Document:

Exhibit 10.10

10/31/01 SOG(BY)

Revised 9/09/05

LEASE

GATEWAY RIDGECREST, INC.,

a California corporation,

Landlord,

and

VANTAGE ENERGY SERVICES,
INC.,

a Delaware corporation,

Tenant

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
  1.

  	
   

  	
  USE AND RESTRICTIONS ON USE

  	
   

  	
  1

  
	
  2.

  	
   

  	
  TERM

  	
   

  	
  1

  
	
  3.

  	
   

  	
  RENT

  	
   

  	
  2

  
	
  4.

  	
   

  	
  RENT ADJUSTMENTS

  	
   

  	
  3

  
	
  5.

  	
   

  	
  SECURITY DEPOSIT

  	
   

  	
  5

  
	
  6.

  	
   

  	
  ALTERATIONS

  	
   

  	
  5

  
	
  7.

  	
   

  	
  REPAIR

  	
   

  	
  6

  
	
  8.

  	
   

  	
  LIENS

  	
   

  	
  6

  
	
  9.

  	
   

  	
  ASSIGNMENT AND SUBLETTING

  	
   

  	
  6

  
	
  10.

  	
   

  	
  INDEMNIFICATION

  	
   

  	
  8

  
	
  11.

  	
   

  	
  INSURANCE

  	
   

  	
  8

  
	
  12.

  	
   

  	
  WAIVER OF SUBROGATION

  	
   

  	
  9

  
	
  13.

  	
   

  	
  SERVICES AND UTILITIES

  	
   

  	
  9

  
	
  14.

  	
   

  	
  HOLDING OVER

  	
   

  	
  10

  
	
  15.

  	
   

  	
  SUBORDINATION

  	
   

  	
  10

  
	
  16.

  	
   

  	
  RULES AND REGULATIONS

  	
   

  	
  11

  
	
  17.

  	
   

  	
  REENTRY BY LANDLORD

  	
   

  	
  11

  
	
  18.

  	
   

  	
  DEFAULT

  	
   

  	
  11

  
	
  19.

  	
   

  	
  REMEDIES

  	
   

  	
  12

  
	
  20.

  	
   

  	
  TENANT’S BANKRUPTCY OR INSOLVENCY

  	
   

  	
  14

  
	
  21.

  	
   

  	
  QUIET ENJOYMENT

  	
   

  	
  15

  
	
  22.

  	
   

  	
  CASUALTY

  	
   

  	
  15

  
	
  23.

  	
   

  	
  EMINENT DOMAIN

  	
   

  	
  16

  
	
  24.

  	
   

  	
  SALE BY LANDLORD

  	
   

  	
  16

  
	
  25.

  	
   

  	
  ESTOPPEL CERTIFICATES

  	
   

  	
  16

  
	
  26.

  	
   

  	
  SURRENDER OF PREMISES

  	
   

  	
  17

  
	
  27.

  	
   

  	
  NOTICES

  	
   

  	
  17

  
	
  28.

  	
   

  	
  TAXES PAYABLE BY TENANT

  	
   

  	
  17

  
	
  29.

  	
   

  	
  RELOCATION OF TENANT

  	
   

  	
  18

  
	
  30.

  	
   

  	
  PARKING

  	
   

  	
  18

  
	
  31.

  	
   

  	
  DEFINED TERMS AND HEADINGS

  	
   

  	
  19

  
	
  32.

  	
   

  	
  TENANT’S AUTHORITY

  	
   

  	
  19

  
	
  33.

  	
   

  	
  FINANCIAL STATEMENTS AND CREDIT
  REPORTS

  	
   

  	
  20

  
	
  34.

  	
   

  	
  COMMISSIONS

  	
   

  	
  20

  
	
  35.

  	
   

  	
  TIME AND APPLICABLE LAW

  	
   

  	
  20

  
	
  36.

  	
   

  	
  SUCCESSORS AND ASSIGNS

  	
   

  	
  20

  

 

 

i

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
  37.

  	
   

  	
  ENTIRE AGREEMENT

  	
   

  	
  20

  
	
  38.

  	
   

  	
  EXAMINATION NOT OPTION

  	
   

  	
  20

  
	
  39.

  	
   

  	
  RECORDATION

  	
   

  	
  20

  
	
  40.

  	
   

  	
  LIMITATION OF LANDLORD’S LIABILITY

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT A - FLOOR PLAN DEPICTING THE PREMISES

  	
   

  	
   

  
	
  EXHIBIT A-1 - SITE PLAN

  	
   

  	
   

  
	
  EXHIBIT B - INITIAL ALTERATIONS

  	
   

  	
   

  
	
  EXHIBIT C - COMMENCEMENT DATE MEMORANDUM

  	
   

  	
   

  
	
  EXHIBIT D - RULES AND REGULATIONS

  	
   

  	
   

  

 

 

ii

 

GROSS (BY) OFFICE
LEASE

REFERENCE PAGES

 

	
  BUILDING:

  	
   

  	
  777 Post Oak Boulevard 

  Houston, Texas 77056

  
	
  LANDLORD:

  	
   

  	
  Gateway
  Ridgecrest, Inc., 

  a California corporation

  
	
  LANDLORD’S
  ADDRESS:

  	
   

  	
  Gateway
  Ridgecrest, Inc., 

  c/o RREEF Management Company 

  1406 Halsey Way, Suite 110 

  Carrollton, TX 75007 

  Attention: District Manager (Post Oak, Houston)

  
	
   

  	
   

  	
  With
  a copy to:

  
	
   

  	
   

  	
  RREEF
  Management Company 

  777 Post Oak Boulevard 

  Houston, Texas 77056 

  Attention: Property Manager

  
	
  WIRE INSTRUCTIONS
  AND/OR ADDRESS FOR RENT PAYMENT:

  	
   

  	
  Gateway
  Ridgecrest, Inc., 

  File #55895 

  Los Angeles, CA 90074-5895

  
	
  LEASE REFERENCE
  DATE:

  	
   

  	
  November
  29, 2006

  
	
  TENANT: 

  	
   

  	
  Vantage
  Energy Services, Inc., 

  a Delaware corporation

  
	
  TENANT’S NOTICE
  ADDRESS:

  	
   

  	
   

  
	
  (a) As of
  beginning of Term:

  	
   

  	
  Vantage
  Energy Services, Inc. 

  777 Post Oak Boulevard, Suite 610 

  Houston, Texas 77056 

  Attention: Paul A. Bragg

  
	
  With a copy to:

  	
   

  	
  Gardere
  Wynne Sewell LLP 

  1000 Louisiana, Suite 3400 

  Houston, TX 77002-5011 

  Attention: Neil Martin, Esq.

  
	
  (b) Prior to
  beginning of Term (if different):

  	
   

  	
  Vantage
  Energy Services, Inc. 

  6435 Vanderbilt 

  Houston, Texas 77005 

  Attention: Paul A. Bragg

  
	
  PREMISES
  ADDRESS:

  	
   

  	
  777
  Post Oak Boulevard, Suite 610 

  Houston, Texas 77056

  
	
  PREMISES
  RENTABLE AREA:

  	
   

  	
  Approximately 4,382 sq. ft. (for outline of Premises see Exhibit A)
  as measured in accordance with standards consistent with the Building Owners
  and Managers Association Standard Method for Measuring Floor Area

  

 

 

iii

 

 

	
   

  	
   

  	
  in
  Office Buildings ANSI/BOMA Z65.1-1996.

  
	
  SCHEDULED
  COMMENCEMENT DATE:

  	
   

  	
  March
  1, 2007

  
	
  TERM OF LEASE:

  	
   

  	
  Approximately three (3)
  years, two (2) months and zero (0) days beginning on the Commencement Date
  and ending on the Termination Date. The period from the Commencement Date to
  the last day of the same month is the “Commencement Month.”

  
	
  TERMINATION
  DATE:

  	
   

  	
  The last day of the thirty eighth
  (38) full calendar month after (if the Commencement Month is not a
  full calendar month), or from and including (if the Commencement Month is a
  full calendar month), the Commencement Month

  

ANNUAL RENT and MONTHLY INSTALLMENT OF

RENT (Article 3):

 

	
  Lease Months *

  	
   

  	
  Rentable Square

  	
   

  	
  Annual Rent

  	
   

  	
   

  	
   

  	
  Monthly Installment 

  	
   

  
	
  from

  	
   

  	
  through

  	
   

  	
  Footage

  	
   

  	
  Per Square Foot

  	
   

  	
  Annual Rent

  	
   

  	
  of Rent

  	
   

  
	
  3/1/07

  	
   

  	
  4/30/07

  	
   

  	
  4,382

  	
   

  	
  $0.00

  	
   

  	
  $0.00

  	
   

  	
  $0.00

  	
   

  
	
  5/1/07

  	
   

  	
  4/30/08

  	
   

  	
  4,382

  	
   

  	
  $22.00

  	
   

  	
  $96,404.00

  	
   

  	
  $8,033.67

  	
   

  
	
  5/1/08

  	
   

  	
  4/30/09

  	
   

  	
  4,382

  	
   

  	
  $22.50

  	
   

  	
  $98,595.00

  	
   

  	
  $8,216.25

  	
   

  
	
  5/1/09

  	
   

  	
  4/30/10

  	
   

  	
  4,382

  	
   

  	
  $22.75

  	
   

  	
  $99,690.50

  	
   

  	
  $8,307.54

  	
   

  

*                            The
Lease months are subject to revision upon determination of the actual
Commencement Date and Termination Date

 

	
  BASE YEAR
  (EXPENSES):

  	
   

  	
  January 1, 2007 to December 31, 2007

  
	
  BASE YEAR
  (TAXES):

  	
   

  	
  Taxes for January 1, 2007 to December 31, 2007

  
	
  TENANT’S
  PROPORTIONATE SHARE:

  	
   

  	
  2.48%
  (4,382 sf out of 176,776 sf)

  
	
  SECURITY
  DEPOSIT:

  	
   

  	
  $8,307.54

  
	
  ASSIGNMENT/SUBLETTING
  FEE:

  	
   

  	
  $1,000.00

  
	
  AFTER-HOURS HVAC
  COST:

  	
   

  	
  $75.00 per hour, subject to change at any time

  
	
  PARKING

  	
   

  	
  Up to twelve (12) passes for unreserved spaces; Tenant may, upon
  prior written notice convert up to three (3) spaces
  to reserved spaces. Rates are as follows:

  
	
   

  	
   

  	
  Unreserved Parking Charges

  3/1/07 — 4/30/10    $35.00 plus tax per
  space/month

  
	
   

  	
   

  	
  Reserved
  Parking Charges

  
	
   

  	
   

  	
  3/1/07
  — 4/30/10    $65.00 plus tax per space/month

  

 

 

iv

 

	
   

  	
   

  	
  The Lease months above are subject to revision upon
  determination of the actual Commencement Date and Termination Date.

  
	
   

  	
   

  	
  (See Article 30
  on Parking)

  
	
  REAL ESTATE
  BROKER DUE COMMISSION:

  	
   

  	
  Cushman
  & Wakefield of Texas  (Landlord)
  

  Moody Rambin Interests (Tenant)

  
	
  TENANT’S SIC
  CODE:

  	
   

  	
  6770

  
	
  BUILDING
  BUSINESS HOURS:

  	
   

  	
  Mondays
  through Fridays: 7.00 a.m. until 6.00 p.m. 

  Saturdays:        
                      8.00 a.m. until 1.00 p.m.

  
	
  AMORTIZATION
  RATE:

  	
   

  	
  Twelve
  percent (12%)

  

[Signature Page Follows]

 

v

 

The Reference Pages information is incorporated into and made a part of
the Lease. In the event of any conflict between any Reference Pages information
and the Lease, the Lease shall control. This Lease includes Exhibits A through
D, all of which are made a part of this Lease.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  GATEWAY
  RIDGECREST, INC., 

  a California corporation

  	
   

  	
  VANTAGE
  ENERGY SERVICES, INC., 

  a Delaware corporation

  
	
  

  By: 

  	
  

  RREEF Management Company, a Delaware corporation

  	
   

  	
   

  	
  

  
	
  

  By: 

  	
  

  /s/ Jay Jehle

  	
   

  	
  

  By: 

  	
  

  /s/ Paul A. Bragg

  
	
  Name:

  	
  Jay Jehle

  	
   

  	
  Name:

  	
  Paul A. Bragg

  
	
  Title:

  	
  Managing Director

  	
   

  	
  Title:

  	
  PRESIDENT & CEO

  
	
   

  	
   

  	
   

  	
  Dated:

  	
  FEBRUARY 15, 2007

  
	
  

  By: 

  	
  

  /s/ Kim M. Boudreau

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Kim M. Boudreau

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President, Regional Director

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  2/20, 2007

  	
   

  	
   

  	
   

  

 

 

vi

 

LEASE

By this Lease Landlord leases to Tenant and Tenant
leases from Landlord the Premises in the Building as set forth and described on
the Reference Pages. The Premises are depicted on the floor plan attached
hereto as Exhibit A, and the Building is depicted on the site plan
attached hereto as Exhibit A-1. The Reference Pages, including all terms
defined thereon, are incorporated as part of this Lease.

1. USE AND RESTRICTIONS ON USE.

1.1 The Premises are to be used solely for general
office purposes. Tenant shall not do or permit anything to be done in or about
the Premises which will in any way obstruct or interfere with the rights of
other tenants or occupants of the Building or injure, annoy, or disturb them,
or allow the Premises to be used for any improper, immoral, unlawful, or
objectionable purpose, or commit any waste. Tenant shall not do, permit or
suffer in, on, or about the Premises the sale of any alcoholic liquor without
the written consent of Landlord first obtained. Tenant shall comply with all
governmental laws, ordinances and regulations applicable to Tenant’s use of the
Premises and its occupancy and shall promptly comply with all governmental
orders and directions for the correction, prevention and abatement of any
violations in the Building or appurtenant land, caused or permitted by, or
resulting from the specific use by, Tenant, or in or upon, or in connection
with, the Premises, all at Tenant’s sole expense. Tenant shall not do or permit
anything to be done on or about the Premises or bring or keep anything into the
Premises which will in any way increase the rate of, invalidate or prevent the
procuring of any insurance protecting against loss or damage to the Building or
any of its contents by fire or other casualty or against liability for damage
to property or injury to persons in or about the Building or any part thereof.

1.2 Tenant shall not, and shall not direct, suffer or
permit any of its agents, contractors, employees, licensees or invitees
(collectively, the “Tenant Entities”) to at any time handle, use, manufacture,
store or dispose of in or about the Premises or the Building any (collectively “Hazardous
Materials”) flammables, explosives, radioactive materials, hazardous wastes or
materials, toxic wastes or materials, or other similar substances, petroleum
products or derivatives or any substance subject to regulation by or under any
federal, state and local laws and ordinances relating to the protection of the
environment or the keeping, use or disposition of environmentally hazardous
materials, substances, or wastes, presently in effect or hereafter adopted, all
amendments to any of them, and all rules and regulations issued pursuant to any
of such laws or ordinances (collectively “Environmental Laws”), nor shall
Tenant suffer or permit any Hazardous Materials to be used in any manner not
fully in compliance with all Environmental Laws, in the Premises or the
Building and appurtenant land or allow the environment to become contaminated
with any Hazardous Materials. Notwithstanding the foregoing, Tenant may handle,
store, use or dispose of products containing small quantities of Hazardous
Materials (such as aerosol cans containing insecticides, toner for copiers,
paints, paint remover and the like) to the extent customary and necessary for
the use of the Premises for general office purposes; provided that Tenant shall
always handle, store, use, and dispose of any such Hazardous Materials in a
safe and lawful manner and never allow such Hazardous Materials to contaminate
the Premises, Building and appurtenant land or the environment. Tenant shall protect, defend, indemnify and hold each
and all of the Landlord Entities (as defined in Article 31) harmless from and
against any and all loss, claims, liability or costs (including court costs and
attorney’s fees) incurred by reason of any actual or asserted failure of Tenant
to fully comply with all applicable Environmental Laws, or the presence,
handling, use or disposition in or from the Premises of any Hazardous Materials
by Tenant or any Tenant Entity (even though permissible under all applicable
Environmental Laws or the provisions of this Lease), or by reason of any actual
or asserted failure of Tenant to keep, observe, or perform any provision of
this Section 1.2. Such indemnity shall survive the termination of
this Lease with respect to any claims or liability accruing prior to such
termination.

1.3 Tenant and the Tenant Entities will be entitled to
the non-exclusive use of the common areas of the Building as they exist from
time to time during the Term, including the parking facilities, subject to
Landlord’s rules and regulations regarding such use. However, in no event will
Tenant or the Tenant Entities park more vehicles in the parking facilities than
Tenant’s Proportionate Share of the total parking spaces available for common
use. The foregoing shall not be deemed to provide Tenant with an exclusive
right to any parking spaces or any guaranty of the availability of any
particular parking spaces or any specific number of parking spaces.

2. TERM.

2.1 The Term of this Lease shall begin on the date (“Commencement
Date”) which shall be the later of the Scheduled Commencement Date as shown on
the Reference Pages and the date that Landlord shall tender possession of the
Premises to Tenant, and shall terminate on the date as shown on the Reference
Pages (“Termination Date”), unless sooner

 

 

1

 

terminated by the provisions of this Lease. Landlord shall tender
possession of the Premises on the Commencement Date, in a “broom-clean”
condition, free of all tenants and occupancies with all the work, if any, to be
performed by Landlord pursuant to Exhibit B to this Lease substantially
completed. Tenant shall deliver a punch list of items not completed within
thirty (30) days after Landlord tenders possession of the Premises and Landlord
agrees to proceed with due diligence to perform its obligations regarding such
items until completion thereof. Tenant shall, at Landlord’s request, execute
and deliver a memorandum agreement provided by Landlord in the form of Exhibit
C attached hereto, setting forth the actual Commencement Date, Termination
Date and, if necessary, a revised rent schedule. Should Tenant fail to do so
within thirty (30) days after Landlord’s request, the information set forth in
such memorandum provided by Landlord shall be conclusively presumed to be
agreed and correct.

2.2 Tenant agrees that in the event of the inability
of Landlord to deliver possession of the Premises on the Scheduled Commencement
Date for any reason, Landlord shall not be liable for any damage resulting from
such inability, but Tenant shall not be liable for any rent until the time when
Landlord can, after notice to Tenant, deliver possession of the Premises to
Tenant. No such failure to give possession on the Scheduled Commencement Date
shall affect the other obligations of Tenant under this Lease, except that if
Landlord is unable to deliver possession of the Premises within ninety (90)
days after the Scheduled Commencement Date (other than as a result of strikes,
shortages of materials, holdover tenancies or similar matters beyond the
reasonable control of Landlord and Tenant is notified by Landlord in writing as
to such delay), Tenant shall have the option to terminate this Lease unless
said delay is as a result of:  (a) Tenant’s
failure to agree to plans and specifications and/or construction cost estimates
or bids; (b) Tenant’s request for materials, finishes or installations other
than Landlord’s standard except those, if any, that Landlord shall have
expressly agreed to furnish without extension of time agreed by Landlord; (c)
Tenant’s change in any plans or specifications; or, (d) performance or
completion by a party employed by Tenant (each of the foregoing, a “Tenant
Delay”). If any delay is the result of a Tenant Delay, the Commencement Date
and the payment of rent under this Lease shall be accelerated by the number of
days of such Tenant Delay.

2.3 In the event Landlord permits Tenant, or any
agent, employee or contractor of Tenant, to enter, use or occupy the Premises
prior to the Commencement Date, such entry, use or occupancy shall be subject
to all the provisions of this Lease other than the payment of rent, including,
without limitation, Tenant’s compliance with the insurance requirements of
Article 11. Said early possession shall not advance the Termination Date.

3. RENT.

3.1 Tenant agrees to pay to Landlord the Annual Rent
in effect from time to time by paying the Monthly Installment of Rent then in
effect on or before the first day of each full calendar month during the Term,
except that the first full month’s rent shall be paid upon the execution of
this Lease and shall be offset against the rent when it first becomes due
pursuant to the rent schedule on the Reference Pages. The Monthly Installment
of Rent in effect at any time shall be one-twelfth (1/12) of the Annual Rent in
effect at such time. Rent for any period during the Term which is less than a
full month shall be a prorated portion of the Monthly Installment of Rent based
upon the number of days in such month. Said rent shall be paid to Landlord,
without deduction or offset and without notice or demand, at the Rent Payment
Address, as set forth on the Reference Pages, or to such other person or at
such other place as Landlord may from time to time designate in writing. If an
Event of Default occurs, Landlord may require by notice to Tenant that all
subsequent rent payments be made by an automatic payment from Tenant’s bank
account to Landlord’s account, without cost to Landlord. Tenant must implement
such automatic payment system prior to the next scheduled rent payment or
within ten (10) days after Landlord’s notice, whichever is later. Unless
specified in this Lease to the contrary, all amounts and sums payable by Tenant
to Landlord pursuant to this Lease shall be deemed additional rent.

