Document:

Exhibit 10.32

Exhibit 10.32

VERSION 4/98

INDUSTRIAL LEASE AGREEMENT

BETWEEN

PINNACLE INDUSTRIAL CENTER LIMITED PARTNERSHIP

AS LANDLORD

AND

TANDY BRANDS ACCESSORIES, INC.

AS TENANT

 

 

 

LEASE INDEX

	 	 	 	 
	Section	 	Subject	 
	 	 	 	 
	1

	 	Basic Lease Provisions	1
	 
	 	 	 
	2

	 	Demised Premises	2
	 
	 	 	 
	3

	 	Term	3
	 
	 	 	 
	4

	 	Base Rent	3
	 
	 	 	 
	5

	 	Security Deposit	3
	 
	 	 	 
	6

	 	Operating Expenses and Additional Rent	4
	 
	 	 	 
	7

	 	Use of Demised Premises	5
	 
	 	 	 
	8

	 	Insurance	6
	 
	 	 	 
	9

	 	Utilities	8
	 
	 	 	 
	10

	 	Maintenance and Repairs	8
	 
	 	 	 
	11

	 	Tenant’s Personal Property; Indemnity	9
	 
	 	 	 
	12

	 	Tenant’s Fixtures	9
	 
	 	 	 
	13

	 	Signs	9
	 
	 	 	 
	14

	 	Intentionally Deleted	9
	 
	 	 	 
	15

	 	Governmental Regulations	10
	 
	 	 	 
	16

	 	Environmental Matters	10
	 
	 	 	 
	17

	 	Construction of Demised Premises	12
	 
	 	 	 
	18

	 	Tenant Alterations and Additions	13
	 
	 	 	 
	19

	 	Services by Landlord	15
	 
	 	 	 
	20

	 	Fire and Other Casualty	15
	 
	 	 	 
	21

	 	Condemnation	15
	 
	 	 	 
	22

	 	Tenant’s Default	16
	 
	 	 	 
	23

	 	Landlord’s Right of Entry	20
	 
	 	 	 
	24

	 	Lender’s Rights	21
	 
	 	 	 
	25

	 	Estoppel Certificate	22
	 
	 	 	 
	26

	 	Landlord’s Liability	22
	 
	 	 	 
	27

	 	Notices	22
	 
	 	 	 
	28

	 	Brokers	23
	 
	 	 	 
	29

	 	Assignment and Subleasing	23
	 
	 	 	 
	30

	 	Termination or Expiration	25

 

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	Section	 	Subject	 
	 
	31

	 	Intentionally Deleted	25
	 
	 	 	 
	32

	 	Late Payments	25
	 
	 	 	 
	33

	 	Rules and Regulations	25
	 
	 	 	 
	34

	 	Quiet Enjoyment	25
	 
	 	 	 
	35

	 	Miscellaneous	26
	 
	 	 	 
	36

	 	Special Stipulations	27
	 
	 	 	 
	37

	 	Lease Date	27
	 
	 	 	 
	38

	 	Authority	27
	 
	 	 	 
	39

	 	No Offer Until Executed	27

Exhibit “A” Demised Premises

Exhibit “B” Plans and Specifications

Exhibit “C” Special Stipulations

Exhibit “D” Rules and Regulations

Exhibit “E” Certificate of Authority

Exhibit “F” Subordination, Non-Disturbance and Attornment Agreement

 

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INDUSTRIAL LEASE AGREEMENT

THIS LEASE AGREEMENT (the “Lease”) is made as of the “Lease Date” (as defined in
Section 37 herein) by and between PINNACLE INDUSTRIAL CENTER LIMITED PARTNERSHIP, a Texas limited
partnership (“Landlord”), and TANDY BRANDS ACCESSORIES, INC., a Delaware corporation
(“Tenant”) (the words “Landlord” and “Tenant” to include their respective legal
representatives, successors and permitted assigns where the context requires or permits).

W I T N E S S E T H:

1. Basic Lease Provisions. The following constitute the basic provisions of this
Lease:

(a) Demised Premises Address: 4421 Davis Blvd.

                    
                    
         
Dallas, Texas 75211

(b) Demised Premises Square Footage: approximately 119,804 sq. ft.

(c) Building Square Footage: approximately 330,000 sq. ft.

(d) Annual Base Rent:

	 	 	 	 	 
	Lease Year 1
	 	$	421,718	 
	 	 	 	 	 
	Lease Years 2 - 5
	 	$	460,056	 
	 	 	 	 	 
	Lease Years 6 - 10
	 	$	517,560	 

(e) Monthly Base Rent Installments:

	 	 	 	 	 
	Lease Year 1
	 	 	 	 
	Month 1
	 	$	-0-	 
	Months 2 - 12
	 	$	38,338	 
	 	 	 	 	 
	Lease Years 2 - 5
	 	$	38,338	 
	 	 	 	 	 
	Lease Years 6 - 10
	 	$	43,130	 

(f) Lease Commencement Date: January 1, 2000

(g) Base Rent Commencement Date: February 1, 2000

(h) Expiration Date: December 31, 2009

(i) Term: 120 months

(j) Tenant’s Operating Expense Percentage: 36.30%

 

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(k) Security Deposit: $38,338

(l) Permitted Use: Storage, distribution, and wholesale sales of accessories, and
office uses incidental thereto.

(m) Address for notice:

	 	 	 
	Landlord:
	 	Pinnacle Industrial Center Limited Partnership

	 	 	c/o Industrial Developments International, Inc.

	 	 	3424 Peachtree Road, N.E., Suite 1500

	 	 	Atlanta, Georgia 30326

	 	 	Attn: Vice President — Operations

	 	 	 

	Tenant:
	 	Tandy Brands Accessories, Inc.

	 	 	690 E. Lamar Blvd.

	 	 	#200

	 	 	Arlington, Texas 76011

	 	 	Attn: David Wagner

(n) Address for rental payments:

	 	 	 
	 	 	Pinnacle Industrial Center Limited Partnership

	 	 	c/o IDI Services Group, Inc.

	 	 	3424 Peachtree Road, N.E.

	 	 	Suite 1500

	 	 	Atlanta, Georgia 30326

	 	 	 
	(o) Broker(s):
	 	Vantage Management Company

	 	 	2911 Turtle Creek, Suite 500

	 	 	Dallas, Texas 75219

	 	 	Attention: Mr. Scott Bredehoeft

2. Demised Premises. For and in consideration of the rent hereinafter reserved and
the mutual covenants hereinafter contained, Landlord does hereby lease and demise unto Tenant, and
Tenant does hereby hire, lease and accept, from Landlord all upon the terms and conditions
hereinafter set forth the following premises, referred to as the “Demised Premises”, as outlined on
Exhibit A attached hereto and incorporated herein: approximately 119,804 square feet of
space, approximately 16,413 square feet of which is office space, having an address as set forth in
Section 1(a), located within Building A (the “Building”), which contains a total of
approximately 330,000 square feet and is located within Pinnacle Industrial Center (the
“Project”), located in Dallas County, Texas.

 

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3. Term. To have and to hold the Demised Premises for a preliminary term (the
“Preliminary Term”) commencing on the Lease Date and ending on the Lease Commencement Date
as set forth in Section l(f), and a primary term (the “Primary Term”) commencing on the
Lease Commencement Date and terminating on the Expiration Date as set forth in Section 1(h), as the
Lease Commencement Date and the Expiration Date may be revised pursuant to Section 17 (the
Preliminary Term, the Primary Term, and any and all extensions thereof, herein referred to as the
“Term”). The term “Lease Year” shall mean each one (1) year period of the Term (or
portion thereof if the last Lease Year of the Term is less than one (1) full year) beginning on the
Lease Commencement Date, and each anniversary thereof, and ending on the day immediately prior to
the next succeeding anniversary of the Lease Commencement Date.

4. Base Rent. Tenant shall pay to Landlord at the address set forth in Section 1(n),
as base rent for the Demised Premises, commencing on the Base Rent Commencement Date and continuing
throughout the Term in lawful money of the United States, the annual amount set forth in Section
1(d) payable in equal monthly installments as set forth in Section 1(e) (the “Base Rent”),
payable in advance, without demand and without abatement, reduction, set-off or deduction, on the
first day of each calendar month during the Term. If the Base Rent Commencement Date shall fall on
a day other than the first day of a calendar month, the Base Rent shall be apportioned pro rata on
a per diem basis (i) for the period between the Base Rent Commencement Date and the first day of
the following calendar month (which pro rata payment shall be due and payable on the Base Rent
Commencement Date), and (ii) for the last partial month of the Term, if applicable. No payment by
Tenant or receipt by Landlord of rent hereunder shall be deemed to be other than on account of the
amount due, and no endorsement or statement on any check or any letter accompanying any check or
payment of rent shall be deemed an accord and satisfaction, and Landlord may accept such check as
payment without prejudice to Landlord’s right to recover the balance of such installment or payment
of rent or pursue any other remedies available to Landlord.

5. Security Deposit. Upon Tenant’s execution of this Lease, Tenant will pay to
Landlord the sum set forth in Section 1(k) (the “Security Deposit”) as security for the
full and faithful performance by Tenant of each and every term, covenant and condition of this
Lease. The acceptance by Landlord of the Security Deposit paid by Tenant shall not render this
Lease effective unless and until Landlord shall have executed and delivered to Tenant a fully
executed copy of this Lease. The Security Deposit may be commingled with Landlord’s other funds or
held by Landlord in a separate interest bearing account, with interest paid to Landlord, as
Landlord may elect. In the event that Tenant is in default under this Lease, Landlord may retain
the Security Deposit for the payment of any sum due Landlord or which Landlord may expend or be
required to expend by reason of Tenant’s default or failure to perform; provided,
however, that any such retention by Landlord shall not be or be deemed to be an election of
remedies by Landlord or viewed as liquidated damages, it being expressly understood and agreed that
Landlord shall have the right to pursue any and all other remedies available to it under the terms
of this Lease or otherwise. In the event all or any portion of the Security Deposit is so retained
by Landlord, Tenant shall, within five (5) days of demand therefor from Landlord, replenish the
Security Deposit to the full amount set forth in Section 1(k). In the event that Tenant shall
comply with all of the terms, covenants and conditions of this Lease, the Security Deposit shall be
returned to Tenant within thirty (30) days after the later of (a) the Expiration Date or (b) the
date that Tenant delivers possession of the Demised Premises to Landlord. In the event of a sale
of the Building, Landlord shall have the right to transfer the Security Deposit to the
purchaser, and upon acceptance by such purchaser, Landlord shall be released from all liability for
the return of the Security Deposit. Tenant shall not assign or encumber the money deposited as
security, and neither Landlord nor its successors or assigns shall be bound by any such assignment
or encumbrance.

 

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6. Operating Expenses and Additional Rent.

(a) Tenant agrees to pay as Additional Rent (as defined in Section 6(b) below) its
proportionate share of Operating Expenses (as hereinafter defined). “Operating
Expenses” shall be defined as all reasonable expenses for operation, repair, replacement
and maintenance as necessary to keep the Building and the common areas, driveways, and
parking areas associated therewith (collectively, the “Building Common Area”) in
good order, condition and repair, including but not limited to, utilities for the Building
Common Area, expenses associated with the driveways and parking areas (including sealing and
restriping, and snow, trash and ice removal), security systems, fire detection and
prevention systems, lighting facilities, landscaped areas, walkways, painting and caulking,
directional signage, curbs, drainage strips, sewer lines, all charges assessed against or
attributed to the Building pursuant to any applicable easements, covenants, restrictions,
agreements, declaration of protective covenants or development standards, property
management fees, all real property taxes and special assessments imposed upon the Building,
the Building Common Area and the land on which the Building and the Building Common Area are
constructed, all costs of insurance paid by Landlord with respect to the Building and the
Building Common Area, and costs of improvements to the Building and the Building Common Area
required by any law, ordinance or regulation applicable to the Building and the Building
Common Area generally (and not because of the particular use of the Building or the Building
Common Area by a particular tenant), which cost shall be amortized on a straight line basis
over the useful life of such improvement, as reasonably determined by Landlord. Operating
Expenses shall not include expenses for the costs of any maintenance and repair required to
be performed by Landlord at its own expense under Section (10)(b). Further, Operating
Expenses shall not include the costs for capital improvements unless such costs are incurred
for the purpose of causing a material decrease in the Operating Expenses of the Building or
the Building Common Area or are made with respect to improvements made to comply with laws,
ordinances or regulations as described above. The proportionate share of Operating Expenses
to be paid by Tenant shall be a percentage of the Operating Expenses based upon the
proportion that the square footage of the Demised Premises bears to the total square footage
of the Building (such figure referred to as “Tenant’s Operating Expense Percentage” and set
forth in Section 1(j)). Prior to or promptly after the beginning of each calendar year
during the Term, Landlord shall estimate the total amount of Operating Expenses to be paid
by Tenant during each such calendar year and Tenant shall pay to Landlord one-twelfth (1/12)
of such sum on the first day of each calendar month during each such calendar year, or part
thereof, during the Term. Within a reasonable time after the end of each calendar year,
Landlord shall submit to Tenant a statement of the actual amount of Operating Expenses for
such calendar year, and the actual amount owed by Tenant, and within thirty (30) days after
receipt of such statement, Tenant shall pay any deficiency between the actual amount owed
and the estimates paid

 

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during such calendar year, or in the event of overpayment, Landlord shall credit the amount of such
overpayment toward the next installment of Operating Expenses owed by Tenant or remit within
thirty (30) days such overpayment to Tenant if the Term has expired or has been terminated
and no Event of Default exists hereunder. The obligations in the immediately preceding
sentence shall survive the expiration or any earlier termination of this Lease. If the
Lease Commencement Date shall fall on other than the first day of the calendar year, and/or
if the Expiration Date shall fall on other than the last day of the calendar year, Tenant’s
proportionate share of the Operating Expenses for such calendar year shall be apportioned
prorata.

(b) Any amounts required to be paid by Tenant hereunder (in addition to Base Rent) and
any charges or expenses incurred by Landlord on behalf of Tenant under the terms of this
Lease shall be considered “Additional Rent” payable in the same manner and upon the same
terms and conditions as the Base Rent reserved hereunder except as set forth herein to the
contrary. Any failure on the part of Tenant to pay such Additional Rent when and as the
same shall become due shall entitle Landlord to the remedies available to it for non-payment
of Base Rent. Tenant’s obligations for payment of Additional Rent shall begin to accrue on
the Lease Commencement Date regardless of the Base Rent Commencement Date.

(c) If applicable in the jurisdiction where the Demised Premises are located, Tenant
shall pay and be liable for all rental, sales, use and inventory taxes or other similar
taxes, if any, on the amounts payable by Tenant hereunder levied or imposed by any city,
state, county or other governmental body having authority, such payments to be in addition
to all other payments required to be paid Landlord by Tenant under the terms of this Lease.
Such payment shall be made by Tenant directly to such governmental body if billed to Tenant,
or if billed to Landlord, such payment shall be paid concurrently with the payment of the
Base Rent, Additional Rent, or such other charge upon which the tax is based, all as set
forth herein.

7. Use of Demised Premises.

(a) The Demised Premises shall be used for the Permitted Use set forth in Section 1(l)
and for no other purpose without Landlord’s prior written consent, which consent may be
withheld in Landlord’s reasonable discretion.

(b) Tenant will permit no liens to attach or exist against the Demised Premises, and
shall not commit any waste.

(c) The Demised Premises shall not be used for any illegal purposes, and Tenant shall
not allow, suffer, or permit any vibration, noise, odor, light or other effect to occur
within or around the Demised Premises that could constitute a nuisance or trespass for
Landlord or any occupant of the Building or an adjoining building, its customers, agents, or
invitees. Upon notice by Landlord to tenant that any of the aforesaid prohibited uses are
occurring, Tenant agrees to promptly remove or control the same.

 

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(d) Tenant shall not in any way violate any law, ordinance or restrictive covenant
affecting the Demised Premises, and shall not in any manner use the Demised Premises so as
to cause cancellation of, prevent the use of, or increase the rate of, the fire and extended
coverage insurance policy required hereunder. Landlord makes no (and does hereby expressly
disclaim any) covenant, representation or warranty as to the Permitted Use being allowed by
or being in compliance with any applicable laws, rules, ordinances or restrictive covenants
now or hereafter affecting the Demised Premises, and any zoning letters, copies of zoning
ordinances or other information from any governmental agency or other third party provided
to Tenant by Landlord or any of Landlord’s agents or employees shall be for informational
purposes only, Tenant hereby expressly acknowledging and agreeing that Tenant shall conduct
and rely solely on its own due diligence and investigation with respect to the compliance of
the Permitted Use with all such applicable laws, rules, ordinances and restrictive covenants
and not on any such information provided by Landlord or any of its agents or employees.

(e) In the event insurance premiums pertaining to the Demised Premises, the Building,
or the Building Common Area, whether paid by Landlord or Tenant, are increased over the
least hazardous rate available due to the nature of the use of the Demised Premises by
Tenant, Tenant shall pay such additional amount as Additional Rent.

8. Insurance.

(a) Tenant covenants and agrees that from and after the Lease Commencement Date or any
earlier date upon which Tenant enters or occupies the Demised Premises or any portion
thereof, Tenant will carry and maintain, at its sole cost and expense, the following types
of insurance, in the amounts specified and in the form hereinafter provided for:

(i) Liability insurance in the Commercial General Liability form (or reasonable
equivalent thereto) covering the Demised Premises and Tenant’s use thereof against
claims for bodily injury or death, property damage and product liability occurring
upon, in or about the Demised Premises, such insurance to be written on an
occurrence basis (not a claims made basis), to be in combined single limits amounts
not less than $3,000,000.00 and to have general aggregate limits of not less than
$5,000,000.00 for each policy year. The insurance coverage required under this
Section 8(a)(i) shall, in addition, extend to any liability of Tenant arising out of
the indemnities provided for in Section 11 and, if necessary, the policy shall
contain a contractual endorsement to that effect.

(ii) Insurance covering (A) all of the items included in the leasehold
improvements constructed in the Demised Premises by or at the expense of Landlord
(collectively, the “Improvements”), including but not limited to demising
walls and the heating, ventilating and air conditioning system and (B) Tenant’s
trade fixtures, merchandise and personal property from time to time in, on or upon
the Demised Premises, in an amount not less than one hundred percent (100%) of their
full replacement value from time to time during the Term, providing protection against

 

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perils included within the standard form of
“all-risks” fire and casualty insurance policy, together with insurance against
sprinkler damage, vandalism and malicious mischief. Any policy proceeds from such
insurance relating to the Improvements shall be used solely for the repair,
construction and restoration or replacement of the Improvements damaged or destroyed
unless this Lease shall cease and terminate under the provisions of Section 20.

(b) All policies of the insurance provided for in Section 8(a) shall be issued in form
reasonably acceptable to Landlord by insurance companies with a rating of not less than “A,”
and financial size of not less than Class XII, in the most current available “Best’s
Insurance Reports”, and licensed to do business in the state in which the Building is
located. Each and every such policy:

(i) shall name Landlord, Lender (as defined in Section 24), and any other party
reasonably designated by Landlord, as an additional insured. In addition, the
coverage described in Section 8(a)(ii)(A) relating to the Improvements shall also
name Landlord as “loss payee”;

(ii) shall be delivered to Landlord, in the form of an insurance certificate
acceptable to Landlord as evidence of such policy, prior to the Lease Commencement
Date and thereafter within thirty (30) days prior to the expiration of each such
policy, and, as often as any such policy shall expire or terminate. Renewal or
additional policies shall be procured and maintained by Tenant in like manner and to
like extent;

(iii) shall contain a provision that the insurer will give to Landlord and such
other parties in interest at least fifteen (15) days notice in writing in advance of
any material change, cancellation, termination or lapse, or the effective date of
any reduction in the amounts of insurance; and

(iv) shall be written as a primary policy which does not contribute to and is
not in excess of coverage which Landlord may carry.

(c) In the event that Tenant shall fail to carry and maintain the insurance coverages
set forth in this Section 8, Landlord may upon thirty (30) days notice to Tenant (unless
such coverages will lapse in which event no such notice shall be necessary) procure such
policies of insurance and Tenant shall promptly reimburse Landlord therefor.

(d) Landlord and Tenant hereby waive any rights each may have against the other on
account of any loss or damage occasioned to Landlord or Tenant, as the case may be, their
respective property, the Demised Premises, its contents or to the other portions of the
Building, arising from any risk covered by all risks fire and extended coverage insurance of
the type and amount required to be carried hereunder, provided that such waiver does not
invalidate such policies or prohibit recovery thereunder. The parties hereto shall cause
their respective insurance companies insuring the property of
either Landlord or Tenant against any such loss, to waive any right of subrogation that
such insurers may have against Landlord or Tenant, as the case may be.

 

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(e) See Special Stipulations 4, 8, and 9 on Exhibit C hereto.

9. Utilities. During the Term, Tenant shall promptly pay as billed to Tenant all
rents and charges for water and sewer services and all costs and charges for gas, steam,
electricity, fuel, light, power, telephone, heat and any other utility or service used or consumed
in or servicing the Demised Premises and all other costs and expenses involved in the care,
management and use thereof. To the extent reasonably possible, such utilities shall be separately
metered and billed to Tenant. Any utilities which are not separately metered shall be billed to
Tenant by Landlord at Landlord’s actual cost. In the event Tenant’s use of any utility not metered
is in excess of the average use by other tenants, Landlord shall have the right to install a meter
for such utility, at Tenant’s expense, and bill Tenant for Tenant’s actual use. If Tenant fails to
pay any utility bills or charges, Landlord may, at its option and upon reasonable notice to Tenant,
pay the same and in such event, the amount of such payment, together with interest thereon at the
Interest Rate as defined in Section 32 from the date of such payment by Landlord, will be added to
Tenant’s next due payment as Additional Rent.

10. Maintenance and Repairs.

(a) Tenant shall, at its own cost and expense, maintain in good condition and repair
the interior of the Demised Premises, including but not limited to the heating, air
conditioning and ventilation systems, glass, windows and doors, sprinkler, all plumbing and
sewage systems, fixtures, interior walls, floors (including floor slabs), ceilings,
storefronts, plate glass, skylights, all electrical facilities and equipment including,
without limitation, lighting fixtures, lamps, fans and any exhaust equipment and systems,
electrical motors, and all other appliances and equipment (including, without limitation,
dock levelers, dock shelters, dock seals and dock lighting) of every kind and nature located
in, upon or about the Demised Premises, except as to such maintenance and repair as is the
obligation of Landlord pursuant to Section 10(b). During the Term, Tenant shall maintain in
full force and effect a service contract for the maintenance of the heating, ventilation and
air conditioning systems with an entity reasonably acceptable to Landlord. Tenant shall
deliver to Landlord (i) a copy of said service contract prior to the Lease Commencement
Date, and (ii) thereafter, a copy of a renewal or substitute service contract within thirty
(30) days prior to the expiration of the existing service contract. Tenant’s obligation
shall exclude any maintenance and repair required because of the act or negligence of
Landlord, its employees, contractors or agents, which shall be the responsibility of
Landlord.

(b) Landlord shall, at its own cost and expense, maintain in good condition and repair
the roof, foundation (beneath the floor slab) and structural frame of the Building.
Landlord’s obligation shall exclude the cost of any maintenance or repair required because
of the act or negligence of Tenant or Tenant’s agents, contractors, employees and invitees
(collectively, “Tenant’s Affiliates”), the cost of which shall be the responsibility
of Tenant.

 

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(c) Unless the same is caused solely by the negligent action or inaction of Landlord,
its employees or agents, and is not covered by the insurance required to be carried by
Tenant pursuant to the terms of this Lease, Landlord shall not be liable to Tenant or to any
other person for any damage occasioned by failure in any utility system or by the bursting
or leaking of any vessel or pipe in or about the Demised Premises, or for any damage
occasioned by water coming into the Demised Premises or arising from the acts or neglects of
occupants of adjacent property or the public.

11. Tenant’s Personal Property; Indemnity. All of Tenant’s personal property in the
Demised Premises shall be and remain at Tenant’s sole risk. Landlord, its agents, employees and
contractors, shall not be liable for, and Tenant hereby releases Landlord from, any and all
liability for theft thereof or any damage thereto occasioned by any act of God or by any acts,
omissions or negligence of any persons, other than Landlord. Landlord, its agents, employees and
contractors, shall not be liable for any injury to the person or property of Tenant or other
persons in or about the Demised Premises, Tenant expressly agreeing to indemnify and save Landlord,
its agents, employees and contractors, harmless, in all such cases, except to the extent caused by
the negligence or misconduct of Landlord, its agents, employees and contractors. Tenant further
agrees to indemnify and reimburse Landlord for any costs or expenses, including, without
limitation, reasonable attorneys’ fees, that Landlord reasonably may incur in investigating,
handling or litigating any such claim against Landlord by a third person, unless such claim arose
from the negligence or misconduct of Landlord, its agents, employees or contractors. The
provisions of this Section 11 shall survive the expiration or earlier termination of this Lease
with respect to any damage, injury or death occurring before such expiration or termination.

12. Tenant’s Fixtures. Tenant shall have the right to install in the Demised Premises
trade fixtures required by Tenant or used by it in its business, and if installed by Tenant, to
remove any or all such trade fixtures from time to time during and upon termination or expiration
of this Lease, provided no Event of Default, as defined in Section 22, then exists;
provided, however, that Tenant shall repair and restore any damage or injury to the
Demised Premises (to the condition in which the Demised Premises existed prior to such
installation, normal wear and tear excepted) caused by the installation and/or removal of any such
trade fixtures.

13. Signs. No sign, advertisement or notice shall be inscribed, painted, affixed, or
displayed on the windows or exterior walls of the Demised Premises or on any public area of the
Building, except in such places, numbers, sizes, colors and styles as are approved in advance in
writing by Landlord, and which conform to all applicable laws, ordinances, or covenants affecting
the Demised Premises. Any and all signs installed or constructed by or on behalf of Tenant
pursuant hereto shall be installed, maintained and removed by Tenant at Tenant’s sole cost and
expense.

14. Intentionally Deleted.

 

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15. Governmental Regulations. Tenant shall promptly comply throughout the Term, at
Tenant’s sole cost and expense, with all present and future laws, ordinances, orders, rules,
regulations or requirements of all federal, state and municipal governments and appropriate
departments, commissions, boards and officers thereof (collectively, “Governmental 
Requirements”) relating to (a) all or any part of the Demised Premises, and (b) to the
use or manner of use of the Demised Premises and the Building Common Area. Tenant shall also
observe and comply with the requirements of all policies of public liability, fire and other
policies of insurance at any time in force with respect to the Demised Premises. Without limiting
the foregoing, if as a result of one or more Governmental Requirements it is necessary, from time
to time during the Term, to perform an alteration or modification of the Demised Premises (a
“Code Modification”) which is made necessary as a result of the specific use being made by
Tenant of the Demised Premises, then such Code Modification shall be the sole and exclusive
responsibility of Tenant in all respects; any such Code Modification shall be promptly performed by
Tenant at its expense in accordance with the applicable Governmental Requirement and with Section
18 hereof. If as a result of one or more Governmental Requirements it is necessary from time to
time during the Term to perform a Code Modification which (i) would be characterized as a capital
expenditure under generally accepted accounting principles and (ii) is not made necessary as a
result of the specific use being made by Tenant of the Demised Premises (as distinguished from an
alteration or modification which would be required to be made by the owner of any warehouse-office
building comparable to the Building irrespective of the use thereof by any particular occupant),
then (a) Landlord shall have the obligation to perform the Code Modification at its expense, (b)
the cost of such Code Modification shall be amortized on a straight-line basis over the useful life
of the item in question, as reasonably determined by Landlord, and (c) Tenant shall be obligated to
pay (as Additional Rent, payable in the same manner and upon the same terms and conditions as the
Base Rent reserved hereunder) for the portion of such amortized costs attributable to the remainder
of the Term, including any extensions thereof. Tenant shall promptly send to Landlord a copy of
any written notice received by Tenant requiring a Code Modification.

16. Environmental Matters.

(a) For purposes of this Lease:

(i) “Contamination” as used herein means the presence of or release of
Hazardous Substances (as hereinafter defined) into any environmental media from,
upon, within, below, into or on any portion of the Demised Premises, the Building,
the Building Common Area or the Project so as to require remediation, cleanup or
investigation under any applicable Environmental Law (as hereinafter defined).

