Document:

exv10w5

Exhibit 10.5

LEASE MODIFICATION AND EXTENSION AGREEMENT

     THIS LEASE MODIFICATION AND EXTENSION AGREEMENT (the “Lease Extension”) is made effective
October 1, 2009, by and among the BOWLING GREEN AREA ECONOMIC DEVELOPMENT AUTHORITY, INC.,
Successor by Merger to BOWLING GREEN-WARREN COUNTY INDUSTRIAL PARK AUTHORITY, INC., a Kentucky
non-profit corporation, 710 College Street, Bowling Green, KY 42102 (the “Lessor”), STOODY COMPANY,
a Delaware corporation, f/k/a Stoody Deloro Stellite, Inc. (the “Lessee”) and THERMADYNE
INDUSTRIES, INC., a Delaware corporation, and THERMADYNE HOLDINGS CORPORATION, a Delaware
corporation (collectively the “Guarantor”).

R E C I T A L S:

     A. Lessor and Lessee are parties to that certain Lease dated October 10, 1990 (the “Original
Lease”) with respect to Lot 2 in South Central Kentucky Industrial Park, consisting of
approximately thirty-seven (37) acres together with all improvements thereon (the “Premises”). (The
Original Lease together with this Lease Extension, collectively referred to herein as the “Lease”)

     B. Lessor and Lessee desire to enter into this Lease Extension.

     NOW THEREFORE, for and in consideration of the mutual promises, covenants, and conditions
contained in the original Lease and this Lease Extension and the mutual benefits to be derived by
Lessor and Lessee, they agree as follows:

     1. Extension of Term; Option to Renew. Article VI of the Original Lease is hereby
amended by amending and restating the third, fourth and fifth sentences thereof to read in its
entirety as follows:

“The term of Lessee’s tenancy under the Original Lease is extended by this Lease Extension
for a period of ten (10) years, beginning October 1, 2009, and ending September 30, 2019
(the “Extension Term”). At the conclusion of the Extension Term, Lessee shall have an
option to renew its tenancy for an additional period of five (5) years (the “Renewal
Term”). This option to renew shall be available to Lessee provided that Lessee is not then
in default under the Lease and provided that Lessee shall have exercised its option to
renew, in writing, no later than One Hundred Eighty (180) Days prior to September 30, 2019.
To exercise this option, Lessee shall give Lessor written notice in accordance with Article
XVI.”

     2. Rent. Article VII, paragraph (b), is hereby amended by adding the following
subparagraph at the end thereof:

“Rent for the Extension Term shall be at the annual rate of $669,700.00. Rent shall be
payable by Lessee to Lessor in equal monthly installments of $55,808.33, on the first day
of each month in advance, beginning October 1, 2009. In addition to the Rent, Lessee shall
pay Lessor during the Term, including the Extension Term and any Renewal Term, the sum of
$150.00 on the first day of each month (the “Additional Rent”). In the event Lessee
exercises its option to renew for an additional five (5) years, the Rent payable by Lessee
to Lessor during the Renewal Term shall be the sum of $703,185.00 annually, payable
monthly, in advance on the first day of each month in

 

 

installments of $58,598.75. Additional Rent shall also be payable monthly, in advance, in
the amount of $150.00 per month.”

     3. Notices. Article XVI is hereby amended by deleting the addresses specified therein
and adding the following in lieu thereof:

	 	 	 	 	 

	 

	 	To Lessor:
	 	Bowling Green Area Economic
Development Authority, Inc.
	 

	 	 	 	710 College Street
	 

	 	 	 	Bowling Green, Kentucky 42102
	 
	 	 	 	 
	 

	 	With a Copy to	 	 
	 

	 	Lessor’s Lenders:	 	 
	 
	 	 	 	 
	 

	 	To Lessee:
	 	Stoody Company
	 

	 	 	 	5557 Nashville Rd.
	 

	 	 	 	Bowling Green, Kentucky 42101
	 

	 	 	 	Attention: Vice President, General
Operations Manager
	 
	 	 	 	 
	 

	 	To Guarantor:
	 	Thermadyne Holdings Corporation
	 

	 	 	 	Thermadyne Industries, Inc.
	 

	 	 	 	16052 Swingley Ridge Rd.
	 

	 	 	 	Suite 300
	 

	 	 	 	Chesterfield, Missouri 63017
	 

	 	 	 	Attention: Chief Financial Officer
	 
	 	 	 	 
	 

	 	With a Copy to:
	 	Thermadyne Holdings Corporation
	 

	 	 	 	16052 Swingley Ridge Rd.
	 

	 	 	 	Suite 300
	 

	 	 	 	Chesterfield, Missouri 63017
	 

	 	 	 	Attention: Vice President, General Counsel

     4. Guarantor Consent. Guarantor joins in this Lease Extension for the purpose of
confirming its assent to the terms hereof and for the purpose of affirming that it remains in all
respects liable under its Guaranty in Article XXVIII of the Original Lease, which Guaranty shall
extend to Rent and Additional Rent payable under this Lease Extension.

     5. Entire Agreement. Except as set out in this Lease Extension, the Original Lease
remains in full force and effect and enforceable to the terms thereof, and Lessor and Lessee agree
that there are no defaults by any party thereunder.

     6. Definitions and Construction. All terms defined in the Original Lease shall have
the same definition in this Lease Extension except where such term is separately defined in this
Lease Extension. In the event of any conflict of interpretation between the Original Lease and this
Lease Extension, the terms of this Lease Extension shall control.

 

 

     7. Binding Effect. The Lease, including this Lease Extension shall continue to be
binding upon and inure to the benefit of the Lessor, the Lessee and the Guarantor by the parties.

     IN TESTIMONY WHEREOF, witness the signatures of the parties hereto on the date written above.

	 	 	 	 	 
	LESSOR:             	BOWLING GREEN AREA ECONOMIC

DEVELOPMENT AUTHORITY, INC.

 	 
	 	BY (sign):  	/s/  Doug Gorman
 	 
	 	 	NAME(print):  Doug Gorman 	 
	 	 	TITLE (print):  Board Chair              	 
	 

	 	 	 	 	 
	LESSEE:            	STOODY COMPANY

 	 
	 	BY (sign):  	/s/  Nick H. Varsam
 	 
	 	 	NAME(print):
 Nick H. Varsam 	 
	 	 	TITLE (print): Vice President, General Counsel 	 
	 

	 	 	 	 	 
	GUARANTOR:         	THERMADYNE INDUSTRIES, INC.

 	 
	 	BY (sign):  	/s/  Nick H. Varsam
 	 
	 	 	NAME(print):
 Nick H. Varsam 	 
	 	 	TITLE (print): Vice President, General Counsel 	 
	 

	 	 	 	 	 
	GUARANTOR:         	THERMADYNE HOLDINGS CORPORATION

 	 
	 	BY (sign):  	/s/  Nick H. Varsam
 	 
	 	 	NAME(print):
 Nick H. Varsam 	 
	 	 	TITLE (print): Vice President, General Counselexv10w6

Exhibit 10.6

LEASE AGREEMENT

     THIS LEASE AGREEMENT, made and entered into by Alliance Gateway No. 58, Ltd., a Texas
limited partnership (“Landlord”), and Victor Equipment Company, a Delaware corporation
(“Tenant”):

WITNESSETH:

     1. PREMISES AND TERM. In consideration of the mutual obligations of Landlord and Tenant set
forth herein, Landlord leases to Tenant, and Tenant hereby takes from Landlord, the Premises
situated within the County of Denton, State of Texas, more particularly described and indicated by
the cross-hatched area on Exhibit “A” attached hereto and incorporated herein by reference
(the “Premises”) which Premises are to constitute a portion of the Building to be
constructed pursuant to the terms hereof, together with all rights, privileges, easements,
appurtenances, and amenities belonging to or in any way pertaining to the Premises, to have and to
hold, subject to the terms, covenants and conditions in this Lease. Tenant’s rights under this
Lease shall be subject to all matters of public record, including, without limitation, all
easements, deed restrictions, covenants, conditions and restrictions, as may exist from time to
time. The term of this Lease (“Term”) shall commence on the Commencement Date (hereinafter
defined) and shall end on the last day of the month that is sixty-three (63) months after the
Commencement Date. The Premises are to be situated on the Land described on Exhibit “B” attached hereto and made a part hereof.

     A. The “Commencement Date” shall be the date that is the earlier of (i) the date on
which Tenant first occupies the Premises for the purpose of conducting its business, or (ii) the
date upon which the Leasehold Improvements (hereinafter defined) to be erected in accordance with
the Working Drawings (hereinafter defined) described on Exhibit “C” attached hereto and
incorporated herein by reference have been substantially completed. As used herein, the term
“substantially completed” shall mean that, in the reasonable opinion of Landlord, (i) such
improvements have been completed in accordance with the Working Drawings; (ii) the Premises are in
good and satisfactory condition, subject only to completion of minor punch list items; and (iii) a
certificate of occupancy (the “CO”) has been issued for the Premises, provided, however, if
the CO has not been issued due to the non-completion of work which is required to be done by Tenant
in order to obtain the issuance of the CO, then the Leasehold Improvements shall be deemed to be
“substantially completed” upon satisfaction of the conditions in the immediately preceding clauses
(i) and (ii). As soon as such improvements have been substantially completed, Landlord shall notify
Tenant in writing that the Commencement Date has occurred. Within ten (10) days thereafter, Tenant
shall submit to Landlord in writing a punch list of items needing completion or correction.
Landlord shall complete such items within thirty (30) days after the receipt of such notice. In
the event Tenant, its employees, agents or contractors cause construction of such improvements to
be delayed, Landlord shall notify Tenant in writing of such delay and the Commencement Date shall
be deemed to be the date that, in the opinion of Landlord, substantial completion would have
occurred if such delays had not taken place. Landlord’s approval of any plans, specifications or
working drawings for the Premises shall create no responsibility or liability on the part of
Landlord for their completeness, design sufficiency or compliance with any laws, rules, or
regulations of governmental agencies or authorities. After the Commencement Date, Tenant shall,
upon demand, execute and deliver to Landlord a memorandum of acceptance of delivery of the Premises
in the form attached hereto as Exhibit “D”.

     B. If the Commencement Date has not occurred by the date that is seventy (70) days after the
date Landlord receives a building permit for the Work (as hereinafter defined) (which seventy [70]
day period shall be extended (i) by one day for each day constituting a Force Majeure Delay, and
(ii) by one day for each day constituting a Tenant Delay, and which date, as so extended, shall be
referred to herein as the “First Deadline Date”), then Tenant shall be entitled to receive,
as its sole and exclusive remedy, a credit against the first Base Rent due hereunder in an amount
equal to $2,340.00 per day for each day that shall elapse from the First Deadline Date until the
earlier to occur of the Second Deadline Date (hereinafter defined) or the Commencement Date. If
the Commencement Date has not occurred by the date that is one hundred thirty (130) days after the
date Landlord receives a building permit for the Work (which one hundred thirty [130] day period
shall be extended (i) by one day for each day constituting a

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Force Majeure Delay, and (ii) by one day for each day constituting a Tenant Delay, and which date,
as so extended, shall be referred to herein as the “Second Deadline Date”), then Tenant
shall be entitled to receive, as its sole and exclusive remedy, a credit against the first Base
Rent due hereunder in an amount equal to $4,680.00 per day for each day that shall elapse from the
Second Deadline Date until the Commencement Date.

     C. Notwithstanding the fact that the Term of this Lease and Tenant’s obligation to pay rent
does not commence until the Commencement Date, this Lease shall nevertheless be binding upon the
parties in accordance with its terms when executed by Landlord and Tenant.

     2. BASE RENT, SECURITY DEPOSIT AND ESCROW PAYMENTS.

     A. Tenant agrees to pay to Landlord base rent (“Base Rent”) for the Premises, in
advance, without demand, deduction or set off, at the following rates and amounts during the Term
hereof:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Monthly	 	Annual	 	Per Square Foot
	Months	 	Base Rent	 	Base Rent	 	Per Annum
	1–3
	 	$	0.00	 	 	$	0.00	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 	 
	4–63
	 	$	42,184.17	 	 	$	506,210.00	*	 	$	4.46	 
	 
	 	 	 	 	 	 	 	 	 

 

			
	*	 	Annual Base Rent for the first year of the Term of this Lease shall be
$379,657.49.

     The first monthly installment of Base Rent, plus the other monthly charges set forth in
Paragraph 2C below, shall be due and payable on the date hereof and subsequent monthly
installments shall be due and payable on or before the first day of each calendar month succeeding
the Commencement Date, except that (i) all payments due hereunder for any fractional calendar
month shall be prorated and (ii) no Base Rent is due during the first three months of the Term.

     B. In addition, Tenant agrees to deposit with Landlord on the date hereof (i) the sum of
Fifty-Three Thousand Eight Hundred Seventeen and 91/100 Dollars ($53,817.91) in cash (“Cash
Security Deposit”), and (ii) a letter of credit (“Letter of Credit”) in the sum of One
Hundred Seventy-Five Thousand and 00/100 Dollars ($175,000.00) and in the form attached hereto as
Exhibit “I” and made a part hereof issued by a financial institution reasonably acceptable
to Landlord, provided the Letter of Credit is payable upon presentation for collection at a branch
location within the continental United States. A Letter of Credit shall be maintained in full force
and effect at all times during the Term of this Lease. The Letter of Credit shall have an
expiration date no earlier than the last day of the twelfth (12th) full month following
the Commencement Date and shall be renewed for successive one-year terms during the Term of this
Lease. All renewals of the Letter of Credit must be delivered to Landlord at least thirty (30) days
prior to the expiration of the Letter of Credit then in effect and, if such renewals are not so
timely delivered to Landlord, Landlord shall have the right to present and receive payment on the
then-current Letter of Credit. The Cash Security Deposit and the Letter of Credit are
collectively referred to herein as the “Security Deposit”. The Security Deposit shall be
held by Landlord as security for the performance of Tenant’s obligations under this Lease, it being
expressly understood and agreed that this Security Deposit is not an advance rental deposit or a
measure of Landlord’s damages in case of Tenant’s default. Upon each occurrence of an Event of
Default (hereinafter defined), Landlord may draw upon the Letter of Credit and use all or part of
the proceeds thereof and/or use any portion of the Cash Security Deposit to pay past due rent or
other payments due Landlord under this Lease, and the cost of any other damage, injury, expense or
liability caused by such Event of Default without prejudice to any other remedy provided herein or
provided by law. On demand, Tenant shall pay Landlord the amount that will restore the Security
Deposit to its original amount. The Security Deposit shall be deemed the property of Landlord, but
any remaining balance of such Security Deposit shall be returned by Landlord to Tenant when
Tenant’s obligations under this Lease have been fulfilled.

     C. In addition to Base Rent and Tenant’s other obligations hereunder, Tenant agrees to pay its
proportionate share (as defined in the Basic Lease Information) of the following costs and expenses
(collectively, the “Reimbursable Expenses”): (i) Taxes (hereinafter defined)

2

 

payable by Landlord pursuant to Paragraph 4A below, (ii) the cost of jointly metered
utilities payable pursuant to Paragraph 9 below, (iii) the cost of maintaining insurance
pursuant to Paragraph 10A below, (iv) Common Area Charges (hereinafter defined) payable by
Tenant in accordance with Paragraph 3 below, (v) the cost of any repair, replacement, or
capital expenditures required under any governmental law or regulation that was not applicable to
the Building at time of original construction, and (vi) replacement reserves for capital items and
other operating expenses required by this Lease. During each month of the Term of this Lease, on
the same day that Base Rent is due hereunder, Tenant shall escrow with Landlord an amount equal to
1/12th of Tenant’s proportionate share of such Reimbursable Expenses, as estimated by Landlord in
good faith. Tenant authorizes Landlord to use the funds deposited with Landlord under this
Paragraph 2C to pay such Reimbursable Expenses. Landlord shall be entitled to revise its
projection in good faith of such Reimbursable Expenses at any time and if Landlord so revises such
projection, Tenant shall pay to Landlord, on the same day as Base Rent is due hereunder, an amount
equal to 1/12th of Tenant’s proportionate share of such Reimbursable Expenses pursuant to
Landlord’s good faith revised estimate thereof. By April 30 of each calendar year (or as soon
thereafter as may be practicable) during the Term hereof Landlord shall determine the actual
Reimbursable Expenses for the preceding calendar year and shall notify Tenant thereof and provide
Tenant with a copy of the accounting and detail of the Reimbursable Expenses. If Tenant’s total
escrow payments are less than Tenant’s actual proportionate share of all such Reimbursable
Expenses, Tenant shall pay the difference to Landlord within twenty (20) days after demand. If the
total escrow payments of Tenant are more than Tenant’s actual proportionate share of all such
Reimbursable Expenses, Landlord shall retain such excess and credit it against Tenant’s next
annual escrow payments.

