Document:

exv10w3

Exhibit 10.3

ONE MCKINNEY PLAZA

 

LEASE AGREEMENT

BETWEEN

GAEDEKE HOLDINGS II, LTD.,

AS LANDLORD,

AND

ARCHIPELAGO LEARNING, LLC. 

AS TENANT

 

 

 

Table of Contents

	 

	1. Definitions

	a. Base Rent

	b. Base Year

	c. Basic Costs

	d. Building

	e. Building Standard

	f. Business Day(s)

	g. Commencement Date

	h. Common Areas

	i. Effective Date

	j. Electricity Costs

	k. Excess Basic Costs

	l. Expiration Date

	m. Guarantor (Intentionally Deleted)

	n. Land

	o. Landlord’s Work

	p. Landlord Parties

	q. Lease Month

	r. Lease Year

	s. Parking Fees

	t. Permitted Use

	u. Premises

	v. Project

	w. Rent

	x. Rentable Area of the Building

	y. Rules and Regulations

	z. Security Deposit

	aa. Service Areas

	bb. Tenant Parties 

	cc. Tenant’s Pro Rata Share

	dd. Term

	ee. Trade Fixtures

	2. Lease Grant & Landlord Representations

	3. Rent

	4. Security Deposit

	5. Use

	a. Prohibited Uses

	b. Floor Loads

	c. Compatible Use

	d. Parking

	6. Entry by Landlord

	7. Basic Services

	8. Electrical Services

	9. Service Terms

	10. Graphics

 

 

	 

	11. Improvements by Landlord (Intentionally Deleted)

	12. Maintenance and Repair by Landlord

	13. Maintenance, Repair, and Alterations by Tenant

	14. Mechanic’s Liens

	15. Assignment and Subletting

	16. Tenant’s Insurance

	a. General Liability Insurance

	b. Workers’ Compensation and Employer Liability Coverage

	c. Property Insurance

	d. Business Income and Extra Expense Coverage

	e. Policy Forms and Additional Representations

	f. Evidence of Property Insurance

	17. Landlord’s Insurance

	18. Subrogation and Waiver of Right of Recovery

	19. Indemnities and Waivers

	20. Limitations of Liability

	21. Casualty

	22. Condemnation

	23. Subordination

	24. Estoppel Certificates

	25. Default

	26. Remedies

	27. Landlord Default/Tenant Remedies

	28. Expiration, Termination, and Hold Over

	29. Quiet Enjoyment

	30. Reservations by Landlord

	31. Transfers by Landlord

	32. Taxes on Tenant’s Property

	33. Authority

	34. Building Rules and Regulations

	35. Compliance with Applicable Laws

	36. Americans with Disabilities Act and Texas Architectural Barriers Act

	37. Telecommunications

	38. Landlord’s Lien

	39. Notices

	40. Miscellaneous

	a. Attorneys’ Fees

	b. Commissions

	c. Construction

	d. Force Majeure

	e. Full Agreement; Amendments

	f. Joint and Several Liability (Intentionally Deleted)

	g. Method of Calculation

	h. No Merger

	i. Non-Disclosure

	j. Recording

 

 

	 

	k. Representations and Warranties

	l. Severability

	m. Successors

	n. Time is of the Essence; Relationship; Successors and Assigns

	o. Waivers

	41. Abandonment

	42. Exhibits and Riders

	 	 	 

	Exhibit A:

	 	Premises
	Exhibit B:

	 	Legal Description of Land
	Exhibit C:

	 	Rules and Regulations
	Exhibit D:

	 	Work Letter and Landlord Work
	Exhibit E:

	 	Commencement Letter
	Exhibit F:

	 	Moving Allowance
	Exhibit G:

	 	Janitorial Specifications
	Exhibit H:

	 	Reconciliation Statement Form
	Exhibit I:

	 	Exceptions to Permitted Use Restrictions in the Project
	Exhibit J:

	 	Depiction of Reserved Spaces
	Exhibit K:

	 	Non-Exclusive, Exclusive and Service Elevators
	Exhibit L:

	 	Required Removables
	Exhibit M:

	 	Parent Guaranty
	 
	 	 
	Rider 1:

	 	Renewal Option
	Rider 2:

	 	Termination Option
	Rider 3:

	 	Expansion Option
	Rider 4:

	 	Signage

 

 

OFFICE LEASE

     Gaedeke Holdings II, Ltd. (“Landlord”) and Archipelago Learning, LLC,
(“Tenant”), for good and valuable consideration, enter into this Lease Agreement 
(“Lease”) as of April 23, 2010, and effective as of the Effective Date (defined in
Paragraph 1.h).

	 	1.	 	Definitions. These capitalized terms are some of the
defined terms used in this Lease:

	 	a.	 	Base Rent means the fixed amounts stated in the
following schedule.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Annual Rate	 	Rentable	 	Monthly Fixed	 	Annual Fixed
	Months	 	(psf)	 	Area	 	Amount	 	Amount
	1 — 24 (24 months)
	 	$	12.90	 	 	 	37,218	 	 	$	40,009.35	 	 	$	480,112.20	 
	25 — 48 (24 months)
	 	$	24.00	 	 	 	37,218	 	 	$	74,436.00	 	 	$	893,232.00	 
	49 — 84 (36 months)
	 	$	25.00	 	 	 	37,218	 	 	$	77,538.00	 	 	$	930,456.00	 
	85 — 120 (36 months)
	 	$	26.00	 	 	 	37,218	 	 	$	80,639.00	 	 	$	967,668.00	 

	 	b.	 	Base Year is 2010; “Base Year Basic Costs” shall mean all Basic
Costs actually incurred during the Base Year, with all costs that
vary with occupancy grossed-up as if 95% of the rentable square
footage of the Building had been occupied and Building Standard
services had been provided to all Common Areas and to 95% of the
rentable square footage of the Building during the Base Year.
	 
	 	c.	 	Basic Costs are all direct costs and
expenditures reasonably incurred in connection with operating,
maintaining, protecting, repairing, replacing, managing, and owning
the Project to the extent that such types of costs were actually
incurred in the Base Year and benefit Tenant in-common with other
occupants of the Project, computed on an accrual basis in
accordance with income tax-based financial accounting principles
Cash basis accounting (“Accounting Principles”) consistently
applied including, without limitation, (i) all costs connected
with: procuring property, liability, and other insurance coverages
(including, without limitation, any payments made to satisfy any
commercially reasonable deductibles and the allocable cost of any
blanket insurance policies); (ii) providing, maintaining,
inspecting, repairing, replacing, changing, installing, servicing,
cleaning, evaluating, or making available any service, facility,
amenity, or equipment serving any part of the Project (including,
without limitation, utility, mechanical, electrical, and plumbing
excluding (y) repairs and general maintenance paid by proceeds of
insurance, by Tenant or by other third parties, and (z) alterations
attributable solely to a specific tenant or group of tenant of the
Building; (iii) Building Standard HVAC (provided during Normal

 

 

	 	 	 	Business Hours); (iv) Building gas, water and sewer supply all
limited to the extent such service is provided for Common Areas,
Service Areas and any other space in the Building that is used for
the Permitted Use; (v)
Building Standard vertical transportation; (vi) Building Standard
fire prevention, warning, and control; (vii) Building Standard
access control; (viii) Building Standard security; (ix) Building
Standard janitorial, window cleaning and waste disposal to the
extent provided for Common Areas, Service Areas and any other space
in the Building that is used for the Permitted Use; (x) Building
Standard landscaping; (xi) buying, renting, or paying for any minor
materials and supplies (e.g., light bulbs and ballasts); (xii)
equipment and tools; (xiii) floor, wall, and window coverings for
Common Areas; (xiv) personal property; (xv) required or beneficial
easements; (xvi) service agreements furthering such purposes; (xvii)
complying with any Applicable Law (including, without limitation,
license, permit, and inspection fees, professional fees, and other
costs of negotiating or contesting real estate taxes or any
governmental impositions on the Project) to the extent such laws,
rules or regulations are amended, become effective, or are
reinterpreted or enforced differently after the Effective Date;
(xviii) amortization over the cost of the useful life of capital
improvements to any part of the Project (plus interest on the
un-amortized or un-depreciated balance at 2% over the prime rate
published in The Wall Street Journal (Wall Street Journal
Prime) on, or on the publication date nearest, the date on which the
cost was incurred), if, and only if, such capital improvements are
(a) primarily for the purpose of actually reducing operating expense
costs or otherwise improving the operating efficiency of the Project
or Building; or (b) required to comply with any laws, rules or
regulations of any governmental authority to the extent such laws,
rules or regulations are amended, become effective, or are
reinterpreted or enforced differently after the Effective Date;
(xix) all taxes, margin taxes, assessments, excises, association
dues, fees, levies, charges, and other taxes of every kind levied or
assessed against, or arising in connection with, the ownership, use,
occupancy, operation, or possession or the Project now or in the
future; and (xx) any local, state or federal capital levy or other
tax directly or indirectly on the rents or revenue received by
Landlord and/or a franchise tax, assessment, levy or charge measured
by or based, in whole or in part, upon such rents or revenue on the
Building or any future building or buildings on the Project, all
limited to the extent that such levy or tax is assessed in lieu of
ad valorem taxes on the Project itself.
	 
	 	 	 	For purposes of computing Tenant’s Pro Rata Share of Excess
Basic Costs, Basic Costs (excluding those cost attributable to real
and personal property taxes and assessments, insurance costs,
utility services) in any calendar year will not increase by more
than 6% on a non-cumulative basis over controllable Basic Costs used
to compute Tenant’s Pro Rata Share of Excess Basic Costs in the
prior year.
	 
	 	 	 	Notwithstanding the foregoing in this Paragraph 1(c), Basic
Costs will not include the cost of: (i) leasing commissions and
attorneys’ fees for leasing space to, or making improvements
exclusively for, another tenant, or for the enforcement of leases;
(ii) non-Building Standard 

 

 

	 	 	 	goods, services and utilities furnished
to another tenant, including without limitation any goods, services
and utilities provided to an occupant of the Building that is not
operating as a Permitted Use, to the
extent that such cost exceeds the average cost per square foot of
such item for occupants using a portion of the Project as the
Permitted Use; (iii) the cost of tenant improvements made for
tenant(s) of the Building; (iv) casualty repairs or condemnation
damages to the extent either (1) same is required to be covered by
insurance pursuant to the terms of this Lease, or (2) damage awards
are provided for the subject damage; (v) principal, interest,
penalties, late fees, on debt or amortization on any mortgage
encumbering the Project or the Land and any other payments to
Landlord’s Mortgagee; (vi) federal and state taxes on income, death
taxes, franchise taxes, gift, inheritance, and estate taxes, and any
taxes imposed or measured on or by the income of Landlord from the
operation of the Project unless such tax is in lieu of ad valorem
taxes on the Project itself; (vii) capital improvements, except to
the extent specifically permitted by Paragraph 1(c); (viii) costs
incurred due to violations of law or other violations by Landlord of
any of the terms and conditions of this Lease, and costs incurred
due to violations by Landlord of any terms of an agreement that
relates to the Project; (ix) advertising and promotional
expenditures, marketing expenses and other similar costs incurred in
connection with the development or leasing of the Project,
including, but not limited to, expenses associated with maintaining
a leasing office (x) the cost of any environmental remediation of
the Project or the Land, including without limitation any costs
incurred to test, survey, cleanup, contain, abate, remove, or
otherwise remedy hazardous wastes or asbestos-containing materials
from the Project, except to the extent directly caused or released
by a Tenant Party (xi) rental under any ground lease or other
underlying lease (xii) salaries of personnel of Landlord above the
level of building manager; (xiii) costs or expenses for correcting
defects in the design or construction of the Project, including
without limitation, latent defects in the Project, and costs
incurred in complying with governmental requirements to the extent
same were applicable to the Project on or prior to the Commencement
Date; (xiv) reserves for bad debts, future repairs, improvements,
additions or any expenditures that would be incurred subsequent to
the current calendar year (xv) Penalties and interest for late
payments; (xvi) the cost of construction of the Project and/or the
improvements on the Land, whether initially or in connection with
any replacement or expansion; (xvii) Landlord’s general corporate
overhead costs and general administrative expenses (other than the
allocable portion thereof attributable to the Project),
organizational fees, and partnership expenses; (xviii) overhead and
profit paid to subsidiaries or affiliates of Landlord for services
on or to the Project and/or Premises, to the extent only that the
costs of such services exceed competitive costs for such services
were they not to rendered by a subsidiary or affiliate; (xix) costs
or expenses of leasing any item if the purchase price of such item,
if purchased, is not properly chargeable as Basic Cost; (xx) costs
or expenses incurred as a result of disputes with other tenants or
occupants of the Project; (xxi) the amount of any increase in
Landlord’s existing insurance premiums or the amount of any premiums
for additional

 

 

	 	 	 	insurance which Landlord is required to purchase, to
any extent that such increases or additional insurance are directly
attributable to the use of any portion of the Building for a use
other than the Permitted Use; (xxii)
any other expenses not expressly included in Basic Costs which, in
accordance with Accounting Principles consistently applied, would
not normally be treated as Basic Costs by landlords of comparable
buildings in the Dallas-Uptown office market, and (xxiii)
Electricity Costs.
	 
	 	d.	 	Building is the 15 story office building tower
located on the Land. Landlord and Tenant stipulate that the
Rentable Area of the Building is 256,543 square feet regardless of
whether this stipulated number is more or less than the actual
number of square feet.
	 
	 	e.	 	Building Standard means the type, brand,
quality, or quantity of materials, equipment, insurance coverages,
methods, scheduling, usages, or services that are customary in for
Class A office buildings located in the Dallas-Uptown office
market.
	 
	 	f.	 	Business Day(s) mean Mondays through Fridays,
except for normal business holidays, New Year’s Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day
(Holidays), and Normal Business Hours mean from 7:00 a.m. to 6:00
p.m. on Business Days, and from 8:00 a.m. to 1:00 p.m., on
Saturdays, except for Holidays.
	 
	 	g.	 	Commencement Date will be the later of (X)
August 1, 2010, or (Y) the earliest of: (i) the date on which
Tenant occupies the Premises and begins conducting business
therein, except for Data Room Operations at the Premises, as
provided for herein; (ii) the date on which the Work (as defined
in Exhibit D hereto) in the Premises is Substantially
Completed (as defined in Exhibit D hereto); or (iii) the
date on which the Work in the Premises would have been
Substantially Completed but for the occurrence of any Tenant Delay
(as defined in Exhibit D hereto)
	 
	 	h.	 	Common Areas are those corridors, elevator
foyers, mail rooms, restrooms, mechanical rooms, elevator
mechanical rooms, janitorial closets, electrical and telephone
closets, vending areas, lobby areas, and other similar facilities
in the Building and driveways, sidewalks, loading areas, and
similar areas outside the Building but on the Project available for
the non-exclusive use or benefit of tenants generally or the public
now or in the future; provided that the Common Areas as of the
Commencement Date may not be reduced nor modified in such a way
that materially and adversely affects Tenant’s use of the Premises
and the Common Areas without the prior written consent of Tenant,
which consent shall not be unreasonably withheld, conditioned or
delayed.
	 
	 	i.	 	Effective Date is the date this Lease and the
Guaranty are fully executed and Tenant delivers to Landlord the
Security Deposit and the first full month’s Base Rent.

 

 

	 	j.	 	Electricity Costs are all actual third-party
costs electrical supply costs incurred by Landlord that are
directly attributable to the Project, being comprised of (i)
electrical services used in the operation, maintenance, and use of
the Project; and (ii) sales, use, excise, and other taxes assessed
by governmental authorities on electrical services supplied to the
Project. With respect to any period of time that at least 95% of
the rentable square footage of the Building is not occupied,
Landlord will be entitled to gross-up all Electricity Costs that
vary with occupancy of the Building as if 95% of the rentable
square footage of the Building had been occupied and electricity
services had been provided to all Common Areas and to 95% of the
rentable square footage of the Building during such period of time;
provided that in no event shall Landlord be able to gross-up
Electricity Costs in a manner that could allow Landlord to recover
more than 100% of the actual Electricity Costs or any component
thereof. The definition of the term Electricity Costs is subject
to change in accordance with the terms of Paragraph 8(a) of this
Lease.
	 
	 	k.	 	Excess Basic Costs are the amount (prorated for
any partial calendar year) by which Basic Costs for that calendar
year exceed Base Year Basic Costs, but Base Rent will never be
reduced, even if Basic Costs for any calendar year are less than
Base Year Basic Costs. Landlord will compute Basic Costs in
accordance with consistently applied Accounting Principles. With
respect to any period of time that at least 95% of the rentable
square footage of the Building is not occupied, Landlord will be
entitled to gross-up all Basic Costs that vary with occupancy of
the Building (For example, the following expenses do not
vary with occupancy and shall not be adjusted in the
“gross-up” calculation: (1) property taxes, (2) amortized capital
improvements costs, (3) insurance premiums, (4) management fees,
(5) landscaping expenses, (6) building security costs, and (7) any
other fixed-cost items that are not subject to fluctuation based
upon occupancy) as if 95% of the rentable square footage of the
Building had been occupied and Building Standard services had been
provided to all Common Areas and to 95% of the rentable square
footage of the Building during such period of time; provided that
in no event shall Landlord be able to gross-up Basic Costs in a
manner that could allow Landlord to recover more than 100% of the
actual Basic Costs or any component thereof. Additionally,
Landlord represents that the Base Year Basic Costs will be
calculated on a consistent basis with Tenant’s Pro Rata share of
Excess Basic Costs; that is, with variable Basic Costs grossed-up
if the Landlord is charging Tenant on a grossed-up basis.
	 
	 	l.	 	Expiration Date is the last day of the
One-hundred twentieth (120th) full calendar month after
the Commencement Date; Landlord and Tenant will sign and deliver a
Commencement Letter (Exhibit E) confirming the
exact Expiration Date and if requested by either party, a lease
amendment.
	 
	 	m.	 	Intentionally Deleted.

 

 

	 	n.	 	Land means the real property described in
Exhibit B on which the Building is situated.
	 
	 	o.	 	 Landlord’s Work is the Work described in the
Work Letter (Exhibit D, Schedule 1) to be
performed by Landlord.
	 
	 	p.	 	Landlord Parties are (i) Landlord, (ii)
Landlord’s Mortgagee, (iii) the Building manager, and (iv) their
respective shareholders, members, partners, affiliates,
subsidiaries, partners, directors, officers, employees, agents, and
contractors.
	 
	 	q.	 	Lease Month means each of the twelve (12)
one-month periods during a Lease Year (defined below) with the
first (1st) Lease Month commencing on the Commencement
Date and with each subsequent Lease Month commencing upon the
expiration of the prior Lease Month and expiring on the last day of
said subsequent calendar month; provided, however, in the event the
Commencement Date is on a date other than the first day of a
calendar month, the first (1st) Lease Month shall be
extended and shall end on the last day of the first full calendar
month after the Renewal Term Commencement Date and Base Rent during
such period shall be prorated on a day by day basis accordingly.
	 
	 	r.	 	Lease Year means a period of one year, with the
first (1st) Lease Year commencing on the Commencement
Date and expiring on the last day of the 12th Lease
Month, and with each subsequent Lease Year commencing upon the
expiration of the prior Lease Year and expiring on the day
immediately preceding the anniversary of such subsequent Lease
Year;
	 
	 	s.	 	Parking Fees are the amounts Landlord will be entitled
to charge for any Tenant Party’s right to use any parking facilities
serving the Project, plus any applicable taxes. For the Term, the monthly
Parking Fee for each of the One-hundred forty-nine (149) Unreserved Spaces
will be waived. Any additional Unreserved parking spaces are $65.00 per
space per month, plus applicable taxes, and any agreed upon Reserved
parking spaces are $100.00 per space per month, plus applicable taxes.
Tenant may lease additional parking spaces on a month-to-month basis at the
aforementioned rates, subject to availability.
	 
	 	t.	 	Permitted Use means general office purposes and
related uses (including without limitation a server room) and no
other purpose.
	 
	 	u.	 	Premises mean the space in the Building shown
on Exhibit A, located on Floors Three and Four and
designated as Suite 300 and Landlord and Tenant stipulate
that the Rentable Area of the Premises is 37,218 square
feet even if this stipulated number is more or less than the actual
number of square feet.
	 
	 	v.	 	Project means the Land, the Building, and the
parking garage serving the Building that is located on the Land,
and all other improvements and facilities now or later located in
the Building or on the Land.

 

 

	 	w.	 	Rent means, collectively: (i) Base Rent (ii)
Parking Fees, (iii) Tenant’s Pro Rata Share of Electricity Costs,
(iv) Tenant’s Pro Rata Share of any Excess Basic Costs, and (v) all
other sums of money owed to Landlord under this Lease.
	 
	 	x.	 	Rentable Area of the Building means 256,543
square feet.
	 
	 	y.	 	Rules and Regulations are the Building Rules
and Regulations (Exhibit C), as Landlord may, from
time to time amend them; provided that in no event except with
Tenant’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed (i) may any change to
the Rules and Regulations adversely affect Tenant’s use and access
to the Premises, parking and Common Areas; (ii) may any rule or
regulation be enforced against any Tenant Party unless such rule or
regulation is consistently applied to and enforced against all
tenants of the Project except rules or regulations that apply only
to the interior of any portion of the Unrestricted Area; and (iii)
may any rule or regulation be enforced against any Tenant Party if
the terms of this Lease are inconsistent with the subject matter of
the applicable rule or regulation.
	 
	 	z.	 	Security Deposit is initially
$70,342.00 subject to adjustment in accordance with the
terms of this Lease.
	 
	 	aa.	 	Service Areas are those areas in the Building
that are used for stairs, elevator shafts, flues, vents, stacks,
pipe shafts, and other vertical penetrations (excluding any such
area dedicated to a particular tenant’s exclusive use) and those
areas outside the Building but serving the Project that are not
available for the non-exclusive use or benefit of tenants generally
or the public.
	 
	 	bb.	 	Tenant Parties are Tenant and its shareholders,
members, partners, directors, officers, employees, agents,
sublessees, licensees, invitees, and contractors.
	 
	 	cc.	 	Tenant’s Pro Rata Share means 14.5%, which is
the Rentable Area of the Premises divided by the Rentable Area of
the Building, expressed as a percentage.
	 
	 	dd.	 	Term means any partial month in which the
Commencement Date occurs, plus the next One-hundred Twenty (120)
full calendar months.
	 
	 	ee.	 	Trade Fixtures include Tenant’s furniture,
equipment, and any signs within the Premises. Trade Fixtures do
not include any permanent leasehold improvements in the Premises or
the Building; any floor, wall, or ceiling coverings (except throw
rugs); interior walls or partitions; attached lighting fixtures; or
anything else that is part of, or attached to, any electrical,
plumbing, or mechanical system in or serving the Premises.

