deepdown_10k-ex1018.htm


    
Exhibit
10.18

     

    
 

    OFFICE
BUILDING LEASE

     

     

     

    NEWQUEST
OFFICE PARK

     

     

     

    BY AND
BETWEEN:

     

     

    DEEP
DOWN,
INC.

    TENANT

     

     

     

    A-K-S-L
49 BELTWAY 8, L.P.

     

    LANDLORD

     

    NOVEMBER
24.
2008

     

     

     

     

     

     

     

     

    
 

    
      
         


      

      
         


        
          

        

      

      
         


      

    


     

    


    TABLE OF
CONTENTS

    


     

    
      	
              SECTION

            	 
      	
              PAGE

            
	
              1.

            	
              LEASED
      PREMISES; COMMON AREA

            	
              1

            
	
              2.

            	
              TERM

            	
              1

            
	
              3.

            	
              SECURITY
      DEPOSIT

            	
              2

            
	
              4.

            	
              RENT
      AND OTHER AMOUNTS PAYABLE BY TENANT

            	
              2

            
	
              5.

            	
              POSSESSION

            	
              7

            
	
              6.

            	
              USE

            	
              7

            
	
              7.

            	
              SERVICE
      TO BE PROVIDED BY LANDLORD

            	
              8

            
	
              8.

            	
              REPAIR
      AND MAINTENANCE

            	
              9

            
	
              9.

            	
              LANDLORD'S
      INSURANCE; FIRE AND CASUALTY

            	
              9

            
	
              10.

            	
              COMPLIANCE
      WITH LAWS AND USAGE

            	
              10

            
	
              11.

            	
              INDEMNITY

            	
              11

            
	
              12.

            	
              WAIVER
      OF LIABILITY

            	
              11

            
	
              13.

            	
              WAIVER
      OF SUBROGATION

            	
              11

            
	
              14.

            	
              TENANTS
      INSURANCE

            	
              11

            
	
              15.

            	
              ADDITIONS
      AND FIXTURES

            	
              12

            
	
              16.

            	
              ASSIGNMENT
      AND SUBLETTING

            	
              12

            
	
              17.

            	
              SUBORDINATION
      AND ATTORNMENT

            	
              14

            
	
              18.

            	
              RULES
      AND REGULATIONS

            	
              14

            
	
              19.

            	
              EMINENT
      DOMAIN

            	
              15

            
	
              20.

            	
              ACCESS
      BY LANDLORD

            	
              13

            
	
              21.

            	
              LANDLORD'S
      LIEN AND SECURITY INTEREST

            	
              15

            
	
              22.

            	
              DEFAULT
      AND REMEDIES

            	
              15

            
	
              23.

            	
              NONWAIVER

            	
              18

            
	
              24.

            	
              HOLDING
      OVER

            	
              18

            
	
              25.

            	
              NOTICE

            	
              18

            
	
              26.

            	
              LANDLORD'S
      MORTGAGEE

            	
              18

            
	
              27.

            	
              QUIET
      ENJOYMENT

            	
              19

            
	
              28,

            	
              TIME
      OF ESSENCE

            	
              19

            
	
              29.

            	
              MECHANIC'S
      LIEN

            	
              19

            
	
              30.

            	
              MEMORANDUM
      OF LEASE

            	
              19

            
	
              31.

            	
              INVALIDITY
      OF PARTICULAR PROVISIONS

            	
              19

            
	
              32.

            	
              WAIVER
      OF BENEFITS

            	
              19

            
	
              33.

            	
              WAIVER
      OF TRIAL BY JURY

            	
              19

            
	
              34.

            	
              MISCELLANEOUS
      TAXES

            	
              19

            
	
              35.

            	
              SUBSTITUTE
      PREMISES

            	
              19

            
	
              36.

            	
              BROKERAGE

            	
              19

            
	
              37.

            	
              NO
      REINSTATEMENT

            	
              20

            
	
              38,

            	
              LIMITATION
      OF IMPLIED WARRANTY

            	
              20

            
	
              39.

            	
              CAPTIONS
      AND BINDING EFFECT

            	
              20

            
	
              40.

            	
              INTEREST

            	
              20

            
	
              41.

            	
              GUARANTY

            	
              20

            
	
              42.

            	
              ATTORNEYS'
      FEES

            	
              20

            
	
              43.

            	
              FORCE
      MAJEURE

            	
              20

            
	
              44.

            	
              USE
      OF LANGUAGE

            	
              20

            
	
              45.

            	
              DAMAGE
      FROM CERTAIN CAUSES

            	
              20

            
	
              46.

            	
              GOVERNING
      LAW

            	
              20

            
	
              47.

            	
              ASBESTOS
      OR OTHER HAZARDOUS SUBSTANCES

            	
              20

            
	
              48.

            	
              AMENDMENT

            	
              21

            
	
              49.

            	
              ENTIRE
      AGREEMENT

            	
              21

            


    

     

    EXHIBIT
"A" - DEPICTION OF LEASED PREMISES: I.EGAL DESCRIPTION

     

    EXHIBIT
"B" - LANDLORD'S WORK LETTER

     

    EXHIBIT
"C" - PYLON SIGN

     

    EXHIBIT
"D" - FORM OF SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT EXHIBIT "E"
- RENEWAL OPTION


    
      
         


      

      
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    OFFICE
BUILDING LEASE

     

    THIS
OFFICE BUILDING LEASE ("Lease') is entered into by and between A-K-S-L 49
BELTWAY 8. L.P., a Texas limited partnership ("Landlord") and DEEP DOWN. INC., a
Nevada corporation ("Tenant").

     

    WITNESSETH:

     

    1.           LEASED PREMISES; COMMON
AREA.

     

    (a)           Landlord
hereby leases to Tenant and Tenant hereby Leases from Landlord approximately
8,856 square feet of Rentable Area on the first ( 1st) floor designated in the
office building within NewQuest Office located at 8827 W. Sam Houston Parkway
N., Houston, Harris County, Texas (the Park "Building"). The area hereby leased
in the Building is hereinafter called "Leased Premises- and is outlined on the
floor plan drawing designated as Exhibit "A" attached hereto and made a part
hereof. and the legal description of the land on which the Building is located
is described in Exhibit "A". The land on which the Building is located. the
Building. and any parking garage or other parking facility for use by tenants of
the Building are collectively referred to herein as the "Project'.

     

    The term
"Rentable Area as used shall mean: On each floor of the Building on which the
entire space rentable to tenants is or will be leased to one tenant, the
Rentable Area for such floor ("Single Tenant Floor”) shall be the entire area
bounded by the exterior or the exterior walls of the Building on such floor less
the area contained within the building stairs, vertical ducts, elevator shafts,
flues, vents. Stacks, and pipe shafts. All the area on any Single Tenant Floor
that is used for elevator lobbies, corridors, special stairways, restrooms,
mechanical rooms, electrical rooms, telephone closets and all vertical
penetrations that are included for the special use by Tenant and columns and
other structural portions of the Building shall he included within the Rentable
Area for such floor.

     

    On each
floor of the Building on which space is or will be leased to more than one
tenant, the Rentable Area attributable to each such lease shall be the total of
( i) the entire area included within the leased premises covered by such lease,
being the area bounded by the exterior of the exterior wall or walls of the
Building bounding such leased premises, the exterior of all walls separating
such leased premises, from any public corridors or other public areas on such
floor, and the centerline of all walls separating such leased premises from
other areas leased or to be leased to other tenants on such floor, and (ii) a
pro rata portion of the area covered by the elevator lobbies, corridors.
restrooms, mechanical rooms, electrical rooms and telephone closets or other
common area situated on such floor.

     

    The
Rentable Area for the entire Building shall be deemed to be 50,710 square feet
for the purposes of this Lease. The Rentable Area contained within the Leased
Premises and the Rentable Area of the Building shall be deemed for all purposes
of the Lease to be the number of square feet set forth above. regardless of
minor variations resulting from construction of the Building and/or tenant
improvements.

     

    (b)           Except
to the extent that Landlord is obligated to construct improvements in the Leased
Premises, as provided on Exhibit "B" attached
hereto and made a part hereof for all purposes. the Leased Premises are
delivered to Tenant and are being leased "AS IS" and "WITH ALL FAULTS." and
Landlord makes no representation or warranty of any kind, expressed or implied,
with respect to the condition of the Leased Premises (including habitability,
fitness or suitability for particular purpose of the Leased Premises, or that
the Building or the improvements to the Leased Premises have been constructed in
a good and workmanlike manner). TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW, LANDLORD HEREBY DISCLAIMS. AND TENANT WAIVES THE  BENEFIT OF, ANY
AND ALL EXPRESS OR IMPLIED WARRANTIES. INCLUDING IMPLIED WARRANTIES OF
HABITABILITY, FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE, OR THAT THE
BUILDING OR THE IMPROVEMENTS IN THE LEASED PREMISES HAVE BEEN CONSTRUCTED IN A
GOOD AND WORKMANLIKE MANNER. TENANT EXPRESSLY ACKNOWLEDGES THAT LANDLORD DID NOT
CONSTRUCT OR APPROVE THE QUALITY OF CONSTRUCTION OF THE BUILDING.

     

    (c)           The
"Common Area" of the Building as it shall exist from time to time shall be that
part of the Building designated by Landlord from time to time for the common use
of all tenants, (including among other facilities, elevators. tunnels, skyways,
halls, lobbies. delivery passages, drinking fountains, public toilets and the
like). Landlord reserves the right to change from time to time the dimensions
and location of the Common Area, Tenant, and its employees and invitees, shall
have the nonexclusive right to use the Common Area constituted from time to
time, such use to be in common with Landlord, other tenants of the Building, and
other persons entitled to use the same, and subject to the rules and regulations
governing use as Landlord may from time to time prescribe. Tenant shall not
solicit business or display merchandise within the Common Area, distribute
handbills therein, or take any action which would interfere with the rights of
other persons to use the Common Area.

     

    (d)           Tenant
shall have the right to use thirty-six (36) unreserved parking spaces on a
non-exclusive basis at no charge during the Term of the Lease. Subject to
availability, Tenant may lease from Landlord reserved parking spaces on an
exclusive basis for Tenant's employees, and Tenant shall pay to Landlord, as
Additional Rent therefor, Thirty-Five Dollars ($35.00) per month for each
reserved parking space.

     

    2.           TERM. The term of this Lease ("Term") shall be
for a period of eighty-nine (89) months, commencing on the date that is five (5)
days following the substantial completion by Landlord of the Leasehold
Improvements pursuant to Exhibit B attached hereto and terminating on the last
day of the eighty-ninth (89th) month thereafter. The estimated date on which
Landlord will deliver the Leasehold Improvements is February 15,
2009.

     

    


    
      
        
        

      

      
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      3.          SECURITY DEPOSIT.
Intentionally Deleted.

       

      4.          RENT AND OTHER AMOUNTS PAYABLE BY
TENANT.

       

      (a)                   As
base rental for the Lease and use of the Leased Premises ("Base Rent"), Tenant
will pay landlord at the Building managers office or other location as Landlord
may direct, without demand and without deduction. abatement or setoff (except as
otherwise expressly provided for in Paragraph 9 or Paragraph 19), the sum of
SIXTEEN AND
50/100 DOLLARS ($16.50) per square foot of Rentable Area of the Leased
Premises per year at the monthly Rent of Twelve Thousand One Hundred
Seventy-Seven and 00/100 Dollars ($12,177.00) for months six (6) through
seventeen (17) of the Term; then SEVENTEEN AND 00/100 DOLLARS ($17.00) per
square foot of Rentable Area of the Leased Premises per year at the monthly Rent
of Twelve Thousand Five Hundred Forty-Six and 00/100 Dollars ($12,546.00) for
months eighteen (18) through twenty-nine (29) of the Term; then SEVENTEEN AND
50/100 DOLLARS ($17.50) per square foot of Rentable Area of the Leased Premises
per year at the monthly Rent of Twelve Thousand Nine Hundred Fifteen and 00/100
Dollars ($12,915.00) for months thirty (30) through forty-one (41) of the Term;
then EIGHTEEN AND 00/100 DOLLARS ($18.00) per square foot of Rentable Area of
the Leased Premises per year at the monthly Rent of Thirteen Thousand Two
Hundred Eight-Four and 00/100 Dollars ($ 13,284.00) for months forty-two(42)
through fifty- three (53) of the Term; then EIGHTEEN AND 50/100 DOLLARS ($18.50)
per square foot of Rentable Area of the Leased Premises per year at the monthly
Rent of Thirteen Thousand Six Hundred Fifty-Three and 00/100 Dollars
($13,653.00) for months fifty-four (54) through sixty-five (65) of the Term;
then NINETEEN AND 00/100 DOLLARS ($19.00) per square foot of Rentable Area of
the Leased Premises per year at the monthly Rent of Fourteen Thousand Twenty-Two
and 00/100 Dollars ($14,022.00) for months sixty-six (66) through seventy-seven
(77) of the Term; then NINETEEN AND 50/100 DOLLARS ($19.50) per square foot of
Rentable Area of the Leased Premises per year at the monthly Rent of Fourteen
Thousand Three Hundred Ninety-One and 00/100 Dollars ($14,391.00) for months
seventy- eight (78) through eighty-nine (89) of the Term. No Base Rent shall be
payable during months one (1) through five (5) of the Term.
Beginning on the sixth month of' the Term, Base Rent shall be paid in advance on
the first day of each calendar month,. for each and every month in the Term, in
lawful money of the United States. If the Term does not commence on the first
day of a calendar month or end on the last day of a calendar month, Tenant will
pay in advance a pro rata part of such sum as Base Rent for such partial month,
which pro rata amount shall be figured on the ratio that the number of days from
the first day of the Term bears to the total number of days in the first
calendar month of the Term.

