Document:

Exhibit 10.11

 

 

 

AMENDED
AND RESTATED LEASE AGREEMENT

BY
AND BETWEEN RONALD C. WORNICK, AS LANDLORD,

AND
SHELF STABLE FOODS, INC., AS TENANT

 

TABLE OF CONTENTS

 

	
  Section 1.

  	
  Certain Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Leased Premises

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Term of Lease

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Rental

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Use of Premises

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 6.

  	
  Operation of Business

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Care of Leased Premises

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 8.

  	
  Fixtures

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Insurance

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Indemnification

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 11.

  	
  Mutual Waiver of
  Subrogation

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 12.

  	
  Assignment,
  Mortgage and Subleasing

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 13.

  	
  Net Lease

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 14.

  	
  Casualty Damage

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 15.

  	
  Risk of Loss

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 16.

  	
  Default of Tenant

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 17.

  	
  Condemnation

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 18.

  	
  Taxes and Assessments

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 19.

  	
  Tenant’s
  Compliance with Laws and Indemnification

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 20.

  	
  CPI Rent Adjustments

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 21.

  	
  Waiver

  	
  17

  
	
   

  	
   

  	
   

  
	
  Section 22.

  	
  Construction of Lease

  	
  17

  

 

i

 

	
  Section 23.

  	
  Prohibition Against Liens

  	
  17

  
	
   

  	
   

  	
   

  
	
  Section 24.

  	
  Holding Over and Successors

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section 25.

  	
  Miscellaneous

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section 26.

  	
  Right of First Refusal

  	
  21

  
	
   

  	
   

  	
   

  
	
  Section 27.

  	
  Purchase
  of the Leased Property in the Event of Damage or Condemnation

  	
  22

  

 

ii

 

 

AMENDED AND RESTATED LEASE AGREEMENT

 

	
  THE STATE OF OHIO

  	
  )

  	
   

  
	
   

  	
  :

  	
  KNOW ALL MEN BY THESE
  PRESENTS:

  
	
  COUNTY OF HAMILTON

  	
  )

  	
   

  

 

The Lease
Agreement effective December 30, 1994, between RONALD C. WORNICK, as
“LANDLORD”, and SHELF STABLE FOODS, INC., an Ohio corporation, as “TENANT” is
amended and restated in its entirety by this Amended and Restated Lease
Agreement (this “Lease”) as follows:

 

WITNESSETH:

 

Section 1.                                          Certain
Definitions.

 

Each of the terms
set forth below shall have the meaning set forth opposite such term:

 

a.                                       Land:  The real property located in Blue Ash, Hamilton
County, Ohio, described on the attached Exhibit “A”.

 

b.                                      Improvements:  The improvements located on the Land.

 

c.                                       Leased
Premises:  The Land and
Improvements.

 

d.                                      CPI:  The Consumer Price Index for All Urban
Consumers, All Items (Base year 1982 - 1984 = 100) published by the United
States Department of Labor, Bureau of Labor Statistics. If the Bureau of Labor
Statistics substantially revises the manner in which the CPI is determined, an
adjustment shall be made in the revised index which would produce results
equivalent, as nearly as possible, to those which would be obtained hereunder
if the CPI were not so revised. If the 1982 - 1984 average shall no longer be
used as an Index of 100, such change shall constitute a substantial revision.  If the CPI becomes unavailable to the public
because publication is discontinued, or otherwise, LANDLORD shall substitute
therefor a comparable index based upon changes in the cost of living or
purchasing power of the consumer dollar published by a governmental agency,
major bank, other financial institution, university or recognized financial
publisher. Under no circumstances shall a decrease in the CPI ever reduce the
monthly rent or give rise to a credit in favor of TENANT.

 

e.                                       CPI
Rent Adjustment and CPI Rent Adjustment Dates:  The CPI Rent Adjustment shall take place on the following dates:

 

 

(1)                                  January 1,
l998 — “First Rent Adjustment Date”

(2)                                  January 1,
200l — “Second Rent Adjustment Date”

(3)                                  January 1,
2004 — “Third Rent Adjustment Date”

(4)                                  January 1,
2007 — “Fourth Rent Adjustment Date”

 

f.                                         Fair
Market Value or Fair Market Value Purchase Price:  “Fair Market Value” and “Fair Market Purchase Price” shall be
determined by appraisal as set forth in this paragraph. In the event that it
becomes necessary to determine the Fair Market Value or Fair Market Value
Purchase Price of the Leased Premises for any purpose of this Lease, the party
required or permitted to give notice of such required determination shall
include in the notice the name of a person selected to act as an appraiser on
its behalf. Within ten (10) days after receipt of any such notice, LANDLORD (or
TENANT, as the case may be) shall by notice to TENANT (or LANDLORD, as the case
may be) appoint a second person as an appraiser on its behalf. The appraisers
thus appointed (each of whom must be a member of the American Institute of Real
Estate Appraisers or any successor organization thereto), within forty-five
(45) days after the date of the notice appointing the first appraiser, shall
proceed to appraise the Leased Premises to determine the Fair Market Value or
Fair Market Value Purchase Price thereof as of the relevant date (giving effect
to the impact, if any, of inflation or deflation from the date of their
decision to the relevant date); provided, however, that if only one appraiser
shall have been so appointed, or if two appraisers shall have been so appointed
but only one such appraiser shall have made such determination within fifty
(50) days after the making of TENANT’s or LANDLORD’s request, then the
determination of such appraiser shall be final and binding upon the parties. If
two appraisers shall have been appointed and shall have made their
determinations within the respective requisite periods set forth above and if
the difference between the amounts so determined shall not exceed ten percent
(10%) of the lesser of such amounts, then the Fair Market Value or Fair Market
Value Purchase Price shall be an amount equal to fifty percent (50%) of the sum
of the amounts so determined. If the difference between the amounts so
determined shall exceed ten percent (10%) of the lesser of such amounts, then
such two appraisers shall have twenty (20) days to appoint a third appraiser,
but if such appraisers fail to do so, then either party may request the
American Arbitration Association or any successor organization thereto to
appoint an appraiser within twenty (20) days of such request, and both parties
shall be bound by any appointment so made within such 20-day period. If no such
appraiser shall have been appointed within such twenty (20) days or within
ninety (90) days of the original request for a determination of Fair Market
Value or Fair Market Value Purchase Price, whichever is earlier, either
LANDLORD or TENANT may apply to any court having jurisdiction to have
appointment made by such court. Any appraiser appointed by the American
Arbitration

 

2

 

Association or by
such court shall be instructed to determine the Fair Market Value or Fair
Market Value Purchase Price within thirty (30) days after appointment of such
appraiser. The determination of the appraiser which differs most in terms of
dollar amount from the determinations of the other two appraisers shall be
excluded, and fifty percent (50%) of the sum of the remaining two
determinations shall be final and binding upon LANDLORD and TENANT as the Fair
Market Value or Fair Market Value Purchase Price for such interest. This
provision for determination by appraisal shall be specifically enforceable to
the extent such remedy is available under applicable law, and any determination
hereunder shall be final and binding upon the parties except as otherwise
provided by applicable law. LANDLORD and TENANT shall each pay the fees and
expenses of the appraiser appointed by it and each shall pay one-half of the
fees and expenses of the third appraiser and one-half of all other costs and
expenses incurred in connection with each appraisal. Notwithstanding any
determination otherwise by such appraisal, the Fair Market Value and Fair
Market Value Purchase Price shall not be less than the amount of the
outstanding principal and accrued unpaid interest on all indebtedness of
LANDLORD for which the Leased Premises is pledged as collateral to secure
payment and performance.

 

Section 2.                                          Leased
Premises.

 

a.                                       In
consideration of the conditions, covenants and agreements hereinafter set forth
to be kept and performed by TENANT, LANDLORD does hereby lease the Leased
Premises to TENANT, and TENANT does hereby lease the Leased Premises from
LANDLORD.

 

b.                                      This
Lease and the Leased Premises are subject to all covenants, easements,
restrictions, encumbrances and governmental regulatory ordinances to the extent
they are valid and in force and effect.

 

Section 3.                                          Term of
Lease.

 

a.                                       This
Lease shall be for a term commencing on December 30, 1994, and terminating
at midnight on December 31, 2010.

 

b.                                      TENANT
shall remain bound by this Lease in accordance with its terms and nothing shall
entitle TENANT to any abatement, reduction, suspension or deferment of the
monthly rental or other sums payable by TENANT hereunder, except as otherwise
specifically provided in this Lease.

 

3

 

Section 4.                                          Rental.

 

TENANT agrees to
pay LANDLORD a rental of $47,666.66 per calendar month subject to increase as
provided herein. All rentals shall be due and payable monthly in advance on the
first day of each month without the right of setoff or deduction except as
expressly provided herein. If this Lease commences on other than the first day
of a month, then the rental for such month shall be prorated based on the
number of days in such month that the Lease was in force.

 

Section 5.                                          Use of
Premises.

 

Subject to the
terms and provisions of this Lease Agreement, TENANT may use the Leased
Premises for any lawful purposes.

 

Section 6.                                          Operation
of Business.

 

TENANT covenants
and agrees as follows:

 

a.                                       Not
to permit any illegal or immoral practice to be carried on or committed on the
Leased Premises; or use or allow the Leased Premises to be used for any purpose
that might invalidate or increase the rate of insurance on the Leased Premises.

 

b.                                      Not
perform any act or carry on any practice on the Leased Premises which may
damage the Leased Premises or which would constitute a nuisance.

 

Section 7.                                          Care of
Leased Premises.

 

a.                                       TENANT
shall not make any alterations or additions to the Leased Premises without the
prior written consent of LANDLORD, and any such additions and alterations made
by TENANT shall become and remain the property of LANDLORD at the termination
of this Lease, except to the extent that LANDLORD agrees otherwise in the above
required written consent. All authorized alterations, additions and
improvements which are erected, constructed or installed by TENANT shall comply
with all applicable governmental laws, ordinances, regulations and other
requirements.

 

b.                                      TENANT
shall keep the Leased Premises in good working order, repair and condition
(which repairs shall include necessary replacements and all expenditures
required to comply with all laws now or hereafter enacted, whether the work is
structural, involves a capital expenditure or results in a benefit extending
beyond the term of this Lease). TENANT is presently occupying the Leased
Premises, and agrees to accept the same “AS IS” without any agreements,
representations,

 

4

 

understandings or
obligations on the part of LANDLORD to perform any alterations, repairs or
replacement.

 

Section 8.                                          Fixtures.

 

TENANT shall be
permitted to install and maintain its trade fixtures and equipment on the
Leased Premises, and all such trade fixtures and equipment may be removed by
TENANT, provided, however, that any damage to the Leased Premises caused by
such removal shall be promptly repaired by TENANT.

 

Section 9.                                          Insurance.

 

a.                                       At
all times during the term of this Lease, TENANT, as additional rent, shall
purchase and maintain a policy or policies of comprehensive general liability
insurance providing personal injury and property damage liability coverages
with respect to the Leased Premises and the business conducted thereon, with
limits approved by LANDLORD. Such insurance policy or policies shall name both
TENANT, LANDLORD and LANDLORD’s mortgagee of the Leased Premises as named
insureds.

 

b.                                      TENANT,
as additional rent, shall purchase and maintain during the term of this Lease
“all risk” casualty insurance policies covering the Improvements, together with
such endorsements as may reasonably be required by LANDLORD from time to time
to fully insure the Improvements on a replacement cost basis. Such insurance
policy(s) shall name LANDLORD as the insured, and shall provide a loss payable
clause in favor of LANDLORD and any mortgagee of the LANDLORD.

 

c.                                       If
LANDLORD so requests, TENANT, as additional rent, shall purchase and maintain a
rental value insurance policy covering risk of loss during the first twelve
(12) months of reconstruction necessitated by the occurrence of any of the
hazards described in Section 14, Casualty Damage, in an amount covering at
least twelve months rental. Such insurance policy shall name LANDLORD as the
insured. Any loss proceeds collected by LANDLORD pursuant to such policy shall
be used to defray TENANT’s rental obligation to the extent of such amounts
actually received by LANDLORD.

 

d.                                      Each
of the foregoing policies of insurance shall be in form and written by insurers
approved by LANDLORD, which approval shall not be unreasonably withheld, and
shall provide that the insurers will not cancel or change such insurance
without first giving LANDLORD, TENANT and LANDLORD’s mortgagee not less than
ten (10) days prior written notice. LANDLORD and LANDLORD’s mortgagee shall be
furnished a duplicate original of all such insurance policies.

 

5

 

e.                                       If
TENANT fails to timely provide the liability, casualty or the rental value
insurance specified in this Section 9, then LANDLORD may elect to provide
such insurance and, in such event, TENANT shall pay to LANDLORD, as additional
rent, the cost of such insurance within ten (10) days after receipt of a
statement of such costs from LANDLORD.

 

Section 10.                                   Indemnification.

 

TENANT covenants
and agrees to protect, indemnify and save LANDLORD and LANDLORD’s heirs, legal
representatives and assigns harmless from all claims for damages and/or
injuries to persons or property arising from injury to persons or property on
or adjacent to the Leased Premises, including all costs, attorney’s fees,
expenses and liabilities incurred in connection with any such claim or action,
without limit and without regard to the cause or causes thereof or the
negligence of LANDLORD, its agents, employees or any other person or entity,
whether such negligence be sole, joint or concurrent, active or passive, or
because of any defect in, on or upon the Leased Premises.

 

Section 11.                                   Mutual
Waiver of Subrogation.

 

LANDLORD hereby
waives any right of recovery that LANDLORD may have against TENANT for the loss
of or damage to any of LANDLORD’s property resulting from any cause whatsoever
to the extent that collection for such loss or damage is made by LANDLORD under
any insurance policy or policies in effect at the time such loss or damage
occurs; and TENANT hereby waives any right of recovery that TENANT may have
against LANDLORD for the loss of or damage to any of TENANT’s property
resulting from any cause whatsoever to the extent that collection for such loss
or damage is made by TENANT under any insurance policy or policies in effect at
the time of such loss or damage. The mutual waivers set forth in this paragraph
apply only to the extent they are permitted by law, the loss or damage is
covered by insurance proceeds, and such waivers do not adversely affect any
insurance coverage.

 

Section 12.                                   Assignment,
Mortgage and Subleasing.

 

a.                                       Assignment
by Tenant. TENANT shall not, whether by operation of law or otherwise,
assign this Lease, or any part thereof, without the prior written approval of
LANDLORD in each instance.

 

b.                                      Subleases.
TENANT shall not sublease all or any part of the Leased Premises without prior
written approval of LANDLORD.

 

6

 

c.                                       Mortgages.
TENANT shall not mortgage all or any part of TENANT’s leasehold estate without
prior written approval of LANDLORD.

 

d.                                      Approvals
by Landlord. LANDLORD agrees not to unreasonably withhold its consent to a
proposed assignment, sublease or mortgage of the Leased Premises. The approval
by LANDLORD of any of the acts specified in this Section shall not relieve
TENANT, or TENANT’s authorized assignee, transferee or subtenant from liability
under this Lease.

 

Section 13.                                   Net
Lease.

 

TENANT agrees that
this Lease is to be a “net lease” and that LANDLORD is to receive all rentals
and other sums required to be paid by TENANT absolutely free from any charges,
assessments, taxes, expenses or deductions of any kind.

 

Section 14.                                   Casualty
Damage.

 

a.                                       All
proceeds payable by reason of any loss or damage to the Leased Premises, or any
portion thereof, and insured under any policy of insurance required by this
Lease shall be paid to LANDLORD and held by LANDLORD in trust and shall be made
available for reconstruction or repair, as the case may be, of any damage to or
destruction of the Leased Premises, or any portion thereof, and shall be paid
out by LANDLORD from time to time for the reasonable cost of such
reconstruction or repair. Any excess proceeds of insurance remaining after the
completion of the restoration or reconstruction of the Leased Premises shall be
retained by LANDLORD free and clear upon completion of any such repair and
restoration except as otherwise specifically provided below in this Section. In
the event neither LANDLORD nor TENANT is required or elects to repair and
restore, all such insurance proceeds shall be retained by LANDLORD. All salvage
resulting from any risk covered by insurance shall belong to LANDLORD except
that any salvage relating to additions paid for by TENANT or to TENANT’S
personal property shall belong to TENANT.

 

b.

 

(1)                                  If
during the term of this Lease, the Leased Premises is totally or partially
destroyed from a risk covered by the insurance described in Section 9 and
the Leased Premises thereby is rendered unsuitable for TENANT’s use, TENANT
shall have the option, by giving notice to LANDLORD within sixty (60) days
following the date of such destruction, to (i) restore the Leased Premises to
substantially the same condition as existed immediately before the damage or
destruction, or (ii) offer to acquire the Leased Premises from LANDLORD for a
purchase price equal

 

7

 

to the Fair Market
Value Purchase Price of the Leased Premises immediately prior to such damage or
destruction.