(ii) “Environmental Laws” as used herein means all federal, state, and
local laws, regulations, orders, permits, ordinances or other requirements, which
exist now or as may exist hereafter, concerning protection of human health, safety
and the environment, all as may be amended from time to time.

(iii) “Hazardous Substances” as used herein means any hazardous or
toxic substance, material, chemical, pollutant, contaminant or waste as those terms
are defined by any applicable Environmental Laws (including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601
et seq. (“CERCLA”) and the Resource Conservation and Recovery Act, 42 U.S.C.
6901 et seq. [“RCRA”]) and any solid
wastes, polychlorinated biphenyls, urea formaldehyde, asbestos, radioactive
materials, radon, explosives, petroleum products and oil.

 

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(b) Landlord represents that, except as revealed to Tenant in writing by Landlord, to
Landlord’s actual knowledge, Landlord has not treated, stored or disposed of any Hazardous
Substances upon or within the Demised Premises, nor, to Landlord’s actual knowledge, has any
predecessor owner of the Demised Premises.

(c) Tenant covenants that all its activities, and the activities of Tenant’s Affiliates
(as defined in Section 10(b)), on the Demised Premises, the Building, or the Project during
the Term will be conducted in compliance with Environmental Laws. Tenant warrants that it
is currently in compliance with all applicable Environmental Laws and that there are no
pending or threatened notices of deficiency, notices of violation, orders, or judicial or
administrative actions involving alleged violations by Tenant of any Environmental Laws.
Tenant, at Tenant’s sole cost and expense, shall be responsible for obtaining all permits or
licenses or approvals under Environmental Laws necessary for Tenant’s operation of its
business on the Demised Premises and shall make all notifications and registrations required
by any applicable Environmental Laws. Tenant, at Tenant’s sole cost and expense, shall at
all times comply with the terms and conditions of all such permits, licenses, approvals,
notifications and registrations and with any other applicable Environmental Laws. Tenant
warrants that it has obtained all such permits, licenses or approvals and made all such
notifications and registrations required by any applicable Environmental Laws necessary for
Tenant’s operation of its business on the Demised Premises.

(d) Tenant shall not cause or permit any Hazardous Substances to be brought upon, kept
or used in or about the Demised Premises, the Building, or the Project without the prior
written consent of Landlord, which consent shall not be unreasonably withheld;
provided, however, that the consent of Landlord shall not be required for
the use at the Demised Premises of cleaning supplies, toner for photocopying machines and
other similar materials, in containers and quantities reasonably necessary for and
consistent with normal and ordinary use by Tenant in the routine operation or maintenance of
Tenant’s office equipment or in the routine janitorial service, cleaning and maintenance for
the Demised Premises. For purposes of this Section 16, Landlord shall be deemed to have
reasonably withheld consent if Landlord determines that the presence of such Hazardous
Substance within the Demised Premises could result in a risk of harm to person or property
or otherwise negatively affect the value or marketability of the Building or the Project.

(e) Tenant shall not cause or permit the release of any Hazardous Substances by Tenant
or Tenant’s Affiliates into any environmental media such as air, water or land, or into or
on the Demised Premises, the Building or the Project in any manner that violates any
Environmental Laws. If such release shall occur, Tenant shall (i) take all steps reasonably
necessary to contain and control such release and any associated Contamination, (ii) clean
up or otherwise remedy such release and any associated Contamination to the extent required
by, and take any and all other actions required
under, applicable Environmental Laws and (iii) notify and keep Landlord reasonably
informed of such release and response.

 

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(f) Regardless of any Consents granted by Landlord pursuant to Section
16(d) allowing Hazardous Substances upon the Demised Premises, Tenant shall under no
circumstances whatsoever cause or permit (i) any activity on the Demised Premises which
would cause the Demised Premises to become subject to regulation as a hazardous waste
treatment, storage or disposal facility under RCRA or the regulations promulgated
thereunder, (ii) the discharge of Hazardous Substances into the storm sewer system serving
the Project or (iii) the installation of any underground storage tank or underground piping
on or under the Demised Premises.

(g) Tenant shall and hereby does indemnify Landlord and hold Landlord harmless from and
against any and all expense, loss, and liability suffered by Landlord (except to the extent
that such expenses, losses, and liabilities arise out of Landlord’s own negligence or
willful act), by reason of the storage, generation, release, handling, treatment,
transportation, disposal, or arrangement for transportation or disposal, of any Hazardous
Substances (whether accidental, intentional, or negligent) by Tenant or Tenant’s Affiliates
or by reason of Tenant’s breach of any of the provisions of this Section 16. Such expenses,
losses and liabilities shall include, without limitation, (i) any and all expenses that
Landlord may incur to comply with any Environmental Laws; (ii) any and all costs that
Landlord may incur in studying or remedying any Contamination at or arising from the Demised
Premises, the Building, or the Project; (iii) any and all costs that Landlord may incur in
studying, removing, disposing or otherwise addressing any Hazardous Substances; (iv) any and
all fines, penalties or other sanctions assessed upon Landlord; and (v) any and all
reasonable legal and professional fees and costs incurred by Landlord in connection with the
foregoing. The indemnity contained herein shall survive the expiration or earlier
termination of this Lease.

17. Construction of Demised Premises.

(a) Landlord and Tenant have agreed on a set of plans and specifications and/or
construction drawings (collectively, the “Plans and Specifications”) as set forth on
Exhibit B attached hereto and incorporated herein, covering all work to be performed
by Landlord in constructing the Improvements (as defined in Section 8(a)(ii)). Any changes
to the Plans and Specifications, and the related costs of construction, requested by Tenant
or to comply with any law, rule, or ordinance as a result of Tenant’s particular use of the
Demised Premises (collectively, “Tenant Changes”) shall be at Tenant’s sole cost and
expense and subject to Landlord’s written approval, which approval shall not be unreasonably
withheld, conditioned or delayed. Tenant agrees to pay the bill for such changes and costs
in full to Landlord within ten (10) calendar days following receipt of such bill. If
completion of construction of the Improvements is delayed beyond the Lease Commencement Date
as a result of Tenant Changes, the Term and Tenant’s obligation to pay Base Rent hereunder
shall nevertheless begin on the Lease Commencement Date.

 

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(b) Landlord shall use reasonable speed and diligence to substantially complete the
Improvements, at Landlord’s sole cost and expense except for Tenant
Changes (as described in subparagraph (a) above), and have the Demised Premises ready
for occupancy on or before the Lease Commencement Date set forth in Section 1(f). If the
Demised Premises are not substantially complete on that date, such failure to complete shall
not in any way affect the obligation of Tenant hereunder except that the Lease Commencement
Date, the Base Rent Commencement Date, and the Expiration Date shall be postponed one day
for each day substantial completion is delayed until the Demised Premises are substantially
complete, unless the delay is caused by Tenant Changes. No liability whatsoever shall arise
or accrue against Landlord by reason of its failure to deliver or afford possession of the
Demised Premises, and Tenant hereby releases and discharges Landlord from and of any claims
for damage, loss, or injury of every kind whatsoever as if this Lease were never executed.
See Special Stipulation 5 on Exhibit C hereto.

(c) Upon substantial completion of the Demised Premises, a representative of Landlord
and a representative of Tenant together shall inspect the Demised Premises and generate a
punchlist of defective or uncompleted items relating to the completion of construction of
the Improvements (the “Punchlist”). Landlord shall, within a reasonable time after
the Punchlist is prepared and agreed upon by Landlord and Tenant, complete such incomplete
work and remedy such defective work as is set forth on the Punchlist. All construction work
performed by Landlord shall be deemed approved by Tenant in all respects except for items of
said work which are not completed or do not conform to the Plans and Specifications and
which are included on the Punchlist.

(d) Upon substantial completion of the Demised Premises and the creation of the
Punchlist, Tenant shall execute and deliver to Landlord a letter of acceptance in which
Tenant (i) accepts the Demised Premises subject only to Landlord’s completion of the items
listed on the Punchlist and (ii) confirms that the Lease Commencement Date, the Base Rent
Commencement Date and the Expiration Date remain as set forth in Section 1, or if revised
pursuant to the terms hereof, setting forth such dates as so revised.

(e) Landlord hereby warrants to Tenant that the materials and equipment furnished by
Landlord’s contractors in the completion of the Improvements will be of good quality and
new, that during the one (1) year period following the Lease Commencement Date, such
materials and equipment and the work of such contractors shall be free from defects not
inherent in the quality required or permitted hereunder, and that such work will conform to
the Plans and Specifications. This warranty shall exclude damages or defects caused by
Tenant or Tenant’s Affiliates, improper or insufficient maintenance, improper operation, or
normal wear and tear under normal usage.

18. Tenant Alterations and Additions.

(a) Tenant shall not make or permit to be made any alterations, improvements, or
additions to the Demised Premises (a “Tenant’s Change”), without first obtaining on
each occasion Landlord’s prior written consent (which consent Landlord agrees not to
unreasonably withhold) and Lender’s prior written consent (if such consent is required). As
part of its approval process, Landlord may require that Tenant submit plans and
specifications to Landlord, for Landlord’s approval

 

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or disapproval, which approval shall not be unreasonably withheld. All Tenant’s Changes shall be performed
in accordance with all legal requirements applicable thereto and in a good and workmanlike
manner with first-class materials. Tenant shall maintain insurance reasonably satisfactory
to Landlord during the construction of all Tenant’s Changes. If Landlord at the time of
giving its approval to any Tenant’s Change notifies Tenant in writing that approval is
conditioned upon restoration, then Tenant shall, at its sole cost and expense and upon the
termination or expiration of this Lease, remove the same and restore the Demised Premises to
its condition prior to such Tenant’s Change. No Tenant’s Change shall be structural in
nature or impair the structural strength of the Building or reduce its value. Tenant shall
pay the full cost of any Tenant’s Change promptly upon receipt of invoice. Except as
otherwise provided herein and in Section 12, all Tenant’s Changes and all repairs and all
other property attached to or installed on the Demised Premises by or on behalf of Tenant
shall immediately upon completion or installation thereof be and become part of the Demised
Premises and the property of Landlord without payment therefor by Landlord and shall be
surrendered to Landlord upon the expiration or earlier termination of this Lease.

(b) To the extent permitted by law, all of Tenant’s contracts and subcontracts for such
Tenant’s Changes shall provide that no lien shall attach to or be claimed against the
Demised Premises or any interest therein other than Tenant’s leasehold interest in the
Demised Premises, and that all subcontracts let thereunder shall contain the same provision.
Whether or not Tenant furnishes the foregoing, Tenant agrees to hold Landlord harmless
against all liens, claims and liabilities of every kind, nature and description which may
arise out of or in any way be connected with such work. Tenant shall not permit the Demised
Premises to become subject to any mechanics’, laborers’ or materialmen’s lien on account of
labor, material or services furnished to Tenant or claimed to have been furnished to Tenant
in connection with work of any character performed or claimed to have been performed for the
Demised Premises by, or at the direction or sufferance of Tenant and if any such liens are
filed against the Demised Premises, Tenant shall promptly discharge the same;
provided, however, that Tenant shall have the right to contest, in good
faith and with reasonable diligence, the validity of any such lien or claimed lien if Tenant
shall give to Landlord, within fifteen days after demand, either evidence that Tenant has
bonded such lien or such security as may be reasonably satisfactory to Landlord to assure
payment thereof and to prevent any sale, foreclosure, or forfeiture of Landlord’s interest
in the Demised Premises by reason of non-payment thereof; provided further that on final
determination of the lien or claim for lien, Tenant shall immediately pay any judgment
rendered, with all proper costs and charges, and shall have the lien released and any
judgment satisfied. If Tenant fails to post such security or does not diligently contest
such lien, Landlord may, without investigation of the validity of the lien claim, discharge
such lien and Tenant shall reimburse Landlord upon demand for all costs and expenses
incurred in connection therewith, which expenses shall include any reasonable attorneys’
fees, paralegals’ fees and any and all costs associated therewith, including litigation
through all trial and appellate levels and any costs in posting bond to effect a discharge
or release of the lien. Nothing contained in this Lease shall be construed as a consent on
the part of Landlord to subject the Demised Premises to liability under any lien law now or
hereafter existing of the state in which the Demised Premises are located.

 

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19. Services by Landlord. Landlord shall be responsible for providing for maintenance
of the Building Common Area, and, except as required by Section 10(b) hereof, Landlord shall be
responsible for no other services whatsoever. Tenant, by payment of Tenant’s share of the
Operating Expenses, shall pay Tenant’s pro rata share of the expenses incurred by Landlord
hereunder.

20. Fire and Other Casualty. In the event the Demised Premises are damaged by fire or
other casualty insured by Landlord, Landlord agrees to promptly restore and repair the Demised
Premises at Landlord’s expense, including the Improvements to be insured by Tenant but only to the
extent Landlord receives insurance proceeds therefor, including the proceeds from the insurance
required to be carried by Tenant on the Improvements. Notwithstanding the foregoing, in the event
that the Demised Premises are (i) in the reasonable opinion of Landlord, so destroyed that they
cannot be repaired or rebuilt within two hundred ten (210) days after the date of such damage; or
(ii) destroyed by a casualty which is not covered by Landlord’s insurance, or if such casualty is
covered by Landlord’s insurance but Lender or other party entitled to insurance proceeds fails to
make such proceeds available to Landlord in an amount sufficient for restoration of the Demised
Premises, then Landlord shall give written notice to Tenant of such determination (the
“Determination Notice”) within forty-five (45) days of such casualty. Either Landlord or
Tenant may terminate and cancel this Lease effective as of the date of such casualty by giving
written notice to the other party within thirty (30) days after Tenant’s receipt of the
Determination Notice. Upon the giving of such termination notice, all obligations hereunder with
respect to periods from and after the effective date of termination shall thereupon cease and
terminate. If no such termination notice is given, Landlord shall, to the extent of the available
insurance proceeds, make such repair or restoration of the Demised Premises to substantially the
condition existing prior to such casualty, promptly and in such manner as not to unreasonably
interfere with Tenant’s use and occupancy of the Demised Premises (if Tenant is still occupying the
Demised Premises). Base Rent and Additional Rent shall proportionately abate during the time that
the Demised Premises or any part thereof are unusable by reason of any such damage thereto.

21. Condemnation.

(a) If all of the Demised Premises is taken or condemned for a public or quasi-public
use, or if a material portion of the Demised Premises is taken or condemned for a public or
quasi-public use and the remaining portion thereof is not usable by Tenant in the reasonable
opinion of Tenant, this Lease shall terminate as of the earlier of the date title to the
condemned real estate vests in the condemnor or the date on which Tenant is deprived of
possession of the Demised Premises. In such event, the Base Rent herein reserved and all
Additional Rent and other sums payable hereunder shall be apportioned and paid in full by
Tenant to Landlord to that date, all Base Rent, Additional Rent and other sums payable
hereunder prepaid for periods beyond that date shall forthwith be repaid by Landlord to
Tenant, and neither party shall thereafter have any liability hereunder, except that any
obligation or liability of either party, actual or contingent, under this Lease which has
accrued on or prior to such termination date shall survive.

 

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(b) If only part of the Demised Premises is taken or condemned for a public or
quasi-public use and this Lease does not terminate pursuant to Section 21(a), Landlord
shall, to the extent of the award it receives, proceed promptly and work diligently to
restore the Demised Premises (including the Improvements) to a condition and to a size as
nearly comparable as reasonably possible to the condition and size thereof immediately prior
to the taking, and there shall be an equitable adjustment to the Base Rent and Additional
Rent based on the actual loss of use of the Demised Premises suffered by Tenant from the
taking.

(c) Landlord shall be entitled to receive the entire award in any proceeding with
respect to any taking provided for in this Section 21, without deduction therefrom for any
estate vested in Tenant by this Lease, and Tenant shall receive no part of such award.
Nothing herein contained shall be deemed to prohibit Tenant from making a separate claim,
against the condemnor, to the extent permitted by law, for the value of Tenant’s moveable
trade fixtures, machinery and moving expenses, provided that the making of such claim shall
not and does not adversely affect or diminish Landlord’s award.

22. Tenant’s Default.

(a) The occurrence of any one or more of the following events shall constitute an
“Event of Default” of Tenant under this Lease:

(i) if Tenant fails to pay Base Rent or any Additional Rent hereunder as and
when such rent becomes due and such failure shall continue for more than five (5)
days after Landlord gives written notice to Tenant of such failure;

(ii) if Tenant fails to pay Base Rent or any Additional Rent on time more than
three (3) times in any period of twelve (12) months, notwithstanding that such
payments have been made within the applicable cure period;

(iii) if Tenant fails to take possession of the Demised Premises on the Lease
Commencement Date or promptly thereafter;

(iv) if Tenant permits to be done anything which creates a lien upon the
Demised Premises and fails to discharge or bond such lien, or post security with
Landlord acceptable to Landlord within thirty (30) days after receipt by Tenant of
written notice thereof;

(v) if Tenant fails to maintain in force all policies of insurance required by
this Lease and such failure shall continue for more than ten (10) days after
Landlord gives Tenant written notice of such failure;

(vi) if any petition is filed by or against Tenant or any guarantor of this
Lease under any present or future section or chapter of the Bankruptcy Code, or
under any similar law or statute of the United States or any state thereof (which,
in the case of an involuntary proceeding, is not permanently discharged, dismissed,
stayed, or vacated, as the case may be, within sixty (60) days of commencement), or
if any order for relief shall be entered against Tenant or any guarantor of this
Lease in any such proceedings;

 

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(vii) if Tenant or any guarantor of this Lease becomes insolvent or makes a
transfer in fraud of creditors or makes an assignment for the benefit of creditors;

(viii) if a receiver, custodian, or trustee is appointed for the Demised
Premises or for all or substantially all of the assets of Tenant or of any guarantor
of this Lease, which appointment is not vacated within sixty (60) days following the
date of such appointment; or

(ix) if Tenant fails to perform or observe any other term of this Lease and
such failure shall continue for more than thirty (30) days after Landlord gives
Tenant written notice of such failure, or, if such failure cannot be corrected
within such thirty (30) day period, if Tenant does not commence to correct such
default within said thirty (30) day period and thereafter diligently prosecute the
correction of same to completion within a reasonable time.

(b) Upon the occurrence of any one or more Events of Default, Landlord may, at
Landlord’s option, without any demand or notice whatsoever (except as expressly required in
this Section 22):

(i) Terminate this Lease by giving Tenant notice of termination, in which event
this Lease shall expire and terminate on the date specified in such notice of
termination and all rights of Tenant under this Lease and in and to the Demised
Premises shall terminate. Tenant shall remain liable for all obligations under this
Lease arising up to the date of such termination, and Tenant shall surrender the
Demised Premises to Landlord on the date specified in such notice; or

(ii) Terminate this Lease as provided in Section 22(b)(i) hereof and recover
from Tenant all damages Landlord may incur by reason of Tenant’s default, including,
without limitation, an amount which, at the date of such termination, is calculated
as follows: (1) the value of the excess, if any, of (A) the Base Rent, Additional
Rent and all other sums which would have been payable hereunder by Tenant for the
period commencing with the day following the date of such termination and ending
with the Expiration Date had this Lease not been terminated (the “Remaining
Term”), over (B) the aggregate reasonable rental value of the Demised Premises
for the Remaining Term (which excess, if any shall be discounted to present value at
the “Treasury Yield” as defined below for the Remaining Term); plus (2) the
costs of recovering possession of the Demised Premises and all other expenses
incurred by Landlord due to Tenant’s default, including, without limitation,
reasonable attorney’s fees; plus (3) the unpaid Base Rent and Additional
Rent earned as of the date of termination plus any interest and late fees due
hereunder, plus other sums of money and damages owing on the date of termination by
Tenant to Landlord under this Lease or in connection with the Demised Premises. The
amount as calculated above shall be deemed immediately due and payable. The payment
of the amount calculated in subparagraph (ii)(1) shall not be deemed a penalty but
shall merely constitute payment of

 

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liquidated damages, it being understood and acknowledged by Landlord
and Tenant that actual damages to Landlord are extremely difficult, if not
impossible, to ascertain. “Treasury Yield” shall mean the rate of return in
percent per annum of Treasury Constant Maturities for the length of time specified
as published in document H.15(519) (presently published by the Board of Governors of
the U.S. Federal Reserve System titled “Federal Reserve Statistical Release”) for
the calendar week immediately preceding the calendar week in which the termination
occurs. If the rate of return of Treasury Constant Maturities for the calendar week
in question is not published on or before the business day preceding the date of the
Treasury Yield in question is to become effective, then the Treasury Yield shall be
based upon the rate of return of Treasury Constant Maturities for the length of time
specified for the most recent calendar week for which such publication has occurred.
If no rate of return for Treasury Constant Maturities is published for the specific
length of time specified, the Treasury Yield for such length of time shall be the
weighted average of the rates of return of Treasury Constant Maturities most nearly
corresponding to the length of the applicable period specified. If the publishing
of the rate of return of Treasury Constant Maturities is ever discontinued, then the
Treasury Yield shall be based upon the index which is published by the Board of
Governors of the U.S. Federal Reserve System in replacement thereof or, if no such
replacement index is published, the index which, in Landlord’s reasonable
determination, most nearly corresponds to the rate of return of Treasury Constant
Maturities. In determining the aggregate reasonable rental value pursuant to
subparagraph (ii)(1)(B) above, the parties hereby agree that, at the time Landlord
seeks to enforce this remedy, all relevant factors should be considered, including,
but not limited to, (a) the length of time remaining in the Term, (b) the then
current market conditions in the general area in which the Building is located, (c)
the likelihood of reletting the Demised Premises for a period of time equal to the
remainder of the Term, (d) the net effective rental rates then being obtained by
landlords for similar type space of similar size in similar type buildings in the
general area in which the Building is located, (e) the vacancy levels in the general
area in which the Building is located, (f) current levels of new construction that
will be completed during the remainder of the Term and how this construction will
likely affect vacancy rates and rental rates and (g) inflation; or

(iii) Without terminating this Lease, declare immediately due and payable the
sum of the following: (1) the present value (calculated using the “Treasury Yield”)
of all Base Rent and Additional Rent due and coming due under this Lease for the
entire Remaining Term (as if by the terms of this Lease they were payable in
advance), plus (2) the cost of recovering and reletting the Demised Premises and all
other expenses incurred by Landlord in connection with Tenant’s default, plus (3)
any unpaid Base Rent, Additional Rent and other rentals, charges, assessments and
other sums owing by Tenant to Landlord under this Lease or in connection with the
Demised Premises as of the date this provision is invoked by Landlord, plus (4)
interest on all such amounts from the date due at the Interest Rate, and Landlord
may immediately proceed to distrain, collect, or bring action for such sum, or may
file a proof of claim in

 

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any bankruptcy or insolvency proceedings to enforce payment thereof; provided,
however, that such payment shall not be deemed a penalty or liquidated damages, but
shall merely constitute payment in advance of all Base Rent and Additional Rent
payable hereunder throughout the Term, and provided further, however, that upon
Landlord receiving such payment, Tenant shall be entitled to receive from Landlord
all rents received by Landlord from other assignees, tenants and subtenants on
account of said Demised Premises during the remainder of the Term (provided that the
monies to which Tenant shall so become entitled shall in no event exceed the entire
amount actually paid by Tenant to Landlord pursuant to this subparagraph (iii)),
less all costs, expenses and attorneys’ fees of Landlord incurred but not yet
reimbursed by Tenant in connection with recovering and reletting the Demised
Premises; or

(iv) Without terminating this Lease, in its own name but as agent for Tenant,
enter into and upon and take possession of the Demised Premises or any part thereof.
Any property remaining in the Demised Premises may be removed and stored in a
warehouse or elsewhere at the cost of, and for the account of, Tenant without
Landlord being deemed guilty of trespass or becoming liable for any loss or damage
which may be occasioned thereby unless caused by Landlord’s negligence. Thereafter,
Landlord may, but shall not be obligated to, lease to a third party the Demised
Premises or any portion thereof as the agent of Tenant upon such terms and
conditions as Landlord may deem necessary or desirable in order to relet the Demised
Premises. The remainder of any rentals received by Landlord from such reletting,
after the payment of any indebtedness due hereunder from Tenant to Landlord, and the
payment of any costs and expenses of such reletting, shall be held by Landlord to
the extent of and for application in payment of future rent owed by Tenant, if any,
as the same may become due and payable hereunder. If such rentals received from
such reletting shall at any time or from time to time be less than sufficient to pay
to Landlord the entire sums then due from Tenant hereunder, Tenant shall pay any
such deficiency to Landlord. Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect to terminate this Lease for
any such previous default provided same has not been cured; or

(v) Without terminating this Lease, and with or without notice to Tenant, enter
into and upon the Demised Premises and, without being liable for prosecution or any
claim for damages therefor, maintain the Demised Premises and repair or replace any
damage thereto or do anything or make any payment for which Tenant is responsible
hereunder. Tenant shall reimburse Landlord immediately upon demand for any expenses
which Landlord incurs in thus effecting Tenant’s compliance under this Lease and
Landlord shall not be liable to Tenant for any damages with respect thereto; or

(vi) Without liability to Tenant or any other party and without constituting a
constructive or actual eviction, suspend or discontinue furnishing or rendering to
Tenant any property, material, labor, utilities or other service, wherever Landlord is obligated to furnish or render the same so long as an
Event of Default exists under this Lease; or

 

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(vii) With or without terminating this Lease, allow the Demised Premises to
remain unoccupied and collect rent from Tenant as it comes due; or

(viii) Pursue such other remedies as are available at law or equity.

(c) If this Lease shall terminate as a result of or while there exists an Event of
Default hereunder, any funds of Tenant held by Landlord may be applied by Landlord to any
damages payable by Tenant (whether provided for herein or by law) as a result of such
termination or default.

(d) Neither the commencement of any action or proceeding, nor the settlement thereof,
nor entry of judgment thereon shall bar Landlord from bringing subsequent actions or
proceedings from time to time, nor shall the failure to include in any action or proceeding
any sum or sums then due be a bar to the maintenance of any subsequent actions or
proceedings for the recovery of such sum or sums so omitted.

(e) No agreement to accept a surrender of the Demised Premises and no act or omission
by Landlord or Landlord’s agents during the Term shall constitute an acceptance or surrender
of the Demised Premises unless made in writing and signed by Landlord. No re-entry or
taking possession of the Demised Premises by Landlord shall constitute an election by
Landlord to terminate this Lease unless a written notice of such intention is given to
Tenant. No provision of this Lease shall be deemed to have been waived by either party
unless such waiver is in writing and signed by the party making such waiver. Landlord’s
acceptance of Base Rent or Additional Rent in full or in part following an Event of Default
hereunder shall not be construed as a waiver of such Event of Default. No custom or
practice which may grow up between the parties in connection with the terms of this Lease
shall be construed to waive or lessen either party’s right to insist upon strict performance
of the terms of this Lease, without a written notice thereof to the other party.

(f) If an Event of Default shall occur, Tenant shall pay to Landlord, on demand, all
expenses incurred by Landlord as a result thereof, including reasonable attorneys’ fees,
court costs and expenses actually incurred.

23. Landlord’s Right of Entry. Tenant agrees to permit Landlord and the authorized
representatives of Landlord and of Lender to enter upon the Demised Premises at all reasonable
times for the purposes of inspecting the Demised Premises and Tenant’s compliance with this Lease,
and making any necessary repairs thereto; provided that, except in the case of an emergency,
Landlord shall give Tenant twenty-four (24) hours reasonable prior notice of Landlord’s intended
entry upon the Demised Premises. Nothing herein shall imply any duty upon the part of Landlord to
do any work required of Tenant hereunder, and the performance thereof by Landlord shall not
constitute a waiver of Tenant’s default in failing to perform it. Landlord shall not be liable for
inconvenience, annoyance, disturbance or other damage to Tenant by reason of making such repairs or
the

 

-20-

 

performance of such work in the Demised Premises or on account of bringing materials, supplies and equipment into or through the
Demised Premises during the course thereof, and the obligations of Tenant under this Lease shall
not thereby be affected; provided, however, that Landlord shall use reasonable
efforts not to disturb or otherwise interfere with Tenant’s operations in the Demised Premises in
making such repairs or performing such work. Landlord also shall have the right to enter the
Demised Premises at all reasonable times to exhibit the Demised Premises to any prospective
purchaser or mortgagee and at all reasonable times during the last twelve (12) months of the Term
to exhibit the Demised Premises to any prospective tenant thereof.