 

 

	 	2.	 	Lease Grant & Landlord Representations.

	 	a.	 	On the terms expressed in this Lease, Landlord leases the
Premises to Tenant, and Tenant leases the Premises from Landlord
for the Term and grants to Tenant a non-exclusive right to use
Building and Common Areas, and to the extent applicable the
Service Area. Tenant shall have access to the Premises as of the
Commencement Date. By taking of possession of the Premises,
except for latent defects and except as otherwise set forth in
this Lease (including without limitation, punch-list items and
warranties created in accordance with the terms of the Work Letter
(Exhibit D)) Tenant: (a) accepts the Premises “as is” and
“where is”; (b) Waives any implied warranties of suitability,
habitability, and fitness for a particular purpose; (c) Waives all
claims based on any defect in the Premises and the Project that
could have been discovered by Tenant’s reasonable inspection; and
(d) acknowledges that Landlord has fully performed its obligations
under the Work Letter, except for (i) Landlord’s completion of any
items of Landlord’s Work listed in the punch-list delivered to
Landlord in accordance with the Work Letter, and (ii) Landlord’s
completion of the Post-Commencement date Work (as defined in the
Work Letter). The foregoing is subject to any Landlord’s
construction obligations hereunder and to any express
representation made by Landlord in connection with this Lease.
	 
	 	b.	 	Landlord represents and warrants to Tenant
that (i) Landlord owns the Land in fee simple, free and clear of
any liens or other encumbrances that would prohibit the occupancy,
use, and enjoyment of the Premises and Common Areas by Tenant for
the purposes intended herein; and (ii) the Project complies with
all Applicable Laws.
	 
	 	c.	 	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, including but not
limited to use for Tenant’s operation of its data room (“Data
Room Operations”), then such entry, use or occupancy shall be
subject to all the provisions of this Lease other than the payment
of Base Rent and Electricity Costs (provided that Tenant shall pay
all the cost of actual electricity supplied to the data room
through a separate meter), including, without limitation, Tenant’s
compliance with the insurance requirements of Paragraph
16; provided that such early entry, use or occupancy shall
not: (i) relieve Landlord of any of its obligations under the Work
Letter, (ii) trigger the

 

 

	 	 	 	Commencement Date. Said early possession shall not advance the
Expiration Date.

	 	3.	 	Rent. Except for any notice or demand expressly required in
this Lease, Tenant must pay to Landlord without any notice, demand, setoff, or
deduction, Base Rent and Tenant’s Pro Rata Share of Excess Basic Cost and Tenant’s
Pro Rata Share of Electricity Cost, and all other components of Rent.

	 	a.	 	Unless otherwise expressly provided in this
Lease, Base Rent, plus 1/12 Landlord’s estimate of Tenant’s Pro
Rata Share of Excess Basic Cost and Tenant’s Pro Rata Share of
Electricity Cost will be due and payable, in advance monthly
installments on or before the 1st day of each calendar month. All
components of Rent owed to Landlord will be prorated daily based
on a 360-day year for any partial calendar month for which any
Rent is due. 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.
	 
	 	b.	 	On or before April 1st of each
calendar year after the Base Year Landlord shall issue a budget
for total Electricity Costs and total Basic Costs for such
calendar year, including Landlord’s estimate of Tenant’s Pro Rata
Share of Excess Basic Cost and Tenant’s Pro Rata Share of
Electricity Cost for that calendar year (the “Annual Budget &
Estimate”). The Annual Budget & Estimate shall provide a budget
for each component expense category comprising Basic Costs and
Electricity Costs. Tenant shall pay as additional Rent during
each calendar year Tenant’s Pro Rata Share of Excess Basic Cost
and Tenant’s Pro Rata Share of Electricity Cost based on the
Annual Budget & Estimate. The Annual Budget & Estimate shall be
binding upon Landlord and Tenant with respect to such calendar
year until the Reconciliation Statement (as defined below) is
provided to Tenant.
	 
	 	c.	 	By May 30th of each calendar year Landlord will
furnish Tenant a statement of actual Basic Costs and Electricity Costs
for the prior calendar year (the “Reconciliation Statement”). If a
Reconciliation Statement is not timely provided to Tenant, then in
addition to all other remedies of Tenant under this Lease, Tenant may
withhold monthly payments applicable to Tenant’s Pro Rata Share of
Excess Basic Cost and Tenant’s Pro Rata Share of Electricity Cost
until the date that is thirty (30) days after the date that the
Reconciliation Statement is provided to Tenant. The Reconciliation
Statement shall provide an accounting of actual expenses for each
component category comprising Basic Costs and Electricity Costs in a
form substantially similar to Exhibit H attached hereto. If no
uncured Default then exists, Landlord will refund any overpayment to
Tenant for the prior calendar year within twenty (20) days after the
date the Reconciliation Statement is issued. In the event of a
deficiency in payment of Tenant’s Pro Rata Share of Excess Basic Cost
and Tenant’s Pro Rata Share of Electricity Cost for the prior year,
Tenant will pay such deficiency to Landlord, as additional rent in one
lump sum payment within thirty (30) days after receipt of the
Reconciliation Statement.

 

 

	 	d.	 	During the Term, Tenant (or a third-party auditor
engaged by Tenant) may review and audit, at Tenant’s sole cost and
expense, the books and records supporting a Reconciliation Statement
in an office of Landlord located in Dallas County, Texas, during
normal business hours, upon giving Landlord fifteen (15) days advance
written notice within one year after receipt of the subject
Reconciliation Statement, but in no event more often than once in any
one (1) year period, subject to execution of a reasonable
confidentiality agreement 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 Excess Basic Costs or Electricity Costs one year
after receipt of same, 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. If such audit reveals that
Tenant overpaid either Excess Basic Costs or Electricity Costs,
Landlord shall reimburse the difference to Tenant within thirty (30)
days of written demand, and if such over payment revealed by the audit
is in an amount of 5% or greater of the total of either Tenant’s Pro
Rata Share of Excess Basic Costs or Tenant’s Pro Rata Share of
Electricity Costs, then Landlord shall reimburse Tenant for is
reasonable third-party cost incurred in connection with such audit.
	 
	 	e.	 	At least two (2) Business Days prior to the first day
of each calendar month, Landlord shall provide Tenant with a statement
of all Rent that is due and payable on such first day of the calendar
month. If Tenant fails to pay (i) any monthly installment of Base Rent
by the 5th Business Day of the month when due; or (ii) any
other component of Rent within 30 days after written demand or the due
date specified in this Lease, Tenant must pay a 10% late fee on the
delinquent amount, provided that such fee shall not apply to the first
late payment, if any, each calendar year. If Tenant is twice in
Default for a failure to timely pay Rent under this Lease (and each of
such Defaults remainder uncured beyond all applicable periods of
notice and cure), then Landlord will be entitled to require Tenant to
pay Rent (as estimated by Landlord) quarterly, in advance, in readily
available funds (e.g., in cash or by wire transfer, cashier’s check,
or money order); provided that if Tenant timely pays all Rent in
advance quarterly for a period of one calendar year, then may return
to the payment of Rent of monthly installments. Landlord will apply
all payments to fees, costs, interest, other sums due under the Lease,
and then to the earliest accrued and unpaid Base Rent then outstanding
in that order.

 

 

	 	4.	 	Security Deposit. Landlord will hold the Security
Deposit, without interest, to secure performance of Tenant’s obligations under this
Lease, but the Security Deposit is not an advance payment of Rent or a measure of
Landlord’s damages for Tenant’s breach of this Lease.

	 	a.	 	Landlord may: (i) commingle the Security
Deposit with Landlord’s other funds; and (ii) during any period of
time that a Default by Tenant exists beyond all applicable period
of notice and cure, use the Security Deposit to pay any delinquent
Rent or to satisfy Tenant’s other obligations after providing five
(5) days’ advance written notice of such application to Tenant.
After any such use of the Security Deposit, Tenant must pay to
Landlord, within five (5) Business Days after written demand, the
amount necessary restore the Security Deposit.
	 
	 	b.	 	If Tenant is not in Default when this Lease
expires or terminates, Landlord will return any unused portion of
the Security Deposit to Tenant within 30 days after the last to
occur of: (i) the Expiration Date; and (ii) the date that Tenant
completes all matter set forth on the Move-Out List (created
pursuant to Paragraph 28(c) of this Lease). Tenant’s actual or
attempted assignment, transfer, or encumbrance of the Security
Deposit will not bind Landlord.

	 	5.	 	Use. The Premises may be used only for the Permitted
Use. The rentable area of the Project may be used only for the Permitted Use,
except as for the portion of the Project described on Exhibit I, attached
hereto (the “Unrestricted Area”).

	 	a.	 	Prohibited Uses. Tenant must not use the
Premises, or permit their use, for any of the following (collectively,
the “Prohibited Uses”): (i) any illegal purpose; (ii) any activity
that is dangerous to life, limb, or property; or (iii) any activity
that would create a nuisance or unreasonably disturb other occupants
of the Building. Landlord shall not permit any portion of the
rentable area of Project to be used for any of the Prohibited Uses.
In addition, Landlord agrees that it will not permit the rentable area
located on the first floor of the lobby portion of the Building tower
that is part of the Unrestricted Area, to be used as either a
nightclub or a business that primarily sells alcohol and/or liquor.
	 
	 	b.	 	Floor Loads. Tenant must not place any load
upon any floor of the Premises exceeding the following limits: 50 psf
(plus 20 psf dead load for partitions) for office space, and 100 psf
for corridors. Landlord may prescribe reasonable limits on the weight
and the position of all objects exceeding 300 lbs that Tenant places
in the Premises and Tenant must deliver written notice to Landlord and
receive Landlord’s written consent before placing any such items in
the Premises, which consent shall not be unreasonably withheld,
conditioned or delayed.

 

 

	 	c.	 	Compatible Use. Tenant covenants with
respect to Tenant Parties and the Premises, and Landlord covenants
with respect to the Landlord Parties and the Project: (i) it will use
commercially reasonable efforts to prevent the unreasonable
transmission of noise or vibration to the Building resulting from the
installation, operation, and maintenance of business machines and
equipment in such area, (ii) it will use commercially reasonable
efforts to control all occupants of such area so that the business and
operations of such occupants shall not unreasonably interfere with,
annoy, or disturb other occupants of the Building, and (iii) it will
use commercially reasonable efforts to prevent waste on such area.
	 
	 	d.	 	Parking. During the Term, without charge,
Tenant may use in accordance with this Lease and the Rules and
Regulations Zero (0) Reserved Spaces and One-hundred forty-nine (149)
Unreserved Spaces. At anytime during the Term, subject to
availability, Tenant may lease additional Unreserved parking spaces at
a cost of $65.00 per space per month, plus applicable taxes, and
Reserved parking spaces are $100.00 per space per month, plus
applicable taxes. The foregoing parking charges may not be increased
during the Term. Landlord and Tenant hereby acknowledge and agree
that, as of the Commencement Date, Tenant shall lease an additional
twenty-one (21) Unreserved Spaces (“Additional Confirmed
Spaces”). With respect to said Additional Confirmed Spaces,
Tenant shall have the right to continue to lease such spaces for each
month remaining during the Term and the right to terminate the lease
of any such spaces by providing Landlord with thirty (30) days’
advance written notice of termination of such spaces or portion
thereof. However, upon Tenant’s election to terminate the lease of the
Additional Confirmed Spaces, Tenant will not have any continuing right
to lease the Additional Confirmed Spaces. If after termination of the
lease of any Additional Confirmed Spaces, Tenant re-leases such spaces
from Landlord pursuant to this Paragraph 5(d), then either Landlord or
Tenant shall have the right to terminate the lease for such Additional
Confirmed Spaces by providing the other party with thirty (30) days’
advance written notice of termination of such leased parking spaces.
With respect to any other additional spaces (i.e. parking spaces other
than the 149 Unreserved Spaces and the 21 Unreserved Spaces described
above) that may be leased by Tenant pursuant to this Paragraph 5(d),
either party may terminate the lease of such spaces or portion thereof
by providing the other party with thirty (30) days’ advance written
notice of termination of such leased parking spaces. As of the
Commencement Date, Landlord will be entitled to: (i) issue access
control devices and use access control methods it deems necessary
(provided that the first one-hundred seventy (170) access control
devices, if any are required, shall be provided to Tenant without
additional charge); (ii) impose fines of up to $25 on Tenant for each
violation of applicable Parking Rules and Regulations or the
unauthorized use of parking facilities by any Tenant Party; and (iii)
make reasonable charges to replace previously issued access control
devices. Within thirty (30) days of Landlord’s written request,
Tenant must furnish Landlord a current list of persons using Tenant’s
spaces, including each user’s name and the make, and license number of
each user’s vehicle. Landlord covenants that it shall maintain all
parking spaces located in the parking garage: (i) for the sole use of
employees and tenants of the Building, except for guest parking in the

 

 

	 	 	 	designated visitor parking area that is located on the 1st
floor and on level two (L-2) before the controlled access gate for the
tenant parking area, (ii) such that, at all times, all parking spaces
leased by Tenant pursuant to this Paragraph 5(d) shall be available in
covered areas within the parking garage located at the Project, and
(iii) such that the layout, design and number of parking spaces located
in the parking garage shall not be modified in a manner that will
materially and adversely affect Tenant, except with the prior written
consent of Tenant, which consent shall not be unreasonable withheld,
conditioned or delayed. In the event of a breach by Landlord of any
obligation under this Paragraph 5(d), Tenant shall provide Landlord
written notice detailing the breach and Landlord shall immediately
commence the cure of such breach (including, without limitation, by
providing valet parking service to Tenant’s employees at the front
entrance of the Building, all without cost or reimbursement from
Tenant). If Landlord has not cured a breach of an obligation under
this Paragraph 5(d) within thirty (30) days after receipt of written
notice identifying the breach, then such breach shall be deemed a
Landlord Default, without further notice requirements or cure
opportunities.

	 	6.	 	Entry by Landlord. Landlord Parties may enter the
Premises at all reasonable hours (and, in emergencies, at any time, by reasonable
means) to inspect the Premises; to show the Premises to prospective purchasers,
mortgagees, or insurers; and (to the extent specifically permitted or required by
this Lease) to clean, repair, or alter the Premises; or within the last ninety (90)
days of the Term, to show the Premises to prospective tenants. Any entry of the
Premises by any Landlord Party shall be subject to reasonable restrictions imposed
by Tenant, including: (i) restrictions imposed to protect confidential information,
(ii) at least 24-hours’ advance notice must be provided to Tenant’s office manager
as a condition to any non-emergency entry, (iii) a representative of Tenant shall
be required to accompany any Landlord Party that enters the Premises pursuant to
this Paragraph 6, except in the event of an emergency, and (iv) a certificate of
insurance for Landlord’s Liability Policy that confirms Landlord’s Liability Policy
remains effective as of the date of entry must be provided to Tenant as a condition
to entry. For the purposes of this Paragraph 6, an emergency shall mean an event or
circumstance that could result in significant damage to property or harm to human
life if access to the Premises is not immediately available to a Landlord Party or
third-party emergency responder. In the event of an emergency, Landlord shall
provide Tenant with the best notice practicable under the circumstances.
	 
	 	7.	 	Basic Services. Landlord will furnish these Building
Standard services to Tenant during the Term, unless otherwise provided herein:

	 	a.	 	hot and cold water at those points of supply
(i) provided for general use of tenants in the Building, and (ii)
designated in plans approved pursuant to the Work Letter
(Exhibit D);
	 
	 	b.	 	heat or air conditioning (HVAC) during Normal
Business Hours in amounts necessary to maintain temperatures of 69
degrees Fahrenheit to 75 degrees Fahrenheit (the “Building
Standard Temperatures”), and Landlord will supply, at Tenant’s
sole cost, HVAC during other than Normal Business Hours (“After
Hours HVAC”) if Tenant delivers its written request to Landlord
before 1:00 p.m. on the preceding Business

 

 

	 	 	 	Day. Within thirty (30) days after receipt of written invoice from
Landlord, Tenant must pay as Rent the After Hours HVAC Cost for
After Hours HVAC that is supplied to the Premises pursuant to this
Paragraph 7(b). The term “After Hours HVAC Cost” shall mean $50.00
per hour; provided that (i) the minimum total charge for each
provision of After Hours HVAC is $100.00; and (ii) after the second
year of the Term, Landlord may, by providing written notice to
Tenant, increase the After Hours HVAC Cost during the remainder of
the Term to the current market rate for similar services in Class A
office space in the Dallas Uptown market. If Landlord fails to
maintain Building Standard Temperatures at the Premises, Tenant
shall provide Landlord written notice identifying the failure; and
Landlord shall use commercially reasonable efforts to remedy to
failure to maintain the Building Standard Temperatures, and Tenant
shall cooperate with Landlord’s efforts, including, but not limited
to closing the window blinds in the Premises. If such failure
remains uncured thirty (30) days after receipt of written notice
from Tenant identifying the failure (with the cure of such failure
being the maintenance of the Building Standard Temperatures at the
Premises for a continuous one-week period), then such failure shall
be deemed a Landlord Default without further notice requirements or
cure opportunities.
	 
	 	c.	 	routine maintenance of electric lighting and
replacement of Building Standard light bulbs and ballasts in
Common Areas and Service Areas;
	 
	 	d.	 	janitorial service Sunday through Thursday and
complying with the janitorial specifications attached as
Exhibit G;
	 
	 	e.	 	exterior window washing at least two (2) times
each year;
	 
	 	f.	 	(i) non-exclusive passenger elevator service
sufficient for ingress and egress to the Premises on each of the
Non-Exclusive Elevators (as described in Exhibit K,
attached hereto), (ii) exclusive passenger elevator service for
ingress and egress to the Premises on each of the Exclusive
Elevators (as described in Exhibit K), commencing on the
date that the renovation of the Exclusive Elevators is scheduled
to be completed pursuant to Schedule I of the Work Letter,
attached as Exhibit D, and (iii) non-exclusive use of the
Service Elevators (as described in Exhibit K) to and from
the Premises;
	 
	 	g.	 	Building Standard light and fluorescent bulb
replacements for light fixtures in the Premises, and Tenant must
pay Landlord the cost of any non-Building Standard replacement
bulbs, within thirty (30) days after receipt of invoice therefor,
as Rent;
	 
	 	h.	 	access control devices or codes allowing
Tenant access to the Building parking garage and Premises during
other than Normal Business Hours;
	 
	 	i.	 	monitored security service of Project,
including an on-site security guard on a twenty-four hours per
day, seven days per week basis;

 

 

	 	j.	 	on-site Building engineer, from 7:00 a.m. to
5:00 p.m. on Business Days; and
	 
	 	k.	 	the ability for Tenant to have commercially
reasonable access to high speed data/internet connections
consistent with a first class office building in Dallas, Texas.

	 	8.	 	Electrical Services. Landlord will furnish Building
Standard electrical service to the Premises twenty four (24) hours per day, seven
(7) days per week in amounts required to operate Building Standard lighting and
ordinary amounts and types of office equipment; provided that in all events
Landlord shall supply electrical service to the Premises of not less than 4 to 6
watts per square foot (1 watt for above lighting and 3 to 5 watts below). Tenant
will not use electrical services that materially exceed the Building Standard,
unless a separate meter is installed for the Premises in accordance with Paragraph
8(a). Landlord shall not permit any other occupant to use electrical service that
materially exceeds the Building Standard, unless such electrical service is
supplied to such occupant pursuant to a separate meter and the related costs are
excluded from Electricity Costs.

	 	a.	 	On 30 days written notice, Landlord unless
prohibited by Applicable Law will be entitled to install a
sub-meter for the Premises, and, in that event: (i) Tenant must
reimburse Landlord for one-half of the actual cost of the
sub-meter, (ii) Tenant will pay, as Rent, the actual cost of
electricity supplied to the Premises as measured by the sub-meter,
and (iii) Tenant must continue to pay Tenant’s Pro Rata Share of
Electricity Costs, except that after the date a sub-meter is
installed pursuant to this Paragraph 8(a), the term “Electricity
Costs” shall be limited to the following: “all actual third-party
costs electrical supply costs incurred by Landlord that are
directly attributable to Common Areas and Service Areas of the
Project (but in no event included any electrical service supplied
to an area that is not made available for use by Tenant), being
comprised of (i) electrical services used in the operation,
maintenance, and use of such areas; and (ii) sales, use, excise,
and other taxes assessed by governmental authorities on electrical
services supplied to such areas; provided that in no event shall
the foregoing be subject to any “gross-up” provision.
	 
	 	b.	 	Landlord, at Landlord’s expense, will be
entitled to measure Tenant’s actual electrical consumption in the
Premises by a survey conducted by a reputable consultant selected
by Landlord; provided that Tenant shall not be obligated to pay
actual costs of electric service supplied to the Premises except
in accordance with the terms of Paragraph 8(a).

