Document:

Exhibit 10.6

 

Service Agreement

 

This Service Agreement is made by and between Mosaic Nutraceuticals,
having principal offices at Suite 200, 4100 Spring Valley Road, Dallas,
Texas, 75244, hereinafter Mosaic and BJC Marketing, having principal offices at
3625 W. Teco Street 2 Las Vegas Nevada 89008 hereinafter BJC, effective the
date last entered below.

 

Witnesseth

 

BJC is a
provider of service fulfillment, and;

BJC is
desirous of providing said service fulfillment services to Mosaic, and;

BJC warrants
that it is fully capable of fully satisfying the service fulfillment
requirements of Mosaic as hereinafter fully defined in Annex A, and;

Mosaic is
desirous of utilizing the experience and expertise of BJC in regards to its
Service Fulfillment;

 

Now, therefore, in consideration of the mutual covenants, conditions
and specifications herein pertaining, the parties agree as follows.

 

Services By BJC

 

1.             BJC
will provide the following services to and for Mosaic. Such services may be
amended, curtailed or expanded throughout the period of this agreement as
required by Mosaic.

A.    Inventory
receipt, BJC shall receive and enter into inventory the product[s] from the
manufacturer.

B.    Inventory
Control. BJC shall maintain real-time records and relate same to Mosaic on daily
basis on all inventoried items.

C.    BJC
shall receive, by internet email or other means as may be determined and
directed by Mosaic, orders from and by the end-users of Mosaic products.

D.    BJC
shall fulfill the received orders within 48 hours of receipt. Fulfillment shall
be considered complete when the Mosaic determined shipping company has provided
BJC with the shipping tracking number[s]. Said shipping tracking numbers and
the relevant ship to addresses shall be forwarded to Mosaic as they may direct
with twenty-four [24] hours of the order being filled.

E.     BJC
shall advise Mosaic in a timely manner of all issues relevant to the sustained
fulfillment of product orders. Adequate lead times will be defined as possible
to ensure that an orderly flow of product[s] is ensured.

F.     BJC
will advise Mosaic by internet email or other means as may be defined and
directed by Mosaic of the status of the order and stock backlog. This shall
include, but is not necessarily limited to the number of

 

1

 

order pending, the amount of product to be
covered in the fulfillment of the pending orders, the projected duration of
current stock in light of projected orders. Exact definitions of the stock and
order backlog reports will be the subject of weekly telephonic conferences by
and between BJC and Mosaic.

 

BJC shall invoice and Mosaic agrees to pay
the following amount for said services based on the following scale.

 

Order Received/Fulfilled per Month

 

	
  1 to 999

  	
   

  	
  $

  	
  2.95

  	
   

  	
  per order

  
	
  1,000 to
  9,999

  	
   

  	
  $

  	
  2.80

  	
   

  	
  per order

  
	
  Greater than
  10,000

  	
   

  	
  $

  	
  2.65

  	
   

  	
  per order

  
	
   

  	
   

  	
  plus shipping cost

  
							

 

Said invoices shall be submitted to Mosaic
electronically not later than the close of business of 3rd day of
the post period month.

 

2.        Mosaic
shall provide the following

 

1.             Relevant
computer and computer related equipment and hardware necessary for the
processing of orders and inventory control.

2.             Relevant
software for operation on the above noted equipment necessary for order
processing and inventory control.

3.             Mosaic
shall direct the internet orders, and others as may be applicable, to BJC for
the noted processing and control.

4.             Mosaic
shall review all relevant and pertinent data and provide payment to BJC for
services rendered within ninety-six [96] hours of receipt of invoice.

5.             Mosaic
reserves the right to hold amounts judged to be in dispute for a period of not
less than ten [10] days and not more than thirty [30] days. Mosaic will use all
efforts to ensure prompt resolution of any dispute.

 

3.        Term

This agreement shall remain in full force and
control for one [1] year full from the date last written below or until such
time as either parties, by written agreement given fully thirty days in advance
of such termination, do terminate said agreement.

 

4.        Proprietary
Information

Each party agrees to hold confidential any
and all information that may come into its possession in regards to the
operations, customers, suppliers, etc of the other. BJC further warrants and
covenants that it will not archive, retain, copy or in any other manner retain
information in regards to any of Mosaics customers or

 

2

 

suppliers. BJC will ensure that this
non-archival policy is fully understood and adhered to by all personnel retained
of and/or by BJC.

 

5.        Governing
Authority

This agreement shall be deemed to have been
entered into and executed in the State of Texas and shall be construed,
performed and enforced in all respects in accordance with the laws of the state
of Texas, including applicable provisions of the Uniform Commercial Code
adopted by that state.

 

6.        Severability

If any provision of this Agreement or
application thereof to any party of circumstance shall, to any extent, now or
hereinafter be or become invalid or unenforceable, the remainder of this
Agreement shall be valid and remain fully in force for the duration of the term
of this Agreement.

 

7.        Authorization

The parties hereto pertaining do hereby
represent and warrant that they are fully authorized to execute this agreement
and any schedules, attachments, annexes, exhibits and amendments hereto.

 

8.        Whole
Agreement

This document and its referenced annexes,
addenda, etc, represent the whole and entire agreement by and between the
parties hereto. All other agreements heretofore in effect are herewith and
fully cancelled and made null and void with the completion of this agreement.

 

This agreement shall not be modified, amended
or re-structured in any manner unless and until such modifications, amendments
and or-re-structuring in completed in writing and duly signed by both parties.

 

IN WITNESS WHEREOF, the parties hereto, by their respective authorized
officers have caused their corporate names to be subscribed on the date[s]
noted below.

 

 

	
  Mosaic Nutraceuticals

  	
  BJC Marketing

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Charles Townsend

  	
   

  	
  /s/ Brian J. Crane

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By 

  	
  Charles Townsend

  	
   

  	
  By 

  	
  Brian J. Crane

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title 

  	
  President

  	
   

  	
  Title 

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date 

  	
  6-23-05

  	
   

  	
  Date 

  	
  6-23-05

  	
   

  
							

 

3Exhibit 10.7

 

OFFICE LEASE AGREEMENT

 

between

 

PHL-OPCO, LP,  

as Landlord

 

and

 

Mosaic Nutraceuticals Corp.,

as Tenant

 

Comerica Bank Building

Farmers Branch, Texas

(6018)

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  DEFINITIONS

  	
   

  
	
  2.

  	
  GRANT OF
  LEASE

  	
   

  
	
  3.

  	
  RENT

  	
   

  
	
  4.

  	
  USE
  AND OCCUPANCY

  	
   

  
	
  5.

  	
  SERVICES AND UTILITIES

  	
   

  
	
  6.

  	
  REPAIRS

  	
   

  
	
  7.

  	
  ALTERATIONS

  	
   

  
	
  8.

  	
  LIENS

  	
   

  
	
  9.

  	
  INSURANCE

  	
   

  
	
  10.

  	
  DAMAGE
  OR DESTRUCTION

  	
   

  
	
  11.

  	
  WAIVERS AND INDEMNITIES

  	
   

  
	
  12.

  	
  CONDEMNATION

  	
   

  
	
  13.

  	
  ASSIGNMENT AND SUBLETTING

  	
   

  
	
  14.

  	
  PERSONAL
  PROPERTY

  	
   

  
	
  15.

  	
  END OF TERM

  	
   

  
	
  16.

  	
  ESTOPPEL CERTIFICATES

  	
   

  
	
  17.

  	
  TRANSFERS OF LANDLORD’S
  INTEREST

  	
   

  
	
  18.

  	
  RULES
  AND REGULATIONS

  	
   

  
	
  19.

  	
  PARKING

  	
   

  
	
  20.

  	
  TENANT’S
  DEFAULT AND LANDLORD’S REMEDIES

  	
   

  
	
  21.

  	
  LANDLORD’S
  DEFAULT AND TENANT’S REMEDIES

  	
   

  
	
  22.

  	
  SECURITY
  DEPOSIT

  	
   

  
	
  23.

  	
  BROKERS

  	
   

  
	
  24.

  	
  LIMITATIONS ON
  LANDLORD’S LIABILITY

  	
   

  
	
  25.

  	
  NOTICES

  	
   

  
	
  26.

  	
  MISCELLANEOUS

  	
   

  

 

 

	
  Exhibit A

  	
  Plan Delineating the Premises

  	
   

  
	
  Exhibit B

  	
  Possession and Leasehold Improvements

  	
   

  
	
  Exhibit C

  	
  Occupancy Estoppel Certificate

  	
   

  
	
  Exhibit D

  	
  Rules and Regulations

  	
   

  

 

i

 

OFFICE
LEASE AGREEMENT

COMERICA BANK BUILDING

FARMERS BRANCH, TEXAS

(6018)

 

THIS
OFFICE LEASE AGREEMENT (“Lease”) is entered into as of the Date, and by and between
the Landlord and Tenant, identified in Section 1.1 below.

 

1.                                      DEFINITIONS

 

1.1                               Basic Lease Definitions.  In
this Lease, the following defined terms have the meanings indicated:

 

(a)                                  “Date” means May 5,
2005.

 

(b)                                 “Landlord” means PHL-OPCO, LP, a Delaware
limited partnership.

 

(c)                                  “Tenant” means Mosaic
Nutraceuticals Corp., a Nevada corporation.

 

(d)                                 “Premises” means those premises known as Suite 200 located on the second floor
of the Building and identified on Exhibit A, which contains
approximately 2,889 square
feet.  The Premises do not include any
areas above the finished ceiling or below the finished floor covering installed
in the Premises or any other areas not shown on Exhibit A as being
part of the Premises.  Landlord reserves,
for Landlord’s exclusive use, any of the following (other than those installed
for Tenant’s exclusive use) that may be located in the Premises; janitor
closets, stairways and stairwells; fan, mechanical, electrical, telephone and
similar rooms; and elevator, pipe and other vertical shafts, flues and ducts.

 

(e)                                  “Building” means the land located at the
following address, and the office building, parking facilities and other improvements
constructed on such land and having the following name and address:

 

Comerica
Bank Building 

4100
Spring Valley Road 

Farmers
Branch, TX 75244

 

(f)                                    “Use” means general office use only.

 

(g)                                 “Term” means the duration of this Lease, which
will be approximately 60 months,
beginning on the date determined pursuant to Exhibit B
(the “Commencement Date”) and ending on the last day of the 60th
month thereafter (the “Expiration Date”) (as defined below), unless
terminated earlier or extended further as provided in this Lease.

 

(h)                                 “Base Rent” means the Rent payable according to
Section 3.1, which will be in an amount per month applicable as follows:

 

	
   

  	
   

  	
  Base Rent

  	
   

  	
  Annual Base Rent

  	
   

  	
  Base Rent

  	
   

  
	
  Lease Months

  	
   

  	
  Per Month

  	
   

  	
  Per Square Foot

  	
   

  	
  Per Year

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1-60

  	
   

  	
  $

  	
  2,889.00

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  34,668.00

  	
   

  
											

 

(i)                                     “Tenant’s Share” means, with respect to the
calculation of Additional Rent according to Section 3.2, 1.95%.

 

(j)                                     “Base Year” means the calendar year ending December 31,
2005.

 

(k)                                  “Security Deposit” means $2,889.00.

 

(l)                                     “Landlord’s Rent Address” means:                                       PHL-OPCO, LP/6018

c/o
Receipts 24 Account

P.O. Box
27460

New
York, NY 10087-7460

 

(m)                               “Landlord’s Notice Address” means all of the
following:

 

	
  PHL-OPCO, LP

  	
   

  	
  PHL-OPCO, LP

  
	
  c/o DLJ Real Estate Capital
  Partners

  	
   

  	
  c/o BetaWest, Ltd.

  
	
  11 Madison Avenue, 16th
  Floor

  	
   

  	
  1050 17th Street,
  Suite 350

  
	
  New York, NY 10010

  	
   

  	
  Denver, CO 80265

  
	
  Attention: Mr. Andrew
  P. Rifkin

  	
   

  	
  Attention: Asset Management

  

 

(n)                                 “Tenant’s Address” means:                                                                             Mosaic Nutraceuticals Corp.

4100
Spring Valley Road, Suite 200 

Farmers
Branch, TX 75244 

Attention:  Charles Townsend

 

(o)                                 “Tenant’s Parking Spaces” means 8 unassigned surface parking spaces and 2 unassigned carport parking spaces in the Building’s parking facilities.

 

(p)                                 “Parking Rent” means NONE.

 

(q)                                 “Brokers” means the following brokers who will
be paid by Landlord:  Capstar Commercial Real Estate Services; and the following
brokers who will be paid by Tenant:  NONE.

 

1.2                               Additional Definitions.  In
addition to those terms defined in Section 1.1 and other sections of this Lease,
the following defined terms when used in this Lease have the meanings
indicated:

 

(a)                                  “Additional Rent” means the Rent payable
according to Section 3.2.

 

(b)                                 “Affiliates” means, with respect to any party,
any persons or entities that own or control, are owned or controlled by, or are
under common ownership or control with, such party and such party’s and each of
such other person’s or entity’s respective officers, directors, shareholders,
partners, venturers, members, managers, agents and employees.  For purposes of this 

 

 

definition, a party is “owned” by anyone that owns more than 50% of the
equity interests in such party and a party is “controlled” by anyone that owns
sufficient voting interests to control the management decisions of such party.

 

(c)                                  “Building Standard” means the scope and
quality of leasehold improvements. Building systems and Building services, as
the context may require, which are reasonably determined by Landlord from time
to time for the Building generally.

 

(d)                                 “Business Hours” means the hours from 8:00 a.m.
to 6:00 p.m. on Monday through Friday and from 8:00 a.m.
to 12:00 noon on Saturday, excluding statutory or legal holidays.

 

(e)                                  “Common Areas” means certain interior and
exterior common and public areas located in or around the Building as may be
designated by Landlord for the nonexclusive use in common by Tenant, Landlord
and other tenants, and their employees, agents and invitees.