24. Lender’s Rights.

(a) For purposes of this Lease:

(i) “Lender” as used herein means the current holder of a Mortgage;

(ii) “Mortgage” as used herein means any or all mortgages, deeds to
secure debt, deeds of trust or other instruments in the nature thereof which may now
or hereafter affect or encumber Landlord’s title to the Demised Premises, and any
amendments, modifications, extensions or renewals thereof.

(b) This Lease and all rights of Tenant hereunder are and shall be subject and
subordinate to the lien and security title of any Mortgage. Tenant recognizes and
acknowledges the right of Lender to foreclose or exercise the power of sale against the
Demised Premises under any Mortgage.

(c) Tenant shall, in confirmation of the subordination set forth in Section 24(b) and
notwithstanding the fact that such subordination is self-operative, and no further
instrument or subordination shall be necessary, upon demand, at any reasonable time or
times, execute, acknowledge, and deliver to Landlord or to Lender any and all reasonable
instruments requested by either of them to evidence such subordination.

(d) At any time during the Term, Lender may, by written notice to Tenant, make this
Lease superior to the lien of its Mortgage. If requested by Lender, Tenant shall, upon
demand, at any reasonable time or times, execute, acknowledge, and deliver to Lender, any
and all reasonable instruments that may be necessary to make this Lease superior to the lien
of any Mortgage.

(e) If Lender (or Lender’s nominee, or other purchaser at foreclosure) shall hereafter
succeed to the rights of Landlord under this Lease, whether through possession or
foreclosure action or delivery of a new lease, Tenant shall, if requested by such successor,
attorn to and recognize such successor as Tenant’s landlord under this Lease without change
in the terms and provisions of this Lease and shall promptly execute and deliver any
instrument that may be necessary to evidence such attornment, provided that such successor
shall not be bound by (i) any payment of Base Rent or Additional Rent for more than one
month in advance, except prepayments in the nature of security for the performance by Tenant
of its obligations under this Lease, and then only if such prepayments have been deposited
with and are under the control of such successor,

 

-21-

 

(ii) any provision of any amendment to the
Lease to which Lender has not consented, (iii) the defaults of any prior landlord under this Lease unless such successor received notice
of such default, or (iv) any offset rights arising out of the defaults of any prior landlord
under this Lease unless such successor received notice of such default. Upon such
attomment, this Lease shall continue in full force and effect as a direct lease between each
successor landlord and Tenant, subject to all of the terms, covenants and conditions of this
Lease.

(f) In the event there is a Mortgage at any time during the Term, Landlord shall use
reasonable efforts to cause the Lender to enter into a subordination, nondisturbance and
attornment agreement with Tenant reasonably satisfactory to Tenant and consistent with this
Section 24.

25. Estoppel Certificate. Landlord and Tenant agree, at any time, and from time to
time, within fifteen (15) days after written request of the other, to execute, acknowledge and
deliver a statement in writing in recordable form to the requesting party and/or its designee
certifying that: (i) this Lease is unmodified and in full force and effect (or, if there have been
modifications, that the same is in full force and effect, as modified), (ii) the dates to which
Base Rent, Additional Rent and other charges have been paid, (iii) whether or not, to the best of
its knowledge, there exists any failure by the requesting party to perform any term, covenant or
condition contained in this Lease, and, if so, specifying each such failure, (iv) (if such be the
case) Tenant has unconditionally accepted the Demised Premises and is conducting its business
therein, and (v) and as to such additional matters as may be requested, it being intended that any
such statement delivered pursuant hereto may be relied upon by the requesting party and by any
purchaser of title to the Demised Premises or by any mortgagee or any assignee thereof or any party
to any sale-leaseback of the Demised Premises, or the landlord under a ground lease affecting the
Demised Premises.

26. Landlord Liability. No owner of the Demised Premises, whether or not named
herein, shall have liability hereunder after it ceases to hold title to the Demised Premises.
Neither Landlord nor any officer, director, shareholder, partner or principal of Landlord, whether
disclosed or undisclosed, shall be under any personal liability with respect to any of the
provisions of this Lease. In the event Landlord is in breach or default with respect to Landlord’s
obligations or otherwise under this Lease, Tenant shall look solely to the equity of Landlord in
the Building for the satisfaction of Tenant’s remedies. It is expressly understood and agreed that
Landlord’s liability under the terms, covenants, conditions, warranties and obligations of this
Lease shall in no event exceed the loss of Landlord’s equity interest in the Building.

27. Notices. Any notice required or permitted to be given or served by either party
to this Lease shall be deemed given when made in writing, and either (i) personally delivered, (ii)
deposited with the United States Postal Service, postage prepaid, by registered or certified mail,
return receipt requested, or (iii) delivered by a recognized overnight delivery service providing
proof of delivery, properly addressed to the address set forth in Section 1(m) (as the same may be
changed by giving written notice of the aforesaid in accordance with this Section 27). If any
notice mailed is properly addressed with appropriate postage but returned for any reason, such
notice shall be deemed to be effective notice and to be given on the date of mailing.

 

-22-

 

28. Brokers. Tenant represents and warrants to Landlord that, except for those
parties set forth in Section 1(o) (the “Brokers”), Tenant has not engaged or had any
conversations or negotiations with any broker, finder or other third party concerning the leasing
of the Demised Premises to Tenant who would be entitled to any commission or fee based on the
execution of this Lease. Tenant hereby further represents and warrants to Landlord that Tenant is
not receiving and is not entitled to receive any rebate, payment or other remuneration, either
directly or indirectly, from the Brokers, and that it is not otherwise sharing in or entitled to
share in any commission or fee paid to the Brokers by Landlord or any other party in connection
with the execution of this Lease, either directly or indirectly. Tenant hereby indemnifies
Landlord against and from any claims for any brokerage commissions (except those payable to the
Brokers, all of which are payable by Landlord pursuant to a separate agreement) and all costs,
expenses and liabilities in connection therewith, including, without limitation, reasonable
attorneys’ fees and expenses, for any breach of the foregoing. Landlord hereby indemnifies Tenant
against and from any claims for any brokerage commissions by the Brokers and all costs, expenses
and liabilities in connection with any other broker, finder or other third party claiming a right
based on Landlord’s agreement with such party to a commission or fee related to the execution of
this Lease, including, without limitation, reasonable attorneys’ fees and expenses, for any breach
of the foregoing. The foregoing indemnification shall survive the termination of this Lease for
any reason.

29. Assignment and Subleasing.

(a) Tenant may not assign, mortgage, pledge, encumber or otherwise transfer this Lease,
or any interest hereunder, or sublet the Demised Premises, in whole or in part, without on
each occasion first obtaining the prior express written consent of Landlord, which consent
Landlord shall not unreasonably withhold. Any change in control of Tenant resulting from a
merger, consolidation, stock transfer or asset sale shall be considered an assignment or
transfer which requires Landlord’s prior written consent. For purposes of this Section 29,
by way of example and not limitation, Landlord shall be deemed to have reasonably withheld
consent if Landlord determines (i) that the prospective assignee or subtenant is not of a
financial strength similar to Tenant as of the Lease Date, (ii) that the prospective
assignee or subtenant has a poor business reputation, (iii) that the proposed use of the
Demised Premises by such prospective assignee or subtenant (including, without limitation, a
use involving the use or handling of Hazardous Substances) will negatively affect the value
or marketability of the Building or the Project or (iv) that the prospective assignee or
subtenant is a current tenant in the Project or is a bona-fide third-party prospective
tenant. See Special Stipulation 7 on Exhibit C hereto.

(b) If Tenant desires to assign this Lease or sublet the Demised Premises or any part
thereof, Tenant shall give Landlord written notice no later than thirty (30) days in advance
of the proposed effective date of any proposed assignment or sublease, specifying (i) the
name and business of the proposed assignee or sublessee, (ii) the amount and location of the
space within the Demised Premises proposed to be subleased, (iii) the proposed effective
date and duration of the assignment or subletting and (iv) the proposed rent or
consideration to be paid to Tenant by such assignee or sublessee. Tenant shall promptly
supply Landlord with financial statements and other information as Landlord may reasonably

 

-23-

 

request to evaluate the proposed assignment or sublease.
Landlord shall have a period of thirty (30) days following receipt of such notice and other
information requested by Landlord within which to notify Tenant in writing that Landlord
elects: (i) to terminate this Lease as to the space so affected as of the proposed
effective date set forth in Tenant’s notice, in which event Tenant shall be relieved of all
further obligations hereunder as to such space, except for obligations under Sections 11 and
28 and all other provisions of this Lease which expressly survive the termination hereof; or
(ii) to permit Tenant to assign or sublet such space; provided, however,
that, if the rent rate agreed upon between Tenant and its proposed subtenant is greater than
the rent rate that Tenant must pay Landlord hereunder for that portion of the Demised
Premises, or if any consideration shall be promised to or received by Tenant in connection
with such proposed assignment or sublease (in addition to rent), then one half (1/2) of such
excess rent and other consideration (after payment of brokerage commissions, attorneys’ fees
and other disbursements reasonably incurred by Tenant for such assignment and subletting if
acceptable evidence of such disbursements is delivered to Landlord) shall be considered
Additional Rent owed by Tenant to Landlord, and shall be paid by Tenant to Landlord, in the
case of excess rent, in the same manner that Tenant pays Base Rent and, in the case of any
other consideration, within ten (10) business days after receipt thereof by Tenant; or (iii)
to refuse, in Landlord’s reasonable discretion (taking into account all relevant factors
including, without limitation, the factors set forth in the Section 29(a) above), to consent
to Tenant’s assignment or subleasing of such space and to continue this Lease in full force
and effect as to the entire Demised Premises. If Landlord should fail to notify Tenant in
writing of such election within the aforesaid thirty (30) day period, Landlord shall be
deemed to have elected option (iii) above. Upon request by Tenant, Landlord shall provide
Tenant in writing with its reason for such refusal. Tenant agrees to reimburse Landlord for
reasonable legal fees and any other reasonable costs incurred by Landlord in connection with
any requested assignment or subletting, and such payments shall not be deducted from the
Additional Rent owed to Landlord pursuant to subsection (ii) above. Tenant shall deliver to
Landlord copies of all documents executed in connection with any permitted assignment or
subletting, which documents shall be in form and substance reasonably satisfactory to
Landlord and which shall require such assignee to assume performance of all terms of this
Lease on Tenant’s part to be performed.

(c) No acceptance by Landlord of any rent or any other sum of money from any assignee,
sublessee or other category of transferee shall be deemed to constitute Landlord’s consent
to any assignment, sublease, or transfer. Permitted subtenants or assignees shall become
liable directly to Landlord for all obligations of Tenant hereunder, without, however,
relieving Tenant of any of its liability hereunder. No such assignment, subletting,
occupancy or collection shall be deemed the acceptance of the assignee, tenant or occupant,
as Tenant, or a release of Tenant from the further performance by Tenant of Tenant’s
obligations under this Lease. Any assignment or sublease consented to by Landlord shall not
relieve Tenant (or its assignee) from obtaining Landlord’s consent to any subsequent
assignment or sublease.

 

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30. Termination or Expiration.

(a) No termination of this Lease prior to the normal ending thereof, by lapse of time
or otherwise, shall affect Landlord’s right to collect rent for the period prior to
termination thereof.

(b) At the expiration or earlier termination of the Term of this Lease, Tenant shall
surrender the Demised Premises and all improvements, alterations and additions thereto, and
keys therefor to Landlord, clean and neat, and in the same condition as at the Lease
Commencement Date, excepting normal wear and tear, condemnation and casualty other than that
required to be insured against by Tenant hereunder.

(c) If Tenant remains in possession of the Demised Premises after expiration of the
Term, with or without Landlord’s acquiescence and without any express agreement of the
parties, Tenant shall be a tenant-at-sufferance at the greater of (i) one hundred fifty
percent (150%) of the then current fair market base rental value of the Demised Premises or
(ii) one hundred fifty percent (150%) of the Base Rent in effect at the end of the Term.
Tenant shall also continue to pay all other Additional Rent due hereunder, and there shall
be no renewal of this Lease by operation of law. In addition to the foregoing, Tenant shall
be liable for all damages, direct and consequential, incurred by Landlord as a result of
such holdover. No receipt of money by Landlord from Tenant after the termination of this
Lease or Tenant’s right of possession of the Demised Premises shall reinstate, continue or
extend the Term or Tenant’s right of possession.

31. Intentionally Deleted.

32. Late Payments. In the event any installment of rent, inclusive of Base Rent, or
Additional Rent or other sums due hereunder, if any, is not paid (i) within five (5) days after
Tenant’s receipt of written notice of such failure to pay on the first occasion during any twelve
(12) month period, or (ii) as and when due with respect to any subsequent late payments in any
twelve (12) month period, Tenant shall pay an administrative fee equal to three percent (3%) of
such past due amount, plus interest on the amount past due at the lesser of (i) the maximum
interest rate allowed by law or (ii) a rate of fifteen percent (15%) per annum (the “Interest
Rate”) to defray the additional expenses incurred by Landlord in processing such payment.

33. Rules and Regulations. Tenant agrees to abide by the rules and regulations set
forth on Exhibit D attached hereto, as well as other rules and regulations reasonably
promulgated by Landlord from time to time, so long as such rules and regulations are uniformly
enforced against all tenants of Landlord in the Building.

34. Quiet Enjoyment. So long as Tenant has not committed an Event of Default
hereunder, Landlord agrees that Tenant shall have the right to quietly use and enjoy the Demised
Premises for the Term.

 

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35. Miscellaneous.

(a) The parties hereto hereby covenant and agree that Landlord shall receive the Base
Rent, Additional Rent and all other sums payable by Tenant hereinabove
provided as net income from the Demised Premises, without any abatement (except as set
forth in Section 20 and Section 21), reduction, set-off, counterclaim, defense or deduction
whatsoever.

(b) If any clause or provision of this Lease is determined to be illegal, invalid or
unenforceable under present or future laws effective during the Term, then and in that
event, it is the intention of the parties hereto that the remainder of this Lease shall not
be affected thereby, and that in lieu of such illegal, invalid or unenforceable clause or
provision there shall be substituted a clause or provision as similar in terms to such
illegal, invalid or unenforceable clause or provision as may be possible and be legal, valid
and enforceable.

(c) All rights, powers, and privileges conferred hereunder upon the parties hereto
shall be cumulative, but not restrictive to those given by law.

(d) TIME IS OF THE ESSENCE OF THIS LEASE.

(e) No failure of Landlord or Tenant to exercise any power given Landlord or Tenant
hereunder or to insist upon strict compliance by Landlord or Tenant with its obligations
hereunder, and no custom or practice of the parties at variance with the terms hereof shall
constitute a waiver of Landlord’s or Tenant’s rights to demand exact compliance with the
terms hereof.

(f) This Lease contains the entire agreement of the parties hereto as to the subject
matter of this Lease and no representations, inducements, promises or agreements, oral or
otherwise, between the parties not embodied herein shall be of any force and effect. The
masculine (or neuter) pronoun, singular number shall include the masculine, feminine and
neuter gender and the singular and plural number.

(g) This contract shall create the relationship of landlord and tenant between Landlord
and Tenant; no estate shall pass out of Landlord; Tenant has a usufruct, not subject to levy
and sale, and not assignable by Tenant except as expressly set forth herein.

(h) Under no circumstances shall Tenant have the right to record this Lease or a
memorandum thereof.

(i) The captions of this Lease are for convenience only and are not a part of this
Lease, and do not in any way define, limit, describe or amplify the terms or provisions of
this Lease or the scope or intent thereof.

(j) This Lease may be executed in multiple counterparts, each of which shall constitute
an original, but all of which taken together shall constitute one and the same agreement.

(k) This Lease shall be interpreted under the laws of the State where the Demised
Premises are located.

 

-26-

 

(l) The parties acknowledge that this Lease is the result of negotiations between the
parties, and in construing any ambiguity hereunder no presumption shall be made in favor of
either party. No inference shall be made from any item which has been stricken from this
Lease other than the deletion of such item.

36. Special Stipulations. The Special Stipulations, if any, attached hereto as
Exhibit C, are incorporated herein and made a part hereof, and to the extent of any
conflict between the foregoing provisions and the Special Stipulations, the Special Stipulations
shall govern and control.

37. Lease Date. For purposes of this Lease, the term “Lease Date” shall mean
the later date upon which this Lease is signed by Landlord and Tenant.

38. Authority. If Tenant is not a natural person, Tenant shall cause its corporate
secretary or general partner, as applicable, to execute the certificate attached hereto as
Exhibit E. Tenant is authorized by all required corporate or partnership action to enter
into this Lease and the individual(s) signing this Lease on behalf of Tenant are each authorized to
bind Tenant to its terms. Landlord is authorized by all required partnership action to enter into
this Lease and the individual(s) signing this Lease on behalf of Landlord are authorized to bind
Landlord to its terms.

39. No Offer Until Executed. The submission of this Lease to Tenant for examination
or consideration does not constitute an offer to lease the Demised Premises and this Lease shall
become effective, if at all, only upon the execution and delivery thereof by Landlord and Tenant.

[SIGNATURES ON NEXT PAGE]

 

-27-

 

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands under seals, the day and
year first above written.

	 	 	 	 	 
		LANDLORD: 

	 
	Date: 9-24-99	
 PINNACLE INDUSTRIAL CENTER LIMITED
PARTNERSHIP, a Texas limited partnership

 	 
	 	By:  	ID International (Texas), Inc.,
 	 
	 	 	a Georgia corporation, General Partner 	 

	 	 	 	 	 
	 	By:  	/s/  Timothy J. Gunter
 	 
	 	 	Name:  	Timothy J. Gunter 	 
	 	 	Title:  	Secretary 	 
	 
	 	(CORPORATE SEAL) 	 

	 	 	 	 	 
	 	By:  	CG Pinnacle, L.L.C., a Delaware limited
 	 
	 	 	liability company, General Partner 	 

	 	 	 	 	 
	 	By:  	                  Connecticut General Life Insurance
 	 
	 	 	Company, a Connecticut corporation, 	 
	 	 	its Member 	 

	 	 	 	 	 
	 	By:  	CIGNA Investments, Inc.,
 	 
	 	 	authorized signatory 	 

	 	 	 	 	 
	 	By:  	                  /s/ Stephen J. Olstein
 	 
	 	 	Name:  	Stephen J. Olstein 	 
	 	 	Title:  	Managing Director 	 
	 
	 	 (CORPORATE SEAL)

 	 

	 	 	 	 	 
	

Date: 9/15/99 	TENANT:

TANDY BRANDS ACCESSORIES, INC.,

a Delaware corporation

 	 
	 	By:  	/s/ Stan Ninemire
 	 
	 	 	Stan Ninemire 	 
	 	 	Senior Vice President 	 
	 
	 	(CORPORATE SEAL)

 	 

 

-28-

 

	 	 	 	 	 

ATTESTATION

Landlord:

STATE OF GEORGIA

COUNTY OF FULTON

BEFORE ME, a Notary Public in and for said County, personally appeared Timothy J. Gunter and
                                        , known to me to be the person(s) who, as Secretary and
                                        , respectively, of ID International (Texas), Inc., the corporation which
executed the foregoing instrument in its capacity as general partner of Landlord, signed the same,
and acknowledged to me that they did so sign said instrument in the name and upon behalf of said
corporation, in its capacity as general partner of Landlord, that the same is their free act and
deed and they were duly authorized thereunto by the corporation and the partnership.

IN TESTIMONY WHEREOF, I have hereunto subscribed my name, and affixed my official seal, this
24th day of September, 1999.

	 	 	 	 	 
	 	 	 
	 	                                              /s/ Charlotte Robinson
 	 
	 	Notary Public 	 
	 	 	 	 	 
	 	My Commission Expires: 10-06-01	 
	 

STATE OF CONNECTICUT

COUNTY OF HARTFORD

BEFORE ME, a Notary Public in and for said County, personally appeared Stephen J. Olstein and
                                        , known to me to be the person(s) who, as Managing Director and
                                        , respectively, of CIGNA Investments, Inc., as the authorized signatory of
Connecticut General Life Insurance Company, in turn as the Member of CG Pinnacle, L.L.C., the
limited liability company which executed the foregoing instrument in its capacity as general
partner of Landlord, signed the same, and acknowledged to me that they did so sign said instrument
in the name and upon behalf of said entity, in such capacity, that the same is their free act and
deed and they were duly authorized thereunto by the entity and the partnership.

IN TESTIMONY WHEREOF, I have hereunto subscribed my name, and affixed my official seal, this
28th day of September, 1999.

	 	 	 	 	 
	 	 	 
	 	                                         /s/ Barbara T. Dressler
 	 
	 	Notary Public 	 
	 	 	 	 	 
	 	My Commission Expires: September 30, 2002	 
	 

 

-29-

 

Tenant:

STATE OF TEXAS

COUNTY OF TARRANT

BEFORE ME, a Notary Public in and for said County, personally appeared Stan Ninemire and
                                        , known to me to be the person(s) who, as Senior Vice President and
                                        , respectively, of Tandy Brands Accessories, Inc., the corporation which
executed the foregoing instrument in its capacity as Tenant, signed the same, and acknowledged to
me that they did so sign said instrument in the name and upon behalf of said corporation as
officers of said corporation, that the same is their free act and deed as such officers,
respectively, and they were duly authorized thereunto by its board of directors; and that the seal
affixed to said instrument is the corporate seal of said corporation.

IN TESTIMONY WHEREOF, I have hereunto subscribed my name, and affixed my official seal, this
15th day of September, 1999.

	 	 	 	 	 
	 	 	 
	 	                                         /s/ Janice Gooch
 	 
	 	Notary Public 	 
	 
	 	My Commission Expires: 6-18-2001	 
	 

 

-30-

 

EXHIBIT “A”

DEMISED PREMISES

 

 

 

Rev. 8/25/99

EXHIBIT “B”

PLANS AND SPECIFICATIONS

INTERIOR FINISH STANDARD SPECIFICATIONS

INDUSTRIAL DEVELOPMENTS INTERNATIONAL, INC.

	1.	 	CARPENTRY & MILLWORK

	 
	A.	 	One 3’-0” Lavatory Counter — Top with Back-Splash in each bathroom.

	 
	B.	 	One 6’-0” Plastic Laminate Base & Upper Cabinets with Laminate Tops in kitchen/break room.

	 
	2.	 	DOORS

	A.	 	Glass entrance door is existing. If relocation is required, there would be an additional
charge.

	 
	B.	 	Interior doors — 1/30 lf of interior partitions.

	 	1.	 	3’-0” x 7’-0” KD hollow metal frame. (Redi or Timely)

	 
	 	2.	 	3’-0” x 7’-0” Solid Core, Flush, Stain Grade Birch Door.

	 
	 	3.	 	1-1/2 Pair Plain Bearing Butts, US-3 Finish.

	 
	 	4.	 	Lever action privacy or passage latch, Series A, “Levon” style by Schlage or
equal.

	 
	 	5.	 	Floor or wall mounted door stop.

	C.	 	Labeled Doors — 1/40 lf of Warehouse/Office Separation Wall.

	 	1.	 	3’-0” x 7’-0”, Solid Core Door and Frame.

	 
	 	2.	 	1-1/2 Pair Plain Bearing Butts, US-3 Finish.

	 
	 	3.	 	Lever Action Lockset, Series D, “Olympiad” style by Schlage or equal.

	 
	 	4.	 	Surface Mounted Closer.

	3.	 	PARTITIONS

	 
	A.	 	Demising Walls — One per tenant space.

	 	1.	 	Partition extended to deck above and constructed of 6”, 20 ga. Studs at 24”
o.c. with 5/8” Fire Code Gypsum Board, both sides. Fire tape to deck.

	B.	 	Office/Warehouse Separation Wall — One per tenant space.

	 	1.	 	Drywall Partition 10’ high and constructed of 3 5/8”, 25 ga. studs at 24’ O.C.
with 5/8” Fire Code Gypsum Board both sides and 3 1/2” thick insulation.

 

b-1

 

	C.	 	Interior Partitions

	 	1.	 	9’-6” Interior Partitions to extend 6” above ceiling, construction to be of
3-5/8”, 25 ga. Studs at 24” o.c. with 5/8” Gypsum Board on both sides.

	4.	 	ACOUSTICAL CEILINGS - All finished office area

	 
	A.	 	2’-0” x 4’-0” Standard Grid System with 5/8” non-directional fissured tile, mineral board
ceiling panels. Ceiling grid system to be non-continuous installed in individual office/work
areas.

	5.	 	FLOORING

	 
	A.	 	Vinyl Composition Tile is to be installed in kitchen/break room and all restrooms. Tile to
be 1/8” Armstrong “Excelon” line or equal.

	 
	B.	 	All other finished office areas are to be carpeted. An allowance of $12.00/sy to
purchase and install carpeting is included.

	 
	C.	 	A 4” Rubber Cove Base is to be installed in all finished office areas.

	 
	D.	 	Warehouse floors are to be cleaned and sealed with one coat of acrylic sealer.

	 
	6.	 	PAINTING & WALL COVERING

	 
	A.	 	All walls in finished office area are to be primed and painted with two coats of Flat Latex
Paint.

	 
	B.	 	Doors are to be stained and sealed.

	 
	C.	 	Restroom walls to be painted with one coat of primer and one coat of premium grade washable
semi-gloss latex paint.

	 
	D.	 	No walls are painted in the warehouse.

	 
	E.	 	FRP wainscot paneling to be installed in rest rooms on all wet walls as per code.

	 
	7.	 	HVAC

	 
	A.	 	The warehouse area will be cooled to approximate average of 80° degrees Fahrenheit when it is
100° degrees outside. Heating in the warehouse area will be an approximate average of 55°
degrees Fahrenheit when it is 20° degrees Fahrenheit outside.

	 
	 	 	Heating and Air Conditioning in office area to be furnished at a rate of one ton per 350 SF.
Higher cooling loads imposed by equipment or heavier than normal occupancy would be at
additional cost. Provide a standard heat/cool thermostat mounted 5’-0” A.F.F in each zone.
A 20 degree Fahrenheit differential from the exterior temperature is expected.

 

b-2

 

	B.	 	Exhaust fans are to be provided in restrooms.

	 
	8.	 	PLUMBING

	 
	A.	 	Tank-type, elongated commode(s) to meet handicap requirements in each restroom.

	 
	B.	 	One lavatory in each restroom.

	 
	C.	 	One single-bowl stainless steel sink in kitchen/break room.

	 
	D.	 	One electric hot water heater to meet requirements of space.

	 
	9.	 	FIRE PROTECTION

	 
	A.	 	Sprinkler heads are to be dropped from the existing system to office area ceilings. An
allowance of one sprinkler head per 120 SF of finished office area is included. If partition
configuration dictates additional heads, they would be installed at an additional charge.

	 
	10.	 	ELECTRICAL

	 
	 	 	SERVICE:

	 
	A.	 	400 amp/480 volt/3 phase depending on size of lease area.

	 
	 	 	OFFICE AREA:

	 
	A.	 	One 2’ x 4’ lay-in, 4 tube fluorescent with acrylic lens & energy saving ballast per
(80) SF.

	 
	B.	 	One lighted exit sign per 750 SF (minimum of 2).

	 
	C.	 	One 120v duplex convenience outlet per 75 SF.

	 
	D.	 	One dedicated 120v duplex receptacle per 1000 SF (minimum of 2).

	 
	E.	 	Provisions for one telephone outlet per 250 SF.

	 
	F.	 	One single pole switch per 250 SF.

	 
	G.	 	Two 3-way switches per 2500 SF.

	 
	H.	 	Power wiring of all HVAC systems listed under HVAC. (Exhaust fans & A/C @ 350 SF/TON.)

 

b-3

 

	 	 	WAREHOUSE AREA:

	 
	A.	 	Lighting is to be by 400w metal halide fixtures providing 25 fc at 36’ AFF
(two rows per bay); high or dense racking may cause increase in number of light fixtures @
tenant’s expense.

	 
	B.	 	Power wiring of all HVAC systems listed under HVAC. (Ventilation & gas fired unit heaters).

	 
	11.	 	SPECIALTIES

	 
	A.	 	5lb — ABC type fire extinguishers located as required per code.

	 
	12.	 	TOILET ACCESSORIES (One each per bathroom stall)

	 
	A.	 	48” grab bar.

	 
	B.	 	Single roll toilet paper holder.

	 
	C.	 	Surface mounted towel dispenser.

	 
	D.	 	16” x 24’ mirror.

	 
	13.	 	SIDEWALKS

	 
	A.	 	Provide 50 SF of connecting sidewalk per tenant space where applicable.

	 
	14.	 	ARCHITECTURAL

	 
	A.	 	Provide all preliminary and construction documents.

 

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EXHIBIT C

Special Stipulations

The Special Stipulations set forth herein are hereby incorporated into the body of the lease
to which these Special Stipulations are attached (the “Lease”), and to the extent of any
conflict between these Special Stipulations and the preceding language, these Special Stipulations
shall govern and control.