 

 

	 	9.	 	Service Terms. Landlord will be entitled, from time
to time, to select and change any provider of Building Standard and non-Building
Standard utility services, electrical services, or of any service furnished by
Landlord; provided that (i) the quality of the replacement service is substantially
similar to or better than the service of the prior provider, (ii) the cost of the
replacement service is not materially greater than the cost of the service of the
prior provider, and (iii) Tenant’s use and occupancy of the Premises is not
materially and adversely affected by the change in service provider.

	 	a.	 	Tenant may make written requests for any
non-Building Standard service and Landlord shall not unreasonably
withhold condition or delay its consent to such service. Landlord
may withhold or condition its consent to any non-Building Standard
service if the requested non-Building Standard service: (i) would
damage or injure the Premises or the Project in a manner that is
not customarily accepted for Class A office buildings located in
the Dallas Uptown market; (ii) would create a dangerous or
hazardous condition; (iii) would entail alteration or repair to
any part of the Project, of a type that is not customary for Class
A office buildings located in the Dallas Uptown market; (iv) would
in any material respect disturb or interfere with the operation of
other facilities or equipment in, or any other occupant’s use of,
the Project; (v) would increase in any material respect Landlord’s
insurance or other costs to operate the Building and Tenant is not
willing to reimburse Landlord for such increased costs; or (vi)
would otherwise be detrimental in any material respect to the
Project, to other occupants, or to Landlord. In no event will
Landlord be liable to any Tenant Party for withholding,
conditioning, or revoking its consent to any non-Building Standard
service if such consent has been withheld, conditioned or revoked
in accordance with the terms of this Paragraph 9(a).
	 
	 	b.	 	Intentionally Omitted.
	 
	 	c.	 	Tenant will cooperate with Landlord and any
service provider at all times, and Tenant will allow (subject to
and in accordance with the restrictions set forth in Paragraph 6
of this Lease) any Landlord Party or any service provider
reasonable access to the Building’s electric lines, cables,
feeders, risers, wiring, electrical panels, and any other
equipment or machinery within, or accessed from, the Premises.
	 
	 	d.	 	Except as provided below, no change,
interruption, or malfunction of any utility service, electrical
service, or of any service furnished by Landlord (collectively,
the “Services”) will: (i) constitute an actual or constructive
eviction, a disturbance of Tenant’s use or occupancy of the
Premises, or a breach of Landlord’s obligations under this Lease;
(ii) render any Landlord Party liable or responsible for any loss
or damage Tenant may sustain because the quantity or character of
any service changes, becomes unavailable, or becomes unsuitable;
(iii) relieve Tenant of any obligation under this Lease
(including, without limitation, the obligation to pay any
component of Rent), or (iv) entitle Tenant to any set-off,
abatement, recoupment, or other reduction in any component of
Rent. Notwithstanding the foregoing in this Paragraph 9(d) if an
interruption or malfunction of any of the Services occurs that

 

 

	 	 	 	materially impairs Tenant’s operations at the Premises, then Tenant
shall provide written notice (the “Service Interruption Notice”) of
such interruption to Landlord, and if such interruption results
from the negligent act or omission of any Landlord Party then all
Rent payable under this Lease shall abate from the date of the
Service Interruption Notice until the date that the subject
Services are fully-restored, and Tenant shall have the right to
terminate this Lease if the subject Service has not been
fully-restored on the date that is sixty (60) days after the date
that the Service Interruption Notice is issued and at anytime
thereafter before the subject Service has been
fully-restored. Landlord will use commercially reasonable
efforts to have the malfunctioning Service restored and make
commercially reasonable efforts to minimize any service disruptions
for scheduled maintenance, repairs, inspections, and tests;
provided that Landlord may not intentionally disrupt any Service
for scheduled maintenance, repairs, inspections and tests without
first providing Tenant with at least five (5) Business Days in
advance, except for emergencies.
	 
	 	e.	 	Landlord, upon reasonable prior notice to
Tenant, will be entitled to temporarily interrupt or turn off
Services for any emergency (being an event that is likely to cause
immediate material damage to property or harm to human life) or to
perform repairs or maintenance of the Building that requires such
interruption of Services, provided that (i) Landlord takes
commercially reasonable steps to minimize the interruption; (ii)
at least ten (10) days’ advance written notice of any interruption
is provided to Tenant; and (iii) the interruption occurs during at
times other than Normal Business Hours to the extent possible.

	 	10.	 	Graphics. Landlord, at its cost, will supply and
install letters and numerals on the exterior of the Premises naming Tenant and
identifying Tenant’s suite number. These letters and numerals will be in Building
Standard graphics, and Tenant will not allow any other graphics to be visible from
outside the Premises, unless Landlord gives its prior written consent. And, if
Landlord consents to Tenant’s use of any other letters, numerals, or graphics,
Tenant must pay all costs associated with their acquisition, installation, and
removal, and all costs to restore the Premises and any other part of the Building
to their condition before such installation. Additionally, Landlord, at its cost,
will take appropriate measures to include Tenant in the building directory.
	 
	 	11.	 	Intentionally Deleted.
	 
	 	12.	 	Maintenance And Repair by Landlord. Landlord shall be
obligated to repair and maintain the Building’s exterior and load-bearing walls,
floors (but not floor coverings within the Premises), and roof. Landlord will keep
the Common Areas, Service Areas, Building Systems, roof, elevator shafts, footings,
foundations, structural portions of load bearing walls, structural floors, and
structural columns and beams in good repair and condition, in all events consistent
with customary standards for a Class A office building located in the Dallas-Uptown
submarket. The term “Building’s Systems” means the Building’s HVAC, life safety,
plumbing, electrical, and mechanical systems, except for the portion of such
systems (excluding life safety systems) that both: (i) exclusively serve the
Premises, and (ii) extend outside of walls, including but not limited to attached
fixtures, and above floors or below the ceiling within the Premises. Tenant will
promptly

 

 

	 	 	 	notify Landlord of the need for any such repairs or maintenance, to the extent that
Tenant is aware of such matter. Notwithstanding the foregoing in this Paragraph 12,
the cost of performing any of maintenance or repairs whether to the Premises or to
the Building caused by the negligence of Tenant, its employees, agents, servants,
licensees, subtenants, contractors or invitees, shall be paid by Tenant, subject to
the waivers set forth in Paragraph 18.
	 
	 	13.	 	Maintenance, Repairs, and Alterations by Tenant.
Except for items that Landlord is obligated to maintain pursuant to Paragraph 12,
Tenant, at its sole cost, must keep the Premises clean, healthful, and in good
repair and condition (including, without limitation, all fixtures, plumbing, and
interior plate glass; carpet or other floor covering; interior partitions; doors;
the exterior surfaces of any demising walls; communications, computer, and other
cabling exclusively serving Tenant’s equipment; supplemental air conditioning
units, private showers and kitchens that are located in and exclusively serve the
Premises. If Tenant fails to promptly commence the repair or replacement of such
items after receipt of written notice from Landlord and the failure to promptly
repair or replace such item will likely result immediate material damage to
property or harm to human life, then Landlord may perform repair or replace such
item and Tenant must pay as Rent Landlord’s actually third-party costs of doing so
within 30 days after receipt of written demand and copied of paid receipts.
Tenant, at is sole cost, must repair or replace any damage to any part of the
Project caused by any Tenant Party.

	 	a.	 	Unless Tenant obtains Landlord’s prior written
consent, not to be unreasonably withheld, Tenant will not alter,
add to, or improve the structural elements of the Premises or any
other part of the Project. Before beginning any such alteration,
addition, or improvement, and as a condition to obtaining
Landlord’s consent, Tenant must furnish Landlord with: (i) plans
and specifications reasonably acceptable to Landlord; (ii) names
and addresses of contractors reasonably acceptable to Landlord;
(iii) copies of contracts, redacted as necessary; (iv) necessary
permits and approvals, if any; and (v) evidence of contractor’s
and subcontractor’s insurance (to include customary insurance
coverages).
	 
	 	b.	 	All such improvements, alterations or
additions will be constructed in a good and workmanlike manner
using Building Standard materials or other new materials of equal
or greater quality.

	 	14.	 	Mechanic’s Liens. Tenant shall use reasonable efforts to
prevent any lien or claim for lien of any mechanic, laborer or supplier to be filed
against the Building, the Land, the Premises, or any other part of thereof arising
out of work performed, or alleged to have been performed by, or at the direction
of, or on behalf of Tenant. If any such lien or claim for lien is filed, Tenant
shall within fifteen (15) days of receiving notice of such lien or claim, either
(a) have such lien or claim for lien released of record or (b) bond around such
lien in accordance with the term of Subchapter H of Chapter 53 of the Texas
Property Code. If Tenant fails to take any of the above actions, Landlord, in
addition to its rights and remedies under Paragraph 26, without investigating the
validity of such lien or claim for lien, may pay or discharge the same and Tenant
shall, as payment of additional Rent hereunder, reimburse Landlord for the amount
so paid by Landlord, including Landlord’s reasonable legal costs and expenses, as
additional Rent, such payment shall be made within thirty (30) days of receipt of
invoice and reasonable supporting documentation

 

 

	 	15.	 	Assignment And Subletting. Tenant will not sell,
assign, sublease, encumber, license, or otherwise transfer (collectively, transfer)
any right or interest in this Lease or any part of the Premises without the prior
written consent of Landlord, which will not be unreasonably withheld, conditioned,
or delayed, so long as the proposed assignee or sublessee otherwise meets
Landlord’s leasing requirements (including without limitation, reasonable financial
responsibility requirements). Any transfer, without Landlord’s prior written
consent, will be a Default under this Lease, and Landlord may in its sole
discretion and in addition to its other remedies declare void any such transfer.

	 	a.	 	Landlord’s consent to any transfer will not
waive its rights, and it will not estop Landlord from exercising
its rights, with respect to any other actual or proposed transfer,
and Landlord’s consent to any transfer will not relieve Tenant of
any liability to Landlord under this Lease or otherwise.
	 
	 	b.	 	Tenant may request, in writing, Landlord’s
consent to a proposed transfer and that request must include: (i)
the name of the proposed transferee; (ii) the nature and character
of the transferee’s business; (iii) the term, use, rental rate,
and all other material terms of the proposed transfer that
specifically relate to this Lease; and (iv) financial statements
or other evidence of the proposed transferee’s assets,
liabilities, net cash flow, operating history, certified by the
proposed transferee’s chief financial officer, and other evidence
Landlord may reasonably request to evaluate the financial capacity
of the proposed transferee to perform its obligations.
	 
	 	c.	 	Within 20 days after its receipt of the
information required by Paragraph 15(b), Landlord will either
consent to, refuse its consent to, or conditionally consent to,
the proposed transfer, with (x) (if consent is refused) a specific
description the elements of the proposed transfer that do not meet
the Landlord’s Leasing Requirements, (y) (if consent is
conditioned) a specific description of the conditions and
description of elements of the proposed transfer that do not meet
the Landlord’s Leasing Requirements without the conditions.
Tenant will pay, within thirty (30) days after receipt of written
invoice, as Rent, all reasonable third-party costs and expenses
(including attorneys’ fees, if any) that Landlord may incur in
connection with Landlord’s review of any request for consent, not
to exceed $750.00 in the aggregate per consent request.
	 
	 	d.	 	Tenant will pay to Landlord fifty percent
(50%) of all rent and other consideration specifically applicable
to the Lease that Tenant receives from any transferee in excess of
the Rent payable under this Lease within thirty (30) days after
Tenant receives it. If Tenant fails to pay any such sum when due
and such failure is not cured within ten (10) days after receipt
of written notice describing such failure, then Landlord may
contact any transferee and require that transferee to make all
payments due under the transfer directly to Landlord.
	 
	 	e.	 	A transfer will be deemed to occur if the
person or persons who own or have voting control of 50% or more of
Tenant on the Effective Date cease to own Tenant during the Term,
unless at least 80% of Tenant’s

 

 

	 	 	 	voting stock is listed on a national security exchange or owned by
another corporation whose voting stock is so listed; however, any
transfer of the type described in this Paragraph 15(e) shall be a
Permitted Transfer as provided for below.
	 
	 	f.	 	Tenant’s transfer of any interest in this
Lease, or in the Premises, in violation of this Lease will be a
Default under this Lease and will entitle Landlord to terminate
this Lease and any option or other right granted Tenant by this
Lease; provided that if Tenant reasonably believed that the
subject transfer was permitted (including without limitation,
pursuant to Paragraph 15(g)), then Tenant shall have thirty (30)
days after receipt of written notice from Landlord to cure such
matter before it shall become a Default.
	 
	 	g.	 	Notwithstanding any term of this Lease to the
contrary, Tenant shall be allowed to conduct any Permitted
Transfer (as defined below), without restriction, subject only to
the Permitted Transfer Requirements (as defined below). Tenant
shall not be required to obtain Landlord’s consent and Landlord
shall have no right to delay, alter or impede any Permitted
Transfer or combinations thereof, provided that the Permitted
Transfer Requirements have been satisfied and that Tenant shall
remain liable hereunder.
	 
	 	 	 	The term “Permitted Transfer” shall mean
each or any of the following: (i) a transfer of an interest in
the Lease to an entity that controls, is controlled by or is
under common control with Tenant, (ii) a transfer of an
interest in the Lease to another entity acquiring
substantially all of Tenant’s assets by an asset sale, merger,
or consolidation, (iii) a change in the ownership of Tenant as
a result of a merger, consolidation, reorganization or joint
venture, (iv) the sale, exchange, issuance or other transfer
of Tenant’s stock on a national exchange or between any entity
that controls, is controlled by or is under common control
with Tenant or to any entity resulting from merger or
consolidation with Tenant (each transaction listed in sub-item
(iv) being a “Stock Transaction”).
	 
	 	 	 	The term “Permitted Transfer Requirements”
shall mean the following:

	 	(i)	 	At least 10 days before the effective
date of any proposed Permitted Transfer (other than a Stock
Transaction), Tenant shall deliver written notice to Landlord
stating: (A) the legal name of the proposed transferee; (B) a
brief description of the proposed Permitted Transfer
transaction.
	 
	 	(ii)	 	On or before the effective date of any
Permitted Transfer (other than a Stock Transaction), Tenant and
the proposed transferee, must deliver to Landlord a fully
executed copy of an instrument, which must: (A) provide the
proposed transferee, as Tenant, will be fully liable to
Landlord for any and all obligations of the Tenant under this
Lease; (B) state, as of the effective date of the Permitted
Transfer, to Tenant’s knowledge Landlord is not in

 

 

	 	 	 	default under the Lease or specify the nature of Landlord’s
default; (C) require that the proposed transferee, as Tenant,
pay to Landlord all Rent accruing under the Lease in
accordance with the terms of the Lease; and (D) require that
the proposed transferee use the Premises for the same
Permitted Use set forth in Paragraph 1(t) above.
	 
	 	(iii)	 	Notwithstanding the foregoing, in the
event that there is a Permitted Transfer, but Tenant continues
to exist and continues as the “Tenant” under the Lease, the
deliveries in clause (ii) of this Paragraph 15(g) shall not be
required.

	 	16.	 	Tenant’s Insurance. Tenant, at its sole cost, must
procure and maintain these insurance coverages throughout the Term:

	 	a.	 	General Liability Insurance. Commercial
general liability insurance (CGL): (i) on form ISO CG 0001 1207 or ISO CG
0001 0695 (or, if Tenant has more than 1 location covered by a policy
having a general aggregate limit, ISO form amendment Aggregate Limits of
Insurance Per Location CG 2504 1185); (ii) on an occurrence basis; (iii)
with at least a $2,000,000 combined single limit; and (iv) having these
unmodified endorsements on Tenant’s CGL and on any umbrella policy: (A) ISO
additional insured form CG 2026 1185 designating Landlord Parties as
additional insureds without modification; and (B) ISO waiver of subrogation
form CG 2404 1093 in favor of Landlord Parties.
	 
	 	b.	 	Workers’ Compensation and Employer Liability
Coverage. Workers’ Compensation insurance (not any alternative form of
coverage) for at least the applicable statutory limit; and employer’s
liability (or equivalent coverage under commercial umbrella) with at least
a $1,000,000 limit for each accident, for bodily injury by accident, and at
least a $1,000,000 limit for each employee for bodily injury by disease.
Each such policy must waive subrogation in favor of Landlord Parties on
endorsement form WC 429394 (Texas only) or ISO form WC 000313 (all other
states).
	 
	 	c.	 	Property Insurance. Broadest
available “special form” or “all risks” property insurance: (i) on
ISO form CP 1030 (or equivalent business owner’s policy); (ii)
with no exclusions, except the standard printed exclusions; (iii)
for 100% of the replacement cost of Tenant’s furniture, fixtures,
and equipment and all above-Building Standard improvements or
alterations to the Premises, regardless of who paid for them; (iv)
waiving of subrogation in favor of Landlord Parties; and (v)
having these unmodified endorsements: (A) Landlord Parties shown
as “insured as its interest may appear”; and (B) ordinance or law
coverage.
	 
	 	d.	 	Business Income and Extra Expense
Coverage. Business income and extra expense coverage for at
least 6 months of Tenant’s income and expenses with a waiver of
subrogation in favor of Landlord Parties.

 

 

	 	e.	 	Policy Forms and Additional
Requirements. Each of Tenant’s insurance providers must
maintain ratings of Best’s Insurance Guide A/VIII or Standard &
Poor Insurance Solvency Review A-, or better, and be admitted to
engage in the business of insurance in the State or Commonwealth
in which the Building is located, and each of Tenant’s policies
must: (i) be primary with all policies of Landlord and Landlord’s
lien holders being excess, secondary, and noncontributing; (ii)
require Tenant’s insurance provider to endeavor to provide
Landlord and Landlord’s Mortgagees at least 30 days prior written
notice of any cancellation, nonrenewal, or material modification;
and (iii) not have a deductible or self-insured retention in
excess of $10,000. Tenant must reinstate the full aggregate limit
of any policy reduced below 75% any aggregate limit required in
this Lease.
	 
	 	f.	 	Evidence of Property Insurance.
Before the Effective Date, and at least 30 days before the
expiration of that policy, Tenant must deliver to Landlord proof
of its property and business income insurance on ACORD form 28
“Evidence of Property Insurance” and of its CGL and workers’
compensation insurance on ACORD form 25 “Certificate of
Insurance,” with copies of any required endorsements attached.

	 	17.	 	Landlord’s Insurance. Landlord must procure and continue
in force these insurance coverages: (i) CGL with a combined single limit for bodily
injury and property damage of not less than $2,000,000 for each occurrence
resulting from the operations of Landlord and its employees within the Project; and
(ii) special form (all risks) property insurance covering the Building, Building
Standard leasehold improvements, and all machinery, equipment, and other personal
property that Landlord uses in connection with the Building, for the full
replacement value of this real and personal property.
	 
	 	18.	 	Subrogation and waiver of right of recovery.
Landlord and Tenant intend that their respective property loss risks shall be
borne by reasonable insurance carriers, and Landlord and Tenant hereby agree to
look solely to, and seek recovery only from, the respective insurance carriers in
the event of a property loss. The parties each hereby waive all rights and claims
against each other for such losses, and waive all rights of subrogation and
recovery of their respective insurers. The parties agree that their respective
insurance policies are now, or shall be, endorsed such that the waiver of
subrogation shall not affect the right of the insured to recover thereunder.
	 
	 	19.	 	Indemnities and Waivers.

	 	a.	 	Definitions. For purposes of this Lease:

	 	i.	 	Beneficiary is the intended
recipient of another party’s Indemnity, Waiver, or
obligation to Defend.
	 
	 	ii.	 	Claims means all
liabilities, claims, damages (excluding consequential,
special and punitive damages), losses, penalties,
litigation, demands, causes of action (whether in tort or
contract, in law or at equity, or otherwise), actions,
suits, proceedings, judgments, disbursements, charges,
assessments, and expenses

 

 

	 	 	 	(including reasonable attorneys’ and experts’ fees and
expenses) incurred in investigating, defending, or
prosecuting any litigation, claim, or proceeding , including
without limitation those matters brought or asserted by or
payable to any third party on account of personal injury,
death, property damage or any other form of injury or
damage.
	 
	 	iii.	 	Defend means to defend with counsel reasonably
acceptable to the indemnified party at no cost to that
party.
	 
	 	iv.	 	Indemnify means to
indemnify, and hold free and harmless from and against.
	 
	 	v.	 	Intentionally Deleted.
	 
	 	vi.	 	Waive means to knowingly and
voluntarily relinquish a right and forever discharge and
release another party from liability for a Claim.

	 	b.	 	Tenant’s Indemnities. To the fullest extent
permitted by Law and this Lease, and subject to the limitations on
Landlord’s liabilities set forth in Paragraphs 18 and 20
Tenant will Indemnify and Defend Landlord Parties against all
Claims to the extent arising out of: (i) any Gross Negligent act
or Willful omission of any Tenant Party (including, without
limitation, Tenant’s conduct of business at the Premises); (ii)
any Tenant Party’s alleged or actual violation of, or failure to
comply with, any Applicable Law; (iii) Any breach, violation or
nonperformance of any obligation of Tenant under this Lease; or
(iv) any misrepresentation made by Tenant set forth in this Lease.

	 
	 	c.	 	Landlord’s Indemnities. To the fullest extent
permitted by law and this Lease, and subject to the limitations on
Landlord’s liabilities set forth in Paragraphs 18 and 20,
Landlord will Indemnify and Defend Tenant against all Claims to
the extent arising out of (i) any Gross negligent act or Willful
omission of any Landlord Party (including without limitation,
Landlord’s conduct of business at and management of the Project);
(ii) any Landlord Party’s actual violation of, or failure to
comply with, any Applicable Law; or (iii) Any breach, violation or
nonperformance of any obligation of Landlord under this Lease; or
(iv) any misrepresentation made by Landlord set forth in this
Lease.
	 
	 	d.	 	Tenant’s Supplemental Indemnity.
Subject to the limitation and exclusions set forth below in
this subsection, Tenant will indemnify and hold harmless Landlord
Parties and any other parties for whom Landlord Parties are legally
responsible (each a “Landlord Indemnified Party”) from, and shall
reimburse each Landlord Indemnified Party for and with respect to,
arising out of or relating to: (a) an incident or event which
occurred within or on the Premises,

 

 

	 	 	 	EVEN IF THE (1) INCIDENT OR EVENT IS THE RESULT OF OR CAUSED BY THE
NEGLIGENT ACTS OR OMISSIONS OF ANY LANDLORD INDEMNIFIED PARTY OR (2)
THE LANDLORD INDEMNIFIED PARTY IS STRICTLY LIABLE FOR ANY CLAIM
ARISING FROM SUCH INCIDENT OR EVENT, or (b) THE USE OR OCCUPANCY OF
THE PREMISES, EVEN IF (1) THE CLAIM IS THE RESULT OF OR CAUSED BY
THE NEGLIGENT ACTS OR OMISSIONS OF ANY LANDLORD INDEMNIFIED PARTY OR
(2) THE LANDLORD INDEMNIFIED PARTY IS STRICTLY LIABLE FOR SUCH
CLAIM. The indemnification and reimbursement obligations of Tenant
under this subsection shall not apply to a Claim (w) waived
by Landlord under Paragraph 18 above or any other provision of this
Lease, (x) related to hazardous or toxic materials and caused by an
act or omission that does not constitute a breach by Tenant of the
provisions of the Lease, or (y) arising out of the gross negligence
or intentional misconduct of the Landlord Indemnified Party. If a
third party files a lawsuit or brings any other legal action
asserting a Claim against a Landlord Indemnified Party and that is
covered by Tenant’s indemnity, then Tenant, upon notice from the
Landlord Indemnified Party, shall resist and defend such Claim
through counsel reasonably satisfactory to the Landlord Indemnified
Party. Tenant’s obligations under this subsection shall survive the
termination of this Lease. Notwithstanding any term of the Lease to
the contrary, the indemnification and defense obligations set forth
in this Paragraph 19(d), shall be limited to the extent the
subject obligation is actually covered by Tenant’s insurance
policies or which would have been covered by an insurance policy
that Tenant is required to maintain under this Lease.
	 
	 	e.	 	Landlord’s Supplemental Indemnity. Subject to the
limitation and exclusions set forth below in this subsection,
Landlord will indemnify and hold harmless Tenant Parties and any
other parties for whom Tenant Parties are legally responsible (each
a “Tenant Indemnified Party”) from, and shall reimburse each Tenant
Indemnified Party for and with respect to, any and all Claims
arising out of or relating to: (a) an incident or event which
occurred within or on any of the Common Areas, Service Areas or any
other portion of the Project that is either occupied by or
exclusively controlled by Landlord, EVEN IF THE (1) INCIDENT OR
EVENT IS THE RESULT OF OR CAUSED BY THE NEGLIGENT ACTS OR OMISSIONS
OF ANY TENANT INDEMNIFIED PARTY OR (2) THE TENANT INDEMNIFIED PARTY
IS STRICTLY LIABLE FOR ANY CLAIM ARISING FROM SUCH INCIDENT OR
EVENT, or (b) THE USE OF ANY PORTION OF THE COMMON AREAS, SERVICE
AREAS OR ANY OTHER PORTION OF THE PROJECT THAT IS EITHER OCCUPIRED
BY OR EXCLUSIVELY CONTROLLED BY LANDLORD, EVEN IF (1) THE CLAIM IS
THE RESULT OF OR CAUSED BY THE NEGLIGENT ACTS OR OMISSIONS OF ANY
TENANT INDEMNIFIED PARTY OR (2) THE TENANT INDEMNIFIED PARTY IS
STRICTLY LIABLE FOR SUCH CLAIM. The indemnification and
reimbursement obligations of Landlord under this subsection
shall not apply to a Claim (w) waived by Tenant under
Paragraph 18 above or any other provision of this Lease, (x)
related to hazardous or toxic materials and caused by an act or
omission that does not constitute a breach by Landlord of the
provisions of the lease, or (y) arising out of the gross negligence
or intentional misconduct of the Tenant Indemnified Party. If a
third party files a lawsuit or brings any other legal action
asserting a Claim against a

 

 

	 	 	 	Tenant Indemnified Party and that is covered by Landlord’s
indemnity, then Landlord, upon notice from the Tenant Indemnified
Party, shall resist and defend such Claim through counsel reasonably
satisfactory to the Tenant Indemnified Party. Landlord’s
obligations under this subsection shall survive the termination of
this Lease. Notwithstanding any term of the Lease to the contrary,
the indemnification and defense obligations set forth in this
Paragraph 19(e), shall be limited to the extent the subject
obligation is actually covered by Landlord’s insurance policies or
which would have been covered by an insurance policy that Landlord
is required to maintain under this Lease.
	 
	 	f.	 	Scope of Indemnities and Waivers. All
Indemnities and obligations to Defend in this Lease: (i) are
independent of, and will not be limited by, each other or any
insurance obligations in this lease (whether or not complied
with); and (ii) will survive the expiration or termination of this
Lease until all Claims against the Beneficiary are time-barred
under Applicable Law. 