 

(f)                                    “Encumbrance” means any ground lease, first
mortgage or first deed of trust now or later encumbering the Building or Land, and all their renewals,
modifications, supplements, consolidations and replacements.

 

(g)                                 “Expenses” means the aggregate of any and all
costs (other than those expressly excluded below) incurred or accrued during
each calendar year according to generally accepted accounting principles for operating, managing,
administering, equipping, securing, protecting, insuring, heating, cooling,
ventilating, lighting, repairing, replacing, renewing, cleaning, maintaining,
decorating, inspecting, and providing water, sewer and other energy and
utilities to, the Land,
Building and Common Areas; management fees calculated according to the
management agreement between Landlord and its managing agent (provided that if
Landlord elects to discontinue the services
of a managing agent, Expenses will include, instead of management fees,
administrative fees calculated in the same manner as management fees were
calculated under the management agreement in effect for the Building for the
last year such agreement was in effect); fees and expenses (including
reasonable attorneys’ fees) incurred in contesting the validity of any Laws
that would cause an increase in Expenses; depreciation on personal property and
moveable equipment which is or should be capitalized on Landlord’s books; and
costs (whether capital or not) that are incurred in order to conform to changes
subsequent to the Date in any Laws, or that are intended to reduce Expenses or
the rate of increase in Expenses (such costs will not be included in Expenses
for the Base Year and will otherwise be charged to Expenses in annual
installments over the useful economic life of the items for which such costs
are incurred together with interest at the average Prime Rate in effect during
each such calendar year). Expenses will not include (1) mortgage principal
or interest; (2) ground lease payments; (3) leasing commissions; (4) costs
of advertising space for lease in the Building; (5) costs for which Landlord is reimbursed by insurance
proceeds or from tenants of the Building (other than such tenants’ regular
contributions to Expenses); (6) any depreciation or capital expenditures
(except as expressly provided above); (7) legal fees incurred for
negotiating leases or collecting rents; and (8) costs directly and solely
related to the maintenance and operation of the entity that constitutes the
Landlord, such as accounting fees incurred solely for the purpose of reporting
Landlord’s financial condition. For each calendar year during the Term, the
amount by which those Expenses that vary with occupancy (such as cleaning costs
and utilities) would have increased had the Building been 100% occupied and
operational and had all Building services been provided to all tenants will be
reasonably determined and the amount of such increase will be included in
Expenses for such calendar year.

 

(h)                                 “Laws” means any and all present or future
federal, state or local laws, statutes, ordinances, rules, regulations or
orders of any and all governmental or quasi-governmental authorities having
jurisdiction.

 

(i)                                     “Lease Year” means each successive period of
12 calendar months during the Term, ending on the same day and month (but not
year, except in the case of the last Lease Year) as the day and month on which
the Expiration Date will occur. If the Commencement Date is not the first day
of a month, the first Lease Year will be greater than 12 months by the number
of days from the Commencement Date to the last day of the month in which the
Commencement Date occurs.

 

(j)                                     “Lender” means the ground lessor of any ground
lease, the mortgagee of any mortgage or the beneficiary of any deed of trust,
that constitutes an Encumbrance.

 

(k)                                  “Prime Rate” means the rate of interest
announced from time to time by The Chase Manhattan Bank, or any successor to
it, as its prime rate. If The Chase Manhattan Bank, or any successor to it,
ceases to announce a prime rate, Landlord will designate a reasonably
comparable financial institution for purposes of determining the Prime Rate.

 

(l)                                     “Rent” means the Base Rent, Additional Rent
and all other amounts required to be paid by Tenant under this Lease.

 

(m)                               “Taxes” means the amount incurred or accrued
during each calendar year according to generally accepted accounting principles
for that portion of the following items that is allocable to the Building; all
ad valorem real and personal property taxes and assessments, special or
otherwise, levied upon or with respect to the Building, the personal property
used in operating the Building, and the rents and additional charges payable by
tenants of the Building, and imposed by any taxing authority having
jurisdiction; all taxes, levies and charges which may be assessed, levied or
imposed in replacement of, or in addition to, all or any part of ad valorem
real or personal property taxes or assessments as revenue sources, and which in
whole or in part are measured or calculated by or based upon the Building, the
leasehold estate of Landlord or the tenants of the Building, or the rents and
other charges payable by such tenants; capital and place-of-business taxes, and
other similar taxes assessed relating to the Common Areas; and any reasonable
expenses incurred by Landlord in attempting to reduce or avoid an increase in
Taxes, including, without limitation, reasonable legal fees and costs. Taxes
will not include any net income taxes of Landlord. Tenant acknowledges that
Taxes may increase during the Term and that if the Building or Land, or both,
are currently subject to a Taxes abatement program and such program ceases to
benefit the Building or Land, or both, during the Term, Taxes will increase.

 

2.                                   GRANT
OF LEASE

 

2.1                               Demise.  Subject to the terms, covenants, conditions
and provisions of this Lease, Landlord leases to Tenant and Tenant leases from
Landlord the Premises, together with the nonexclusive right to use the Common
Areas, for the Term.

 

2.2                               Quiet Enjoyment.  Landlord
covenants that during the Term Tenant will have quiet and peaceable possession
of the Premises, subject to the terms, covenants, conditions and provisions of
this Lease, and Landlord will not disturb such possession except as expressly provided in this Lease.

 

3.                                     RENT

 

3.1                               Base
Rent.  Commencing on the Commencement Date and then throughout the Term, Tenant
agrees to pay Landlord Base Rent according to the following provisions.  Base Rent during each Lease Year (or portion
of a Lease Year) described in Section

 

1

 

1.l(h) will be payable in monthly installments in the amount specified
for such Lease Year (or portion) in Section 1.1(h), in advance, on or
before the first day of each and every month during the Term. However, if the
Term commences on other than the first day of a month or ends on other than the
last day of a month. Base Rent for such month will be appropriately prorated.

 

3.2                               Additional Rent. 
Tenant agrees to pay Landlord, as Additional Rent, in the manner provided
below for each calendar year subsequent to the Base Year that contains any part
of the Term, Tenant’s Share of (i) the amount by which Expenses for such
calendar year exceed Expenses for the Base Year (“Additional Expenses”); and (ii) the
amount by which Taxes for such calendar year exceed Taxes for the Base Year (“Additional
Taxes”).

 

(a)                                  Estimated Payments.  Prior
to or as soon as practicable after the beginning of each calendar year
subsequent to the Base Year,
Landlord will notify Tenant of Landlord’s estimate of Tenant’s Share of
Additional Expenses and Additional Taxes for the ensuing calendar year. On or
before the first day of each month during the ensuing calendar year, Tenant will
pay to Landlord, in advance,
1/12 of such estimated amounts, provided that until such notice is given with
respect to the ensuing calendar year. Tenant will continue to pay on the basis
of the prior calendar year’s estimate until the month after the month in which
such notice is given. In the month Tenant first pays based on Landlord’s new
estimate, Tenant will pay to Landlord 1/12
of the difference between the new estimate and the prior year’s estimate
for each month which has elapsed
since the beginning of the current calendar year. If at any time or times it
appears to Landlord that Tenant’s Share of Additional Expenses or Tenant’s
Share of Additional Taxes for the then-current calendar year will vary from
Landlord’s estimate by more than 5%, Landlord may, by notice to Tenant, revise
its estimate for such year and subsequent payments by Tenant for such year will
be based upon the revised estimate.

 

(b)                                 Annual Settlement.  As
soon as practicable after the close of each calendar year subsequent to the
Base Year, Landlord will deliver to Tenant its statement of Tenant’s Share of
Additional Expenses and Additional Taxes for such calendar year. If on the
basis of such statement Tenant owes an amount that is less than the estimated
payments previously made by Tenant for such calendar year, Landlord will either
refund such excess amount to Tenant or credit such excess amount against the
next payment (s), if any, due from Tenant to Landlord. If
on the basis of such statement Tenant owes an amount that is more than the
estimated payments previously made by Tenant for such calendar year. Tenant
will pay the deficiency to
Landlord within 30 days after the delivery of such statement. If this Lease commences on a day other
than the first day of a calendar
year or terminates on a day other than the last day of a calendar year, Tenant’s
Share of Additional Expenses and Additional Taxes applicable to the calendar
year in which such commencement or termination occurs will be prorated on the
basis of the number of days within such calendar year that are within the Term.

 

(c)                                  Final Payment. 
Tenant’s obligation to pay the Additional Rent provided for in this Section 3.2 which is accrued
but not paid for periods prior to the expiration or early termination of the
Term will survive such expiration or early termination. Prior to or as soon as
practicable after the expiration or early termination of the Term, Landlord may
submit an invoice to Tenant stating Landlord’s estimate of the amount by which
Tenant’s Share of Additional Expenses and Additional Taxes through the date of
such expiration or early termination will exceed Tenant’s estimated payments of
Additional Rent for the calendar year in which such expiration or termination
has occurred or will occur. Tenant will pay the amount of any such excess to
Landlord within 30 days after the date of Landlord’s invoice.

 

3.3                               Other Taxes.  Tenant will reimburse Landlord
upon demand for any and all taxes payable by Landlord (other than net income
taxes and taxes included in Taxes) whether or not now customary or within the
contemplation of Landlord and Tenant: 
(a) upon, measured by or reasonably attributable to the cost or value of
Tenant’s equipment, furniture, fixtures and other personal property located in
the Premises; (b) upon or measured by Rent; (c) upon or with respect
to the possession, leasing, operation, management, maintenance, alteration,
repair, use or occupancy by Tenant of the Premises or any portion of the
Premises; and (d) upon this transaction or any document to which Tenant is
a party creating or transferring an interest or an estate in the Premises.  If it is not lawful for Tenant to reimburse
Landlord, the Base Rent payable to Landlord under this Lease will be revised to
yield to Landlord the same net rental after the imposition of any such tax upon
Landlord as would have been payable to Landlord prior to the imposition of any
such tax.

 

3.4                               Terms of Payment.  All
Base Rent, Additional Rent and other Rent will be paid to Landlord in lawful
money of the United States of America, at Landlord’s Rent Address or to such
other person or at such other place as Landlord may from time to time designate
in writing, without notice or demand. Tenant agrees that its covenant to pay
Rent is an independent covenant, not subject to abatement, offset or deduction,
except as otherwise expressly provided in this Lease.

 

3.5                               Late Payments.  To
compensate Landlord for its additional cost of processing late payments, for
any payment of Rent which is not received within 5 days after it is due, Tenant will pay a late charge of 2% of
the late payment, but not less than $100 or more than $1,500. In addition, all
amounts payable under this Lease by Tenant to Landlord, if not paid when due,
will bear interest from the due date until paid at the lesser of the highest
interest rate permitted by law or 5% in excess of the then-current Prime Rate.

 

3.6                               Right
to Accept Payments.  No receipt by Landlord of an amount less than
Tenant’s full amount due will be deemed to be other than payment “on account,”
nor will any endorsement or statement on any check or any accompanying letter
effect or evidence an accord and satisfaction. Landlord may accept such check
or payment without prejudice to Landlord’s right to recover the balance or
pursue any right of Landlord. No payments by Tenant to Landlord after the
expiration or other termination of the Term, or after the giving of any notice
(other than a demand for payment of money) by Landlord to Tenant, will
reinstate, continue or extend the Term or make ineffective any notice given to
Tenant prior to such payment. After notice or commencement of a suit, or after
final judgment granting Landlord possession of the Premises, Landlord may
receive and collect any sums of Rent due under this Lease, and such receipt
will not void any notice or in any manner affect any pending suit or any
judgment obtained.

 

4.                                   USE AND OCCUPANCY

 

4.1                               Use.  Tenant agrees to use and occupy
the Premises only for the Use described in Section 1.1(f), or for such
other purpose as Landlord expressly authorizes in writing.

 

4.2                               Compliance.

 

(a)                                  Tenant agrees to use the Premises in a safe,
careful and proper manner, and to comply, at Tenant’s expense, with all Laws
applicable to Tenant’s use,
occupancy or alteration of the Premises and with any Laws that require any alterations
to the Premises due to Tenant’s status under such Laws. If, due to the nature
or manner of any use or occupancy of the Premises by Tenant that is other than
normal office use and occupancy, any improvements or alterations to the
Premises or Building or changes in the services provided by Landlord according
to Article 5 are required to comply with any Laws, or with requirements of
Landlord’s insurers, then Tenant will pay all costs of the required
improvements, alterations or changes in services.

 

2

 

(b)                                 Landlord and Tenant agree that, during the
Term, each will comply with all Laws governing, and all procedures established
by Landlord for, the use, abatement, removal, storage, disposal or transport of
any substances, chemicals or materials declared to be, or regulated as,
hazardous or toxic under any applicable Laws (“Hazardous Substances”) and any
required or permitted alteration, repair, maintenance, restoration, removal or
other work in or about the Premises or Building that involves or affects any
Hazardous Substances. No Hazardous Substances will be stored, used, released,
produced, processed or disposed in, on or about, or transported to or from, the
Premises or Building by Tenant or its subtenants, or any of their respective
agents, employees, contractors or invitees, without first obtaining Landlord’s
express written consent (any Hazardous Substances which are stored, used,
released, produced, processed or disposed in, on or about, or transported to or
from, the Premises or Building by any of such persons or entities are called “Tenant’s
Hazardous Substances”). However, normal quantities of Tenant’s Hazardous
Substances customarily used in general office activities (such as copier and
cleaning chemicals) may be stored and used at the Premises without Landlord’s
prior written consent. Tenant, at its expense, will take all action necessary
to restore the Land, Building and Premises to the condition existing prior to
the introduction of Tenant’s Hazardous Substances, whether such action is
required by any governmental authority in order to comply with applicable Laws or by Landlord in order for Landlord
to make the same economic use of the Land, Building and Premises as Landlord
could have made prior to the introduction of Tenant’s Hazardous Substances.
Such action may include, without limitation, the investigation of the
environmental condition of the Land, Building or Premises, the preparation of
remediation plans or feasibility studies and the performance of cleanup,
remedial, removal or restoration work. Tenant will obtain Landlord’s written
approval before undertaking any action required by this Section 4.2(b),
which approval will not be unreasonably withheld so long as the proposed
actions will not have an avoidable material and adverse effect. Each party will
indemnify and hold the other and the other’s Affiliates harmless from and
against any and all claims, costs and liabilities (including reasonable
attorneys’ fees) arising out of or in connection with any breach by such party
of its covenants under this Section 4.2(b). The parties’ obligations under
this Section 4.2(b) will survive the expiration or early termination
of the Term.