3.2 Tenant recognizes that late payment of any rent or
other sum due under this Lease will result in administrative expense to
Landlord, the extent of which additional expense is extremely difficult and
economically impractical to ascertain. Tenant therefore agrees that if rent or
any other sum is not paid when due and payable pursuant to this Lease, a late
charge shall be imposed in an amount equal to the greater of: (a) Fifty Dollars
($50.00), or (b) six percent (6%) of the unpaid rent or other payment. The
amount of the late charge to be paid by Tenant shall be reassessed and added to
Tenant’s obligation for each successive month until paid. The provisions of this
Section 3.2 in no way relieve Tenant of the obligation to pay rent or other
payments on or before the date on which they are due, nor do the terms of this
Section 3.2 in any way affect Landlord’s remedies pursuant to Article 19 of
this Lease in the event said rent or other payment is unpaid after date due.

 

 

2

 

4. RENT ADJUSTMENTS.

4.1 For the purpose of this Article 4, the following
terms are defined as follows:

4.1.1 Lease Year:
Each fiscal year (as determined by Landlord from time to time) falling partly
or wholly within the Term.

4.1.2 Expenses:
All costs of operation, maintenance, repair, replacement and management of the
Building (including the amount of any credits which Landlord may grant to
particular tenants of the Building in lieu of providing any standard services
or paying any standard costs described in this Section 4.1.2 for similar
tenants), as determined in accordance with generally accepted accounting
principles, including the following costs by way of illustration, but not
limitation: water and sewer charges; insurance charges of or relating to all
insurance policies and endorsements deemed by Landlord to be reasonably
necessary or desirable and relating in any manner to the protection, preservation,
or operation of the Building or any part thereof; utility costs, including, but
not limited to, the cost of heat, light, power, steam, gas; waste disposal; the
cost of janitorial services; the cost of security and alarm services (including
any central station signaling system); costs of cleaning, repairing, replacing
and maintaining the common areas, including parking and landscaping, window
cleaning costs; labor costs; costs and expenses of managing the Building
including management fees; air conditioning maintenance costs; elevator
maintenance fees and supplies; material costs; equipment costs including the
cost of maintenance, repair and service agreements and rental and leasing
costs; purchase costs of equipment; current rental and leasing costs of items
which would be capital items if purchased; tool costs; licenses, permits and
inspection fees; wages and salaries; employee benefits and payroll taxes
payable to employees directly involved in the operations of the Building up to
and including the level of District Manager; accounting and legal fees; any
sales, use or service taxes incurred in connection therewith; but excluding
costs for which Landlord actually receives reimbursement by insurance or
condemnation awards; expenses incurred in leasing or procuring new tenants,
including advertising expenses or leasing commissions paid to agents of
Landlord or other brokers; professional fees incurred in connection with
preparing or enforcing any lease (including this Lease (Landlord’s costs of
enforcement of this Lease being recoverable under Article 19, or as otherwise
set forth in this Lease); costs to test, survey, clean-up, or otherwise remedy
Hazardous Materials (except to the extent caused by Tenant or any Tenant
Entity, which costs shall be payable by Tenant under Article 1); costs arising
from the gross negligence or willful misconduct of Landlord, its agents,
employees, or contractors; advertising and promotional expenses for the purpose
of marketing space in the Building; the cost of any repairs, improvements or
replacements made to remedy any structural or other defect in the original
design or construction of the Building; depreciation of the Building or
Landlord’s personal property at the Building; interest on debt or amortization
payments on any mortgage or deed of trust; rental under any ground lease or
similar rental under any other superior lease or sublease; any wages, salaries
or other compensation paid to any officer or executive level employees of
Landlord and/or its equity owners or any employee not employed for or on behalf
of the Building except as hereinabove stated; dividends paid by Landlord; costs
of alterations and capital improvements which would not be expenses under
generally accepted accounting principles except as otherwise permitted under
this Section 4.1.2; and the costs for repairs or maintenance that are
reimbursed by others, including, without limitation, reimbursement made on
warranty claims. Landlord shall be entitled to recover, as additional rent
(which, along with any other capital expenditures constituting Expenses,
Landlord may either include in Expenses or cause to be billed to Tenant along
with Expenses and Taxes but as a separate item), Tenant’s Proportionate Share
of: (i) an allocable portion of the cost of capital improvement items which are
reasonably calculated to reduce operating expenses; (ii) the cost of fire
sprinklers and suppression systems and other life safety systems; and (iii)
other capital expenses which are required under any governmental laws, regulations
or ordinances which were not applicable to the Building at the time it was
constructed; but the costs described in this sentence shall be amortized over
the reasonable life of such expenditures in accordance with such reasonable
life and amortization schedules as shall be determined by Landlord in
accordance with generally accepted accounting principles, with interest on the
unamortized amount at one percent (1%)  in
excess of the Wall Street Journal prime lending rate announced from time to
time. Expenses shall not include depreciation or amortization of the Building
or equipment in the Building except as provided herein, loan principal
payments, costs of alterations of tenants’ premises, leasing commissions,
interest expenses on long-term borrowings or advertising costs.

4.1.3 Taxes:
Real estate taxes and any other taxes, charges and assessments which are levied
with respect to the Building or the land appurtenant to the Building, or with
respect to any improvements, fixtures and equipment or other property of
Landlord, real or personal, located in the Building and used in connection with
the operation of the Building and said land, any payments to any ground lessor
in reimbursement of tax payments made by such lessor; and all fees, expenses
and costs incurred by Landlord in investigating, protesting, contesting or in
any way seeking to reduce or avoid increase in any assessments, levies or the
tax rate pertaining to any Taxes to be paid by Landlord in any Lease Year; and
all taxes of whatsoever nature that are imposed wholly or in part in
substitution for, or in lieu of, any of the taxes,

 

 

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charges, and assessments included in this definition of Taxes. Taxes
shall not include any estate or inheritance tax, or tax imposed upon any
transfer by Landlord of its interest in this Lease or the Building, due to a
change in the ownership of the Building, or any taxes to be paid by Tenant
pursuant to Article 28. If, due to a change in a method of taxation, any tax
shall be levied against Landlord wholly or in part in substitution for, or in
lieu of, tax otherwise recoverable under this Section 4.1.3, such other tax
shall be deemed to be a Tax for the purposes of this Section 4.1.3 to the
extent not reimbursable from Tenant to Landlord under Article 28 of this
Agreement. Tenant shall be entitled to its proportionate share of any refunds
received by Landlord which shall be offset against future rent payments due by
Tenant.

4.2 If in any Lease Year, (i) Expenses paid or
incurred shall exceed Expenses paid or incurred in the Base Year (Expenses)
and/or (ii) Taxes paid or incurred by Landlord in any Lease Year shall exceed
the amount of such Taxes which became due and payable in the Base Year (Taxes),
Tenant shall pay as additional rent for such Lease Year Tenant’s Proportionate
Share of such excess.

4.3 The annual determination of Expenses shall be made
by Landlord and shall be binding upon Landlord and Tenant, subject to the
provisions of this Section 4.3. During the Term, Tenant may review, at Tenant’s
sole cost and expense, the books and records supporting such determination in
an office of Landlord, or Landlord’s agent, during normal business hours, upon
giving Landlord five (5) days advance written notice within sixty (60) days
after receipt of such determination, but in no event more often than once in
any one (1) year period, subject to execution of a confidentiality agreement
acceptable to Landlord, and provided that if Tenant utilizes an independent
accountant to perform such review it shall be one of national standing which is
reasonably acceptable to Landlord, is not compensated on a contingency basis
and is also subject to such confidentiality agreement. If Tenant fails to
object to Landlord’s determination of Expenses within ninety (90) days after
receipt, or if any such objection fails to state with specificity the reason
for the objection, Tenant shall be deemed to have approved such determination
and shall have no further right to object to or contest such determination. In
the event that during all or any portion of any Lease Year or Base Year, the
Building is not fully rented and occupied Landlord shall make an appropriate
adjustment in occupancy-related Expenses for such year for the purpose of
avoiding distortion of the amount of such Expenses to be attributed to Tenant
by reason of variation in total occupancy of the Building, by employing
consistent and sound accounting and management principles to determine Expenses
that would have been paid or incurred by Landlord had the Building been at
least ninety-five percent (95%) rented and occupied, and the amount so
determined shall be deemed to have been Expenses for such Lease Year. Any
determination of Expenses and/or Taxes shall be made annually as provided
herein and, with respect to Expenses, shall not include any months that are not
included in either the prior Lease Year being examined for such determination
or in the twelve (12) months immediately preceding such Lease Year.

4.4 Prior to the actual determination thereof for a
Lease Year, Landlord may from time to time estimate Tenant’s liability for
Expenses and/or Taxes under Section 4.2, Article 6 and Article 28 for the Lease
Year or portion thereof. Landlord will give Tenant written notification of the
amount of such estimate and Tenant agrees that it will pay, by increase of its
Monthly Installments of Rent due in such Lease Year, additional rent in the
amount of such estimate. Any such increased rate of Monthly Installments of
Rent pursuant to this Section 4.4 shall remain in effect until further written
notification to Tenant pursuant hereto.

4.5 When the above mentioned actual determination of
Tenant’s liability for Expenses and/or Taxes is made for any Lease Year and
when Tenant is so notified in writing, then:

4.5.1 If the total additional rent Tenant actually
paid pursuant to Section 4.3 on account of Expenses and/or Taxes for the Lease
Year is less than Tenant’s liability for Expenses and/or Taxes, then Tenant
shall pay such deficiency to Landlord as additional rent in one lump sum within
thirty (30) days of receipt of Landlord’s bill therefor; and

4.5.2 If the total additional rent Tenant actually
paid pursuant to Section 4.3 on account of Expenses and/or Taxes for the Lease
Year is more than Tenant’s liability for Expenses and/or Taxes, then Landlord
shall credit the difference against the then next due payments to be made by
Tenant under this Article 4, or, if the Lease has terminated, refund the
difference in cash. Tenant shall not be entitled to a credit by reason of
actual Expenses and/or Taxes in any Lease Year being less than Expenses and/or
Taxes in the Base Year (Expenses and/or Taxes).

4.6 If the Commencement Date is other than January 1
or if the Termination Date is other than December 31, Tenant’s liability for
Expenses and Taxes for the Lease Year in which said Date occurs shall be
prorated based upon a three hundred sixty-five (365) day year.

 

 

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5. SECURITY DEPOSIT. Tenant
shall deposit the Security Deposit with Landlord upon the execution of this
Lease. Said sum shall be held by Landlord as security for the faithful
performance by Tenant of all the terms, covenants and conditions of this Lease
to be kept and performed by Tenant and not as an advance rental deposit or as a
measure of Landlord’s damage in case of Tenant’s default. If Tenant defaults
with respect to any provision of this Lease, Landlord may use any part of the
Security Deposit for the payment of any rent or any other sum in default, or
for the payment of any amount which Landlord may spend or become obligated to
spend by reason of Tenant’s default, or to compensate Landlord for any other
loss or damage which Landlord may suffer by reason of Tenant’s default. If any
portion is so used, Tenant shall within five (5) days after written demand
therefor, deposit with Landlord an amount sufficient to restore the Security
Deposit to its original amount and Tenant’s failure to do so shall be a
material breach of this Lease. Except to such extent, if any, as shall be
required by law, Landlord shall not be required to keep the Security Deposit
separate from its general funds, and Tenant shall not be entitled to interest
on such deposit. If Tenant shall fully and faithfully perform every provision
of this Lease to be performed by it, the Security Deposit or any balance
thereof shall be returned to Tenant within sixty (60) days after the expiration
or early termination of this Lease.

6. ALTERATIONS.

6.1 Except for those, if any, specifically provided
for in Exhibit B to this Lease, Tenant shall not make or suffer to be
made any alterations, additions, or improvements, including, but not limited
to, the attachment of any fixtures or equipment in, on, or to the Premises or
any part thereof or the making of any improvements as required by Article 7,
without the prior written consent of Landlord. When applying for such consent,
Tenant shall, if requested by Landlord, furnish complete plans and
specifications for such alterations, additions and improvements. Landlord’s
consent shall not be unreasonably withheld with respect to alterations which
(i) are not structural in nature, (ii) are not visible from the exterior of the
Building, (iii) do not affect or require modification of the Building’s electrical,
mechanical, plumbing, HVAC or other systems, and (iv) in aggregate do not cost
more than $3.00 per rentable square foot of that portion of the Premises
affected by the alterations in question. Landlord shall approve or deny Tenant’s
plans or specifications within ten (10) days after receipt thereof. Provided
that the Initial Work is limited to painting, re-carpeting and signage as
described in Exhibit B, then notwithstanding anything to the contrary
contained in this Lease, Tenant shall not be obligated to remove any of the
alterations, additions or improvements made to the Premises (or restore the
Premises to any earlier state of condition) in connection with the Initial
Work.

6.2 In the event Landlord consents to the making of
any such alteration, addition or improvement by Tenant, the same shall be made
by using either Landlord’s contractor or a contractor reasonably approved by
Landlord, in either event at Tenant’s sole cost and expense. If Tenant shall
employ any contractor other than Landlord’s contractor and such other
contractor or any subcontractor of such other contractor shall employ any
non-union labor or supplier, Tenant shall be responsible for and hold Landlord
harmless from any and all delays, damages and extra costs suffered by Landlord
as a result of any dispute with any labor unions concerning the wage, hours,
terms or conditions of the employment of any such labor. In any event Landlord
may charge Tenant a construction management fee not to exceed five percent (5%)
of the cost of such work to cover its overhead as it relates to such proposed
work, plus third-party costs actually incurred by Landlord in connection with
the proposed work and the design thereof, with all such amounts being due five
(5) days after Landlord’s demand.

6.3 All alterations, additions or improvements
proposed by Tenant shall be constructed in accordance with all government laws,
ordinances, rules and regulations, using Building standard materials where
applicable, and Tenant shall, prior to construction, provide the additional
insurance required under Article 11 in such case, and also all such assurances
to Landlord as Landlord shall reasonably require to assure payment of the costs
thereof, including but not limited to, notices of non-responsibility, waivers of
lien, surety company performance bonds and funded construction escrows and to
protect Landlord and the Building and appurtenant land against any loss from
any mechanic’s, materialmen’s or other liens. Tenant shall pay in addition to
any sums due pursuant to Article 4, any increase in real estate taxes
attributable to any such alteration, addition or improvement for so long,
during the Term, as such increase is ascertainable; at Landlord’s election said
sums shall be paid in the same way as sums due under Article 4. Landlord may,
as a condition to its consent to any particular alterations or improvements,
require Tenant to deposit with Landlord the amount reasonably estimated by
Landlord as sufficient to cover the reasonable costs of removing such alterations
or improvements and restoring the Premises, to the extent required under
Section 26.2.

 

 

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7. REPAIR.

7.1 Landlord shall have no obligation to alter,
remodel, improve, repair, decorate or paint the Premises, except as specified
in Exhibit B if attached to this Lease and except that Landlord shall
repair and maintain the structural portions of the Building, including the
basic plumbing, air conditioning, heating and electrical systems installed or
furnished by Landlord. By taking possession of the Premises, Tenant accepts
them as being in good order, condition and repair and in the condition in which
Landlord is obligated to deliver them, except as set forth in the punch list to
be delivered pursuant to Section 2.1 and as provided in Section 2.1. It is
hereby understood and agreed that no representations respecting the condition
of the Premises or the Building have been made by Landlord to Tenant, except as
specifically set forth in this Lease.

7.2 Tenant shall, at all times during the Term, keep
the Premises in good condition and repair excepting damage by fire, or other
casualty, and in compliance with all applicable governmental laws, ordinances
and regulations, promptly complying with all governmental orders and directives
for the correction, prevention and abatement of any violations or nuisances in
or upon, or connected with, the Premises, all at Tenant’s sole expense.

7.3 Landlord shall not be liable for any failure to
make any repairs or to perform any maintenance unless such failure shall
persist for an unreasonable time after written notice of the need of such
repairs or maintenance is given to Landlord by Tenant.

7.4 Except as provided in Article 22, there shall be
no abatement of rent and no liability of Landlord by reason of any injury to or
interference with Tenant’s business arising from the making of any repairs,
alterations or improvements in or to any portion of the Building or the
Premises or to fixtures, appurtenances and equipment in the Building. Except to
the extent, if any, prohibited by law, Tenant waives the right to make repairs
at Landlord’s expense under any law, statute or ordinance now or hereafter in
effect.

8. LIENS. Tenant shall
keep the Premises, the Building and appurtenant land and Tenant’s leasehold
interest in the Premises free from any liens arising out of any services, work
or materials performed, furnished, or contracted for by Tenant, or obligations
incurred by Tenant. In the event that Tenant fails, within ten (10) days following
the imposition of any such lien, to either cause the same to be released of
record or provide Landlord with insurance against the same issued by a major
title insurance company or such other protection against the same as Landlord
shall accept (such failure to constitute an Event of Default), Landlord shall
have the right to cause the same to be released by such means as it shall deem
proper, including payment of the claim giving rise to such lien. All such sums
paid by Landlord and all expenses incurred by it in connection therewith shall
be payable to it by Tenant within five (5) days of Landlord’s demand.

9. ASSIGNMENT AND SUBLETTING.

9.1 Tenant shall not have the right to assign or
pledge this Lease or to sublet the whole or any part of the Premises whether
voluntarily or by operation of law, or permit the use or occupancy of the
Premises by anyone other than Tenant, and shall not make, suffer or permit such
assignment, subleasing or occupancy without the prior written consent of
Landlord, such consent not to be unreasonably withheld, and said restrictions
shall be binding upon any and all assignees of the Lease and subtenants of the
Premises. In the event Tenant desires to sublet, or permit such occupancy of,
the Premises, or any portion thereof, or assign this Lease, Tenant shall give
written notice thereof to Landlord at least thirty (30) days but no more than
one hundred twenty (120) days prior to the proposed commencement date of such
subletting or assignment, which notice shall set forth the name of the proposed
subtenant or assignee, the relevant terms of any sublease or assignment and
copies of financial reports and other relevant financial information of the
proposed subtenant or assignee.

9.2 Notwithstanding any assignment or subletting, permitted
or otherwise, Tenant shall at all times remain directly, primarily and fully
responsible and liable for the payment of the rent specified in this Lease and
for compliance with all of its other obligations under the terms, provisions
and covenants of this Lease. Upon the occurrence of an Event of Default, if the
Premises or any part of them are then assigned or sublet, Landlord, in addition
to any other remedies provided in this Lease or provided by law, may, at its
option, collect directly from such assignee or subtenant all rents due and
becoming due to Tenant under such assignment or sublease and apply such rent
against any sums due to Landlord from Tenant under this Lease, and no such
collection shall be construed to constitute a novation or release of Tenant
from the further performance of Tenant’s obligations under this Lease.

 

 

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9.3 In addition to Landlord’s right to approve of any
subtenant or assignee, Landlord shall have the option, in its sole discretion,
in the event of any proposed subletting or assignment, to terminate this Lease,
or in the case of a proposed subletting of less than the entire Premises, to
recapture the portion of the Premises to be sublet, as of the date the
subletting or assignment is to be effective. The option shall be exercised, if
at all, by Landlord giving Tenant written notice given by Landlord to Tenant
within thirty (30) days following Landlord’s receipt of Tenant’s written notice
as required above. However, if Tenant notifies Landlord, within five (5) days
after receipt of Landlord’s termination notice, that Tenant is rescinding its
proposed assignment or sublease, the termination notice shall be void and the
Lease shall continue in full force and effect. If this Lease shall be
terminated with respect to the entire Premises pursuant to this Section, the
Term of this Lease shall end on the date stated in Tenant’s notice as the
effective date of the sublease or assignment as if that date had been
originally fixed in this Lease for the expiration of the Term. If Landlord
recaptures under this Section only a portion of the Premises, the rent to be
paid from time to time during the unexpired Term shall abate proportionately
based on the proportion by which the approximate square footage of the
remaining portion of the Premises shall be less than that of the Premises as of
the date immediately prior to such recapture. Tenant shall, at Tenant’s own
cost and expense, discharge in full any outstanding commission obligation which
may be due and owing as a result of any proposed assignment or subletting,
whether or not the Premises are recaptured pursuant to this Section 9.3 and
rented by Landlord to the proposed tenant or any other tenant.

9.4 In the event that Tenant sells, sublets, assigns
or transfers this Lease, Tenant shall pay to Landlord as additional rent an
amount equal to one hundred percent (100%) of any Increased Rent (as defined
below), less the Costs Component (as defined below), when and as such Increased
Rent is received by Tenant. As used in this Section, “Increased Rent” shall
mean the excess of (i) all rent and other consideration which Tenant is
entitled to receive by reason of any sale, sublease, assignment or other
transfer of this Lease, over (ii) the rent otherwise payable by Tenant under
this Lease at such time. For purposes of the foregoing, any consideration
received by Tenant in form other than cash shall be valued at its fair market
value as determined by Landlord in good faith. The “Costs Component” is that
amount which, if paid monthly, would fully amortize on a straight-line basis,
over the entire period for which Tenant is to receive Increased Rent, the
reasonable costs incurred by Tenant for leasing commissions and tenant
improvements in connection with such sublease, assignment or other transfer.