       

      (b)                   Beginning
on the sixth month of the Term, Tenant agrees to pay as additional rent, as
hereafter provided, an amount equal to Tenant's "Pro Rata Share"
of  ''Operating Expenses" as such quoted terms are herein defined)
adjusted from time to time, pursuant to the provisions hereafter stated. As used
herein, the term "Pro Rata Share" shall mean 17.46%, which is the percentage
obtained by dividing the rentable square feet of area in the Premises, which is
stipulated to be 8,856 rentable square feet by the total number of square feet
of area in the Building, which is stipulated to be 50,710 rentable square feet.
Landlord shall utilize accounting records and procedures conforming to generally
accepted accounting principles, consistently applied, with respect to all
aspects of determining Tenant's Pro Rata Share of the Total Cost (herein
defined). As used herein, the term "Operating Expenses' means all expenses,
costs and disbursements of every kind which Landlord shall pay in connection
with the operation and maintenance of the Project, including, without
limitation, the following:

       

      (i)     
wages, salaries and fees of all personnel or entities engaged in
the operation, maintenance or security of the Project, including taxes,
insurance and benefits relating thereto: provided, however, that if during the
Term such personnel or entities are working on other projects periodically
developed or operated by Landlord as well as working on the Project, their
wages. salaries, fees and related expenses shall be appropriately allocated
among all of such projects and only those portions of such expenses reasonably
allocable to the Project shall be included as Operating Expenses;

       

      (ii)      all
supplies and materials used in the operation, repair, cleaning and maintenance
of the Project;

       

      (iii)     cost of
all maintenance, security and service agreements for the Project and the
equipment thereon, including, without limitation. alarm service, janitorial
service, trash removal service, window cleaning, elevator maintenance,
landscaping, lawn care and irrigation service, and parking area
maintenance;

       

      (iv)     cost of all insurance
relating to the Project for which Landlord is responsible hereunder,
or which
Landlord considers reasonably necessary for the operation of the Project,
including. without limitation, the cost of casualty and liability insurance
applicable to the Project and Landlord's personal property used in connection
therewith, and the cost of business interruption insurance in such amounts as
will reimburse Landlord for all losses of earnings and other income attributable
to such perils as are commonly insured against by prudent
landlords;

       

      (v)    all taxes,
assessments,
and other governmental charges, whether federal, state, county. or
municipal, and whether assessed by taxing districts or authorities presently
taxing the Project or by others, subsequently created or otherwise, and any
other taxes and assessments attributable to the Project or its operation
(including, without limitation, any sales or use taxes), exclusive of any
inheritance, gift, franchise, income, corporate or profit taxes which may be
assessed against
Landlord;

      


       

      
        
          
          

        

        
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          (vi)           cost
of repairs and general maintenance (excluding repairs and general maintenance
paid by proceeds of insurance or paid directly by Tenant or other third parties,
and excluding alterations, other than those standard for the Project, which are
performed for the benefit of tenants on the Project):

           

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

           

          (viii)           all
charges for utilities (including. but not limited to, water, sewer, electricity
and gas) paid by Landlord;

           

          (ix)           rent
or rental value of Landlords leasing and management offices on or near the
Project;

           

          (x)           Landlord's
central accounting costs, together with the costs of all audits required by the
terms of this Lease, and legal and appraisal fees relating to the operation of
the Project; and

           

          (xi)           the
property management fee (not to exceed 4% of total Base Rent per year for the
Building) which is from time to time in effect and which is due to the manager
of the Project.

           

          Notwithstanding
anything to the contrary contained in the Lease, the following items shall be
excluded from the calculation of Total Costs:

           

          (A)                Corporate Overhead.
All costs associated with the operation of the business of the entity which
constitutes "Landlord" or "Landlord's managing agent" (as distinguished from the
costs of the operations of the Building/Project) including, but not limited to,
Landlord's or Landlord's managing agent's general corporate overhead and general
administrative expenses, legal,. risk management, and corporate and/or
partnership accounting and legal costs, mortgages, debt costs or other financing
charges, asset management fees, administrative fees, any costs that would
normally be considered included in a management fee (e.g., property accounting
charges, local area network ("LAN") and wide area network ("WAN") charges,
travel expenses for company meetings or training. etc.), placement/recruiting
fees/costs for employees whether they are assigned to the Building/Project or
not, employee training programs, real estate licenses and other industry
certifications, health/sports club dues, employee parking and transportation
charges, tickets to special events, costs of any business licenses regardless if
such costs are considered a form of Real Estate Tax, costs of defending any
lawsuits, costs of selling, syndicating, financing, mortgaging or hypothecating
any of Landlord's interests in the Building/Project, bad debt loss, rent loss or
any reserves thereof, and costs incurred in connection with any disputes between
Landlord and/or Landlord's management agent and their employees, tenants or
occupants, and providers of goods and services to the
Building/Project;

           

          (B)                Leasing. Any cost
relating to the marketing, solicitation, negotiation and execution of leases of
space in the Building/Project, including without limitation, promotional and
advertising expenses, commissions, finders fees, and referral fees, accounting,
legal and other professional fees and expenses relating to the negotiation and
preparation of any lease, license, sublease or other such document, costs of
design, plans, permits, licenses, inspection, utilities, construction and clean
up of tenant improvements to the Premises or the premises of other tenants or
other occupants, the amount at' any allowances or credits paid to or granted to
tenants or other occupants of any such design or construction, and all other
costs of alterations of space in the Building/Project leased to or occupied by
other tenants or occupants;

           

          (C)                Executive/Unrelated/Off-Site
Salaries. Wages, salaries, fees, fringe benefits, and any other form of
compensation paid to any executive employee of Landlord and/or Landlord's
managing agent above the grade of Building Manager as such term is commonly
understood in the property management industry, provided, however, all wages,
salaries and other compensation otherwise allowed lobe included in Operating
Costs shall also exclude any portion of such costs related to any employee's
time devoted to other efforts unrelated to the maintenance and operation of the
Building/Project;

           

          (D)                Competitively Bid.
Any amount paid by Landlord or Landlord's managing agent to a subsidiary or
affiliate of Landlord or Landlord's managing agent, or to any party as a result
of a non-competitive selection process, for management or other services to the
Building/Project, or for supplies or other materials, to the extent the cost of
such services, supplies, or materials exceeds the cost that would have been paid
had the services, supplies or materials been provided by parties unaffiliated
with the Landlord or Landlord's managing agent on a competitive basis and are
consistent with those incurred by similar buildings in the same metropolitan
area in which the Building/Project is located;

           

          
 

          
            
              
              

            

            
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            (E)             Ground Lease. Any
rental payments and related costs pursuant to any ground lease of land
underlying all or any portion of the Building/Project, and any costs related to
any reciprocal easement agreement, and/or covenant, condition and restriction
agreement;

             

            (F)             Office & Parking
Charges. Any office rental and any parking charges, either actual or nor,
for the Landlord's and/or Landlord's managing agent's management, engineering,
maintenance, security, parking or other vendor personnel:

             

            (G)             Building Defects. Any
costs incurred in connection with the original design, construction, landscaping
and clean-up of the Building/Project or any major changes to same, including but
not limited to, additions or deletions of floors, renovations of the common
areas (except as otherwise expressly permitted under this BOCA), correction
of defects in design and/or construction of the Building/Project including
defective equipment, replacement of major components which have reached the and
of their useful life irrespective of whether the replacement may result in
reducing the Total Costs, and the repair of damage to the Building/Project in
connection with any type of casualty, event of damage or destruction or
condemnation;

             

            (H)            Capital. All costs of
a capital nature, including, but not limited to, capital improvements, capital
repairs, capital equipment, and capital tools, all as determined in accordance
with generally accepted accounting principles, consistently applied. and sound
management practices, except (i)any capital improvement made to the Building
which actually reduces Total Costs, amortized on a straight- line basis,
including interest as the lesser of the interest rate actually paid by Landlord
or 7.0% per annum, over the improvement's useful life in accordance with
generally accepted accounting principles, provided, however, the annual
amortization shall not exceed the annual amount of Total Costs actually saved as
a result of such capital improvement, or (ii) capital expenditures required by
government regulation or law enacted after the Commencement Date, the amount of
such costs to be amortized on a straight-line basis, with interest at the lesser
of the interest rate actually paid by Landlord or 7.0% per annum, over the
asset's useful life in accordance with generally accepted accounting principles,
or (iii) any cost incurred which is not considered annual recurring routine
maintenance but maintains the general appearance of the Building/Project (i.e.,
painting of the common areas, replacement of carpet in common areas. maintenance
of stone/tile) with the amount of all such costs to be amortized on a
straight-line basis over the useful life, with interest at the lesser of the
interest rate actually paid by Landlord or 7.0% per annum;

             

            (I)          
   Other Capital,
Rentals and other related expenses incurred in leasing air conditioning systems,
elevators or other equipment, the cost of which if purchased would be excluded
from Total Costs as a capital cost, excepting from this exclusion equipment not
affixed to the Building/Project which is used in providing janitorial or similar
services and, further excepting from this exclusion such equipment rented or
leased to remedy or ameliorate an emergency condition in the
Building/Project;

             

            (J)        
    Building Codes/ADA. Any cost incurred
in connection with upgrading the Building/Project to comply with insurance
requirements, life safety codes, ordinances, statutes, or other laws as such
laws are in effect prior to the Commencement Date, including without limitation
the Americans With Disabilities Act (or similar laws, statutes, ordinances or
rules imposed by the State, County. City, or other agency where the
Building/Project is located), including penalties or damages incurred as a
result of non-compliance;

             

            (K)        
   Hazardous Material.
Any cost or expense related to monitoring, testing, removal, cleaning,
abatement or remediation of any "hazardous material", including toxic
mold, in or about the Building/Project or real property, and including, without
limitation, hazardous substances in the ground water or soil;

             

            (L)      
      Reimbursements. Any
cost of any service or items sold or provided to tenants or other occupants for
which Landlord or Landlord's managing agent has been or is entitled to be
reimbursed by such tenants or other occupants for such service or has been or is
entitled to be reimbursed by insurance or otherwise compensated by parties other
than tenants of the Building/Project to include replacement of any item covered
by a warranty;

             

            (M)     
     Benefits to Others. Expenses in
connection with services or other benefits which are provided to another tenant
or occupant of the Building/Project and which do not benefit Tenant to include
the repairs and maintenance of the common area of a multi-tenant floor (e.g.
elevator lobby, restrooms and hallways) if Tenant is a full-floor tenant and
such repairs and maintenance are not provided to Tenant;

             

            (N)      
    Other Taxes.
Landlord's gross receipts taxes for the Building/Project, personal and corporate
income taxes, inheritance and estate taxes, other business taxes and
assessments, franchise, gift and transfer taxes, and all other Real Estate Taxes
relating to a period payable or assessed outside the term of the
Lease;

             

            


            
              
                
                

              

              
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              (O)           
Special
Assessment. Special assessments or special taxes initiated as a means of
financing improvements to the Building/Project and the surrounding areas
thereof;

               

              (P)           
Advertising/Promotion/Gifts.
All advertising and promotional costs including any form of entertainment
expenses, dining expenses, any costs relating to tenant or vendor relation
programs including flowers, gifts, luncheons, parties, and other social events
but excluding any cost associated with life safety information
services;

               

              (Q)           
FinesPenalties. Any fines,
costs, lace charges. liquidated damages, penalties, tax penalties or related
interest charges, imposed on Landlord or Landlord's managing agent;

               

              (R)           
Contributions/Dues/Subscriptions.
Any costs, fees, dues, contributions or similar expenses for political,
charitable, industry association or similar organizations, as well as the cost
of any newspaper, magazine, trade or other subscriptions. excepting the
Building's/Project's annual membership dues in the local Building Owners and
Managers Association ("BOMA").

               

              (S)           
Art. Costs, other than those
incurred in ordinary maintenance and repair, for sculptures. paintings,
fountains or other objects of art or the display of such items;

               

              (T-)           
Concessionaires. Any
compensation or benefits paid to or provided to clerks, attendants or other
persons in commercial concessions operated by or on behalf of the
Landlord;

               

              (U)           
Insurance. Costs
incurred by Landlord for the repair of damage to the Building/Project caused by
fire, windstorm, earthquake or other casualty, condemnation or eminent domain to
include terrorism or environmental other than deductibles not to exceed
(i) $15,000 to Tenant per occurrence for windstorm, and (ii) Tenant's Pro
Rata Share of $10,000 per occurrence for other casualties;

               

              (V)            
Other
Insurance. Any increase in the cost of Landlord's insurance caused by a
specific use of another tenant or by Landlord;

               

              (W)           
Reserves. Any
reserves of any kind;

               

              (X)           
Telecommunications.
Any cost incurred in connection with modifying, upgrading, replacing, repairing
or maintaining any component of the Building's telecommunication systems which
is not used by Tenant; and

               

              (Z)           
Parking. Any
maintenance, repair or replacement of the canopies
installed in the parking area for the exclusive use of certain tenants on a
reserved basis.

               

              In
determining the amount of Operating Expenses for any calendar year (i) if less
than 95% of the Building shall have been occupied by tenants and fully used by
them, at any time during the year, Landlord shall make an appropriate adjustment
in accordance with industry standards and generally accepted accounting
principles, consistently applied, to the Building/Project and Operating Expenses
shall be increased to an amount equal to the like operating expense which would
normally be expected to be incurred had such occupancy been 95% and had such
full utilization been made during the entire period, or (ii) if the Landlord is
not furnishing any particular work or service (the cost of which if' performed
by the Landlord would constitute an Operating Expense) to tenants who have
undertaken to perform such work or service in lieu of the performance thereof by
the Landlord, Operating Expenses shall he deemed for the purposes of this
Paragraph to he increased by an amount equal to the additional Operating Expense
which would have reasonably been incurred during such period by the Landlord if
it had at its own expense furnished such work or service. Tenant shall not pay
Total Costs that exceed cost actually paid by Landlord.

               

              (C)           
Other Adjustments.