 

(2)                                  If
during the term of this Lease, the Leased Premises is partially destroyed from
a risk covered by the insurance described in Section 9, but the Leased
Premises is not thereby rendered unsuitable for TENANT’s use, TENANT shall
restore the Leased Premises to substantially the same condition as existed immediately
before the damage or destruction. Such damage or destruction shall not
terminate this Lease; provided, however, if TENANT cannot within a reasonable
time obtain all necessary governmental approvals, including building permits,
licenses, conditional use permits and any certificates of need, after diligent
efforts to do so, in order to be able to perform all required repair and
restoration work and to operate the Leased Premises for TENANT’s use in
substantially the same manner as immediately prior to such damage or
destruction, TENANT may offer to purchase the Leased Premises for a purchase
price equal to the Fair Market Value Purchase Price of the Leased Premises
immediately prior to such damage or destruction.

 

(3)                                  If
the cost of the repair or restoration exceeds the amount of insurance proceeds
received by LANDLORD, TENANT shall be obligated to contribute any excess amount
needed to restore the Leased Premises. Such amount shall be paid by TENANT to
LANDLORD to be held in trust together with any other insurance proceeds for
application to the cost of repair and restoration.

 

(4)                                  In
the event LANDLORD does not accept TENANT’s offer to so purchase the Leased
Premises within thirty (30) days after the date of such offer, TENANT may
either (a) withdraw its offer to purchase the Leased Premises and proceed to
restore the Leased Premises to substantially the same condition as existed
immediately before the damage or destruction, or (b) terminate this Lease and
LANDLORD shall retain the insurance proceeds, and TENANT shall pay to LANDLORD,
on demand, the amount of any deductible or uninsured loss arising in connection
therewith.

 

(5)                                  In
the event LANDLORD accepts TENANT’s offer to purchase the Leased Premises, this
Lease shall terminate upon payment of the purchase price and LANDLORD shall
remit to TENANT all insurance proceeds being held in trust by LANDLORD.

 

c.                                       If
during the term of this Lease, the Leased Premises is totally or materially
destroyed from a risk not covered by the

 

8

 

insurance
described in Section 9, whether or not such damage or destruction renders
the Leased Premises unsuitable for TENANT’s use, TENANT at its option shall
restore the Leased Premises to substantially the same condition it was in immediately
before such damage or destruction and such damage or destruction shall not
terminate this Lease.

 

d.                                      All
insurance proceeds payable by reason of any loss of or damage to and of
TENANT’s personal property shall be paid to TENANT and TENANT shall use such
insurance proceeds in trust to pay the cost of repairing or replacing the
damage to TENANT’s personal property.

 

e.                                       If
TENANT is required or elects to restore the Leased Premises as provided in this
section, TENANT shall also restore all alterations and improvements made by
TENANT, and TENANT’s personal property.

 

f.                                         This
Lease shall remain in full force and effect and TENANT’s obligation to make
rental payments and to pay all other charges required by this Lease shall
remain unabated during any period required for repair and restoration, except
that the proceeds of rental insurance, if any, paid to LANDLORD shall
constitute payment of such amounts by TENANT.

 

g.                                      Any
termination of this Lease pursuant to this Section shall cause any right
of first refusal granted to LANDLORD under this Lease to be terminated and to
be without further force or effect.

 

h.                                      LANDLORD
hereby waives any statutory or common law rights of termination which may arise
by reason of any damage or destruction of the Leased Premises.

 

Section 15.                                   Risk
of Loss.

 

During the term of
this Lease, the risk of loss or of decrease in the enjoyment and beneficial use
of the Leased Premises in consequence of the damage or destruction thereof by
fire, the elements, casualties, thefts, riots, wars or otherwise, is assumed by
TENANT and, LANDLORD shall in no event be answerable or accountable therefor
nor shall any of the events mentioned in this Section entitle TENANT to
any abatement of monthly rental except as specified provided in this Lease.

 

9

 

Section 16.                                   Default
of Tenant.

 

1.                                       Events
of Default. The following events shall be deemed to be events of default by
TENANT under this Lease:

 

a.                                       If
TENANT shall fail to pay any installment of rent, additional rent or other sum
of money payable hereunder when due and the continuance of such failure for ten
(10) days following written notice hereof from LANDLORD to TENANT.

 

b.                                      If
TENANT shall fail to comply with any term, provision, or covenant of this Lease,
other than the payment of rent, additional rent or other sum of money to
LANDLORD, and shall not cure or correct such failure within a reasonable time
but, in no event, more than thirty (30) days following notice; provided,
however, if the nature of the TENANT’s failure is such that more time is
reasonably required in order to cure, TENANT shall not be in default if TENANT
commences to cure within such time period and thereafter with reasonable
diligence seeks to cure such failure to completion.

 

c.                                       If
a petition in bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee of all or a portion of the property of
TENANT shall be filed against TENANT in any court, pursuant to any statute
either of the United States or of any state, and if, within thirty (30) days
thereafter, TENANT fails to secure a discharge thereof, or if TENANT shall
voluntarily file any such petition, or make an assignment for the benefit of
creditors.

 

d.                                      If
TENANT’s leasehold estate shall be taken under writ of execution or other
process of law in any action against TENANT.

 

e.                                       If
TENANT shall abandon or vacate the Leased Premises.

 

2.                                       Remedies.  If an event of default shall have occurred,
LANDLORD shall have the right, without further notice or demand of any kind to
TENANT or any other party, then or at any time thereafter, to the extent
permitted by law, to pursue any one or more of the following remedies in
addition to all other rights or remedies provided herein or at law or in
equity.

 

a.                                       LANDLORD
may terminate this Lease and forthwith repossess the Leased Premises and be
entitled to recover forthwith as damages a sum of money equal to the total of
(i) the reasonable cost of recovering the Leased Premises,

 

10

 

(ii) the unpaid rent and additional rent earned at the time of
termination, the cost of curing TENANT’s other defaults plus interest thereon
from the due date at the rate herein provided, and (iii) an amount equal to the
then present value of the balance of the rent and additional rent for the
remainder of the term, less the then present value of the fair rental value of
the Leased Premises for the remainder of the term. The amounts computed in
accordance with the foregoing subclause (iii) shall both be discounted in
accordance with accepted financial practice at the rate of four percent (4%)
per annum to determine present value.

 

b.                                      LANDLORD
may elect to terminate TENANT’s right of possession without terminating this
Lease, in which event TENANT agrees to surrender possession and vacate the
Leased Premises immediately and deliver possession to LANDLORD, and TENANT
hereby grants LANDLORD full and free license to enter in and upon the Leased
Premises or any part thereof and to expel or remove TENANT or any other person
or party who may be occupying or within the Leased Premises or any part thereof
and remove any and all property therefrom. Such property may be removed by
LANDLORD and stored in a public warehouse or elsewhere at the cost of and for
the account of TENANT without terminating this Lease or releasing TENANT in
whole or in part from TENANT’s obligations to pay rent, additional rent and
other charges and perform any of the covenants, conditions and agreements to be
performed by TENANT as provided in this Lease, and without LANDLORD being
deemed in any manner guilty of trespass, eviction, forcible entry or detainer,
and without relinquishing LANDLORD’s rights as herein provided.

 

c.                                       If
LANDLORD re-enters the Leased Premises without terminating this Lease, then
LANDLORD may relet the Leased Premises or any part or parts thereof, either in
the name of LANDLORD or otherwise, for a term which may at LANDLORD’s option be
less than or exceed the period which would otherwise have constituted the balance
of the term and upon such other terms and conditions as LANDLORD may deem
advisable. TENANT shall pay LANDLORD for each month of the period which would
otherwise have constituted the balance of the term, any deficiency between (i)
the sum of one monthly installment of rent and other costs that would have been
payable for the month in question but for such re-entry or termination, and
(ii) the net amount, if any, of the rents collected on account of the lease or
leases of the Leased Premises for each month of the period which would
otherwise have constituted the balance of the term. The failure of LANDLORD to
relet the Leased Premises or any part or parts thereof shall not release or
affect TENANT’s liability for damages; provided, however, that LANDLORD shall
use

 

11

 

reasonable efforts to relet the Leased Premises. There shall be added
to the said deficiency such expenses as LANDLORD may reasonably incur in
connection with any reletting (such as court costs, attorney’s fees, brokerage
costs and expenses for putting and keeping the Leased Premises in good order or
for preparing the same for reletting). Any deficiency shall be paid in monthly
installments by TENANT on the rent day specified in this Lease, and any suit
brought to collect the amount of the deficiency for any month shall not
prejudice in any way the rights of LANDLORD to collect the deficiency for any
subsequent month by a similar proceeding. No such re-entry or taking possession
of the Leased Premises by LANDLORD shall be construed as an election on its
part to terminate this Lease unless a written notice of such termination is
given to TENANT or unless the termination thereof is decreed by a court of
competent jurisdiction.

 

Any amount collected
by LANDLORD from subsequent Tenants for any rental period in excess of that
provided for in this Lease for such period shall be credited to TENANT in
reduction of TENANT’s liability for any rental period in which the amount
collected by LANDLORD shall be less than that provided for by this Lease; but
TENANT shall only be entitled to receive any such excess rentals at the end of
the term and without interest. An election to re-enter the Leased Premises
(without terminating this Lease) and the reletting or not reletting of the
Leased Premises shall not thereafter prevent LANDLORD from electing to
terminate this Lease for such previous breach.

 

In the event it is
necessary for LANDLORD to bring suit for such rental payments or other charges
as they accrue or in order to collect any damages, LANDLORD shall have the
right to allow such rental or deficiencies to accumulate and to bring an action
on several or all of the deficiencies at one time. Any such suit shall not
prejudice in any way the right of LANDLORD to bring a similar action for
subsequent rental or damage deficiencies.

 

Section 17.                                   Condemnation.

 

a.

 

(1)                                  “Condemnation”
means (i) the exercise of any governmental power, whether by legal proceedings
or otherwise, by a Condemnor or (ii) a voluntary sale or transfer by LANDLORD
to any Condemnor, either under threat of Condemnation or while legal
proceedings for Condemnation are pending.

 

(2)                                  “Date
of Taking” means the date the Condemnor has the right to possession of the
property being condemned.

 

12

 

(3)                                  “Award”
means all compensation, sums or anything of value awarded, paid or received on
a total or partial Condemnation.

 

(4)                                  “Condemnor”
means any public or quasi-public authority, or private corporation or
individual, having the power of Condemnation.

 

b.                                      If
during the term of this Lease there is any taking of all or any part of the
Leased Premises or any interest in this Lease by Condemnation, the rights and
obligations of the parties shall be determined by this Section.

 

c.                                       If
there is any taking of all of the Leased Premises by Condemnation or if a
portion of the Leased Premises is taken so that the Leased Premises is rendered
unfit for TENANT’s use, then this Lease shall terminate on the Date of Taking.

 

d.                                      If
there is a taking of a portion of the Leased Premises by Condemnation, this
Lease shall remain in effect if the Leased Premises is not thereby rendered
unsuitable for TENANT’s use. If, however, the Leased Premises is thereby
rendered unsuitable for TENANT’s use, TENANT shall have the right (a) to
restore the Leased Premises, to the extent possible, to substantially the same
condition as existed immediately before the partial taking and, subject to the
rights of LANDLORD’s mortgagee, LANDLORD shall make the condemnation award
available to TENANT for such restoration, or (b) to offer to acquire the Leased
Premises from LANDLORD for a purchase price equal to the Fair Market Value
Purchase Price of the Leased Premises immediately prior to such partial taking,
in which event this Lease shall terminate upon payment of the purchase price.
TENANT shall exercise its option by giving LANDLORD notice thereof within (60)
days after TENANT receives notice of the taking. In the event LANDLORD does not
accept TENANT’s offer to so purchase the Leased Premises within thirty (30)
days after receipt of the notice described in the preceding sentence, TENANT
may either (a) withdraw its offer to purchase the Leased Premises and proceed
to restore the Leased Premises to the extent possible, to substantially the
same condition as existed immediately before the partial taking, or (b)
terminate this Lease by written notice.

 

e.                                       If
there is a partial taking of the Leased Premises and this Lease remains in full
force and effect, TENANT shall accomplish all necessary restoration and,
subject to the rights of LANDLORD’s mortgagee, LANDLORD shall make the
condemnation award available to TENANT for such restoration.

 

13

 

f.                                         In
the event LANDLORD accepts TENANT’s offer to purchase the Leased Premises, the
entire Award shall belong to TENANT and LANDLORD agrees to assign to TENANT all
of its rights thereto at closing of the purchase. In any other event, the
entire Award shall belong to and be paid to LANDLORD, except that, if this
Lease is terminated, and subject to the rights of the LANDLORD’s mortgagee and
as otherwise provided herein, TENANT shall be entitled to receive from the
Award a sum attributable to TENANT’s personal property and any reasonable
removal and relocation costs if specifically included in the Award.

 

If TENANT is
required or elects to restore the Leased Premises, LANDLORD agrees that,
subject to the rights of the LANDLORD’s mortgagees, its portion of the Award
shall be used for such restoration and it shall hold such portion of the Award
in trust, for application to the cost of the restoration. If the LANDLORD’s
mortgagees do not allow the Award to be used for restoration, then TENANT’s
sole remedy shall be to terminate this Lease.

 

Section 18.                                   Taxes
and Assessments.

 

a.                                       TENANT
shall pay to LANDLORD, as additional rent, within ten (10) days after receipt
of a statement, the amount of all taxes and assessments levied and assessed by
any lawful authority against the Leased Premises during the term of this Lease,
including, but not limited to, taxes and assessments levied and assessed for
1995. The amount of additional rent to be paid to LANDLORD by TENANT because of
such taxes and assessment shall be prorated between LANDLORD and TENANT for the
last year of the term of this Lease based upon the number of days in such year
that this Lease was in force.

 

b.                                      TENANT
shall pay all taxes and assessments levied and assessed on the value of its
personal property prior to their becoming delinquent.

 

Section 19.                                   Tenant’s
Compliance with Laws and Indemnifications.

 

a.                                       TENANT
shall, at its expense, comply with all laws, rules, orders, ordinances,
directions, regulations and requirements of federal, state, county and
municipal authorities pertaining to TENANT’s use of the Leased Premises
regardless of when they become effective, including, without limitation, the
Americans with Disabilities Act, all applicable federal, state and local laws,
regulations or ordinances pertaining to air and water quality, hazardous
materials (as hereinafter defined), waste, disposal, air emissions and other
environmental, zoning and land use matters, and with any directive or order of
any public officer or officers, pursuant to law, which shall impose

 

14

 

any duty upon
TENANT with respect to the use or occupation of the Leased Premises.

 

b.                                      TENANT
shall not cause or knowingly permit any Hazardous Material to be brought upon,
kept or used in or about the Leased Premises by TENANT, its employees, invitees
or guests without the prior written consent of LANDLORD.

 

c.                                       In
addition to, and without limitation on any general indemnity obligations of
TENANT under this Lease, TENANT specifically agrees that it shall indemnify,
defend and hold LANDLORD harmless from any and all claims, judgments, damages,
penalties, fines, costs, liabilities or losses (including, without limitation,
diminution in value of the Leased Premises, damages for the loss or restriction
on use of rentable or usable space or of any amenity of the Leased Premises,
and sums paid in settlement of claims, attorney’s fees, consultant fees and
expert fees) which arise during or after the term as a result of any breach by
TENANT of its obligations under this Section or any contamination of the
Leased Premises resulting from the presence of Hazardous Materials on or about
the Leased Premises caused or knowingly permitted by TENANT. This
indemnification of LANDLORD by TENANT includes, without limitation, costs incurred
in connection with any investigation of site conditions, and any cleanup,
remedial, removal or restoration work required by any federal, state, or local
governmental agency or political subdivision. Without limiting the foregoing,
if the presence of any Hazardous Material on the Leased Premises caused or
knowingly permitted by TENANT results in any contamination of the Leased
Premises or surrounding area, TENANT shall promptly take all actions at its
sole expense as are necessary to return such property to the condition existing
prior to the introduction of any such Hazardous Material; provided, however,
that LANDLORD’s approval of such actions shall first be obtained. TENANT
further agrees to defend LANDLORD, its agents, employees, and assigns in any administrative
or judicial proceeding brought by private individuals or governmental entities
seeking recovery of damages for personal injury or property damage, or recovery
of civil penalties or fines out of, connected with, or relating to any breach
by TENANT of its obligations under this Section or any contamination of
the Leased Premises resulting from the presence of Hazardous Materials on or
about the Leased Premises caused or knowingly permitted by TENANT. The
foregoing indemnity shall survive the expiration or earlier termination of this
Lease.

 

As used herein,
the term “Hazardous Material” or “Hazardous Materials” means any pollutant,
toxic substance, hazardous waste, hazardous material, hazardous substance, or
oil as defined in or pursuant to the Resource Conservation and Recovery Act, as
amended, the Comprehensive Environmental Response, Compensation, and Liability
Act, as amended, or all other federal, state or

 

15

 

local environmental law, regulation, ordinance, rule, or bylaw, whether
existing as of the date hereof, previously enforced or subsequently enacted.

 

Section 20.                                   CPI
Rent Adjustments.

