Negotiation
Period and additionally to have withdrawn its exercise of this Option to
Extend, and the Lease shall expire on the Expiration Date without renewal or
extension.


 


C.            Arbitration.  If Tenant timely gives the Landlord an
Arbitration Notice, then the Market Rental Rate for the applicable Renewal
Period shall be settled by arbitration in accordance with the following
provisions, and any determination as a result thereof shall be binding upon the
parties:


 


(i)            Landlord and Tenant
shall use reasonable efforts to agree, within 10 business days following
receipt of an Arbitration Notice, upon the appointment of one arbitrator to
resolve the matter.  If an agreement on a
single arbitrator cannot be reached within such 10 business-day period,
Landlord and Tenant shall each appoint their respective arbitrator within 10
business days following the lapse of the 10 business-day period and shall
specify the name and address of their respective arbitrator to the other party
prior to the expiration of such 10 business-day period; provided, that if one
party fails to specify the name and address of its selected arbitrator within
such 10 business-day period the other party shall give such failing party
written notice, and if within 10 business days after such written notice the
failing party still has not specified an arbitrator, the arbitrator selected by
the other party shall act as the single arbitrator as if both parties had
agreed to the appointment of such arbitrator as provided above.  The selected arbitrators shall then appoint a
third arbitrator within 10 business days following their appointment.  If the two arbitrators are unable to agree
upon a third arbitrator within such 10 business-day period, the third
arbitrator shall be appointed as soon as reasonably possible thereafter by a
court of competent jurisdiction residing in Harris County, Texas, subject to
the qualification requirements set forth below. 
In the event of the failure, refusal or inability of any arbitrator to
act, a new arbitrator shall be appointed in his stead, which appointment shall
be made in the same manner as set forth above for the


 


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appointment of
such resigning arbitrator.  Immediately
following the selection of the final arbitrator, the arbitrator(s) shall meet
and, within 15 days following the complete selection of the arbitrator(s),
endeavor to resolve the matter.


 


(ii)           Within 15 business days
following the selection of all arbitrators, each party shall submit to the
arbitrators such party’s proposed Market Rental Rate, together with reasonable
evidence supporting such proposed rate. 
The arbitrator(s) shall select either the proposed Market Rental Rate
submitted by Landlord or the proposed Market Rental Rate submitted by Tenant,
whichever proposal the arbitrator(s) deem to be the most nearly correct
according to the definitions, terms and requirements set forth in the Lease,
without compromise.  The power of the
arbitrators shall be exercised by the concurrence of at least two arbitrators,
except that if only one arbitrator is required, the decision of such arbitrator
shall govern.  The arbitrator(s) shall
have the authority to request additional facts or evidence from each of the
parties and, if such arbitrators so require, a hearing to present the
same.  In the event of such a hearing,
rules of evidence applicable to state court judicial proceedings in Houston,
Texas civil district courts shall govern; however, evidence will be admitted or
excluded in the sole discretion of the arbitrator(s).  The arbitrator(s) shall resolve the
controversy and shall execute and acknowledge their decision, together with a
brief statement describing the rationale for such decision, in writing and
deliver a copy thereof to each of the parties personally or by registered or
certified mail, return receipt requested. 
If the arbitrators fail to reach an agreement during such 15-day period
(as extended pursuant to the next sentence), they shall be discharged, and new
arbitration proceedings shall commence, which appointments shall be made in the
same manner as set forth above.  By
agreement in writing, Landlord and Tenant may extend the time to reach
agreement either before or after the expiration thereof up to a maximum of 30
additional days.


 


(iii)          Each party shall bear
their own costs and the costs of the arbitrator it appoints.  The cost of the third arbitrator (or the
single arbitrator if only one arbitrator is required) shall be split equally.


 


(iv)          Each arbitrator shall
(1) be a real estate broker licensed under the laws of the State of Texas, (2)
have been actively and continuously engaged in leasing office space in
multi-story office buildings in Houston, Texas for not less than the previous
10 years, and (3) during the previous 10 years been involved in transactions
which in the aggregate total more than 2,000,000 square feet of rentable area
of office space in Houston, Texas.  The
arbitrator(s) selected by Landlord and Tenant may not be the real estate brokers
or agents that represented Landlord and Tenant in negotiations regarding the
Market Rental Rate prior to the submission of the proposed Market Rental Rate
to arbitration.


 


(v)           The decision of the
arbitrator(s) shall be final and non-appealable, shall be binding on both
Landlord and Tenant, and may be enforced in any court of competent
jurisdiction.