	 	20.	 	Limitations of Liability. Except in the case of damages
caused by fraudulent activity by Landlord or any Landlord Party, Landlord’s
liability to Tenant Parties for any act or omission or for breach of any obligation
under this Lease will be recoverable exclusively from (i) Landlord’s interest in
the Building, (ii) insurance proceeds related to this Lease or the Project, (iii)
condemnation awards related to the Project, and (iv) rental income from the
Project. Tenant releases and waives any and all Claims against any Landlord Party
for consequential, incidental, or punitive damages (including, without limitation,
lost profits and business interruption) allegedly suffered by any Tenant Party.
Landlord releases and waives any and all Claims against any Landlord Party for
consequential, incidental, or punitive damages (including, without limitation, lost
profits and business interruption) allegedly suffered by any Landlord Party. No
employee or officer of any Landlord Party or any Tenant Party will have personal
liability under this Lease or be personally liable for any judgment or deficiency.
The provision contained in this Paragraph 20 is not intended to, and shall not,
limit any right that Tenant might otherwise have to obtain injunctive relief
against Landlord or Landlord’s successors in interest or any suit or action in
connection with enforcement or collection of amounts which may become owing or
payable under or on account of insurance maintained by Landlord.
	 
	 	21.	 	Casualty

	 	a.	 	Damage. If any portion of the Premises
shall be destroyed or damaged by fire or any other casualty, Tenant
shall immediately give notice thereof to Landlord. If any portion of
the Premises or Project shall be destroyed or damaged by fire or any
other casualty, then, unless this Lease is terminated in
accordance with this Paragraph 21, Landlord shall proceed
with reasonable diligence to restore and repair the portion of the
Premises or Project damaged. If the Premises are rendered
untenantable for more than five (5) consecutive Business Days in
whole or in material part by reason of such casualty (subject to the
limitation of Paragraph 21(b)), Tenant as its sole and
exclusive remedy shall be entitled to an equitable abatement of the
Rent hereunder (subject to the limitation in Paragraph 21(c)
below) until such time as the damaged portion of the Premises
(exclusive of any of Tenant’s Property or Tenant’s

 

 

	 		 	improvements) are repaired or restored by Landlord to the extent
required hereby. In the event (a) the Building shall be destroyed or
substantially damaged by a casualty that is not covered by
Landlord’s insurance and would not have been covered if Landlord had
maintained the insurance required by this Lease, or (b) the entire
Building is destroyed, or if so much of the Building is destroyed
that the same cannot be restored to substantially the condition
existing prior to such casualty within two hundred seventy (270)
days after the date thereof, then Landlord or Tenant may terminate
this Lease by written notice to the other within sixty (60) days
after the date of such casualty whereupon all Rent accrued up to the
time of such termination and any other sums due and owing shall be
paid by Tenant to Landlord (less any sums then due and owing Tenant
by Landlord) and any remaining sums due and owing by Landlord to
Tenant shall be paid to Tenant.
	 
	 	b.	 	Repair. If neither party terminates this
Lease in accordance with Paragraph 21(a), then this Lease
shall continue in full force and effect, and the repairs will be
made within a reasonable time, but in any event within two hundred
seventy (270) days after the casualty, subject to the provisions of
Paragraph 21 of this Lease. If Landlord rebuilds the
Premises, or other portion of the Project, Landlord shall only be
obligated to restore or rebuild the Premises, or other portion of
the Project to approximately the same condition as existed at the
time immediately prior to the subject casualty and Landlord will not
be required to rebuild, repair or replace any part of Tenant’s
Property or Tenant’s leasehold improvements, provided that Landlord
does not retain any proceeds actually paid out by any insurance
company for Tenant’s Property and Tenant’s leasehold improvements
and that any such proceeds received by Landlord shall be forwarded
to Tenant for the designated purpose of replacing Tenant’s leasehold
improvements. Additionally, if for any reason, such damages have
not been fully repaired within two hundred seventy (270) days from
the date of the casualty; Tenant shall have the right to terminate
this Lease after thirty (30) days prior written notice to Landlord,
unless the damages are fully repaired during said thirty (30) day
period.
	 
	 	c.	 	Landlord will allow Tenant a fair allowable
abatement of Rent during the time, and to the extent, that the
Premises are unfit for occupancy as a result of the casualty, but
Tenant will be entitled to this allowance only to the extent that
the damage did not result from the negligence of any Tenant Party.

	 	22.	 	Condemnation

	 	a.	 	Total Taking. In the event of a taking
or damage related to the exercise of the power of eminent domain,
by any agency, authority, public utility, person, corporation or
entity empowered to condemn property (including without limitation
a voluntary conveyance by Landlord in lieu of such taking or
condemnation) (individually, a “Taking”) of (i) the entire
Premises, (ii) so much of the Premises as to prevent or
substantially impair its use by Tenant during the Term of this
Lease or (iii) portions of

 

 

	 	 	 	the Building or Project that materially and adversely interfere with
Tenant’s access to, or use of, the Premises (individually, a “Total
Taking”), the rights of Tenant under this Lease and the leasehold
estate of Tenant in and to the Premises shall cease and terminate as
of the date upon which title to the property taken passes to and
vests in the condemnor (or the effective date of any order for
possession if issued prior to the date title vests in the condemnor)
(“Date of Taking”).
	 
	 	b.	 	Partial Taking. In the event of a
Taking that does not constitute a Total Taking during the Term of
this Lease (individually, a “Partial Taking”), the Lease shall not
terminate; however the rights of Tenant under this Lease and the
leasehold estate of Tenant in and to the portion of the property
taken shall cease and terminate as of the Date of Taking, and there
shall be an adjustment to the Base Rent in proportion to the area
taken, effective on the Date of Taking.
	 
	 	c.	 	Rent Adjustment. If this Lease is
terminated pursuant to this Paragraph 22 Landlord shall refund to
Tenant any prepaid unaccrued Base Rent or Additional Rent and any
other sums due and owing to Tenant (less any sums then due and
owing Landlord by Tenant), and Tenant shall pay to Landlord any
remaining sums due and owing Landlord under this Lease, each
prorated as of the Date of Taking where applicable.
	 
	 	d.	 	Repair. If this Lease is not terminated
as provided for in this Paragraph 22, then Landlord at its expense
shall promptly repair and restore the Building, Project and/or the
Premises to approximately the same condition that existed at the
time Tenant entered into possession of the Premises, reasonable
wear and tear excepted (and Landlord shall have no obligation to
repair or restore Tenant’s improvements to the Premises or Tenant’s
Property), except for the part taken, so as to render the Building
or Project as complete architectural and economically efficient
unit, but only to the extent of the condemnation award received by
Landlord for the damage, provided that if Landlord fails to repair
and restore the Premises to the condition existing before the
Taking within one hundred fifty (150) days of the Date of Taking,
Tenant may, as its sole and exclusive remedy therefor, terminate
this Lease by providing written notice of same to Landlord within
thirty (30) days thereafter.
	 
	 	e.	 	Awards and Damages. Landlord reserves
all rights to damages and awards paid because of any Partial or
Total Taking of the Premises or the Project. Tenant assigns to
Landlord any right Tenant may have to the damages or award.
Notwithstanding, Tenant may claim and recover from the condemning
authority a separate award for Tenant’s moving expenses, business
dislocation damages, Tenant’s Property and any other award to
which Tenant may be lawfully entitled as long as such separate
award does not reduce the amount of the award that would otherwise
be awarded to Landlord.

 

 

	 	23.	 	Subordination.

	 	a.	 	General. Tenant accepts this Lease
subject to any ground lease or voluntary lien created by any
mortgage, deed of trust, or security interest (collectively,
encumbrance) that may later be created and affect title to the
Premises or any part of the Project (including, without
limitation, as affected by any renewal, modification, refinancing,
or extension of any encumbrance); subject to the condition that
the holder of each such encumbrance provide Tenant with a
recordable subordination, non-disturbance and attornment agreement
in a form that is reasonably acceptable to Tenant (the “SNDA”),
which shall provide, among other reasonably acceptable terms, that
the holder of each such lease, mortgage or deed of trust and any
purchaser at a foreclosure sale of the mortgage or deed of trust
shall not disturb Tenant’s possession of the Premises for as long
as Tenant is not in default beyond any applicable cure period, and
that Tenant will attorn to such holder or purchaser as Landlord
under the terms and conditions of this Lease upon written notice
requesting such attornment and advising that such party has
succeeded to the interest of Landlord under this Lease.
Notwithstanding the generality of the foregoing, any mortgagee or
ground lessor may at any time subordinate any such deeds of trust,
mortgages, other encumbrance to this Lease.
	 
	 	b.	 	Existing Mortgagee. Landlord hereby
represents and warrants to Tenant that Bayerische Hypo-Und
Vereinsbank, AG (“Existing Lien Holder”) is the current holder of
the only encumbrance filed against the Project, which encumbrance
is created by that certain Deed of Trust and Security Agreement
recorded as instrument no. 20070455868, in the Real Property
Records of Dallas County, Texas, and the Assignment of Leases and
Rents recorded as instrument no. 20070455869, in the Real Property
Records of Dallas County, Texas (collectively, the “Existing
Lien”). Landlord hereby covenants to use commercially reasonable
efforts to obtain a SNDA in a form reasonably acceptable to Tenant
from Existing Lien Holder with respect to the Existing Lien, and
to continue such efforts until either the SNDA is obtained or for
as long as the Existing Lien or a replacement lien that could be
subrogated to the position of the Existing Lien position exists.
Landlord (in both its capacity as Landlord and as a separate
indemnitor in its personal capacity) hereby agrees to
Indemnify and Defend Tenant against all Claims to the extent
arising out of the Existing Lien and any lien that is subrogated
to the position of the Existing Lien. The indemnification
provided in the preceding sentence shall terminate on (i) the date
that a SNDA has been full signed by Existing Lien Holder, Landlord
and Tenant, or (ii) the date the Existing Lien, and any lien the
could be subrogated to the position of the Existing Lien, is fully
released; provided that the indemnification shall remain effective
with respect to any Claims that accrued prior to such date.

 

 

	 	24.	 	Estoppel Certificates. Each of Landlord and Tenant,
within twenty (20) days after written request from the other party, shall sign and
deliver written statement certifying that (a) this Lease is unmodified and in full
force and effect (or, if there have been any modifications, that this Lease, as so
modified, is in full force and effect); (b) the requesting party is not in breach
of any obligation under the Lease (or, if the party providing the statement claims
such a breach then exists, specifying the nature of each such breach); and (c)
Tenant has paid all Rent (including any specific components of Rent) through a
specified date or dates; and (d) certifying to the status of any other matters
related to this Lease or its performance.
	 
	 	25.	 	Default. The occurrence of any one or more of the
following events is a Default:

	 	a.	 	Tenant fails to pay where and when due any
Base Rent or other component of Rent and that failure continues
for 5 Business Days after written notice from Landlord identifying
the failure (Monetary Default);
	 
	 	b.	 	Tenant does not vacate the Premises
immediately upon the expiration or termination of this Lease,
except for a hold-over after the expiration of the Term in which
case the terms of Paragraph 28 shall apply.
	 
	 	c.	 	Tenant: (i) shall become insolvent; (ii) makes
a transfer in fraud of creditors; (iii) makes an assignment for
the benefit of creditors; or (iv) admits, in writing, its
inability to pay its debts as they become due.
	 
	 	d.	 	Tenant or any Guarantor: (i) commits an act of
bankruptcy; (ii) files a petition under the United States
Bankruptcy Code or under any other similar Federal or state law;
(iii) is adjudged bankrupt; or (iv) is named in pleading or motion
filed in any court proposing to reorganize or adjudicate as a
bankrupt Tenant or any Guarantor, and that pleading or motion is
not discharged or denied within 90 days after its filing.
	 
	 	e.	 	A receiver or trustee is appointed for all or
substantially all of the assets of Tenant (i) in any proceeding
brought by Tenant; or (ii) in any proceeding brought against
Tenant, and the receiver or trustee (A) is not discharged within
90 days after its appointment, or (B) Tenant consents to, or
acquiesces in, its appointment.
	 
	 	f.	 	Intentionally Deleted.
	 
	 	g.	 	The liquidation, termination, or dissolution,
of Tenant.
	 
	 	h.	 	Intentionally Deleted.
	 
	 	i.	 	Tenant fails to comply with any other term of
this Lease, and Tenant does not cure its failure within 30 days
after Landlord delivers written notice to Tenant that specifically
identifies the Tenant’s failure; provided, however, that if such
failure cannot reasonably be cured within such period, the failure
shall not be a default until 90 days following such notice of
non-compliance provided Tenant is diligently acting to cure the
failure in question.

 

 

	 	j.	 	Intentionally Deleted.
	 
	 	k.	 	Intentionally Deleted.

	 	26.	 	Remedies. Landlord’s remedies are cumulative and not
exclusive. If a Default occurs, Landlord without prejudice to any other legal,
equitable, or contractual right or remedy will be entitled to exercise any one or
more of the following remedies, using lawful force if necessary or appropriate,
without further notice or demand:

	 	a.	 	Terminate this Lease or any of Tenant’s rights
under this Lease, with or without reentering or repossessing the
Premises.
	 
	 	b.	 	Terminate Tenant’s right to occupy all or any
part of the Premises without terminating this Lease and with or
without reentering or repossessing the Premises.
	 
	 	c.	 	Recover unpaid Rent and any Damages.
	 
	 	d.	 	Change or pick the locks, access codes, or
other access control devices, and take any other self-help or
judicial action to exclude Tenant and other occupants from the
Premises.
	 
	 	e.	 	Remove and store (at Tenant’s sole cost) any
property on the Premises.
	 
	 	f.	 	Sue for eviction, specific enforcement,
equitable relief, rent, damages, or any other available remedy.
	 
	 	g.	 	Apply the Security Deposit in any manner
permitted by this Lease, and increase the amount of the Security
Deposit.
	 
	 	h.	 	Cure Tenant’s Default, and if Landlord does
so, Tenant must reimburse Landlord within 30 days after Landlord
delivers an invoice for any expenses Landlord incurred effecting
compliance with Tenant’s obligations.
	 
	 	i.	 	Withhold or suspend any payment that this
Lease would otherwise require Landlord to make.
	 
	 	j.	 	Charge interest on any amount not paid when
due from the due date through the date of its payment at the
Default Rate, which is the lesser of 18% per annum or the highest
rate permitted by Applicable Law.
	 
	 	k.	 	Recover — but only if Tenant fails to pay
Base Rent, and Landlord terminates this Lease or Tenant’s right of
possession with more than 12 months remaining in the Term —
Liquidated Rental Damages for the period after any such
termination equal to 12 times the monthly Base Rent (including
Parking Fees and Landlord’s estimate of Tenant’s Pro Rata Share of
Excess Basic Cost and Tenant’s Pro Rata Share of Electricity
Costs) in lieu of any other contractual or legal measure of
damages (including reletting costs) for Tenant’s non-payment of
Base Rent, and the parties agree this is a reasonable estimate of
Landlord’s

 

 

	 	 	 	damages for such a breach given the uncertainty of future market
rental rates and of the duration of any vacancy.
	 
	 	l.	 	Exercise all other remedies available to
Landlord at law or in equity (including, without limitation,
injunctive and other extraordinary remedies).

     Damages include, without limitation, all actual, incidental, and consequential damages, court
costs, interest, and attorneys’ fees arising from Tenant’s breach of the Lease (including, without
limitation, the cost of (A) recovering possession, (B) removing and storing Tenant’s and any other
occupant’s property, (C) reletting (including, without limitation, the costs of brokerage
commissions and cleaning, decorating, repairing, or altering the Premises for a substitute tenant
or tenants), (D) collecting any money owed by Tenant or a substitute tenant, (E) repairing any
damage caused by any Tenant Party, (F) performing any obligation of Tenant under the Lease, (G) any
other loss or cost incurred by Landlord as a result of, or arising from, Tenant’s breach of the
Lease or Landlord’s exercise of its rights and remedies for such breach, (H) any contractual or
liquidated types or measures of damages specified in this Lease; and (I) any other type or measure
of damages recoverable for any particular breach under Applicable Law.

     Rental Deficiency is a contractual measure of Damages for Tenant’s non-payment of Rent
measured by either the: (A) Actual Rental Deficiency, which is the difference (never less than
zero) between (1) the Base Rent due for, and other Rent allocable under this Lease to, each month
beginning with the first month with respect to which Landlord receives rent from reletting the
Premises, and (2) the proceeds, if any, that Landlord actually collects from any substitute tenant
for any part of the Premises in each corresponding month in which the Term and the term of the
substitute tenant’s lease overlap, or (B) Market Rental Deficiency, which is the present value
discounted at 6% simple annual interest of the difference (never less than zero) between (1) the
Rent otherwise due under the Lease during any period after Tenant’s breach in which Landlord may
elect to recover this damage measure, and (2) the Fair Rental Value of the Premises during that
period, plus any costs incurred in connection with any actual or attempted reletting and any other
Damages. In determining the Market Rental Deficiency, the Fair Rental Value will be the total rent
that a comparable tenant would pay for comparable space in a building of substantially equivalent
quality, size, condition, and location, considering rental rates and concessions then prevalent in
the marketplace, the remaining lease term, the expected vacancy, any other relevant factors. An
independent MAI appraiser selected by Landlord will determine the Premises’ Fair Rental Value, and
that determination will conclusively bind the parties in any computation of the Market Rental
Deficiency.

Landlord will not be in breach of this Lease if Landlord begins and pursues the cure of its failure
to meet any material obligation under this Lease within 30 days after Landlord receives written
notice from Tenant specifying Landlord’s failure. Except as otherwise specifically provided in
this Lease, Tenant will have no right to terminate or rescind this Lease or to abate, set-off, or
withhold any payment of Rent as a result of Landlord’s breach of this Lease. Tenant Waives all
rights to terminate of rescind this Lease for Landlord’s breach, and Tenant agrees that its sole
and exclusive remedy for any breach will be a suit for damages, specific performance, or
injunction. Before exercising any remedy for Landlord’s breach, Tenant will give Landlord’s
Mortgagees written notice specifying Landlord’s breach and at least 30 days right to cure that
breach.

Unless Landlord delivers signed, written notice thereof to Tenant, no act or omission by any
Landlord Party will constitute Landlord’s acceptance of surrender of the Premises, termination of
Lease, or an actual or constructive eviction of Tenant (including, without limitation, Tenant’s
delivery of keys to any Landlord Party or Landlord’s repossession, reentry, or reletting of the
Premises).