     3. COMMON AREA CHARGES. A. In addition to other amounts required to be paid by Tenant
hereunder, Tenant shall pay to Landlord Tenant’s proportionate share of the following costs and
expenses (collectively, the “Common Area Charges”):

     i. The cost of repair, maintenance and replacement of: (i) the exterior of the Building
(including painting), other than those structural repairs and replacements for which Landlord is
responsible pursuant to Paragraph 5; (ii) all mechanical, electrical, plumbing, sewer,
sprinkler and other life-safety equipment and systems forming a part of the Building or the
Project of which the Building forms a part (other than the cost of repair, replacement and
maintenance of the items which are Tenant’s responsibility pursuant to Paragraph 6 which
shall be paid entirely by Tenant as provided in Paragraph 6); and (iii) all other common
areas and facilities constituting a part of the Building or the Project of which the Building
forms a part (including, but not limited to, all paved areas in and about the Building).

     ii. The cost of maintenance and replacement of the grass, shrubbery and other landscaping in
and about the Building and/or the Project.

     iii. The cost of operating and maintaining in a good, neat, clean and sanitary condition all
parking areas, driveways, alleys and grounds in and about the Building (including trash removal).

     iv. The cost of assessments under any applicable Declaration of Covenants, Restrictions and
Easements (as may be amended from time to time) which are assessed by the applicable property
owners association.

     v. Security services (if furnished by Landlord), and the cost of operating and maintaining
any property, facilities or services provided for the common use of Tenant and other lessees of
the Building or the Project, which costs shall include, without limitation, management fees (or if
no management company is engaged by Landlord for the management of the Project, wages and employee
benefits payable to employees of Landlord or affiliates of Landlord whose duties are connected
with the operation and maintenance of the Building); provided, however, such management fees (or
if no management company is engaged by Landlord, such wages and benefits) shall not exceed an
amount equal to three percent (3%) of the Base Rent payable under this Lease.

     B. Notwithstanding the foregoing, it is agreed that with regard to Controllable Expenses
(hereinafter defined), Tenant’s obligation to pay any increases in Controllable Expenses for any
year of the Term of this Lease following the first year of the Term of this

3

 

Lease, shall be limited to an increase of six percent (6%) (the “Cap”) from the amount
paid with respect to Controllable Expenses for the immediately preceding year; provided, however,
that if any such increase in Controllable Expenses is less than the maximum amount that
Controllable Expenses could have increased pursuant to the foregoing applicable Cap (the
difference between the maximum amount that such Controllable Expenses could have increased and the
amount that they did in fact increase is referred to herein as the “Unused Cap”), then the
Unused Cap shall be applied to increase the Cap that is applicable to the year in question and for
all subsequent years until all Unused Cap amounts are exhausted. Furthermore, the Unused Cap for
all years shall be cumulated and be applied to increase the Caps applicable to all subsequent
years in the Term of the Lease. It is the intention of this provision that the Cap provided with
respect to Controllable Expenses be a “cumulative cap”. The term “Controllable Expenses”
shall mean all Common Area Charges, except for costs described in Paragraph 3A(i) above.

     4. TAXES.

     A. Landlord agrees to pay all taxes, assessments and governmental charges of any kind and
nature (collectively referred to herein as “Taxes”) that accrue against the Premises,
and/or the Land and/or improvements of which the Premises are a part. (For purposes of this Lease,
the term “Taxes” shall include the amount of any taxes that would otherwise be imposed but for the
provisions of any tax abatement agreement with respect to which Landlord is a party which is
entered into pursuant to chapter 312 of the Texas Tax Code; and for purposes of this Lease, such
abated taxes shall be deemed to be payable by Landlord.) If at any time during the Term of this
Lease, there shall be levied, assessed or imposed on Landlord a capital levy or other tax directly
on the rents received herefrom and/or a franchise tax, assessment, levy or charge measured by or
based, in whole or in part, upon such rents from the Premises and/or the Land and improvements of
which the Premises are a part, then all such taxes, assessments, levies or charges, or the part
thereof so measured or based, shall be deemed to be included within the term “Taxes” for the
purposes hereof. Landlord shall have the right to employ a tax consulting firm to attempt to assure
a fair tax burden on the building and grounds within the applicable taxing jurisdiction. Tenant
agrees to pay its proportionate share of the cost of such consultant which cost shall be allocated
on a fair and equitable basis.

     B. Tenant shall be liable for all taxes levied or assessed against any personal property or
fixtures placed in the Premises. If any such taxes are levied or assessed against Landlord or
Landlord’s property and (i) Landlord pays the same or (ii) the assessed value of Landlord’s
property is increased by inclusion of such personal property and fixtures and Landlord pays the
increased taxes, then, upon demand Tenant shall pay to Landlord such taxes. In addition, if the
Building is a multiple occupancy building and the cost of any improvements constructed to Tenant’s
Premises is disproportionately higher than the cost of improvements constructed to the premises of
other tenants of the Building, then upon demand Tenant shall pay the amount of Taxes attributable
to such disproportionately more expensive improvements, in addition to Tenant’s proportionate share
of Taxes.

     Tenant hereby waives any right it may have under Section 41.413 of the Texas Tax Code to
protest the appraised value of all or any portion of the Premises and the Building, and any right
it may have under Section 42.015 of the Texas Tax Code to appeal an order of the appraisal review
board with respect to all or any portion of the Premises and/or the Building. Tenant agrees that
Landlord shall have the sole right to protest any appraisals of the Premises and the Building.
Tenant also hereby waives any right it may have to receive a copy of any notice received by
Landlord of reappraisal of all or any portion of the Premises and/or the Building, including
without limitation any notice required under Section 41.413(d) of the Texas Tax Code. Tenant
agrees that Landlord shall not be liable to Tenant for any damages for Landlord’s failure to send
to Tenant a copy of any notice of reappraisal concerning the Premises and/or the Building,
irrespective of any obligation under applicable law of Landlord to provide such notice.
Notwithstanding the foregoing, if Tenant protests, challenges or appeals any valuation for
property tax purposes of all or any portion of the Premises and/or the Building, and such
valuation increases from the value protested, appealed or challenged, Tenant agrees to indemnify
Landlord on an after-tax basis for any property taxes due as a result of such increase.

     C. Tenant shall have the right (unless Landlord shall in good faith agree to contest, at
Tenant’s sole expense, such tax increase) to contest or resist, in good faith, diligently and by
appropriate proceedings, the validity of the amount or rate of any increase or proposed increase

4

 

in the Taxes, all at Tenant’s sole expense. If Landlord shall agree to contest such Taxes,
Landlord shall do so at Tenant’s expense (the cost of which contest, if involving the property of
Landlord in addition to the Premises, shall be allocated to Tenant on a reasonable and equitable
basis), under the direction and control of Landlord (which shall make all decisions in connection
therewith, subject to Tenant’s right to monitor Landlord’s conduct of such contest proceeding); if
Landlord elects not to contest such Taxes or, having elected to contest such Taxes, fails to
contest such Taxes diligently and in good faith, and such failure continues uncured beyond a
reasonable time following written notice from Tenant to Landlord, or if Tenant reasonably
determines that Landlord is not pursuing an adequately aggressive position with respect to such
tax contest and Landlord fails to comply with Tenant’s reasonable request with respect thereto,
Tenant shall have the right to itself contest such Taxes. It shall be a condition precedent to
Tenant’s right to contest any such Taxes that Tenant provide Landlord with security (in a form
reasonably acceptable to Landlord and Landlord’s mortgagee) in an amount reasonably necessary to
assure full payment of such Taxes being contested, together with all penalties, fines and interest
and other fees and amounts that could be collected by the taxing authority in case the contest is
unsuccessful (but in any event not less than the amount reasonably required by Landlord’s
mortgagee in connection with such contest of Taxes). In determining the security required pursuant
to the immediately preceding sentence, due regard shall be given to Tenant’s contractual
obligations with respect to Taxes pursuant to Paragraph 2C above. Tenant shall in all
events pay all such contested Taxes (together with all penalties, fines, interest and such other
fees and amounts) at least thirty (30) days prior to the date on which the Premises (or any
portion thereof) are scheduled for any unstayed foreclosure on account of nonpayment thereof.
Tenant shall indemnify and hold harmless Landlord from and against any and all expenses,
liabilities and claims (including but not limited to attorneys’ fees) incurred by or asserted
against Landlord or the Project arising as a result of any such contest by Tenant. Landlord and
Tenant agree to reasonably cooperate with one another in connection with all contests of Taxes
under this Lease.

     5. LANDLORD’S REPAIRS.

     Tenant understands and agrees that Landlord’s maintenance, repair and replacement obligations
are limited to those expressly set forth in this Paragraph 5. Landlord, at its own cost
and expense, shall be responsible only for repair and replacement of the roof, the foundation, and
the structural members of the exterior walls of the Building, reasonable wear and tear excluded.
The term “walls” as used herein shall not include windows, glass or plate glass, doors, special
store fronts or office entries. Tenant shall immediately give Landlord written notice of defect or
need for repairs after which Landlord shall have reasonable opportunity to repair same or cure
such defect.

     6. TENANT’S REPAIRS AND MAINTENANCE.

     A. Tenant, at its own cost and expense, shall (i) maintain all parts of the Premises
(including, but not limited to, the floor slab of the Premises and the mechanical, electrical,
plumbing, sewer, sprinkler and other life-safety equipment, fixtures and systems forming a part of
the Premises), in good, neat, clean, sanitary and operable condition and (ii) promptly make all
necessary repairs and replacements to the Premises in a good and workmanlike manner. In addition
to the foregoing, Tenant shall, at its sole expense, repair any damage to the Premises or the
Building caused by the negligent or intentional acts or omissions of Tenant or Tenant’s employees,
agents or invitees, or caused by Tenant’s default hereunder.

     B. In addition to Tenant’s other obligations hereunder, Tenant, at its own cost and expense,
shall enter into a regularly scheduled preventive maintenance/service contract with a maintenance
contractor approved by Landlord (such approval not to be unreasonably withheld) for servicing all
hot water, heating and air conditioning and elevator systems and equipment within or serving the
Premises. The service contract must include all services suggested by the equipment manufacturer in
its operations/maintenance manual and an executed copy of such contract must be provided to
Landlord prior to the date Tenant takes possession of the Premises.

     7. ALTERATIONS. Tenant shall not make any alterations, additions or
improvements to the Premises without the prior written consent of Landlord. Tenant, at its own cost
and expense, may erect such shelves, bins, machinery and trade fixtures as it desires provided
that: (i) such items do not alter the basic character of the Premises or the Building and/or
improvements of which the Premises are a part; (ii) such items do not overload or damage

5

 

the Premises, the Building or such improvements; (iii) such items may be removed without injury
to the Premises; and (iv) the construction, erection or installation thereof complies with all
applicable governmental laws, ordinances, regulations and with Landlord’s specifications and
requirements. All alterations, additions, improvements and partitions erected by Tenant shall be
and remain the property of Tenant during the Term of this Lease. All shelves, bins, machinery and
trade fixtures installed by Tenant shall be removed on or before the earlier to occur of the date
of termination of this Lease or vacating of the Premises by Tenant, at which time Tenant shall
restore the Premises to their original condition except for reasonable wear and tear. All
alterations, installations, removals and restoration shall be performed in a good and workmanlike
manner so as not to damage or alter the primary structure or structural qualities of the Building
and other improvements situated on the  Premises or of which the Premises are a part.
Notwithstanding anything to the contrary contained herein, it is agreed that the use of and
access to the roof of the Building is expressly reserved to Landlord and is expressly denied to
Tenant. Tenant shall not penetrate the roof of the Building in any manner, nor install or
construct any alterations, additions or improvements thereon, nor otherwise use or occupy the
roof at any time during the Term hereof.

     8. SIGNS. Any signage, decorations, advertising media, blinds, draperies, window treatments,
bars, and security installations Tenant desires for the Premises shall be subject to Landlord’s
written consent (not to be unreasonably withheld) and shall be submitted to Landlord prior to
installation of such items. Tenant shall repair, paint, and/or replace the Building facia surface
to which its signs are attached upon vacation of the Premises, or the removal or alteration of its
signage, all at Tenant’s sole cost and expense. Tenant shall not (i) make any changes to the
exterior of the Premises, (ii) install any exterior lights, decorations, balloons, flags, pennants,
banners or painting, or (iii) erect or install any signs, windows or door lettering, placards,
decorations or advertising media of any type which can be viewed from the exterior of the Premises,
without Landlord’s prior written consent. Notwithstanding anything to the contrary contained
herein, all signs, decorations, advertising media, blinds, draperies and other window treatment or
bars or other security installations visible from outside the Premises shall conform in all
respects to the criteria established by Landlord and to the requirements of all covenants,
conditions and restrictions applicable to the Premises and the Building (including, but not limited
to, approval by the Development Review Board).

     9. UTILITIES. Tenant shall timely pay for all water, gas, heat, light, power, telephone,
sewer, sprinkler charges and other utilities and services used on or at the Premises, together with
any taxes, penalties, deposits, surcharges or the like pertaining to Tenant’s use of the Premises,
and any maintenance charges for utilities. Tenant shall pay all impact or other fees associated
with utility hook-ups, meter installations or services to the Premises. Landlord shall have the
right to cause any of said services to be separately metered to Tenant, provided the cost of such
separate metering is allocated on a fair and equitable basis among all tenants of the Building
benefiting from the separate metering. Notwithstanding anything to the contrary contained
herein, if Tenant requests separate metering for the Premises, Landlord shall cause such separate
metering at Tenant’s sole cost and expense. Tenant shall pay its proportionate share of all
charges for jointly metered utilities (including, but not limited to the cost of utilities consumed
in connection with providing electrical power for the Building’s canopy lighting, the lighting of
the parking facilities and other common areas and facilities associated with the Building, the
Building’s fire pump room and irrigation system, as well as other electricity gauged by the “house
meter”). Landlord shall not be liable for any interruption or failure of utility service on the
Premises.

     10. INSURANCE.

     A. Landlord shall maintain insurance covering the Building of which the Premises are a part in
an amount not less than the “replacement cost” thereof insuring against the perils and costs of
Fire, Lightning, Extended Coverage, Vandalism and Malicious Mischief and such other insurance as
Landlord shall deem necessary.

     B. Tenant, at its own expense, shall maintain during the Term of this Lease a policy or
policies of worker’s compensation and comprehensive general liability insurance, including personal
injury and property damage, with contractual liability endorsement, in the amount of Two Million
Dollars ($2,000,000.00) for property damage and Two Million Dollars ($2,000,000.00)
per occurrence for personal injuries or deaths of persons occurring in or about

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the Premises. Tenant, at its own expense, also shall maintain during the Term of this Lease (i)
fire and extended coverage insurance covering the replacement cost of all alterations, additions,
partitions and improvements installed or placed on the Premises by Tenant or by Landlord on behalf
of Tenant, and all of Tenant’s personal property contained within the Premises and (ii) business
interruption insurance insuring loss of profits in the event of an insured peril damaging the
Premises. Said policies shall (i) name Landlord as an additional insured and insure Landlord’s
contingent liability under this Lease (except for the worker’s compensation policy, which instead
shall include a waiver of subrogation endorsement in favor of Landlord), (ii) be issued by an
insurance company which is licensed to do business in the State of Texas, and which has a Best’s
rating of A/VII or better, and (iii) provide that said insurance shall not be cancelled unless
thirty (30) days prior written notice shall have been given to Landlord. In addition, such
insurance provided by Tenant shall be primary coverage for Landlord when any policy issued to
Landlord is similar or duplicate in coverage, and Landlord’s policy shall be excess over Tenant’s
policies. All insurance policies carried by Tenant hereunder shall expressly provide (by
endorsement or otherwise) that Landlord’s rights thereunder shall be assignable to Landlord’s
mortgagee who shall be shown as an additional insured thereon. Said policy or policies or
certificates thereof shall be delivered to Landlord by Tenant upon commencement of the Term of the
Lease and upon each renewal of said insurance.

     C. Tenant will not permit the Premises to be used for any purpose or in any manner that would
(i) void the insurance thereon, (ii) increase the insurance risk, or (iii) cause the disallowance
of any sprinkler credits, including without limitation, use of the Premises for the receipt,
storage or handling of any product, material or merchandise that is explosive or highly
inflammable. If any increase in the cost of any insurance on the Premises or the Building of which
the Premises are a part is caused by Tenant’s use of the Premises, or because Tenant vacates the
Premises, then Tenant shall pay the amount of such increase to Landlord.

     11. FIRE AND CASUALTY DAMAGE.

     A. If the Premises or the Building of which the Premises are a part should be damaged or
destroyed by fire or other peril, Tenant immediately shall give written notice to Landlord. If the
Building of which the Premises are a part should be totally destroyed by any peril which would be
covered by the insurance which Landlord is required to maintain under Paragraph 10A above,
or if they should be so damaged thereby that, in Landlord’s estimation, rebuilding or repairs
cannot be completed within one hundred eighty (180) days after Landlord’s receipt of all insurance
proceeds with respect to such damage, this Lease shall terminate and the rent shall be abated
during the unexpired portion of this Lease, effective upon the date of the occurrence of such
damage.

     B. If the Building of which the Premises are a part should be damaged by any peril which would
be covered by the insurance which Landlord is required to maintain under Paragraph 10A
above, and in Landlord’s reasonable estimation, rebuilding or repairs can be substantially
completed within one hundred eighty (180) days after the date of such damage, this Lease shall not
terminate, and Landlord shall restore the Premises to substantially its previous condition, except
that Landlord shall not be required to rebuild, repair or replace any part of the partitions,
fixtures, additions and other improvements that may have been constructed, erected or installed in,
or about the Premises for the benefit of, or by or for Tenant. Effective upon the date of the
occurrence of such damage and ending upon substantial completion, if the Premises are untenantable
in whole or part during such period, the rent shall be reduced to such extent as may be fair and
reasonable under all of the circumstances. If such repairs and rebuilding have not been
substantially completed within one hundred eighty (180) days after the date of such damage (subject
to Force Majeure Delays [hereinafter defined] and any delays caused by Tenant or its employees,
agents or contractors), Tenant, as Tenant’s exclusive remedy, may terminate this Lease by
delivering written notice of termination to Landlord in which event the rights and obligations
hereunder shall cease and terminate (except as expressly provided to the contrary herein).