               

              (i)   Net Expenses. Operating
Expenses. Tax (herein defined) and Insurance Charges (herein defined) shall be
"net" only and shall therefore be reduced by all cash discounts, trade
discounts, quantity discounts, rebates, refunds, credits, or other amounts
received by Landlord or Landlord's managing agent, including any such related
amounts from tenants of the Building/Project, for its purchase of or provision
of any goods, utilities, or services:

               

              (ii)  Partial Year.
Building/Project Operating Expenses that cover a period
of  time not entirely within the Term of the Lease shall be prorated
based on the actual number of days in the year:

               

              (iii)   Vacancy Credit.
Except in the event, Operating Expenses are to be "grossed up”, in the event
Tenant ceases to occupy (but still leases) the Premises or any portion thereof,
Tenant shall receive a credit against rent (for example, a credit to either Base
Rent or Tenant's Pro Rata Share of Operating Costs) equal to Tenant's Pro Rata
Share of the reduction in the cost of utilities not incurred as a result of such
vacancy;

               

              (iv)   Duplicate Charges. Landlord
shall not (i) profit by including items in Operating Costs and/or Real Estate
Taxes that are otherwise also charged separately to others, or (ii) collect
Operating Costs and/or Real Estate Taxes from Tenant and all other
tenants/occupants in the Building/Project in an amount in excess of what
Landlord actually incurred for the items included in Operating
Costs:

              


               

              
                
                  
                  

                

                
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      (d)      
Tenant further agrees to pay as part of "Additional Rent", an amount equal to
Tenant's Pro Rata Share of the "Tax" and "Insurance Charges" (as hereafter
defined) adjusted from time to time, as hereafter provided:

       

      (i)          The
phrases "Tax" and "Taxes", as used herein, shall mean all taxes, assessments,
impositions, levies, charges, and other sums (whether now existing
or hereafter arising, whether foreseen or unforeseen and whether made under the
present system of real estate taxation or some other system), levied, assessed.
charged or imposed by any governmental authority or other taxing authority
(including, but not by way of limitation, municipal utility district taxing
authorities) or which accrue upon the Project for any Calendar Year (or portion
thereof) during the Term, including, without  limitation, any future
tax upon rents received by Landlord (to he distinguished from income, franchise
or profit taxes), as well as any costs incurred by Landlord contesting any such
Taxes or obtaining consultants relative to any tax assessments, together with
all penalties, interest and other charges (with respect to taxes) payable by
reason of any delay and/or failure or refusal of Tenant to make timely payment
as required under this Lease. "Taxes" shall not include any of Landlord's
income, franchise or profit, estate, inheritance or gift taxes.

       

      (ii)          The
phrase "Insurance Charges" shall mean the total annual insurance premiums which
accrue on all fire and extended coverage insurance, boiler insurance, public
liability and properly damage insurance, rent insurance, and any other insurance
which, from time to time, may, at Landlord's election, be carried by Landlord
with respect to the Project during any Calendar Year (or portion thereof) during
the Term; provided, however, that in the event, during any such Calendar Year,
all or any part of such coverage is written under a blanket policy or other
policy form whereby Landlord is unable to determine a specific insurance premium
charge applicable to the Project (or to determine an equitable manner in which
to prorate such charge among the properties covered by such policy), then in
such event, the amount considered to be the Insurance Charge with respect to
such policy shall be that amount, as
reasonably determined by Landlord. which would have been the annual Insurance
Charge payable under the rates in effect (at approximately the same time that
such policy was issued) for a separate Texas standard form insurance policy
generally providing such type and amount of coverage (without any deductible
amount) with respect to the Project (considering the type of construction and
other relevant matters), even though Landlord carried such insurance, or a
portion thereof, under such blanket coverage. Landlord may, from time to time,
make a corresponding calculation as such policy is renewed or replaced. The
phrase "Insurance Charges" shall also include the amount of any deductibles
payable with respect to insurance carried by Landlord with respect to the
Project.

       

      (d)          Tenant
shall pay to Landlord monthly estimated Operating Expenses, and estimated Tax
and Insurance Charges (all of which are hereafter referred to as the "Monthly
Estimated Costs"), as determined by Landlord from time to time, which shall be
due and payable on or before the first day of each month during the Term hereof.
Within one hundred twenty (120) days after the end of each Calendar Year
occurring during the Term (and subsequent to the expiration or other termination
of this Lease, if such occurs on a date other than the last day of the Calendar
Year), Landlord will give Tenant notice of the total amount paid by Tenant for
the applicable Calendar Year together with the actual amount of (i) Operating
Expenses and (ii) Tax and Insurance Charges for such Calendar Year (collectively
referred to in this section as the "Total Costs"). It the actual amount of
Tenant's Pro Rata Share the Total Costs with respect to such period exceeds the
aggregate amount previously paid by Tenant with respect thereto during such
period, Tenant shall pay to Landlord the deficiency within thirty (30) days
following notice from Landlord: if, however, the aggregate amount previously
paid by Tenant with respect thereto exceeds Tenant's Pro Rata Share of the Total
Costs for such period, then, at Landlord's election, such excess (net of any
amounts then owing by Tenant  to Landlord) shall be credited against
the next installment of any such cost due hereunder by Tenant, or Landlord may
refund such net excess to Tenant within thirty (30)days following delivery of
Landlord's notice. Periodically, during the Term of this Lease, Tenant shall pay
all taxes assessed against Tenant's personal property and leasehold
improvements. Notwithstanding anything contained in this Article 4 to the
contrary, annual increases in the amount of Tenant's Additional Rent (Tenant's
Pro Rata Share of Operating Expenses, Taxes and insurance) shall be capped at
ten percent (10%), calculated on a cumulative basis, solely with respect to
Controllable Expenses following the first full calendar year of the Project.
“Controllable Expenses” specifically does not include ( i) Insurance, (ii)
Taxes, (iii) utilities, and (iv) any change in Additional Rent which is a result
of an increase in minimum wage, labor unions, or any change mandated by
governmental regulation.

       

      (e)          The
term "Calendar Year as used herein, means each calendar year and partial
calendar year for the full Term hereof. The First (1st) Calendar Year means the
period which begins with the Commencement  Date and which ends on the
following 31st day of December. Each following Calendar Year period shall be for
a term of a full twelve (12) months beginning with the next following January
1st and shall continue for each and every twelve (12) month period thereafter;
however the last Calendar Year shall be for less than twelve (12) months if the
Lease Term ends on a date other than December 31st.

       

      (f)         For
all purposes tinder this Lease, "Rent" shall mean the Base Rent and Additional
Rent. Tenant acknowledges that late payment by Tenant to Landlord of all Rent or
other charges due from Tenant under this Lease will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of such costs being
extremely difficult and impractical to fix. Such costs include, without
limitation, processing accounting charges, and late charges that may be imposed
on landlord by the terms of any encumbrance and note secured by any encumbrance
covering the demised premises. Therefore, if any installment of Rent or other
charges due from Tenant under this Lease is not received within ten (10) days of
the date when due, Tenant shall pay to Landlord an additional sum of ten percent
(10%) of the overdue Rent or earlier charges due from Tenant under this Lease as
a late charge. Further, the parties agree that this late charge represents a
fair and reasonable estimate of the costs that Landlord will incur by reason of
late payments by Tenant, however, Landlord's acceptance of any late charge shall
not constitute a waiver of Tenant's default with respect to the overdue amount,
nor prevent Landlord from exercising any of the other rights and remedies
available to Landlord.

       

       

       

      
        
          
          

        

        
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        (g)    Tenant, at
Tenant's sole cost and expense, shall have the right, to be exercised by written
notice given to Landlord within ninety (90) days after receipt of aforesaid
statement showing Total Costs for the previous calendar year, to audit, at the
place where Landlord maintains its books and records, Landlord's books and
records pertaining only to such Total Costs for such previous calendar year,
provided (A) such audit commences within thirty (30) days after Tenant's
notice to Landlord and thereafter proceeds regularly and continuously to
conclusion, (B) that Tenant or Tenant's employee is present at all times
during the audit, (C) such audit does not unreasonably interfere with the
conduct of Landlord's business, (D) such audit is performed by a national or
regional auditing Finn which is commonly known to be reputable, and (E) said
auditing firm signs a nondisclosure agreement in favor of Landlord, acceptable
to Landlord in all respects, agreeing that information derived from such audit
shall not be used directly or indirectly in connection with soliciting
additional auditing business from other existing, previous or future tenants in
the Building, Landlord agrees to cooperate in good faith with Tenant in the
conduct of any such audit. Notwithstanding anything to the contrary set forth in
this Paragraph, however, in no event shall Tenant ever be permitted to audit or
cause to be audited Landlord's records concerning Total Costs through, or with
the assistance of auditors or others whose compensation is contingent upon, or
the amount of whose compensation is affected by, the outcome of such audit, in
whole or in part, or on any payment or reimbursement by Landlord to Tenant in
connection with such audit, or which is otherwise done in whole or in part on
any basis other than reasonable hourly charges for the hours expended in the
performance of such audit, and reimbursement of reasonable out-of-pocket
expenses incurred by such auditors in connection with such audit. In the event
that the audit determines that the amount charged to Tenant exceeds the correct
amount by 5% or more. Landlord will promptly refund the Tenant all amounts
overpaid and Landlord shall pay for the reasonable cost of the
audit.

         

        5.    POSSESSION. If Landlord is unable to
deliver possession of the Leased Premises on the date of the commencement of the
Term because the Leased Premises are not ready for occupancy, Landlord shall not
be subject to any liability for the failure to deliver possession on said date.
Under such circumstances, unless the delay is the fault of Tenant, the Rent
shall not commence until Leased Premises are ready for occupancy by Tenant, and
no such failure to deliver possession on the date of commencement of the Term
shall in any way affect the validity of this Lease or the obligations of Tenant
hereunder, nor shall same be construed in any way to extend the Term, the delay
in the accrual of rent described in the foregoing sentence constitutes full
settlement of all claims that Tenant might otherwise have by reason of the
Leased Premises not being ready for occupancy on the commencement of the
Term. If, at Tenant's request, Landlord shall make the Leased Premises
available to Tenant prior to the date of commencement of the Term for the
purposes of decorating. constructing, furnishing, and equipping he Leased
Premises, the use of the Leased Premises for such work shall not create a
landlord-tenant relationship between the parties nor constitute occupancy of the
Leased Premises within the meaning of the next sentence, but the provisions of
Paragraph 9, 11, 12,13 and 14 of the Lease shall apply from the date the Leased
Premises are made available to the Tenant. If with the consent of Landlord,
Tenant shall enter into occupancy on the Leased Premises to do business therein
prior to the date of commencement of the Term, the provisions of the Lease shall
apply and rent shall accrue and he payable from the date of occupancy. If
pursuant to the terms of this Paragraph 3, the Term shall commence on any data
other than that commencement date noted in Paragraph 2, Tenant agrees to enter
into a letter amendment to this Lease identifying the new "Term" hereof.
Notwithstanding anything to the contrary contained in this Lease upon execution
of this Lease by Landlord and Tenant. Landlord and Tenant hereby agree that they
are bound by the terms of this Lease from and after the date both parties
executed this Lease.

         

        6.    
USE.

         

        (a)          Tenant
shall use the Leased Premises solely for the purpose of general office space.
Tenant shall use the Leased Premises for no other purpose without the prior
written consent of Landlord. In addition, Tenant covenants and agrees to operate
its approved business in a first-class, reputable and efficient manner,
throughout the Term °runs Lease in or on the Leased Premises.

         

        (b)          Tenant
shall be entitled to place, at Tenant's sole cost and expense. a sin panel on
the pylon sign to be constructed for the Building, which pylon sign shall be
constructed by Landlord at its sole cost and expense within thirty (30) days
following the Commencement Date. The location and appearance of such sign and
panel are shown on the attached Exhibit "C". Landlord shall
furnish and install building standard graphics including Tenant's name and/or
logo on all Building directories and at Tenant's entry door, at Landlord's
cost.

         

        (c)          The
Project will be at all times under the control, management and operation of
Landlord: provided. However, nothing in this subparagraph (c) shall create
liability on the part of Landlord, if such liability arises out of any
obligation undertaken by Tenant under this Lease. Landlord may from time to time
(i) alter or redecorate the Project (including any Common Area) or construct
additional facilities adjoining or approximate to the Project: (ii)
close, temporarily, doors, entryways, public spaces and corridors and
interrupt or suspend, temporarily, Building services and facilities in order to
perform any redecorating or alteration or in order to prevent the public from
acquiring prescriptive rights in any Common Area; (iii) change the name or
street address of the Building: and (iv) install, maintain or change a sign or
signs on the exterior or interior of the Building.

         

        (d)          Landlord
will use commercially reasonable efforts not to disrupt Tenant's operations in
the Leased Premises during the proper exercise of Landlord's rights under
Paragraph 6(c) or Paragraph 20 hereof, but it is not required to incur any
unreasonable expenses in order to minimize the disruption. Tenant hereby waives
all claims for damages. injuries or interference with Tenant's business, loss of
occupancy, or quiet enjoyment and for claims under any other laws resulting from
the proper exercise by Landlord of any right under Paragraph 6(c) or Paragraph
20 hereof. No proper exercise by Landlord of any right under Paragraph 6(c) or
Paragraph 20 hereof constitutes actual or constructive eviction or breach of any
expressed or implied covenant for quiet enjoyment.

        


         

        
          
            
            

          

          
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      (e)    If, at any
time during the Term, Tenant vacates, abandons, or ceases its operation at the
Lease Premises for more than ninety (90) days (except as a result of casualty or
condemnation). Landlord shall provide written notice to Tenant thereof. and if
Tenant shall not have recommenced its occupancy for operation at the Premises
within thirty (30) days following receipt of such notice, then Landlord shall
have the right to immediately recapture the Leased Premises and in such event,
the Lease Term shall expire and end on the date stated in Landlord's notice (the
"Recapture Notice"), in which event neither Landlord nor Tenant shall have any
further liability hereunder, except for those obligations which expressly
survive the expiration or earlier termination of this Lease.

       

      7.    SERVICE TO BE PROVIDED BY
LANDLORD.

       

      (a)    Subject to
the Building rules and regulations hereinafter set forth, Landlord shall furnish
Tenant, at Landlord's expense, except as provided in Paragraph 4 above, the
following services while Tenant is occupying the Leased Premises during the
Term:

       

      (i)          During
normal business hours (7:00 a.m. - 7:00 p.m.) on Mondays through Fridays, and,
Saturdays (9:00. a.m. - 12:00 p.m.) air-conditioning and beating in season, at
such temperatures and in such amounts as are considered by Landlord to be
standard. but such service outside normal business hours and on Sundays and
holidays shall be furnished only at Landlord's discretion and in any event only
upon forty-eight (48) hours prior written request by Tenant, who shall bear the
standard charges of Landlord therefor, which shall never be less than the cost
thereof

       

      (ii)          Hot
and cold water at those points of supply provided for general use.

       

      (iii)          Standard
building janitor service in and about the Building and the Leased Premises, five
(5) days per week, and periodic window washing; however, Tenant shall pay the
additional costs attributable to the cleaning of improvements within the Leased
Premises other titan building standard improvements.

       

      (iv)          Elevators
for ingress to and egress from the Building during normal business hours and
other such periods as are considered by Landlord to be standard.

       

      (v)          Proper
building standard facilities to furnish sufficient electrical power for standard
lighting, typewriters, dictating equipment, calculating machines and other
machines of similar low electrical consumption, but not including electricity
required for special lighting in excess of building standard, or which, in
Landlord's reasonable judgment, exceeds the capacity of existing feeders,
conductors, risers, or wiring in or to the Leased Premises or Building, and not
including electricity for any other item of electrical equipment which singly
consumes more than 0.25 kilowatts per hour at rated capacity, or voltage other
than 120 volts or single phase. Tenant shall pay to landlord, monthly as billed,
such charges as may be separately metered or as Landlord's engineer may compute
for any electrical service furnished to Tenant in excess of that stated
above.

