Document:

exhbt103.htm

  

  

  

 

 

Exhibit 10.3

 

REGISTRATION RIGHTS AGREEMENT

 

 

 

BY AND AMONG

 

 

 

 

GEOGLOBAL RESOURCES INC.

 

 

 

AND

 

 

 

THE ISRAEL LAND DEVELOPMENT COMPANY – ENERGY LTD.

 

 

 

______________________________

 

 

DATED AS OF NOVEMBER 21, 2011

 

 

_______________________________

 

 

 

 

 

 

  

  

  

TABLE OF CONTENTS

	  	  	  	
Page

	
ARTICLE I REGISTRATION

	
1

	  	
Section 1.1

	
      Registration Statements

	
1

	  	
Section 1.2

	
      Expenses

	
2

	  	
Section 1.3

	
      Effectiveness

	
2

	  	
Section 1.4

	
      Suspension Period

	
2

	
ARTICLE II COMPANY OBLIGATIONS

	
2

	  	
Section 2.1

	
Company Obligations

	
2

	
ARTICLE III OBLIGATIONS OF ILDE

	
4

	  	
Section 3.1

	
Company Information

	
4

	  	
Section 3.2

	
Cooperation

	
4

	  	
Section 3.3

	
Discontinuation

	
4

	
ARTICLE IV INDEMNIFICATION

	
4

	  	
Section 4.1

	
Indemnification by the Company

	
4

	  	
Section 4.2

	
Indemnification by ILDE

	
5

	  	
Section 4.3

	
Conduct of Indemnification Proceedings

	
5

	  	
Section 4.4

	
Contribution

	
6

	
ARTICLE V GENERAL PROVISIONS

	
6

	  	
Section 5.1

	
Amendment and Modification

	
6

	  	
Section 5.2

	
Waiver of Compliance

	
6

	  	
Section 5.3

	
Notices

	
7

	  	
Section 5.4

	
Definitions

	
7

	  	
Section 5.5

	
Interpretation

	
9

	  	
Section 5.6

	
Third Party Beneficiaries

	
10

	  	
Section 5.7

	
Successors and Assigns

	
10

	  	
Section 5.8

	
Severability

	
10

	  	
Section 5.9

	
Governing Law; Dispute Resolution

	
10

	  	
Section 5.10

	
Counterparts

	
10

	  	
Section 5.11

	
Entire Agreement

	
11

  

  

  

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of November 21, 2011, by and among GeoGlobal Resources Inc., a Delaware corporation (the “Company”), and The Israel Land Development Company – Energy Ltd. (“ILDE”), a company incorporated in Israel.

 

W I T N E S S E T H:

 

WHEREAS, concurrently with the execution and delivery of this Agreement, the parties hereto are executing and delivering the Stock Purchase Agreement, dated as of the date hereof, by and among the Company and ILDE (the “Stock Purchase Agreement”), pursuant to which ILDE agreed to purchase, and the Company agreed to issue, 16,466,639 shares of common stock, $0.001 par value, of the Company (the “Company Common Stock”);

 

WHEREAS, concurrently with the execution and delivery of this Agreement, the parties hereto are executing and delivering the Securities Purchase and Exchange Agreement, dated as of the date hereof, by and among the Company and ILDE (the “Exchange Agreement”), pursuant to which the Company agreed, upon the satisfaction of the conditions set forth therein, to (a) issue 32,740,479 shares of Company Common Stock and 16,466,639 warrants to purchase shares of Company Common Stock (the “Warrants”), to ILDE in exchange for the issuance by ILDE of 28,402,262 ordinary shares, nominal value NIS0.01 per share, of ILDE (the “ILDE Ordinary Shares”) and (b) grant ILDE the right to purchase 16,466,639 units (the “Units”), each consisting of (i) one (1) share of Company Common Stock and (ii) a Warrant to purchase one (1) share of Company Common Stock;

 

WHEREAS, in order to induce ILDE to consummate the transactions contemplated by the Stock Purchase Agreement and the Exchange Agreement, the Company wishes to provide ILDE with the registration rights set forth herein;

 

NOW, THEREFORE, in consideration of the foregoing, the mutual promises set forth herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

 

 

REGISTRATION

 

Section 1.1 Registration Statements

 

(a) Promptly following the closing of the purchase and sale of Company Common Stock contemplated by the Stock Purchase Agreement (the “Stock Purchase Agreement Closing Date”) (but no later than five (5) days after the Stock Purchase Agreement Closing Date), the Company shall prepare and file with the SEC a Registration Amendment on Form S-3 (or, if Form S-3 is not then available to the Company, on such form of registration statement as is then available to effect a registration for resale of the Registrable Securities), covering the resale of the Registrable Securities in an amount equal to the number of shares of 

 

  

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Company Common Stock issued to ILDE pursuant to the Stock Purchase Agreement on the Stock Purchase Agreement Closing Date.

 

(b) If, on the date on which the consummation of the transaction contemplated by the Exchange Agreement occurs (the “Exchange Agreement Closing Date”) the Company does not have in effect a Registration Statement that covers the resale of the Registrable Securities issued pursuant to the Exchange Agreement, the Company shall promptly (but no later than thirty (30) days after the Exchange Agreement Closing Date), prepare and file with the SEC a Registration Amendment covering the resale of the Registrable Securities in an amount equal to the number of Registrable Securities issued pursuant to the Exchange Agreement.

 

Section 1.2 Expenses

 

The Company will pay all expenses associated with each registration, including ILDE’s reasonable expenses in connection with the registration but excluding discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar securities industry professionals related to a sale of the Registrable Shares.

 

Section 1.3 Effectiveness

 

The Company shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable.

 

Section 1.4 Suspension Period

 

For not more than twenty (20) consecutive trading days or for a total of not more than sixty (60) trading days in any twelve (12) month period, the Company may delay the disclosure of material non-public information concerning the Company, by terminating or suspending effectiveness of any registration contemplated by this Section containing such information, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company (a “Suspension Period”); provided, that the Company shall promptly (i) notify ILDE in writing of the existence of (but in no event, without the prior written consent of ILDE, shall the Company disclose to ILDE any of the facts or circumstances regarding) material non-public information giving rise to a Suspension Period, and (ii) if the Registration Amendment has already been filed and declared effective, advise ILDE in writing to cease all sales under the Registration Statement until the end of the Suspension Period.

 

ARTICLE II

 

 

COMPANY OBLIGATIONS

 

Section 2.1 Company Obligations

 

The Company will use its commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the terms hereof, and pursuant thereto the Company will, as expeditiously as possible:

 

(a) use its commercially reasonable efforts to cause the Registration Amendments to become effective and to remain continuously effective for a period that will terminate upon the earlier of (i) the date on which all Registrable Securities, covered by such Registration Statement, as amended from time to time, have been sold, and (ii) the date on which all Registrable Securities may be sold pursuant to Rule 144 of the Securities Act without volume or manner of sale restrictions (“Registration Period”);

 

  

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(b) prepare and file with the SEC such amendments and post-effective amendments to the Registration Statement and the Prospectus as may be necessary to keep the Registration Statement effective for the Registration Period and to comply with the provisions of the Securities Act and the Exchange Act with respect to the distribution of all Registrable Securities;

 

(c) furnish to ILDE and their legal counsel (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company (but not later than two (2) business days after the filing date, receipt date or sending date, as the case may be), a reasonable number of copies of any Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus and each amendment or supplement thereto, and each letter written by or on behalf of the Company to the SEC or the staff of the SEC, and each item of correspondence from the SEC or the staff of the SEC, in each case relating to such Registration Statement (other than any portion of any thereof which contains information for which the Company has sought confidential treatment), and (ii) such number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as ILDE may reasonably request in order to facilitate the disposition of the Registrable Securities owned by ILDE;

 

(d) immediately notify ILDE, at any time when a Prospectus relating to the Registrable Securities is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and at the request of ILDE, promptly prepare and furnish to ILDE a reasonable number of copies of a supplement to or an amendment of such Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

 

(e) with a view to making available to the ILDE the benefits of Rule 144 promulgated under the Securities Act and other rules and regulations of the SEC that may at any time permit ILDE to sell securities of the Company to the public without registration, the Company covenants that it will (i) file in a timely manner all reports and other documents required, if any, to be filed by it under the Securities Act and the Exchange Act and (ii) make available information necessary to comply with Rule 144, if available with respect to resales of the Registrable Securities under the Securities Act, at all times, all to the extent required from time to time to enable ILDE without registration under the Securities Act within the limitation of the exemptions provided by (x) Rule 144 promulgated under the Securities Act (if available with respect to resales of the Registrable Securities), as such rules may be amended from time to time or (y) any other rules or regulations now existing or hereafter adopted by the SEC.  Upon the reasonable request of ILDE, the Company will deliver to ILDE a written statement as to whether it has complied with such information;

 

(f) use its commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness and, if such order is issued, obtain the withdrawal of any such order at the earliest possible moment;

 

  

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(g) cause all Registrable Securities covered by a Registration Statement to be listed on each securities exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed;

 

(h) in the case of certificated Registrable Securities, cooperate with ILDE to facilitate the timely preparation and delivery of certificates representing Registrable Securities sold pursuant to a Registration Statement;

 

(i) provide and cause to be maintained a transfer agent and registrar for all such Registrable Securities that are Company Common Stock from and after the effective date of the applicable Registration Statement; and

 

(j) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the Securities Act and the Exchange Act, and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder.

 

ARTICLE III

 

 

OBLIGATIONS OF ILDE

 

Section 3.1 Company Information

 

ILDE shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.

 

Section 3.2 Cooperation

 

ILDE, by its acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Amendments.

 

Section 3.3 Discontinuation

 

ILDE agrees that, upon receipt of any notice from the Company of the happening of any event rendering a Registration Statement no longer effective, ILDE will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until the supplemented or amended prospectus filed with the SEC is declared effective.

 

ARTICLE IV

 

 

INDEMNIFICATION

 

Section 4.1 Indemnification by the Company

 

The Company will indemnify and hold harmless ILDE and their respective officers, directors, members, employees and agents, successors and assigns, and each other person, if any, who controls ILDE within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such seller, officer, director, member, or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, any preliminary 

 

  

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prospectus or final Prospectus contained therein, or any amendment or supplement thereof; (ii) any blue sky application or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities under the securities laws thereof; (iii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; or (iv) any violation by the Company or its agents of any rule or regulation promulgated under the Securities Act or Exchange Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection with such registration; and will advance to or reimburse ILDE, and each such officer, director or member and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability directly arises out of or is based solely upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by ILDE or any such controlling person in writing specifically for use in such Registration Statement or Prospectus.

 

Section 4.2 Indemnification by ILDE

 

In connection with any registration pursuant to the terms of this Agreement, ILDE will furnish to the Company in writing such information as the Company reasonably requests concerning ILDE or the proposed manner of distribution for use in connection with any Registration Statement or Prospectus and agrees to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees, stockholders and each person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expense (including reasonable attorney fees) resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration Statement or Prospectus or preliminary prospectus or amendment or supplement thereto or necessary to make the statements therein not misleading, to the extent, but only to the extent that such untrue statement or omission is contained in any information furnished in writing by ILDE to the Company specifically for inclusion in such Registration Statement or Prospectus or amendment or supplement thereto and that such information was substantially relied upon by the Company in preparation of the Registration Statement or Prospectus or any amendment or supplement thereto.  In no event shall the indemnification obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such holder and the amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.

 

Section 4.3 Conduct of Indemnification Proceedings

 

Any Person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any Person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Person unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such Person or (c) in the reasonable judgment of any such Person, a conflict of interest exists between such Person and the 

 

  

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indemnifying party with respect to such claims or there are additional defenses available to such Person (in which case, if the Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person); and provided, further, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation.  It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties.  No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release of such indemnified party from all liability in respect of such claim or litigation.

 

Section 4.4 Contribution

 

If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable to an indemnified party or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations.  No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation.  In no event shall the contribution obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such holder and the amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.

 

ARTICLE V

 

 

GENERAL PROVISIONS

 

Section 5.1 Amendment and Modification

 

Subject to applicable Law, this Agreement may be amended, modified, or supplemented only by the written agreement of the parties hereto.

 

Section 5.2 Waiver of Compliance

 

Except as otherwise provided in this Agreement, the failure by any Person to comply with any obligation, covenant, agreement or condition may be waived by the Person entitled to the benefit thereof only by a written instrument signed by the Person granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition will not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.  The failure of any Person to enforce at any time any of the provisions of this Agreement will in no way be construed to be a waiver of any such provision, nor in any way affect the validity of this Agreement or any part of this Agreement or the right of any Person thereafter to enforce each and every such provision.  No waiver of any breach of any provisions of this Agreement will be held to be a waiver of any other or subsequent breach.

 

  

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Section 5.3 Notices

 

All notices required or permitted pursuant to this Agreement will be in writing and will be deemed to be properly given when actually received by the Person entitled to receive the notice at the address stated below, or at such other address as a party may provide by notice to the other:

 

	
  

	
If to the Company:

 

 

	
  

	
GeoGlobal Resources Inc.

 

	
  

	
Suite 200, 625 - 4th Ave. S.W.

 

	
  

	
Calgary, Alberta

 

	
  

	
T2P 0K2

 

	
  

	
Fax: (403) 777-9199

 

	
  

	
Attention:  Paul Miller

 

	
  

	
With a copy (which shall not constitute notice) to:

 

 

	
  

	
Paul, Weiss, Rifkind, Wharton & Garrison LLP

 

	
  

	
1285 Avenue of the Americas

 

	
  

	
New York, NY10019-6064

 

	
  

	
Fax:  (212) 492-0078

 

	
  

	
Attention:  Andrew J. Foley, Esq.