1. Intentionally Deleted.

2. SNDA. Tenant acknowledges that Landlord is in the process of obtaining a
construction loan related to the construction of the Building. As part of such loan transaction,
Landlord is required to deliver to the construction lender a Subordination, Non-Disturbance and
Attornment Agreement (“SNDA”) in the form attached hereto as Exhibit F signed by
Tenant. Accordingly, simultaneously with the execution of this Lease, Tenant shall execute and
deliver to Landlord a SNDA in the form attached hereto as Exhibit F, and Landlord is hereby
authorized to deliver the SNDA signed by Tenant to the construction lender as part of the
construction loan closing.

3. Inspection Rights.

(a) Landlord’s books and records pertaining to the calculation of Operating Expenses
for any calendar year within the Term may be inspected by Tenant (or by an independent
certified accountant) at Tenant’s expense, at any reasonable time within three (3) months
after Tenant’s receipt of Landlord’s statement for Operating Expenses; provided that Tenant
shall give Landlord not less than fifteen (15) days’ prior written notice of any such
inspection. If Landlord’s calculation of Tenant’s share of Operating Expenses for the
inspected calendar year was incorrect, then Tenant shall be entitled to a credit against
future Base Rent for said overpayment (or a refund of any overpayment if the Term has
expired) or Tenant shall pay to Landlord the amount of any underpayment, as the case may be.
If Tenant’s inspection proves that Landlord’s calculation of Tenant’s share of Operating
Expenses for the inspected calendar year resulted in an overpayment by more than ten percent
(10%) of Tenant’s share, Landlord shall also pay the actual and reasonable fees and expenses
of Tenant (as evidenced by receipts) related directly to conducting said inspection.

(b) All of the information obtained through Tenant’s inspection with respect to
financial matters (including, without limitation, costs, expenses, income) and any other
matters pertaining to Landlord, the Demised Premises, the Building and/or the Project as
well as any compromise, settlement, or adjustment reached between Landlord and Tenant
relative to the results of the inspection shall be held in strict confidence by Tenant and
its officers, agents, and employees; and Tenant shall cause its independent professionals
and any of its officers, agents or employees to be similarly bound. The obligations within
this subsection (b) shall survive the expiration or earlier termination of the Lease.

 

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4. Landlord Insurance.

(a) Landlord shall maintain at all times during the Term of this Lease, with such
deductible as Landlord in its sole judgment determines advisable, insurance on the
“All-Risk” or equivalent form on a Replacement Cost Basis against loss or damage to the
Building. Such insurance shall be in the amount of 80% of the replacement value of the
Building (excluding all fixtures and property required to be insured by Tenant under this
Lease).

(b) Landlord shall maintain at all times during the Term commercial liability insurance
with limits at least equal to the amount as Tenant is required to maintain pursuant to
Section 8(a)(i) of this Lease.

5. Construction of Demised Premises. Notwithstanding the provisions of Section 17(b)
of this Lease, in the event that Landlord is unable to substantially complete the Demised Premises
for occupancy by Tenant on or before the date which is ninety (90) days after the Lease
Commencement Date, as extended by Delay as defined below, Tenant may, at its option and as its sole
remedy, terminate this Lease by written notice to Landlord given within thirty (30) days following
the expiration of such ninety (90)-day period (provided that substantial completion has not
occurred prior to Landlord’s receipt of said termination notice), and thereafter neither Landlord
nor Tenant shall have any further obligation hereunder. For purposes of this Lease,
“Delay” shall mean delays incurred by reason of Tenant’s failure to approve the Plans and
Specifications as set forth in Section 17(a) or changes requested by Tenant in the Plans and
Specifications after Tenant’s approval thereof, and for such additional time as is equal to the
time lost by Landlord or Landlord’s contractors or suppliers in connection with the performance of
Landlord’s work and/or the construction of the Demised Premises and related improvements due to
strikes or other labor troubles, governmental restrictions and limitations, war or other national
emergency, non-availability of materials or supplies, delay in transportation, accidents, floods,
fire, damage or other casualties, weather or other conditions, acts or omissions of Tenant, or
delays by utility companies in bringing utility lines to the Demised Premises.

6. Landlord Default. Landlord shall not be in default unless it fails to perform the
obligations required of it by this Lease within thirty (30) days after written notice from Tenant
specifying which obligation Landlord has failed to perform. Provided, however, that if the nature
of the specified obligation is such that more than thirty (30) days are reasonably required to
complete its cure, then Landlord shall not be in default if it commences to cure within said thirty
(30) day period and thereafter diligently prosecutes the same to completion. As to Landlord’s
maintenance and repair obligations hereunder, if Landlord has not cured or commenced to cure a
maintenance or repair default set forth in said notice within said thirty (30) day period, Tenant,
may, at its option, cure such default. If Tenant elects to cure said default, Tenant shall, prior
to commencement of said work, provide to Landlord a specific description of the work to be
performed by Tenant and the name of Tenant’s contractor. Any materials used shall be of equal or
better quality than currently exists in the Building and Tenant’s contractor shall be adequately
insured and of good reputation. Landlord shall reimburse Tenant for the reasonable, actual cost of
said cure upon receipt of adequate bills or other supporting evidence substantiating said cost,
less any amounts otherwise reimbursable to Tenant under any insurance policies carried by Tenant.

 

c-2

 

7. Assignment and Subleasing. Notwithstanding the provisions of Section 29 of this
Lease, Tenant may assign its rights and obligations under this Lease to any entity owning a
majority of the outstanding stock of Tenant, or to any entity under common ownership or control
with Tenant, or to any entity owned by Tenant, without the prior consent of Landlord, provided that
(a) the successor entity shall have a Tangible Net Worth (as hereinafter defined) equal Tenant’s
Tangible Net Worth as of the Lease Date and (b) Tenant shall give Landlord prior written notice of
such assignment, together with reasonable evidence of the Tangible Net Worth of such successor.
For purposes herein, “Tangible Net Worth” is defined as the excess of the value of tangible
assets (i.e. assets excluding those which are intangible such as goodwill, patents and trademarks)
over liabilities.

8. Blanket Insurance. Any insurance provided for in Section 8(a) may be maintained by
means of a policy or policies of blanket insurance, covering additional items or locations or
insureds, provided, however, that:

(i) Landlord and any other parties in interest from time to time designated by Landlord
to Tenant shall be named as an additional insured thereunder as its interest may appear;

(ii) the coverage afforded Landlord and any such other parties in interest will not be
reduced or diminished by reason of the use of such blanket policy of insurance;

(iii) the policy identifies with specificity the particular address of the Demised
Premises/Building as being covered under the blanket policy; and the limits of such blanket
policy of insurance apply separately to each location covered thereby;

(iv) the policy expressly waives any pro rata distribution requirements contained in
Tenant’s blanket policy covering the Demised Premises; and

(v) the requirements set forth in Section 8 are otherwise satisfied.

9. Umbrella Insurance. Notwithstanding the provisions of Section 8(a)(i) of the
Lease, such insurance may have general aggregate limits of $2,000,000 for any policy year that
Tenant carries umbrella insurance coverage of at least $5,000,000, provided (i) Landlord and any
other parties in interest from time to time designated by Landlord to Tenant shall be named as an
additional insured under such umbrella policy as their interests may appear, (ii) such umbrella
policy contains a “per location aggregate” endorsement, and (iii) the requirements set forth in
Section 8 of the Lease are otherwise satisfied.

 

c-3

 

EXHIBIT D

Rules And Regulations

These Rules and Regulations have been adopted by Landlord for the mutual benefit and
protection of all the tenants of the Building in order to insure the safety, care and cleanliness
of the Building and the preservation of order therein.

1. The sidewalks shall not be obstructed or used for any purpose other than ingress and
egress. No tenant and no employees of any tenant shall go upon the roof of the Building without
the consent of Landlord.

2. No awnings or other projections shall be attached to the outside walls of the Building.

3. The plumbing fixtures shall not be used for any purpose other than those for which they
were constructed, and no sweepings, rubbish, rags or other substances, including Hazardous
Substances, shall be thrown therein.

4. No tenant shall cause or permit any objectionable or offensive odors to be emitted from the
Demised Premises.

5. The Demised Premises shall not be used for lodging or sleeping or for any immoral or
illegal purposes.

6. No tenant shall make, or permit to be made any unseemly or disturbing noises, sounds or
vibrations or disturb or interfere with tenants of this or neighboring buildings or premises or
those having business with them.

7. Each tenant must, upon the termination of this tenancy, return to the Landlord all keys of
stores, offices, and rooms, either furnished to, or otherwise procured by, such tenant, and in the
event of the loss of any keys so furnished, such tenant shall pay to the Landlord the cost of
replacing the same or of changing the lock or locks opened by such lost key if Landlord shall deem
it necessary to make such change.

8. Canvassing, soliciting and peddling in the Building and the Project are prohibited and each
tenant shall cooperate to prevent such activity.

9. Landlord will direct electricians as to where and how telephone or telegraph wires are to
be introduced. No boring or cutting for wires or stringing of wires will be allowed without
written consent of Landlord. The location of telephones, call boxes and other office equipment
affixed to the Demised Premises shall be subject to the approval of Landlord.

10. Parking spaces associated with the Building are intended for the exclusive use of
passenger automobiles. Except for intermittent deliveries, no vehicles other than passenger
automobiles may be parked in a parking space without the express written permission of Landlord.
Trucks and tractor trailers may only be parked at designated areas of the Building. Trucks and
tractor trailers shall not block access to the Building.

11. No tenant shall use any area within the Project for storage purposes other than the
interior of the Demised Premises.

 

d-1

 

EXHIBIT E

CERTIFICATE OF AUTHORITY

CORPORATION

The undersigned, Secretary of TANDY BRANDS ACCESSORIES, INC., a Delaware corporation
(“Tenant”), hereby certifies as follows to PINNACLE INDUSTRIAL CENTER LIMITED PARTNERSHIP,
a Texas limited partnership (“Landlord”), in connection with Tenant’s proposed lease of
premises in Building A, at Pinnacle Industrial Center, Dallas County, Texas (the
“Premises”):

1. Tenant is duly organized, validly existing and in good standing under the laws of the State
of Delaware, and duly qualified to do business in the State of Texas.

2. That the following named persons, acting individually, are each authorized and empowered to
negotiate and execute, on behalf of Tenant, a lease of the Premises and that the signature opposite
the name of each individual is an authentic signature:

	 	 	 	 	 
	 

	 	 	 	/s/ Stan Ninemire
	 

(name)
	 	 

(title)
	 	 

(signature)

	 	 	 	 	 
	 
	 	 
	 	 
	(name)
	 	(title)
	 	(signature)
	 	 	 	 	 
	 
	 	 
	 	 
	(name)
	 	(title)
	 	(signature)

3. That the foregoing authority was conferred upon the person(s) named above by the Board of
Directors of Tenant, at a duly convened meeting held June 15, 1999.

	 	 	 	 	 
	 	 	 
	 	
/s/ Darrel A. Rice
 	 
	 	Secretary 	 
	 
	 	[CORPORATE SEAL]	 

 

e-1

 

EXHIBIT F

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

THIS AGREEMENT made this
 _____ 
day of                     ,
 _____ 
between GUARANTY FEDERAL BANK,
F.S.B., a federal savings bank (hereinafter called “Lender”),                                         
(hereinafter called “Tenant”), and                                         (hereinafter called
“Landlord”).

W I T N E S S E T H  T H A T:

WHEREAS, Lender is the owner and holder of a [Deed of Trust] (hereinafter called the “Deed
of Trust”) dated                     ,
 _____, covering the real property described in Exhibit
A and the buildings and improvements thereon (hereinafter collectively called the
“Mortgaged Premises”) securing the payment of a promissory note in the stated principal
amount of $                     payable to the order of Lender;

WHEREAS, Tenant is the tenant under a lease (hereinafter called the “Lease”) dated
                                        ,
 _____, executed by and between Landlord and Tenant, covering certain
property (hereinafter called the “Demised Premises”) consisting of all or a part of the
Mortgaged Premises; and

WHEREAS, Tenant and Lender desire to confirm their understanding with respect to the Lease and
the Deed of Trust;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained,
Lender and Tenant hereby agree and covenant as follows:

1. Subordination. The Lease now is, and shall at all times and for all purposes
continue to be, subject and subordinate, in each and every respect, to the Deed of Trust, with the
provisions of the Deed of Trust controlling in all respects over the provisions of the Lease, it
being understood and agreed that the foregoing subordination shall apply to any and all increases,
renewals, modifications, extensions, substitutions, replacements and/or consolidations of the Deed
of Trust, provided that any and all such increases, renewals, modifications, extensions,
substitutions, replacements and/or consolidations shall nevertheless be subject to the terms of
this Agreement.

2. Non-Disturbance. So long as (i) Tenant is not in default (beyond any period given
Tenant to cure such default) in the payment of rent or additional rent or in the performance of any
of the other terms, covenants or conditions of the Lease on Tenant’s part to be performed, (ii) the
Lease is in full force and effect according to its original terms, or with such amendments or
modifications as Lender shall have approved, and (iii) Tenant attorns to Lender or a purchaser of
the Mortgaged Premises as provided in Paragraph 3, then (a) Tenant’s possession, occupancy, use and
quiet enjoyment of the Demised Premises under the Lease, or any extensions or renewals thereof or
acquisition of additional space which may be effected in accordance with any option therefor in the
Lease, shall not be terminated, disturbed, diminished or interfered with by Lender in the exercise
of any of its rights under the Deed of Trust, and (b) Lender will not join Tenant as
a party defendant in any action or proceeding for the purpose of terminating Tenant’s interest
and estate under the Lease because of any default under the Deed of Trust.

 

f-1

 

3. Attornment. If Lender shall become the owner of the Mortgaged Premises or the
Mortgaged Premises shall be sold by reason of non-judicial or judicial foreclosure or other
proceedings brought to enforce the Deed of Trust or the Mortgaged Premises shall be conveyed by
deed in lieu of foreclosure, the Lease shall continue in full force and effect as a direct Lease
between Lender or other purchaser of the Mortgaged Premises, who shall succeed to the rights and
duties of Landlord, and Tenant, and Tenant shall attorn to Lender or such purchaser, as the case
may be, upon any such occurrence and shall recognize Lender or such purchaser, as the case may be,
as the Landlord under the Lease. Such attornment shall be effective and self-operative without the
execution of any further instrument on the part of any of the parties hereto. Tenant agrees,
however, to execute and deliver at any time and from time to time, upon the request of Landlord or
of any holder(s) of any of the indebtedness or other obligations secured by the Deed of Trust or
any such purchaser, any instrument or certificate which, in the sole reasonable judgment of the
requesting party, is necessary or appropriate, in connection with any such foreclosure or deed in
lieu of foreclosure or otherwise, to evidence such attornment. Tenant hereby waives the provisions
of any statute or rule of law, now or hereafter in effect, which may give or purport to give Tenant
any right or election to terminate or otherwise adversely affect the Lease and the obligations of
Tenant thereunder as a result of any such foreclosure or deed in lieu of foreclosure.

4. Obligations and Remedies. If Lender shall become the owner of the Mortgaged
Premises or the Mortgaged Premises shall be sold by reason of non-judicial or judicial foreclosure
or other proceedings brought to enforce the Deed of Trust or the Mortgaged Premises shall be
conveyed by deed in lieu of foreclosure, Lender or other purchaser of the Mortgaged Premises, as
the case may be, shall have the same remedies by entry, action or otherwise in the event of any
default by Tenant (beyond any period given Tenant to cure such default) in the payment of rent or
additional rent or in the performance of any of the other terms, covenants and conditions of the
Lease on Tenant’s part to be performed that Landlord had or would have had if Lender or such
purchaser had not succeeded to the interest of Landlord. Upon attornment by Tenant as provided
herein, Lender or such purchaser shall be bound to Tenant under all the terms, covenants and
conditions of the Lease and Tenant shall have the same remedies against Lender or such purchaser
for the breach of an agreement contained in the Lease that Tenant might have had under the Lease
against Landlord if Lender or such purchaser had not succeeded to the interest of Landlord;
provided, however, that Lender or such purchaser shall not be liable or bound to Tenant:

(a) for any act or omission of any prior landlord (including Landlord); or

(b) for any offsets or defenses which Tenant might have against any prior landlord
(including Landlord); or

(c) for or by any rent or additional rent which Tenant might have paid for more than
the current month to any prior landlord (including Landlord); or

 

f-2

 

(d) by any amendment, modification or consensual termination of the Lease made without
Lender’s consent; or

(e) for any security deposit, rental deposit or similar deposit given by Tenant to a
prior landlord (including Landlord) unless such deposit is actually paid over to Lender or
such purchaser by the prior landlord; or

(f) for any repairs or replacements to or required by the Demised Premises or the
Mortgaged Premises arising prior to the date Lender or such purchaser takes possession of
the Mortgaged Premises; or

(g) for any construction of or payment or allowance for tenant improvements to the
Demised Premises or any part thereof or to the Mortgaged Premises or any part thereof for
the benefit of Tenant; or

(h) for the payment of any leasing commissions or other expenses for which any prior
landlord (including Landlord) incurred the obligation to pay; or

(i) by any notice given by Tenant to a prior landlord (including Landlord) unless a
copy thereof was also then given to Lender.

The person or entity to whom Tenant attorns shall be liable to Tenant under the Lease only for
matters arising during such person’s or entity’s period of ownership, and such liability shall
terminate upon the transfer by such person or entity of its interest in the Lease and the Mortgaged
Premises.

5. No Abridgment. Nothing herein contained is intended, nor shall it be construed, to
abridge or adversely affect any right or remedy of Landlord under the Lease in the event of any
default by Tenant (beyond any period given Tenant to cure such default) in the payment of rent or
additional rent or in the performance of any of the other terms, covenants or conditions of the
Lease on Tenant’s part to be performed.

6. Notices of Default to Lender. Tenant agrees to give Lender a copy of any default
notice sent by Landlord under the Lease to Tenant or by Tenant to Landlord and to promptly send
written notice to Lender upon learning of any default under the Lease by any party to the Lease.

7. Representations by Tenant. Tenant represents and warrants to Lender that Tenant
has validly executed the Lease; the Lease is valid, binding and enforceable and is in full force
and effect in accordance with its terms; the Lease has not been amended except as stated herein; no
rent under the Lease has been paid more than thirty (30) days in advance of its due date; there are
no defaults existing under the Lease; and Tenant, as of this date, has no charge, lien,
counterclaim or claim of offset under the Lease, or otherwise, against the rents or other charges
due or to become due under the Lease.

 

f-3

 

8. Rent Payment. If Lender shall become the owner of the Mortgaged Premises or the
Mortgaged Premises shall be sold by reason of non-judicial or judicial foreclosure or other
proceedings brought to enforce the Deed of Trust or the Mortgaged Premises shall be conveyed
by deed in lieu of foreclosure, Tenant agrees to pay all rents directly to Lender or other
purchaser of the Mortgaged Premises, as the case may be, in accordance with the Lease immediately
upon notice of Lender or such purchaser, as the case may be, succeeding to Landlord’s interest
under the Lease. Tenant further agrees to pay all rents directly to Lender immediately upon notice
that Lender is exercising its rights to such rents under the Deed of Trust or any other loan
documents (including but not limited to any Assignment of Leases and Rents) following a default by
Landlord or other applicable party.

9. Notice of Deed of Trust. To the extent that the Lease shall entitle Tenant to
notice of any deed of trust or security agreement, this Agreement shall constitute such notice to
the Tenant with respect to the Deed of Trust and to any and all other deeds of trust and security
agreements which may hereafter be subject to the terms of this Agreement.

10. Landlord Defaults. Tenant agrees with Lender that effective as of the date of
this Agreement: (i) Tenant shall not take any steps to terminate the Lease for any default by
Landlord or any succeeding owner of the Mortgaged Premises until after giving Lender written notice
of such default, stating the nature of the default and giving Lender thirty (30) days from receipt
of such notice to effect cure of the same, or if cure cannot be effected within said thirty (30)
days due to the nature of the default, Lender shall have a reasonable time to cure provided that it
commences cure within said thirty (30) day period of time and diligently carries such cure to
completion; and (ii) notice to Landlord under the Lease (oral or written) shall not constitute
notice to Lender.

11. No Amendment, Termination, Assignment or Subletting of Lease. Tenant agrees that
Tenant’s interest in and obligations under the Lease shall not be altered, modified or terminated
without the prior written consent of Lender. Tenant further agrees that Tenant shall not assign
the Lease or allow it to be assigned in any manner or sublet the Demised Premises or any part
thereof without the prior written consent of Lender in any situation where Landlord’s consent to
any such action is required under the Lease.

12. Liability of Lender. If Lender shall become the owner of the Mortgaged Premises
or the Mortgaged Premises shall be sold by reason of foreclosure or other proceedings brought to
enforce the Mortgage or the Mortgaged Premises shall be conveyed by deed in lieu of foreclosure,
Tenant agrees that, notwithstanding anything to the contrary contained in the Lease, after such
foreclosure sale or conveyance by deed in lieu of foreclosure, Lender shall have no personal
liability to Tenant under the Lease and Tenant shall look solely to the estate and property of
Landlord in the Mortgaged Premises, to the net proceeds of sale thereof or the rentals received
therefrom, for the satisfaction of Tenant’s remedies for the collection of a judgment or other
judicial process requiring the payment of money by Landlord in the event of any default or breach
by Landlord with respect to any of the terms, covenants, and conditions of the Lease to be observed
or performed by Landlord and any other obligation of Landlord created by or under this Lease, and
no other property or assets of Landlord or of its partners, officers, beneficiaries, co-tenants,
shareholders, or principals (as the case may be) shall be subject to levy, execution or other
enforcement procedures for the satisfaction of Tenant’s remedies. The term “Landlord” as
used herein shall be limited to mean and include only the owner or owners at the time in question
of Landlord’s interest in the Lease, which term shall include Lender in the event Lender

 

f-4

 

acquires title to the Mortgaged Premises. Further, in the event of any transfer by Landlord of Landlord’s interest in this Lease, Landlord (and in the case of any subsequent transfers or conveyances,
the then assignor), including each of its partners, officers, beneficiaries, co-tenants,
shareholders or principals (as the case may be) shall be automatically freed and released, from and
after the date of such transfer or conveyance, of all liability for the performance of any
covenants and agreements which accrue subsequent to the date of such transfer of Landlord’s
interest.

13. Notice. Any notice or communication required or permitted hereunder shall be
given in writing, sent by (a) personal delivery, or (b) expedited delivery service with proof of
delivery, or (c) United States mail, postage prepaid, registered or certified mail, or (d)
telegram, telex or telecopy, addressed as follows:

	 	 	 	 
	 	To Lender:

	 	Guaranty Federal Bank, F.S.B.

8333 Douglas Avenue

Dallas, Texas 75225

Attn: Commercial Real Estate Lending Division
	 	 
	 	 
	 	To Tenant:

	 	 
	 
	 	 
	 	 

	 	 
	 
	 	 
	 	 

	 	 

	 	 	 	 	 	 
	 	 

	 	Attn:	 	 
	 	 

	 	 	 

or to such other address or to the attention of such other person as hereafter shall be designated
in writing by the applicable party sent in accordance herewith. Any such notice or communication
shall be deemed to have been given and received either at the time of personal delivery or, in the
case of delivery service or mail, as of the date of first attempted delivery at the address and in
the manner provided herein, or in the case of telegram, telex or telecopy, upon receipt.

14. Modification. This Agreement may not be modified orally or in any manner other
than by an agreement in writing signed by the parties hereto or their respective successors in
interest.

15. Successor Lender. The term “Lender” as used throughout this Agreement includes
any successor or assign of Lender and any holder(s) of any interest in the indebtedness secured by
the Deed of Trust.

16. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the parties hereto, their successors and assigns, and any purchaser or purchasers at
foreclosure of the Mortgaged Premises, and their respective heirs, personal representatives,
successors and assigns.

17. Paragraph Headings. The paragraph headings contained in this Agreement are for
convenience only and shall in no way enlarge or limit the scope or meaning of the various and
several paragraphs hereof.

 

f-5

 

18. Gender and Number. Within this Agreement, words of any gender shall be held and
construed to include any other gender, and words in the singular number shall be held and
construed to include the plural and words in the plural number shall be held and construed to
include the singular, unless the context otherwise requires.

19. Applicable Law. This Agreement and the rights and duties of the parties hereunder
shall be governed by all purposes by the law of the State of California and the law of the United
States applicable to transactions within such state.

20. Counterparts. This Agreement may be executed in multiple counterparts, and by the
different parties hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be one and the same instrument with the same signature as of all parties to this
Agreement had signed the same signature page.

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

	 	 	 	 	 	 	 
	 

	 	LENDER:	 	 
	 
	 	 	 	 	 	 
	 	 	GUARANTY FEDERAL BANK, F.S.B.,

a federal savings bank	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 	 	 	 
	 

	 	 
	Name: 	 

	 	 
	 

	 	 
	Title: 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	TENANT:	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 
	 

	 	By: 	 	 	 
	 

	 	 
	Name: 	 

	 	 
	 

	 	 
	Title: 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	LANDLORD:	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 
	 

	 	By: 	 	 	 
	 

	 	 
	Name: 	 

	 	 
	 

	 	 
	Title: 	 

	 	 
	 

	 	 	 	 

	 	 

[ACKNOWLEDGMENTS]

 

f-6

 

FIRST AMENDMENT TO INDUSTRIAL LEASE AGREEMENT

THIS AMENDMENT is made as of the Amendment Date (as hereinafter defined) by and between
PINNACLE INDUSTRIAL CENTER LIMITED PARTNERSHIP, a Texas limited partnership (“Landlord”)
and TANDY BRANDS ACCESSORIES, INC., a Delaware corporation (“Tenant”).

RECITALS

Landlord and Tenant have previously entered into that certain Industrial Lease Agreement dated
September 24, 1999 (the “Lease”) for the lease of approximately 119,804 square feet of
space, more commonly known as 4421 Davis Blvd., Dallas, Texas 75211 (the “Original Demised
Premises”) located within Pinnacle Industrial Center, Dallas County, Texas.

Landlord and Tenant desire to amend the Lease to, among other things, increase the Base Rent,
increase the square footage within the Original Demised Premises, adjust the Lease Commencement
Date, and extend the Term.

NOW, THEREFORE, for and in consideration of Ten and No/100 Dollars ($10.00) and other good and
valuable consideration in hand paid by each party hereto to the other, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto do hereby agree as follows:

1. All capitalized terms used herein but undefined shall have the meaning as defined in the
Lease.

2. Section 1(d) of the Lease is hereby deleted in its entirety and the following is
substituted therefor:

1(d) Annual Base Rent:

	 	 	 	 	 
	Lease Year 1
	 	$	467,830.00	 
	 
	 	 	 	 
	Lease Years 2 - 5
	 	$	510,360.00	 
	 
	 	 	 	 
	Lease Years 6 - 10
	 	$	574,152.00	 

3. Section 1(e) of the Lease is hereby deleted in its entirety and the following is
substituted therefor:

1(e) Monthly Base Rent Installments:

	 	 	 	 	 
	Lease Year 1
	 	 	 	 
	Month 1
	 	$	-0-	 
	Months 2 – 12
	 	$	42,530.00	 
	 
	 	 	 	 
	Lease Years 2 – 5
	 	$	42,530.00	 
	 
	 	 	 	 
	Lease Years 6 – 10
	 	$	47,846.00	 

 

 

 

4. The Lease Commencement Date, as defined in Section 1(f) of the Lease, is hereby extended to
February 1, 2000.

5. The Base Rent Commencement Date, as defined in Section 1(g) of the Lease, is hereby
extended to March 1, 2000.

6. The Expiration Date, as defined in Section 1(h) of the Lease, is hereby extended to January
31, 2010. As used herein, “Term” is hereby defined as the period commencing on the
Commencement Date and terminating on the Expiration Date, as extended hereby.

