Document:

exv10w4

Exhibit 10.4

Archipelago Learning, Inc.

2009 Omnibus Incentive Plan

Article 1. Establishment & Purpose

     1.1 Establishment. Archipelago Learning, Inc., a Delaware corporation (the
“Company”), hereby establishes the 2009 Omnibus Incentive Plan (the “Plan”) as set
forth herein.

     1.2 Purpose of the Plan. The purpose of this Plan is to attract, retain and motivate
officers, employees, non-employee directors, and other individuals providing services to the
Company and its Subsidiaries and Affiliates and to promote the success of the Company’s business by
providing the Participants with appropriate incentives.

Article 2. Definitions

     Whenever capitalized in the Plan, the following terms shall have the meanings set forth below.

     2.1 “Affiliate” means any entity that the Company, either directly or indirectly, is
in common control with, is controlled by or controls, or any other entity designated by the Board
in which the Company or an Affiliate has a substantial direct or indirect equity interest.

     2.2 “Annual Award Limit” shall have the meaning set forth in Section 5.1(b)
hereof.

     2.3 “Award” means any Option, Stock Appreciation Right, Restricted Stock, Other
Stock-Based Award, or Performance-Based Compensation that is granted under the Plan.

     2.4 “Award Agreement” means either (a) a written agreement entered into by the Company
and a Participant setting forth the terms and provisions applicable to an Award granted under this
Plan, or (b) a written statement issued by the Company, a Subsidiary, or Affiliate to a Participant
describing the terms and conditions of the actual grant of such Award.

     2.5 “Board” means the Board of Directors of the Company.

     2.6 “Cause” means any of the following, as determined by the Board in good faith: (a)
fraud, embezzlement, material dishonesty, breach of fiduciary duty against the Company or any
Subsidiary or Affiliate, (b) indictment or pleading of nolo contendere to a felony or a crime
involving moral turpitude, (c) a material breach of, a material failure to perform, or material
negligence in performance of, the duties of employment or other engagement by the Company or any
Subsidiary or Affiliate, (d) habitual drug use or intoxication which negatively impacts job
performance, or (e) any gross or willful misconduct resulting in a material loss to the Company or
any Subsidiary or Affiliate or material harm to the reputation of the Company or any Subsidiary of
Affiliate provided, however, that in the case of a Participant who has an
employment agreement with the Company or any Subsidiary or Affiliate, “Cause” shall be determined
in accordance with such definition.

     2.7 “Change of Control” unless otherwise specified in the Award Agreement, means an
event or series of events that results in any of the following:

	 	(a)	 	Change in Ownership of the Company. A change in the ownership
of the Company occurs on the date that any one Person or more than one Person
acting as a group (as determined under Treas. Reg. Section
1.409A-3(i)(5)(v)(B)), other

 

 

	 	 	 	than any Person directly or indirectly owned by the Company, acquires on an
arms length basis ownership of stock of the Company that, together with
stock held by such Person or group, constitutes more than 50% of the total
fair market value or total voting power of stock of the Company. However,
if any one Person (or more than one Person acting as a group) is considered
to own more than 50% of the total fair market value or total voting power of
the Company’s stock prior to the acquisition, any acquisition of additional
stock by the same Person or Persons is not considered to cause a change in
the ownership of the Company;

	 	(b)	 	Change in Board of Directors of the Company. A change in the
effective control of the Company occurs on the date individuals who, as of the
Effective Date, constitute the Board (the “Incumbent Board”) cease for
any reason to constitute at least a majority of the Board, provided, however,
that if the election, or nomination for election by the Company’s shareholders,
of any new director was approved by a vote of at least a majority of the
Incumbent Board, such new director shall be considered a member of the
Incumbent Board, and provided further that any reductions in the size of the
Board that are instituted voluntarily by the Incumbent Board shall not
constitute a “Change of Control”, and after any such reduction the “Incumbent
Board” shall mean the Board as so reduced; or
	 
	 	(c)	 	Change in Ownership of a Substantial Portion of the Company’s
Assets. A change in the ownership of a substantial portion of the Company’s
assets occurs on the date that any one Person, or more than one Person acting
as a group (as determined under Treas. Reg. Section 1.409A-3(i)(5)(v)(B)),
other than any Person directly or indirectly owned by the Company, acquires (or
has acquired during the 12-month period ending on the date of the most recent
acquisition by such Person or Persons) assets from the Company that have a
total gross fair market value of more than 50% of the total gross fair market
value of all of the assets of the Company immediately prior to such acquisition
or acquisitions. For this purpose, gross fair market value means the value of
the assets of the Company, or the value of the assets being disposed of,
determined without regard to any liabilities associated with such assets.

     2.8 “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.

     2.9 “Committee” means the Compensation Committee of the Board or any other committee
designated by the Board to administer this Plan. To the extent applicable, the Committee shall
have at least two members, each of whom shall be (a) a Non-Employee Director, (b) an Outside
Director, and (c) an “independent director” within the meaning of the listing requirements of any
exchange on which the Company is listed.

     2.10 “Covered Employee” means for any Plan Year, a Participant designated by the
Company as a potential “covered employee” as such term is defined in Section 162(m) of the
Code.

     2.11 “Director” means a member of the Board who is not an Employee.

     2.12 “Effective Date” means the date set forth in Section 15.13 hereof.

     2.13 “Employee” means an officer or other employee of the Company, a Subsidiary or
Affiliate, including a member of the Board who is an employee of the Company, a Subsidiary or
Affiliate.

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     2.14 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time.

     2.15 “Fair Market Value” means, as of any date, the per Share value determined as
follows, in accordance with applicable provisions of Section 409A of the Code:

	 	(a)	 	The average of the high and low trading price on a recognized
stock exchange or any established over-the-counter trading system on which
dealings take place, or if no trades were made on any such day, the immediately
preceding day on which trades were made; or
	 
	 	(b)	 	In the absence of an established market for the Shares of the
type described in (a) above, the per Share Fair Market Value thereof shall be
determined by the Committee in good faith and in accordance with applicable
provisions of Section 409A of the Code.

     2.16 “Incentive Stock Option” means an Option intended to meet the requirements of an
incentive stock option as defined in Section 422 of the Code and designated as an Incentive Stock
Option.

     2.17 “Non-Employee Director” means a person defined in Rule 16b-3(b)(3) promulgated by
the Securities and Exchange Commission under the Exchange Act, or any successor definition adopted
by the Securities and Exchange Commission.

     2.18 “Nonqualified Stock Option” means an Option that is not an Incentive Stock Option.

     2.19 “Other Stock-Based Award” means any right granted under Article 9 hereof.

     2.20 “Option” means any stock option granted from time to time under Article 6 hereof.

     2.21 “Option Price” means the purchase price per Share subject to an Option, as
determined pursuant to Section 6.2 hereof.

     2.22 “Outside Director” means a member of the Board who is an “outside director”
within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder.

     2.23 “Participant” means any eligible person as set forth in Section 4.1
hereof to whom an Award is granted.

     2.24 “Performance-Based Compensation” means compensation under an Award that is
intended to constitute “qualified performance-based compensation” within the meaning of the
regulations promulgated under Section 162(m) of Code or any successor provision.

     2.25 “Performance Measures” means measures as described in Section 10.2 on
which the performance goals are based in order to qualify Awards as Performance-Based Compensation.

     2.26 “Performance Period” means the period of time during which the performance goals
must be met in order to determine the degree of payout and/or vesting with respect to an Award.

     2.27 “Person” means any natural person, sole proprietorship, general partnership,
limited partnership, limited liability company, joint venture, trust, unincorporated organization,
association,

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corporation, governmental authority, or any other organization, irrespective of whether it is
a legal entity and includes any successor (by merger or otherwise) of such entity.

     2.28 “Plan Year” means the applicable fiscal year of the Company.

     2.29 “Restricted Stock” means any Award granted under Article 8 hereof.

     2.30 “Restriction Period” means the period during which Restricted Stock awarded under
Article 8 of the Plan is subject to forfeiture.

     2.31 “Share” means a share of common stock of the Company, par value $0.001 per share,
or such other class or kind of shares or other securities resulting from the application of
Article 13 hereof.

     2.32 “Stock Appreciation Right” means any right granted under Article 7
hereof.

     2.33 “Subsidiary” means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company (or any parent of the Company) if each of the
corporations, other than the last corporation in each unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the other corporations in
such chain.

     2.34 “Ten Percent Shareholder” means a person who on any given date owns, either
directly or indirectly (taking into account the attribution rules contained in Section 424(d) of
the Code), stock possessing more than ten percent of the total combined voting power of all classes
of stock of the Company or a Subsidiary or Affiliate.

Article 3. Administration

     3.1 Authority of the Committee. The Plan shall be administered by the Committee, which shall
have full power to interpret and administer the Plan and Award Agreements and full authority to
select the Participants to whom Awards will be granted, and to determine the type and amount of
Awards to be granted to each such Participant and the terms and conditions of Awards and Award
Agreements. Without limiting the generality of the foregoing, the Committee may, in its sole
discretion, but subject to the limitations in Article 12 and Sections 6.6 and
10.5 hereof, clarify, construe or resolve any ambiguity in any provision of the Plan or any
Award Agreement, extend the term or period of exercisability of any Awards, or waive any terms or
conditions applicable to any Award. Awards may, in the discretion of the Committee, be made under
the Plan in assumption of, or in substitution for, outstanding awards previously granted by the
Company or any of its Subsidiaries or Affiliates or a company acquired by the Company or with which
the Company combines. The Committee shall have full and exclusive discretionary power to adopt
rules, forms, instruments, and guidelines for administering the Plan as the Committee deems
necessary or proper. Notwithstanding anything in this Section 3.1 to the contrary, the
Board, or any other committee or sub-committee established by the Board, is hereby authorized (in
addition to any necessary action by the Committee) to grant or approve Awards as necessary to
satisfy the requirements of Section 16 of the Exchange Act and the rules and regulations thereunder
and to act in lieu of the Committee with respect to Awards made to Non-Employee Directors under the
Plan. All actions taken and all interpretations and determinations made by the Committee or by the
Board (or any other committee or sub-committee thereof), as applicable, shall be final and binding
upon the Participants, the Company, and all other interested individuals.

     3.2 Delegation. The Committee may delegate to one or more of its members, one or more
officers of the Company or any of its Subsidiaries or Affiliates, and one or more agents or
advisors such administrative duties or powers as it may deem advisable; provided that the Committee
shall not delegate

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to officers of the Company or any of its Subsidiaries or Affiliates the power to make grants
of Awards to officers of the Company or any of its Subsidiaries or Affiliates; provided, further,
that no delegation shall be permitted under the Plan that is prohibited by applicable law.

Article 4. Eligibility and Participation

     4.1 Eligibility. Participants will consist of such Employees, Directors and other individuals
providing services to the Company or any Subsidiary or Affiliate as the Committee in its sole
discretion determines and whom the Committee may designate from time to time to receive Awards.
Designation of a Participant in any year shall not require the Committee to designate such person
to receive an Award in any other year or, once designated, to receive the same type or amount of
Award as granted to the Participant in any other year.

     4.2 Type of Awards. Awards under the Plan may be granted in any one or a combination of: (a)
Options, (b) Stock Appreciation Rights, (c) Restricted Stock, (d) Other Stock-Based Awards, and (e)
Performance-Based Compensation Awards. The Plan sets forth the performance goals and procedural
requirements to permit the Company to design Awards that qualify as Performance-Based Compensation,
as described in Article 10 hereof. Awards granted under the Plan shall be evidenced by
Award Agreements (which need not be identical) that provide additional terms and conditions
associated with such Awards, as determined by the Committee in its sole discretion; provided,
however, that in the event of any conflict between the provisions of the Plan and any such Award
Agreement, the provisions of the Plan shall prevail.

Article 5. Shares Subject to the Plan and Maximum Awards

     5.1 Number of Shares Available for Awards.

	 	(a)	 	General. Subject to adjustment as provided in Article
13 hereof, the maximum number of Shares available for issuance to
Participants pursuant to Awards under the Plan shall be [number of shares]
Shares. The number of Shares available for granting Incentive Stock Options
under the Plan shall not exceed [number of shares] Shares, subject to
Article 13 hereof and the provisions of Sections 422 and 424 of the
Code and any successor provisions. The Shares available for issuance under the
Plan may consist, in whole or in part, of authorized and unissued Shares or
treasury Shares. Any Shares delivered to the Company as part or full payment
for the purchase price of an Award, or to satisfy the Company’s withholding
obligation with respect to an Award, shall again be available for Awards to the
extent the Committee determines that the availability of Incentive Stock
Options will not be compromised; provided, however, that such Shares shall
continue to be counted as outstanding for purposes of determining whether an
Annual Award Limit has been attained.
	 
	 	(b)	 	Annual Award Limits. The maximum number of Shares with respect
to Awards denominated in Shares that may be granted to any Participant in any
Plan Year shall be [number of shares] Shares, subject to adjustments made in
accordance with Article 13 hereof, and the maximum value of cash
payable with respect to Awards denominated in cash or property that may be
granted to any Participant in any Plan Year shall be $[     ], subject to
adjustments made in accordance with Article 13 hereof (the “Annual
Award Limit”).

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	 	(c)	 	Additional Shares. In the event that any outstanding Award
expires, is forfeited, cancelled or otherwise terminated without the issuance
of Shares or is otherwise settled for cash, the Shares subject to such Award,
to the extent of any such forfeiture, cancellation, expiration, termination or
settlement for cash, shall again be available for Awards. If the Committee
authorizes the assumption under this Plan, in connection with any merger,
consolidation, acquisition of property or stock, or reorganization, of awards
granted under another plan, such assumption shall not (i) reduce the maximum
number of Shares available for issuance under this Plan or (ii) be subject to
or counted against a Participant’s Annual Award Limit.

Article 6. Stock Options

     6.1 Grant of Options. The Committee is hereby authorized to grant Options to Participants.
Each Option shall permit a Participant to purchase from the Company a stated number of Shares at an
Option Price established by the Committee, subject to the terms and conditions described in this
Article 6 and to such additional terms and conditions, as established by the Committee, in
its sole discretion, that are consistent with the provisions of the Plan. Options shall be
designated as either Incentive Stock Options or Nonqualified Stock Options, provided that Options
granted to Directors shall be Nonqualified Stock Options. An Option granted as an Incentive Stock
Option shall, to the extent it fails to qualify as an Incentive Stock Option, be treated as a
Nonqualified Stock Option. Neither the Committee nor the Company or any of its Subsidiaries or
Affiliates shall be liable to any Participant or to any other Person if it is determined that an
Option intended to be an Incentive Stock Option does not qualify as an Incentive Stock Option.
Options shall be evidenced by Award Agreements which shall state the number of Shares covered by
such Option. Such Award Agreements shall conform to the requirements of the Plan, and may contain
such other provisions, as the Committee shall deem advisable.

     6.2 Terms of Option Grant. The Option Price per Share shall be determined by the Committee at
the time of grant, but shall not be less than 100% of the Fair Market Value of a Share on the date
of grant. In the case of any Incentive Stock Option, the Option Price per Share shall be (a) if
granted to a person other than a Ten Percent Shareholder, not less than 100% of the Fair Market
Value of a Share on the date of grant or (b) if granted to a Ten Percent Shareholder, not less than
110% of the Fair Market Value of a Share on the date of grant.

     6.3 Option Term. The term of each Option shall be determined by the Committee at the time of
grant and shall be stated in the Award Agreement, but in no event shall such term be greater than
ten years (or, in the case on an Incentive Stock Option granted to a Ten Percent Shareholder, five
years).

     6.4 Time of Exercise. Options granted under this Article 6 shall be exercisable at
such times and be subject to such restrictions and conditions as the Committee shall in each
instance approve, which terms and restrictions need not be the same for each grant or for each
Participant.

     6.5 Method of Exercise. Except as otherwise provided in the Plan or in an Award Agreement, an
Option may be exercised for all, or from time to time any part, of the Shares for which it is then
exercisable. For purposes of this Article 6, the exercise date of an Option shall be the
later of the date a notice of exercise is received by the Company and, if applicable, the date
payment is received by the Company pursuant to clauses (a), (b), (c) (d), or (e) in the following
sentence (including the applicable tax withholding pursuant to Section 15.3 hereof). The
aggregate Option Price for the Shares as to which an Option is exercised shall be paid to the
Company in full at the time of exercise at the election of the Participant (a) in cash or its
equivalent (e.g., by cashier’s check), (b) to the extent permitted by the Committee, in Shares
(whether or not previously owned by the Participant) having a Fair Market Value

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equal to the aggregate Option Price for the Shares being purchased and satisfying such other
requirements as may be imposed by the Committee, (c) partly in cash and, to the extent permitted by
the Committee, partly in such Shares (as described in (b) above), (d) by reducing the number of
Shares otherwise deliverable upon the exercise of the Option by the number of Shares having a Fair
Market Value equal to the Option Price, or (e) if there is a public market for the Shares at such
time, subject to such requirements as may be imposed by the Committee, through the delivery of
irrevocable instructions to a broker to sell Shares obtained upon the exercise of the Option and to
deliver promptly to the Company an amount out of the proceeds of such sale equal to the aggregate
Option Price for the Shares being purchased. The Committee may prescribe any other method of
payment that it determines to be consistent with applicable law and the purpose of the Plan.

     6.6 Limitations on Incentive Stock Options. Incentive Stock Options may be granted only to
employees of the Company or of a “parent corporation” or “subsidiary corporation” (as such terms
are defined in Section 424 of the Code) at the date of grant. The aggregate Fair Market Value
(generally determined as of the time the Option is granted) of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by a Participant during any calendar
year under all plans of the Company and of any “parent corporation” or “subsidiary corporation”
shall not exceed $100,000, or the Option shall be treated as a Nonqualified Stock Option. For
purposes of the preceding sentence, Incentive Stock Options will be taken into account generally in
the order in which they are granted. Each provision of the Plan and each Award Agreement relating
to an Incentive Stock Option shall be construed so that each Incentive Stock Option shall be an
incentive stock option as defined in Section 422 of the Code, and any provisions of the Award
Agreement thereof that cannot be so construed shall be disregarded.

Article 7. Stock Appreciation Rights

     7.1 Grant of Stock Appreciation Rights. The Committee is hereby authorized to grant Stock
Appreciation Rights to Participants. Stock Appreciation Rights shall be evidenced by Award
Agreements that shall conform to the requirements of the Plan and may contain such other
provisions, as the Committee shall deem advisable. Subject to the terms of the Plan and any
applicable Award Agreement, a Stock Appreciation Right granted under the Plan shall confer on the
holder thereof a right to receive, upon exercise thereof, the excess of (a) the Fair Market Value
of a specified number of Shares on the date of exercise over (b) the grant price of the right as
specified by the Committee on the date of the grant. Such payment may be in the form of cash,
Shares, other property or any combination thereof, as the Committee shall determine in its sole
discretion.