 


C.            Market Rental
Rate.  The “Market
Rental Rate” is the rate (or rates) a willing tenant
would pay and a willing landlord would accept for a comparable transaction
(e.g., renewal, expansion, relocation, etc., as applicable, in comparable space
and in a comparable building) as of the commencement date of the applicable
term, neither being under any compulsion to lease and both having reasonable
knowledge of the relevant facts, considering the highest and most profitable
use if offered for lease in the open market with a reasonable period of time in
which to consummate a transaction.  In
calculating the Market Rental Rate, all relevant factors will be taken into
account, including the location and quality of the Building, lease term,
amenities of the Property, condition of the space and any concessions and
allowances commonly being offered by Landlord for comparable transactions in
the Property.  The parties agree that the
best evidence of the Market Rental Rate will be the effective rate then charged
for comparable transactions in the Property.


 


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RIDER NO. 2


 


OPTION TO EXPAND


 


A.            Expansion
Space.  Tenant shall have
the option to lease the entire (subject to the terms and conditions in this Rider No. 2) 17th floor of the
Building (the “Expansion Space”), for a term
commencing on the date that is ninety (90) days following the date Landlord
delivers to Tenant possession of the Expansion Space (the “Expansion Space
Commencement Date”) and continuing through the expiration
or earlier termination of the Term (as it may be extended or renewed); provided
that (i) Tenant gives Landlord written notice (the “Expansion Notice”)
no later than December 15, 2007; (ii) no uncured event of default exists
under the Lease at the time of such Expansion Notice or the Expansion Space
Commencement Date; and (iii) Tenant has not sublet or assigned any portion of
the Premises.  The Base Rent payable for
the Expansion Space shall be at the same per-square-foot rate as specified in Section 1.D of the Lease, with the
rental abatement specified in such Section 1.D
prorated for the remaining Term of the Lease. 
This Option to Expand shall terminate upon assignment of this Lease or subletting
of all or any part of the Premises.  The
Expansion Space shall be reduced to the extent Tenant leases any portion
thereof, whether or not pursuant to a formal option provision in the Lease.


 


B.            Acceptance.  Within 30 days of receipt of the Expansion
Notice, Landlord and Tenant shall execute a lease amendment adding the
Expansion Space as part of the Premises for all purposes under the Lease
(including any extensions or renewals) effective as of the Expansion Space
Commencement Date and confirming the Base Rent and other terms applicable to
the Expansion Space, which shall be the same as those set forth in the
Lease.  Such lease amendment shall
contain a construction agreement substantially in the form of Exhibit D to the Lease regarding the
construction of leasehold improvements in the Expansion Space, provided that
the allowances specified therein shall be prorated for the remaining Term of
the Lease.  If Tenant fails timely to
execute and return the required lease amendment, then this Option to Expand
shall automatically expire and be of no further force or effect.


 


C.            Tender of
Possession.  Landlord shall
tender possession of the Expansion Space upon execution of the lease amendment
for such space.  Landlord shall not be
liable for any delay or failure to tender possession of the Expansion Space for
any reason, including by reason of any holdover tenant or occupant, nor shall
such failure invalidate the Lease or extend the Term.  Tenant shall be permitted to lease and occupy
the Expansion Space in increments of not less than 4,000 square feet of
Rentable Square Footage at a time, as needed.


 


D.            Condition of
Premises.  The Expansion Space
shall be tendered in an “as-is” condition. subject to the Landlord Work
outlined in Exhibit D of
the Lease as the same shall apply to the Expansion Space, and the leasehold
improvements to the Expansion Space shall be constructed in accordance with
said Exhibit D provided
that the allowances specified therein shall be prorated for the remaining Term
of the Lease.


 


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RIDER NO. 3


 


MUST TAKE SPACE


 


A.            Must Take Space.  Landlord shall lease to Tenant and Tenant
shall lease from Landlord at least 9,000 and up to 15,000 square feet (in
Tenant’s discretion) of additional Rentable Square Footage (the “Must Take Space”) of the Expansion Space identified on Rider No. 2.  Effective no later than the first day of the
19th calendar month of the initial Term of the Lease, the Must Take
Space shall be added to and automatically become a part of the Premises;
provided that Tenant may give Landlord written notice to take the Must Take
Space earlier than such date at Tenant’s option, and in such instance(s)
Landlord shall deliver the space upon execution of a lease amendment and the Commencement
Date for such space shall be ninety (90) days following the date of delivery of
the Must Take Space.  The Rentable Square
Footage of the Must Take Space shall be measured by Landlord’s architect using
the same methodology and applying the same add-on factors as were applicable to
the original Premises.  The lease of the
Must Take Space shall be subject to all of the terms and conditions of the
Lease currently in effect, except as modified in this Rider No. 3.  The Base Rent payable for the Must Take Space
shall be at the same per-square-foot rate as specified in Section 1.D of the Lease, with the
rental abatement specified in such Section 1.D
prorated for the remaining Term of the Lease; provided that if Tenant elects to
take the Must Take Space on or before the Commencement Date of the Lease, then
Tenant shall receive the full rental abatement specified in Section 1.D for the Must Take Space
with no proration.