     C. Notwithstanding anything herein to the contrary if the holder of any indebtedness secured
by a mortgage or deed of trust covering the Premises requires that the insurance proceeds be
applied to such indebtedness, then Landlord shall have the right to terminate this Lease by
delivering written notice of termination to Tenant within fifteen (15) days after such

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requirement is made known by any such holder, whereupon all rights and obligations hereunder shall
cease and terminate (except as expressly provided to the contrary herein).

     D. Landlord and Tenant hereby waive and release each other (but only to the extent of the
insurance coverage required to be maintained by the respective parties hereunder) of and from any
and all rights of recovery, claim, action or cause of action, against each other, their agents,
officers and employees, for any liability, loss or damage that may occur to the Premises,
improvements or the Building of which the Premises are a part, or personal property (building
contents) within the Building and/or Premises as the result of any fire or other casualty required
to be insured against under this Lease. Each party to this Lease agrees immediately after
execution of this Lease to give each insurance company, which has issued to it policies of fire
and extended coverage insurance, written notice of the terms of the mutual waivers contained in
this subparagraph and to have the insurance policies properly endorsed to reflect such waivers.

     12. LIABILITY AND INDEMNIFICATION. EXCEPT FOR ANY CLAIMS, RIGHTS OF RECOVERY AND CAUSES
OF ACTION THAT TENANT HAS RELEASED, LANDLORD SHALL HOLD TENANT HARMLESS AND DEFEND TENANT AGAINST
ANY AND ALL CLAIMS OR LIABILITY FOR ANY INJURY OR DAMAGE TO ANY PERSON IN, ON OR ABOUT THE
PREMISES OR ANY PART THEREOF AND/OR THE BUILDING OF WHICH THE PREMISES ARE A PART, WHEN SUCH
INJURY OR DAMAGE SHALL BE CAUSED BY THE ACT, NEGLECT, FAULT, OR OMISSION OF ANY DUTY WITH RESPECT
TO THE SAME BY LANDLORD, ITS AGENTS, SERVANTS AND EMPLOYEES (UNLESS THE INDEMNIFIED LOSS IS CAUSED
WHOLLY OR IN PART BY TENANT’S NEGLIGENCE OR INTENTIONAL ACTS, IN WHICH EVENT THIS INDEMNITY SHALL
NOT APPLY TO THE ALLOCABLE SHARE OF SUCH LOSS RESULTING FROM TENANT’S NEGLIGENCE OR INTENTIONAL
ACTS). EXCEPT FOR ANY CLAIMS, RIGHTS OF RECOVERY AND CAUSES OF ACTION THAT LANDLORD HAS RELEASED,
TENANT SHALL INDEMNIFY, PROTECT, HOLD HARMLESS AND DEFEND LANDLORD, ITS AGENTS, EMPLOYEES,
CONTRACTORS, PARTNERS, DIRECTORS, OFFICERS AND ANY AFFILIATES OF THE ABOVE-MENTIONED PARTIES
(COLLECTIVELY THE “LANDLORD AFFILIATES”) FROM AND AGAINST ANY AND ALL OBLIGATIONS, SUITS,
LOSSES, JUDGMENTS, ACTIONS, DAMAGES, CLAIMS OR LIABILITY (INCLUDING, WITHOUT LIMITATION, ALL
COSTS, ATTORNEYS’ FEES, AND EXPENSES INCURRED IN CONNECTION THEREWITH) IN CONNECTION WITH ANY
LOSS, INJURY OR DAMAGE (I) TO ANY PERSON OR PROPERTY WHATSOEVER OCCURRING IN, ON OR ABOUT THE
PREMISES OR ANY PART THEREOF AND/OR OF THE BUILDING OF WHICH THE PREMISES ARE A PART, INCLUDING
WITHOUT LIMITATION ELEVATORS, STAIRWAYS, PASSAGEWAYS OR HALLWAYS, THE USE OF WHICH TENANT MAY HAVE
IN ACCORDANCE WITH THIS LEASE, TO THE EXTENT SUCH INJURY OR DAMAGE SHALL BE CAUSED BY THE ACT,
NEGLECT, FAULT OF, OR OMISSION OF ANY DUTY WITH RESPECT TO THE SAME BY TENANT, ITS AGENTS,
SERVANTS, EMPLOYEES, OR INVITEES (II) ARISING FROM THE CONDUCT OF MANAGEMENT OF ANY WORK DONE BY
TENANT IN OR ABOUT THE PREMISES, (III) ARISING FROM TRANSACTIONS OF TENANT, OR (IV) ARISING FROM A
BREACH, VIOLATION OR NON-PERFORMANCE OF ANY TERM, PROVISION, COVENANT OR AGREEMENT OF TENANT
HEREUNDER, OR A BREACH OR VIOLATION BY TENANT OF ANY COURT ORDER OR ANY LAW, REGULATION, OR
ORDINANCE OF ANY FEDERAL, STATE OR LOCAL AUTHORITY (COLLECTIVELY, THE “LOSSES”), EVEN IF
THE LOSSES ARE CAUSED WHOLLY OR IN PART BY THE NEGLIGENCE OF LANDLORD AND/OR LANDLORD AFFILIATES.
IF ANY CLAIM IS MADE AGAINST LANDLORD OR LANDLORD AFFILIATES, TENANT, AT ITS SOLE COST AND
EXPENSE, SHALL DEFEND ANY SUCH CLAIM, SUIT OR PROCEEDING BY OR THROUGH ATTORNEYS SATISFACTORY TO
TENANT. THE PROVISIONS OF THIS PARAGRAPH 12 SHALL SURVIVE THE EXPIRATION OR TERMINATION OF
THIS LEASE WITH RESPECT TO ANY CLAIMS OR LIABILITY OCCURRING PRIOR TO SUCH EXPIRATION OR
TERMINATION.

     13. USE. The Premises shall be used only for the purpose of receiving, storing,
light manufacturing, shipping and selling (other than retail) products, materials and merchandise
made

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and/or distributed by Tenant and for such other lawful purposes as may be incidental thereto.
Tenant acknowledges that it does not intend to use the Premises to serve the public. Outside
storage, including without limitation, storage of trucks and other vehicles, is prohibited without
Landlord’s prior written consent. Tenant shall comply with (i) all governmental laws, ordinances
and regulations applicable to the use and occupancy of the Premises, and promptly shall comply
with all governmental orders and directives for the correction, prevention and abatement of
nuisances in or upon, or connected with, the Premises, all at Tenant’s sole expense, (ii) the
requirements of all deed restrictions, restrictive covenants and other covenants, conditions and
restrictions affecting the Building and/or the Land, and (iii) the requirements of “Alliance
Development Guidelines” as may exist from time to time, and all amendments thereto. Tenant shall
not permit any objectionable or unpleasant odors, smoke, dust, gas, noise or vibrations to emanate
from the Premises, nor take any other action that would constitute a nuisance or would disturb,
unreasonably interfere with, or endanger Landlord or any other lessees of the Building of which
the Premises are a part.

     Landlord represents that, to its current actual knowledge, the Land is currently zoned “M-1
Light” industrial pursuant to the zoning ordinance of the City of Roanoke, Texas.

     14. INSPECTION. Landlord and Landlord’s agents and representatives shall have the right to
enter the Premises at any time, upon prior reasonable notice, to (i) inspect the Premises, (ii)
make such repairs as may be required or permitted pursuant to this Lease, and (iii) show the
Premises to prospective purchasers of, or parties who are anticipated to provide financing with
respect to, the Building. Notwithstanding the foregoing, Landlord shall have the right to enter the
Premises at any time, without notice to Tenant, in case of an emergency posing a threat to persons
or property. During the period that is six (6) months prior to the end of the Term of this Lease,
upon telephonic notice to Tenant, Landlord and Landlord’s representatives may enter the Premises
during business hours for the purpose of showing the Premises. In addition, Landlord shall have
the right to erect a suitable sign on the Premises stating the Premises are available. Tenant shall
notify Landlord in writing at least thirty (30) days prior to vacating the Premises and shall
arrange to meet with Landlord for a joint inspection of the Premises prior to vacating. If Tenant
fails to give such notice or to arrange for such inspection, then Landlord’s inspection of the
Premises shall be deemed correct for the purpose of determining Tenant’s responsibility for repairs
and restoration of the Premises.

     15. ASSIGNMENT AND SUBLETTING

     A.
 Tenant shall not assign (either voluntarily, nor permit assignment by operation of law),
sublet, transfer or encumber this Lease, or any interest therein, to any third party without the
prior written consent of Landlord (such consent not to be unreasonably withheld); provided,
however, Tenant may assign this Lease or sublet the Premises to any entity that controls, is
controlled by, or is under common control with Tenant (individually, an “Affiliate”). Any
attempted assignment, subletting, transfer or encumbrance by Tenant in violation of the terms and
covenants of this Paragraph shall be void. No assignment, subletting or other transfer, whether
consented to by Landlord or not, shall relieve Tenant of its liability hereunder. In the event
Tenant desires to sublet the Premises, or any portion thereof, or assign this Lease, Tenant shall
give written notice thereof to Landlord within a reasonable time prior to the proposed commencement
date of such subletting or assignment, which notice shall set forth the name of the proposed
sublessee or assignee, the relevant terms of any sublease or assignment and copies of financial
reports and other relevant financial information of the proposed sublessee or assignee. Tenant
shall reimburse Landlord for Landlord’s actual reasonable out-of-pocket expenses and attorneys’
fees for processing and reviewing Tenant’s request for any subletting or assignment.

     B. In addition to, but not in limitation of, Landlord’s right to approve of any sublessee or
assignee, Landlord shall have the option, in its sole discretion, in the event of any subletting or
assignment (other than to an Affiliate), to terminate this Lease, or in case of a subletting of
less than the entire Premises (other than to an Affiliate), to recapture the portion of the
Premises to be sublet, as of the date the subletting or assignment is to be effective. The option
shall be exercised, if at all, by Landlord giving Tenant written notice thereof within sixty (60)
days following Landlord’s receipt of Tenant’s written notice as required above. If this Lease
shall be terminated with respect to the entire Premises pursuant to this Paragraph, the Term of
this Lease shall end on the date stated in Landlord’s notice as the effective date of the

9

 

sublease or assignment as if that date had been originally fixed in this Lease for the expiration
of the Term hereof; provided, however, that effective on such date Tenant shall pay Landlord all
amounts, as estimated by Landlord, payable by Tenant to such date with respect to taxes,
insurance, repairs, maintenance, restoration and other obligations, costs or charges which are the
responsibility of Tenant hereunder. Further, upon any such cancellation Landlord and Tenant shall
have no further obligations or liabilities to each other under this Lease, except with respect to
obligations or liabilities which have accrued hereunder as of such cancellation date (in the same
manner as if such cancellation date were the date originally fixed in this Lease for the
expiration of the Term hereof) and except for those obligations and liabilities which, by the
express terms of this Lease, are to survive any expiration or termination hereof. If Landlord
recaptures only a portion of the Premises under this Paragraph, the Base Rent during the unexpired
Term hereof shall abate proportionately based on the rent per square foot contained in this Lease
as of the date immediately prior to such recapture. Tenant shall, at Tenant’s own cost and
expense, discharge in full any outstanding commission obligation on the part of Landlord with
respect to this Lease, and any commissions which may be due and owing as a result of any proposed
assignment or subletting, whether or not the Premises are recaptured pursuant hereto and rented by
Landlord to the proposed tenant or any other tenant.

     C. Upon the occurrence of an assignment or subletting, whether or not consented to by
Landlord, or mandated by judicial intervention, Tenant hereby assigns, transfers and conveys to
Landlord all rents or other sums received or receivable by Tenant under any such assignment or
sublease, which are in excess of the rents and other sums payable by Tenant under this Lease (or in
case of a sublease, which are in excess of the rents and other sums payable by Tenant with respect
to the portion of the Premises that is subleased), and agrees to pay such amounts to Landlord
within ten (10) days after receipt.

     D. If this Lease is assigned to any person or entity pursuant to the provisions of the United
States Bankruptcy Code, 11 U.S.C. § 101 et. seq. (the
“Bankruptcy Code”), any and all monies or
other consideration payable or otherwise to be delivered in connection with such assignment shall
be paid or delivered to Landlord, shall be and remain the exclusive property of Landlord and shall
not constitute property of Tenant or of the estate of Tenant within the meaning of the Bankruptcy
Code. Any and all monies or other considerations constituting Landlord’s property under the
preceding sentence not paid or delivered to Landlord shall be held in trust for the benefit of
Landlord and be promptly paid or delivered to Landlord. Any person or entity to which this Lease is
assigned pursuant to the provisions of the Bankruptcy Code, shall be deemed, without further act or
deed, to have assumed all of the obligations arising under this Lease on and after the date of such
assignment. Any such assignee shall upon demand execute and deliver to Landlord an instrument
confirming such assumption.

     E. Any assignee, sublessee or transferee of Tenant’s interest in this Lease (all such
assignees, sublessees and transferees being hereinafter referred to as “Transferees’’), by
accepting any such assignment, sublease or transfer shall be deemed to have assumed Tenant’s
obligations hereunder, and shall be deemed to have assumed liability to Landlord for all amounts
paid to persons other than Landlord by such Transferees. No assignment, subletting or other
transfer, whether consented to by Landlord or not or permitted hereunder, shall relieve Tenant of
its liability hereunder. If an Event of Default occurs while the Premises or any part thereof are
assigned or sublet, then Landlord, in addition to any other remedies herein provided, or provided
by law, may collect directly from such Transferee all rents payable to Tenant and apply such rent
against any sums due Landlord hereunder. No such collection shall be construed to constitute a
novation or a release of Tenant from the further performance of Tenant’s obligations hereunder.

     16. CONDEMNATION. If more than fifty percent (50%) of the Premises are taken for any public or
quasi-public use under governmental law, ordinance or regulation, or by right of eminent domain, or
by a conveyance in lieu thereof, and the taking prevents or materially interferes with the use of
the Premises for the purpose for which they were leased to Tenant, this Lease shall terminate and
the rent shall be abated during the unexpired portion of this Lease, effective on the date of such
taking. If less than fifty percent (50%) of the Premises are taken for any public or quasi-public
use under any governmental law, ordinance or regulation, or by right of eminent domain, or by a
conveyance in lieu thereof, this Lease shall not terminate, but the rent payable hereunder during
the unexpired portion of this Lease shall be reduced to such extent as may be fair and reasonable
under all of the circumstances. All compensation awarded in connection with or as a result of any
of the foregoing proceedings shall be the property of

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Landlord; and Tenant hereby assigns any interest in any such award to Landlord; provided, however,
Landlord shall have no interest in any award made to Tenant for loss of business or goodwill or
for the taking of Tenant’s fixtures and improvements, if a separate award for such items is made
to Tenant.

     17. HOLDING OVER. At the termination of this Lease by its expiration or otherwise, Tenant
immediately shall deliver possession of the Premises to Landlord. If, for any reason, Tenant
retains possession of the Premises or any part thereof after such termination, then Landlord may,
at its option, serve written notice upon Tenant that such holding over constitutes either (i) the
creation of a month to month tenancy, upon the terms and conditions set forth in this Lease, or
(ii) creation of a tenancy at sufferance, in any case upon the terms and conditions set forth in
this Lease; provided, however, that the monthly rental (or daily rental under (ii)) shall, in
addition to all other sums which are to be paid by Tenant hereunder, whether or not as additional
rent, be equal to double the rental being paid monthly to Landlord under this Lease immediately
prior to such termination (prorated in the case of (ii) on the basis of a 365-day year for each day
Tenant remains in possession). If no such notice is served, then a tenancy at sufferance shall be
deemed to be created at the rent in the preceding sentence. Tenant shall also pay to Landlord all
damages sustained by Landlord resulting from retention of possession by Tenant, including the loss
of any proposed subsequent tenant for any portion of the Premises. The provisions of this paragraph
shall not constitute a waiver by Landlord of any right of re-entry as herein set forth; nor shall
receipt of any rent or any other act in apparent affirmance of the tenancy operate as a waiver of
the right to terminate this Lease for a breach of any of the terms, covenants, or obligations
herein on Tenant’s part to be performed. No holding over by Tenant, whether with or without
consent of Landlord, shall operate to extend this Lease except as otherwise expressly provided.
The preceding provisions of this Paragraph 17 shall not be construed as consent for Tenant
to retain possession of the Premises in the absence of written consent thereto by Landlord.

     18. QUIET ENJOYMENT. Landlord has the authority to enter into this Lease and so long as Tenant
pays all amounts due hereunder and performs all other covenants and agreements herein set forth,
Tenant shall peaceably and quietly have, hold and enjoy the Premises for the Term hereof without
hindrance from Landlord subject to the terms and provisions of this Lease. If this Lease is a
sublease, then Tenant agrees to take the Premises subject to the provisions of the prior leases.

     19. EVENTS OF DEFAULT. The following events (herein individually referred to as an “Event
of Default”) each shall be deemed to be an event of default by Tenant under this Lease:

     A. Tenant shall fail to pay any installment of the Base Rent herein reserved when due, or any
other payment or reimbursement to Landlord required herein when due, and such failure shall
continue for a period of five (5) days after written notice to Tenant.