       

      (vi)          Replacement
of fluorescent lamps in building standard ceiling mounted fixtures installed by
Landlord and incandescent bulb replacement in public areas.

       

      (b)    No
interruption, moratorium or malfunction of any services, or failure of any
machinery, equipment or systems, or components thereof, to operate, or
malfunction in the operation thereof, for any cause whatsoever shall constitute
an eviction or disturbance of Tenant's use and possession of the Leased Premises
or Project or a breach by Landlord of any of its obligations hereunder or render
Landlord liable for damages or entitle Tenant to be relieved from any of its
obligations hereunder (including the obligation to pay Rent) or grant Tenant any
right of setoff or recoupment. In the event of any such interruption, however,
Landlord shall use reasonable diligence to restore such service in any
circumstances in which such restoration is within the reasonable control of
Landlord and the interruption was not caused by Tenant's fault or the fault of
Tenant's employees, agents, contractors, invitees, or licensees. Notwithstanding
anything contained herein, Landlord shall use reasonable efforts to restore any
service required of it that becomes unavailable: however, such unavailability
shall not render Landlord liable for any damages caused thereby, be a
constructive eviction of Tenant, constitute a breach of any implied warranty,
or, except as provided in the next sentence, entitle Tenant to any abatement of
Tenant's obligations hereunder. If, however, Tenant is prevented from using the
Premises for more than live (5) consecutive business days because of the
unavailability of any such service and such service is within Landlord's
control, then Tenant shall, as its exclusive remedy be entitled to a reasonable
abatement of Base Rent and Additional Rent for each consecutive day (after such
5-day period) that Tenant is so prevented from using the Premises.

       

      (c)    Should Tenant
desire any additional services beyond those described in Subparagraph (a) of
this Paragraph 7 or rendition of any such services outside the normal times of
Landlord for providing such services. Landlord may (at Landlord's option), upon
reasonable advance notice from Tenant to Landlord, furnish such services, and
Tenant agrees to pay Landlord such charges as may be agreed on between Landlord
and Tenant, but in no event at a charge less than Landlord's actual cost plus
reasonable overhead for the additional services provided. By way of illustration
and not limitation, special equipment requiring abnormal use of water or
electricity used as a power source for data processing machines, including, air
conditioning costs therefor, large business machines and similar equipment of
high electrical consumption characteristics shall not constitute standard water
consumption or electrical service, as the case may be, and the costs thereat'
shall he paid by Tenant. Tenant hereby agrees to cause, at its sole expense,
separate meters for measuring units of' consumption to be installed within the
Leased Premises, if the services consumed by Tenant are reasonably determined by
Landlord to be beyond or more than those services described in Subparagraph (a)
of this Paragraph 7 to be provided by Landlord.

      


      
        
          
          

        

        
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      (d)          Tenant
shall pay to the Landlord the amount provided for in this Paragraph 7(c) for
additional services within five (5) business days after receipt of an
invoice therefor from Landlord.

       

      (e)          Tenant
shall also pay for, before delinquencies, all telephone charges and the cost or
charge for all other materials and services not expressly the obligation of
Landlord that are Furnished to or used on, in or about the Leased Premises by
other parties during the Term of this Lease.

       

      8.    REPAIR AND
MAINTENANCE.

       

      (a)          Landlord
shall, subject to the casualty provisions of Paragraph 9, maintain the (i)
Common Area and service areas of the Project, ( ii) roof, foundation,
exterior windows and load-bearing items of the Building; (iii) exterior (located
outside the Leased Premises) surfaces of walls; (iv) plumbing, pipes and
conduits located in the Common Area or service areas of the Project; and (v) the
Buildings central heating, ventilation and air conditioning,
electrical, mechanical and plumbing systems, landlord is not required to
make any repair in connection with or resulting from (1) any alteration or
modification to the Leased Premises or to Building equipment performed by, for
or because of Tenant or to special equipment or systems, installed by, for or
because of Tenant, (2) the installation, use or operation of Tenant's property,
fixtures, and equipment, (3) the moving of Tenant's property in or out of
the Building, or in and about the Leased Premises, (4) Tenant's use or occupancy
of the Leased Premises in violation of Paragraph 6 or in a manner set out in
this Lease (e.g. subsequent installation of special use rooms), (5) the acts or
omissions of Tenant and Tenant's employees, agents, invitees, subtenants,
licensees or contractors, or (6) fire or other casualty, except as provided in
Paragraph 9. Depending on the nature of repairs undertaken by Landlord, the cost
of the repairs will be borne solely by Landlord (if required to be under the
terms of the Lease) or will be reimbursed to Landlord either by a particular
tenant or tenants or by all tenants as part of the Operating
Expenses.

       

      (b)          Except
for janitorial services provided by Landlord and landlord's obligations under
Paragraph I(b) and 8(a), and subject to the terms of Paragraph 15. Tenant
shall maintain the Leased Premises, including all fixtures installed by Tenant,
in good and tenantable condition and repair and shall promptly make all
reasonably necessary non­structural repairs and replacements thereto except
those caused by fire or other casualty covered by insurance on the Building
under policies naming Landlord as the insured. all at Tenant's sole expense,
under the supervision and with the reasonable approval of Landlord. Such repairs
and replacements shall be in quality and class equal to the original work.
Without diminishing such obligations of Tenant, if Tenant fails to make such
repairs or replacements within fifteen (15) days after the occurrence of the
damage or injury, Landlord may at its option (after prior written notice to
Tenant) make such repair and Tenant shall pay Landlord for the reasonable cost
thereof upon demand, plus interest thereon, as provided in this Lease, from
demand until payment. In addition, Tenant shall pay the cost of repair and
replacement due to damage or injury done to the Building or any part thereof or
any part of the Project, by Tenant or Tenant's agents, employees, contractors,
licensees or invitees. Such amount shall be paid by Tenant to Landlord within
five (5) business days, after written demand, plus interest thereon, as provided
in this Lease, from demand until payment. Upon termination of this Lease, Tenant
will surrender the Leased Premises to Landlord in the same condition in which
they existed at the commencement of the Lease or as subsequently Unproved by
Landlord or Tenant, excepting only ordinary wear and tear and damage arising
from any cause required hereunder to be repaired at Landlord's
expense.

       

      (c)          If
there now is or shall be installed in the Building a "sprinkler system" and such
systems or any of its appliances shall be damaged or injured or not in
perfect working order by reason of any act or omission of Tenant, Tenant's
agents, servants, employees, contractors, licensees or invitees, Tenant shall
forthwith restore same to good working condition at its own expense under the
supervision and with the approval of Landlord; and if any
bureau, department or official oldie state or city government require or
recommend that any changes, modifications or alterations be made or that
sprinkler heads and equipment be supplied by reason of Tenant's business, or the
location of partitions, trade Fixtures or other contents of the Leased
Premises. Tenant shall, at Tenant's expense, promptly make and supply such
changes, or modifications, alterations, additional sprinkler heads or other
equipment.

       

      (d)          Tenant
acknowledges that after it has inspected the Leased Premises and Tenant's taking
possession of the Leased Premises shall be conclusive evidence as against
the Tenant that the Leased Premises were in good order and satisfactory
condition when the Tenant took possession. No promise of the Landlord to alter,
remodel, repair or improve the Leased Premises or the Building and no
representation respecting the condition of the Leased Premises or the Building
have been made by Landlord to Tenant, other than as may be contained herein or
in a separate Work Letter agreement signed by Landlord and, Tenant.

       

      9.    LANDLORD'S INSURANCE; FIRE AND
CASUALTY.

       

      (a)    Landlord will
maintain fire and extended coverage insurance on the Building in an amount not
less than 80%
(or such greater percentage as necessary to comply with co-insurance
requirements of the policy) of the "replacement cost" thereof, as defined in a
Replacement Cost Endorsement to be attached thereto. Said insurance is for
Landlord's sole benefit and is under its sole control.

       

       

      
        
          
          

        

        
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        (b)     
      If at any time during the Term, the Leased
Premises or any portion of the Building or Common Area shall be damaged or
destroyed by tire or other casualty, then Landlord shall have the election
either to terminate this Lease or to repair and reconstruct the Common Area, the
Leased Premises and/or the Building to substantially the same condition in which
they existed immediately prior to such damage or destruction, except that
Landlord shall not be required to repair, replace or reconstruct any personal
property, furniture, trade fixtures, tenants improvements, alterations or
additions made by or for Tenant, or office equipment which is located in the
Leased Premises and removable or insurable by Tenant under the provisions of
this Lease, and except that Landlord is not required in any event to expend more
than the amount of insurance proceeds actually received by Landlord as a result
of fire or other casualty.

         

        (c)          
 In any of the aforesaid circumstances, Rent shall abate proportionately
during the period and to the extent that the Leased Premises or portion
thereof are untenantable or unfit for use by Tenant in the ordinary conduct of
its business, if Landlord has elected to repair and restore the Leased Premises
to the extent staled above, this Lease shall continue in full force and effect
and such repairs will be made within a reasonable time thereafter, subject to
delays arising from shortages of labor or materials, acts of God, war or other
conditions beyond Landlord's reasonable control. Within sixty (60) days
following any casualty hereunder, Landlord notify Tenant in writing of the time
required to repairs such casualty, as estimated by Landlord. Should (i)
Landlord, in Landlord's reasonable judgment, estimate that reasonable repairs
cannot be completed within six (6) months after the casualty, or (ii) Landlord
estimate that the reasonable repairs will be completed within six (6) months
after the casualty, but Landlord does not in fact complete such repairs within
such six (6) month period, then Tenant may terminate this Lease by written
notice within (x) thirty (30) days after receipt of Landlord's notice with
respect to clause (i) of this sentence, or (y) thirty (30) days following the
expiration of such six (6) month period with respect to clause (ii) of this
sentence. In the event that this Lease is terminated as herein permitted,
Landlord shall refund to Tenant any prepaid Rent (unaccrued as of the date of
damage or destruction) less any sum then owing Landlord by Tenant. If Landlord
has elected to repair and reconstruct the Leased Premises to the extent stated
above, then, at Landlord's election, the Term may be extended by a period of
time equal to the period of such repair and reconstruction.

         

        (d)      
    Notwithstanding the provisions of Subparagraphs (b) and
(c) of this Paragraph 9, if the Leased Premises or any other portion of the
Building is damaged by fire or other casualty resulting from the fault or
negligence of Tenant or any of Tenant's agents, employees, contractors,
licensees or invitees, the Rent hereunder shall not be diminished during repair
of such damage, and Tenant shall be liable to Landlord for the reasonable cost
and expense of the repair and restoration of the Leased Premises or the Building
caused thereby to the extent such reasonable cost and expenses are not covered
by insurance proceeds.

         

        (e)      
     Notwithstanding anything herein to the contrary,
if Landlords Mortgagee requires that the insurance proceeds be applied to
indebtedness owed to such mortgagee. Landlord may terminate this Lease by
delivering written notice of termination to Tenant within three (3) days after
the requirement is made by Landlord's Mortgagee, whereupon all further rights
and obligations of each party hereunder shall cease and terminate.

         

        (f)            
If the Leased Premises, or any part thereof, are damaged or destroyed by a
casualty other than a peril covered by the insurance to be provided by landlord
under Subparagraph 9(a), or if any other improvements situated on the Leased
Premises are damaged or destroyed, then Tenant shall at its sole cost and
expense proceed with reasonable diligence to rebuild and repair the damaged
improvements to substantially the condition in which they existed before the
damage or destruction, subject to Landlord's approval of The plans and
specifications for the rebuilding and repairing.

         

        10.    COMPLIANCE WITH LAWS AND USAGE. Tenant, at its own
expense, will (i) promptly comply with all federal, state, municipal and other
laws,
ordinances,
rules and regulations applicable to the Leased Premises and the business
conducted therein by Tenant: (ii) not engage in any activity which would cause
Landlords fire and extended
coverage insurance to be canceled or the rate therefor to be increased (or, at
Landlord's option, will pay any such increase); (iii)
not commit any act which is a nuisance, disturbance or
annoyance to Landlord or to other tenants, or which might,
in the exclusive reasonable judgment of Landlord, waste in the
Leased Premises or Building; and (v) not paint, erect or display
any sign,
advertisement, placard or lettering which is visible on the corridors or lobby
of the Building or from the exterior of the Building without Landlords prior
written approval. The parties acknowledge that the Americans With Disabilities
Act of 1990 (42 U.S.C. ss. 12101 et seq.)
and regulations and guidelines promulgated thereunder, as all of the
same may be amended and supplemented from time to time (collectively referred to
herein as the "ADA") establish requirements for business operations, accessibility and
barrier removal, and that such requirements may or may not apply to the Leased
Premises and the
Building depending on, among other things; (1) whether
Tenant's business is deemed a "public accommodation" or "commercial
facility",
(2) whether such requirements are "readily achievable", and (3) whether a given
alteration affects a "primary function area" or triggers "path of travel"
requirements. The parties hereby agree that; (a) Landlord
shall be responsible for ADA Title III compliance in the Common Areas of
the Building, except as provided below, (b) Tenant shall be responsible for ADA
Title III compliance in the Leased Premises, including any leasehold
improvements or other work to be performed in the Leased Premises under or in
connection with this Lease, and (c) Landlord may perform, or require that Tenant
perform, and Tenant shall be responsible for the cost of, ADA Title III "path of
travel" requirements triggered by alterations in the Leased Premises. Tenant
shall be solely responsible for requirements under Title I of the ADA relating
to Tenant's employees. The parties hereto specifically agree that no provision
of this
Lease or any exhibit attached hereto shall be construed in any manner as to
violate the ADA, and neither party has any intent, and disclaims any intent, to
violate the ADA, and no activities of the Landlord or Tenant otherwise
prohibited by this Lease or any exhibit hereto shall be prohibited to the extent
such prohibition is construed as a violation of the ADA.