 

 

	 	27.	 	Landlord Default / Tenant Remedies.

	 	a.	 	Landlord Default. The occurrence of
any one or more of the following events is a Landlord Default: (i)
Landlord fails to pay where and when due any payment that is due
and owed from Landlord to Tenant and that failure continues for 5
Business Days after receipt of written notice from Tenant
identifying the default and documentation reflecting the amount
due and owing to Tenant (“Landlord Monetary Default”);
and/or (ii) Landlord fails to comply with any other term of this
Lease, and Landlord does not cure its failure within thirty 30
days after Tenant delivers written notice to Landlord of its
failure that specifically identifies the Landlord’s failure;
provided, however, that if such failure cannot reasonably be cured
within such period, the failure shall not be a default until 90
days following such notice of non-compliance provided Landlord is
diligently acting to cure the failure in question.
	 
	 	b.	 	Tenant Remedies. If a Landlord
Default occurs, Tenant will be entitled to exercise any one or
more of the following remedies, without further notice or demand:
(a) offset any Landlord Monetary Default owing from Landlord to
Tenant against any Rent payable by Tenant under the Lease subject
to and in accordance with the Offset Procedure (as defined below);
(b) sue for equitable relief, damages or any other available
remedy, (c) cure the Landlord Default, and if Tenant does so,
Landlord must reimburse Tenant within 30 days after Tenant
delivers an invoice for any expenses Tenant incurred effecting
compliance with Landlord’s obligations, (d) charge interest on any
amount not paid when due from the due date through the date of its
payment at the Default Rate, and/or (e) exercise all other
remedies available to Tenant at law or in equity (including
without limitation, injunctive and other extraordinary remedies).
Tenant’s remedies are cumulative and not exclusive. The term
“Offset Procedure” shall refer to the following procedure: (1)
Tenant will provide Landlord with thirty (30) days’ advance
written notice of the Landlord Monetary Default that it intends to
offset against Rent pursuant to this Paragraph 27(b); (2)
within such 30-day period, Landlord may elect to contest the
proposed offset by filing a claim with a court that has
jurisdiction and concurrently providing written notice of such
contest to Tenant (collectively, the “Landlord Contest”); (3) if
Landlord does not timely complete the Landlord Contest, then
Tenant may complete the Rent offset identified in its written
notice to Landlord; and (4) if Landlord does timely complete the
Landlord Contest then Tenant shall either (x) continue to pay all
Rent due and payable under the Lease to Landlord, (y) interplead
future accruing Rent, in an amount equal to the Landlord Monetary
Default, with the court that is handling the Landlord Contest, or
(z) pay future accruing Rent, in an amount equal to the Landlord
Monetary Default, into an interest-bearing escrow account with
Republic Title of Texas or other reputable escrow company, with
instructions that such funds may not be released except pursuant
to the joint instructions signed by both Landlord and Tenant. In
the event that Tenant implements the Offset Procedure improperly,
and if it is determined that Tenant was not entitled to such
offset by a final Court order, then within five (5) days of such
determination Tenant

 

 

	 	 	 	shall sign all reasonable instruments that are necessary to cause
the release (from escrow or court registry, as applicable) of such
improperly offset funds to Landlord.

	 	28.	 	Expiration, Termination, and Hold Over. If Tenant holds
over or continues to occupy the Premises after the expiration or termination of
this Lease or of Tenant’s right of possession, Tenant will: (a) do so as a
tenant-at-will; (b) pay Landlord (for the entire holdover or period of occupancy)
150% of the Rent that otherwise would have accrued during the holdover or
occupancy.

	 	a.	 	No holding over by Tenant or payment to
Landlord after the expiration or termination of this Lease will
renew or extend this Lease, prevent Landlord from recovering
immediate possession of the Premises by summary proceedings or
otherwise, unless Landlord sends written notice to Tenant that
Landlord elects to extend this Lease and said notice is accepted
by Tenant within 5 (five) days of receipt of such notice (and if
Tenant fails to so accept such notice then Landlord may recover
immediate possession of the Premises as provided herein or as
provided by law and/or equity).
	 
	 	b.	 	Tenant will be liable for all Landlord’s
damages resulting from any holdover or occupancy after this Lease
expires or terminates, and Tenant will Indemnify and Defend
Landlord Parties against any and all Claims arising from Tenant’s
failure to timely vacate the Premises.
	 
	 	c.	 	Within 5 Business Days after written request
during the ninety (90) days period preceding a scheduled
expiration or termination of this Lease (except for a Tenant
Default), Landlord’s authorized representative shall attend an
inspection of the Premises with Tenant and during that inspection
Landlord and Tenant shall prepare a list (the “Move-Out List”)
signed by Landlord’s and Tenant’s respective representative that
specifically lists each of Tenant’s obligations with respect to
the following categories:

	 	(i)	 	surrender any keys, electronic ID
cards, and other access control devices in Tenant’s possession
to Landlord at the place then fixed for the payment of Rent;
	 
	 	(ii)	 	remove all Tenant’s Trade Fixtures
from the Premises;
	 
	 	(iii)	 	turn over to Landlord the Premises in
broom or vacuum clean condition;
	 
	 	(iv)	 	leave the Premises and any
improvements to the Premises in the substantially the same
condition as they were when Landlord delivered them, ordinary
wear and tear and improvements and alteration made in
compliance with the Lease excepted;

 

 

	 	(v)	 	deliver the Premises to Landlord free
of any and all Hazardous Materials and Contamination caused by
any Tenant Parties; and
	 
	 	(vi)	 	repair any damage to the Premises or
the Project resulting from the removal of any Required
Removable (as defined below) or any of Tenant’s personal
property.

	 	d.	 	Any and all alterations, additions, and
improvements to the Premises, all attached furniture, attached
equipment and fixtures will become the property of Landlord upon
the expiration or termination of this Lease. In addition, all
other personal property of Tenant that remains in the Premises
after the termination of this Lease and after five (5) days from
Landlord identifying any such personal property that remains at
the Premises after lease expiration or termination will, at
Landlord’s option, (i) be deemed abandoned; or (ii) become the
property of Landlord. If Tenant fails to remove the “Required
Removables” that are listed on Exhibit L attached hereto,
Tenant will pay Landlord on demand all reasonable third-party
costs incurred in removing and disposing of the Required
Removable.

	 	29.	 	Quiet Enjoyment. Landlord warrants unto Tenant that, at
anytime Tenant is not in Default (and such Default remains uncured), Tenant shall,
during the entire Term, have lawful and quiet possession and occupation of the
Premises and shall enjoy all of the written rights described in this Lease without
any hindrance, ejection, molestation, or interference by any person.
	 
	 	30.	 	Reservations by Landlord. In addition to other rights
conferred by this Lease or by law, Landlord reserves the right, to be exercised in
Landlord’s reasonable discretion to (subject to any restrictions set forth in this
Lease and provided that none of the following actions may be taken without the
prior written consent of Tenant, which consent shall not be unreasonably withheld,
conditioned or delayed, if the result could materially and adversely affect
Tenant’s use and occupancy of the Premises or the Project): (a) change the name of
the Building; (b) change entrances and exits to the Building and to the parking lot
adjacent to the Building; (c) install and maintain a sign or signs on the exterior
or interior of the Building; (d) change the street address of the Building; (e)
designate all sources furnishing signs, sign painting and lettering; (f) take all
measures as may be necessary or desirable for the safety and protection of the
Premises or of the Building; (g) sell or mortgage the Project and assign this Lease
in connection therewith; (h) have pass keys to the Premises; (i) repair, alter, add
to, improve, or build adjacent to the Building; (j) run necessary pipes, conduits
and ducts through the Premises; (k) carry on any work, repairs, alterations or
improvements in, on or about the Building or in the vicinity thereof and, during
the continuance of any such work, to temporarily close doors, entryways, public
space and corridors in the Building; (l) change the arrangement and location of
entrances or passageways, doors and doorways, corridors, elevators, stairs,
toilets, or any public parts of the Building; and (m) grant to anyone the exclusive
right to conduct any business or render any service in or to the Building, provided
such exclusive right shall not operate to exclude Tenant from the use expressly
permitted herein and shall be subject to the terms of this Lease that limit certain
uses within the Project. This paragraph is not to be construed to diminish
obligations of Landlord or Tenant provided

 

 

	 	 	 	in this Lease, nor to create or increase any obligation on the part of Landlord with
respect to repairs or improvements.
	 
	 	31.	 	Transfers by Landlord. Landlord may transfer its rights,
interests, and obligations under this Lease to the purchaser of the Project. Upon
any such transfer, (a) the transferor Landlord will be released from any further
obligations under this Lease; (b) the transferor Landlord will transfer to the
transferee Landlord the unused balance of any Security Deposit, any insurance
proceed applicable to the Project and any condemnation awards applicable to the
Project; and (c) Tenant will attorn to the transferee Landlord and look solely to
the transferee Landlord to perform any obligations of Landlord accruing on or after
the effective date of the transfer.
	 
	 	32.	 	Taxes on Tenant’s Property. Tenant will be liable for,
and will promptly pay, all taxes on personal property, furniture, improvements,
additions, or fixtures that any Tenant Party places or keeps in the Premises. If
any tax for which Tenant is liable is levied or assessed against Landlord or
Landlord’s property, Landlord may pay the tax, or, if the assessed value of
Landlord’s property is increased by inclusion of any Tenant Party’s personal
property, furniture, or fixtures in the Premises, Landlord may pay the tax
attributable to such valuation increase, and, in either case, Tenant must reimburse
Landlord for such tax payments within 30 days after Tenant receives written demand
from Landlord, along with a copy of the paid tax receipts therefor.
	 
	 	33.	 	Authority. Each of Landlord and Tenant hereby represents
to the other that: (a) such party, in accordance with its organizational documents
has duly authorized its signatory hereto to execute and deliver this Lease; (b)
this Lease is binding on such party according to its terms; (c) such party is duly
organized and legally existing in the state of its organization, and is qualified
to do business in the State of Texas; (d) upon request, such party will provide the
other party with true and correct copies of its organizational documents (including
any amendments) and any authorizations for it to enter into the Lease; (e) its
execution and delivery of this Lease will not breach, or cause a default under, any
mortgage, deed of trust, lease, loan, credit agreement, partnership agreement, or
other contract to which it is a party; and (f) no third-party consent is required
for such party to enter into this Lease.
	 
	 	34.	 	Building Rules and Regulations. Tenant must comply, and
cause all other Tenant Parties, to comply with the Building Rules and Regulations
adopted or altered by Landlord from time to time. These Building Rules and
Regulations will apply generally to tenants, but Landlord will be entitled to
change or Waive (with respect to any tenant) any Building Rule or Regulation so
long as it does not materially interfere with Tenant’s use of the Project.
	 
	 	35.	 	Compliance with Applicable Laws. Landlord (i) represents
to Tenant that Landlord knows of no Hazardous Materials existing in the Premises as
of the Commencement Date; (ii) represents that the Project complies with all
Applicable Laws as of the Commencement Date, and (iii) covenants that Landlord
shall be responsible for removing any Hazardous Materials located in the Premises
prior to the Commencement Date and which applicable laws require to be removed,
unless caused by any Tenant Parties. Tenant, at its sole cost, must comply with,
and cause all other Tenant Parties to comply with, all applicable laws; ordinances;
rules; regulations; court orders; judgments; decrees; police, fire, and sanitary
codes; and any other requirements, present and future (Applicable Laws), adopted by
any governmental authority relating to (i) the handling,

 

 

	 	 	 	transport, treatment, storage, disposal or other use of Hazardous Materials by
Tenant Parties at the Premises, or (ii) Tenant’s or Tenant Parties use or occupancy
of any part of the Premises. Landlord, at its sole cost, must comply with, and
cause all other Landlord Parties to comply with, Applicable Laws, adopted by any
governmental authority relating to (i) the handling, transport, treatment, storage,
disposal or other use of Hazardous Materials by Landlord Parties at the Project, or
(ii) the condition, use, or occupancy of, any part of the Project by Landlord. The
obligations in this paragraph will survive the expiration or termination of this
Lease.

	 	a.	 	Hazardous Materials mean any toxic, flammable,
reactive, or corrosive substance now or hereafter regulated by any
Applicable Law, including, without limitation, any substance (i)
defined as a hazardous waste, extremely hazardous waste, hazardous
substance, hazardous material, or regulated substance, including
without limitation, any asbestos-containing material,
polychlorinated biphenyl, lead-based paint, urea formaldehyde, or
toxic or hazardous mold, or (ii) requiring special use, handling,
storage, or disposal under any Applicable Law.
	 
	 	b.	 	Contamination means any presence, release or
disposal of Hazardous Materials in violation of Applicable Law,
and affecting the improvements, facilities, soil, groundwater,
air, or other element pertaining to the Project that could result
in a Claim or in a fine, use restriction, cost recovery lien,
remediation requirement, or other imposition. A Claim arising
from Contamination includes, without limitation, the loss of or
restriction on the use of any part of the Project, any adverse
impact on marketing or leasing space, and all costs of site
investigation, remediation, removal, and restoration, claims
settlement, attorneys’ fees, consultant fees, and expert fees).
	 
	 	c.	 	Tenant will not bring, or permit any Tenant
Party to bring, any Hazardous Material on the Project (except for
de minimus amounts of household cleaning and office products used,
kept, and disposed of in compliance with all Applicable Laws). If
Tenant becomes aware of any other Hazardous Materials on the
Premises or the Project, Tenant will notify Landlord immediately.
Landlord will not bring, or permit any Landlord Party or other or
any other person to bring, any Hazardous Material on the Project
(except for de minimus amounts of household cleaning and office
products used, kept, and disposed of in compliance with all
Applicable Laws, or in connection with any of its operations or
construction activity, in compliancy with Applicable Law). If
Landlord becomes aware of any other Hazardous Materials that are
located on the Premises or the Project in violation of Applicable
Law, Landlord will notify Tenant of such matter immediately.
	 
	 	d.	 	If any Contamination occurs as a result of the
gross negligent act or omission of any Tenant Party, Tenant, at
its sole cost, shall comply with all Applicable Laws relating to
the Contamination and will promptly take all actions necessary to
remediate the affected property or facilities in accordance with
the requirements of Applicable Law. Before Tenant remediates any
Contamination, Tenant must obtain Landlord’s written approval and
any required governmental approvals. In addition, 

 

 

	 	 	 	TENANT WILL INDEMNIFY AND DEFEND LANDLORD PARTIES FROM ANY
CLAIMS TO THE EXTENT ARISING FROM CONTAMINATION CAUSED BY ANY
TENANT PARTY’S GROSSLY NEGLIGENT ACT OR WILLFUL OMISSION.
But, Tenant will not indemnify, defend, or be liable to Landlord
for any Claim to the extent arising from any Contamination existing
on the Project unless caused by Tenant. If any Contamination occurs
as a result of the grossly negligent act or willful omission of any
Landlord Party, then Landlord, at its sole cost, shall comply with
all Applicable Laws relating to the Contamination and will promptly
take all actions necessary to remediate the affected property or
facilities in accordance with the requirements of Applicable Law.
In addition, LANDLORD WILL INDEMNIFY AND DEFEND TENANT PARTIES
FROM ANY CLAIMS TO THE EXTENT ARISING FROM CONTAMINATION CAUSED BY
ANY LANDLORD PARTY’S GROSSLY NEGLIGENT ACT OR WILLFUL
OMISSION. But, Landlord will not indemnify, defend, or be
liable to Tenant for any Claim to the extent arising from any
Contamination existing on the Project after the Commencement Date
unless caused by a Landlord Party.
	 
	 	e.	 	If any Contamination occurs and neither
Landlord nor Tenant are obligated to pursuant to Paragraph
35(d) to remediate such Contamination, then this Lease will
not create an independent obligation of either Landlord or Tenant
to remediate or otherwise address the Contamination; provided,
however, if a third-party environmental consultant hired by Tenant
determines that it may not safe or prudent for Tenant to use all
or a portion of the Premises due to such Contamination, then
Tenant may terminate this Lease upon thirty (30) days’ advance
notice to Landlord; further provided that such termination shall
be void if prior to the effective date of such termination
Landlord provides Tenant with written notice stating that Landlord
has elected to and shall at its cost (without reimbursement as a
Basic Cost) remediate the Contamination in accordance with the
requirements of Applicable Law (the “Elective Remediation”). If
Landlord assumes responsibility for the Elective Remediation, then
all Rent payable under this Lease shall abate from the date that
Landlord elected to complete the Elective Remediation through the
date that the Elective Remediation is complete, to the extent that
Tenant does not use the Premises during such period of time.
	 
	 	f.	 	Subject to the restrictions set forth in
Paragraph 6 of this Lease, Landlord, its agents, and its
representatives will be entitled to (but they will not be required
to) inspect the Premises at any time to monitor Tenant’s
compliance with Applicable Laws and the Lease. Landlord will use
reasonable efforts to minimize any resulting interference with
Tenant’s business, but Landlord will not be liable for any such
interference.

	 	36.	 	Americans with Disabilities Act And Texas Architectural Barriers
Act. Tenant, at its sole cost, will (a) comply with all requirements of
the Americans with

 

 

	 	 	 	Disabilities Act (Public Law 101-336 (July 26, 1990)) [ADA] and the Texas
Architectural Barriers Act (Article 9102, Tex. Rev. Civ. Stat. (Vernon’s
1991)) [Texas Act] applicable to the Premises and to any improvements or other
facilities within the Premises; (b) be solely responsible for any accommodations
within, or alterations to, the Premises required to accommodate any Tenant Party;
and (c) be solely responsible for any accommodations or alterations to the Project
required for a Tenant Party if Landlord would not otherwise be required to make the
additional accommodation or alteration under this Lease or under generally
applicable provisions of the ADA or the Texas Act. Landlord, at its sole cost, will
(provided that Landlord may comply with the following requirements by causing
third-parties to satisfy the subject obligations) comply with all requirements of
the ADA and Texas Act applicable to the Project (other than the Premises) and to any
improvements or other facilities located at the Project (other than within the
Premises). No term of this Lease authorizes, or should be construed as authorizing,
Landlord or Tenant to violate the ADA or the Texas Act.
	 
	 	37.	 	Telecommunications. Tenant, at its sole cost, may order
and use telephone and other wired telecommunications services in accordance with
the Rules and Regulations, but Tenant must obtain Landlord’s prior written consent
to Tenant’s use of services of a telephone or telecommunications service provider
who is not then providing service to the Building. Unless Landlord otherwise
requests or consents in writing, Tenant’s telecommunications equipment must be
located in the Premises and the telephone closet(s) on the floor(s) on which the
Premises are located. Landlord has no obligation to maintain Tenant’s
telecommunications equipment, wiring, or other telecommunications equipment
infrastructure owned by Tenant.

	 	a.	 	Landlord, upon reasonable prior notice to
Tenant, will be entitled to interrupt or turn off
telecommunications facilities for any emergency, to repair the
Building, or to install telecommunications or other equipment for
the Building’s other occupants or users, provided that (i)
Landlord takes commercially reasonable steps to minimize the
interruption; (ii) at least ten (10) days’ advance written notice
of any interruption is provided to Tenant; and (iii) the
interruption occurs during at times other than Normal Business
Hours to the extent possible.
	 
	 	b.	 	By the expiration or termination of this
Lease, Tenant, at its sole cost, will remove all
telecommunications equipment and other facilities for
telecommunications transmittal (except wiring) installed in the
Premises or on the Project for Tenant’s use. But Landlord will be
entitled to, upon written notice to Tenant given no later than
ninety (90) days before the Term expires, require Tenant to
abandon and leave in place, without payment to Tenant or credit
against Rent, any and all telecommunications wiring and related
infrastructure, whether located in the Premises or elsewhere in
the Building.
	 
	 	c.	 	Tenant will not use any wireless
communications equipment (other than cellular telephones),
antennae, or satellite receiver dishes within the Premises or on
the Project without Landlord’s prior written consent
	 
	 	d.	 	If any Tenant Party’s telecommunications
service, transmitters, or receivers interfere with Landlord’s or
another occupant’s telecommunications services or equipment that
existed prior to the initial

 

 

	 	 	 	installation and operation of the Tenant Party’s equipment, then
Tenant will promptly eliminate any such interference or, if Tenant
cannot eliminate it, stop using the equipment or service causing
such interference. If any Landlord Party’s or other Building
occupant’s telecommunications service, transmitters, or receivers
interfere with Tenant’s telecommunications services or equipment
that existed prior to the initial installation and operation of the
interfering equipment, then Landlord will promptly eliminate (or
cause to be eliminated) any such interference or, if Landlord
cannot eliminate it, Landlord shall (or cause the operating
Building occupant to) stop using the equipment or service causing
such interference.

	 	38.	 	Landlord’s Lien. LANDLORD HEREBY WAIVES AND DISCLAIMS ALL
STATUTORY AND CONTRACTUAL LANDLORD LIEN RIGHTS IN TENANT’S FURNITURE, FIXTURES,
TRADE FIXTURES, EQUIPMENT, MERCHANDISE, AND OTHER PROPERTY NOW OR HEREAFTER PLACED
BY TENANT AT THE PREMISES. SUCH WAIVER DOES NOT INCLUDE A WAIVER OF ANY RIGHTS
LANDLORD HAS TO THE IMPROVEMENTS AT THE END OF THE TERM.
	 
	 	39.	 	Notices. All notices, demands, requests, and other
communications required or permitted by this Lease must be: (a) in writing; (b)
delivered to the party’s designated representative at the party’s address on its
signature page of this Lease, or to another person, or at another address,
designated in a notice delivered in a manner permitted by this paragraph; and (c)
delivered (i) in person (e.g., hand delivery by courier or overnight delivery
service), (ii) by facsimile transmittal (fax), or (iii) by United States mail,
registered or certified, postage fully prepaid, return receipt requested. Any
notice given by fax also must be given by another means permitted by this
paragraph. Notice delivered in person, by fax, or by mail will be effective when
actually received, and any properly mailed notice (even if not actually received)
will be will be deemed received on the 3rd day after its deposit in a regularly
maintained receptacle for the United States mail.
	 
	 	40.	 	Miscellaneous. The following provisions are not
immaterial because they are included in this paragraph of this Lease.

	 	a.	 	Attorneys’ Fees. In any suit or other
dispute between Landlord and Tenant, the prevailing party will be
entitled to recover its reasonable attorneys’ fees, court costs,
and other litigation expenses.
	 
	 	b.	 	Commissions. Tenant represents that it
has dealt directly with and only with Dillon Corporate
Services dba CresPartners Dallas (whose commission shall be
paid by Landlord pursuant to a separate written agreement) in
connection with this Lease. TENANT AND LANDLORD SHALL EACH
INDEMNIFY THE OTHER AGAINST ALL COSTS, EXPENSES, ATTORNEYS’ FEES,
LIENS AND OTHER LIABILITY FOR COMMISSIONS OR OTHER COMPENSATION
CLAIMED BY ANY BROKER OR AGENT CLAIMING THE SAME BY, THROUGH OR
UNDER THE INDEMNIFYING PARTY, OTHER THAN THE BROKER(S)
SPECIFICALLY IDENTIFIED ABOVE.