7. Commencing on the Amendment Date, the Original Demised Premises shall be expanded to also
include that certain additional 15,014 square foot space, all of which is warehouse space, as more
particularly described on Exhibit “A” attached hereto and incorporated herein by reference,
the address of which is the same address as the Original Demised Premises (the “Expansion
Space”). Commencing on the Amendment Date, the Demised Premises shall be defined as the
Original Demised Premises and the Expansion Space.

8. For purposes of calculating Tenant’s pro rata share of Operating Expenses pursuant to
Section 6 of the Lease, commencing on the Amendment Date, Tenant’s Operating Expense Percentage, as
set forth in Section 1(j) of the Lease, shall be 40.85%.

9. Except for Vantage Management Company, whose commission shall be paid by Landlord, Landlord
and Tenant each represents and warrants to the other that neither party has engaged or had any
conversations or negotiations with any broker, finder or other third party concerning the matters
set forth in this Amendment who would be entitled to any commission or fee based on the execution
of this Amendment. Landlord and Tenant each hereby indemnifies the other against and from any
claims for any brokerage commissions and all costs, expenses and liabilities in connection
therewith, including, without limitation, reasonable attorneys’ fees and expenses, for any breach
of the foregoing. The foregoing indemnification shall survive the termination of the Lease for any
reason.

10. Landlord shall use reasonable speed and diligence to substantially complete the
Improvements for the Expansion Space on the same basis as and pursuant to the Plans and
Specifications for the warehouse portion of the Original Demised Premises.

11. Tenant represents to Landlord that, as of the date hereof, Landlord is not in default of
the Lease.

12. For purposes of this Amendment, the term “Amendment Date” shall mean the date upon
which this Amendment is signed by Landlord or Tenant, whichever is later.

 

-2-

 

13. Except as amended hereby, the Lease shall be and remain in full force and effect and
unchanged. As amended hereby, the Lease is hereby ratified and confirmed by Landlord and Tenant.
To the extent the terms hereof are inconsistent with the terms of the Lease, the terms hereof shall
control.

14. submission of this Amendment to Tenant for examination or consideration does not
constitute an offer to amend the Lease, and this Amendment shall become effective only upon the
execution and delivery thereof by Landlord and Tenant.

[SIGNATURES ON FOLLOWING PAGE]

 

-3-

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and sealed as
of the Amendment Date.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	LANDLORD:
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	PINNACLE INDUSTRIAL CENTER LIMITED
	 	 	PARTNERSHIP, a Texas limited partnership
	 
	 	 	 	 	 	 	 	 	 	 
	Date: January 5, 2000	 	By:	 	ID International (Texas), Inc., a Georgia

corporation, General Partner
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	/s/ Henry D. Gregory
	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name: Henry D. “Greg” Gregory
	 	 	 	 	 	 	Title: President
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	[CORPORATE SEAL]

	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	CG Pinnacle, L.L.C., a Delaware

limited liability company,
General Partner
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Connecticut General Life Insurance

Company, a Connecticut corporation,

its Member
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	CIGNA Investments, Inc.,

authorized signatory
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:
	 	/s/ Leon Pouncy
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Name: Leon Pouncy

Title: Managing Director
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	[CORPORATE SEAL]

 

-4-

 

	 	 	 	 	 	 	 
	 

	 	TENANT:	 	 
	 
	 	 	 	 	 	 
	 	 	TANDY BRANDS ACCESSORIES, INC.,
a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	Date: 12-17-99

	 	By:
	 	/s/ Stan Ninemire
 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	[CORPORATE SEAL]	 	 

 

-5-

 

CONSENT

The capitalized terms of this Consent shall have the meaning as defined in the Amendment to which
this Consent is attached (the “Amendment”), unless otherwise defined. The undersigned,
being the holder of that Deed of Trust, Mortgage and Security Agreement (hereinafter called the
“Deed of Trust”) dated July 17, 1999 and recorded in Volume 99144, Page 01392, Real
Property Records of Dallas County, Texas, covering the real property described in this Amendment
(hereinafter collectively called the “Mortgaged Premises”) securing the payment of a
promissory note (the Note) in the stated principal amount of $6,887,811 payable to the order of
Lender, which Note was modified to evidence an increase the maximum principal amount of the loan
evidenced a new promissory note (the “Replacement Promissory Note”) in the maximum amount
of $7,394,083 payable to the order of Lender, and the Deed of Trust has been modified to reflect
such Replacement Promissory Note, hereby consents to the Amendment, and agrees that any reference
to the Lease in that certain Subordination, Non-Disturbance and Attornment Agreement signed and
delivered by Landlord, Tenant, and the undersigned, shall mean the Lease as amended by the
Amendment.

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	GUARANTY FEDERAL BANK, F.S.B.,
	 	 	 	 	 	 	a federal savings bank
	 
	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 
	 	 	 	 

Name:
	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 

 

-6-

 

CERTIFICATE OF AUTHORITY

CORPORATION

The undersigned, Secretary of TANDY BRANDS ACCESSORIES, INC., a Delaware corporation
(“Tenant”), hereby certifies as follows to PINNACLE INDUSTRIAL CENTER LIMITED PARTNERSHIP,
a Texas limited partnership (“Landlord”), in connection with that First Amendment to
Industrial Lease Agreement for Tenant’s lease of premises in Building A, at Pinnacle Industrial
Center, Dallas County, Texas (the “Premises”):

1. Tenant is duly organized, validly existing and in good standing under the laws of the State
of Delaware, and duly qualified to do business in the State of Texas.

2. That the following named persons, acting individually, are each authorized and empowered to
negotiate and execute, on behalf of Tenant, a lease of the Premises and that the signature opposite
the name of each individual is an authentic signature:

	 	 	 	 	 
	Stan Ninemire
	 	Senior Vice President
	 	/s/ Stan Ninemire
	 
	 	 
	 	 
	(name)
	 	(title)
	 	(signature)
	 	 	 	 	 
	 
	 	 
	 	 
	(name)
	 	(title)
	 	(signature)
	 	 	 	 	 
	 
	 	 
	 	 
	(name)
	 	(title)
	 	(signature)

3. That the foregoing authority was conferred upon the person(s) named above by the Board of
Directors of Tenant, at a duly convened meeting held Dec. 21, 1999.

	 	 	 	 	 
	 	 	 
	 	/s/ Darrel A. Rice
 	 
	 	Secretary 	 
	 	 	 
	 

[CORPORATE SEAL]

 

 

 

Exhibit A

 

 

 

SECOND AMENDMENT TO LEASE

(Expansion of Demised Premises)

I. PARTIES AND DATE

THIS SECOND AMENDMENT TO LEASE (this “Amendment”), dated as September 4, 2003, is
entered into by and between PINNACLE INDUSTRIAL DALLAS, INC., a Delaware corporation
(“Landlord”), and TANDY BRANDS ACCESSORIES, INC., a Delaware corporation
(“Tenant”).

II. RECITALS

A. Pinnacle Industrial Center Limited Partnership, a Texas limited partnership,
predecessor-in-interest to Landlord, and Tenant entered into that certain Industrial Lease
Agreement dated as of September 24, 1999, as amended by that certain First Amendment to Industrial
Lease Agreement dated as of January 5, 2000 (collectively as amended, the “Lease”), for the
leasing of certain premises measuring approximately 134,818 rentable square feet (the “Demised
Premises”) in that certain building located at 4421 Davis Blvd., Dallas, Texas 75211 (the
“Building”), as the Demised Premises is more particularly described in the Lease. The
Expiration Date of the Lease is January 31, 2010. Capitalized terms used and not otherwise defined
herein shall have the same definitions as set forth in the Lease.

B. Tenant desires to expand the Demised Premises by approximately 28,954 rentable square feet
(the “Expansion Premises”), and Landlord has agreed to such expansion. In connection
therewith, Landlord and Tenant hereby reaffirm and modify the Lease, and expand the Demised
Premises, all as more particularly set forth in this Amendment.

III. MODIFICATIONS

For good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Landlord and Tenant hereby agree to amend the Lease upon the terms and conditions
hereinafter set forth.

A. Reaffirmance of Lease. Subject to the terms of this Amendment, Landlord and Tenant
hereby reaffirm all of the terms and provisions of the Lease.

B. Expansion of Demised Premises. Effective as of October 15, 2003 (the
“Expansion Premises Commencement Date”), the Demised Premises shall be expanded to
incorporate the Expansion Premises, which is conclusively deemed to contain 28,954 square feet of
rentable area, such Expansion Premises being more particularly indicated in cross-hatch on the
attached Exhibit A. If delivery of possession is delayed for any reason whatsoever, this
Amendment shall not be void or voidable. If the Expansion Premises Commencement Date is other than
the date set forth above, the parties shall memorialize the Expansion Premises Commencement Date
promptly following determination thereof.

 

1

 

C. Improvement Work. In order to prepare the Expansion Premises for Tenant’s
occupancy, Landlord will cause to be completed certain improvement work deemed necessary in
Landlord’s reasonable discretion (the “Work”), including without limitation, the
removal of the existing demising walls and the construction of new demising walls. Such Work shall
be performed by Coker & Associates (“Landlord’s Contractor”). The Work shall be completed
diligently in accordance with plans prepared by Landlord’s Contractor and approved by Tenant (such
approval not to be unreasonably withheld) and all applicable laws. Tenant shall pay for one-third
(1/3) of all costs and expenses incurred by Landlord for the Work, plus all costs for the Work
which exceed a total of $225,000.00 (collectively, “Tenant’s Share”); provided, however,
that: (i) Landlord shall not be entitled to pay itself any fees in connection with the Work (but
nothing herein shall prevent Landlord from paying a construction management fee to its property
manager, such fee to be included in the final bid); and (ii) if the total cost of the Work is
estimated to exceed $225,000.00, Tenant shall be entitled to value engineer and/or make changes to
the Work to reduce the amount of estimated costs. The parties currently anticipate that the cost
of the Work will be approximately $212,700.00. Tenant shall pay Landlord for Tenant’s Share within
ten (10) days of a written request for same from Landlord delivered to Tenant following substantial
completion of the Work and delivery of the Expansion Premises. Landlord shall warrant and repair
any defects in the Work which are reported to Landlord in writing within twelve (12) months
following the Expansion Premises Commencement Date.

D. Modification of Square Footage and Tenant’s Proportionate Share. Effective as of
the Expansion Premises Commencement Date, (i) the square footage of the Demised Premises shall be
amended to be 163,772 square feet of rentable area; and (ii) Tenant’s Operating Expense Percentage,
as set forth in Section 1(j) of the Lease, shall be amended to be 49.63%.

E. Annual Base Rent. Section 1(d) of the Lease is hereby deleted in its entirety and
the following is substituted therefor:

	 	 	 	 	 
	Annual Base Rent:	 	 	 	 
	 
	 	 	 	 
	Lease Year 1
	 	$	467,830.00	 
	Lease Year 2 – The day preceding the Expansion Premises
Commencement Date
	 	$	510,360.00	 
	Expansion Premises Commencement Date – 2/15/05
	 	$	620,695.88	 
	2/16/05 – 1/31/10
	 	$	697,668.72	 

F. Monthly Base Rent. Section 1(e) of the Lease is hereby deleted in its entirety and
the following is substituted therefor:

	 	 	 	 	 
	Monthly Base Rent Installments:	 	 	 	 
	 
	 	 	 	 
	Lease Year 1
	 	 	 	 
	Month 1
	 	$	0	 
	Months 2-12
	 	$	42,530.00	 
	Lease Year 2 – The day preceding the Expansion Premises
Commencement Date
	 	$	42,530.00	 
	Expansion Premises Commencement Date – 2/15/05
	 	$	51,724.66	 
	2/16/05 – 1/31/10
	 	$	58,139.06	 

 

2

 

G. Environmental Matters. Section 16 of the Lease is hereby amended as follows:

a. Section 16(b) of the Lease is hereby deleted in its entirety and replaced with the
following paragraph:

“Tenant will immediately advise Landlord in writing upon Tenant obtaining knowledge
of any of the following: (i) any pending or threatened Environmental Claim (defined
below) against Tenant relating to the Demised Premises, the Building or, the
Project; (ii) any condition or occurrence on the Demised Premises, the Building or
the Project caused or permitted by Tenant or any Tenant Affiliate (defined below)
that (a) results in noncompliance by Tenant with any applicable Environmental Law,
or (b) could reasonably be anticipated to form the basis of an Environmental Claim
against Tenant or Landlord or the Demised Premises; (iii) any condition or
occurrence on the Demised Premises or any property adjoining the Demised Premises
caused or permitted by Tenant or any Tenant Affiliate that could reasonably be
anticipated to cause the Demised Premises to be subject to any restrictions on the
ownership, occupancy, use or transferability of the Demised Premises under any
Environmental Law; and (iv) the actual or anticipated taking of any removal or
remedial action by Tenant in response to the actual or alleged presence of any
Hazardous Substances on the Demised Premises, the Building or the Project. All such
notices shall describe in reasonable detail the nature of the claim, investigation,
condition, occurrence or removal or remedial action and Tenant’s response thereto.
In addition, Tenant will provide Landlord with copies of all communications
regarding the Demised Premises with any government or governmental agency relating
to Environmental Laws, all such communications with any person relating to
Environmental Claims, and such detailed reports of any such Environmental Claim as
may reasonably be requested by Landlord. In the event any investigation or
monitoring of site conditions or any clean-up, containment, restoration, removal or
other remedial work (collectively, the “Remedial Work”) is required under
any Environmental Law, by any judicial order, or by any governmental entity as the
result of operations or activities upon, or any use or occupancy of, any portion of
the Demised Premises by Tenant or any Tenant Affiliate, then Tenant shall perform or
cause to be performed the Remedial Work in compliance with such law or, if Tenant
fails to commence the Remedial Work within thirty (30) days after it has been
determined that Tenant or any Tenant Affiliate caused or permitted the contamination
which triggered the Remedial Work, Landlord may cause such Remedial Work to be
performed and Tenant shall reimburse Landlord for the cost thereof within thirty
(30) days of demand therefor. All Remedial Work performed by Tenant shall be
performed by one or more contractors, selected by Tenant and approved in advance in
writing by Landlord, and under the supervision of a consulting engineer selected by
Tenant and approved in advance in writing by Landlord. All costs and expenses of
such Remedial Work which is the result of environmental contamination
caused or permitted by Tenant or any Tenant Affiliate shall be paid by Tenant,
including, without limitation, the charges of such contractor(s), the consulting
engineer, and Landlord’s reasonable attorneys’ fees and costs incurred in connection
with monitoring or review of such Remedial

 

3

 

Work. The covenants and agreements of Tenant set forth in this
Section 16(b) shall survive the expiration or earlier termination of this Lease.
Except to the extent of Remedial Work resulting from environmental contamination
caused or permitted by Tenant or any Tenant Affiliate, Landlord shall cause all
Remedial Work to be completed promptly and in accordance with all applicable laws at
Landlord’s sole cost and expense, without reimbursement from Tenant. If Tenant is
unable to use the Premises as a result of any environmental contamination not caused
or permitted by Tenant or any Tenant Affiliate, Tenant shall be entitled to receive
an abatement of all rent payable under the Lease from the commencement of such
interruption until Tenant’s use of the Premises is restored. As used herein, the
term (1) “Tenant Affiliates” shall mean Tenant, its assignees, subtenants,
and their respective agents, employees, representatives and contractors;
(2) “Environmental Claim” means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
non-compliance or violation, investigations, proceedings, consent orders or consent
agreements relating in any way to any Environmental Law or any Environmental Permit,
including without limitation (i) any and all Environmental Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law and (ii) any
and all Environmental Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Substances or arising from alleged injury or threat of injury to health,
safety or the environment; and (3) “Environmental Permits” means all
permits, approvals, identification numbers, licenses and other authorizations
required under any applicable Environmental Law.”

b. In the first sentence of Section 16(d) of the Lease, the phrase “which consent shall
not be unreasonably withheld” is hereby deleted.

c. A new Section 16(h) is hereby inserted in the Lease to read as follows:

“At any time and from time to time during the term of this Lease, Landlord may
perform an environmental site assessment report concerning the Demised Premises,
prepared by an environmental consulting firm chosen by Landlord, indicating the
presence or absence of Hazardous Substances caused or permitted by Tenant and the
potential cost of any compliance, removal or remedial action in connection with any
such Hazardous Substances on the Demised Premises. Tenant shall grant and hereby
grants to Landlord and its agents access to the Demised Premises and specifically
grants Landlord an irrevocable non-exclusive license to undertake such an
assessment. The cost of any such environmental site assessment shall be borne by
Landlord unless (i) Landlord initiates same based on Landlord’s reasonable belief
that Tenant has caused or permitted a Hazardous Substance problem on or at the
Demised Premises and (ii) the results of such assessment indicate that Tenant has
caused or permitted a Hazardous Substance problem on or at the Demised Premises. If
Tenant shall be held responsible for
the costs of the assessment as above described, Tenant shall pay Landlord for the
costs of such assessment within thirty (30) days after demand.”

 

4

 

H. Tenant’s Default. Section 22(a)(i) of the Lease is hereby amended by the insertion
of the following at the end of the sentence: “provided, however, that for each calendar year
during which Landlord has already given Tenant two (2) written notices of the failure to pay Base
Rent or any Additional Rent, no further notice shall be required (i.e., the Event of Default will
automatically occur on the fifth (5th) day after the day upon which the rent
was due);”. Section 22(a)(ii) is hereby deleted from the Lease.

I. Assignment. A new Section 29(d) is hereby inserted in the Lease to read as follows:

“In the event of the transfer and assignment by Landlord of its interest in this Lease and
in the Building to a person expressly assuming Landlord’s obligations under this Lease,
Landlord shall thereby be released from any obligations hereunder arising after such
transfer and assumption, and Tenant agrees to look solely to such successor in interest of
the Landlord for performance of such obligations. Any security given by Tenant to secure
performance of Tenant’s obligations hereunder shall be transferred by Landlord to such
successor in interest and Landlord shall thereby be discharged of any further obligation
relating thereto.”

J. Waiver of Jury Trial. A new Section 31 is hereby inserted in the Lease to read as
follows:

“Waiver of Jury Trial. LANDLORD AND TENANT HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LEASE OR ANY DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF EITHER PARTY ARISING OUT OF OR RELATED IN ANY MANNER
WITH THE DEMISED PREMISES (INCLUDING WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL
THIS LEASE OR ANY CLAIMS OR DEFENSES ASSERTING THAT THIS LEASE WAS FRAUDULENTLY INDUCED OR
IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT FOR LANDLORD TO ENTER
INTO AND ACCEPT THIS LEASE.”

K. Address for Notice. Landlord’s address for notices in Section 1(m) of the Lease
shall be changed to:

Pinnacle Industrial Dallas, Inc.

c/o SSR Realty Advisors, Inc.

One California Street, Suite 1400

San Francisco, California 94111

Attn: Pinnacle Industrial Park Asset Manager

 

5

 

With a copy to:

IDI

3424 Peachtree Road, N.E., Suite 1500

Atlanta, Georgia 30326

Attn: Pinnacle Industrial Park Property Manager

L. Representations and Warranties. Tenant hereby represents, warrants and agrees
that: (i) there exists no breach, default or event of default under the Lease, as amended by this
Amendment, or any event or condition which, with notice or passage of time or both, would
constitute a breach, default or event of default on the part of Tenant under the Lease, as amended
by this Amendment; (ii) the Lease, as amended by this Amendment, continues to be a legal, valid and
binding agreement and obligation of Tenant; (iii) to Tenant’s actual knowledge, Landlord is not in
default under the Lease, as amended by this Amendment; and (iv) Tenant has no offset or defense to
its performance or obligations under the Lease, as amended by this Amendment. Landlord hereby
represents, warrants and agrees that: (w) there exists no breach, default or event of default
under the Lease, as amended by this Amendment, or any event or condition which, with notice or
passage of time or both, would constitute a breach, default or event of default on the part of
Landlord under the Lease, as amended by this Amendment; (x) the Lease, as amended by this
Amendment, continues to be a legal, valid and binding agreement and obligation of Landlord; (y) to
Landlord’s actual knowledge, without inquiry, Tenant is not in default under the Lease, as amended
by this Amendment; and (z) at the date of this Amendment, the Building is not encumbered by the
lien of a mortgage or deed of trust.

M. Broker. Tenant and Landlord warrant that they have had no dealings with any broker
or agent in connection with this Amendment other than IDI, whose commission shall be paid by
Landlord. Landlord and Tenant covenant to pay, hold harmless and indemnify each other from and
against any and all cost, expense or liability for any compensation, commission or charges claimed
by any other broker or agent utilized by the indemnitor with respect to this Amendment or the
negotiation hereof.

IV. GENERAL

A. Effect of Amendment; Ratification. Except to the extent the Lease is expressly
modified by this Amendment, the terms and provisions of the Lease shall remain unmodified and in
full force and effect. In the event of conflict between the terms of the Lease and the terms of
this Amendment, the terms of this Amendment shall prevail.

B. Counterparts. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which when taken together shall constitute one and
the same instrument.

C. Governing Law. The Lease, this Amendment, and any enforcement of the agreements
and modifications set forth therein or herein, shall be governed by and construed in accordance
with the laws of the state where the Demised Premises is located.

 

6

 

D. Sole Agreement. The Lease and this Amendment shall constitute the sole agreement
between Landlord and Tenant respecting the Demised Premises and the leasing of the Demised Premises
to Tenant. No other agreements or understandings shall be effective.

E. Time of the Essence. Time is of the essence of this Amendment and each and every
provision hereof.

F. Attorneys’ Fees. The provisions of the Lease respecting payment of attorneys’ fees
shall also apply to this Amendment.

G. Authority to Execute. Tenant represents that each of the individuals executing
this Amendment on behalf of Tenant is duly authorized to execute and deliver this Amendment on
behalf of Tenant and agrees to deliver evidence of such authority to Landlord upon request by
Landlord.

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

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PINNACLE INDUSTRIAL DALLAS, INC.,	 	 	 	TANDY BRANDS ACCESSORIES, INC.,	 	 
	a Delaware corporation	 	 	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	 	 	 	 	 	 	By:	 	/s/ Stan Ninemire	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 	 	Name:	 	Stan Ninemire	 	 
	 

	 	Title:	 	 	 	 
	 	 	 	Title:
	 	Executive Vice President	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Date of Execution: September ___, 2003	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Date of Execution: September ___, 2003	 	 

 

7

 

EXHIBIT A

EXPANSION PREMISES

 

A-1

 

			
	Re:	 	Pinnacle Park II

3631 West Davis Street

Dallas, Texas 75211

THIRD AMENDMENT TO LEASE

	 	 	 	 	 
	THE STATE OF TEXAS

	 	§	 	 
	 

	 	§
	 	KNOW ALL MEN BY THESE PRESENTS:
	COUNTY OF DALLAS

	 	§	 	 

THIS THIRD AMENDMENT TO LEASE (this “Amendment”) has been executed as of (but not
necessarily on) the 24th day of August, 2009, by THE REALTY ASSOCIATES FUND VII, L.P., a Delaware
limited partnership (“Landlord”), and TANDY BRANDS ACCESSORIES, INC., a Delaware
corporation (“Tenant”).

R E C I T A L S:

A. Pinnacle Industrial Center Limited, Partnership, a Texas limited partnership (“Original
Landlord”) and Tenant have heretofore executed that certain Industrial Lease Agreement (the
“Original Lease”) dated September 24, 1999, as amended and/or affected by Tenant Acceptance
of Demised Premises dated                     , 2000, by First Amendment to Industrial Lease Agreement
dated January 5, 2000, Second Amendment to Lease (Expansion of Demised Premises) dated September 4,
2003, Agreement and Acknowledgement dated February 29, 2008 and Subordination of Landlord’s Lien
dated March 25, 2008 (the Original Lease, as so amended, the “Lease”), pursuant to which
Tenant is currently leasing approximately 163,772 rentable square feet (the “Current
Premises”) in the above-referenced Building, as more particularly described in the Lease (the
“Building”). Unless otherwise defined herein, all initially capitalized terms used herein
will have the respective meanings assigned thereto in the Lease.

B. Landlord has acquired title to among other property, the Building and all of Original
Landlord’s interest under the Lease.

C. Landlord and Tenant desire to execute this Amendment in order to evidence their agreement
to (i) expand the Current Premises; (ii) extend the Term; and (iii) make certain other amendments
to the Lease, all as more particularly set forth in this Amendment.

NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:

THIRD AMENDMENT TO LEASE – Page 1 of 26

 

 

 

ARTICLE I

CERTAIN AMENDMENTS

Section 1.01 Second Expansion Premises. As of the date the Contingency (as
hereinafter defined) is satisfied, estimated to be on or about December 1, 2009, but in any event
to be not earlier than the date that the current tenant and occupant of the Second Expansion
Premises has vacated same and has removed all furniture, fixtures and personal property therefrom
such that the Refurbishment Work (as defined below) may be commenced immediately (the “Second
Expansion Premises Effective Date” or “SEPED”), subject to the terms, conditions and
contingencies set forth herein, and regardless of whether the Refurbishment Work is completed, the
Current Premises shall be expanded to include approximately 61,130 rentable square feet in the
Building as shown cross-hatched on Exhibit A of this Amendment (the “Second Expansion
Premises”; and together with the Current Premises, the “Premises”). As a result, the
Premises covered under the Lease will equal approximately 224,902 rentable square feet in the
Building; provided, further, that from and after the SEPED, the term “Demised Premises” as used in
the Lease shall mean and refer to, and shall be one and the same as, the “Premises” described
above.

Section 1.02 Tenant’s Operating Expense Percentage. As of the Second Expansion
Premises Effective Date, Tenant’s Operating Expense Percentage shall be amended to be 68.152%
(i.e., 224,902 rentable square feet in the Premises divided by 330,000 rentable square feet in the
Building).

Section 1.03 Term. The Term is hereby extended through and including January 31,
2020, subject to adjustment and earlier termination as provided in the Lease. Except as set forth
in Exhibit B of this Amendment, Tenant shall have no further renewal rights or options and all of
such rights or options, if any, are hereby deleted.

Section 1.04 Base Rent. As of the Second Expansion Premises Effective Date, the Base
Rent due and payable by Tenant to Landlord under the Lease with respect to the entire Premises
(i.e., the Current Premises and the Second Expansion Premises) shall be as follows:

	 	 	 	 	 	 	 	 	 
	 	 	Annual	 	 	Monthly	 
	Period*:	 	Base Rent Per R.S.F.:	 	 	Base Rent:	 
	Second Expansion Premises Effective Date –
150th day following SEPED**
	 	$	0.00	 	 	$	0.00	 
	151st day following SEPED – 1/31/13
	 	$	3.35	 	 	$	62,785.14	 
	2/1/13 – 1/31/18
	 	$	3.55	 	 	$	66,533.51	 
	2/1/18 – 1/31/20
	 	$	3.75	 	 	$	70,281.88	 

	 	 	 
	*	 	Note: Pursuant to the above schedule, Tenant’s Base Rent obligation for the Current Premises is
reduced.

	 
	**	 	To the extent that the Refurbishment Work is not sufficiently completed by the date which is 150
days following the SEPED so that the Second Expansion Premises can be used and occupied by Tenant
for the uses and purposes permitted and contemplated hereunder, and if such failure to
so sufficiently complete is due, in whole or in part, to Landlord’s (or its agents’, employees’ or
contractors’) acts or omissions to act, then the Base Rent shall thereafter be further equitably
abated until the date that such Refurbishment Work is so substantially completed.

THIRD AMENDMENT TO LEASE – Page 2 of 26

 

 

 

The Base Rent under the Lease shall be due and payable in equal monthly installments, each such
monthly installment due and payable on the first day of each calendar month, in advance, without
demand and without setoff or deduction whatsoever (except, in each such case, as may be otherwise
expressly set forth in the Lease or herein). Prior to the Second Expansion Premises Effective
Date, the Base Rent shall remain as set forth in the Lease.