 

	
  

	
If to ILDE:

 

 

	
  

	
The Israel Land Development Company – Energy Ltd.

 

	
  

	
2 Shenkar St.

 

	
  

	
Tel-Aviv, Israel

 

	
  

	
Fax: +972 (3) 796-2246

 

	
  

	
Attention: Ohad Marani, CEO

 

With a copy (which shall not constitute notice) to:

CBLS Law Offices

35th floor, 5 Azrieli Center, Square Tower

Tel-Aviv

Israel

Fax: +972 (3) 718-8701

Attention: Barak Luchtenstein, Adv.

Section 5.4 Definitions

 

As used in this Agreement, the following terms have the respective meanings set forth below.

 

“Affiliate” means, with respect to any person, any other person which directly or indirectly controls, is controlled by, or is under common control with, such person.

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

 “Company” has the meaning set forth in the preamble to this Agreement.

 

  

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“Company Common Stock” has the meaning set forth in the recitals to this Agreement.

 

“Current Registration Statement” shall mean the shelf Registration Statement of the Company that is effective on the Stock Purchase Agreement Closing Date.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Exchange Agreement” has the meaning set forth in the recitals to this Agreement.

 

“Exchange Agreement Closing Date” has the meaning set forth in Section 1.1(b).

 

“ILDE” has the meaning set forth in the preamble to this Agreement.

 

“ILDE Ordinary Shares” has the meaning set forth in the recitals to this Agreement.

 

“Person” means any individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, government (or an agency or political subdivision thereof) or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.

 

 “Prospectus” shall mean the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus.

 

“Register,” “registered” and “registration” refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the Securities Act (as defined below), and the declaration or ordering of effectiveness of such Registration Statement or document.

 

“Registrable Securities” shall mean the shares of Company Common Stock issued and issuable to ILDE pursuant to the Stock Purchase Agreement and the Exchange Agreement and issuable upon the exercise of the Warrants and any other securities issued in exchange therefor or in connection with ILDE’s ownership thereof.

 

“Registration Amendment” shall mean a post-effective amendment to the Current Registration Statement or any other amendment or Registration Statement required to fulfill the Company’s obligations to ILDE under the terms of this Agreement.

 

“Registration Period” has the meaning set forth in Section 2.1(a).

 

“Registration Statement” shall mean any registration statement of the Company filed under the Securities Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration 

 

  

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Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Stock Purchase Agreement” has the meaning set forth in the recitals to this Agreement.

 

“Stock Purchase Agreement Closing Date” has the meaning set forth in Section 1.1(a).

 

 “Suspension Period” has the meaning set forth in Section 1.4.

 

“Units” has the meaning set forth in the recitals to this Agreement.

 

“Warrants” has the meaning set forth in the recitals to this Agreement.

 

Section 5.5 Interpretation

 

.  Unless otherwise expressly provided, for the purposes of this Agreement, the following rules of interpretation shall apply:

 

(a) The Article and Section headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation hereof.

 

(b) When a reference is made in this Agreement to an Article or a Section, paragraph, Exhibit or Schedule, such reference shall be to an Article or a Section, paragraph, Exhibit or Schedule hereof unless otherwise clearly indicated to the contrary.

 

(c) Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

 

(d) The words “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement.

 

(e) The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.”

 

(f) The meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term, and words denoting any gender shall include all genders.  Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning.

 

(g) A reference to “$,” “U.S. dollars” or “dollars” shall mean the legal tender of the United States.

 

(h) A reference to “NIS” shall mean the Israeli New Shekel.

 

  

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(i) A reference to any period of days shall be deemed to be to the relevant number of calendar days, unless Business Days is specified.

 

(j) All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

 

(k) Unless otherwise defined, a reference to any accounting term shall have the meaning as defined under GAAP.

 

(l) The parties have participated jointly in the negotiation and drafting of this Agreement (including the Schedules and Exhibits hereto).  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions hereof.

 

(m) Any statute defined or referred to herein or in any agreement or instrument that is referred to herein means such statute as from time to time amended, modified or supplemented, including by succession of comparable successor statutes and shall also be deemed to include all rules and regulations promulgated thereunder, and references to all attachments thereto and instruments incorporated therein.

 

Section 5.6 Third Party Beneficiaries

 

.  Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement.

Section 5.7 Successors and Assigns

 

This Agreement will be binding upon and will inure to the benefit of the signatories hereto and their respective successors and permitted assigns.  Neither the Company nor ILDE may assign this Agreement or any of its rights or liabilities hereunder without the prior written consent of the other party hereto, and any attempt to make any such assignment without such consent will be null and void.  Any such assignment will not relieve the party making the assignment from any liability under this Agreement.

 

Section 5.8 Severability

 

The illegality or partial illegality of any of this Agreement, or any provision hereof, will not affect the validity of the remainder of this Agreement, or any provision hereof, and the illegality or partial illegality of this Agreement will not affect the validity of this Agreement in any jurisdiction in which such determination of illegality or partial illegality has not been made, except in either case to the extent such illegality or partial illegality causes this Agreement to no longer contain all of the material provisions reasonably expected by the parties to be contained herein.

 

Section 5.9 Governing Law; Dispute Resolution

 

This Agreement, and all claims arising hereunder or relating hereto, shall be governed by and construed and enforced in accordance with the Laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof, and each of the parties agrees to submit all disputes hereunder to binding arbitration to take place in London, England.

 

Section 5.10 Counterparts

 

       This Agreement may be executed in two or more counterparts, all of which will be considered one and the same agreement and will become 

 

  

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effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that each party need not sign the same counterpart.

Section 5.11 Entire Agreement

 

This Agreement (including the documents and the instruments referred to in this Agreement) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

  

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IN WITNESS WHEREOF, each of the signatories hereto has caused this Agreement to be signed by their respective duly authorized officers as of the date first above written.

 

GEOGLOBAL RESOURCES INC.

 

	
  

	
By:/s/ Paul B. Miller

 

	
  

	
Name:  Paul B. Miller

 

	
  

	
Title:    President and CEO

 

THE ISRAEL LAND DEVELOPMENT COMPANY – ENERGY LTD.

 

	
  

	
By:/s/ Ohad Marani

 

	
  

	
Name:  Ohad Marani

 

	
  

	
Title:    CEOExhibit 10.1

CONSTRUCTION LOAN AGREEMENT

          This CONSTRUCTION
LOAN AGREEMENT (the “Agreement”) is entered into as of the __18th__
day of November, 2011, among PROSPERITY BANK (the “Lender”) and AmREIT
WOODLAKE POINTE I, LP, a Texas limited partnership (the “Borrower”),
as follows:

RECITALS:

          A.          Borrower
owns the real property (sometimes hereinafter called the “Property”) described
hereafter, and desires to construct certain improvements (the “Improvements”,
consisting of the Landlord’s Work and the Tenant’s Work as defined below)
thereon, said property being described as follows, to wit:

	
  

 
	
 A tract or parcel containing 3.7931 acres or 165,225 square feet of
 land, being out of Unrestricted Reserve “A” of Woodlake Pointe, a subdivision
 recorded under Film Code Number (F.C. No.) 631064, of the Harris County Map
 Records (H.C.M.R.), situated in Harris County, Texas, with said 3.7931 acre
 tract being more particularly described by metes and bounds attached as Exhibit
 “A”. With all bearings based on said subdivision plat.

 

          B.          The
Property has been leased by AmREIT Westheimer Gessner, L.P. (which has
assigned the Lease to Borrower) to L.A. FITNESS INTERNATIONAL, LLC, a
California limited liability company (the “Tenant”) pursuant to a Retail Lease
agreement dated May 12, 2011 (the “Lease”) which, including the defined terms
therein, is incorporated herein by reference for all purposes.

          C.          Pursuant
to the terms of the Lease, Borrower is obligated to construct certain improvements
on the Property, being the “Landlord’s Work” as defined in Section 4 of
the Work Letter (Exhibit C to the Lease, being referred to in this Agreement as
the “Work
Letter”, a copy of which is attached as “Attachment 3”
hereto). Out of the $6,715,000.00 Note, the amount of $2,035,000.00 (the “Landlord
Allocation”) is allocated to the Landlord’s Cost for the Landlord’s
Work and other costs, excluding the Tenant Allocation as defined below, as
scheduled on the Loan Budget (the “Budget”) attached hereto as Exhibit “B”.
Further, Borrower will be permitted to reallocate Budget line item costs
between categories, provided that the amount remaining in any line item shall
not be less than the expected cost thereof.

          D.          Pursuant
to the terms of the Lease. Tenant through Tenant’s contractor is obligated to
construct certain improvements on the Property, being the “Tenant’s Work” as defined in
Section 6 of the Work Letter. Out of the $6,715,000.00 Note, the amount of
$4,680,000.00 (the “Tenant Allocation”) is allocated to the
Landlord’s Construction Cost Contribution (per Section 7.1 of the Work Letter)
for the Tenant’s Work.

          E.          The
Improvements are to be constructed in conformity with the architectural plans
and specifications (the “Plans and Specifications”) prepared by or
on behalf of Borrower and Tenant.

          F.          The
Improvements shall be completed by the ___18th__ day of May, 2013 (the “Completion
Date”).

          G.          Borrower
and Tenant may each engage one or more general contractors (collectively any
and all such general contractors, subcontractors, materialmen, artisans,
laborers and suppliers are referred to herein collectively as the “Contractor”,
with all contracts and agreements with any Contractor being collectively the “Contract”).
Borrower, Tenant and their respective Contractor may have entered into an
additional agreement and/or may have agreed on plans and/or specifications
(which collectively are referred to herein as the “Construction Agreement”) for
the construction of the Improvements.

          H.          Borrower
has executed a Promissory Note (the “Note”) to Lender to finance the cost of
construction of the Improvements, and Lender, subject to the conditions
hereinafter contained, has agreed to make the loan evidenced by the Note.
Borrower has executed a Deed of Trust, Security Agreement and Financing
Statement (the “Mortgage”) creating certain liens and security interests (the
“Liens”)
in order to secure the Note and the indebtedness described in the Mortgage and
in this Agreement.

A
G R E E M E N T S:

           NOW, THEREFORE, in consideration of the
premises herein contained and for Ten and No/100 ($10.00) Dollars and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned agree as follows:

          1.          The
Loan. Lender shall make a loan (the “Loan”) to Borrower in the principal amount
of SIX
MILLION SEVEN HUNDRED FIFTEEN THOUSAND AND NO/100 ($6,715,000.00) DOLLARS
to pay for the costs of labor performed and materials furnished (collectively
called the “Work”, including the Landlord’s Work and the Tenant’s Work)
pursuant to the Lease, to be advanced by Lender as provided below. Borrower
agrees that Borrower will fully perform Borrower’s covenants and obligations
under the Contract and the Construction Agreement executed by Borrower with
respect to Landlord’s Work. Borrower will enforce the performance by Tenant
under the Lease, including Tenant’s covenants and obligations under the Work
Letter with respect to Tenant’s Work. Borrower agrees that the Improvements
will be completed by the Completion Date.

          2.          Warranties.
Borrower warrants and represents that as of the date hereof, no Work of any
kind has been performed upon the Property, no material or equipment has been
delivered upon the Property, and no construction contract has been executed by
Borrower for any work or materials in connection with any of the Improvements
contemplated to be constructed on the Property. Furthermore, Borrower confirms,
ratifies and reiterates each and every warranty and representation contained in
the Mortgage and each instrument executed by Borrower in connection with the
Loan.

2

          3.          Loan
Advances; Retainage. The proceeds of the Loan relating to the Work shall be
advanced from time to time (at such intervals as Lender shall determine) in
installments, in amounts and after Borrower has requested Lender, as provided
in this Agreement, to pay for Work which has been performed and completed under
the Contract and after Lender is satisfied that the Work, or such portion of
the Work satisfactory to Lender, has been completed in accordance with the
Plans and Specifications and the terms and provisions of this Agreement, the
Contract and the Construction Agreement and such work has been approved by
Lender’s third party inspector (such as AECC). In no event shall the total
advances exceed the amount of the Note, unless otherwise agreed to in writing
by both of the undersigned or contemplated in this Agreement. The Lender shall
not have an obligation to make any advance under the Note if there is a default
under the Note, the Contract, this Agreement, the Construction Agreement or any
other instrument executed in connection with the Loan.

          The amount
of each advance shall be the amount approved by Lender, in its sole discretion,
less ten percent (10%) (the “Retainage”) unless such Retainage is waived
by Borrower and Lender. To the extent Retainage may be waived, Borrower
acknowledges that Borrower may be additionally and personally liable to
Contractors, including subcontractors or material suppliers and other lien
claimants, for such amount under applicable law, but Lender shall have no
liability therefor. Borrower understands that such liability would be in
addition to all amounts Borrower will have paid Contractor, and in some
instances could make Borrower pay more than 100% of the Contract Price.

          Within ten
(10) days following Lender’s written demand to Borrower, Borrower shall deposit
with Lender such sums (the “Borrower’s Deposit”) as Lender may deem
necessary in addition to the Loan for the completion and payment of all costs
in connection with the construction of the Improvements and for the performance
of any obligation of Borrower to Lender. Borrower agrees that such Borrower’s
Deposit will be advanced by Lender for the Work prior to Lender’s advancing
additional funds out of the Loan.