     7.2 Terms of Stock Appreciation Right. Subject to the terms of the Plan and any applicable
Award Agreement, the grant price (which shall not be less than 100% of the Fair Market Value of a
Share on the date of grant), term, methods of exercise, methods of settlement, and any other terms
and conditions of any Stock Appreciation Right shall be as determined by the Committee. The
Committee may impose such other conditions or restrictions on the exercise of any Stock
Appreciation Right as it may deem appropriate. No Stock Appreciation Right shall have a term of
more than ten years from the date of grant.

Article 8. Restricted Stock

     8.1 Grant of Restricted Stock. The Committee is hereby authorized to grant Restricted Stock
to Participants. An Award of Restricted Stock is a grant by the Committee of a specified number of
Shares to the Participant, which Shares are subject to forfeiture upon the occurrence of specified
events. Participants shall be awarded Restricted Stock in exchange for consideration not less than
the minimum consideration required by applicable law. Restricted Stock shall be evidenced by an
Award Agreement,

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which shall conform to the requirements of the Plan and may contain such other provisions, as
the Committee shall deem advisable.

     8.2 Terms of Restricted Stock Awards. Each Award Agreement evidencing a Restricted Stock
grant shall specify the period(s) of restriction, the number of Shares of Restricted Stock subject
to the Award, the performance, employment or other conditions (including the termination of a
Participant’s service whether due to death, disability or other cause) under which the Restricted
Stock may be forfeited to the Company and such other provisions as the Committee shall determine.
Any Restricted Stock granted under the Plan shall be evidenced in such manner as the Committee may
deem appropriate, including book-entry registration or issuance of a stock certificate or
certificates (in which case, the certificate(s) representing such Shares shall be legended as to
sale, transfer, assignment, pledge or other encumbrances during the Restriction Period and
deposited by the Participant, together with a stock power endorsed in blank, with the Company, to
be held in escrow during the Restriction Period). At the end of the Restriction Period, the
restrictions imposed hereunder and under the Award Agreement shall lapse with respect to the number
of Shares of Restricted Stock as determined by the Committee, and the legend shall be removed and
such number of Shares delivered to the Participant (or, where appropriate, the Participant’s legal
representative).

     8.3 Voting and Dividend Rights. The Committee shall determine and set forth in a
Participant’s Award Agreement whether or not a Participant holding Restricted Stock granted
hereunder shall have the right to exercise voting rights with respect to the Restricted Stock
during the Restriction Period (the Committee may require a Participant to grant an irrevocable
proxy and power of substitution) and have the right to receive dividends on the Restricted Stock
during the Restriction Period (and, if so, on what terms).

     8.4 Performance Goals. The Committee may condition the grant of Restricted Stock or the
expiration of the Restriction Period upon the Participant’s achievement of one or more performance
goal(s) specified in the Award Agreement. If the Participant fails to achieve the specified
performance goal(s), the Committee shall not grant the Restricted Stock to such Participant or the
Participant shall forfeit the Award of Restricted Stock to the Company, as applicable.

     8.5 Section 83(b) Election. If a Participant makes an election pursuant to Section 83(b) of
the Code concerning Restricted Stock, the Participant shall be required to file promptly a copy of
such election with the Company.

Article 9. Other Stock-Based Awards

     The Committee, in its sole discretion, may grant Awards of Shares and Awards that are valued,
in whole or in part, by reference to, or are otherwise based on the Fair Market Value of Shares
(the “Other Stock-Based Awards”), including without limitation, restricted stock units,
dividend equivalent rights, and other phantom awards. Such Other Stock-Based Awards shall be in
such form, and dependent on such conditions, as the Committee shall determine, including, without
limitation, the right to receive one or more Shares (or the equivalent cash value of such Shares)
upon the completion of a specified period of service, the occurrence of an event and/or the
attainment of performance objectives. Other Stock-Based Awards may be granted alone or in addition
to any other Awards granted under the Plan. Subject to the provisions of the Plan, the Committee
shall determine to whom and when Other Stock-Based Awards will be made, the number of Shares to be
awarded under (or otherwise related to) such Other Stock-Based Awards, whether such Other
Stock-Based Awards shall be settled in cash, Shares or a combination of cash and Shares, and all
other terms and conditions of such Awards (including, without limitation, the vesting provisions
thereof and provisions ensuring that all Shares so awarded and issued shall be fully paid and
non-assessable).

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Article 10. Performance-Based Compensation

     10.1 Grant of Performance-Based Compensation Awards. To the extent permitted by Section
162(m) of the Code, the Committee is authorized to design any Award so that the amounts or Shares
payable or distributed pursuant to such Award are treated as “qualified performance-based
compensation” within the meaning of Section 162(m) of the Code and related regulations.

     10.2 Performance Measures. The vesting, crediting and/or payment of Performance-Based
Compensation shall be based on the achievement of objective performance goals based on one or more
of the following Performance Measures: (a) consolidated earnings before or after taxes (including
earnings before interest, taxes, depreciation and amortization); (b) net income; (c) operating
income; (d) earnings per Share; (e) book value per Share; (f) return on shareholders’ equity; (g)
expense management; (h) return on investment; (i) improvements in capital structure; (j)
profitability of an identifiable business unit or product; (k) maintenance or improvement of profit
margins; (l) stock price; (m) market share; (n) revenues or sales; (o) costs; (p) cash flow; (q)
working capital; and (r) return on assets. Any Performance Measure may be (y) used to measure the
performance of the Company and/or any of the Subsidiaries or Affiliates as a whole, any business
unit thereof or any combination thereof against any goal including past performance or (z) compared
to the performance of a group of comparable companies, or a published or special index, in each
case that the Committee, in its sole discretion, deems appropriate.

     10.3 Establishment of Performance Goals for Covered Employees. No later than 90 days after
the commencement of a Performance Period (but in no event after 25% of such Performance Period has
elapsed), the Committee shall establish in writing: (a) the performance goals applicable to the
Performance Period; (b) the targets to be used to measure the performance goals in terms of an
objective formula or standard; (c) the formula for computing the amount of compensation payable to
the Participant if such performance goals are obtained; and (d) the Participants or class of
Participants to which such performance goals apply. The outcome of such performance goals must be
substantially uncertain when the Committee establishes the goals.

     10.4 Adjustment of Performance-Based Compensation. Awards that are designed to qualify as
Performance-Based Compensation may not be adjusted upward. The Committee shall retain the
discretion to adjust such Awards downward, either on a formula or discretionary basis or any
combination, as the Committee determines.

     10.5 Certification of Performance. Except for Awards that pay compensation attributable
solely to an increase in the value of Shares, no Award designed to qualify as Performance-Based
Compensation shall be vested, credited or paid, as applicable, with respect to any Participant
until the Committee certifies in writing that the performance goals and any other material terms
applicable to such Performance Period have been satisfied.

     10.6 Terms of Performance-Based Compensation Awards. Each provision of the Plan and each
Award Agreement relating to Performance-Based Compensation shall be construed so that each such
Award shall be “qualified performance-based compensation” within the meaning of Section 162(m) of
the Code and related regulations, and any provisions of the Award Agreement thereof that cannot be
so construed shall be disregarded.

Article 11. Termination of Service

     11.1 Termination of Service For Cause. Unless the Award Agreement provides otherwise, all of
a Participant’s Awards (including any exercised Awards for which Shares have not been delivered to
the Participant) shall be cancelled and forfeited immediately on the date Participant’s service
terminates

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if such termination is for Cause or Cause exists on such date and the Company shall return to
the Participant the price (if any) paid for such undelivered Shares.

     11.2 Termination of Service For Reason Other Than For Cause. If a Participant’s service is
terminated other than a termination for Cause, then unless the Award Agreement provides otherwise,
all unvested Awards will terminate immediately as of the date the Participant’s service terminates
and all vested Awards will terminate on the earlier of (a) the expiration of their term and (b) the
90th day following such termination.

Article 12. Compliance with Section 409A of the Code

     12.1 General. The Company intends that all Awards be structured, interpreted, operated and
administered to satisfy an exemption from Section 409A of the Code and all regulations, guidance,
compliance programs and other interpretative authority thereunder (“Section 409A”). If any
Awards are not exempted from Section 409A, then the Company intends for such Awards to comply with
Section 409A, such that there are no adverse tax consequences, interest, or penalties under Section
409A as a result of the payments. Notwithstanding the Company’s intention, in the event any Award
is subject to Section 409A, the Committee may, in its sole discretion and without a Participant’s
prior consent, amend the Plan and/or Awards, adopt policies and procedures, or take any other
actions (including amendments, policies, procedures and actions with retroactive effect) as are
necessary or appropriate to (a) exempt the Plan and/or any Award from the application of
Section 409A, (b) preserve the intended tax treatment of any such Award, or (c) comply with the
requirements of Section 409A, including without limitation any such regulations guidance,
compliance programs and other interpretative authority that may be issued after the date of the
grant.

     12.2 Payments to Specified Employees. Notwithstanding any contrary provision in the Plan or
Award Agreement, any payment(s) of nonqualified deferred compensation (within the meaning of
Section 409A) that are otherwise required to be made under the Plan to a “specified employee” (as
defined under Section 409A) as a result of his or her separation from service (other than a payment
that is not subject to Section 409A) shall be delayed for the first six months following such
separation from service (or, if earlier, until the date of death of the specified employee) and
shall instead be paid (in a manner set forth in the Award Agreement) on the day that immediately
follows the end of such six-month period or within fifteen (15) days thereafter (but no later than
then end of the applicable taxable year).

     12.3 Separation from Service. A termination of service shall not be deemed to have occurred
for purposes of any provision of the Plan or any Award Agreement providing for the payment of any
amounts or benefits that are considered nonqualified deferred compensation under Section 409A upon
or following a termination of service, unless such termination is also a “separation from service”
within the meaning of Section 409A and the payment thereof prior to a “separation from service”
would violate Section 409A. For purposes of any such provision of the Plan or any Award Agreement
relating to any such payments or benefits, references to a “termination,” “termination of
employment,” “termination of service,” or like terms shall mean “separation from service.”

Article 13. Adjustments

     13.1 Adjustments in Authorized Shares. In the event of any corporate event or transaction
involving the Company, a Subsidiary and/or an Affiliate (including, but not limited to, a change in
the Shares of the Company or the capitalization of the Company) such as a merger, consolidation,
reorganization, recapitalization, separation, stock dividend, stock split, reverse stock split,
split up, spin-off, combination of Shares, exchange of Shares, dividend in kind, amalgamation, or
other like change in capital structure (other than normal cash dividends to stockholders of the
Company), or any similar

10

 

corporate event or transaction, the Committee, to prevent dilution or enlargement of
Participants’ rights under the Plan, shall substitute or adjust, in its sole discretion, the number
and kind of Shares or other property that may be issued under the Plan or under particular forms of
Awards, the number and kind of Shares or other property subject to outstanding Awards, the Option
Price, grant price or purchase price applicable to outstanding Awards, the Annual Award Limits,
and/or other value determinations applicable to the Plan or outstanding Awards.

     13.2 Change of Control. Upon the occurrence of a Change of Control after the Effective Date,
unless otherwise specifically prohibited under applicable laws or by the rules and regulations of
any governing governmental agencies or national securities exchanges, or unless the Committee shall
determine otherwise in the Award Agreement, the Committee is authorized (but not obligated) to make
adjustments in the terms and conditions of outstanding Awards, including without limitation the
following (or any combination thereof): (a) continuation or assumption of such outstanding Awards
under the Plan by the Company (if it is the surviving company or corporation) or by the surviving
company or corporation or its parent; (b) substitution by the surviving company or corporation or
its parent of awards with substantially the same terms for such outstanding Awards; (c) accelerated
exercisability, vesting and/or lapse of restrictions under outstanding Awards immediately prior to
the occurrence of such event; (d) upon written notice, provide that any outstanding Awards must be
exercised, to the extent then exercisable, during a reasonable period of time immediately prior to
the scheduled consummation of the event, or such other period as determined by the Committee
(contingent upon the consummation of the event), and at the end of such period, such Awards shall
terminate to the extent not so exercised within the relevant period; and (e) cancellation of all or
any portion of outstanding Awards for fair value (as determined in the sole discretion of the
Committee and which may be zero) which, in the case of Options and Stock Appreciation Rights or
similar Awards, may equal the excess, if any, of the value of the consideration to be paid in the
Change of Control transaction to holders of the same number of Shares subject to such Awards (or,
if no such consideration is paid, Fair Market Value of the Shares subject to such outstanding
Awards or portion thereof being canceled) over the aggregate Option Price or grant price, as
applicable, with respect to such Awards or portion thereof being canceled.

Article 14. Duration, Amendment, Modification, Suspension, and Termination

     14.1 Duration of the Plan. Unless sooner terminated as provided in Section 14.2
hereof, the Plan shall terminate on the tenth anniversary of the Effective Date.

     14.2 Amendment, Modification, Suspension, and Termination of Plan. Subject to the terms of
the Plan, the Committee may amend, alter, suspend, discontinue or terminate this Plan or any
portion thereof or any Award (or Award Agreement) hereunder at any time, in its sole discretion.

Article 15. General Provisions

     15.1 No Right to Service. The granting of an Award under the Plan shall impose no obligation
on the Company, any Subsidiary or any Affiliate to continue the service of a Participant and shall
not lessen or affect any right that the Company, any Subsidiary or any Affiliate may have to
terminate the service of such Participant. No Participant or other Person shall have any claim to
be granted any Award, and there is no obligation for uniformity of treatment of Participants, or
holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s
determinations and interpretations with respect thereto need not be the same with respect to each
Participant (whether or not such Participants are similarly situated).

     15.2 Settlement of Awards; Fractional Shares. Each Award Agreement shall establish the form
in which the Award shall be settled. The Committee shall determine whether cash, Awards, other

11

 

securities or other property shall be issued or paid in lieu of fractional Shares or whether
such fractional Shares or any rights thereto shall be rounded, forfeited or otherwise eliminated.

     15.3 Tax Withholding. The Company shall have the power and the right to deduct or withhold
automatically from any amount deliverable under the Award or otherwise, or require a Participant to
remit to the Company, the minimum statutory amount to satisfy federal, state, and local taxes,
domestic or foreign, required by law or regulation to be withheld with respect to any taxable event
arising as a result of the Plan. With respect to required withholding, Participants may elect
(subject to the Company’s automatic withholding right set out above), subject to the approval of
the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company
withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the
minimum statutory total tax that could be imposed on the transaction.

     15.4 No Guarantees Regarding Tax Treatment. Participants (or their beneficiaries) shall be
responsible for all taxes with respect to any Awards under the Plan. The Committee and the Company
make no guarantees to any Person regarding the tax treatment of Awards or payments made under the
Plan. Neither the Committee nor the Company has any obligation to take any action to prevent the
assessment of any tax on any Person with respect to any Award under Section 409A of the Code or
Section 457A of the Code or otherwise and none of the Company, any of its Subsidiaries or
Affiliates, or any of their employees or representatives shall have any liability to a Participant
with respect thereto.

     15.5 Non-Transferability of Awards. Unless otherwise determined by the Committee, an Award
shall not be transferable or assignable by the Participant except in the event of his death
(subject to the applicable laws of descent and distribution) and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable
against the Company or any Affiliate. No transfer shall be permitted for value or consideration.
An award exercisable after the death of a Participant may be exercised by the legatees, personal
representatives or distributees of the Participant. Any permitted transfer of the Awards to heirs
or legatees of the Participant shall not be effective to bind the Company unless the Committee
shall have been furnished with written notice thereof and a copy of such evidence as the Committee
may deem necessary to establish the validity of the transfer and the acceptance by the transferee
or transferees of the terms and conditions hereof.

     15.6 Conditions and Restrictions on Shares. The Committee may impose such other conditions or
restrictions on any Shares received in connection with an Award as it may deem advisable or
desirable. These restrictions may include, but shall not be limited to, a requirement that the
Participant hold the Shares received for a specified period of time or a requirement that a
Participant represent and warrant in writing that the Participant is acquiring the Shares for
investment and without any present intention to sell or distribute such Shares. The certificates
for Shares may include any legend which the Committee deems appropriate to reflect any conditions
and restrictions applicable to such Shares.

     15.7 Rights as a Stockholder. Except as otherwise provided herein or in the applicable Award
Agreement, a Participant shall have none of the rights of a stockholder with respect to Shares
covered by any Award until the Participant becomes the record holder of such Shares.

     15.8 Severability. If any provision of the Plan or any Award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction, or as to any Person or Award, or would
disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed
or deemed amended without, in the determination of the Committee, materially altering the intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person, or Award,
and the remainder of the Plan and any such Award shall remain in full force and effect.

12

 

     15.9 Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to
any investments that the Company or any of its Subsidiaries or Affiliates may make to aid it in
meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Participant, beneficiary, legal representative,
or any other Person. To the extent that any Person acquires a right to receive payments from the
Company under the Plan, such right shall be no greater than the right of an unsecured general
creditor of the Company. All payments to be made hereunder shall be paid from the general funds of
the Company and no special or separate fund shall be established and no segregation of assets shall
be made to assure payment of such amounts. The Plan is not subject to the U.S. Employee Retirement
Income Security Act of 1974, as amended from time to time.

     15.10 No Constraint on Corporate Action. Nothing in the Plan shall be construed to (a) limit,
impair, or otherwise affect the Company’s right or power to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure, or to merge or consolidate, or
dissolve, liquidate, sell, or transfer all or any part of its business or assets, or (b) limit the
right or power of the Company to take any action which such entity deems to be necessary or
appropriate.

     15.11 Successors. All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of
all or substantially all of the business or assets of the Company.

     15.12 Governing Law. The Plan and each Award Agreement shall be governed by the laws of the
State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise
refer construction or interpretation of the Plan to the substantive law of another jurisdiction.

     15.13 Effective Date. The Plan shall be effective as of the date of adoption by the Board,
which date is set forth below (the “Effective Date”).

     15.14 Stockholder Approval. The Plan will be submitted for approval by the stockholders of
the Company at an annual meeting or any special meeting of stockholders of the Company within 12
months of the Effective Date. Any Awards granted under the Plan prior to such approval of
stockholders shall be effective as of the date of grant, but no such Award may be exercised or
settled and no restrictions relating to any Award may lapse prior to such stockholder approval, and
if stockholders fail to approve the Plan as specified hereunder, the Plan and any Award shall be
terminated and cancelled without consideration.

*     *     *

     This Plan was duly adopted and approved by the Board of Directors of the Company by resolution
at a meeting held on the ___ day of                      , 2009.

	 	 	 
	 
	 	 
	 

	 	 

13exv10w28

Exhibit 10.28

OFFICE BUILDING LEASE

between

3400 Carlisle, Ltd.

as

“Landlord”

and

Study Island, L.L.C.

as

“Tenant”

 

 

OFFICE BUILDING LEASE

     In consideration of the mutual covenants and upon the terms and conditions set forth in Part
One “Fundamental Lease Provisions”, Part Two “Supplemental Lease Provisions”, and other attachments
and exhibits numerated in the Table of Contents to this Office Building Lease (“Lease”), 3400
Carlisle, Ltd. (“Landlord”) hereby leases to the Tenant named below and Tenant hereby leases from
Landlord, certain premises described below.