 

4.3                               Occupancy.  Tenant will not do or permit
anything which obstructs or interferes with other tenants’ rights or with Landlord’s
providing Building services, or which injures or annoys other tenants. Tenant
will not cause, maintain or permit any nuisance or waste in or about the
Premises and will keep the Premises free of debris, and anything of a
dangerous, noxious, toxic or offensive nature or which could create a fire
hazard or undue vibration, heat, noise, fumes, vapors or odors. Tenant will not
increase on an ongoing basis the number of persons occupying the Premises or
the pedestrian traffic in and out of the Premises or the Building above an
ordinary level for general office tenants in comparable office buildings (by,
for example, instituting multiple shifts). Tenant will not do or permit
anything which interferes with the transmission or reception of microwave,
television, radio, telephone or other communication signals from antennae or
other facilities on the Building or Land. If any item of equipment, building
material or other property brought into the Building by Tenant or on Tenant’s
request causes a dangerous, noxious, toxic or offensive effect (including an
environmental effect) and in Landlord’s reasonable opinion such effect will not
be permanent but will only be temporary and is able to be eliminated, then
Tenant will not be required to remove such item, provided that Tenant promptly
and diligently causes such effect to be eliminated, pays for all costs of
elimination and indemnifies Landlord against all liabilities arising from such
effect. Tenant will not make or permit any use of the Premises which may
jeopardize any insurance coverage, increase the cost of insurance or require
additional insurance coverage. If by reason of Tenant’s failure to comply with
the provisions of this Section 4.3, (a) any insurance coverage is
jeopardized, then Landlord will have the option to terminate this Lease; or (b) insurance
premiums are increased, then Landlord may require Tenant to immediately pay
Landlord as Rent the amount of the increase in insurance premiums.

 

5.                               SERVICES
AND UTILITIES

 

5.1                               Landlord’s Standard Services.  During the Term, Landlord will operate and
maintain the Building in compliance with all applicable Laws and according to
those standards from time to time prevailing for similar office buildings in
this area in which the Building is located. Landlord will provide the following
services according to such standards, the costs of which will be included in
Expenses to the extent provided in Section 1.2(g):

 

(a)                                  repair, maintenance and replacement of all
structural elements of the Building and all mechanical, plumbing and electrical
systems installed in the Building, but excluding any mechanical, plumbing or
electrical equipment that is not Building Standard, exclusively serves a tenant’s
premises or is installed or operated to accommodate such tenant’s special
requirements (such as a supplementary air conditioning unit installed to cool a
tenant’s computer room);

 

(b)                                 heating, ventilating and air conditioning the
Premises and Common Areas during Business Hours, at temperatures and in amounts
consistent with those the mechanical system serving the Premises is designed to
provide and otherwise as may be reasonably required for comfortable use and
occupancy under normal business operations with “Customary Office Equipment” (as
used in this Lease, “Customary Office Equipment” will include desk top personal
computers and printers, small reproduction machines and similar devices and
equipment; but will not include any machines, devices or equipment that
adversely affect the temperature otherwise maintained in the Premises such as,
e.g., data processing or heavy-duty computer or reproduction equipment);

 

(c)                                  electricity for lighting the Premises and
operating Customary Office Equipment during Business Hours and in amounts not
exceeding the demand the electrical system serving the Premises is designed to
provide;

 

(d)                                 water for small kitchens, washrooms and
drinking fountains;

 

(e)                                  janitorial services to the Premises and Common
Areas 5 days a week;

 

(f)                                    passenger elevators for access to and from any floor(s) on which the
Premises are located above the Building’s
first floor;

 

(g)                                 toilet facilities, including necessary washroom supplies sufficient for
Tenant’s normal use;

 

(h)                                 electric lighting for all Common Areas that
require electric light during the day or are open at night, including
replacement of tubes and ballasts in lighting fixtures; and

 

(i)                                     replacement of tubes and ballasts in those
Building Standard lighting fixtures installed in the Premises; and

 

(j)                                     Tenant’s name on Building
Standard signage at the entrance to the Premises and on the Building directory in the
lobby.

 

5.2                               Additional Services.

 

(a)                                  If Tenant requires heating, ventilating or air
conditioning for the Premises outside Business Hours, Landlord will furnish the
same for the hours specified in a request from Tenant (which request will be
made at the time and in the manner reasonably designated by Landlord for such
requests from time to time), and for this service Tenant will pay Landlord the
hourly rate reasonably determined by Landlord from time to time.

 

3

 

(b)                                 If Tenant requires electric current, water or
any other energy in excess of the amounts provided by Landlord according to Section 5.1, such excess electric,
water or other energy requirements will be supplied only with Landlord’s
consent, which consent will not be unreasonably withheld. If Landlord grants
such consent, Tenant will pay all costs of meter service and installation of
facilities or professional services necessary to measure and/or furnish the
required excess capacity. Tenant will also pay the entire cost of such
additional electricity, water or other energy so required.

 

(c)                                  If Tenant installs any machines, equipment or
devices in the Premises that do not constitute Customary Office Equipment and
such machines, equipment or devices cause the temperature in any part of the
Premises to exceed the temperature the Building’s mechanical system would be
able to maintain in the Premises were it not for such machines, equipment or
devices, then Landlord reserves the right to install supplementary air
conditioning units in the Premises, and Tenant will pay Landlord all costs of installing, operating
and maintaining such supplementary units.

 

(d)                                 If Tenant requires any janitorial or cleaning
services in excess of the amounts provided by Landlord according to Section 5.1
(such as cleaning services beyond normal office janitorial services for
kitchens, computer rooms or other special use areas), Landlord will provide
such excess services to Tenant within a reasonable period after Tenant’s
request made to Landlord’s Building manager, provided that such excess services
are available from Landlord’s regular janitorial or cleaning contractor. Tenant
will pay the cost of such excess services. Landlord will also provide, within a
reasonable period after Tenant’s request made to Landlord’s Building manager,
at Tenant’s cost and to the extent available to Landlord, replacement of bulbs,
tubes or ballasts in any non-Building Standard lighting fixtures in the
Premises.

 

(e)                                  Tenant will pay as Rent, within 10 days after
the date of Landlord’s invoice, all costs which may become payable by Tenant to
Landlord under this Section 5.2.

 

5.3                               Interruption of Services.  If
any of the services provided for in this Article 5 are interrupted or
stopped, Landlord will use due diligence to resume the service; provided, however,
no irregularity or stoppage of any of these services will create any
liability for Landlord (including, without limitation, any liability for
damages to Tenant’s personal property caused by any such irregularity or stoppage),
constitute an actual or constructive eviction or, except as expressly provided
below, cause any abatement of the Rent payable under this Lease or in any
manner or for any purpose relieve Tenant from any of its obligations under this
Lease. If, due to reasons within Landlord’s reasonable control, any of the
services required to be provided by Landlord under this Article 5 should become
unavailable and should remain unavailable for a continuous period in excess of
5 business days after notice of such unavailability from Tenant to Landlord,
and if such unavailability should render all or any portion of the Premises
untenantable, then commencing upon the expiration of such continuous 5 business
day period, Tenant’s Rent will equitably abate in proportion to the portion of
the Premises so rendered untenantable for so long as such services remain
unavailable for such reasons. Without limiting those reasons for an
irregularity or stoppage of services that may be beyond Landlord’s
control, any such irregularity or stoppage that is required in order to
comply with any Laws will be deemed caused by a reason beyond Landlord’s
control.

 

6.                                      REPAIRS

 

6.1                               Repairs Within the Premises. 
Subject to the terms of Articles 4, 10, and 12 and Sections 5.l(a),
5.1(e), and 5.1(i), and except to the extent Landlord is required to perform or
pay for certain maintenance or repairs according to those provisions, Tenant will,
at Tenant’s own expense and at all times during the Term, maintain and repair
the Premises and Tenant’s equipment, personal property and trade fixtures in
the Premises, and any mechanical, plumbing or electrical equipment that is not
Building Standard, exclusively serves the Premises or is installed or operated
to accommodate Tenant’s special requirements (such as a supplementary air
conditioning unit installed to cool a computer room in the Premises), in good
order and repair and in a condition that complies with all applicable Laws.
Subject to Section 11.1, Tenant will also be responsible for the cost of
repairing all damage to the Premises, Building or Common Areas (or any
equipment or fixtures in or serving the same) caused by Tenant or its
subtenants, or any of their respective agents, employees, contractors or
invitees. Any such damage may be repaired by Landlord, in which case Tenant will
pay as Rent to Landlord the cost of such repairs, including an amount
sufficient to reimburse Landlord for overhead and supervision, within 10 days
after the date of Landlord’s
invoice. Alternatively, at Landlord’s option Tenant will promptly and adequately
repair all such damage under the supervision and subject to the prior
reasonable approval of Landlord. All work done by Tenant or its contractors
(which contractors will be subject to Landlord’s reasonable approval) will be
done in a first-class workmanlike manner using only grades of materials at
least equal in quality to Building Standard materials and will comply with all
insurance requirements and all applicable Laws.

 

6.2                               Failure to Maintain Premises.  If
Tenant fails to perform any of its obligations under Section 6.1, then Landlord
may perform such obligations and Tenant will pay as Rent to Landlord the cost
of such performance, including an amount sufficient to reimburse Landlord for
overhead and supervision, within 10 days after the date of Landlord’s invoice. For purposes of performing such
obligations, or to inspect the Premises, Landlord may enter the Premises upon
not less than 2 days’ prior notice to Tenant (except in cases of actual or
suspected emergency, in which case no prior notice will be required) without
liability to Tenant for any loss or damage incurred as a result of such entry.
Landlord will take reasonable steps in connection with such entry to minimize
any disruption to Tenant’s business or its use of the Premises.

 

6.3                               Notice of Damage.  Tenant
will notify Landlord promptly after Tenant learns of (a) any fire or other
casualty in the Premises; (b) any damage to or defect in the Premises,
Building, or Common Areas, including any fixtures or equipment in or serving the
same, which was caused by Tenant or its subtenants, or their respective agents,
employees, contractors of invitees, or for the repair of which Landlord might be
responsible; and (c) any damage to or defect in any parts or appurtenances
of the Building’s sanitary, electrical, heating, ventilating, air conditioning,
elevator or other systems located in or passing through the Premises.

 

7.                                      ALTERATIONS

 

7.1                               Alterations by Tenant.  Tenant
may from time to time at its
own expense make changes, additions and improvements to the Premises to better
adapt the same to its business, provided that any such change, addition or
improvement will (a) comply with all applicable Laws; (b) be made
only with the prior written consent of Landlord, which consent will not be
unreasonably withheld; (c) equal or exceed Building Standard; and (d) be
carried out only by persons selected by Tenant and approved in writing by
Landlord, who will if required by Landlord deliver to Landlord before
commencement of the work performance and payment bonds. Tenant will maintain,
or will cause the persons performing any such work to maintain, worker’s
compensation insurance and public liability and property damage insurance (with
Landlord named as an additional insured), in amounts, with companies and in a
form reasonably satisfactory to Landlord, which insurance will remain in effect
during the entire period in which the work will be carried out. If requested by
Landlord, Tenant will deliver to Landlord proof of all such insurance. Tenant will promptly pay, when due, the cost of
all such work and, upon completion. Tenant will deliver to Landlord, to the
extent not previously received by Landlord, evidence of payment, contractors’
affidavits and full and final waivers of all liens for labor, services or
materials. Tenant will also pay any increase in property taxes on, or fire or
casualty insurance premiums for, the Building attributable to such change,
addition or improvement and

 

4

 

the cost of any modifications to the Building outside the Premises that
are required to be made in order to make the change, addition or improvement to
the Premises. Tenant, at its expense, will have promptly prepared and submitted
to Landlord reproducible as-built plans of any such change, addition or
improvement upon its completion. All changes, additions and improvements to the
Premises, whether temporary or permanent in character, made or paid for by
Landlord or Tenant will, without compensation to Tenant, become Landlord’s
property upon installation. If at the
time Landlord consents to their installation, Landlord requests or approves the
removal by Tenant of any such
changes, additions or improvements upon termination of this Lease. Tenant will
remove the same upon termination of this Lease as provided in Section 15.1.
All other changes, additions and improvements will remain Landlord’s property
upon termination of this Lease and will be relinquished to Landlord in good
condition, ordinary wear and tear excepted.

 

7.2                               Alterations by Landlord. Landlord may from time to time make repairs,
changes, additions and improvements to the Building, Common Areas and those
Building systems necessary to provide the services described in Article 5,
and for such purposes Landlord may enter the Premises upon not less than 10
days’ prior notice to Tenant (except in cases of actual or suspected emergency,
in which case no prior notice will be required) without liability to Tenant for
any loss or damage incurred as a result of such entry. In doing so, Landlord
will not disturb or interfere with Tenant’s use of the Premises and operation
of its business any more than is reasonably necessary in the circumstances and
will repair any damage to the Premises caused by such entry. No permanent
change, addition or improvement made by Landlord will materially impair access
to the Premises.