          4.          Conditions
for Initial Advance. In addition to the requirements contained in other
Sections of this Agreement, prior to or at the time of the initial advance on
the Loan (including the purchase money portion of the Loan), Lender shall be in
receipt of the following, all in form and substance satisfactory to Lender:

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
    (a)

 	
 The Note and
 the recorded Mortgage.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
    (b)

 	
 This
 Agreement.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
    (c)

 	
 A Loan
 Policy of Title Insurance, insuring that the lien created by the Mortgage
 constitutes a valid first lien on the Property.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
    (d)

 	
 Insurance
 policies for (i) public liability insurance and workmen’s compensation
 insurance for Borrowers and Contractor; (ii) hazard insurance (builder’s
 risk) providing all risk coverage on the Property and Improvements, including
 materials stored on the Property or elsewhere and including all perils of
 collapse; (iii) flood insurance, if applicable; and

 

3

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (iv) fire
 and extended coverage insurance, all policies with standard mortgagee clauses
 attached in favor of Lender.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
   (e)

 	
 A survey of
 the Property.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
   (f)

 	
 A copy of
 the executed Construction Agreement, including the Plans and Specifications,
 a copy of the building permit and the approval (if required) of any deed
 restriction or architectural control committee having the right to review and
 approve the plans.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
   (g)

 	
 Proof
 satisfactory to Lender that Borrower has paid third party Contractor(s) the
 first $0.00 of the cost of the Work.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
   (h)

 	
 Such other
 documents as Lender may reasonably require in connection with the Loan.

 

Notwithstanding the foregoing to the contrary, upon the closing of the
Loan (i.e., Lender receipt and approval of items a, b and c above), Lender
shall advance to Borrower the amount of Borrower’s closing costs, one half
(1/2) of the commission and soft costs as per the Budget which Borrower has
provided to Lender. Following that, the next series of advances on the Loan
shall be with respect to the Landlord’s Work as provided in this Agreement.
Following substantial completion of Landlord’s Work, then the next series of
advances shall be with respect to the Tenant’s Work as provided in this
Agreement.

          5.          Application
for Advances. An application for each advance, in form approved by Lender,
shall be filed a reasonable time before the date upon which an advance is
desired, certified to by: (i) Borrower’s architect, engineer or inspector, if
any, as approved by Lender; (ii) such inspector or engineer as required by
Lender, in its discretion; (iii) Borrower; and (iv) with respect to any of
Tenant’s Work, approved by Tenant in accordance with the Work Letter. Such
application shall contain such information as Lender may reasonably request,
including proof of payment to Contractor, including all contractors,
subcontractors, materialmen, laborers, vendors, suppliers and all others
providing labor and materials for the Improvements (in the case of
subcontractors, with respect to amounts greater than $10,000.00). With respect
to lien waivers from Contractor, the same may be conditional based on payment of
current amounts due, and with respect to any final lien waiver shall be
submitted to Lender within ten (10) days following advancement therefor.
Following any event of default by Borrower and/or with the prior consent of
Borrower, amounts advanced under the Loan on behalf of Borrower may be
delivered directly to any Contractor, or in Lender’s discretion may be funded
by a check issued jointly to Borrower and any such Contractor. Lender shall
have the right to enter the Property and to inspect the Work at any time.
Additionally, Lender shall have the right to inspect all books and records of
Borrower relating to the Property and the Improvements. Lender shall have the
absolute right to communicate directly with any contractors, workmen, artisans,
materialmen, suppliers or subcontractors. Lender shall not be obligated to
advance for any Work not approved by Lender. Lender may, but is not obligated
to, exercise any of the rights of Borrower or Architect (as defined in the
Construction Agreement) in deciding to reduce or withhold all or any part of
any requested advance or payment.

4

          6.          Change
Orders. No amendment, modification and/or change order (a “Change Order”)
to the Contract, the Plans and Specifications and/or the Construction
Agreement, shall be effective unless the same is in writing and signed by all
parties to such respective instrument. Furthermore, Lender shall have the right
to review and approve all Change Orders (i) in excess of $100,000, or (H) which
cumulatively affect the contract price by more than 5% of the contract price,
or (iii) which extend the contract time by 30 or more calendar days, or (iv)
which make any material change in the Plans and Specifications, as a condition
precedent to said Change Orders becoming effective. Notwithstanding any
provision in this Agreement to the contrary, Lender may, in Lender’s reasonable
discretion (but without any obligation of Lender to do so), choose to advance
additional sums under this Agreement for some or all of any Change Orders, or
for any other purpose, even to the extent that the total amount advanced is in
excess of the amount of the Note, which additional sums advanced shall be added
to the principal amount due under the Note and shall bear interest and shall be
due and payable as provided in the Note, or upon Lender’s request, Borrower
shall execute such additional Promissory Note to Lender and/or such
modification of Note as Lender shall request to evidence such indebtedness,
bearing interest and being due and payable as Lender shall require, all of
which shall be secured by the Liens, and Borrower shall execute such other and
further instruments as Lender’s counsel shall require.

          7.          Commencement;
Completion; Payment of Retainage. Within ten (10) days following the
commencement of construction of the Improvements (which must be after the date
of filing of the Deed of Trust), Borrower shall sign and file an Affidavit of
Commencement in the form attached hereto as Attachment 1 and provide a copy of
same to Lender. Any Retainage and/or “holdback” shall be payable upon the
expiration of thirty (30) days after the later to occur of (i) the date of
final completion of the Improvements, or (ii) the filing of a statutory
Affidavit of Completion in the form attached hereto as Attachment 2 and notice
thereof under Section 53.106 of the Texas Property Code; provided that the
Improvements have been inspected and accepted by Lender and by any financing
agency providing permanent financing of the Improvements. Additionally, the
Improvements shall not be considered complete unless and until all the Work
requiring inspection by any property owners association or similar entity, or
by any municipal or other governmental authority having jurisdiction, has been
duly inspected and approved by such entity or authority and all requisite
certificates of occupancy and other approvals have been duly issued; and
provided further, that Lender may withhold approval of final payment until
after evidence satisfactory to Lender shall have been presented to Lender
showing payment in full of all obligations incurred in connection with
construction and completion of the Improvements.

          8.          Subrogation
for Advances. Advances made by Lender pursuant to this Agreement for Work
shall be in payment of such respective portion of the indebtedness from
Borrower to each Contractor for such Work, and Lender shall be subrogated to
any rights of each such respective Contractor with respect to such
indebtedness, including any and all rights, security interests and liens of
such respective Contractor, irrespective of whether such liens, security
interests, charges or encumbrances are released of record.

          Borrower
shall have no right of offset, counterclaim or defense against Lender for
payment of any indebtedness owing under any Contract which Lender has advanced
under the Loan because of any claim Borrower may have against any such
Contractor. The obligations arising under any Contract and/or the Construction
Agreement between any Contractor and 

5

Borrower are separate and independent of any obligations arising
hereunder among Borrower and Lender.

          If
any portion of the indebtedness owing under any Contract or under any document
executed in connection with the Loan cannot lawfully be secured by the Liens
granted therein, any payment made on such indebtedness shall be applied first
to the discharge of such unsecured portion of the indebtedness.

          9.          No
Liability of Lender. Lender has no liability, obligation or responsibility
whatsoever with respect to the Work related to the construction of the
Improvements except to advance the proceeds of the Loan as herein agreed.
Lender has no liability if the amount of the Loan is insufficient to complete
the Improvements. Lender is not obligated to inspect the Improvements or the
construction thereof nor is Lender liable for the performance or default of any
Contractor, including any contractor, subcontractor, materialman, supplier,
artisan or laborer, or for any failure to construct, complete, protect or
insure the Improvements, or for the payment of any cost or expense incurred in
connection therewith, or for the performance or nonperformance of any
obligation of Borrower to such parties; and nothing, including without
limitation, any disbursement hereunder or the deposit or acceptance of any document
or instrument, shall be construed as a representation or warranty, express or
implied, on Lender’s part. No party, including Borrower, any Contractor and/or
any third party, shall have the right to assert any claim against Lender as a
result of Lender’s inspections, failure to inspect, advances or otherwise. No
third party shall be entitled to be a beneficiary of this Agreement. Borrower
shall be responsible for inspecting the Improvements during construction and
for determining that the Improvements are in accordance with the Contract, the
Plans and Specifications and the Construction Agreement, and shall promptly
notify Lender in writing of any defects discovered by Borrower.

          10.         Borrower’s
Additional Agreements. Borrower hereby agree as follows:

(a)      Borrower
agrees to save and hold Lender harmless from any and all claims of Contractor,
including any and all subcontractors, materialmen or laborers for work
performed, labor or supplies provided or for the construction of the Work.

(b)      All
amounts advanced by Lender in connection with the Work are stipulated as “Trust Funds”
for the benefit of those providing labor and materials until all such labor and
materials have been paid in full. Borrower shall fully and promptly pay all
Trust Funds promptly to the party entitled to payment thereof. In the event
Borrower should default in the payment of such Trust Funds (any amounts owing
as a result of such default being “Unpaid Bills”), then Lender may elect to
declare the Loan in default, or Lender may choose to allow further construction
of the Improvements (but without waiving such default or the right to later
declare any then uncured failure to pay Trust Funds as a default under this
Agreement), in which case the following shall apply:

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 1)

 	
 Borrower shall continue to be fully responsible for all obligations
 under the Agreement, the Contract, the Construction Agreement and all other 

 

6

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 instruments
 executed in connection with the Loan and in connection with the Contract.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 2)

 	
 Advances may be made by Lender directly to any Contractor for
 completed Work or for completion of the Work. Lender may choose not to pay to
 or advance any further proceeds of the Loan directly to Borrower until all
 Unpaid Bills have been paid and satisfied in full.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 3)

 	
 Upon completion of the Work, any unadvanced portion of the Loan may
 be advanced by Lender to pay any then Unpaid Bills.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 4)

 	
 Lender is not waiving its right to declare this Agreement to be in
 default as a result of a default as described above. In the event Lender
 shall receive any lien claim or notice from any Contractor with respect to
 Unpaid Bills, Lender shall have the right to exercise all rights under the
 Note and this Agreement, including the termination by Lender of Lender’s
 obligation to make further advances under the Loan, however any such
 termination shall not effect or diminish Lender’s lien with respect to the
 Property for all amounts advanced by Lender pursuant to the Contract and/or
 this Agreement.

 

          11.          Assignment.
Borrower hereby assigns to Lender any and all contracts, agreements and warranties with any Contractor of said party, and all professional
agreements, including those with architects, engineers and surveyors, and all
plans and specifications relating to the Improvements.

          12.          Conformance
with Contract and Laws. Borrower hereby warrants to Lender that the
Improvements, when complete, and all work in progress, will be in strict
conformance with the Plans and Specifications, the Contract and the
Construction Agreement and all applicable codes, ordinances, regulations, laws,
covenants and restrictions which may affect the Property or the Improvements.
This warranty to Lender shall survive termination, and shall remain in
existence until all indebtedness to Lender shall have been fully and finally
paid in full, and until all liens assigned to Lender have been fully and
finally released by Lender, notwithstanding the provisions of §16.009 of the
Texas Civil Practices and Remedies Code. This warranty is assignable by Lender.

          13.          Survey.
Upon request, the Borrower shall furnish to Lender, promptly after the
foundation for the Improvements has been poured, a survey by a surveyor,
licensed as such in the State of Texas and acceptable to Lender, of the
Property showing, in addition to the usual and customary information disclosed
by a proper survey, the location of said foundation, duly certified by such
surveyor as an accurate survey. Such survey must reflect that none of said Work
encroaches upon a street or any adjoining property and that no adjoining
structure encroaches upon said Property, and said survey must not disclose any
violation of building setback lines or building restrictions or any other title
defect or encumbrance. A final survey covering the matters set forth above
shall be of said Work in accordance with the Plans and Specifications therefor.
Lender may also require Borrower to furnish an “as built” set of plans and/or
specifications.

7

          14.          Lender’s
Right to Complete. Subject to the force majeure provision in the next
paragraph, if Borrower at any time prior to the completion of the Improvements
abandons the same, ceases work thereon for a period of more than twenty (20)
days, fails to complete the erection of the Improvements strictly in accordance
with the Plans and Specifications, except as to changes approved by Lender,
makes material changes in the Plans and Specifications without first securing
written approval of the Lender in accordance with Section 6 of this Agreement,
fails to enforce any default by Tenant under the Lease, or otherwise fails to
comply with the terms of this Agreement or the Mortgage, any such failure shall
be a default hereunder and Lender shall have the right, but not the obligation,
to complete the Improvements and the Liens granted under the Mortgage shall
secure all amounts incurred by Lender in connection with such completion. Such
amounts, together with an overhead and oversight fee of fifteen percent (15%)
thereof, shall be due and owing from Borrower to Lender and (together with
other amounts owing to Lender under the Loan and this Agreement) shall be fully
secured by the Liens. In the event of Borrower’s default, Lender may terminate
this Agreement, and/or the Lender, at its option, at any time thereafter, may
enter into possession of the Property and perform any and all work and labor
necessary to complete the Improvements; all sums so expended by the Lender,
together with an overhead and oversight fee of fifteen percent (15%) thereof,
shall be deemed advanced to Borrower and secured by the Mortgage.

          Force
Majeure. Regarding the dates for completion of the Improvements and/or the
cessation of work for more than twenty (20) days as provided above in this
Agreement, if such date is prevented or delayed by reason of any act of Nature
(including, but not limited to lightning, storm, flood, hurricane), strike,
fire, explosion, lockout, labor trouble, acts of war or terrorism or inability
to secure materials, or any other cause (except financial inability) not the
fault of the party required to perform the act, and provided that such delay
qualifies as a force majeure event under the Lease with Tenant’s and Borrower’s
written acknowledgment thereof, Lender will not unreasonably withhold its
consent to Borrower’s request to extend the time for performance of the act for
a period equivalent to the number of days of delay and performance of the act
during the period of delay will be excused. However with respect to the date of
completion of the Improvements, such time of extension must be incorporated
into a written Modification Agreement executed by Borrower and Lender. Nothing
in this paragraph shall excuse the prompt payment of interest, principal or any
other amount required to be paid by Borrower to Lender under the Note or Loan
documents.