 

 

	 	c.	 	Construction. Landlord and Tenant have
participated in drafting this Lease, and they agree that this
Lease will not be construed against either party as its drafter.
Each defined term includes any capitalized grammatical variants,
and the use of bold type is sometimes used for the reader’s
convenience, but its use does not affect any term’s meaning.
Unless the context otherwise requires, the singular includes the
plural, and vice versa, and any gender references are
interchangeable. Time is of the essence.
	 
	 	d.	 	Force Majeure. Whenever this Lease sets a
time period for a party to act, the party required to perform the
act will not be liable to the other party, and the computation of
the time period will exclude, any delays due to strikes; riots;
acts of God; shortages of required labor or materials (or
reasonable substitutes therefore) are not available on the market;
war; or governmental laws, regulations, or restrictions prohibit
the timely performance of the subject action. But no such force
majeure will excuse a party from its obligation to pay any sum of
money due under this Lease, including without limitation, Tenant’s
obligations to timely pay Rent to Landlord. Notwithstanding the
foregoing, no action or obligation of a party will be delayed by
force majeure unless such party provides written notice to the
other party describing the force majeure event in reasonable
detail within three (3) Business Days after the inception of the
force majeure event.
	 
	 	e.	 	Full Agreement; Amendments. This Lease
contains the parties’ entire agreement regarding the subject
matter hereof. All understandings, discussions, and agreements
previously made between the parties, written or oral, are
superseded by this Lease, and neither party is relying upon any
warranty, statement or representation not contained in this Lease.
No change in any term of this Lease will be effective, unless
Landlord and Tenant each sign and deliver a written instrument
evidencing the change.
	 
	 	f.	 	Intentionally Deleted.
	 
	 	g.	 	Method of Calculation. Tenant is
knowledgeable and experienced in commercial transactions and does
hereby acknowledge and agree that the provisions of this Lease for
determining charges and amounts payable by Tenant are commercially
reasonable and valid and constitute satisfactory methods for
determining such charges and amounts as required by Section 93.012
of the Texas Property Code. TENANT FURTHER VOLUNTARILY AND
KNOWINGLY WAIVES (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW) ALL RIGHTS AND BENEFITS OF TENANT UNDER SUCH SECTION, AS IT
NOW EXISTS OR AS IT MAY BE HEREAFTER AMENDED OR SUCCEEDED.
	 
	 	h.	 	No Merger. If the same person or entity
acquires any direct or indirect interest in this Lease or the
leasehold and in the fee, the leasehold will not merge with the
fee. And, neither Tenant’s surrender of this Lease or its mutual
cancellation will constitute a merger. But,

 

 

	 	 	 	upon any surrender or cancellation of this Lease, Landlord, in its
sole discretion, may terminate or assume any then existing
subtenancy.
	 
	 	i.	 	Non-Disclosure. Neither Landlord nor
Tenant will to disclose any terms of its Lease to other tenants in
this Building or to the general public, except to the extent
required by Applicable Law; provided that the remedy available for
breach of this covenant is limited to injunctive relief.
	 
	 	j.	 	Recording. Neither Landlord nor Tenant
will not record this Lease, but the parties may file a memorandum
of this Lease.
	 
	 	k.	 	Representations and Warranties. Tenant
represents and warrants to Landlord that: (a) no Landlord Party
made, and no Tenant Party relied on, any representation, warranty,
or promise with respect to this Lease, the Premises, or the
Project, except for those expressed in this Lease; (b) Tenant
acquired no rights, easements, or licenses (by implication or
otherwise), except for those expressed in this Lease; (c) any and
all financial information about Tenant and the Guarantor were true
and correct in all material respects when it was delivered and
except as otherwise described to Landlord in writing, on the
Effective Date. Landlord represents to Tenant that: (i) Landlord
has all necessary permits and entitlements for such use; (ii) no
recorded or unrecorded document prohibits such use by Tenant;
(iii) Landlord is not in default under any such document nor has
any circumstance occurred which would be a default thereunder with
the giving of notice, the passage of time, or both.
	 
	 	l.	 	Severability. If any term of this Lease
is or becomes illegal, invalid, or unenforceable, the remaining
terms of this Lease will not be affected, and the invalid,
illegal, or unenforceable term will be reformed to give effect (to
the fullest extent possible) to the parties’ intentions in a
manner that is legal, valid, and enforceable.
	 
	 	m.	 	Successors. This Lease will apply to,
inure to the benefit of, and bind Landlord and Tenant, and their
respective heirs, successors-in-interest, legal representatives,
and permitted assigns, except as otherwise expressly provided in
this Lease.
	 
	 	n.	 	Time is of the Essence; Relationship; Successors
and Assigns. Time is of the essence with respect to each
parties’ performance of its obligations under this Lease and the
exercise of any expansion, renewal or extension rights or other
options granted to Tenant.
	 
	 	o.	 	 Waivers. Neither Landlord nor Tenant will
be deemed to have Waived any right or breach by the other party of
any of its obligation under this Lease, unless such Waiver is
delivered in a signed writing that explicitly relinquishes the
subject right or breach. Landlord’s or Tenant’s Waiver of any
right, or of a breach by the other party, on one or more occasions
will not be deemed a Waiver on any other occasion. No custom or
practice arising during the administration this Lease will

 

 

	 	 	 	Waive, or diminish, either party’s right to insist upon strict
performance of the other party’s obligations. No restrictive
endorsement or other statement on or accompanying any check or
payment will be deemed an accord and satisfaction or novation, and
Landlord will be entitled to accept any such check or payment,
without prejudice, to Landlord’s rights to recover the full amount
due and to exercise its other remedies.

	 	i.	 	Appraisals. Except with respect
to Tenant’s personal property located at the Project,
Tenant Waives its rights (if any) (A) to protest or
appeal any tax appraisal, and (B) to receive notice of
any tax reappraisal.
	 
	 	ii.	 	Intentionally Deleted. 
	 
	 	iii.	 	DTPA. After consulting with an
attorney of Tenant’s own selection, Tenant voluntarily
waives its rights against Landlord parties under the
DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT,
SECTION 17.41 et seq., TEXAS BUSINESS & COMMERCE CODE, a
law that gives consumers special rights and protections.
Tenant represents and warrants that IT’S attorney was
not, directly or indirectly, identified, suggested, or
selected by any Landlord party.
	 
	 	iv.	 	Jury Trial. Tenant parties and
Landlord parties each knowingly, voluntarily, and on the
advice of Counsel: (i) agree not to elect a jury trial in
any suit arising out of, or relating to, this Lease or
the Project; and (ii) waive any present or future right
to a Jury trial.
	 
	 	v.	 	Tax Waiver. Landlord covenants to use
commercially reasonable efforts to contest where
appropriate appraised values of the Project in order to
minimize ad valorem taxes assessed for the Project.
Tenant waives all rights pursuant to all laws to contest
any taxes or other levies or protest appraised values or
receive notice or reappraisal regarding the Project
(including Landlord’s Personalty), irrespective of
whether Landlord contests same, but excluding Tenant’s
personal property located at the Project.
	 
	 	vi.	 	Lien. To the fullest extent
permitted by law, Tenant voluntarily waives its future
rights to claim a lien (pursuant to Section 91.004 of the
Texas Property Code and otherwise) on Landlord’s
nonexempt property in tenant’s possession, if any, and on
the rent due to Landlord under the Lease to secure
payment by Landlord of Tenant’s damages, if 

 

 

	 	 	 	any, arising out of Landlord’s failure to comply with
this Lease, in whole or in part.

	 	41.	 	ABANDONMENT. In the event Tenant vacates or abandons the
Premises but is otherwise in compliance with all the terms, covenants and
conditions of this Lease, Landlord upon thirty days’ advance written notice to
Tenant shall (i) have the right to enter into the Premises in order to show the
space to prospective tenants subject to the terms of Paragraph 6, (ii) have
the right to reduce the services provided to Tenant pursuant to the terms of this
Lease to such levels as Landlord reasonably determines to be adequate services for
an unoccupied premises. Notwithstanding the foregoing, (x) Landlord may not reduce
services provided to the Premises if Tenant provides Landlord with written notice
stating that it requires the continued provision of full services to the Premises,
and (y) if the provision of services to the Premises is limited pursuant to this
Paragraph 41 then Landlord must restore the provision of full and complete services
to the Premises within two (2) Business Days after receipt of written request from
Tenant for the restoration of such services. None of the foregoing acts of Landlord
or any other act of Landlord shall constitute a termination of Tenant’s right to
possession or an acceptance of Tenant’s surrender of the Premises, and the Lease
shall continue in effect.
	 
	 	42.	 	EXHIBITS AND RIDERS. These Exhibits and Riders, attached
hereto and incorporated herein and are part of this Lease :

	 	 	 

	Exhibit A:

	 	Premises
	Exhibit B:

	 	Legal Description of Land
	Exhibit C:

	 	Rules and Regulations
	Exhibit D:

	 	Work Letter and Landlord Work
	Exhibit E:

	 	Commencement Letter
	Exhibit F:

	 	Moving Allowance
	Exhibit G:

	 	Janitorial Specifications
	Exhibit H:

	 	Reconciliation Statement Form
	Exhibit I:

	 	Exceptions to Permitted Use Restrictions in the Project
	Exhibit J:

	 	Depiction of Reserved Spaces
	Exhibit K:

	 	Non-Exclusive, Exclusive and Service Elevators
	Exhibit L:

	 	Required Removables
	Exhibit M:

	 	Parent Guaranty
	 
	 	 
	Rider 1:

	 	Renewal Option
	Rider 2:

	 	Termination Option
	Rider 3:

	 	Expansion Option
	Rider 4:

	 	Signage

(SIGNATURES APPEAR ON FOLLOWING PAGE)

 

 

     As of the date referenced above, Landlord and Tenant executed multiple original
counterparts of this Lease.

	 	 	 	 	 	 	 

	Address:	 	LANDLORD:	 	 
	 
	 	 	 	 	 	 
	3232 McKinney Avenue	 	Gaedeke Holdings II, Ltd.	 	 
	Suite 730	 	by its agent, Gaedeke Group, L.L.C.	 	 
	Dallas, Texas 75204
	 	 	 	 	 	 
	Attn: Sandra Plunk, Property Manager
	 	 	 	 	 	 
	Tel No. (214) 871-7777

	 	By:
	 	/s/ Sabine Gaedeke Stener	 	 
	 

	 	 	 	 	 	 
	Fax No. (214) 871-7838

	 	 	 	Sabine Gaedeke Stener	 	 
	 

	 	 	 	CEO	 	 
	 
	 	 	 	 	 	 
	Address Before Commencement Date:	 	TENANT:	 	 
	 
	 	 	 	 	 	 
	3400 Carlisle Street, Suite 345	 	Archipelago Learning, LLC	 	 
	Dallas, Texas 75204
	 	 	 	 	 	 
	Attn: James B. Walburg
	 	 	 	 	 	 
	Tel No. (800) 419-3191

	 	By:
	 	/s/ James B. Walburg	 	 
	 

	 	 	 	 	 	 
	Fax No. (866) 515-9145

	 	 	 	Name: James B. Walburg	 	 
	 

	 	 	 	Title: EVP & CFO	 	 
	 
	 	 	 	 	 	 
	Address After Commencement Date:
	 	 	 	 	 	 
	3232 McKinney Avenue
	 	 	 	 	 	 
	Suite 300
	 	 	 	 	 	 
	Dallas, Texas 75204
	 	 	 	 	 	 
	Attn: James B. Walburg
	 	 	 	 	 	 
	Tel No.     
                  
                  
              
	 	 	 	 	 	 
	Fax No.     
                  
                  
              
	 	 	 	 	 	 

 

 

Exhibit A

Premises

3rd and 4th Floors — Suite 300 – 37,218 rentable square feet (r.s.f.)

DIAGRAMS OF FLOOR LAYOUT

 

 

Exhibit B

Legal Description of Land

TRACT I:

Lot 1B, Block 1/638, of McKinney Plaza, a Replat of Lots 1A, 2A, and 3A One McKinney Plaza Addition
and Lots 7 through 12, Block 1/638 of the Watt Cole’s McKinney Avenue Addition, an addition to the
City of Dallas, Dallas County, Texas, according to the Plat thereof recorded in volume 87072, Page
3752, or the map Records of Dallas County, Texas.

TRACT II:

Being part of Log 2B in Block 1/638 of McKinney Plaza, an addition to the City of Dallas as
recorded in Volume 87072, Page 3752, Deed Records, Dallas County, Texas, and being more
particularly described as follows:

COMMENCING at an iron rod set situated in the intersection of northeasterly line of Bowen Street
(43.72’ R.O.W.) and the northwesterly line of Oak Grove Avenue (53’ R.O.W.);

THENCE North 41 26’ 00” East along the northwesterly line of said Oak Grove Avenue a distance of
171.34 feet to an “x” cut set for the POINT OF BEGINNING;

THENCE North 45 10’ 13” West departing the northwesterly line of said Oak Grove Avenue a distance
of 116.25 feet to an “x” cut set;

THENCE North 44 49’ 47” East a distance of 22.04 feet to an “x’ cut set;

THENCE South 41 10; 13” East a distance of 114.94 feet to an “x” cut found situated in the
northwesterly line of said Oak Grove Avenue;

THENCE South 41 26’ 00” West along the northwesterly line of said Oak Grove Avenue a distance of
22.08 feet to the POINT OF BEGINNING and containing 2,548 square feet or 0.0585 acres of land.

 

 

Exhibit C

Rules and Regulations

Unless and until modified in accordance with the terms of the Lease, these Rules and Regulations
apply to the Premises and all other parts of the Project:

	 	1.	 	Sidewalks, doorways, vestibules, halls, stairways and other similar areas will
not be obstructed or used by any Tenant Party for any purpose other than ingress and
egress to and from the Premises and for going from one to another part of the Building.
	 
	 	2.	 	Plumbing, fixtures and appliances will be used only for the purposes for which
designed, and no sweepings, rubbish, rags or other unsuitable material will
intentionally be thrown or placed therein. [The following is not applicable as the
subject matter has been fully-addressed within the Lease: Damage resulting to any such
fixtures or appliances from misuse by a tenant or such tenant’s agents, employees or
invitees, will be paid by such tenant, and Landlord will not in any case be responsible
therefore.]
	 
	 	3.	 	No signs, advertisements or notices will be painted or affixed on or to any
windows, doors or other parts of such Building except those of such color, size, style
and in such places as will be first approved in writing by Landlord. [The following is
not applicable as the subject matter has been fully-addressed within the Lease: No
nails, hooks or screws will be driven or inserted in any part of the Building except by
the Building maintenance personnel nor will any part of the Building be defaced by
tenants.] No curtains or other window treatments will be placed between the glass and
the Building Standard window treatments.
	 
	 	4.	 	Landlord will provide and maintain an alphabetical directory board for all
tenants on the first floor (main lobby) of the Building and no other directory will be
permitted unless previously consented to by Landlord in writing.
	 
	 	5.	 	Landlord will provide all locks for doors in the Premises of each tenant, at
the cost of such tenant, and no tenant will place any additional lock or locks on any
door in its Demised Premise without Landlord’s prior written consent. A reasonable
number of keys to the locks on the doors in the Premises of each tenant will be
furnished by Landlord to each tenant, at the cost of such tenant, and the tenants will
not have any duplicate keys made.
	 
	 	6.	 	Landlord will provide tenant master entry cards and all tenants will be
required to use such master entry cards to gain entry into the Building during other
than Normal Business Hours. Landlord will determine the number of master entry cards
to be delivered to each tenant based upon the net rentable area leased by each
respective tenant and such other factors as Landlord will deem relevant in its sole
discretion. Landlord will provide the Two-hundred (200) master entry cards delivered
to Tenant free of charge. The charge for any additional master entry cards delivered
to Tenant by Landlord will be Twenty-five Dollars ($25.00) per card. Tenant agrees to
surrender all master entry cards then in its possession upon the expiration or earlier
termination of this Lease. Any lost cards will be canceled and Tenant will pay the sum
of Twenty-five Dollars ($25.00) for each replacement card.
	 
	 	7.	 	[The following is not applicable as the subject matter has been fully-addressed
within the Lease: All tenants will refer all contractors, contractors’ representatives
and installation technicians to Landlord for Landlord’s supervision, approval and
control before the

 

 

	 	 	 	performance of any contractual services. This provision will apply to all work
performed in the Building including, but not limited to: installations of
telephones, telegraph equipment, electrical devices and attachments, doors, entrance
ways, and any and all installations of every nature affecting floors, walls,
woodwork, trim, windows, ceilings, equipment and any other physical portion of the
Building.]
	 
	 	8.	 	Movement in or out of the Building of furniture, office equipment, safes, heavy
equipment, bulky material, merchandise or materials which require the use of elevators
or stairways; or movements through the Building entrances or lobby will be restricted
to such hours as Landlord will designate. All such movement will be under the
supervision of Landlord and will proceed in a manner agreed upon between the tenants
and Landlord by pre-arrangement before performance so as to arrive at the optimum time,
method, and routing of such movement; [The following is not applicable as the subject
matter has been fully-addressed within the Lease: subject, however, to Landlord’s
ability to prohibit any such article from being brought into the Building for safety
concerns. The tenants are to assume all risks as to the damage to articles moved and
injury to persons or public engaged or not engaged in such movement, including
equipment, property and personnel of Landlord, if damaged or injured as a result of
acts in connection with carrying out this service for a tenant from time to time of
entering the property to completion of work; and Landlord will not be liable for acts
of any person engage in, or any damage or loss to any of said property or persons
resulting from, an act in connection with such services performed for a Tenant.]
	 
	 	9.	 	Corridor doors, when not in use, will be kept closed.
	 
	 	10.	 	Tenants will not employ any person to clean the Premises other than the
Building’s cleaning and maintenance personnel. Nothing will intentionally be swept or
thrown into the corridors, halls, elevator shafts or stairways.
	 
	 	11.	 	To ensure orderly operation of the Building, no non-Building Standard ice,
mineral or other water, towels, newspapers, etc. will be delivered to any of the
Premises except by persons appointed or approved by Landlord in writing, which approval
shall not be unreasonably, withheld, conditioned or delayed.
	 
	 	12.	 	Should a Tenant require telegraphic, telephonic, annunciation or other
communication service, Landlord will direct the electrician where and how wires are to
be introduced and placed and none will be introduced or placed except as Landlord will
direct. Electric current will not be used for heating units located in the Premises
without Landlord’s prior written permission.
	 
	 	13.	 	[The following is not applicable as the subject matter has been fully-addressed
within the Lease: Tenant will not make or permit any improper, objectionable or
unpleasant noises or odors in the Building or otherwise interfere in any way with other
Tenants or persons having business with them.]
	 
	 	14.	 	Except for service animals, no birds or other animals will be brought into or
kept in, on or about any of Tenant’s Premises.
	 
	 	15.	 	No flammable or explosive fluid or substance will be used or kept in the
Building, except for customary cleaning products and office supplies.

 

 

	 	16.	 	No portion of any tenant’s Premises will at any time be used or occupied as
sleeping or lodging quarters.
	 
	 	17.	 	No vehicle(s) will be left in the parking garage or any other area designated
for building/project parking for more than a consecutive forty-eight (48) hour period
without the Landlord’s prior written consent.
	 
	 	18.	 	[The following is not applicable as the subject matter has been fully-addressed
within the Lease: In the event the tenant does not have a security deposit on account,
Landlord may at his sole discretion, charge a deposit of not less than Five Hundred
Dollars ($500.00) prior to scheduling the tenant move-out to mitigate any damage to the
property associated with the tenant vacating. After the move and verification of any
damage charges, the deposit, if any, shall be refunded to such tenant within Ten (10)
business days.]
	 
	 	19.	 	Tenant and its employees will not smoke in the public areas of the building
such as, but not limited to, public restrooms, corridors, elevator lobbies, and
building lobbies. In addition, Tenant and its employees shall not smoke within fifty
(50) feet of any Building entry or elevators unless otherwise explicitly designated in
writing by Landlord.
	 
	 	20.	 	[The following is not applicable as the subject matter has been fully-addressed
within the Lease: The Tenant, at such Tenant’s expense and upon vacating the Premises,
must remove or have removed any and all telecommunications cabling and hardware, of
which they have installed in or on any part of the Building or Premises. Additionally,
Tenant must also remove all security devices installed in Premises upon vacating same.]

 

 

Exhibit D

Work Letter

     Gaedeke Holdings II, Ltd. (Landlord) and Archipelago Learning, LLC. (Tenant) agrees
to prepare the Premises for Tenant’s occupancy in accordance with this Work Letter.

	1.	 	Defined Terms: Unless otherwise noted, the defined terms in this Work
Letter have the same meaning as the defined terms used in the Lease, and any other term
defined in this Work Letter will have the same meaning if it is used as a defined term in the
Lease.

	2.	 	Space Plan. Landlord and Tenant hereby acknowledge approval of that
certain space plan (the “Space Plan”) prepared by Interprise Design, dated March
24 , 2010, identified as plan/project number 0193-1039-16 showing, regardless of the
quantities of such items, the location of all partitions and doors and the lay-out of the
Premises.

	3.	 	Construction Plans. On or before thirty (30) days after the Effective
Date, Landlord’s space planner and engineer, as part of the Allowance, will prepare and
provide Tenant with a complete set of construction plans (such construction plans, when
approved, and all changes and amendments thereto agreed to by Landlord and Tenant in writing,
are herein called the “Construction Plans”) for all of Tenant’s improvements requested
pursuant to the Space Plan, the design and color scheme and any Above Building Standard
Product Specification List (all improvements required by the Construction Plans are herein
called “Tenant’s Work”), including complete detail and finish drawings for partitions,
doors, reflected ceiling, telephone outlets, electrical switches and outlets and Building
standard heating, ventilation and air conditioning equipment and controls. Within three (3)
Business Days after construction plans are delivered to Tenant, Tenant shall approve (which
approval shall not be unreasonably withheld, conditioned or delayed) or disapprove same in
writing and if disapproved, Tenant shall provide Landlord and Landlord’s space planner and
engineer specific reasons for disapproval. The foregoing process shall continue until the
construction plans are approved by Tenant; provided that if Tenant fails to respond in any
three (3) Business Day period, then each day after such date that Tenant fails to provide a
response shall constitute one (1) day of Tenant Delay.

	4.	 	Changes to Approved Plans. If any re-drawing or re-drafting of either
the Space Plan or the Construction Plans is necessitated by Tenant’s request for a change that
is not consistent with the Space Plan [all of which shall be subject to approval by Landlord
(which approval shall not be unreasonably withheld, conditioned or delayed) and, if
applicable, any governmental agency or authority to which the plans and specifications are
required to be submitted], the expense of any such re-drawing or re-drafting required in
connection therewith and the expense of any work and improvements necessitated by such
re-drawing or re-drafting will be charged to Tenant.

	5.	 	Coordination of Planners and Designers. If Tenant shall arrange for
interior design services, whether with Landlord’s space planner or any other planner or
designer, it shall be Tenant’s responsibility to cause necessary coordination of its agents’
efforts with Landlord’s agents to ensure that no delays are caused to either the planning or
construction of the Tenant’s Work; provided that Landlord, Landlord’s space planner,
Landlord’s Contractor and Landlord’s Manager shall use commercially reasonable efforts to
accommodate customary work performed by a Tenant Party during the completion of the Tenant’s
Work, including without limitation, the installation of security systems, data cables and
Tenant’s furniture and fixtures.

