Exhibit 10.12


 


 


 


STANDARD INDUSTRIAL LEASE


 


 


270 SHARYLAND, L.P. — LANDLORD


 


 


and


 


 


THE WORNICK COMPANY RIGHT AWAY DIVISION — TENANT


 


 


DATED: 
MARCH 4TH 2003


 

















 


STANDARD INDUSTRIAL LEASE


 


THIS
STANDARD INDUSTRIAL LEASE (the “Lease”) is made to be effective the 4th day of
March, 2003, by and between 270 Sharyland, L.P. (“Landlord”), a Texas limited
partnership, and The Wornick Company Right Away Division (“Tenant”), a Nevada
corporation, Charter No. C-25930-99; EIN #74-1909484.


 


W  I  T  N  E  S  S
E  T  H:


 


In
consideration of the rents, covenants, and agreements herein set forth,
Landlord and Tenant enter into the following agreement:


 


1.                                      Definitions and Key
Provisions.  The following terms shall be defined in this
Lease as follows:


 


	
  Premises:

  	
  The
  171,179 square foot (more or less) space located within the Building
  identified on Exhibit “A”, sometimes also referred to as the “Premises Area”.

  
	
   

  	
   

  
	
  Project:

  	
  The
  real estate and improvements including the approximately 271,872 square foot
  building (the “Building”) as shown on Exhibit “A” and municipally numbered as
  5700 South International Parkway, Suites B & C, McAllen, Texas; the legal
  description of the real estate (the “Land”) is attached as Exhibit “B”.

  
	
   

  	
   

  
	
  Tenant’s Share:

  	
  62.96%;
  the fraction, the numerator of which is the Premises Area and the denominator
  of which is the total number of square feet of rentable space in the
  Building.

  
	
   

  	
   

  
	
  Initial Term:

  	
  Five
  (5) years unless terminated earlier as provided herein, commencing on the
  Rent Commencement Date.

  
	
   

  	
   

  
	
  Renewal Terms:

  	
  One
  (1) additional consecutive term of five (5) years.

  
	
   

  	
   

  
	
  Rent Commencement Date:

  	
  March 1,
  2003.

  
	
   

  	
   

  
	
  Occupancy:

  	
  Tenant
  may occupy the warehouse area of the Premises for the purpose of setting up
  equipment and racks immediately upon execution of this Lease by both parties.

  
				



 


	
  Base Rent:

  	
   

  	
  Monthly

  	
   

  	
  Annually

  	
   

  	
  PSF
  (Annual)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Years 1-5:

  	
   

  	
  $

  	
  59,912.65

  	
   

  	
  $

  	
  718,951.80

  	
   

  	
  $

  	
  4.20 NNN

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Renewal Base Rent:
  Years 6-10:

  	
   

  	
  $

  	
  68,899.55

  	
   

  	
  $

  	
  826,794.57

  	
   

  	
  $

  	
  4.83 NNN

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Security Deposit:

  	
   

  	
  $

  	
  59,912.65

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prepaid Rent:

  	
   

  	
  $

  	
  134,090.22

  	
   

  	
   

  	
   

  	
   

  



 


Initial Estimated Annual Operating Expenses: (estimated on per square foot basis
commencing on Tenant’s occupancy and subject to adjustment to actual costs and
expenses as provided herein)


 


	
  1.

  	
   

  	
  Common Area Charges:

  	
  $

  	
  0.40

  	
   

  
	
  2.

  	
   

  	
  Taxes:

  	
  $

  	
  0.54

  	
   

  
	
  3.

  	
   

  	
  Insurance:

  	
  $

  	
  0.06

  	
   

  
	
  4.

  	
   

  	
  Total:

  	
  $

  	
  1.00

  	
   Per Square Foot Annually Beginning March 1, 2003

  



 


	
  Brokers:

  	
  Grubb
  & Ellis, Best/White, LLC

  



 

















 


2.                                      Granting Clause and Quiet
Enjoyment.  In consideration of the obligation of Tenant
to pay rent as herein provided and in consideration of the other terms,
covenants and conditions hereof, Landlord leases to Tenant, and Tenant takes
from Landlord, the Premises for the term hereof. Notwithstanding the fact that
the Rent Commencement Date is subsequent to the effective date of this Lease,
it is the intention of Landlord and Tenant that each have vested rights
hereunder and that this Lease constitutes a binding and valid obligation of
each as of the date this Lease is fully executed. Landlord covenants and agrees
that upon Tenant’s paying rent and performing all of the covenants and
conditions set forth in this Lease, Tenant shall peaceably and quietly have,
hold and enjoy the Premises, for the purposes
specified in Section 6.1 hereof subject, however, to all of
the terms hereof and to all reservations in favor of Landlord, all zoning
ordinances and other laws and regulations governing or regulating the use of
the Premises, and all easements, rights-of-way, and presently recorded instruments
which affect the Premises. Landlord warrants and represents to Tenant that the
Premises and the Building each contain within ten percent (10%), plus or minus,
of the useable, rentable square feet set forth in Section 1 hereof.


 


3.                                      Renewal Terms.  Provided
Tenant is not then in default hereunder, Tenant shall have the right to extend
the term of this Lease for the applicable Renewal Terms provided Tenant gives
Landlord written notice of its election to extend the Lease at least six (6)
months prior to the expiration of the then expiring Term.


 


4.                                      Security Deposit. 
Concurrently with Tenant’s execution of this Lease, Tenant shall deposit
with Landlord the Security Deposit referenced in Section 1 which shall be held by Landlord, without
obligation for interest or segregation, as security for performance of Tenant’s
covenants and obligations under this Lease, it being expressly understood and
agreed that such deposit is not an advance rental deposit or an exact measure
of Landlord’s damages in case of Tenant’s default. Upon the occurrence of any
default by Tenant, Landlord may, without prejudice to any other available
remedy, use such fund to make good any rent arrearage or any other damage,
injury, expense or liability caused by such event of default, and Tenant shall
pay to Landlord within ten (10) days of written demand therefor, the amount so
applied in order to restore the Security Deposit to its original amount.
Subject to the requirements of and conditions imposed by laws applicable to
security deposits under commercial leases, and if Tenant is not then in default
hereunder, Landlord shall, within ninety (90) days of the expiration of this
Lease, return to Tenant the portion of the Security Deposit remaining after
deducting all damages, charges, and other amounts permitted by Law. Landlord
and Tenant agree that such deductions shall include, without limitation, all
damages and losses that Landlord has suffered or that Landlord reasonably
estimates that it will suffer as a result of any breach of this Lease by
Tenant.


 


Subject
to the requirements of and conditions imposed by laws applicable to security
deposits under commercial leases, Landlord shall, within the time required by
applicable law, return to Tenant that portion of the Security Deposit remaining
after deducting all damages, charges and other amounts permitted by law.
Landlord and Tenant agree that such deductions shall include, without
limitation, all damages and losses that Landlord has suffered or that Landlord
reasonably estimates that it will suffer as a result of any breach of this
Lease by Tenant.


 


5.                                      Rent.


 


5.1                               Base Rent. 
Tenant shall pay Base Rent to Landlord for the Premises in the amounts
set forth in Section 1;
and more specifically in equal and successive monthly installments of Base Rent
as set forth therein. Said Base Rent shall be paid in advance on the first day
of each month of the Term, without charge to Landlord, with proration to occur
for any partial month if the Rent Commencement Date is other than on the first
day of a calendar month. In addition to the Security Deposit, the Prepaid Rent,
and the first monthly installment of estimated Operating Expenses (as herein
defined) shall be due and payable on the date this Lease is fully executed. All
rentals to be paid by Tenant to Landlord shall be in lawful money of the United
States of America and shall be paid without deduction, offset or charge, prior
notice or demand, and at such place or places as may be designated from time to
time by Landlord. Upon the occurrence of an event of default specified in this
Lease, Landlord may at its option, require Tenant to make any payment(s) of
rental by certified check or money order. Tenant’s obligation to pay rent under
this Lease is an independent covenant and no act or circumstance, regardless of
whether such act or circumstance constitutes a breach of this Lease by
Landlord, shall release Tenant of its obligation to pay rent as required by
this Lease.


 


5.2                               Operating Expense Payments.  It
is the intention of Landlord and Tenant that Landlord receive the Base Rent
“net” of all other charges except as expressly provided herein; accordingly,
beginning on the earlier of (i) the Commencement Date (as defined in the
Construction Addendum) or (ii) Tenant’s initial occupancy of the Premises, Tenant
shall pay as additional rent Tenant’s Share of the “Operating Expenses” for the
Project. The


 


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term “Operating Expenses” shall mean all costs
and expenses (including without limitation sales tax) incurred by Landlord with
respect to the ownership, maintenance and operation of the Project, including
but not limited to: Taxes as provided in Section 11);
Insurance (as provided in Section 14);
association fees, if any; utilities for the Project; maintenance, repair and
replacement of all portions of the Project, including without limitation,
signs, fire suppression systems (if any), repair or replacement of exterior
surfaces, including but not limited to painting, cleaning and graffiti removal,
paving and parking areas, roads, roof (routine maintenance and repair only),
alleys, landscaping, line painting, utility lines, lighting, electrical
systems; amounts paid to contractors and subcontractors for work or services
performed in connection with the foregoing; reasonable property management fees
(which, at Landlord’s option, may be payable to itself, an affiliate or third
party manager); deductibles on insurance loss; security services, if any; trash
collection and sweeping and compliance with laws, rules, regulations and orders
of governmental authorities. Operating Expenses do not include debt service
under mortgages; costs of restoration to the extent of net insurance proceeds
received by Landlord with respect thereto; utilities for the Premises; leasing commissions;
or the cost of renovating space for other tenants of the Project or capital
expenditures unless incurred by Landlord with a principal purpose to: (i)
effect a reduction in the Operating Expenses; or (ii) keep the Project in
compliance with applicable laws, rules, regulations and orders of governmental
authorities. The costs of additions or alterations which are required to be
capitalized for federal income tax purposes shall be amortized on a
straight-line basis over a period equal to the lesser of the useful life
thereof for federal income tax purposes or ten (10) years. Landlord may at its
option increase Tenant’s Share of the Operating Expenses (or any portion
thereof) if in Landlord’s reasonable opinion a disproportionate allocation is
necessary because of Tenant’s use or operation.