 

Commencing with
the First Rent Adjustment Date, the monthly rent shall be adjusted by the
percentage increase, if any, in the CPI from January 1, 1995. Each
subsequent CPI rental adjustment shall be by reference to the CPI in effect at
the time of the prior CPI Rent Adjustment Date. Pending determination of the
actual adjustment, TENANT shall pay an estimated adjusted rental, as reasonably
determined by LANDLORD by reference to the then available CPI information. Upon
notification of the actual adjustment after the publication of the required
information, any overpayment shall be credited against the next installment of
rent due, and any underpayment shall be immediately due and payable by TENANT.
LANDLORD’s failure to request payment of an estimated or actual rent adjustment
shall not constitute a waiver of the right to any adjustment provided for in
this Lease or in this Section. The CPI Rent Adjustments are:

 

a.                                       First
CPI Rent Adjustment.  The monthly
rental payable for January 1, 1998 to December 31, 2000 (the “First
Rent Adjustment Date”) shall be the greater of the following: (i) $47,666, or
(ii) the amount of rent determined by the percentage increase in the CPI for
the period from January 1, 1995 to December 31, 1997 multiplied by
$47,666 (“First Adjusted Rental Period”).

 

b.                                      Second
CPI Rent Adjustment.  The monthly
rental payable for January 1, 2001 to December 31, 2003, shall be the
greater of the following: (i) the monthly rent payable during the First
Adjusted Rental Period or (ii) the amount of rent determined by the percentage
increase in the CPI from January 1, 1998 to December 30, 2000
multiplied by the monthly rent paid during the First Adjusted Rental Period
(“Second Adjusted Rental Period”).

 

c.                                       The
monthly rental payable for January 1, 2004 to December 31, 2006,
shall be the greater of the following: (i) the monthly rent payable during the
Second Adjusted Rental Period, or (ii) the amount of rent determined by the
percentage increase in the CPI from January 1, 2001 to December 30,
2003 multiplied by the monthly rent paid during the Second Adjusted Rental
Period (“Third Adjusted Rental Period”).

 

d.                                      The
monthly rental payable for January 1, 2007 to December 31, 2010,
shall be the greater of the following: (i) the monthly rent payable during the
Third Adjusted Rental Period, or (ii) the amount of rent determined by the
percentage increase in the CPI from January 1, 2004 to January 1,
2006 multiplied by

 

16

 

the monthly rent
paid during the Third Adjusted Rental Period (“Fourth Adjusted Rental Period”).

 

Section 21.                                   Waiver.

 

For the purposes
of determining the rights of LANDLORD and TENANT hereunder, it is agreed that
no act or omission of LANDLORD shall be construed or held to be a waiver of its
rights hereunder, except insofar as LANDLORD may specifically waive a
particular right in writing. Such a written waiver by LANDLORD shall apply only
to the default existing at the time of its execution and described therein and
shall not be deemed or held to be a waiver of a subsequent default of the same
or any other nature. A written consent given by LANDLORD pursuant to the terms
and provisions of this Lease shall never be deemed or held to be consent to a
subsequent performance of the same or any other act. LANDLORD’s receipt of
monies from TENANT under the terms of this Lease shall never be deemed or held to
be a waiver of the rights of LANDLORD hereunder.

 

Section 22.                                   Construction
of Lease.

 

a.                                       In
the event any provision of this Lease shall be held to be invalid or
unenforceable, such holding shall not be deemed to affect the validity and
enforceability of the remainder of the Lease, nor of the same provision as
applied to other persons or circumstances. This Lease shall be construed with
the express intention of the parties to it that it shall be valid and
enforceable in every respect to the extent permitted by law.

 

b.                                      This
Lease sets forth all the covenants, promises, agreements, conditions and
understandings between LANDLORD and TENANT concerning the Leased Premises and
there are no covenants, promises, agreements, conditions or understandings,
either oral or written, between them other than are herein set forth. Except as
herein otherwise provided, no subsequent alteration, amendment, change or
addition to this Lease shall be binding upon LANDLORD or TENANT unless reduced
to writing and signed by them.

 

c.                                       Time
is of the essence.

 

Section 23.                                   Prohibition
Against Liens.

 

TENANT shall have
no power or authority, expressed or implied, to do, and TENANT is hereby
prohibited from doing, any act or to make any contract that may create a Lien
upon, or in any manner to bind, the interest or estate of LANDLORD in the
Leased Premises. Any approval by LANDLORD to TENANT to do any work upon the
Leased Premises, or any part thereof, shall never be construed to constitute an
express or implied agency in TENANT to bind or encumber the interest or estate
of LANDLORD in any way

 

17

 

whatsoever, any relationship between the parties hereto other than that
of LANDLORD and TENANT being hereby expressly negated. TENANT covenants and
agrees that TENANT will pay or cause to be paid all costs, charges, and
expenses that become due and payable on account of work on, at, to, from, or
about the Leased Premises authorized by TENANT, and will not permit any valid
and enforceable lien to be established against LANDLORD’s interest in the
Leased Premises on account of such work. TENANT shall protect, indemnify and
hold LANDLORD harmless from any costs, claims, causes of action or expenses
including, without limitation, attorney’s fees and court costs, arising from or
in any manner pertaining to the approved construction or installation of any
alterations, additions or improvements to the Leased Premises and/or any claim
for unpaid bills, or any claim of or creation of a Lien upon, or in any manner
pertaining to the interest or estate of LANDLORD in the Leased Premises.

 

Section 24.                                   Holding Over and
Successors.

 

a.                                       Holding
Over by Tenant. TENANT shall pay LANDLORD the monthly rental, additional
rent and other charges prorated on a per diem basis for each day TENANT shall
retain possession of the Leased Premises or any part thereof after expiration
or earlier termination of this Lease, together with all damages sustained by
LANDLORD on account thereof. This provision shall not serve as permission for
TENANT to hold over nor serve to extend the term (although tenant shall remain
a tenant at sufferance bound to comply with all provisions of the Lease until
TENANT vacates the Leased Premises.) LANDLORD shall have the right, at any time
after expiration or earlier termination of this Lease or TENANT’S right to
possession, to reenter and possess the Leased Premises and remove all property
and persons therefrom, and LANDLORD shall have such other remedies for holdover
as may be available to LANDLORD under other provisions of this Lease or
applicable laws.

 

b.                                      Successors.
All rights and liabilities herein given, or imposed upon, the respective
parties shall extend and bind the several respective heirs, legal
representatives, successors and assigns of the said parties subject to the
limitations on assignment and subleasing contained herein.

 

Section 25.                                   Miscellaneous.

 

1.                                       Notices.  Any notice, request, demand, or other
communication which, under the terms of this Lease or under any statute or
other law, must or may be given or made by the parties hereto, shall be in
writing, shall be sent by and deemed received when deposited in the United
States mails, registered or certified mail, postage prepaid, return receipt
requested, or if otherwise delivered or sent, shall be deemed to have been
given or made when received at the following addresses or such other

 

18

 

addresses as may hereafter be designated in writing from time to time
by the parties hereto in the manner provided in this paragraph:

 

	
  TENANT:

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
  Shelf Stable Foods,
  Inc.

  Attn: Brian Dwyer

  10825 Kenwood Road

  Cincinnati, Ohio 45242

  	
   

  	
  Ronald C. Wornick

  345 Lorton Avenue

  Burlingame, California 94010

  

 

2.                                       Amendments.  No subsequent alteration, amendment, change,
deletion, or addition to this Lease shall be binding upon LANDLORD or TENANT
unless in writing and signed by both LANDLORD and TENANT.

 

3.                                       Governing Law.  This Lease and the rights and obligations of
the parties hereto shall be interpreted, construed, and enforced in accordance
with the laws of the State of Ohio.

 

4.                                       Captions and
Section Numbers.  The captions,
paragraph numbers, and article numbers appearing anywhere in this Lease
are inserted only as a matter of convenience and in no way define, limit,
construe, or describe the scope or intent of any such Paragraphs or Articles of
this Lease nor in any way affect this Lease. All references herein to
“Articles,” “Paragraphs,” or “Sub-Paragraphs” are references to articles,
paragraphs, or sub-paragraphs of this Lease.

 

5.                                       Attorney’s
Fees.  In the event of any
litigation between the parties relating to this Lease, the prevailing party
shall be entitled to recover its reasonable attorney’s fees and costs as part
of the judgment or settlement therein. In the event of a breach of this Lease
by either party which does not result in litigation but which causes the
non-breaching party to incur attorneys’ fees or costs, the breaching party
shall reimburse such fees and costs to the non-breaching party upon demand. If
either party or any of its officers, directors, shareholders, partners, agents,
affiliates or employees shall be made a party to any litigation commenced by or
against the other party and is not found to be at fault, the other party shall
pay all costs, expenses and reasonable attorneys’ fees incurred by any such
party in connection with such litigation.

 

6.                                       Quiet
Enjoyment.  LANDLORD shall defend
the TENANT in the quiet enjoyment and peaceful possession of the Leased
Premises during the term so long as TENANT is not in default under the terms of
this Lease.

 

19

 

7.                                       Recordation.  Both LANDLORD and TENANT agree not to record
this Lease, but each party hereto agrees, on request of the other, to execute a
short form memorandum of this Lease in recordable form specifying the names and
addresses of the parties, the date hereof, the term, the renewal options, and a
description of the Leased Premises. In no event shall such short form
memorandum set forth the rental or other charges payable by TENANT under this
Lease; and any such memorandum shall expressly state that it is executed
pursuant to the provisions contained in this Lease and is not intended to vary
the terms and conditions of this Lease.

 

8.                                       Unavoidable
Default or Delay.  In the event
either party to this Lease shall be delayed, hindered, or prevented from the
performance of any act required hereunder by reason of acts of God, strikes,
lockouts, labor disputes, inability to produce materials, failure of power,
restrictive governmental laws or regulations, riot, insurrection, war,
relocation of electrical generating, distribution or service facilities or the
inability of any company providing utilities to the Building or other cause not
within the reasonable control of such party (expressly except the financial
inability of such party to perform its obligations hereunder), then the
performance of such acts shall be excused for the period of delay and the
period for performance of any such act shall be extended for a period
equivalent to the period of such delay.

 

9.                                       Landlord’s
Performance for the Account of Tenant. 
If, after reasonable notice TENANT fails to perform any one or more of
its obligations, hereunder, in addition to the other rights of LANDLORD
hereunder, LANDLORD shall have the right but not the obligation to perform all
or any part of such obligations of TENANT. Upon receipt of a demand therefor
from LANDLORD, TENANT shall reimburse LANDLORD for (i) the cost to LANDLORD of
performing such obligations plus (ii) interest thereon as hereinafter provided.

 

10.                                 Landlord’s Failure
to Perform.  If LANDLORD fails to
perform any of its obligations under this Lease, LANDLORD shall not be in
default hereunder and TENANT shall not have any rights or remedies growing out
of such failure unless TENANT gives LANDLORD written notice thereof setting
forth in reasonable detail the nature and extent of such failure and such
failure by LANDLORD is not cured within the thirty (30) day period following
delivery of such notice, or if the nature of LANDLORD’s default is such that
more time is reasonably required in order to cure, such period shall be
extended for the period reasonably required therefor if LANDLORD commences
curing such failure within such thirty (30) day period and continues the curing
thereof with reasonable diligence until completion.

 

20

 

11.                                 Interest.  All installments of rent, additional rent
and all other payments of any character required to be paid to LANDLORD by
TENANT under the terms of this Lease shall, following the due date thereof,
bear interest at either the rate of Ten percent (10%) per annum or the maximum
non-usurious rate allowed by law, whichever is the lesser rate.

 

12.                                 Estoppel Certificate.  TENANT shall from time to time, within ten
(10) days after written request from LANDLORD, execute, acknowledge and deliver
a statement: (i) certifying that this Lease is unmodified and in full force and
effect (or if this Lease is claimed not to be in force and effect, specifying
the ground therefor) and the dates to which the rent and other charges
hereunder have been paid, (ii) acknowledging that there are not, to TENANT’s
knowledge, any uncured defaults on the part of LANDLORD hereunder, or specifying
such defaults if any are claimed, and (iii) certifying such other matters as
LANDLORD may reasonably request, or as may be requested by LANDLORD’s current
or prospective Lenders, insurance carriers, auditors, and prospective
purchasers. Any such statement may be relied upon by any such parties. If
TENANT shall fail to execute and return such statement within the time required
herein, TENANT shall be deemed to have agreed with the matters set forth
therein.

 

Section 26.                                   Right of First
Refusal.

 

If at any time
during the term of this Lease, LANDLORD shall desire to sell the Leased
Premises, TENANT shall have the right of first refusal to purchase the Leased
Premises, as follows:

 

a.                                       LANDLORD
shall furnish to TENANT three (3) copies of a contract of sale (“Contract”)
between LANDLORD and TENANT signed by LANDLORD specifying the terms and
conditions upon which he will sell the Leased Premises to TENANT. If TENANT
shall fail to exercise this Right of First Refusal by signing and returning two
(2) copies of the Contract to LANDLORD together with any down-payment or
earnest money deposit therein provided within ten (10) days after receipt of
the Contract, then LANDLORD shall have the right to sell the Leased Premises to
any other party upon terms substantially equal to or better than set forth in
the Contract. If LANDLORD shall sell the Leased Premises upon terms equal to or
better than those offered to TENANT, this Right of First Refusal shall
terminate; provided, however, if such a sale is not consummated, then this
Right of First Refusal shall remain in force and effect.

 

b.                                      The
following transfers shall be excluded from TENANT’S Right of First Refusal:

 

1.                                       The
sale of LANDLORD’s estate in the Leased Premises at a foreclosure of any Deed
of Trust or Mortgage

 

21

 

covering the Leased Premises or by a Deed in
Lieu of Foreclosure;

 

2.                                       A
transfer of LANDLORD’s estate in the Leased Premises, or any part thereof, to
any corporation, partnership, trust or other entity which is controlled wholly
or in part by LANDLORD or members of LANDLORD’S family;

 

3.                                       A
transfer by gift, devise or descent;

 

TENANT’s Right of
First Refusal shall, however, remain in effect after any such transfer
specified in subparagraphs 2. and 3. of paragraph b of this Section and be
binding on the transferee in any such transaction.

 

Section 27.                                   Purchase of the
Leased Property in the Event of Damage or Condemnation.

 

In the event
LANDLORD accepts an offer from TENANT to purchase the Leased Premises at the
Fair Market Value or Fair Market Value Purchase Price under the conditions and
terms of section 14b or Section l7d of this Lease, then such sale
shall be on the terms and conditions as set forth in this paragraph. Closing of
such sale shall be on or before thirty (30) days from the date that LANDLORD
accepts TENANT’s offer to purchase. At Closing, LANDLORD shall deliver to
TENANT a deed with limited warranty covenants, subject to all matters of
record, but free and clear of any mortgage lien, and TENANT shall deliver to
LANDLORD the purchase price payable in cash. Any real estate transfer taxes, to
the extent permitted by law, shall be paid by TENANT.

 

IN WITNESS
WHEREOF, LANDLORD and TENANT have executed this Amended and Restated Lease
Agreement to be effective as of October 28, 1995.

 

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  /s/ Ronald C. Wornick

  	
   

  
	
   

  	
  Ronald C. Wornick

  
	
   

  	
   

  
	
  Signed in the presence
  of:

  	
   

  
	
   

  	
   

  
	
  /s/ Nina Sorensen

  	
   

  	
   

  
	
  (Witness No. 1)

  	
   

  
	
  Print Name: Nina
  Sorensen

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  /s/ S. Baldinger

  	
   

  	
   

  
	
  (Witness No. 2)

  	
   

  
	
  Print Name: Sue
  Baldinger

  	
   

  
	
   

  	
   

  	
   

  

 

22

 

	
  Print Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  SHELF
  STABLE FOODS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald C. Wornick

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  Signed in the presence
  of:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Nina Sorensen

  	
   

  	
   

  
	
  (Witness No. 1)

  	
   

  
	
  Print Name: Nina
  Sorensen

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Witness No. 2)

  	
   

  
	
  Print Name:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  This Instrument
  Prepared By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Harry L. Marks

  Gary, Thomasson, Hall & Marks

  Professional Corporation

  P.O. Box 2888

  Corpus Christi, Texas 78403

  (512) 884-19761

  	
   

  
							

 

23

 

EXHIBIT “A”

 

All that tract of
land situated in Section 17, Township 4, Entire Range 1, Miami Purchase,
Sycamore Township, Hamilton County, Ohio in the City of Blue Ash and being more
particularly described as follows:

 

Beginning at a
point in the easterly line of said Section 17, also the center line of
Kenwood Road, located South 03° 41’ 00” West, 1,543.38 feet from the
northeasterly corner of said Section 17;

 

thence South 03°
41’ 00” West, along said easterly line of Section 17 and center line of
Kenwood Road, 400.00 feet to a point;

 

thence North 81°
15’ 40” West, passing a found Concrete Monument at 30.12 feet, a total distance
of 602.34 feet to a found Concrete Monument;

 

thence North 03°
41’ 00” East, parallel with the easterly line of said Section 17, a
distance of 35.13 feet to a set iron pin with cap;

 

thence North 81°
15’ 40” West, 401.56 feet to a set iron pin with cap;

 

thence North 03°
41’ 00” East, parallel with the easterly line of said Section 17, a
distance of 276.39 feet to a set iron pin with cap;

 

thence South 86°
19’ 00” East, passing a found Concrete Monument at 400.00 feet, and also
passing a set iron pin with cap at 970.00 feet, a total distance of 1000.00
feet to the Place of Beginning.