PART ONE

FUNDAMENTAL LEASE PROVISIONS

     1. Tenant: Study Island, L.L.C., organized under the laws of the State of Texas.

     2. Premises:
Designated as “Suite 345”, outlined and crosshatched on
Exhibit B hereof and containing approximately
1,717 square feet of Rentable Area
on the 3rd floor(s) of the Tower. (Part Two, Article 1)

     3. Term:
Beginning on Commencement Date June 1, 2003 and ending
June 30, 2004 (Part Two, Article 2)

     4. Monthly Installment of Base Annual Rent (Part Two, Section 3.1):

	 	 	 	 	 	 	 	 	 
	 	 	BASE ANNUAL	 	 	BASE ANNUAL	 
	LEASE Months	 	RENT/SQUARE FOOT	 	 	RENT/MONTH	 
	1-13
	 	$	16.00	 	 	$	2,289.33	 
	 
	 	 	 	 	 	 

 

			
	*	 	June 2003 Base Rental shall be abated

     5. Landlord’s Annual Operating Cost Contribution: Actual Operating Costs per square
foot of Rentable Area of Premises for calendar year 2003 times the number of square feet of
Rentable Area in the Premises. [Part Two, Section 3.2(b)]

     6. Security
Deposit: Two thousand two hundred eighty-nine and 33 /100 Dollars
($2,289.33). (Part Two, Section 3.6)

     7. Prepaid
Rent: Two thousand two hundred eighty-nine and 33 /100 Dollars ($2,289.33).
(Part Two, Section 3.6)

     8. Premises Use: Office space. (Part Two, Article 6)

     9. Commercial General Liability Insurance: Two Million and No/100 Dollars
($2,000,000.00). (Part Two, Article 8)

     10. Addresses For Notices and Payment of Rent and Other Charges
(Article 16):

	 	 	 	 	 
	 	 	 TO TENANT:	 	TO LANDLORD:
	 
	 	 	 	 
	 

	 	 	 	Breunig Commercial
	 

	 	 	 	2811 McKinney Ave Suite 10W 
	 

	 	 	 	Dallas, Texas 75204-2530
	 

	 	 	 	Attention: Property Manager

     11. Broker (Article 17): Mark E. Davidson of Breunig Commercial.

     12. Parking Spaces: Number of
unreserved Spaces: six (6). 

           Monthly Charge:
$ -0- per space.

Part One, Page 1

 

     13. Riders: The following numbered Riders are attached to this
Lease and made of a part of this Lease for all purposes:

	 	 	 
	Rider 1:
	 	 
	 

	 	 
	 
	 	 
	Rider 2:
	 	 
	 

	 	 
	 
	 	 
	Rider 3:
	 	 
	 

	 	 
	 
	 	 
	Rider 4:
	 	 
	 

	 	 

     14. Incorporation of Other Provisions: All of the provisions, covenants and
conditions set forth in Part Two and all other exhibits and riders described in the attached Table
of Contents and the preceding paragraph, are by this reference incorporated into the Fundamental
Lease Provisions as fully as if the same were set forth at length in the Fundamental Lease
Provisions. Each reference in Part Two and exhibits and riders to any provision in the Fundamental
Lease Provisions will be construed to incorporate all of the terms provided under the referenced
provision in the Fundamental Lease Provisions. In the event of any conflict between a provision in
the Fundamental Lease Provisions, on the one hand, and a provision in Part Two or exhibits or
riders, on the other hand, the latter will control.

     This Lease has been executed by Landlord and Tenant as of the       day of                      ,                     .

	 	 	 	 	 	 	 
	TENANT:	 	 	 	LANDLORD:

	 
	Study
Island, L.L.C.	 	3400 Carlisle, Ltd., a texas limited partnership

By: 3400 Carlisle, Inc., a Texas Corporation, its General Partner
	 
	 	 	 	 	 	 
	By:

	 	/s/ David Muzzo
	 	By:
	 	/s/ Robert P. Breunig
	 

	 	 
	 	 	 	 
	Name:

	 	David Muzzo
	 	Name:
	 	Robert P. Breunig
	Title:

	 	Member
	 	Title:
	 	President
	 
	 	 	 	 	 	 
	ATTEST:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Cameron Chalmers	 	 	 	 
	 

	 	 	 	 	 	 
	Name:

	 	Cameron Chalmers	 	 	 	 
	Title:

	 	Member	 	 	 	 

[THE LEASE MUST BE EXECUTED FOR TENANT, IF A CORPORATION, BY THE PRESIDENT OR VICE-PRESIDENT AND
ATTESTED BY THE SECRETARY OR ASSISTANT SECRETARY, UNLESS THE BY-LAWS OR A RESOLUTION OF THE BOARD
OF DIRECTORS OTHERWISE PROVIDE, IN WHICH EVENT A CERTIFIED COPY OF THE BY-LAWS OR RESOLUTION, AS
THE CASE MAY BE, MUST BE FURNISHED.]

Part One, Page 2

 

TABLE OF CONTENTS 

PART TWO

	 	 	 	 	 
	 	 	Part Two, Page #	 
	1. PREMISES, COMMON AREAS, SERVICE AREAS
	 	 	1	 
	1.1. Building
	 	 	1	 
	1.2. Computation of Rentable Area
	 	 	1	 
	1.3. Minor Variations in Area
	 	 	1	 
	1.4.
Ceilings, Walls, Floors
	 	 	1	 
	1.5. Condition of Premises
	 	 	1	 
	1.6. Common and Service Areas
	 	 	1	 
	2. TERM
	 	 	2	 
	2.1. Term
	 	 	2	 
	2.2. Delay in Commencement
	 	 	2	 
	2.3. Holding Over
	 	 	2	 
	3. MONETARY PROVISIONS
	 	 	2	 
	3.1. Base Annual Rent
	 	 	2	 
	3.2. Tenant’s Share of Certain Costs
	 	 	2	 
	3.3. Personal Property Taxes
	 	 	3	 
	3.4. Taxes for Leasehold Improvements
	 	 	3	 
	3.5. Prepaid Rent
	 	 	4	 
	3.6. Security Deposit
	 	 	4	 
	3.7. Late Payments
	 	 	4	 
	3.8. Interest
	 	 	4	 
	3.9. Administrative Reimbursement
	 	 	4	 
	3.10. Additional Rent
	 	 	4	 
	3.11. Method of Computation
	 	 	4	 
	4. CONSTRUCTION
	 	 	5	 
	5. SERVICES AND UTILITIES
	 	 	5	 
	5.1. Services by Landlord
	 	 	5	 
	5.2. Tenant’s Obligations
	 	 	5	 
	5.3. Tenant’s Additional Service Requirements
	 	 	5	 
	5.4. Interruption of Utility Service
	 	 	6	 
	6. OCCUPANCY AND CONTROL
	 	 	7	 
	6.1. Use
	 	 	7	 
	6.2. Rules and Regulations
	 	 	7	 
	6.3. Additional Covenants of Tenant
	 	 	7	 
	6.4. Access by Landlord
	 	 	7	 
	6.5. Control of Building and Common Areas
	 	 	8	 
	6.6. Minimization of Disruption
	 	 	8	 
	7. REPAIRS, MAINTENANCE AND ALTERATIONS
	 	 	8	 
	7.1. Landlord’s Repair Obligations
	 	 	8	 
	7.2. Tenant’s Repair Obligations
	 	 	8	 
	7.3. Rights of Landlord
	 	 	9	 
	7.4. Surrender
	 	 	9	 
	7.5. Alterations by Tenant
	 	 	9	 
	7.6. Liens
	 	 	10	 
	8. INSURANCE
	 	 	10	 
	8.1. Insurance Required of Tenant
	 	 	10	 
	8.2. Policy Form
	 	 	10	 

(i)

 

	 	 	 	 	 
	 	 	Part Two, Page #	 
	8.3. Waiver of Subrogation
	 	 	10	 
	8.4. Damage to Property or Persons
	 	 	11	 
	8.5. Landlord’s Insurance
	 	 	11	 
	9. DAMAGE OR DESTRUCTION
	 	 	11	 
	9.1. Repair by Landlord
	 	 	11	 
	9.2.
Landlord’s Rights Upon The Occurrence of Certain Casualties
	 	 	                                     11	 
	9.3. Repairs by Tenant
	 	 	12	 
	10. EMINENT DOMAIN
	 	 	12	 
	10.1. Total Taking
	 	 	12	 
	10.2. Partial Taking
	 	 	13	 
	10.3. Award
	 	 	13	 
	11. ASSIGNMENT AND SUBLETTING
	 	 	13	 
	11.1. Consent
	 	 	13	 
	11.2. Landlord’s Option
	 	 	13	 
	11.3. Definition of Transfer
	 	 	14	 
	11.4. Legal Fees
	 	 	14	 
	12. DEFAULT; REMEDIES
	 	 	14	 
	12.1. Defaults by Tenant
	 	 	14	 
	12.2. Remedies
	 	 	15	 
	12.3. Remedies Cumulative
	 	 	16	 
	12.4. Attorneys’ Fees
	 	 	16	 
	12.5. Waiver
	 	 	16	 
	12.6. Landlord’s Lien
	 	 	16	 
	12.7. Force Majeure
	 	 	16	 
	13. ESTOPPEL CERTIFICATES
	 	 	17	 
	13.1. Acknowledgment of Commencement Date
	 	 	17	 
	13.2. Certificates
	 	 	17	 
	13.3. Financial Statements
	 	 	17	 
	14. SUBORDINATION AND ATTORNMENT
	 	 	17	 
	15. LANDLORD’S INTEREST
	 	 	17	 
	15.1. Liability of Landlord
	 	 	17	 
	15.2. Notice to Mortgagee
	 	 	17	 
	15.3. Sale of Building
	 	 	18	 
	16. NOTICES
	 	 	18	 
	17. BROKERS
	 	 	18	 
	18. INDEMNITY
	 	 	18	 
	18.1. Definitions
	 	 	18	 
	18.2. Indemnity and Waiver
	 	 	18	 
	18.3. Scope of Indemnities and Waivers
	 	 	18	 
	18.4. Negligence of the Beneficiary
	 	 	19	 
	19. SUBSTITUTION OF SPACE
	 	 	19	 
	19.1. Substitute Space
	 	 	19	 
	19.2. Maximum Base Annual Rent
	 	 	19	 
	19.3. Condition of Premises
	 	 	19	 
	19.4. Commencement of Rent
	 	 	19	 
	20. PARKING
	 	 	19	 
	20.1. Parking Spaces
	 	 	19	 
	20.2. Control of Parking
	 	 	19	 
	20.3. Liability
	 	 	20	 
	20.4. Default Remedies
	 	 	20	 
	21. HAZARDOUS SUBSTANCES
	 	 	20	 

(ii)

 

	 	 	 	 	 
	 	 	Part Two, Page #	 
	22. INTERPRETATIVE
	 	 	20	 
	22.1. Captions
	 	 	20	 
	22.2. Attachments
	 	 	20	 
	22.3.
Number, Gender, Defined Terms
	 	 	21	 
	22.4. Entire Agreement
	 	 	21	 
	22.5. Amendment
	 	 	21	 
	22.6.
Severability
	 	 	21	 
	22.7. Time of Essence
	 	 	21	 
	22.8. Best Efforts
	 	 	21	 
	22.9. Binding Effect
	 	 	21	 
	22.10. Subtenancies
	 	 	21	 
	22.11. No Reservation
	 	 	21	 
	22.12. Consents
	 	 	21	 
	22.13. Legal Authority
	 	 	21	 
	22.14. Choice of Law
	 	 	22	 
	EXHIBIT A
	 	 	1	 
	LEGAL DESCRIPTION
	 	 	1	 
	EXHIBIT B
	 	 	1	 
	FLOOR PLAN(s)
	 	 	1	 
	EXHIBIT C
	 	 	1	 
	EXHIBIT D
	 	 	1	 
	RULES & REGULATIONS
	 	 	1	 
	EXHIBIT E
	 	 	1	 
	CERTIFICATE OF ACCEPTANCES OF PREMISES
	 	 	1	 

(iii)

 

PART TWO

SUPPLEMENTAL LEASE PROVISIONS

1. PREMISES,
COMMON AREAS, SERVICE AREAS

     1.1. Building. The term “Building” in this Lease will refer to “3400 Carlisle”, an
office building situated on a tract of land in the City of Dallas and County of Dallas, Texas,
described in Exhibit A of this Lease, and having a postal address of 3400 Carlisle Avenue,

Texas 75204-2530.

     1.2.
Computation of Rentable Area.

          (a) Single Tenant Floor. With respect to a single tenant floor, “Rentable Area” will
mean the sum of (i) the floor area (in square feet) bounded by the inside surfaces of the exterior
glass walls of the Building, excluding standard openings in the floor slab used, for example, for
Building stairs, elevator and other shafts and vertical ducts (collectively, the “Excluded
Spaces”), and (ii) an allocation of the floor area of Common Areas and Service Areas located in or
serving the Building.

          (b) Multiple Tenant Floor. With respect to a multiple tenant floor, “Rentable Area”
will mean the sum of (i) the floor area (in square feet) bounded by the inside surfaces of the
exterior glass walls, the outside surfaces of partitions separating the Premises from corridors and
other Common Areas and Service Areas, and the center line of partitions separating the Premises
from adjoining leasable spaces, less any Excluded Spaces located within such boundaries, and (ii)
an allocation of the floor area of the Common Areas and Service Areas on such floor, and (iii) an
allocation of the floor area of Common and Service Areas located in or serving the Building.

          (c) Columns and Non-Standard Openings. No deductions will be made
in either Section 1.2(a) or Section 1.2(b) for (i) columns and projections
necessary to the structural support of the Building or (ii) for openings in the floor slab which
were made at the request of Tenant or to accommodate items installed at the request of Tenant.

     1.3. Minor Variations in Area. The Rentable Area of the Premises contained in the
Fundamental Lease Provisions has been calculated in accordance with the foregoing definitions and
is agreed to be the Rentable Area of the Premises regardless of minor variations resulting from
construction of the Building and/or tenant improvements.

     1.4.
Ceilings, Walls, Floors. Tenant acknowledges that pipes, ducts, conduits, wires
and equipment serving other parts of the Building may be located above acoustical ceiling surfaces,
below floor surfaces or within walls in the Premises.

     1.5 Condition of Premises. The taking of possession of the Premises by Tenant will
establish conclusively that the Premises and the Building were at such time in satisfactory order
and condition except for (i) minor matters of structural, mechanical, electrical, and finish
adjustment in the Premises (commonly referred to as “punchlist items”) specified in reasonable
detail on a list delivered by Tenant to Landlord within fifteen (15) days after the date on which
Tenant takes possession of the Premises and (ii) defects not discoverable upon inspection and about
which Tenant notifies Landlord within one (1) year after taking possession of the Premises.

     1.6 Common and Service Areas. Tenant is hereby granted a nonexclusive right to use
the Common Areas during the term of this Lease for their intended purposes, in common with others,
subject to the terms and conditions of this Lease, including, without limitation, the Rules and
Regulations.

          (a) Common Areas. “Common Areas” will mean all areas, spaces, facilities,
and equipment
(whether or not located within the Building) made available by Landlord for the common and joint
use of Landlord, Tenant and others, including, but not limited to, tunnels, walkways, sidewalks
and driveways necessary for access to the Building, Building lobbies, landscaped areas, enclosed
mall areas, loading areas, public corridors, public

Part Two-Page 1

 

restrooms, Building stairs and elevators, drinking fountains and such other areas and facilities,
if any, as are designated by Landlord from time to time as Common Areas.

          (b) Service Areas. “Service Areas” will refer to areas, spaces, facilities and equipment
serving the Building (whether or not located within the Building) but to which Tenant and other
occupants of the Building will not have access, including, but not limited to, mechanical,
telephone, electrical and similar rooms, and air and water refrigeration equipment.

2. TERM

     2.1. Term. The Term of this Lease will commence on the date (“Commencement Date”) set
forth in a notice to be delivered by Landlord to Tenant as the date on which Tenant may take
possession of the Premises and will terminate on the date set forth in the Fundamental Lease
Provisions (“Expiration Date”) unless sooner terminated in accordance with the provisions of this
Lease.

     2.2. Delay in Commencement. If Landlord fails for any reason to tender possession of
the Premises to Tenant on the “Contemplated Commencement Date” (herein so called) set forth in the
Fundamental Lease Provisions, (i) Landlord will not be liable to Tenant for any direct or
consequential loss resulting to Tenant from the delay, (ii) the validity of this Lease will not be
affected, and (iii) the term of this Lease will not be extended.

     2.3. Holding Over. If Tenant, or any party claiming rights to the Premises through
Tenant, retains possession of the Premises without the written consent of Landlord after the
Expiration Date or earlier termination of this Lease, such possession will constitute a tenancy at
will, subject, however, to all the terms and provisions of this Lease except for (i) the Term and
(ii) the Base Annual Rent, which Base Annual Rent will become an amount equal to two (2) times the
highest amount set forth in this Lease as Base Annual Rent, plus any adjustments which have
previously occurred. No holding over by Tenant, and no acceptance of rental payments by Landlord
during a holdover period, whether with or without consent of Landlord, will operate to extend this
Lease.

3. MONETARY PROVISIONS

     3.1.
Base Annual Rent. Subject to the prepaid rent provisions of Section 3.5, Tenant
will pay as the monthly installment of “Base Annual Rent” for each month of the Term, the sum set
forth in the Fundamental Lease Provisions, in advance on the first day of each calendar month of
the Term, without deduction, offset, prior notice, or demand, and in lawful money of the United
States. If the Commencement Date is not the first day of a calendar month, Tenant will pay to
Landlord on the Commencement Date a portion of the monthly installment of Base Annual Rent prorated
on the basis of a thirty (30) day month.

     3.2. Tenant’s Share of Certain Costs. In addition to all other sums due under this
Lease, Tenant will pay to Landlord, in the manner and at the times set forth below, Tenant’s
Pro-rata Share of Operating Costs for each calendar year or partial calendar year.

          (a) Operating Costs. “Operating Costs” will mean all costs, charges, and expenses
incurred by Landlord in connection with owning, operating, maintaining, repairing, insuring and
managing the Building and the Common Areas and Service Areas, computed on an accrual basis and
including, without limitation, costs, charges and expenses incurred with respect to the items
enumerated as “Operating Cost Examples” in Paragraph 2 of Exhibit C to this Lease.
Operating Costs will not include those items enumerated as “Operating Cost Exclusions” in
Paragraph 1 of Exhibit C to this Lease.

          (b) Pro Rata Share Computation. “Tenant’s Pro Rata Share” of Operating Costs will be
computed by multiplying the Operating Costs per square foot by the number of square feet of
Rentable Area in the Premises and subtracting from such product the amount of Landlord’s Operating
Cost Contribution set forth in Paragraph 5 of the Fundamental Lease Provisions.