 


Landlord
shall furnish Tenant a written statement estimating Tenant’s Share of the
Operating Expenses for the current calendar year (herein the “Estimate”).
Beginning on the Rent Commencement Date and on the first day of each month
during the Term, Tenant shall pay Landlord as additional rent one-twelfth
(1/12) of the Estimate. In addition, Tenant shall pay with the rental payment
for the first month following receipt of the Estimate an amount equal to the
number of months elapsed in the calendar year prior to receipt of the Estimate
times one-twelfth (1/12) of the Estimate, so as to bring said monthly payments
current for the year. As soon as practical after the end of each calendar year,
Landlord shall furnish Tenant a written statement showing Tenant’s Share of the
total Operating Expenses actually due for the calendar year ended (the “Actual
Expenses”). If the Actual Expenses exceed the Estimate, then Tenant agrees to
pay within ten (10) days of receipt of said statement, the difference between
Tenant’s Share of the Actual Expenses and the Estimate. If the Estimate exceeds
the Actual Expenses, then Landlord agrees to refund the difference at the time
that such statement is furnished, provided Tenant is not then in default in the
performance of any of its obligations under this Lease. In the event, and only
in such event, that during the term hereof a specific CAM category actually
exceeds Landlord’s estimate, as set forth in Section 1 hereof, for the first year, and
subsequently, the actual amount of each preceding year for that category by ten
percent (10%) or more, and upon not less than fifteen (15) business days
written notice from Tenant to Landlord within three (3) months of receipt of
the Actual Expenses statement reflecting such, Tenant shall have the right to
review and Landlord shall provide copies of invoices, statements, receipts or
similar evidence of said specific CAM category expenses for amounts over
twenty-five dollars ($25.00) at Landlord’s business office during regular
business hours. If Landlord is required to conduct research regarding the
expense amounts, Tenant shall pay Landlord $25.00 per hour per personnel for
such research. If Landlord and Tenant are unable to agree on the amount to be
paid by Tenant, each shall designate a CPA and the two CPA’s shall designate a
third CPA to serve as arbitrator of the dispute. The arbitrator’s decision as
to the amount to be paid by Tenant shall be binding upon the parties. The
non-prevailing party shall bear the expenses incurred by this action. The
provisions of this Section shall apply for any partial calendar year
during which this Lease is effective, subject to a pro rata adjustment based
upon the number of calendar months or portions thereof that this Lease is in
effect. Tenant’s obligation to pay any such difference in the Operating
Expenses shall survive the termination or expiration of this Lease.


 


For
purposes of this Section, a year shall mean a calendar year except for the
first year of this Lease, which shall begin on the Rent Commencement Date and
the last year which shall end at the expiration of the Lease.


 


Landlord
and Tenant are knowledgeable and experienced in commercial transactions and
agree that the provisions of this Lease for determining charges, amounts and
additional rental payable by Tenant (including without limitation, payments
under Sections 1, 5, 11 and 13 hereof regarding operating expenses, taxes, and
utilities, etc.) are commercially reasonable and valid, and as to each such charge
or amount, constitute a “method by which the charge is to be computed” for
purposes of Section 93.004 of the Texas Property Code, as enacted by House
Bill 2186, 77th Legislature.


 


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5.3                               Late Charges.  Tenant
agrees to pay a late charge of ten percent (10%) as additional rent for each
payment due hereunder that remains unpaid, i.e., not received in Landlord’s
office, for more than five (5) days after the first (1st) day of the
month to cover Landlord’s administrative costs of processing such late payment.
In addition to said late charge, any rental or other amount due from Tenant
under this Lease which is more than thirty (30) days delinquent shall bear
interest from the date such rental or other amount was due at the lesser of the
rate of eighteen percent (18%) per year or the then maximum nonusurious rate
under applicable law, (the lesser of said amounts being herein referred to as
the “Maximum Rate.”) In the event the late charge is ever deemed to be “interest”
the amount of interest on past due amounts shall be automatically reduced so
that the combination of said late charge and the interest on past due amounts,
if any, does not exceed the Maximum Rate. Any amount collected which exceeds
the Maximum Rate will be deemed credited to other amounts owed by Tenant to
Landlord under this Lease, and any remaining excess after such credit shall be
refunded to Tenant. It is the intent of both Landlord and Tenant to at all
times comply with the applicable law regarding the maximum nonusurious amount
or rate of interest which may be contracted for, charged, taken, reserved or
received by Landlord.


 


6.                                      Conduct of Business of
Tenant.  


 


6.1                               Use of Premises.  The
Premises shall be occupied and used by Tenant solely for the purpose of
conducting therein the business of light manufacturing, receiving and
distributing, storing and selling (wholesale only) of products, materials and
merchandise made or distributed by Tenant and for such lawful purposes as may
be incident thereto and for no other purpose without Landlord’s prior written
consent which shall not be unreasonably withheld. Any and all forklift or
similar vehicles used or placed in or around the Premises must have
polyurethane coated wheels. Tenant shall not use the Premises as a place of
public accommodation. Tenant’s acceptance of occupancy from Landlord shall
constitute acknowledgment by Tenant that Tenant has inspected the Premises and
the Project of which the Premises are a part and that same are suitable for Tenant’s
intended use thereof as stated in this Section.  Tenant recognizes and agrees that Landlord is making no
warranties, expressed or implied, as to the suitability of the Premises or the
Project for any particular use. Tenant accepts the space “AS IS” with all
faults.


 


6.2                               Operation by Tenant. 
Tenant covenants and agrees to the following:


 


(a)                                  Tenant, at Tenant’s expense, shall comply
with all laws, rules, orders, ordinances, directions, regulations and
requirements of federal, state, county and municipal authorities regardless of
when they become effective, pertaining to Tenant’s use or occupancy of the
Premises and with any recorded covenants, conditions and restrictions,
including, without limitation, all applicable federal, state and local laws, regulations
or ordinances pertaining to air, soil and water quality, Hazardous Materials
(as defined in Section 29.3
hereof), waste disposal, air emissions and other environmental, health and
safety, zoning and land use matters, the Americans with Disabilities Act or
similar laws and with any directive or order of any public officer or officers,
pursuant to law, which impose any duty upon Landlord or Tenant with respect to
the use or occupancy of the Premises;


 


(b)                                 Tenant shall comply with all requirements of
any authority or agency having jurisdiction over the insurance rates with
respect to the use or occupancy of the Premises;


 


(c)                                  Landlord shall have the exclusive right to
use the roof, side and rear walls of the Premises for any purpose, including
but not limited to erecting signs or other structures on or over all or any
part of the same, erecting scaffolds and other aids to the construction and
installation of the same, and installing, maintaining, using, repairing, and
replacing pipes, ducts, conduits and wires leading through, to or from the
Premises and serving other parts of the Project in locations which do not
materially interfere with Tenant’s use of the Premises. Tenant shall have no
right whatsoever to the exterior or exterior walls, or the roof of the Premises
or any portion of the Project outside the Premises, except as otherwise
provided in this Lease;


 


(d)                                 Tenant agrees that it shall not use or permit
the Premises to be used for an adult bookstore, adult motion picture theater,
nude or semi-nude entertainment club, or similar adult entertainment
establishment.


 


7.                                      Rules and Regulations. Tenant and Tenant’s agents, employees, and
invitees shall faithfully observe and comply with all reasonable, uniform rules
and regulations promulgated by Landlord from time to time for the safety, care
or cleanliness of the Project and for the preservation of good order therein.
Landlord shall not be


 


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responsible to Tenant for the nonperformance by any other tenant or
occupant of the Project of any of the rules and regulations, but shall try to
enforce performance of all rules and regulations by all tenants.


 


8.                                      Parking and Use of Common
Area and Facilities.


 


8.1                               Common Area.  All
parking areas, access roads and facilities furnished, made available or
maintained by Landlord on the Project for the general use in common of tenants
of the Project and their invitees in the Project or on the Land, including
employee parking areas, truck ways, driveways, loading docks and areas,
delivery areas, pickup stations, pedestrian sidewalks, courts and ramps,
landscaped areas, retaining walls, stairways, hallways, common restrooms,
lighting facilities, and other similar areas and improvements provided by
Landlord for the general use in common of tenants of the Project and their
customers (all within the Project are herein collectively called the “Common
Area”) shall at all times be subject to the exclusive control and management of
Landlord. Tenant acknowledges that it does not have an exclusive interest in
the Common Area. Landlord reserves the right to grant such easements and other
rights in the Common Area as Landlord may from time to time deem necessary for
the benefit of the Project and/or its tenants, including without limitation,
easements for mutual ingress and egress, truck turning and similar matters for
the benefit of adjacent properties. Landlord may, at its sole option, modify
the Common Areas or make such changes thereto as Landlord deems reasonably
necessary for the benefit of the Project and/or its tenants.


 


8.2                               Use of Common Area. 
Tenant and Tenant’s business invitees, employees and customers shall
have the nonexclusive right, in common with Landlord and all others to whom
Landlord has granted or may hereafter grant rights, to use the Common Area,
subject to such reasonable, uniform rules and regulations as Landlord may from
time to time impose and the rights of Landlord set forth above. Landlord may at
any time close temporarily all or any part of the Common Area to make repairs
or changes, to prevent the acquisition of public rights therein or for any
other reasonable purpose. Tenant shall not interfere with the other tenants’
right to use any part of the Common Area. Landlord may allocate parking spaces
among Tenant and other tenants in the Project if, in Landlord’s opinion, such
parking facilities are becoming crowded. Landlord shall not be responsible for
enforcing Tenant’s parking rights against any third parties. Nothing herein
shall obligate Landlord to maintain or provide any security services or systems
for the Project. Tenant agrees that Landlord shall not be liable to Tenant for,
and Tenant waives any claim against Landlord with respect to, any loss by theft
or any other damage suffered or incurred by Tenant in connection with any
unauthorized entry into the Premises or Project, or other criminal or willful
acts of third parties.


 


9.                                      Maintenance of Premises.


 


9.1                               Maintenance by Landlord.  Landlord shall
keep or cause to be kept the foundations, roof and exterior walls of the
Premises in good order, repair and condition except for damage thereto due to
the acts or omissions of Tenant, Tenant’s employees or invitees. Landlord shall
commence required repairs as soon as reasonably practicable after receiving written
notice from Tenant thereof, but in any event within ten (10) business days from
such notice. Except as provided in this Section, Landlord shall not be
obligated to make repairs, replacements or improvements of any kind upon the
Premises, or to any equipment, merchandise, stock in trade, facilities or
fixtures therein, all of which shall be Tenant’s responsibility. Landlord
reserves the right to enter into a standard maintenance contract with a third
party for the routine and regular maintenance of all heating, ventilation and
air-conditioning equipment located on the roof or exterior of the
Premises.  Landlord shall be responsible
for repairs as well as maintenance of said equipment, but Tenant agrees to
reimburse Landlord for all expenses incurred by Landlord in connection with
such standard maintenance contract and the maintenance and repair of the
heating, ventilation, and air-conditioning equipment serving the Premises.


 


9.2                               Maintenance by Tenant. 
Tenant shall at all times keep the Premises (including all entrances and
vestibules) and all partitions, gutters and downspouts, windows and window
frames and moldings, glass, doors, door openers, fixtures, equipment and
appurtenances thereof (including lighting, electrical, and plumbing equipment
and appurtenances and all interior heating, ventilation and air-conditioning
equipment) and all parts of the Premises not required in Section 9.1 to be maintained by
Landlord in good order, condition and repair and in a clean, orderly, sanitary
and safe condition, damage by unavoidable casualty excepted (including but not
limited to doing such things as necessary to cause the Premises to comply with
applicable laws, rules, regulations and orders of governmental and public
authorities and agencies). If replacement of equipment, fixtures and
appurtenances thereto are necessary, Tenant shall replace the same with
equipment, fixtures and appurtenances of the same quality, and shall repair all
damages done in or by such replacement.