         

         

        
          
            
            

          

          
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      11.          INDEMNITY. Landlord shall not
be liable for and Tenant agrees to indemnify and save harmless Landlord and its
affiliates and their agents, servants, directors, officers and employees
(collectively "Indemnitees") from and against any and all liabilities, damages,
claims, suits, costs (including reasonable costs of suit, reasonable attorneys'
fees and reasonable costs of investigation) and actions of any kind arising or
alleged by the injured party or arise by reason of injury to or death of any
person or damage to or loss of property occurring on, in or about the Leased
Premises or by reason of any other claim whatsoever of any person or party
occasioned or alleged to be occasioned by any act or omission on the part of
Tenant or any invitee, patron, licensee, employee, director, officer, agent,
servant, owner, contractor, subcontractor, or tenant of Tenant, or on the part
of any person entering the Building or Leased Premises under the expressed or
implied invitation of Tenant, or by any breach, violation or nonperformance of
any covenant of Tenant, or by any breach, violation or nonperformance of any
covenant of Tenant under this Lease, whether such liability, claims, suits,
costs, injuries, deaths, or damages arise from or are attributed to the
concurrent negligence of any Indemnitee, if any action or proceeding shall be
brought by or against any Indemnitee in connection with any such liability or
claim, Tenant, on notice from the Indemnitee shall defend such action or
proceeding, at Tenant's expense, by or through attorneys reasonably satisfactory
to the Indemnitee. The provisions of this Paragraph shall apply to all
activities of Tenant with respect to Leased Premises or the Project, occurring
after execution of this Lease, Tenant's obligations under this Paragraph shall
not be limited to the limits or coverage of insurance maintained or required to
be maintained by Tenant under this Lease.

       

      12.          WAIVER OF LIABILITY. No
Indemnitee shall be liable in any manner to Tenant or any other person or party
for any injury to or death of persons or for any loss of or damage to property
of Tenant, its employees, agents, customers, invitees or to others,
regardless of whether such property is entrusted to employees of the Building or
such loss or damage is occasioned by casualty, theft or any other cause of
whatsoever nature, unless caused by the willful misconduct or gross negligence
of the particular Indemnitee. In no event shall any Indemnitee be liable in any
manner to Tenant or any other person or party as a result of the acts or
omissions of Tenant, its agents, employees, contractors, invitees, patrons,
licensees, directors, officers, tenants, or any other person or party entering
the Project or the Leased Premises under the expressed or implied invitation of
Tenant, or any other tenant of the Building. All personal property upon the
Leased Premises shall be at the risk of Tenant only, and no Indemnitee shall be
liable for any damage thereto or theft thereof, whether or not due in whole or
in part to the negligence of any Indemnitee.

       

      13.          WAIVER OF SUBROGATION.
Regardless of fault or negligence, Landlord and Tenant hereby waive any claim
arising in favor of one against the other, or anyone claiming through either, by
way of subrogation or otherwise, for any loss of or damage to any property
of either which loss or damage is covered under their respective casualty
insurance policies (including extended coverage). Said waiver shall be in
addition to any other waiver or release contained in this Lease with regard to
loss or damage to property of either. Landlord and Tenant each shall request its
insurer to consent to such waiver and agree to waive all rights of subrogation
against the other party, and Landlord and Tenant shall provide the other party
with all endorsements necessary to evidence the consent of its
insurer.

       

      14.          TENANT'S INSURANCE. Tenant
shall maintain at all times during the term of this Lease, at Tenant's
expense:

       

      (a)          CASUALTY
INSURANCE; including extended coverage, vandalism, and malicious mischief, and
demolition and debris removal, insuring for an
amount not less than 80% of the current replacement cost of all Tenant
improvements,
alterations or additions made to the Leased Premises by Tenant, and Tenant's
trade fixtures, inventory, furniture and
equipment owned, controlled or in use by Tenant and situated in the Leased
Premises. Landlord shall have no interest in the insurance upon Tenant's
equipment and trade fixtures other than as a lien holder pursuant to Paragraph
21 with respect to such equipment and trade fixtures. Landlord will not carry
insurance insuring Tenant's property unless it elects to do so pursuant to
Paragraph 14(1) below.

       

      (b)          COMMERCIAL
GENERAL LIABILITY INSURANCE including Bodily Injury and Property Damage
Liability and Person & Advertising Injury Liability on an occurrence basis
with respect to Tenant's business and occupancy of the Leased
Premises for any one occurrence or claim of not less than $2,000,000. with N/A Products
Aggregate and $5,000,000 General Aggregate, or such greater
amount as Landlord may reasonably require in writing from time to time. Such
insurance shall contain a provision including coverage for all liabilities
assumed by Tenant under this Lease and shall name Landlord as an additional
insured.

       

      (c)          WORKER'S
COMPENSATION INSURANCE for all Tenant employees working in the Leased Premises
in an amount sufficient to comply with applicable laws or regulations. The
policy shall include Employer's Liability with minimum limits of Sl00.000 per
accident, $100,000 per employee, $500.000 policy limit.

       

      (d)          INSURANCE
against such other perils and in such amounts as Landlord may from time to time
reasonably require in writing. Such request shall be made on the basis that the
insurance coverage requested is customary at the time for prudent
tenants.

       

      All
policies of insurance required to be maintained by Tenant hereunder shall (i) be
in a form acceptable to Landlord: (ii) be issued by an insurer licensed to do
business in the state in which the Building is situated and which insurer shall
otherwise be reasonably acceptable to Landlord: (iii) require at least thirty
(30) days written notice to Landlord before termination or material alteration:
and (iv) with respect to insurance, required under Subparagraphs (a), (h), and
(e), name Landlord and Landlord's Mortgagee as an "additional insured". Tenant
shall, upon the commencement of the Term of this Lease and thereafter within
thirty (30) days prior to the expiration of each such policy, promptly deliver
to Landlord certified copies or other evidence of such policies and evidence
satisfactory to Landlord that all premiums have been paid and the policies are
in effect.

       

       

      
        
          
          

        

        
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        (f)    Tenant shall
provide Landlord with an original certificate of insurance upon execution of
this Lease. If Tenant fails to comply with the insurance requirements set forth
in Paragraph 14, then Landlord may (in addition to having available to it all
other remedies provided herein upon an occurrence of an Event of Default),
obtain such insurance and Tenant shall pay to Landlord on demand, the premium
cost thereof, plus interest provided under Paragraph 40.

         

        I5.    ADDITIONS AND
FIXTURES.

         

        (a)          Tenant
shall not make any alteration, change, improvement, repair, replacement or
addition to the Leased Premises ("Alteration") without prior written consent of
Landlord which consent shall not be unreasonably withheld. Unless Landlord has
waived the requirement in writing, together with Tenant's request for approval
of an Alteration, Tenant must also submit reasonable detail with respect so
design concept, plans and specifications. certificates of insurance to be
maintained by Tenant's contractors, hours of construction, proposed construction
methods, details with respect to the quality of the proposed work, and
reasonable evidence of security (such as payment and performance bonds) to
assure timely completion and payment of the costs of the work by the contractor.
With respect to an Alteration that is visible from outside the Leased Premises,
the Alteration must, in the opinion of the Landlord, also be architecturally and
aesthetically harmonious with the remainder of the Building. If Landlord
consents to the Alteration, the work in such connection shall be at Tenant's
expense, but be performed by workers of Landlord or workers and contractors
approved by the Landlord in advance and in writing, and shall he performed in a
manner and upon terms and conditions and at times reasonably satisfactory to and
approved in advance and in writing by Landlord. In any instance in which
Landlord grants such consent, Landlord may grant such consent contingent and
conditioned upon Tenant's working in harmony and not interfering with any labor
utilized by Landlord. Landlord's contractors or mechanics, or by any other
tenant or such other tenant's contractors or mechanics: and if at any time such
entry by one or more persons furnishing labor or materials for Tenant's work
shall cause interference in the Project or with respect to other tenants and
their employees, agents, contractors, invitees or licensees, the consent granted
by Landlord to Tenant may be withdrawn upon forty-eight (48) hours written
notice to Tenant. All work performed by or for Tenant will be performed
diligently and in a first class, workmanlike manner, and in compliance with all
applicable laws, ordinances, regulations and rules of any public authority
having jurisdiction over the Building  and/or Tenant and, so long as
communicated in writing to Tenant, Landlord's insurance carriers. Landlord has
the right, but not the obligation,. to inspect periodically the work on the
Leased Premises and may require or make changes in the method or quality of the
work.

         

        Except
for the cost that Landlord agrees with Tenant in writing to pay, Tenant shall
pay for all costs incurred or arising out of any Alterations and shall not
permit a mechanic's or materialman's lien to be asserted against the Leased
Premises. On Landlord's request, Tenant shall deliver to Landlord proof of
payment and lien waivers and releases satisfactory to Landlord of all costs
incurred or arising out of Alterations. If for any reason Tenant fails to
discharge any such obligation, and a mechanics or materialman's lien is tiled
against any portion of the Project, other than liens that are being contested by
Tenant in good faith, in addition to any other right or remedy of Landlord for
an occurrence of an Event of Default under this Lease. Landlord may (but is not
obligated to) discharge the lien, either by paying the amount due or by
procuring a bond, or by any other means. Any amount paid by Landlord to obtain
the discharge of the lien, with interest as provided in Paragraph 40, shall be
paid by Tenant to Landlord on demand.

         

        (b)          Tenant
may remove its trade fixtures, office supplies and movable office furniture and
equipment not attached to the Building provided: (i) such removal is made prior
to the termination of the term: (ii) Tenant is not in default of any obligation
or covenant under this Lease at the time of such removal: and (iii) Tenant
promptly repairs all damage cause by such removal. All other property at the
Leased Premises and any Alteration of the Leased Premises (including
wall-to-wall carpeting, paneling or other wall covering) and any other article
attached or affixed to the Leased Premises (any of which as stated above shall
require Landlord's prior written consent) shall become the property of Landlord
upon construction or installation and shall remain upon and he surrendered with
the Leased Premises as part thereof at the termination of this Lease, (however,
Landlord shall not have any obligation to insure or rebuild or replace any such
alterations) and Tenant hereby waives all rights to any payment or compensation
therefor. If, however, Landlord notifies Tenant in writing upon approval of the
"Final Plans" (as defined in Exhibit C attached
hereto). Tenant will, prior to termination of this Lease, remove any and/or all
Alterations, fixtures, equipment and property placed or installed by it or at
its request in the Lease Premises and will repair any damage caused by such
removal.

         

        16.    ASSIGNMENT AND
SUBLETTING.

         

        (a)    Neither
Tenant, nor Tenant's legal representatives or successors in interest by
operation of law or otherwise, shall assign this Lease or sublease of the Leased
Premises or any part thereof or mortgage, pledge or hypothecate its leasehold
interest in this Lease or grant any concession or license within the Leased
Premises without the prior express written permission of Landlord (which
permission may not be unreasonably withheld, conditioned or delayed), and any
attempt to do any of the foregoing without the prior express written permission
of Landlord shall be an Event of Default hereunder and such attempted act shall
be void and of no effect. In the event Tenant requests Landlords permission as
to any such assignment, sublease or other transaction, in the event of any such
attempted assignment or attempted sublease or should Tenant, in any other
transaction, permit or attempt to permit anyone to occupy the Leased Premises
(or any other portion thereof) without the prior written permission of the
Landlord. Landlord shall thereupon have the right and option, but not the
obligation, to cancel and terminate this Lease effective upon fifteen (15) days
notice to Tenant given by Landlord at any time thereafter either as to the
entire Leased Premises or as to only the portion thereof which Tenant shall have
attempted to assign or sublease or otherwise permitted some other party's
occupancy without Landlord's prior express written permission, and if Landlord
elects to cancel and terminate this Lease as to the aforesaid portion of
the  Leased Premises, then the Rent and other charges payable
hereunder shall thereafter be proportionately reduced. This prohibition against
assigning or subletting shall be construed to include a prohibition against any
assignment or subletting by operation of the law, Tenant shall pay Landlord, on
demand, as additional Rent hereunder all reasonable costs (including reasonable
attorneys' fees) incurred by Landlord in connection with any request by Tenant
hereunder, whether or not such request is approved.

        


        
          
            
            

          

          
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    (b)    Notwithstanding that
the prior express written permission of Landlord to any of the aforesaid
transactions may have been obtained, the following shall apply:

    
       

      (i)          In
the event of an assignment, contemporaneously with the granting of Landlord's
aforesaid consent, Tenant shall cause the assignee to expressly assume in
writing and agree to perform all of the covenants, duties and obligations of
Tenant hereunder and such assignee shall be jointly and severally liable
therefor along with Tenant;

       

      (ii)          A
signed counterpart or all instruments relative thereto (executed by all parties
to such transaction with the exception of Landlord) shall be submitted by Tenant
to Landlord prior to or contemporaneously with the request for Landlord's
written consent thereto (it being understood that no such instrument shall be
effective without the written consent of Landlord);

       

      (iii)          Tenant
shall subordinate to Landlords statutory lien and Landlord's contractual lien
and security interest any liens or other rights which Tenant may claim with
respect to any fixtures, leased to tire proposed assignee or sublessee or other
party intending to occupy the Leased Premises;

       

      (iv)          No
usage of the Leased Premises different from the usage herein provided to be made
by Tenant shall be permitted and all other terms and provisions of this Lease
shall continue to apply after any such assignment or subleasing;
and

       

      (v)   In any case where
Landlord consents to an assignment, sublease, grant or concession or license or
mortgage, pledge or hypothecation of the leasehold, the Tenant (and any
guarantor of this Lease) will nevertheless remain directly and primarily liable
for the performance of all the covenants, duties and obligations of Tenant
hereunder (including, without limitation, the obligation to pay all Rent and
other sums herein provided to be paid), and Landlord shall be permitted to
enforce the provisions of this instrument against the undersigned Tenant (and
such guarantor) and/or any assignee without demand upon or proceeding in any way
against any other person; and

       

      (vi)        
In the event that the Rent and any other consideration due and payable on a
monthly basis or otherwise by a sublessee under any sublease permitted by
Landlord pursuant to the terms of this Lease, exceed the Rent payable under this
Lease, or if with respect to a permitted assignment. permitted license or other
transfer by Tenant permitted by Landlord, the consideration payable to Tenant by
the assignee, licensee or other transferee exceeds the Rent payable tinder this
Lease, then Tenant shall he bound and obligated to pay Landlord. in addition to
Rent due under this Lease, as additional Rent under this Lease, Fifty percent
(50%) of all such excess Rent (after deducting the costs paid by Tenant to
complete such sublease, assignment or transfer) other excess consideration
within ten (10) days following receipt thereof by Tenant from such sublessee,
assignee, licensee or other transferee, as the case might be.