 


B.            Amendment.  Within 30 days of delivery of the Must Take
Space, Landlord and Tenant shall execute a lease amendment adding the Must Take
Space as part of the Premises for all purposes under the Lease (including any
extensions or renewals) effective as of the delivery date of the same and
confirming the Base Rent and other terms applicable to the Must Take
Space.  Such lease amendment shall
contain a construction agreement substantially in the form of Exhibit D to the Lease regarding the
construction of leasehold improvements in the Must Take Space, provided that
the allowances specified therein shall be prorated for the remaining Term of
the Lease (except that if Tenant elects to take the Must Take Space on or
before the Commencement Date of the Lease, then Tenant shall receive the full
allowances specified in Exhibit D
for the Must Take Space with no proration).


 


C.            Condition of Premises.  The Must Take Space shall be tendered in an “as-is”
condition, subject to any Landlord Work as set forth in Exhibit D of the Lease.  However, leasehold improvements to the Must
Take Space shall be constructed in accordance with Exhibit D of the Lease, provided that
the allowances specified therein shall be prorated for the remaining Term of
the Lease.


 





 


3 - i





















 


RIDER NO. 4


 


PREFERENTIAL RIGHT TO LEASE


 


A.            Preferential
Right To Lease. 
So long as 24 months remain in the initial Term, Tenant shall have a
continuing and recurring Preferential Right to Lease any space on the 17th
floor not taken pursuant to Riders Nos. 2
and 3 of this Lease, plus
approximately 10,000 Rentable Square Feet (+/-20%, in Landlord’s discretion) on
floor 16 of the Building, as shown on Schedule 1 to this Rider No. 4 (the “Preferential Space”),
at such time as such space becomes Available (as defined below) for direct
lease to a new tenant (whether or not a bona fide offer has been made);
provided no uncured event of default exists under the Lease (and no condition
exists which, with the passage of time and/or giving of notice, would be an
event of default) and Tenant remains in occupancy of the entire Premises.  The Preferential Space shall be deemed “Available”
at such time as Landlord decides to offer the Preferential Space for lease and
such space is no longer any of the following: (i) leased or occupied; (ii)
assigned or subleased by the then-current tenant of the space; or (iii)
re-leased by the then-current tenant of the space by renewal, extension or
renegotiation (whether agreed to prior to or after the Effective Date).  This Preferential Right to Lease shall
terminate upon any Transfer as defined in the Lease, except in the case of a
Permitted Transfer.  The Preferential
Space shall be reduced to the extent Tenant leases any portion thereof, whether
or not pursuant to a formal option provision in this Lease.


 


B.            Acceptance.  Prior
to leasing the Preferential Space to a new tenant, Landlord shall first offer
such space in writing to Tenant specifying the amount and location of such
space, the anticipated date of tender of possession, the rental rate based on
the Market Rental Rate (as defined in Rider
No. 1) as of the anticipated Preferential Space Commencement Date
(as defined below), including any projected rate increases over the applicable
term, and other applicable terms (the “Preferential Rental Notice”).  Tenant shall have 10 Business Days within
which to accept or reject such offer.  If
Tenant accepts Landlord’s offer, Tenant shall, within 15 days after Landlord’s
written request, execute and return a lease amendment adding the Preferential
Space to the Premises for all purposes under this Lease (including any
extensions or renewals) and confirming the Base Rent and other applicable terms
specified in the Preferential Rental Notice. 
Such lease amendment may, if applicable, contain a construction
agreement using Landlord’s then-current form setting forth the schedule and
other terms and obligations of the parties regarding the construction of any
leasehold improvements in the Preferential Space.  If Tenant rejects such offer or fails timely
to (i) accept such offer or (ii) execute and return the required lease
amendment, then this Preferential Right to Lease shall lapse and be of no
further force and effect.  In such event,
Landlord shall be relieved of any future obligations hereunder and may
thereafter lease all or part of the Preferential Space to any party without
further notice or obligation to Tenant.


 


C.            Tender of
Possession.  The
Preferential Space shall be leased for the period commencing upon Landlord’s
tender of possession of the Preferential Space in accordance with Landlord’s
offer and this Rider (the “Preferential Space Commencement Date”)
and continuing through the expiration or earlier termination of the Term, as it
may be extended or renewed.  Landlord
shall not be liable for any delay or failure to tender possession of the
Preferential Space by the anticipated tender date for any reason, including by
reason of any holdover tenant or occupant, nor shall such failure invalidate
this Lease or extend the Term.


 


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Schedule 1 to Rider No. 4


 


Preferential Right Space


 





 


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