 


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9.3                               Fire Equipment. 
Tenant agrees to supply and maintain at its own expense any fire
extinguishers, or other fire prevention equipment, including, without
limitation, sprinkler or fire suppression systems, required by law, rules, orders,
ordinances, and regulations of any city, county, or state in which the Premises
are located and/or required by any insurance carrier, underwriters association,
bureau, or any other similar body having jurisdiction involving the Premises.
Additionally, Tenant agrees to comply, at its own expense, with all
recommendations of any such authority.


 


10.                               Alterations, Liens and Signs.


 


10.1                        Alterations. 
Tenant will not paint, decorate or change the architectural treatment of
any part of the exterior of the Premises or construct any changes to the
interior of the Premises, without Landlord’s prior written approval thereto,
and will promptly remove any paint, decoration, alteration, addition or changes
applied or installed without Landlord’s approval or take such other action with
respect thereto as Landlord directs. Tenant shall not make any structural
alterations, additions or changes to the Premises. Tenant may, at its own cost
and expense erect shelves, bins, racks and removable (i.e., not attached to the
realty) trade fixtures (collectively “Trade
Fixtures”) in the ordinary course of its business provided such
items do not alter the basic character of the Premises, do not damage the
Premises, may be removed without injury to the Premises and the construction,
erection and installation thereof complies with all legal requirements and
other provisions of this Lease. If Landlord grants consent to any requested
alterations, the alterations shall be performed in a good, workmanlike and lien
free manner in accordance with all applicable legal requirements and any
restrictions which may be imposed by Landlord as a condition to its consent.
All alterations, changes, additions and all leasehold improvements made by
Tenant or made by Landlord on Tenant’s behalf and all fixtures installed by
Tenant which are not Trade Fixtures are herein collectively referred to as “Tenant Additions”, and shall be the
property of Landlord. Such Tenant Additions shall not be removed by Tenant on,
before or following expiration or termination of the Lease without Landlord’s
consent except as may be required pursuant to Section 27.1.


 


10.2                        Liens. 
Tenant shall promptly pay all contractors and materialmen, and not
permit or suffer any lien to attach to the Premises or Project or any part
thereof, and indemnify and save harmless Landlord against the same. Landlord
shall have the right to require Tenant to furnish a bond or other indemnity
satisfactory to Landlord prior to the commencement of any work by Tenant on the
Premises. If any lien attaches or is claimed, Tenant, within ten (10) days
following the imposing of any such lien, shall cause the same to be released of
record by payment or posting of a bond as provided in the Texas Property Code.
Tenant has no express or implied authority to create or place any lien or
encumbrance of any kind upon, or in any manner to bind the interest of Landlord
in the Premises or Project or to charge the rentals payable hereunder for any
claim in favor or any person dealing with Tenant, including, without
limitation, those who may furnish materials or perform labor for any
construction or repairs.


 


10.3                        Signs. 
Tenant will not place or permit on any exterior door or window or any
exterior wall of the Premises any sign, awning, canopy, advertising matter,
decoration, lettering or other thing of any kind without the written consent of
Landlord except as provided in the Sign Criteria Addendum attached hereto.
Failure by Tenant to erect an approved company name/logo sign on the Building
within forty-five (45) days of occupancy shall constitute a default hereunder.


 


11.                               Real Estate Taxes. 
Landlord has the sole right to render the Project, land and any
improvements thereon to any appropriate taxing authorities. Tenant, as
additional rent, agrees to pay Tenant’s Share of all taxes (both general and
special), assessments, or governmental charges (hereinafter “Taxes”) lawfully
levied or assessed against the land, Project or any portion thereof, including
without limitation any gross receipts or similar tax. Tenant’s Share of the Taxes
shall be payable as additional rent in accordance with Section 5.2. Additionally, Tenant
shall pay to Landlord upon demand, Tenant’s Share of all reasonable costs
(including tax consultant and/or attorney’s fees) incurred by Landlord in
connection with any protest or contest of the valuation of taxes imposed on the
Project or land. Provided, however, Landlord shall have no obligation to take
any such action. Tenant shall have the right to inspect, at Landlord’s business
office during regular business hours and upon reasonable notice to Landlord,
the tax bills which Landlord receives from the applicable taxing authorities.


 


12.                               Personal Property Taxes. 
During the term of this Lease, Tenant shall pay prior to delinquency all
taxes assessed against and levied upon fixtures, furnishings, equipment and all
other personal property of Tenant contained in the Premises. When possible,
Tenant shall cause its personal property to be assessed and billed


 


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separately from the real
property of Landlord. If any of Tenant’s personal property shall be assessed
with Landlord’s real property, Tenant shall pay Landlord the taxes attributable
to Tenant within ten (10) days after receipt of a written statement therefor
or, at Landlord’s option as provided in Section 11.


 


13.                               Utilities. 
Tenant agrees to convert all utilities to Tenant’s name upon move-in and
to pay before delinquency all charges for all utilities (including but not
limited to gas, water, heat, sewer, electricity, telephone, garbage removal,
water meter charges and all hookup or connection fees or charges) which may
accrue with respect to the Premises during the term of this Lease.
Additionally, Tenant shall pay to Landlord, as additional rent, upon demand,
its share of any utilities which are not separately metered based upon usage as
reasonably determined by Landlord. Landlord shall in no event be liable to
Tenant for any interruption in the service of any such utilities to the
Premises, howsoever such interruption may be caused and this Lease shall
continue in full force and effect despite any such interruptions. Tenant agrees
to limit use of water and sewer to normal restroom use. Tenant acknowledges
that it has inspected the utilities available to the Premises and that it has
determined that such utilities are sufficient for all anticipated uses of the
Premises. Tenant shall not install any equipment or make any use of the
Premises which overloads the utilities available to the Premises and if
Landlord reasonably deems Tenant’s use of equipment to be in violation of this
provision, Landlord may, in addition to such other remedies which Landlord has
hereunder, require Tenant, at Tenant’s expense, to upgrade such utility lines
and related equipment including without limitation transformers.


 


14.                               Insurance; Waiver;
Indemnification.


 


14.1                        Landlord’s Obligation. 
During the term of this Lease and any extension or renewal hereof,
Landlord shall procure and maintain such “all risk property and general
liability” insurance coverage on the Project as Landlord deems appropriate,
including, if Landlord so elects, loss of rental insurance in an amount of one
or more year’s annual rental.


 


14.2                        Tenant’s Obligations.


 


14.2.1.           All Risk Property and
General Liability.  Tenant, as additional rent, shall pay to
Landlord an amount equal to Tenant’s Share of all premiums paid by Landlord for
the insurance coverage described in Section 14.1.
Tenant’s Share of such premiums is payable as additional rent in accordance
with Section 5.2.


 


14.2.2.           Liability. 
Tenant shall procure and maintain a policy or policies of insurance
insuring Tenant, with Landlord named as additional insured, against all claims,
damages or actions arising out of or in connection with Tenant’s use or
occupancy of the Premises or by the condition of the Premises, the limits of
such policy or policies to be in an amount not less than $1,000,000 per
occurrence, and in an amount not less than $2,000,000 in the general aggregate
for bodily injury and property damage. Said policy or policies shall
additionally include “Fire Legal Liability” insurance coverage in the maximum
allowable amount. Tenant shall also maintain workman’s compensation insurance
in the required statutory amounts and provide Landlord with proof of all insurance.


 


14.2.3.           Personalty Coverage. 
Tenant also agrees to carry insurance against fire and such other risks
as are from time to time included in standard extended coverage insurance, for
the full insurable value, covering all of Tenant’s merchandise, trade fixtures,
furnishings, wall covering, floor covering, carpeting, drapes, equipment and
all items of personal property of Tenant located on or within the Premises.


 


14.2.4.           Construction Liability. 
Tenant, at its own cost and expense, shall obtain and maintain at all
times when demolition, excavation, or construction work is in progress being
done by Tenant on the Premises, construction liability insurance with limits of
not less than $500,000.00 and $2,000,000.00 in the general aggregate for bodily
injury and property damage, protecting Landlord and Tenant as well as such
other person or persons as Tenant may designate against any and all liability
for injury or damage to any person or property in any way arising out of such
demolition, excavation, or construction work.


 


14.2.5.           Form of Insurance. All policies required of Tenant hereunder
shall: (i) be issued by a reputable insurance company qualified to do business
in the State of Texas and with an A.M. Best rating reasonably acceptable to
Landlord; (ii) name Landlord as an additional insured and Tenant as a named
insured; (iii) provide that they cannot be canceled for any reason unless
Landlord is given thirty (30) days prior written notice by


 


7

















 


the insurer; (iv) state that
such insurance is primary over any insurance carried by Landlord; (v) contain
an endorsement in favor of Landlord, waiving such insurance company’s right of
subrogation against Landlord; and (vi) contain a statement that the premium for
such policy(es) is current. A duly executed certificate of insurance shall be
delivered to Landlord on or within five (5) days of the Commencement Date. All
renewals shall be delivered to Landlord at least ten (10) days prior to the
expiration of the respective policy terms. Landlord shall have the right to
review said insurance amounts at least yearly during the term of this Lease and
require Tenant to increase said insurance policies to provide coverage in such
amounts as Landlord and/or Landlord’s lender, in their discretion, deems
necessary. Moreover, should Tenant’s use of the Premises (or any vacancy by
Tenant) result in an increased insurance rate, Landlord may, in its discretion
allocate such amount of the insurance premium to Tenant as Landlord deems
reasonable to pass the cost of such increased premium through to Tenant rather
than other tenants of the Project. Tenant agrees to procure and maintain said
increased insurance coverage. The insurance required of Landlord hereunder may
be maintained under a blanket or master policy which includes properties other
than the Project.


 


14.3                        Mutual Waiver of Subrogation
Rights.  Landlord and Tenant and all parties claiming
under them mutually release and discharge each other and their respective
officers, directors, partners, employees and agents from all claims and
liabilities arising from or caused by any casualty or hazard to the extent
covered by valid and collectible insurance on the Project; and waive any right
of subrogation which might otherwise exist in or accrue to any person on
account thereof; provided that, such release shall not operate in any case
where the effect is to invalidate such insurance coverage. THIS RELEASE SHALL APPLY EVEN IF THE LOSS OR DAMAGE
SHALL BE CAUSED BY THE FAULT OR NEGLIGENCE OF A PARTY HERETO OR FOR ANY PERSON
FOR WHICH SUCH PARTY IS RESPONSIBLE.