       

      (c)    If Tenant or
any guarantor of Tenant's obligations hereunder is a corporation, then any
merger or consolidation of the corporation with another corporation or
dissolution of the corporation or any change in ownership or power to vote a
majority of the voting stock outstanding at the time of execution of this
instrument of Tenant or such guarantor shall constitute an assignment of this
Lease for the purpose of this Lease, if the outstanding voting shares of capital
stock of Tenant or any guarantor of Tenant's obligations hereunder is stock
which is registered pursuant to the Securities Exchange Act of 1941, and listed
on a recognized security exchange or over-the-counter market, the provision or
the Paragraph I 6(c) shall not apply. For purposes of this Paragraph 16(c), the
term "voting stock" shall refer to shares of stock regularly entitled to vote
for the election of directors of the corporation involved.

       

      If Tenant
or such guarantor is a general partnership having one or more corporations as
partner, or if Tenant is a limited partnership having one or more corporations
as a general partner, the provisions of the  preceding paragraph shall
apply to each of such corporations as if such corporation alone had been the
Tenant or such guarantor hereunder.

       

      If Tenant
or such guarantor is a general partnership (whether or not having any
corporations as partners or if Tenant or such guarantor is a limited partnership
(whether or not having any corporation as general partners) the transfer of the
partnership interest or interests constituting a majority of the general
partnership interests on the date of full execution of this Lease shall
constitute an assignment for the purpose of this Lease.

       

      (d)    Consent by
Landlord to a particular assignment or sublease or other transaction shall not
be deemed consent to any other or subsequent transaction, if this Lease be
assigned or if the Leased Premises be subleased (whether in whole or in part) or
in the event of the mortgage, pledge or hypothecation of the leasehold interest
or grant of any concession or license within the Leased Premises without the
prior express written permission of the Landlord, or  of the Leased
Premises be occupied in whole or in part by anyone other than Tenant without
prior express written permission of Landlord, Landlord may nevertheless collect
Rent from the assignee, sublessee, mortgagee, pledgee, party to whom the
leasehold interest was hypothecated, concessionee or licensee or other occupant
and apply the net amount collected to the Rent payable hereunder, but no such
transaction or collection of Rent or application thereof by Landlord shall be
deemed a waiver of the provisions of this Lease relating to assignment and
subletting of this Lease, or a release of Tenant from further performance by
Tenant of its covenants, duties and
obligations hereunder.

      


      
        
          
          

        

        
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      17.    SUBORDINATION AND
ATTORNMENT.

      


      (a)          Tenant
accepts this Lease subject and subordinate to any mortgage, deed of trust or
other lien presently
existing or hereafter placed upon the Building and to any renewals and
extensions thereof; but Tenant agrees that any mortgagee and/or beneficiary of
any such deed of trust or other lien ("Landlord's Mortgagee") and/or Landlord
shall have the right (but shall not be obligated) at any time to subordinate
such mortgage, deed of trust or other lien to this Lease on such terms and
subject to such conditions as Landlords Mortgagee may deem appropriate in its
discretion. Within thirty (30) days following Tenant's execution of this Lease,
Tenant agrees to promptly execute and deliver a subordination, non-disturbance
and attornment agreement ("SNDA"), substantially in the forms attached hereto as
Exhibit "D",
subordinating this Lease, as Landlords Mortgagee shall request, Landlord shall
deliver to Tenant the fully-executed SNDA within sixty (60) days after Landlord
receives Tenant's executed counterpart copy of the SNDA.

      


      (b)          If
a mortgagee or other lienholder or any other purchaser acquires the Building or
Project as a purchaser at a foreclosure sale (any such mortgagee or other
lienholder or purchaser at a foreclosure sale being each hereinafter referred to
as the "Purchaser at Foreclosure"), then Tenant shall (at the sole and absolute
election of the Purchaser at Foreclosure) thereafter remain bound to the terms
of this Lease to the same effect as if a new and identical lease between the
Purchaser at Foreclosure, as Landlord and Tenant, as Tenant, had been entered
into for the remainder of the Term of the Lease in effect at the time of the
foreclosure. Tenant shall, on request, execute any certificate or instrument
necessary or desirable further to confirm a Purchaser at Foreclosures election
to continue (or discontinue) of the Lease in effect alter foreclosure, as above
provided. If the Purchaser at Foreclosure elects to continue this Lease within
ninety (90) days after such foreclosure, Tenant shall attorn and pay vent to the
Purchaser at Foreclosure as if that party were a signatory to this Agreement as
"Landlord".

      


      (c)    In the event
that Tenant shall fail to execute any instrument described in (a) or (b) above
within seven (7) days
as requested. Tenant hereby irrevocably constitutes Landlord as Tenant's
attorney-in-fact to execute such instrument in Tenant's name, place and stead,
it being stipulated by Landlord and Tenant That such agency is coupled with an
interest in Landlord and is, accordingly, irrevocable.

      


      18.    RULES AND
REGULATIONS.

      


      (a)          Tenant
shall not exhibit, sell or offer for sale on the Leased Premises or on the
Project any article or thing (except those articles or things essentially
connected with the stated use of the Leased Premises by Tenant) without the
prior written consent of Landlord.

      


      (b)          Tenant
shall not display, inscribe, print, paint, maintain, or affix in or about the
Project any sign, notice, legend, direction, figure or advertisement, except on
the doors of the Leased Premises and on the Building directory and then only
such names) and matter and in such color, size, style, place and materials as
shall first have been approved by the Landlord. The listing of any name other
than that of Tenant, whether on the doors of the Leased Premises, on the
Building directory or otherwise, shall not operate to vest in any additionally
named party any right or interest in this Lease or in the Leased Premises or be
deemed to be written consent of Landlord to any act of Tenant, it being
expressly understood that any such listing is a privilege extended by Landlord
revocable at will by written notice to Tenant.

       

      (c)          Tenant
shall not advertise the business, profession or activities of the Tenant
conducted in the Leased Premises in any manner that violates the letter or
spirit of any code of ethics adopted by a recognized association or organization
pertaining to such business, profession or activities and shall not use the name
of the Building for any purposes other than that of the business address of the
Tenant and shall never use any picture or likeness of the Building in any
circular, notices, advertisements or correspondence without Landlord's
consent.

       

      (d)          No
additional locks or similar devices shall be attached to any door or window
without Landlord's prior written consent. No keys for any door other than those
provided by the Landlord shall be trade. If more than two (2) keys for one lock
are desired, Landlord will provide the same upon payment by Tenant of the cost
of making such additional keys. All keys must be returned to Landlord at the
expiration or termination of this Lease.

       

      (e)    All persons
entering or leaving the Building alter hours on Monday through Friday, or at any
time on Saturdays,
Sundays or holidays, may be required to do so under such regulations as Landlord
may impose. The Landlord may exclude or expel any peddler, and Landlord shall
not be required to accept any deliveries or packages on behalf of
Tenant.

       

      (f)    Tenant shall
not overload, in accordance with commercially reasonable standards, any floor.
Landlord may
direct the time and manner of delivery, routing and removal and the location of
safes and other heavy articles.

       

      (g)    Unless
Landlord gives advance written consent, Tenant shall not install or operate any
steam or internal
combustion engine, boiler, machinery, refrigerating or heating device or air
conditioning apparatus in or about the Leased Premises or carry on any
mechanical business therein or use the Leased Premises for housing
accommodations or lodging or sleeping purposes, or do any cooking with the
exception of microwave ovens therein or use or permit to be brought into the
Building any inflammable fluids such as gasoline, kerosene, naphtha and benzine
or any explosive, radioactive
materials or other articles deemed extra hazardous to life, limb or property.
Tenant shall not use the Leased Premises of any illegal or immoral
purposes.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

    

     

    
      


       

      (h)         Tenant
shall reasonably cooperate fully with Landlord to assure the commercially
effective  operation of the Buildings air-conditioning system, including the
closing of venetian blinds and drapes.

       

      (i)          The
sidewalks, halls, passages, exits, entrances, elevators and stairways shall not
be obstructed by Tenant or used for any purpose other than for ingress to or
egress from the Leased Premises. The halls, passages, exits, entrances.
elevators, stairways and roof, not for the uses of the general public and
Landlord shall in all cases retain the right to control and prevent access
thereto by all persons whose presence, in the judgment of Landlord, shall be
prejudicial to the safety, character, reputation and interests of the Building
and its tenants. Neither Tenant nor the agents. Contractors, employees, or
invitees of Tenant shall go upon the roof or mechanical floor of the Building.
Tenant shall keep closed at all times, except for ordinary use, all corridor
entrance/exit doors in the Leased Premises.

       

      (j)    Tenant shall
not use, keep or permit to be used or kept any foul or noxious gas or substance
in the Leased Premises or permit or suffer the Leased Premises to be occupied or
used in a manner offensive or objectionable to landlord or other occupants of
the Building by reason of noise, odors and/or vibrations, or interfere in any
way with other tenants or those having business there, nor shall any animals or
birds be brought in or kept about the Leased Premises or the
Building.

       

      (k)    Tenant shall
see that the doors and windows, if operable, of the Leased Premises are closed
and securely locked before leaving the Building and shall observe strict care
and caution that all water faucets or water apparatus are entirely shut off
before Tenant or Tenant's employees leave the Building and that all electricity
shall likewise be shut off so as to reasonably prevent waste or damage. For any
default of or under this Lease by Tenant or carelessness of Tenant, Tenant shall
reimburse, indemnify and hold harmless Landlord and all other tenants and
occupants of the Project for or front all injuries or losses sustained by
Landlord or other tenants or occupants of the Building.

       

      In
addition to all other liabilities for any failure by Tenant to observe the rules
and regulations, Tenant shall pay to Landlord an amount equal to any increase in
insurance premiums payable by the Landlord or any other tenant in the Building
caused solely by such failure. The inability of Landlord to cause another
occupant of the Building to comply with the rules and regulations will neither
excuse Tenant's obligation to comply with the rules or any other provisions of
this Lease, nor cause Landlord to he liable to Tenant for any damages resulting
to Tenant. Tenant shall cause its employees, agents, invitees, licensees and
contractors to comply with all rules and regulations for the
Project.

       

      19.          EMINENT DOMAIN. If there shall
be taken by exercise of the power of eminent domain during the Term of this
Lease any of the Leased Premises. Landlord or Tenant may elect to terminate this
Lease. If more than ten percent (10%) of the Building shall be taken by exercise
of the power of eminent domain during the Term of this Lease, Landlord may elect
to terminate this Lease. If neither party terminates this Lease, then this Lease
shall continue in full force and effect, except that Rent shall be reduced in
proportion to the area of the Leased Premises to be taken and Landlord shall
repair any damage to the Leased Premises or Building resulting from such taking.
All sums awarded or agreed upon between Landlord and the condemning authority
for the raking of the interest of Landlord or Tenant, whether as damages or as
compensation, will be the property of Landlord without prejudice, and are hereby
assigned from Tenant (to the extent of Tenant's interest) to Landlord. However,
as to claims of Tenant against the condemning authority on account of the
unamortized cost of leasehold improvements paid For by Tenant taken by the
condemning authority. If this Lease should he terminated tinder any provision of
this Paragraph 19. Rent shall be payable up to the date that possession is taken
by the condemning authority and Landlord will refund to Tenant any prepaid
unaccrued Rent less any sum then owing by Tenant to Landlord.

       

      20.          ACCESS BY LANDLORD. Landlord,
its agents and employees shall have access to and the right to enter upon the
Leased Premises at any reasonable time and upon reasonable notice during regular
business hours except for an emergency to examine the condition thereof, to make
any repair's or alterations required to be made by Landlord hereunder, to show
the Leased Premises to prospective purchasers, mortgagees or tenants and for any
other purpose deemed reasonable by Landlord. In addition, Landlord may post "For
Rent” signs on or about the Project advertising the Building and Leased Premises
for lease.

       

      21.          INTENTIONALLY
DELETED.

       

      22.          DEFAULT AND
REMEDIES.

       

      (a)    Each of the
following acts or omissions of Tenant or occurrences shall constitute and "Event
of Default":

       

      (i)          Failure
or refusal by Tenant to timely pay Rent or other payments hereunder within two
(2) business days following written notice to Tenant of such
failure.

       

      (ii)        Failure
to perform or observe any other covenant or condition of this Lease by Tenant to
be performed or observed prior to the expiration of a period of thirty (30) days
following written notice to Tenant specifying with particularity such failure
(plus an additional reasonable period as may be required by Tenant to cure such
default if Tenant shall diligently pursue the cure of such default until the
same shall be cured).

       

      
 

      
        
          
          

        

        
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      (iii)         
The filing or execution or occurrence of any of the following with respect to
either Tenant or any guarantor of this Lease: a petition in bankruptcy or other
solvency proceeding by or against them; or any petition or answer seeking relief
under any provision of the Bankruptcy Code or an assignment for the benefit of
creditors or composition: or a petition or other proceeding by or against them
for the appointment of a trustee, receiver or liquidator of them or any of their
property; or a proceeding by any governmental authority for the dissolution or
liquidation of them.

       

      (b)    This Lease
and the Term and estate hereby granted and the demise hereby made are subject to
the limitation that if and whenever any Event of Default shall occur, Landlord
may, at its option, in addition to till other rights and remedies given
hereunder or by law or equity, do any one or more of the following:

       

      (i)          Terminate
this Lease, in which event Tenant shall immediately surrender possession of the
Leased Premises to Landlord.

       

      (ii)          Enter
upon and take possession of the Leased Premises and expel or remove Tenant and
any other occupant therefrom, with or without terminating the
Lease.

       

      (iii)       
Change or alter locks and other security devices at the Leased Premises
prohibiting entry into the Leased Premises and deny Tenants access thereto. In
connection with such change or alteration, of locks. Landlord shall have no
obligation to advise Tenant of the change of locks other than to provide written
notice at the Demised Premises of the person Tenant may contact, during normal
business hours for the Leased Premises, to acquire additional information.
Furthermore, Tenant waives all rights under Section 91 of the Texas Property
Code, to which it is otherwise entitled.

       

      (iv)      
Perform any action required to be performed by Tenant hereunder.