          (c) Estimated Costs. Tenant’s Pro Rata Share of Operating Costs for the remainder of
the first calendar year (whether full or partial) and for each subsequent calendar year of the Term
will be estimated by Landlord, and notice of such estimated amounts will be given to Tenant at
least thirty (30) days prior to the

Part Two-Page 2

 

Commencement Date or the beginning of each calendar year, as the case may be. For each full
calendar year of the Term beginning with calendar year 2004, Tenant will pay to Landlord
each month, at the same time the monthly installment of Base Annual Rent is due, an amount equal to
one-twelfth (1/12) of the Tenant’s estimated Pro Rata Share of Operating due for such calendar
year. If the Expiration Date does not occur on December 31, for the partial calendar year preceding
the Expiration Date, Tenant will pay to Landlord, each month, at the same time the monthly
installment of Base Annual Rent is due, an amount equal to the amount of Tenant’s estimated Pro
Rata Share of Operating Costs for such partial calendar year divided by the number of full calendar
months of such partial calendar year.

          (d) Estimate Revisions. At any time and from time to time during the Term, Landlord
will have the right, by notice to Tenant, to change the monthly amount then payable by Tenant for
Tenant’s estimated Pro Rata Share of Operating Costs to reflect more accurately, in the reasonable
judgment of Landlord, Tenant’s actual Pro Rata Share of Operating Costs for the then current
calendar year. Tenant will begin paying the revised estimated amount together with the next
monthly payment of Base Annual Rent due after receipt by Tenant of Landlord’s notice.

          (e) Annual Adjustments. On or before April 1 of each calendar year, Landlord will
prepare and deliver to Tenant a statement setting forth the calculation of Tenant’s actual Pro Rata
Share of Operating Costs for the previous calendar year. Within thirty (30) days after receipt of
the statement of Tenant’s actual Pro Rata Share of Operating Costs, Tenant will pay to Landlord, or
Landlord will credit against the next rental or other payment or payments due from Tenant, as the
case may be, the difference between Tenant’s actual Pro Rata Share of Operating Costs for the
preceding calendar year and Tenant’s estimated Pro Rata Share of Operating Costs paid by Tenant
during such year.

          (f) Final Partial Year. If the Term will expire or this Lease has been terminated
prior to a final determination of the Tenant’s actual Pro Rata Share of Operating Costs, the amount
of adjustment between Tenant’s estimated Pro Rata Share and Tenant’s actual Pro Rata Share of
Operating Costs payable for the preceding calendar year and/or the final partial calendar year of
the Term will be projected by the Landlord based upon the best data available to Landlord at the
time of the estimate. Within thirty (30) days after receipt of a statement from Landlord setting
forth Landlord’s projections, Tenant will pay to Landlord, or Landlord will pay to Tenant, as the
case may be, the difference between Tenant’s projected actual Pro Rata Share of Operating Costs for
the period in question and Tenant’s estimated Pro Rata Share of Operating Costs paid by Tenant for
the period in question. The obligations set forth in the preceding sentence will survive the
Expiration Date or earlier termination of this Lease.

          (g) Adjustment for Occupancy. During any calendar year in which the Building has less
than full occupancy. Operating Costs will be computed as though the Building had been completely
occupied for the entire calendar year.

     3.3. Personal Property Taxes. Tenant agrees to pay, before delinquency, all taxes,
fees or charges, rates, duties and assessments, imposed, levied or assessed directly against
Tenant, or indirectly through Landlord, and payable during the Term hereof, upon Tenant’s
equipment, furniture, movable trade fixtures and other personal property located in the Premises.
Tenant will also pay, before delinquency, business and other taxes, fees or charges, rates, duties
and assessments imposed, levied or assessed because of the Tenant’s occupancy of the Premises or
upon the business or income of the Tenant generated from the Premises.

     3.4. Taxes for Leasehold Improvements. If any authority levying real and personal
property taxes against the Building as a standard practice for determining the value of the
Building for tax purposes includes a component for tenant improvement or nonmovable trade fixtures
of individual tenants, Tenant will pay to Landlord any portion of such taxes which is equal to the
product of (i) the total of such taxes multiplied by (ii) the fraction the numerator of which is
the cost of tenant improvements or nonmovable trade fixtures in the Premises in excess of the
Building standard or existing improvements (collectively, “Above Standard Improvements”) and the
denominator of which is the cost of all tenant improvements in the Building. Upon receipt of any
such tax statement, Landlord will compute Tenant’s share of taxes attributable to Above Standard
Improvements, and submit a statement to Tenant evidencing the method of calculation. Tenant will
pay to Landlord together with the next monthly installment of Base Annual Rent due after the
receipt of Landlord’s statement the entire amount due under this Section 3.4. The method
of calculation of the share of taxes attributable to Above Standard Improvements will be subject to

Part Two-Page 3

 

adjustment by Landlord from time to time in order to reflect the method currently utilized by
taxing authorities to calculate taxes for Above Standard Improvements. If Tenant is assessed for
taxes for Above Standard Improvements directly by the taxing authorities, Tenant will pay the same
before delinquency and deliver to Landlord copies of receipts for payment of such taxes and
assessments no later than ten (10) days prior to the deadline for payment without imposition of
penalty.

     3.5. Prepaid Rent. Concurrently with Tenant’s execution of this Lease, Tenant will pay
to Landlord the sum specified in Paragraph 7 of the Fundamental Lease Provisions as
“Prepaid Rent” which sum will be credited to Base Annual Rent in the manner set forth in the
Fundamental Lease Provisions.

     3.6. Security Deposit. Contemporaneously with the execution of this Lease, Tenant
will pay Landlord the sum set forth in Paragraph 6 of the Fundamental Lease Provisions as
“Security Deposit” as security for the performance by Tenant under this Lease. If Tenant defaults
with respect to any provision of this Lease, Landlord may, but will not be required to, use, apply
or retain all or any part of the Security Deposit for the payment of any rent or any other sum in
default, or for the payment of any other amount which Landlord may spend or become obligated to
spend by reason of Tenant’s default, or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant’s default. If any portion of the Security Deposit is so
used or applied, Tenant will, upon demand therefor, deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to the original amount. If Tenant fully performs every
provision of this Lease to be performed by Tenant, including surrender of the Premises in
accordance with Section 7.4, the Security Deposit will be returned to Tenant within thirty
(30) days after the Expiration Date. Tenant will not assign or encumber Tenant’s interest in the
Security Deposit and neither Landlord nor Landlord’s successors or assigns will be bound by any
such attempted assignment or encumbrance of the Security Deposit.

     3.7. Late Payments. Should Tenant fail to pay when due any installment of Base
Annual Rent on or before the fifth (5th) day of each calendar month, Interest will accrue from the
date on which such sum is due and such Interest, together with a “Late Charge” (herein so called)
in an amount equal to five percent (5%) of the installment then due, will be paid by Tenant to
Landlord at the time of payment of the delinquent sum. The Late Charge is agreed by Landlord and
Tenant to be a reasonable estimate of the extra administrative expenses incurred by Landlord in
handling such delinquency.

     3.8. Interest. Whenever reference is made in this Lease to the accrual of interest on
sums due Landlord or whenever any amount owed to Landlord is not paid when due, such sum will bear
interest (“Interest”) at an annual rate equal to the lesser of (i) two percent (2%) over the “base”
or “prime” rate published from time to time by Citibank, N.A., or (ii) the maximum lawful rate.

     3.9. Administrative Reimbursement. In the event Landlord performs construction,
maintenance, or repairs for Tenant under Sections 7.3, 8.5 or 12.2 of this Lease,
Tenant will reimburse Landlord within five (5) days after receipt of an invoice from Landlord for
the cost of such construction, maintenance or repairs plus an amount equal to fifteen percent
(15%) of such costs (“Administrative Reimbursement”) to reimburse Landlord for administration
and overhead.

     3.10. Additional Rent. Any payments to be made by Tenant to Landlord under this Lease
in addition to the Base Annual Rent, whether or not denominated as rent, will be deemed to be
additional rent under this Lease for the purpose of securing their collection and will constitute
rent for purposes of Section 502 of the Bankruptcy Code. Landlord will have the same rights and
remedies upon Tenant’s failure to make such payments as for the nonpayment of Base Annual Rent.

     3.11 Method of Computation. Subject to the rights and remedies expressly granted to
Tenant under this Lease, Tenant understands and accepts the amounts and the methods to compute
the amounts of charges that may be assessed upon and to be paid by Tenant under this Lease.
Tenant agrees that this Lease states the amounts or the methods to compute the amounts of charges
that may be assessed upon and to be paid by Tenant under this Lease in compliance with Section
93.004 of the Texas Property Code.

Part Two-Page 4

 

4. CONSTRUCTION

     In the event any construction of tenant improvements is necessary for the Premises, such
construction will be accomplished and the cost of such construction will be borne by Landlord
and/or Tenant in accordance with a separate Rider to this Lease (“Work Letter”) between Landlord
and Tenant. Except as expressly provided in this Lease or in the Work Letter, if any, Tenant
acknowledges that Landlord has not undertaken to perform any modification, alteration or
improvement to the Premises.

5. SERVICES AND UTILITIES

     5.1. Services by Landlord. Provided Tenant is not in default under this Lease, and
subject to the conditions and standards set forth in this Lease and to standards, limitations and
guidelines imposed by governmental authorities and utility companies, Landlord will furnish or
cause to be furnished the following services and utilities:

          (i) Heat and air conditioning to the Premises during “Normal Business Hours” (as
defined in the Rules and Regulations), at such temperatures and in such quantities as Landlord determines are
reasonably necessary for the comfortable use and occupancy of the Premises for general office
purposes;

          (ii) Water at the normal temperature of the supply of water to the Building for lavatory and
drinking purposes through fixtures installed by Landlord or by Tenant with Landlord’s consent;

          (iii) Janitorial cleaning services to those portions of the Premises which are used for
office purposes five (5) days per week (except on holidays observed by the Building);

          (iv) Twenty-four (24) hour, nonexclusive passenger elevator service and, when scheduled
through the Building management, nonexclusive freight elevator service to the floor(s) on which
the Premises are located;

          (v) Routine maintenance in the Common Areas;

          (vi) Replacement of Building standard light bulbs, fluorescent tubes, and ballasts in the
Premises; and

          (vii) Electric current to the Premises for Building standard office lighting and office
machines which consume electric current within the parameters set forth in Section
5.3(a)(i) of this Lease.

     5.2. Tenant’s Obligations. Tenant will pay for, prior to delinquency, all telephone
charges and all other materials and services not expressly the obligation of Landlord that are
furnished to or used by Tenant on or about the Premises during the Term of this Lease.

     5.3. Tenant’s Additional Service Requirements.

          (a) Additional Services Requiring Landlord Consent. Tenant will not,
without Landlord’s prior consent, do the following:

               (i) Install or use special lighting beyond Building standard, or any
equipment, machinery, or device in the Premises which requires a nominal voltage of more than one hundred
twenty (120) volts single phase, or which in Landlord’s reasonable opinion exceeds the capacity
of existing feeders, conductors, risers, or wiring in or to the Premises or Building, or which
requires amounts of water in excess of that usually furnished or supplied for use in office
space, or which will decrease the amount or pressure of water or the amperage or voltage of
electricity Landlord can furnish to other occupants of the Building;

               (ii) Install or use any heat or cold-generating equipment, machinery or device which
affects the temperature otherwise maintainable by the heat or air conditioning system of the
Building;

Part Two-Page 5

 

               (iii) Use portions of the Premises for special purposes requiring greater or more
difficult cleaning work than office areas, such as, but not limited to, kitchens, reproduction
rooms, interior glass partitions, and non-Building standard materials or finishes; or

               (iv) Accumulate refuse or rubbish (A) in excess of that ordinarily accumulated in
business office occupancy or (B) at times other than Building standard cleaning times.

          (b) Providing Additional Services. If, in the reasonable opinion of
Landlord, additional services to Tenant are necessary, Landlord will have the following rights:

               (i) Landlord may require that Tenant cease the activity or remove the item (or
refuse to permit the activity or installation of the item), causing (or which will cause) the need
for such additional service, if Landlord and Tenant are not able to agree upon a mutually
satisfactory method for providing such additional services or, in the reasonable opinion of
Landlord, providing such additional service is not operationally or economically feasible;

               (ii) With respect to additional utility consumption, Landlord may install and
maintain separate metering devices, or may cause periodic usage surveys to be prepared by an
engineer employed by Landlord for such purpose. The cost of the additional utility consumption
plus, if Landlord installs and maintains separate meters, the cost of such meters and their
installation, maintenance and repair, or if Landlord orders usage surveys, the cost of such
surveys, will be the obligation of Tenant;

               (iii) With respect to heat or cold generating equipment, Landlord may furnish
additional heat or air conditioning to the Premises, or install supplementary heating or air
conditioning units in the Premises or elsewhere in the Building, or modify the existing heating or
air conditioning system in the Premises. The cost of additional heat or air conditioning,
supplementary units, or modifications to the existing system will be the obligation of Tenant;

               (iv) With respect to lighting beyond Building standard, Landlord may purchase and
replace, at the expense of Tenant, light bulbs and ballasts and/or fixtures; and/or

               (v) With respect to additional cleaning work, Landlord may instruct Landlord’s
janitorial contractor to provide such services and the cost of such service will be the obligation
of Tenant;

          (c)
After Hours Heat or Air Conditioning. Landlord will, upon request and at the
cost of
Tenant, provide after hours heat or air conditioning. The cost of after hours heat or air
conditioning will be
determined from time to time by Landlord and, upon request, confirmed in writing to Tenant.

          (d)
Payment. Tenant will pay to Landlord the cost of any additional service and any
other
cost for which Tenant is obligated under Section 5.3(b)
or (c) within five (5) days
after receipt of an invoice with
respect to same from Landlord.

     5.4. Interruption of Utility Service. Landlord will use Landlord’s best efforts to
provide the services required of Landlord under this Lease. However, Landlord reserves the right,
without any liability to Tenant and without affecting Tenant’s covenants and obligations under
this Lease, to stop or interrupt or reduce any of the services listed in Section 5.1 or to
stop or interrupt or reduce any other services required of Landlord under this Lease, whenever and
for so long as may be necessary, by reason of (i) accidents or emergencies, (ii) the making of
repairs or changes which Landlord in good faith deems necessary or is required or is permitted by
this Lease or by law to make, (iii) difficulty in securing proper supplies of fuel, water,
electricity, labor or supplies, (iv) the compliance by Landlord with governmental,
quasi-governmental or utility company energy conservation measures, or (v) the exercise by
Landlord of any right under Section 6.5. Landlord will, in the event of an interruption of
a utility service, use Landlord’s best efforts to cause such service to be resumed. However, no
interruption or stoppage of any of such services will ever be construed as an eviction of Tenant
nor will such interruption or stoppage cause any abatement of the rent payable under this Lease or
in any manner relieve Tenant from any of Tenant’s obligations under this Lease. Landlord will not
be liable for any interruption or stoppage of any of such services or for any damage to persons or
property resulting from such stoppage.

 Part Two-Page 6

 

6. OCCUPANCY AND CONTROL

     6.1. Use. The Premises will be used and occupied by Tenant for general office
purposes and for no
other purposes. In no event shall the Premises be used for an educational facility,
telemarketing or a personnel
agency. Tenant shall not maintain an occupancy ratio of no more than one person for every
three hundred thirty-
three (333) square feet of Rentable Area in the Premises at any given point in time during the
Term, or any
extension thereof, without Landlord’s prior written consent.

     6.2. Rules and Regulations. Tenant’s use of the Premises and the Common Areas will be
subject at all
times during the Term to the “Rules and Regulations” attached to the Lease as Exhibit
D and to any modifications of
such Rules and Regulations and any additional Rules and Regulations from time to time
promulgated by Landlord.
Additional Rules and Regulations will not become effective and a part of this Lease until a
copy of same has been
delivered to Tenant. The inability of Landlord to cause another occupant of the Building to
comply with the Rules
and Regulations will neither excuse Tenant’s obligation to comply with such Rules and
Regulations or any other
obligation of Tenant under this Lease nor cause the Landlord to be liable to Tenant for any
damage resulting to
Tenant. Tenant will cause Tenant’s employees, servants and agents to comply with the Rules
and Regulations. In
the event of a conflict between a provision in the Rules and Regulations and a provision in
this Lease, the provision
in this Lease will prevail.

     6.3. Additional Covenants of Tenant.

          (a)
Laws, Statutes. Tenant will, at Tenant’s sole cost, promptly comply with all
laws,
statutes, ordinances, regulations, guidelines or requirements now in force or hereafter
enacted and with the
requirements of any governmental authority having jurisdiction over the Building, board of
fire underwriters, utility
company serving the Building or other similar body now or hereafter constituted, relating to
or affecting the
condition, use or occupancy of the Premises, including without limitation, Title III of The
Americans with
Disabilities Act of 1990, all regulations issued thereunder, and the Accessibility Guidelines
for Buildings and
Facilities issued pursuant thereto, and the Texas Architectural Barriers Act, as the same are
in effect on the date of
this Lease and as hereafter amended. The judgment of any court of competent jurisdiction or
the admission of
Tenant in any action against Tenant, whether Landlord is a party thereto or not, that Tenant
has violated any of the
foregoing will be conclusive of that fact between Landlord and Tenant.

          (b) Nuisance. Tenant will not do or permit anything to be done in or about the
Premises
which will in any way obstruct or interfere with the operation of the Building or Common Areas
or with the rights of
other tenants or occupants of the Building or Common Areas or injure, disturb or annoy other
tenants or occupants
of the Building or Common Areas.

          (c) Building Reputation. Tenant will not use or permit the Premises to be used for
any
objectionable purpose or any purpose which, in the reasonable opinion of the Landlord, harms
or tends to harm the
business or reputation of the Landlord or Building or reflects unfavorably on the Building, or
any part of the
Building, or deceives or defrauds the public.

          (d) Fire Hazards. Tenant will not cause, maintain or permit anything to be done in
the
Premises nor keep anything in the Premises which will, in the opinion of Landlord, increase
the possibility of fire or
other casualty or increase the then existing premiums for or void the coverage of any
insurance upon the Building or
contents of the Building.

          (e) Recording. Tenant will not record this Lease or any memorandum of this Lease
without
the prior written consent of Landlord. Tenant will, upon request of Landlord, execute,
acknowledge and deliver to
Landlord a short form or memorandum of this Lease for recording purposes.