 

 

ASSIGNMENT OF AMENDED AND RESTATED LEASE AGREEMENT

 

Date:                                                                   October 28, 1995

 

Assignor:                                         SHELF
STABLE FOODS, INC., an Ohio corporation

 

Assignee:                                         THE
WORNICK COMPANY, a Texas business corporation

 

Lease:                                                            Amended
and Restated Lease Agreement (the “Lease”)

 

Date:                                                                   Effective
December 30, 1994

 

Landlord:                                           RONALD C.
WORNICK

 

Tenant:                                                      SHELF
STABLE FOODS, INC., an Ohio corporation

 

Leased Premises:

 

The real property located
in Blue Ash, Hamilton County, Ohio, and more fully described on Exhibit A
attached hereto and incorporated herein, together with any improvements located
thereon.

 

Assignor assigns
to Assignee Tenant’s interest in the Lease.

 

A.                                   Assignee
agrees to –

 

1.                                       Assume
and fully perform all of Tenant’s obligations under the Lease.

 

2.                                       Accept
the Leased Premises in its present “AS IS”
condition.

 

B.                                     Landlord
consents to this assignment.

 

C.                                     Assignee
is also a party to that certain Lease Agreement dated October 28, 1995, by
and between THE WORNICK COMPANY, a Texas business corporation, as TENANT, and
RONALD C. WORNICK, as LANDLORD, pertaining to the properties located in Hidalgo
County, Texas, and more fully described therein (the “Hidalgo County Lease”).
Assignee agrees that a default in the timely performance of any of the
obligations and covenants of TENANT under this Lease (or the Hidalgo County
Lease, as the case may be), at the option of the LANDLORD, shall constitute a
default under the terms of Hidalgo County Lease (or this Lease, as the case may
be).

 

 

	
  ASSIGNOR:

  	
  ASSIGNEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
  SHELF
  STABLE FOODS, INC.

  	
  THE
  WORNICK COMPANY

  
	
   

  	
   

  
	
  By:

  	
  /s/ Brian Dwyer

  	
   

  	
  By:

  	
  /s/ Ronald C. Wornick 

  	
   

  
	
   

  	
  Brian Dwyer,

  	
   

  	
   

  	
  Ronald C. Wornick,
  Chairman

  	
   

  
	
   

  	
  President

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LANDLORD:

  	
   

  
	
   

  	
   

  
	
  /s/ Ronald C. Wornick 

  	
   

  	
   

  
	
  RONALD C. WORNICK

  	
   

  

 

2

 

AMENDMENT TO LEASE AGREEMENTS

 

RONALD C. WORNICK,
as “Landlord” and The Wornick Company, a Texas corporation, as “Tenant,” are
parties to the following two lease agreements:

 

A.                                   Lease
Agreement by and between Landlord and Tenant, dated
November 27, 1995, and pertaining to certain real property located in
Hidalgo County, Texas and more fully described therein (the “Texas Lease”).

 

B.                                     Amended
and Restated Lease Agreement by and between Landlord and Tenant (Tenant’s
interest being acquired pursuant to the Assignment of Amended and Restated
Lease Agreement dated October 28, 1995), dated to be effective
December 10, 1994, and pertaining to certain real property located in
Hamilton County, Ohio and more fully described therein (the “Ohio Lease”).

 

The parties agree
that the Texas Lease and the Ohio Lease are amended as follows:

 

1.                                       The
discount rate set forth in the last sentence of Section 16.2.a shall be
“six percent (6%)”.

 

2.                                       Section 16.1.e.
is amended and restated in its entirety to read as follows:

 

“If Tenant shall
abandon or vacate the Leased Premises and cease to care for the Leased Premises
as provided for in Section 7 herein.”

 

3.                                       The
last sentence of Section 1.f. of the Ohio Lease and Section 1.f. of
the Ohio Lease and Section 1.h. of the Texas Lease are deleted.

 

4.                                       Section 26
is amended to provide that Tenant shall have thirty (30) days within which to
exercise its right of first refusal, rather than ten (10) days.

 

5.                                       Section 14.i.
of the Texas Lease is amended and restated in its entirety to read as follows:

 

“If Landlord’s mortgagees do not allow the insurance proceeds to be
used for restoration, then Tenant’s exclusive remedies shall be (a) to
terminate this Lease, or (b) if (i) such proceeds are used to service
Landlord’s mortgage secured by the Leased Premises or otherwise are made
available to or used for the benefit of Landlord and (ii) Tenant is not in
default under this Lease to require Landlord to restore the Leased Premises,
provided, however, that Landlord’s obligation to restore the Leased Premises
shall be limited to the amount of

 

 

such proceeds and,
provided further that Landlord shall not be obligated to restore the Leased
Premises pursuant to provisions of this section if such proceeds are not
available prior to the end of the 12th year of term of the Lease.

 

6.                                       The
last sentence of the second paragraph of Section 17.f. is amended and
restated in its entirety to read as follows:

 

“If Landlord’s mortgagees do not allow the Award to be used for
restoration, then Tenant’s exclusive remedies shall be (a) to terminate this
Lease, or (b) if (i) such proceeds are used to service Landlord’s mortgage
secured by the Leased Premises or otherwise are made available to or used for
the benefit of Landlord and (ii) Tenant is not in default under this Lease to
require Landlord to restore the Leased Premises, provided, however, that
Landlord’s obligation to restore the Leased Premises shall be limited to the
amount of such proceeds and, provided further that Landlord shall not be obligated
to restore the Leased Premises pursuant to provisions of this section if
such proceeds are not available prior to the end of the twelfth year of term of
the Lease.

 

Except as
specifically amended above, the Ohio Lease and the Texas Lease are ratified and
confirmed.

 

	
  Effective as of
  November 29, 1995

  	
   

  
	
   

  	
   

  
	
  TENANT:

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
   

  
	
  THE
  WORNICK COMPANY

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Larry L. Rose 

  	
   

  	
  /s/ Ronald C. Wornick 

  	
   

  
	
  Name:

  	
  Larry L. Rose 

  	
   

  	
  Ronald C. Wornick

  
	
  Title:

  	
  Secretary

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed to by Landlord’s
  Mortgage:

  	
   

  
	
   

  	
   

  
	
  TEXAS
  STATE BANK

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ G. E. Roney

  	
   

  	
   

  
	
  Name:

  	
  G. E. Roney

  	
   

  	
   

  
	
  Title:

  	
  Chairman of the Board

  	
   

  	
   

  
										

 

 

 

LEASE ASSIGNMENT

 

	
  Date:

  	
  July 8th, 1998

  
	
   

  	
   

  
	
  Assignor:

  	
  Ronald C. Wornick

  
	
   

  	
   

  
	
  Assignee:

  	
  Ronald C. Wornick and
  Anita L. Wornick, Trustees of the Ronald C. Wornick and Anita L. Wornick
  Revocable Trust U/D/T dated October 24, 1997

  
	
   

  	
   

  
	
  Leases:

  	
   

  
	
   

  	
   

  
	
   

  	
  (1)

  	
  Amended and Restated
  Lease Agreement, as amended by Amendment to Lease Agreements dated
  November 29, 1995

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  Effective December 30, 1994

  
	
   

  	
   

  	
   

  
	
   

  	
  Landlord:

  	
  Ronald C. Wornick

  
	
   

  	
   

  	
   

  
	
   

  	
  Tenant:

  	
  The Wornick Company, a Texas business corporation,
  pursuant to Assignment of Amended and Restated Lease Agreement dated
  October 28, 1995

  
	
   

  	
   

  	
   

  
	
   

  	
  Premises:

  	
  All that tract of land situated in Section 17,
  Township 4, Entire Range 1, Miami Purchase, Sycamore Township, Hamilton
  County, Ohio in the City of Blue Ash and being more particularly described on
  the Exhibit “A” attached hereto.

  
				

 

(2)                                  Lease
Agreement, dated November 27, 1995, as amended by Amendment to Lease
Agreements dated November 29, 1995

 

Landlord:              Ronald
C. Wornick

 

Tenant:                                                      The
Wornick Company, a Texas corporation

 

Premises:                                        All of the real
property located in Hidalgo County, Texas, described as Tract I, Tract II,
Tract III and Tract IV on the Exhibit “B” attached hereto.

 

Assignor assigns to Assignee Landlord’s interest in the Leases.

 

A.                                    Assignee
agrees to —

 

1.                                       Assume
Landlord’s obligations under the Leases.

 

2.                                       Accept
the premises in their present “as is” condition.

 

 

B.                                    Tenant
consents to this assignment.

 

C.                                    Assignor
agrees that Assignor remains liable on the Leases.

 

	
  ASSIGNOR:

  	
  ASSIGNEE:

  
	
   

  	
  RONALD C. WORNICK AND
  ANITA L. WORNICK, TRUSTEES OF THE RONALD C. WORNICK AND ANITA L. WORNICK
  REVOCABLE TRUST U/D/T dated October 24, 1997

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Ronald C. Wornick 

  	
   

  	
  By:  

  	
  /s/ Ronald C. Wornick

  	
   

  
	
  Ronald C. Wornick

  	
   

  	
  Ronald C. Wornick,
  Trustee

  
	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Anita L. Wornick

  	
   

  
	
   

  	
   

  	
  Anita L. Wornick,
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
  TENANT:

  	
   

  
	
   

  	
   

  
	
  The Wornick Company, a
  Texas corporation  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Ronald C. Wornick

  	
   

  	
   

  
	
   

  	
  Name:

  	
  President & CEO

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Ronald C. Wornick

  	
   

  	
   

  
								

 

2

 

EXHIBIT “A”

 

All that tract of
land situated in Section 17, Township 4, Entire Range 1, Miami Purchase,
Sycamore Township, Hamilton County, Ohio in the City of Blue Ash and being more
particularly described as follows:

 

Beginning at a
point in the easterly line of said Section 17, also the center line of
Kenwood Road, located South 03’ 41’ 00” West, 1,543.38 feet from the
northeasterly corner of said Section 17;

 

thence South 03°
41’ 00” West, along said easterly line of Section 17 and center line of
Kenwood Road, 400.00 feet to a point;

 

thence North 81°
15’ 40” West, passing a Found Concrete Monument at 30.12 feet, a total distance
of 602.34 feet to a found Concrete Monument;

 

thence North 03°
41’ 00” East, parallel with the easterly line of said Section 17, a
distance of 35.13 feet to a set iron pin with cap;

 

thence North 81°
15’ 40” West, 401.56 feet to a set iron pin with cap;

 

thence North 03°
41’ 00” East, parallel with the easterly line of said Section 17, a
distance of 276.39 feet to a set iron pin with cap;

 

thence South 86°
19’ 00” East, passing a found Concrete Monument at 400.00 feet, and also
passing a set iron pin with cap at 970.00 feet, a total distance of 1000.00
feet to the Place of Beginning.

 

 

EXHIBIT
“B”

 

	
  TRACT
  I:

  	
   

  	
  All of Lot “A”,
  RIGHT-AWAY-FOODS INC., an addition to the City of McAllen, Hidalgo County,
  Texas, according to the map or plat thereof recorded in Volume 21, Page 81,
  Map Records of Hidalgo County, Texas.

  
	
   

  	
   

  	
   

  
	
  TRACT
  II:

  	
   

  	
  A 5.0 acre tract of
  land, more or less, out of Lot 5, Block 12, STEELE AND PERSHING SUBDIVISION,
  Hidalgo County, Texas, according to the map or plat thereof recorded in
  Volume 8, Page 115, Deed Records of Hidalgo County, Texas and being more
  particularly described by metes and bounds as follows:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BEGINNING at an iron
  rod set on the West line of Lot 5, South 8 degrees 46 minutes West, 160.0
  feet from its Northwest corner for the Northwest corner of the following described
  tract of land, said point being on the South line McAllen Pharr Outfall Drain
  Ditch right of way;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THENCE, with the South
  line of said drain ditch right of way, parallel to the North line of Lot 5,
  South 81 degrees 14 minutes East, 463.4 feet to an iron rod set, for the
  Northeast corner hereof;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THENCE, parallel to the
  West line of Lot 5, South 8 degrees 46 minutes West, 470.0 feet to an iron
  rod set on the North line of 60 foot Cedar Avenue, for the Southeast corner
  hereof; said Cedar Avenue shown on map of Industrial Distribution Center,
  recorded in Volume 21, Page 80, Map Records;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THENCE, with the North
  line of Cedar Avenue, North 81 degrees 14 minutes West, 463.4 feet to an iron
  rod set on the West line of Lot 5, for the Southwest corner hereof; said
  point also being on the East line of Lot “A”, Right Away Foods, Inc.
  Subdivision, recorded in Volume 21, Page 81, Map Records.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THENCE, with the East
  line of Lot “A” Right Away Foods, Inc. Subdivision and the West line of Lot
  5, Block 12, Steele and Pershing Subdivision, North 8 degrees 46 minutes
  East, 470.0 feet to the PLACE OF BEGINNING, containing 5.0 acres of land,
  more or less.

  
	
   

  	
   

  	
   

  
	
  TRACT
  III:

  	
   

  	
  All of Lot “A”, WORNICK
  CO. BUSINESS DEVELOPMENT CENTER SUB’D, an addition to the City of Pharr,
  Hidalgo County, Texas according to the map or plat thereof recorded in Volume
  26, Page 69B, Map Records of Hidalgo County, Texas.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SAVE AND EXCEPT the
  West 30 feet thereof conveyed to U.S. Internex Transportation, Inc., in
  Warranty Deed dated October 18, 1994, filed February 6, 1995 in the
  office of the County Clerk of Hidalgo County, Texas, under Document No.
  434330.

  

 

 

	
  TRACT
  IV:

  	
   

  	
  A tract of land
  containing 2.46 acres, more or less, out of the West 17.51 acres of Lot 4,
  Block 12, STEELE AND PERSHING SUBDIVISION, Hidalgo County, Texas, according
  to the map or plat thereof recorded in Volume 8, Page 115, Deed Records of
  Hidalgo County, Texas and being more particularly described by metes and
  bounds as follows:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BEGINNING at an iron
  pipe on the South right of way line of the McAllen Outfall Drain Ditch, in
  the City of McAllen, Texas, for the Northeast corner of the following
  described tract of land; said point located North 81 deg. 14 min. West, 789.0
  feet, and South 8 deg. 46 rain. West 160.0 feet from the Northeast corner of
  said Lot 4;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THENCE, with the East
  line of the West 17.51 acres of Lot 4, South 8 deg. 46 min. West, 201.78 feet
  to a point for the most Northerly Southeast corner hereof; said point being
  5.0 feet Northerly from the North edge of concrete curb;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THENCE, parallel to the
  North line of Lot 4, parallel to the North edge of concrete curb, North 81
  deg. 14 min. West, 30.0 feet to the point of beginning of a curve to the
  left, for a point in line hereof;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THENCE, continue
  parallel to and 5.0 feet Westerly from the edge of concrete curb, with said
  curve to the left, on a radius of 55.0 feet through an arc of 156 deg. 25
  min. 19 sec., a distance of 150.15 feet to the point of beginning of curve to
  right;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THENCE, continue
  parallel to and 5.0 feet Westerly from the edge of concrete curb, with said
  curve to the right, on a radius of 45.0 feet, through an arc of 32 deg. 20
  min. 41 sec., a distance of 25.40 feet to end of curve, for a point in the
  East line hereof; said point being 30.0 feet Westerly from the centerline of
  North 1st Street;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THENCE, parallel to and
  30 feet Westerly from the centerline of North 1st Street; South 8 deg. 46
  min. West 366.88 feet to an iron pipe for the most Southerly Southeast corner
  hereof;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THENCE, North 81 deg.
  23 min. 30 sec. West, 144.92 feet to an iron pipe on the approximate East toe
  of Drain Ditch Spoil Bank, for the Southwest corner hereof;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THENCE, with a line
  along said Spoil Bank, North 7 deg. 40 min. East, 708.46 feet to an iron pipe
  on the South right of way line of McAllen Outfall Drain Ditch, for the
  Northwest corner hereof;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THENCE, with said drain
  ditch right of way line as follows; South 73 deg. 30 mm. 40 sec. East, 98.42
  feet and South 81 deg. 14 min. East, 90.99 feet to the POINT OF BEGINNING.
  Containing 2.46 acres of land, more or less.

  

 

 

 

ASSIGNMENT AND
ASSUMPTION OF LEASE

 

ASSIGNMENT AND ASSUMPTION OF LEASE (this “Agreement”), entered into as
of June 30, 2004, by and among The Wornick Company, a Nevada corporation
(“Assignor”); and The Wornick Company, a Delaware corporation (“Assignee”).
Assignor and Assignee are referred to collectively herein as the “Parties.”

 

W  I  T  N  E  S
S  E  T  H:

 

WHEREAS, Assignor’s predecessor-in-interest, Shelf Stable Foods, Inc.,
as “Tenant,” and Ronald C. and Anita A. Wornick Revocable Trust,
successor-in-interest to Ronald C. Wornick, as “Landlord,” are parties to the
Amended and Restated Lease Agreement dated December 30, 1994, as assigned
to Tenant by Assignment of Amended and Restated Lease Agreement dated
October 28, 1995, as amended by Amendment to Lease Agreements dated
November 29, 1995 and as assigned to Landlord by Lease Assignment dated
July 8, 1998 (collectively, the “Lease”), presently covering certain
premises (the “Premises”) located at 10825 Kenwood Road, Cincinnati, Ohio, a
copy of which Lease is attached hereto as Exhibit A; and

 

WHEREAS, Assignor, as “Seller,” and Assignee, as “Buyer,” are parties
to an Assets Purchase and Sale Contract dated December 3, 2003 (the
“Purchase Agreement”), pursuant to which, subject to the terms and conditions
set forth therein, Assignee will purchase substantially all of the assets (and
assume certain of the liabilities) of Assignor, including all of Seller’s
right, title and interest in, under and to the Lease; and

 

WHEREAS, simultaneously with the closing of the transactions
contemplated by the Purchase Agreement, the Parties mutually desire (a) that
Assignor assign all of its right, title and interest in, under and to the Lease
to Assignee, (b) that Assignee accept such assignment from Assignor and assume
all of Assignor’s obligations as Tenant under the Lease, and (c) that Landlord
consent to the assignment contemplated hereby, all on the terms and conditions
hereinafter set forth.