 

8.                                      LIENS.  Tenant agrees to pay before delinquency all
costs for work, services or
materials furnished to Tenant for the Premises, the nonpayment of which could
result in any lien against the Building. 
Tenant will keep title to the Building free and clear of any such
lien.  Tenant will immediately notify
Landlord of the filing of any such lien or any pending claims or proceedings
relating to any such lien and will indemnify and hold Landlord harmless from
and against all loss, damages and expenses (including reasonable attorneys’
fees) suffered or incurred by Landlord as a result of such lien, claims and
proceedings.  In case any such lien
attaches, Tenant agrees to cause it to be immediately released and removed of
record (failing which Landlord may do so at Tenant’s sole expense), unless
Tenant has a good faith dispute as to such lien in which case Tenant may
contest such lien by appropriate proceedings so long as Tenant deposits with
Landlord a bond or other security in an amount reasonably acceptable to
Landlord and any Lender which may be used by Landlord to release such lien if
Tenant’s contest is abandoned or is unsuccessful.  Upon final determination of any permitted
contest, Tenant will immediately pay any judgment rendered and cause the lien
to be released.

 

9.                                      INSURANCE

 

9.1                               Landlord’s Insurance. 
During the Term, Landlord will provide and keep in force the following
insurance:

 

(a)                                  commercial general liability insurance relating
to Landlord’s operation of the Building, for personal and bodily injury and
death, and damage to others’ property;

 

(b)                                 all risk or fire insurance (including standard
extended coverage endorsement perils, leakage from fire protective devices and other water damage)
relating to the Building (but excluding Tenant’s fixtures, furnishings,
equipment, personal property, documents, files and work products);

 

(c)                                  loss of rental income insurance or loss of
insurable gross profits; and

 

(d)                                 such other insurance (including boiler and
machinery, earthquake and flood insurance) as Landlord reasonably elects to
obtain or any Lender requires.

 

(e)                                  Insurance effected by Landlord under this Section 9.1
will be in amounts which
Landlord from time to time reasonably determines sufficient or any Lender
requires; will be subject to such deductibles and exclusions as Landlord
reasonably determines; will, in the case of insurance under Sections 9.1(b),
(c), and (d), permit the release of Tenant from certain liability under Section 11.1;
and will otherwise be on such terms and conditions as Landlord from time to
time reasonably determines sufficient.

 

9.2                               Tenant’s Insurance.  During the Term, Tenant will provide and keep
in force the following insurance:

 

(a)                                  commercial general liability insurance
relating to Tenant’s business (carried on, in or from the Premises) and Tenant’s
use and occupancy, for personal and bodily injury and death, and damage to
others’ property, with limits of not less than $1,000,000 for any one accident
or occurrence;

 

(b)                                 all risk or fire insurance (including standard
extended endorsement perils, leakage from fire protective devices and other
water damage) relating to Tenant’s fixtures, furnishings, equipment, personal
property, inventory and stock-in-trade on a full replacement cost basis in
amounts sufficient to prevent Tenant from becoming a coinsurer and subject only
to such deductibles and exclusions as Landlord may reasonably approve;

 

(c)                                  if any boiler or machinery is operated in the
Premises, boiler and machinery insurance;

 

(d)                                 if Tenant operates owned, hired or nonowned
vehicles on the Land, automobile liability insurance with limits of not less
than $1,000,000 combined bodily injury and property damage; and

 

(e)                                  worker’s compensation and employer’s liability
insurance in any amounts required to comply with applicable Laws.

 

Landlord, Landlord’s Building
manager, Landlord’s asset manager and any Lender will be named as additional
insureds in the policy described
in Section 9.2(a), which will include cross liability and severability of
interests clauses and will be on an “occurrence” (and not a “claims made”)
form. The policies described in Sections 9.2(b) and (c) will permit
the release of Landlord from certain liability under Section 11.2. Tenant’s
insurance policies will be written by insurers that are rated A-IX or better by
Best’s Rating Guide and licensed in the state in which the Building is located,
will be written as primary policies, not contributing with and not supplemental
to the coverage that Landlord may carry, and will otherwise be upon such terms
and conditions as Landlord from time to time reasonably requires. Tenant will
file with Landlord, on or before the Commencement Date and at least 10 days
before the expiration date of expiring policies, such copies of either current
policies or certificates, or other proofs, as may be reasonably required to
establish Tenant’s insurance coverage in effect from time to time and payment
of premiums. Tenant’s insurers will agree to give Landlord and all other
additional insureds at least 30 days’ prior notice of any non-renewal, and at
least 10 days’ prior notice of any cancellation, of any insurance coverage
required by this Section 9.2. If Tenant fails to insure or pay premiums,
or to file satisfactory proof as required, Landlord may, upon a minimum of 24-hours’
notice, effect such insurance and recover from Tenant on demand any premiums
paid. 

 

10.                               DAMAGE
OR DESTRUCTION

 

10.1                        Termination
Options.  If the Premises or the Building are damaged by
fire or other casualty Landlord will, promptly after learning of such damage,
notify Tenant in writing of the time necessary to repair or restore such
damage, as estimated by

 

5

 

Landlord’s architect, engineer
or contractor. If such estimate states that repair or restoration of all of
such damage that was caused to the Premises or to any other portion of the
Building necessary for Tenant’s occupancy cannot be completed within 180 days
from the date of such damage (or within 30 days from the date of such damage if
such damage occurred within the last 12 months of the Term), then Tenant will
have the option to terminate this Lease. If such estimate states that repair or
restoration of all of such damage that was caused to the Building cannot be
completed within 180 days from the date of such damage, or if such damage
occurred within the last 12 months of the
Term and such estimate states that repair or restoration of all such
damage that was caused to the Premises or to any other portion of the Building necessary for Tenant’s
occupancy cannot be completed within 30 days from the date of such damage, or
if such damage is not insured against by the insurance policies required to be
maintained by Landlord according to Section 9.1. then Landlord will have
the option to terminate this Lease. Any option to terminate granted above must be
exercised by written notice to the other party given within 10 days after
Landlord delivers to Tenant the notice of estimated repair time. If either
party exercises its option to terminate this Lease, the Term will expire and
this Lease will terminate 10 days after notice of termination is delivered;
provided, however, that Rent for the period commencing on the date of such
damage until the date this Lease terminates will be reduced to the reasonable
value of any use or occupation of the Premises by Tenant during such period.

 

10.2                        Repair Obligations.  If
the Premises or the Building are damaged by fire or other casualty and neither
party terminates this Lease according to Section 10.1, then Landlord will
repair and restore such damage with reasonable promptness, subject to delays
for insurance adjustments and delays caused by matters beyond Landlord’s
control.  However, Landlord will not be required
to spend more for such repair and restoration than the insurance proceeds
available to Landlord as a result of the fire or other casualty. Landlord will
have no liability to Tenant and Tenant will not be entitled to terminate this
Lease if such repairs and restoration are not in fact completed within the
estimated time period, provided that Landlord promptly commences and diligently
pursues such repairs and restoration to completion.  In no event will Landlord be obligated to
repair, restore or replace any of the property required to be insured by Tenant
according to Section 9.2.

 

10.3                        Rent Abatement.  If
any fire or casualty damage renders the Premises untenantable and if this Lease
is not terminated according to Section 10.1, then Rent will abate
beginning on the date of such damage. 
Such abatement will end on the date Landlord has substantially completed
the repairs and restoration Landlord is required to perform according to Section 10.2.
Such abatement will be in an amount bearing the same ratio to the total amount
of Rent for such period as the untenantable portion of the Premises bears to the
entire Premises. In no event will Landlord be liable for any inconvenience or
annoyance to Tenant or injury to the business of Tenant resulting in any way
from damage caused by fire or other casualty or the repair of such damage,
provided however that, to the extent Tenant remains in possession of a portion of the Premises, Landlord will take all reasonable steps to
minimize the disruption to Tenant’s business and use of such portion of the
Premises during the period of repair.

 

11.                               WAIVERS AND INDEMNITIES

 

11.1                        Landlord’s Waivers.  Tenant
and its Affiliates will not be liable or in any way responsible to Landlord
for, and Landlord waives all claims against Tenant and its Affiliates for, any
loss, injury or damage that is insured or required to be insured by Landlord
under Sections 9.1(b), (c), or (d), so long as such loss, injury or damage
results from or in connection with this Lease or Tenant’s use and occupancy of
the Premises.

 

11.2                        Tenant’s Waivers. 
Except to the extent caused by the willful or negligent act or omission or breach of this Lease by Landlord
or its agents or employees, Landlord and its Affiliates will not be liable or
in any way responsible for, and Tenant waives all claims against Landlord and
its Affiliates for, any loss, injury or damage suffered by Tenant or others
relating to (a) loss or theft of, or damage to, property of Tenant or
others; (b) injury or damage to persons or property resulting from fire,
explosion, falling plaster, escaping steam or gas, electricity, water, rain or
snow, or leaks from any part of the Building or from any pipes, appliances or plumbing,
or from dampness; or (c) damage caused by other tenants, occupants or
persons in the Premises or other premises in the Building, or caused by the
public or by construction of any private or public work. Landlord and its
Affiliates will not be liable or in any way responsible to Tenant for, and
Tenant waives all claims against Landlord and its Affiliates for, any loss,
injury or damage that is insured or required to be insured by Tenant under
Sections 9.2(b) or (c), so long as such loss, injury or damage results
from or in connection with this Lease or Landlord’s operation of the Building.

 

11.3                        Landlord’s Indemnity. 
Subject to Sections 5.3 and 11.2 and except to the extent caused by the
willful or negligent act or omission or breach of this Lease by Tenant, its
subtenants or licensees, or any of their respective agents, employees or
invitees, Landlord will indemnify and hold Tenant harmless from and against any
and all liability, loss, claims, demands, damages or expenses (including
reasonable attorneys’ fees) due to or arising out of any willful or negligent
act or omission or breach of this
Lease by Landlord or its agents or employees. 
Landlord’s obligations under this Section 11.3 will survive the
expiration or early termination of the Term.

 

11.4                        Tenant’s Indemnity. 
Subject to Section 11.1 and except to the extent caused by the willful
or negligent act or omission or breach of this Lease by Landlord or its agents
or employee, Tenant will indemnify and hold Landlord harmless from and against any and all
liability, loss, claims, demands, damages or expenses (including reasonable
attorneys’ fees) due to or arising out of any accident or occurrence on or
about the Premises (including, without limitation, accidents or occurrences
resulting in injury, death, property damage or theft) or any willful or
negligent act or omission of or breach of this Lease by Tenant, its subtenants
or licensees, or any of their respective agents, employees or invitees.  Tenant’s obligations under this Section 11.4
will survive the expiration or early termination of the Term.

 

12.                           CONDEMNATION

 

12.1                        Full Taking.  If all or substantially all of
the Building or Premises are taken for any public or quasi-public use under any
applicable Laws or by right of eminent domain, or are sold to the condemning
authority in lieu of condemnation, then this Lease will terminate as of the
date when the condemning authority takes physical possession of the Building or
Premises.

 

12.2                        Partial Taking.

 

(a)                                  Landlord’s Termination of Lease.  If
only part of the Building or Premises is thus taken or sold, and if after such
partial taking, in Landlord’s reasonable judgment, alteration or reconstruction
is not economically justified, then Landlord (whether or not the Premises are
affected) may terminate this Lease by giving written notice to Tenant within 60
days after the taking.

 

(b)                                 Tenant’s Termination of Lease. If over 20% of the Premises is thus taken or
sold and Landlord is unable to provide Tenant with comparable replacement
premises in the Building, Tenant may terminate this Lease if in Tenant’s
reasonable judgment the Premises cannot be operated by Tenant in an
economically viable fashion because of such partial taking.  Such termination by Tenant must be exercised
by written notice to Landlord given not later than 60 days after Tenant is
notified of the taking of the Premises.

 

6

 

(c)                                  Effective Date of Termination. 
Termination by Landlord or Tenant will be effective as of the date when physical
possession of the applicable portion of the Building or Premises is taken by
the condemning authority.

 

(d)                                 Election to Continue Lease.  If
neither Landlord nor Tenant elects to terminate this Lease upon a partial taking
of a portion of the Premises,
the Rent payable under this Lease will be diminished by an amount allocable to the
portion of the Premises which was so taken or sold. If this Lease is not
terminated upon a partial taking of the Building or Premises, Landlord will, at
Landlord’s sole expense, promptly restore and reconstruct the Building and
Premises to substantially their former condition to the extent the same is
feasible. However, Landlord will not be required to spend for such restoration
or reconstruction an amount in excess of the net amount received by Landlord as
compensation or damages for the part of the Building or Premises so taken.

 

12.3                        Awards.  As between the parties to this
Lease, Landlord will be entitled to receive, and Tenant assigns to Landlord,
all of the compensation awarded upon taking of any part or all of the Building
or Premises, including any award for the value of the unexpired Term. However,
Tenant may assert a claim in a separate proceeding against the condemning
authority for any damages resulting from the taking of Tenant’s trade fixtures
or personal property, or for moving expenses, business relocation expenses or
damages to Tenant’s business incurred as a result of such condemnation.

 

13.                               ASSIGNMENT
AND SUBLETTING

 

13.1                        Limitation.  Without Landlord’s prior
written consent, Tenant will not assign all or any of its interest under this Lease,
sublet all or any part of the Premises or permit the Premises to be used by any
parties other than Tenant and its employees.

 

13.2                        Notice of Proposed Transfer; Landlord’s
Options.  If Tenant desires to enter into any
assignment of this Lease or a sublease of all or any part of the Premises,
Tenant will first give Landlord written notice of the proposed assignment or
sublease, which notice will contain the name and address of the proposed
transferee, the proposed use of the Premises, statements reflecting the proposed
transferee’s current financial condition and income and expenses for the past 2
years, and the principal terms of the proposed assignment or sublease.  Except in the case of any transfer permitted
under Section 13.7, Landlord will have the option, which must be exercised,
if at all, by notice given to Tenant within 30 days after Landlord’s receipt of
Tenant’s notice of the proposed transfer, either (1) if Tenant’s notice
relates to a subletting, to sublet from Tenant such space as is described in
the notice for such portion of the Term as is described in the notice, upon the
same terms and conditions and for the same Rent (apportioned, as appropriate,
to the amount of such space) as provided in this Lease; or (2) if such
notice relates to an assignment, to become Tenant’s assignee.