          If Lender
takes possession of the Property, it may take any and all actions necessary in
Lender’s judgment to complete construction of the Improvements, including but
not limited to making changes in the Plans and Specifications (subject to the
provisions of the Lease), work, or materials and entering into, modifying or
terminating any contractual arrangements, subject to Lender’s right at any time
to discontinue any work without liability. If Lender elects to complete the
Improvements, it will not assume any liability to Borrower, Tenant or to any
other person for completing the Improvements or for the manner or quality of
construction of the Improvements, and Borrower expressly waives any such
liability. Borrower irrevocably appoints Lender as Borrower’s attorney-in-fact,
with full power of substitution, to complete the Improvements, at Lender’s
option, either in Borrower’s name or in Lender’s name. Lender shall have the
right, in its sole discretion, to: (a) use any funds of the Borrower, including
any balance which may be held in escrow and any funds which may remain
unadvanced under this Agreement for the 

8

purpose of completing the Improvements, (b) employ such contractors,
subcontractors, and agents, architects and inspectors as shall be required for
said purposes, (c) employ watchmen to protect the Property from injury, (d)
pay, settle or compromise all existing bills and claims which may be liens or
claims against the Improvements, or as may be necessary or desirable for the
completion of the Improvements, or for clearance of title, (e) execute all
applications and certificates in the name of the Borrower which may be required
by any of the contract documents relating to the Property and/or the
Improvements, and (f) to do any and every act which the Borrower might do in
its own behalf with respect to the Property and the Improvements It is further
understood and agreed that this power of attorney shall be deemed to be a power
coupled with an interest and cannot be revoked. The above mentioned
attorney-in-fact shall also have the power to prosecute and defend all actions
or proceedings in connection with the construction of the Improvements or the
Property and to take such action and require such performance as such
attorney-in-fact deems necessary.

          In any
event, all sums expended by Lender in completing the construction of the
Improvements will be considered to have been disbursed to Borrower and will be
secured by the collateral for the Loan. Any such sums that cause the principal
amount of the Loan to exceed the face amount of the Note will be considered to
be an additional Loan to Borrower, bearing interest as provided in the Note,
and being secured by Lender’s Liens on the Property and by all collateral for
the Loan.

          For these
purposes, Borrower assigns to Lender all of its right, title and interest in
and to the following documents (the “Project Documents”): All Plans and
Specifications, all studies, data and drawings relating to the Property and the
Improvements, whether prepared by or for Borrower, all permits, all
construction contracts, all engineering and architectural contracts, and all
other contracts and agreements relating to the Property or to the construction
of the Improvements. However Lender will not have any obligation under the
Project Documents unless Lender expressly hereafter agrees to assume such
obligations in writing. Lender will have the right to exercise any rights of
Borrower under the Project Documents upon the occurrence of a default by
Borrower. Except as may be prohibited by applicable law, all of Lender’s rights
and remedies, whether evidenced by this Agreement or by any other writing, shall
be cumulative and may be exercised singularly or concurrently.

          15.          Borrower
and Tenant Obligated to Their Contractor(s). Borrower and Tenant shall be
obligated to their respective Contractor(s) under any Contract and under any
Construction Agreement with Borrower or Tenant respectively. Lender shall not
be responsible to Contractor for the payment or performance of any obligation
of Borrower or Tenant under any such Contract or Construction Agreement.

          16.          Affidavits
of Commencement/Completion. Upon the request of Lender, or at Borrower’s
election, the Borrower shall execute and file an Affidavit of Commencement as
provided in Section 53.124 of the Texas Property Code. Upon the request of
Lender, Borrower shall execute and file an Affidavit of Completion, and send
such notices as provided in Section 53.106 of the Texas Property Code.

          17.          Expenses.
Borrower shall pay for all expenses incurred in connection with the
transactions described herein, including costs for the issuance of any
casualty, liability, and/or 

9

title insurance binders or policies, recording fees, survey fees,
appraisal charges, engineering fees, inspection fees, expenses of Lender’s
counsel, loan fees, and any other costs and expenses arising pursuant to this
Agreement and/or the Loan. Lender shall have the right to pay any of such
expenses not paid by Borrower as an advance on the Loan and add the same to the
Note. Such inspection fees shall include, without limitation, the cost of professional
third party inspection company such as AECC.

          18.          Assignment
Prohibited. Except as provided in this Agreement, Borrower shall not have
the right to assign this Agreement, or any of its rights, obligations or
benefits, without first receiving the prior written consent of Lender. Subject
to the foregoing, the provisions of this Agreement, the Contract, the
Construction Agreement and all other instruments executed in connection with
the Loan and the Property, shall be binding upon the successors, legal
representatives, heirs and assigns of Borrower, and the benefits shall extend
to the successors and assigns of Lender.

          19.          Events
of Default. Any of the following shall, if determined by Lender (in its
sole discretion) to have occurred or be occurring, constitute an Event of
Default:

	
  

 	
  

 
	
  

 	
 (a)          Any
representation or warranty of Borrower in this Agreement, or in the Mortgage,
Lease or any other instrument executed in connection with the Loan, is or
becomes untrue in any material respect, in whole or in part; or

 
	
  

 	
  

 
	
  

 	
(b)          Borrower
breaches any agreement or obligation contained in this Agreement, the Note
and/or the Mortgage, or in the any Contract or Construction Agreement executed
by Borrower, or in any other instrument executed in connection with the Loan,
or if there is any default by Tenant under the Lease which continues beyond any
applicable cure period provided in the Lease; or

 
	
  

 	
  

 
	
  

 	
(c)          Any
sum of money which is due under the Note, this Agreement, the Mortgage or the
Construction Agreement is not paid by the responsible party when due; or

 
	
  

 	
  

 
	
  

 	
(d)          Borrower
or Tenant is or becomes insolvent or is adjudicated a bankrupt, or is the
subject of a proceeding for debtor relief, or a receiver is appointed for
Borrower or Tenant, or if Lender determines that Borrower or Tenant is
financially unable to complete such parties obligations with respect to this
Agreement, the Note and/or the Mortgage, or pursuant to any Contract or
Construction Agreement; or

 
	
  

 	
  

 
	
  

 	
(e)          The
Improvements or Property is damaged or destroyed, and any insurance proceeds
are insufficient (in Lender’s determination) to repair and restore the same, or
the Improvements cannot be completed by the Completion Date; or

 
	
  

 	
  

 
	
  

 	
(f)          Borrower
or Tenant abandons construction of the Improvements prior to completion, or if
construction of the Improvements ceases for a period of twenty 

 

10

	
  

 	
  

 
	
  

 	
(20) consecutive days or more, subject to Force Majeure as provided in
Section 14 of this Agreement.

 

          20.          Default
Remedies. If an Event of a Default shall occur or be continuing, Lender
shall have the right (in addition to any other rights available to Lender under
the Note, the Mortgage, or any other instrument), to refuse to make any further
advance(s), and/or to declare the Note and the Mortgage in default and to
exercise all rights and remedies of Lender under such instruments or any other
instruments executed in connection with the Loan.

          21.          Construction
Sign(s). Lender shall have the right at any time, at Lender’s election and
at Lender’s expense, to provide, install and/or remove one or more temporary
signs on the Property containing Lender’s name, logo, address, etc. which
indicate that Lender is providing construction financing for the Improvements.

          22.          General.
Time is of the essence hereof with respect to the dates, terms and provisions of
this Agreement. This Agreement is performable at Lender’s office as stated in
the Note. Under no circumstances shall Lender be in default of any obligation
or covenant herein unless the party claiming such default shall notify Lender
in writing by certified mail, return receipt requested, or by hand delivery, to
the President of Lender, specifying such alleged default and specifying a
period of time [no less than ten (10) business days] in which Lender may cure
such alleged default, and provided Lender fails to cure or commence to cure
such alleged default within such time period.

	
  

 	
  

 
	
  

 	
 THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN
 THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
 OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

 

11

THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 

This Agreement is executed as of the date first stated above.

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 LENDER:

 
	
  

 	
  

 	
  

 
	
  

 	
 PROSPERITY
 BANK

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
     /s/
 Robert J. Dowdell

 	
  

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Name:

 	
         Robert
 J. Dowdell

 	
  

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Title: 

 	
              Regional
 President

 	
  

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 BORROWER:

 
	
  

 	
  

 
	
  

 	
 AmREIT
 WOODLAKE POINTE I, LP, a Texas limited 

 Partnership

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 AmREIT
 Woodlake Pointe GP, LLC, a Texas 

 limited liability company, its general partner

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
 AmREIT
 Realty Investment 

 Corporation, a Texas corporation, its 

 Member

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 By

 	
 :     /s/
 Chad C. Braun

 
	
  

 	
  

 	
  

 	
  

 	
         Chad
 C. Braun, Vice President

 

12

Attachment
1

AFFIDAVIT
OF COMMENCEMENT

OF CONSTRUCTION

	
  

 	
  

 
	
 THE STATE OF
 TEXAS

 	
 §

 
	
  

 	
 §

 
	
 COUNTY OF
 HARRIS

 	
 §

 

          The undersigned
are the Owner and General Contractor with regard to the construction described
below. This instrument is recorded in the records of Harris County, Texas,
pursuant to Section 53.124 of the Texas Property Code, and provides notice to
all concerned of the commencement of construction of improvements on the real
property, as described below:

          1.          The
Owner is AmREIT
WOODLAKE POINTE I, LP, a Texas limited partnership, whose mailing
address is 8 Greenway Plaza, Suite 1000, Houston, Texas 77046.

          2.
   The Contractor is
___________________________, whose mailing address is _________________________________________________________________________________________________.

          3.          The
Real Property is known as ______________________________________________ County, Texas
_______________________, more fully described as follows:

	
  

 	
  

 
	
  

 	
 A tract or parcel containing 3.7931 acres or 165,225 square feet of
 land, being out of Unrestricted Reserve “A” of Woodlake Pointe, a subdivision
 recorded under Film Code Number (F.C. No.) 631064, of the Harris County Map
 Records (H.C.M.R.), situated in Harris County, Texas, with said 3.7931 acre
 tract being more particularly described by metes and bounds attached as
 Exhibit “A”. With all bearings based on said subdivision plat.

 

	
  

 	
  

 	
  

 
	
  

 	
 4.

 	
 Work
actually commenced on _____________________, 20______.

 
	
  

 	
   

 	
   

 
	
  

 	
 5.

 	
 The
 improvements commenced may generally be described as construction of
 improvements and related site work for the Owners.

 

13

          EXECUTED
this the _________ day of________, 20____.

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 OWNER:

 	
 CONTRACTOR:

 
	
  

 	
  

 
	
  

 	
  

 

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 AmREIT
 WOODLAKE POINT I, a Texas limited 

 	
  

 
	
 partnership

 	
 By:

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 Name:

 	
  

 
	
 By:

 	
 AmREIT
 Woodlake Pointe GP, LLC, a Texas

 	
 Title:

 	
  

 
	
  

 	
 limited
 liability company, its general partner

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 AmREIT
 Realty Investment Corporation, a Texas corporation, its Member

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Chad C.
 Braun, Vice President

 	
  

 	
  

 

14

(NOTARY ACKNOWLEDGMENTS FOR AFFIDAVIT OF

COMMENCEMENT OF CONSTRUCTION)

	
  

 	
  

 
	
 THE STATE OF
 TEXAS

 	
 §

 
	
  

 	
 §

 
	
 COUNTY OF
 HARRIS

 	
 §

 

          BEFORE ME,
the undersigned authority, on this day personally appeared CHAD C. BRAUN, the
VICE PRESIDENT of AmREIT REALTY INVESTMENT CORPORATION, a Texas corporation, a
Member of AmREIT WOODLAKE POINTE GP, LLC, a Texas limited liability company,
the general partner of AmREIT WOODLAKE POINTE I, LP, a Texas limited
partnership, known to me to be the persons whose names are subscribed to the
foregoing instrument, and acknowledged to me that they executed the same for the
purposes and consideration therein expressed.

          SWORN AND
SUBSCRIBED TO BEFORE ME on this the _____ day of___________________ 20_____, to
certify which witness my hand and seal of office.

	
  

 	
  

 
	
  

 	
  

 
	
  

 	
 Notary
 Public in and for 

 
	
  

 	
 The State of
 Texas

 

	
  

 	
  

 
	
 THE STATE OF
 TEXAS

 	
 §

 
	
  

 	
 §

 
	
 COUNTY OF
 HARRIS

 	
 §

 

          BEFORE ME,
the undersigned authority, on this day personally appeared
_______________________________ the ___________________________________ of
________________________, known to me to be the person whose name is subscribed
to the foregoing instrument, and acknowledged to me that he executed the same
for the purposes and consideration therein expressed and in the capacity
stated.

          SWORN AND
SUBSCRIBED TO BEFORE ME on this the _____ day of ___________________ 20_____,
to certify which witness my hand and seal of office.