 


14.4                        Waiver.  LANDLORD, ITS AGENTS AND EMPLOYEES, SHALL NOT BE LIABLE FOR, AND
TENANT WAIVES ALL CLAIMS FOR DAMAGE (EXCEPT CLAIMS CAUSED BY OR RESULTING FROM
THE NEGLIGENCE OR WILLFUL MISCONDUCT OF LANDLORD, ITS AGENTS OR EMPLOYEES),
INCLUDING BUT NOT LIMITED TO CONSEQUENTIAL DAMAGES, TO PERSON, PROPERTY OR
OTHERWISE, SUSTAINED BY TENANT OR ANY PERSON CLAIMING THROUGH TENANT RESULTING
FROM ANY ACCIDENT OR OCCURRENCE IN OR UPON ANY PART OF THE PREMISES OR THE
PROJECT, INCLUDING BUT NOT LIMITED TO, CLAIMS FOR DAMAGE RESULTING FROM: (A)
ANY EQUIPMENT OR APPURTENANCES BECOMING OUT OF REPAIR; (B) INJURY DONE OR
CAUSED BY WIND, WATER, OR OTHER NATURAL ELEMENTS; (C) ANY DEFECT IN OR FAILURE
OF PLUMBING, HEATING OR AIR-CONDITIONING EQUIPMENT, ELECTRIC WIRING OR
INSTALLATION THEREOF, GAS, WATER, AND STEAM PIPES, STAIRS, PORCHES, RAILINGS OR
WALKS; (D) BROKEN GLASS; (E) THE BACKING UP OF ANY SEWER PIPE OR DOWNSPOUT; (F)
THE BURSTING, LEAKING OR RUNNING OF ANY TANK, TUB, WASHSTAND, WATER, SNOW OR
ICE UPON THE PREMISES OR THE PROJECT; (G) THE FALLING OF ANY FIXTURE, PLASTER
OR STUCCO; (H) DAMAGE TO OR LOSS BY THEFT OR OTHERWISE OF PROPERTY OF TENANT OR
OTHERS; (I) ACTS OR OMISSIONS OF OTHER PERSONS IN THE PREMISES, OTHER TENANTS
IN THE PROJECT, OCCUPANTS OF NEARBY PROPERTIES, OR ANY OTHER PERSONS; AND (J)
ANY ACT OR OMISSION OF OWNERS OF ADJACENT OR CONTIGUOUS PROPERTY. ALL PROPERTY
OF TENANT KEPT IN THE PREMISES SHALL BE SO KEPT AT TENANT’S RISK ONLY AND
TENANT SHALL INDEMNIFY, DEFEND AND SAVE LANDLORD HARMLESS FROM CLAIMS ARISING
OUT OF DAMAGE TO THE SAME, INCLUDING SUBROGATION CLAIMS BY TENANT’S INSURANCE
CARRIER, EXCEPT CLAIMS CAUSED BY OR RESULTING FROM THE NEGLIGENCE OR WILLFUL
MISCONDUCT OF LANDLORD, ITS AGENTS OR EMPLOYEES,


 


14.5                        Indemnification. 
Tenant shall indemnify, defend and save harmless Landlord from and
against any and all liability, liens, claims, demands, damages, expenses, fees,
costs, fines, penalties, suits, proceedings, actions and causes of action of
any and every kind and nature arising or growing out of or in any way connected
with the use, occupancy, management or control of the Premises by Tenant, its
agents, employees, contractors or invitees or the operations, conduct or
activities in the Premises or the Project by Tenant, its agents, employees,
contractors or invitees, including without limitation: (i) liability for damage
resulting from the personal injury or death of an employee of Tenant,
regardless of whether the Tenant has paid such employee under the Workman’s
Compensation law of any state or other similar federal or state program for the
protection of employees, (ii) liability arising from any entrance upon the
Land, the Project, or the Premises by any person through any means for the
purpose of selling or solicitation, including but not limited to, the marketing
of edible or potable products,


 


8

















 


and (iii) damage to any real
or personal property of Tenant, Landlord or any third parties. Tenant
authorizes Landlord (although expressly recognizing that Landlord is under no
obligation to do so) to defend, settle or compromise any claims, demands,
suits, proceedings or the like which may represent an indemnifiable obligation
of Tenant hereunder should Tenant choose not to so act. Such action or inaction
by Landlord shall in no way affect Tenant’s indemnity obligations as provided
herein. Tenants indemnity obligations under this Section and elsewhere in
this Lease shall survive the expiration or earlier termination of this Lease.
Landlord shall indemnify, defend and save harmless Tenant from and against any
and all liability, liens, claims, demands, damages, expenses, fees, costs,
fines, penalties, suits, proceedings, actions and causes of action of any and
every kind and nature arising or growing out of or in any way directly
connected with Landlord’s actions or omissions related to the Project as a
result of the negligence or willful misconduct of Landlord, its agents or employees.


 


15.                               Right of Entry. 
Upon reasonable prior notice (24 hours) unless in the case of an
emergency, Landlord, its agents and employees, shall have the right to enter
the Premises from time to time at reasonable times to examine, to show them to
prospective purchasers and other persons, and to make such repairs,
alterations, improvements or additions as Landlord deems desirable. Rent shall
not abate during any such entry by Landlord, including without limitation,
during the period of any such repairs, alterations, improvements, or addition.
During the last six (6) months of the term of this Lease, Landlord may exhibit
the Premises to prospective tenants and maintain upon the Premises notices
deemed advisable by Landlord. In addition, during any apparent emergency,
Landlord, its agents and employees, may enter the Premises forcibly without
liability therefor and without in any manner affecting Tenant’s obligations
under this Lease. Nothing herein contained, however, shall be deemed to impose
upon Landlord any obligation, responsibility or liability whatsoever, for any
care, maintenance or repair except as otherwise herein expressly provided.


 


16.                               Subordination and Attornment. 
Tenant accepts this Lease subject and subordinate to any mortgage, deed
of trust, or other lien presently existing on the Project or the Land or
subsequently created on the Project, and to any renewals and extensions
thereof, provided that the rights of Tenant shall remain in full force and
effect during the term of this Lease so long as Tenant shall continue to
perform all of the covenants and conditions of this Lease, but Tenant agrees
that any such mortgagee shall have the right at any time to subordinate such
mortgage, deed of trust, or other lien to this Lease. Landlord is hereby
irrevocably vested with full power and authority to subordinate this Lease to
any mortgage, deed of trust, or other lien hereafter placed on the Project or
the Land, and Tenant agrees on demand, and without charge to Landlord or any
mortgagee, to execute such further instruments subordinating this Lease as
Landlord may reasonably request, provided such subordination shall be on the
express condition that this Lease shall be recognized by the mortgagee, and
that the rights of Tenant shall remain in full force and effect during the term
of this Lease so long as Tenant shall continue to perform all of the covenants
and conditions of this Lease. No such mortgagee shall be required to assume any
liabilities for defaults occurring prior to its ownership of the Project.
Tenant covenants and agrees that upon foreclosure of any deed of trust,
mortgage or other instrument of security and the sale of the Project or the
Land pursuant to any such document, to attorn to any purchaser at such a sale
and to recognize such purchaser as the Landlord under this Lease. The agreement
of Tenant to attorn to any purchaser pursuant to such a foreclosure sale or
trustee’s sale in the immediately preceding sentence shall survive any such
sale. Tenant’s rights under this Lease shall remain in full force and effect so
long as Tenant shall continue to perform all of the covenants and conditions of
this Lease and Tenant is not in default under this Lease and Landlord owns the
Project.


 


17.                               Estoppel Certificate. 
Tenant shall at any time but not more often than three (3) times per
year, upon the reasonable request of Landlord and without charge to Landlord or
any third party requesting same of Landlord, execute, acknowledge and deliver
to Landlord a statement in writing certifying that this Lease is unmodified and
in full force and effect (or if modified stating the nature of such
modification and certifying that the Lease as modified is in full force and
effect), the dates to which the rent and other charges are paid in advance, if
any, and acknowledging that there are not, to Tenant’s knowledge, any uncured
defaults on the part of Landlord hereunder, or specifying such defaults if any
are claimed. The parties hereto agree that any such statement may be relied
upon by any prospective purchaser or encumbrancer of all or any portion of the
Project or the Land. Tenant’s failure to deliver such statement within ten (10)
days after Landlord’s request for the same, shall be conclusive upon Tenant
that: (i) this Lease is in full force and effect; (ii) this Lease has not been
modified or amended other than expressly stated; (iii) there are no uncured
defaults in Landlord’s performance; and (iv) not more than one month’s rent or
other charge has been paid in advance.


 


18.                               Damage and Destruction.  If the
Premises are hereafter partially damaged or destroyed or rendered partially
untenantable (i.e., less than 30% of the Premises are damaged or untenantable)
for their


 


9

















 


accustomed use by fire or
other casualty and such fire or other casualty is not caused directly or
indirectly by the fault or negligence of Tenant, its agents, employees,
contractors or invitees, Landlord shall, unless the Lease is terminated as
provided below, promptly repair the same to substantially the condition which
they were in immediately prior to the happening of such casualty (excluding
stock in trade, fixtures, furniture, furnishings, carpeting, floor covering,
wall covering, drapes and equipment), and from the date of such casualty until
the Premises are so repaired and restored, the monthly rent payments hereunder
shall abate in such proportion as the part of said Premises thus destroyed or
rendered untenantable bears to the total Premises. Provided, however, Landlord
shall not be obligated to expend for such repair or restoration an amount in
excess of the insurance proceeds received by Landlord as a result of such
damage. Landlord’s obligation to rebuild is contingent upon its receipt of
insurance proceeds sufficient to make such repairs. In the event any mortgagee
or lender requires such sums to be applied to any debt, Landlord will not be
deemed to have received the proceeds. Notwithstanding the above, if the
Premises or any material portion of the Project is wholly or substantially
damaged (i.e., more than 30% of the Premises are damaged or untenantable),
destroyed or rendered untenantable for their accustomed use by fire or other
casualty then Landlord shall have the right to terminate this Lease effective
as of the date of such casualty by giving to Tenant, within ninety (90) days
after the happening of such casualty, written notice of such termination. If
such notice is given, this Lease shall terminate and provided Tenant is not in
default hereunder, Landlord shall promptly repay to Tenant any rent theretofore
paid in advance which was not earned at the date of such casualty. If said
notice is not given and Landlord is required or elects to repair or restore the
Premises as herein provided, then Tenant shall promptly repair or replace its
stock in trade, fixtures, furnishings, furniture, carpeting, wall covering,
floor covering, drapes and equipment to the same condition as they were in
immediately prior to the casualty. If the Premises or any portion of the
Project are damaged by fire or other casualty caused directly or indirectly by
the fault or negligence of Tenant or its agents, employees, contractors, or
invitees, the rent under this Lease will not abate and Tenant shall be liable
to Landlord for the cost and expense of the repair and restoration of the
Premises or the Project caused thereby to the extent that such cost and expense
is equal to or less than the deductible amount covered by the insurance
proceeds described in Section 14.1.