     6.4. Access by Landlord. Landlord reserves the right for Landlord and Landlord’s
agents to enter the
Premises at any reasonable time, (i) to inspect the Premises, (ii) to supply janitorial
service or other services to be
provided by Landlord to Tenant under this Lease, (iii) to show the Premises to prospective
lenders, purchasers or,
during the last six (6) months of the Lease Term, tenants, (iv) to alter, improve, maintain or
repair the Premises or

 Part Two-Page 7

 

any other portion of the Building abutting the Premises, (v) to install, maintain, repair, replace
or relocate any pipe, duct, conduit, wire or equipment serving other portions of the Building but
located in the ceiling, wall or floor of the Premises, (vi) to perform any other obligation of
Tenant after Tenant’s failure to perform same, or (vii) upon default by Tenant under this Lease. If
Landlord enters the Premises for the purpose of performing work, Landlord may erect scaffolding and
store tools, material, and equipment in the Premises when required by the character of the work to
be performed.

     6.5. Control of Building and Common Areas. The Building and Common Areas will be at
all times
under the exclusive control, management and operation of the Landlord. Landlord hereby
reserves the right from
time to time (i) to alter or redecorate the Building (including the Common Areas or Service
Areas) or construct
additional facilities adjoining or proximate to the Building; (ii) to close temporarily doors,
entry ways, public spaces
and corridors and to interrupt or suspend temporarily Building services and facilities in
order to perform any
redecorating or alteration or in order to prevent the public from acquiring prescriptive
rights in the Common Areas;
and (iii) to change the name of the Building.

     6.6. Minimization of Disruption. Landlord will attempt not to disrupt Tenant’s operations in the
Premises during the exercise of Landlord’s rights or the performance by Landlord of Landlord’s
obligations under
this Lease, but will not be required to incur extra expenses in order to minimize such
disruption. Tenant hereby
waives all claims for damages or injuries or interference with Tenant’s business, loss of
occupancy or quiet
enjoyment and any other loss resulting from the exercise by Landlord of any right or the
performance by Landlord
of Landlord’s obligations under this Lease. No exercise by Landlord of any right or the
performance by Landlord of
Landlord’s obligations under this Lease will constitute actual or constructive eviction or a
breach of any express of
implied covenant for quiet enjoyment.

7. REPAIRS, MAINTENANCE AND ALTERATIONS

     7.1. Landlord’s Repair Obligations. Landlord will, subject to the casualty
provisions of Article 9, maintain the (i) the Common Areas and Service Areas, (ii) roof, foundation, exterior windows
and load bearing
items of the Building; (iii) exterior surfaces of walls, windows and ceilings, floors and
window coverings; (iv)
plumbing, pipes and conduits located in the Common Areas or Service Areas of the Building, and
(v) the Building
central heating, ventilation and air conditioning, electrical, mechanical and plumbing
systems. Landlord will not be
required to make any repair in connection with or resulting from (1) any alteration or
modification to the Premises or
to Building equipment performed by, for or because of Tenant or to special equipment or
systems installed by, for or
because of Tenant, (2) the installation, use or operation of Tenant’s property, fixtures and
equipment, (3) the moving
of Tenant’s property in or out of the Building or in and about the Premises, (4) Tenant’s use
or occupancy of the
Premises in violation of Article 6 or in a manner not contemplated by the parties at
the time of execution of this
Lease (e.g., subsequent installation of special use rooms), (5) the acts or omissions of
Tenant and Tenant’s
employees, agents, invitees, subtenants, licensees or contractors, (6) fire or other casualty,
except as provided in
Article 9, or (7) condemnation, except as provided in Article 10. Depending
upon the nature of repairs undertaken
by Landlord, the cost of such repairs will be borne solely by Landlord or reimbursed to
Landlord either by a
particular tenant or tenants or by all tenants as an Operating Cost.

     7.2. Tenant’s Repair Obligations. Except for janitorial services provided by Landlord and repairs
required by Articles 9 and 10 of this Part Two to be performed by Landlord,
Tenant, at Tenant’s expense, will
maintain the Premises in good order, condition and repair including, without limitation, the
interior surfaces of the
windows, walls and ceilings; floors; wall and floor coverings; window coverings; doors;
interior windows; and all
switches, fixtures and equipment in the Premises. Upon receipt of reasonable notice from
Tenant, Landlord will
perform, at the expense of Tenant, all repairs and maintenance to plumbing, pipes and
electrical wiring located
within walls, above ceiling surfaces and below floor surfaces resulting from the use of the
Premises by Tenant. In
no event will Tenant be responsible for any plumbing, pipes and electrical wiring, switches,
fixtures and equipment
located in the Premises but serving another tenant or for portions of the central heat,
ventilation and air conditioning,
electrical, mechanical and plumbing systems of the Building which are located in the Premises,
except for (i) repairs
resulting from the acts of Tenant and Tenant’s employees, agents, invitees, subtenants,
licensees or contractors, (ii)
modifications made to such systems by, for, or because of Tenant, and (iii) special equipment
installed by, for, or
because of Tenant.

 Part Two-Page 8

 

     7.3. Rights of Landlord. In the event Tenant fails, in the reasonable judgment of
Landlord, to maintain
the Premises in good order, condition and repair, Landlord will have the right to perform such
maintenance, repairs,
refurbishing or repairing at Tenant’s expense.

     7.4. Surrender. Upon the expiration or earlier termination of this Lease, or upon the exercise by
Landlord of Landlord’s right to re-enter the Premises without terminating this Lease, Tenant
will surrender the
Premises in the same condition as received or as subsequently improved by Landlord or Tenant,
except for (i)
ordinary wear and tear and (ii) damage by fire, earthquake, acts of God or the elements for
which damage Landlord
has received all insurance proceeds, and will deliver to Landlord all keys for the Premises
and combinations to safes
located in the Premises. Tenant will, at Landlord’s option, remove, or cause to be removed,
from the Premises or the
Building, at Tenant’s expense and as of Expiration Date or earlier termination of this Lease,
all signs, notices,
displays, millwork, non-movable trade fixtures, or, subject to Subsection 7.5(d) of
this Lease, any non-Building
standard tenant improvements placed in the Premises or the Building. Tenant agrees to repair,
at Tenant’s expense,
any damage to the Premises or the Building resulting from the removal of any articles of
personal property, movable
business or trade fixtures, machinery, equipment, furniture, movable partitions or
non-Building standard tenant
improvements, including without limitation, repairing the floor and patching and painting
the walls where
reasonably required by Landlord. Tenant’s obligations under this Section 7.4 will
survive the expiration or earlier
termination of this Lease. If Tenant fails to remove any item of property permitted or
required to be removed at the
expiration or earlier termination of the Term, Landlord, may, at Landlord’s option, (a) remove
such property from
the Premises at the expense of Tenant and sell or dispose of same in such manner as Landlord
deems advisable, or
(b) place such property in storage at the expense of Tenant. Any property of Tenant remaining
in the Premises ten
(10) days after the Expiration Date or earlier termination of this Lease will be deemed to
have been abandoned by
Tenant.

     7.5. Alterations by Tenant.

          (a) Approval Required. Tenant will not make, or cause or permit to be made, any
additions,
alterations, installations or improvements in or to the Premises (collectively,
“Alterations”), without the prior written
consent of Landlord. Unless Landlord has waived such requirement in writing, together with
Tenant’s request for
approval of any Alteration, Tenant must also submit details with respect to the proposed
source of funds for the
payment of the cost of the Alteration by Tenant, design concept, plans and specifications,
names of proposed
contractors, and financial and other pertinent information about such contractors (including
without limitation, the
labor organization affiliation or lack of affiliation of any contractors), certificates of
insurance to be maintained by
Tenant’s contractors, hours of construction, proposed construction methods, details with
respect to the quality of the
proposed work and evidence of security (such as payment and performance bonds) to assure
timely completion of
the work by the contractor and payments by the contractor of all costs of the work. With
respect to any Alteration
which is visible from outside the Premises, such proposed Alteration must, in the opinion of
Landlord, also be
architecturally and aesthetically harmonious with the remainder of the Building.

          (b) Complex Alterations. If the nature, volume or complexity of any proposed
Alterations,
causes Landlord to consult with an independent architect, engineer or other consultant, Tenant
will reimburse
Landlord for the fees and expenses incurred by Landlord. If any improvements will affect the
basic heat, ventilation
and air conditioning or other Building systems or the Building, Landlord may require that such
work be designed by
consultants designated by Landlord and be performed by Landlord or Landlord’s contractors.

          (c) Standard of Work. All work to be performed by or for Tenant pursuant hereto will
be
performed diligently and in a first-class, workmanlike manner, and in compliance with all
applicable laws,
ordinances, regulations and rules of any public authority having jurisdiction over the
Building and/or Tenant and
Landlord’s insurance carriers. Landlord will have the right, but not the obligation, to
inspect periodically the work
on the Premises and may require changes in the method or quality of the work.

          (d) Ownership of Alterations. All Alterations made by or for Tenant (other than the
Tenant’s
movable trade fixtures), will immediately become the property of the Landlord, without
compensation to the Tenant;
provided, however, Landlord will have no obligation to repair, maintain or insure such
Alterations. Carpeting,
shelving and cabinetry will be deemed improvements of the Premises and not movable trade
fixtures, regardless of
how or where affixed. Such Alterations will not be removed by Tenant from the Premises
either during or at the

 Part Two-Page 9

 

expiration or earlier termination of the Term and will be surrendered as a part of the Premises
unless such Alteration is not Building standard and Landlord has requested that Tenant remove
same. All non-Building standard improvements resulting from such Alteration will be subject to
removal.

     7.6. Liens. Tenant will keep the Premises and the Building free from any liens
arising out of work performed, materials furnished, or obligations incurred by or on behalf of or
for the benefit of Tenant. If Tenant does not, within ten (10) days following the imposition of
any such lien, cause such lien to be released of record by payment or posting of a proper bond or
other security, Landlord will have, in addition to all other remedies provided in this Lease and
by law, the option, to cause the same to be released by such means as Landlord deems proper,
including payment of the claim giving rise to such lien. All sums paid and expenses incurred by
Landlord in connection therewith, including attorneys’ fees and a reasonable amount for Landlord’s
administrative time, will be payable to Landlord by Tenant on demand with Interest from the date
such sums are expended.

8. INSURANCE

     8.1. Insurance Required of Tenant. Tenant will at Tenant’s sole cost and expense,
obtain and provide, on or before the Commencement Date, and will keep in force at all times during
the Term, the following insurance coverages with respect to Tenant’s operations and the Premises:

          (i) Commercial general liability insurance relating to the Premises and the
appurtenances of
the Premises on an occurrence basis with an aggregate limit in the amount set forth in the
Fundamental Lease Provisions. Such policy will name Landlord and any other parties designated by
Landlord from time to time, as “additional insureds” on Insurance Services Organization, Inc.
(“ISO”) form CG 1126 1185.

          (ii) Special Form (formerly “all risks”) property insurance providing coverage in an amount
adequate to cover the replacement cost of all property owned by Tenant or for which Tenant is
legally liable and which is located within the Building, including without limitation, personal
property, decorations, trade fixtures, furnishings, equipment, and all fixtures, alterations,
leasehold improvements and betterments in the Premises made, installed or purchased by or on
behalf of Tenant. Such policy will be written in the name of Tenant, Landlord, and any other
parties designated by Landlord from time to time, as their respective interests may appear.

          (iii) Workers’ compensation insurance insuring against and satisfying Tenant’s obligations
and liabilities under the workers’ compensation laws of the State of Texas.

          (iv) Such additional policy limits or different insurance coverages on the Premises and
Tenant’s operation therein as may from time to time be reasonably requested by Landlord.

     8.2. Policy Form. All insurance required of Tenant will be in form and written by
one or more
insurance companies reasonably satisfactory to Landlord. All such insurance may be carried in
a single policy or in
a combination of primary and umbrella policies or under a blanket policy covering the Premises
and any other of
Tenant’s offices. All such insurance will contain endorsements that (i) such insurance may
not be canceled or
amended with respect to Landlord or Landlord’s designees except upon thirty (30) days’ prior
notice to Landlord and
Landlord’s designees by the insurance company, (ii) Tenant will be solely responsible for
payment of premiums and
that Landlord and Landlord’s designees will not be required to pay any premiums for such
insurance, (iii) in the
event of payment of any loss covered by such policy, Landlord or Landlord’s designees will be
paid first by the
insurance company for Landlord’s loss, and (iv) Tenant’s insurance is primary in the event of
overlapping coverage
which may be carried by Landlord. The minimum limits of the commercial general liability
policy of insurance
required by Section 8.1(i) will in no way limit or diminish Tenant’s liability under
this Lease. Tenant will deliver to
Landlord at least fifteen (15) days prior to the time such insurance is first required to be
carried by Tenant and
thereafter at least fifteen (15) days prior to the expiration of such policy, either a
duplicate original or a legally
enforceable certificate of insurance on all policies procured by Tenant in compliance with
Tenant’s obligations under
this Lease, together with evidence satisfactory to Landlord of the payment of the premiums therefor.

     8.3. Waiver of Subrogation. Landlord and Tenant agree that, in the event of property
damage experienced by either party due to any of the perils for which the party incurring
the loss has agreed to provide property insurance, such party will look solely to such party’s
property

 Part Two-Page 10

 

insurance for recovery, INCLUDING WITHOUT LIMITATION, MATTERS CAUSED BY THE SOLE OR
CONCURRENT NEGLIGENCE OF THE OTHER PARTY. Landlord and Tenant hereby grant to each other, on
behalf of any insurer providing insurance to either of them with respect to the Premises, a waiver
of any right of subrogation which any insurer of one party may acquire against the other by virtue
of payment of any loss under such insurance. Landlord and Tenant will deliver notice of this
Section 8.3 to its insurance carriers.

     8.4.
Damage to Property or Persons.
Tenant hereby releases Landlord from liability,
including liability occasioned by the act, omission or negligence of Landlord, its agents,
servants
and employees, for the following: (i) any loss of or damage to property of Tenant or of
others
located in the Premises or the Building, by theft or otherwise, (ii) any injury or damage
to persons or
property or the interior of the Premises resulting from fire, explosion, falling
sheetrock, gas,
electricity, water, rain, snow or leaks from any part of the Premises or from the pipes,
appliances, or
plumbing works or from the roof, street, or subsurface or from any other place or by
dampness or by
any other cause of whatsoever nature, (iii) any injury or damage caused by other tenants
or any
person(s) either in the Premises or elsewhere in the Building, or by occupants of property
adjacent to
the Building or Common Areas, or by the public or by the construction of any private,
public, or
quasi-public work, or (iv) any latent defect in construction of the building.

     8.5. Landlord’s Insurance. Landlord will, during the Term of this Lease, procure and
continue in force
the following insurance:

          (i) Commercial general liability insurance with an aggregate limit for bodily injury
and
property damage of not less than Two Million and No/100 Dollars ($2,000,000.00) for each
occurrence resulting from the operations of the Landlord or Landlord’s employees within the
Building.

          (ii) Special form (formerly “all risks”) property insurance covering the Building and all
machinery, equipment and other personal property used in connection with the Building (but not
property owned by any tenant of the Building or for which any tenant of the Building is legally
liable or alterations, leasehold improvements, or betterments made, installed or purchased by or
on behalf of any tenant of the Building), in an amount not less than the replacement cost of same.

9. DAMAGE OR DESTRUCTION

     9.1. Repair by Landlord. Tenant will immediately notify Landlord of fire or other
casualty in the
Premises. If the Premises are damaged by fire or other casualty and unless this Lease is
terminated as hereinafter
provided, Landlord will proceed with reasonable diligence to repair the so-called “shell” of
the Premises and any
leasehold improvements originally installed by Landlord. Landlord’s obligation to repair is
subject to (i) delays
which may arise by reason of adjustment of loss under insurance policies, including, without
limitation, Tenant’s
policy for leasehold improvements and betterments described in Section 8.1 of this
Lease, and (ii) other delays
beyond Landlord’s reasonable control. Landlord’s obligation to repair will be limited to the
extent of insurance
proceeds actually available to Landlord for repairs after the election by the holder of any
mortgage against the
Building to apply a portion or all of the proceeds against the debt owing to such holder.
Until Landlord’s repairs to
the Premises are completed, the Base Annual Rent and additional rent will abate in proportion
to the part of the
Premises, if any, that is rendered untenantable.

     9.2. Landlord’s Rights Upon The Occurrence of Certain Casualties. In the event:

          (i) either the Premises or the Building (whether or not the Premises are affected)
is totally or
partially destroyed or damaged by fire or other casualty and repairs cannot, in Landlord’s
reasonable judgment, be completed within one hundred eighty (180) days after the occurrence of
such damage without the payment by Landlord of overtime or other premiums;

          (ii) fifty percent (50%) or more of the Rentable Area of the Building (wherever located) is
damaged or destroyed by fire or other casualty (whether or not the Premises are affected
thereby);

 Part Two-Page 11

 

          (iii) damage is otherwise so great that Landlord, in Landlord’s absolute discretion,
decides to demolish the Building, in whole or in substantial part;

          (iv) insurance proceeds remaining after payment of any proceeds required to be paid to
the holder of any mortgage affecting the Building are insufficient to repair or restore the damage
or destruction;

          (v) the Building or the Premises are damaged or destroyed as a result of any cause
other than
the perils covered by Landlord’s property insurance and, in Landlord’s judgment, the cost of
repairs will exceed five percent (5%) of the full insurable value of the Building; or

          (vi) the Premises are materially damaged, in Landlord’s judgment, by fire or other
casualty during the last twenty-four (24) months of the Term;

Landlord may elect (a) to the extent of the insurance proceeds actually received by the Landlord,
to proceed to repair, restore or rebuild the Building or the Premises, in which event this Lease
will continue in effect, or (b) to terminate this Lease (effective as of the event of destruction)
upon thirty (30) days’ prior notice to Tenant, which notice will be given, if at all, within sixty
(60) days following the date of the occurrence of the destruction. In repairing or restoring the
Building or any part thereof, the Landlord may use designs, plans and specifications, other than
those used in the original construction of the Building and the Landlord may alter or relocate, or
both, any or all buildings, facilities and improvements, including the Premises, provided that the
Premises as altered or relocated will be substantially the same size and will be in all material
respects reasonably comparable to the Premises. Tenant will pay Base Annual Rent and all other
sums payable under this Lease prorated through the effective date of such termination and Landlord
and Tenant will be free and discharged from all obligations under this Lease arising after the
effective date of such termination, except those obligations expressly stated in this Lease to
survive the termination of this Lease.

     9.3. Repairs by Tenant. Landlord will not be required to repair any injury or damage
by fire or other cause, to restore or replace or to reimburse Tenant for damage to any of the
Tenant’s property or any leasehold improvements installed in the Premises by Tenant. Landlord’s
obligations to repair leasehold improvements originally installed by Landlord will be subject to,
and limited to the extent of, receipt of adequate proceeds from Landlord’s Tenant’s insurance.
Tenant will be required to repair any injury or damage to the Premises or to the contents of the
Premises which Landlord is not responsible for repairing. Except for abatement, if any, of Base
Annual Rent and additional rent in accordance with the provisions of this Lease, Tenant will not
be entitled to any allowance, compensation or damages from Landlord for loss of use of all or any
part of the Premises or Tenant’s property or for any inconvenience, annoyance, disturbance or loss
or interruption of business, or otherwise, arising from any damage to the Premises or the Building
by fire or any other cause, or arising from any repairs, reconstruction or restoration, nor will
Tenant have the right to terminate this Lease.