Section 1.05 AS IS; Refurbishment Work. Landlord is leasing the Premises to Tenant
“as is” “where without representation or warranty, either express or implied, without any
obligation to alter, remodel, improve, repair or decorate any part of the Premises; provided,
however, Landlord shall provide Tenant with an allowance (the “Refurbishment Allowance”) in
an amount equal to $674,706.00 to perform improvements to the Premises (the “Refurbishment
Work”, which Refurbishment Work shall be deemed a “Tenant’s Change” under Section 18(a)
of the Original Lease, provided, however, that to the extent that any conflicts or contradictions
may exist between Section 18 of the Original Lease and this Amendment, the terms and conditions of
this Amendment shall be controlling [so that, by way of example and not limitation, if the
Refurbishment Work contemplated by the plans and specifications approved by Landlord and Tenant as
provided below includes “structural” changes or work, then such structural work shall be a
permitted Tenant’s Change notwithstanding any provision of said Section 18 to the contrary])
pursuant to plans and specifications approved by Landlord and Tenant in writing (such approval not
to be unreasonably withheld or delayed). Tenant shall pay Landlord all costs of the Refurbishment
Work in excess of the Refurbishment Allowance, and Landlord shall have the right to deduct all
costs or the Refurbishment Work from the Refurbishment Allowance. Upon Landlord’s request (to be
made before Landlord enters into any contracts to perform the Refurbishment Work), Tenant shall
deposit with Landlord the amount by which the total agreed contract price for the applicable
Refurbishment Work exceeds the amount of the Refurbishment Allowance, and Landlord shall have no
obligation to perform the Refurbishment Work unless Tenant has deposited such funds (the
“Deposit”) with Landlord. Landlord shall maintain the funds so deposited by Tenant in a
separate, FDIC insured account. Such funds deposited by Tenant (and interest earned on such funds,
which, as between Landlord and Tenant, shall be deemed income of Tenant) shall be placed in an
interest bearing account for the sole purpose of paying for the agreed costs of the Refurbishment
Work which are in excess of the Refurbishment Allowance. The Refurbishment Work shall be performed
only by contractors engaged by Landlord utilizing a guaranteed maximum price contract form
providing for the fixed price agreed to by Landlord and Tenant in the approved budget described
below; provided, however, (i) Tenant may elect to provide Landlord with the name(s) of general
contractor/contractors to participate in the competitive bidding process, (ii) Tenant may review
the summary bid sheet and select the general contractor, and (iii) all general contractors must
meet all of Landlord’s insurance requirements and qualifications. Landlord will use commercially
reasonable efforts to cause construction of the Refurbishment Work to be commence promptly after
approval of the plans and selection of the general contractor and will use commercially reasonable
efforts to cause such work to be diligently performed to completion. At the conclusion of the

THIRD AMENDMENT TO LEASE – Page 3 of 26

 

 

 

above-described competitive bidding process, Landlord and Tenant shall mutually and reasonably
agree upon the budget and fixed price for the Refurbishment Work, and such fixed price shall be the total guaranteed maximum price to be set forth in the above-described
construction contract(s); provided, further, that it is agreed that Tenant shall thereafter not be
liable or responsible for any costs incurred in connection with the Refurbishment Work which is in
excess of such agreed guaranteed maximum price, except (A) any costs in excess of such amount which
Tenant agrees to pay in written change orders executed by Tenant in advance in writing (and
Landlord may require Tenant to increase its above-described Deposit by the amount of such costs so
agreed to, concurrently with the full execution and delivery of such agreed change order), (B) any
costs in excess of such amount that are incurred due to damages or disruption to the Refurbishment
Work caused directly by Tenant and/or any of Tenant’s agents, employees or contractors, and (C) any
increases in costs or additional costs that are permitted under the guaranteed maximum price
contract due to exceptions, conditions and/or exclusions to the guaranteed maximum price contained
in the guaranteed maximum price contract (but only if such exceptions, conditions and exclusions
are part of a standard AIA contract and are beyond the control of Landlord, or if Tenant has first
approved in writing any and all exceptions, conditions and exclusions that are not part of a
standard AIA contract). Within 60 days after final completion of the Refurbishment Work (including
all punch-list items) and Landlord’s receipt of all draw requests for the Refurbishment Work,
Landlord shall prepare for Tenant’s review and approval a reconciliation of the total costs of the
Refurbishment Work (including reasonable supporting documentation requested by Tenant). If as a
result of payments made by Tenant to Landlord pursuant to this Section (and interest earned on such
payments), Tenant has overpaid or underpaid for the actual cost of the Refurbishment Work as set
forth in such reconciliation, then Landlord or Tenant (as applicable) shall pay the other within 30
days of delivery of the reconciliation for such overpayment (including from funds deposited by
Tenant with Landlord) or underpayment (as applicable), subject however to the terms, limitations
and conditions set forth in this Section 1.05. Tenant acknowledges that Landlord’s contractors may
construct the Refurbishment Work while Tenant occupies the Premises, that the construction of the
Refurbishment Work may prevent Tenant from using all or part of the Premises from time to time and
that the construction of the Refurbishment Work may create noise dust and debris that will
interfere with Tenant’s use of the Premises, but Landlord agrees that Landlord and its
contractor(s) shall reasonably endeavor to minimize, to the extent reasonably possible, any
interference with Tenant’s use or occupancy of the Premises from such Refurbishment Work. Tenant
acknowledges and agrees that it shall have no right to any abatement of rent or to recover any
other damages from Landlord due to its inability to use all or portions of the Premises while the
Refurbishment Work is being completed or due to interference with its business operations caused by
such construction except as is otherwise expressly set forth above. Tenant shall reasonably
cooperate with Landlord’s contractors in completing the Refurbishment Work and Landlord’s
Contractors are hereby granted authority to enter the Premises to complete the Refurbishment Work.
Landlord and Tenant shall reasonably coordinate the completion of the Refurbishment Work in order
to minimize disruptions to Tenant’s business activities, but Landlord shall have no obligation to
incur costs in order to minimize such disruptions. Landlord shall notify Tenant in writing when
Landlord believes that the Refurbishment Work is substantially completed and ready for inspection,
and representatives of Landlord and Tenant shall then inspect the Premises together and shall
identify (and mutually and reasonably agree upon) any and all items requiring completion (the
“Punchlist Items”), which list of Punchlist Items shall be attached to the Confirmation to
be executed pursuant to Section 1.09 hereof, and Landlord shall thereafter, but in any event within
30 days, complete or repair all such Punchlist Items. Tenant shall be solely responsible for

THIRD AMENDMENT TO LEASE – Page 4 of 26

 

 

 

moving its personal property (e.g., computers,
telephone equipment, cabling, and photocopy machines) from time to time, at Tenant’s sole expense,
to facilitate the completion of the Refurbishment Work, and Landlord and its contractors shall have
no obligation to move any of Tenant’s personal property. Landlord or its agent shall supervise the
Refurbishment Work, make disbursements from the funds deposited with Landlord required to be made
to the contractor, and act as a liaison between the contractor and Tenant and coordinate the
relationship between the Refurbishment Work, the Building, and the Building’s systems. In
consideration for Landlord’s construction supervision services, Tenant shall pay to Landlord a
construction supervision fee equal to 3% of the total costs (including “hard” and “soft” costs as
such terms are commonly understood in the area of the Building in connection with tenant
improvement construction) related to the Refurbishment Work, which Landlord may deduct from the
Refurbishment Allowance. Any unused portion of the Refurbishment Allowance as of December 31, 2010
shall be the property of Landlord.

Section 1.06 Brokers. Landlord and Tenant represent to the other that it has not
dealt with any broker or agent in connection with the negotiation or execution of this Amendment
except Holt Lunsford Commercial and Jackson & Cooksey. Ltd. (collectively, “Broker”).
Landlord will be responsible to pay the commission, if any, owed to Broker pursuant to the terms of
a separate written agreement. Landlord and Tenant hereby indemnify the other from any claims,
losses, damages (including attorneys’ fees) resulting from a breach by the indemnifying party of
the above representation.

Section 1.07 Extension Option. Tenant shall have an extension option in accordance
with Exhibit B of this Amendment.

Section 1.08 Miscellaneous Amendments to Lease.

A. The “Permitted Use” (defined in Section 1(l) of the Original Lease) is amended to
include office use as a permitted primary use, subject to Section 7(d) of the Original
Lease; provided, that Landlord hereby represents and warrants that during the undersigned
Landlord’s ownership of the Project the undersigned Landlord has not granted or created any
restrictive covenants or other agreements currently encumbering the Project or Premises that
prevent office use in the Project or Premises.

B. The “management fees” component of Operating Expenses is currently 3% and during the
remainder of the Term shall not materially exceed management fees of comparable projects.
Landlord further agrees that there shall hereafter be excluded from Operating Expenses (and
tenant shall accordingly not be obligated to pay a proportionate share of) the following
except to the extent any of the following are specifically identified as being an “Operating
Expense” (or a component of Operating Expenses, such as “real property taxes”) under the
Lease or this Amendment (i) any costs or expenses which, under generally accepted accounting
principles consistently applied, would not be considered to be an operating expense of the
Building or Premises, and (ii) any other costs or expenses which are not then customarily
passed through to, and paid or contributed to by, tenants of reasonably comparable projects
or properties of comparable type and quality in the portions of the U.S. Interstate-30
corridor situated in the western sector of Dallas, Texas and in Grand Prairie, Texas. For
example, since the cost of snow
removal is specifically identified as being a specific Operating Expense under the
Lease, the cost of snow removal shall be included in Operating Expenses regardless of
whether subsections (i) or (ii) above apply.

THIRD AMENDMENT TO LEASE – Page 5 of 26

 

 

 

C. All utilities serving the Premises shall be obtained by Tenant directly from the
utility provider and Landlord shall have no obligation to furnish any utilities to the
Premises. If a failure of electricity service to the Premises continues for more than 15
consecutive business days, causes the Premises to be unusable for Tenant’s intended use, is
caused by the gross negligence or willful misconduct of Landlord and is within the
reasonable control of Landlord to restore within such 15 consecutive day period (except for
interruptions attributable to a casualty, which are addressed under Section 20 of the
Lease), then Tenant shall be entitled, as its sole and exclusive remedy, to a reasonable
abatement of Base Rent for each consecutive day (after such 15-day period) that the Premises
are untenantable and Tenant does not use the Premises.

D. The reference to “roof” in Section 10(b) of the Original Lease is amended to be
“roof (full roof replacement only, with all other roof repairs and maintenance being
included in Operating Expenses)”.

E. Landlord shall perform its obligations under Section 19 of the Original Lease in a
commercially reasonable manner.

F. The second sentence of Section 4(a) of Exhibit C of the Original Lease is deleted
and replaced with the following: “Such insurance shall contain a commercially reasonable
amount of coverage consistent with comparable projects”.

G. The following is added to Section 4 of Exhibit C of the Original Lease: “(c) Upon
Tenant’s request, Landlord shall provide Tenant proof of the insurance it is required to
maintain under the Lease.”

H. As provided in Section 18(a) of the Original Lease, Tenant shall not be required to
remove or restore any “Tenant’s Change” (as defined in Section 18(a) of the Original Lease)
unless Landlord conditioned its approval of the Tenant’s Change upon restoration; provided,
further, that Tenant shall not, in that regard, be required to remove or restore any of the
original Improvements and/or Tenant Changes (each as defined in Section 17(a) of the
Original Lease) construed with regard to the Premises pursuant to Section 17 of the Original
Lease.

I. Upon the expiration of the Term Tenant shall have the right to remove its trade
fixtures, subject to and in accordance with Section 12 of the Original Lease; provided,
further, that if the Refurbishment Work includes the purchase and installation of a
generator, then Tenant shall be entitled to remove the generator.

THIRD AMENDMENT TO LEASE – Page 6 of 26

 

 

 

J. During the Term of the Lease, subject to the terms and conditions of the Lease,
Tenant shall have the non-exclusive right, at Tenant’s sole cost and expense and subject to
Laws (as hereinafter defined), to construct and install 1 sign on the exterior of the
Premises (the “Building Signage”). The location graphics, material, size, lighting,
color and installation of the Building Signage shall be subject to the prior written consent
of Landlord; provided, however, that such consent shall not be unreasonably withheld or
delayed by Landlord and provided, further, that Landlord in any event hereby approves the
Tenant’s existing sign currently situated on the exterior of the Premises for all purposes
hereunder (if Tenant desires or elects to simply retain such existing sign in place). In
addition, Tenant shall maintain the Building Signage in a neat, clean and first-class
appearance. Tenant shall maintain the Building Signage at Tenant’s sole cost and expense
(including, without limitation, electricity) and in conformity with all federal, state, and
local laws, ordinances, rules and regulations, all court orders, governmental directives,
and governmental orders and all interpretations of the foregoing, and all restrictive
covenants (including, without limitation, the approval of any property owner associations)
and other matters affecting the Building (“Laws”) and remove the same and repair and
restore all damage caused by such removal at the expiration or earlier termination of the
Lease or Tenant’s right to maintain the Building Signage; provided, however, Landlord shall
have the right to repair and restore all damage at Tenant’s sole cost and expense.

K. Notwithstanding the foregoing, Tenant may make, without Landlord’s prior written
consent but with at least 30 days’ prior written notice to Landlord (the “Tenant’s
Cosmetic Alterations Notice”) and in accordance with the other terms and conditions of
the Lease concerning Tenant’s Changes (as defined in Section 18(a) of the Original
Lease)(including any applicable rules and regulations for the Building), Tenant’s Changes
that satisfy all of the following criteria (“Cosmetic Alterations”): (1) is of a
cosmetic nature such as painting (but not wallpapering), hanging pictures and installing
carpeting; (2) is not visible from the exterior of the Premises or Building; (3) will not
affect the Buildings systems or Building’s structure; (4) does not require work to be
performed inside the walls or above the ceiling of the Premises; and (5) cost less than
$25,000 per occurrence. The Tenant’s Cosmetic Alterations Notice must describe the scope of
Cosmetic Alterations to be done, the date the Cosmetic Alterations will be commenced, the
estimated cost and the name of the person or persons performing the Cosmetic Alterations or
furnishing materials. Landlord shall have the right, by giving Tenant written notice within
ten (10) days of Landlord’s receipt of Tenant’s Cosmetic Alterations Notice, to require
Tenant to remove Cosmetic Alterations upon the expiration or earlier termination of the
Lease.

L. The following is added after the second, third, fourth and fifth references to
“Demised Premises” in Section 21 of the Lease: “(and/or Building (Common Areas)”.

M. Section 24(f) of the Original Lease is deleted and replaced with the following:

“(f) In the event Landlord encumbers the Building and/or Demised
Premises with a Mortgage at any time after the date hereof and Tenant is
notified of same (provided, that Landlord hereby represents and warrants to
Tenant that the Building and/or Demised Premises is not currently subject to
a ground lease or encumbered by a Mortgage, and Landlord further hereby
agrees to notify Tenant in writing promptly following the grant of any
Mortgage hereafter

THIRD AMENDMENT TO LEASE – Page 7 of 26

 

 

 

 by
Landlord, or its successors or assigns, which encumbers the Building and/or Demised
Premises in whole or in part), and Tenant notifies Landlord in writing that
Tenant requests a subordination and non-disturbance agreement (an
“SNDA”) on Landlord’s Lender’s standard commercially reasonable
form, Tenant’s subordination and attornment obligations under this Section
shall be conditioned on such Lender and Tenant entering into an SNDA in
commercially reasonable form and content and mutually and reasonably
satisfactory to both Tenant and such Lender. Tenant agrees to execute and
deliver such an SNDA within 10 days of Landlord’s request and reimburse
Landlord for reasonable fees charged by such Lender in connection with
preparing, negotiating and delivery of the SNDA, and if Tenant fails to
execute and deliver the SNDA, then the Lease shall be subordinate to any
such Lender.”

N. The first sentence of Section 26 of the Original Lease is deleted.

O. In the event Landlord elects to Terminate the Lease pursuant to Section 29(b)(i) of
the Original Lease, Tenant, within 10 days following the date of delivery to Tenant of such
termination notice, Tenant shall have the right, as its sole remedy, to revoke its request
for said subletting or assignment by giving Landlord written notice of such revocation. If
Landlord has sent the termination notice, and Tenant fails to revoke said request within
said 10-day period, the Lease will terminate, subject to the terms and conditions set forth
in this Section.

P. Intentionally deleted.

Q. In the event of any express conflict between the express terms of the Lease and the
terms of the rules and regulations (as they may be amended), the express terms of the Lease
will govern.

R. Notwithstanding anything to the contrary set forth in the Lease (including, without
limitation, in Section 22(a)(iii) of the Original Lease), it is hereby agreed that Tenant
shall in no event be required to continuously occupy the Premises or to conduct business
therein, it being hereby further agreed that Tenant shall thus be entitled to “go dark” at
the Premises at any time during the Term of the Lease (as extended hereby) and that any such
failure by Tenant to occupy the Premises or to conduct business thereat shall not constitute
a default or Event of Default under the Lease so long as Tenant continues to pay all rent
and other charges due and payable by Tenant under the Lease and so long as Tenant continues
to comply with all other applicable provisions of the Lease pertaining to such Premises
(including, without limitation, maintaining all insurance required to be maintained by
Tenant under the Lease with respect thereto and maintaining and repairing the Premises in
accordance with Tenant’s obligations and requirements under the Lease).

Section 1.09 Second Expansion Premises Effective Date Confirmation. Promptly
following the substantial completion of the Refurbishment Work, Landlord and Tenant shall execute
the Second Expansion Premises Effective Date Confirmation attached to this
Amendment as Exhibit C or another form mutually and reasonably acceptable to Landlord
and Tenant.

THIRD AMENDMENT TO LEASE – Page 8 of 26

 

 

 

Section 1.10 Additional Consideration (Letter of Credit). Simultaneously with the
execution of this Amendment, Tenant shall deposit with Landlord a letter of credit in accordance
with Exhibit D of this Amendment.

Section 1.11 Contingency. Tenant acknowledges that there is currently a tenant
leasing and/or occupying the Second Extension Premises. Accordingly, this Amendment is contingent
upon (the “Contingency”) both of the following: (a) the current tenant vacating the Second
Expansion Premises, and (b) the current tenant entering into a lease termination, relocation or
reduction agreement with Landlord which provides for the current tenant to vacate the Second
Expansion Premises on or before December 31, 2009, on such terms and conditions as are acceptable
to Landlord, in Landlord’s sole discretion. In the event that the Contingency has not been
satisfied by Landlord by December 31, 2009, then, in such event, Tenant or Landlord may elect, at
their respective discretion, to terminate this Amendment at any time after December 31, 2009 but
before the Contingency is satisfied, whereupon neither party hereto shall have any liability to the
other as a result of such termination; provided, however, Tenant shall have no right to terminate
this Amendment pursuant to this sentence at any time after Landlord has commenced the performance
of the Refurbishment Work. Furthermore, in the event that Landlord and the current tenant have not
entered into such a lease termination, relocation or reduction agreement by September 1, 2009,
Tenant shall have the right to elect to terminate this Amendment at any time after September 2009
but before such agreement is entered into by Landlord and the current tenant, in which event
Landlord shall (a) pay for the cost of the construction drawings relating to the Refurbishment Work
(estimated to be $25,000.00), and (b) pay Tenant $65,000,00 within 30 days of Tenant’s election to
terminate this Amendment; provided, however, Tenant shall have no right to terminate this Amendment
pursuant to this sentence at any time after Landlord has commenced the performance of the
Refurbishment Work.

Section 1.12 Further Amendments. The Lease shall be and hereby is further amended
wherever necessary even though not specifically referred to herein, in order to give effect to the
terms of this Amendment.

Section 1.13 Signage. Subject to compliance thereof with all applicable governmental
laws, rules, regulations, codes and ordinances, Landlord hereby grants Tenant the right throughout
the Term of the Lease (as extended hereby and as same may be further renewed or extended) to have,
install and maintain one or more signs on the Building, and one or more monument signs (for
multi-tenant usage) at or about the outside ground level of the Building (Tenant shall be entitled
to the top position on such monument sign(s)), all of which signs shall be at Tenant’s sole cost
and expense and installed and maintained at locations to be mutually and reasonably agreed upon by
and between Landlord and Tenant in advance. Further, it is agreed that Tenant shall have the right
to affix signs and/or lettering on or about the walls, doors and lobby glass on the interior of the
Premises, so long as such signs comply with all applicable governmental laws, rules, regulations
and codes. Such signs shall be installed by Tenant at Tenant’s sole cost and expense, except to
the extent that such signs are agreed by the parties to be purchased and/or installed as a part of
the Refurbishment Work as described hereinabove. The
design and other relevant plans and specifications for such signs shall be subject to the
prior written approval of Landlord (which approval shall not be unreasonably withheld, conditioned
or delayed), provided that such signs may in any event be the maximum size permitted by applicable
law. Upon the expiration or sooner termination of the Lease, Tenant shall, at Tenant’s sole cost
and expense, remove or cause to be removed the Building sign(s) and shall repair all damage caused
by such removal.

THIRD AMENDMENT TO LEASE – Page 9 of 26

 

 

 

Section 1.14 Parking. Landlord agrees that in addition to the lease of the Premises
as provided above, Tenant shall have and is hereby granted the non-exclusive right (in common with
other tenants of the Project and all others to whom Landlord has granted or may grant such rights)
to use the Building Common Area (including all common areas, driveways and parking areas associated
with the Project) throughout the Term of the Lease (as extended pursuant hereto) for the purposes
intended, subject to such reasonable rules and regulations as Landlord may establish therefore from
time to time (including, without limitation, rules and regulations to control overcrowding of the
parking areas); provided, that (a) at times when there are other tenants or occupants of the
Project, Tenant may not use in excess of its proportionate share of the parking spaces located in
the Building Common Area, and (b) Landlord agrees that the Building Common Area shall at all times
during the Term of the Lease (as extended hereby) contain the access ways and driveways and Tenant
shall be entitled to not less than its proportionate share of the number of parking spaces
currently situated within the Building Common Area, all in the same general location and
configuration as is in place in the Building Common Area as of the effective date of this
Amendment, and provided, further, that Landlord additionally agrees that no such parking spaces or
areas shall at any time during the Term of the Lease (as extended hereby) be reserved or limited in
any way, including for the exclusive use of any tenant, occupant or other person or party entitled
to utilize any such portion of the Building Common Area (except to the extent required by
applicable law to be reserved for handicap use and except if required to control overcrowding of
the parking areas). Landlord hereby further agrees that parking in the Building Common Area shall
be limited to vehicles no larger than standard sized automobiles or pick up trucks, trailers and
utility vehicles, and that no rights to use of any such parking areas in the Building Common Areas
shall be granted by Landlord to any persons or parties other than the tenants of the Building and
Project and their respective employees, agents, subtenants, licensees, visitors, guests and
invitees. If any parking spaces in the Building Common Area become unavailable to Tenant due to
casualty damage, flooding, condemnation or repairs, Landlord will use commercially reasonable
efforts to provide Tenant with reasonably satisfactory alternative parking arrangements until the
use of such parking spaces is restored.

ARTICLE II

MISCELLANEOUS

Section 2.01 Ratification. The Lease, as amended hereby, is hereby ratified,
confirmed and deemed in full force and effect in accordance with its terms. Each party represents
to the other that such party: (a) is currently unaware of any default by the other party under the
Lease; and (b) has full power and authority to execute and deliver this Amendment and this
Amendment represents a valid and binding obligation of such party enforceable in accordance with
its terms. Tenant represents to Landlord that, except as set forth in this Amendment (including
with respect to the Refurbishment Work and Refurbishment Allowance): (a) Landlord has completed
all
improvements to the Premises in compliance with all requirements in the Lease; and (b) all
tenant finish costs or allowances payable by Landlord have been paid and no such costs or
allowances are payable hereafter under the Lease.

THIRD AMENDMENT TO LEASE – Page 10 of 26

 

 

 

Section 2.02 No Offer. The submission of this Amendment to Tenant shall not be
construed as an offer, nor shall Tenant have any rights under this Amendment unless Landlord
executes a copy of this Amendment and delivers it to Tenant.

Section 2.03 Counterparts. This Amendment may be executed in multiple counterparts
each of which is deemed an original but together constitute one and the same instrument. This
Amendment may be executed by facsimile or “pdf” and each party has the right to rely upon a
facsimile or “pdf” counterpart of this Amendment signed by the other party to the same extent as if
such party had received an original counterpart.

Section 2.04 Governing Document. In the event the terms of the Lease conflict with or
are inconsistent with those of this Amendment, the terms of this Amendment shall govern.

Section 2.05 Margin & Substitution Taxes. Notwithstanding anything in the Lease to
the contrary, the definition of “real property taxes” shall include the following regardless of
whether the following are expressly excluded by language elsewhere in the Lease (a) all taxes
allocated by Landlord to the Building attributable to taxable margin levied pursuant to Chapter 171
of the Texas Tax Code or any amendment, adjustment or replacement thereof (which amount shall be
calculated assuming that the Building is Landlord’s only asset and source of income), and (b) any
taxes, assessments, levies, impositions, tolls, excises, tariffs, charges or fees imposed, levied
or assessed in lieu of or in substitution, addition or supplementation of other real property
taxes.

[SIGNATURES ON FOLLOWING PAGES]

THIRD AMENDMENT TO LEASE – Page 11 of 26

 

 

 

IN WITNESS WHEREOF, this Amendment has been executed as of (but not necessarily upon) the date
and year first above written.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	LANDLORD:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	THE REALTY ASSOCIATES FUND VII, L.P.,

a Delaware limited partnership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Realty Associates Fund VII, LLC

its General Partner	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Realty Associates Advisors, LLC,

its Manager
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	Realty Associates Advisors Trust,

its Manager	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:
	 	/s/ Heather L. Hohenthal	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Officer
	 	 	 	 

	 	 	 	 	 
	 	TENANT:

TANDY BRANDS ACCESSORIES, INC.,

a Delaware corporation

 	 
	 	By:  	/s/ N. Roderick McGeachy III
 	 
	 	 	Name:  	N. Roderick McGeachy III 	 
	 	 	Title:  	Chief Executive Officer 	 
	 	 	Date:  	August 24, 2009 	 

THIRD AMENDMENT TO LEASE – Page 12 of 26

 

 

 

EXHIBIT A

SECOND EXPANSION PREMISES

THIRD AMENDMENT TO LEASE – Page 13 of 26

 

 

 

EXHIBIT B

EXTENSION OPTION

Notwithstanding anything to the contrary contained herein, Landlord hereby grants to Tenant
the option to extend the Term (“Extension Option”) for 1 period of 5 years (“Extension
Term”) commencing when the Term (as same has been extended pursuant to the Amendment, herein so
called, to which this Exhibit is attached and made a part of) expires in accordance with and
subject to each of the following terms and conditions:

1. Extension Notice. If Tenant desires to exercise the Extension Option, Tenant shall
give Landlord written notice (the “Extension Notice”) (subject to revocation only under
Section 5 hereof) of Tenant’s exercise of the Extension Option, which shall be delivered by U.S.
certified mail, return receipt requested or by a reputable overnight courier service. The
Extension Notice must be received by Landlord no later than the date that is 9 full months prior to
the date that the Extension Term would start and no earlier than the date that is 15 full months
prior to the date that the Extension Term would start. Time is of the essence with respect to
Landlord’s receipt of the Extension Notice and all other deadlines in this exhibit.

2. Terms of Extension Term. During any Extension Term, all of the terms and
conditions of the Lease (excluding any terms conditions and options specifically applicable to only
the initial or any prior Term) except where specifically modified by this exhibit shall apply.
Tenant shall have no additional extension option unless otherwise hereafter agreed in writing
executed by both Landlord and Tenant.

3. Rent for Extension Term. The Rent payable during an Extension Term shall be the
Market Rate on the date the Extension Term commences.

4. Definition of Market Rate. The term “Market Rate” shall mean the amount
that a willing, comparable renewal tenant would pay and a willing, comparable landlord of a similar
building in the portion of the U.S. Interstate-30 corridor situated in the western sector of
Dallas, Texas and in Grand Prairie, Texas (including, but not limited to, Pinnacle Park, Grand
Lakes, Lone Star and Turnpike developments) would accept at arm’s length for similar space, giving
appropriate consideration to all relevant factors, including, without limitation, the following
matters: (i) annual rental rates per rentable square foot; (ii) the type of escalation clauses
(including, but without limitation, operating expenses, real estate taxes, electrical costs and
CPI) and the extent of liability under the escalation clauses (i.e., whether determined on a “net
lease” basis or by increases over a particular base year or base dollar amount); (iii) rent
abatement provisions reflecting free rent and/or no rent during the Extension Term; (iv) length of
the Extension Term; (v) quality, size, utility and location of the premises being leased; (vi)
whether other renewal tenants are receiving tenant improvements or refurbishment allowances; (vii)
size and credit standing of Tenant; (viii) the amount of the tenant improvement or refurbishment
allowance being given to Tenant; and (ix) other generally applicable turns and conditions of
tenancy for similar space. In no event shall Landlord be obligated to provide Tenant with a tenant
improvement or refurbishment allowance. The Market Rate may also designate periodic rental
increases, a new base year(s) and similar economic adjustments. The Market Rate shall be the
Market Rate in effect as of the beginning of the Extension Term, even though the
determination may be made in advance of that date, and the parties may use recent trends in
rental rates in determining the proper Market Rate as of the beginning of the Extension Term. The
Market Rate will be an effective rate, not specifically including, but accounting for the
appropriate economic considerations described above.