 

13.3                        Consent Not to be Unreasonably Withheld.  If
Landlord does not exercise its applicable option under Section 13.2, then
Landlord will not unreasonably withhold or delay its consent to the proposed
assignment or subletting if each of the following conditions is satisfied:

 

(a)                                  the proposed transferee, in Landlord’s
reasonable opinion, has sufficient financial capacity and business experience
to perform Tenant’s obligations under this Lease;

 

(b)                                 the proposed transferee will make use of the
Premises which in Landlord’s reasonable opinion (1) is lawful, (2) is
consistent with the permitted Use of the Premises under this Lease, (3) is
consistent with the general character of business carried on by tenants of
similar office buildings, (4) does not conflict with any exclusive rights
or covenants not to compete in favor of any other tenant or proposed tenant of
the Building, (5) will not increase the likelihood of damage or destruction to
the Building, (6) will not increase the rate of wear and tear to the
Premises or Common Areas, (7) will not cause an increase in insurance
premiums for insurance policies applicable to the Building, and (8) will
not require new tenant improvements incompatible with then-existing Building
systems and components;

 

(c)                                  the proposed transferee does not have a poor
reputation in the general business community (such as a reputation for engaging
in illegal or unethical business practices);

 

(d)                                 the proposed transferee, at the time of the
proposed transfer, is neither a tenant in any building owned or managed by
Landlord or any affiliate of Landlord in the same city in which the Building is
located, nor a party with whom Landlord is then negotiating for the lease of
space in the Building;

 

(e)                                  if the proposed transfer is a sublease, the
rent which the proposed transferee will be required to pay will be equal to at
least 90% of the then-current market rent for the portion of the Premises being
sublet; and

 

(f)                                    at the time of the proposed transfer no “Default”
(as defined in Section 20.1) exists under this Lease.

 

13.4                        Form of Transfer.  If
Landlord consents to a proposed assignment or sublease, Landlord’s consent will
not be effective unless and until Tenant delivers to Landlord an ordinal duly
executed assignment or sublease, as the case may be, that provides, in the case
of a sublease, that the subtenant will comply with all applicable terms and
conditions of this Lease and, in the case of an assignment, an assumption by
the assignee of all of the terms, covenants and conditions which this Lease
requires Tenant to perform.

 

13.5                        Payments to Landlord.  If
Landlord does not exercise its applicable option under Section 13.2 and
Tenant effects an assignment or sublease, then Landlord will be entitled to receive
and collect, either from Tenant or directly from the transferee, 50% of the
amount by which the consideration required to be paid by the transferee for the
use and enjoyment of Tenant’s rights under this Lease (after deducting from
such consideration Tenant’s reasonable costs incurred in effecting the
assignment or sublease) exceeds the Rent payable by Tenant to Landlord
allocable to the transferred space.  Such
percentage of such amount will be payable to Landlord at the time(s) Tenant
receives the same from its transferee (whether in monthly installments, in a
lump sum, or otherwise).

 

13.6                        Change of Ownership.  Any
change by Tenant in the form of its legal organization (such as, for example, a
change from a general to a limited partnership), any transfer of 51% or more of
Tenant’s assets, and any other transfer of
interest effecting a change in identity of persons exercising effective
control of Tenant will be deemed an “assignment” of this Lease requiring
Landlord’s prior written consent.  The
transfer of any outstanding capital stock of a corporation whose stock is
publicly-traded will not, however, be deemed
a “transfer of interest” under this Section 13.6.

 

13.7                        Permitted Transfers. 
Tenant may, upon notice to Landlord but without obtaining Landlord’s
consent, assign this Lease or sublease all or any part of the Premises to a
wholly-owned subsidiary of Tenant or the parent of Tenant.

 

13.8                        Effect of Transfers.  No
subletting or assignment will release Tenant from any of its obligations under
this Lease unless Landlord agrees to the contrary in writing. Acceptance of
Rent by Landlord from any person other than Tenant will not be deemed a waiver
by Landlord of any provision of this Article 13. Consent to one assignment
or subletting will not be deemed a consent to any subsequent assignment or
subletting. In the event of any default by any assignee or subtenant or any
successor of Tenant in the performance of any Lease obligation, Landlord may
proceed directly against Tenant without exhausting remedies against

 

7

 

such assignee, subtenant or successor. The voluntary or other surrender
of this Lease by Tenant or the cancellation of this Lease by mutual agreement
of Tenant and Landlord will not work a
merger and will, at Landlord’s option, terminate all or any subleases or
operate as an assignment to Landlord of all or any subleases; such option will
be exercised by notice to Tenant and all known subtenants in the Premises.

 

14.                               PERSONAL PROPERTY

 

14.1                        Installation and Removal. 
Tenant may install in the Premises its personal property (including
Tenant’s usual trade fixtures) in a proper manner, provided that no such
installation will interfere with or damage the mechanical, plumbing or
electrical systems or the structure of the Building, and provided further that
if such installation would require any change, addition or improvement to the
Premises, such installation will be subject to Section 7.1.  If no Default then exists, any such personal
property installed in the Premises by Tenant (a) may be removed from the
Premises from time to time in the ordinary course of Tenant’s business or in
the course of making any changes, additions or improvements to the Premises
permitted under Section 7.1, and (b) will be removed by Tenant at the
end of the Term according to Section 15.1. Tenant will promptly repair at
its expense any damage to the Building resulting from such installation or
removal.

 

14.2                        Responsibility.  Tenant
will be solely responsible for all costs and expenses related to personal
property used or stored in the Premises. 
Tenant will pay any taxes or other governmental impositions levied upon
or assessed against such personal property, or upon Tenant for the ownership or
use of such personal property, on or before the due date for payment.  Such personal property taxes or impositions
are not included in Taxes.

 

14.3                        Landlord’s Lien.  In
addition to any statutory landlord’s lien and in order to secure payment of all
Rent becoming due from Tenant, and to secure payment of any damages or loss
which Landlord may suffer by reason of Tenant’s failure to perform any of its
obligations under this Lease, Tenant grants to Landlord a security interest in
and an express contractual lien upon all goods, wares, equipment, fixtures,
furniture, improvements and other personal property of Tenant now or later situated on the Premises and all proceeds
thereof.  Tenant’s personal property may
not be removed from the Premises without Landlord’s consent at any time a
Default exists or, except as provided in Section 14.1, until all of Tenant’s
obligations under this Lease have been fully complied with and performed.  Upon the occurrence of a Default, in addition
to any other available remedies, Landlord will have all the rights of a secured
party under the Uniform Commercial Code of the state in which the Building is
located with respect to the property covered by such security interest. Upon
Landlord’s request, Tenant agrees to execute and deliver to Landlord such
financing statements as may be required to perfect such security interest.

 

15.                               END
OF TERM

 

15.1                        Surrender.  Upon the expiration or other
termination of the Term, Tenant will immediately vacate and surrender possession
of the Premises in good order, repair and condition, except for ordinary wear
and tear.  Upon the expiration or other termination
of the Term, Tenant agrees to remove (a) all changes, additions and
improvements to the Premises the removal of which Landlord requested or
approved according to Section 7.1 at the time Landlord consented to their
installation, and (b) all of Tenant’s trade fixtures, office furniture,
office equipment and other personal property. 
Tenant will pay Landlord on demand the cost of repairing any damage to
the Premises or Building caused by the installation or removal of any such
items.  Any of Tenant’s property remaining
in the Premises will be conclusively deemed to have been abandoned by Tenant
and may be appropriated, stored, sold, destroyed or otherwise disposed of by
Landlord without notice or obligation to account to or compensate Tenant, and
Tenant will pay Landlord on demand all costs incurred by Landlord relating to
such abandoned property.

 

15.2                        Holding Over.  Tenant understands that it does not have the
right to hold over at any time and Landlord may exercise any and all remedies
at law or in equity to recover possession of the Premises, as well as any
damages incurred by Landlord, due to Tenant’s failure to vacate the Premises
and deliver possession to Landlord as required by this Lease.  If Tenant holds over after the Expiration
Date with Landlord’s prior written consent, Tenant will be deemed to be a
tenant from month to month, at a monthly Base Rent, payable in advance, equal to 150% of monthly Base Rent
payable during the last year of the Term, and Tenant will be bound by all of
the other terms, covenants and agreements of this Lease as the same may apply
to a month-to-month tenancy.  If Tenant
holds over after the Expiration Date without Landlord’s prior written consent. Tenant
will be deemed a tenant at sufferance, at a daily Base Rent, payable in
advance, equal to 200% of the Base Rent per day payable during the last year of
the Term, and Tenant will be bound by all of the other terms, covenants and
agreements of this Lease as the same may apply to a tenancy at sufferance.

 

16.                               ESTOPPEL
CERTIFICATES. 
Promptly upon Landlord’s request after Tenant has occupied the Premises.
Tenant will execute and deliver to Landlord an Occupancy Estoppel Certificate
in the form of Exhibit C.  In
addition, Tenant agrees that at any time and from time to time (but on not less
than 10 days’ prior request by Landlord), Tenant will execute, acknowledge and
deliver to Landlord a certificate indicating any or all of the following:  (a) the Commencement Date and Expiration
Date; (b) that this Lease is unmodified and in full force and effect (or,
if there have been modifications, that this Lease is in full force and effect,
as modified, and stating the date and nature of each modification); (c) the
date, if any, through which Base Rent, Additional Rent and any other Rent payable
have been paid; (d) that no default by Landlord or Tenant exists which has
not been cured, except as to defaults stated in such certificate; (e) that
Tenant has no existing defenses or set-offs to enforcement of this Lease,
except as specifically slated in such certificate; (f) provided such
events have occurred, that Tenant has accepted the Premises and that all
improvements required to be made
to the Premises by Landlord have been completed according to this Lease; (g) that,
except as specifically stated in such certificate, Tenant, and only Tenant,
currently occupies the Premises; and (h) such other matters as may be
reasonably requested by Landlord. Any such certificate may be relied upon by
Landlord and any prospective purchaser or present or prospective mortgagee, deed
of trust beneficiary or ground lessor of all or a portion of the Building.

 

17.                               TRANSFERS OF LANDLORD’S INTEREST

 

17.1                        Sale, Conveyance and Assignment. Subject only to Tenant’s rights under this
Lease, nothing in this Lease will restrict Landlord’s right to sell, convey,
assign or otherwise deal with the Land, Building or Landlord’s interest under
this Lease.

 

17.2                        Effect of Sale, Conveyance or Assignment. A sale, conveyance or assignment of the
Building will automatically release Landlord from liability under this Lease
from and after the effective date of the transfer, except for any liability
relating to the period prior to such effective date; and Tenant will look
solely to Landlord’s transferee for performance of Landlord’s obligations
relating to the period after such effective date. This Lease will not be
affected by any such sale, conveyance or assignment and Tenant will attorn to
Landlord’s transferee.

 

17.3                        Subordination and Nondisturbance.  This
Lease is and will be subject
and subordinate in all respects to any Encumbrance. With respect to any
Encumbrance first encumbering the Building subsequent to the Date of this
Lease, upon Tenant’s request, Landlord will use its good faith efforts to cause
the Lender to agree (either in the Encumbrance or in a separate agreement with

 

8

 

Tenant) that so long as
Tenant is not in default of its obligations under this Lease, this Lease will
not be terminated and Tenant’s possession of the Premises will not be disturbed by the termination or
foreclosure, or proceedings for enforcement,
of such Encumbrance. While such subordination will occur automatically, Tenant
agrees, upon request by and without cost to Landlord or any successor in
interest, to promptly execute and deliver to Landlord or any Lender such
instrument(s) as may be reasonably required to evidence such subordination. In
the alternative, however, any Lender may unilaterally elect to subordinate its
Encumbrance to this Lease.

 

17.4                        Attornment.  If the interest of Landlord is
transferred to any person (a “Transferee”) by reason of the termination or
foreclosure, or proceedings for enforcement, of an Encumbrance, or by delivery
of a deed in lieu of such foreclosure or proceedings, Tenant will immediately
and automatically attorn to the Transferee. Upon attornment this Lease will
continue in full force and effect as a direct lease between the Transferee and
Tenant, upon all of the same terms, conditions and covenants as stated in this
Lease, except that the Transferee will not be: (a) liable for any act or omission
of any prior landlord, including Landlord (but such exemption will not excuse
the Transferee from the performance of any obligations of the landlord under
this Lease required to be performed subsequent to the transfer to the
Transferee); (b) subject to any offsets or defenses which Tenant might
have against any prior landlord, including Landlord (excluding any express
right of abatement granted under this Lease, provided that the Lender who held
the Encumbrance the enforcement of which resulted in the transfer to the
Transferee (the “Foreclosing Lender”) was afforded any notice and cure rights
to which it was entitled under Section 21.1 with respect to the matter
that gave rise to such express right of abatement); (c) bound by any Rent
or advance Rent which Tenant might have paid for more than the current month or
the next succeeding month to any prior landlord, including Landlord, and all
such Rent will remain due and owing, regardless of such advance payment; (d)
obligated for repayment to Tenant of the Security Deposit or any other security
or advance rental deposit made by Tenant, except to the extent the same is paid
over to the Transferee; or (e) bound by any termination, amendment or
modification of this Lease (other than one expressly contemplated by the terms
of this Lease and effected according to such express terms, such as a
termination by Landlord due to a Default by Tenant) made without the written
consent of the Foreclosing Lender. Tenant agrees, upon request by and without
cost to the Transferee, to promptly execute and deliver to the Transferee such
instrument(s) as may be reasonably required to evidence such attornment.

 

18.                               RULES
AND REGULATIONS. Tenant agrees to faithfully observe and
comply with the Rules and Regulations set forth on Exhibit D and
with all reasonable modifications and additions to such Rules and
Regulations (which will be applicable to all Building tenants) from time to
time adopted by Landlord and of which Tenant is notified in writing.  No such modification or addition will contradict
or abrogate any right expressly granted to Tenant under this Lease.  Landlord’s enforcement of the Rules and
Regulations will be uniform and nondiscriminatory, but Landlord will not be
responsible to Tenant for failure of any person to comply with the Rules and
Regulations.