9.5 Notwithstanding any other provision hereof, it
shall be considered reasonable for Landlord to withhold its consent to any
assignment of this Lease or sublease of any portion of the Premises if at the time
of either Tenant’s notice of the proposed assignment or sublease or the
proposed commencement date thereof, there shall exist any uncured default of
Tenant or matter which will become a default of Tenant with passage of time
unless cured, or if the proposed assignee or sublessee is an entity: (a) with
which Landlord is already in negotiation; (b) is already an occupant of the
Building unless Landlord is unable to provide the amount of space required by
such occupant; (c) is a governmental agency; (d) is incompatible with the
character of occupancy of the Building; (e) with which the payment for the
sublease or assignment is determined in whole or in part based upon its net
income or profits; or (f)  would
subject the Premises to a use which would: (i) involve increased personnel or
wear upon the Building; (ii) violate any exclusive right granted to another
tenant of the Building; (iii) require any addition to or modification of the
Premises or the Building in order to comply with building code or other governmental
requirements; or, (iv) involve a violation of Section 1.2. Tenant expressly
agrees that for the purposes of any statutory or other requirement of
reasonableness on the part of Landlord, Landlord’s refusal to consent to any
assignment or sublease for any of the reasons described in this Section 9.5,
shall be conclusively deemed to be reasonable.

9.6 Upon any request to assign or sublet, Tenant will
pay to Landlord the Assignment/Subletting Fee plus, on demand, a sum equal to
all of Landlord’s costs, including reasonable attorney’s fees, incurred in
investigating and considering any proposed or purported assignment or pledge of
this Lease or sublease of any of the Premises, regardless of whether Landlord
shall consent to, refuse consent, or determine that Landlord’s consent is not
required for, such assignment, pledge or sublease. Any purported sale,
assignment, mortgage, transfer of this Lease or subletting which does not
comply with the provisions of this Article 9 shall be void.

9.7 If Tenant is a corporation, limited liability
company, partnership or trust, any transfer or transfers of or change or
changes within any twelve (12) month period in the number of the outstanding
voting shares of the corporation or limited liability company, the general
partnership interests in the partnership or the identity of the persons or
entities controlling the activities of such partnership or trust resulting in
the persons or entities owning or controlling a majority of such shares,
partnership interests or activities of such partnership or trust at the
beginning of such period no longer having such ownership or control shall be
regarded as equivalent to an assignment of this Lease to the persons or
entities acquiring such ownership or control and shall be subject to all the
provisions of this Article 9 to the same extent and for all intents and
purposes as though such an assignment.

 

 

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9.8 So long as Tenant is not entering into the
Permitted Transfer for the purpose of avoiding or otherwise circumventing the
remaining terms of this Article 9, subject as hereinafter stated, Tenant may
assign or sublease all or part of its interest in this Lease or all or part of
the Premises (a “Permitted Transfer”) to the following types of entities (a “Permitted
Transferee”) without the written consent of Landlord:

(1) a parent, affiliate, subsidiary, or operating
division of Tenant provided that the Tangible Net Worth (as defined below) of
such entity is not less than the Tangible Net Worth of Tenant as of the Lease
Reference Date;

(2) any corporation, limited partnership, limited
liability partnership, limited liability company or other business entity in
which or with which Tenant or its corporate successors or assigns, is merged or
consolidated, in accordance with applicable statutory provisions governing
merger and consolidation of business entities, so long as (A) Tenant’s
obligations hereunder are assumed by the entity surviving such merger or
created by such consolidation; and (B) the Tangible Net Worth of the surviving
or created entity is not less than the Tangible Net Worth of Tenant as of the
Lease Reference Date; or

(3) any corporation, limited partnership, limited
liability partnership, limited liability company or other business entity
acquiring all or substantially all of Tenant’s assets if such entity’s Tangible
Net Worth after such acquisition is not less than the Tangible Net Worth of
Tenant as of the Lease Reference Date.

Tenant shall notify Landlord at least twenty (20) days in advance of
any proposed Permitted Transfer. In the case of an assignment, the Permitted
Transferee shall sign and deliver to Landlord an assumption agreement
reasonably acceptable to Landlord. Tenant shall remain liable for the
performance of all of the obligations of Tenant hereunder, or if Tenant no
longer exists because of a merger, consolidation, or acquisition, the surviving
or acquiring entity shall expressly assume in writing the obligations of Tenant
hereunder. The Permitted Transferee shall comply with all of the terms and
conditions of this Lease, including the permitted use hereunder. Within at
least thirty (30) days after the effective date of any Permitted Transfer,
Tenant shall furnish Landlord with copies of the instrument effecting any of
the foregoing Permitted Transfers and documentation establishing Tenant’s
satisfaction of the requirements set forth above applicable to any such
Permitted Transfer. The occurrence of a Permitted Transfer shall not waive
Landlord’s rights as to any subsequent Transfer. “Tangible Net Worth” means the
excess of total assets over total liabilities, in each case determined in
accordance with GAAP. Any subsequent transfer by Permitted Transferee shall be
subject to the provisions of this Article 9.

10. INDEMNIFICATION. None of the
Landlord Entities shall be liable and Tenant hereby waives all claims against
them for any damage to any property or any injury to any person in or about the
Premises or the Building by or from any cause whatsoever (including without
limiting the foregoing, rain or water leakage of any character from the roof,
windows, walls, basement, pipes, plumbing works or appliances, the Building not
being in good condition or repair, gas, fire, oil, electricity or theft),
except to the extent caused by or arising from the gross negligence or willful
misconduct of the Landlord Entities or its agents, employees or contractors.
Tenant shall protect, indemnify and hold the Landlord Entities harmless from
and against any and all loss, claims, liability or costs (including court costs
and attorney’s fees) incurred by reason of (a) any damage to any property
(including but not limited to property of any Landlord Entity) or any injury
(including but not limited to death) to any person occurring in, on or about
the Premises or the Building to the extent that such injury or damage shall be
caused by or arise from any actual or alleged act, neglect, fault, or omission
by or of Tenant or any Tenant Entity to meet any standards imposed by any duty
with respect to the injury or damage; (b) the conduct or management of any work
or thing whatsoever done by the Tenant in or about the Premises or from
transactions of the Tenant concerning the Premises; (c) Tenant’s failure to
comply with any and all governmental laws, ordinances and regulations
applicable to the condition or use of the Premises or its occupancy; or (d) any
breach or default on the part of Tenant in the performance of any covenant or
agreement on the part of the Tenant to be performed pursuant to this Lease. The
provisions of this Article shall survive the termination of this Lease with
respect to any claims or liability accruing prior to such termination.

11. INSURANCE.

11.1 Tenant shall keep in force throughout the Term:
(a) a Commercial General Liability insurance policy or policies to protect the
Landlord Entities against any liability to the public or to any invitee of
Tenant or a Landlord Entity incidental to the use of or resulting from any
accident occurring in or upon the Premises with a limit of not less than
$1,000,000 per occurrence and not less than $2,000,000 in the annual aggregate,
or such larger amount as Landlord may prudently require from time to time,
covering bodily injury and property damage liability and $1,000,000 products/completed
operations aggregate; (b) Business Auto Liability covering owned, non-owned and
hired vehicles with a limit of not less than

 

 

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$1,000,000 per accident; (c) Worker’s
Compensation Insurance with limits as required by statute with Employers
Liability and limits of $500,000 each accident, $500,000 disease policy limit,
$500,000 disease—each employee; (d) All Risk or Special Form coverage
protecting Tenant against loss of or damage to Tenant’s alterations, additions,
improvements, carpeting, floor coverings, panelings, decorations, fixtures,
inventory and other business personal property situated in or about the
Premises to the full replacement value of the property so insured; and, (e)
Business Interruption Insurance with limit of liability representing loss of at
least approximately six (6) months of income.

11.2 The aforesaid policies
shall (a) be provided at Tenant’s expense; (b) name the Landlord Entities as
additional insureds (General Liability) and loss payee (Property—Special Form);
(c) be issued by an insurance company with a minimum Best’s rating of “A-:VII”
during the Term; and (d) provide that said insurance shall not be canceled
unless thirty (30) days prior written notice (ten days for non-payment of
premium) shall have been given to Landlord; a certificate of Liability
insurance on ACORD Form 25 and a certificate of Property insurance on ACORD
Form 27 shall be delivered to Landlord by Tenant upon the Commencement Date and
at least thirty (30) days prior to each renewal of said insurance.

11.3 Whenever Tenant shall
undertake any alterations, additions or improvements in, to or about the
Premises (“Work”) the aforesaid insurance protection must extend to and include
injuries to persons and damage to property arising in connection with such
Work, without limitation including liability under any applicable structural
work act, and such other insurance as Landlord shall require; and the policies
of or certificates evidencing such insurance must be delivered to Landlord
prior to the commencement of any such Work.

11.4 Throughout the Term of
this Lease, Landlord shall maintain with any such deductibles as Landlord may
from time to time determine (a) a policy or policies of insurance covering “all
risks” perils to the extent of one hundred percent (100%) of the insurable
value of the Building, and (b) a Commercial General Liability Insurance Policy
or policies covering the Building and any areas adjacent thereto with a limit
of not less than One Million Dollars ($1,000,000.00) per occurrence and not
less than Two Million Dollars ($2,000,000.00) in the annual aggregate.

12. WAIVER
OF SUBROGATION. So long as their respective insurers so permit,
Tenant and Landlord hereby mutually waive their respective rights of recovery
against each other for any loss insured by fire, extended coverage, All Risks
or other insurance now or hereafter existing for the benefit of the respective
party but only to the extent of the net insurance proceeds payable under such
policies. Each party shall obtain any special endorsements required by their
insurer to evidence compliance with the aforementioned waiver.

13. SERVICES
AND UTILITIES.

13.1 Provided no Event of
Default has occurred and is continuing, and subject to the other provisions of
this Lease, Landlord agrees to furnish to the Premises during Building Business
Hours (specified on the Reference Pages) on generally recognized business days
(but exclusive in any event of Sundays and national and local legal holidays),
the following services and utilities subject to the rules and regulations of
the Building prescribed from time to time: (a) hot and cold water suitable for
normal office use of the Premises (with Tenant being responsible for the repair
and maintenance of the water heater servicing the Premises); (b) heat and air
conditioning required in Landlord’s judgment for the use and occupation of the
Premises during Building Business Hours; (c) cleaning and janitorial service;
(d) elevator service by nonattended automatic elevators, if applicable; and,
(e) equipment to bring to the Premises electricity for lighting, convenience
outlets and other normal office use. To the extent that Tenant is not billed
directly by a public utility, Tenant shall pay, within five (5) days of
Landlord’s demand, for all electricity used by Tenant in the Premises. The
charge shall be at the rates charged for such services by the local public
utility. Alternatively, Landlord may elect to include electricity costs in
Expenses. In the absence of Landlord’s gross negligence or willful misconduct,
Landlord shall not be liable for, and Tenant shall not be entitled to, any
abatement or reduction of rental by reason of Landlord’s failure to furnish any
of the foregoing, unless such failure shall persist for an unreasonable time
after written notice of such failure is given to Landlord by Tenant and
provided further that Landlord shall not be liable when such failure is caused
by accident, breakage, repairs, labor disputes of any character, energy usage restrictions
or by any other cause, similar or dissimilar, beyond the reasonable control of
Landlord. Landlord shall use reasonable efforts to remedy any interruption in
the furnishing of services and utilities.

13.2 Should Tenant require
any additional work or service, as described above, including services
furnished outside ordinary business hours specified above, Landlord may, on
terms to be agreed, upon reasonable advance notice by Tenant, furnish such
additional service and Tenant agrees to pay Landlord such charges as may be
agreed upon, including any tax imposed thereon, but in no event at a charge
less than Landlord’s actual cost plus overhead for such additional service

 

 

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and, where appropriate, a reasonable allowance for depreciation of any
systems being used to provide such service. The current charge for after-hours
HVAC service, which is subject to change at any time, is specified on the
Reference Pages.

13.3 Wherever heat-generating machines or equipment
are used by Tenant in the Premises which affect the temperature otherwise
maintained by the air conditioning system or Tenant allows occupancy of the
Premises by more persons than the heating and air conditioning system is
designed to accommodate, in either event whether with or without Landlord’s
approval, Landlord reserves the right to install supplementary heating and/or
air conditioning units in or for the benefit of the Premises and the cost
thereof, including the cost of installation and the cost of operations and
maintenance, shall be paid by Tenant to Landlord within five (5) days of
Landlord’s demand.

13.4 Tenant will not, without the written consent of
Landlord, use any apparatus or device in the Premises, including but not
limited to, electronic data processing machines and machines using current in
excess of 2000 watts and/or 20 amps or 120 volts, which will in any way
increase the amount of electricity or water usually furnished or supplied for
use of the Premises for normal office use, nor connect with electric current,
except through existing electrical outlets in the Premises, or water pipes, any
apparatus or device for the purposes of using electrical current or water. If
Tenant shall require water or electric current in excess of that usually
furnished or supplied for use of the Premises as normal office use, Tenant
shall procure the prior written consent of Landlord for the use thereof, which
Landlord may refuse, and if Landlord does consent, Landlord may cause a water
meter or electric current meter to be installed so as to measure the amount of
such excess water and electric current. The cost of any such meters shall be
paid for by Tenant. Tenant agrees to pay to Landlord within five (5) days of
Landlord’s demand, the cost of all such excess water and electric current
consumed (as shown by said meters, if any, or, if none, as reasonably estimated
by Landlord) at the rates charged for such services by the local public utility
or agency, as the case may be, furnishing the same, plus any additional expense
incurred in keeping account of the water and electric current so consumed.

13.5 Tenant will not, without the written consent of
Landlord, contract with a utility provider to service the Premises with any
utility, including, but not limited to, telecommunications, electricity, water,
sewer or gas, which is not previously providing such service to other tenants
in the Building. Subject to Landlord’s reasonable rules and regulations and the
provisions of Articles 6 and 26, Tenant shall be entitled to the use of wiring
(“Communications Wiring”) from the existing telecommunications nexus in the
Building to the Premises, sufficient for normal general office use of the
Premises. Tenant shall not install any additional Communications Wiring, nor remove
any Communications Wiring, without in each instance obtaining the prior written
consent of Landlord, which consent may be withheld in Landlord’s sole and
absolute discretion. Landlord’s shall in no event be liable for disruption in
any service obtained by Tenant pursuant to this paragraph.

14. HOLDING OVER. Tenant
shall pay Landlord for each day Tenant retains possession of the Premises or
part of them after termination of this Lease by lapse of time or otherwise at
the rate (“Holdover Rate”) which shall be One Hundred Fifty Percent (150%) the
amount of the Annual Rent for the last period prior to the date of such
termination plus all Rent Adjustments under Article 4, prorated on a daily
basis, and also pay all damages sustained by Landlord by reason of such
retention. If Landlord gives notice to Tenant of Landlord’s election to such
effect, such holding over shall constitute renewal of this Lease for a period
from month to month at the Holdover Rate, but if the Landlord does not so
elect, no such renewal shall result notwithstanding acceptance by Landlord of
any sums due hereunder after such termination; and instead, a tenancy at
sufferance at the Holdover Rate shall be deemed to have been created. In any
event, no provision of this Article 14 shall be deemed to waive Landlord’s
right of reentry or any other right under this Lease or at law.

15. SUBORDINATION. Without
the necessity of any additional document being executed by Tenant for the
purpose of effecting a subordination, this Lease shall be subject and
subordinate at all times to ground or underlying leases and to the lien of any
mortgages or deeds of trust now or hereafter placed on, against or affecting
the Building provided that, subject to compliance by Tenant with the terms and
conditions of this Lease (as the same may be amended, modified or supplemented
from time to time), such lessor, mortgagee or trustee agrees not to disturb the
Lease or Tenant’s use or occupancy of the premises in accordance with this
Lease, Landlord’s interest or estate in the Building, or any ground or
underlying lease; provided, however, that if the lessor, mortgagee, trustee, or
holder of any such mortgage or deed of trust elects to have Tenant’s interest
in this Lease be superior to any such instrument, then, by notice to Tenant,
this Lease shall be deemed superior, whether this Lease was executed before or
after said instrument. Notwithstanding the foregoing, Tenant covenants and
agrees to execute and deliver within ten (10) days of Landlord’s request such
further instruments evidencing such subordination or superiority of this Lease
as may be required by Landlord and are in form and substance reasonable and
customary.

 

 

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16.      RULES AND REGULATIONS.  Tenant shall faithfully observe
and comply with all the rules and regulations as set forth in Exhibit D
to this Lease and all reasonable and non-discriminatory modifications of and
additions to them from time to time put into effect by Landlord. Landlord shall
not be responsible to Tenant for the non-performance by any other tenant or
occupant of the Building of any such rules and regulations.

17.      REENTRY
BY LANDLORD.

17.1    Landlord reserves and shall at all times
have the right to re-enter the Premises to inspect the same, to supply janitor
service and any other service to be provided by Landlord to Tenant under this
Lease, to show said Premises to prospective purchasers, mortgagees or within
the last one hundred eighty (180) days of the Term, tenants, and to alter,
improve or repair the Premises and any portion of the Building, without
abatement of rent, and may for that purpose erect, use and maintain
scaffolding, pipes, conduits and other necessary structures and open any wall,
ceiling or floor in and through the Building and Premises where reasonably
required by the character of the work to be performed, provided entrance to the
Premises shall not be blocked thereby, and further provided that the business
of Tenant shall not be interfered with unreasonably. Landlord shall have the
right at any time to change the arrangement and/or locations of entrances, or
passageways, doors and doorways, and corridors, windows, elevators, stairs,
toilets or other public parts of the Building and to change the name, number or
designation by which the Building is commonly known. In the event that Landlord
damages any portion of any wall or wall covering, ceiling, or floor or floor
covering within the Premises, Landlord shall repair or replace the damaged
portion to match the original as nearly as commercially reasonable but shall
not be required to repair or replace more than the portion actually damaged.
Tenant hereby waives any claim for damages for any injury or inconvenience to
or interference with Tenant’s business, any loss of occupancy or quiet
enjoyment of the Premises, and any other loss occasioned by any action of
Landlord authorized by this Article 17. Landlord hereby agrees to use
reasonable efforts to minimize its interference with Tenant’s use and occupancy
of the Premises during any entry into the Premises to the extent reasonably
possible or practicable. Landlord agrees that any entry shall be on at least
twenty-four (24) hours advance written notice to Tenant (except for emergencies)
and Tenant shall have the right to have a representative present during such
access (except during emergencies), provided however that Landlord shall not be
denied entry to the Premises due to the non­ availability of a Tenant
representative.

17.2    For each of the aforesaid purposes, Landlord
shall at all times have and retain a key with which to unlock all of the doors
in the Premises, excluding Tenant’s vaults and safes or special security areas
(designated in advance), and Landlord shall have the right to use any and all
means which Landlord may deem proper to open said doors in an emergency to
obtain entry to any portion of the Premises. As to any portion to which access
cannot be had by means of a key or keys in Landlord’s possession, Landlord is
authorized to gain access by such means as Landlord shall elect and the cost of
repairing any damage occurring in doing so shall be borne by Tenant and paid to
Landlord within five (5) days of Landlord’s demand.

18.      DEFAULT.

18.1    Except as otherwise provided in Article 20,
the following events shall be deemed to be Events of Default under this Lease:

18.1.1   Tenant
shall fail to pay when due any sum of money becoming due to be paid to Landlord
under this Lease, whether such sum be any installment of the rent reserved by
this Lease, any other amount treated as additional rent under this Lease, or
any other payment or reimbursement to Landlord required by this Lease, whether
or not treated as additional rent under this Lease, and such failure shall
continue for a period of five (5) days after written notice that such payment
was not made when due, but if any such notice shall be given, for the twelve
(12) month period commencing with the date of such notice, the failure to pay
within five (5) days after due any additional sum of money becoming due to be
paid to Landlord under this Lease during such period shall be an Event of
Default, without notice.

18.1.2   Tenant
shall fail to comply with any term, provision or covenant of this Lease which
is not provided for in another Section of this Article and shall not cure such
failure within twenty (20) days (forthwith, if the failure involves a hazardous
condition) after written notice of such failure to Tenant provided, however,
that such failure shall not be an event of default if such failure could not
reasonably be cured during such twenty (20) day period, Tenant has
commenced the cure within such twenty (20) day period and thereafter is
diligently pursuing such cure to completion, but the total aggregate cure
period shall not exceed ninety (90) days.

18.1.3   Tenant
shall fail to vacate the Premises immediately upon termination of this Lease,
by lapse of time or otherwise, or upon termination of Tenant’s right to
possession only.

 

 

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18.1.4   Tenant
shall become insolvent, admit in writing its inability to pay its debts
generally as they become due, file a petition in bankruptcy or a petition to
take advantage of any insolvency statute, make an assignment for the benefit of
creditors, make a transfer in fraud of creditors, apply for or consent to the
appointment of a receiver of itself or of the whole or any substantial part of
its property, or file a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws, as now in effect or hereafter
amended, or any other applicable law or statute of the United States or any
state thereof.