 


19.                               Eminent Domain.


 


19.1                        Eminent Domain.  If
30% or more of the Premises or any portion of the Project shall be acquired,
condemned or damaged as a result of the exercise of any power of eminent
domain, condemnation or sale under threat thereof, or in lieu thereof, then
Landlord at its election may terminate this Lease by giving notice to the
Tenant of its election, within 180 days of the date the condemning authority
shall have the right to possession of the Premises or portion of the Project
condemned. Moreover, if any portion of the Project is taken and in Landlord’s
judgment such taking would materially interfere with or impair its ownership or
operation of the Project, Landlord may terminate this Lease. If the Lease shall
not be terminated as aforesaid, then it shall continue in full force and
effect, and Landlord shall within a reasonable time after possession is
physically taken by the condemning authority (subject to delays due to shortage
of labor, materials or equipment, labor difficulties, breakdown of equipment,
governmental restrictions, fires, other casualties or other causes beyond the
reasonable control of Landlord) restore the remaining portion of the Premises
to the extent reasonably possible, to render it reasonably suitable for the use
permitted by Section 6.1.
Provided, however, Landlord shall not be obligated to expend an amount greater
than the proceeds received from the condemning authority less all expenses
incurred in connection therewith (including attorney’s fees) for the
restoration. Base rent as provided in Section 5.1,
shall be reduced in the proportion that the area of the Premises so taken bears
to the total Premises, No taking of the Common Area shall entitle Tenant to an
abatement.


 


19.2                        Damages. 
Landlord reserves and Tenant assigns to Landlord, all rights to damages
on account of any taking or condemnation or sale under threat or in lieu
thereof or any act of any public or quasi-public authority for which damages
are payable. Tenant shall execute such instruments of assignment as Landlord
reasonably requires, join with Landlord at Landlord’s cost and expense in any
action for the recovery of damages if requested by Landlord, and turn over to
Landlord any damages recovered in any proceeding. If Tenant fails to execute
instruments required by Landlord or to undertake such other steps as requested,
Landlord may impose a fine on Tenant equal to the daily Base Rent amount, plus
compounded interest at the rate of 10% per day, for each day that Tenant fails
to execute such instruments. However, Landlord does not reserve any damages
payable for trade fixtures installed by Tenant at its own cost which are not
part of the realty.


 


20.                               Assignment and Subletting. 
Tenant shall not assign this Lease or any interest therein, whether
voluntarily, by operation of law, or otherwise, and shall not sublet the
Premises or any part thereof, including but not limited to all concession
vending, except by written permission and consent of Landlord being first had
and obtained.


 


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Consent of Landlord to any
such assignment or subletting shall not be unreasonably withheld if: (i) at the
time of such assignment or subletting Tenant is not in default in the
performance and observance of any of the covenants and conditions of this
Lease; (ii) the assignee or subtenant of Tenant shall expressly assume in
writing all of Tenant’s obligations hereunder; (iii) Tenant shall provide proof
to Landlord that the assignee or subtenant has a financial condition which is
satisfactory to Landlord and Landlord’s lender; (iv) the Premises continue to
be used solely for the purpose set forth in Section 6.1, and (v) Landlord is furnished with and
approves the form of the proposed sublease. In connection with any such
assignment or sublease, Tenant or the assignee or subtenant of Tenant shall pay
to Landlord any legal and administrative costs incurred by Landlord in
approving such assignment or subletting, not to exceed $5,000.00. Any such
assignment or sublease, even with the approval of Landlord, shall not relieve
Tenant from liability for payment of all forms of rental and other charges
herein provided or from the obligations to keep and be bound by the terms,
conditions and covenants of this Lease. The acceptance of rent from any other
person shall not be deemed to be a waiver of any of the provisions of this
Lease, or a consent to the assignment or subletting of the Premises. Consent to
any assignment or subletting shall not be deemed a consent to any future
assignment or subletting. Any merger, consolidation or transfer of corporate
shares of Tenant, if Tenant is a corporation, so as to result in a change in
the present voting control of the Tenant by the person or persons owning a
majority of said corporate shares on the date of this Lease, shall constitute an
assignment and be subject to the conditions of this Section. If Tenant is a
general partnership having one or more corporations as partners or if Tenant is
a limited partnership having one or more corporations as general partners, the
provisions of the preceding sentence shall apply to each of such corporations
as if such corporation alone had been the Tenant hereunder. If Tenant is a
partnership, the withdrawal of a general partner shall be an assignment subject
to the provisions hereof. Moreover, in the event that the rental due and
payable by a sublessee or assignee, or a combination of the rental payable
under such sublease or assignment plus any bonus or other consideration
therefor or incident thereto exceeds the rental payable under this Lease, or if
with respect to an assignment, sublease, license or other transfer by Tenant
permitted by Landlord, the consideration payable to Tenant by the assignee,
subtenant, licensee or other transferee exceeds the rental payable under this
Lease, then Tenant shall be bound and obligated to pay Landlord, in addition to
all rental required hereunder, such excess rental and other excess
consideration within ten (10) days following receipt thereof by Tenant from
such sublessee, assignee, licensee or other transferee, as the case may be.
Finally, in the event of any assignment or subletting it is understood and
agreed that all rentals paid to Tenant by an assignee or sublessee shall be
received by Tenant in trust for Landlord, to be forwarded immediately to
Landlord without reduction of any kind, and upon election by Landlord such
rentals shall be paid directly to Landlord. Without limitation on Landlord’s
approval rights as provided above, Tenant shall provide a copy of any executed
sublease to Landlord within ten (10) days of the execution thereof. Landlord
may assign this Lease at will and shall provide Tenant with a copy of such
assignment.


 


Notwithstanding
the foregoing subsection, Tenant shall have the right to assign this Lease or
sublet all or any portion of the Premises without the consent of, but with
prior written notice to, Landlord, to any corporation or entity which controls,
is controlled by or is under common control with Tenant, or to any corporation
resulting from the merger or consolidation with Tenant, or to any person or
entity which acquires substantially all of the assets of Tenant so long as such
assignee or sublessee or survivor entity has similar or better financial
status, and provided that no such assignment or sublease shall act as a release
of Tenant from any of the provisions, covenants and conditions on the part of
Tenant to be kept or performed under this Lease.


 


21.                               Default by Tenant.


 


21.1                        Events of Default.  The
following shall be considered for all purposes to be events of default under and
a breach of this Lease: (a) any failure of Tenant to pay any rent or other
amount due hereunder for more than ten (10) days after written notice thereof;
(b) failure of Tenant to maintain insurance in the amounts and in a form called
for under this Lease; (c) any failure by Tenant to perform or observe any of
the other terms, provisions, conditions and covenants of this Lease for more
than thirty (30) days after written notice of such failure; (d) Tenant shall
become bankrupt or insolvent, or file or have filed against it a petition in
bankruptcy or for reorganization or arrangement or for the appointment of a
receiver or trustee of all or a portion of Tenant’s property, or Tenant makes
an assignment for the benefit of creditors; (e) if Tenant abandons or vacates
the Premises; (f) this Lease, Tenant’s interest herein or in the Premises, any
improvements thereon, or any property of Tenant is executed upon or attached;
or (g) the Premises come into the hands of any person other than expressly
permitted under this Lease.


 


21.2                        Landlord’s Remedies.  Upon
the occurrence of any event of default specified in this Lease, Landlord,
without grace period, demand or notice (the same being hereby waived by
Tenant), and in addition


 


11

















 


to all other rights or
remedies Landlord may have for such default, shall have the right to pursue any
one or more of the following remedies:


 


(a)                                  Terminate this Lease in which event Tenant
shall immediately surrender the Premises to Landlord, and if Tenant fails to do
so, Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the
Premises and expel or remove Tenant and any other person who may be occupying said
Premises or any part thereof, by force if necessary, without notice or the need
to resort to legal process and without being deemed guilty of trespass or
becoming liable for any loss or damage occasioned thereby; and Landlord may
recover from Tenant the amount of all loss and damage which Landlord may suffer
by reason of such termination, including, without limitation, all costs of
retaking the Premises and the total rent and charges reserved in this Lease for
the remainder of the term of this Lease (i.e., the duration of this Lease had
it not been terminated) all of which shall be immediately due and payable by
Tenant to Landlord; and/or


 


(b)                                 Without terminating this Lease, enter upon
and take possession of the Premises, and expel or remove Tenant and any other
person who may be occupying said Premises, or any part thereof, by force if
necessary, without notice or the need to resort to legal process and without
being deemed guilty of trespass or becoming liable for any loss or damage
occasioned thereby. Landlord may make such alterations and repairs as it deems
advisable to relet the Premises, and relet the Premises or any part thereof for
such term or terms (which may extend beyond the term of this Lease) and at such
rentals and upon such other terms and conditions as Landlord in its sole
discretion deems advisable. Upon each such reletting all rentals received by
Landlord therefrom shall be applied: first, to any indebtedness other than rent
due hereunder from Tenant to Landlord; second, to pay any costs and expenses of
reletting, including brokers’ and attorneys’ fees and costs of alterations and
repairs; third, to rent due hereunder; and fourth, the residue, if any, shall
be held by Landlord and applied in payment of future rent as it becomes due hereunder.
No such reletting shall relieve Tenant or any guarantors from their obligations
hereunder. If rentals received from such reletting during any month are less
than that to be paid during that month by Tenant hereunder, Tenant shall
immediately pay any such deficiency to Landlord. In no event shall Tenant be
entitled to any excess rent obtained by reletting the Premises over and above
the rent reserved herein.


 


No
re-entry or taking possession of the Premises by Landlord shall be construed as
an election to terminate this Lease unless a written notice of such termination
is given by Landlord to Tenant. Notwithstanding any such reletting or re-entry
or taking possession, without termination, Landlord may at any time thereafter
terminate this Lease for any prior breach or default. Pursuit of any of the
foregoing remedies shall not preclude pursuit of any of the other remedies
herein provided or any other remedies provided by at law or in equity, nor
shall pursuit of any remedy herein provided constitute a forfeiture or waiver
of any rent due to Landlord hereunder or of any damages accruing to Landlord.
Notwithstanding anything herein to the contrary, Landlord shall have no
obligation to relet or attempt to relet the Premises or any portion thereof
following termination of this Lease, re-entry or repossession of the Premises.
Provided, however, in the event Landlord is ever held to have such a duty,
Tenant agrees that Landlord shall, in connection with such efforts, not be
required to do anything more than list the Premises for lease with a licensed
real estate broker of Landlord’s choosing (which may be an affiliate of
Landlord) for a period of three (3) months. If no party acceptable to Landlord
executes a lease with Landlord on terms reasonably acceptable to Landlord
within this three (3) month period, Tenant agrees that Landlord shall
conclusively have satisfied any such duty to release or mitigate. In no event
will Landlord have any duty to lease the Premises before Landlord leases other
vacant space which it has in the Project or other buildings owned by Landlord
nor shall Landlord have any duty to lease to and Landlord will not be
considered to be acting unreasonably in refusing to lease to any party if: (i)
the prospective lessee has a financial condition which is unacceptable to
Landlord or Landlord’s lenders; (ii) the prospective lessee requires any
alterations which are unacceptable to the Landlord or Landlord’s lenders; (iii)
the prospective lessee requires tenant improvements to be paid by Landlord; or
(iv) the prospective lessee requires terms different from this Lease or which
are otherwise unacceptable to Landlord or Landlord’s lender.