     B. Tenant shall: (i) become insolvent; (ii) admit in writing its inability to pay its debts;
(iii) make a general assignment for the benefit of creditors; (iv) commence any case, proceeding or
other action seeking to have an order for relief entered on its behalf as a debtor or to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or of any substantial part of its property; or (v) take
any action to authorize or in contemplation of any of the actions set forth above in this
Paragraph.

     C. Any case, proceeding or other action against Tenant or any guarantor of Tenant’s
obligations hereunder shall be commenced seeking: (i) to have an order for relief entered against
it as debtor or to adjudicate it a bankrupt or insolvent; (ii) reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors; (iii) appointment of a receiver,
trustee, custodian or other similar official for it or for all or any substantial part of its
property, and such case, proceeding or other action (a) results in the entry of an order for relief
against it which is not fully stayed within seven (7) business days after the entry thereof or (b)
shall remain undismissed for a period of forty-five (45) days.

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     D. Tenant shall (i) fail to take possession of the Premises within thirty (30) days of
substantial completion of the Leasehold Improvements, (ii) vacate, desert, or abandon all or a
substantial portion of the Premises, or threaten to do so or (iii) fail to continuously operate its
business at the Premises for the permitted use set forth herein, whether or not Tenant is in
default in payment of the rental payments due under this Lease.

     E. Tenant shall fail to promptly discharge any lien placed upon the Premises in violation of
Paragraph 22 hereof.

     F. Tenant shall fail to comply with any term, provision or covenant of this Lease (other than
those listed above in this Paragraph 19), and shall not cure such failure within twenty
(20) days after written notice thereof to Tenant; provided, however, if such failure cannot through
the exercise of reasonable diligence be cured within such twenty (20) days, an Event of Default
shall not be deemed to have occurred under this Paragraph 19F so long as Tenant commences
it curative efforts within such twenty (20)-day period and diligently prosecutes same to
completion.

     G. Tenant, its bankruptcy trustee, or any entity authorized by court order to act on behalf of
Tenant, shall reject this Lease under 11 U.S.C. sec. 365(a) or any other provision of Title 11 of
the United States Code, or the deemed rejection of this Lease by operation of law under 11 U.S.C.
sec. 365(d)(4). Any such rejection of this Lease terminates this Lease, without notice of any kind
to Tenant, effective on the later of: (1) the date Tenant vacates the Premises following such
rejection; (2) the date the Bankruptcy Court with jurisdiction over Tenant’s bankruptcy case enters
an order on its docket authorizing Tenant to reject this Lease; or (3) the date this Lease is
deemed rejected under 11 U.S.C. sec. 365(d)(4).

     20. REMEDIES.

     A. Upon each occurrence of an Event of Default, Landlord shall have the option to pursue,
without any notice or demand, (except as expressly provided otherwise herein) any one or more of
the following remedies and/or any other remedies to which Landlord is entitled at law or in
equity:

     (1) Terminate this Lease, in which event Tenant shall immediately surrender the
Premises to Landlord. If Tenant fails to do so, Landlord may, without any further notice
and without prejudice to any other remedy Landlord may have for possession or arrearages in
rental, enter upon and take possession of the Premises and remove Tenant and its effects
without being liable for prosecution or any claim for damages therefor, and Tenant shall
indemnify Landlord for all loss and damage which Landlord may suffer by reason of such
termination, whether through inability to relet the Premises or otherwise, including any
loss of rental for the remainder of the Term.

     (2) If the Event of Default relates to nonpayment of Base Rent or any other monetary
sum due hereunder, or the desertion, vacation or abandonment of the Premises, terminate
this Lease, in which event Tenant’s default shall be deemed a total and entire breach of
Tenant’s obligations under this Lease and Tenant immediately shall become liable for
damages in an amount equal to the excess of (i) the total rental for the remainder of the
Term, discounted at the Prime Rate (hereinafter defined) to the then present value,
together with all other actual and reasonable expenses incurred by Landlord in connection
with Tenant’s default, all sums due pursuant to Paragraph 20B below, and the unpaid
rental due as of the date of termination, over (ii) the fair market rental value of the
Premises for the balance of the Term, discounted at the Prime Rate to the then present
value. For the purposes of clause (i) above, the components of monthly rent (other than
Base Rent) for the remainder of the Term shall be deemed to be equal to the respective
monthly amounts thereof as were due and payable during the month in which the Lease was
terminated. It is acknowledged, intended and agreed that the amounts which Landlord is
entitled to recover under this Paragraph 20A(2) constitute liquidated damages and
not a penalty for Tenant’s defaults related to nonpayment of rental, or the desertion,
vacation or abandonment of the Premises. Such amounts constitute the parties’ best, good
faith, and reasonable estimate of the damages which

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would be suffered by Landlord in the event any such default occurs, the exact amount of
such damages being difficult or impractical to calculate.

     (3) Enter upon and take possession of the Premises as Tenant’s agent without
terminating this Lease and without being liable for prosecution or any claim for damages
therefor, and Landlord may relet the Premises as Tenant’s agent and receive the rental
therefor, in which event Tenant shall pay to Landlord on demand all sums due pursuant to
Paragraph 20B below, together with any deficiency that may arise by reason of such
reletting.

     (4) Do whatever Tenant is obligated to do under this Lease and enter the Premises,
without being liable for prosecution or any claim for damages therefor, to accomplish such
purpose. Tenant shall reimburse Landlord immediately upon demand for any expenses which
Landlord incurs in thus effecting compliance with this Lease on Tenant’s behalf, together
with interest thereon at the highest lawful rate from the date Landlord incurs the expense
in question until Landlord is reimbursed therefor.

     (5) Require Tenant to pay any rental in quarterly installments in advance of each
calendar quarter during the Term by certified or cashier’s check.

     (6) With twenty-four (24) hours prior notice, alter the locks and any other security
device or devices which allow Tenant access to the Premises or the Building of which the
Premises form a part, and Landlord shall not be required to provide a new key or right of
access to Tenant, and restrict or terminate any right to use parking facilities associated
with the Building as well as utility services to the Premises. This Paragraph
20A(6) is intended to and shall supersede the provisions of Section 93.002 of the Texas
Property Code.

     B. Upon the occurrence of an Event of Default, in addition to any other sum provided to be
paid herein, Tenant also shall be liable for and shall pay to Landlord: (i) brokers’ fees incurred
by Landlord in connection with reletting the whole or any part of the Premises to the extent such
brokers’ fees (if calculated based on the term of the lease for the reletting) are attributable to
the remainder of the Term of this Lease; (ii) the costs of removing and storing Tenant’s or other
occupant’s property; (iii) the costs of repairing, altering, remodeling or otherwise putting the
Premises into condition acceptable to a new tenant or tenants; (iv) all reasonable expenses
incurred in marketing the Premises and (v) all reasonable expenses incurred by Landlord in
enforcing or defending Landlord’s rights and/or remedies. If either party hereto institutes any
action or proceeding to enforce any provision hereof by reason of any alleged breach of any
provision of this Lease, the prevailing party shall be entitled to receive from the losing party
all actual and reasonable attorneys’ fees and all court costs in connection with such proceeding.
If Tenant files a voluntary petition under any chapter of title 11 of the United States Code, or if
an involuntary petition is filed against Tenant seeking relief under any chapter of title 11 of the
United States Code, Tenant acknowledges that Landlord may, at its option, retain an attorney to
represent Landlord in such bankruptcy case and all attorneys’ fees and expenses (including expenses
of consulting or testifying expert witnesses) incurred by Landlord in connection with such
bankruptcy case shall be recoverable by Landlord as additional rent under this Lease and shall
constitute part of the cure required under 11 U.S.C. sec. 365(b)(l)(A) if Tenant seeks to assume or
assume and assign this Lease.

     C. In the event Tenant fails to make any payment due hereunder when payment is due, to help
defray the additional cost to Landlord for processing such late payments, Tenant shall pay to
Landlord on demand a late charge in an amount equal to five percent (5%) of such payment; and the
failure to pay such amount within five (5) days after demand therefor shall be an additional Event
of Default hereunder. The provision for such late charge shall be in addition to all of Landlord’s
other rights and remedies hereunder or at law and shall not be construed as liquidated damages or
as limiting Landlord’s remedies in any manner.

     D. Exercise by Landlord of any one or more remedies hereunder granted or otherwise available
shall not be deemed to be an acceptance of surrender of the Premises by Landlord, whether by
agreement or by operation of law, it being understood that such surrender can be effected only by
the written agreement of Landlord and Tenant. Tenant and Landlord further agree that forbearance
by Landlord to enforce its rights pursuant to this Lease, at law or

13

 

in equity, shall not be a waiver of Landlord’s right to enforce one or more of its rights in
connection with that or any subsequent default.

     E. The term “Prime Rate” as used herein shall mean the per annum “prime rate” of
interest as published, on the date on which this Lease is terminated in accordance with this
Paragraph 20, by The Wall Street Journal, Southwest Edition, in its listing of “Money
Rates”, or if The Wall Street Journal is not published on the date on which this Lease is
terminated, then the “prime rate” of interest as published in The Wall Street Journal on the most
recent date prior to the date on which this Lease is so terminated or, if The Wall Street Journal
has ceased publication and does not have a comparable successor as of the date on which this Lease
is terminated, then the “Prime Rate” as used herein shall mean the prime rate of interest
announced from time to time by Bank One Texas, N.A.

     F. If Landlord fails to perform any of its obligations hereunder within thirty (30) days after
written notice from Tenant specifying in detail such failure (or if the failure cannot be
corrected, through the exercise of reasonable diligence, within such thirty (30)-day period, if
Landlord does not commence to correct same within such thirty (30)-day period and thereafter
diligently prosecute same to completion), Tenant’s sole and exclusive remedy shall be an action for
damages. Unless and until Landlord fails to so cure any default after such notice, Tenant shall
not have any remedy or cause of action by reason thereof. All obligations of Landlord hereunder
will be construed as covenants, not conditions; and all such obligations will be binding upon
Landlord only during the period of its possession of the Premises and not thereafter. The term
“Landlord” shall mean only the owner, for the time being of the Premises, and in the event of the
transfer by such owner of its interest in the Premises, such owner shall thereupon be released and
discharged from all covenants and obligations of Landlord thereafter accruing, but such covenants
and obligations shall be binding during the Term of this Lease upon each new owner for the duration
of such owner’s ownership. Notwithstanding any other provision hereof, Landlord shall not have any
personal liability hereunder. In the event of any breach or default by Landlord of any term or
provision of this Lease, Tenant agrees to look solely to the equity or interest then owned by
Landlord in the Premises or of the Building of which the Premises are a part; however, in no event,
shall any deficiency judgment of any kind be sought or obtained against Landlord.

     G. If Landlord repossesses the Premises pursuant to the authority herein granted, then
Landlord shall have the right to (i) keep in place and use or (ii) remove and store, all of the
furniture, fixtures and equipment at the Premises, including that which is owned by or leased to
Tenant at all times prior to any foreclosure thereon by Landlord or repossession thereof by any
landlord thereof or third party having a lien thereon. Landlord also shall have the right to
relinquish possession of all or any portion of such furniture, fixtures, equipment and other
property to any person (“Claimant”) who presents to Landlord a copy of any instrument
represented by Claimant to have been executed by Tenant (or any predecessor of Tenant) granting
Claimant the right under various circumstances to take possession of such furniture, fixtures,
equipment or other property, without the necessity on the part of Landlord to inquire into the
authenticity or legality of said instrument. The rights of Landlord herein stated shall be in
addition to any and all other rights that Landlord has or may hereafter have at law or in equity;
and Tenant stipulates and agrees that the rights herein granted Landlord are commercially
reasonable.

     H. Notwithstanding anything in this Lease to the contrary, all amounts payable by Tenant to
or on behalf of Landlord under this Lease, whether or not expressly denominated as rent, shall
constitute rent.

     I. This is a contract under which applicable law excuses Landlord from accepting performance
from (or rendering performance to) any person or entity other than Tenant.

     21. MORTGAGES. Tenant accepts this Lease subject and subordinate to any mortgages and/or deeds
of trust now or at any time hereafter constituting a lien or charge upon the Premises or the
improvements situated thereon or the Building of which the Premises are a part; provided, however,
that if the mortgagee, trustee, or holder of any such mortgage or deed of trust elects to have
Tenant’s interest in this Lease superior to any such instrument, then by notice to Tenant from such
mortgagee, trustee or holder, this Lease shall be deemed superior to such lien, whether this Lease
was executed before or after said mortgage or deed of trust. Tenant, at

14

 

any time hereafter on demand, shall execute any instruments, releases or other documents that may
be reasonably required by any mortgagee, trustee or holder for the purpose of subjecting and
subordinating this Lease to the lien of any such mortgage or deed of trust (Tenant hereby agreeing
that an instrument in the form of Exhibit “H” attached hereto and made a part hereof is acceptable
to Tenant for such purpose). If any future mortgagee or beneficiary under a mortgage or deed of
trust hereafter placed upon the Building desires to subordinate its mortgage or deed of trust to
this Lease, Tenant agrees that it shall promptly execute such instruments as may be reasonably
required by such mortgagee or beneficiary in order to effect such subordination.

     22. MECHANIC’S LIENS. Tenant has no authority, express or implied, to create or place any lien
or encumbrance of any kind or nature whatsoever upon, or in any manner to bind, the interest of
Landlord or Tenant in the Premises or to charge the rentals payable hereunder for any claim in
favor of any person dealing with Tenant, including those who may furnish materials or perform labor
for any construction or repairs. Tenant covenants and agrees that it will pay or cause to be paid
all sums legally due and payable by it on account of any labor performed or materials furnished in
connection with any work performed on the Premises and that it will save and hold Landlord harmless
from any and all loss, cost or expense based on or arising out of asserted claims or liens against
the leasehold estate or against the right, title and interest of Landlord in the Premises or under
the terms of this Lease. Tenant agrees to give Landlord immediate written notice of the placing
of any lien or encumbrance against the Premises.

     23. HAZARDOUS MATERIALS.

     A. Tenant shall never incorporate into, or dispose of, at, in or under the Premises, the
Building or the Land any toxic or hazardous materials. Tenant further agrees not to use at, place
in, or store at the Premises any toxic or hazardous materials, except for those toxic or hazardous
materials that are either (a) office supplies or (b) kitchen cleaning materials that are generally
considered to be a household cleaner and are purchased in a container not larger than one (1)
gallon and then only if (i) all such toxic or hazardous materials, supplies and materials are
properly labeled and contained, (ii) all such toxic or hazardous materials are stored, handled,
transported and disposed of in accordance with highest accepted industry standards and all
applicable laws, rules and regulations, and (iii) if a material safety data sheet is required under
applicable laws to accompany the toxic or hazardous materials, supplies or materials, a copy of
such current material safety data sheet is provided to Landlord. For purposes of this Lease, “toxic
or hazardous materials” shall mean hazardous or toxic chemicals or any materials containing
hazardous or toxic chemicals at levels or content which cause such materials to be classified as
hazardous or toxic as then prescribed by the highest industry standards or by the then current
levels or content as set from time to time by the U.S. Environmental Protection Agency
(“EPA”) or the U.S. Occupational Safety and Health Administration (“OSHA”) or as
defined under 29 CFR 1910 or 29 CFR 1925 or other applicable governmental laws, rules or
regulations. In the event there is a spill of toxic or hazardous materials (other than permitted
office supplies and kitchen cleaning supplies) at the Premises, the Building or the Land, Tenant
shall notify Landlord of the method, time and procedure for any clean-up and removal of such toxic
or hazardous materials; and, Landlord shall have the right to require reasonable changes in such
method, time or procedure. In the event there is a spill of a toxic or hazardous material that
comes from office supplies in the Premises, Tenant shall notify Landlord if the spill would in any
way endanger or pose a threat to Tenant’s employees, Building maintenance or custodial personnel,
other Building tenants or the general public. In the event of any breach of this provision by
Tenant or any contamination of the Premises, the Building or the Land, by Tenant, Tenant shall pay
all costs for the removal or abatement or clean-up of any toxic or hazardous materials at the
Premises, the Building and the Land. If any lender or governmental agency shall ever require
testing to ascertain whether or not there has been any release of hazardous materials caused by
Tenant, then the reasonable costs thereof shall be reimbursed by Tenant to Landlord upon demand as
additional charges, unless the testing determines the hazardous material was not caused by Tenant
or persons acting under Tenant. In addition, Tenant shall execute affidavits, representations and
the like from time to time at Landlord’s reasonable request concerning Tenant’s best knowledge and
belief regarding the presence of hazardous substances or materials on the Premises. In all events,
Tenant shall indemnify Landlord in the manner elsewhere provided in this Lease from any release of
hazardous materials on the Premises occurring while Tenant is in possession or elsewhere if caused
by Tenant or persons acting under Tenant.

15

 

     B. Landlord represents and warrants to Tenant as of the date hereof that to Landlord’s current
actual knowledge there is no environmental contamination of the Land other than as disclosed in the
Phase I Environmental Site Assessment dated July 22, 2002, prepared by HBC Engineering
(“Environmental Report”) a copy of which Environmental Report has been provided to Tenant;
provided, however, Landlord makes no representation or warranty regarding the accuracy of the
findings, conclusions or recommendations contained in the Environmental Report or the
qualifications of the consultant who prepared the Environmental Report. The term “Landlord’s
current actual knowledge” and terms of similar import shall be construed to mean the actual
knowledge (and not constructive knowledge) of Robert Alter and Tony Creme.