18.1.5   A
court of competent jurisdiction shall enter an order, judgment or decree
adjudicating Tenant bankrupt, or appointing a receiver of Tenant, or of the
whole or any substantial part of its property, without the consent of Tenant,
or approving a petition filed against Tenant seeking reorganization or
arrangement of Tenant under the bankruptcy laws of the United States, as now in
effect or hereafter amended, or any state thereof, and such order, judgment or
decree shall not be vacated or set aside or stayed within sixty (60) days from
the date of entry thereof.

19.      REMEDIES.

19.1    Except as otherwise provided in Article 20,
upon the occurrence of any of the Events of Default described or referred to in
Article 18, Landlord shall have the option to pursue any one or more of the
following remedies without any notice or demand whatsoever, concurrently or
consecutively and not alternatively:

19.1.1   Landlord
may, at its election, terminate this Lease or terminate Tenant’s right to
possession only, without terminating the Lease.

19.1.2   Upon
any termination of this Lease, whether by lapse of time or otherwise, or upon
any termination of Tenant’s right to possession without termination of the
Lease, Tenant shall surrender possession and vacate the Premises immediately,
and deliver possession thereof to Landlord, and Tenant hereby grants to
Landlord full and free license to enter into and upon the Premises in such
event and to repossess Landlord of the Premises as of Landlord’s former estate
and to expel or remove Tenant and any others who may be occupying or be within
the Premises and to remove Tenant’s signs and other evidence of tenancy and all
other property of Tenant therefrom without being deemed in any manner guilty of
trespass, eviction or forcible entry or detainer, and without incurring any
liability for any damage resulting therefrom, Tenant waiving any right to claim
damages for such re-entry and expulsion, and without relinquishing Landlord’s
right to rent or any other right given to Landlord under this Lease or by
operation of law.

19.1.3   Upon
any termination of this Lease, whether by lapse of time or otherwise, Landlord
shall be entitled to recover as damages, all rent, including any amounts
treated as additional rent under this Lease, and other sums due and payable by
Tenant on the date of termination, plus as liquidated damages and not as a
penalty, an amount equal to the sum of: (a) an amount equal to the then present
value of the rent reserved in this Lease for the residue of the stated Term of
this Lease including any amounts treated as additional rent under this Lease
and all other sums provided in this Lease to be paid by Tenant, minus the fair
rental value of the Premises for such residue; (b) the value of the time and
expense necessary to obtain a replacement tenant or tenants, and the estimated
expenses described in Section 19.1.4 relating to recovery of the Premises,
preparation for reletting and for reletting itself; and (c) the cost of
performing any other covenants which would have otherwise been performed by
Tenant.

19.1.4   Upon
any termination of Tenant’s right to possession only without termination of the
Lease:

19.1.4.1   Neither
such termination of Tenant’s right to possession nor Landlord’s taking and
holding possession thereof as provided in Section 19.1.2 shall terminate the
Lease or release Tenant, in whole or in part, from any obligation, including
Tenant’s obligation to pay the rent, including any amounts treated as
additional rent, under this Lease for the full Term, and if Landlord so elects
Tenant shall continue to pay to Landlord the entire amount of the rent as and
when it becomes due, including any amounts treated as additional rent under
this Lease, for the remainder of the Term plus any other sums provided in this
Lease to be paid by Tenant for the remainder of the Term.

19.1.4.2   Landlord
shall use commercially reasonable efforts to relet the Premises or portions
thereof to the extent required by applicable law. Landlord and Tenant agree
that nevertheless landlord shall at most be required to use only the same
efforts Landlord then uses to lease premises in the Building generally and that
in any case that Landlord shall not be required to give any preference or
priority to the showing or leasing of the Premises or portions thereof over any
other space that Landlord may be leasing or have available and may place a
suitable prospective tenant in any such other space regardless of when such
other space becomes available and that Landlord shall have the right to relet
the

 

12

 

Premises for a greater or lesser term than that
remaining under this Lease, the right to relet only a portion of the Premises,
or a portion of the Premises or the entire Premises as a part of a larger area,
and the right to change the character or use of the Premises. In connection
with or in preparation for any reletting, Landlord may, but shall not be
required to, make repairs, alterations and additions in or to the Premises and
redecorate the same to the extent Landlord deems necessary or desirable, and
Tenant shall pay the cost thereof, together with Landlord’s expenses of
reletting, including, without limitation, any commission incurred by Landlord,
within five (5) days of Landlord’s demand. Landlord shall not be required to
observe any instruction given by Tenant about any reletting or accept any
tenant offered by Tenant unless such offered tenant has a credit-worthiness
acceptable to Landlord and leases the entire Premises upon terms and conditions
including a rate of rent (after giving effect to all expenditures by Landlord
for tenant improvements, broker’s commissions and other leasing costs) all no
less favorable to Landlord than as called for in this Lease, nor shall Landlord
be required to make or permit any assignment or sublease for more than the
current term or which Landlord would not be required to permit under the
provisions of Article 9.

19.1.4.3   Until such time as Landlord
shall elect to terminate the Lease and shall thereupon be entitled to recover
the amounts specified in such case in Section 19.1.3, Tenant shall pay to
Landlord upon demand the full amount of all rent, including any amounts treated
as additional rent under this Lease and other sums reserved in this Lease for
the remaining Term, together with the costs of repairs, alterations, additions,
redecorating and Landlord’s expenses of reletting and the collection of the
rent accruing therefrom (including reasonable attorney’s fees and broker’s
commissions), as the same shall then be due or become due from time to time,
less only such consideration as Landlord may have received from any reletting
of the Premises; and Tenant agrees that Landlord may file suits from time to
time to recover any sums falling due under this Article 19 as they become due.
Any proceeds of reletting by Landlord in excess of the amount then owed by
Tenant to Landlord from time to time shall be credited against Tenant’s future
obligations under this Lease but shall not otherwise be refunded to Tenant or
inure to Tenant’s benefit.

19.2    Upon the
occurrence of an Event of Default, Landlord may (but shall not be obligated to)
cure such default at Tenant’s sole expense. Without limiting the generality of
the foregoing, Landlord may, at Landlord’s option, enter into and upon the
Premises if Landlord determines in its sole discretion that Tenant is not
acting within a commercially reasonable time to maintain, repair or replace
anything for which Tenant is responsible under this Lease or to otherwise
effect compliance with its obligations under this Lease and correct the same,
without being deemed in any manner guilty of trespass, eviction or forcible
entry and detainer and without incurring any liability for any damage or
interruption of Tenant’s business resulting therefrom and Tenant agrees to
reimburse Landlord within five (5) days of Landlord’s demand as additional
rent, for any expenses which Landlord may incur in thus effecting compliance
with Tenant’s obligations under this Lease, plus interest from the date of
expenditure by Landlord at the Wall Street Journal prime rate.

19.3    Tenant
understands and agrees that in entering into this Lease, Landlord is relying
upon receipt of all the Annual and Monthly Installments of Rent to become due
with respect to all the Premises originally leased hereunder over the full
Initial Term of this Lease for amortization, including interest at the
Amortization Rate. For purposes hereof, the “Concession Amount” shall be
defined as the aggregate of all amounts forgone or expended by Landlord as free
rent under the lease, under Exhibit B hereof for construction allowances
(excluding therefrom any amounts expended by Landlord for Landlord’s Work, as
defined in Exhibit B), and for brokers’ commissions payable by reason of
this Lease. Accordingly, Tenant agrees that if this Lease or Tenant’s right to
possession of the Premises leased hereunder shall be terminated as of any date
(“Default Termination Date”) prior to the expiration of the full Initial Term
hereof by reason of a default of Tenant, there shall be due and owing to
Landlord as of the day prior to the Default Termination Date, as rent in addition
to all other amounts owed by Tenant as of such Date, the amount (“Unamortized
Amount”) of the Concession Amount determined as set forth below; provided,
however, that in the event that such amounts are recovered by Landlord pursuant
to any other provision of this Article 19, Landlord agrees that it shall not
attempt to recover such amounts pursuant to this Paragraph 19.3. For the
purposes hereof, the Unamortized Amount shall be determined in the same manner
as the remaining principal balance of a mortgage with interest at the
Amortization Rate payable in level payments over the same length of time as
from the effectuation of the Concession concerned to the end of the full
Initial Term of this Lease would be determined. The foregoing provisions shall also
apply to and upon any reduction of space in the Premises, as though such
reduction were a termination for Tenant’s default, except that (i) the
Unamortized Amount shall be reduced by any amounts paid by Tenant to Landlord
to effectuate such reduction and (ii) the manner of application shall be that
the Unamortized Amount shall first be determined as though for a full
termination as of the Effective Date of the elimination of the portion, but
then the amount so determined shall be multiplied by the fraction of which the
numerator is the rentable square footage of the eliminated portion and the
denominator is the rentable square footage of the Premises originally leased
hereunder; and the amount thus obtained shall be the Unamortized Amount.

 

 

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19.4    If, on
account of any breach or default by Tenant in Tenant’s obligations under the
terms and conditions of this Lease, it shall become necessary or appropriate
for Landlord to employ or consult with an attorney or collection agency
concerning or to enforce or defend any of Landlord’s rights or remedies arising
under this Lease or to collect any sums due from Tenant, Tenant agrees to pay
all costs and fees so incurred by Landlord, including, without limitation, reasonable
attorneys’ fees and costs. EACH OF TENANT
AND LANDLORD EXPRESSLY WAIVE ANY RIGHT TO:
TRIAL BY JURY.

19.5    Pursuit
of any of the foregoing remedies shall not preclude pursuit of any of the other
remedies provided in this Lease or any other remedies provided by law (all such
remedies being cumulative), nor shall pursuit of any remedy provided in this
Lease constitute a forfeiture or waiver of any rent due to Landlord under this
Lease or of any damages accruing to Landlord by reason of the violation of any
of the terms, provisions and covenants contained in this Lease.

19.6    Except as
otherwise provided herein, no act or thing done by Landlord or its agents
during the Term shall be deemed a termination of this Lease or an acceptance of
the surrender of the Premises, and no agreement to terminate this Lease or
accept a surrender of said Premises shall be valid, unless in writing signed by
Landlord. No waiver by Landlord or Tenant of any violation or breach of any of
the terms, provisions and covenants contained in this Lease shall be deemed or
construed to constitute a waiver of any other violation or breach of any of the
terms, provisions and covenants contained in this Lease. Landlord’s acceptance
of the payment of rental or other payments after the occurrence of an Event of
Default shall not be construed as a waiver of such Default, unless Landlord so
notifies Tenant in writing. Forbearance by Landlord or Tenant in enforcing one
or more of the remedies provided in this Lease upon an Event of Default or default
on the part of Landlord shall not be deemed or construed to constitute a waiver
of such default or of either party’s right to enforce any such remedies with
respect to such default or any subsequent default.

19.7    Intentionally
Deleted.

19.8    Any and all
property which may be removed from the Premises by Landlord pursuant to the
authority of this Lease or of law, to which Tenant is or may be entitled, may
be handled, removed and/or stored, as the case may be, by or at the direction
of Landlord but at the risk, cost and expense of Tenant, and Landlord shall in
no event be responsible for the value, preservation or safekeeping thereof.
Tenant shall pay to Landlord, upon demand, any and all expenses incurred in
such removal and all storage charges against such property so long as the same
shall be in Landlord’s possession or under Landlord’s control. Any such
property of Tenant not retaken by Tenant from storage within thirty (30) days
after removal from the Premises shall, at Landlord’s option, be deemed conveyed
by Tenant to Landlord under this Lease as by a bill of sale without further
payment or credit by Landlord to Tenant.

19.9    If more
than two (2) Events of Default occur during the Term or any renewal thereof,
Tenant’s renewal options, expansion options, purchase options and rights of
first offer and/or refusal, if any are provided for in this Lease, shall be
null and void.

20.      TENANT’S BANKRUPTCY OR INSOLVENCY.

20.1    If at any
time and for so long as Tenant shall be subjected to the provisions of the United
States Bankruptcy Code or other law of the United States or any state thereof
for the protection of debtors as in effect at such time (each a “Debtor’s Law”):

20.1.1   Tenant, Tenant as
debtor-in-possession, and any trustee or receiver of Tenant’s assets (each a “Tenant’s
Representative”) shall have no greater right to assume or assign this Lease or
any interest in this Lease, or to sublease any of the Premises than accorded to
Tenant in Article 9, except to the extent Landlord shall be required to permit
such assumption, assignment or sublease by the provisions of such Debtor’s Law.
Without limitation of the generality of the foregoing, any right of any Tenant’s
Representative to assume or assign this Lease or to sublease any of the
Premises shall be subject to the conditions that:

20.1.1.1   Such Debtor’s Law shall
provide to Tenant’s Representative a right of assumption of this Lease which
Tenant’s Representative shall have timely exercised and Tenant’s Representative
shall have fully cured any default of Tenant under this Lease.

20.1.1.2   Tenant’s Representative or
the proposed assignee, as the case shall be, shall have deposited with Landlord
as security for the timely payment of rent an amount equal to the larger of:
(a) three (3) months’ rent

 

 

14

 

and other monetary charges accruing under this Lease; and (b) any sum
specified in Article 5; and shall have provided Landlord with adequate other
assurance of the future performance of the obligations of the Tenant under this
Lease. Without limitation, such assurances shall include, at least, in the case
of assumption of this Lease, demonstration to the satisfaction of the Landlord
that Tenant’s Representative has and will continue to have sufficient unencumbered
assets after the payment of all secured obligations and administrative expenses
to assure Landlord that Tenant’s Representative will have sufficient funds to
fulfill the obligations of Tenant under this Lease; and, in the case of
assignment, submission of current financial statements of the proposed
assignee, audited by an independent certified public accountant reasonably
acceptable to Landlord and showing a net worth and working capital in amounts
determined by Landlord to be sufficient to assure the future performance by
such assignee of all of the Tenant’s obligations under this Lease.

20.1.1.3   The assumption or any
contemplated assignment of this Lease or subleasing any part of the Premises,
as shall be the case, will not breach any provision in any other lease,
mortgage, financing agreement or other agreement by which Landlord is bound.

20.1.1.4   Landlord shall have, or
would have had absent the Debtor’s Law, no right under Article 9 to refuse
consent to the proposed assignment or sublease by reason of the identity or
nature of the proposed assignee or sublessee or the proposed use of the
Premises concerned.

21.      QUIET ENJOYMENT. Landlord represents and
warrants that it has full right and authority to enter into this Lease and that
Tenant, while no Event of Default has occurred and is continuing, shall
peaceably and quietly have, hold and enjoy the Premises for the Term without
hindrance or molestation from Landlord subject to the terms and provisions of
this Lease. Landlord shall not be liable for any interference or disturbance by
other tenants or third persons, nor shall Tenant be released from any of the
obligations of this Lease because of such interference or disturbance.

22.      CASUALTY

22.1    In the
event the Premises or the Building are damaged by fire or other cause and in
Landlord’s reasonable estimation such damage can be materially restored within
one hundred eighty (180) days, Landlord shall forthwith repair the same and
this Lease shall remain in full force and effect, except that Tenant shall be
entitled to a proportionate abatement in rent from the date of such damage.
Such abatement of rent shall be made pro rata in accordance with the extent to
which the damage and the making of such repairs shall interfere with the use
and occupancy by Tenant of the Premises from time to time. Within forty-five
(45) days from the date of such damage, Landlord shall notify Tenant, in
writing, of Landlord’s reasonable estimation of the length of time within which
material restoration can be made, and Landlord’s determination shall be binding
on Tenant. For purposes of this Lease, the Building or Premises shall be deemed
“materially restored” if they are in such condition as would not prevent or
materially interfere with Tenant’s use of the Premises for the purpose for
which it was being used immediately before such damage.

22.2    If such
repairs cannot, in Landlord’s reasonable estimation, be made within one hundred
eighty (180) days, Landlord and Tenant shall each have the option of giving the
other, at any time within ninety (90) days after such damage, notice
terminating this Lease as of the date of such damage. In the event of the
giving of such notice, this Lease shall expire and all interest of the Tenant
in the Premises shall terminate as of the date of such damage as if such date
had been originally fixed in this Lease for the expiration of the Term. In the
event that neither Landlord nor Tenant exercises its option to terminate this
Lease, then Landlord shall repair or restore such damage, this Lease continuing
in full force and effect, and the rent hereunder shall be proportionately
abated as provided in Section 22.1.

22.3    Landlord
shall not be required to repair or replace any damage or loss by or from fire
or other cause to any panelings, decorations, partitions, additions, railings,
ceilings, floor coverings, office fixtures or any other property or
improvements installed on the Premises by, or belonging to, Tenant. Any
insurance which may be carried by Landlord or Tenant against loss or damage to
the Building or Premises shall be for the sole benefit of the party carrying
such insurance and under its sole control.

22.4    In the
event that Landlord should fail to complete such repairs and material
restoration within sixty (60) days after the date estimated by Landlord
therefor as extended by this Section 22.4, Tenant may at its option and as its
sole remedy terminate this Lease by delivering written notice to Landlord,
within fifteen (15) days after the expiration of said period of time, whereupon
the Lease shall end on the date of such notice or such later date fixed in such
notice as if the date of such notice was the date originally fixed in this
Lease for the expiration of the Term; provided, however, that if construction
is delayed because of changes, deletions or additions in construction requested
by Tenant, strikes, lockouts,

 

 

15

 

casualties, Acts of God, war, material or
labor shortages, government regulation or control or other causes beyond the reasonable
control of Landlord, the period for restoration, repair or rebuilding shall be
extended for the amount of time Landlord is so delayed.

22.5    Notwithstanding
anything to the contrary contained in this Article: (a) Landlord shall not have
any obligation whatsoever to repair, reconstruct, or restore the Premises when
the damages resulting from any casualty covered by the provisions of this
Article 22 occur during the last twelve (12) months of the Term or any
extension thereof, but if Landlord determines not to repair such damages
Landlord shall notify Tenant and if such damages shall render any material
portion of the Premises untenantable Tenant shall have the right to terminate
this Lease by notice to Landlord within fifteen (15) days after receipt of
Landlord’s notice; and (b) in the event the holder of any indebtedness secured
by a mortgage or deed of trust covering the Premises or Building requires that
any insurance proceeds be applied to such indebtedness, then Landlord shall
have the right to terminate this Lease by delivering written notice of
termination to Tenant within fifteen (15) days after such requirement is made
by any such holder, whereupon this Lease shall end on the date of such damage
as if the date of such damage were the date originally fixed in this Lease for
the expiration of the Term.

22.6    In the
event of any damage or destruction to the Building or Premises by any peril
covered by the provisions of this Article 22, it shall be Tenant’s
responsibility to properly secure the Premises and upon notice from Landlord to
remove forthwith, at its sole cost and expense, such portion of all of the
property belonging to Tenant or its licensees from such portion or all of the
Building or Premises as Landlord shall request.

23.      EMINENT DOMAIN. If all or any substantial
part of the Premises shall be taken or appropriated by any public or
quasi-public authority under the power of eminent domain, or conveyance in lieu
of such appropriation, either party to this Lease shall have the right, at its
option, of giving the other, at any time within thirty (30) days after such
taking, notice terminating this Lease, except that Tenant may only terminate
this Lease by reason of taking or appropriation, if such taking or
appropriation shall be so substantial as to materially interfere with Tenant’s
use and occupancy of the Premises. If neither party to this Lease shall so
elect to terminate this Lease, the rental thereafter to be paid shall be
adjusted on a fair and equitable basis under the circumstances from the date of
such taking. In addition to the rights of Landlord above, if any substantial
part of the Building shall be taken or appropriated by any public or
quasi-public authority under the power of eminent domain or conveyance in lieu
thereof, and regardless of whether the Premises or any part thereof are so
taken or appropriated, Landlord shall have the right, at its sole option, to
terminate this Lease. Landlord shall be entitled to any and all income, rent,
award, or any interest whatsoever in or upon any such sum, which may be paid or
made in connection with any such public or quasi-public use or purpose, and
Tenant hereby assigns to Landlord any interest it may have in or claim to all
or any part of such sums, other than any separate award which may be made with
respect to Tenant’s trade fixtures and moving expenses; Tenant shall make no
claim for the value of any unexpired Term.

24.      SALE BY LANDLORD. In event of a sale or
conveyance by Landlord of the Building, the same shall operate to release Landlord
from any future liability upon any of the covenants or conditions, expressed or
implied, contained in this Lease in favor of Tenant, and in such event Tenant
agrees to look solely to the responsibility of the successor in interest of
Landlord in and to this Lease, provided such successor in interest assumes all
of Landlord’s obligations under this Lease. Except as set forth in this Article
24, this Lease shall not be affected by any such sale and Tenant agrees to
attorn to the purchaser or assignee. If any security has been given by Tenant
to secure the faithful performance of any of the covenants of this Lease,
Landlord may transfer or deliver said security, as such, to Landlord’s
successor in interest and thereupon Landlord shall be discharged from any
further liability with regard to said security to the extent that such security
is actually paid to such successor.