 

19.                        PARKING.  Landlord grants Tenant the
right to use Tenant’s Parking Spaces for the temporary or daily parking of automobiles
or similarly sized light trucks or utility vehicles during the Term of this Lease. Tenant will pay Parking Rent for the use of Tenant’s-Parking
Spaces.  All Parking-Rent will be payable
in advance on the first day of each month during the Term to the same place as Base
Rent (or to such other place as Landlord may designate in writing) and will be
considered Rent under this-Lease. Tenant’s rights to use Tenant’s Parking
Spaces and the Building’s parking facilities in which they are located are
nonexclusive, will be deemed a license only and are conditioned upon this Lease
being in full force and effect and there being no Default. Tenant will not abuse
its privileges with respect to Tenant’s Parking Spaces and will use the same
and the Building’s parking facilities in accordance with Landlord’s reasonable
directions, including any reasonable
Rules and Regulations adopted by Landlord with respect to such use and any
signage posted in the Buildings’ parking facilities.  In no event will Tenant use more than the
number of Tenant’s Parking Spaces in the Building’s parking facilities for the
parking of vehicles by Tenant or any of its agents or employees.  However, Tenant’s invitees may use any
visitor parking spaces available in the Building’s parking facilities on an
occasional and reasonable basis. Landlord’s inability to make any of Tenant’s
Parking Spaces available at any time during the Term for reasons beyond Landlord’s
control will not be deemed a default by Landlord giving rise to any claim by
Tenant.  , except that Tenant will be
entitled to an equitable abatement of Parking Rent for any such spaces during the
period of unavailability-and such abatement will be in full settlement of claims
that Tenant might otherwise have-had for such-unavailability.  Landlord reserves the right (but will have no
obligation) from time to time to change the number, size, location, shape or
arrangement of the Building’s parking facilities, designate visitor,
handicapped, reserved or loading areas and change the level or grade of parking.
Landlord will have no liability to Tenant with respect to Tenant’s use of
Tenant’s Parking Spaces, including any liability for any property that is lost,
stolen, damaged or destroyed as a result of or in connection with such use.

 

20.                         TENANT’S DEFAULT AND
LANDLORD’S REMEDIES

 

20.1                        Default. Each of the following events will constitute a material breach by
Tenant and a “Default” under
this Lease:

 

(a)                                  Failure to Pay Rent. 
Tenant fails to pay Base Rent, Additional Rent or any other Rent payable
by Tenant under the terms of this Lease when due, and such failure continues
for 5 days after written notice from Landlord to Tenant of such failure;
provided that with respect to Base Rent and Additional Rent, Tenant will be
entitled to only 2 notices of such failure during any Lease Year and if, after 2 such notices are given in any
Lease Year, Tenant fails, during such Lease Year, to pay any such amounts when
due, such failure will constitute a Default without further notice by Landlord
or additional cure period.

 

(b)                                 Failure to Perform Other Obligations. 
Tenant breaches or fails to comply with any other provision of this Lease
applicable to Tenant, and such breach or noncompliance continues for a period
of 20 days after notice by Landlord to Tenant; or, if such breach or
noncompliance cannot be reasonably cured within such 20-day period, Tenant does
not in good faith commence to cure such breach or noncompliance within such 20-day
period or does not diligently complete such cure within 60 days after such
notice from Landlord. However, if such breach or noncompliance causes or
results in (1) a dangerous condition on the Premises or Building, (2) any
insurance coverage carried by Landlord or Tenant with respect to the Premises
or Building being jeopardized, or (3) a material disturbance to another
tenant, then a Default will exist if such breach or noncompliance is not cured
as soon as reasonably possible after notice by Landlord to Tenant, and in any
event is not cured within 30 days after such notice. For purposes of this Section 20.1(b),
financial inability will not be deemed a reasonable ground for failure to
immediately cure any breach of, or failure in comply with, the provisions of
this Lease.

 

(c)                                  Nonoccupancy of Premises. 
Tenant fails to occupy and use the Premises within 15 days after the Commencement
Date or leaves substantially all of the Premises unoccupied for 15 consecutive
days or vacates and abandons substantially all of the Premises.

 

(d)                                 Transfer of Interest Without Consent. Tenant’s interest under this Lease or in the
Premises is transferred or passes to, or devolves upon, any other party in
violation of Article 13.

 

9

 

(e)                                  Execution and Attachment Against Tenant. 
Tenant’s interest under this Lease or in the Premises is taken upon execution or by other process of law directed against Tenant, or is
subject to any attachment by any creditor or claimant against Tenant and such
attachment is not discharged or disposed of within 15 days after levy.

 

(f)                                    Bankruptcy or Related Proceedings. 
Tenant files a petition in bankruptcy or insolvency, or for reorganization
or arrangement under any bankruptcy or insolvency Laws, or voluntarily lakes
advantage of any such Laws by
answer or otherwise, or dissolves or makes an assignment for the benefit of
creditors, or involuntary proceedings under any such Laws or for the
dissolution of Tenant are instituted against Tenant, or a receiver or trustee
is appointed for the Premises
or for all or substantially all of Tenant’s property, and such proceedings are
not dismissed or such receivership or trusteeship vacated within 60 days after
such institution or appointment.

 

20.2                        Remedies.  Time is of the essence. If any
Default occurs, Landlord will have the right, at Landlord’s election, then or
at any later time, to exercise any one or more of the remedies described below.
Exercise of any of such remedies will not prevent the concurrent or subsequent
exercise of any other remedy provided for in this Lease or otherwise available
to Landlord at law or in equity.

 

(a)                                  Cure by Landlord.  Landlord
may, at Landlord’s option but without obligation to do so, and without releasing
Tenant from any obligations under this Lease, make any payment or take any action as Landlord deems necessary
or desirable to cure any Default in such manner and to such extent as Landlord
deems necessary or desirable.  Landlord
may do so without additional demand on, or additional written notice to. Tenant
and without giving Tenant an additional opportunity to cure such Default.  Tenant covenants and agrees to pay Landlord,
upon demand, all advances, costs and expenses of Landlord in connection with making
any such payment or taking any such action, including reasonable attorney’s
fees, together with interest at the rate described in Section 3.5 from the
date of payment of any such advances, costs and expenses by Landlord.

 

(b)                                 Termination of Lease and Damages. 
Landlord may terminate this Lease, effective at such time as may be specified
by written notice to Tenant, and demand (and, if such demand is refused,
recover) possession of the Premises from Tenant. Tenant will remain liable to
Landlord for damages in an amount equal to the Base Rent, Additional Rent and
other Rent which would have been owing by Tenant for the balance of the Term
had this Lease not been terminated, less the net proceeds, if any, of any reletting
of the Premises by Landlord subsequent to such termination, after deducting all
Landlord’s expenses in connection with such recovery of possession or
reletting.  Landlord will be entitled to
collect and receive such damages from Tenant on the days on which the Base
Rent, Additional Rent and other Rent would have been payable if this Lease had
not been terminated.  Alternatively, at Landlord’s
option. Landlord will be entitled to recover from Tenant, as damages for loss
of the bargain and not as a penalty, an aggregate sum equal to (1) all
unpaid Base Rent, Additional Rent and other Rent for any period prior to the
termination date of this Lease (including interest from the due date to the
date of the award at the rate described in Section 3.5), plus any other
sum of money and damages owed by Tenant to Landlord for events, or actions
occurring prior to the termination date; plus (2) the present value at the
time of termination (calculated at the rate commonly called the discount rate
in effect at the Federal Reserve Bank of New York on the termination date) of
the amount, if any, by which (A) the aggregate of the Base Rent,
Additional Rent and all other Rent payable by Tenant under this Lease that
would have accrued for the balance of the Term after termination (with respect
to Additional Rent, such aggregate will be calculated by assuming that Expenses
and Taxes for the calendar year in which termination occurs and for each subsequent
calendar year remaining in the Term if this Lease had not been terminated will
increase by 8% per year over the amount of Expenses and Taxes for the prior
calendar year), exceeds (B) the amount of such Base Rent, Additional Rent
and other Rent which Landlord will receive for the remainder of the Term from
any reletting of the Premises occurring prior to the date of the award, or if the
Premises have not been relet prior to the date of the award, the amount, if any, of such Base Rent, Additional
Rent and other Rent which could reasonably be recovered by reletting the
Premises for the remainder of the Term at the then-current fair rental value,
in either case taking into consideration loss of rent while finding a new
tenant, tenant improvements and rent abatements necessary to secure a new
tenant, leasing brokers’ commissions and other costs which Landlord has
incurred or might incur in leasing the Premises to a new tenant; plus (3) interest
on the amount described in (2) above from the termination date to the date
of the award at the rate described in Section 3.5.

 

(c)                                  Repossession and Reletting. 
Landlord may reenter and take possession of all or any part of the Premises,
without additional demand or notice, and repossess the same and expel Tenant
and any party claiming by, through or under Tenant, and remove the effects of
both using such force for such purposes as may be necessary, without being
liable for prosecution for such action or being deemed guilty of any manner of
trespass, and without prejudice to any remedies for arrears of Rent or right to bring any proceeding for breach of
covenants or conditions. No such reentry or taking possession of the Premises
by Landlord will be construed as an election by Landlord to terminate this
Lease unless a written notice of such intention is given to Tenant.  No notice from Landlord or notice given under
a forcible entry and detainer statute or similar Laws will constitute an
election by Landlord to terminate this Lease unless such notice specifically so
states.  Landlord reserves the right,
following any reentry or reletting, to exercise its right to terminate this
Lease by giving Tenant such written notice, in which event the Lease will
terminate as specified in such notice. After recovering possession of the
Premises, Landlord may, from time to time, but will not be obligated to, relet
all or any part of the Premises for Tenant’s account, for such term or terms
and on such conditions and other terms as Landlord, in its discretion,
determines. Landlord may make such repairs, alterations or improvements as
Landlord considers appropriate to accomplish such reletting, and Tenant will
reimburse Landlord upon demand for all costs and expenses, including attorneys’
fees, which Landlord may incur in connection with such reletting.  Landlord may collect and receive the rents for
such reletting but Landlord will in no way be responsible or liable for any
failure to relet the Premises or for any inability to collect any rent due upon
such reletting. Regardless of Landlord’s recovery of possession of the
Premises, Tenant will continue to pay on the dates specified in this Lease, the
Base Rent, Additional Rent and other Rent which would be payable if such
repossession had not occurred, less a credit for the net amounts, if any,
actually received by Landlord through any reletting of the Premises.  Alternatively, at Landlord’s option, Landlord
will be entitled to recover from Tenant, as damages for loss of the bargain and
not as a penalty, an aggregate sum equal to (1) all unpaid Base Rent,
Additional Rent and other Rent for any period prior to the repossession date
(including interest from the due date to the date of the award at the rate described
in Section 3.5), plus any other sum of money and damages owed by Tenant to
Landlord for events or actions occurring prior to the repossession date; plus (2) the
present value at the time of repossession (calculated at the rate commonly
called the discount rate in effect at the Federal Reserve Bank of New York on
the repossession date) of the amount, if any, by which (A) the aggregate
of the Base Rent, Additional Rent and all other Rent payable by Tenant under
this Lease that would have accrued for the balance of the Term after
repossession (with respect to Additional Rent, such aggregate will be
calculated by assuming that Expenses and Taxes for the calendar year in which
repossession occurs and for each subsequent calendar year remaining in the Term
if Landlord had not repossessed the Premises will increase by 8% per year over
the amount of Expenses and Taxes for the prior calendar year), exceeds (B) the
amount of such Base Rent, Additional Rent and other Rent which Landlord will
receive for the remainder of the Term from any reletting of the Premises
occurring prior to the date of the award, or if the Premises have not been
relet prior to the date of the award, the amount, if any, of such Base Rent,
Additional Rent and other Rent which could reasonably be recovered by reletting

 

10

 

the Premises for the remainder of the Term at the then-current fair
rental value, in either case taking
into consideration loss of rent
while finding a new tenant, tenant improvements and rent abatements necessary
to secure a new tenant, leasing brokers’ commissions and other costs which
Landlord has incurred or might incur in leasing the Premises to a new tenant;
plus (3) interest on the amount described in (2) above from the repossession
date to the date of the award at the rate described in Section 3.5.

 

(d)                                 Bankruptcy Relief. 
Nothing contained in this Lease will limit or prejudice Landlord’s right
to prove and obtain as liquidated damages in any bankruptcy, insolvency, receivership,
reorganization or dissolution proceeding, an amount equal to the maximum
allowable by any Laws governing such proceeding in effect at the time when such
damages are to be proved, whether or not such amount be greater, equal or less
than the amounts recoverable, either as damages or Rent, under this Lease.

 

21.                               LANDLORD’S DEFAULT AND TENANT’S REMEDIES

 

21.1                        Default.  If Tenant believes that
Landlord has breached or failed to comply with any provision of this Lease
applicable to Landlord, Tenant will give written notice to Landlord describing
the alleged breach or noncompliance. Landlord will not be deemed in default
under this Lease if Landlord cures the breach or noncompliance within 20 days
after receipt of Tenant’s notice or, if the same cannot reasonably be cured
within such 20-day period, if Landlord in good faith commences to cure such
breach or noncompliance within such period and then diligently pursues the cure
to completion. Tenant will also send a copy of such notice to any Lender of
whom Tenant has been notified in writing, and such Lender will also have the
right to cure the breach or noncompliance within the period of time described
above.

 

21.2                        Remedies.  If Landlord breaches or fails
to comply with any provision of this Lease applicable to Landlord, and such
breach or noncompliance is not cured within the period of time described in Section 21.1,
then Tenant may exercise any right or remedy available to Tenant at law or in
equity, except to the extent expressly waived or limited by the terms of this
Lease.