     C. This Paragraph 23 shall survive the expiration or any termination of this Lease.

     24. MISCELLANEOUS.

     A. Words of any gender used in this Lease shall be held and construed to include any other
gender, and words in the singular number shall be held to include the plural, unless the context
otherwise requires. The captions inserted in this Lease are for convenience only and in no way
define, limit or otherwise describe the scope or intent of this Lease, or any provision hereof, or
in any way affect the interpretation of this Lease.

     B. The terms, provisions and covenants contained in this Lease shall run with the land and
shall apply to, inure to the benefit of, and be binding upon, the parties hereto and upon their
respective heirs, executors, personal representatives, legal representatives, successors and
assigns, except as otherwise herein expressly provided. Landlord shall have the right to transfer
and assign, in whole or in part, its rights and obligations in the Building and property that are
the subject of this Lease. Upon any Landlord’s conveyance of the Building or the Land, and the
assignment of its rights under this Lease, to another party (“Successor”), such Landlord
shall be released from its obligations hereunder and the Successor shall become the “Landlord”
hereunder from and after the date of any such conveyance and assignment and shall thereafter have
all of the rights and obligations of Landlord hereunder, in accordance with the terms hereof,
during the period of its ownership of the Building. Each party agrees to furnish to the other,
promptly upon demand, a corporate resolution, proof of due authorization by partners, or other
appropriate documentation evidencing the due authorization of such party to enter into this Lease.

     C. Neither Tenant nor Landlord shall be held responsible for delays in the performance of
their respective obligations hereunder when such delays are caused by material shortages, weather,
acts of God, labor disputes or other causes beyond the reasonable control of Tenant or Landlord, as
the case may be (collectively, the “Force Majeure Delays”); provided, however, the
foregoing shall be inapplicable to and shall not in any way excuse Tenant’s or Landlord’s failure
to timely pay Base Rent, other rent or other monetary amount, as applicable, due hereunder from one
party to the other at the time such payments are due.

     D. Tenant agrees, from time to time, within ten (10) days after request by Landlord, to
deliver to Landlord or Landlord’s designee, a certificate of occupancy, financial statements and an
estoppel certificate stating (1) that this Lease is in full force and effect, (2) the date to which
rent is paid, (3) that there is no default on the part of Landlord or Tenant under this Lease, (4)
that Tenant does not have any right of offset, claims or defenses to the performance of its
obligations under this Lease, and (5) such other factual matters pertaining to this Lease as may be
reasonably requested by Landlord. Tenant hereby irrevocably appoints Landlord as attorney-in-fact
for Tenant with full power and authority to execute and deliver in the name of Tenant such estoppel
certificate if Tenant fails to deliver the same within such ten (10) day period and such
certificate as signed by Landlord or Landlord’s designee, as the case may be, shall be fully
binding on Tenant, if Tenant fails to deliver a contrary certificate within five (5) days after
receipt by Tenant of a copy of the certificate executed by Landlord or Landlord’s designee, as the
case may be, on behalf of Tenant.

     E. This Lease constitutes the entire understanding and agreement of Landlord and Tenant with
respect to the subject matter of this Lease, and contains all of the covenants and agreements of
Landlord and Tenant with respect thereto. Landlord and Tenant each acknowledge that no
representations, inducements, promises or agreements, oral or written, have been made by Landlord
or Tenant, or anyone acting on behalf of Landlord or Tenant, which are

16

 

not contained herein, and any prior agreements, promises, negotiations, or representations not
expressly set forth in this Lease are of no force or effect. This Lease may not be altered,
changed or amended except by an instrument in writing signed by both parties hereto.

     F. All obligations of Tenant hereunder not fully performed as of the expiration or earlier
termination of the Term of this Lease shall survive the expiration or earlier termination of the
Term hereof, including without limitation, all payment obligations with respect to taxes and
insurance and all obligations concerning the condition and repair of the Premises. Upon the
expiration or earlier termination of the Term hereof, Tenant shall pay to Landlord any amount
reasonably estimated by Landlord as necessary to put the Premises, including without limitation,
all heating and air conditioning systems and equipment thereon, in good condition and repair,
reasonable wear and tear excluded. Tenant shall also, prior to vacating the Premises, pay to
Landlord the amount, as estimated by Landlord, of Tenant’s obligation hereunder for real estate
taxes and insurance premiums, common area maintenance, utility and other charges for the year in
which the Lease expires or terminates. All such amounts shall be used and held by Landlord for
payment of such obligations of Tenant hereunder, with Tenant being liable for any additional costs
therefor upon demand by Landlord, or with any excess to be returned to Tenant after all such
obligations have been determined and satisfied as the case may be. Any security deposit held by
Landlord shall be credited against the amounts due from Tenant under this Paragraph 24F.

     G. If any clause or provision of this Lease is illegal, invalid or unenforceable under present
or future laws effective during the Term of this Lease, 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 it is
also the intention of the parties to this Lease that in lieu of each clause or provision of this
Lease that is illegal, invalid or unenforceable, there be added, as a part of this Lease, 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.

     H. All references in this Lease to “the date hereof” or similar references shall be deemed to
refer to the last date, in point of time, on which all parties hereto have executed this Lease.

     I. Tenant represents and warrants that it has dealt with no broker, agent or other person in
connection with this transaction and that no broker, agent or other person brought about this
transaction, other than the broker or agent identified in the Basic Lease Information, and Tenant
agrees to indemnify and hold Landlord harmless from and against any claims by any other broker,
agent or other person claiming a commission or other form of compensation by virtue of having
dealt with Tenant with regard to this leasing transaction.

     J. If and when included within the term “Landlord”, as used in this instrument, there is more
than one person, firm or corporation, all shall jointly arrange among themselves for their joint
execution of a notice specifying some individual at some specific address for the receipt of
notices and payments to Landlord. If and when included within the term “Tenant”, as used in this
instrument, there is more than one person, firm or corporation, all shall jointly arrange among
themselves for their joint execution of a notice specifying some individual at some specific
address within the continental United States for the receipt of notices and payments to Tenant.
All parties included within the terms “Landlord” and “Tenant”, respectively, shall be bound by
notices given in accordance with the provisions of Paragraph 25 hereof to the same effect
as if each had received such notice.

     K. By taking possession of the Premises, Tenant shall be deemed to have: (a) acknowledged that
the Premises and the improvements to be constructed pursuant to Exhibit “C” attached hereto
are substantially complete except for “punch list” items (if any) and are accepted “as is” and
“with all faults”; (b) accepted the Premises as suitable for the purposes for which the Premises
are leased; and (c) acknowledged that the Premises are in a good and satisfactory condition.
Landlord expressly disclaims, and Tenant hereby waives to the full extent permitted by law, any implied warranty that the Premises or the Building are suitable for Tenant’s intended commercial
purpose, and any and all other implied warranties (whether arising by virtue of statute, case law
or otherwise). The foregoing shall not be construed to relieve Landlord from its obligations which
are expressly set forth in this Lease.

17

 

     L. Submission of this Lease shall not be deemed to be a reservation of the Premises. Landlord
shall not be bound hereby until its delivery to Tenant of an executed copy hereof signed by
Landlord, already having been signed by Tenant, and until such delivery Landlord reserves the
right to exhibit and lease the Premises to other prospective tenants. Notwithstanding anything
contained herein to the contrary, Landlord may withhold delivery or possession of the Premises
from Tenant until such time as Tenant has paid to Landlord the security deposit required by
Paragraph 2B hereof and one month’s rent as set forth in Paragraph 2A hereof.

     M. Landlord and Tenant agree that the terms and conditions of this Lease are confidential and
the parties hereto agree not to disclose the terms of this Lease to any third party (other than to
its attorneys and accountants and other than to parties who propose to purchase or finance the
Building, or the Project of which the Building forms a part, or who propose to become investors in
Landlord) except as may be required by law or by the order of a court of competent jurisdiction.

     N. [Intentionally Omitted]

     O. Tenant agrees that Landlord or an affiliate of Landlord may include Tenant’s name and logo
in marketing literature for the Alliance development, the Circle T development, and other
developments owned and/or operated by Landlord or an affiliate of Landlord, for the limited
purpose of informing third parties that Tenant is occupying the Project or the larger development
of which the Project is a part.

     25. NOTICES. Each provision of this instrument or of any applicable governmental laws,
ordinances, regulations and other requirements with reference to the sending, mailing or delivering
of notice or the making of any payment by Landlord to Tenant, or with reference to the sending,
mailing or delivering of any notice or the making of any payment by Tenant to Landlord, shall be
deemed to be complied with when and if the following steps are taken:

     (a) All rent and other payments required to be made by Tenant to Landlord hereunder
shall be payable to Landlord at the address for Landlord set forth in the Basic Lease
Information or at such other address as Landlord may specify from time to time by written
notice delivered in accordance herewith. Tenant’s obligation to pay rent and any other
amounts to Landlord under the terms of this Lease shall not be deemed satisfied until such
rent and other amounts have been actually received by Landlord. In addition to Base Rent
due hereunder, all sums of money and all payments due Landlord hereunder shall be deemed to
be additional rental owed to Landlord.

     (b) All payments required to be made by Landlord to Tenant hereunder shall be payable
to Tenant at the address set forth in the Basic Lease Information, or at such other address
within the continental United States as Tenant may specify from time to time by written
notice delivered in accordance herewith.

     (c) Any written notice or document required or permitted to be delivered hereunder
shall be deemed to be delivered, whether actually received or not, when deposited in the
United States Mail, postage prepaid, Certified or Registered Mail, addressed to the parties
hereto at the respective addresses set out in the Basic Lease Information, or at such other
address as they have theretofore specified by written notice delivered in accordance
herewith.

     26. LANDLORD’S LIEN. In addition to any statutory lien for rent in Landlord’s favor,
Landlord shall have and Tenant hereby grants to Landlord, subject to any existing liens, a
continuing security interest, to secure payment of all rentals and other sums of money becoming due
hereunder from Tenant and for the performance of all of its other obligations hereunder, upon all
equipment, fixtures, and furniture now or hereafter situated at the Premises, and such property
shall not be removed therefrom without the consent of Landlord until all arrearages in rent as well
as any and all other sums of money then due to Landlord hereunder shall first have been paid and
discharged and all other obligations of Tenant have been fully performed and discharged. In the
event any of the foregoing described property is removed from the Premises in violation of the
covenant in the preceding sentence, the security interest shall continue in such property and all
proceeds and products, regardless of location. Upon the occurrence of an Event of Default
hereunder, or upon Tenant’s threatened breach of its obligations hereunder (including,

18

 

without limitation, any threatened vacation or abandonment of the Premises), in addition to all
other rights and remedies, Landlord shall have all rights and remedies under the Uniform
Commercial Code, including without limitation, the right to sell the property described in this
Paragraph at public or private sale upon five (5) days’ notice by Landlord. Tenant hereby agrees
to execute such other instruments, necessary or desirable under applicable law, to perfect the
security interest hereby created. Landlord and Tenant agree that this Lease and security agreement
serves as a financing statement and that a copy, photographic or other reproduction of this
portion of this Lease may be filed of record by Landlord and have the same force and effect as the
original. This security agreement and financing statement also covers fixtures located at the
Premises subject to this Lease and legally described in Exhibit “A” attached hereto and
incorporated herein by reference and is to be filed for record in the real estate records. The
record owner of this property is Landlord. Concurrently with the execution hereof, Tenant shall
execute and deliver to Landlord a financing statement in the form attached hereto as Exhibit
“E”.

     27. PARKING. Landlord shall provide Tenant approximately one hundred twenty (120) vehicular
parking spaces on the surface parking lot (the “Parking Lot”) constructed on the Land in front of
the Building as generally depicted on Exhibit “A” attached hereto and incorporated herein
by reference. Additional parking will be available to Tenant at the rear of the Building as
generally shown on Exhibit “A”. During the Term of this Lease, Tenant shall be permitted to
use all of the vehicular parking spaces located on the Parking Lot, subject to such terms,
conditions and regulations as are from time to time applicable to patrons of the Parking Lot. The
parking spaces in the Parking Lot shall be made available to Tenant on a first-come first-served
basis, it being agreed that Landlord shall have no obligation to patrol, police, or monitor the
Parking Lot or to take any other actions to ensure that Tenant has the use of all such parking
spaces.

     28. ADDITIONAL
PROVISIONS. See Exhibits “A” – “I” attached hereto and
incorporated by reference herein.

     EXECUTED BY LANDLORD, this 22nd day of September, 2003.

	 	 	 	 	 	 	 	 	 	 	 

	 	 	ALLIANCE GATEWAY NO. 58, LTD., 
a Texas limited
partnership	 	 
	 
	 	 	By:	 	Hillwood Alliance Management, L.P., 
a
Texas limited partnership, 
its general
partner	 	 
	 
	 	 	 	 	By:	 	Hillwood Alliance GP, LLC,

a Texas limited liability company, 
its
general partner	 	 
	 
	 
	 	 	 	 	 	By:	 	/s/ Michael K. Berry
 
	 	 
	 
	 	 	 	 	 	Name:	 	Michael K. Berry	 	 
	 
	 	 	 	 	 	Its:	 	Exec. Vice President	 	 

     EXECUTED BY TENANT, this 22 day of September, 2003.

	 	 	 	 	 	 	 

	 	 	VICTOR EQUIPMENT COMPANY,	 	 
	 	 	a Delaware corporation	 	 
	 
	 
	 	By:	 	/s/ James H. Tate
 
	 	 
	 
	 	Name:	 	James H. Tate	 	 
	 
	 	Its:	 	Sr. V.P. & CFO	 	 

19

 

EXHIBIT “A”

A-1

 

EXHIBIT“B”

Exhibit B

Land

BEING a tract of land situated in the J. Short Survey, Abstract No. 1236 and the L. Dotson Survey,
Abstract No. 392, City of Roanoke, Denton County,
Texas and being a portion of those
tracts of land as described by deed to  All Investment, L.P. and recorded in Volume 425a, Page
137, Volume 4785, Page 868, and Volume 4577, Page 1295, and all of that tract of land as described
by deed to Alliance Gateway No. 58, Ltd. And recorded in Volume 5132, Page 687, all of Real
Property Records of Denton County, Texas, said tract of land being
more particularly described by metes and bounds as follows:

BEGINNING
at a 5/8 inch iron rod with cap stamped “Carter & Burgees” found at the
southeast corner or Lot 1, Block 4, Alliance Gateway North Addition as recorded in Cabinet 5, Page 15,
said Plat Records of Denton County, Texas, also the northeast corner of said Alliance Gateway No.
58, Ltd. tract, said point being in the westerly right-of-way line of
Freedom Drive (80 min.
right-of-way);

THENCE along said westerly right-of-way line of said Freedom
Drive, the following bearings and
distances;

S 00 deg, 00 min. 57 sec. E, 299.68 feet to a 5/8 inch iron rod with cap stamped
“Carter & Burgees” set, the beginning of a curve to
the left;

[ILLEGIBLE] feet along the arc of said curve to the left through a central angle of 10 deg. 24 min. 07
sec., a radius of 1040.00 feet and a long chord of S.0S deg. 13 min.
01 sec. E,
180.55 feet to a 5/8 inch from rod with cap stamped “Carter
& Burgees” set;

S 10 deg. 25 min. 04 sec. E, 30.97 feet to a 5/8 inch iron rod with cap stamped
“Carter & Burgees” set, the beginning of a curve to
the right;

47.12 feet along the arc of said curve to the right through a central angle of 90 deg. 00 min. 00
sec., a radius of 30.00 feet and a long chord of S 24 deg. 34 min. 56 sec. W, 42.43
feet to a 5/8 inch iron rod with cap stamped “Carter &
Burgees” set in the northerly
right-of-way line of Honriotta Creek road;

THENCE
along the northerly right-of-way line of said Henrietta Creek road, the following
bearings and distances:

S 79 deg.
34 min. 56 sec. W, 178.56 feet to a 5/8 inch iron rod with cap
stamped “Carter &
Burgees” set, the beginning of a curve to the right;

191.44 feet along the arc of said curve to the right through a central angle of 10 deg. 38 min. 57
sec., a radius of 1010.00 feet and a long chord of a 8.84 deg. 54
min. 24 sec. W, 191.16 feet to a 5/8 inch iron rod with cap stamped
“Carter & Burgees” set;

N 59 deg.
46 min. 08 sec. W, 061.51 feet to a 5/8 inch iron rod with cap
stamped “Carter
& Burgees” set; the beginning of a curve to the left;

244.68 feet along the arc of said curve to the right through a central angle of 07 deg. 09 min. 09
sec., a radius of 1960.00 feet and a long chord of N 86 deg. 11 min. 33 sec. W, 244.52 feet
to a 5/8 inch iron rod with cap stamped “Carter & Burgees” set, the beginning of a reverse
curve to the left;

6.21 feet along the arc of said reverse curve to the left through a central angle of 00 deg. 10
min. 28 sec., a radius of 2040.00 feet and a long chord of N 02 deg. 42 min. 12 sec.
W, 6.21 feet to a 5/8 inch iron rod with cap stamped “Carter
& Burgees” set in the
easterly line of Alliance Gateway-Phase III Association, Inc. tract as recorded in Volume 4915,
Page 1412, said County Records;

THENCE
along the easterly line of said Alliance Gateway-Phase III Association, Inc. tract, the
following bearings and distances.