25.      ESTOPPEL CERTIFICATES. Within ten (10) days
following any written request which Landlord may make from time to time, Tenant
shall execute and deliver to Landlord or mortgagee or prospective mortgagee a
sworn statement certifying: (a) the date of commencement of this Lease; (b) the
fact that this Lease is unmodified and in full force and effect (or, if there
have been modifications to this Lease, that this Lease is in full force and
effect, as modified, and stating the date and nature of such modifications);
(c) the date to which the rent and other sums payable under this Lease have
been paid; (d) the fact that there are no current defaults under this Lease by
either, to the best of Tenant’s knowledge, Landlord or Tenant except as
specified in Tenant’s statement, and (e) such other matters as may be requested
by Landlord. Landlord and Tenant intend that any statement delivered pursuant
to this Article 25 may be relied upon by any mortgagee, beneficiary or
purchaser, and Tenant shall be liable for all loss, cost or expense resulting
from the failure of any sale or funding of any loan caused by any material
misstatement contained in such estoppel certificate. Tenant irrevocably agrees
that if Tenant fails to execute and deliver such certificate within such ten
(10) day period Landlord or Landlord’s beneficiary or agent may execute and
deliver such certificate on Tenant’s behalf, and that such certificate shall be
fully binding on Tenant.

 

16

 

26.      SURRENDER
OF PREMISES.

26.1    Tenant
shall arrange to meet Landlord for two (2) joint inspections of the Premises,
the first to occur at least thirty (30) days (but no more than sixty (60) days)
before the last day of the Term, and the second to occur not later than
forty-eight (48) hours after Tenant has vacated the Premises. In the event of
Tenant’s failure to arrange such joint inspections and/or participate in either
such inspection. Landlord’s inspection at or after Tenant’s vacating the
Premises shall be conclusively deemed correct for purposes of determining
Tenant’s responsibility for repairs and restoration.

26.2    All
alterations, additions, and improvements in, on, or to the Premises made or
installed by or for Tenant, including, without limitation, carpeting
(collectively, “Alterations”), shall be and remain the property of Tenant
during the Term. Upon the expiration or sooner termination of the Term, all
Alterations shall become a part of the realty and shall belong to Landlord
without compensation, and title shall pass to Landlord under this Lease as by a
bill of sale. At the end of the Term or any renewal of the Term or other sooner
termination of this Lease, Tenant will peaceably deliver up to Landlord
possession of the Premises, together with all Alterations by whomsoever made,
in the same conditions received or first installed, broom clean and free of all
debris, excepting only ordinary wear and tear and damage by fire or other
casualty. Notwithstanding the foregoing, if Landlord elects by notice given to
Tenant at least twenty (20) days prior to expiration of the Term, Tenant shall,
at Tenant’s sole cost, remove any Alterations, including carpeting, so
designated by Landlord’s notice, and repair any damage caused by such removal.
Tenant must, at Tenant’s sole cost, remove upon termination of this Lease, any
and all of Tenant’s furniture, furnishings, equipment, movable partitions of
less than full height from floor to ceiling and other trade fixtures and
personal property, as well as all data/telecommunications cabling and wiring
installed by or on behalf of Tenant, whether inside walls, under any raised
floor or above any ceiling (collectively, “Personalty”). Personalty not so
removed shall be deemed abandoned by the Tenant and title to the same shall
thereupon pass to Landlord under this Lease as by a bill of sale, but Tenant
shall remain responsible for the cost of removal and disposal of such Personalty,
as well as any damage caused by such removal. In lieu of requiring Tenant to
remove Alterations and Personalty and repair the Premises as aforesaid,
Landlord may, by written notice to Tenant delivered at least thirty (30) days
before the Termination Date, require Tenant to pay to Landlord, as additional
rent hereunder, the cost of such removal and repair in an amount reasonably
estimated by Landlord.

26.3    All
obligations of Tenant under this Lease not fully performed as of the expiration
or earlier termination of the Term shall survive the expiration or earlier
termination of the Term Upon the expiration or earlier termination of the Term,
Tenant shall pay to Landlord the amount, as estimated by Landlord, necessary to
repair and restore the Premises as provided in this Lease and/or to discharge
Tenant’s obligation for unpaid amounts due or to become due to Landlord. All
such amounts shall be used and held by Landlord for payment of such obligations
of Tenant, with Tenant being liable for any additional costs upon demand by
Landlord, or with any excess to be returned to Tenant after all such
obligations have been determined and satisfied. Any otherwise unused Security
Deposit shall be credited against the amount payable by Tenant under this
Lease.

27.      NOTICES. Any notice or document required or
permitted to be delivered under this Lease shall be addressed to the intended
recipient, by fully prepaid registered or certified United States Mail return
receipt requested, or by reputable independent contract delivery service
furnishing a written record of attempted or actual delivery, and shall be
deemed to be delivered when tendered for delivery to the addressee at its
address set forth on the Reference Pages, or at such other address as it has
then last specified by written notice delivered in accordance with this Article
27, or if to Tenant at either its aforesaid address or its last known
registered office or home of a general partner or individual owner, whether or
not actually accepted or received by the addressee. Any such notice or document
may also be personally delivered if a receipt is signed by and received from,
the individual, if any, named in Tenant’s Notice Address.

28.      TAXES PAYABLE BY TENANT.
In addition to rent and other charges to be paid by Tenant under this Lease,
Tenant shall reimburse to Landlord, upon demand, any and all taxes payable by
Landlord (other than net income taxes) whether or not now customary or within
the contemplation of the parties to this Lease: (a) upon, allocable to, or
measured by or on the gross or net rent payable under this Lease, including
without limitation any gross income tax or excise tax levied by the State, any
political subdivision thereof, or the Federal Government with respect to the
receipt of such rent; (b) upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy of the
Premises or any portion thereof, including any sales, use or service tax
imposed as a result thereof; (c) upon or measured by the Tenant’s gross
receipts or payroll or the value of Tenant’s equipment, furniture, fixtures and
other personal property of Tenant or leasehold improvements, alterations or
additions located in the Premises; or (d) upon this transaction or any document
to which Tenant is a party creating or transferring any interest of Tenant in
this Lease or the Premises. In addition to the foregoing, Tenant agrees to pay,
before delinquency, any and all taxes levied or assessed against Tenant and
which

 

17

 

become payable during the term hereof upon
Tenant’s equipment, furniture, fixtures and other personal property of Tenant
located in the Premises.

29.      RELOCATION OF TENANT. Landlord, at its sole
expense, on at least sixty (60) days prior written notice, may, at any time
after the first (1st) year of the Term, require Tenant to move from
the Premises to other space of comparable size and decor (to include comparable
tenant finish out) on the North side of the Building in order to permit
Landlord to consolidate the space leased to Tenant with other adjoining space
leased or to be leased to another tenant. In the event of any such relocation,
Landlord will pay all expenses of preparing, constructing and decorating the
new premises so that they will be substantially similar to the Premises from
which Tenant is moving, and Landlord will also pay the expense of moving Tenant’s
furniture and equipment to the relocated premises, together with the cost of
relocating Tenant’s then existing data and telecommunication cabling and
equipment from the Premises to the new space, and, the cost (not exceeding
$500.00) of obtaining new stationary and business cards with Tenant’s address
thereon of the same quantity and quality of Tenant’s supply on hand immediately
prior to Landlord’s notice to Tenant of exercise of this relocation right. In
such event this Lease and each and all of the terms and covenants and
conditions hereof shall remain in full force and effect and thereupon be deemed
applicable to such new space except that revised Reference Pages and a revised Exhibit
A shall become part of this Lease and shall reflect the location of the new
premises. In no event shall the new space be smaller in size than the Premises,
unless such reduction is marginal (i.e. by no more than two hundred (200)
feet). If the new space is smaller in size than the Premises, then the rent and
other provisions in this Lease which are dependent upon the size of the space
shall be proportionately reduced. If the new space is larger than the Premises,
then the additional square footage shall be discounted for purposes of
calculating the rent payable by Tenant so that Tenant shall not be required to
pay a Monthly Installment of Rent in excess of the amount shown in the rent
schedule on the Reference Pages. In addition, Tenant’s Proportionate Share and
any other charges payable by Tenant under this Lease which are dependent upon
the size of the Premises shall not be increased by virtue of the increase in
size of the new space.

30.      PARKING.

30.1    During the initial Term of this Lease, Tenant agrees to lease
from Landlord and Landlord agrees to lease to Tenant, the number and type of
parking passes as set forth on the Reference Page of this Lease. This right to
park in the Building’s parking facilities (the “Parking Facility”) shall be on
an unreserved, nonexclusive, first come, first served basis, for passenger-size
automobiles and is subject to the following terms and conditions:

30.1.1   Tenant
shall pay to Landlord, or Landlord’s designated parking operator, the monthly
parking charges as set forth on the Reference Pages, without deduction or
offset, on the first day of each month during the Term of this Lease. No
deductions from the monthly charge shall be made for days on which the Parking
Facility is not used by Tenant.

30.1.2   Tenant
shall at all times abide by and shall cause each of Tenant’s employees, agents,
customers, visitors, invitees, licensees, contractors, assignees and subtenants
(collectively, “Tenant’s Parties”) to abide by any rules and regulations (“Rules”)
for use of the Parking Facility that Landlord or Landlord’s garage operator
reasonably establishes from time to time, and otherwise agrees to use the
Parking Facility in a safe and lawful manner. Landlord reserves the right to
adopt, modify and enforce the Rules governing the use of the Parking Facility
from time to time including any key-card, sticker or other identification or
entrance system and hours of operation. Landlord may refuse to permit any
person who violates such Rules to park in the Parking Facility, and any
violation of the Rules shall subject the car to removal from the Parking
Facility.

30.1.3   Unless
specified to the contrary above, the parking spaces hereunder shall be provided
on a non- designated “first-come, first-served” basis. Landlord reserves the
right to assign specific spaces, and to reserve spaces for visitors, small
cars, disabled persons or for other tenants or guests, and Tenant shall not
park and shall not allow Tenant’s Parties to park in any such assigned or
reserved spaces. Tenant may validate visitor parking by such method as Landlord
may approve, at the validation rate from time to time generally applicable to
visitor parking. Tenant acknowledges that the Parking Facility may be closed
entirely or in part in order to make repairs or perform maintenance services,
or to alter, modify, re-stripe or renovate the Parking Facility, or if required
by casualty, strike, condemnation, act of God, governmental law or requirement
or other reason beyond the operator’s reasonable control.

30.1.4   Tenant
acknowledges that to the fullest extent permitted by law, Landlord shall have
no liability for any damage to property or other items located in the parking
areas of the Project (including without limitation, any loss or damage to
tenant’s automobile or the contents thereof due to theft, vandalism or
accident), nor for any personal injuries or

 

18

 

death arising out of the use of the Parking
Facility by Tenant or any Tenant’s Parties, whether or not such loss or damage
results from Landlord’s active negligence or negligent omission. The limitation
on Landlord’s liability under the preceding sentence shall not apply however to
loss or damage arising directly from Landlord’s willful misconduct. Without
limiting the foregoing, if Landlord arranges for the parking areas to be
operated by an independent contractor not affiliated with Landlord, Tenant
acknowledges that Landlord shall have no liability for claims arising through
acts or omissions of such independent contractor. Tenant and Tenant’s Parties
each hereby voluntarily releases, discharges, waives and relinquishes any and
all actions or causes of action for personal injury or property damage
occurring to Tenant or any of Tenant’s Parties arising as a result of parking
in the Parking Facility, or any activities incidental thereto, wherever or
however the same may occur, and further agrees that Tenant will not prosecute
any claim for personal injury or property damage against Landlord or any of its
officers, agents, servants or employees for any said causes of action and in
all events, Tenant agrees to look first to its insurance carrier and to require
that Tenant’s Parties look first to their respective insurance carriers for
payment of any losses sustained in connection with any use of the Parking
Facility. Tenant hereby waives on behalf of its insurance carriers all rights
of subrogation against Landlord or Landlord’s agents.

30.1.5   Tenant’s
right to park as described in this Article and this Lease is exclusive to
Tenant and shall not pass to any assignee or sublessee without the express
written consent of Landlord. Such consent is at the sole discretion of the
Landlord.

30.1.6   In the
event any surcharge or regulatory fee is at any time imposed by any
governmental authority with reference to parking, Tenant shall (commencing
after two (2) weeks’ notice to Tenant) pay, per parking pass, such surcharge or
regulatory fee to Landlord in advance on the first day of each calendar month
concurrently with the month installment of rent due under this Lease. Landlord
will enforce any surcharge or fee in an equitable manner amongst the Building
tenants.

30.2    If Tenant violates any of the terms and conditions of this
Article, the operator of the Parking Facility shall have the right to remove
from the Parking Facility any vehicles hereunder which shall have been involved
or shall have been owned or driven by parties involved in causing such violation,
without liability therefor whatsoever. In addition, Landlord shall have the
right to cancel Tenant’s right to use the Parking Facility pursuant to this
Article upon ten (10) days’ written notice, unless within such ten (10) day
period, Tenant cures such default. Such cancellation right shall be cumulative
and in addition to any other rights or remedies available to Landlord at law or
equity, or provided under this Lease.

31.      DEFINED TERMS AND HEADINGS. The Article
headings shown in this Lease are for convenience of reference and shall in no
way define, increase, limit or describe the scope or intent of any provision of
this Lease. Any indemnification or insurance of Landlord shall apply to and
inure to the benefit of all the following “Landlord Entities”, being Landlord,
Landlord’s investment manager, and the trustees, boards of directors, officers,
general partners, beneficiaries, stockholders, employees and agents of each of
them. Any option granted to Landlord shall also include or be exercisable by Landlord’s
trustee, beneficiary, agents and employees, as the case may be. In any case
where this Lease is signed by more than one person, the obligations under this
Lease shall be joint and several. The terms “Tenant” and “Landlord” or any
pronoun used in place thereof shall indicate and include the masculine or
feminine, the singular or plural number, individuals, firms or corporations,
and their and each of their respective successors, executors, administrators
and permitted assigns, according to the context hereof. The term “rentable area”
shall mean the rentable area of the Premises or the Building as calculated by
the Landlord on the basis of the plans and specifications of the Building
including a proportionate share of any common areas. Tenant hereby accepts and
agrees to be bound by the figures for the rentable square footage of the
Premises and Tenant’s Proportionate Share shown on the Reference Pages;
however, Landlord may adjust either or both figures if there is manifest error,
addition or subtraction to the Building or any business park or complex of
which the Building is a part, remeasurement or other circumstance reasonably
justifying adjustment. The term “Building” refers to the structure in which the
Premises are located and the common areas (parking lots, sidewalks,
landscaping, etc.) appurtenant thereto. If the Building is part of a larger
complex of structures, the term “Building” may include the entire complex,
where appropriate (such as shared Expenses or Taxes) and subject to Landlord’s
reasonable discretion.

32.      TENANT’S AUTHORITY. If Tenant signs as a
corporation, partnership, trust or other legal entity each of the persons
executing this Lease on behalf of Tenant represents and warrants that Tenant
has been and is qualified to do business in the state in which the Building is
located, that the entity has full right and authority to enter into this Lease,
and that all persons signing on behalf of the entity were authorized to do so
by appropriate actions. Tenant agrees to deliver to Landlord, simultaneously
with the delivery of this Lease, a corporate resolution, proof of due
authorization by partners, opinion of counsel or other appropriate
documentation reasonably acceptable to Landlord evidencing the due
authorization of Tenant to enter into this Lease.

 

 

19

 

Tenant hereby represents and warrants that neither Tenant, nor any
persons or entities holding any legal or beneficial interest whatsoever in
Tenant, are (i) the target of any sanctions program that is established by
Executive Order of the President or published by the Office of Foreign Assets
Control, U.S. Department of the Treasury (“OFAC”); (ii) designated by the
President or OFAC pursuant to the Trading with the Enemy Act, 50 U.S.C. App. §
5, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-06, the
Patriot Act, Public Law 107-56, Executive Order 13224 (September 23, 2001) or
any Executive Order of the President issued pursuant to such statutes as the
same may be amended, renewed or replaced from time to time; or (iii) named on
the following list that is published by OFAC: “List of Specially Designated
Nationals and Blocked Persons” as the same may be amended, renewed or replaced
from time to time. If the Foregoing representation is untrue at any time during
the Term, an Event of Default will be deemed to have occurred, without the
necessity of notice to Tenant.”

33.      FINANCIAL STATEMENTS AND CREDIT REPORTS. At
Landlord’s request, Tenant shall deliver to Landlord a copy, certified by an
officer of Tenant as being a true and correct copy, of Tenant’s most recent
audited financial statement, or, if unaudited, certified by Tenant’s chief
financial officer as being true, complete and correct in all material respects.
Tenant hereby authorizes Landlord to obtain one or more credit reports on
Tenant at any time, and shall execute such further authorizations as Landlord
may reasonably require in order to obtain a credit report.

34.      COMMISSIONS. Each of the parties represents
and warrants to the other that it has not dealt with any broker or finder in
connection with this Lease, except as described on the Reference Pages.

35.      TIME AND APPLICABLE LAW. Time is of the
essence of this Lease and all of its provisions. This Lease shall in all
respects be governed by the laws of the state in which the Building is located.

36.      SUCCESSORS AND ASSIGNS. Subject to the
provisions of Article 9, the terms, covenants and conditions contained in this
Lease shall be binding upon and inure to the benefit of the heirs, successors,
executors, administrators and assigns of the parties to this Lease.

37.      ENTIRE AGREEMENT. This Lease, together with
its exhibits, contains all agreements of the parties to this Lease and
supersedes any previous negotiations. There have been no representations made
by the Landlord or any of its representatives or understandings made between
the parties other than those set forth in this Lease and its exhibits. This
Lease may not be modified except by a written instrument duly executed by the
parties to this Lease.

38.      EXAMINATION NOT OPTION. Submission of this
Lease shall not be deemed to be a reservation of the Premises. Landlord shall
not be bound by this Lease until it has received a copy of this Lease duly
executed by Tenant and has delivered to Tenant a copy of this Lease duly
executed by Landlord, and until such delivery Landlord reserves the right to
exhibit and lease the Premises to other prospective tenants. Notwithstanding
anything contained in this Lease to the contrary, Landlord may withhold
delivery of possession of the Premises from Tenant until such time as Tenant
has paid to Landlord any security deposit required by Article 5, the first
month’s rent as set forth in Article 3 and any sum owed pursuant to this Lease.

39.      RECORDATION. Tenant shall not record or
register this Lease or a short form memorandum hereof without the prior written
consent of Landlord, and then shall pay all charges and taxes incident such
recording or registration.

40.      LIMITATION OF LANDLORD’S LIABILITY. Redress
for any claim against Landlord under this Lease shall be limited to and
enforceable only against and to the extent of Landlord’s interest in the
Building (including insurance proceeds and condemnation awards). The
obligations of Landlord under this Lease are not intended to be and shall not
be personally binding on, nor shall any resort be had to the private properties
of, any of its or its investment manager’s trustees, directors, officers,
partners, beneficiaries, members, stockholders, employees, or agents, and in no
case shall Landlord be liable to Tenant hereunder for any lost profits, damage
to business, or any form of special, indirect or consequential damages.
Additionally, to the maximum extent permitted by law, Tenant hereby waives its
statutory lien under Section 91.004 of the Texas Property Code.

[REMAINDER
OF THE PAGE INTENTIONALLY LEFT BLANK]

 

20

 

 

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  GATEWAY
  RIDGECREST, INC.,

  a California corporation

  	
   

  	
  VANTAGE
  ENERGY SERVICES, INC.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  RREEF Management Company, a Delaware corporation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Jay Jehle

  	
   

  	
  By:

  	
  /s/ Paul A. Bragg

  
	
  Name:

  	
  Jay Jehle

  	
   

  	
  Name:

  	
  Paul A. Bragg

  
	
  Title:

  	
  Managing Director

  	
   

  	
  Title:

  	
  President & CEO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Dated:

  	
  February 15, 2007

  
	
  By:

  	
  /s/ Kim M. Boudreau

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Kim M. Boudreau

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President, Regional Director

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  2/20, 2007

  	
   

  	
   

  	
   

  

 

 

21

 

 

EXHIBIT A—FLOOR PLAN
DEPICTING THE PREMISES

attached to and made a
part of Lease bearing the

Lease Reference Date of November 29, 2006 between

Gateway Ridgecrest, Inc., as Landlord and

Vantage Energy Services, Inc., as Tenant

Exhibit A is intended only to show the general layout of the Premises
as of the beginning of the Term of this Lease. It does not in any way supersede
any of Landlord’s rights set forth in Article 17 with respect to arrangements
and/or locations of public parts of the Building and changes in such
arrangements and/or locations. It is not to be scaled; any measurements or
distances shown should be taken as approximate.

 

[MAP]

 

 

A-1

EXHIBIT A-l—SITE PLAN

attached to and made a
part of Lease bearing the

Lease Reference Date of November 29, 2006 between

Gateway Ridgecrest, Inc., as Landlord and

Vantage Energy Services, Inc., as Tenant

Exhibit A-l is intended only to show the general location of the
Building as of the beginning of the Term of this Lease. It does not in any way
supersede any of Landlord’s rights set forth in Article 17 with respect to
arrangements and/or locations of public parts of the Building and changes in
such arrangements and/or locations. It is not to be scaled; any measurements or
distances shown should be taken as approximate.