	
  

 	
  

 
	
  

 	
  

 
	
  

 	
 Notary
 Public in and for 

 
	
  

 	
 The State of
 Texas

 

AFTER
RECORDING RETURN TO:

PROSPERITY
BANK 

Attn: Loan Operations 202 W. Colorado

La Grange, Texas 78945

15

Attachment
2

AFFIDAVIT
OF COMPLETION OF CONSTRUCTION

	
  

 	
  

 
	
 THE STATE OF
 TEXAS

 	
 §

 
	
  

 	
 §

 
	
 COUNTY OF
 HARRIS

 	
 §

 

          THE
UNDERSIGNED are the owners with respect to the construction described below.
This instrument is recorded in the records of Harris County, Texas, pursuant
to Section 53.106 of the Texas Property Code, and provides notice to all
concerned of the completion of construction of improvements on the real
property as described below:

	
  

 	
  

 	
  

 
	
  

 	
 1.

 	
 The Owner is AmREIT WOODLAKE POINTE I, LP, a Texas limited
 partnership, whose mailing address is 8 Greenway Plaza, Suite
 1000, Houston, Texas 77046.

 
	
  

 	
  

 	
  

 
	
  

 	
 2.

 	
 The Contractor is _________________________, whose mailing address is
___________________________________________________________________.

 
	
  

 	
  

 	
  

 
	
  

 	
 3.

 	
 The Real Property is known as _____________________, _____________
 County, Texas ________________________, more fully described as follows:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 A tract or parcel containing 3.7931 acres or 165,225 square feet of
 land, being out of Unrestricted Reserve “A” of Woodlake Pointe, a subdivision
 recorded under Film Code Number (F.C. No.) 631064, of the Harris County Map
 Records (H.C.M.R.), situated in Harris County, Texas, with said 3.7931 acre
 tract being more particularly described by metes and bounds attached as
 Exhibit “A”. With all bearings based on said subdivision plat.

 
	
  

 	
  

 	
  

 
	
  

 	
 4.

 	
 The improvements furnished under the original contract may generally
 be described as construction of improvements and related site work for the
 Owners.

 

16

	
  

 	
  

 	
  

 
	
  

 	
 5.

 	
 The
 improvements described above have been completed and the date of completion
 was ______________, 20______.

 
	
  

 	
  

 	
  

 
	
  

 	
 ALL
 CLAIMANTS ARE HEREBY NOTIFIED THAT YOU MAY NOT HAVE A LIEN ON RETAINED FUNDS
 UNLESS YOU FILE AN AFFIDAVIT CLAIMING THE LIEN NOT LATER THAN THE 30TH DAY
 AFTER THE DATE OF COMPLETION.

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
 OWNER:

 	
  

 
	
  

 	
  

 
	
 AmREIT
 WOODLAKE POINTE I, LP, a Texas limited Partnership

 	
  

 
	
  

 	
  

 
	
 By:

 	
 AmREIT
 Woodlake Pointe GP, LLC, a Texas limited liability company, its general
 partner

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 AmREIT
 Realty Investment Corporation, a Texas corporation, its Member

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Chad C.
 Braun, Vice President

 	
  

 

17

(NOTARY ACKNOWLEDGMENT FOR AFFIDAVIT

OF COMPLETION OF CONSTRUCTION)

	
  

 	
  

 
	
 THE STATE OF
 TEXAS

 	
 §

 
	
  

 	
 §

 
	
 COUNTY OF
 HARRIS

 	
 §

 

          BEFORE ME,
the undersigned authority, on this day personally appeared CHAD C. BRAUN, the
VICE PRESIDENT of AmREIT REALTY INVESTMENT CORPORATION, a Texas corporation, a
Member of AmREIT WOODLAKE POINTE GP, LLC, a Texas limited liability company,
the general partner of AmREIT WOODLAKE POINTE I, LP, a Texas limited partnership,
known to me to be the persons whose names are subscribed to the foregoing
instrument, and acknowledged to me that they executed the same for the purposes
and consideration therein expressed.

          SWORN AND
SUBSCRIBED TO BEFORE ME on this the _____________ day of __________________,
20______ to certify which witness my hand and seal of office.

	
  

 	
  

 
	
  

 	
  

 
	
  

 	
 Notary
 Public in and for The State of Texas

 

AFTER
RECORDING RETURN TO:

PROSPERITY
BANK 

Attn: Loan Operations 

202 W. Colorado

La Grange, Texas 78945

18

Attachment 3

Work Letter to Lease

19

EXHIBIT C

WORK LETTER

THIS WORK LETTER
(“Work Letter”) is part of that certain Retail Lease dated May ______, 2011 (the
“Effective Date”) by and between AMREIT WESTHEIMER GESSNER, LP, a Texas limited
partnership, as Landlord, and L.A. FITNESS INTERNATIONAL, LLC, a California
limited liability company, as Tenant (the “Lease”).

1.         Force and Effect. The provisions of this
Work Letter ate hereby incorporated into the Lease and shall have the same
force and effect as if this Work Letter were a numbered article of the Lease.

2.         Defined Terms. All capitalized terms not
defined herein but defined in the Lease shall have the same meaning as set
forth in the Lease, except as otherwise specifically stated herein.

3.         Design and Construction Consultants.

	
  

 	
  

 
	
  

 	
 3.1.         Tenant’s Architect. Heights Venture
 Architects, RKAA, Schroeder-Slater Architecture, Architects Forum or such
 other Texas licensed architect as Tenant may select with written notice to
 Landlord, shall act as Tenant’s architect (“Tenant’s Architect”) for
 “Tenant’s Work” (as defined in Section 6 below).

 
	
  

 	
  

 
	
  

 	
 3.2          Landlord’s Civil Engineer. Ryan Getz of
 Ward, Getz & Associates, LLP (with an address of 2500 Tanglewilde, Suite
 301, Houston, Texas 77063 and telephone number of 713.789.1900) or such other
 Texas licensed civil engineering company as Landlord may identify with
 written notice to Tenant, shall act as Landlord’s civil engineer with respect
 to the Premises (“Landlord’s Engineer”),

 
	
  

 	
  

 
	
  

 	
 3.3          Tenant’s Project Manager. Jon Zaich at
 2600 Michelson Drive, Suite 300, Irvine, CA 92612, tel.: (949) 255-7440, fax:
 (949) 660-4928, email: jonz@lafitness.com, shall act as Tenant’s project
 manager (“Tenant’s Project Manager”) with respect to the completion of
 Tenant’s Work.

 
	
  

 	
  

 
	
  

 	
 3.4          Landlord’s Project Manager. Ron Lindsey
 and/or Jason Lax (with an address of 8 Greenway Plaza, Suite 1000, Houston,
 Texas 77046 and telephone number of 713¬850--1400) shall act as Landlord’s
 project manager (“Landlord’s Project Manager”) with respect to the completion
 of Landlord’s Work (as defined in Section 4.1 below).

 
	
  

 	
  

 
	
  

 	
 3.5          Communications. All communications with
 respect to the matters covered by this Work Letter are to be made to Tenant’s
 Project Manager or Landlord’s Project Manager, as the case may be, in
 writing. Either party may change its representative under this Work Letter at
 any time by written notice to the other party in compliance with the notice
 provisions of the Lease.

 

20

	
  

 	
  

 
	
 4.

 	
 Landlord’s Work.

 
	
  

 	
  

 
	
  

 	
 4.1          Definition. The term “Landlord’s Work”
 shall mean (i) painting of the east and north walls of the Other Building (as
 defined in the Lease), (ii) repairing and striping the parking area within
 Tenant’s Area of Control (and the Land to the extent any existing pavement in
 the parking area within the Land remains) and (iii) the construction of the
 on-site and off-site work set forth) on Addendum 1 and Addendum 2
 hereto and as set forth in the Site Work Plans (as defined in Section 4.6
 below).

 
	
  

 	
  

 
	
  

 	
 4.2          Delivery of Conceptual Engineering
 Package. Within thirty (30) days after the Effective Date, at its sole cost
 and expense, Landlord shall prepare and deliver to Tenant the Conceptual
 Engineering Package (as defined in Section 4.3 below). 

 
	
  

 	
  

 
	
  

 	
 4.3          Conceptual Engineering Package. The term
 “Conceptual Engineering Package”, as used herein, shall mean the following
 documents related to the Land and Tenant’s Area of Control (herein “Phase I
 of the Project”): (a) an ALTA, boundary and topographical survey, (b) a site
 plan prepared by a licensed civil engineer (“Site Plan”), (c) a preliminary
 grading and drainage plan, (d) a preliminary utility plan for both “wet” and
 “dry” utilities, including power, gas, telephone, water and sewer, (e) a
 signage plan including design and location of any free-standing signs, (f) a
 geotechnical report on the soils within Phase I of the Project prepared by a
 licensed soils engineer, (g) a Phase I environmental assessment prepared by a
 licensed environmental engineer, together with a certification from such
 engineer that Tenant may rely on the information contained in such
 assessment, and any other environmental reports or studies, (h) a preliminary
 title report dated no more than sixty (60) days prior to the Effective Date,
 together with copies of all documents representing exceptions to title and a
 color-coded plan plotting the easements, rights of way and other third-party
 rights affecting title, (i) to the extent reasonably available, “will serve
 letters” from all providers of utilities shown on the utility plan, (j) a
 water flow (fire flow) test, (k) a preliminary parking and landscaping plan,
 and (I) Landlord’s recap of Site Plan entitlement progress including related
 agency correspondence and documentation. The Conceptual Engineering Package
 shall be prepared based on the Utility Work and the Site Work obligations of
 Landlord (each as defined in Section 4.6 below). Within thirty (30) days of
 the date Tenant approves the Conceptual Engineering Package, Landlord shall deliver
 to Tenant a preliminary site lighting plan for Phase I of the Project with
 photometrics. 

 
	
  

 	
  

 
	
  

 	
4.4          Approval of Conceptual Engineering Package.
 Within thirty (30) days after receipt of the complete Conceptual Engineering’
 Package, Tenant shall either approve or reasonably disapprove of same in
 writing. If Tenant. reasonably disapproves any aspect of the Conceptual
 Engineering Package, Tenant shall notify Landlord in writing of any changes
 reasonably required by Tenant, and, within fifteen (15) days thereafter,
 Landlord shall incorporate any such changes (to the extent reasonably
 acceptable to Landlord) into the Conceptual Engineering Package and redeliver
 the Conceptual Engineering Package, as revised, to Tenant for approval.
 Within ten (10) days after receiving the revised Conceptual Engineering Package, Tenant shall notify Landlord of
 Tenant’s approval or reasonable disapproval thereof in writing. If Tenant
 again disapproves such revised 

 

21

	
  

 	
  

 
	
  

 	
 Conceptual Engineering Package in writing and Landlord
 does not revise and redeliver the Conceptual Engineering Package to Tenant
 with changes acceptable to Tenant in Tenant’s reasonable judgment within ten
 (10) days of Tenant’s written submission of all requested changes to
 Landlord, then, on ten (10) days’ written notice to the other party, either
 party shall have the right to terminate the Lease, following which neither
 party shall have any further liability to the other (except as otherwise
 provided in the Lease or this Work Letter). Landlord may cancel Tenant’s
 termination notice if, prior to the expiration of the ten (10) day notice
 period, Landlord redelivers the Conceptual Engineering Package to Tenant
 incorporating all of Tenant’s reasonably requested changes. Tenant or
 Landlord, as the case may be, may cancel the other’s termination notice if,
 prior to the expiration of the ten (10) day notice period, Tenant or
 Landlord, as the case may be, delivers written notice to the other that it
 accepts the Conceptual Engineering Package as last submitted.

 
	
  

 	
  

 
	
  

 	
 4.5          Site Plan Submittal Package and Governmental
 Approvals. Within fifteen (15) days following Tenant’s approval of
 the Conceptual Engineering Package, Landlord shall prepare and submit all
 applications and submittals (collectively, the “Site Plan Submittal Package”)
 to the Governmental Authorities having jurisdiction over the design and
 construction of Landlord’s Work necessary to obtain the Required Project
 Entitlements and all other governmental permits and approvals for the
 construction of Landlord’s Work (collectively, the “Approvals”). The Site
 Plan Submittal Package shall be prepared in a manner consistent with the
 Conceptual Engineering Package and, together with the proposed applications,
 drawings, plans and fee schedule, shall be submitted to Tenant’s Architect
 for approval or disapproval prior to actual submittal to the applicable
 Governmental Authorities. Landlord shall provide Tenant with a prompt written
 notice of the issuance of the Approvals.

 
	
  

 	
  

 
	
  

 	
 4.6          Site Work Plans. Within thirty (30) days
 following issuance of the Approvals, Landlord shall prepare and deliver final
 site work plans and specifications (“Site Work Plans”) to Tenant for Tenant’s
 approval (not to be unreasonably withheld, conditioned or delayed). The Site
 Work Plans shall include, without limitation, the Phase I of the Project
 utility work set forth on Addendum l (the “Utility Work”) and the site work
 set forth on Addendum 2 (the “Site Work”). Within ten (10) days after receipt
 of the Site Work Plans, Tenant shall either approve or reasonably disapprove
 the same in writing. If Tenant reasonably disapproves any aspect of the Site
 Work Plans, Tenant shall notify Landlord of any changes reasonably required
 by Tenant in writing, and Landlord shall promptly incorporate any such
 changes into the Site Work Plans and redeliver them, as revised, to Tenant,
 for Tenant’s written approval or disapproval, Any elements of the Site Work
 Plans that conflict with the approved Site Plan Submittal. Package are hereby
 deemed to be disapproved. Unless Landlord is otherwise notified in writing by
 Tenant, Landlord shall be obligated to correct any elements of the Site Work
 Plans which conflict with the approved Site Plan Submittal Package. Once
 approved by Tenant, no material changes to the approved Site Work Plans shall
 be made without Tenant’s prior written approval. So long as Landlord has
 provided Tenant with a reminder notice ten (10) clays prior to the expiration
 of the thirty (30) day period referenced in this Section, or three (3) 

 

22

	
  

 	
  

 
	
  

 	
 days prior to the expiration of the ten (10) day period referenced in
 this Section, as the case may be, if Tenant fails to notify Landlord in
 writing of any objections to the Site Work Plans within thirty (30) days of
 its receipt of the Site Work Plans, or within ten (10) days after receipt its
 receipt of the revised Site Work Plans, as the case may be, then Tenant shall
 be deemed to have approved the Site Work Plans/revised Site Work Plans.