N 00 deg.
00 min. 57 sec. W, 161.12 feet to a 5/8 inch iron rod with cap
stamped “Carter &
Burgees” set, the beginning of a curve to the right;

159.04 feet along the arc of said curve to the right through a central angle of 53 deg. 36 min. 03
sec., a radius of 170.00 feet and a long chord of N 26 deg. 47 min. 05 sec. S , 183.30 feet
to a 5/8 inch iron rod with cap stamped “Carter & Burgees” set, the beginning of a reverse
curve to the left;

315.17 feet along the arc of said reverse curve to the left through a central angle of 53 deg.
36 min. 03 sec., a radius of 230.00 feet and a long chord of N 26 deg. 47 min. 08 sec. Y
207.41 feet to a 5/8 inch iron rod with cap stamped “Carter
& Burgees” set;

N 00 deg.
00 min. 57 sec. W, 115.98 feet to a 5/8 inch iron rod with cap
stamped “Carter &
Burgees” set, the southwest corner of the aforementioned lot 1,
Blook 4, Alliance Gateway North Addition;

THENCE N
85 deg. 59 min. 03 sec. E 1315.00 feet along said southerly line to the POINT OF
BEGINNING and containing 045.240 square feet or 19.427 acres of land,
more or less.

B- 1

 

EXHIBIT “C” 

LEASEHOLD IMPROVEMENTS

     1. WORKING DRAWINGS. Landlord shall cause to be prepared plans, specifications and
construction drawings of all improvements for the Premises
(“Leasehold Improvements”) which
Leasehold Improvements are generally described on Exhibit C-1 attached hereto and made a
part hereof.

     Landlord shall submit such plans, specifications and construction drawings to Tenant for its review
and approval. Tenant agrees that it shall not unreasonably withhold or delay giving its approval of
such submitted plans, specifications and construction drawings. If Tenant has not given Landlord
written notice of its disapproval of such plans, specifications and construction drawings within
five (5) business days after they are submitted to Tenant, then Tenant shall be deemed to have
approved the submitted plans, specifications and construction drawings. As used herein,
“Working Drawings” shall mean the final plans, specifications and construction drawings
which are prepared by Landlord and which are approved by Tenant (or deemed approved by Tenant), as
amended from time to time by any approved changes thereto, and “Work” shall mean the work required
to construct and install all Leasehold Improvements to be constructed in accordance with and as
indicated on the Working Drawings. Preparation by Landlord of the Working Drawings shall not be a
representation or warranty of Landlord, and shall create no responsibility or liability on the part
of Landlord, with respect to their adequacy for any use, purpose or condition, their completeness,
design sufficiency, or compliance with any laws, rules or regulations of governmental agencies or
authorities, but shall merely be the consent of Landlord to the performance of the Work. Tenant
shall, at Landlord’s request, sign the Working Drawings to evidence its review and approval
thereof. All changes in the Work must receive the prior written approval of Landlord, and in the
event of any such approved change Tenant shall, upon completion of the Work, furnish Landlord with
an accurate, reproducible “as-built” plan (e.g., sepia) of the Leasehold Improvements as
constructed, which plan shall be incorporated into this Lease by this reference for all purposes.

     2. CONTRACTOR. Landlord shall enter into the construction contract
(“Contract”) with the contractor who has been selected by Landlord to perform the Work
(“Contractor”). The Contract shall be in form and substance acceptable to Landlord. The
Contractor and all subcontractors shall be required to procure and maintain (a) insurance against
such risks, in such amounts, and with such companies as Landlord may reasonably require and such
insurance policies must name Landlord and Landlord’s mortgagee as additional insureds and (b) if
Landlord so elects, payment and performance bonds covering the cost of the Work and otherwise
reasonably satisfactory to Landlord. Certificates of such insurance, with paid receipts therefor,
and copies of such bonds must be received by Landlord before the Work is commenced.

     3. TENANT DELAY. If a delay in the performance of the Work occurs (a) because of any change
by Tenant to the Working Drawings, (b) because of any specification by Tenant of materials or
installations in addition to or other than Building standard finish-out materials, (c) because of
any specification by Tenant of materials with long procurement lead times when materials of
comparable quality are more readily available, (d) because of Tenant’s failure to pay when due any
expense, charge or fee due from Tenant to Landlord pursuant to this Lease, (e) if Tenant or
Tenant’s agents delay in approving the proposed plans, specifications, or construction drawings
prepared or caused to be prepared by Landlord, or (f) Tenant’s or Tenant’s agents otherwise delay
completion of the Work (including, without limitation, any delay caused by Tenant’s early occupancy
of a portion of the Premises), then, any such delay shall be a “Tenant Delay”.

     4. ARCHITECTURAL FEE AND FIRE ALARM ALLOWANCES. Landlord shall provide to Tenant an
architectural fee allowance (“Architectural Fee Allowance”) for the purpose of defraying the costs
associated with engaging an architect to design, review and inspect the Working Drawings and the
Leasehold Improvements, which Architectural Fee Allowance shall be equal to $24,000.00. Landlord
shall provide to Tenant a fire alarm allowance (“Fire Alarm Allowance”) for the purpose of
defraying the cost of installation of a fire alarm system, which Fire Alarm Allowance shall be
equal to $58,500.00.

C-1

 

     5. CONSTRUCTION MANAGEMENT FEE. Upon completion of the Work, Tenant shall pay to Landlord
a construction management fee in an amount equal to five percent (5%) of hard costs.

     6. EARLY OCCUPANCY. Upon the following terms and conditions, Landlord shall permit Tenant
to occupy a portion of the Premises prior to the date on which all of the Leasehold Improvements
have been substantially completed: (i) Tenant shall be permitted to occupy such portion of the
Premises only for the purpose of installing Tenant’s racks and fixtures, but not for any other
purpose; (ii) Tenant shall be permitted to occupy such portion of the Premises only if the
Leasehold Improvements to be constructed in such portion of the Premises have been completed and a
certificate of occupancy has been issued for such portion of the Premises; (iii) Tenant’s early
occupancy of such portion of the Premises shall not interfere with the construction of the
Leasehold Improvements; and (iv) such early occupancy shall be subject to all of the terms and
conditions of this Lease (including, but not limited to, Tenant’s indemnification obligations and
Tenant’s obligations to carry insurance) other than the payment of Base Rent the payment of which
shall commence as provided in Paragraph 2 of the Lease.

     7. LEASE CONSTRUCTION PROVISIONS. To the extent not inconsistent with this Exhibit,
Paragraph 7 of this Lease shall govern the performance of the Work and Landlord’s and
Tenant’s respective rights and obligations regarding the improvements installed pursuant thereto.

C-2

 

EXHIBIT
“C-1”

	1.	 	2,500 SF of office space in the warehouse, including restrooms and a breakroom ($35 per square
foot budgeted for this).
	 
	2.	 	3,711 SF of office space in the assembly area including shipping office, medical assembly, dust
room, HP & I assembly and compressor room – all open configuration ($30 per square foot budgeted
for this).
	 
	3.	 	1,400 SF of breakroom and warehouse restrooms ($50 per square foot budgeted for this).
	 
	4.	 	Warehouse lighting of (153) 400-watt metal halide fixtures (estimated to reasonably achieve
approximately 30fc average at 36” A.F.F. in an open warehouse; depending on rack layout, the
foot-candle result may change).
	 
	5.	 	Air conditioning for a warehouse/distribution use (as opposed to an assembly
manufacturing use) in the warehouse (including additional power for A/C) to achieve an approximate
20-degree temperature delta.
	 
	6.	 	Heat in the warehouse to achieve an approximate temperature delta of 30-degrees.
	 
	7.	 	Electrical service to the space, as well as electrical drops to boxes per drawing provided to
Landlord by Tenant on or about August 7, 2003.
	 
	8.	 	Overhead domestic waterline.
	 
	9.	 	Approximately twenty (20) trailer storage spaces across from the dock doors.
	 
	10.	 	Seventeen (17) dock doors equipped with seals and 25,000lb. manual dock levelers.
	 
	11.	 	One (1) 12’x14’ oversize dock door.
	 
	12.	 	Demising wall (tape and bed only).

C-1-1

 

EXHIBIT “D” 

MEMORANDUM OF ACCEPTANCE OF PREMISES

     This memorandum is entered into on      , 200_, by Alliance Gateway No. 58, Ltd. (“Landlord”) and Victor
Equipment Company (“Tenant”), pursuant to Paragraph 1 of the Lease Agreement (“Lease”)
dated      ,
2003, executed by Landlord and Tenant. All terms used herein have the same meanings as in the
Lease. This memorandum amends the Lease (including the Basic Lease Information) to the extent of
the matters set forth herein.

	 	1.	 	The Commencement Date is                , 200     .
	 
	 	2.	 	The Premises contain 113,500 square feet of area.
	 
	 	3.	 	The Building contains 278,333 square feet of area.
	 
	 	4.	 	Tenant’s Proportionate Share is 40.79%.

             LANDLORD:

	 	 	 	 	 	 	 	 	 	 	 

	 	 	ALLIANCE GATEWAY NO. 58, LTD.,
 a Texas limited partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Hillwood Alliance Management, L.P.,	 	 
	 	 	 	 	a Texas limited partnership,	 	 
	 	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Hillwood Alliance GP, LLC,	 	 
	 	 	 	 	 	 	a Texas limited liability company,	 	 
	 	 	 	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 

	 	 	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 

	 	 	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 

             TENANT:

	 	 	 	 	 	 	 

	 	 	VICTOR EQUIPMENT COMPANY,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	James H. Tate
 

	 	 
	 

	 	Name:
	 	James H. Tate
 

	 	 
	 

	 	Its:
	 	Sr. V.P. & CFO
 

	 	 

D-1

 

EXHIBIT “E”

	UCC FINANCING STATEMENT
FOLLOW INSTRUCTIONS (front and bacK) CAREFULLY
A. NAME & PHONE OF CONTACT AT FILER [optional]
B. SEND ACKNOWLEDGMENT TO: (Name and Address)
THE ABOVE SPACE IS FOR FILING OFFICE USE
ONLY
1. DEBTOR’S EXACT FULL LEGAL NAME -Insert only one debtor name (la or 1b) — do ml abbreviate of
combine names
la. ORGANIZATION’S NAME
OR
1b. individual’s last name first name middle name suffix
1c. mailing address city state postal code country
1d tax id #: ssn orein add’l info re 1a. type of organization 1f, jursdiction of
organization 1g, organizational id #. if any
organization
debtor none
2. ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME -Insert only one debtor name (2a or 2b) -Jo
not abbreviate or combine names
2a. ORGANIZATION’S NAME
OR 11
2b. INDIVIDUAL’S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
2c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
2d. TAX ID fr SSN OREIN ADDL INFO RF, 2e. TYPE OF ORGANIZATION 2f. JURISDICTION OF ORGANIZATION 2g.
ORGANIZATlONAL ID # any
ORGANIZATION
DEBTOR NONE
3. SECURED PARTY’S NAME — (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/F) — Insert only one
secured party name (3a or 3b)
3a. ORGANIZATION’S NAME
3D. INDIVIDUAL’S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
3c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
4. This FINANCING STATEMENT covens the following collateral:

E-1

 

Instructions for National UCC Financing Statement (Form UCC1)

Please type or laser-print this form. Be sure it is completely legible. Read all instructions,
especially Instruction 1; correct Debtor name is crucial. Follow
Instructions Completely.

Fill in form very
carefully; mistakes may have important legal consequences. If you
have questions, consult your attorney. Filing office cannot give legal advice. Do
not insert anything in the open space in the upper portion of this form; it is
reserved for filing office use.

When properly completed, send Filing Office Copy, with required fee, to filing office.
If you want an acknowledgment, complete item B and, if filing in a filing office
that returns an acknowledgment copy furnished by filer, you may also send
Acknowledgment Copy; otherwise detach. If you want to make a search request,
complete Item 7 (after reading Instruction 7 below) and send Search Report Copy,
otherwise detach. Always detach Debtor and Secured Party Copies.

If
you need to use attachments, use 8-1/2 X 11 inch sheets and put at the top of
each sheet the name of the first Debtor, formatted exactly as it appears in item 1
of this form; you are encouraged to use Addendum (Form UCC1Ad).

	A.	 	To assist filing offices that might wish to communicate with filer, filer may provide
information in item A. This item is options.
	 
	B.	 	Complete item B if you want an acknowledgment sent to you. If filing in a filing office that
returns an acknowledgment copy furnished by filer,
present simultaneously with this form a carbon or other copy of this form for use as an
acknowledgment copy.
	 
	1.	 	Debtor name: Enter only one Debtor name in item 1, an
organization’s name (1a) or an
individual’s name (1b). Enter Debtor’s exact full legal name. Don’t abbreviate.
	 
	1a.	 	Organization Debtor. “Organization” means an entity having a legal
identity separate from its owner. A partnership is an organization; a sole
proprietorship is not an organization, even if it does business under a trade name.
If Debtor is a partnership, enter exact full legal name of partnership; you need
not enter names of partners as additional Debtors. If Debtor is a registered
organization (e.g., corporation, limited partnership, limited liability company),
it is advisable to examine Debtor’s current filed charter documents to determine
Debtor’s correct name, organization type, and jurisdiction of organization.
	 
	1b.	 	Individual Debtor. “Individual” means a natural person, this includes a
sole proprietorship, whether or not operating under a trade name. Don’t use
prefixes (Mr., Mrs., Ms.). Use suffix only for title of lineage (Jr., Sr., III)
and not for other suffixes or titles (e.g., M.D.). Use married woman’s personal
name (Mary Smith, not Mrs. John Smith). Enter individual Debtor’s family name
(surname) in Last Name box, first given name in First Name box, and all additional
given names in Middle Name box.
For both organization and individual Debtors: Don’t use Debtor’s trade name,
DBA, AKA, FKA, Division name, etc. in place of or combined with Debtor’s legal name;
you may add such other names as additional Debtors if you wish (but this is neither
required nor recommended).
	 
	1c.	 	An address is always required for the Debtor named in 1a or 1b.
	 
	1d.	 	Debtor’s taxpayer identification number (tax ID #) — social security number or employer
identification number — may be required in some states.
	 
	1e,1f.	 	“Additional information re organization Debtor” is always required. Type of
organization and jurisdiction of organization as well as Debtor’s exact legal name
can be determined from Debtor’s current filed charter document. Organizational ID
#, if any, is assigned by the agency where the charter document was filed; this is
different from tax ID #; this should be entered preceded by the 2-character U.S.
Postal identification of state of organization if one of the United States (e.g.,
CA12345, for a California corporation whose organizational ID # is 12345); if
agency does not assign organizational ID #, check box in item 1g indicating “none.”

Note: If Debtor is a trust or a trustee acting with respect to property held in trust, enter
Debtor’s name in Item 1 and attach Addendum (Form UCC1Ad)
and check appropriate box in Item 17. If Debtor is a decedent’s estate, enter name of deceased
individual in item 1b and attach Addendum (Form
UCC1Ad) and check appropriate box in item 17. If Debtor is a transmitting utility or this Financing
Statement is filed in connection with a
Manufactured-Home Transaction or a Public-Finance Transaction as defined in applicable Commercial
Code, attach Addendum (Form UCC1Ad) and
check appropriate box in item 18.

	2.	 	If an additional Debtor is included, complete item 2, determined and formatted per
Instruction 1. To include further additional Debtors, or one or
more additional Secured Parties, attach either Addendum
(Form UCC1Ad) or other
additional page(s), using correct name format. Follow
Instruction 1 for determining and formatting additional names.
	 
	3.	 	Enter information for Secured Party or Total Assignee, determined and formatted per
Instruction 1. If there is more than one Secured Party, see
Instruction 2. If there has been a total assignment of the Secured Party’s interest
prior to filing this form, you may either (1) enter Assignor S/P’s
name and address in item 3 and file an Amendment (Form UCC3) [see item 5 of that form];
or (2) enter Total Assignee’s name and address in item 3
and, if you wish, also attaching Addendum (Form UCC1Ad) giving Assignor S/P’s name and
address in item 12.
	 
	4.	 	Use item 4 to indicate the collateral covered by this Financing Statement. If space
in item 4 is insufficient, put the entire collateral description or
continuation of the collateral description on either Addendum (Form UCC1Ad) or other
attached additional page(s).
	 
	5.	 	If filer desires (at filer’s option) to use titles of lessee and lessor, or
consignee and consignor, or seller and buyer (in the case of accounts or chattel
paper), or bailee and bailor instead of Debtor and Secured Party, check the appropriate
box in item 5. If this is an agricultural lien (as defined in
applicable Commercial Code) filing or is otherwise not a UCC security interest filing
(e.g., a tax lien, judgment lien, etc.), check the appropriate box
in item 5, complete items 1-7 as applicable and attach any other items required under
other law.
	 
	6. 	 	If this Financing Statement is filed as a fixture filing or if the collateral
consists of timber to be cut or as-extracted collateral, complete items 1-5,
check the box in item 6, and complete the required information (items 13, 14 and/or 15)
on Addendum (Form UCC1Ad).
	 
	7.	 	This item is optional. Check appropriate box in item 7 to request Search Report(s)
on all or some of the Debtors named in this Financing Statement.
The Report will list all Financing Statements on file against the designated Debtor on
the date of the Report, including this Financing Statement.
There is an additional fee for each Report. If you have checked a box in item 7, file
Search Report Copy together with Filing Officer Copy (and
Acknowledgment Copy). Note: Not all states do searches and not all states will honor a
search request made via this form; some states require a
separate request form.
	 