 

[MAP]

 

 

A-1-1

 

EXHIBIT B —
INITIAL ALTERATIONS

attached to and made a
part of Lease bearing the

Lease Reference Date of November 29, 2006 between

Gateway Ridgecrest, Inc., as Landlord and

Vantage Energy Services, Inc., as Tenant

(Landlord does the
Initial Work)

(1)       Leasehold Improvements. Tenant shall
take the Premises in its “AS-IS” condition except for certain painting and
re-carpeting in the Premises and the provision of building standard signage at
the entrance to the Premises and a firm identification strip in the Building’s
lobby directory (the “Initial Work”) to the Premises which shall be completed
in accordance with the terms of this Exhibit B.

(2)       Construction of the Initial Work. In
the event that any design or construction drawings are required, Landlord shall
arrange for the preparation of the same and Tenant shall have two (2) business
days following delivery to it of the drawings in which to provide its comments
to Landlord. Both parties shall act in good faith in connection with approval
of drawings. Upon final approval of any required drawings, Landlord shall
competitively bid the Initial Work to at least two (2) contractors approved by
Landlord and Tenant. Landlord shall then enter into a construction contract
with the general contractor mutually approved by Landlord and Tenant. The
Initial Work shall be performed using Building standard materials unless
otherwise required by Tenant and agreed to by Landlord. The general contractor
shall be responsible for obtaining any permits, licenses and governmental approvals
required for the construction of the Initial Work. Tenant shall be responsible
for obtaining a certificate of occupancy. Landlord assumes no liability for
special, consequential, or incidental damages of any kind whatsoever in
connection with the design or construction of the Initial Work and the
obtaining of permits, licenses and approvals, and makes no representations,
warranties, or guaranties regarding the same, expressed or implied, including,
without limitation, warranties of merchantability, compliance with applicable
laws, fitness for a particular purpose, or habitability except that the Initial
Work shall be performed in accordance with the construction contract.

(3)       Substantial Completion. When the
Initial Work is Substantially Completed as provided herein, Landlord will
notify Tenant at least two (2) business days prior thereto. Landlord’s
representative and Tenant’s representative or their nominees shall conduct a
walk-through of the Premises on the that the Initial Work is Substantially Completed
and identify any necessary touch-up work, repairs and minor completion items
that are necessary for final completion of the Initial Work. Neither Landlord’s
representative nor Tenant’s representative shall unreasonably withhold his or
her agreement on punchlist items. Landlord shall use reasonable efforts to
cause the contractor performing the Initial Work to complete all punchlist
items within thirty (30) days after agreement thereon or as soon as reasonably
practicable thereafter; however, Landlord shall not be obligated to engage
overtime labor in order to complete such items. As used herein “Substantial
Completion”, “Substantially Completed”, and any derivations thereof mean the
Initial Work is substantially completed as reasonably determined by Landlord
even though minor details of construction, decoration and mechanical
adjustments remain to be completed.

(4)       Construction Costs. Tenant shall bear
the entire cost of performing the Initial Work (including, without limitation,
costs of preparation of any design drawings and construction drawings, costs of
construction labor and materials, electrical usage during construction,
additional janitorial services, related taxes and insurance costs, all of which
costs are herein collectively called the “Total Construction Costs”) in excess
of the Allowance (hereinafter defined). Tenant shall pay to landlord, within
thirty (30) days after receipt of an invoice or invoices therefor, an amount
equal to the estimated Total Construction Costs, less the amount of the
Allowance. On or prior to Substantial Completion, Landlord will provide Tenant
with a reasonably detailed itemization of the actual Total Construction Costs.
The outstanding amount of the Total Construction Costs shall then be paid
within thirty (30) days after receipt by Tenant of an invoice or invoices
therefor. Any late payment of amounts due under this Exhibit B shall
bear interest or be subject to a charge as set forth in Section 3.2 of the
Lease.

(5)       Allowance. Landlord shall provide to
Tenant an allowance (the “Allowance”) of $26,292.00 calculated at the rate of
$6.00 per rentable square foot in that part of the Premises. The Allowance
shall be used for (i) costs of preparation of any required drawings, (ii) hard
costs under the construction contract, (iii) a 3% construction management fee
to be paid to Landlord under Paragraph (6) below, and (iv) tenant directory and
suite signage costs, but no part of the Allowance may be

 

B-1

 

used for purchase and installation of Tenant’s
furniture and inventory. The Allowance shall not be disbursed to Tenant in
cash, but shall be applied by Landlord to the payment of the Total Construction
Costs, if, as, and when the cost of the Initial Work is actually incurred and
paid by Landlord. Any Allowance which has not been used by March 31, 2007 shall
belong to Landlord absolutely.

(6)       Construction Management
Fee. Landlord, or its designated agent or representative, shall
supervise the Initial Work, contract with the general contractor, make
disbursements required to be made to the contractor, act as a liaison between
the general contractor and Tenant and coordinate the relationship between the
Initial Work, the Building, and the Building’s systems. In consideration for
Landlord’s construction supervision services, Tenant shall pay to Landlord a
construction management fee equal to three percent (3%) of the Total
Construction Costs. Such construction management fee shall be deducted from the
Allowance.

(7)       Construction Representatives.
Landlord’s and Tenant’s representatives for coordination of construction will
be as follows, provided that either party may change its representative upon
written notice to the other:

 

	
  Landlord’s
  Representative:

  	
  Elaine Burcham

  RREEF Management Company

  777 Post Oak Blvd., Suite 310

  Houston, TX 77056

  Phone: 713/572-9482

  Fax: 713/572-1594

  Email: elaine.burcham@rreef.com

  	
   

  
	
   

  	
   

  	
   

  
	
  Tenant’s
  Representative:

  	
  Paul Bragg

  Vantage Energy Services, Inc.

  6435 Vanderbilt

  Houston, Texas 77005

  Phone: 713/824-5985

  Fax: 713/839-8854

  Email: braggpa@yahoo.com

  	
   

  

 

B-2

 

EXHIBIT C – COMMENCEMENT
DATE MEMORANDUM

attached to and made a
part of Lease bearing the

Lease Reference Date of November 29, 2006 between

Gateway Ridgecrest, Inc., as Landlord and

Vantage Energy Services, Inc., as Tenant

COMMENCEMENT DATE
MEMORANDUM

THIS MEMORANDUM, made as of           ,
20        , by and between             
(“Landlord”) and            (“Tenant”).

Recitals:

A.                      Landlord and
Tenant are parties to that certain Lease, dated for reference              ,
20       (the “Lease”) for certain premises (the “Premises”)
consisting of approximately             
square feet at the building commonly known as             .

B.                      Tenant is in
possession of the Premises and the Term of the Lease has commenced.

C.                      Landlord and
Tenant desire to enter into this Memorandum confirming the Commencement Date, the
Termination Date and other matters under the Lease.

NOW, THEREFORE, Landlord and Tenant agree as follows:

1.        The
actual Commencement Date is                .

2.        The
actual Termination Date is                .

3.        The
schedule of the Annual Rent and the Monthly Installment of Rent set forth on
the Reference Pages is deleted in its entirety, and the following is
substituted therefor:

[insert
rent schedule]

4.        Capitalized
terms not defined herein shall have the same meaning as set forth in the Lease.

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed as of the date and year first above written.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  RREEF Management
  Company, a Delaware corporation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  DO NOT SIGN

  	
   

  	
  By: 

  	
  DO NOT SIGN

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  Dated: 

  	
   

  

 

 

C-1

 

EXHIBIT D — RULES AND
REGULATIONS

attached to and made a
part of Lease bearing the

Lease Reference Date of November 29, 2006 between

Gateway Ridgecrest, Inc., as Landlord and

Vantage Energy Services, Inc., as Tenant

1.         No sign, placard,
picture, advertisement, name or notice shall be installed or displayed on any
part of the outside or inside of the Building without the prior written consent
of the Landlord. Landlord shall have the right to remove, at Tenant’s expense
and without notice, any sign installed or displayed in violation of this rule.
All approved signs or lettering on doors and walls shall be printed, painted,
affixed or inscribed at Tenant’s expense by a vendor designated or approved by
Landlord. In addition, Landlord reserves the right to change from time to time
the format of the signs or lettering and to require previously approved signs
or lettering to be appropriately altered.

2.         If Landlord objects in
writing to any curtains, blinds, shades or screens attached to or hung in or
used in connection with any window or door of the Premises, Tenant shall
immediately discontinue such use. No awning shall be permitted on any part of
the Premises. Tenant shall not place anything or allow anything to be placed
against or near any glass partitions or doors or windows which may appear
unsightly, in the opinion of Landlord, from outside the Premises.

3.         Tenant shall not
obstruct any sidewalks, halls, passages, exits, entrances, elevators, or
stairways of the Building. No tenant and no employee or invitee of any tenant
shall go upon the roof of the Building.

4.         Any directory of the
Building, if provided, will be exclusively for the display of the name and
location of tenants only and Landlord reserves the right to exclude any other
names. Landlord reserves the right to charge for Tenant’s directory listing.

5.         All cleaning and
janitorial services for the Building and the Premises shall be provided
exclusively through Landlord. Tenant shall not cause any unnecessary labor by
carelessness or indifference to the good order and cleanliness of the Premises.
Landlord shall not in any way be responsible to any Tenant for any loss of
property on the Premises, however occurring, or for any damage to any Tenant’s
property by the janitor or any other employee or any other person.

6.         The toilet rooms,
toilets, urinals, wash bowls and other apparatus shall not be used for any
purpose other than that for which they were constructed. No foreign substance
of any kind whatsoever shall be thrown into any of them, and the expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by the Tenant who, or whose employees or invitees, shall have caused it.

7.         Tenant shall store all
its trash and garbage within its Premises. Tenant shall not place in any trash
box or receptacle any material which cannot be disposed of in the ordinary and
customary manner of trash and garbage disposal. All garbage and refuse disposal
shall be made in accordance with directions issued from time to time by Landlord.
Tenant will comply with any and all recycling procedures designated by
Landlord.

8.         Landlord will furnish
Tenant two (2) keys free of charge to each door in the Premises that has a
passage way lock. Landlord may charge Tenant a reasonable amount for any additional
keys, and Tenant shall not make or have made additional keys on its own. Tenant
shall not alter any lock or install a new or additional lock or bolt on any
door of its Premises. Tenant, upon the termination of its tenancy, shall
deliver to Landlord the keys of all doors which have been furnished to Tenant,
and in the event of loss of any keys so furnished, shall pay Landlord therefor.

9.         If Tenant requires
telephone, data, burglar alarm or similar service, the cost of purchasing,
installing and maintaining such service shall be borne solely by Tenant. No
boring or cutting for wires will be allowed without the prior written consent
of Landlord.

10.       No equipment, materials,
furniture, packages, bulk supplies, merchandise or other property will be received
in the Building or carried in the elevators except between such hours and in
such elevators as may be designated by Landlord. The persons employed to move
such equipment or materials in or out of the Building must be acceptable to
Landlord.

 

D-1

 

11.       Tenant shall not place a
load upon any floor which exceeds the load per square foot which such floor was
designed to carry and which is allowed by law. Heavy objects shall stand on
such platforms as determined by Landlord to be necessary to properly distribute
the weight. Business machines and mechanical equipment belonging to Tenant
which cause noise or vibration that may be transmitted to the structure of the
Building or to any space in the Building to such a degree as to be
objectionable to Landlord or to any tenants shall be placed and maintained by
Tenant, at Tenant’s expense, on vibration eliminators or other devices
sufficient to eliminate the noise or vibration. Landlord will not be
responsible for loss of or damage to any such equipment or other property from
any cause, and all damage done to the Building by maintaining or moving such
equipment or other property shall be repaired at the expense of Tenant.

12.       Landlord shall in all
cases retain the right to control and prevent access to the Building of all
persons whose presence in the judgment of Landlord would be prejudicial to the
safety, character, reputation or interests of the Building and its tenants,
provided that nothing contained in this rule shall be construed to prevent such
access to persons with whom any tenant normally deals in the ordinary course of
its business, unless such persons are engaged in illegal activities. Landlord
reserves the right to exclude from the Building between the hours of 6 p.m. and
7 a.m. the following day, or such other hours as may be established from time
to time by Landlord, and on Sundays and legal holidays, any person unless that
person is known to the person or employee in charge of the Building and has a pass
or is properly identified. Tenant shall be responsible for all persons for whom
it requests passes and shall be liable to Landlord for all acts of such
persons. Landlord shall not be liable for damages for any error with regard to
the admission to or exclusion from the Building of any person.

13.       Tenant shall not use any
method of heating or air conditioning other than that supplied or approved in
writing by Landlord.

14.       Tenant shall not waste
electricity, water or air conditioning. Tenant shall keep corridor doors
closed. Tenant shall close and lock the doors of its Premises and entirely shut
off all water faucets or other water apparatus and electricity, gas or air
outlets before Tenant and its employees leave the Premises. Tenant shall be
responsible for any damage or injuries sustained by other tenants or occupants
of the Building or by Landlord for noncompliance with this rule.

15.       Tenant shall not install
any radio or television antenna, satellite dish, loudspeaker or other device on
the roof or exterior walls of the Building without Landlord’s prior written
consent, which consent may be withheld in Landlord’s sole discretion, and which
consent may in any event be conditioned upon Tenant’s execution of Landlord’s
standard form of license agreement. Tenant shall be responsible for any
interference caused by such installation.

16.       Tenant shall not mark,
drive nails, screw or drill into the partitions, woodwork, plaster, or drywall
(except for pictures, tackboards and similar office uses) or in any way deface
the Premises. Tenant shall not cut or bore holes for wires. Tenant shall not
affix any floor covering to the floor of the Premises in any manner except as
approved by Landlord. Tenant shall repair any damage resulting from
noncompliance with this rule.

17.       Tenant shall not
install, maintain or operate upon the Premises any vending machine without
Landlord’s prior written consent, except that Tenant may install food and drink
vending machines solely for the convenience of its employees.

18.       No cooking shall be done
or permitted by any tenant on the Premises, except that Underwriters’
Laboratory approved microwave ovens or equipment for brewing coffee, tea, hot
chocolate and similar beverages shall be permitted provided that such equipment
and use is in accordance with all applicable federal, state and city laws,
codes, ordinances, rules and regulations.

19.       Tenant shall not use in
any space or in the public halls of the Building any hand trucks except those
equipped with the rubber tires and side guards or such other material-handling
equipment as Landlord may approve. Tenant shall not bring any other vehicles of
any kind into the Building.

20.       Tenant shall not permit
any motor vehicles to be washed or mechanical work or maintenance of motor
vehicles to be performed in any parking lot.

21.       Tenant shall not use the
name of the Building or any photograph or likeness of the Building in
connection with or in promoting or advertising Tenant’s business, except that
Tenant may include the Building name in Tenant’s address.

 

D-2

 

Landlord shall have the right, exercisable without notice and without
liability to any tenant, to change the name and address of the Building.

22.       Tenant requests for
services must be submitted to the Building office by an authorized individual.
Employees of Landlord shall not perform any work or do anything outside of
their regular duties unless under special instruction from Landlord, and no
employee of Landlord will admit any person (Tenant or otherwise) to any office
without specific instructions from Landlord.

23.       Tenant shall not permit
smoking or carrying of lighted cigarettes or cigars other than in areas
designated by Landlord as smoking areas.

24.       Canvassing, soliciting,
distribution of handbills or any other written material in the Building is
prohibited and each tenant shall cooperate to prevent the same. No tenant shall
solicit business from other tenants or permit the sale of any good or
merchandise in the Building without the written consent of Landlord.

25.       Tenant shall not permit
any animals other than service animals, e.g. seeing-eye dogs, to be brought or
kept in or about the Premises or any common area of the Building.

26.       These Rules and
Regulations are in addition to, and shall not be construed to in any way modify
or amend, in whole or in part, the terms, covenants, agreements and conditions
of any lease of any premises in the Building. Landlord may waive any one or
more of these Rules and Regulations for the benefit of any particular tenant or
tenants, but no such waiver by Landlord shall be construed as a waiver of such
Rules and Regulations in favor of any other tenant or tenants, nor prevent
Landlord from thereafter enforcing any such Rules and Regulations against any or
all of the tenants of the Building.

27.       Landlord reserves the
right to make such other and reasonable rules and regulations as in its
judgment may from time to time be needed for safety and security, for care and
cleanliness of the Building, and for the preservation of good order in and
about the Building. Tenant agrees to abide by all such rules and regulations
herein stated and any additional rules and regulations which are adopted.
Tenant shall be responsible for the observance of all of the foregoing rules by
Tenant’s employees, agents, clients, customers, invitees and guests.

[REMAINDER
OF THE PAGE LEFT INTENTIONALLY BLANK]

 

 

D-3

 

 

COMMENCEMENT DATE
MEMORANDUM

Attached
to and made a part of Lease  bearing
the

Lease Reference Date of November 29, 2006,
between

Gateway Ridgecrest, Inc., a California
corporation, as Landlord and

Vantage Energy Services, Inc., a Delaware
Corporation, as Tenant

THIS MEMORANDUM, made as of April 9, 2007, by and
between Gateway Ridgecrest, Inc., a California corporation, as Landlord and Vantage Energy Services, Inc., a Delaware
corporation, as Tenant.

Recitals:

A.                      Landlord and Tenant are parties
to that certain Lease, dated for reference November 26, 2006 (the “Lease”) for certain premises (the “Premises”)
consisting of approximately 4,382 square feet at the building commonly
known as 777 Post Oak Boulevard.

B.                        Tenant is in possession of the
Premises and the Term of the Lease has commenced.

C.                        Landlord and Tenant desire to enter into this Memorandum confirming the
Commencement Date, The Termination Date and other matters under the
Lease.

NOW, THEREFORE, Landlord and Tenant agree as
follows:

1.                          The
actual Commencement Date is April 9, 2007.

2.                          The
actual Termination date is June 30, 2010.

3.                          The schedule of the Annual Rent and the Monthly
Installment of Rent set forth on the Reference Pages is deleted in its
entirety, and the following is submitted therefor:

 

	
  Period

  	
   

  	
  Rentable

  	
   

  	
  Annual Rent

  	
   

  	
   

  	
   

  	
  Monthly 

  Installment

  
	
  from

  	
   

  	
  through

  	
   

  	
  Square Footage

  	
   

  	
  per Square Foot

  	
   

  	
  Annual Rent

  	
   

  	
  of Rent

  
	
  4/9/2007

  	
   

  	
  6/8/2007

  	
   

  	
  4,382

  	
   

  	
  $0.00

  	
   

  	
  $0.00

  	
   

  	
  $0.00

  
	
  6/9/2007

  	
   

  	
  3/31/2008

  	
   

  	
  4,382

  	
   

  	
  $22.00

  	
   

  	
  $96,404.00

  	
   

  	
  $8,033.67

  
	
  4/1/2008

  	
   

  	
  3/31/2009

  	
   

  	
  4,382

  	
   

  	
  $22.50

  	
   

  	
  $98,595.00

  	
   

  	
  $8,216.25

  
	
  4/1/2009

  	
   

  	
  6/30/2010

  	
   

  	
  4,382

  	
   

  	
  $22.75

  	
   

  	
  $99,690.50

  	
   

  	
  $8,307.54

  

4.                          Capitalized terms not defined herein shall have the
same meaning as set forth in the Lease.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year first above
written.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
  By:

  	
  

  RREEF Management Company,

  a Delaware corporation

  	
   

  	
  Vantage Energy Services, Inc.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/ Paul A. Bragg

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Kim Boudreau

  	
   

  	
  Name:

  	
  Paul A. Bragg

  
	
  Title:

  	
  Regional Director

  	
   

  	
  Title:

  	
  President & CEO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
  4/9/2007

  

 

 

1Exhibit 10.25

PRIDE INTERNATIONAL, INC.