 


21.3                        Landlord’s Performance for
Account of Tenant.  If the Tenant shall continue in default in
the performance of any of the covenants or agreements herein contained after
the time limit for the curing thereof then Landlord may perform the same for
the account of Tenant. Any amount paid or expense or liability (together with
interest thereon at the Maximum Rate from the date upon which any such expense
shall have been incurred) incurred by Landlord in the performance of any such
matter for the account of Tenant shall be deemed to be additional rent and the
same (together with interest thereon at the Maximum Rate from the date upon
which any such expense shall have been incurred) may, at the option of
Landlord, be added to any rent then due or thereafter falling due hereunder or
shall be payable by Tenant to Landlord on demand.


 


12

















 


21.5                        Waiver of Rights of
Redemption.  To the extent permitted by law, Tenant
waives any and all rights of redemption granted by or under any present or
future laws if Tenant is evicted or dispossessed for any cause, or if Landlord
obtains possession of the Premises due to Tenant’s default hereunder or
otherwise.


 


21.6                        No Waiver.  No
delay or omission in the exercise of any right or remedy of Landlord on any
default by Tenant shall impair such a right or remedy or be construed as a
waiver. The receipt and acceptance by Landlord of delinquent rent shall not
constitute a waiver of any other default; it shall constitute only a waiver of
timely payment for the particular rent payment involved. No act or conduct of
Landlord, including, without limitation, the acceptance of the keys to the
Premises, shall constitute an acceptance of the surrender of the Premises by
Tenant before the expiration of the term. Only a notice from Landlord to Tenant
shall constitute acceptance of the surrender of the Premises and accomplish a
termination of the Lease. Landlord’s consent to or approval of any act by
Tenant requiring Landlord’s consent or approval shall not be deemed to waive or
render unnecessary Landlord’s consent to or approval of any subsequent act by
Tenant. Any waiver by Landlord or any default must be in writing and shall not
be a waiver of any other default concerning the same or any other provision of
the Lease.


 


22.                               Landlord’s Lien.  To
secure the performance of Tenant’s obligations under this Lease, Tenant, as
Debtor, and referred to in this Section as “Debtor”, hereby grants to
Landlord, as “Secured Party”, a security interest in and an express contractual
lien upon all of Debtor’s equipment, furniture, furnishings, appliances, goods,
trade fixtures, inventory, chattels, and other personal property of Debtor
which is now on the Premises or which is placed on the Premises at some later
date, and all proceeds from such items. This property shall not be removed from
the Premises without the consent of Secured Party until all arrearages in rent
and all other sums of money being due to Secured Party under this Lease have
been paid and discharged, and all the covenants, agreements, and conditions of
this Lease have been fully complied with and performed by Debtor. Secured Party
is authorized and Debtor hereby irrevocably and throughout the term of this
Lease (and any extensions or renewals thereof) appoints Secured Party as its
attorney-in-fact to prepare and file financing statements signed only by
Secured Party as attorney-in-fact on behalf of Debtor covering the security
described above; moreover, Debtor agrees to sign the same upon request.
Notwithstanding the foregoing, Secured Party is hereby authorized to file a
duplicate original or Xerox copy of this Lease as a financing statement with
the Office of the Secretary of State and with the appropriate county clerk’s
office for the county where the Premises are located, as appropriate. Upon
default under this Lease by Debtor, any or all of Debtor’s obligations to
Secured Party secured hereby shall, at Secured Party’s option, be immediately
due and payable without notice or demand. In addition to all rights or remedies
of Secured Party under this Lease and the law, including the right to a
judicial or nonjudicial foreclosure, Secured Party shall have all the rights
and remedies of a secured party under the Uniform Commercial Code as enacted in
the State of Texas. This security agreement and the security interest hereby
created shall survive the termination of this Lease if such termination results
from Debtor’s default. The above-described security interest and lien are in
addition to and cumulative of the Landlord’s lien provided by the laws of the
State of Texas. In the event Landlord sells Tenant’s property at a judicial or
nonjudicial foreclosure sale, Tenant hereby expressly consents to and gives
Landlord the authority to bid on and purchase all or a portion of Tenant’s
property at such sale.


 


23.                               Default by Landlord. 
Landlord shall in no event be charged with default in any of its
obligations hereunder unless and until Landlord shall have failed to perform
such obligations within thirty (30) days (or such additional time as is
reasonably required to correct any such default provided Landlord has commenced
action to correct such default within said 30 day period and continues to
diligently prosecute such action to completion) after written notice to
Landlord by Tenant, specifically describing such failure. All obligations of
Landlord hereunder shall be construed as covenants, not conditions; and, except
as may be otherwise expressly provided in this Lease, Tenant may not terminate
this Lease for breach of Landlord’s obligations hereunder. All obligations of
Landlord under this Lease will be deemed binding upon Landlord only during the
period of its ownership of the Project and not thereafter. The term “Landlord”
in this Lease shall mean only the owner, for the time being of the Project, and
in the event of the transfer by such owner of its interest in the Project, such
owner shall thereupon be released and discharged from all obligations of
Landlord thereafter accruing, but such obligations shall be binding during the
Lease term upon each new owner for the duration of such owner’s ownership. Any
liability of Landlord under this Lease shall be limited solely to its interest
in the Project, and in no event shall any personal liability be asserted
against Landlord in connection with this Lease nor shall any recourse be had to
any other property or assets of Landlord. In the event of an immediate
necessary repair, Tenant may act for Landlord if Landlord is unable to achieve
immediate results, and Landlord shall reimburse Tenant for all reasonable
expense incurred by Tenant in such action based on Landlord’s payment experience
with such repair.


 


13

















 


24.                               Application of Payments
Received From Tenant.  Landlord shall have the right at any time to
apply any payments made by Tenant to the satisfaction of any debt or obligation
of Tenant to Landlord according to Landlord’s sole discretion and regardless of
the instructions of Tenant as to application of any such sum, whether such
instructions be endorsed upon Tenant’s check or otherwise, unless otherwise
agreed upon by both parties in writing. The acceptance by Landlord of a check
or checks drawn by a party other than Tenant shall not affect Tenant’s
liability hereunder nor shall it be deemed an approval of any assignment or
sublease of this Lease by Tenant.


 


25.                               Notices.  All
notices required to be given hereunder shall be in writing and shall (i) be
served in person upon the party to be notified or upon its agent, or (ii) be
mailed by prepaid certified or registered mail, or (iii) be deposited with a
nationally recognized overnight courier, charges prepaid, designated for next
business day delivery, or (iv) be sent via facsimile transmission to the
appropriate number shown on the signature page of this Lease, and shall be
deemed given (i) upon hand delivery to a competent agent, employee or officer
of the party, or (ii) three (3) days after deposit with the US Postal Service,
or (iii) on the next business day after deposit with an overnight courier, or
(iv) upon verifiable confirmation of transmission of the facsimile to the
proper number. Either party shall have the right to change its address for
notice by notifying the other party of such change in accordance with this
Section.


 


26.                               Sale of Project or Land by
Landlord.  In the event of any sale of the Project or
Land by Landlord, or any part thereof, Landlord shall be and is hereby entirely
freed and relieved of all liability under any and all of its covenants and
obligations contained in or derived from this Lease arising out of any act,
occurrence or omission occurring after the consummation of such sale; and the
purchaser, at such sale or any subsequent sale of the Project or Land shall be
deemed, without any further agreement between the parties or their successors
in interest or between the parties and any such purchaser, to have assumed and
agreed to carry out any and all of the covenants and obligations of the
Landlord under this Lease. Furthermore, in the event of a sale or conveyance by
Landlord of the Project or Land, this Lease shall not be affected by any such
sale, and Tenant agrees to attorn to the purchaser thereof.


 


27.                               Surrender, Holding Over and
Successors.


 


27.1                        Surrender.  Upon
the expiration or earlier termination of this Lease, whether by forfeiture,
lapse of time, or otherwise, or upon the termination of Tenant’s right to
possession of the Premises, Tenant will at once surrender and deliver up the
Premises, to Landlord in good and broom-clean condition and repair, reasonable
wear and tear and loss by fire or other casualty excepted. All Tenant Additions
will, following the expiration or termination of this Lease, remain in the
Premises as Landlord’s property unless Landlord directs Tenant to remove all or
any portion of same whereupon Tenant agrees that it shall, at its expense,
remove such Tenant Additions (or portion thereof directed by Landlord).
Provided Tenant is not in default, it will remove its Trade Fixtures,
inventory, and other personal property upon the expiration of the Term. If
Tenant is in default, it shall remove its Trade Fixtures only if specifically
directed to do so in writing by Landlord. Tenant shall repair any damage to the
Premises caused by the removal of such Tenant Additions, Trade Fixtures, or
other items. In no event will any fire sprinklers, fire suppression equipment,
HVAC System components, floor tiles, carpeting, ceiling tiles, plumbing
fixtures, or similar building system items or any equipment or fixtures
attached to the realty be considered “Trade Fixtures” or be removed unless
directed by Landlord to do so. Tenant agrees that following an Event of
Default, Landlord may, at its option, allow any party claiming to be a lessor
of Tenant to remove equipment, Trade Fixtures, and similar items leased from
such lessor. Landlord shall have no liability to Tenant therefor. Landlord may
condition its consent upon such lessor agreeing to repair any damage to the
Premises caused by such removal and providing adequate financial assurances of
its ability to pay for any such damages. Provided, however, no such agreement
by any such lessor, or Landlord’s failure to obtain such an agreement, shall
relieve Tenant of its obligations hereunder including without limitation,
Tenant’s obligation to repair said damage even if the damage is caused by said
lessor or its contractors or agents. Tenant shall remove all Hazardous
Materials. Any Trade Fixtures or Tenant Additions not removed by Tenant as
required herein shall be deemed abandoned and may be stored, removed and
disposed of by Landlord at Tenant’s expense, and Tenant waives all claims
against Landlord for any damages resulting from Landlord’s retention or
disposal of same. Moreover, any period following the termination or expiration
of this Lease during which there is Hazardous Material, Tenant Alterations or
Trade Fixtures which are not removed as herein required shall be considered a
holdover by Tenant and, in addition to all other remedies available to Landlord
hereunder, shall obligate Tenant to the increased rental payments pursuant to Section 27.2. Tenant shall be
entitled to no payment or offset for the value of any such property (even if
sold by Landlord) and shall pay on demand all costs incurred by Landlord in
connection with such removal or disposal. No retention,


 


14

















 


disposal or sale or such
items shall limit remedies otherwise available to Landlord hereunder for a
breach by Tenant. All obligations of Tenant hereunder not fully performed as of
the termination or expiration of the Lease shall survive such termination or
expiration.