THIRD AMENDMENT TO LEASE – Page 14 of 26

 

 

 

5. Determination of Market Rate – Baseball Arbitration. If Tenant exercises an
Extension Option (in accordance with Section 1 hereof), Landlord shall determine the initial
proposed Market Rate by using its good faith judgment. Landlord shall provide Tenant with written
notice (“Landlord’s Notice”) of such amount within 30 days after Tenant exercises such
Extension Option. Tenant shall have 20 days (“Tenant’s Review Period”) after receipt of
Landlord’s Notice within which to reject such initial proposed Market Rate. In the event Tenant
fails to timely reject in writing such initial proposed Market Rate, then such initial proposed
Market Rate shall be deemed accepted. In the event Tenant timely rejects in writing such Market
Rate, Landlord and Tenant shall attempt to agree upon the Market Rate, using their best good faith
efforts. If Landlord and Tenant fail to reach agreement within 15 days following Tenant’s Review
Period (“Outside Agreement Date”), then the parties shall each, by written notice delivered
to the other within 10 days following the Outside Agreement Date, appoint a real estate broker who
shall be licensed in the State or Commonwealth in which the Premises are located and who
specializes in the field of commercial industrial space leasing in the market in which the Premises
are located, has at least 5 years of experience in such field and market and is recognized within
such field and market as being reputable and ethical. If one party does not timely appoint a
broker, then the broker appointed by the other party shall promptly appoint a broker for such party
having the qualifications described above and who has not previously represented or worked for or
with the party who appointed the broker making such appointment. Such two individuals shall each
determine, within 10 days after their appointment, such Market Rate. If such individuals do not
agree on the Market Rate, then such two individuals shall, within 5 days thereafter, render
separate written reports of their determinations and together appoint a third individual having the
qualifications described above and who has not previously worked for or with nor represented either
Landlord or Tenant. If the two brokers are unable to agree upon a third individual, the individual
shall be appointed by the presiding judge of the county court for the county in which the Premises
is located, or, if he or she refuses to act, by any judge having jurisdiction over the parties.
The third individual shall within 10 days after his or her appointment make a determination of such
Market Rate. The third individual shall determine which of the determinations of the first two
individuals is closest to his or her own and the determination that is closest shall be final and
binding upon the parties, and such determination may be enforced in any court of competent
jurisdiction. Landlord and Tenant shall each bear the cost of its broker and shall share equally
the cost of the third broker. If for any reason the Market Rate shall not have been determined
prior to the commencement of the Extension Term, then, until the Market Rate and, accordingly, the
Rent shall have been finally determined, the Rent payable for and during the Extension Term shall
be equal to the Market Rate proposed by Landlord. If upon final determination of the Market Rate,
it shall have been determined that the Rent payable for and during the Extension Term shall be
different than the Rent actually paid by Tenant for the Extension Term, then an appropriate
adjustment shall be made to the Rent actually paid by Tenant and (i) Tenant shall pay Landlord the
amount due, if any, as a result of such adjustment within 5 business days of the determination of
the Market Rate, and (ii) Tenant shall be entitled to a credit against future Rent in the amount of
the amount due, if any, as a result of such adjustment.

THIRD AMENDMENT TO LEASE – Page 15 of 26

 

 

 

6. Tenant’s Default. Notwithstanding the foregoing, (a) Tenant shall have no right to
exercise an Extension Option or deliver an Extension Notice at any time in which an event exists
which constitutes an Event of Default under the Lease, and any delivery of an Extension Notice
during such period of time shall be null and void and of no effect, (b) if an Event of Default
occurs under the Lease (beyond the expiration of any applicable notice and/or cure periods) prior
to Tenant’s exercise of an Extension Option (in accordance with Section 1 hereof), the Extension
Option shall automatically become null and void, and (c) if after Tenant’s exercise of an Extension
Option (in accordance with Section 1 hereof) but before the commencement of an Extension Term an
Event a Default under the Lease occurs (beyond the expiration of any applicable notice and/or cure
periods), then Landlord may elect, but is not obligated, by written notice given to Tenant to
cancel and declare null and void Tenant’s exercise of the Extension Option, and the Lease shall
continue in full force and effect for the full Term hereof unaffected by Tenant’s exercise of the
Extension Option. If Landlord does not cancel Tenant’s exercise of the Extension Option, Tenant
shall cure the default within the period of time specified in the Lease.

7. No Extension Option After Transfer. The Extension Option is personal to the
originally named Tenant in the Lease or Lease amendment to which this exhibit is attached (and an
assignee pursuant to Section 7 of Exhibit C of the Original Lease). If an assignment, sublease or
other transfer occurs (other than an assignment pursuant to Section 7 of Exhibit C of the Original
Lease), the Extension Option shall be deemed null and void and neither Tenant nor any assignee,
subtenant or other transferee shall have the right to exercise such option. This condition may be
waived in writing by Landlord at its sole and absolute discretion and may not be used by Tenant as
a means to negate the effectiveness of Tenant’s exercise of an Extension Option.

8. Occupancy of Premises. The Extension Option may only be exercised while Tenant is
occupying at least 80,000 rentable square feet of the Premises, and at Landlord’s election any
delivery of an Extension Notice during any period of time in which Tenant is not occupying at least
80,000 rentable square feet of the Premises shall be null and void and of no effect.

9. No Extension Option After Exercise of Certain Options. Notwithstanding anything in
the Lease to the contrary, (a) if Tenant exercises any option contained in the Lease, if any, to
terminate the Lease or reduce the size of the Premises, the Extension Option shall automatically
become null and void upon such exercise, and (b) if Tenant exercises an Extension Option, any
rights of Tenant under the Lease to terminate the Lease or reduce the size of the Premises, if any,
shall automatically become null and void upon such exercise.

THIRD AMENDMENT TO LEASE – Page 16 of 26

 

 

 

10. Brokerage Commissions. Landlord shall not be liable for any brokerage commissions
payable to any broker(s) representing Tenant related to any extension pursuant to this exhibit
except to the extent Landlord is responsible for any such commissions pursuant to a separate
written agreement with such broker(s).

11. Amendment to Lease. Promptly after the determination of the Market Rate, Landlord
and Tenant shall enter into an amendment to the Lease to reflect the Extension Term,
which amendment shall be in commercially reasonable form and content mutually and reasonably
acceptable to both Landlord and Tenant.

THIRD AMENDMENT TO LEASE – Page 17 of 26

 

 

 

EXHIBIT C

SECOND EXPANSION PREMISES EFFECTIVE DATE CONFIRMATION

			
	Landlord:	 	THE REALTY ASSOCIATES FUND VII, L.P.

			
	Tenant:	 	TANDY BRANDS ACCESSORIES, INC.

This Second Expansion Premises Effective Date Confirmation (this “Confirmation”) has
been executed as of the
 _____ 
day of               
      , 2009, and is made by Landlord and Tenant pursuant
to that certain Third Amendment to Lease dated as of            
         , 2009 (the “Amendment”), for
certain premises located at Pinnacle Park II, 3631 West Davis Street, Dallas, Texas 75211 (the
“Premises”). This Confirmation is made pursuant to the Amendment.

1. Second Expansion Premises Effective Date. Landlord and Tenant hereby agree that
the Second Expansion Premises Effective Date (as defined in the Amendment) is       
              , 2009.

2. Acceptance of Premises. Tenant has inspected the Second Expansion Premises and
affirms that the Second Expansion Premises is acceptable in all respects in its current “as is”
condition, with the exception of any “Punchlist Items” described in Schedule 1 attached hereto and
made a part hereof.

3. Incorporation. This Confirmation is incorporated into the Amendment, and forms an
integral part thereof. This Confirmation shall he construed and interpreted in accordance with the
terms of the Lease for all purposes.

[SIGNATURES ON FOLLOWING PAGE]

THIRD AMENDMENT TO LEASE – Page 18 of 26

 

 

 

IN WITNESS WHEREOF, this Confirmation has been executed as of (but not necessarily on) the
date and year first above written.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	LANDLORD:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	THE REALTY ASSOCIATES FUND VII, L.P.,

a Delaware limited partnership	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Realty Associates Fund VII, LLC

its General Partner	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Realty Associates Advisors, LLC,

its Manager
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	Realty Associates Advisors Trust,

its Manager	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Officer
	 	 	 	 

	 	 	 	 	 
	 	TENANT:

TANDY BRANDS ACCESSORIES, INC.,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	N. Roderick McGeachy III 	 
	 	 	Title:  	Chief Executive Officer 	 
	 	 	Date:  	 	 

THIRD AMENDMENT TO LEASE – Page 19 of 26

 

 

 

EXHIBIT D

ADDITIONAL CONSIDERATION (LETTER OF CREDIT)

1. General. As additional consideration for Landlord’s agreement to enter into this
Amendment, concurrently with Tenant’s execution and delivery of this Amendment, and as a condition
to Landlord’s obligations under the Lease, Tenant covenants and agrees to deliver to Landlord, as
additional consideration, an irrevocable letter of credit (the “L/C”) in the form of, and
upon all of the terms and conditions contained in Exhibit D-1 attached hereto and
incorporated herein by reference. The L/C shall be issued by an institutional lender of good
financial standing (which lender shall in any event, have assets equal to or exceeding $500,000,000
as of the date of issuance of the L/C), having a place of business where the L/C can be presented
for payment in Dallas, Texas and Boston, Massachusetts. The lender shall be subject to Landlord’s
prior written approval; provided, that such approval shall in any event not be unreasonably
withheld, conditioned or delayed and provided, further, that Landlord hereby initially approves
Comerica Bank as the lender and issuer of the L/C for all purposes of this Exhibit D. The L/C
shall provide for 1 or more draws by Landlord or its transferee up to the aggregate amount of US
$500,000.00 (the “L/C Amount”) on the terms and conditions of Exhibit D-1.
Landlord and Tenant (1) acknowledge and agree that in no event or circumstance shall the L/C or any
renewal thereof or substitute therefor or any proceeds thereof be deemed to be or treated as a
“security deposit” under any Law applicable to security deposits in the commercial context
(“Security Deposit Laws”), and (2) acknowledge and agree that the L/C (including any
renewal thereof or substitute therefor or any proceeds thereof) is independent consideration
separate and apart from the Security Deposit and is not intended to serve as a security deposit,
and the Security Deposit Laws shall have no applicability or relevancy thereto.

2. Renewal of L/C. Tenant shall maintain the L/C in effect from the date of Tenant’s
execution of this Amendment until the date which is 60 days after Tenant shall have performed all
of its obligations under the Lease (said period is hereinafter referred to as the “L/C
Term”). If the expiration date of the L/C (or any renewal or replacement L/C provided pursuant
to this section) occurs prior to the end of the L/C Term, then Tenant shall deliver to Landlord a
renewal of the L/C or a replacement L/C meeting all of the terms and conditions of this section,
not later than thirty (30) days prior to the then applicable expiration date. Each L/C provided
pursuant to this section shall have an expiration date which is at least one (1) year from such
L/C’s date of issue except where the then applicable expiration date of the issue is less than one
(1) year from the end of the L/C Term, in which case the renewal or replacement L/C shall be for
such lesser period. The issuing bank’s agreement to place an automatic renewal provision in the
L/C, as required pursuant to said Exhibit D-1, shall not relieve or release Tenant from its
obligation to provide a renewal or replacement L/C on the terms hereinabove stated, it being
understood that any such automatic renewal is an independent obligation of the issuing bank which
is intended for Landlord’s sole benefit. If Tenant fails to provide the renewal or replacement L/C
not later than thirty (30) days prior to the then-applicable, stated expiration date (excluding
automatic renewal provisions), and if such failure is continuing ten (10) days following the
delivery by Landlord to Tenant of written notice thereof, such failure shall not be a default by
Tenant under the Lease, but Landlord shall thereupon have the right, without notice or demand, on
one or more occasions, to draw upon all or any part of the remaining proceeds of the L/C, and hold
the L/C
proceeds as a cash security deposit pursuant to the Lease and/or apply the L/C proceeds
pursuant to Section 4 of this Exhibit D.

THIRD AMENDMENT TO LEASE – Page 20 of 26

 

 

 

3. Draw on L/C. Landlord may elect from time to time, in Landlord’s sole discretion,
without notice or demand to Tenant, to draw upon all or any part of the remaining proceeds of the
L/C upon the occurrence of one or more of the following events: (i) an Event of Default by Tenant
occurs under the Lease which is continuing beyond the expiration of all applicable notice and cure
periods, (ii) Tenant fails to perform any of its obligations under the Lease (including, but not
limited to, its obligations under this section), and Landlord is precluded by law from giving
Tenant the requisite notice needed for an Event of Default to occur (i.e., a Tenant bankruptcy
filing), or (iii) Tenant makes any assignment for the benefit of all its creditors, Tenant declares
bankruptcy or is the subject of an involuntary bankruptcy proceeding, a trustee or receiver is
appointed to take possession of some or all of Tenant’s assets or, in Landlord’s reasonable
judgment, Tenant is insolvent (provided, that in the event any such proceeding, filing or
appointment is involuntary, such is not stayed or dismissed within 60 days of the filing or entry
thereof).

4. Application of L/C Proceeds. Landlord may elect, from time to time, upon written
notice to Tenant, in Landlord’s sole discretion, to apply the proceeds it receives from a draw on
the L/C in one or more of the following manners without prejudice to any other remedies: (i) as
payment for some or all of the rent or other amounts due and owed by Tenant under the Lease but
unpaid on the date of such draw, (ii) as payment for some or all of the future amounts of rent or
other amounts payable by Tenant to Landlord under the Lease after the date of the draw which are
not paid as and when due, (iii) as payment for some or all of the reasonable, out-of-pocket costs
Landlord may incur as a result of Tenant’s failure to perform its obligations under the Lease, (iv)
as collateral for lease obligations of Tenant, and/or (v) in any other manner permitted by the
Lease or applicable law. Landlord may make one or more partial draws under the L/C and shall have
the right, upon written notice to Tenant, to treat each draw or a portion thereof in one or more of
the ways described in the previous sentence. Tenant hereby waives any other law or regulation that
may be inconsistent with the terms and conditions of this section.

5. Enforcement. Tenant’s obligation to furnish the L/C shall not be released,
modified or affected by any failure or delay on the part of Landlord to enforce or assert any of
its rights or remedies under the Lease or this section, whether pursuant to the terms thereof or at
law or in equity. Landlord’s right to draw upon the L/C shall be without prejudice or limitation
to Landlord’s right to draw upon any security deposit provided by Tenant to Landlord or to avail
itself of any other rights or remedies available to Landlord under the Lease or at law or equity.

6. Intentionally Deleted.

7. Conflict. If there is any conflict between the terms and conditions of this
section and the terms and conditions of the Lease, the terms of this section shall control.

THIRD AMENDMENT TO LEASE – Page 21 of 26

 

 

 

8. Reduction in Amount of L/C. So long as (a) an Event of Default by Tenant has not
occurred under the Lease which is continuing beyond the expiration of all applicable notice and
cure periods, (b) Tenant has not assigned, sublet, or transferred the Lease or the Premises
except for an assignment pursuant to Section 7 of Exhibit C of the Original Lease, and
(c) Landlord has not drawn upon the L/C, Tenant shall have the right to reduce the L/C Amount as
follows:

	 	 	 	 	 
	Date: 	 	LC Amount:	 
	 
	 	 	 	 
	January 1, 2011
	 	$	419,000.00	 
	January 1, 2012
	 	$	330,000.00	 
	January 1, 2013
	 	$	230,000,00	 
	January 1, 2014
	 	$	121,000.00	 

The documents evidencing the reduction of the L/C shall be satisfactory to Landlord, in Landlord’s
sole discretion.

9. Elimination of L/C and New Security Deposit. So long as (a) an Event of Default by
Tenant has not occurred under the Lease which is then continuing beyond the expiration of all
applicable notice and cure periods, (b) Tenant has not assigned, sublet, or transferred the Lease
or the Premises except for an assignment pursuant to Section 7 of Exhibit C of the Original Lease,
and (c) Landlord has not drawn upon the L/C, on or after January 1, 2015 Tenant shall have the
right to deposit with Landlord an additional Security Deposit in the amount of $102,225.76 to he
held by Landlord in accordance with the Lease, so that the total Security Deposit held by Landlord
under the Lease shall equal $140,563.76 (i.e., $38,338.00 plus $102,225.76), and upon receipt of
such cash Security Deposit Landlord shall allow the L/C to be cancelled.

THIRD AMENDMENT TO LEASE – Page 22 of 26

 

 

 

EXHIBIT D-1

LETTER OF CREDIT

SPECIMEN LANGUAGE ONLY (“EXHIBIT A”) REVISED 07/28/09

COMERICA BANK HAS PREPARED THIS SPECIMEN UPON THE REQUEST AND BASED ON THE INFORMATION PROVIDED.
NO REPRESENTATION AS TO THE ACCURACY OR WILLINGNESS FOR COMMITMENT IS MADE BY COMERICA BANK TO
ISSUE THIS LETTER OF CREDIT IN THIS OR ANY OTHER FORM.

APPROVED BY                                          DATE                     

***********************************************************************************************************

COMERICA BANK

INTERNATIONAL TRADE SERVICES

6260 E. MOCKINGBIRD, 2ND FLOOR

DALLAS, TEXAS 75214

TELEX NO: 3772597

FAX NO.: 214-828-5992

SWIFT: MNBDUS4D

PHONE:           
               
               

			
	 	 	 
	IRREVOCABLE STANDBY LETTER OF CREDIT NO. *****
	 	DATE OF ISSUE: <date>

	 	 	 	 	 	 	 	 	 
	“BENEFICIARY”
	 	 	:	 	 	THE REALTY ASSOCIATES FUND VII, L.P.
	 
	 	 	 	 	 	C/O TA ASSOCIATES REALTY
	 
	 	 	 	 	 	28 STATE STREET, 10TH FLOOR
	 
	 	 	 	 	 	BOSTON, MA  02109
	 
	 	 	 	 	 	ATTN:  ASSET MANAGEMENT DEPARTMENT
	 
	 	 	 	 	 	 	 	 
	“ACCOUNT PARTY”
	 	 	:	 	 	TANDY BRANDS ACCESSORIES, INC.
	 
	 	 	 	 	 	 	 	 
	“EXPIRY DATE”
	 	 	:	 	 	<date>, OR ANY AUTOMATICALLY EXTENDED DATE, AS HEREIN DEFINED.  IN NO EVENT WILL THIS LETTER OF CREDIT EXTEND BEYOND <date>
	 
	 	 	 	 	 	 	 	 
	“TOTAL AMOUNT”
	 	 	:	 	 	USD amount  (amount U.S. DOLLARS)

WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT IN YOUR FAVOR, FOR THE ACCOUNT PARTY,
FOR A SUM NOT EXCEEDING THE TOTAL AMOUNT, STATED ABOVE, AVAILABLE WITH COMERICA BANK, BY
PRESENTATION OF THE FOLLOWING:

	 	1.	 	THIS ORIGINAL LETTER OF CREDIT AND ALL AMENDMENTS HERETO.

	 	2.	 	DEMAND IN THE FORM OF “ANNEX A”

THIRD AMENDMENT TO LEASE – Page 23 of 26

 

 

 

IF A DEMAND FOR PAYMENT MADE BY YOU HEREUNDER DOES NOT, IN ANY INSTANCE CONFORM TO THE TERMS AND
CONDITIONS OF THIS LETTER OF CREDIT, WE SHALL GIVE YOU WRITTEN NOTICE WITHIN ONE (1) BUSINESS DAY
THAT THE DEMAND FOR PAYMENT WAS NOT EFFECTED IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS
LETTER OF CREDIT, STATING THE REASONS THEREFOR AND THAT WE WILL UPON YOUR INSTRUCTIONS HOLD ANY
DEMAND AT YOUR DISPOSAL OR RETURN THE SAME TO YOU. UPON BEING NOTIFIED THAT THE DEMAND FOR PAYMENT
WAS NOT EFFECTED IN CONFORMITY WITH THIS LETTER OF CREDIT, YOU MAY ATTEMPT TO CORRECT ANY SUCH
NON-CONFORMING DEMAND FOR PAYMENT TO THE EXTENT THAT YOU ARE ENTITLED TO DO SO AND WITHIN THE
VALIDITY OF THIS LETTER OF CREDIT.

PARTIAL DRAWINGS AND MULTIPLE PRESENTATIONS PERMITTED.

IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT SHALL BE DEEMED AUTOMATICALLY EXTENDED WITHOUT
AMENDMENT FOR A PERIOD OF ONE YEAR FROM THE PRESENT OR ANY FUTURE EXPIRATION DATE, UNLESS AT LEAST
SIXTY (60) DAYS PRIOR TO THE EXPIRATION DATE WE SHALL SEND TO YOU BY COURIER OUR WRITTEN NOTICE
THAT WE ELECT NOT TO EXTEND THIS CREDIT FOR ANY SUCH ADDITIONAL PERIOD. SAID NOTIFICATION WILL BE
SENT TO THE BENEFICIARY’S ADDRESS INDICATED ABOVE, UNLESS A CHANGE OF ADDRESS IS OTHERWISE NOTIFIED
BY YOU TO US IN WRITING BY RECEIPTED MAIL OR COURIER, QUOTING OUR LETTER OF CREDIT NUMBER. SAID
CHANGE OF ADDRESS NOTIFICATION MUST BE RECEIVED BY COMERICA BANK, AT OUR ABOVE ADDRESS.

THIS IRREVOCABLE STANDBY LETTER OF CREDIT IS TRANSFERABLE AND CAN BE SUCCESSIVELY TRANSFERRED TO
ANY TRANSFEREE THAT BENEFICIARY STATES IN WRITING TO US HAS SUCCEEDED AS BENEFICIARY UNDER THIS
LETTER OF CREDIT, PROVIDED THAT TRANSFEREE IS NOT LOCATED IN OR A NATIONAL OF, OR CONTROLLED BY AN
ENTITY LOCATED IN ANY COUNTRY SUBJECT TO FOREIGN ASSET CONTROL REGULATIONS OF THE U.S. DEPARTMENT
OF TREASURY. THIS LETTER OF CREDIT IS TRANSFERABLE ONLY BY COMERICA BANK. IF TRANSFERRED, THE
CREDIT MUST BE RETURNED TO US ALONG WITH ALL AMENDMENTS TOGETHER WITH A TRANSFER REQUEST SUPPLIED
BY COMERICA BANK UPON REQUEST, DULY EXECUTED, IN CASE OF ANY TRANSFER UNDER THIS STANDBY LETTER OF
CREDIT. THE DEMAND STATEMENT MUST BE EXECUTED BY THE TRANSFEREE AND WHERE THE BENEFICIARY’S NAME
APPEARS WITHIN THIS STANDBY LETTER OF CREDIT, THE TRANSFEREE’S NAME IS AUTOMATICALLY SUBSITUTED
THEREFOR. TRANSFER FEE IS FOR THE ACCOUNT OF THE APPLICANT.

EXCEPT AS EXPRESSLY STATED HEREIN, THIS UNDERTAKING IS NOT SUBJECT TO ANY AGREEMENT, CONDITION OR
QUALIFICATION. THE OBLIGATION OF COMERICA BANK UNDER THIS LETTER OF CREDIT IS THE INDIVIDUAL
OBLIGATION OF COMERICA BANK AND IS IN NO WAY CONTINGENT UPON REIMBURSEMENT WITH RESPECT THERETO.

THIRD AMENDMENT TO LEASE – Page 24 of 26

 

 

 

THIS LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR UNDERTAKING AND SUCH UNDERTAKING SHALL
NOT IN ANY WAY BE MODIFIED, AMENDED OR AMPLIFIED BY REFERENCE TO ANY DOCUMENTS OR INSTRUMENT
REFERRED TO HEREIN OR IN WHICH THIS LETTER OF CREDIT IS REFERRED TO OR TO WHICH THIS LETTER OR
CREDIT RELATES AND ANY SUCH REFERENCE SHALL NOT BE DEEMED TO INCORPORATE HEREIN BY REFERENCE ANY
DOCUMENT OR INSTRUMENT.

IN THE EVENT YOU WISH TO CANCEL THIS LETTER OF CREDIT, THIS ORIGINAL LETTER OF CREDIT AND ALL
AMENDMENTS HERETO MUST BE SUBMITTED TO COMERICA BANK ACCOMPANIED BY YOUR LETTER NOTIFYING US OF
YOUR INTENT TO CANCEL.

ALL DOCUMENTS ARE TO BE FORWARDED IN ONE LOT AT THE BENEFICIARY’S EXPENSE BY COURIER TO COMERICA
BANK, INTERNATIONAL TRADE SERVICES, AT THE COMERICA BANK ADDRESS EVIDENCED ABOVE.

WE ENGAGE WITH YOU THAT ANY PRESENTATION DRAWN IN COMPLIANCE WITH THE TERMS OF THIS CREDIT WILL BE
DULY HONORED WITHIN ONE (1) BUSINESS DAY OF PRESENTATION, WHEN PRESENTED AT THIS OFFICE ON OR
BEFORE THE CLOSE OF BUSINESS ON THE EXPIRY DATE, AS SET FORTH ABOVE.

THIS LETTER OF CREDIT IS SUBJECT TO AND GOVERNED BY THE INTERNATIONAL STANDBY PRACTICES 1998 OF THE
INTERNATIONAL CHAMBER OF COMMERCE.

END OF SPECIMEN LANGUAGE

THIRD AMENDMENT TO LEASE – Page 25 of 26

 

 

 

“ANNEX A”

COMERICA BANK STANDBY LETTER OF CREDIT NO. ****** DATED ******

DATE:                                                             

TO:

COMERICA BANK

INTERNATIONAL TRADE SERVICES

6260 E. MOCKINGBIRD LAND, 2ND FL.

MC-6588

DALLAS, TX 75214

			
	RE:	 	STANDBY LETTER OF CREDIT NO. ***** DATED ***** ISSUED BY
COMERICA BANK

GENTLEMEN:

THE UNDERSIGNED BENEFICIARY HEREBY DEMANDS PAYMENT OF USD                                          TO BE PAID IN
IMMEDIATELY AVAILABLE FUNDS IN ACCORDANCE WITH THE ABOVE-MENTIONED STANDBY LETTER OF CREDIT.

SINCERELY,

	 	 	 	 
	
 	 
	BENEFICIARY NAME 	 
	 	 
	
 	 
	AUTHORIZED SIGNATURE – TITLE 	 
	 	 
	
 	 
	PRINT NAME – TITLE 	 
	 	 

THIRD AMENDMENT TO LEASE – Page 26 of 26

 

 

 

			
	Re:	 	Pinnacle Park II

3631 West Davis Street

Dallas, Texas 75211

FOURTH AMENDMENT TO LEASE

	 	 	 	 	 
	THE STATE OF TEXAS

	 	§	 	 
	 

	 	§
	 	KNOW ALL MEN BY THESE PRESENTS:
	COUNTY OF DALLAS

	 	§	 	 

THIS FOURTH AMENDMENT TO LEASE (this “Amendment”) has been executed as of (but not
necessarily on) the 6 day of October, 2009, by THE REALTY ASSOCIATES FUND VII, L.P., a Delaware
limited partnership (“Landlord”), and TANDY BRANDS ACCESSORIES, INC., a Delaware
corporation (“Tenant”).

R E C I T A L S:

A. Pinnacle Industrial Center Limited Partnership, a Texas limited partnership (“Original
Landlord”) and Tenant have heretofore executed that certain Industrial Lease Agreement
(the “Original Lease”) dated September 24, 1999, as amended and/or affected by Tenant
Acceptance of Demised Premises dated                     , 2000, by First Amendment to Industrial Lease
Agreement dated January 5, 2000, Second Amendment to Lease (Expansion of Demised Premises) dated
September 4, 2003, Agreement and Acknowledgement dated February 29, 2008, Subordination of
Landlord’s Lien dated March 25, 2008 and Third Amendment to Lease (the “Third Amendment”)
dated August 24, 2009 (the Original Lease, as so amended, the “Lease”), respecting certain
premises in the above-referenced Building, as more particularly described in the Lease (the
“Building”). Unless otherwise defined herein, all initially capitalized terms used herein
will have the respective meanings assigned thereto in the Lease.