 

22.                               SECURITY DEPOSIT

 

22.1                        Amount.  Upon execution of this Lease, Tenant
will deposit the Security Deposit with Landlord in the amount described in Section 1.1(k).
Landlord and Tenant intend the Security Deposit to be used solely as security
for Tenant’s faithful and diligent performance of all of Tenant’s obligations
under this Lease. The Security Deposit will remain in Landlord’s possession for
the entire Term, and Landlord will not be required to segregate it from
Landlord’s general funds. Tenant will not be entitled to any interest on the Security Deposit.

 

22.2                        Use and Restoration.  If
Tenant fails to perform any of its obligations under this Lease, Landlord may,
at its option, use, apply or retain all or any part of the Security Deposit for
the payment of (1) any Rent in arrears; (2) any expenses Landlord may
incur as a direct or indirect result of Tenant’s failure to perform; and (3) any
other losses or damages Landlord may suffer as a direct or indirect result of
Tenant’s failure to perform. If Landlord so uses or applies all or any portion
of the Security Deposit, Landlord will notify Tenant of such use or application
and Tenant will, within 10 days after the date of Landlord’s notice, deposit
with Landlord a sum
sufficient to restore the Security Deposit to the amount held by Landlord
immediately prior to such use or application. Tenant’s failure to so restore
the Security Deposit will constitute a Default.

 

22.3                        Transfers.  Tenant will not assign or
encumber the Security Deposit without Landlord’s express written consent. Neither
Landlord nor its successors or assigns will be bound by any assignment or
encumbrance unless Landlord has given its consent. Landlord will have the
right, at any time and from time to time, to transfer the Security Deposit to
any purchaser or lessee of the entire Building. Upon any such transfer, Tenant
agrees to look solely to the new owner or lessee for the return of the Security
Deposit.

 

22.4                        Refund.  Provided that Tenant has fully
and faithfully performed all of its obligations
under this Lease, Landlord will refund the Security Deposit, or any balance
remaining, to Tenant or, at Landlord’s option, to the latest assignee of Tenant’s
interest under this Lease, within 60 days after the expiration or early
termination of the Term and Tenant’s vacation and surrender of the Premises to
Landlord in the condition required by Section 15.1.  If Tenant fails to make any final estimated
payment of Additional Rent required by Landlord according to Section 3.2(c),
Landlord may withhold such final payment from the amount of the Security Deposit
refund.

 

23.                               BROKERS.  Landlord and Tenant represent and
warrant that no broker or agent negotiated or was instrumental in negotiating
or consummating this Lease except the Brokers. Neither party knows of any other
real estate broker or agent who
is or might be entitled to a commission or compensation in connection with this
Lease. Landlord will pay all fees, commissions or other compensation payable to
the Brokers to be paid by Landlord according to Section 1.1(q) and Tenant
will pay all fees, commissions or other compensation payable to the Brokers to
be paid by Tenant according to Section 1.1(q). Tenant and Landlord will
indemnify and hold each other harmless from all damages paid or incurred by the
other resulting from any claims asserted against either party by brokers or
agents claiming through the other party.

 

24.                               LIMITATIONS ON LANDLORD’S LIABILITY.  Any
liability for damages, breach or nonperformance by Landlord, or arising out of
the subject matter of, or the relationship
created by, this Lease, will be collectible only out of Landlord’s interest in
the Building and no personal liability is assumed by, or will at any time be
asserted against, Landlord, its Affiliates, Building manager or asset manager,
or any of its or their successors or assigns; all such liability, if any, being
expressly waived and released by Tenant. Landlord’s review, supervision,
commenting on or approval of any aspect of work to be done by or for Tenant
(under Article 7, Exhibit B, or otherwise) are solely for Landlord’s
protection and, except as expressly provided, create no warranties or duties to
Tenant or to third parties.

 

25.                            NOTICES.  All notices required or
permitted under this Lease must be in writing and will only be deemed properly
given and received (a) when actually given and received, if delivered in
person to a party who acknowledges receipt in writing; or (b) one business
day after deposit with a private courier or overnight delivery service, if such
courier or service obtains a written acknowledgment of receipt; or (c) 2
business days after deposit in the United States mails, certified mail with
return receipt requested and postage prepaid. 
All such notices must be transmitted by one of the methods described
above to the party to receive the notice at, in the case of notices to
Landlord, Landlord’s Notice Address, and in the case of notices to Tenant,
Tenant’s Address, or, in either case, at such other address(es) as either party
may notify the other of according to this Article 25.

 

26.                              MISCELLANEOUS

 

26.1                        Binding Effect.  Each
of the provisions of this Lease will extend to bind or inure to the benefit of,
as the case may be, Landlord and Tenant, and their respective heirs, successors
and assigns, provided this clause will not permit any transfer by Tenant
contrary to the provisions of Article 13.

 

11

 

26.2                        Complete Agreement; Modification.  All
of the representations and obligations of the parties are contained in this
Lease and no modification, waiver or amendment of this Lease or of any of its
conditions or provisions will be binding upon a party unless in writing signed
by such party.

 

26.3                        Delivery for Examination. 
Submission of the form of the Lease for examination will not bind
Landlord in any manner, and no obligations will arise under this Lease until it
is signed by both Landlord and Tenant and delivery is made to each.

 

26.4                        No Air Rights. This Lease does not grant any easements or
rights for light, air or view. Any diminution or blockage of light, air or view
by any structure or condition now or later erected will not affect this Lease
or impose any liability on Landlord.

 

26.5                        Enforcement Expenses.  Each
party agrees to pay, upon demand, all of the other party’s costs, charges and
expenses, including the fees and
out-of-pocket expenses of counsel, agents, and others retained, incurred in
successfully enforcing the other party’s obligations under this Lease.

 

26.6                        Building Planning. At any time after the Date, Landlord may
(upon at least 90 days prior notice) substitute for the Premises other premises
in the Building (“New Premises”) provided that the New Premises will be similar
to the Premises in area and usable for Tenant’s purpose. If Tenant is already
occupying the Premises, then Landlord will also pay the reasonable expenses of
Tenant’s moving from the Premises to the New Premises and for improving the New
Premises so that the leasehold improvements in the New Premises are substantially
similar to those in the Premises. Such move will be made during evenings,
weekends or otherwise so as to incur the least inconvenience to Tenant.

 

26.7                        Building Name. 
Tenant will not, without Landlord’s consent, use Landlord’s or the Building’s name, or any facsimile or
reproduction of the Building, for any purpose; except that Tenant may use the
Building’s name in the address of the business to be conducted by Tenant in the
Premises. Landlord reserves the right, upon reasonable prior notice to Tenant,
to change the name or address of the Building.

 

26.8                        No Waiver.  No waiver of any provision of
this Lease will be implied by any failure of either party to enforce any remedy
upon the violation of such provision, even if such violation is continued or
repeated subsequently. No express waiver will affect any provision other than
the one specified in such waiver, and that only for the time and in the manner
specifically stated.

 

26.9                        Recording; Confidentiality. 
Tenant will not record this Lease, or a short form memorandum, without
Landlord’s written consent and any such recording without Landlord’s written
consent will be a Default.  Tenant agrees
to keep the Lease terms, provisions and conditions confidential and will not
disclose them to any other person without Landlord’s prior written consent. However,
Tenant may disclose Lease terms, provisions and conditions to Tenant’s
accountants, attorneys, managing employees and others in privity with Tenant,
as reasonably necessary for Tenant’s business purposes, without such prior
consent.

 

26.10                 Captions.  The captions of articles and sections are for
convenience only and will not be deemed to limit, construe, affect or alter the
meaning of such articles and sections.

 

26.11                 Invoices.  All bills or invoices to be
given by Landlord to Tenant will be sent to Tenant’s Address.  Tenant may change Tenant’s Address by notice
to Landlord given according to Article 25. 
If Tenant fails to give Landlord specific written notice of its
objections within 60 days after receipt of any bill or invoice from Landlord, such bill or invoice
will be deemed true and correct and Tenant may not later question the validity
of such bill or invoice or the underlying information or computations used to
determine the amount stated.

 

26.12                 Severability.  If any provision of this Lease is declared
void or unenforceable by a final judicial or administrative order, this Lease
will continue in full force and effect, except that the void or unenforceable
provision will be deemed deleted and replaced with a provision as similar in
terms to such void or unenforceable provision as may be possible and be valid
and enforceable.

 

26.13                 Jury Trial.  LANDLORD AND TENANT WAIVE TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY LANDLORD OR TENANT
AGAINST THE OTHER WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION
WITH THIS LEASE, TENANT’S USE AND OCCUPANCY OF THE PREMISES, OR THE
RELATIONSHIP OF LANDLORD AND TENANT. HOWEVER, SUCH WAIVER OF JURY TRIAL WILL
NOT APPLY TO ANY CLAIMS FOR PERSONAL INJURY.

 

26.14                 Authority to Bind.  The
individuals signing this Lease on behalf of Landlord and Tenant represent and
warrant that they are empowered and duly authorized to bind Landlord or Tenant,
as the case may be, to this Lease according to its terms.

 

26.15                 Only Landlord/Tenant Relationship. 
Landlord and Tenant agree that neither any provision of this Lease nor
any act of the parties will be deemed to create any relationship between
Landlord and Tenant other than the relationship of landlord and tenant.

 

26.16                 Governing Law.  This Lease will be governed by and construed
according to the laws of the state in which the Building is located.

 

26.17                 Executive Order. 
Tenant represents and warrants to Landlord that (a) Tenant is not listed
on the Specially Designated Nationals and Blocked Person List maintained by the
Office of Foreign Asset Control Department of the Treasury (“OFAC”) pursuant to
the requirements of Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) (the “Order”) or on
any other lists of terrorist or terrorist organizations (“Lists”) issued
pursuant to the rules and regulations of OFAC or in any other enabling legislation
or other Executive Orders in respect thereof (the Order and such other rules,
regulations, legislation or orders are collectively called the “Orders”); (b) Tenant
is not and will not be engaged in any activities prohibited in the Orders; (c) Tenant
has not been convicted or pleaded nolo contendere to charges related to
activity prohibited in the Orders; and (d) Tenant will not permit the Premises
to be used for activities prohibited in the Orders nor permit the Premises to be occupied by any person on such
Lists.

 

26.18                 Form of
Execution Copy.  The parties acknowledge that they intend to
execute a blacklined copy of this Lease which shows all changes to Landlord’s
form of lease for the Building. The parties acknowledge that this Lease
reflects the final agreement between the parties hereto and that any words or
items stricken herein are intended to be
deleted and any words or items in bold are intended to be included and
made a part of this Lease.

 

26.19.              Exhibits.
The Exhibits listed below are attached
to and incorporated in this Lease. In the event of any inconsistency between
such Exhibits and the terms and provisions of this Lease, the terms and
provisions of the Exhibits will control. The Exhibits to this Lease are:

 

12

 

Exhibit A                                               Plan Delineating the Premises

Exhibit B                                                 Possession and Leasehold Improvements 

Exhibit C                                                 Occupancy Estoppel Certificate

Exhibit D                                                Rules and Regulations

 

Having read and intending to be bound by the terms
and provisions of this Lease, Landlord and Tenant have signed it as of the
Date.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  PHL-OPCO, LP, a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  PHL-GP, LLC, a Delaware
  limited liability company, its general

  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  PHL-HOLDCO, LLC, a Delaware
  limited liability company,

  its authorized member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Laura L.
  Hahn

  
	
   

  	
   

  	
  Name

  	
  Laura L. Hahn

  
	
   

  	
   

  	
  Its Authorized Agent

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  Mosaic
  Nutraceuticals Corp., a
  Nevada corporation

  
	
   

  	
  By

  	
  /s/ Charles
  Townsend

  
	
   

  	
  Title

  	
  President

  
	
   

  	
  Name

  	
  Charles Townsend

  
	
   

  	
   

  
	
  STATE OF

  	
  TEXAS

  	
  )

  
	
   

  	
  )ss.

  
	
  COUNTY OF

  	
  DALLAS

  	
  )

  
											

 

This Lease Agreement was acknowledged before
me this 6 day of May, 2005 by Charles
Townsend as President of Mosaic Nutraceuticals Corporation, a Nevada corporation.

 

	
  WITNESS my hand and official seal.

  
	
   

  
	
   

  	
  /s/ Margie L. Smith

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
   

  
	
  My commission expires: 

  	
  7/20/06

  	
   

  
	
   

  
	
   

  	
  

  	
  MARGIE
  L. SMITH

  	
   

  
	
   

  	
  MY
  COMMISSION EXPIRES

  	
   

  
	
   

  	
  July
  20, 2006

  	
   

  
							

 

13

 

Exhibit A

COMERICA BANK BUILDING

 

PLAN DELINEATING THE PREMISES

 

 

A-1

 

Exhibit B

COMERICA BANK BUILDING

 

POSSESSION AND LEASEHOLD IMPROVEMENTS

 

1.                                      Conflicts; Terms.  If
there is any conflict or inconsistency between the provisions of the Lease and
those of this Exhibit B (“Work Letter”), the provisions of this
Work Letter will control.  Except for
those terms expressly defined in this Work Letter, all initially capitalized
terms will have the meanings stated for such terms in the Lease. The following
terms, which are not defined in the Lease, have the meanings indicated:

 

(a)                                  “Scheduled Commencement Date” means June 1, 2005.

 

(b)                                 “Commencement Date” means the first day of the
Term, which will be the Scheduled Commencement Date, unless the Commencement
Date is extended according to Paragraph 4 below or Section 27.4 of the
Lease.

 

(c)                                  “Landlord’s Representative” means Sarah-Lynn
Jimenez of CAPSTAR Commercial Real Estate Services.

 

(d)                                 “Tenant’s Representative” means Charlie
Townsend of Mosaic Nutraceuticals Corp.

 

(e)                                  “Leasehold Improvements” means the
alterations, leasehold improvements and installations to be constructed or
installed by Landlord for Tenant in the Premises according to this Work Letter
and set forth on Schedule B-l attached hereto.