 


27.2                        Holding Over.  If
Tenant holds over or occupies the Premises beyond the term of this Lease (it
being agreed there shall be no such holding over or occupancy without
Landlord’s written consent), Tenant shall pay Landlord for each day of such
holding over a sum equal to twice the monthly rent applicable hereunder at the
expiration of the term (including Operating Expenses), prorated for the number
of days of such holding over. In such event, Tenant shall occupy the Premises
as a Tenant at sufferance, and all of the terms and provisions of this Lease
shall be applicable, with the exception of the rent applicable during such
holding over period, which shall be increased as aforesaid. Tenant agrees that
Landlord may institute a forcible detainer or similar action against Tenant or
any other party in possession of the Premises without serving any demand for
possession, demand to vacate, notice of termination or similar demand or notice
upon Tenant or such party in possession.


 


27.3                        Successors.  All
rights and liabilities herein given or imposed upon the respective parties
hereto shall bind and inure to the several respective heirs, successors,
administrators, executors and assigns of the parties and if Tenant is more than
one person, they shall be bound jointly and severally by this Lease. No rights,
however, shall inure to the benefit of any assignee of Tenant unless the
assignment is approved by Landlord as required herein.


 


28.                               Brokers or Finders.  Other than the Broker named in Section 1,
Tenant represents and warrants to Landlord, that it has engaged no broker or
finder and that no claims for brokerage commissions or finders’ fees will arise
in connection with the execution of this Lease and agrees to indemnify, defend
and hold Landlord harmless from any liability or expense (including attorney’s
fees) arising from any such claim.


 


29.                               Environmental Issues.


 


29.1                        Tenants Compliance with
Environmental Laws.  Tenant shall not cause or permit any
Hazardous Material to be brought upon, kept or used in or about the Premises by
Tenant, its agents, employees, contractors or invitees without the prior
written consent of Landlord, which Landlord shall not unreasonably withhold
provided Tenant demonstrates to Landlord’s satisfaction that such Hazardous
Material is necessary or useful to Tenant’s business. All Hazardous Materials
will be used, kept and stored in a manner that complies with all laws
regulating any such Hazardous Material so brought upon or used or kept in or
about the Premises. Landlord represents that the Premises was free of Hazardous
Materials prior to Tenant’s move-in.


 


29.2                        Indemnification.  In
addition to, and without limitation on the general indemnity obligations of
Tenant under this Lease, Tenant specifically agrees that it shall indemnify,
defend and hold Landlord harmless from any and all claims, judgments, damages,
penalties, fines, costs, injuries, liabilities or losses (including, without
limitation, diminution in value of the Premises or the Project, damages for the
loss or restriction on use of rentable or usable space or of any amenity of the
Premises or the Project, and sums paid in settlement of claims, attorneys’
fees, consultant fees and expert fees arising from related claims or suits)
which arise during or after the Lease term, or prior to the Lease Term if
Tenant had access to and use of the Premises or the Project during that time,
as a result of any breach by Tenant of its obligations under this
Section or any contamination of the Premises or the Project resulting from
the presence of Hazardous Materials on or about the Premises or the Project
caused or permitted by Tenant. This indemnification of Landlord by Tenant
includes, without limitation, costs incurred in connection with any
investigation of site conditions or any clean-up, detoxification, remediation,
removal or restoration work required by any federal, state or local
governmental agency or political subdivision because of Hazardous Material
present in the soil or air or ground water on, over or under the Premises or
the Project. Without limiting the foregoing, if the presence of any Hazardous
Material on the Premises or the Project caused or permitted by Tenant results
in any contamination of the Premises or the Project, Tenant shall promptly take
all actions at its sole expense as are necessary to return the Premises or the
Project to the condition existing prior to the introduction of any such
Hazardous Material to the Premises or the Project, provided that Landlord’s
approval of such actions shall first be obtained. Tenant further agrees to
defend Landlord, its agents, employees, and assigns in any administrative or
judicial proceeding commenced by private individuals or governmental entities
seeking recovery of damages for personal or bodily injury or property damage,
or recovery of civil penalties or fines arising out of, connected with, or
relating to any breach by Tenant of its obligations under this Section or
any contamination of the Premises or the Project resulting from the presence of
Hazardous Materials on or about the Premises or the Project caused or permitted
by Tenant. The foregoing indemnity shall survive the expiration or earlier
termination of this Lease.


 


15

















 


29.3                        Hazardous Material.  As
used herein, the term “Hazardous Material” means any pollutant, toxic
substance, hazardous waste, hazardous material, hazardous substance, oil
hydrocarbon, asbestos or similar item as defined in or pursuant to the Resource
Conservation and Recovery Act, as amended, the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended, the Federal Clean Water
Act, as amended, the Safe Drinking Water Act, as amended, the Federal Water
Pollution Control Act, as amended, the Texas Water Code, as amended, the Texas
Solid Waste Disposal Act, as amended, or any other federal, state or local
environmental or health and/or safety related law, regulation, ordinance, rule,
or bylaw, whether existing as of the date hereof, previously enforced or
subsequently enacted (collectively the “Environmental Laws”).


 


29.4                        Notice of Certain Events.  Tenant and
Landlord shall immediately advise each other in writing of (a) any governmental
or regulatory actions instituted or threatened under any Environmental Law
affecting either party or the Premises, (b) all claims made or threatened by
any third party against either Tenant or Landlord or the Premises relating to
damage, contribution, cost recovery, compensation, loss or injury resulting
from any Hazardous Materials, (c) the discovery of any occurrence or condition
on any real property adjoining or in the vicinity of the Premises that could
cause the Premises or the Project or Land to be classified in a manner which
may support a claim under any Environmental Law, and (d) the discovery of any
occurrence or condition on the Premises, the Project or Land or any real
property adjoining or in the vicinity of the Premises, the Project or Land
which could subject Tenant or Landlord, the Premises, the Project or the Land
to any restrictions in ownership, occupancy, transferability or use of the
Premises, the Project or the Land under any Environmental Law. Landlord may
elect to join and participate in any settlements, remedial actions, legal
proceedings or other actions initiated in connection with any claims under any
Environmental Law caused or alleged to have been caused by Tenant, it agents,
employees, contractors or invitees and to have its reasonable attorney’s fees
paid by Tenant. Landlord represents that it is the sole owner of the Premises
and the Project. At its sole cost and expense, Tenant agrees when applicable or
upon request of Landlord to promptly and completely cure and remedy every
violation of an Environmental Law caused by Tenant, its agents, employees,
contractors or invitees.


 


29.5                        Environmental Review.  In
the event reasonable evidence exists of the occurrence or existence of the
violation of any Environmental Law or the presence of any Hazardous Material on
the Premises, the Project or the Land, caused by Tenant, its agents, employees,
contractors, or invitees, Landlord (by its officers, employees and agents) at
any time and from time to time may contract for the services of persons (the
“Site Reviewers”) to perform environmental site assessments (“Site
Assessments”) on the Premises, the Project, Land or neighboring properties for
the purpose of determining whether there exists on the Premises, the Project,
Land or neighboring properties any environmental condition which could
reasonably be expected to result in any liability, cost or expense to Landlord.
The Site Reviewers are hereby authorized to enter upon the Premises for
purposes of conducting Site Assessments. The Site Reviewers are further
authorized to perform both above and below the ground testing for environmental
damage or the presence of Hazardous Materials and such other tests on the
Premises, the Project, Land or neighboring properties as may be necessary to
conduct the Site Assessments in the reasonable opinion of the Site Reviewers.
Tenant agrees to supply to the Site Reviewers such historical and operational
information regarding the Premises as may be reasonably requested by the Site
Reviewers to facilitate the Site Assessments and will make available for
meetings with the Site Reviewers appropriate personnel having knowledge of such
matters. The results of Site Assessments shall be furnished to Tenant upon
request. The cost of performing such Site Assessments shall be paid by Tenant
if such reports establish Tenant as the liable party.


 


30.                               Miscellaneous.


 


30.1                        Partial Invalidity.  If
any term, covenant, condition or provision of this Lease is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the provisions hereof shall remain in full force and effect and shall in no way
be affected, impaired or invalidated thereby.


 


30.2                        Captions.  The
various headings and numbers herein and the grouping of the provisions of this
Lease into Sections are for the purpose of convenience only and shall not be
considered a part hereof unless expressly stated to the contrary.


 


30.3                        Gender; Number. 
Words of any gender used in this Lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, and vice versa, unless the context otherwise requires.


 


16

















 


30.4                        Corporation as Tenant.  If a
corporation executes this Lease as Tenant, it shall promptly furnish Landlord
with copies of certified corporate resolutions attesting to the authority of
the officers executing this Lease on behalf of such corporation.


 


30.5                        Applicable Law.  This
Lease shall be governed by the laws of the State of Texas.


 


30.6                        Time.  Time
is of the essence of this Lease.


 


30.7                        Joint and Several Liability.  If
Tenant is a partnership or other business organization the members of which are
subject to personal liability, the liability of each such member shall be
deemed to be joint and several.


 


30.8                        Accord and Satisfaction. 
Landlord is entitled to accept, receive and cash or deposit any payment
made by Tenant for any reason or purpose or in any amount whatsoever, and apply
the same at Landlord’s option to any obligation of Tenant and the same shall
not constitute payment of any amount owed except that to which Landlord has
applied the same. No endorsement or statement on any check or letter of Tenant
shall be deemed an accord and satisfaction or otherwise recognized for any
purpose whatsoever. The acceptance of any such check or payment shall be
without prejudice to Landlord’s right to recover any and all amounts owed by
Tenant hereunder and the Landlord’s right to pursue any other available remedy.


 


30.9                        Entire Agreement. 
There are no representations, covenants, warranties, promises,
agreements, conditions or undertaking, oral or written, between Landlord and
Tenant other than herein set forth. Except as otherwise provided herein, no
subsequent alteration, amendment, change or addition to this Lease shall be
binding upon Landlord or Tenant unless in writing and signed by them. The normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of the
Lease or any exhibits or addendums hereto. The person(s) executing this Lease
represent that they are duly authorized to execute it in the capacity
indicated.


 


30.10                 No Partnership. 
Landlord does not, in any way or for any purpose, become a partner,
employer, principal, master, agent or joint venturer of or with Tenant.