 

NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other valuable consideration, the receipt and adequacy of which are
expressly acknowledged, the Parties agree as follows:

 

1.                                       Effective Date. For all purposes under this Agreement, the term “Effective Date” shall
mean that date, if any, on which the closing of the transactions contemplated
by the Purchase Agreement is consummated.

 

2.                                       Assignment and Assumption.

 

(a)                                  Effective as of the Effective Date, Assignor
hereby assigns, transfers and sets over unto Assignee all of Assignor’s right,
title and interest in, under and to (i) the Lease and (ii) the aggregate
security deposit heretofore made by Assignor pursuant to the Lease. Assignor
will deliver possession of the Premises to Assignee on the Effective Date.

 

 

(b)                                 Assignee hereby accepts the foregoing assignment
and hereby agrees to perform all of the terms and conditions of the Lease to be
performed on the part of Assignor and assumes all of the liabilities and
obligations of Assignor under the Lease, as amended hereby, arising or accruing
on or after the Effective Date, including, without limitation, liability for
the payment of rent and for the due performance of all the terms, covenants and
conditions of the tenant pursuant to the Lease as amended hereby.

 

3.                                       Consent to Assignment. Effective as of the Effective Date, Landlord
has consented to the assignment effected hereby.

 

4.                                       Representation of Assignor. The Assignor hereby represents to the Assignee
and agrees as follows:

 

(a)                                  The Lease attached hereto as Exhibit A is a true,
correct and complete copy of the Lease, the Lease has not been amended or
modified except as set forth above and the same is the only agreement between
the Landlord and the Assignor with respect to the subject matter thereof.

 

(b)                                 The Lease is in full force and effect with no
defaults (or events which, with the passage of time, would become defaults)
thereunder on the part of either party in the performance of its obligations
under such Lease.

 

(c)                                  The minimum or base rent and all other rentals
and other payments due, owing and accruing under the Lease have been paid
through the due date thereof immediately preceding the Effective Date.

 

(d)                                 The current amount of tenant’s expense and tax
payments are $36,615.36 per six months.

 

(e)                                  Landlord is currently holding a security deposit
with respect to the Lease in the amount of $0.

 

5.                                       Miscellaneous.

 

(a)                                  Headings. The section headings used herein are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.

 

(b)                                 Governing law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio.

 

(c)                                  Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together will constitute one
and the same instrument.

 

2

 

IN WITNESS WHEREOF, the parties have executed
this Agreement as of the day and year first above written.

 

 

	
  ASSIGNOR

  	
  ASSIGNEE

  
	
  The Wornick Company, a
  Nevada

  corporation

  	
  The Wornick Company, a
  Delaware

  corporation

  
	
   

  	
   

  
	
  By:

  	
  /s/ Larry L. Rose

  	
   

  	
  By:

  	
  /s/ Robert B. McKeon

  	
   

  
	
   

  	
  Larry
  L. Rose, President and

  Chief Executive Officer

  	
   

  	
  Robert
  B. McKeon, President

  
						

 

3

 

	
  STATE OF NEW YORK

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY OF NEW YORK

  	
   

  	
  §

  

 

The foregoing instrument was acknowledged before me this June 30,
2004 by Larry L. Rose, President and CEO of The Wornick Company, a Nevada
corporation, on behalf of the corporation.

 

 

	
  /s/
  Janna Gabriel

  	
   

  	
   

  
	
  Notary Public

  	
   

  
	
  Printed Name:

  	
  Janna Gabriel

  	
   

  	
   

  
	
  My Commission Expires:

  	
   

  
	
  9/24/05

  	
   

  	
   

  
					

 

 

	
  STATE OF NEW YORK

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY OF NEW YORK

  	
   

  	
  §

  

 

The foregoing instrument was acknowledged before me this June 30,
2004 by Robert B. McKeon, President of The Wornick Company, a Delaware
corporation, on behalf of the corporation.

 

 

	
  /s/
  Elaine Gerace

  	
   

  	
   

  
	
  Notary Public

  	
   

  
	
  Printed Name:

  	
  Elaine
  Gerace

  	
   

  	
   

  
	
  My Commission Expires:

  	
   

  
	
  5/18/06

  	
   

  	
   

  
					

 

4Exhibit 10.12

 

 

 

STANDARD INDUSTRIAL LEASE

 

 

270 SHARYLAND, L.P. — LANDLORD

 

 

and

 

 

THE WORNICK COMPANY RIGHT AWAY DIVISION — TENANT

 

 

DATED: 
MARCH 4TH 2003

 

 

STANDARD INDUSTRIAL LEASE

 

THIS
STANDARD INDUSTRIAL LEASE (the “Lease”) is made to be effective the 4th day of
March, 2003, by and between 270 Sharyland, L.P. (“Landlord”), a Texas limited
partnership, and The Wornick Company Right Away Division (“Tenant”), a Nevada
corporation, Charter No. C-25930-99; EIN #74-1909484.

 

W  I  T  N  E  S  S
E  T  H:

 

In
consideration of the rents, covenants, and agreements herein set forth,
Landlord and Tenant enter into the following agreement:

 

1.                                      Definitions and Key
Provisions.  The following terms shall be defined in this
Lease as follows:

 

	
  Premises:

  	
  The
  171,179 square foot (more or less) space located within the Building
  identified on Exhibit “A”, sometimes also referred to as the “Premises Area”.

  
	
   

  	
   

  
	
  Project:

  	
  The
  real estate and improvements including the approximately 271,872 square foot
  building (the “Building”) as shown on Exhibit “A” and municipally numbered as
  5700 South International Parkway, Suites B & C, McAllen, Texas; the legal
  description of the real estate (the “Land”) is attached as Exhibit “B”.

  
	
   

  	
   

  
	
  Tenant’s Share:

  	
  62.96%;
  the fraction, the numerator of which is the Premises Area and the denominator
  of which is the total number of square feet of rentable space in the
  Building.

  
	
   

  	
   

  
	
  Initial Term:

  	
  Five
  (5) years unless terminated earlier as provided herein, commencing on the
  Rent Commencement Date.

  
	
   

  	
   

  
	
  Renewal Terms:

  	
  One
  (1) additional consecutive term of five (5) years.

  
	
   

  	
   

  
	
  Rent Commencement Date:

  	
  March 1,
  2003.

  
	
   

  	
   

  
	
  Occupancy:

  	
  Tenant
  may occupy the warehouse area of the Premises for the purpose of setting up
  equipment and racks immediately upon execution of this Lease by both parties.

  
				

 

	
  Base Rent:

  	
   

  	
  Monthly

  	
   

  	
  Annually

  	
   

  	
  PSF
  (Annual)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Years 1-5:

  	
   

  	
  $

  	
  59,912.65

  	
   

  	
  $

  	
  718,951.80

  	
   

  	
  $

  	
  4.20 NNN

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Renewal Base Rent:
  Years 6-10:

  	
   

  	
  $

  	
  68,899.55

  	
   

  	
  $

  	
  826,794.57

  	
   

  	
  $

  	
  4.83 NNN

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Security Deposit:

  	
   

  	
  $

  	
  59,912.65

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prepaid Rent:

  	
   

  	
  $

  	
  134,090.22

  	
   

  	
   

  	
   

  	
   

  

 

Initial Estimated Annual Operating Expenses: (estimated on per square foot basis
commencing on Tenant’s occupancy and subject to adjustment to actual costs and
expenses as provided herein)

 

	
  1.

  	
   

  	
  Common Area Charges:

  	
  $

  	
  0.40

  	
   

  
	
  2.

  	
   

  	
  Taxes:

  	
  $

  	
  0.54

  	
   

  
	
  3.

  	
   

  	
  Insurance:

  	
  $

  	
  0.06

  	
   

  
	
  4.

  	
   

  	
  Total:

  	
  $

  	
  1.00

  	
   Per Square Foot Annually Beginning March 1, 2003

  

 

	
  Brokers:

  	
  Grubb
  & Ellis, Best/White, LLC

  

 

 

2.                                      Granting Clause and Quiet
Enjoyment.  In consideration of the obligation of Tenant
to pay rent as herein provided and in consideration of the other terms,
covenants and conditions hereof, Landlord leases to Tenant, and Tenant takes
from Landlord, the Premises for the term hereof. Notwithstanding the fact that
the Rent Commencement Date is subsequent to the effective date of this Lease,
it is the intention of Landlord and Tenant that each have vested rights
hereunder and that this Lease constitutes a binding and valid obligation of
each as of the date this Lease is fully executed. Landlord covenants and agrees
that upon Tenant’s paying rent and performing all of the covenants and
conditions set forth in this Lease, Tenant shall peaceably and quietly have,
hold and enjoy the Premises, for the purposes
specified in Section 6.1 hereof subject, however, to all of
the terms hereof and to all reservations in favor of Landlord, all zoning
ordinances and other laws and regulations governing or regulating the use of
the Premises, and all easements, rights-of-way, and presently recorded instruments
which affect the Premises. Landlord warrants and represents to Tenant that the
Premises and the Building each contain within ten percent (10%), plus or minus,
of the useable, rentable square feet set forth in Section 1 hereof.

 

3.                                      Renewal Terms.  Provided
Tenant is not then in default hereunder, Tenant shall have the right to extend
the term of this Lease for the applicable Renewal Terms provided Tenant gives
Landlord written notice of its election to extend the Lease at least six (6)
months prior to the expiration of the then expiring Term.

 

4.                                      Security Deposit. 
Concurrently with Tenant’s execution of this Lease, Tenant shall deposit
with Landlord the Security Deposit referenced in Section 1 which shall be held by Landlord, without
obligation for interest or segregation, as security for performance of Tenant’s
covenants and obligations under this Lease, it being expressly understood and
agreed that such deposit is not an advance rental deposit or an exact measure
of Landlord’s damages in case of Tenant’s default. Upon the occurrence of any
default by Tenant, Landlord may, without prejudice to any other available
remedy, use such fund to make good any rent arrearage or any other damage,
injury, expense or liability caused by such event of default, and Tenant shall
pay to Landlord within ten (10) days of written demand therefor, the amount so
applied in order to restore the Security Deposit to its original amount.
Subject to the requirements of and conditions imposed by laws applicable to
security deposits under commercial leases, and if Tenant is not then in default
hereunder, Landlord shall, within ninety (90) days of the expiration of this
Lease, return to Tenant the portion of the Security Deposit remaining after
deducting all damages, charges, and other amounts permitted by Law. Landlord
and Tenant agree that such deductions shall include, without limitation, all
damages and losses that Landlord has suffered or that Landlord reasonably
estimates that it will suffer as a result of any breach of this Lease by
Tenant.

 

Subject
to the requirements of and conditions imposed by laws applicable to security
deposits under commercial leases, Landlord shall, within the time required by
applicable law, return to Tenant that portion of the Security Deposit remaining
after deducting all damages, charges and other amounts permitted by law.
Landlord and Tenant agree that such deductions shall include, without
limitation, all damages and losses that Landlord has suffered or that Landlord
reasonably estimates that it will suffer as a result of any breach of this
Lease by Tenant.

 

5.                                      Rent.

 

5.1                               Base Rent. 
Tenant shall pay Base Rent to Landlord for the Premises in the amounts
set forth in Section 1;
and more specifically in equal and successive monthly installments of Base Rent
as set forth therein. Said Base Rent shall be paid in advance on the first day
of each month of the Term, without charge to Landlord, with proration to occur
for any partial month if the Rent Commencement Date is other than on the first
day of a calendar month. In addition to the Security Deposit, the Prepaid Rent,
and the first monthly installment of estimated Operating Expenses (as herein
defined) shall be due and payable on the date this Lease is fully executed. All
rentals to be paid by Tenant to Landlord shall be in lawful money of the United
States of America and shall be paid without deduction, offset or charge, prior
notice or demand, and at such place or places as may be designated from time to
time by Landlord. Upon the occurrence of an event of default specified in this
Lease, Landlord may at its option, require Tenant to make any payment(s) of
rental by certified check or money order. Tenant’s obligation to pay rent under
this Lease is an independent covenant and no act or circumstance, regardless of
whether such act or circumstance constitutes a breach of this Lease by
Landlord, shall release Tenant of its obligation to pay rent as required by
this Lease.

 

5.2                               Operating Expense Payments.  It
is the intention of Landlord and Tenant that Landlord receive the Base Rent
“net” of all other charges except as expressly provided herein; accordingly,
beginning on the earlier of (i) the Commencement Date (as defined in the
Construction Addendum) or (ii) Tenant’s initial occupancy of the Premises, Tenant
shall pay as additional rent Tenant’s Share of the “Operating Expenses” for the
Project. The

 

2

 

term “Operating Expenses” shall mean all costs
and expenses (including without limitation sales tax) incurred by Landlord with
respect to the ownership, maintenance and operation of the Project, including
but not limited to: Taxes as provided in Section 11);
Insurance (as provided in Section 14);
association fees, if any; utilities for the Project; maintenance, repair and
replacement of all portions of the Project, including without limitation,
signs, fire suppression systems (if any), repair or replacement of exterior
surfaces, including but not limited to painting, cleaning and graffiti removal,
paving and parking areas, roads, roof (routine maintenance and repair only),
alleys, landscaping, line painting, utility lines, lighting, electrical
systems; amounts paid to contractors and subcontractors for work or services
performed in connection with the foregoing; reasonable property management fees
(which, at Landlord’s option, may be payable to itself, an affiliate or third
party manager); deductibles on insurance loss; security services, if any; trash
collection and sweeping and compliance with laws, rules, regulations and orders
of governmental authorities. Operating Expenses do not include debt service
under mortgages; costs of restoration to the extent of net insurance proceeds
received by Landlord with respect thereto; utilities for the Premises; leasing commissions;
or the cost of renovating space for other tenants of the Project or capital
expenditures unless incurred by Landlord with a principal purpose to: (i)
effect a reduction in the Operating Expenses; or (ii) keep the Project in
compliance with applicable laws, rules, regulations and orders of governmental
authorities. The costs of additions or alterations which are required to be
capitalized for federal income tax purposes shall be amortized on a
straight-line basis over a period equal to the lesser of the useful life
thereof for federal income tax purposes or ten (10) years. Landlord may at its
option increase Tenant’s Share of the Operating Expenses (or any portion
thereof) if in Landlord’s reasonable opinion a disproportionate allocation is
necessary because of Tenant’s use or operation.

 

Landlord
shall furnish Tenant a written statement estimating Tenant’s Share of the
Operating Expenses for the current calendar year (herein the “Estimate”).
Beginning on the Rent Commencement Date and on the first day of each month
during the Term, Tenant shall pay Landlord as additional rent one-twelfth
(1/12) of the Estimate. In addition, Tenant shall pay with the rental payment
for the first month following receipt of the Estimate an amount equal to the
number of months elapsed in the calendar year prior to receipt of the Estimate
times one-twelfth (1/12) of the Estimate, so as to bring said monthly payments
current for the year. As soon as practical after the end of each calendar year,
Landlord shall furnish Tenant a written statement showing Tenant’s Share of the
total Operating Expenses actually due for the calendar year ended (the “Actual
Expenses”). If the Actual Expenses exceed the Estimate, then Tenant agrees to
pay within ten (10) days of receipt of said statement, the difference between
Tenant’s Share of the Actual Expenses and the Estimate. If the Estimate exceeds
the Actual Expenses, then Landlord agrees to refund the difference at the time
that such statement is furnished, provided Tenant is not then in default in the
performance of any of its obligations under this Lease. In the event, and only
in such event, that during the term hereof a specific CAM category actually
exceeds Landlord’s estimate, as set forth in Section 1 hereof, for the first year, and
subsequently, the actual amount of each preceding year for that category by ten
percent (10%) or more, and upon not less than fifteen (15) business days
written notice from Tenant to Landlord within three (3) months of receipt of
the Actual Expenses statement reflecting such, Tenant shall have the right to
review and Landlord shall provide copies of invoices, statements, receipts or
similar evidence of said specific CAM category expenses for amounts over
twenty-five dollars ($25.00) at Landlord’s business office during regular
business hours. If Landlord is required to conduct research regarding the
expense amounts, Tenant shall pay Landlord $25.00 per hour per personnel for
such research. If Landlord and Tenant are unable to agree on the amount to be
paid by Tenant, each shall designate a CPA and the two CPA’s shall designate a
third CPA to serve as arbitrator of the dispute. The arbitrator’s decision as
to the amount to be paid by Tenant shall be binding upon the parties. The
non-prevailing party shall bear the expenses incurred by this action. The
provisions of this Section shall apply for any partial calendar year
during which this Lease is effective, subject to a pro rata adjustment based
upon the number of calendar months or portions thereof that this Lease is in
effect. Tenant’s obligation to pay any such difference in the Operating
Expenses shall survive the termination or expiration of this Lease.