10. EMINENT DOMAIN

     10.1. Total Taking. If all of the Building will be taken or appropriated for public
or quasi-public use by right of eminent domain or transferred by agreement with such public or
quasi-public agency, this Lease will terminate as of the date possession is taken by the
condemning authority. If less than all of the Premises or Building is taken or appropriated but in
Landlord’s reasonable judgment, the balance will be rendered untenable, such taking will
constitute a total taking for purposes of this Section 10.1. Landlord will notify Tenant
of Landlord’s decision that the remainder is untenable within thirty (30) days of Landlord’s
receipt of notice of the taking or appropriation and this Lease will terminate as of the date
possession is taken by the condemning authority.

 Part Two-Page 12

 

     10.2. Partial Taking. If only part of the Building (whether or not such part
includes the Premises) is
taken or appropriated by a public or quasi-public agency under the right of eminent domain or
conveyed in
agreement with a public or quasi-public agency (whether or not the Premises are affected
thereby) and, (i) in
Landlord’s reasonable judgment, substantial alteration or reconstruction of the Building is
necessary as a result of
such taking or conveyance, or (ii) if Landlord decides to demolish or discontinue operating
the Building as a result
of such taking or conveyance, or (iii) twenty-five percent (25%) or more of the Rentable Area
of the Building is so
taken or conveyed or, in the reasonable judgment of Landlord, the Building is rendered
untenable as a result, or (iv)
proceeds from such taking or conveyance remaining after payment of any such proceeds required
to be paid to the
holder of any mortgage affecting the Building are insufficient to restore the Building and the
Premises to an
architectural whole, then, in any of such events, Landlord may, at Landlord’s option,
terminate this Lease by giving
Tenant notice of termination within thirty (30) days after such taking or conveyance. In the
event this Lease is not
terminated, Landlord will, to the extent of proceeds actually received after the exercise by
any mortgagee of the
Building of an option to apply such proceeds against Landlord’s debt to such mortgagee,
restore the Building to an
architectural whole.

     10.3. Award. Any award for or proceeds from any partial or entire taking or conveyance to a public or
quasi-public agency will be the property of Landlord, including, without limitation, any award
or proceeds based on
value of the leasehold interest of Tenant. Nothing contained in this Section 10.3
will be deemed to give Landlord
any interest in or to preclude Tenant from seeking and recovering for Tenant’s account a
separate award from the
condemning authority (but only to the extent such separate award does not reduce any award to
Landlord) for the
taking of personal property and fixtures removable by Tenant, for the interruption of or
damage to Tenant’s business
or for Tenant’s unamortized cost of leasehold improvements paid for by Tenant. In the event
of a partial taking
which does not result in a termination of this Lease, Base Annual Rent and additional rent
will be abated in the
proportion which the Rentable Area of the Premises rendered unusable bears to the total
Rentable Area of the
Premises. No temporary taking of Tenant’s Premises and/or of Tenant’s rights therein or
under this Lease will
terminate this Lease or give Tenant any right to any abatement of Base Annual Rent or
additional rent under this
Lease. Any award made to Tenant by reason of any temporary taking will belong entirely to
Tenant and Landlord
will not be entitled to share in such award.

11. ASSIGNMENT AND SUBLETTING

     11.1. Consent. Tenant will not assign this Lease or sublet all or any portion of
the Premises
(collectively, “Transfer”) without the prior written consent of the Landlord. Landlord will
not unreasonably
withhold consent to any Transfer (other than an encumbrance of Tenant’s interest in this
Lease) pursuant to this
Paragraph 11.1. Landlord will not be deemed to have been unreasonably withheld consent if:
(i) Transferee’s
financial condition is not reasonably satisfactory to Landlord or does not evidence
Transferee’s ability to pay its
obligations under the Lease when due; (ii) the net worth of Tenant (plus any guarantor) as of
the date of this Lease
or the effective date of Transfer (whichever is greater) exceeds the net worth of Transferee
(plus any guarantor); (iii)
Transferee refuses to provide additional security required by Landlord as a result of a change
in financial
creditworthiness or legal structure; (iv) Transferee’s use of the Premises conflicts with the
permitted use or any
exclusive usage rights granted to any other tenant in the Building; (v) the use, nature,
business, activities or
reputation in the business community of Transferee (or its principals, employees or invitees)
is not acceptable to
Landlord; (vi) an uncured Event of Default exists under this Lease (or a condition exists
which, with the passage of
time or giving of notice, would become an Event of Default); (vii) Transferee is an occupant
of, or Landlord is
otherwise engaged in lease negotiations with Transferee for, other space in the Project;
(viii) Transferee is or has
been involved in a dispute or litigation with Landlord; or (x) Transferee fails to execute
Landlord’s then-standard
consent form containing an assumption by Transferee of all obligations of Tenant accruing
under this Lease after the
date of Transfer. If consent to any Transfer is given by Landlord, such consent will not
relieve the Tenant or any
guarantor of this Lease from any obligation or liability under this Lease. If this Lease is
Transferred or any part of
the Premises is occupied by any person other than the Tenant without the consent of Landlord,
the Landlord may
nevertheless collect Base Annual Rent and additional rent from the Transferee or occupant, and
apply the net
amount collected to the Base Annual Rent and other amounts payable under this Lease but, in no
event will such
collection be construed as a waiver of this covenant.

     11.2. Landlord’s Option. Tenant will notify Landlord at least thirty (30) days in advance of the effective
date of a proposed Transfer. Tenant will provide Landlord with a copy of the proposed
Transfer, and sufficient

 Part Two-Page 13

 

information concerning the proposed Transferee to allow Landlord to make informed judgments as to
the financial condition, reputation, operations and general desirability of the proposed assignee
or subtenant(s). Within fifteen (15) days after Landlord’s receipt of Tenant’s proposed Transfer
and all required information concerning the proposed subtenant(s) or assignee, Landlord will have
the option to:

          (i) Cancel the Lease as to all of the Premises, if Tenant proposes to assign the
Lease or sublet
more than fifty percent (50%) of the Premises, or cancel the Lease as to the portion of the
Premises proposed to be sublet if Tenant proposes to sublet less than fifty percent (50%) of the
Premises; or

          (ii) Consent to the proposed Transfer, provided, however, if the rent due and payable by any
Transferee under any such permitted Transfer (or a combination of the rent payable under such
Transfer plus any bonus or any other consideration for the Transfer or any payment incident to the
Transfer) exceeds the rent payable under the Lease for such space, Tenant will pay to Landlord
one-half
(1/2) all of such excess rent and other excess consideration within ten (10) days
following receipt of such excess rent and/or consideration by Tenant (if the proposed Transferee
is subject to compliance with additional requirements under The Americans with Disabilities Act
beyond those requirements which are applicable to the Tenant desiring to sublet or assign,
Landlord may condition Landlord’s consent upon receipt of plans and specifications acceptable to
Landlord for complying with the additional requirements and of security acceptable to Landlord
that such construction be completed timely and lien-free) after deducting the reasonable expenses
incurred by Tenant in connection with such Transfer; or

          (iii) Reasonably refuse to consent to the proposed Transfer but allow Tenant to continue in
the search for a Transferee that will be acceptable to Landlord, which option will be deemed to be
elected unless Landlord gives Tenant notice providing otherwise.

     11.3. Definition of Transfer. The word “Transfer” in this Article 11 will
include (i) the pledging,
mortgaging or encumbering of Tenant’s interest in this Lease, or the Premises or any part
thereof, and (ii) the total or
partial occupation of all or any part of the Premises by any person, firm, partnership, or
corporation, or any groups
of persons, firms, partnerships, or corporations, or any combination thereof, other than
Tenant, (iii) an assignment or
transfer by operation of law, and (iv) with respect to a corporation, partnership, or other
business entity, a transfer or
issue by sale, assignment, bequest, inheritance, operation of law, or other disposition, or by
subscription, any part or
all of the corporate shares of or partnership or other interests in the Tenant, so as to
result in any change in the
present effective voting control of the Tenant by the party or parties holding such voting
control on the date of this
Lease. Upon the request of Landlord, Tenant will make available to the Landlord or to
Landlord’s representatives,
for inspection all books and records of the Tenant necessary to ascertain whether there has,
in effect, been a change
in control of Tenant. Item (iv) of this Section 11.3 will not apply to a
corporation whose shares are traded on a
nationally recognized stock exchange.

     11.4. Legal Fees. All reasonable legal fees and expenses incurred by the Landlord in connection with
the review by the Landlord of the Tenant’s request pursuant to this Article 11.
together with any reasonable legal
fees and disbursements incurred in the preparation and review of any documentation, will be
the responsibility of the
Tenant and will be paid by Tenant within five (5) days from receipt of an invoice from
Landlord, as additional rent,
not to exceed $500.00 in the aggregate per request.

12. DEFAULT; REMEDIES

     12.1. Defaults by Tenant. The occurrence of any of the following will
constitute a default under this Lease by Tenant:

          (i) any failure by Tenant to pay an installment of Base Annual Rent or to make any
other
payment required under this Lease when due [except that the first time such failure occurs during
each calendar year, Tenant will not be in default unless Tenant fails to pay such sum within five
(5) days after notice from Landlord];

          (ii) any failure by Tenant to observe and perform any other provision of this Lease to be
observed and performed by Tenant, where such failure continues for twenty (20) days after notice
by Landlord to Tenant;

 Part Two-Page 14

 

          (iii) failure to take possession or delivery of the Premises within ten (10) days after
notice from Landlord that the Premises are ready for occupancy, or abandonment of the Premises,
i.e., the failure by Tenant or Tenant’s employees to occupy the Premises for ten (10) consecutive
days;

          (iv) Tenant’s interest in this Lease or in all or a part of the Premises is taken by process
of law directed against Tenant, or becomes subject to any attachment at the instance of any
creditor of or claimant against Tenant, and such attachment is not discharged within ten (10)
days;

          (v) Tenant or any guarantor of Tenant’s obligations under this Lease: (a) is unable to pay
such party’s debts generally as they become due; (b) makes an assignment of all or a substantial
part of such party’s property for the benefit of creditors; (c) convenes or attends a meeting of
such party’s creditors, or any class thereof, for purposes of effecting a moratorium upon or
extension or composition of such party’s debts; (d) applies for or consents to or acquiesces in
the appointment of a receiver, trustee, liquidator, or custodian of
such party or of all or a
substantial part of such party’s property or of the Premises or of Tenant’s interest in this
Lease; or (e) files a voluntary petition in bankruptcy or a petition or an answer seeking
reorganization under the Bankruptcy Code or any other law relating to bankruptcy, insolvency,
reorganization or relief of debtors or an arrangement with creditors, or takes advantage of any
insolvency law or files an answer admitting the material allegations of a petition filed against
such party in any bankruptcy, relief, reorganization or insolvency proceedings;

          (vi) Tenant or any guarantor of Tenant’s obligations under this Lease takes any corporate
action to authorize any of the actions set forth in
Section 12.1(v); or

          (vii) the entry of a court order, judgment or decree against Tenant or any guarantor of
Tenant’s obligations under this Lease, without the application, approval or consent of such party,
approving a petition seeking reorganization of such party or relief of debtors under the
Bankruptcy Code or any other law relating to bankruptcy, insolvency, reorganization, or relief of
debtors or granting an order for relief against it as debtor or appointing a receiver, trustee,
liquidator, or custodian of such party or of all or a substantial part of such party’s property or
of the Premises or of Tenant’s interest in this Lease, or adjudicating such party bankrupt or
insolvent, and such order, judgment or decree will not be vacated, set aside or dismissed within
sixty (60) days from the date of entry.

     12.2. Remedies. Upon the occurrence of any event of default enumerated in Section
12.1. Landlord will have the option of (i) terminating this Lease by notice thereof to Tenant
or (ii) continuing this Lease in full force and effect and/or (iii) performing the obligation of
Tenant.

          (a) Termination of Lease. In the event Landlord elects to terminate this
Lease, upon notice to
Tenant this Lease will end as to Tenant and all persons holding under Tenant, and all of Tenant’s
rights will be forfeited and lapsed, as fully as if this Lease had expired by lapse of time, and
there will be recoverable from Tenant: (i) the cost of restoring the Premises to good condition,
normal wear and tear excepted, (ii) all accrued, unpaid sums, plus Interest and late charges, if in
arrears, under the terms of this Lease up to the date of termination, (iii) Landlord’s cost of
recovering possession of the Premises, and (iv) rent and other sums accruing subsequent to the date
of termination pursuant to the holdover provisions of Section 2.3. Notwithstanding any
provision in this Lease to the contrary, if Tenant’s default is by reason of Tenant’s failure to
pay rents, Landlord will, at Landlord’s option, be entitled to liquidated damages equal to six (6)
monthly installments of Base Annual Rent and, if Tenant’s default constitutes an anticipatory
breach under Texas law. Landlord shall also be entitled to collect all other damages permitted
under Texas law for anticipatory breach. The Landlord will at once
have all the rights of re-entry
upon the Premises, without becoming liable for damages, or guilty of a trespass.

 Part Two-Page 15

 

          (b) Continuation of Lease. In the event that Landlord elects to continue this Lease
in full force and effect, Tenant will continue to be liable for all rents. Landlord will
nevertheless have all the rights of re-entry upon the Premises without becoming liable for damages,
or guilty of a trespass. Landlord, after re-entry, may relet all or a part of the Premises to a
substitute tenant or tenants, for a period of time equal to or less or greater than the remainder
of the Term on whatever terms and conditions Landlord, at Landlord’s sole discretion, deems
advisable. Against the rents and sums due from Tenant to Landlord during the remainder of the
Term, credit will be given Tenant in the net amount of rent received from the new tenant after
deduction by Landlord for; (i) the costs incurred by Landlord in reletting the Premises
(including, without limitation, remodeling costs, brokerage fees and the like), (ii) the accrued
sums, plus Interest and late charges if in arrears, under the terms of this Lease, (iii)
Landlord’s cost of recovering possession of the Premises, and (iv) if Landlord elects to store
Tenant’s property in accordance with Section 7.4. the cost of storing any of Tenant’s
property left on the Premises after re-entry. Notwithstanding any
provision in this Section 12.2(b) to the contrary, upon the default of any substitute tenant or upon the expiration of
the term of such substitute tenant before the expiration of the Term hereof, Landlord may, at
Landlord’s election, either relet to another substitute tenant, or terminate this Lease and
exercise Landlord’s rights under Section 12.2(a) of this Lease.

          (c) Performance for Tenant. In the event that Landlord elects to perform the
obligation(s) of Tenant, all sums expended by Landlord effecting such performance (including
Administrative Reimbursement under Section 3.9), plus Interest thereon, will be due and payable
with the next monthly installment of Base Annual Rent. Such sum will constitute additional rental
under this Lease, and failure to pay such sums when due will enable Landlord to exercise all of
Landlord’s remedies under this Lease.

     12.3. Remedies Cumulative. All rights and remedies of Landlord under this Lease will
be nonexclusive
of and in addition to any other remedies available to Landlord at law or in equity.

     12.4. Attorneys’ Fees. If legal action is necessary in order to enforce or interpret this Lease, the
prevailing party will be entitled to reasonable attorneys’ fees, costs and disbursements in
addition to any other relief
to which such party is entitled.

     12.5. Waiver. No covenant, term or condition or the breach thereof will be deemed waived, except by
written consent of the party against whom the waiver is claimed and any waiver of the breach
of any covenant, term
or condition will not be deemed to be a waiver of any preceding or succeeding breach of the
same or any other
covenant, term or condition. Acceptance by Landlord of any performance by Tenant after the
time the same was
due will not constitute a waiver by Landlord of the breach or default of any covenant, term or
condition unless
otherwise expressly agreed to by Landlord in writing.

     12.6. Landlord’s Lien. To assure payment of all sums due under this Lease and the faithful performance
of all other covenants of the Lease, Tenant hereby grants to Landlord an express contract lien
on and security
interest in all property, chattels or merchandise owned by Tenant which may be placed in the
Premises and also
upon all proceeds of any insurance which may accrue to Tenant by reason of damage or
destruction of any such
property. Landlord will have all the rights and remedies of a secured party under the Texas
Business and Commerce
Code, and this lien and security interest may be foreclosed by process of law. Upon request
by Landlord, Tenant
agrees to execute and to deliver a financing statement in form sufficient to perfect the
security interest of Landlord
under the Texas Business and Commerce Code. Tenant further agrees that Landlord may file
this Lease as a
financing statement. The lien and security interest granted in this Section 12.6 will
be cumulative of and in addition
to any statutory lien rights in favor of Landlord, now or hereafter existing.

     12.7. Force Majeure. Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of
God, inability to obtain labor or materials or reasonable substitutes therefor (provided such
inability does not arise
from the inability of Landlord to pay for same), governmental restrictions, governmental
regulations, governmental
controls, enemy or hostile governmental action, civil commotion, fire or other casualty, and
other causes beyond the
reasonable control of the Landlord, will excuse the performance by Landlord for a period of
time equal to any such
prevention, delay or stoppage, of any obligation Landlord is obligated to perform under this
Lease.

 Part Two-Page 16

 

13. ESTOPPEL CERTIFICATES

     13.1. Acknowledgment of Commencement Date. Upon tender of possession of the Premises
to the Tenant and as often thereafter as may be requested by Landlord, Tenant will, within ten
(10) days after receipt of a request from Landlord, execute, acknowledge and deliver to Landlord a
statement in the form of Exhibit E which will (i) set forth the actual Commencement Date
and Expiration Date of the Term, and (ii) contain acknowledgments that Tenant has accepted the
Premises and that the Premises and Building are satisfactory in all
respects.

     13.2. Certificates. Tenant will, within ten (10) days after receipt of a request from
Landlord or any mortgagee of Landlord, execute, acknowledge and deliver to Landlord or such
mortgagee either a statement in writing or three party agreement among Landlord, Tenant and such
mortgagee (i) certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of such modification and certifying that this Lease, as so modified,
is in full force and effect) and the date to which Base Annual Rent and other charges are paid in
advance, if any; (ii) acknowledging that there are not, to Tenant’s knowledge, any uncured
defaults on the part of Landlord under this Lease, or specifying such defaults if any are claimed,
and (iii) specifying any further information and agreeing to such notice provisions and other
matters reasonably requested by Landlord or such mortgagee. Any such statement may be conclusively
relied upon by a prospective purchaser or mortgagee of the Premises. Tenant’s failure to deliver
such statement within ten (10) days will constitute a default under this Lease.

     13.3. Financial Statements. Landlord will have the right to request financial
statements from Tenant for purposes of selling, financing or refinancing the Building. Tenant
will, within ten (10) days after receipt of a request from Landlord setting forth the purposes for
which such financial statement will be used, deliver to Landlord a current financial statement
certified by Tenant’s chief financial officer to be true and correct and to fairly express
Tenant’s current financial condition. All such financial statements will be received by Landlord
in confidence and used only for the purpose set forth in the request.