EMPLOYMENT/NON-COMPETITION/

CONFIDENTIALITY AGREEMENT

PAUL
A. BRAGG

EFFECTIVE
FEBRUARY 5, 1999

 

 

 

 

INDEX

 

	
  I. PRIOR
  AGREEMENTS/EMPLOYMENT CONTRACTS

  	
   

  	
  6

  
	
  1.01

  	
   

  	
  Effect of Prior
  Agreements

  	
   

  	
  6

  
	
  II. DEFINITION OF TERMS

  	
   

  	
  6

  
	
  2.01

  	
   

  	
  Company

  	
   

  	
  6

  
	
  2.02

  	
   

  	
  Executive/Officer/Employee

  	
   

  	
  6

  
	
  2.03

  	
   

  	
  Office/Position/Title

  	
   

  	
  6

  
	
  2.04

  	
   

  	
  Effective Date

  	
   

  	
  6

  
	
  2.05

  	
   

  	
  Change in
  Control

  	
   

  	
  7

  
	
  2.06

  	
   

  	
  Termination

  	
   

  	
  7

  
	
  2.07

  	
   

  	
  Customer

  	
   

  	
  9

  
	
  III. EMPLOYMENT

  	
   

  	
  10

  
	
  3.01

  	
   

  	
  Employment

  	
   

  	
  10

  
	
  3.02

  	
   

  	
  Best Efforts And
  Other Employment Of Executive

  	
   

  	
  10

  
	
  3.03

  	
   

  	
  Term Of
  Employment

  	
   

  	
  10

  
	
  3.04

  	
   

  	
  Compensation And
  Benefits

  	
   

  	
  11

  
	
  3.05

  	
   

  	
  Termination
  Without Change In Control

  	
   

  	
  12

  
	
  IV. CHANGE IN CONTROL

  	
   

  	
  14

  
	
  4.01

  	
   

  	
  Extension Of
  Employment Period

  	
   

  	
  14

  
	
  4.02

  	
   

  	
  Change In
  Control Termination Payments & Benefits

  	
   

  	
  15

  
	
  4.03

  	
   

  	
  Voluntary
  Resignation Upon Change In Control

  	
   

  	
  15

  
	
  V. NON-COMPETITION AND
  CONFIDENTIALITY

  	
   

  	
  15

  
	
  5.01

  	
   

  	
  Consideration

  	
   

  	
  15

  
	
  5.02

  	
   

  	
  Non-Competition

  	
   

  	
  16

  
	
  5.03

  	
   

  	
  Confidentiality

  	
   

  	
  17

  
	
  5.04

  	
   

  	
  Geographical
  Area

  	
   

  	
  18

  
	
  5.05

  	
   

  	
  Company Remedies
  For Violation Of Non-Competition Or Confidentiality Agreement

  	
   

  	
  18

  
	
  5.06

  	
   

  	
  Termination Of
  Benefits For Violation Of Non-Competition And Confidentiality

  	
   

  	
  19

  

 

 

 

	
  VI. GENERAL

  	
   

  	
  19

  
	
  6.01

  	
   

  	
  Enforcement
  Costs

  	
   

  	
  20

  
	
  6.02

  	
   

  	
  Income, Exercise
  or Other Tax Liability

  	
   

  	
  20

  
	
  6.03

  	
   

  	
  Payment Of
  Benefits Upon Termination For Cause

  	
   

  	
  20

  
	
  6.04

  	
   

  	
  Non-Exclusive
  Agreement

  	
   

  	
  21

  
	
  6.05

  	
   

  	
  Notices

  	
   

  	
  21

  
	
  6.06

  	
   

  	
  Non-Alienation

  	
   

  	
  21

  
	
  6.07

  	
   

  	
  Entire Agreement:
  Amendment

  	
   

  	
  22

  
	
  6.08

  	
   

  	
  Successors And
  Assigns

  	
   

  	
  22

  
	
  6.09

  	
   

  	
  Governing Law

  	
   

  	
  22

  
	
  6.10

  	
   

  	
  Venue

  	
   

  	
  22

  
	
  6.11

  	
   

  	
  Headings

  	
   

  	
  22

  
	
  6.12

  	
   

  	
  Severability

  	
   

  	
  22

  
	
  6.13

  	
   

  	
  Partial
  Invalidity

  	
   

  	
  22

  
	
  6.14

  	
   

  	
  Counterparts

  	
   

  	
  23

  

 

 

EMPLOYMENT/NON-COMPETITION/CONFIDENTIALITY

AGREEMENT

 

	
  DATE:

  	
   

  	
  FEBRUARY
  5, 1999

  
	
   

  	
   

  	
   

  
	
  COMPANY/EMPLOYER:

  	
   

  	
  Pride International, Inc., A Louisiana corporation

  5847 San Felipe, Suite 3300 Houston, Texas 77057

  
	
   

  	
   

  	
   

  
	
  EXECUTIVE/EMPLOYEE:

  	
   

  	
  Paul A. Bragg

  5435 Vanderbilt

  Houston, Texas 77005

  

This Agreement is made as of the date first above
written and to become effective as herein provided.

PREAMBLE

WHEREAS, the Company wishes to attract and retain
well-qualified Executive and key personnel and to assure itself of the
continuity of its management;

WHEREAS, Executive is an officer of the Company with
significant management responsibilities in the conduct of its business;

WHEREAS, the Company recognizes that Executive is a
valuable resource of the Company and the Company desires to  be assured of the continued services of
Executive;

WHEREAS, the Company desires to obtain assurances that
Executive will devote his best efforts to his employment with the Company and
will not enter into competition with the Company in its business as now
conducted and to be conducted, or solicit customers or other employees of the
Company to terminate their relationships with the Company;

WHEREAS, Executive is a key employee of the Company
and he acknowledges that his talents and services to the Company are of a
special, unique, unusual and extraordinary character and are of particular and
peculiar benefit and importance to the Company:

 

 

4

 

WHEREAS, the Company is concerned that in the event of
a possible or threatened change in control of the Company, uncertainties
necessarily arise; Executive may have concerns about the continuation of his
employment status and responsibilities and may be approached by others offering
competing employment opportunities; the Company, therefore, desires to provide
Executive with assurances as to the continuation of his employment status and
responsibilities in such event;

WHEREAS, the Company further desires to assure
Executive that, if a possible or threatened change in control should arise and
Executive should be involved in deliberations or negotiations in connection
therewith, Executive would be in a secure position to consider and participate
in such transaction as objectively as possible in the best interests of the
Company and to this end desires to protect Executive from any direct or implied
threat to his financial well-being;

WHEREAS, Executive is willing to continue to serve as
such but desires assurances that in the event of such a  change in control he will continue to
have the employment status and responsibilities he could reasonably expect
absent such event and, that in the event this turns out not to be the case, he
will have fair and reasonable severance protection on the basis of his service
to the Company to that time;

WHEREAS, different factors affect the Company and
Executive under circumstances of regular employment between the Company and the
Executive when there is no threat of change in control and/or none has
occurred, as opposed to circumstances under which a change in control is
rumored, threatened, occurring or has occurred. For this reason this Employment
Agreement is primarily in two parts. One part deals with the regular employment
of Executive under circumstances whereby no change in control is threatened,
occurring or occurred; herein called “Regular Employment”. The second part
deals with circumstances whereby a change in control is threatened, occurring
or has occurred. Other parts of the Agreement deal with matters affecting both
Regular Employment and employment following change in control, including
non-competition confidentiality; and

WHEREAS, Executive is willing to enter into and carry
out the Non-Competition and Confidentiality Agreement set forth herein in
consideration of the Employment Agreement set forth herein.

 

5

 

AGREEMENT

NOW THEREFORE, the parties agree as follows:

I.                           PRIOR
AGREEMENTS/EMPLOYMENT CONTRACTS.

1.01.          EFFECT OF PRIOR
AGREEMENTS. On and as of 12:00 o’clock noon of the Effective Date all prior
employment and non-competition contracts between Company and Executive are
hereby amended, modified and superseded by this Agreement insofar as future
employment, compensation, non-competition, confidentiality, accrual of payments
or any form of compensation or benefits from the Company are concerned. This
Agreement does not release or relieve Company from its liability or obligation
with respect to any compensation, payments, or benefits already accrued to
Executive, nor to any vesting of benefits or other rights which are
attributable to length of employment, seniority or other such matters. This
agreement does not relieve Executive of any prior non-competition or
confidentiality obligations and agreements and the same are hereby modified and
amended as to future matters and future confidentiality even as to matters
accruing prior to the Effective Date hereof.

II.                       DEFINITION
OF TERMS.

2.01.          COMPANY. Company means
Pride International, Inc., a Louisiana corporation, as the same presently
exists, as well as any and all successors, regardless of the nature of the
entity or the State or Nation of organization, whether by reorganization,
merger, consolidation, absorption or dissolution. For the purpose of the
Non-Competition and Confidentiality Agreement, Company includes any subsidiary
or affiliate of the Company to the extent it is carrying on any portion of the
business of the Company or a business similar to that being conducted by the
Company.

2.02.          EXECUTIVE/OFFICER/EMPLOYEE.
Executive/Officer/Employee means Paul A. Bragg.

2.03.          OFFICE/POSITION/TITLE.
The Office, Position and Title for which the Executive is employed is that of
President and Chief Operating Officer of the Company and carries with it the
duties, responsibilities, rights, benefits and privileges presently held by the
Executive, or as may reasonably be assigned to the Executive as are customary
and usual for such position.

2.04.          EFFECTIVE DATE. This
Agreement becomes effective and binding as of February 5, 1999.

 

 

6

 

2.05.          CHANGE IN CONTROL. The
term “Change in Control” of the Company shall mean, and shall be deemed to have
occurred on the date of the first to occur of any of the following:

a.                          there
occurs a Change in Control of the Company of the nature that would be required
to be reported in response to item 6(a) of Schedule 14A of Regulation 14A or
Item 1 of Form 8(k) promulgated under the Securities Exchange Act of 1934 as in
effect on the date of this Agreement, or if neither item remains in effect, any
regulations issued by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 which serve similar purposes;

b.                         any “person”
{as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934} is or becomes a beneficial owner, directly or indirectly, of
securities of the Company representing twenty percent (20%) or more of the
combined voting power of the Company’s then outstanding securities;

c.                          the
individuals who were members of the Board of Directors of the Company
immediately prior to a meeting of the shareholders of the Company involving a
contest for the election of Directors shall not constitute a majority of the
Board of Directors following such election;

d.                         the
Company shall have merged into or consolidated with another corporation, or
merged another corporation into the Company, on a basis whereby less than fifty
percent (50%) of the total voting power of the surviving corporation is
represented by shares held by former shareholders of the Company prior to such
merger or consolidation; or

e.                          the
Company shall have sold, transferred or exchanged all, or substantially all, of
its assets to another corporation or other entity or person.

2.06.          TERMINATION. The term “termination”
shall mean termination, prior to the expiration of the Employment Period, of
the employment of the Executive with the Company {including death and
disability (as described below} for any reason other than cause (as described
below) or voluntary resignation (as described below). Termination includes “Constructive
Termination” as described below. Termination includes non-renewal or failure to
extend this Agreement at the end of any employment term, except for cause.

a.                          The term
“disability” means physical or mental incapacity qualifying the Executive for a
long-term disability under the Company’s long-

 

7

 

term disability plan. If no such plan exists on the Effective
Date of this Agreement, the term “disability” means physical or mental
incapacity as determined by a doctor jointly selected by the Executive and the
Board of Directors of the Company qualifying the Executive for long-term
disability under reasonable employment standards.

b.                         The term “cause”
means: (i) the willful and continued failure of the Executive substantially to
perform his duties with the Company (other than any failure due to physical or
mental incapacity) after a demand for substantial performance is delivered to
him by the Board of Directors which specifically identifies the manner in which
the Board believes he has not substantially performed his duties, (ii) willful
misconduct materially and demonstrably injurious to the Company or (iii)
material violation of the covenant not to compete (except after termination
under the Change in Control provisions hereof and confidentiality provisions
hereof.) No act or failure to act by the Executive shall be considered “willful”
unless done or omitted to be done by him not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Company. The unwillingness of the Executive to accept any or all of a change in
the nature or scope of his position, authorities or duties, a reduction in his
total compensation or benefits, or other action by or at request of the Company
in respect of his position, authority, or responsibility that is contrary to
this Agreement, may not be considered by the Board of Directors to be a failure
to perform or misconduct by the Executive. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for cause for purposes of
this Agreement unless and until there shall have been delivered to him a copy
of a resolution, duly adopted by a vote of three-fourths of the entire Board of
Directors of the Company at a meeting of the Board of Directors called and held
(after reasonable notice to the Executive and an opportunity for  the Executive and his counsel to be heard
before the Board) for the purpose of considering whether the Executive has been
guilty of such a willful failure to perform or such willful misconduct as
justifies termination for cause hereunder, finding that in the good faith
opinion of the Board of Directors the Executive has been guilty thereof and
specifying the particulars thereof.

c.                          The term
“Constructive Termination” means any circumstance by which the actions of the
Company either reduce or change Executive’s title, position, duties,
responsibilities or authority to such an extent or in such a manner as to
relegate Executive to a position not substantially similar to that which he
presently holds; would degrade, embarrass or otherwise make it unreasonable for
Executive

 

8

 

to remain in the employment of the Company; and
includes violation of the employment provisions and conditions of this
Agreement.

d.                         The
resignation of the Executive shall be deemed “voluntary” if it is for any
reason other than one or more of the following:

(i)                       The
Executive’s resignation or retirement is 
requested by the Company other than for cause;

(ii)                    Any
significant adverse change in the nature or scope of the Executive’s position,
authorities or duties from those described in this Agreement;

(iii)                 Any reduction in
the Executive’s total compensation or benefits from that provided in the
Compensation and Benefits Section hereof;

(iv)                The material
breach by the Company of any other provision of this Agreement;

(v)                   Any action by
the Company which would constitute Constructive Termination; or

(vi)                Non-renewal or
failure to extend any employment term, contrary to the wishes of the Executive.

Termination that entitles the Executive to the
payments and benefits provided in the “Termination Payments and Benefits” Section
hereof shall not be deemed or treated by the Company as the termination of the
Executive’s employment or the forfeiture of his participation, award, or
eligibility, for the purpose of any plan, practice or agreement of the Company
referred to in the Compensation and Benefits Section hereof.

2.07.          CUSTOMER. The term “Customer”
includes all persons, firms or entities that are purchasers or  end-users of services or products
offered, provided, developed, designed, sold or leased by the Company during
the relevant time periods, and all persons, firms or entities which control, or
which are controlled by, the same person, firm or entity which controls such
purchase.

III.                   EMPLOYMENT.

3.0.1.       EMPLOYMENT. Except as
otherwise provided in this Agreement, the Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company, for the

 

9

 

Term of Employment (“Employment Period”) herein
specified. During the Employment Period, Executive shall exercise such position
and authority and perform such responsibilities as are commensurate with the
position and authority being exercised and duties being performed by the
Executive immediately prior to the Effective Date of this Agreement, which
services shall be performed at the location where the Executive was employed
immediately prior to the Effective Date of this Agreement or at such other
location as the Company and Executive may agree.

3.02.          BEST EFFORTS AND OTHER
EMPLOYMENT OF EXECUTIVE.

a.                          Executive
agrees that he will at all times faithfully, industriously and to the best of
his ability, experience and talents, perform all of the duties that may be
required of and from him pursuant to the express and implicit terms hereof, to
the reasonable satisfaction of the Company. Such duties shall be rendered at
Houston, Texas, and such other place or places within or without the State of
Texas as the Company and Executive shall agree.

b.                         Executive
shall devote his normal and regular business time, attention and skill to the
business and interests of the Company, and the Company shall be entitled to all
of the benefits, profits or other issue arising from or incident to all work,
services and advice of Executive performed for the Company. Such employment
shall be considered “full time” employment. Executive shall have the right to
make investments in businesses which engage in activities other than those
engaged by the Company. Executive shall also have the right to devote such
incidental and immaterial amount of his time which are not required for the
full and faithful performance of his duties hereunder to any outside activities
and businesses which are not being engaged in by the Company and which shall
not otherwise interfere with the performance of his duties hereunder. Executive
shall have the right to make investments in the manner and to the extent
authorized and set forth in the Non-Competition Section of this Agreement.

3.03.          TERM OF EMPLOYMENT (“EMPLOYMENT
PERIOD”). Executive’s regular employment (no Change in Control being presently
contemplated) will commence on the Effective Date of this Agreement and will be
for a term of two (2) years ending at 12:00 o’clock midnight February 4, 2001;
thereafter, the Term of Employment of Executive will be automatically extended
for successive terms of one (1) year each commencing February 5, 2001, and on
February 5 of each year thereafter, unless Company or Executive gives

 

10

 

written notice to the other that employment will not
be renewed or continued after the next scheduled expiration date which is not
less than one year after the date that the notice of non-renewal was given. All
extended employment terms will be considered to be within the Employment Period
while Executive is employed with the Company.

3.04.          COMPENSATION AND
BENEFITS. During the Employment Period the Executive shall receive the
following compensation and benefits:

a.                         He shall
receive an annual base salary of not less than his annual base salary which is
$334,000.00, with the opportunity for increases, from time to time thereafter,
which are in accordance with the Company’s regular executive compensation
practices. Executive’s salary will be reviewed at least annually by the
Compensation Committee of the Board of Directors.

b.                        To the
extent that such plans exist immediately prior to the Effective Date of this
Agreement, he shall be eligible to participate on a  reasonable basis, and to continue his existing participation,
in annual bonus, stock option and other incentive compensation plans which
provide opportunities to receive compensation in addition to his annual base
salary which are the greater of: (i) the opportunities provided by the Company
for Executives with comparable duties, or (ii) the opportunities under any such
plans in which he was participating immediately prior to the Effective Date of
this Agreement.

c.                         To the
extent such plans exist immediately prior to the Effective Date of this
Agreement, he shall be entitled to receive and participate in salaried employee
benefits including, but not limited to: medical, life, health, accident and
disability insurance and disability benefits and prerequisites which are the
greater of: (i) the employee benefits and prerequisites provided by the Company
to Executives with comparable duties and (ii) the employee benefits and
prerequisites to which he was entitled or in which he participated immediately
prior to the Effective Date of this Agreement.

d.                        To the
extent such plans exist immediately prior to the Effective Date of this
Agreement, he shall be entitled to continue to accrue credited service for
retirement benefits and to be entitled to receive retirement benefits under and
pursuant to the terms of the Company’s qualified retirement plan for salaried
employees, the Company’s supplemental executive retirement plan, and any
successor or other retirement plan or agreement in effect on the Effective Date
of this Agreement with respect to his retirement, whether or not a qualified
plan or agreement, so that his aggregate monthly retirement benefit from all
such plans and agreements (regardless when he begins to receive such benefit)
will be not less than it would be had all such plans and agreements were in
effect immediately prior to the Effective Date of this

 

11

 

Agreement and continued to be in effect without change
until and after he begins to receive such benefits.

e.                         Paid
vacations each year and use of a Company car or a car allowance to the same
extent as he is presently receiving or the benefits provided to Executives with
comparable duties whichever is greater.

f.                           Participation
in all other executive incentive stock and benefit plans approved by the
Compensation Committee

3.05.          TERMINATION WITHOUT
CHANGE IN CONTROL. The Company shall have the right to terminate Executive at
any time during the Employment Period (including any extended term). Should the
Company choose not to renew  or
extend the Employment period of this Employment Agreement or choose to
terminate the Executive during, or at the end of, the Employment Period, or in
the event of death or disability of the Executive, if the termination is not
after a Change in Control and is not for cause, the Company shall, within
thirty (30) days following such termination, pay and provide to the Executive
(or his Executor, Administrator or Estate in the event of death, as soon as
reasonably practical):

a.                          An
amount equal to two full years of his base salary (including the amount
allocated to the covenant not to compete), which base salary is here defined as
twelve (12) times the then current monthly salary in effect for the Executive
and all other benefits due him based upon the salary in effect on the Date of
Termination (but not less than the highest annual base salary paid to the
Executive during any of the three (3) years immediately preceding his Date of
Termination). There shall be deducted only such amounts as may be required by
law to be withheld for taxes and other applicable deductions.

b.                         The
Company shall provide to Executive for a  period
of two (2) full years following the Date of Termination, life, health, accident
and disability Insurance. These benefits are not to be less than the highest
benefits furnished to the Executive during the term of this Agreement.

c.                          An
amount equal to two (2) times the target award for the Executive under the
Company’s annual bonus plan for the fiscal year in which termination occurs,
provided that if the Executive has deferred his award for such year under a
Company plan, the payment due the Executive under this subparagraph shall be
paid in accordance with the terms of the deferral or as specified by the
Executive.