 

For
purposes of this Section, a year shall mean a calendar year except for the
first year of this Lease, which shall begin on the Rent Commencement Date and
the last year which shall end at the expiration of the Lease.

 

Landlord
and Tenant are knowledgeable and experienced in commercial transactions and
agree that the provisions of this Lease for determining charges, amounts and
additional rental payable by Tenant (including without limitation, payments
under Sections 1, 5, 11 and 13 hereof regarding operating expenses, taxes, and
utilities, etc.) are commercially reasonable and valid, and as to each such charge
or amount, constitute a “method by which the charge is to be computed” for
purposes of Section 93.004 of the Texas Property Code, as enacted by House
Bill 2186, 77th Legislature.

 

3

 

5.3                               Late Charges.  Tenant
agrees to pay a late charge of ten percent (10%) as additional rent for each
payment due hereunder that remains unpaid, i.e., not received in Landlord’s
office, for more than five (5) days after the first (1st) day of the
month to cover Landlord’s administrative costs of processing such late payment.
In addition to said late charge, any rental or other amount due from Tenant
under this Lease which is more than thirty (30) days delinquent shall bear
interest from the date such rental or other amount was due at the lesser of the
rate of eighteen percent (18%) per year or the then maximum nonusurious rate
under applicable law, (the lesser of said amounts being herein referred to as
the “Maximum Rate.”) In the event the late charge is ever deemed to be “interest”
the amount of interest on past due amounts shall be automatically reduced so
that the combination of said late charge and the interest on past due amounts,
if any, does not exceed the Maximum Rate. Any amount collected which exceeds
the Maximum Rate will be deemed credited to other amounts owed by Tenant to
Landlord under this Lease, and any remaining excess after such credit shall be
refunded to Tenant. It is the intent of both Landlord and Tenant to at all
times comply with the applicable law regarding the maximum nonusurious amount
or rate of interest which may be contracted for, charged, taken, reserved or
received by Landlord.

 

6.                                      Conduct of Business of
Tenant.  

 

6.1                               Use of Premises.  The
Premises shall be occupied and used by Tenant solely for the purpose of
conducting therein the business of light manufacturing, receiving and
distributing, storing and selling (wholesale only) of products, materials and
merchandise made or distributed by Tenant and for such lawful purposes as may
be incident thereto and for no other purpose without Landlord’s prior written
consent which shall not be unreasonably withheld. Any and all forklift or
similar vehicles used or placed in or around the Premises must have
polyurethane coated wheels. Tenant shall not use the Premises as a place of
public accommodation. Tenant’s acceptance of occupancy from Landlord shall
constitute acknowledgment by Tenant that Tenant has inspected the Premises and
the Project of which the Premises are a part and that same are suitable for Tenant’s
intended use thereof as stated in this Section.  Tenant recognizes and agrees that Landlord is making no
warranties, expressed or implied, as to the suitability of the Premises or the
Project for any particular use. Tenant accepts the space “AS IS” with all
faults.

 

6.2                               Operation by Tenant. 
Tenant covenants and agrees to the following:

 

(a)                                  Tenant, at Tenant’s expense, shall comply
with all laws, rules, orders, ordinances, directions, regulations and
requirements of federal, state, county and municipal authorities regardless of
when they become effective, pertaining to Tenant’s use or occupancy of the
Premises and with any recorded covenants, conditions and restrictions,
including, without limitation, all applicable federal, state and local laws, regulations
or ordinances pertaining to air, soil and water quality, Hazardous Materials
(as defined in Section 29.3
hereof), waste disposal, air emissions and other environmental, health and
safety, zoning and land use matters, the Americans with Disabilities Act or
similar laws and with any directive or order of any public officer or officers,
pursuant to law, which impose any duty upon Landlord or Tenant with respect to
the use or occupancy of the Premises;

 

(b)                                 Tenant shall comply with all requirements of
any authority or agency having jurisdiction over the insurance rates with
respect to the use or occupancy of the Premises;

 

(c)                                  Landlord shall have the exclusive right to
use the roof, side and rear walls of the Premises for any purpose, including
but not limited to erecting signs or other structures on or over all or any
part of the same, erecting scaffolds and other aids to the construction and
installation of the same, and installing, maintaining, using, repairing, and
replacing pipes, ducts, conduits and wires leading through, to or from the
Premises and serving other parts of the Project in locations which do not
materially interfere with Tenant’s use of the Premises. Tenant shall have no
right whatsoever to the exterior or exterior walls, or the roof of the Premises
or any portion of the Project outside the Premises, except as otherwise
provided in this Lease;

 

(d)                                 Tenant agrees that it shall not use or permit
the Premises to be used for an adult bookstore, adult motion picture theater,
nude or semi-nude entertainment club, or similar adult entertainment
establishment.

 

7.                                      Rules and Regulations. Tenant and Tenant’s agents, employees, and
invitees shall faithfully observe and comply with all reasonable, uniform rules
and regulations promulgated by Landlord from time to time for the safety, care
or cleanliness of the Project and for the preservation of good order therein.
Landlord shall not be

 

4

 

responsible to Tenant for the nonperformance by any other tenant or
occupant of the Project of any of the rules and regulations, but shall try to
enforce performance of all rules and regulations by all tenants.

 

8.                                      Parking and Use of Common
Area and Facilities.

 

8.1                               Common Area.  All
parking areas, access roads and facilities furnished, made available or
maintained by Landlord on the Project for the general use in common of tenants
of the Project and their invitees in the Project or on the Land, including
employee parking areas, truck ways, driveways, loading docks and areas,
delivery areas, pickup stations, pedestrian sidewalks, courts and ramps,
landscaped areas, retaining walls, stairways, hallways, common restrooms,
lighting facilities, and other similar areas and improvements provided by
Landlord for the general use in common of tenants of the Project and their
customers (all within the Project are herein collectively called the “Common
Area”) shall at all times be subject to the exclusive control and management of
Landlord. Tenant acknowledges that it does not have an exclusive interest in
the Common Area. Landlord reserves the right to grant such easements and other
rights in the Common Area as Landlord may from time to time deem necessary for
the benefit of the Project and/or its tenants, including without limitation,
easements for mutual ingress and egress, truck turning and similar matters for
the benefit of adjacent properties. Landlord may, at its sole option, modify
the Common Areas or make such changes thereto as Landlord deems reasonably
necessary for the benefit of the Project and/or its tenants.

 

8.2                               Use of Common Area. 
Tenant and Tenant’s business invitees, employees and customers shall
have the nonexclusive right, in common with Landlord and all others to whom
Landlord has granted or may hereafter grant rights, to use the Common Area,
subject to such reasonable, uniform rules and regulations as Landlord may from
time to time impose and the rights of Landlord set forth above. Landlord may at
any time close temporarily all or any part of the Common Area to make repairs
or changes, to prevent the acquisition of public rights therein or for any
other reasonable purpose. Tenant shall not interfere with the other tenants’
right to use any part of the Common Area. Landlord may allocate parking spaces
among Tenant and other tenants in the Project if, in Landlord’s opinion, such
parking facilities are becoming crowded. Landlord shall not be responsible for
enforcing Tenant’s parking rights against any third parties. Nothing herein
shall obligate Landlord to maintain or provide any security services or systems
for the Project. Tenant agrees that Landlord shall not be liable to Tenant for,
and Tenant waives any claim against Landlord with respect to, any loss by theft
or any other damage suffered or incurred by Tenant in connection with any
unauthorized entry into the Premises or Project, or other criminal or willful
acts of third parties.

 

9.                                      Maintenance of Premises.

 

9.1                               Maintenance by Landlord.  Landlord shall
keep or cause to be kept the foundations, roof and exterior walls of the
Premises in good order, repair and condition except for damage thereto due to
the acts or omissions of Tenant, Tenant’s employees or invitees. Landlord shall
commence required repairs as soon as reasonably practicable after receiving written
notice from Tenant thereof, but in any event within ten (10) business days from
such notice. Except as provided in this Section, Landlord shall not be
obligated to make repairs, replacements or improvements of any kind upon the
Premises, or to any equipment, merchandise, stock in trade, facilities or
fixtures therein, all of which shall be Tenant’s responsibility. Landlord
reserves the right to enter into a standard maintenance contract with a third
party for the routine and regular maintenance of all heating, ventilation and
air-conditioning equipment located on the roof or exterior of the
Premises.  Landlord shall be responsible
for repairs as well as maintenance of said equipment, but Tenant agrees to
reimburse Landlord for all expenses incurred by Landlord in connection with
such standard maintenance contract and the maintenance and repair of the
heating, ventilation, and air-conditioning equipment serving the Premises.

 

9.2                               Maintenance by Tenant. 
Tenant shall at all times keep the Premises (including all entrances and
vestibules) and all partitions, gutters and downspouts, windows and window
frames and moldings, glass, doors, door openers, fixtures, equipment and
appurtenances thereof (including lighting, electrical, and plumbing equipment
and appurtenances and all interior heating, ventilation and air-conditioning
equipment) and all parts of the Premises not required in Section 9.1 to be maintained by
Landlord in good order, condition and repair and in a clean, orderly, sanitary
and safe condition, damage by unavoidable casualty excepted (including but not
limited to doing such things as necessary to cause the Premises to comply with
applicable laws, rules, regulations and orders of governmental and public
authorities and agencies). If replacement of equipment, fixtures and
appurtenances thereto are necessary, Tenant shall replace the same with
equipment, fixtures and appurtenances of the same quality, and shall repair all
damages done in or by such replacement.

 

5

 

9.3                               Fire Equipment. 
Tenant agrees to supply and maintain at its own expense any fire
extinguishers, or other fire prevention equipment, including, without
limitation, sprinkler or fire suppression systems, required by law, rules, orders,
ordinances, and regulations of any city, county, or state in which the Premises
are located and/or required by any insurance carrier, underwriters association,
bureau, or any other similar body having jurisdiction involving the Premises.
Additionally, Tenant agrees to comply, at its own expense, with all
recommendations of any such authority.

 

10.                               Alterations, Liens and Signs.

 

10.1                        Alterations. 
Tenant will not paint, decorate or change the architectural treatment of
any part of the exterior of the Premises or construct any changes to the
interior of the Premises, without Landlord’s prior written approval thereto,
and will promptly remove any paint, decoration, alteration, addition or changes
applied or installed without Landlord’s approval or take such other action with
respect thereto as Landlord directs. Tenant shall not make any structural
alterations, additions or changes to the Premises. Tenant may, at its own cost
and expense erect shelves, bins, racks and removable (i.e., not attached to the
realty) trade fixtures (collectively “Trade
Fixtures”) in the ordinary course of its business provided such
items do not alter the basic character of the Premises, do not damage the
Premises, may be removed without injury to the Premises and the construction,
erection and installation thereof complies with all legal requirements and
other provisions of this Lease. If Landlord grants consent to any requested
alterations, the alterations shall be performed in a good, workmanlike and lien
free manner in accordance with all applicable legal requirements and any
restrictions which may be imposed by Landlord as a condition to its consent.
All alterations, changes, additions and all leasehold improvements made by
Tenant or made by Landlord on Tenant’s behalf and all fixtures installed by
Tenant which are not Trade Fixtures are herein collectively referred to as “Tenant Additions”, and shall be the
property of Landlord. Such Tenant Additions shall not be removed by Tenant on,
before or following expiration or termination of the Lease without Landlord’s
consent except as may be required pursuant to Section 27.1.

 

10.2                        Liens. 
Tenant shall promptly pay all contractors and materialmen, and not
permit or suffer any lien to attach to the Premises or Project or any part
thereof, and indemnify and save harmless Landlord against the same. Landlord
shall have the right to require Tenant to furnish a bond or other indemnity
satisfactory to Landlord prior to the commencement of any work by Tenant on the
Premises. If any lien attaches or is claimed, Tenant, within ten (10) days
following the imposing of any such lien, shall cause the same to be released of
record by payment or posting of a bond as provided in the Texas Property Code.
Tenant has no express or implied authority to create or place any lien or
encumbrance of any kind upon, or in any manner to bind the interest of Landlord
in the Premises or Project or to charge the rentals payable hereunder for any
claim in favor or any person dealing with Tenant, including, without
limitation, those who may furnish materials or perform labor for any
construction or repairs.

 

10.3                        Signs. 
Tenant will not place or permit on any exterior door or window or any
exterior wall of the Premises any sign, awning, canopy, advertising matter,
decoration, lettering or other thing of any kind without the written consent of
Landlord except as provided in the Sign Criteria Addendum attached hereto.
Failure by Tenant to erect an approved company name/logo sign on the Building
within forty-five (45) days of occupancy shall constitute a default hereunder.

 

11.                               Real Estate Taxes. 
Landlord has the sole right to render the Project, land and any
improvements thereon to any appropriate taxing authorities. Tenant, as
additional rent, agrees to pay Tenant’s Share of all taxes (both general and
special), assessments, or governmental charges (hereinafter “Taxes”) lawfully
levied or assessed against the land, Project or any portion thereof, including
without limitation any gross receipts or similar tax. Tenant’s Share of the Taxes
shall be payable as additional rent in accordance with Section 5.2. Additionally, Tenant
shall pay to Landlord upon demand, Tenant’s Share of all reasonable costs
(including tax consultant and/or attorney’s fees) incurred by Landlord in
connection with any protest or contest of the valuation of taxes imposed on the
Project or land. Provided, however, Landlord shall have no obligation to take
any such action. Tenant shall have the right to inspect, at Landlord’s business
office during regular business hours and upon reasonable notice to Landlord,
the tax bills which Landlord receives from the applicable taxing authorities.

 

12.                               Personal Property Taxes. 
During the term of this Lease, Tenant shall pay prior to delinquency all
taxes assessed against and levied upon fixtures, furnishings, equipment and all
other personal property of Tenant contained in the Premises. When possible,
Tenant shall cause its personal property to be assessed and billed

 

6

 

separately from the real
property of Landlord. If any of Tenant’s personal property shall be assessed
with Landlord’s real property, Tenant shall pay Landlord the taxes attributable
to Tenant within ten (10) days after receipt of a written statement therefor
or, at Landlord’s option as provided in Section 11.

 

13.                               Utilities. 
Tenant agrees to convert all utilities to Tenant’s name upon move-in and
to pay before delinquency all charges for all utilities (including but not
limited to gas, water, heat, sewer, electricity, telephone, garbage removal,
water meter charges and all hookup or connection fees or charges) which may
accrue with respect to the Premises during the term of this Lease.
Additionally, Tenant shall pay to Landlord, as additional rent, upon demand,
its share of any utilities which are not separately metered based upon usage as
reasonably determined by Landlord. Landlord shall in no event be liable to
Tenant for any interruption in the service of any such utilities to the
Premises, howsoever such interruption may be caused and this Lease shall
continue in full force and effect despite any such interruptions. Tenant agrees
to limit use of water and sewer to normal restroom use. Tenant acknowledges
that it has inspected the utilities available to the Premises and that it has
determined that such utilities are sufficient for all anticipated uses of the
Premises. Tenant shall not install any equipment or make any use of the
Premises which overloads the utilities available to the Premises and if
Landlord reasonably deems Tenant’s use of equipment to be in violation of this
provision, Landlord may, in addition to such other remedies which Landlord has
hereunder, require Tenant, at Tenant’s expense, to upgrade such utility lines
and related equipment including without limitation transformers.

 

14.                               Insurance; Waiver;
Indemnification.

 

14.1                        Landlord’s Obligation. 
During the term of this Lease and any extension or renewal hereof,
Landlord shall procure and maintain such “all risk property and general
liability” insurance coverage on the Project as Landlord deems appropriate,
including, if Landlord so elects, loss of rental insurance in an amount of one
or more year’s annual rental.

 

14.2                        Tenant’s Obligations.

 

14.2.1.           All Risk Property and
General Liability.  Tenant, as additional rent, shall pay to
Landlord an amount equal to Tenant’s Share of all premiums paid by Landlord for
the insurance coverage described in Section 14.1.
Tenant’s Share of such premiums is payable as additional rent in accordance
with Section 5.2.

 

14.2.2.           Liability. 
Tenant shall procure and maintain a policy or policies of insurance
insuring Tenant, with Landlord named as additional insured, against all claims,
damages or actions arising out of or in connection with Tenant’s use or
occupancy of the Premises or by the condition of the Premises, the limits of
such policy or policies to be in an amount not less than $1,000,000 per
occurrence, and in an amount not less than $2,000,000 in the general aggregate
for bodily injury and property damage. Said policy or policies shall
additionally include “Fire Legal Liability” insurance coverage in the maximum
allowable amount. Tenant shall also maintain workman’s compensation insurance
in the required statutory amounts and provide Landlord with proof of all insurance.

 

14.2.3.           Personalty Coverage. 
Tenant also agrees to carry insurance against fire and such other risks
as are from time to time included in standard extended coverage insurance, for
the full insurable value, covering all of Tenant’s merchandise, trade fixtures,
furnishings, wall covering, floor covering, carpeting, drapes, equipment and
all items of personal property of Tenant located on or within the Premises.