14. SUBORDINATION AND ATTORNMENT

     This Lease is and will be subject and subordinate to all ground or underlying leases which
now exist or may hereafter be executed affecting the Building and to the lien and provisions of
any mortgages or deeds of trust now or hereafter placed against the Building or against Landlord’s
interest or estate in the Building or on or against any ground or underlying lease, and any
renewals, modifications, consolidations and extensions of such lease, without the necessity of the
execution and delivery of any further instruments on the part of Tenant to effect subordination.
If any mortgagee, trustee or ground lessor elects to have this Lease prior to the lien of such
mortgagee’s, trustee’s or ground lessor’s mortgage or deed of trust or ground lease, and gives
notice of such election to Tenant, this Lease will be deemed prior to the lien of such mortgage or
deed of trust or ground lease, whether this Lease is dated prior or subsequent to the date of such
mortgage, deed of trust, or ground lease, or the date of the recording thereof. Tenant will
execute and deliver upon request from Landlord, such further instruments evidencing the
subordination of this Lease to any ground or underlying lease, and to any mortgage or deed of
trust. In the event any proceedings are brought for default under any ground or underlying lease
or in the event of foreclosure or the exercise of the power of sale under any mortgage or deed of
trust against the Premises, Tenant will, upon request of any person or party succeeding to the
interest of Landlord as a result of such proceedings, attorn to such successor in interest and
recognize such successor in interest as Landlord under this Lease.

15. LANDLORD’S INTEREST

     15.1. Liability of Landlord. If Landlord defaults under this Lease and, if as a
consequence of such default, Tenant recovers a money judgment against Landlord, such judgment will
be satisfied only out of the right, title and interest of Landlord in the Building and Landlord
will not be liable for any deficiency. In no event will Tenant have the right to levy execution
against any property of Landlord or Landlord’s partners other than Landlord’s interest in the
Building. In no event will Landlord be liable to Tenant for consequential or special damages.

     15.2. Notice to Mortgagee. If Landlord defaults under this Lease and, if as a
consequence of such default, Tenant will have the right to terminate this Lease, Tenant will not
exercise such right to terminate unless and until (i) Tenant gives notice of such default
(specifying the exact nature of such default and how such default may be

Part Two-Page 17 

 

remedied) to any lessor under a ground lease or any mortgagee of the Building whose name and
address have been delivered to Tenant prior to the time of default and (ii) such lessor and/or
mortgagee fails to cure, or to cause to be cured, such default within thirty (30) days after such
lessor’s or mortgagee’s receipt of notice. Tenant agrees to accept curative action, if any,
undertaken by any such mortgagee as curative action by Landlord.

     15.3.
Sale of Building. The term “Landlord” will mean only the owner at the time in
question of the fee title or a tenant’s interest in a ground lease of the Premises. The
obligations contained in this Lease to be performed by Landlord will be binding on Landlord and
Landlord’s successors and assigns only during their respective periods of ownership. In the event
of a sale of the Building or assignment of this Lease by Landlord,
Landlord will have the right to transfer the Security Deposit to Landlord’s vendee or assignee, subject to Tenant’s rights
therein, and Landlord will thereafter be released from any liability to Tenant with respect to the
return of the Security Deposit to Tenant.

16. NOTICES

     Wherever in this Lease it is required or permitted that a request, notice or demand be given
or served or consent be obtained by either party to, on, or from the other, such request, notice,
demand, or consent must be in writing and either personally delivered or mailed by certified or
registered United States mail, postage prepaid, to the addresses of the parties specified in the
Fundamental Lease Provisions. Any notice which is mailed will be deemed to have been given on the
regular business day next following the date of deposit of such notice in a depository of the
United States Postal Service. Either party may change such address by notice to the other. Base
Annual Rent and other charges will be paid to Landlord at Landlord’s address as set forth in the
Fundamental Lease Provisions, or as changed pursuant to a notice delivered to Tenant in the manner
specified above.

17. BROKERS

     Tenant represents and warrants that Tenant has had no dealings with any broker or agent
[other than the broker(s) specified in Paragraph 11 of the Fundamental Lease Provisions]
in connection with the negotiation or execution of this Lease.

18. INDEMNITY

     18.1. Definitions. The “Tenant Parties” are Tenant and its shareholders, members,
managers, partners, directors, officers, employees, agents, contractors, sublessees, licensees and
invitees. The “Landlord Parties” are Landlord, the Property manager, Landlord’s mortgagee(s) and
any affiliates or subsidiaries of the foregoing, and all of their respective officers, directors,
employees, shareholders, members, partners, agents and contractors. A “Beneficiary” is the
intended recipient of the benefits of an Indemnity, Waiver or obligation to Defend. “Claims” means
all damages, losses, injuries, penalties, costs, expenses (including attorneys’ fees and court
costs), demands, litigation, settlement payments, causes of action or judgments incurred by a
Beneficiary. “Indemnify” means to protect a party against a potential Claim and/or to compensate a
party for a Claim actually incurred. “Waive” means to relinquish a right and/or to release another
party from liability. “Defend” means to provide a competent legal defense of a Beneficiary against
a Claim with counsel reasonably acceptable (and at no cost) to the Beneficiary. The terms “Bodily
Injury”, “Property Damage” and “Personal Injury” will have the same meanings as in ISO commercial
general liability insurance form CG 0001 0196, without consideration as to any modifications,
exceptions or exclusions available for or included in such form.

     18.2. Indemnity and Waiver. Tenant Waives as to the Landlord Parties, and will
Indemnify and Defend the Landlord Parties Against, all Claims arising, or alleged to
arise, from (i) Bodily Injury or Personal Injury suffered by any party and occurring in
the Premises; (ii) Bodily Injury or Personal Injury caused by a Tenant Party and occurring
outside the Premises; and/or (iii) Property Damage suffered by any party inside the
Premises or caused or suffered by a Tenant Party outside the Premises.

     18.3. Scope of Indemnities and Waivers. All Indemnities, Waivers and obligations to
Defend contained in this Lease are independent of, and will not be limited by, each other or any
insurance obligations in this Lease (whether or not complied with) and will survive the Expiration
Date.

Part Two-Page 18 

 

     18.4. Negligence of the Beneficiary. All Indemnities, Waivers and obligations to
Defend contained in this lease will be enforced to the fullest extent permitted by applicable law
for the benefit of a Beneficiary thereof, regardless of any extraordinary shifting of risks, and
even if the applicable claim is caused by the sole, joint, concurrent or comparative negligence of
a Beneficiary, and regardless of whether liability without fault or strict liability is imposed
upon or alleged against a Beneficiary, but will not be enforced with respect to a Beneficiary to
the extent that a court of final resort holds a claim is caused by the willful misconduct or gross
negligence of the Beneficiary.

19. SUBSTITUTION OF SPACE

     19.1. Substitute Space. Landlord reserves the right at any time prior to tender of
possession of the Premises to Tenant or during the Term of this Lease after the Commencement Date
and upon sixty (60) days’ prior notice (“Substitution Notice”) to substitute other space
(“Substitute Space”) within the Building for the Premises provided the Rentable Area of the
Substitute Space is approximately the same as the Rentable Area of the Premises.

     19.2. Maximum Base Annual Rent. The Base Annual Rent for the Substitute Space will be
computed by multiplying the number of square feet of Rentable Area in the Substitute Space by the
per rentable square foot Base Annual Rent for the Premises.

     19.3. Condition of Premises. If relocation occurs after the Commencement Date, Tenant
will have the election to take the Substitute Space “as is” or to have the Substitute Space
improved in substantially the same manner as the Premises, such election to be exercised by notice
delivered to Landlord within ten (10) days after Tenant’s receipt of the Substitution Notice.
Failure by Tenant to notify Landlord of Tenant’s election within the ten (10) day period will be
deemed to be an election to take the Substitute Space “as
is”.

     19.4. Commencement of Rent. Rental for the Substitute Space will commence to accrue
within fifteen (15) days after Landlord tenders possession of the Substitute Space to the Tenant.
Tenant’s continued occupancy of the Premises after such fifteen (15) day period will be treated as
a holding over by Tenant under Section 2.3 hereof.

20. PARKING

     20.1. Parking Spaces. Landlord hereby grants to Tenant and persons designated by
Tenant a license to
use the number of parking spaces set forth in Paragraph 12 of the Fundamental Lease
Provisions in that certain
parking structure constructed within the Building (“Garage”). The term of such license will
commence on the
Commencement Date and will continue until the earlier to occur of the Expiration Date under
the Lease or
termination of the Lease or Tenant’s abandonment of the Premises. During the term of this
license, Tenant will pay
Landlord the monthly charges established from time to time by Landlord for parking in the
Garage, payable in
advance, with Tenant’s payment of monthly installment of Base Annual Rental. The initial
charge for such spaces is
set forth in Paragraph 12 of the Fundamental Lease Provisions. No deductions from the
monthly charge will be
made for days on which the Garage is not used by Tenant. However, Tenant may reduce the
number of parking
spaces hereunder, at any time, by providing at least thirty (30) days’ advance written notice
to Landlord,
accompanied by any key-card, sticker or other identification or entrance system provided by
Landlord or its parking
contractor; such cancellation will be irrevocable. Tenant may, from time to time, request
additional parking spaces,
and if Landlord provides the same, the spaces will be provided and used on a month-to-month
basis, and for such
monthly parking charges as Landlord establishes from time to time.

     20.2. Control of Parking. Tenant shall at all times comply with all applicable ordinances, rules,
regulations, codes, laws, statutes and requirements of all federal, state, county and
municipal governmental bodies or
their subdivisions respecting the use of the Garage. Landlord reserves the right from time to
time to adopt, modify
and enforce reasonable rules governing the use of the Garage, including any key-card, sticker
or other identification
or entrance system, and hours of operation. Landlord may refuse to permit any person who
violates such rules to
park in the Garage, and any violation of the rules will subject the car to removal from the
Garage.

Part Two-Page 19 

 

     20.3. Liability. The parking spaces hereunder will be provided on an unreserved
“first-come, first-served” basis. Tenant acknowledges that Landlord has or may arrange for the
Garage to be operated by an independent contractor, not affiliated with Landlord. In such event,
Tenant acknowledges that Landlord will have no liability for claims arising through acts or
omissions of such independent contractor. Landlord will have no liability whatsoever for any
damage to property or any other items located in the Garage, nor for any personal injuries or
death arising out of any matter relating to the Garage, and in all events, Tenant agrees to look
first to its insurance carrier and to require that Tenant’s employees look first to their
respective insurance carriers for payment of any losses sustained in connection with any use of
the Garage. Tenant hereby waives on behalf of Tenant’s insurance carriers all rights of
subrogation against Landlord or Landlord’s agents. Landlord reserves the right to assign specific
spaces, and to reserve spaces for visitors, small cars, handicapped persons and for other tenants,
guests of tenants or other parties, and Tenant and persons designated by Tenant hereunder will not
park in any such assigned or reserved spaces. Landlord also reserves the right to close all or any
portion of the Garage in order to make repairs or perform maintenance services, or to alter,
modify, restripe or renovate the Garage, or if required by casualty, strike, condemnation, act of
God, governmental law or requirement or other reason beyond Landlord’s reasonable control. If, for
any other reason, Tenant or persons properly designated by Tenant, are denied access to the
Garage, and Tenant or such persons will have complied with this Section 20, Landlord’s
liability will be limited to parking charges (excluding tickets for parking violations) incurred
by Tenant or such persons in utilizing alternative parking, which amount Landlord will pay upon
presentation of documentation supporting Tenant’s claims in connection therewith.

     20.4.
Default, Remedies. If Tenant defaults under this
Section 20, Landlord
will have the right to remove from the Garage any vehicles hereunder which are involved or are
owned or driven by parties involved in causing such default, without liability therefor
whatsoever. In addition, if Tenant defaults under this Section 20, Landlord will have the
right to cancel Tenant’s parking spaces on ten (10) days’ written notice. If Tenant defaults with
respect to the same term or condition under this Section 20 more than three (3) times
during any twelve (12) month period, the next default of such term or condition during the
succeeding twelve (12) month period, will, at Landlord’s election, constitute an incurable
default. Such cancellation right will be cumulative and in addition to any other rights or
remedies available to Landlord at law or equity, or provided under this Lease.

21. HAZARDOUS SUBSTANCES

     The term “Hazardous Substances”, as used in this Lease will mean pollutants, contaminants,
toxic or hazardous wastes, or any other substances, the removal of which is required or the use of
which is restricted, prohibited or penalized by any “Environmental Law”, which term will mean any
federal, state or local law or ordinance relating to pollution or protection of the environment.
Tenant hereby agrees that (i) no activity will be conducted on the Premises that will produce any
Hazardous Substances, except for such activities that are part of the ordinary course of Tenant’s
business activities (“Permitted Activities”) provided the Permitted Activities are conducted in
accordance with all Environmental Laws; (ii) the Premises will not be used in any manner for the
storage of any Hazardous Substances except for any temporary storage of such materials that are
used in the ordinary course of Tenant’s business (“Permitted Materials”), provided such Permitted
Materials are properly stored in a manner and location meeting all Environmental Laws; (iii)
Tenant will not permit any Hazardous Substances to be brought onto the Premises, except for the
Permitted Materials, and if so brought or found thereon, the same shall be immediately removed,
with proper disposal, and all required cleanup procedures shall be diligently undertaken pursuant
to all Environmental Laws. Tenant will Indemnify and Defend Landlord against Claims of
any

nature arising from or as a result of the violation of the provisions of this Section 20 by
Tenant. The foregoing indemnification will survive the termination or expiration of this Lease.

22. INTERPRETATIVE

     22.1. Captions. The captions of the Articles and Sections of this Lease are for
convenience only and will not affect the interpretation or construction of any provision of this
Lease.

     22.2. Attachments. Exhibits, addenda, schedules and riders attached hereto and listed
in the Table of Contents of the Lease (and no other exhibits, addendums, schedules and riders) are
deemed by attachment to constitute part of this Lease and are incorporated into this Lease.

Part Two-Page 20 

 

     22.3.
Number, Gender, Defined Terms. The words “Landlord” and “Tenant”, as used in
this Lease, will include the plural as well as the singular. Words used in the neuter gender
include the masculine and feminine and words in the masculine or feminine gender include the other
and the neuter. If more than one person or entity constitutes Tenant, the obligations under this
Lease imposed upon Tenant will be joint and several.

     22.4. Entire Agreement. This Lease, including any exhibits and attachments hereto
listed in the Table of Contents, constitutes the entire agreement between Landlord and Tenant
relative to the Premises. Landlord and Tenant agree hereby that all prior or contemporaneous oral
and written agreements between and among themselves or their agents, including any leasing agent,
and representatives relative to the leasing of the Premises are merged in or revoked by this
Lease.

     22.5. Amendment. This Lease and the exhibits and attachments may be altered, amended
or revoked only by an instrument in writing signed by both Landlord and Tenant.

     22.6.
Severability. If any term or provision of this Lease is, to any extent,
determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Lease will not be affected thereby, and each remaining term and provision of this Lease will
be valid and be enforceable to the fullest extent permitted by law.

     22.7. Time of Essence. Time is of the essence of this Lease and each and every
provision of this Lease.

     22.8. Best Efforts. Whenever in this Lease or the Work Letter, if any, there is
imposed upon Landlord the obligation to use Landlord’s best efforts or reasonable efforts or
diligence, Landlord will be required to exert such efforts or diligence only to the extent the
same are economically feasible and will not impose upon Landlord extraordinary financial or other
burdens.

     22.9. Binding Effect. Subject to any provisions of this Lease restricting assignment
or subletting by Tenant and releasing Landlord upon sale of the Building, all of the provisions of
this Lease will bind and inure to the benefit of the parties to this Lease and their respective
heirs, legal representatives, successors and assigns.

     22.10. Subtenancies. The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof, will not work a merger of estates and will, at the option of
Landlord, operate as an assignment to Landlord of any or all subleases or subtenancies.

     22.11. No Reservation. Submission by Landlord of this instrument to Tenant for
examination or signature does not constitute a reservation of or option for lease. This Lease will
be effective as a lease or otherwise only upon execution and delivery by both Landlord and Tenant.

     22.12. Consents. If Tenant requests Landlord’s consent under any provision of this
Lease and Landlord fails or refuses to give such consent, Tenant’s sole remedy will be an action
for specific performance or injunction.

     22.13. Legal Authority. In the event Tenant is a corporation (including any form of
professional association), then each individual executing or attesting this Lease on behalf of such
corporation hereby covenants, warrants and represents (i) that he is duly authorized to execute or
attest and deliver this Lease on behalf of such corporation in accordance with a duly adopted
resolution of the corporation’s board of directors and in accordance with such corporation’s
articles of incorporation or charter and bylaws; (ii) that this Lease is binding upon such
corporation; (iii) that Tenant is a duly organized and legally existing corporation in good
standing in the State of Texas; and (iv) the execution and delivery of the lease by Tenant will not
result in any breach of, or constitute a default under any mortgage, deed of trust, lease, loan,
credit agreement, partnership agreement or other contract or instrument to which Tenant is a party
or by which Tenant may be bound. If Tenant is a corporation, Tenant will, within ninety (90) days
from the date of this Lease, deliver to Landlord a copy of a resolution of Tenant’s board of
directors authorizing or ratifying the execution and delivery of this Lease, which resolution will
be duly certified to Landlord’s satisfaction by the secretary or assistant secretary of Tenant.

          In the event Tenant is a partnership (general or limited), then each individual executing this
Lease on behalf of the partnership hereby covenants, warrants and represents (i) that he is duly
authorized to execute and

Part Two-Page 21 

 

deliver this Lease on behalf of the partnership in accordance with the partnership agreement, or an
amendment thereto, now in effect; (ii) that this Lease is binding upon such partnership; (iii) that
the Tenant is a duly organized and legally existing partnership and has filed any and all
certificates required by law; and (iv) the execution and delivery of this Lease will not result in
any breach of, or constitute a default under, any mortgage, deed of trust, Lease, loan, credit
agreement, partnership agreement, or other contract or instrument to which Tenant is a party or by
which Tenant may be bound.

     22.14. Choice of Law. This Lease will be construed under, governed by and enforced
in accordance with the laws of the State of Texas.