 
	
  

 	
  

 
	
  

 	
 4.7          Construction Commencement. Subject to
 Force Majeure Events not to exceed thirty (30) days and delays solely caused
 by Tenant, Landlord shall commence construction of Landlord’s Work
 (“Landlord’s Commencement”) within ten (10) days of the later to occur of the
 date that (i) Landlord obtains the Approvals, (ii) Tenant approves the Site
 Work Plans in writing pursuant to Section 4.6 above and (iii) Tenant obtains
 the Building Permit and provides Landlord with a copy of same.

 
	
  

 	
  

 
	
  

 	
 4.8          Landlord’s Cost. Landlord shall be
 responsible for all costs, expenses and delays associated with Landlord’s
 Work including change order requests to the extent that they are (i)
 initiated by Landlord, (ii) mandated by applicable Governmental Authorities,
 (iii) required to bring the Conceptual Engineering Package and/or the Site
 Work Plans into conformance with one another, with applicable governmental
 requirements, the Utility Work and/or the Site Work, or (iv) required to
 correct deficiencies or inaccuracies within such plans.

 
	
  

 	
  

 
	
  

 	
 4.9          Project Managers’ Review. Tenant’s
 Project Manager and Landlord’s Project Manager shall determine on behalf of
 both Tenant and Landlord that each is meeting its construction obligations
 hereunder. Both Tenant’s Project Manager and Landlord’s Project Manager shall
 be given access to the Project at all times and shall be provided by each
 other with all project schedules, copies of all field inspections and copies
 of any correspondence from any Governmental Authorities having jurisdiction
 over the design and/or construction process.

 
	
  

 	
  

 
	
  

 	
 4.10        Completion of Tenant’s Building Pad and Critical
 Site Work. Landlord shall complete the preparation of the Building
 Pad as well as all portions of Landlord’s Work which may be required for
 Tenant to commence its uninterrupted construction of Tenant’s Work (the
 “Critical Site Work”) in accordance with the approved Site Work Plans.
 Critical Site Work is defined as performance and/or completion of Landlord’s
 Work outlined in Addendum 1 and Sections 2, 3 and 8 of Addendum 2, as well as
 fire protection and any other temporary utilities as may be required by the
 Governmental Authorities, and all-weather access to and around the Building
 Pad in accordance with the approved Site Work Plans. Subject to Force Majeure
 Events and delays solely caused by Tenant, Landlord shall satisfy Delivery on
 or before the date that is thirty (30) days after the Landlord’s Commencement
 set forth in Section 4.7 above (the “Completion Date”).

 
	
  

 	
  

 
	
  

 	
 4.11        Delay in delivery of the Building Pad. Subject
 to Force Majeure Events and delays solely caused by Tenant, if Landlord fails
 to accomplish Delivery on or before the Completion Dale, Landlord shall pay
 Tenant, within ten (10) days of Tenant’s written demand therefor, liquidated
 damages of One Thousand and 00/100 Dollars ($1,000.00). If Landlord fails to
 satisfy Delivery on or before the Outside Turnover Date specified in

 

23

	
  

 	
  

 
	
  

 	
 Section 1.6 of the Lease, then Tenant may, at its sole option and
 discretion, terminate the Lease pursuant to Article XXIV of the Lease or
 waive the contingency and continue to accrue the foregoing per diem
 liquidated damages. Landlord and Tenant agree that, based on the existing
 circumstances as of the date hereof, the actual damages that will be suffered
 by Tenant as a result of Landlord’s failure to satisfy Delivery as required
 hereunder are extremely difficult to determine and that the liquidated damages
 provided hereunder are reasonable under the circumstances; provided, however,
 the foregoing shall not diminish or restrict Tenant’s self-help remedy under
 Section 9.2 of this Work Letter.

 
	
  

 	
  

 
	
  

 	
 4.12          Completion
 of Utility Work. Landlord shall complete, within sixty (60) days
 following the date Tenant commences its construction pursuant to Section 6.3
 below, the construction and installation of all permanent utilities set forth
 in Addendum 1 hereto at point of connection locations shown on Tenant’s Plans
 and Specifications (as defined in Section 6.2 below), Tenant will, at no
 third-party out-of-pocket cost to Tenant, reasonably cooperate with Landlord
 in connection with the foregoing utility work obligation of Landlord.

 
	
  

 	
  

 
	
  

 	
 4.13          Scheduling
 for Tenant’s Opening. Tenant shall give Landlord not less than
 sixty (60) days prior written notice of the estimated date of Tenant’s
 intended opening date for its health and fitness facility. Landlord shall
 cause all of Landlord’s Work additional to the Critical Site Work (the
 “Non-Critical Site Work”) to be substantially complete, including, but not
 limited to, the parking lot paving and striping, construction of any required
 pylon or monument sign structure (as described in Section 21.1 of the Lease)
 and all other work required for Tenant to obtain a certificate of occupancy
 or equivalent for Tenant’s Work, not later than thirty (30) days prior to
 Tenant’s scheduled opening date.

 
	
  

 	
  

 
	
  

 	
 4.14          Completion
 of Landlord’s Work. Landlord’s Work shall not be deemed
 “completed” until such time that Tenant has received a certificate from
 Landlord’s Engineer certifying that Landlord’s Work has been fully completed
 in accordance with the Site Work Plans and evidence of approval from the
 Governmental Authority having jurisdiction over Landlord’s Work in the form
 and to the extent same is issued by such Governmental Authority in the
 ordinary course of business. Within twenty (20) days following Tenant’s
 receipt of such certification, Tenant shall provide Landlord with a written
 punchlist setting forth the incomplete and defective items of Landlord’s Work
 which require additional work by Landlord (the “Site Work Punchlist”).
 Landlord shall fully perform or cause to be fully performed all items of work
 disclosed in the Site Work Punchlist that Landlord should have performed
 pursuant to the terms of this Work Letter, within thirty (30) days following
 Landlord’s receipt of the Site Work Punchlist. Should Landlord fail or refuse
 to perform the work itemized in the Site Work Punchlist, Tenant may, after
 providing written notice to Landlord, perform the work. at the cost of
 Landlord, whereupon Landlord shall reimburse Tenant for the actual itemized
 third-party out-of-pocket costs of performing such work plus interest thereon
 at the Interest Rate within ten (10) clays following Landlord’s receipt of
 Tenant’s or Tenant’s Architect’s itemized invoice for same. Should Landlord
 fail to so reimburse Tenant, then such 

 

24

	
  

 	
  

 
	
  

 	
 amounts
 shall be offset against Minimum Rent and other sums first coming due under
 the Lease.

 
	
  

 	
  

 
	
 5.

 	
 Intentionally omitted.

 
	
  

 	
  

 
	
 6.

 	
 Tenant’s Work.

 
	
  

 	
  

 
	
  

 	
 6.1          
 Definition. The term “Tenant’s Work” shall mean the construction
 of the Building pursuant to Tenant’s Plans and Specifications.

 
	
  

 	
  

 
	
  

 	
 6.2           Tenant’s
 Plans and Specifications. Subject to Landlord Delays, within
 ninety (90) days following the later to occur of the date (i) all
 contingencies in Article XXIV of the Lease (except for that contained in
 Section 24.3) have been satisfied or otherwise waived in writing by Tenant,
 (ii) Tenant receives from Landlord a geotechnical report on the soils in the
 Land and Tenant’s Area of Control prepared by a licensed soils engineer in
 accordance with the required Utility Work and Site Work, (iii) Tenant
 approves the Site Work Plans in accordance with Section 4.6 above, and (iv)
 Landlord notifies Tenant in writing that Landlord has obtained the Required
 Project Entitlements, Tenant will cause Tenant’s Architect to prepare and
 deliver to Landlord complete plans, drawings and specifications (“Tenant’s
 Plans and Specifications”) for the construction of Tenant’s Work
 substantially in accordance with the elevations set forth in Addendum 3
 (“Tenant’s Elevations”) and the space plans set forth in Addendum 4
 (“Tenant’s Space Plans”), which Tenant’s Elevations and Tenant’s Space Plans
 are hereby pre-approved by Landlord subject to Applicable Laws.

 
	
  

 	
  

 
	
  

 	
                Tenant’s
 Plans and Specifications will show the architectural, structural and MEP
 detail for the construction of Tenant’s Work in sufficient detail as is
 required to obtain necessary building permits and other approvals and for
 Tenant’s contractor to prosecute the construction within the time frames set
 forth in the Lease and this Exhibit C, including but not limited to: (a) the
 base Building shell and other improvements constituting the Premises that are
 not within the scope of Landlord’s Work; (b) all utility facilities which
 will require conduiting or other improvements from the base Building shell work
 and/or within the Premises; and (c) all other material specifications for
 Tenant’s Work.

 
	
  

 	
  

 
	
  

 	
                As
 long as Tenant’s Plans and Specifications substantially conform to Tenant’s
 Space Plans, Tenant’s Elevations and the terms and conditions hereof in all
 material respects, Landlord will not unreasonably withhold, delay or
 condition its consent to Tenant’s Plans and Specifications. If Landlord
 reasonably disapproves any material aspect of Tenant’s Plans and
 Specifications, Landlord agrees to advise Tenant in writing of such
 disapproval and the reasons therefor within live (5) business days of its
 receipt of Tenant’s Plans and Specifications. Landlord’s failure to so notify
 Tenant within such five. (5) business day period shall be deemed to be Landlord’s
 approval of Tenant’s Plans and Specifications. If Landlord reasonably
 disapproves any aspect of Tenant’s Plans and Specifications, Tenant and
 Landlord shall then use diligent efforts to reach agreement as to Tenant’s
 Plans and Specifications. Notwithstanding the foregoing, any approval given 

 

25

	
  

 	
  

 
	
  

 	
 or deemed given by Landlord in connection with Tenant’s Plans and
 Specifications or the construction work described in this Work Letter, shall
 be a conceptual approval and not a technical approval. No such submission or
 approval by Landlord shall be deemed to mean approval of structural capacity,
 size of ducts and piping, adequacy of electrical wiring, system/equipment
 capacities and, without limitation, other technical matters pertaining to
 Tenant’s Work; nor shall such approval relieve Tenant of the responsibility
 for proper and adequate design and construction of Tenant’s Work or
 responsibility for compliance with all Applicable Laws.

 
	
  

 	
  

 
	
  

 	
                 Within
 ten (10) days following Landlord’s approval of Tenant’s Plans and
 Specifications and to the extent permitted by the appropriate Governmental
 Authorities, Tenant will submit Tenant’s Plans and Specifications to the
 appropriate Governmental Authorities for plan checking and the issuance of
 the Building Permit, and contemporaneously provide Landlord with a copy of
 such submission. Tenant will use diligent and commercially reasonable efforts
 to obtain the Building Permit as soon as commercially reasonable following
 the date Tenant submits for the same (subject to delays caused by the
 Governmental Authorities). Tenant’s Architect shall make any and all changes
 to Tenant’s Plans and Specifications required by any applicable Governmental
 Authority (“Governmental Changes”) to obtain the Building Permit, and
 Landlord is hereby deemed to have approved all Governmental Changes. Subject
 to the immediately preceding sentence, Tenant shall make no material changes
 to Tenant’s Plans and Specifications without Landlord’s reasonable written
 approval (in this particular regard, only structural changes or changes to
 the exterior facade of the Building shall be deemed to be “material”).
 Tenant’s Work shall be constructed in a good and workmanlike manner, in
 accordance with Applicable Laws and in material conformity with Tenant’s
 Plans and Specifications, except where Landlord has given or is deemed to
 have given prior written approval for material modifications. Tenant shall
 diligently pursue the issuance of the Building Permit and agrees to respond,
 to the extent reasonable, to plan review comments from the Governmental
 Authorities within ten (10) days following the date such comments are
 received by Tenant. Tenant shall keep Landlord promptly informed of any such
 plan review comments from the Governmental Authorities.

 
	
  

 	
  

 
	
  

 	
 6.3           Construction
 of the Building. Subject to Landlord Delays and delays caused by
 Force Majeure. Events, within twenty (20) days following the issuance of the
 Building Permit and satisfaction of Delivery, Tenant will commence (“Tenant
 Commencement Date”) to construct Tenant’s Work substantially in accordance
 with Tenant’s Plans and Specifications and will diligently pursue completion
 of the same in such a manner as to achieve substantial completion on or
 before the expiration of three hundred sixty five (365) days after the Tenant
 Commencement Date (subject to Landlord Delays and delays caused by Force
 Majeure Events).