 

14.2.4.           Construction Liability. 
Tenant, at its own cost and expense, shall obtain and maintain at all
times when demolition, excavation, or construction work is in progress being
done by Tenant on the Premises, construction liability insurance with limits of
not less than $500,000.00 and $2,000,000.00 in the general aggregate for bodily
injury and property damage, protecting Landlord and Tenant as well as such
other person or persons as Tenant may designate against any and all liability
for injury or damage to any person or property in any way arising out of such
demolition, excavation, or construction work.

 

14.2.5.           Form of Insurance. All policies required of Tenant hereunder
shall: (i) be issued by a reputable insurance company qualified to do business
in the State of Texas and with an A.M. Best rating reasonably acceptable to
Landlord; (ii) name Landlord as an additional insured and Tenant as a named
insured; (iii) provide that they cannot be canceled for any reason unless
Landlord is given thirty (30) days prior written notice by

 

7

 

the insurer; (iv) state that
such insurance is primary over any insurance carried by Landlord; (v) contain
an endorsement in favor of Landlord, waiving such insurance company’s right of
subrogation against Landlord; and (vi) contain a statement that the premium for
such policy(es) is current. A duly executed certificate of insurance shall be
delivered to Landlord on or within five (5) days of the Commencement Date. All
renewals shall be delivered to Landlord at least ten (10) days prior to the
expiration of the respective policy terms. Landlord shall have the right to
review said insurance amounts at least yearly during the term of this Lease and
require Tenant to increase said insurance policies to provide coverage in such
amounts as Landlord and/or Landlord’s lender, in their discretion, deems
necessary. Moreover, should Tenant’s use of the Premises (or any vacancy by
Tenant) result in an increased insurance rate, Landlord may, in its discretion
allocate such amount of the insurance premium to Tenant as Landlord deems
reasonable to pass the cost of such increased premium through to Tenant rather
than other tenants of the Project. Tenant agrees to procure and maintain said
increased insurance coverage. The insurance required of Landlord hereunder may
be maintained under a blanket or master policy which includes properties other
than the Project.

 

14.3                        Mutual Waiver of Subrogation
Rights.  Landlord and Tenant and all parties claiming
under them mutually release and discharge each other and their respective
officers, directors, partners, employees and agents from all claims and
liabilities arising from or caused by any casualty or hazard to the extent
covered by valid and collectible insurance on the Project; and waive any right
of subrogation which might otherwise exist in or accrue to any person on
account thereof; provided that, such release shall not operate in any case
where the effect is to invalidate such insurance coverage. THIS RELEASE SHALL APPLY EVEN IF THE LOSS OR DAMAGE
SHALL BE CAUSED BY THE FAULT OR NEGLIGENCE OF A PARTY HERETO OR FOR ANY PERSON
FOR WHICH SUCH PARTY IS RESPONSIBLE.

 

14.4                        Waiver.  LANDLORD, ITS AGENTS AND EMPLOYEES, SHALL NOT BE LIABLE FOR, AND
TENANT WAIVES ALL CLAIMS FOR DAMAGE (EXCEPT CLAIMS CAUSED BY OR RESULTING FROM
THE NEGLIGENCE OR WILLFUL MISCONDUCT OF LANDLORD, ITS AGENTS OR EMPLOYEES),
INCLUDING BUT NOT LIMITED TO CONSEQUENTIAL DAMAGES, TO PERSON, PROPERTY OR
OTHERWISE, SUSTAINED BY TENANT OR ANY PERSON CLAIMING THROUGH TENANT RESULTING
FROM ANY ACCIDENT OR OCCURRENCE IN OR UPON ANY PART OF THE PREMISES OR THE
PROJECT, INCLUDING BUT NOT LIMITED TO, CLAIMS FOR DAMAGE RESULTING FROM: (A)
ANY EQUIPMENT OR APPURTENANCES BECOMING OUT OF REPAIR; (B) INJURY DONE OR
CAUSED BY WIND, WATER, OR OTHER NATURAL ELEMENTS; (C) ANY DEFECT IN OR FAILURE
OF PLUMBING, HEATING OR AIR-CONDITIONING EQUIPMENT, ELECTRIC WIRING OR
INSTALLATION THEREOF, GAS, WATER, AND STEAM PIPES, STAIRS, PORCHES, RAILINGS OR
WALKS; (D) BROKEN GLASS; (E) THE BACKING UP OF ANY SEWER PIPE OR DOWNSPOUT; (F)
THE BURSTING, LEAKING OR RUNNING OF ANY TANK, TUB, WASHSTAND, WATER, SNOW OR
ICE UPON THE PREMISES OR THE PROJECT; (G) THE FALLING OF ANY FIXTURE, PLASTER
OR STUCCO; (H) DAMAGE TO OR LOSS BY THEFT OR OTHERWISE OF PROPERTY OF TENANT OR
OTHERS; (I) ACTS OR OMISSIONS OF OTHER PERSONS IN THE PREMISES, OTHER TENANTS
IN THE PROJECT, OCCUPANTS OF NEARBY PROPERTIES, OR ANY OTHER PERSONS; AND (J)
ANY ACT OR OMISSION OF OWNERS OF ADJACENT OR CONTIGUOUS PROPERTY. ALL PROPERTY
OF TENANT KEPT IN THE PREMISES SHALL BE SO KEPT AT TENANT’S RISK ONLY AND
TENANT SHALL INDEMNIFY, DEFEND AND SAVE LANDLORD HARMLESS FROM CLAIMS ARISING
OUT OF DAMAGE TO THE SAME, INCLUDING SUBROGATION CLAIMS BY TENANT’S INSURANCE
CARRIER, EXCEPT CLAIMS CAUSED BY OR RESULTING FROM THE NEGLIGENCE OR WILLFUL
MISCONDUCT OF LANDLORD, ITS AGENTS OR EMPLOYEES,

 

14.5                        Indemnification. 
Tenant shall indemnify, defend and save harmless Landlord from and
against any and all liability, liens, claims, demands, damages, expenses, fees,
costs, fines, penalties, suits, proceedings, actions and causes of action of
any and every kind and nature arising or growing out of or in any way connected
with the use, occupancy, management or control of the Premises by Tenant, its
agents, employees, contractors or invitees or the operations, conduct or
activities in the Premises or the Project by Tenant, its agents, employees,
contractors or invitees, including without limitation: (i) liability for damage
resulting from the personal injury or death of an employee of Tenant,
regardless of whether the Tenant has paid such employee under the Workman’s
Compensation law of any state or other similar federal or state program for the
protection of employees, (ii) liability arising from any entrance upon the
Land, the Project, or the Premises by any person through any means for the
purpose of selling or solicitation, including but not limited to, the marketing
of edible or potable products,

 

8

 

and (iii) damage to any real
or personal property of Tenant, Landlord or any third parties. Tenant
authorizes Landlord (although expressly recognizing that Landlord is under no
obligation to do so) to defend, settle or compromise any claims, demands,
suits, proceedings or the like which may represent an indemnifiable obligation
of Tenant hereunder should Tenant choose not to so act. Such action or inaction
by Landlord shall in no way affect Tenant’s indemnity obligations as provided
herein. Tenants indemnity obligations under this Section and elsewhere in
this Lease shall survive the expiration or earlier termination of this Lease.
Landlord shall indemnify, defend and save harmless Tenant from and against any
and all liability, liens, claims, demands, damages, expenses, fees, costs,
fines, penalties, suits, proceedings, actions and causes of action of any and
every kind and nature arising or growing out of or in any way directly
connected with Landlord’s actions or omissions related to the Project as a
result of the negligence or willful misconduct of Landlord, its agents or employees.

 

15.                               Right of Entry. 
Upon reasonable prior notice (24 hours) unless in the case of an
emergency, Landlord, its agents and employees, shall have the right to enter
the Premises from time to time at reasonable times to examine, to show them to
prospective purchasers and other persons, and to make such repairs,
alterations, improvements or additions as Landlord deems desirable. Rent shall
not abate during any such entry by Landlord, including without limitation,
during the period of any such repairs, alterations, improvements, or addition.
During the last six (6) months of the term of this Lease, Landlord may exhibit
the Premises to prospective tenants and maintain upon the Premises notices
deemed advisable by Landlord. In addition, during any apparent emergency,
Landlord, its agents and employees, may enter the Premises forcibly without
liability therefor and without in any manner affecting Tenant’s obligations
under this Lease. Nothing herein contained, however, shall be deemed to impose
upon Landlord any obligation, responsibility or liability whatsoever, for any
care, maintenance or repair except as otherwise herein expressly provided.

 

16.                               Subordination and Attornment. 
Tenant accepts this Lease subject and subordinate to any mortgage, deed
of trust, or other lien presently existing on the Project or the Land or
subsequently created on the Project, and to any renewals and extensions
thereof, provided that the rights of Tenant shall remain in full force and
effect during the term of this Lease so long as Tenant shall continue to
perform all of the covenants and conditions of this Lease, but Tenant agrees
that any such mortgagee shall have the right at any time to subordinate such
mortgage, deed of trust, or other lien to this Lease. Landlord is hereby
irrevocably vested with full power and authority to subordinate this Lease to
any mortgage, deed of trust, or other lien hereafter placed on the Project or
the Land, and Tenant agrees on demand, and without charge to Landlord or any
mortgagee, to execute such further instruments subordinating this Lease as
Landlord may reasonably request, provided such subordination shall be on the
express condition that this Lease shall be recognized by the mortgagee, and
that the rights of Tenant shall remain in full force and effect during the term
of this Lease so long as Tenant shall continue to perform all of the covenants
and conditions of this Lease. No such mortgagee shall be required to assume any
liabilities for defaults occurring prior to its ownership of the Project.
Tenant covenants and agrees that upon foreclosure of any deed of trust,
mortgage or other instrument of security and the sale of the Project or the
Land pursuant to any such document, to attorn to any purchaser at such a sale
and to recognize such purchaser as the Landlord under this Lease. The agreement
of Tenant to attorn to any purchaser pursuant to such a foreclosure sale or
trustee’s sale in the immediately preceding sentence shall survive any such
sale. Tenant’s rights under this Lease shall remain in full force and effect so
long as Tenant shall continue to perform all of the covenants and conditions of
this Lease and Tenant is not in default under this Lease and Landlord owns the
Project.

 

17.                               Estoppel Certificate. 
Tenant shall at any time but not more often than three (3) times per
year, upon the reasonable request of Landlord and without charge to Landlord or
any third party requesting same of Landlord, execute, acknowledge and deliver
to Landlord a statement in writing certifying that this Lease is unmodified and
in full force and effect (or if modified stating the nature of such
modification and certifying that the Lease as modified is in full force and
effect), the dates to which the rent and other charges are paid in advance, if
any, and acknowledging that there are not, to Tenant’s knowledge, any uncured
defaults on the part of Landlord hereunder, or specifying such defaults if any
are claimed. The parties hereto agree that any such statement may be relied
upon by any prospective purchaser or encumbrancer of all or any portion of the
Project or the Land. Tenant’s failure to deliver such statement within ten (10)
days after Landlord’s request for the same, shall be conclusive upon Tenant
that: (i) this Lease is in full force and effect; (ii) this Lease has not been
modified or amended other than expressly stated; (iii) there are no uncured
defaults in Landlord’s performance; and (iv) not more than one month’s rent or
other charge has been paid in advance.

 

18.                               Damage and Destruction.  If the
Premises are hereafter partially damaged or destroyed or rendered partially
untenantable (i.e., less than 30% of the Premises are damaged or untenantable)
for their

 

9

 

accustomed use by fire or
other casualty and such fire or other casualty is not caused directly or
indirectly by the fault or negligence of Tenant, its agents, employees,
contractors or invitees, Landlord shall, unless the Lease is terminated as
provided below, promptly repair the same to substantially the condition which
they were in immediately prior to the happening of such casualty (excluding
stock in trade, fixtures, furniture, furnishings, carpeting, floor covering,
wall covering, drapes and equipment), and from the date of such casualty until
the Premises are so repaired and restored, the monthly rent payments hereunder
shall abate in such proportion as the part of said Premises thus destroyed or
rendered untenantable bears to the total Premises. Provided, however, Landlord
shall not be obligated to expend for such repair or restoration an amount in
excess of the insurance proceeds received by Landlord as a result of such
damage. Landlord’s obligation to rebuild is contingent upon its receipt of
insurance proceeds sufficient to make such repairs. In the event any mortgagee
or lender requires such sums to be applied to any debt, Landlord will not be
deemed to have received the proceeds. Notwithstanding the above, if the
Premises or any material portion of the Project is wholly or substantially
damaged (i.e., more than 30% of the Premises are damaged or untenantable),
destroyed or rendered untenantable for their accustomed use by fire or other
casualty then Landlord shall have the right to terminate this Lease effective
as of the date of such casualty by giving to Tenant, within ninety (90) days
after the happening of such casualty, written notice of such termination. If
such notice is given, this Lease shall terminate and provided Tenant is not in
default hereunder, Landlord shall promptly repay to Tenant any rent theretofore
paid in advance which was not earned at the date of such casualty. If said
notice is not given and Landlord is required or elects to repair or restore the
Premises as herein provided, then Tenant shall promptly repair or replace its
stock in trade, fixtures, furnishings, furniture, carpeting, wall covering,
floor covering, drapes and equipment to the same condition as they were in
immediately prior to the casualty. If the Premises or any portion of the
Project are damaged by fire or other casualty caused directly or indirectly by
the fault or negligence of Tenant or its agents, employees, contractors, or
invitees, the rent under this Lease will not abate and Tenant shall be liable
to Landlord for the cost and expense of the repair and restoration of the
Premises or the Project caused thereby to the extent that such cost and expense
is equal to or less than the deductible amount covered by the insurance
proceeds described in Section 14.1.

 

19.                               Eminent Domain.

 

19.1                        Eminent Domain.  If
30% or more of the Premises or any portion of the Project shall be acquired,
condemned or damaged as a result of the exercise of any power of eminent
domain, condemnation or sale under threat thereof, or in lieu thereof, then
Landlord at its election may terminate this Lease by giving notice to the
Tenant of its election, within 180 days of the date the condemning authority
shall have the right to possession of the Premises or portion of the Project
condemned. Moreover, if any portion of the Project is taken and in Landlord’s
judgment such taking would materially interfere with or impair its ownership or
operation of the Project, Landlord may terminate this Lease. If the Lease shall
not be terminated as aforesaid, then it shall continue in full force and
effect, and Landlord shall within a reasonable time after possession is
physically taken by the condemning authority (subject to delays due to shortage
of labor, materials or equipment, labor difficulties, breakdown of equipment,
governmental restrictions, fires, other casualties or other causes beyond the
reasonable control of Landlord) restore the remaining portion of the Premises
to the extent reasonably possible, to render it reasonably suitable for the use
permitted by Section 6.1.
Provided, however, Landlord shall not be obligated to expend an amount greater
than the proceeds received from the condemning authority less all expenses
incurred in connection therewith (including attorney’s fees) for the
restoration. Base rent as provided in Section 5.1,
shall be reduced in the proportion that the area of the Premises so taken bears
to the total Premises, No taking of the Common Area shall entitle Tenant to an
abatement.

 

19.2                        Damages. 
Landlord reserves and Tenant assigns to Landlord, all rights to damages
on account of any taking or condemnation or sale under threat or in lieu
thereof or any act of any public or quasi-public authority for which damages
are payable. Tenant shall execute such instruments of assignment as Landlord
reasonably requires, join with Landlord at Landlord’s cost and expense in any
action for the recovery of damages if requested by Landlord, and turn over to
Landlord any damages recovered in any proceeding. If Tenant fails to execute
instruments required by Landlord or to undertake such other steps as requested,
Landlord may impose a fine on Tenant equal to the daily Base Rent amount, plus
compounded interest at the rate of 10% per day, for each day that Tenant fails
to execute such instruments. However, Landlord does not reserve any damages
payable for trade fixtures installed by Tenant at its own cost which are not
part of the realty.

 

20.                               Assignment and Subletting. 
Tenant shall not assign this Lease or any interest therein, whether
voluntarily, by operation of law, or otherwise, and shall not sublet the
Premises or any part thereof, including but not limited to all concession
vending, except by written permission and consent of Landlord being first had
and obtained.