 

 

	6.	 	Tenant Work Allowance. Landlord, at Tenant’s sole cost, will cause
Tenant’s Work to be performed in substantial conformity with the Construction Plans and in
accordance with the terms of this Work Letter. But, Landlord will
provide Tenant up to
$669,942.00 improvement allowance for Tenant’s Work (the “Allowance”) to offset
the costs of the Construction Plans and the Tenant Work; if, however, the Construction Plans
and the Tenant Work actually cost less than the Allowance, Tenant will not be entitled to
offset or otherwise apply the unused portion of the Allowance against any other sum owed to
Landlord; except Tenant may utilize any unused portion of the Allowance for it
signage, for its security systems installed at the Premises, for data cables installed at the
Premises, for fixtures installed at the Premises, its construction management fees, and as an
additional Moving Allowance
(of up to $260,525.00) to offset Tenant’s relocation costs
as outlined in Exhibit F. Landlord shall obtain Tenant’s written consent of
cost estimates for all labor, services and material that will be charged against the
Allowance, prior to Landlord approving or incurring such costs.

	 	a)	 	The Allowance shall be disbursed by Landlord, from time to time, for payment of
(in the following priority) (i) the contract sum required to be paid to the General
Contractor engaged to construct Tenant’s Work (the “Contract Sum”), and (ii)
the fees of the preparer(s) of the Construction Plans and Space Plan (the foregoing
costs are collectively referred to as the “Permitted Costs”). Landlord has
agreed to waive its 5% construction management fee, and will work in conjunction with
the construction manager to be retained by Tenant.
	 
	 	b)	 	Tenant has hired its project manager, James Louis with CresaPartners, and
Tenant shall have the right to hire a move coordinator. Unless otherwise agreed to in
writing by Landlord and Tenant, construction and installation of the Tenant’s Work
shall be carried out by Landlord’s Contractor under the direction of Tenant’s project
manager, subject to the supervision and direction of the Landlord’s Manager. Landlord
and Tenant shall cooperate with each other and the Space Planner to promote the
efficient and expeditious completion of such Tenant’s Work. On or before the first day
of each calendar month, Landlord shall provide and within two (2) Business Days
thereafter Tenant shall review with Landlord monthly statements of costs incurred for
the Tenant Work, which statements shall reflect prior payments on the Tenant Work
contract, along with appropriate lien releases for such prior work.
	 
	 	c)	 	No Tenant Party will be entitled to hold any Landlord Party responsible for
determining whether Tenant is a public accommodation. Tenant shall be solely
responsible for this determination. All of the Tenant Work’s design, construction and
installation shall conform to the requirements of applicable building, plumbing and
electrical codes, requirements of government laws, including the ADA, and the
requirements of any authority having jurisdiction over, or with respect to, such work.
Further, all design, construction and installation shall meet industry standards for
electrical power required by Tenant’s Permitted Use operations in the Premises,
including without limitation computer and telecommunications systems, software,
printers, scanners, fax machines, and copiers, backup and batteries.
	 
	 	d)	 	If the sum of the Permitted Costs exceeds the Allowance, then Tenant shall pay
all such excess costs (“Excess Costs”), provided, however, Landlord will, prior
to the commencement of construction of Tenant’s Work , advise Tenant of the Excess
Costs, if any, and the Contract Sum. Tenant shall have two (2) Business Days from and
after the receipt of such advice within which to approve or disapprove the Contract Sum
and any Excess Costs. If Tenant disapproves the Contract Sum and Excess Costs then
Tenant shall either reduce the scope of Tenant’s Work such that there shall be no
Excess Costs or, at Tenant’s option,

 

 

	 	 	 	Landlord shall obtain two (2) additional bids (i.e. bids in addition to the bids that
Landlord is required to obtain pursuant to Section 11 of this Work Letter),
provided that each day beyond such two (2) Business Day period and until the rebid is
accepted by Tenant shall constitute a Tenant Delay hereunder. Subject to the last
sentence of this subsection, the foregoing process shall continue until a Contract Sum
and resulting Excess Costs, if any, are accepted or deemed accepted by Tenant. Landlord
and Tenant must approve (or be deemed to have approved) the Contract Sum for the
construction of Tenant’s Work in writing prior to the commencement of construction. If
Tenant fails to provide a response within an applicable time-period set forth in this
Section 6(d), then each day after such date until Tenant provides the required
response shall constitute one (1) day of Tenant “Delay.”
	 
	 	e)	 	Unless Landlord approved the use of other materials in the final Plans, which
approval shall not be unreasonably withheld, conditioned or delayed, all Tenant Work
will use Building Standard materials.
	 
	 	f)	 	Tenant shall remit to Landlord the actual Excess Costs, not to exceed the
projected Excess Costs as identified in Section 6(d) of this Work Letter, if any,
within ten (10) days after Substantial Completion of Tenant’s Work and receipt of
invoice from Landlord. Failure by Tenant to timely tender to Landlord the full payment
required by this Section 6(f) shall permit Landlord to stop all work until such
payment is received. All sums due Landlord under this Subsection shall be considered
Rent under the terms of the Lease and nonpayment shall constitute a default, after 5
days written notice and opportunity to cure, under the Lease and entitle Landlord to
any and all remedies specified in the Lease.

	7.	 	Delay and Completion. For purposes of determining the date on which
Landlord will be deemed to have tendered the premises for Tenant’s occupancy will be the date
of Substantial Completion (as described in Section 7(b) below), moved back one day for each
day of Delay).

	 	a)	 	Delay means each of the following acts or omissions of a Tenant Party that
actually impedes the substantial completion of the Tenant Work or Landlord Work:

	 	i)	 	failing to make its agents available, to
furnish required information, or to respond to any request for any
approval or information within any prescribed time period or, if no
time period is prescribed, within 2 Business Days of that request;
	 
	 	ii)	 	insisting on any Non-Building Standard service,
material, or improvement that is not identified in the Construction
Plans;
	 
	 	iii)	 	changing the Space Plan or changing the
Construction Plans after same have been approved pursuant to
Section 2 of this Work Letter;
	 
	 	iv)	 	having work performed by any Tenant Party that
results in an unreasonable interference with the Landlord Work or the
Tenant Work;
	 
	 	v)	 	requesting that Landlord delay performing any
of Tenant Work or Landlord Work;
	 
	 	vi)	 	any Default;

 

 

	 	vii)	 	taking possession of any part of the Premises
before the Substantial Completion of Tenant Work, other than early
occupancy of the Data Room; or
	 
	 	viii)	 	any other delay chargeable to a Tenant Party,
as provided for herein.

	b)	 	Substantial Completion will occur when all of the following have occurred: (i)
the Tenant Work has been performed in substantial compliance with the final
Construction Plans and the terms of this Work Letter (which shall be determined by
Landlord’s architect, which determination will conclusively bind all parties absent
manifest error), (ii) any permanent certificate of occupancy if one is required has
been issued or final building inspection approval by the City of Dallas, (iii) Landlord
shall have complied with the obligations set forth in the first two sentences of
Section 10 of this Work Letter, and (iv) all services to the Premises are
available and fully operational.
	 
	c)	 	Tenant’s sole and exclusive remedy for Landlord’s failure, regardless of cause,
to Substantially Complete the Tenant’s Work and the Landlord’s Work by the Delivery
Date (as defined in this Work Letter) and tender the Premises to Tenant by the Delivery
Date, or otherwise to make the Premises available, by the Delivery Date, will be the
accrual of one day of abatement of Base Rent for each day after the Delivery Date until
the date that Landlord is deemed to have tendered the Premises for Tenant’s occupancy
with the Landlord’s Work and the Tenant’s Work Substantially Complete. Each day of Base
Rent abatement that accrues under this Section 7(c) shall be applied to Base
Rent accruing on and after the Commencement Date. Landlord and Tenant hereby
acknowledge and agree that no Rent shall accrue under the Lease until the Commencement
Date.

	8.	 	Building Standard Materials. Building Standard construction materials
include:

	a)	 	Flooring: Grade and quality of carpeting to be selected by Landlord,
with color to be selected by Tenant from those offered by Landlord.
	 
	b)	 	Window Covering: Miniblinds in Landlord’s uniform color.
	 
	c)	 	Ceiling: Acoustical tiles — Grid system.
	 
	d)	 	Partitions: Sheetrock partitions with tape, bed, texture and paint
finish, and/or vinyl pre-clad sheetrock.
	 
	e)	 	Doors: Solid core door with metal frame and hardware.
	 
	f)	 	Electrical Outlets: Standard 110 volt duplex wall-mounted convenience
outlets.
	 
	g)	 	Light Switches: Single pole light switches.
	 
	h)	 	Telephone Facilities: Standard unwired telephone outlets (ring and
string) mounted on partitions. Tenant must make timely arrangements for telephone
installation and is responsible for all charges related to such installation.
	 
	i)	 	Light Fixtures: Recessed fluorescent lighting fixtures.
	 
	j)	 	OTHER. Sprinklers; exit signs; life safety devices required by code.

 

 

	9.	 	Commencement Letter. Landlord and Tenant will each sign and deliver
to the other a Commencement Letter on the form attached as Exhibit E
confirming the Commencement Date, the Expiration Date, the Rentable Area, and any other facts
or terms that may be affected by improvements to the Premises.

	10.	 	Walk-Through; Punch List. When Landlord considers the Tenant Work in
the Premises to be Substantially Completed, Landlord will notify Tenant in writing and within
three (3) Business Days thereafter, Landlord’s representative and Tenant’s representative
shall conduct a walk-through of the Premises and identify any necessary touch-up work, repairs
and minor completion items that are necessary for final completion of the Tenant Work.
Neither Landlord’s representative nor Tenant’s representative shall unreasonably withhold his
or her agreement on punch list items. Landlord shall use reasonable efforts to cause the
contractor performing the Tenant Work to complete all punch list items within thirty (30) days
after agreement thereon; however, Landlord shall not be obligated to engage overtime labor in
order to complete such items. If any item listed on the Punch List is not completed by the
later of (i) thirty days after receipt of written notice from Tenant to Landlord identifying
the incomplete item, and (ii) the date that is ninety (90) days after the date the Punch List
is approved by both Landlord’s and Tenant’s representatives, then Tenant may (without
obligation) complete such uncompleted items at Landlord’s sole cost and expense, such that
Landlord shall reimburse Tenant for the completion costs within thirty (30) days after receipt
of invoice and paid receipts from Tenant.

	11.	 	Contractor. Landlord shall provide Tenant with three (3) lump sum
construction bids, based on contracts that include customary warranty terms for work and
materials supplied pursuant to the contract. Tenant shall within three (3) Business Days
after of receipt of such bids provide notice to Landlord of the contractor that Tenant chooses
for the construction of the Tenant Work (“General Contractor”). The General
Contractor must agree to correct defects for one (1) year and agree that all warranties are
for the additional benefit of and are enforceable by Tenant.

	12.	 	LANDLORD’S WORK.

	 	(a)	 	Landlord, at its sole cost and expense (i.e., without any contribution from
Tenant or deduction from the Allowance), will (i) demolish all existing improvements in
the Premises in order that the Premises are in “shell condition” as described on
Schedule I to this Exhibit D and will use commercially reasonable
efforts to do so within 30 days following the date of Lease execution, (ii) perform all
“Base Building Work” described on Schedule I to this Exhibit D; and (iii) shall
perform all other work set forth in Schedule I within the applicable time
periods set forth therein.
	 
	 	(b)	 	Landlord shall cause the Tenant’s Work to be Substantially Complete and
Landlord will deliver possession of the Premises to Tenant, no later than ninety (90)
days after the Effective Date, and extended for each day of a Tenant Delays (the
“Delivery Date”). Landlord shall use commercially reasonable efforts to
complete, obtain a temporary certificate of occupancy for and provide Tenant with the
use of Tenant’s Data Room (as described in the Construction Plans) at least two weeks
prior to the Delivery Date. Notwithstanding any terms of the Lease to the contrary,
Tenant’s use of the Data Room prior to the Delivery Date and the Commencement Date (but
after delivery by Landlord) shall not relieve Landlord of any obligations under the
Lease, nor trigger any obligation of Tenant to pay Rent.

	 	 	Landlord and Tenant executed this Work Letter to be effective on the Effective Date.

 

 

	 	 	 	 	 	 	 	 	 

	TENANT:	 	LANDLORD:	 	 
	 
	 	 	 	 	 	 	 	 
	Archipelago Learning, LLC 	 	Gaedeke Holdings II, Ltd., 

by and through its Agent, Gaedeke Group, L.L.C.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ James B. Walburg
 

	 	By:
	 	/s/ Sabine Gaedeke Stener
 

	 	 
	 

	 	Name: James B. Walburg
	 	 	 	Sabine Gaedeke Stener	 	 
	 

	 	Title: EVP & CFO
	 	 	 	CEO	 	 

 

 

SCHEDULE 1 TO Exhibit D

Landlord Base Building Work 

Landlord’s scope of work includes a portion of the defined Premises, known as the former Bally
Health Club, on a portion of the 3rd floor as reflected on the cross-hatched area as
provided in the Schedule 1-A attached here, and on the 4th floors, of One
McKinney Plaza. Landlord’s Work will be completed and consistent in accordance with the
construction documents prepared by BOKA Powell dated 12/04/2009.

	 	1.	 	The term “Shell Condition” shall mean broom clean with all walls, doors and frames
demolished (except core walls, doors and frames); all plumbing capped, electrical removed
back to nearest junction box in plenum; removal and storage of HVAC grilles, diffusers,
removal of flexible ductwork back to rigid ductwork and placement of thermostats into
plenum; complete removal of suspended ceiling assembly (tile, grid, and hangers);
fluorescent fixtures stacked and the removal of all existing cabling. Return to building
attic stock or dispose of at building management discretion.
	 
	 	2.	 	Landlord work to deliver the Premises free of asbestos containing material and all other
hazardous materials.
	 
	 	3.	 	The HVAC system serving the Premises shall be tested and operable to Landlord’s
requirements.
	 
	 	4.	 	Building fire alarm pull boxes, annunciators, and smoke detectors for lease space will
be compliant with current local and national fire code.
	 
	 	5.	 	Tenant may use existing plumbing stacks as needed.
	 
	 	6.	 	Replacement of any damaged or cracked windows (exterior) as deemed necessary by
Landlord with mutual agreement with Tenant.
	 
	 	7.	 	Landlord will cause the Common Area restrooms on the 3rd floor and the restrooms on the
4th floor to conform in all material respects to applicable regulatory codes including ADA
and Texas Accessibility Standards (TAS) and shall renovate such restrooms to Building
Standard by installation of new Building Standard floor finishes, wall finishes, fixtures,
sink, faucets, etc.
	 
	 	8.	 	Landlord shall provide wall coverings and flooring for the Common Area on the
3rd floor in accordance with new Building Standard requirements of Landlord.
	 
	 	9.	 	Landlord’s Work shall include the provision and installation of Building Standard
miniblinds on all windows located in the Premises.

Additional Items:

	 	a.	 	Elevators. Landlord shall perform a complete mechanical modernization and
interior renovation of the Exclusive Elevators, which is similar to existing condition of
the Non-Exclusive Elevators, (except due to weight and timing limitation, Landlord shall
not be required to install stone in the Exclusive Elevators). The
Landlord may complete such work in a staged manner, and will have the first elevator available within one-hundred

 

 

	 	 	 	
sixty (160) days after the Effective Date, and the second elevator within one hundred ninety
(190) days after the Effective Date.
	 	b.	 	Limitations and Conditions. The work to be done by Landlord is limited to that
required by this Schedule I and will be completed in timely manner as time is of
the essence. All work not so classified as Landlord’s Work is Tenant’s Work. All material
for Landlord’s Work shall be Building Standard. All Landlord’s Work shall be completed at
Landlord’s sole cost and expense, without reimbursement from Tenant and without application
of any funds from the Allowance. Landlord shall obtain customary warranties for all
Landlord’s Work

 

 

SCHEDULE 1-A TO Landlord’s Base Work to EXHIBIT D

DIAGRAM OF BUILDING

 

 

Exhibit E

Commencement Letter

Date:

Archipelago Learning, LLC

3232 McKinney Ave.

Dallas, TX 75204

	Re:	 	Commencement Letter with respect to that certain Lease Agreement between Gaedeke Holdings
II, Ltd., as Landlord, and Archipelago Learning, LLC as Tenant, for                     
square feet of Rentable Area on floors Three and Four of the Building.

Dear       
                    
              

     Except for punch-list items identified pursuant to the Work Letter and except for latent
defects, Tenant accepts possession of the Premises in accordance with the terms of the Lease, and
Landlord and Tenant agree:

	 	1.	 	The Commencement Date of the Lease is                                    .
	 
	 	2.	 	The Expiration Date of the Lease is                                         .
	 
	 	3.	 	The Rentable Area of the Premises is                               .

          Please acknowledge Tenant’s acceptance of possession and its agreement to these terms by
signing all 3 copies of this Commencement Letter in the space provided and returning 2 fully
executed copies to me.

Sincerely,

	 	 	 	 	 
	Gaedeke Holdings II, Ltd., 

by and through its Agent

Gaedeke Group, L.L.C.

Sandra Plunk, Property Manager

AGREED AND ACCEPTED:

Archipelago Learning, LLC 

 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 

 

 

	 	 	 	 	 

Exhibit F

Moving Allowance

Within 30 days after Tenant submits to Landlord third-party invoices which reasonably detail the
moving services provided by such third parties, and the out-of-pocket costs paid and proof of
payment by Tenant, Landlord will reimburse Tenant up to One Dollar ($1.00) per rentable square foot
($37,218.00 total) (“Moving Allowance”) to offset the out-of-pocket costs incurred by
Tenant associated with moving, wiring, project management costs, and installation of
telecommunications wiring in the Premises. Tenant may also utilize the Moving Allowance to offset
signage costs.

 

 

Exhibit G

Janitorial Specifications

CLEANING INSTRUCTIONS

 

 

Exhibit H

Reconciliation Statement Form

RECONCILIATION FORM

 

 

Exhibit I

Unrestricted Use/Exceptions to Permitted Use Restrictions in the Project

DIAGRAM OF BUILDING

 

 

Exhibit J

Reserved Parking/Intentionally Omitted

[None]

 

 

Exhibit K

Non-Exclusive, Exclusive and Service Elevators

DIAGRAM OF BUILDING

 

 

Exhibit L

Required Removables

	•	 	Items on the Move-Out List

	•	 	all telecommunications cabling and hardware installed in or on any part of the
Building or Premises by or pursuant to the direction of Tenant. Additionally, Tenant must
also remove all security devices installed in Premises and the exclusive elevators by or
pursuant to the direction of Tenant upon vacating same.

	•	 	Tenant’s signage

 

 

EXHIBIT M

Guaranty Agreement

To induce Landlord to enter into the Lease, Archipelago Learning, Inc. (Guarantor)
irrevocably and unconditionally guarantees the full and prompt payment and performance of the
obligations of ARCHIPELAGO LEARNING, LLC.  (Tenant) under its Lease Agreement (Lease)
with Gaedeke Holdings II, Ltd. (Landlord).

NOW, THEREFORE, in consideration of Landlord’s execution of the Lease, and other good and valuable
consideration,

	1.	 	The undersigned unconditionally, absolutely and to the same extent as if the undersigned
had signed the Lease as Tenant, assumes all liabilities, obligations of Tenant accruing under
the Lease, and guarantees to Landlord , its successors, and assigns the full, prompt and
complete payment and performance of each and every term, covenant, condition, and provision of
the Lease to be kept or performed by Tenant, its successors, or assigns (including, without
limitation, payment and performance all Rent, damages, indemnities, and any other obligations
accruing thereunder or arising from the nonperformance thereof.
	 
	2.	 	The undersigned’s liability under this Guaranty will be unconditional and primary, and
Landlord will be entitled proceed against the undersigned solely, against the undersigned and
any other person or entity jointly, without regard to Tenant’s ability to perform and without
first commencing any action, exhausting any remedy, obtaining any judgment, or proceeding in
any way against Tenant or any other person or entity; and Landlord may bring against the
undersigned to enforce any liability, duty, or obligation guaranteed without joining Tenant or
any other person or entity.
	 
	3.	 	Until Tenant and Tenant’s successors or assigns have fully discharged all of their
obligations under the Lease, and any renewals, extensions, amendments, or modifications
thereof, this Guaranty will continue.
	 
	4.	 	Until all the covenants and conditions in the Lease to be performed and observed by Tenant or
Tenant’s successors or assigns are fully performed and observed, the undersigned:

	 	(a)	 	will have no right of subrogation or any other right to enforce any remedy against
Tenant, its successors, or assigns because of the undersigned’s payment or performance
thereof; and
	 
	 	(b)	 	subordinates any liability or indebtedness of Tenant or Tenant’s successors or
assigns now or hereafter held by the undersigned to all obligations of Tenant or
Tenant’s successors or assigns to Landlord under the Lease.

	5.	 	The undersigned’s obligations under the terms of this Guaranty will not be released,
diminished, impaired, reduced, or affected by any limitation of liability or recourse under
the Lease or by the occurrence of any one or more of the following events:

	 	(a)	 	taking or accepting any other security for or guaranty of the Lease;

 

 

	 	(b)	 	releasing, surrendering, exchanging, subordinating, or losing any security for the
Lease;
	 
	 	(c)	 	the death, insolvency, bankruptcy, disability, dissolution, termination,
receivership, reorganization, or lack of corporate, partnership or other power of
Tenant, the undersigned, or any party at any time liable for payment or performance of
the Lease;
	 
	 	(d)	 	any assignment or sublease of Tenant’s interest in the whether or not permitted
by the Lease or by Landlord;
	 
	 	(e)	 	amending, renewing, extending, modifying, or rearranging any term of payment or
performance under the Lease with or without notice to, or consent of, the undersigned,
or any adjustment, indulgence, forbearance, or compromise that Landlord may grant
Tenant or any other party now or hereafter liable for payment or performance of the
Lease;
	 
	 	(f)	 	Landlord’s neglect, delay, omission, failure, or refusal to take or prosecute any
action to collect or enforce the Lease;
	 
	 	(g)	 	Landlord’s failure to notify the undersigned of any renewal, extension,
rearrangement, modification, or assignment of the Lease, any subletting of any part of
the Premises, any release or substitution of any security, any other act taken or not
taken by Landlord, or any new agreement between Landlord and Tenant, it being
understood that Landlord will not be required to give the undersigned any notice of any
kind under any circumstances with respect to or in connection with the Lease;
	 
	 	(h)	 	the unenforceability of all or any part of the Lease, it being agreed that the
undersigned will remain liable under this Guaranty regardless of Tenant’s or any other
person’s liability under the Lease.
	 