       

      (c)    Exercise by
Landlord of any one or more remedies hereunder granted or otherwise available
shall not be deemed to be an acceptance or surrender of the Leased Premises by
Tenant, whether by agreement or by operation of the law, it being understood
that such surrender can he affected only by the written agreement of Landlord
and Tenant. No such alteration of security devices and no removal or other
exercise of dominion by Landlord over the property of Tenant or others at the
Leased Premises shall be deemed unauthorized or constitute a conversion. Tenant
hereby consenting, after an Event of Default, to the aforesaid exercise of
dominion over Tenant's property within the Building. All claims for damages by
reason of such re-entry and/or repossession and/or alteration of locks or other
security devices are hereby waived, as are all claims for damages by reason of
Landlord's compliance with distress warrant, forcible detainer proceeding,
sequestration proceedings, or other legal process. Tenant agrees that any
re-entry by Landlord may be pursuant to judgment obtained in forcible detainer
proceedings or other legal proceedings or without the necessity for any legal
proceedings, as Landlord may elect, and Landlord shall not be liable in trespass
or otherwise.

       

      (d)    In the event
Landlord elects to terminate the Lease by reason of an Event of Default. Then,
notwithstanding such termination, Tenant shall be liable, as damages to Landlord
and not as a penalty, for the breach of this Lease, and shall pay to Landlord
the total of (i) the reasonable costs of recovering the Leased Premises and the
sum of all Rent and other indebtedness accrued to the date of such termination,
(ii) the Rent due hereunder which was suspended or waived because of any "free
rent period", (iii) out of pocket expenses of Landlord in constructing the
Tenant finish required under this Lease, (iv) all commissions paid by Landlord
in connection with this Lease, (v) the amount of the excess of (a) the total
Rent and other benefits which Landlord would have received under this Lease for
the remainder of the Term (at rates then in effect) together with all other
expenses incurred by Landlord in connection with Tenant's default, over (b) the
Fair Market Value of the Balance of the Lease Term (as hereinafter defined) as
of the time of such breach: and (vi) all other sums of money and damages then
owing by Tenant to Landlord. As used herein, the term "Fair Market Value of the
Balance of the Lease Term shall mean the difference between art amount equal to
all Rent and other benefits payable over the remainder of the Lease Term, minus
reasonable rental value of the Leased Premises for the same period. by
comparison to other tenants of the Building (or, if there are no comparable
tenants in the Building, in comparable buildings) and to other leasing space of
comparable size, similarly situated, for a lease term comparable to the
remainder of the Term, with such difference discounted to a present value based
upon a rare of seven percent (7%) per annum.

       

      (e)    In the event
that Landlord elects to repossess the Leased Premises without terminating the
Lease, then Tenant shall be liable for and shall pay to Landlord all Rent and
other indebtedness accrued to the date of such repossession, plus rent required
to be paid by Tenant to Landlord during the remainder of the Term until the date
of expiration of the Term as stated in Paragraph 2, diminished by any net sums
thereafter received by Landlord through reletting the Leased Premises during
said period (after deducting reasonable expenses incurred by Landlord as
provided in Subparagraph 22(1) hereof). Actions to collect amounts due by Tenant
provided for in this Paragraph may be brought front time to time by Land lord
during the aforesaid period, on one or more occasions, without the necessity of
Landlord's waiting until expiration of such period; and in no event shall Tenant
he entitled to any excess of Rent (or Rent plus other sums) obtained by
reletting over and above the Rent provided for in this Lease.

       

      (f)    In the case
of an Event of Default, Tenant shall also be liable for and shall pay to
Landlord in addition to any sum provided to be paid above, (i) reasonable
broker's fees incurred by Landlord in connection with reletting the whole or any
part of the Leased Premises, (ii) the reasonable cost of removing and storing
Tenants or other occupants property; (iii) reasonable cost of repairing,
altering, remodeling or otherwise purring the Leased Premises into condition
acceptable to a new tenant or tenants, and (iv) all reasonable expenses incurred
by Landlord in enforcing Landlord's remedies, including reasonable attorneys'
fees. Past due Rent and other past due payments shall bear interest from
maturity until paid by Landlord to Tenant at the rate described in Paragraph 40
hereof.

       

      
 

      
        
          
          

        

        
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      (g)          In
the event of repossession of the Leased Premises after an Event of Default.
Landlord shall not have any obligation to reset or attempt to reset the
Leased Premises, or any port ion thereof, or to collect Rent after reletting:
but Landlord shall have the option to relet or attempt to relett and in the
event of reletting. Landlord may reset the whole or any portion of the Leased
Premises for any period, to any tenant, and for any use and
purpose.

       

      (h)          If
Tenant should fail to make any payment or cure any Event of Default hereunder
within the time herein permitted, Landlord, without being under any obligation
to do so and without thereby waiving such default, may make such payment and/or
remedy such other Event of Default for the account of Tenant (and enter the
Leased Premises for study purposes) and thereupon Tenant shall be obligated to,
and hereby agrees to pay Landlord upon demand, as additional Rent hereunder, all
reasonable costs, expenses and disbursements (including reasonable attorneys'
fees) incurred by Landlord in taking such remedial action.

       

      (i)    In the event
of any default by Landlord, Tenant's exclusive remedy shall be an action for
damages (Tenant hereby waiving the benefit of any laws granting the right to
terminate this Lease, to a lien upon the property of Landlord and/or upon
Rent due Landlord), but prior to any such action Tenant will give landlord
written notice specifying such default with particularity and Landlord shall
have thirty (30) days (plus an additional reasonable period as may be required
by Landlord to cure such default, if Landlord shall diligently pursue the cure
of such default until same shall be cured) in which to cure any such default.
Unless and until Landlord bills to so cure any default after such notice, Tenant
shall also have any remedy or causes of action by reason thereof. All
obligations of Landlord hereunder will be construed as covenants, not
conditions, and all such obligations will be binding upon Landlord only during
period of its ownership of the Building and not thereafter. Landlord shall have
no personal liability for the performance of any obligations hereunder, recourse
by any party for default against Landlord being limited to Landlord's interest
in the Building. The term "Landlord" shall mean only the owner of the Building
at the date a commencement of the Term, and in the event of the transfer by
such owner (or subsequent owner) of its interest in the Building, such previous
owner shall thereupon be released and discharged from all covenants and
obligations of the Landlord under this Lease thereafter accruing, and Tenant
agree to look only to the new owner for the performance of the obligations of
Landlord hereunder.

       

      (j)    In any
circumstances set out in this Lease where Landlord is permitted to enter upon
Leased Premises during  the Term, whether for the purposes of curing
any default of Tenant or repairing damage resulting from fire or other
casualty or an eminent domain taking or where Landlord is otherwise permitted
hereunder or by law to go upon the Leased Premises, no such entry in accordance
therewith will constitute an eviction or disturbance of Tenant's use and
possession of the Leased Premises or a breach by Landlord of any of its
obligations hereunder or render Landlord liable for damages for loss of business
or for any other reason to entitle tenant to be relieved from any of its
obligations hereunder or grant Tenant any right of setoff or recoupment or other
remedy; and in connection with any such entry incident to performance of
repairs, replacements, maintenance or construction, all of the aforesaid
provisions shall be applicable notwithstanding that Landlord may elect to take
building materials in, to or upon the Leased Premises that may be required or
utilized in connection with such entry by Landlord.

       

      (k)    In the event
Landlord commences any proceedings against Tenant for nonpayment of Rent or any
other sum due and payable by Tenant hereunder. Tenant will not interpose any
non-compulsory counterclaim against Landlord of whatever nature or description
in any such proceedings, and in the event Tenant interposes any such
non-compulsory counterclaim or other claim against Landlord in such proceedings.
Landlord and Tenant stipulate and agree that in addition to any other lawful
remedy of Landlord, upon motion of Landlord, such non-compulsory counterclaim or
other claim instituted by Tenant shall be severed from the proceeding institutes
by Landlord and the proceedings instituted by landlord may proceed to final
judgment separately and apart from and without consolidation with or reference
to the status of such non-compulsory counterclaim or any other claim asserted by
Tenant: provided, however, the provisions of this sentence do not apply to
counterclaims or claims by Tenant which may only be asserted in the aforesaid
proceedings brought by Landlord or forever be barred if not asserted in said
proceedings.

       

      (l)    Landlord may
seek to restrain or enjoin any breach or threatened breach of any covenant, duty
or obligation of Tenant herein.
The remedies of Landlord hereunder,  at law or in equity shall
be deemed cumulative, and no remedy of landlord, whether exercised by Landlord
or not, shall be deemed to be in exclusion of any other. Except as may be
otherwise herein expressly provided, in all circumstances under this Lease where
prior consent or permission of one party ("first party") is required before the
other party ("second party") is authorized to take any particular type of
action. the matter of whether to grant such consent or permission shall be
within the sole and exclusive judgment and discretion of the first party; and it
shall not constitute any nature of breach by the first party hereunder or any
defense to the performance of any covenant, duty or obligation of the
second party hereunder that the first party delayed or withheld the granting of
such consent or permission, whether or not the delay or withholding of such
consent or permission was prudent or reasonable or based on good
cause.

       

      (m)    The
obligation of Tenant to pay all Rent and other sums hereunder provided to be
paid by Tenant and the obligation of Tenant to perform Tenant's other covenants
and duties hereunder constitute independent, unconditional obligations to be
performed at all times provided for hereunder, save and except only when an
abatement thereof or reduction therein is herein expressly provided for and not
otherwise. Tenant waives and relinquishes all rights which Tenant might have to
claim any nature of lien against or withhold, deduct from or offset against any
Rent and other sums provided hereunder to be paid Landlord by Tenant. Tenant
waives and relinquishes any right to assert, either as a claim or as a defense,
which Landlord is bound to perform or is liable for time nonperformance of any
implied covenant or implied duty of Landlord not expressly herein set
forth.

       

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

    

     

    
      


       

      (n)          In
the event of foreclosure by any 1ienholder of the Building or Project, Tenant
shall not have a right to terminate this Lease, although Tenant
hereby understands and agrees that such lienholder who or
which forecloses its lien on the Building or Project -shall have the option
to terminate
this Lease (as such rights are further described in Paragraph 17(b)), unless such
lienholder has agreed in writing to the contrary.

       

      (o)          Under
no circumstances whatsoever shall Landlord or Tenant ever by liable hereunder
for consequential damages or special damages.

       

      (p)          This
Lease is a contract under which
applicable law excuses Landlord from accepting performance from (or rendering
performance to) any person or entity other than Tenant within the meaning of
Sections 365(e) and 365(e)(2) of the Bankruptcy Code. 11 U.S.C. §5101 et seq.
("Bankruptcy Code")

       

      (q)          If
this Lease is assigned to any person or entity pursuant to the provisions of the
Bankruptcy Code. Any and all monies or other consideration payable or otherwise
to be delivered in connection with such assignment shall be paid or delivered to
Landlord, shall be and remain the exclusive property of Landlord, and shall not
constitute property of Tenant or of the Estate of Tenant within the meaning of
the Bankruptcy Code. Any and all monies or other considerations constituting
Landlord's property under the preceding sentence not paid or delivered to
Landlord shall be held in trust for the benefit of Landlord and he promptly paid
or delivered to Landlord.

       

      (r)          Notwithstanding
anything to the contrary, in any bankruptcy filed by or against Tenant, all Rent
or other amounts payable by Tenant or on behalf of Tenant to Landlord tinder
this Lease, whether or not expressly denominated as rent, shall constitute
credit provided to the Bankruptcy Estate which shall have the priority set forth
in Section 264(c)(1) of the Bankruptcy Code, and such
designation as credit shall be binding on any trustee, assignee, or receiver of
Tenant. Notwithstanding the foregoing, should Landlord's Section 364(c)(1)
priority not be allowed, then any rents or other amounts due to Landlord under
this Lease shall constitute administrative priority allowed pursuant to, inter alia,
Section 503(b) of the Bankruptcy Code. Furthermore, Tenant agrees not
to seek any extension under Section 365(d) of the Bankruptcy Code.

       

      (s)          Any
person or entity to which this Lease is assigned pursuant to the provisions of
the Bankruptcy Code shall be deemed, without further act or deed, to have assumed
all of the obligations arising under this Lease on or after the date of such
assignment. Any such assignee shall upon demand execute and deliver to Landlord
any instrument confirming such assumption.

       

      23.          NONWAIVER. Neither acceptance of Rent by
Landlord nor failure by Landlord to complain of any action, non action or
default of Tenant shall constitute a waiver of any of Landlords rights
hereunder. Waiver by Landlord of any right for any default of Tenant shall not
constitute a waiver of any right for either a subsequent default of the same
obligation or any other default. Receipt by Landlord of Tenant's keys to the
Leased Premises shall not constitute any acceptance or surrender of the Leased
Premises.

       

      24.          HOLDING OVER. If Tenant should
remain in possession of the Leased Premises after the expiration of the Term
without execution by Landlord and Tenant of a new lease, then Tenant shall be
deemed to be occupying the Leased Premises as a tenant-at-sufferance, subject to
all the covenants and obligations of this Lease and at a daily rental of 1.50
times the per day Rent provided hereunder, computed on the basis of a thirty
(30) day month. Additionally, Tenant shall pay Landlord for all direct damages
sustained by Landlord by reason of Tenant's retention of possession. If any
property not belonging to Landlord remains at the Leased Premises after the
expiration of the Term of this Lease, Tenant hereby authorizes Landlord to make
such disposition of such property as Landlord may desire without liability for
compensation or damages to Tenant. Tenant agrees to indemnify and hold Landlord
harmless from all suits, actions, liability. loss, damages, and expenses in
connection with or incident to any removal, exercise or dominion over, and/or
disposition of such property by Landlord. The provisions of this Paragraph do
not exclude Landlord's right of re-entry or any other right of Landlord
hereunder.

       

      25.    NOTICE. Any notice or request
which may or shall be given tinder the terms of this Lease shall be in writing
and shall be either delivered by hand to the Building management office (for
Landlord) or the Leased Premises (by Tenant) or sent by United States Registered
or Certified Mail, post prepaid, addressed to the parties hereto at the
respective addressed set out opposite their names below. Such address may be
changed from time to time by either party giving notice as provided above.
Notice shall be deemed given when delivered (if delivered by hand) or when
postmarked (if sent by mail).

       

      


      
        	
                Tenant:

                 

                Deep
      Down. Inc.