 
	
  

 	
  

 
	
  

 	
 6.4           General
 Contractor. In connection with the construction of Tenant’s Work,
 Tenant shall select and use a bondable non-union general contractor,
 possessing good labor relations and experienced in commercial construction.
 Tenant shall have the right, but not the obligation, to select its general
 contractor through a competitive bidding 

 

26

	
  

 	
  

 
	
  

 	
 process. Excluding Landlord’s obligation to disburse Landlord’s
 Construction Cost Contribution pursuant to this Work Letter, Landlord shall
 have no obligation to Tenant’s general contractor, and Tenant’s general
 contractor shall look solely to Tenant for the performance of any and all
 obligations pursuant to the construction contract between Tenant and Tenant’s
 general contractor. In no event is Tenant or Tenant’s general contractor
 required to obtain a performance bond or any other bond in connection with
 the construction of Tenant’s Work. Notwithstanding the foregoing, if
 Landlord’s lender shall require such a bond, Tenant will obtain or cause its
 general contractor to obtain such bond and Landlord shall reimburse Tenant
 (over and above Landlord’s Construction Cost Contribution, as defined below)
 or its general contractor, as applicable, for any and all costs and expenses
 incurred in the obtaining of such bond and shall provide any other assurances
 or indemnities required by the surety company as a condition to issuing such
 bond.

 
	
  

 	
  

 
	
  

 	
 6.5           Condition
 of Tenant’s Work. Tenant’s Work will be deemed to be completed at
 such time as (i) Tenant’s Architect certifies in writing to Landlord that to
 the best of Tenant’s Architect’s knowledge, information and belief, Tenant’s
 Work has been constructed substantially in accordance with Tenant’s Plans and
 Specifications, but for minor punchlist items which do not preclude Tenant
 from opening or operating the Premises for the Primary Uses, and (ii) a
 certificate of occupancy, temporary certificate of occupancy, final building
 department sign-off or the equivalent has been issued.

 
	
  

 	
  

 
	
  

 	
 6.6           Warranties.
 Tenant shall assign to Landlord all of the warranties Tenant obtains in
 connection with the construction of Tenant’s Work to the extent Landlord is
 obligated to maintain and repair the same under the Lease. Tenant shall
 retain rights to enforce such warranties in the event Landlord breaches its
 maintenance and repair obligations.

 
	
  

 	
  

 
	
 7.

 	
 Landlord’s Construction Cost Contribution.

 
	
  

 	
  

 
	
  

 	
 7.1           Construction
 Allowance. In consideration for the Rent to be paid under the
 Lease, Landlord shall provide construction funding to Tenant (“Landlord’s
 Construction Cost Contribution”) for the purpose of planning, designing,
 permitting and constructing Tenant’s Work up to the amount of Four Million
 Six Hundred Eighty Thousand and 00/100 Dollars ($4,680,000.00) (based on
 $104.00 per square foot of the Premises). Landlord’s Construction Cost
 Contribution may be used by Tenant to pay for any costs associated with the
 improvement of the Premises for Tenant’s use (including, without limitation,
 architectural and engineering fees and the cost of obtaining all necessary
 permits and approvals that Tenant is required to obtain pursuant to the terms
 of the Lease and this Work Letter). Tenant shall provide evidence of costs
 for which it seeks reimbursement of Landlord’s Construction Cost Contribution
 pursuant to Section 7.2 below. Should the cost to design, obtain permits for
 and construct Tenant’s Work exceed Landlord’s Construction Cost Contribution,
 then Tenant shall pay such excess. Landlord shall not impose any fee, cost or
 other charge on Tenant (including, without limitation, for profit, overhead,
 supervision or otherwise) in connection with the design and construction of
 Tenant’s Work.

 

27

	
  

 	
  

 
	
  

 	
 7.2     Payment of
 Landlord’s Construction Cost Contribution. Landlord shall disburse
 Landlord’s Construction Cost Contribution on a monthly progress basis
 throughout the course of the design and construction of Tenant’s Work in
 accordance with the following:

 

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)          For
 the first draw on Landlord’s Construction Cost Contribution, Tenant shall
 deliver to Landlord (i) with respect to the payment of design, architectural,
 engineering and agency fees relating to Tenant’s Work, written invoices from
 the applicable party to Landlord, and (ii) with respect to construction costs
 relating to Tenant’s Work, an Application and Certificate for Payment (AIA
 Document G702/G703) executed by Tenant’s general contractor and Tenant’s
 Architect showing the breakdown by sub-trades of the cost of Tenant’s Work,
 including Tenant’s general contractor’s sworn statement and a conditional
 release of lien from Tenant’s general contractor in the form attached hereto
 as Addendum 6. Landlord shall pay Tenant the amount of the initial draw
 request in accord with Section 7.2(c) below. An unconditional lien waiver
 from Tenant’s general contractor in the form attached hereto as Addendum 6
 for the first draw will be provided with the next draw request per Section
 7.2(b) below. No subcontractor lien waivers shall be provided with the
 initial draw request, as all such subcontractor lien waivers for the initial
 draw will be provided with the next draw request per Section 7.2(b) below;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)          After
 the submission of the initial draw request, not more often than monthly
 throughout the course of construction of Tenant’s Work, Tenant shall (i) with
 respect to the payment of design, architectural, engineering and agency fees
 relating to Tenant’s Work, supply written invoices from the applicable party
 to Landlord, and (ii) with respect to construction costs relating to Tenant’s
 Work, deliver to Landlord an Application and Certificate for Payment (AIA
 Document G702/G703) executed by Tenant’s general contractor and Tenant’s
 Architect, showing the percentage and value of work completed since the prior
 disbursement and stating that the portion of Tenant’s Work for which the
 disbursement is requested has been completed and deliver to Landlord, prior
 to or simultaneously with each monthly draw request, partial conditional lien
 releases (in the form attached as Addendum 6 and such other documents as
 required by Applicable Law to the extent applicable) from Tenant’s general
 contractor and each applicable subcontractor and/or material supplier
 providing construction services or supplies for Tenant’s Work whose contract
 with Tenant’s general contractor in the aggregate exceeds Ten Thousand and
 00/100 Dollars ($10,000.00) (each, a “Material Subcontractor”) for the
 portion of the Work completed by Tenant’s general contractor and/or such
 Material Subcontractor, as applicable, and covered by the prior monthly
 disbursement request(s) along with proof of payment by Tenant of Tenant’s
 general contractor’s and any Material Subcontractor’s prior payment
 applications for the work completed by Tenant’s general contractor and/or
 such Material Subcontractor, as applicable, in connection with the prior
 monthly disbursement request(s) and an unconditional lien release in the form
 attached as Addendum 6 and such other documents as required by Applicable Law
 to the extent applicable from the Tenant’s general contractor and any 

 

28

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Material Subcontractor showing proof of payment for the prior
 application. The Application and Certificate for Payment shall constitute a
 representation by Tenant that Tenant’s Work identified therein has been
 completed in a good and workmanlike manner and in substantial accordance with
 Tenant’s Plans and Specifications;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)          Landlord shall disburse (i) one hundred percent (100%) of any
 design, architectural, engineering and agency fees, and (ii) at least ninety
 percent (90%) of the value stated in line item 4 of each Application and
 Certificate for Payment (less any previous certificates for payment) within
 twenty (20) days of each submittal for payment and shall retain no more than
 ten percent (10%) of the value stated as retainage to be disbursed upon
 completion The final disbursement of the remaining balance of Landlord’s
 Construction Cost Contribution shall be disbursed to Tenant when Landlord has
 received an Application and Certificate for Payment (AIA Document G702/G703)
 executed by Tenant’s general contractor and Tenant’s Architect as to all of
 Tenant’s Work as provided hereinabove and the following conditions have been
 satisfied:

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 1)

 	
 A certificate of occupancy, temporary certificate of occupancy, final
 building department sign-off, or equivalent has been issued by the
 appropriate Governmental Authority; and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 2)

 	
 Tenant shall have provided Landlord with unconditional final lien
 releases/waivers from Tenant’s general contractor and all Material
 Subcontractors involved in Tenant’s Work.

 

	
  

 	
  

 
	
  

 	
 7.3     Building
 Permits and Certificates of Occupancy. Landlord will fully
 cooperate with Tenant in obtaining the Building Permit, all other permits for
 the construction of Tenant’s Work required by Governmental Authorities, and
 all required certificates of occupancy.

 

8.       Landlord
Delays. For purposes of the Lease and this Work Letter, the term “Landlord
Delays” means any delay in the completion of Tenant’s Work or any delay in the
opening of the Premises for business to the general public resulting from any
or all of the following: (i) Landlord’s failure to timely perform any of its
obligations pursuant to this Work Letter including, without limitation, the
timely completion of Landlord’s Work and the timely payment of Landlord’s
Construction Cost Contribution, or (ii) Landlord’s changes to any of the
Conceptual Engineering Package, the Site Plan Submittal Package, or the Site
Work Plans after Tenant’s approval thereof pursuant to the terms of this Work
Letter.

9.       Defaults.
Time is of the essence for each party’s obligations hereunder. If Landlord
fails to perform any of its obligations within the timeframes set forth herein,
Tenant may avail itself of the following remedies:

	
  

 	
  

 
	
  

 	
 9.1     Monetary
 Default. If Landlord fails to pay any sum due to Tenant pursuant
 to the terms of this Work Letter, then such sum shall accrue interest at the
 Interest Rate from the date due until paid in full, and Tenant may bring suit
 for collection against Landlord

 

29

	
  

 	
  

 
	
  

 	
 for such amounts. In addition, Tenant shall
 have the right to offset the amount due, together with interest at the
 interest Rate, against Minimum Rent and other charges due from Tenant to
 Landlord under the Lease until Tenant has received all sums due under the
 Lease and Work Letter. In addition, if Landlord fails to pay Tenant any
 portion of Landlord’s Construction Cost Contribution, Tenant may cease
 construction of Tenant’s Work until such time as Tenant has received such
 payment.

 
	
  

 	
  

 
	
  

 	
 9.2     Non-monetary
 Default. In addition to any and all other remedies available to
 Tenant hereunder or by law, but subject to Force Majeure Events and delays
 caused by Tenant or Tenant’s employees, contractors or agents, if Landlord
 fails to commence construction within the time period specified in Section
 4.7 above or if Tenant reasonably determines that the construction of
 Landlord’s Work is not proceeding so as to be completed within the time
 limits agreed to in Section 4 above, Tenant may give written notice of such
 fact to Landlord. If within ten (10) days of Landlord’s receipt of Tenant’s
 written notice Landlord does not present to Tenant evidence reasonably
 acceptable to Tenant that Landlord’s Work will be commenced or completed as
 required, then Tenant shall have the right, but not the obligation, to assume
 control of the portion of Landlord’s Work made the basis of Tenant’s written
 notice (a “Takeover Notice”). In such event, Tenant shall have the right to
 modify the Site Work Plans as Tenant reasonably deems advisable in order to
 complete the portion of Landlord’s Work over which Tenant has assumed control
 so as to accommodate Tenant’s need to open on schedule. Landlord hereby
 grants to Tenant, its contractors, agents and employees a temporary license
 to enter upon the Land and Tenant’s Area of Control for the purpose of
 performing all or any part of Landlord’s Work. Landlord shall remain liable for
 payment of the costs associated with Landlord’s Work. If Landlord fails to
 pay for Landlord’s Work, then the amounts owed to Tenant shall bear interest
 at the Interest Rate from the date due until paid, and Tenant may offset such
 amounts against Minimum Rent and other sums first coming due under the Lease
 until Tenant has been fully reimbursed.

 
	
  

 	
  

 
	
  

 	
 9.3     Certificate
 of Occupancy. If a temporary or permanent certificate of occupancy
 (or its equivalent) cannot be issued after Tenant’s Work is complete due to
 incompleteness of or defects in Landlord’s Work, then, notwithstanding
 anything contained in the Lease to the contrary and without limiting any
 other rights or remedies of Tenant, for each day that Tenant is delayed in
 opening for business within the Premises, Tenant shall be given two (2) days
 of Minimum Rent and Additional Rent free for every day until Landlord’s Work
 is completed or corrected and a temporary or permanent certificate of
 occupancy (or its equivalent) is issued and delivered to Tenant permitting
 use of the Premises for the Primary Uses.

 
	
  

 	
  

 
	
  

 	
 9.4     Cumulative
 Remedies. The remedies provided in this Section 9 are in addition
 to any remedies available elsewhere in this Work Letter, in the Lease, or
 under Applicable Law. Exercise of one remedy shall not be deemed to preclude
 exercise of other remedies for the same default, and all remedies available
 to Tenant may be exercised cumulatively.

 

10.     Intentionally
omitted.

30

11.     Temporary
Easements.

	
  

 	
  

 
	
  

 	
 11.1     Mutual
 Easements. By executing the Lease, Landlord and Tenant each grants
 and conveys to the other and the other’s contractors, materialmen or workmen,
 such temporary licenses of passage and use over and across the Project as are
 reasonably necessary for Tenant to construct Tenant’s Work, or to perform any
 maintenance or other work required to be performed by Tenant under the Lease,
 and for Landlord to construct Landlord’s Work or to perform any maintenance
 or other work required to be performed by Landlord under the Lease. In
 addition, Landlord grants to Tenant an easement and right to use one of the
 two (2) agreeable staging areas within the Land as depicted on the Site Plan
 for the purpose of storage of materials and equipment during the construction
 of Tenant’s Work; provided, Tenant shall initially use Staging Area A, but
 upon Tenant’s receipt of Landlord’s written request, Tenant shall use Staging
 Area B in lieu of Staging Area A; provided further, Landlord shall not
 request Tenant use an alternative agreeable staging area more than once
 during the construction of Tenant’s Work. This reciprocal grant is subject to
 the conditions that (i) such licenses will be in effect only during periods
 when actual construction or maintenance is performed and in any event will
 terminate upon the termination of the Lease, and (ii) such licenses will be
 exercised so as not to unreasonably interfere with the use and operation of
 the affected areas.