B. Landlord has acquired title to, among other property, the Building and all of Original
Landlord’s interest under the Lease.

C. Landlord and Tenant desire to execute this Amendment in order to evidence their agreement
to (i) modify the Third Amendment; and (ii) make certain other amendments to the Lease, all as more
particularly set forth in this Amendment.

NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:

FOURTH AMENDMENT TO LEASE – Page 1 of 4

 

 

 

Article I

CERTAIN AMENDMENTS

SECTION 1.01. Modifications to Third Amendment. Sections 1.03 and 1.04 of the Third
Amendment are amended and restated as follows:

SECTION 1.03. Term. The Term is hereby extended through and including the
last of the 126th full calendar month following the Second Expansion
Premises Effective Date, subject to adjustment and earlier termination as provided
in the Lease. Except as set forth in Exhibit B of the Third Amendment, Tenant shall
have no further renewal rights or options and all of such rights or options, if any,
are hereby deleted.

SECTION 1.04. Base Rent. As of the Second Expansion Premises Effective
Date, the Base Rent due and payable by Tenant to Landlord under the Lease with
respect to the entire Premises (i.e., the Current Premises and the Second Expansion
Premises) shall be as follows:

	 	 	 	 	 	 	 	 	 
	 	 	Annual Base	 	 	 	 
	 	 	Rent Per	 	 	Monthly	 
	Period*:	 	R.S.F.:	 	 	Base Rent:	 
	SEPED – 150th day following SEPED**
	 	$	0.00	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	151st day following SEPED –
42nd full month following SEPED
	 	$	3.35	 	 	$	62,785.14	 
	 
	 	 	 	 	 	 	 	 
	43rd full month following SEPED –
102nd full month following SEPED
	 	$	3.55         	 	 	$	66,533.51	 
	 
	 	 	 	 	 	 	 	 
	103rd full month following SEPED –
126th full month following SEPED
	 	$	3.75	 	 	$	70,281.88	 

	 	 	 
	*	 	Note: Pursuant to the above schedule, Tenant’s Base Rent obligation for the
Current Premises may be reduced.

	 
	**	 	To the extent that the Refurbishment Work is not sufficiently completed by the
date which is 150 days following the SEPED so that the Second Expansion Premises can
be used and occupied by Tenant for the uses and purposes permitted and contemplated
under the Lease, and if such failure to so sufficiently complete is due, in whole or
in part, to Landlord’s (or its agents’, employees’ or contractors’) acts or
omissions to act, then the Base Rent shall thereafter be further equitably abated
until the date that such Refurbishment Work is so substantially completed.

	 
	 	 	The Base Rent under the Lease shall be due and payable in equal monthly
installments, each such monthly installment due and payable on the first day of
each calendar month, in advance, without demand and without setoff or deduction
whatsoever (except, in each such case, as may be otherwise expressly set forth in
the Lease or herein). Prior to the Second Expansion Premises Effective Date, the
Base Rent shall remain as set forth in the Lease.

FOURTH AMENDMENT TO LEASE – Page 2 of 4

 

 

 

SECTION 1.02. Brokers. Landlord and Tenant represent to the other that it has not
dealt with any broker or agent in connection with the negotiation or execution of this Amendment
except Holt Lunsford Commercial and Jackson & Cooksey, Ltd. (collectively, “Broker”).
Landlord will be responsible to pay the commission, if any, owed to Broker pursuant to the terms of
a separate written agreement. Landlord and Tenant hereby indemnify the other from any claims,
losses, damages (including attorneys’ fees) resulting from a breach by the indemnifying party of
the above representation.

SECTION 1.03. Further Amendments. The Lease shall be and hereby is further amended
wherever necessary, even though not specifically referred to herein, in order to give effect to the
terms of this Amendment.

Article II

MISCELLANEOUS

SECTION 2.01. Ratification.  The Lease, as amended hereby, is hereby ratified,
confirmed and deemed in full force and effect in accordance with its terms. Each party represents
to the other that such party: (a) is currently unaware of any default by the other party under the
Lease; and (b) has full power and authority to execute and deliver this Amendment and this
Amendment represents a valid and binding obligation of such party enforceable in accordance with
its terms. Tenant represents to Landlord that, except as set forth in the Third Amendment
(including with respect to the Refurbishment Work and Refurbishment Allowance): (a) Landlord has
completed all improvements to the Premises in compliance with all requirements in the Lease; and
(b) all tenant finish costs or allowances payable by Landlord have been paid and no such costs or
allowances are payable hereafter under the Lease.

SECTION 2.02. No Offer. The submission of this Amendment to Tenant shall not be
construed as an offer, nor shall Tenant have any rights under this Amendment unless Landlord
executes a copy of this Amendment and delivers it to Tenant.

SECTION 2.03. Counterparts. This Amendment may be executed in multiple counterparts
each of which is deemed an original but together constitute one and the same instrument. This
Amendment may be executed by facsimile or “pdf” and each party has the right to rely upon a
facsimile or “pdf” counterpart of this Amendment signed by the other party to the same extent as if
such party had received an original counterpart.

SECTION 2.04. Governing Document. In the event the terms of the Lease conflict with
or are inconsistent with those of this Amendment, the terms of this Amendment shall govern.

[SIGNATURES ON FOLLOWING PAGES]

FOURTH AMENDMENT TO LEASE – Page 3 of 4

 

 

 

IN WITNESS WHEREOF, this Amendment has been executed as of (but not necessarily upon) the date
and year first above written.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	LANDLORD:
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	THE REALTY ASSOCIATES FUND VII, L.P.,
a Delaware limited partnership
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Realty Associates Fund VII, LLC

its General Partner
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Realty Associates Advisors LLC,

its Manager
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	Realty Associates Advisors Trust,

its Manager
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:
	 	/s/ Heather L. Hohenthal
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Officer

Heather L. Hohenthal 

Regional Director

	 	 	 	 	 
	 	TENANT:

TANDY BRANDS ACCESSORIES, INC.,

a Delaware corporation

 	 
	 	By:  	/s/ M.C. Mackey
 	 
	 	 	Name:  	M.C. Mackey 	 
	 	 	Title:  	CFO 	 
	 	 	Date:  	9/30/09 	 

FOURTH AMENDMENT TO LEASE – Page 4 of 4Exhibit 10.33

Exhibit 10.33

Tandy Brands Accessories, Inc.

2011 Performance Unit Award Agreement

This award agreement (“Award Agreement”) sets forth the terms and conditions of the 2011
Performance Unit Program (the “Program”) which is governed by the Tandy Brands Accessories, Inc.
2002 Omnibus Plan (the “Plan”). This Award Agreement, together with the Plan, govern the rights
under the Program with respect to the performance-based units (each, a “Performance Unit”) Awards
granted under this Award Agreement, and set forth all of the conditions and limitations affecting
such rights. Terms used in this Award Agreement that are not otherwise defined herein shall have
the meanings ascribed to them in the Plan. If there is any inconsistency between the terms of this
Award Agreement and the terms of the Plan, the Plan’s terms shall supersede and replace the
conflicting terms of this Award Agreement. For purposes of this Award Agreement, “Company” means
Tandy Brands Accessories, Inc., its affiliates, and/or its subsidiaries.

Award and Program Provisions

	1.	 	Performance Units Granted:                      Performance Units granted to                      (the
“Participant”).

	 
	2.	 	Date of Grant: July 1, 2010.

	 
	3.	 	Performance Cycle. The performance cycle commences on July 1, 2010, and ends on June 30,
2013 (the “Performance Cycle”).

	 
	4.	 	Performance Unit. The value of a single Performance Unit shall equal $1.00. Each
Performance Unit shall be comprised 50% of cash and 50% of phantom shares of the Common Stock
of the Company, subject to adjustment in accordance with Section 14 of this Award Agreement.
The number of phantom shares of Common Stock attributable to the Award shall be determined
based upon the Fair Market Value of the Common Stock of the Company on the date of grant,
which was $_____.

	 
	5.	 	Performance Measure – Earnings Per Share. Earnings Per Share (“EPS”) shall be determined by
dividing the Company’s consolidated net income or loss by the number of basic common shares of
the Company for each twelve-month period, which shall begin each July 1 and end on the
following June 30, in the Performance Cycle (each, a “Performance Year”). All amounts
necessary to calculate EPS for each Performance Year shall be determined in accordance with
generally accepted accounting principles in the United States and, to the extent possible,
based on disclosures in the Company’s consolidated financial statements; provided, however,
with respect to the determination of:

	 	(a)	 	consolidated net income or loss, the Company’s consolidated financial statements shall
be adjusted to exclude, as applicable, the following possible actions or effects:

	 	(i)	 	the cumulative effect(s) of changes in accounting principles;

 

 

 

	 
	 	(ii)	 	extraordinary items;

	 
	 	(iii)	 	recognized capital gains or losses; and

	 
	 	(iv)	 	such one-time, non-operating items as determined by the Board; and

	 	(b)	 	the number of basic common shares, the calculation shall:

	 	(i)	 	be made in accordance with the provisions of Financial Accounting Standards
Board Statement No. 128, “Earnings per Share,” as amended and interpreted as of the
date of this Award Agreement and without regard to subsequent revisions, amendments,
interpretations, or replacements; and

	 
	 	(ii)	 	exclude the effects, if any, during the Performance Cycle of:

	 	(A)	 	the issuance of securities in connection with the acquisition of assets
or a business;

	 
	 	(B)	 	the declaration or payment of a stock dividend;

	 
	 	(C)	 	any recapitalization resulting in a stock split-up, combination, or
exchange of shares of Common Stock; or

	 
	 	(D)	 	other increase or decrease in such shares of Common Stock effected
without receipt of consideration by the Company.

	6.	 	Amount of Performance Unit Award Earned: If not previously forfeited, on June 30, 2013, the
Participant shall vest in and have a nonforfeitable right to the percentage of Performance
Units that equals the average of the Achievement Percentages attained for each Performance
Year in the Performance Cycle that corresponds with the EPS Performance Level Achieved for
each such year as set forth in the table below.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Performance	 	EPS Performance Level Achieved	 
	 	 	Year Ending	 	(Income (Loss))	 
	 	 	June 30,	 	Threshold	 	 	Target	 	 	Maximum	 
	 
	 	2011	 	$	                    	 	 	$	                    	 	 	$	                    	 
	Achievement Percentage
	 	 	 	 	50	%	 	 	100	%	 	 	200	%
	 
	 	2012	 	$	                    	 	 	$	                    	 	 	$	                    	 
	Achievement Percentage
	 	 	 	 	50	%	 	 	100	%	 	 	200	%
	 
	 	2013	 	$	                    	 	 	$	                    	 	 	$	                    	 
	Achievement Percentage
	 	 	 	 	50	%	 	 	100	%	 	 	200	%

	 	 	The Achievement Percentage for each Performance Year shall be interpolated to the actual EPS
achieved for that Performance Year; provided, however, that if the actual EPS achieved for any
Performance Year is (i) less than the corresponding threshold level set forth above, the
Achievement Percentage for such Performance Year shall be 0% or (ii) greater than the
corresponding maximum level set forth above, the Achievement Percentage for such Performance
Year shall be 200%.

 

-2-

 

	 	 	As described above, the percentage of Performance Units that shall vest at the end of the
Performance Cycle shall be calculated by averaging the Achievement Percentages attained for each
Performance Year in the Performance Cycle. By way of example, but not limitation:

	 	•	 	If the actual EPS Performance Level Achieved for each of 2011, 2012 and 2013 was
$_____, $_____ and $_____, respectively, the corresponding Achievement Percentages for
each of 2011, 2012 and 2013 would be
 _____%,
 _____% and
 _____%, respectively.

	 
	 	•	 	Based on the foregoing, the percentage of Performance Units that would vest at the
end of the Performance Cycle would be the average of the Achievement Percentages, or

 _____%.

	 
	 	•	 	As a result, the Performance Units earned would equal                      multiplied by

 _____%, or                      Performance Units.

	 
	 	•	 	Of the                      Performance Units earned, the Participant would be entitled to
receive (a)  $                     (calculated by multiplying                      Performance Units by
$1.00 and multiplying the product by 50%), and (b) $                     (calculated by
multiplying                      Performance Units by $1.00 and multiplying the product by
50%, then, dividing by $                    , the Fair Market Value of the Company’s Common Stock
on the date of grant, and then, multiplying by $                    , the Fair Market Value of the
Company’s Common Stock on the date of payment). For purposes of this example, we are
assuming a Fair Market Value of $                     on the date of payment.

	7.	 	Settlement of Award: The Performance Units which vest pursuant to Section 6 of this Award
Agreement shall be settled, in cash, by the Company as provided in Section 9 of this Award
Agreement. Notwithstanding the foregoing, the Company may, in its sole and absolute
discretion, settle the phantom shares attributable to the Award in shares of Common Stock of
the Company.

	 
	8.	 	Eligibility for Earned Performance Units: A Participant will be eligible to receive
Performance Units in which the Participant has a vested interest pursuant to Section 6 of this
Award Agreement only if:

	 	(a)	 	The Participant was approved as a participant for the Performance Cycle; and

	 
	 	(b)	 	(i) The Participant:

	 	(A)	 	continues to be employed by the Company through the end of the
Performance Cycle; or

	 
	 	(B)	 	experiences a Termination of Service during the Performance Cycle
due to death, Total and Permanent Disability or Retirement.

	 
	 	 	 	For the purposes of this Agreement, “Retirement” shall mean any Termination of
Service solely due to retirement upon attainment of age 65, permitted Early
Retirement as determined by the Committee, or Termination of Service by the
Company without Cause. Early Retirement shall mean the Participant’s
Termination of Service with the Company: (i) after attainment of age 55, but
before attainment of age 65; and (ii) after completion of 15 years of service.

 

-3-

 

	 	 	 	Cause shall mean the Participant’s commission of any of the following: (1)
violation of any restrictive covenant in any applicable employment, bonus or
similar agreement with the Company, provided that such act shall have been
detrimental to the Company; (2) Participant’s willful misconduct, malfeasance,
negligence in the performance or intentional nonperformance of any of
Participant’s material duties and responsibilities hereunder; (3) Participant’s
dishonesty or fraud with respect to the business, reputation or affairs of the
Company; (4) fraud, misappropriation or embezzlement of funds or other property
of the Company, (5) Participant’s conviction of a felony crime which, in the
opinion of the Board of Directors of the Company, brings Participant or the
Company into disrepute or causes harm to the Company’s business, customer
relations, financial condition or prospects, or (6) violation of any statutory
or common law duty of loyalty to the Company. For purposes of this Agreement,
no act, or failure to act, on the part of the Participant shall be deemed
“intentional” if it was due primarily to an error in judgment or negligence,
but shall be deemed “intentional” only if done, or omitted to be done, by the
Participant not in good faith and without reasonable belief that the
Participant’s action or omission was in the best interest of the Company); or

	 	(ii)	 	There is a Change of Control of the Company during the Performance Cycle.

	 	 	If the Participant experiences a Termination of Service due to death, Total and Permanent
Disability, or Retirement during the Performance Cycle, the Participant shall be eligible to
vest in a fraction of the number of Performance Units in which the Participant may have
otherwise vested under Section 6 of this Award Agreement for the Performance Cycle had the
Participant remained employed until the end of the Performance Cycle. The fraction of the
number of Performance Units in which the Participant will vest in connection with the
Participant’s Termination of Service due to death, Total and Permanent Disability, or Retirement
will be determined using a numerator which equals the number of complete Performance Years that
have elapsed since the beginning of the Performance Cycle as of the date of the Participant’s
Termination of Service and a denominator which is equal to the number of Performance Years in
the Performance Cycle. In the event such pro-ration results in the Participant vesting in a
fractional number of Performance Units, the number of Performance Units in which the Participant
will vest will be rounded up to the nearest whole number.

	 
	 	 	Except as otherwise provided in this Award Agreement, all Performance Units that are not vested
in connection with a Participant’s experiencing a Termination of Service as a result of the
Participant’s death, Total and Permanent Disability, or Retirement shall be forfeited to the
Company. In the event of a Participant’s death, the Participant’s beneficiary or estate shall
be entitled to the Performance Units to which the Participant otherwise would have been entitled
under the same conditions as would have been applicable to the Participant.

	 
	 	 	If there is a Change of Control of the Company during the Performance Cycle, the Participant
shall vest in and have a nonforfeitable right to 100% of the Performance Units granted under
Section 1 of this Award Agreement without regard to the actual Achievement Percentage attained
for any Performance Year.

	 
	9.	 	Time of Payment: Settlement of the Performance Units which vested pursuant to Section 6 of
this Award Agreement, will be made:

 

-4-

 

	 	(a)	 	To a Participant who (i) experiences a Termination of Service as a result of the
Participant’s death, Total and Permanent Disability, or Retirement during the Performance
Cycle, or (ii) remains employed with the Company for the entire Performance Cycle, as soon
as administratively practicable following the end of the Performance Cycle, but not later
than the last day of the calendar year in which the Performance Cycle ends.

	 
	 	(b)	 	In connection with a Change of Control during the Performance Cycle, within two and one
half (21/2) months following the earlier of the date of a Section 409A Change of Control or
the end of the Performance Cycle.

	 
	 	 	 	For purposes of this Award Agreement, a “Section 409A Change of Control” shall mean:

	 	(i)	 	any one person, or more than one person acting as a group, acquires ownership
of stock of the Company that, together with stock held by such person or group,
constitutes more than 50% of the total fair market value or total voting power of the
stock of the Company;

	 
	 	(ii)	 	any one person, or more than one person acting as a group, acquires (or has
acquired during any twelve (12) month period) ownership of stock of the Company
possessing 30% or more of the total voting power of the stock of the Company;

	 
	 	(iii)	 	a majority of the members of the Board is replaced during any twelve (12)
month period by directors whose appointment is not endorsed by a majority of the
members of the Board before the date of the appointment or election; or

	 
	 	(iv)	 	any one person, or more than one person acting as a group, acquires (or has
acquired during any twelve (12) month period) assets from the Company that have a total
gross fair market value equal to or more than 40% of the total gross fair market value
of all of the assets of the Company immediately before such acquisition or
acquisitions.

	 	 	 	The determination of whether a Section 409A Change of Control has occurred shall be made in
accordance with the provisions of Code Section 409A and the regulations promulgated
thereunder.

	10.	 	Termination of Service for Other Reasons: In the event a Participant experiences a
Termination of Service during the Performance Cycle by the Company for any reason other than
those reasons set forth in Section 8, this entire Award shall be forfeited and no payment
shall be made to the Participant under this Award Agreement.

	 
	11.	 	Nontransferability: During the Performance Cycle, Performance Units awarded pursuant to this
Award Agreement may not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated (“Transfer”), other than by will or by the laws of descent and distribution,
except as provided in the Plan. If any Transfer, whether voluntary or involuntary, of
Performance Units is made, or if any attachment, execution, garnishment, or lien shall be
issued against or placed upon the Performance Units, the individual’s right to such
Performance Units shall be immediately forfeited to the Company, and this Award Agreement
shall lapse.

	 
	12.	 	Community Interest of Spouse: The community interest, if any, of any spouse of a Participant
in any of the Performance Units shall be subject to all of the terms, conditions and
restrictions of this Award Agreement and the Plan, and shall be forfeited and surrendered to
the Company upon the
occurrence of any of the events requiring the Participant’s interest in such Performance Units
to be so forfeited and surrendered pursuant to this Award Agreement.

 

-5-

 

	13.	 	Rights: A Performance Unit represents an unsecured promise of the Company to pay cash in the
future. Until the Performance Units have vested, the Participant shall have no rights under
this Award Agreement. Notwithstanding the foregoing, the Participant’s rights under this
Agreement do not exceed that of a general unsecured creditor of the Company.

	 
	14.	 	Adjustments: In the event that the outstanding shares of Common Stock are changed into or
exchanged for a different number or kind of capital stock or other securities of the Company
or its successor by reason of merger, consolidation, recapitalization, reclassification, stock
split-up, stock dividend or combination of shares of Common Stock, the Committee or the Board,
subject to the provisions of the Plan and this Award Agreement, shall make an appropriate and
equitable adjustment in accordance with the provisions of the Plan in the number and kind of
Performance Units under this Award Agreement so that after such event each Participant’s
proportionate interest shall be maintained as before the occurrence of such event. Any such
adjustment made by the Committee or the Board shall be final and binding upon the Participant,
the Company and all other interested persons.

	 
	15.	 	Requirements of Law: The granting of Performance Units under the Program and Plan shall be
subject to all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

	 
	16.	 	Tax Withholding: With respect to withholding required upon any taxable event arising under
this Award Agreement, by execution of this Award Agreement or any related acknowledgement, the
Participant shall be deemed to have authorized the Company to withhold from the cash to be
paid as a result of the Participant’s vesting in the Performance Units, the cash necessary to
satisfy the Participant’s minimum required withholding, if any. The amount of the minimum
required withholding and the cash required to satisfy Participant’s minimum required
withholding, if any, as well as the amount reflected on tax reports filed by the Company,
shall be based on the cash to be paid on the day the liability is determined by the Company.
Notwithstanding the foregoing, the Company may require that the Participant satisfy any
required withholding by any other means the Company, in its sole discretion, considers
reasonable. The obligations of the Company under this Award Agreement shall be conditioned on
the Participant’s satisfaction of any required withholding.

	 
	17.	 	Administration: This Award Agreement and the rights hereunder are subject to all the terms
and conditions of the Plan, as the same may be amended from time to time, as well as to such
rules and regulations as the Committee may adopt for administration of the Plan. It is
expressly understood that the Committee is authorized to administer, construe, and make all
determinations necessary or appropriate to the administration of the Plan and the Award
Agreement, all of which shall be binding upon the Participant.

 

-6-

 

	18.	 	No Right to Future Grants; No Right of Employment or Continued Employment: In accepting the
Award granted hereunder, the Participant acknowledges that: (a) the Plan and this Program are
established voluntarily by the Company, they are discretionary in nature and they may be
modified, suspended or terminated by the Company at any time, as provided in the Plan and this
Award Agreement; (b) the Award is voluntary and occasional and does not create any contractual
or other right to receive future Awards; (c) all decisions with respect to future Awards, if
any, will be at the sole discretion of the Company; (d) the Participant’s participation in the
Program and Plan is
voluntary; (e)  the Award is not part of normal or expected compensation or salary for any
purposes, including, but not limited to, calculating any severance, resignation, termination,
redundancy, end of service payments, bonuses, long-service awards, pension or retirement
benefits or similar payments; (f) in the event that a Participant is an employee of the Company,
the Award will not be interpreted to form an employment contract or relationship with the
Company; (g) this Award shall not confer upon an individual any right to continuation of
employment by the Company, nor shall this Award interfere in any way with the Participant’s or
the Company’s right to terminate employment at any time; and (h)  except as otherwise
specifically provided under this Award Agreement, in the event of the termination of a
Participant’s employment by the Company for any reason, the right to receive cash under this
Award Agreement, if any, will terminate effective as of the date that the Participant is no
longer actively employed and will not be extended by any notice period mandated under any
federal, state, provincial, or local law (including but not limited to the Worker Adjustment and
Retraining Notification Act).

	 
	19.	 	Amendment to the Plan: The Committee may terminate, amend, or modify the Plan and this
Program; provided, however, that no such termination, amendment, or modification of the Plan
or this Program may in any way adversely affect a Participant’s rights under this Award
Agreement, without the consent of the Participant or the Participant’s designated beneficiary.

	 
	20.	 	Successor: All obligations of the Company under the Plan and this Award Agreement, with
respect to the Performance Units, shall be binding on any successor to the Company, whether
the existence of such successor is the result of a direct or indirect purchase, merger,
consolidation, or otherwise, of all or substantially all of the business and/or assets of the
Company.

	 
	21.	 	Applicable Laws and Consent to Jurisdiction: The validity, construction, interpretation, and
enforceability of this Award Agreement shall be determined and governed by the laws of the
State of Texas without giving effect to the principles of conflicts of law. For the purpose of
litigating any dispute that arises under this Award Agreement, the parties hereby consent to
exclusive jurisdiction and agree that such litigation shall be conducted in the federal or
state courts of the State of Texas.

	 
	22.	 	Severability: The provisions of this Award Agreement are severable and if any one or more
provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the
remaining provisions shall nevertheless be binding and enforceable.

	 
	23.	 	Settlement in Shares. In the event the Company exercises its discretion and issues shares of
Common Stock of the Company in settlement of the phantom shares attributable to this Award,
evidence of the issuance of the shares of Common Stock may be accomplished in such manner as
the Company or its authorized representatives shall deem appropriate including, without
limitation, electronic registration, book-entry registration or issuance of a certificate or
certificates in the name of the Participant or in the name of such other party or parties as
the Company and its authorized representatives shall deem appropriate. In the event the
 shares of Common Stock issued pursuant to this Award Agreement remain subject to any
additional restrictions, the Company and its authorized representatives shall ensure that the
Participant is prohibited from entering into any transaction, which would violate any such
restrictions, until such restrictions lapse. The Participant shall have no rights of a
stockholder of the Company (e.g., no right to vote the shares of Common Stock underlying the
Performance Units or to receive any dividend or dividend equivalent thereon) until such shares
of Common Stock of the Company have been issued pursuant to this Section 23. The Participant
acknowledges that the future value of the underlying shares of Common Stock is unknown and
cannot be predicted with certainty. 

 

-7-

 

	 	 	 	 	 
	 	TANDY BRANDS ACCESSORIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

-8-

 

Tandy Brands Accessories, Inc.

2011 Performance Unit Award Acknowledgement

**If this Acknowledgement is not dated, signed and returned as requested below, the award of
Performance Units pursuant to the Award Agreement attached will be null and void and there will be
no substitute award of Performance Units.**

Please acknowledge your agreement to participate in the Tandy Brands Accessories, Inc. 2002 Omnibus
Plan (the “Plan”), receive performance-based units (“Performance Units”) under the 2011 Performance
Unit Award Agreement (“Award Agreement”), attached, and to abide by all of the governing terms and
provisions, by signing the following acknowledgement and agreement (“Acknowledgement”) and
returning it to the Chief Financial Officer of Tandy Brands Accessories, Inc. at 3631 West Davis,
Dallas, Texas 75211 within thirty days of receipt. For purposes of this Acknowledgement, “Company”
means Tandy Brands Accessories, Inc., its affiliates, and/or its subsidiaries.

Agreement to Participate

By signing this Acknowledgement and returning it to the Chief Financial Officer of Tandy Brands
Accessories, Inc., I acknowledge that I have read the Plan and the Award Agreement dated July 1,
2010, and that I fully understand all of my rights under the Plan and the Award Agreement, as well
as all of the terms and conditions which may limit my eligibility to retain or receive the
Performance Units or cash payable to me pursuant to the Plan and the Award Agreement.

I further acknowledge and agree that the Performance Units subject to the Award Agreement shall
vest and the restrictions resulting in the forfeiture of the Performance Units shall lapse, if at
all, only during the period of my service to the Company or as otherwise provided in the Award
Agreement (not through the act of being granted the Performance Units).

I further acknowledge and agree that nothing in the Award Agreement or the Plan shall confer on me
any right with respect to future awards or continuation of my service to the Company.

I acknowledge receipt of a copy of the Plan, represent that I am familiar with the terms and
provisions thereof, and hereby accept the Award subject to all of the terms and provisions hereof
and thereof. I have reviewed the Award Agreement and the Plan in their entirety, have had an
opportunity to obtain the advice of counsel prior to executing this Acknowledgement, and fully
understand all provisions of this Acknowledgement, the Award Agreement and the Plan.

I further acknowledge that the tax consequences associated with the Performance Units under the
Award Agreement are complex and that the Company has urged me to review the federal, state, and
local tax consequences of the award of Performance Units under the Award Agreement with my own tax
advisors. I am relying solely on such advisors and not on any statements or representations of the
Company or any of its agents. I understand that I, and not the Company, shall be responsible for
my own tax liability that may arise as a result of the Award Agreement.

	 	 	 	 	 	 	 
	Date: 	 	 	 	 
	 	 	 	N. Roderick McGeachy, III

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