	 	(i)	 	any payment that constitutes a preference under applicable bankruptcy laws or that
Landlord is required refund.

	6.	 	If any claim is brought to enforce or collect this Guaranty, the undersigned will pay
reasonable attorneys’ fees and all other expenses and court costs incurred by Landlord in
connection therewith.
	 
	7.	 	This Guaranty will be binding upon the undersigned’s heirs, legal representatives,
successors, and assigns, and it will inure to the benefit of Landlord’s heirs, legal
representatives, successors, and assigns.
	 
	8.	 	The undersigned represents that the undersigned is the owner of a direct or indirect interest
in Tenant and that the undersigned will receive a direct or indirect benefit from the Lease.
	 
	9.	 	The undersigned’s obligations and those of any other guarantor or surety of the Lease will be
joint and several. The undersigned agrees that Landlord, in its discretion, may

 

 

	 	 	(a) bring suit against the undersigned and any other guarantor or surety of the Lease
jointly and severally or against any one or more of them, (b) compound or settle with any or
more of the guarantors or sureties of the Lease for such consideration as Landlord may deem
proper, (c) release one or more of the guarantors or sureties of the Lease from liability
thereunder; and (d) otherwise deal with any one or more of them, in any manner whatsoever,
and that no such action shall impair the rights of Landlord to collect under this Guaranty.
	 
	10.	 	This Guaranty and all rights, obligations and liabilities arising hereunder will be construed
according to the laws of the State of Texas. The undersigned agrees that this Guaranty is
performable in Dallas County and waives the right to be sued elsewhere.

IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the 23rd day of April, 2010.

GUARANTOR:

	 	 	 	 	 	 	 	 	 	 	 

	Address:	 	 	 	 	 	 	 	 
	 	 	3400 Carlisle St,
Suite 345 

	 	 	 	ARCHIPELAGO
LEARNING, INC.	 	 
	 

	 	Dallas, TX 75204
 

	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	By:
	/s/ Tim McEwen
 

	 	 
	Tel No.

	 	(800) 419-3191
	 	 	 	 
	Name: 	 Tim McEwen
 

	 	 
	Fax No.

	 	(866) 515-9145
	 	 	 	 
	Title: 	CEO	 	 
	Date:

	 	April 23, 2010
 

	 	 	 	 	 	April 23, 2010
 

	 	 

 

 

Rider 1

Renewal Option

	1.	 	Provided Tenant is not in Default (and such Default remains uncured) and is
occupying a portion of the Premises at the time of such election, Tenant shall have the
right, at Tenant’s option, to extend the Term of this Lease for up to two (2)
additional period (as to each option) of five (5) years (each five year period being an
“Extension Period”) on the same terms provided in this Lease (except as set
forth below) (each option being an “Extension Option”). Such Extension Option
shall be exercised by Tenant delivering an irrevocable and unconditional written notice
of the exercise of such Extension Option to Landlord not later than the later of: (i)
nine (9) months before the expiration of the initial Term; and (ii) fifteen (15) days
after the date that a Market Rate has been approved by the parties pursuant to
Paragraph 3, or has been determined pursuant to Paragraph 3(e).
	 
	2.	 	If Tenant properly and timely exercises the Extension Option, Landlord and
Tenant shall execute an amendment to this Lease extending the Term on the same terms
provided in this Lease, except that:

	 	(a)	 	The Base Rent payable during the Extension Period shall be at
100% of the then current market rate (“Market Rate”) for similar
renewal transactions, determined as provided below, taking into account such
factors as the quality, size, utility, and location of the Premises, the length
of the extension, and the credit standing of Tenant and all other relevant
factors (the Market Rate shall be determined as provided in Paragraph 3 below)
	 
	 	(b)	 	Other than the two Extension Options created hereby, Tenant
shall have no further renewal options unless expressly granted by Landlord in
writing; and
	 
	 	(c)	 	Landlord shall lease the Premises to Tenant in their
then-current condition, and Landlord shall not provide to Tenant any allowances
(moving allowance, construction allowance, and the like) or other tenant
inducements.

	3.	 	The procedures set forth in this Paragraph 3 shall be used to determine the
Market Rate for the Extension Period.

	 	(a)	 	If Tenant desires to exercise the Extension Option to extend
the Term, Tenant must, not less than thirteen (13) months prior to the
expiration of the original Term request in writing that Landlord advise Tenant,
in writing, of the rate that Landlord believes to be the “Market Rate”
applicable to the Extension Period (“Landlord’s Quoted Rate”). Any
such request by Tenant shall not be deemed an exercise of the Extension

 

 

	 	 	 	Option. Landlord shall then provide notice of Landlord’s Quoted Rate to
Tenant, in writing, within thirty (30) days after such request; provided,
however, that Landlord shall not be obligated to provide Landlord’s Quoted
Rate more than twelve (12) months before the end of the Term.
	 	 	 	 
	 	(b)	 	Within ten (10) days of receiving Landlord’s Quoted Rate,
Tenant shall, in writing, either (i) advise Landlord that Tenant
accepts the Landlord’s Quoted Rate as the Market Rate for the Extension Period
(in which event no further proceedings under this Paragraph 3 shall be required
and the Base Rent rate for the Extension Period shall be 95% of such Landlord’s
Quoted Rate if Tenant ultimately exercises the Extension Option), or
(ii) object to Landlord’s Quoted Rate and request that the Market Rate for the
Extension Period be established pursuant to the further procedures hereinafter
stated in this Paragraph 3. If Tenant objects to the Landlord’s Quoted Rate,
Tenant shall also simultaneously notify Landlord in writing of the rate
(“Tenant’s Requested Rate”) that Tenant believes should be the Market
Rate for the Extension Period. If Tenant does timely notify Landlord of its
objection to Landlord’s Quoted Rate and simultaneously provides Tenant’s
Requested Rate, such notice shall not be deemed an exercise by Tenant of the
Extension Option.
	 
	 	(c)	 	Within ten (10) days after receipt of Tenant’s Requested Rate
as aforesaid, Landlord shall, in writing, either (i) notify Tenant that
Landlord accepts the Tenant’s Requested Rate as the Market Rate for the
Extension Period (in which event no further proceedings under this Paragraph 3
shall be required and the Base Rent rate for the Extension Period shall be 95%
of such Tenant’s Requested Rate if Tenant ultimately exercises the Extension
Option), or (ii) notify Tenant that Landlord does not accept the
Tenant’s Requested Rate.
	 
	 	(d)	 	Within ten (10) days after receipt of Landlord’s notification
as provided above, Tenant shall, in writing, either (i) notify Landlord
that Tenant accepts the Landlord’s Quoted Rate as the Market Rate for the
Extension Period (in which event no further proceedings under this Paragraph 3
shall be required and the Base Rent rate for the Extension Period shall be 95%
of such Landlord’s Quoted Rate if Tenant ultimately exercises the Extension
Option), or (ii) notify Landlord that Tenant requires that the actual
Market Rate for the Extension Period be determined by appraisal as provided
herein.
	 
	 	(e)	 	If the foregoing procedures have not resulted in an agreement
by the parties as to the Market Rate for the Extension Period, then the Market
Rate shall be determined by appraisal as follows; provided that at any time
during the process the parties may agree upon the Market Rate and cease any
further appraisal proceedings. Within fifteen (15) days of Tenant notifying
Landlord that the Market Rate for the Extension Period be determined by
appraisal as provided in subparagraph (d) (ii) above, Tenant

 

 

	 	 	 	and Landlord shall each designate an appraiser. Within ten (10) days after
the aforesaid 15-day period, each of the two appraisers shall determine the
rate that such appraiser believes should be the Market Rate for the
Extension Period. If the difference between the higher of the two quoted
Market Rates and the lower is less than 10% of the lower quoted Market Rate,
then the Market Rate shall be the average of the two rates. If such
difference is more than 10%, then the two appraisers in question shall then
designate a third appraiser within ten (10) days after the date on which the
latter of the two appraisers has determined what it believes the Market Rate
should be for the Extension Term. Within ten (10) days of being appointed
as an appraiser, the third appraiser shall determine what it believes the
Market Rate should be for the Extension Term and the Market Rate shall be
the average of those two rates (out of the three rates determined by the
three appraisers) that are closest to each other (or, if the higher and
lower rates are equally more (and less) than the middle rate, then the
Market Rate shall be the average of all three rates). The Base Rent for the
Extension Period shall then be 95% of the Market Rate determined pursuant to
this subparagraph 3(e) if Tenant ultimately exercises the Extension Option.
	 	 	 	 
	 	(f)	 	Each appraiser designated by any person in accordance with this
Paragraph 3 shall be a disinterested person having at least ten (10) years
continuous experience in the Downtown/Uptown area of Dallas, Texas office
leasing market and shall be a member of the American Institute of Real Estate
Appraisers or similar professional organization. Each party shall bear the
cost of its own designated appraiser and each party shall bear one-half of the
cost of the third appraiser.

	4.	 	Tenant’s rights under this Rider shall terminate if (a) this Lease or Tenant’s
right to possession of the Premises is terminated, (b) Tenant transfers any of its
interest in this Lease or sublets any portion of the Premises other than an Approved
Transfer or a Permitted Transfer, or (c) Tenant fails to timely exercise its option
under this Rider, time being of the essence with respect to Tenant’s exercise thereof.

 

 

Rider 2

Termination Option

     Provided Tenant is not in Default of this Lease Agreement and such default remains
uncured on the date that the Termination Option (defined below) is exercised, and Tenant has not
assigned or sublet or transferred the Premises except pursuant to a Permitted Transfer, then Tenant
shall have the one-time right to terminate this Lease as to the entire Premises
(“Termination Option”), effective on the last day of Sixtieth (60th)
Lease Month (the “Termination Date”), as provided for herein. Tenant must
give Landlord not more than twelve (12) months, and not less than six (6) months, prior written
notice of its intent to exercise of the Termination Option, and such notice shall included the
payment of the “Termination Fee,” as hereinafter defined.

     If Tenant fails to give notice of exercise of the Termination Option on or prior to the
required notice date, or fails to timely pay the Termination Fee to Landlord when due (and such
failure continues for ten (10) days after Tenant’s receipt of written notice from Landlord
identifying such failure), then Tenant’s Termination Option shall be deemed waived and of no
further force and effect.

     “Termination Fee” shall be an amount equal to $790,091.00.

 

 

RIDER 3

Right of First Refusal

     Provided Tenant Event of Default does not exist under the Lease that remains uncured and
provided that Tenant is in occupancy of the Premises and has not assigned nor sublet it except for
any Permitted Transfer, Tenant shall have the one-time right, subject to the terms and
conditions set forth below, to lease that certain space located on the 7th floor, and
totaling 22,211 rentable square feet as described on Schedule 1 to Rider 3 attached hereto
and labeled “Right of First Refusal Space” (herein so called) before it is leased to any
other party, but subject to the current encumbrances as reflected on Schedule 1 to Rider 3.

     In the event any third party (except for a third party exercising a right to the Right of
First Refusal Space that is set forth on Schedule 1 to this Rider 3), expresses interest in
leasing all or any portion of the Right of First Refusal Space during the Lease Term (“Third
Party Interest”), Landlord shall offer the entire portions of such Right of First Refusal Space
to Tenant upon the same terms, covenants and conditions as provided in the Lease for the original
Premises, except that:

	 	a.	 	Commencement Date. The commencement date for the Lease for the Right of
First Refusal Space (the “Refusal Space Commencement Date”) shall be the day the Right
of First Refusal Space is delivered to the Tenant broom clean, free of tenant or other
occupants, and in its then “As-Is” condition;
	 
	 	b.	 	The Premises. As of the Refusal Space Commencement Date, the Right of
First Refusal Space shall be deemed to be part of the Premises;
	 
	 	c.	 	Pro Rata Share. As of the Refusal Space Commencement Date, Tenant’s
Pro Rata Share shall be increased to an amount computed by dividing the amount deemed
by Landlord to be the total of the rentable square footage of the Premises, including
all Right of First Refusal Space leased by Tenant, by the amount deemed by Landlord to
be the rentable square footage of the Building, and expressing the fractions as a
percentage;
	 
	 	d.	 	Rent. As of the Refusal Space Commencement Date, the Base Rent shall
be increased to an amount, determined as follows:

	 	i.	 	Expansion within 24 months If the Right of First
Refusal Space is deemed part of the Premises, within 24 months of the
Commencement Date of the initial Term, then as of the Refusal Space
Commencement Date, the Base Rent shall be increased to an amount computed by
multiplying the square foot rental rate that is payable by Tenant under the
Lease with respect to the Premises for the month immediately preceding the
month in which the Landlord sends the Right of Refusal Notice by the number of
rentable square feet deemed by Landlord to be contained in the Right of First
Refusal Space taken by Tenant; and Tenant shall be entitled to a prorated
Allowance as provided in Exhibit D of the Lease; with such Allowance to
be prorated for the balance of the initial Term.
	 
	 	ii.	 	Expansion past 24 months. If the Right of First
Refusal Space is deemed part of the Premises after the initial 24 Lease Months
from the Commencement Date, then as of the Refusal Space Commencement Date, the
Base Rent shall be increased to an amount computed by multiplying the Market
Rate (as defined or determined in

 

 

	 	 	 	accordance with Rider 1 to the Lease) per square foot at the time it becomes
available by the number of rentable square feet contained in the Right of First
Refusal Space taken by Tenant.

	 	e.	 	Cancel Lease Clauses. No abatements, allowances or other concessions
or tenant inducements (if any) provide for in the Lease (e.g., moving allowance,
construction allowance and the like) shall apply to the Right of First Refusal Space,
except as provided in subsection (d) (A) above. Tenants parking ratio for any Right of
First Refusal Space shall be at the Building Standard ratio of 1/333 rentable sq. feet
and at the Building Standard parking rates.
	 
	 	f.	 	Confirming Lease Amendment. Within 30 days after the Refusal Space
Commencement Date, Landlord and Tenant shall confirm the following in a written
amendment to the Lease: (A) the Refusal Space Commence Date, (B) the location and size
of the Right of First Refusal Space leased by Tenant, (C) the new Base Rent, and (D)
Tenant’s increased Tenant’s Pro Rata Share.

     Tenant shall have five (5) days after receipt of the offer to lease the Right of
First Refusal Space to accept such offer by providing Landlord with written notice of such
election. If Tenant notifies Landlord in writing of the acceptance of such offer, then Landlord and
Tenant shall promptly enter into a written agreement modifying and supplementing the Lease and
specifying that such Right of First Refusal Space accepted by Tenant is a part of the Premises
demised pursuant to the Lease for the remainder of the Lease Term and any renewal thereof, if
applicable and containing other appropriate terms and conditions relating to the addition of the
Right of First Refusal Space to this Lease (including specifically any increase or adjustment of
the rent as a result of such addition). In the event that Tenant does not notify Landlord in
writing of its acceptance of such offer in such five (5) day period, then Tenant’s rights
under this paragraph with respect to the Right of First Refusal Space shall terminate and Landlord
shall thereafter be able to lease the Right of First Refusal Space or any portion thereof to a
third party and Tenant shall have no further rights to the space; provided, however, if said third
party does not execute a lease agreement with Landlord, then Tenant’s Right of First Refusal shall
be reinstated until another third party provides Landlord with a bona fide offer to Lease.

     Any termination of the Lease shall terminate all rights of Tenant with respect to the Right of
First Refusal Space. The rights of Tenant with respect to the Right of First Refusal Space shall
not be severable from the Lease, nor may such rights be assigned or otherwise conveyed in
connection with any assignment of the Lease except for a Permitted Transfer (in which case the
rights will be conveyed to the transferee). Landlord’s consent to any assignment of the Lease
shall not be construed as allowing an assignment or a conveyance of such rights to any assignee.

 

 

RIGHT OF FIRST REFUSAL SPACE -SCHEDULE 1 TO RIDER 3

DIAGRAM OF BUILDING

 

 

RIDER 4

Signage

	1.	 	Tenant, at Tenant’s sole cost, shall have the right to an exterior signage panel on the
new lit monument sign to be located on McKinney Avenue, in the general locations depicted
on Schedule 1, to Rider 4,  attached hereto. All signage materials, final
location, size and lettering must be approved in writing in advance by Landlord (which
consent shall not be unreasonably withheld, conditioned or delayed) and must be in
compliance with Building Standard. Sign installation and maintenance shall be at Tenant’s
sole risk, cost and expense. Tenant shall remove the sign, repair damage, if any, within
fifteen (15) days following termination of this Lease.
	 
	2.	 	Tenant, at its sole risk, cost and expense, shall have the right to install exterior
electrical or non-electrical signage bearing Tenant’s name and logo on the wall next to the
garage entry on Hall Street on the planter box façade (in the general locations depicted on
Schedule 2, to Rider 4, attached hereto, the “Wall Sign Location”) and using
designs approved by Landlord, and upon installation, Tenant will have the obligation, at
Tenant’s sole risk, cost, and expense to repair, maintain, and operate (including supplying
and paying for submetered electricity for such signage). Tenant will obtain any necessary
governmental approvals for such signage, and Tenant warrants that any such signage will
comply with all applicable laws, regulations, ordinances, and orders of any governmental
authority having jurisdiction. Before installing any sign, Tenant must submit its plans
and specifications to Landlord and receive Landlord’s advance written approval.
	 
	3.	 	Within fifteen (15) days following the expiration or termination of this lease, Tenant,
at its sole risk, cost and expense, must remove all exterior signage and make any repairs
necessary to restore the Building to substantially the condition it was in at the time the
signage was installed, and Tenant, at its sole risk, cost and expense, will repair any
damage to the Building caused by the installation, repair, maintenance, operation, or
existence of any such signage.

 

 

SCHEDULE 1 TO RIDER 4

Monument Sign

PICTURE OF SIGNAGE

 

 

SCHEDULE 2 TO RIDER 4

Wall Sign Location

DIAGRAM OF BUILDINGExhibit 10.1

Exhibit 10.1

PROMISSORY NOTE

					
	 	 	 	 	 
	$350,000.00
	 	 
	 	April 9, 2010

FOR VALUE RECEIVED, the undersigned, Here Media Inc., a Delaware corporation, with the principal
place of business at 10990 Wilshire Blvd., Penthouse, Los Angeles, CA 90024 (“Maker”), promises to
pay to the order of Stephen Jarchow, an individual, who has a place of business at 8411 Preston
Road Suite 650 Dallas, TX 75225 (“Lender”), the principal sum of THREE-HUNDRED FIFTY THOUSAND
DOLLARS ($350,000), together with all accrued interest on the unpaid principal balance hereof as
set forth herein. All payments under this Promissory Note (this “Note”) are payable at the address
of Lender, or such other place as the holder hereof may reasonably direct, in lawful money of the
United States of America.

Interest accrues on the outstanding principal balance under this Note at the rate of ten
percent (10%) per annum from the date hereof, and is payable monthly as indicated on the attached
Schedule until the principal under this Note is paid in full.

Principal and interest shall be paid in monthly installments according to the attached
Schedule (“Amortization Information”). The first monthly installment is due and payable on the
third day of May, 2010, and on the first business day of each succeeding month thereafter until
fully paid.

This Note may be prepaid in whole or in part without penalty or premium, at any time from the
date of this Note until this Note is payable in full. Any payment on this Note, whether a
prepayment or otherwise, is to be applied first against fees or charges due hereunder, then against
interest and then against the principal of this Note in inverse order of maturity. No partial
prepayment on this Note excuses any future payments of interest or principal as long as any such
amounts remain unpaid.

The holder of this Note has the right to accelerate this Note and declare all outstanding and
unpaid principal and interest immediately due and payable upon the failure of Maker to make any
payment due hereunder after the same becomes due and payable after the holder of this Note has
given Maker five (5) business days notice to cure any default hereunder. Notwithstanding the
above, if a bankruptcy, liquidation, dissolution or similar proceeding is instituted by or against
Maker under any bankruptcy, insolvency or similar law now or hereafter in effect, and in the case
of any such institution against Maker, the same is not dismissed within 30 days, all outstanding
and unpaid principal and interest under this Note becomes immediately due and payable without any
action on the part of Lender or the holder hereof.

This Note and the rights and obligations of Maker and the holder hereof are to be governed by
and construed and interpreted in accordance with the laws of the State of California applicable to
contracts made and to be performed wholly within California, without regard to choice or conflict
of laws rules.

All provisions of this Note are binding upon and are enforceable by or against Maker and its
heirs, executors, administrators or other legal representatives and successors and assigns.

The holder of this Note is not required to renew, extend or refinance this Note or any amounts
due under this Note.

The debt represented by this Note is a business loan.

	 	 	 	 	 
	 	 	 
	 	By:  	                           /s/ TONY SHYNGLE
 	 
	 	 	Tony Shyngle, CFO 	 
	 	 	Here Media Inc. 	 

 

 

 

Schedule

Amortization Information

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Interest Rate:
	 	 	10.0	%	 	Number of Years:	 	 	0	 
	 
	Amount of Loan:
	 	$	350,000.00	 	 	Number of Months:	 	 	3	 
	 
	Amount of Payment:
	 	varies according to 
installment	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Installment	 	Principle	 	 	Interest	 	 	Payment	 	 	Loan Balance	 
	1 (May 3, 2010)
	 	$	75,000.00	 	 	$	2,876.71	 	 	$	77,876.71	 	 	$	272,123.29	 
	2 (June 1, 2010)
	 	$	75,000.00	 	 	$	2,260.27	 	 	$	77,260.27	 	 	$	194,863.02	 
	3 (July 1, 2010)
	 	$	200,000.00	 	 	$	1,443.84	 	 	$	201,643.84	 	 	$	0.00	 

Notwithstanding the foregoing Amortization Information, when and as Maker receives funds from the
following advertising deals, Maker will pay such funds directly to Holder’s bank account as
directed by Holder until payment is satisfied in full:

	1.	 	Wells Fargo Bank, N.A. / “Money Minute” advertising

	 
	2.	 	2010 AT&T Mobility Retail Youth Full Year Plan / “Team Out” advertising

	 
	3.	 	Digitas, Inc. (d/b/a/ Digitas Health) for AstraZeneca / “Ask the doctor” advertising

Amortization Summary

	 	 	 	 	 
	Total Interest:
	 	$	6,780.82	 
	 
	Amount of Loan:
	 	$	350,000.00	 
	 
	Total Loan Cost:
	 	$	356,780.82

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