 

12

 

 

d.                         The
Company shall pay, distribute and otherwise provide to the Executive the amount
and value of his entire plan account and interest under any retirement plan,
employee benefit plan, investment plan or stock ownership plan, if any exists
on the Date of Termination, and all employer contributions made or payable to
any such plan for his account prior to the end of the month in which
Termination occurs shall be deemed vested and payable to him. Such payment or
distribution shall be in accordance with the elections made by the Executive
with respect to distributions in accordance with the plan as if the Executive’s
employment with the Company terminated at the end of the month in which
Termination occurs.

e.                          All
stock options and awards to which the Executive is entitled will immediately
vest and the time for exercising any option will be as specified in the plan as
if the Executive were still employed by the Company; provided however if  the immediate vesting of all benefits
under the plan is not permitted by the plan, then the  benefits will be vested only to the extent authorized or
permitted by the plan.

f.                            If
Executive elects to treat the termination as retirement then on the Date of
Termination, the Executive shall be deemed to have retired from the Company. At
that time, or at such later time as he may elect consistent with the terms of
any applicable plan or benefit, in order to receive benefits or avoid or
minimize any applicable early pension reduction provisions, he shall be
entitled to commence to receive total combined qualified and non-qualified
retirement benefits to which he is entitled hereunder; or, his total
non-qualified retirement benefit hereunder if under the terms of the Company’s
qualified retirement plan for salaried employees he is not entitled to a
qualified benefit. Executive may treat the termination as termination other
than “retirement” if Executive so elects and may defer “retirement” to a later
date if permitted by any applicable plan.

g.                         The “Compensation
and Benefits” section hereof shall be applicable in determining the payments
and benefits due the Executive under this section and if Termination occurs
after a reduction in all or part of the Executive’s total compensation or
benefits, the lump sum severance allowance and other compensation and benefits
payable to him pursuant to this section shall be based upon his compensation
and benefits before the reduction.

h.                         If any
provision of this Section cannot, in whole or in part, be implemented and
carried out under the terms of the applicable compensation, benefit or other
plan or arrangement of the Company

 

13

 

because the Executive has ceased to be an actual
employee of the Company, due to insufficient or reduced credited service based
upon his actual employment by the Company or because the plan or arrangement
has been terminated or amended after the Effective Date of this Agreement, or
for any other reason, the Company itself shall pay or otherwise provide the
equivalent of such rights, benefits and credits for such benefits to the
Executive, his dependents, beneficiaries and estate as if Executive’s
employment had not been terminated.

i.                            All
life, health, hospitalization, medical and accident benefits available to
Executive’s spouse and dependents shall continue for the same term as the
Executive’s benefits. If the Executive dies, all benefits will be provided for
a term of two (2) years {or three (3) years if after a change in control} after
the date of death of the Executive.

j.                            The
Company’s obligation under this Section to continue to pay or provide health
care, life, accident and disability insurance to the Executive, the Executive’s
spouse and Executive’s dependents, during the remainder of the Employment
Period shall be reduced when and to the extent any of such benefits are paid or
provided to the Executive by another employer, provided that the Executive
shall have all rights afforded to retirees to convert group insurance coverage
to the individual insurance coverage as, to the extent of, and whenever his
group insurance coverage under this Section is reduced or expires. Apart from
this subparagraph, the Executive shall have and be subject to no obligation to
mitigate.

k.                         The
Company shall deduct applicable withholding taxes in performing its obligations
under this Section.

Nothing in this Section is intended, nor shall be
deemed or interpreted, to be an amendment to any compensation, benefit or other
plan to the Company. To the extent the Company’s performance under this Section
includes the performance of the Company’s obligations to the Executive under
any other plan or under another agreement between the Company and the
Executive, the rights of the Executive under such other plan or other
agreements, which are discharged under this Agreement, are discharged,
surrendered, or released pro tanto.

IV.                    CHANGE
IN CONTROL.

4.01.           EXTENSION OF EMPLOYMENT PERIOD. Upon any
Change in Control the Employment Period shall be immediately and without
further action extended

 

14

 

for a term of three (3) years following the Effective
Date of the Change in Control and will expire at 12:00 o’clock midnight on the
last day of the month following three (3) years after the Change in Control.
Thereafter, the Employment Period will be extended for successive terms of one
(1) year each, unless terminated, all in the manner specified in the Term of
Employment Section pertaining to regular employment.

4.02.            CHANGE IN CONTROL, TERMINATION PAYMENTS AND
BENEFITS. In the event the Executive is terminated within three (3) years
following a Change in Control, the Executive will receive the payments and
benefits specified in the “Termination without Changes in Control” Section in
the same time and manner therein specified except as amended and modified
hereby:

a.                         The
salary and benefits specified in Section 3.05a will be paid based upon a
multiple of three (3) years (Instead of two (2) years).

b.                        Life,
health, accident and disability insurance specified in Section 3.05b will be  provided until: (i) Executive becomes
reemployed and receives similar benefits from a new employer, or (ii) three (3)
years after the Date of Termination, whichever is earlier.

c.                         An amount
equal to three (3) times the maximum award that the Executive could receive
under the Company’s Annual Bonus Plan for the fiscal year in which the
termination occurs, instead of the benefits provided in Section 3.05(c) hereof.

d.                        All other
rights and benefits specified in Section 3.05.

4.03.           VOLUNTARY RESIGNATION UPON CHANGE IN
CONTROL. If the Executive voluntarily resigns his employment within twelve (12)
months after a Change in Control (whether or not Company may be alleging the
right to terminate employment for cause), he will receive the same payments,
compensation and benefits as if he had been terminated on the date of
resignation after Change in Control.

V.                        NON-COMPETITION
AND CONFIDENTIALITY.

5.01.           CONSIDERATION. The base salary awerded to
the Executive and to be paid to the Executive in the future includes
consideration for the Non-Competition and Confidentiality Agreement set forth
herein and the amount to be paid to Executive in the event of the termination
of employment of Executive, voluntarily, involuntarily, or under a Change in
Control, under Sections 3.05a and 4.02a hereof constitute payment, in part, for
the Non-Competition and Confidentiality of the Executive. It is contracted,
stipulated and agreed that

 

 

15

 

fifteen percent (15%) of such amount paid and to be
paid to the Executive shall constitute the consideration for the
Non-Competition and Confidentiality Agreement set forth herein.

5.02.          NON-COMPETITION.
Executive acknowledges that his employment with the Company has in the past and
will, of necessity, provide him with specialized knowledge which, if used in
competition with the Company could cause serious harm to the Company.
Accordingly, the Executive agrees that during his employment with the Company
and for a period of two (2) years after he is no longer employed by the Company
(unless his employment is terminated after a Change in Control, In which event
there will be no covenant not to compete and the provisions of the covenant not
to compete herein contained will terminate on the date of termination of the
Executive) the Executive will not, directly or indirectly, either as an
individual, proprietor, stockholder (other than as a holder of up to one
percent (1%) of the outstanding shares of a corporation whose shares are listed
on a stock exchange or traded in accordance with the automated quotation system
of the National Association of Securities Dealers), partner, officer, employee
or otherwise:

a.                          work
for, become an employee of, invest in, provide consulting services or in any
way engage in any business which provides, produces, leases or sells products
or services of the same or similar type provided, produced, leased or sold by
the Company and with regard to which Executive was engaged, or over which
Executive had direct or indirect supervision or control, within three (3) years
preceding the Executive’s termination of employment, in any area where the
Company provided, produced, leased or sold such products or services at any
time during the three (3) years preceding such termination of employment, or

b.                         provide,
sell, offer to sell, lease, offer to  tease,
or solicit any orders for any products or services which the Company provided
and with regard to which the Executive had direct or indirect supervision or
control, within three (3) years preceding Executive’s termination of
employment, to or from any person, firm or entity which was a customer for such
products or services of the Company during the three (3) years preceding such
termination from whom the Company had solicited business during such three (3)
years; or

c.                          solicit,
aid, counsel or encourage any officer, director, employee or other individual
to: (i) leave his or her employment or position with the Company, (ii) compete
with the business of the Company, or (iii) violate the terms of any employment,
non-competition or similar agreement with the Company; or

 

 

16

 

d.                          employ,
directly or indirectly; permit the employment of, contract for services or work
to be performed by; or otherwise, use, utilize or benefit from the services of
any officer, director, employee or any other individual holding a position with
the Company within two (2) years after the Date of Termination of employment of
Executive with the Company or within two (2) years after such officer,
director, employee or individual terminated employment with the Company,
whichever occurs earlier.

5.03.          CONFIDENTIALITY. Executive acknowledges that his employment with
the Company has in the past and will, of necessity, provide him with
specialized knowledge which, if used in competition with the Company, or
divulged to others, could cause serious harm to the Company. Accordingly,
Executive will not at any time during or after his employment by the Company,
directly or indirectly, divulge, disclose or communicate to any person, firm or
corporation (in any manner whatsoever) any information concerning any matter
affecting or relating to the Company or the business of the Company. While
engaged as an employee or the Company, the Executive may only use information
concerning any matters affecting or relating to the Company or the business of
the Company for a purpose which is necessary to the carrying out of the
Executive’s duties as an employee of the Company, and the Executive may not
make use of any information of the Company after he is no longer an employee of
the Company. The Executive agrees to the foregoing without regard to whether
all of the foregoing matters will be deemed confidential, material or
important, it being stipulated by the parties. All information, whether written
or otherwise, regarding the Company’s business, including, but not limited to,
information regarding customers, customer lists, costs, prices, earnings,
products, services, formulae, compositions, machinery, equipment, apparatus,
systems, manufacturing procedures, operations, potential acquisitions, new
location plans, prospective and executed contracts and other business
arrangements, and sources of supply, is prima
facie presumed to be  important,
material and confidential information of the Company for the purposes of this
Agreement, except to the extent that such information may be otherwise lawfully
and readily available to the general public. The Executive further agrees that
he will, upon termination of his employment with the Company, return to the
Company all books, records, lists and other written, typed or printed
materials, whether furnished by the Company or prepared by the Executive, which
contain any information relating to the Company’s business, and the Executive
agrees that he will neither make nor retain any copies of such materials after
termination of employment. Notwithstanding any of the foregoing, the Executive
will not be liable for any breach of these confidentiality provisions unless
the same constitutes a material detriment to the Company, or due to the nature
of the

 

17

 

information divulged and the manner in which it was
divulged and the person to whom it was divulged would likely cause damage to
the Company or constitute a material detriment to the Company.

5.04.          GEOGRAPHICAL AREA. The
geographical area within which the non-competition covenants of this Agreement
shall apply is that territory within two hundred (200) miles of: (i) any of the
Company’s present offices, (ii) any of the Company’s present rig yards, and
(iii) any additional location where the Company, as of the date of any action
taken in violation of the non-competition covenants of this Agreement, has an
office, a rig yard, or definitive plans to locate an office or a rig yard.
Notwithstanding the foregoing, If the two hundred (200) mile radius extends
into another country and the Company is not then doing business in that other
country, there will be no territorial limitations extending into such other
country.

5.05.          COMPANY REMEDIES FOR
VIOLATION OF NON-COMPETITION OR CONFIDENTIALITY AGREEMENT. Without limiting the
right of the Company to pursue all other legal and equitable rights available
to it for violation of any of the covenants made by the Executive herein, it is
agreed that:

a.                          the
skills, experience and contacts of Executive are of a special, unique, unusual
and extraordinary character which give them a peculiar value;

b.                         because
of the nature of the business of the Company, the restrictions agreed  to by Executive as to time and area
contained in this Agreement are reasonable; and

a.                          the
injury suffered by the Company by a violation of any covenant in this Agreement
resulting from loss of profits created by the competitive use of such skills,
experience and contacts that otherwise will make it difficult to calculate in
damages in an action at law and cannot fully compensate the Company for any
violation of any covenant in this Agreement, accordingly.

(i)                       the Company
shall be entitled to Injunctive relief to prevent violations of such covenants
or continuing violations thereof and to prevent Executive from rendering any
services to any person, firm or entity in breach of such covenant and to
prevent Executive from divulging  any
confidential information, and

(ii)                    compliance
with this Agreement is a condition precedent to the Company’s obligation to
make payments of any nature to the

 

 

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Executive.

5.06.          TERMINATION OF BENEFITS
FOR VIOLATION OF NON-COMPETITION AND CONFIDENTIALITY. If the Executive’s
termination was not after a Change in Control and if the Executive shall have
materially violated the Confidentiality and/or Non-Competition Agreement or any
agreement he may have signed as an employee of the Company, the Executive
agrees that there shall be no obligation on the part of the Company to provide
any payments or benefits (other than payments or benefits already earned or
accrued) described in the Termination of Rights and Benefits Section hereof,
subject to the provisions of Section 6.01 hereof. There will be no withholding
of benefits or payments if the termination occurred after a Change in Control
and the Executive will not be bound by the non-competition provisions if
terminated while the Change in Control provisions hereof are applicable.

VI.                   GENERAL

6.01.          ENFORCEMENT COSTS. The
Company is aware that upon the occurrence of a Change in Control, or under
other circumstances even when a Change in Control has not occurred, the Board
of Directors or a stockholder of the Company may then cause or attempt to cause
the Company to refuse to comply with its obligations under this Agreement, or
may cause or attempt to cause the Company to Institute, or may institute,
litigation seeking to have this Agreement declared unenforceable, or may take,
or attempt to take other action to deny Executive the benefits intended under
this Agreement; or actions may be taken to enforce the non-competition or
confidentiality provisions of this Agreement. In these circumstance, the
purpose of this Agreement could be frustrated. It is the intent of the parties
that Executive not be required to incur the legal fees and expenses associated
with the protection or enforcement of his rights under this Agreement by
litigation or other legal action because such costs would substantially detract
from the benefits intended to be extended to Executive hereunder nor be bound
to negotiate any settlement of his rights hereunder underthreat of incurring
such costs. Accordingly, If at any time after the Effective Date of this
Agreement it should appear to the Executive that the Company is or has acted
contrary to or is falling or has failed to comply with any of its obligations
under this Agreement for the reason that it regards this Agreement to be void
or unenforceable, that Executive has violated the terms of this Agreement, or
for any other reason, or that the Company has purported to terminate his
employment for cause or is in the course of doing so, or is withholding
payments or benefits, or is threatening to withhold payments or benefits,
contrary to this Agreement, or in the event that the Company or any other
person takes any action to declare this Agreement void or unenforceable, or
institutes any litigation or other legal action designed to deny, diminish or
to

 

 

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recover from Executive the benefits provided or
intended to be provided to him hereunder, and the Executive has acted in good
faith to perform his obligations under this Agreement, the Company irrevocably
authorizes Executive from time to time to retain counsel of his choice at the
expense of the Company to represent him in connection with the protection and
enforcement of his rights hereunder including, without limitation,
representation in connection with termination of his employment or withholding
of benefits or payments contrary to this Agreement or with the initiation or
defense of any litigation or any other legal action, whether by or against the
Executive or the Company or any Director, Officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Company is not authorized to
withhold the periodic payments of attorney’s fees and expenses hereunder based
upon any belief or assertion by the Company that Executive has not acted in
good faith or has violated this Agreement. If Company subsequently establishes
that Executive was not acting in good faith and has violated this Agreement,
Executive will be liable to the Company for reimbursement of amounts paid due
to Executive’s actions not based on good faith and in violation of this
Agreement. The reasonable fees and expenses of counsel selected from time to
time by Executive as hereinabove provided shall be paid or reimbursed to
Executive by the Company, on a regular, periodic basis within thirty (30) days
after presentation by Executive of a statement or statements prepared by such
counsel in accordance with its customary practices, up to a maximum aggregate
amount of $250,000,00.

6.02             INCOME, EXCISE OR
OTHER TAX LIABILITY. Executive will be liable for and will pay all income tax
liability by virtue of any payments made to the Executive under this Agreement,
as if the same were earned and paid in the normal course of business and not
the result of a Change in Control and not otherwise triggered by the “golden
parachute” or excess payment provisions of the Internal Revenue Code of the
United States, which would cause additional tax liability to be imposed. If any
additional income tax, excise or other taxes are imposed on any amount or
payment in the nature of compensation paid or provided to or on behalf of
Executive, the Company shall “gross up” Executive for such tax liability by
paying to Executive an amount sufficient so that after payment of all such
taxes so imposed, Executive’s position on an after-tax basis is what it would
have been had no such additional taxes been imposed. Executive will cooperate
with the company to minimize the tax consequences to the Executive and to the
Company so long as the actions proposed to be taken by the Company do not cause
any additional tax consequences to the Executive and do not prolong or delay
the time that payments are to be made, or the amount of payments to be made,
unless the Executive consents, in writing, to any delay or deferment of
payment.

 

 

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6.03.          PAYMENT OF BENEFITS UPON
TERMINATION FOR CAUSE. If the termination of the Executive is for cause and not
after a Change in Control, the Company will have the right to withhold all
payments (except those specified in Sections 6.01); provided, however, that if
a final judgment is entered finding that cause did not exist for termination,
the Company will pay all benefits to the Executive to which he would have been
entitled had the termination not been for cause, plus interest on all amounts
withheld from the Executive at the rate specified for judgments under Article
5069-1.05 V.A.T.S. but not less than ten percent (10%) per annum. If the
termination for cause occurs after a Change in Control, the Company shall have
no right to suspend or withhold payments to the Executive under any provision
of this Agreement until or unless a final judgment is entered upholding the Company’s
determination that the termination was for cause, in which event the Executive
will be liable to the Company for all amounts paid, plus interest at the rate
allowed for judgments under Article 5069-1.05 V.A.T.S.

6.04.          NON-EXCLUSIVE AGREEMENT.
The specific arrangements referred to herein are not intended to exclude or
limit Executive’s participation in other benefits available to executive
personnel generally, or to preclude or limit other compensation or benefits as
may be authorized by the Board of Directors of the Company at any time, or to
limit or reduce any compensation or benefits to which Executive would be
entitled but for this Agreement.

6.05.          NOTICES. Notices,
requests, demands and other communications provided for by this Agreement shall
be in writing and shall either be personally delivered by hand or sent by: (i)
Registered or Certified Mail, return receipt requested, postage prepaid,
properly packaged, addressed and deposited in the United States Postal System,
(ii) by facsimile transmission if the receiver acknowledges receipt; (iii) by
Federal Express or other expedited delivery service provided that
acknowledgement or receipt is received and retained by the deliverer and
furnished to the sender, if to the Executive, at the last address he has filed
in writing with the Company, or if to the Company, to its Corporate Secretary
at its principal executive offices.

6.06.          NON-ALIENATION. The
Executive shall not have any right to pledge hypothecate, anticipate, or in any
way create a lien upon any amounts provided under this Agreement, and no
payments or benefits due hereunder shall be assignable in anticipation of
payment either by voluntary or involuntary acts or by operation of law. So long
as the Executive lives, no person, other than the parties hereto, shall have
any rights under or interest in this Agreement or the subject, matter hereof.
Upon the death of the Executive, his Executors, Administrators, devisees and
heirs, in that order, shall have the right to enforce the provisions hereof.

 

 

21

 

6.07.          ENTIRE AGREEMENT;
AMENDMENT. This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof. No provision of this Agreement may be
amended, waived, or  discharged
except by the mutual written agreement of the parties. The consent of any other
persons to any such amendment, waiver or discharge shall not be required.

6.08.          SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the Company, its
successors or assigns, by operation of law or otherwise including, without
limitation, any corporation or other entity or persons which shall succeed
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company, and
the Company will require any successor, by agreement in form end substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement. Except as otherwise provided herein this Agreement shall be binding
upon and inure to the benefit of the Executive and his legal representatives,
heirs, and assigns, provided however, that in the event of the Executive’s
death prior to payment or distribution of all amounts, distributions, and
benefits due him hereunder, each such unpaid amount and distribution shall be
paid in accordance with this Agreement to the person or persons designated by
Executive, to the Company, to receive such payment or distribution and in the
event Executive has made no applicable designation, to his Estate. If the
Company should split, divide or otherwise become more than one entity, all
liability and obligations of the Company shall be the joint and several
liability and obligation of all of the parts.

6.09.          GOVERNING LAW. Except to
the extent required to be governed by the laws of the State of Louisiana
because the Company is  incorporated
under the laws of the State of Louisiana, the validity, interpretation and
enforcement of this Agreement shall be governed by the laws of the State of
Texas.

6.10.          VENUE. To the extent
permitted by applicable State and Federal law, venue for all proceedings
hereunder will be in Harris County, Texas.

6.11.          HEADINGS. The headings
in this Agreement are inserted for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement.

6.12.          SEVERABILITY. In the
event that any provision or portion of this Agreement shall be determined to be
invalid or unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and
effect.

6.13.          PARTIAL INVALIDITY. In
the event that any part, portion or section of this

 

 

22

 

Agreement is found to be invalid or unenforceable for
any reason, the remaining provisions of this Agreement shall be binding upon
the parties hereto and the Agreement will be construed to give meaning to the
remaining provisions of this Agreement in according with the intent of this
Agreement.

6.14.          COUNTERPARTS. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be original, but all of which together constitute one and the same
instrument.

IN WITNESS WHEREOF, the Executive has hereunto set his
hand and, pursuant to  the
authorization from its Board of Directors and the Compensation Committee, the
Company has caused these presents to be executed in its name and on its behalf,
and its corporate seal to be hereunto affixed and attested by its Secretary or
Assistant Secretary, all as of the day and year first above written.

Executed in multiple originals and/or counterparts as
of the Effective Date.

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  

  	
   

  	
   

  	
  

  /s/ Paul A. Bragg

  
	
   

  	
   

  	
   

  	
   

  	
  PAUL A. BRAGG

  

 

	
   

  	
   

  	
   

  	
  PRIDE INTERNATIONAL, INC.

  
	
   

  	
  

  	
   

  	
   

  	
   

  
	
  CORPORATE SEAL

  	
   

  	
   

  	
   

  

 

	
   

  	
  

  	
   

  	
  By: 

  	
  /s/ Ray H. Tolson

  
	
   

  	
   

  	
   

  	
  RAY H. TOLSON

  CEO and Chairman of the Board

  

 

 

	
  ATTEST:

  	
   

  	
   

  	
   

  
	
   

  	
  

  	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Frida A. Martinez

  	
   

  	
   

  	
   

  
	
   

  	
  Frida A. Martinez

  Assistant Secretary

  	
   

  	
   

  	
   

  

 

 

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