Part Two-Page 22 

 

EXHIBIT
A  

LEGAL DESCRIPTION

PROPERTY DESCRIPTION

BEING all
of Lot 1-B, Block 2/973, of SECOND REPLAT of the POWER INVESTMENT
COMPANY’S SUBDIVISION, an Addition to the City of Dallas, Dallas
County, Texas,
according to the plat thereof recorded in Volume 84139. Page 1590 of the Map
Records of Dallas County, Texas, and being more particularly described as follows:

BEGINNING at an “X” cut found for corner being the southeasterly corner clip of the
northeast corner of Lot 1-B, Block 2/973, located at the intersection of Cole Ave. (63.0’
R.O.W.) and Lemmon Ave. (62.0’ R.O.W.);

THENCE S 28°17’30” W, a distance of 291.51 feet along the northwesterly right of
way line of Cole Ave. to a 1/4” iron rod set for corner being the northeast corner
of Lot 5, Block A/973;

THENCE N 45°06’ W. a distance of 273.02 feet along the northeasterly line of said Lot 5 to
a 1/2” iron rod located in the southeasterly right of way line of Carlisle Street and
being the northwesterly corner of said Lot 5;

THENCE N 44°40’54” E, a distance of 278.94 feet along said right of way line to on
“X” cut found at the southwesterly corner clip of the northwest corner
of said Lot 1-B and located at the intersection of Lemmon Ave. and Carlisle Street;

THENCE N 89°47’27” E. a distance of 14.12 feet along said intersection to an “X” cut
found for the northern corner clip of said northeast corner of said Lot 1—B

THENCE S
45°06’ E, a distance of 167.94 feet along the southerly right of way line of Lemmon Ave.
to an “X” cut found for the northwest corner clip of the northeast
corner of Lot 1-B;

THENCE S 08°24’19” E. a distance of 16.04 feet to the POINT OF BEGINNING and
containing 66.495 square feet of land.

Exhibit A, page 1

 

EXHIBIT B

FLOOR PLAN(s)

	3400 CARLISLE
Suite 345/1,718 RSF

Exhibit B, page 1

 

EXHIBIT C

OPERATING COST COMPUTATION

     1. Operating Cost Exclusions. The following are, without limitation, examples of
costs excluded
from the computation of Operating Costs:

          (a) leasing commissions, attorneys’ fees, costs and disbursement and other expenses incurred
in connection with leasing, renovating or improving space for tenants or prospective tenants
of the Building;

          (b) costs incurred by Landlord in the discharge of its obligations under the Work
Letter;

          (c) costs
(including permit, license and inspection fees) incurred in renovating or otherwise improving or decorating, painting or redecorating space for tenants or vacant space;

          (d) Landlord’s costs of any services sold to tenants for which Landlord is entitled to be
reimbursed by such tenants as an additional charge or rental over and above the Base Annual
Rent and Operating
Costs payable under the lease with such tenant or other occupant;

          (e) any depreciation and amortization on the Building except as expressly permitted
herein;

          (f) costs
incurred due to violation by Landlord of any of the terms and conditions of this Lease or any other lease relating to the Building;

          (g) interest
on debt or amortization payments on any mortgages or deeds of trust
or any other debt for borrowed money;

          (h) all items and services for which Tenant reimburses Landlord outside of Operating Costs or
pays third persons or which Landlord provides selectively to one or more tenants or occupants of
the Building (other than Tenant) without reimbursement;

          (i) advertising and promotional expenditures;

          (j) repairs or other work occasioned by fire, windstorm or other work paid for
through
insurance or condemnation proceeds; and

          (k) repairs resulting from any defect in the original design or construction
of the Building.

     2. Operating Cost Examples. The following are, without limitation, examples of
costs included
within the computation of Operating Costs:

               (i) garbage and waste disposal;

               (ii) janitorial service and window cleaning for the Building and the Common Areas
and Service Areas (including materials, supplies, Building standard light bulbs and ballasts,
equipment and tools therefor and rental and depreciation costs related to any of the foregoing) or
contracts with third parties to provide same;

               (iii) security;

               (iv) insurance premiums (including, without limitation, property, rental value,
liability and any other types of insurance carried by Landlord with respect to the Building and the
Common Areas and Service Areas, the costs of which may include an allocation of a portion of the
premium of a blanket insurance policy maintained by Landlord);

Exhibit C, page 1

 

               (v) business or excise taxes payable on account of Landlord’s ownership or
operation of the Building (excluding any inheritance, estate succession, transfer, gift,
franchise, corporation, income or profits tax imposed upon Landlord);

               (vi) real estate taxes, assessments, excises, and any other governmental levies and
charges of every kind and nature whatsoever, general and special, extraordinary and ordinary,
foreseen and unforeseen, which may during the Term be levied or assessed against, or arising in
connection with the use, occupancy, operation or possession of, the Building and the Common Areas
and Service Areas, or any part thereof, or substituted, in whole or in part, for a real estate
tax, assessment, excise or governmental charge or levy previously in existence, by any authority
having the direct or indirect power to tax, including interest on installment payments and all
costs and fees (including attorneys’ fees) incurred by Landlord in contesting or negotiating with
taxing authorities as to same; provided, however, Landlord will have the option to pay any of the
foregoing as rentals under a ground lease arrangement with the fee simple titleholder to the land
upon which the Building is, or is to be, constructed;

               (vii) water and sewer charges and any add-ons;

               (viii) charges for any easement maintained for the benefit of the Building or the Common
Areas and Service Areas;

               (ix) license, permit and inspection fees;

               (x) compliance with any fire safety or other governmental rules, regulations, laws,
statutes, ordinances or requirements imposed by any governmental authority or insurance company
with respect to the Building during the Term hereof;

               (xi) wages, salaries, employee benefits and taxes (or an allocation of the foregoing)
for personnel working full or part time in connection with the operation, maintenance and
management of the Building and the Common Areas and Service Areas;

               (xii) accounting and legal services (but excluding legal services in connection with
negotiations and disputes with specific tenants unless the matter involved affects all tenants of
the Building);

               (xiii) administrative and management fees for the Building and Landlord’s overhead
expenses directly attributable to Building management;

               (xiv) indoor or outdoor landscaping;

               (xv) depreciation (or amortization) of Required Capital Improvements and Cost
Savings Improvements. “Required Capital Improvements” will mean capital improvements or
replacements made in or to the Building in order to conform to any law, ordinance, rule,
regulation or order of any governmental authority having jurisdiction over the Building,
including, without limitations, The Americans with Disabilities Act or Texas Architectural
Barriers Act. “Cost Savings Improvements” will mean any capital improvements or replacements which
are intended to reduce, stabilize or limit increases in Operating Costs. [The cost of Cost Savings
Improvements will be amortized by spreading such costs uniformly over a term equal to the lesser
of (a) the period of years over which the amount by which Operating Costs are reduced would be
equal to the cost of such installation or (b) ten (10) years. The cost of Required Capital
Improvements and depreciable (or amortizable) maintenance and repair items (e.g., painting of
Common Areas, replacement of carpet in elevator lobbies), will be amortized by spreading such
costs uniformly over a term equal to the lesser of (a) the period employed by Landlord for federal
income tax purposes or (b) ten (10) years.]

               (xvi) Interest (as defined in Section 3.8 of the Supplemental Lease Provisions) upon
the undepreciated (or unamortized) balance of the original cost of items which the Landlord is
entitled to depreciate (or amortize) as an Operating Cost;

Exhibit C, page 2

 

               (xvii) operation, maintenance, and repair (to include replacement of components) of
the Building, including but not limited to all floor, wall and window coverings and personal
property in the Common Areas, Building systems such as heat, ventilation and air conditioning
system, elevators, escalators, and all other mechanical or electrical systems serving the Building
and the Common Areas and Service Areas and service agreements for all such systems and equipment;

               (xviii) charges for any easement maintained for the benefit of the Building or the Common
Areas and Service Areas;

               (xix) license, permit and inspection fees;

               (xx) compliance with any fire safety or other governmental rules, regulations, laws,
statutes, ordinances or requirements imposed by any governmental authority or insurance company
with respect to the Building during the Term hereof;

               (xxi) wages, salaries, employee benefits and taxes (or an allocation of the foregoing)
for personnel working full or part time in connection with the operation, maintenance and
management of the Building and the Common Areas and Service Areas;

               (xxii) accounting and legal services (but excluding legal services in connection with
negotiations and disputes with specific tenants unless the matter involved affects all tenants of
the Building);

               (xxiii) administrative and management fees for the Building and Landlord’s overhead
expenses directly attributable to Building management;

               (xxiv) indoor or outdoor landscaping;

               (xxv) expenses and fees (including attorneys’ fees) incurred contesting of the validity or
applicability of any governmental enactments which may affect Operating Costs; and

               (xxvi) the costs incurred by Landlord for (i) any and all forms of fuel or energy utilized
in connection with the operation, maintenance, and use of the Building, Common Areas and Service
Areas, (ii) sales, use, excise and other taxes assessed by governmental authorities on energy
sources, and (iii) other costs of providing energy to the Building, Common Areas and Service Areas.

     3. Landlord will credit against Operating Costs any refunds received as a result of tax
contests, after
deduction for Landlord’s costs in connection with same.

     4. The foregoing provisions of this Exhibit C will not be deemed to require Landlord
to furnish or
cause to be furnished any service or facility not otherwise required to be furnished by
Landlord pursuant to the
provisions of this Lease, although Landlord, in Landlord’s absolute discretion, may choose to
do so from time to
time.

Exhibit C, page 3

 

EXHIBIT D

RULES & REGULATIONS

	1.	 	Except as specifically provided for in this Lease, no sign, placard, picture, advertisement,
name or notice will be inscribed, displayed or printed or affixed on or to any part of the
outside or inside of the Building or the Premises without the written consent of Landlord
first having been obtained.
	 
	2.	 	Any directory of the Building provided by Landlord will be exclusively for the display of
the name and location of tenants in the Building, and Landlord reserves the right to exclude
any other names therefrom and may limit the number of listings per tenant. Tenant will pay
Landlord’s standard charge for Tenant’s listing thereon and for any changes by Tenant.
	 
	3.	 	Tenant will not place anything or allow anything to be placed near the glass of any window,
door, partition or wall which may appear unsightly from outside the Premises. No awnings or
other projections will be attached to the outside walls and roof of the Building without
prior written consent of Landlord. No curtains, blinds, shades or screens will be attached to
or hung in or used in connection with any window or door of the Premises without the prior
consent of Landlord.
	 
	4.	 	“Normal Business Hours” for purposes of Landlord’s obligation to provide air conditioning
(both heating and cooling) will mean 7:00 a.m. to 6:00 p.m. Monday through Friday and 7:00
a.m. to 1:00 p.m. on Saturday except for the following holidays: New Year’s Day, Presidents’
Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans’ Day, Thanksgiving and
Christmas.
	 
	5.	 	The Premises will not be used for the manufacturing or storage of merchandise except as such
storage may be incidental to the use of the Premises for the purposes permitted in this
Lease. The Premises will not be used for lodging or sleeping, or for any illegal purposes.
	 
	6.	 	The sidewalks, halls, passages, exits, entrances, elevators and stairways will not be
obstructed by any of the tenants or be used by them for any purpose other than for ingress to
and egress from their respective leased premises. The halls, passages, exits, entrances,
elevators, stairways, terraces and roof are not for the use of the general public, and
Landlord will in all cases retain the right to control and prevent access thereto by all
persons whose presence, in the judgment of Landlord, will be prejudicial to the safety,
character, reputation and interest of the Building and its tenants, provided that nothing
herein contained will be construed to prevent such access to persons with whom Tenant
normally deals in the ordinary course of business, unless such persons are engaged in illegal
activities. No tenant and no employee or invitee of any tenant will go upon the roof of the
Building.
	 
	7.	 	Except as expressly permitted in writing by Landlord, no additional locks or bolts of any
kind will be placed upon any of the doors or windows by Tenant, nor will any changes be made
to existing locks or the mechanisms thereof. Landlord will furnish two (2) keys for each lock
it installs on the Premises without charge to Tenant. Landlord will make a reasonable charge
for any additional keys requested by Tenant, and Tenant will not duplicate or obtain keys
from any other source. Tenant will upon the termination of the Term of this Lease return to
Landlord all keys so issued. The Tenant will bear the cost for the replacing or changing of
any lock or locks due to any keys issued to Tenant being lost.
	 
	8.	 	The toilets and wash basins and other plumbing fixtures will not be used for any purpose
other than those for which they were constructed, and no sweepings, rubbish, rags or foreign
substances will be thrown therein.
	 
	9.	 	No furniture, freight or equipment of any kind will be brought into the Building without the
consent of Landlord, and all moving of the same into or out of the Building will be done at
such time and in such manner as Landlord will designate. No furniture, packages, supplies,
equipment or merchandise will be received in the Building or carried up or down in the
elevators except between such hours and in such elevators that will be designated by Landlord.
There will not be used in any space or in the public areas of

Exhibit D, page 1

 

	 	 	the Building, either by Tenant or others, any hand trucks except those equipped with rubber
tires and side guards.
	 
	10.	 	No tenant will make or permit to be used any unseemly or disturbing noises, or disturb or
interfere with occupants of this or neighboring buildings or leased premises, whether by the
use of any musical instrument, radio, phonograph, unusual noise or in any other way. No
Tenant will throw anything out of doors or down the passage ways.
	 
	11.	 	Tenant will not use or keep in the Premises or the Building any kerosene, gasoline, or any
inflammable, combustible or explosive fluid, chemical or substance or use any method of
heating or air conditioning other than those supplied or approved by Landlord.
	 
	12.	 	Tenant will see that the windows and doors of the Premises are closed and surely locked
before leaving the Building. No tenant will permit or suffer any windows to be opened in the
Premises while the air conditioning is in operation except at the direction of Landlord.
Tenant must observe strict care and caution that all water faucets and other apparatus are
entirely shut off before Tenant and Tenant’s employees leave the Building, and that all
electricity, gas or air conditioning will likewise be carefully shut off so as to prevent
waste or damage; for any default or carelessness, Tenant will make good all injuries
sustained by all other tenants or occupants or Landlord of the Building.
	 
	13.	 	Landlord reserves the right to exclude or expel from the Building any person who, in the
judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who will
in any manner do any act in violation of any of the rules or regulations of the Building.
	 
	14.	 	The requirements of Tenant will be attended to only upon application at the office of
Building. Employees of the Landlord will not perform any work or do anything outside of their
regular duties unless under special instructions from Landlord, and no employees will admit
any person (Tenant or otherwise) to any office without specific
instructions from Landlord.
	 
	15.	 	No tenant will disturb, solicit, or canvass any occupant of the Building, nor will Tenant
permit or cause others to do so, and Tenant will co-operate to prevent same by others.
	 
	16.	 	No vending machine or machines of any description will be installed, maintained or operated
upon the Premises without the written consent of Landlord. Tenant will not permit in the
Premises any cooking or the use of apparatus for the preparation of any food or beverages
(except where the Landlord has approved the installation of cooking facilities as part of the
Tenant’s leasehold improvements), nor the use of any electrical apparatus likely to cause an
overload of the electrical circuits.
	 
	17.	 	All persons entering and leaving the Building at any time other than during normal business
hours will register in the books kept by Landlord at or near the night entrance or entrances,
and Landlord will have the right to prevent any persons entering or leaving the Building
unless provided with a key to the premises to which such person seeks entrance, and a pass in
a form to be approved by Landlord and provided at Tenant’s expense. Any persons found in the
Building at such times without such keys or passes will be subject to the surveillance of the
employees and agents of Landlord. Landlord will be under no responsibility for failure to
enforce this rule.
	 
	18.	 	Tenant will not use any janitor closets or telephone or electrical closets for anything
other than their originally intended purposes. In the event Tenant will purchase privately
owned communications equipment for which telephone closets were not installed in connection
with initial occupancy of Tenant, such equipment will not be installed in existing telephone
closets.
	 
	19.	 	Tenant’s right to have heavy furnishings, equipment, and files in the Premises will be
limited to items weighing less than the load-bearing limits of floors within the Premises as
established by Landlord. Heavy items must be placed in locations approved in advance by
Landlord. Upon written demand from Landlord, Tenant will promptly remove from the Premises any
items which, in the judgment of Landlord, constitute a structural overload on floors within
the Premises. If Landlord approves the presence of a heavy item for

Exhibit D, page 2

 

	 	 	which reinforcement of the floor or other precautionary measures are necessary, Tenant will
bear the entire cost of such reinforcement or other precautionary measures. If the services
of a structural engineer are, in the judgment of Landlord, necessary to determine the
location for and/or precautionary measures to be taken in connection with any heavy load,
Landlord will engage such engineer, but the fees and expenses of such engineer will be paid
by Tenant upon demand.
	 
	20.	 	Tenant will not, without the prior written consent of Landlord, use the name or any
photograph, drawing or other likeness of the Building for any purpose other than as the
address of the business to be conducted by Tenant in the Premises, nor will Tenant do or
permit anything to be done in connection with Tenant’s business or advertising which, in the
reasonable judgment of Landlord, might mislead the public as to any apparent connection or
relationship between Landlord, the Building and Tenant.
	 
	21.	 	Tenant, its invitees, and employees shall be allowed to smoke only in those designated
smoking areas outside the building.

Exhibit D, page 3

 

EXHIBIT E

CERTIFICATE OF ACCEPTANCES OF PREMISES

     Re:
Office Building Lease for space in 3400 Carlisle, executed on
the
          
day of
                    ,                    , between 3400 Carlisle, Ltd., as “Landlord”, and Study Island, L.L.C., as “Tenant”.

Landlord and Tenant hereby agree that:

	1.	 	Except for those items shown on the attached “punch list” which Landlord will use Landlord’s
best efforts to remedy within                                         (                    ) days from the date of this Certificate, Landlord has fully completed
the construction work required under the terms of the Lease and the Work Letter.
	 
	2.	 	The Premises are tenantable, the Landlord has no further obligation for construction
(except as specified above), and Tenant acknowledges that both the Building and the
Premises are satisfactory in all respects.
	 
	3.	 	The Commencement Date of the Lease is the                      day of                                         ,        
             .
	 
	4.	 	The Expiration Date of the Lease is be the 31st day of May,   
               
   .

All other terms and conditions of the Lease are hereby ratified and
acknowledged to be unchanged.

EXECUTED this    
              
    day of          
              
               
  ,        
             .

	 	 	 	 	 	 	 	 	 
	TENANT:

	 	 	 	 	 	LANDLORD:	 	 
	 
	 	 	 	 	 	 	 	 
	Study Island, L.L.C.	 	     	 	3400 Carlisle, Ltd., a Texas limited partnership
	 	 	 	 	 	 	By: 3400 Carlisle, Inc., a Texas Corporation, its General
Partner
	 
	 	 	 	 	 	 	 	 
	By:

	 	 
	 	 
	 	By:	 	 /s/ ROBERT P. BREUNIG
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	 	 	 	 	Name:
	 	Robert P. Breunig
	 

	 	 
	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:
	 	President
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ATTEST:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

Exhibit E, page 1

 

RIDER 1

WORK LETTER

TO

OFFICE LEASE AGREEMENT

BETWEEN

3400 Carlisle, Ltd.

AND

Study Island, L.L.C.

	1.	 	Landlord shall install up to four (4) duplex electrical outlets in mutually agreed to locations.
	 
	2.	 	Landlord shall clean the carpet.
	 
	3.	 	Other than the above, the Premises to be leased “as-is”.

Rider 2, page 1

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