                8827
      W. Sam Houston Pkwy., N. Suite 100

                Houston,
      Texas 77040

              	
                Landlord:

                 

                A-K-S-L
      49 BELTWAY 8, L.P

                8827
      W. Sam Houston Pkwy N.

                Suite
      200

                Houston,
      TX 77040

              


      

       

      26.    LANDLORD'S
MORTGAGEE.

       

      (a)    If the
Project. Building and/or Leased Premises are at any time subject to a mortgage
or deed of trust lien, then in any instance in which Tenant gives notice to
Landlord alleging default by' Landlord hereunder. Tenant will also
simultaneously give a copy of such notice to each Landlord's Mortgagee (provided
Landlord or Landlord's Mortgagee shall have provided written notice to Tenant of
the name and address of Landlord's Mortgagee), and each Landlord's Mortgagee
shall have the right (but not the obligation) to cure or remedy such default during the
period that is permitted to Landlord hereunder, plus and additional period or
thirty (30) days, and Tenant will
accept such curative or remedial action (if any)
taken by Landlord's Mortgagee with the same effect as if such action had been
taken by Landlord.

      


      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

    

     

    
      


       

      (b)    Tenant agrees
that from time to time Tenant will deliver to Landlord a statement in writing
certifying (i) that this Lease is unmodified and in full force and effect (or if
there have been modifications that the same is in full force and effect as
modified and identifying the modifications), (ii) the dates to
which the Rent and other charges have been paid and (iii) that the Landlord is
not in default or specifying each such default of which the person making the
certificate may have knowledge, it being understood that any such statement so
delivered may be relied upon by any landlord under any ground or underlying
lease, or any
prospective purchaser, mortgagee or any
assignee of any mortgage on the Project or any part thereof.

       

      27.          QUIET ENJOYMENT. Provided
Tenant complies with its covenants, duties and obligations hereunder, Tenant
shall quietly have, hold and enjoy the Leased Premises during the Term as
against Landlord, subject to the terms and provisions of this
Lease.

       

      28.          TIME OF ESSENCE. In all
instances where Landlord or Tenant is required hereunder to pay any sum or do
any act at a particular indicated time or within an indicated period. it is
understood that time is of the essence: and all performance due dates, time
schedules and conditions precedent to exercising a right by Landlord or Tenant
shall he strictly adhered to without delay except where otherwise expressly
provided.

       

      29.    MECHANIC'S LIEN. It because of
any act or omission of Tenant, its employees, agents, contractors or
subcontractors, any mechanic's lien or other lien, charge or order for the
payment of money shall be filed against Landlord or against all or any portion
of the Leased Premises or the Building. Tenant shall, at its own cost and
expense, cause the same to be discharged of record within thirty (30) days after
filing thereat and Tenant shall indemnify and save harmless Landlord against and
from all reasonable costs and expenses, liabilities, suits, penalties, claims
and demands, including, without limitation, reasonable attorneys fees, resulting
therefrom.

       

      30.    MEMORANDUM OF LEASE. Tenant
agrees that, upon written request from Landlord, Tenant will within ten (10)
days of such request deliver a copy of this Lease, or, if the Landlord so
requests, a Memorandum of this Lease in recordable form to Landlord. Tenant
shall not record this Lease or a memorandum thereof without the prior written
consent of the Landlord. Any such recording without Landlords prior written
consent shall be an Event of Default hereunder.

       

      31.          INVALIDITY OF PARTICULAR
PROVISIONS. If any clause or provision of this Lease is or becomes
illegal, invalid or unenforceable because of present or future laws or any rule
or regulation of any governmental or quasi- governmental body or any court
holding effective during the Term, the intention of the parties hereto is that
the remaining parts of this Lease shall not be affected thereby unless such
invalidity is. in the sole determination of the Landlord, essential to the
rights of both parties, in which event Landlord has the right, but not tine
obligation, to terminate this Lease on written notice to Tenant.

       

      32.          WAIVER OF BENEFITS. To the
extent permitted by law, tenant waives the benefits of all existing and future
rent control legislation and statutes and similar governmental rules and
regulations, whether in time of war or not.

       

      33.          WAIVER OF TRIAL BY JURY. It is
mutually agreed by and between Landlord and Tenant that the respective parties
hereto shall and they hereby do waive trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other on any
matters whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant,  Tenant's use or occupancy of the
Leased Premised and any emergency statute or any other statutory
remedy.

       

      34.          MISCELLANEOUS TAXES. Tenant
shall pay prior to delinquency all taxes assessed against or levied upon its
occupancy of tine Leased Premises, or upon the fixtures, furnishings, equipment
and all other personal property owned by Tenant located on the Leased Premises,
if nonpayment thereof shall give rise to a lien on the real estate, and when
possible Tenant shall use its best efforts to cause said fixtures, furnishings,
equipment and other personal property to be assessed and billed separately from
the property of the Landlord. In the event any or all of Tenant's fixtures,
Furnishings, equipment and other personal property upon, or Tenant's occupancy
of, the Leased Premises shall be assessed and taxed with the property of
Landlord. Tenant shall pay to Landlord Tenant's share of such taxes within ten
(10) days after delivery to Tenant by Landlord of a statement in writing setting
forth the amount of such taxes applicable to Tenant's fixtures, furnishings,
equipment or personal property along with a copy of the assessment and tax
invoice.

       

      35.     INTENTIONALLY
DELETED.

       

      36.    BROKERAGE. Tenant represents
and warrants that, except for Mary Caldwell or Caldwell Companies, it has dealt
with no broker, agent or other person in connection with this transaction and
that no broker, agent or other person brought about this transaction, and Tenant
agrees to indemnify and hold Landlord harmless from and against any claims by
any other broker, agent or other person claiming a commission or other form of
compensation by virtue of having dealt with Tenant with regard to this leasing
transaction. The provisions of this Paragraph, in addition to all of Tenant's
indemnities and covenants expressly set forth in this Lease, shall survive the
termination of this Lease.

       

       

      
        
          
          

        

        
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        37.          NO REINSTATEMENT. No receipt
of money by Landlord from Tenant after the termination of this Lease, after the
service of any notice of any Event of Default or of termination of this Lease,
or after the commencement of any suit or after final judgment for possession of
the Leased Premises shall reinstate, continue to extend the term of this Lease
or affect any such notice, demand or suit or imply consent for any action for
which Landlord's consent is required.

         

        38.          LIMITATION OF IMPLIED
WARRANTY. Landlord's duties and warranties are limited to those expressly
stated in this Lease and shall not include any implied duties or implied
warranty now or in the future. LANDLORD HAS NOT MADE, AND TENANT MAY NOT RELY
ON, ANY REPRESENTATIONS OR WARRANTIES WITH REGARD TO THE BUILDING, LEASED
PREMISES OR OTHERWISE, EXPRESSED OR IMPLIED, EXCEPT AS STATED IN THIS LEASE. IN
PARTICULAR, LANDLORD HAS NOT AUTHORIZED ANY AGENT OR BROKER TO MAKE A
REPRESENTATION OR WARRANTY INCONSISTENT WITH THE TERMS OF THIS LEASE AND TENANT
MAY NOT RELY ON ANY SUCH INCONSISTENT REPRESENTATION OR WARRANTY.

         

        39.          CAPTIONS AND BINDING EFFECT.
Paragraph captions are for convenience only and neither limit nor amplify the
provisions of this Lease. The provisions of this Lease shall be binding upon and
inure to the benefit of the heirs, executors, administrators, successors and
assigns of the parties, but this provision shall in no way alter the restriction
herein in connection with assignment and subletting by Tenant. In the event of
variation or discrepancy between copies of this Lease, Landlord's original copy
shall control.

         

        40.          INTEREST. Notwithstanding any
provision of the Lease to the contrary, whenever this Lease provides for the
payment of interest to Landlord, the rate of interest shall be the maximum rate
allowed by applicable law, and if there is no maximum rate, then twelve percent
(12%) per annum, however, regardless of any provision contained herein. or in
any other document executed in connection herewith, no Landlord or holder of
this Lease shall ever be entitled to receive, collect or apply, as interest on
any amount owing hereunder, any amount in excess of the maximum non-usurious
contract rate of interest allowed front time to time by applicable law ("Highest
Lawful Rate"), and in the event any Landlord or holder of this Lease ever
receives, collects, or applies, as interest. any such excess, such amount as
would be excessive same shall be ipso facto reduced to
the amount permitted by law; and if all amounts of this Lease shall be paid in
full. any excess shall forthwith be paid to Tenant. In determining whether or
not the interest paid or payable, tinder any specific contingency, exceeds the
Highest Lawful Rate, the Landlord and any holder of this Lease shall, to the
maximum extent permitted by law (a) characterize any non-principal payment as an
expense, fee or premium rather than as interest: (b) exclude voluntary
prepayment and the effects thereof; and (c) compare the total amount of interest
collected, contracted for. charged or received throughout the entire
contemplated term of this Lease at the Highest Lawful Rate; provided that
if all Tenant's obligations under this Lease are paid and performed prior to the
end of the full contemplated terms thereof, and if the interest received for the
actual period of existence hereof exceeds the Highest Lawful Rate, the Landlord
and holder of this Lease shall refund to the Tenant the amount of such excess,
and in such event, no Landlord or holder of this Lease shall be subject to any
penalties provided by any laws for collecting, contracting for, charging or
receiving interest in excess of the Highest Lawful Rate.

         

        41.          INTENTIONALLY
DELETED.

         

        42.          ATTORNEYS' FEES. If, as a
result of any breach or default by Tenant of its respective obligations under
this Lease, Landlord employs an attorney to enforce or defend any of its rights
or remedies hereunder, and if Landlord prevails, then Tenant shall pay to
Landlord the reasonable attorneys' fees incurred by Landlord. If Tenant
prevails, Landlord shall pay to Tenant the reasonable attorney's Fees incurred
by Tenant.

         

        43.          FORCE MAJURE. If the
performance by Landlord or Tenant of any provision of this Lease is delayed or
prevented by an Act of God, strike, lockout, shortage of material or labor,
restriction by any governmental authority, civil riot, flood and any other cause
not within the control of Landlord or Tenant, then the period for landlord's or
Tenant's performance of the provision shall be automatically extended for the
same amount of time that Landlord or Tenant in so delayed or
hindered.

         

        44.          USE OF LANGUAGE. Words of any
gender used in this Lease include any other gender, and words in the singular
include the plural, unless the context otherwise requires.

         

        45.          DAMAGE FROM CERTAIN CAUSES.
Landlord or Tenant are not liable or responsible to the other party for any loss
or damage to any property or person occasioned by theft, fire, act of God,
public enemy, injunction, riot, strike, insurrection, war, court order,
requisition, or order of governmental body or authority, or for any damages or
inconvenience that may arise through repair or alteration of any part of the
Project, the Building or the Leased Premises, or failure to make any such
repairs.

         

        46.          GOVERNING LAW. This Lease and
the rights and obligations of the parties hereto shall be interpreted, construed
and enforced in accordance with the local laws of the State of
Texas.

         

        47.   
     ASBESTOS OR OTHER HAZARDOUS
SUBSTANCES. Tenant shall not cause or permit any hazardous substance or
solid waste to be brought upon, kept or used in or about the Leased Premises by
Tenant or its agents, employees, contractors or invitees (the "Tenant Group').
If Tenant breaches the obligations stated in the preceding sentence (which shall
be an Event of Default under this Lease), or if the presence of a hazardous
substance or solid waste otherwise occurs, in or about the Leased Premises
caused by the Tenant Group, then Tenant shall indemnify, defend and hold
harmless Landlord and Landlords' parents, subsidiaries, affiliates, officers,
directors, employees, agents, attorneys and representatives front any and all
claims, judgments, damages, penalties, fines, reasonable costs, liabilities or
losses which arise during or after the Lease Term as a result of such
contamination, and Tenant shall, at its sole cost and expense, cause the removal
or containment of any such contamination in accordance with all laws, rules
and/or regulations of any governmental authority having jurisdiction.
Furthermore, if Landlord discovers any hazardous substance or solid waste on or
about the Project, including, but not limited to asbestos in the Building
of a material amount, Landlord shall have the option to terminate this Lease
upon fifteen (15) days written notice to Tenant. The term "hazardous
substances" and "solid waste" shall have the meanings specified in the
Comprehensive Environmental Response. Compensation and Liability Act
of  1980, as amended, the Resource Conservation and Recovery Act of
1976. as amended, the Texas Water Code and The Texas Solid Waste Disposal
Act.

         

         

        
          
            
            

          

          
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            48.         
AMENDMENT.  Except
where (a) otherwise authorized, permitted or required by express terms of this
lease, and (b) notice to consent or approval of, or joinder by any party has
been expressly waived by the provisions hereof, no amendment, moderation,
deletion, release, termination or extension of; alteration, variance or change
in; or supplement to, the provisions of this Lease shall be valid or effective
or otherwise binding on the parties hereto, unless and until such amendment,
etc., shall have been reduced to writing and executed by the parties hereto with
the same formality as this Lease.

             

            49.          ENTIRE AGREEMENT. THE PARTIES
HERETO ACKNOWLEDGE AND AGREE THAT, WITH REGARD TO THE SUBJECT MATTER OF THIS
LEASE AND THE TRANSACTIONS CONTEMPLATED HEREIN (a) THERE ARE NO ORAL AGREEMENTS
BETWEEN THE PARTIES HERETO AND (b) THIS LEASE, INCLUDING THE DEFINED TERMS AND
ALL EXHIBITS AND ADDENDUMS, IF ANY, ATTACHED HERETO, (i) EMBODIES THE FINAL
AND COMPLETE AGREEMENT BETWEEN THE PARTIES; (ii) SUPERSEDES ALL PRIOR AND
CONTEMPORANEOUS NEGOTIATIONS, OFFERS, PROPOSALS, AGREEMENTS, COMMITMENTS,
ASSURANCES AND UNDERSTANDINGS, WHETHER VERBAL OR WRITTEN, AND (iii) MAY NOT BE
VARIED OR CONTRADICTED BY EVIDENCE OF ANY SUCH PRIOR OR CONTEMPORANEOUS MATTER
OR BY EVIDENCE OF ANY SUBSEQUENT ORAL AGREEMENT OF THE PARTIES
HERETO.

             

            Executed
on this the Day of November. 2008.

             

            
            

             

            
              	 	

                      LANDLORD:

                       

                      A-K-S-L
      49 BELTWAY 8, LP., a Texas limited partnership

                       

                      By:A-K-S-L
      49, L.C.,

                      a
      Texas limited liability company, its General Partner

                      


                      By:  /s/
      Jay K. Sears

                      Name Jay Sears

                      Title:  Member-Manager

                       

                       

                       

                      TENANT:

                       

                      DEEPDOWN, INC.,

                      a Nevada Corporation

                       

                      By:  /s/
      Bradley Parro

                      Name:  Bradley Parro

                      Title:  Vice President

                    


            

             

             

            
              
                
                

              

              
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