 


30.11                 Force Majeure.  If
either party hereto shall be delayed or hindered in or prevented from the
performance of any act required hereunder by reason of acts of God, unavoidable
casualties, the elements, inclement weather preventing work, strikes, lockouts,
labor troubles, inability to procure material, failure of power, restrictive
governmental laws or regulations, riots, insurrection, war or other reason of a
like nature, not the fault of the party delayed in performing work or doing
acts required under this Lease, the period for the performance of any such act
shall be extended for a period equivalent to the period of such delay. Tenant
shall not be excused from any obligations for payment of rent, percentage rent,
additional rent or any other payments required by the terms of this Lease when
same are due, and all such amounts shall be paid when due.


 


30.12                 Financial Statements. 
Tenant shall, within ten (10) days of request of Landlord or Landlord’s
lender, furnish Tenant’s most recent audited financial statements in reasonable
detail and certified as complete and correct by an authorized officer or a
principal of Tenant.


 


30.13                 Determining Charges. 
Landlord and Tenant are knowledgeable and experienced in commercial
transactions and agree that the provisions of this Lease for determining
charges, amounts and additional rental payable by Tenant (including without
limitation, payments under Sections 1, 3 and 5 hereof regarding operating
expenses, taxes, and utilities, etc.) are commercially reasonable and valid,
and as to each such charge or amount, constitute a “method by which the charge
is to be computed” for purposes of Section 93.004 of the Texas Property
Code, as enacted by House Bill 2186, 77th Legislature.


 


30.14                 Attorney’s Fees and Waiver
of Jury Trial.  In the event the Landlord finds it necessary
to retain an attorney in connection with the default by Tenant in any of the
agreements or covenants contained in this Lease, Tenant shall pay reasonable
attorney’s fees to said attorney. In the event of any litigation regarding this
Lease, the losing party shall pay to the prevailing party reasonable attorney’s
fees. Without limitation on the foregoing, Tenant agrees that should Landlord
ever file a forcible detainer action or a forcible entry and detainer action,
Landlord shall be entitled to its reasonable attorney’s fees and costs in such
action, and Landlord shall not be required to give Tenant written notice to
vacate or any other notice in order to recover such attorney’s fees and costs


 


17

















 


as provided in
Section 24.006 of the Texas Property Code, as amended, or similar
statutes. Landlord and Tenant acknowledge the
delay, expense and uncertainty associated with a jury trial involving a complex
commercial lease of this nature, and in recognition of these inherent problems
hereby waive their rights to a jury trial and agree that any litigation
regarding this Lease will be tried without a jury.


 


30.15                 Exhibits.  The
following Exhibits are attached to this Lease and are incorporated herein by
reference:


 


Exhibit “A” = Premises/Site Plan


Exhibit “B” = Legal Description of Project


Exhibit “C” = Sign Criteria


 


30.16                 Additional Provisions.


 


a)                                   Project Condition. 
Tenant’s acceptance of occupancy from Landlord shall constitute
acknowledgment by Tenant that Tenant has inspected the Premises and the Project
of which the Premises are a part and that same are suitable for Tenant’s
intended use thereof as stated in this Lease. Tenant recognizes and agrees that
Landlord is making no warranties, expressed or implied, as to the suitability
of the Premises or the Project for any particular use. Tenant accepts the space
“AS IS” with all faults. Landlord represents that the Premises and the Project
comply with all applicable laws and regulations of pertinent governmental
authorities as of completion of construction and as of the date of Tenant
move-in.


 


b)                                   Flex Provision.  If
after the expiration of thirty-six (36) months of the Initial Term of the Lease
Tenant desires to terminate this Lease, Landlord will allow Tenant to terminate
this Lease with six (6) months’ prior written notice from Tenant to Landlord
provided such notice is received by Landlord during the thirty (30) day period
immediately preceding the six (6) months’ notice period.


 


30.17                 Addenda.  The
following addendums are attached hereto and incorporated herein for all
purposes (check as applicable):


 


ý Construction Addendum


o Guaranty


ý Existing Rules and Regulations


 


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


 


	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  270 SHARYLAND, L.P.

  
	
   

  	
  By:  F-Star Management, L.L.C., General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:
  

  	
  /s/
  Jerry C. Ayoub

  	
   

  
	
   

  	
   

  	
   

  	
  Jerry
  C. Ayoub, President

  	
   

  
	
   

  	
  Address:
  12190 Rojas Drive, El Paso, Texas 79936

  
	
   

  	
  Phone:
  915-860-4500 Fax: 915-860-4504

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  THE WORNICK COMPANY RIGHT AWAY DIVISION

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Keith Frase

  	
   

  
	
   

  	
  Name
  & Title:

  	
  Keith
  Frase, President

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:
  200 N. 1st Street, McAllen, Texas 78501

  
	
   

  	
  Phone
  & Fax: 956-687-9401; 956-631-0857

  
							



 


18

















 


ASSIGNMENT AND ASSUMPTION OF LEASE


 


ASSIGNMENT AND ASSUMPTION OF LEASE (this “Agreement”), entered into as
of June 30, 2004, by and among The Wornick Company Right Away Division,
L.P., a Texas limited partnership (“Assignor”); and The Wornick Company Right
Away Division, L.P., a Delaware limited partnership (“Assignee”). Assignor and
Assignee are referred to collectively herein as the “Parties.”


 


W  I  T  N
E  S  S  E  T  H:


 


WHEREAS, Assignor, as “Tenant,” and 270 Sharyland, L.P., a Texas
limited partnership, as “Landlord,” are parties to the Standard Industrial
Lease dated March 4, 2003 (the “Lease”), presently covering certain
premises (the “Premises”) located at 5700 South International Parkway, Suites B
& C, McAllen, Texas, a copy of which Lease is attached hereto as Exhibit A;
and


 


WHEREAS, Assignor, as “Seller,” and Assignee, as “Buyer,” are parties
to an Assets Purchase and Sale Contract dated December 3, 2003 (the
“Purchase Agreement”), pursuant to which, subject to the terms and conditions
set forth therein, Assignee will purchase substantially all of the assets (and
assume certain of the liabilities) of Assignor, including all of Seller’s
right, title and interest in, under and to the Lease; and


 


WHEREAS, simultaneously with the closing of the transactions
contemplated by the Purchase Agreement, the Parties mutually desire (a) that
Assignor assign all of its right, title and interest in, under and to the Lease
to Assignee, (b) that Assignee accept such assignment from Assignor and assume
all of Assignor’s obligations as Tenant under the Lease, and (c) that Landlord
consent to the assignment contemplated hereby, all on the terms and conditions
hereinafter set forth.


 


NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other valuable consideration, the receipt and adequacy of which are
expressly acknowledged, the Parties agree as follows:


 


1.                                       Effective
Date. For all purposes under this Agreement, the term “Effective Date”
shall mean that date, if any, on which the closing of the transactions
contemplated by the Purchase Agreement is consummated.


 


2.                                       Assignment
and Assumption.


 


(a)                                  Effective
as of the Effective Date, Assignor hereby assigns, transfers and sets over unto
Assignee all of Assignor’s right, title and interest in, under and to (i) the
Lease and (ii) the aggregate security deposit heretofore made by Assignor
pursuant to the Lease. Assignor will deliver possession of the Premises to
Assignee on the Effective Date.


 


(b)                                 Assignee
hereby accepts the foregoing assignment and hereby agrees to perform all of the
terms and conditions of the Lease to be performed on the part of Assignor and
assumes all of the liabilities and obligations of Assignor under the Lease, as
amended hereby, arising or accruing on or after the Effective Date, including,
without limitation, liability for the


 

















 


payment of rent and for the due performance of all the terms, covenants
and conditions of the tenant pursuant to the Lease as amended hereby.


 


3.                                       Consent
to Assignment. Effective as of the Effective Date, Landlord has consented
to the assignment effected hereby.


 


4.                                       Representation
of Assignor. The Assignor hereby represents to the Assignee and agrees as
follows:


 


(a)                                  The
Lease attached hereto as Exhibit A is a true, correct and complete copy of the
Lease, the Lease has not been amended or modified except as set forth above and
the same is the only agreement between the Landlord and the Assignor with
respect to the subject matter thereof.


 


(b)                                 The
Lease is in full force and effect with no defaults (or events which, with the
passage of time, would become defaults) thereunder on the part of either party
in the performance of its obligations under such Lease.


 


(c)                                  The
minimum or base rent and all other rentals and other payments due, owing and
accruing under the Lease have been paid through the due date thereof
immediately preceding the Effective Date.


 


(d)                                 The
current amount of tenant’s expense and tax contribution is $82,249.98 per
month.


 


(e)                                  Landlord
is currently holding a security deposit with respect to the Lease in the amount
of $59,912.65.


 


5.                                       Miscellaneous.


 


(a)                                  Headings.
The section headings used herein are inserted for convenience only and
shall not affect in any way the meaning or interpretation of this Agreement.


 


(b)                                 Governing
law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas.


 


(c)                                  Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which together will constitute one and the
same instrument.


 


2

















 


IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.


 


 


	
  ASSIGNOR

  	
  ASSIGNEE

  	
   

  
	
   

  	
   

  	
   

  
	
  The Wornick Company Right Away

  Division, L.P., a Texas limited

  partnership

  	
  The Wornick Company Right Away Division, L.P., a Delaware limited
  partnership

  	
   

  
	
   

  	
   

  	
   

  
	
  By: Right Away Management Corporation,

  	
  By: Right Away Management Corporation,

  	 

	
  a Texas corporation,

  	
  a Delaware corporation,

  	
   

  	 

	
  its general partner

  	
  its general partner

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  By:

  	
    /s/ Keith E. Frase

  	
   

  	
  By:

  	
  /s/ Robert B. McKeon 

  	
   

  	 

	
   

  	
   

  	
  Keith E. Frase, President

  	
   

  	
   

  	
   

  	
  Robert B. McKeon, President

  	
   

  	 

											



 


3

















 


	
  STATE OF NEW YORK

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY OF NEW YORK

  	
   

  	
  §

  



 


This instrument was acknowledged before me on June 30, 2004, by
Keith E. Frase, President of Right Away Management Corporation, a Texas
corporation, the general partner of The Wornick Company Right Away Division,
L.P., a Texas limited partnership.


 


	
     /s/ Janna Gabriel

  	
   

  
	
  Notary Public

  
	
  Printed Name: 

  	
  Janna Gabriel

  	
   

  
	
  My Commission Expires:

  
	
  9/24/05

  	
   

  
					



 


 


	
  STATE OF NEW YORK

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY OF NEW YORK

  	
   

  	
  §

  



 


This instrument was acknowledged before me on June 30, 2004 by
Robert B. McKeon, President of Right Away Management Corporation, a Delaware
corporation, the general partner of The Wornick Company Right Away Division,
L.P., a Delaware limited partnership.


 


	
     /s/ Elaine Gerace

  	
   

  
	
  Notary Public

  
	
  Printed Name:

  	
    Elaine Gerace

  	
   

  
	
  My Commission Expires:

  
	
  5/18/06

  	
   

  
				



 


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