	8.	 	This item is optional and is for filer’s use only. For filer’s convenience of
reference, filer may enter in item 8 any identifying information (e.g.,
Secured Party’s loan number, law firm file number, Debtor’s name or other identification,
state in which form is being filed, etc.) that filer may fine
useful.

E-2

 

	UCC FINANCING STATEMENT ADDENDUM
FOLLOW INSTRUCTlONS (front and bach) CAREFULLY
9. NAME OF FIRST DEBTOR (1a or 1b) ON RELATED FINANCING STATEMENT
9a. ORGANIZATION’S NAME OR
9b. INDIVIDUAL’S LAST NAME FIRST NAME I MIDDLE NAME. SUFFIX
10. MISCELLANEOUS:
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
11. ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME — Insert only one debtor name (11a or 11b)
 — do not abbreviate or combine names
11a ORGANIZATION’S NAME
OR hTM
11b. INDIVIDUAL’S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
11c. MAILING ADDRESS CITY” STATE POSTAL CODE COUNTRY
11d. TAX lD# SSN OR EN ADDL lNFO RE 11e, TYPE OF ORGANIZATION 11f. JURISDICTION OF ORGANIZATION
11g. ORGANIZATIONAL ID #, If any
ORGANIZATION NONE
        .12. bb ADDITIONAL SECURED PARTY’S OR bb ASSIGNOR SIP’S NAME — insert only
one name (12a or 12b)
12a. ORGANIZATION’S NAME
12b lNIVIDUAl’S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
12c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
13. This FINANCING STATEMENT covers bb timber to be
out or bb as extracted 16, Additional collateral
description;
collateral, or is filed as a bb fixture filing.
14.
15. Description of real estate:
16.
15. Name and address of a RECORD OWNER
of above-described real estate (if
Debtor does not have a record
Interest):
17 Check o nly if applicable and check
only one box,
Debtor is a bb trust or bb Trustee
ading with respect to property held in trust or
bb Decedent’s Estate
18. Check only if applicable and check only
one box.
bb Debtor Is a TRANSMITTING UTILITY
bb Filed In connection with a Manufactured-
Home Transaction —effective 30 years
bb Filed in connection With a
Public-Finance Transaction — effective 30 years
FILING OFFICE COPY — NATIONAL UCC FINANCING STATEMENT ADDENDUM (FORM UCC1Ad)(REV. 07/29/98)

E-3

 

Instructions for National UCC Financing Statement (Form UCC1Ad)

	9.	 	Insert name of first Debtor shown on Financing Statement to which this Addendum is related,
exactly as shown in item 1 of
Financing Statement.
	 
	10.	 	Miscellaneous: Under certain circumstances, additional information not provided on Financing
Statement may be required.
Also, some states have non-uniform requirements. Use this space to provide such additional
information or to comply with such
requirements; otherwise, leave blank.
	 
	11.	 	If this Addendum adds an additional Debtor, complete item 11 in accordance with Instruction 1
on Financing Statement. To add
more than one additional Debtor, either use an additional Addendum form for each additional
Debtor or replicate for ach additional
Debtor for the formatting of Financing Statement item 1 on a 8-1/2 X 11 inch sheet (showing at
the top of the sheet the name of the
first Debtor shown on the Financing Statement), and in either case give complete information
for each additional Debtor in accordance with Instruction 1 on
Financing Statement. All additional Debtor information,
especially the name, must be
presented in proper format exactly identical to the format of item 1 of Financing Statement.
	 
	12.	 	If this Addendum adds an additional Secured Party, complete item 12 in accordance with
Instruction 3 on Financing Statement. In the case of a total assignment of the Secured Party’s interest before the filing of this
Financing Statement, if filer has given the
name and address of the Total Assignee in item 3 of the Financing Statement, filer may give
the Assignor S/P’s name and
address in item 12.
	 
	13-15.	 	If collateral is timber to be cut or as-extracted collateral, or if this Financing
Statement is filed as a fixture filing, check appropriate box in item 13; provide description
of real estate in item 14; and, if Debtor is not a record owner of the described real estate,
also provide, in item 15, the name and address of a record owner. Also provide collateral
description in item 4 of Financing Statement. Also check box 6 on Financing Statement.
Description of real estate must be sufficient under the applicable law of the jurisdiction
where the real estate is located.
	 
	16.	 	Use this space to provide continued description of collateral, if you cannot complete
description in item 4 of Financing Statement.
	 
	17.	 	If Debtor is a trust or a trustee acting with respect to property held in trust or is a
decedent’s estate, check the appropriate box.
	 
	18.	 	If Debtor is a transmitting utility or if the Financing Statement relates to a
Manufactured-Home Transaction or a Public-Finance Transaction as defined in the applicable
Commercial Code, check the appropriate box.

E-4

 

EXHIBIT “F”

RENEWAL OPTIONS

     Provided Tenant is not in default and is occupying the entire Premises at the time of such
election, Tenant may renew this Lease for one (1) additional period of five (5) years on the same
terms and conditions as provided in this Lease (except as set forth below), by delivering written
notice of the exercise thereof to Landlord not later than nine (9) months before the expiration of
the Term. On or before six (6) months prior to the commencement date of the extended Term,
Landlord and Tenant shall execute an amendment to this Lease extending the Term on the same terms
and conditions as provided in this Lease, except as follows:

     (a) The Base Rent payable during each such extended Term shall be $4.91 psf
per annum;

     (b) Tenant shall have no further renewal options unless expressly granted by
Landlord in writing; and

     (c) Landlord shall lease to Tenant the Premises in their then-current condition.

	 	 	Tenant’s rights under this Exhibit “F” shall terminate if (i) this Lease or Tenant’s
right to possession of the Premises is terminated, (ii) Tenant assigns any of its interest in this
Lease or sublets any portion of the Premises (other than to an Affiliate), or (iii) Tenant fails to
timely exercise its option under this Exhibit “F”, time being of the essence with respect
to Tenant’s exercise thereof. If this Lease is renewed or extended, the word “Term” shall include
the additional period covered by the renewal or extension, and this Lease shall apply to such
additional period except as otherwise provided for herein.

F-1

 

EXHIBIT “G”

RIGHT OF FIRST OFFER

     Landlord hereby grants to Tenant a right of first offer to lease the remaining leasable space
in the Building which is identified on Exhibit “G-1” attached hereto and made a part hereof
(“Additional Space”) in accordance with the terms of this Exhibit “G”. At such time as
Landlord desires to lease all or a portion of the Additional Space to an unaffiliated third party
(“Third Party”), Landlord shall give Tenant written notice
thereof (“Offer Notice”) and shall offer
to lease to Tenant the Additional Space upon the terms and conditions stated in the Offer Notice.
The Offer Notice shall specify the portion of the Additional Space subject to such offer, the rent
to be paid for such Additional Space and the date on which the Additional Space in question shall
be included in the Premises. Tenant shall notify Landlord in writing whether Tenant elects to lease
all of such Additional Space, at the rental rate and upon the other terms and conditions set forth
in the Offer Notice, within ten (10) business days after Landlord delivers the Offer Notice to
Tenant. If Tenant timely elects to lease such Additional Space, then Landlord and Tenant shall
execute an amendment to this Lease, effective as of the date such Additional Space is to be
included in the Premises, providing for Tenant’s leasing of the Additional Space on the same terms
and conditions as set forth in the Offer Notice. If Tenant fails or is unable to timely exercise
its right hereunder, then such right shall lapse, time being of the essence with respect to the
exercise thereof, and Landlord may lease the Additional Space to the Third Party or to any other
party upon terms which are acceptable to Landlord. Tenant may not exercise its rights under this
Exhibit “G” if Tenant is in default hereunder or if Tenant is not then occupying the entire
Premises. Tenant’s rights under this Exhibit shall terminate if (a) this Lease or Tenant’s right to
possession of the Premises is terminated or (b) Tenant assigns any of its interest in this Lease or
sublets any portion of the Premises (other than to an Affiliate).

G-1

 

Exhibit G-1

G-1-1

 

EXHIBIT “H”

[TEACHERS] FORM OF

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

(Fee Transaction Form)

     THIS
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this “Agreement”) is made by
and between TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New York corporation with
offices at 730 Third
Avenue, New York, New York 10017 (“Lender”) and
          , a [an] [individual]
name of state [corporation] [limited liability company] [general partnership] [limited
partnership]
[d/b/a           ] with its principal place of business at          
(“Tenant”).

RECITALS:

     A. Lender has made or is about to make a loan (together with all advances and
increases, the “Loan”) to          , a [an] [individual] [corporation] [limited
liability company] [general partnership] [limited partnership]                    
(“Borrower’’).

     B. Borrower, as landlord, and Tenant have entered into a lease dated
as amended by amendments dated
                    (the
“Lease”) which leased to
Tenant
[Suite No.          
] [Floor           ] [Store No.           ] (the “Leased Space”)
located in the Property (defined below).

     C. The Loan is or will be secured by the [Open-End] Mortgage, Assignment of
Leases and Rents, Fixture Filing Statement and Security Agreement recorded or to be recorded
in the official records of the County of                     , State or Commonwealth of
                     (together with all advances, increases, amendments or consolidations, the
“Mortgage”) and the Assignment of Leases and Rents recorded or to be recorded in such official
records (together with all amendments or consolidations, the
“Assignment”), assigning to Lender the
Lease and all rent, additional rent and other sums payable by Tenant
under the Lease (the “Rent”).

     D. The Mortgage encumbers the real property, improvements and fixtures located at
                    
in the City of
                    , County of                     , State
of Commonwealth of                     , commonly known as                     ,
and described on Exhibit “A” (the
“Property”).

     IN CONSIDERATION of the mutual agreements contained in this Agreement, Lender and Tenant
agree as follows:

     1. The Lease and all of Tenant’s rights under the Lease are and will remain subject
and subordinate to the lien of the Mortgage and all of Lender’s rights under the Mortgage and
Tenant will not subordinate the Lease to any other lien against the Property without Lender’s
prior consent.

     2. This Agreement constitutes notice to Tenant of the Mortgage and the Assignment
and, upon receipt of notice from Lender, Tenant will pay the Rent as and when due under the
Lease to Lender and the payments will be credited against the Rent due under the Lease.

     3. Tenant does not have and will not acquire any right or option to purchase any
portion of or interest in the Property.

     4. Tenant and Lender agree that if Lender exercises its remedies under the Mortgage
or the Assignment and if Tenant is not then in default under this Agreement and if Tenant is not
then in default beyond any applicable grace and cure periods under the Lease:

H-1

 

     (a) Lender will not name Tenant as a party to any judicial or non-judicial foreclosure
or other proceeding to enforce the Mortgage unless joinder is required under applicable law but
in such case Lender will not seek affirmative relief against Tenant, the Lease will not be
terminated and Tenant’s possession of the Leased Space will not be disturbed.

     (b) If
Lender or any other entity (a “Successor Landlord”) acquires the Property
through foreclosure, by other proceeding to enforce the Mortgage or deed-in-lieu of
foreclosure
(a “Foreclosure”), Tenant’s possession of the Leased Space will not be disturbed and the Lease
will continue in full force and effect between Successor Landlord and Tenant; and

     (c) If, notwithstanding the foregoing, the Lease is terminated as a result of a
Foreclosure, a lease between Successor Landlord and Tenant will be deemed created, with no
further instrument required, on the same terms as the Lease except that the term of the
replacement lease will be the then unexpired term of the Lease. Successor Landlord and Tenant
will execute a replacement lease at the request of either.

     5. Upon Foreclosure, Tenant will recognize and attorn to Successor Landlord as the
landlord under the Lease for the balance of the term. Tenant’s attornment will be
self-operative
with no further instrument required to effectuate the attornment except that at Successor
Landlord’s request, Tenant will execute instruments reasonably satisfactory to Successor
Landlord confirming the attornment.

     6. Successor Landlord will not be:

     (a) liable for any act or omission of any prior landlord under the Lease occurring
before the date of the Foreclosure except for repair and maintenance obligations of a
continuing
nature imposed on the landlord under the Lease;

     (b) required to credit Tenant with any Rent paid more than one month in advance or
for any security deposit unless such Rent or security deposit has been received by Successor
Landlord;

     (c) bound by any amendment, renewal or extension of the Lease that is inconsistent
with the terms of this Agreement or is not in writing and signed both by Tenant and landlord;

     (d) bound by any reduction of the Rent unless the reduction is in connection with an
extension or renewal of the Lease at prevailing market terms or was made with Lender’s prior
consent;

     (e) bound
by any reduction of the term1 of the Lease or any termination, cancellation
or surrender of the Lease unless the reduction, termination, cancellation or surrender
occurred
during the last 6 months of the term or was made with Lender’s prior consent;

     (f) bound by any amendment, renewal or extension of the Lease entered into without
Lender’s prior consent if the Leased Space represents 50% or more of the net rentable area of the
building in which the Leased Space is located;

     (g) subject to any credits, offsets, claims, counterclaims or defenses that Tenant may
have that arose prior to the date of the Foreclosure or liable for any damages Tenant may suffer
as a result of any misrepresentation, breach of warranty or any act of or failure to act by any
party other than Successor Landlord;

     (h) bound by any obligation to make improvements to the Property, including the Leased Space,
to make any payment or give any credit or allowance to Tenant provided for in the Lease or to pay
any leasing commissions arising out of the Lease, except that Successor Landlord will be:

          (i) bound by any such obligations provided for in the Lender-approved form
lease;

 

			
	1	 	For purposes of this subparagraph “the term of the Lease” includes any renewal term
after the right to renew has been exercised.

H-2

 

     (ii) bound by any such obligations if the overall economic terms of the Lease
(including the economic terms of any renewal options) represented market terms for similar
space in properties comparable to the Property when the Lease was executed; and

     (iii) bound to comply with the casualty and condemnation restoration provisions
included in the Lease provided that Successor Landlord receives the insurance or
condemnation proceeds; or

     (j) liable for obligations under the Lease with respect to any off-site property or
facilities for the use of Tenant (such as off-site leased space or parking) unless Successor
Landlord acquires in the Foreclosure the right, title or interest to the off-site property.

     7. Lender will have the right, but not the obligation, to cure any default by
Borrower, as landlord, under the Lease. Tenant will notify Lender of any default that would
entitle Tenant to terminate the Lease or abate the Rent and any notice of termination or
abatement will not be effective unless Tenant has so notified Lender of the default and Lender
has had a 30-day cure period (or such longer period as may be necessary if the default is not
susceptible to cure within 30 days) commencing on the latest to occur of the date on which (i) the
cure period under the Lease expires; (ii) Lender receives the notice required by this
paragraph;
and (iii) Successor Landlord obtains possession of the Property if the default is not
susceptible to
cure without possession.

     8. All notices, requests or consents required or permitted to be given under this
Agreement must be in writing and sent by certified mail, return receipt requested or by
nationally
recognized overnight delivery service providing evidence of the date of delivery, with all
charges
prepaid, addressed to the appropriate party at the address set forth above.

     9. Any claim by Tenant against Successor Landlord under the Lease or this
Agreement will be satisfied solely out of Successor Landlord’s interest in the Property and
Tenant will not seek recovery against or out of any other assets of Successor Landlord.
Successor Landlord will have no liability or responsibility for any obligations under the Lease
that arise subsequent to any transfer of the Property by Successor Landlord.

     10. This Agreement is governed by and will be construed in accordance with the laws
of the state or commonwealth in which the Property is located.

     11. Lender and Tenant waive trial by jury in any proceeding brought by, or
counterclaim asserted by, Lender or Tenant relating to this Agreement.

     12. If there is a conflict between the terms of the Lease and this Agreement, the terms
of this Agreement will prevail as between Successor Landlord and Tenant.

     13. This Agreement binds and inures to the benefit of Lender and Tenant and their
respective successors, assigns, heirs, administrators, executors, agents and representatives.

     14. This Agreement contains the entire agreement between Lender and Tenant with
respect to the subject matter of this Agreement, may be executed in counterparts that together
constitute a single document and may be amended only by a writing signed by Lender and
Tenant.

H-3

 

     IN WITNESS WHEREOF, Lender and Tenant have executed and delivered this
Agreement as of
                    ,           .

	 	 	 	 	 

	 	 	TEACHERS INSURANCE AND ANNUITY
	 	 	ASSOCIATION OF AMERICA, a New York
	 	 	corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	Name:
	 	 
 
	 

	 	Its:
	 	 
 
	 

	 	 	 	 
 
	 
	 	 	 	 
	 	 	Insert Name of
Tenant
	 	 	a[n] [individual]           [corporation]
	 	 	[limited liability company] [general partnership]
	 	 	[limited
partnership] [d/b/a                     
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
 
	 

	 	Name:	 	 
	 

	 	Its:
	 	 
 
	 

	 	 	 	 
 

H-4

 

	 	 	 	 	 

	STATE OF NEW YORK

	 	 	)	 	 	 
	 

	 	 	)	 	 	SS:
	COUNTY OF NEW YORK

	 	 	)	 	 	 

     Before
me, a Notary Public, in and for said County, personally appeared
_____, to me known and known to me to be the persons who, as Assistant Secretary
of TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, the Corporation which executed the
foregoing instrument, signed the same, and acknowledged to me that they did so sign said
instrument in the name and upon behalf of said corporation as such officers respectively; that the
same is their free act and deed as such officers, respectively, and the free act and deed of said
corporation; that they were duly authorized thereunto by its board of trustees; 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 at New York, New York this
          
day of           ,           .