 

2.                                      Landlord’s Obligations. 
Landlord will proceed to complete the Premises according to this Work
Letter and tender possession of the Premises to Tenant when the Leasehold
Improvements have been completed to the extent that only minor construction
details, which would not materially interfere with Tenant’s use and enjoyment
of the Premises, require completion or correction.  Tenant will accept the Premises when Landlord
tenders possession, provided that the Leasehold Improvements have been substantially
completed as described above. Landlord and Tenant agree that all alterations, improvements and
additions made to the Premises according to this Work Letter, whether paid for
by Landlord or Tenant, will, without compensation to Tenant, become Landlord’s
property upon installation and will remain Landlord’s property at the
expiration or earlier termination of the Term.

 

3.                                      Occupancy During Construction. 
Landlord and Tenant acknowledge that Tenant will be in possession of the
Premises during the construction of Leasehold Improvements. Landlord and Tenant
will cooperate to minimize disruption to Tenant’s business in completing the
Leasehold Improvements, provided that Landlord will not be required to incur
overtime expenses as part of such cooperation. 
Further, Tenant acknowledges that during construction of the Leasehold
Improvements, Tenant may be subject to noise, dust, odors, and vibrations, none
of which will subject Landlord to any claim, including, without limitation,
damages, breach of quiet enjoyment, or constructive eviction, under this Lease
or the Existing Lease.

 

4.                                      Delayed Occupancy.  If
Landlord fails to tender possession of the Premises to Tenant according to
Paragraph 2 above on or before the Scheduled Commencement Date, Landlord will
not be in default or liable in damages to Tenant, nor will the obligations of
Tenant be affected, provided, however, that the Commencement Date will be
extended automatically by one day for each day of the period after the
Scheduled Commencement Date to the day on which Landlord tenders possession of
the Premises to Tenant according to Paragraph 2 above.  Such postponement of the commencement of the
Term will be in full settlement of all claims that Tenant might otherwise have
against Landlord by reason of Landlord’s failure to substantially complete its
obligations under this Work Letter by the Scheduled Commencement Date.

 

5.                                      Punch List.  Tenant’s
taking possession of any portion of the Premises will be conclusive evidence
that such portion of the Premises was in good order and satisfactory condition
when Tenant took possession, except as to any patent defects identified on a
punch list prepared and signed by Landlord’s Representative and Tenant’s
Representative after an inspection of the Premises by both such parties when
Tenant takes possession, and except as to any latent defects of which Tenant
notifies Landlord in writing within one year after the Commencement Date.
Landlord will not be responsible for any items of damage caused by Tenant, its
agents, independent contractors or suppliers. 
No promises to alter, remodel or improve the Premises or Building and no
representations concerning the condition of the Premises or Building have been
made by Landlord to Tenant other than as may be expressly stated in the Lease
(including this Work Letter).

 

6.                                     Representatives. 
Landlord appoints Landlord’s Representative to act for Landlord in all
matters covered by this Work Letter. 
Tenant appoints Tenant’s Representative to act for Tenant in all matters
covered by this Work Letter. All inquiries, requests, instructions,
authorizations and other communications with respect to the matters covered by
this Work Letter will be made to Landlord’s Representative or Tenant’s
Representative, as the case may be. 
Tenant will not make any inquiries of or requests to, and will not give
any instructions or authorizations to, any other employee or agent of Landlord,
including Landlord’s architect, engineers and contractors or any of their
agents or employees, with regard to matters covered by this Work Letter. Either
party may change its Representative under this Work Letter at any time by 3
days’ prior written notice to the other party.

 

7.                                     General.  No
approval by Landlord or Landlord’s architect or engineer of any drawings, plans
or specifications which are prepared in connection with construction of
improvements in the Premises will constitute a representation or warranty by Landlord
as to the adequacy or sufficiency of such drawings, plans or specifications, or
the improvements to which they relate, for any use, purpose or condition, but
such approval will merely be the consent of Landlord to the construction or
installation of improvements in the Premises according to such drawings, plans
or specifications.  Failure by Tenant to
pay any amounts due under this Work Letter will have the same effect as failure
to pay Rent under the Lease, and such failure or Tenant’s failure to perform
any of its other obligations under this Work Letter will constitute a Default
under Section 20.1 of the Lease, entitling Landlord to all of its remedies
under the Lease as well as all remedies otherwise available to Landlord.

 

B-1

 

Schedule B-1

COMERICA BANK BUILDING

 

LANDLORD’S WORK

 

Landlord’s
Work:

 

1.                                       Demolish one interior office wall of approximately 12 linear feet and
construct one interior office wall of approximately 11 linear feet.

 

2.                                       Install new Building Standard carpet and base.

 

3.                                       Repaint all walls using Building Standard
paint in a single color.

 

4.                                       Repaint existing
cabinets in break room and copy room.

 

5.                                       Install new dishwasher.

 

6.                                       Repair scratches in wood paneling in reception area.

 

7.                                       Install Building Standard suite signage with
Tenant’s name.

 

8.                                       Seal one interior doorway.

 

9.                                       Install a glass insert in one interior door.

 

10.                                 Install VCT in one office.

 

B-2

 

Exhibit C

COMERICA BANK BUILDING

 

OCCUPANCY ESTOPPEL CERTIFICATE

 

THIS
OCCUPANCY ESTOPPEL CERTIFICATE (“Certificate”) is made upon this
            day of
           , 20
    , by
                                                    ,
a                                      
(the “Tenant”), with respect to and forming a part of that certain Lease
Agreement (the “Lease”) dated
                                                 ,
between PHL-OPCO, LP (the “Landlord”) and
Tenant for the premises commonly known as Suite
              (the
“Premises”) of the Comerica Bank Building located at 4100 Spring Valley Road,
Farmers Branch, Texas (the “Building”).

 

In
consideration of the mutual covenants and agreements stated in the Lease, and
intending that this Certificate may be relied upon by Landlord and any
prospective purchaser or present or prospective mortgagee, deed of trust
beneficiary, or ground lessor of all or a portion of the Building, including,
without limitation, General Electric Capital Corporation, Tenant certifies as
follows:

 

1.                                       Except for those terms expressly defined in
this Certificate, all initially capitalized terms will have the meanings stated
for such terms in the Lease.

 

2.                                       The Commencement Date occurred on
          , and the Expiration
Date will occur on                                   .

 

3.                                       Tenant’s obligation to make monthly payments
of Base Rent under the Lease began (or will begin) on the first anniversary of
the Commencement Date and is paid
current through the date of this Certificate.

 

4.                                       Tenant’s obligation to make monthly estimated
payments of Additional Rent under the Lease began (or will begin) on
                                               
and is paid current through the date of this Certificate.

 

5.                                       Tenant has accepted the Premises, and all
leasehold improvements and other work required to be performed by Landlord under
the Lease have been completed.

 

6.                                       Tenant has no existing offset, credit, or defense
to the payment of any Rent.

 

IN
WITNESS WHEREOF, Tenant has executed this Certificate as of the day and year
first written above.

 

	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
                                                 ,
  a
                         

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
					

 

C-1

 

Exhibit D

COMERICA BANK BUILDING

 

RULES AND REGULATIONS

 

1.                                      Rights of Entry. 
Tenant will have the right to enter the Premises at any time, but
outside of Business Hours Tenant will be required to furnish proper and
verifiable identification. Landlord will have the right to enter the Premises
at all reasonable hours to perform janitorial services or clean windows; and
also at any time during the last 3 months of the Term, with reasonable prior notice
to Tenant, to show the Premises to prospective tenants.

 

2.                                      Right of Exclusion. 
Landlord reserves the right to exclude or expel from the Building any
person who, in Landlord’s judgment, is intoxicated or under the influence of
alcohol or drugs.

 

3.                                      Obstructions. 
Tenant will not obstruct or place anything in or on the sidewalks or
driveways outside the Building, or in the lobbies, corridors, stairwells or
other Common Areas.  Landlord may remove,
at Tenant’s expense, any such obstruction or thing without notice or obligation
to Tenant.

 

4.                                      Refuse. 
Tenant will place all refuse in the Premises in proper receptacles
provided and paid for by Tenant, or in receptacles provided by Landlord for the
Building, and will not place any litter or refuse on or in the sidewalks or
driveways outside the Building, or the Common Areas, lobbies, corridors,
stairwells, ducts or shafts of the Building.

 

5.                                      Public Safety.  Tenant will not throw anything out of doors,
windows or skylights, down passageways or over walls.

 

6.                                      Keys; Locks. 
Landlord may from time to time install and change locks on entrances to
the Building, Common Areas and the Premises, and will provide Tenant a
reasonable number of keys to meet Tenant’s requirements. If Tenant desires
additional keys, they will be furnished by Landlord and Tenant will pay a
reasonable charge for them. Tenant will not add or change existing locks on any
door in or to the Premises without Landlord’s prior written consent.  If with Landlord’s consent, Tenant installs
lock(s) incompatible with the Building master locking system:

 

(a)                                  Landlord, without abatement of Rent, will be
relieved of any obligation under the Lease to provide any service that requires
access to the affected areas;

 

(b)                                 Tenant will indemnify Landlord against any
expense as a result of forced entry to the affected areas which may be required
in an emergency; and

 

(c)                                  Tenant will, at the end of the Term and at
Landlord’s request, remove such lock(s) at Tenant’s expense.

 

At the end of the Term,
Tenant will promptly return to Landlord all keys for the Building and Premises
which are in Tenant’s possession.

 

7.                                      Aesthetics. 
Tenant will not attach any awnings, signs, displays or projections to
the outside or inside walls or windows of the Building which are visible from
outside the Premises without Landlord’s prior written approval, which may be
withheld in Landlord’s sole discretion.

 

8.                                      Window Treatment.  If
Tenant desires to attach or hang any curtains, blinds, shades or screens to or
in any window or door of the Premises, Tenant must obtain Landlord’s prior
written approval.  Tenant will not coat
or sunscreen the interior or exterior of any windows without Landlord’s express
written consent.  Tenant will not place
any objects on the window sills that cause, in Landlord’s reasonable opinion,
an aesthetically unacceptable appearance.

 

9.                                      Directory Boards.  The
Building office directory boards have a limited capacity; however, Landlord
will make every reasonable effort to accommodate Tenant’s requirements.

 

10.                               Building Control. 
Landlord reserves the right to control and operate the Common Areas as
well as facilities furnished for the common use of tenants in such manner as Landlord deems best for the
benefit of tenants generally. Landlord reserves the right to prevent access to
the Building during an emergency by closing the doors or otherwise, for the
safety of tenants and protection of the Building and property in the Building.

 

11.                               Engineering Consent.  All
plumbing, electrical and heating, ventilating and air conditioning (“HVAC”)
work for and in the Premises requires Landlord’s prior written consent to
maintain the integrity of the Building’s electrical, plumbing and HVAC systems.

 

12.                               HVAC Interference. 
Tenant will not place objects or other obstructions on the HVAC
convectors or diffusers and will not permit any other interference with the
HVAC system.

 

13.                               Plumbing.  Tenant
will only use plumbing fixtures for the purpose for which they we
constructed.  Tenant will pay for all
damages resulting from any misuse by Tenant
of plumbing fixtures.

 

14.                               Equipment Location. 
Landlord reserves the right to specify where Tenant’s business machines,
mechanical equipment and heavy objects will be placed in the Premises in order
to best absorb and prevent vibration, noise and annoyance to other tenants, and
to prevent damage to the Building. 
Tenant will pay the cost of any required professional engineering
certification or assistance.

 

D-1

 

15.                               Bicycles; Animals. 
Tenant will not bring into, or keep about, the Premises any bicycles,
vehicles, birds, animals or organic Christmas decor of any kind. Bicycles and
vehicles may only be parked in areas designated for such purpose.

 

16.                               Carpet Protection.  In
those portions of the Premises where carpet has been provided by Landlord,
Tenant will at its own expense install and maintain pads to protect the carpet
under all furniture having castors other than carpet castors.

 

17.                               Proper Conduct. 
Tenant will conduct itself in a manner which is consistent with the
character of the Building and will ensure that Tenant’s conduct will not impair
the comfort or convenience of other tenants in the Building.

 

18.                               Elevators. 
Except as may be expressly permitted by Landlord, only freight elevators
may be used for deliveries. Use of freight elevators after Business Hours must
be scheduled through the office of the Property Manager.

 

19.                               Deliveries. 
Tenant will ensure that deliveries of materials and supplies to the
Premises are made through such entrances, elevators and corridors and at such
times as may from time to time be reasonably
designated by Landlord.  Such deliveries may
not be made through any of the main entrances to the Building without Landlord’s
prior permission.  Tenant will use or
cause to be used, in the Building, hand trucks or other conveyances equipped
with rubber tires and rubber side guards to prevent damage to the Building or
property in the Building. Tenant will promptly pay Landlord the cost of
repairing any damage to the Building caused by any person making deliveries to
the Premises.

 

20.                               Moving. 
Tenant will ensure that furniture and equipment and other bulky matter
being moved to or from the Premises are moved through such entrances, elevators
and corridors and at such times as may from time to time be reasonably designated
by Landlord, and by movers or a moving company reasonably approved by Landlord.
Tenant will promptly pay Landlord the cost of repairing any damage to the
Building caused by any person moving any such furniture, equipment or matter to
or from the Premises.

 

21.                               Solicitations. 
Canvassing, soliciting and peddling in the Building are prohibited and
Tenant will cooperate in preventing the same.

 

22.                               Food.  Only
persons approved from time to time by Landlord may prepare, solicit orders for,
sell, serve or distribute food in or around the Building.  Except us may be specified in the Lease or on
construction drawings for the Premises approved by Landlord, and except for
microwave cooking, Tenant will not use the Premises for preparing or dispensing
food, or soliciting of orders for sale, serving or distribution of food.

 

23.                               Parking Rules and
Regulations.  Tenant will comply with all reasonable rules and
regulations applicable to the parking facilities serving the Building as
determined by the parking facility operator.

 

24.                               Employees, Agents and Invitees.  In
these Rules and Regulations, “Tenant” includes Tenant’s employees, agents,
invitees, licensees and others permitted by Tenant to access, use or occupy the
Premises.

 

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