 
	
  

 	
  

 
	
  

 	
 11.2     Construction
 Easements. By executing the Lease, Landlord does hereby grant
 Tenant an easement in the area beneath Tenant’s Work for the purpose of
 constructing foundations, pylons and other necessary building support for the
 construction of Tenant’s Work and for the repair and maintenance of the same.
 This easement will remain in effect for the full Term of the Lease or until
 any earlier termination in accordance with its terms.

 

12.     Ownership of
Tenant’s Work. Tenant acknowledges and agrees that upon payment in
full of Landlord’s Construction Cost Contribution to Tenant, Tenant’s Work and
any and all improvements at any time constructed, placed or maintained on or
under any part of the Premises (exclusive of Tenant’s Personal Property) will
be and remain the property of Landlord.

13.     Insurance.
Tenant agrees to indemnify and hold harmless Landlord, and Landlord’s members,
partners, employees and agents, from all liability in connection with Tenant’s
Work and Landlord agrees to indemnify and hold harmless Tenant, and Tenant’s
members, partners, employees and agents, from all liability in connection with
Landlord’s Work. During performance of any work under this Work Letter or the
Lease, the parties shall provide or cause their contractor(s) to provide,
insurance as specified in Addendum 5 hereto and such insurance as may from time
to time be required by city, county, state or federal laws, codes, regulations
or authorities, together with such other insurance as is reasonably necessary
or appropriate under the circumstances. All insurance policies required under
Addendum 5 shall provide that Landlord or Tenant (as applicable) shall be given
thirty (30) days’ prior written notice of any alteration or termination of
coverage.

14.     Addenda.
The parties agree that all addenda attached to this Work Letter are hereby
incorporated by reference and arc made a part of this Work Letter and the
Lease.

31

EXHIBIT A

DESCRIPTION

3.7931 ACRES OR 165,225 SQUARE FEET

A TRACT OR PARCEL CONTAINING 3.7931 ACRES OR 165,225 SQUARE FEET OF
LAND, BEING OUT OF UNRESTRICTED RESERVE “A” OF WOODLAKE POINTE, A SUBDIVISION
RECORDED UNDER FILM CODE NUMBER (F.C.NO.) 6.31064,OF THE HARRIS COUNTY MAP
RECORDS (H.C.M.R.), SITUATED IN HARRIS COUNTY, TEXAS, WITH SAID 3.7931 ACRE
TRACT BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS. WITH ALL BEARINGS BASED ON
SAID SUBDIVISION PLAT; 

BEGINNING AT A 1” INCH IRON PIPE FOUND ON THE WEST RIGHT-OF-WAY
(R.O.W.) LINE OF TANGLEWILDE AVENUE (EIGHTY FEE WIDE) AND MARKING THE NORTHEAST
CORNER OF LOT 16 BLOCK 1, OF TANGLEWILDE, SECTION ONE, A SUBDIVISION RECORDED
IN VOLUME 49, PAGE 25, OF THE H.C.M.R. AND THE SOUTHEAST CORNER OF SAID
UNRESTRICTED RESERVE “A” AND THE SOUTHEAST CORNER OF THE HEREIN DESCRIBED
TRACT;

THENCE, WITH
THE NORTH LINE OF SAID TANGLEWILDE SECTION ONE AND THE SOUTH LINE OF SAID
UNRESTRICTED RESERVE “A”, SOUTH 87 DEGREES 29 MINUTES 48 SECONDS WEST, A
DISTANCE OF 531.50 FEET TO A CAPPED 5/8” IRON ROD STAMPED “WINDROSE LAND
SERVICES” SET ON SAID COMMON LINE AND THE SOUTHWEST CORNER OF THE HEREIN
DESCRIBED TRACT;

THENCE, THROUGH AND ACROSS SAID UNRESTRICTED RESERVE “A” THE FOLLOWING
THREE (3) COURSES:

	
  

 	
  

 	
  

 
	
  

 	
 1.

 	
 NORTH 02
 DEGREES 30 MINUTES 12 SECONDS WEST, A DISTANCE OF 235.29 FEET TO A CUT “X” IN
 CONCRETE SET FOR A WESTERLY CORNER OF THE HEREIN DESCRIBED TRACT;

 
	
  

 	
  

 	
  

 
	
  

 	
 2.

 	
 NORTH 87 DEGREES
 29 MINUTES 48 SECONDS EAST, A DISTANCE OF 64.74 FEET TO A CAPPED 5/8” IRON
 ROD STAMPED “WINDROSE LAND SERVICES” SET FOR AN INTERIOR CORNER OF THE HEREIN
 DESCRIBED TRACT;

 
	
  

 	
  

 	
  

 
	
  

 	
 3.

 	
 NORTH 02
 DEGREES 30 MINUTES 12 SECONDS WEST, A DISTANCE 154.78 FEET TO A CUT “X” IN
 CONCRETE SET ON THE SOUTH R.O.W. LINE OF WESTHEIMER ROAD (ONE HUNDRED-TWENTY
 FEET WIDE) AND THE NORTH LINE OF SAID UNRESTRICTED RESERVE “A” AND FOR THE
 NORTHWEST CORNER OF THE HEREIN DESCRIBED TRACT;

 

THENCE, WITH THE SOUTH LINE OF SAID WESTHEIMER ROAD AND THE NORTH LINE
OF SAID UNRESTRICTED RESERVE “A” NORTH 87 DEGREES 29 MINUTES 48 

32

SECONDS EAST, A DISTANCE OF 301.82 FEET TO A CUT “X” IN CONCRETE SET ON
THE SOUTH LINE OF SAID WESTHEIMER ROAD BEING THE NORTHEAST CORNER OF SAID
UNRESTRICTED RESERVE “A” AND THE NORTHWEST CORNER OF RESTRICTED RESERVE “A” OF
MCDONALD’S PLACE-TANGLEWILDE, A PLAT RECORDED IN VOLUME 339, PAGE 141, OF THE
H.C.M.R AND BEING THE NORTHEAST CORNER OF THE HEREIN DESCRIBED TRACT;

THENCE, WITH THE COMMON LINES OF SAID RESTRICTED RESERVE “A” AND SAID
UNRESTRICTED RESERVE “A” THE FOLLOWING TWO (2) COURSES:

	
  

 	
  

 	
  

 
	
  

 	
 1.

 	
 SOUTH 02 DEGREES 30 MINUTES 12 SECONDS EAST, A DISTANCE OF 230.00
 FEET TO A CUT “X” IN CONCRETE FOUND MARKING THE SOUTHEAST CORNER OF SAID
 RESTRICTED RESERVE “A” AND AN INTERIOR CORNER OF SAID UNRESTRICTED RESERVE
 “A” AND OF THE HEREIN DESCRIBED TRACT.

 
	
  

 	
  

 	
  

 
	
  

 	
 2.

 	
 NORTH 87 DEGREES 29 MINUTES 48 SECONDS EAST, A DISTANCE OF 231.62
 FEET TO CUT “X” IN CONCRETE SET FOR THE BEGINNING OF A NON-TANGENT CURVE TO
 THE RIGHT ON THE WEST R.O.W. LINE OF SAID TANGLEWILDE AVENUE MARKING THE
 SOUTHEAST CORNER OF SAID RESTRICTED RESERVE “A” AND THE MOST EASTERLY
 NORTHEAST CORNER OF SAID UNRESTRICTED RESERVE “A” AND THE HEREIN DESCRIBED
 TRACT;

 

THENCE WITH SAID WEST R.O.W. LINE AND THE EAST LINE OF SAID
UNRESTRICTED RESERVE “A”, 159.01 FEET ALONG THE ARC OF SAID NON-TANGENT CURVE
TO THE RIGHT, HAVING A RADIUS OF 809.29 FEET, A CENTRAL ANGLE OF 11 DEGREES 15
MINUTES 26 SECONDS, AND HAVING A CHORD BEARING AND DISTANCE OF SOUTH 19 DEGREES
38 MINUTES 11 SECONDS WEST, 158.75 FEET TO A CUT “X” IN CONCRETE SET MARKING
THE END OF SAID CURVE. 

THENCE, CONTINUING ALONG SAID WEST R.O.W LINE AND THE EAST LINE OF SAID
UNRESTRICTED RESERVE, “A”, SOUTH 25 DEGREES 15 MINUTES 35 SECONDS WEST, A
DISTANCE OF 14.71 FEET TO THE PLACE OF BEGINNING AND CONTAINING 3.7931 ACRES OR
165,225 SQUARE FEET OF LAND, AS SHOWN ON JOB NO 45315WC FILED IN THE OFFICES OF
WINDROSE LAND SERVICES, INC.

33

EXHIBIT
B

Woodlake Pointe Phase 1- LA
Fitness 

Prosperity Bank Loan Budget

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Budget

 	
  

 	
 Funding
 at Closing

 	
  

 	
 Progress

 Fundings

 	
  

 
	
 Hard Cost

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Fee

 	
  

 	
 $

 	
 40,417

 	
  

 	
 $

 	
 -

 	
  

 	
 $

 	
 40,417

 	
  

 
	
 General Conditions

 	
  

 	
  

 	
 71,154

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 71,154

 	
  

 
	
 Site Work

 	
  

 	
  

 	
 230,896

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 230,896

 	
  

 
	
 Utilities

 	
  

 	
  

 	
 131,625

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 131,625

 	
  

 
	
 Landscaping & Irrigation

 	
  

 	
  

 	
 37,590

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 37,590

 	
  

 
	
 Concrete Paving/Sidewalks

 	
  

 	
  

 	
 370,929

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 370,929

 	
  

 
	
 Thermal/Moisture Protection

 	
  

 	
  

 	
 19,270

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 19,270

 	
  

 
	
 Electrical

 	
  

 	
  

 	
 76,600

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 76,600

 	
  

 
	
 Sales Tax

 	
  

 	
  

 	
 2,153

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 2,153

 	
  

 
	
 Insurance

 	
  

 	
  

 	
 22,262

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 22,262

 	
  

 
	
 Stripe Lot

 	
  

 	
  

 	
 3,825

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 3,825

 	
  

 
	
 Bond

 	
  

 	
  

 	
 5,433

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 5,433

 	
  

 
	
 Contingency

 	
  

 	
  

 	
 16,191

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 16,191

 	
  

 
	
 Signage

 	
  

 	
  

 	
 76,000

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 76,000

 	
  

 
	
 Less LAF sign reimbursement

 	
  

 	
  

 	
 (26,500

 	
 )

 	
  

 	
 -

 	
  

 	
  

 	
 (26,500

 	
 )

 
	
 Less Portion of Signage allocable to Borders Bldg

 	
  

 	
  

 	
 (49,500

 	
 )

 	
 $

 	
 -

 	
 

 	
  

 	
 (49,500

 	
 )

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Subtotal

 	
  

 	
 $

 	
 1,028,345

 	
  

 	
 $

 	
 -

 	
  

 	
 $

 	
 1,028,345

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Tenant Improvements

 	
  

 	
  

 	
 4,680,000

 	
  

 	
  

 	
  

 	
  

 	
 $

 	
 4,680,000

 	
  

 
	
 Total
 Hard Cost

 	
  

 	
 $

 	
 5,708,345

 	
  

 	
 $

 	
 -

 	
  

 	
 $

 	
 5,708,345

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Soft Cost

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Developer Fee

 	
  

 	
 $

 	
 258,269

 	
  

 	
  

 	
 -

 	
  

 	
 $

 	
 258,269

 	
  

 
	
 Architects & Engineers

 	
  

 	
  

 	
 35,000

 	
  

 	
  

 	
 21,185

 	
  

 	
  

 	
 13,815

 	
  

 
	
 Legal

 	
  

 	
  

 	
 15,000

 	
  

 	
  

 	
 14,613

 	
  

 	
  

 	
 387

 	
  

 
	
 Permits

 	
  

 	
  

 	
 10,000

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 10,000

 	
  

 
	
 Materials Testing

 	
  

 	
  

 	
 15,000

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 15,000

 	
  

 
	
 Loan Fee of 0.5%

 	
  

 	
  

 	
 33,575

 	
  

 	
  

 	
 32,511

 	
  

 	
  

 	
 1,064

 	
  

 
	
 Appraisal

 	
  

 	
  

 	
 2,500

 	
  

 	
  

 	
 2,500

 	
  

 	
  

 	
 -

 	
  

 
	
 Survey

 	
  

 	
  

 	
 4,000

 	
  

 	
  

 	
 3.953

 	
  

 	
  

 	
 47

 	
  

 
	
 Impact Fees

 	
  

 	
  

 	
 85,654

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 85,654

 	
  

 
	
 Contingency

 	
  

 	
  

 	
 13,889

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 13,889

 	
  

 
	
 Title Insurance (Loan at time of Closing)

 	
  

 	
  

 	
 33,079

 	
  

 	
  

 	
 33,168

 	
  

 	
  

 	
 (89

 	
 )

 
	
 Construction Interest

 	
  

 	
  

 	
 95,689

 	
  

 	
  

 	
 -

 	
  

 	
  

 	
 95,689

 	
  

 
	
 Commission on LAF ($5 outside, $4 inside)

 	
  

 	
  

 	
 405,000

 	
  

 	
  

 	
 112,500

 	
  

 	
  

 	
 292,500

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Total
 Soft Cost

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 $

 	
 1,006,655

 	
  

 	
  

 	
 220,430

 	
  

 	
  

 	
 786,225

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Total Loan Budget 

 	
  

 	
 $

 	
 6,715,000

 	
  

 	
 $

 	
 220,430

 	
  

 	
 $

 	
 6,494,570

 	
  

 

34

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00196-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00196-of-00352.parquet"}]]