	 	 	 

	 

	 	 
 Notary
Public

ACKNOWLEDGMENTS

	 	 	 	 	 

	INDIVIDUAL
	 	 	 	 	 
	 
	 	 	 	 	 
	STATE OF

	 	 	)	 	 	 
	 

	 	 	)	 	 	SS:
	COUNTY OF

	 	 	)	 	 	 

     On
this
          
day of                     ,           , before me personally appeared
               to me personally known to be the person described in and who executed the
foregoing instrument, and acknowledged that               executed the same as their free
act and deed.

	 	 	 	 	 

	 

	 	 

Notary Public
	 	 
	 
	 	 	 	 
	 

	 	My commission expires:	 	 
	 
	 	 	 	 
	 

	 	 

	 	 

H-5

 

	 	 	 	 	 

	CORPORATE
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	STATE OF

	 	 	)	 	 	 
	 

	 	 	)	 	 	SS:
	COUNTY OF

	 	 	)	 	 	 

     On
this            day of           ,      , before me, personally appeared
           to me personally known, who, being by me duly sworn, did say he is the
           of            and that the seal affixed to the foregoing instrument is
the corporate seal of said corporation, and that said instrument was signed and sealed in behalf of
said corporation by authority of its Board of Directors, and acknowledged said instrument to be the
free act and deed of said corporation.

	 	 	 

	 

	 	 
 Notary
Public
	 
	 	 
	 

	 	My commission expires:
	 
	 	 
	 

	 	 
 

	 	 	 	 	 

	PARTNERSHIP
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	STATE OF

	 	 	)	 	 	 
	 

	 	 	)	 	 	SS:
	COUNTY OF

	 	 	)	 	 	 

     In
          
County in said station on
the           
day of
          ,           ,
before me personally appeared
           as general partner of              
PARTNERSHIP, to me known and known by me to be the party executing the foregoing and the
acknowledged said instrument by him executed to be his free act and deed, and his free act and
deed in his capacities as aforesaid, and the free act and deed of           
PARTNERSHIP.

	 	 	 

	 

	 	 
 Notary
Public
	 
	 	 
	 

	 	My commission expires:
	 
	 	 
	 

	 	 
 

H-6

 

EXHIBIT “A”

 PROPERTY DESCRIPTION

Exhibit A
to Subordination, Non-Disturbance and Attornment Agreement — Page 1

 

 

EXHIBIT “H”

	 	 	 	 

	STATE OF TEXAS

	 	 	)	 
	 
	 	 	 	 
	COUNTY OF DENTON

	 	 	)	 

[SOUTHTRUST] FORM OF

SUBORDINATION, ATTORNMENT, AND NON-DISTURBANCE AGREEMENT

     THIS SUBORDINATION, ATTORNMENT, AND NON-DISTURBANCE
AGREEMENT (this “Agreement”) is made and entered into
as of the
          
day of           ,
          ,
by and between                      (“Tenant”), and SOUTHTRUST BANK, an Alabama banking corporation (“Bank”).

R E
C I T A L S:

     Tenant
is
the present
tenant under that certain Lease Agreement
dated                     , (hereinafter the “Lease”), with respect to an approximately
           square feet of floor space located on the parcel of real property more particularly
described in Exhibit A attached hereto and made a part hereof. The premises demised to
Tenant under the Lease, as more particularly described therein, are referred to herein as the
“Premises.”

     Alliance Gateway No.          , Ltd., as the landlord under the Lease (the “Landlord”), has
obtained a loan from Bank, which is secured by a first Deed of Trust and Security Agreement
covering the Premises and an Assignment of Rents and Leases which collaterally assign to Lender
all leases relating thereto. Said Deed of Trust and Security Agreement and Assignment of Rents and
Leases, as the same may hereafter be amended, increased, renewed, extended, spread, consolidated,
severed, restated, or otherwise changed from time to time (the consent of Tenant to which shall
not be required), are referred to herein as the “Security Instruments.” As a condition to making
such loan, Bank has required that Tenant execute this instrument. The Deed
of Trust and the Assignment of Rents and Leases are recorded at Instrument No.                     ,
Volume           , Page           , and Instrument No.          , Volume           , Page           ,
respectively, of the Real Property Records of Denton County, Texas.

AGREEMENT

     NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set
forth, and as an inducement to Bank to extend financing to the Landlord, the parties hereto do
mutually covenant and agree as follows:

     1. Subordination. The Lease shall at all times be subject and subordinate in all
respects to the Security Instruments, the lien and security interest imposed by the Security
Instruments, and all advances made under the Security Instruments.

     2. Bank’s Right to Cure. Notwithstanding anything to the contrary in the Lease or
this Agreement, Tenant shall give prompt written notice to Bank of any default or breach by
Landlord under the Lease that are of such a nature as to give Tenant a right to terminate the
Lease, to reduce rent, or to credit or offset any amounts against future rents. After Bank receives
such notice, Bank shall have a period of sixty (60) days beyond the time available to Landlord
under the Lease in which to cure the breach or default by Landlord. Bank shall have no
obligation to cure (and shall have no liability or obligation for not curing) any breach or default
by Landlord.

     3. Non-Disturbance. So long as Tenant is not in default in the payment of rent,
additional rent, or other charges or conditions of the Lease, Tenant shall not be disturbed by
Bank in Tenant’s possession, enjoyment, use, and occupancy of the Premises during the original
or any renewal term of the Lease or any extension or modification thereof.

     4. Payment of Rents to Bank. Upon Bank’s written request and without regard to
contrary instructions from Landlord, Tenant agrees that it will make the payments to be made by
Tenant under the Lease directly to Bank. Prior to the time that Bank shall succeed to the interest
of Landlord in the Premises as described in Section 5 below, receipt of such payments by Bank

H-1

 

shall not relieve Landlord of its obligations under the Lease nor operate to make Bank responsible
for the performance thereof, and Tenant shall continue to look solely to Landlord for performance
of such obligations.

     5. Attornment. If the interest of Landlord in the Premises shall be acquired by
Bank or any other successor landlord through foreclosure, deed in lieu of foreclosure, or by any
other method, and Bank shall succeed to the interest of Landlord under the Lease, then the Lease
shall continue in full force and effect and shall not be terminated or disturbed except in
accordance with the terms thereof. Tenant shall thereupon be bound to Bank, and Bank shall be
bound to Tenant, under all the terms, covenants, and conditions of the Lease for the balance of
the term thereof remaining, and any extensions or renewals thereof, with the same force and
effect as if Bank was the original landlord under the Lease. Tenant does hereby attorn to Bank
as its landlord, said attornment to be effective and self-operative without the execution of any
additional documents by the parties hereto immediately upon Bank’s succeeding to the interest
of Landlord under the Lease.

     6. Protection
of Bank. Notwithstanding anything to the contrary in the Lease or the
Security Instruments, Bank shall not be liable for or bound by any of the following matters:

	 	(a)	 	except for any default or breach of which Bank has been notified pursuant to
Section 2 hereof but has failed to cure, any default or breach in the Landlord’s
obligations under the Lease occurring prior to the time Bank succeeds to the
interest of Landlord in the Premises;
	 
	 	(b)	 	any payment of rent (including fixed rent, percentage rent, or additional rent) that
Tenant might have made to Landlord more than thirty (30) days before the date
such rent was first due and payable under the Lease with respect to any period
after the time Bank succeeds to the interest of Landlord in the Premises;
	 
	 	(c)	 	any deposit or security which was delivered to Landlord but which was not
subsequently delivered to Bank;
	 
	 	(d)	 	any modification or amendment to the Lease, or any waiver of any terms of the
Lease, made without Bank’s prior written consent as required by the Security
Instruments;
	 
	 	(e)	 	any consensual or negotiated surrender, cancellation, or termination of the Lease,
in whole or in part, agreed upon between Landlord and Tenant, made without
Bank’s prior written consent as required by the Security Instruments; or
	 
	 	(f)	 	any obligation of Landlord under the Lease to make, pay for, or reimburse Tenant
for any construction, alterations, demolition, or other improvements or work at the
Shopping Center, including the Premises (other than day-to-day maintenance and
repairs).

     7. Notices. All notices, demands, or requests, and responses thereto, required or
permitted to be given pursuant to this Agreement shall be in writing and shall be given or served
by the United States mail, postage prepaid and certified with return receipt requested, or by a
nationally recognized overnight courier service, addressed as follows:

     If to Bank:

SouthTrust Bank 
Post
Office Box 2554

Commercial Real Estate Group

Birmingham, Alabama 35290

H-2

 

     And to:

     South Trust Bank

     230 Fourth Avenue North

     Eighth Floor

     Nashville, Tennessee 37219

     Attn: Mr. Daniel S. Harrington

     If to Tenant:

	 	 	 	 	 

	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 

or at such other single address in the United States as either party may by notice in
writing designate. Any notice shall be effective the next business day after being sent by
overnight courier service and five (5) business days after being sent by certified mail (return
receipt requested).

     8. Successors
and Assigns. This Agreement shall bind and benefit the parties, their
successors and assigns. If Bank assigns the Security Instruments, then upon delivery to Tenant
of written notice thereof accompanied by the assignee’s written assumption of all obligations
under this Agreement, all liability of the assignor shall terminate.

     9. Entire
Agreement. This Agreement constitutes the entire agreement between
Bank and Tenant regarding the subordination of the Lease to the Security Instruments and the
rights and obligations of Tenant and Bank as to the subject matter of this Agreement.

     10. Interaction
with Lease with Security Instruments. If this Agreement conflicts
with the Lease, then this Agreement shall govern as between Tenant and Bank, including upon
any attornment pursuant to this Agreement. This Agreement supersedes, and constitutes full
compliance with, any provisions in the Lease that provide for subordination of the Lease to, or
for delivery of nondisturbance agreements by the holder of, the Security Instruments. Bank
confirms that Bank has consented to Landlord’s entering into the Lease.

     11. Interpretation;
Governing Law. The interpretation, validity, and enforcement
of this Agreement shall be governed by and construed under the internal laws of the State of
Texas.

     12. Amendments. This Agreement may be amended, discharged, or terminated, or
any of its provisions waived, only by a written instrument executed by the party to be charged.

     13. Execution. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which together shall constitute one and the
same instrument.

     14. Waiver
of Jury Trial. THE PARTIES HERETO WAIVE ANY RIGHT TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION (INCLUDING, BUT NOT LIMITED
TO, ANY CLAIMS, CROSS-CLAIMS OR THIRD PARTY CLAIMS) ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE LEASE, OR THE
SECURITY INSTRUMENTS. TENANT CERTIFIES THAT NO REPRESENTATIVE OR
AGENT OF BANK OR BANK’S COUNSEL HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT BANK WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK
TO ENFORCE THIS WAIVER OF JURY TRIAL PROVISION.

H-3

 

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

	 	 	 	 	 	 	 

	 	 	TENANT:	 	 
	 
	 
	 	 	 	 
	 
	 

	 	By:	 	 	 	 
	 

	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 

	 	 
	 	 	Date of execution:	 	 
	 

	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	BANK:	 	 
	 
	 	 	 	 	 	 
	 	 	SOUTHTRUST BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 

	 	 
	 	 	Date of execution:	 	 
	 

	 	 

	 	 

	 	 	 	 	 	 	 

	STATE OF

	 	 	 	 	)	 
	 

	 	 

	 	 	 	 
	COUNTY OF

	 	 	 	 	)	 
	 

	 	 

	 	 	 	 

     This instrument was acknowledged before me on _________, _____ by
_____, _____ of _____ on behalf of _______________.

	 	 	 	 	 	 	 

	 	 	 	 	 
	 

	 	Notary Public	 	 	 	 
	 

	 	My commission expires:	 	 	 	 
	 

	 	 	 	 

	 	 

[NOTARIAL SEAL]

	 	 	 	 	 	 	 

	STATE OF

	 	 	 	 	)	 
	 

	 	 

	 	 	 	 
	COUNTY OF

	 	 	 	 	)	 
	 

	 	 

	 	 	 	 

     This instrument was acknowledged before me on _________, _____ by Daniel S.
Harrington, Group Vice President of SouthTrust Bank, an Alabama banking corporation, on behalf of
said corporation.

	 	 	 	 	 	 	 

	 	 	 	 	 
	 

	 	Notary Public	 	 	 	 
	 

	 	My commission expires:	 	 	 	 
	 

	 	 	 	 

	 	 
	[NOTARIAL SEAL]
	 	 	 	 	 	 

H-4

 

LANDLORD’S CONSENT

     Landlord consents and agrees to the foregoing Agreement, which was entered into at Landlord’s
request. The foregoing Agreement shall not alter, waive, or diminish any of Landlord’s obligations
under the Security Instruments or the Lease. The foregoing Agreement discharges the obligations of
Bank under the Security Instruments and related loan documents, if any, to enter into a
nondisturbance agreement with Tenant. Landlord is not a party to the foregoing Agreement.

	 	 	 	 	 	 	 	 	 	 	 	 	 

	 	 	LANDLORD:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	ALLIANCE GATEWAY NO. 58, LTD.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Hillwood Alliance Management, L.P.,	 	 
	 	 	 	 	a Texas limited partnership,	 	 
	 	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Hillwood Alliance GP, LLC,	 	 
	 	 	 	 	 	 	a Texas limited liability company,	 	 
	 	 	 	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

	 	 
	 

	 	 	 	 	 	 	 	Its:	 	 	 	 
	 
	 	 	 	 	 	 	 	 

	 	 

	 	 	 	 	 	 	 

	STATE OF TEXAS

	 	 	 	 	)	 
	COUNTY OF

	 	 	 	 	)	 
	 

	 	 	 	 

     This instrument was acknowledged before me on _____, 2003, by
__________, __________ of Hillwood Alliance GP, LLC, a
Texas limited liability company, the general partner of Hillwood Alliance Management, L.P. a Texas limited
partnership, general partner of Alliance Gateway No. 58, Ltd., a Texas limited partnership, on
behalf of said limited partnership.

	 	 	 	 	 	 	 

	 	 	 	 	 
	 

	 	Notary Public	 	 	 	 
	 

	 	My commission expires:	 	 	 	 
	 

	 	 	 	 

	 	 
	[NOTARIAL SEAL]
	 	 	 	 	 	 

H-5

 

EXHIBIT “A”

TO

SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE AGREEMENT

[insert legal description]

H-6

 

EXHIBIT “I”

IRREVOCABLE LETTER OF CREDIT

	 	 	 

	MAXIMUM AMOUNT U.S. $175,000.00

	 	No. _____
	 
	 	 
	 

	 	Effective Date: __________, 2003

	 	 	 

	To:

	 	Alliance Gateway No. 58, Ltd.
	 

	 	c/o Hillwood Development Company, LLC
	 

	 	13600 Heritage Parkway, Suite 200
	 

	 	Fort Worth, Texas 76177
	 

	 	Attention: Bill Burton

Gentlemen:

     We hereby establish in your favor our Irrevocable Letter of Credit No. _____ up to
an aggregate amount of One Hundred Seventy-Five Thousand and 00/100 Dollars ($175,000.00) for the
account of Victor Equipment Company, subject to the following limitations:

	1.	 	Funds under this Letter of Credit are available by your drafts at sight marked “Drawn
under __________ Letter of Credit No. _____
Dated _____, 2003.”
	 
	2.	 	Drafts must be accompanied by a signed Draw Certificate in the form attached hereto.
	 
	3.	 	We hereby agree with the drawers, endorsers and bona fide holders of all drafts drawn
under and in compliance with the terms of this credit to duly honor each draft drawn
under and in compliance with the terms of this credit if presented at our offices at
_______________ on or before
the close of business on __________, 200__.
	 
	4.	 	This Letter of Credit shall expire on __________, 200__.
	 
	5.	 	This Letter of Credit is subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision) International Chamber of Commerce Publication No. 500, and,
except as to matters governed thereby, shall be governed and construed in accordance
with the internal laws of the State of Texas, as such laws presently exist or as may be
amended in the future.
	 
	6.	 	Partial draws are allowed.

	 	 	 	 	 	 	 

	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 	 	 	 	 
	 

	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Its: 	 	 	 	 
	 

	 	 	 

	 	 

I-1

 

Draw Certificate

to Irrevocable Letter of Credit No. _____

dated _____, 200__, issued by

_______________

Irrevocable Letter of Credit No. __________

Alliance Gateway No. 58, Ltd. hereby Certifies, with reference to Irrevocable Letter of Credit
No. _____ (the “Letter of Credit”) issued by __________
for the account of Victor Equipment Company, that:

An “Event of Default” has occurred under that certain lease between Alliance Gateway No. 58,
Ltd. and Victor Equipment Company, Alliance Gateway No. 58, Ltd. is hereby requesting a draw
of $_____ under the Letter of Credit in such amount.

IN WITNESS WHEREOF, Alliance Gateway No. 58, Ltd. has executed and delivered this Draw
Certificate as of the __________ day
of __________, __________.

ALLIANCE GATEWAY NO. 58, LTD.,

a Texas limited partnership

	 	 	 	 	 	 	 	 	 

	By:	 	Hillwood Alliance Management, L.P.,	 	 
	 	 	a Texas limited partnership,	 	 
	 	 	its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Hillwood Alliance GP, LLC,	 	 
	 	 	 	 	a Texas limited liability	 	 
	 	 	 	 	company, its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 

	 	 

I-2

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