 

10

 

Consent of Landlord to any
such assignment or subletting shall not be unreasonably withheld if: (i) at the
time of such assignment or subletting Tenant is not in default in the
performance and observance of any of the covenants and conditions of this
Lease; (ii) the assignee or subtenant of Tenant shall expressly assume in
writing all of Tenant’s obligations hereunder; (iii) Tenant shall provide proof
to Landlord that the assignee or subtenant has a financial condition which is
satisfactory to Landlord and Landlord’s lender; (iv) the Premises continue to
be used solely for the purpose set forth in Section 6.1, and (v) Landlord is furnished with and
approves the form of the proposed sublease. In connection with any such
assignment or sublease, Tenant or the assignee or subtenant of Tenant shall pay
to Landlord any legal and administrative costs incurred by Landlord in
approving such assignment or subletting, not to exceed $5,000.00. Any such
assignment or sublease, even with the approval of Landlord, shall not relieve
Tenant from liability for payment of all forms of rental and other charges
herein provided or from the obligations to keep and be bound by the terms,
conditions and covenants of this Lease. The acceptance of rent from any other
person shall not be deemed to be a waiver of any of the provisions of this
Lease, or a consent to the assignment or subletting of the Premises. Consent to
any assignment or subletting shall not be deemed a consent to any future
assignment or subletting. Any merger, consolidation or transfer of corporate
shares of Tenant, if Tenant is a corporation, so as to result in a change in
the present voting control of the Tenant by the person or persons owning a
majority of said corporate shares on the date of this Lease, shall constitute an
assignment and be subject to the conditions of this Section. If Tenant is a
general partnership having one or more corporations as partners or if Tenant is
a limited partnership having one or more corporations as general partners, the
provisions of the preceding sentence shall apply to each of such corporations
as if such corporation alone had been the Tenant hereunder. If Tenant is a
partnership, the withdrawal of a general partner shall be an assignment subject
to the provisions hereof. Moreover, in the event that the rental due and
payable by a sublessee or assignee, or a combination of the rental payable
under such sublease or assignment plus any bonus or other consideration
therefor or incident thereto exceeds the rental payable under this Lease, or if
with respect to an assignment, sublease, license or other transfer by Tenant
permitted by Landlord, the consideration payable to Tenant by the assignee,
subtenant, licensee or other transferee exceeds the rental payable under this
Lease, then Tenant shall be bound and obligated to pay Landlord, in addition to
all rental required hereunder, such excess rental and other excess
consideration within ten (10) days following receipt thereof by Tenant from
such sublessee, assignee, licensee or other transferee, as the case may be.
Finally, in the event of any assignment or subletting it is understood and
agreed that all rentals paid to Tenant by an assignee or sublessee shall be
received by Tenant in trust for Landlord, to be forwarded immediately to
Landlord without reduction of any kind, and upon election by Landlord such
rentals shall be paid directly to Landlord. Without limitation on Landlord’s
approval rights as provided above, Tenant shall provide a copy of any executed
sublease to Landlord within ten (10) days of the execution thereof. Landlord
may assign this Lease at will and shall provide Tenant with a copy of such
assignment.

 

Notwithstanding
the foregoing subsection, Tenant shall have the right to assign this Lease or
sublet all or any portion of the Premises without the consent of, but with
prior written notice to, Landlord, to any corporation or entity which controls,
is controlled by or is under common control with Tenant, or to any corporation
resulting from the merger or consolidation with Tenant, or to any person or
entity which acquires substantially all of the assets of Tenant so long as such
assignee or sublessee or survivor entity has similar or better financial
status, and provided that no such assignment or sublease shall act as a release
of Tenant from any of the provisions, covenants and conditions on the part of
Tenant to be kept or performed under this Lease.

 

21.                               Default by Tenant.

 

21.1                        Events of Default.  The
following shall be considered for all purposes to be events of default under and
a breach of this Lease: (a) any failure of Tenant to pay any rent or other
amount due hereunder for more than ten (10) days after written notice thereof;
(b) failure of Tenant to maintain insurance in the amounts and in a form called
for under this Lease; (c) any failure by Tenant to perform or observe any of
the other terms, provisions, conditions and covenants of this Lease for more
than thirty (30) days after written notice of such failure; (d) Tenant shall
become bankrupt or insolvent, or file or have filed against it a petition in
bankruptcy or for reorganization or arrangement or for the appointment of a
receiver or trustee of all or a portion of Tenant’s property, or Tenant makes
an assignment for the benefit of creditors; (e) if Tenant abandons or vacates
the Premises; (f) this Lease, Tenant’s interest herein or in the Premises, any
improvements thereon, or any property of Tenant is executed upon or attached;
or (g) the Premises come into the hands of any person other than expressly
permitted under this Lease.

 

21.2                        Landlord’s Remedies.  Upon
the occurrence of any event of default specified in this Lease, Landlord,
without grace period, demand or notice (the same being hereby waived by
Tenant), and in addition

 

11

 

to all other rights or
remedies Landlord may have for such default, shall have the right to pursue any
one or more of the following remedies:

 

(a)                                  Terminate this Lease in which event Tenant
shall immediately surrender the Premises to Landlord, and if Tenant fails to do
so, Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the
Premises and expel or remove Tenant and any other person who may be occupying said
Premises or any part thereof, by force if necessary, without notice or the need
to resort to legal process and without being deemed guilty of trespass or
becoming liable for any loss or damage occasioned thereby; and Landlord may
recover from Tenant the amount of all loss and damage which Landlord may suffer
by reason of such termination, including, without limitation, all costs of
retaking the Premises and the total rent and charges reserved in this Lease for
the remainder of the term of this Lease (i.e., the duration of this Lease had
it not been terminated) all of which shall be immediately due and payable by
Tenant to Landlord; and/or

 

(b)                                 Without terminating this Lease, enter upon
and take possession of the Premises, and expel or remove Tenant and any other
person who may be occupying said Premises, or any part thereof, by force if
necessary, without notice or the need to resort to legal process and without
being deemed guilty of trespass or becoming liable for any loss or damage
occasioned thereby. Landlord may make such alterations and repairs as it deems
advisable to relet the Premises, and relet the Premises or any part thereof for
such term or terms (which may extend beyond the term of this Lease) and at such
rentals and upon such other terms and conditions as Landlord in its sole
discretion deems advisable. Upon each such reletting all rentals received by
Landlord therefrom shall be applied: first, to any indebtedness other than rent
due hereunder from Tenant to Landlord; second, to pay any costs and expenses of
reletting, including brokers’ and attorneys’ fees and costs of alterations and
repairs; third, to rent due hereunder; and fourth, the residue, if any, shall
be held by Landlord and applied in payment of future rent as it becomes due hereunder.
No such reletting shall relieve Tenant or any guarantors from their obligations
hereunder. If rentals received from such reletting during any month are less
than that to be paid during that month by Tenant hereunder, Tenant shall
immediately pay any such deficiency to Landlord. In no event shall Tenant be
entitled to any excess rent obtained by reletting the Premises over and above
the rent reserved herein.

 

No
re-entry or taking possession of the Premises by Landlord shall be construed as
an election to terminate this Lease unless a written notice of such termination
is given by Landlord to Tenant. Notwithstanding any such reletting or re-entry
or taking possession, without termination, Landlord may at any time thereafter
terminate this Lease for any prior breach or default. Pursuit of any of the
foregoing remedies shall not preclude pursuit of any of the other remedies
herein provided or any other remedies provided by at law or in equity, nor
shall pursuit of any remedy herein provided constitute a forfeiture or waiver
of any rent due to Landlord hereunder or of any damages accruing to Landlord.
Notwithstanding anything herein to the contrary, Landlord shall have no
obligation to relet or attempt to relet the Premises or any portion thereof
following termination of this Lease, re-entry or repossession of the Premises.
Provided, however, in the event Landlord is ever held to have such a duty,
Tenant agrees that Landlord shall, in connection with such efforts, not be
required to do anything more than list the Premises for lease with a licensed
real estate broker of Landlord’s choosing (which may be an affiliate of
Landlord) for a period of three (3) months. If no party acceptable to Landlord
executes a lease with Landlord on terms reasonably acceptable to Landlord
within this three (3) month period, Tenant agrees that Landlord shall
conclusively have satisfied any such duty to release or mitigate. In no event
will Landlord have any duty to lease the Premises before Landlord leases other
vacant space which it has in the Project or other buildings owned by Landlord
nor shall Landlord have any duty to lease to and Landlord will not be
considered to be acting unreasonably in refusing to lease to any party if: (i)
the prospective lessee has a financial condition which is unacceptable to
Landlord or Landlord’s lenders; (ii) the prospective lessee requires any
alterations which are unacceptable to the Landlord or Landlord’s lenders; (iii)
the prospective lessee requires tenant improvements to be paid by Landlord; or
(iv) the prospective lessee requires terms different from this Lease or which
are otherwise unacceptable to Landlord or Landlord’s lender.

 

21.3                        Landlord’s Performance for
Account of Tenant.  If the Tenant shall continue in default in
the performance of any of the covenants or agreements herein contained after
the time limit for the curing thereof then Landlord may perform the same for
the account of Tenant. Any amount paid or expense or liability (together with
interest thereon at the Maximum Rate from the date upon which any such expense
shall have been incurred) incurred by Landlord in the performance of any such
matter for the account of Tenant shall be deemed to be additional rent and the
same (together with interest thereon at the Maximum Rate from the date upon
which any such expense shall have been incurred) may, at the option of
Landlord, be added to any rent then due or thereafter falling due hereunder or
shall be payable by Tenant to Landlord on demand.

 

12

 

21.5                        Waiver of Rights of
Redemption.  To the extent permitted by law, Tenant
waives any and all rights of redemption granted by or under any present or
future laws if Tenant is evicted or dispossessed for any cause, or if Landlord
obtains possession of the Premises due to Tenant’s default hereunder or
otherwise.

 

21.6                        No Waiver.  No
delay or omission in the exercise of any right or remedy of Landlord on any
default by Tenant shall impair such a right or remedy or be construed as a
waiver. The receipt and acceptance by Landlord of delinquent rent shall not
constitute a waiver of any other default; it shall constitute only a waiver of
timely payment for the particular rent payment involved. No act or conduct of
Landlord, including, without limitation, the acceptance of the keys to the
Premises, shall constitute an acceptance of the surrender of the Premises by
Tenant before the expiration of the term. Only a notice from Landlord to Tenant
shall constitute acceptance of the surrender of the Premises and accomplish a
termination of the Lease. Landlord’s consent to or approval of any act by
Tenant requiring Landlord’s consent or approval shall not be deemed to waive or
render unnecessary Landlord’s consent to or approval of any subsequent act by
Tenant. Any waiver by Landlord or any default must be in writing and shall not
be a waiver of any other default concerning the same or any other provision of
the Lease.

 

22.                               Landlord’s Lien.  To
secure the performance of Tenant’s obligations under this Lease, Tenant, as
Debtor, and referred to in this Section as “Debtor”, hereby grants to
Landlord, as “Secured Party”, a security interest in and an express contractual
lien upon all of Debtor’s equipment, furniture, furnishings, appliances, goods,
trade fixtures, inventory, chattels, and other personal property of Debtor
which is now on the Premises or which is placed on the Premises at some later
date, and all proceeds from such items. This property shall not be removed from
the Premises without the consent of Secured Party until all arrearages in rent
and all other sums of money being due to Secured Party under this Lease have
been paid and discharged, and all the covenants, agreements, and conditions of
this Lease have been fully complied with and performed by Debtor. Secured Party
is authorized and Debtor hereby irrevocably and throughout the term of this
Lease (and any extensions or renewals thereof) appoints Secured Party as its
attorney-in-fact to prepare and file financing statements signed only by
Secured Party as attorney-in-fact on behalf of Debtor covering the security
described above; moreover, Debtor agrees to sign the same upon request.
Notwithstanding the foregoing, Secured Party is hereby authorized to file a
duplicate original or Xerox copy of this Lease as a financing statement with
the Office of the Secretary of State and with the appropriate county clerk’s
office for the county where the Premises are located, as appropriate. Upon
default under this Lease by Debtor, any or all of Debtor’s obligations to
Secured Party secured hereby shall, at Secured Party’s option, be immediately
due and payable without notice or demand. In addition to all rights or remedies
of Secured Party under this Lease and the law, including the right to a
judicial or nonjudicial foreclosure, Secured Party shall have all the rights
and remedies of a secured party under the Uniform Commercial Code as enacted in
the State of Texas. This security agreement and the security interest hereby
created shall survive the termination of this Lease if such termination results
from Debtor’s default. The above-described security interest and lien are in
addition to and cumulative of the Landlord’s lien provided by the laws of the
State of Texas. In the event Landlord sells Tenant’s property at a judicial or
nonjudicial foreclosure sale, Tenant hereby expressly consents to and gives
Landlord the authority to bid on and purchase all or a portion of Tenant’s
property at such sale.

 

23.                               Default by Landlord. 
Landlord shall in no event be charged with default in any of its
obligations hereunder unless and until Landlord shall have failed to perform
such obligations within thirty (30) days (or such additional time as is
reasonably required to correct any such default provided Landlord has commenced
action to correct such default within said 30 day period and continues to
diligently prosecute such action to completion) after written notice to
Landlord by Tenant, specifically describing such failure. All obligations of
Landlord hereunder shall be construed as covenants, not conditions; and, except
as may be otherwise expressly provided in this Lease, Tenant may not terminate
this Lease for breach of Landlord’s obligations hereunder. All obligations of
Landlord under this Lease will be deemed binding upon Landlord only during the
period of its ownership of the Project and not thereafter. The term “Landlord”
in this Lease shall mean only the owner, for the time being of the Project, and
in the event of the transfer by such owner of its interest in the Project, such
owner shall thereupon be released and discharged from all obligations of
Landlord thereafter accruing, but such obligations shall be binding during the
Lease term upon each new owner for the duration of such owner’s ownership. Any
liability of Landlord under this Lease shall be limited solely to its interest
in the Project, and in no event shall any personal liability be asserted
against Landlord in connection with this Lease nor shall any recourse be had to
any other property or assets of Landlord. In the event of an immediate
necessary repair, Tenant may act for Landlord if Landlord is unable to achieve
immediate results, and Landlord shall reimburse Tenant for all reasonable
expense incurred by Tenant in such action based on Landlord’s payment experience
with such repair.

 

13

 

24.                               Application of Payments
Received From Tenant.  Landlord shall have the right at any time to
apply any payments made by Tenant to the satisfaction of any debt or obligation
of Tenant to Landlord according to Landlord’s sole discretion and regardless of
the instructions of Tenant as to application of any such sum, whether such
instructions be endorsed upon Tenant’s check or otherwise, unless otherwise
agreed upon by both parties in writing. The acceptance by Landlord of a check
or checks drawn by a party other than Tenant shall not affect Tenant’s
liability hereunder nor shall it be deemed an approval of any assignment or
sublease of this Lease by Tenant.

 

25.                               Notices.  All
notices required to be given hereunder shall be in writing and shall (i) be
served in person upon the party to be notified or upon its agent, or (ii) be
mailed by prepaid certified or registered mail, or (iii) be deposited with a
nationally recognized overnight courier, charges prepaid, designated for next
business day delivery, or (iv) be sent via facsimile transmission to the
appropriate number shown on the signature page of this Lease, and shall be
deemed given (i) upon hand delivery to a competent agent, employee or officer
of the party, or (ii) three (3) days after deposit with the US Postal Service,
or (iii) on the next business day after deposit with an overnight courier, or
(iv) upon verifiable confirmation of transmission of the facsimile to the
proper number. Either party shall have the right to change its address for
notice by notifying the other party of such change in accordance with this
Section.

 

26.                               Sale of Project or Land by
Landlord.  In the event of any sale of the Project or
Land by Landlord, or any part thereof, Landlord shall be and is hereby entirely
freed and relieved of all liability under any and all of its covenants and
obligations contained in or derived from this Lease arising out of any act,
occurrence or omission occurring after the consummation of such sale; and the
purchaser, at such sale or any subsequent sale of the Project or Land shall be
deemed, without any further agreement between the parties or their successors
in interest or between the parties and any such purchaser, to have assumed and
agreed to carry out any and all of the covenants and obligations of the
Landlord under this Lease. Furthermore, in the event of a sale or conveyance by
Landlord of the Project or Land, this Lease shall not be affected by any such
sale, and Tenant agrees to attorn to the purchaser thereof.

 

27.                               Surrender, Holding Over and
Successors.

 

27.1                        Surrender.  Upon
the expiration or earlier termination of this Lease, whether by forfeiture,
lapse of time, or otherwise, or upon the termination of Tenant’s right to
possession of the Premises, Tenant will at once surrender and deliver up the
Premises, to Landlord in good and broom-clean condition and repair, reasonable
wear and tear and loss by fire or other casualty excepted. All Tenant Additions
will, following the expiration or termination of this Lease, remain in the
Premises as Landlord’s property unless Landlord directs Tenant to remove all or
any portion of same whereupon Tenant agrees that it shall, at its expense,
remove such Tenant Additions (or portion thereof directed by Landlord).
Provided Tenant is not in default, it will remove its Trade Fixtures,
inventory, and other personal property upon the expiration of the Term. If
Tenant is in default, it shall remove its Trade Fixtures only if specifically
directed to do so in writing by Landlord. Tenant shall repair any damage to the
Premises caused by the removal of such Tenant Additions, Trade Fixtures, or
other items. In no event will any fire sprinklers, fire suppression equipment,
HVAC System components, floor tiles, carpeting, ceiling tiles, plumbing
fixtures, or similar building system items or any equipment or fixtures
attached to the realty be considered “Trade Fixtures” or be removed unless
directed by Landlord to do so. Tenant agrees that following an Event of
Default, Landlord may, at its option, allow any party claiming to be a lessor
of Tenant to remove equipment, Trade Fixtures, and similar items leased from
such lessor. Landlord shall have no liability to Tenant therefor. Landlord may
condition its consent upon such lessor agreeing to repair any damage to the
Premises caused by such removal and providing adequate financial assurances of
its ability to pay for any such damages. Provided, however, no such agreement
by any such lessor, or Landlord’s failure to obtain such an agreement, shall
relieve Tenant of its obligations hereunder including without limitation,
Tenant’s obligation to repair said damage even if the damage is caused by said
lessor or its contractors or agents. Tenant shall remove all Hazardous
Materials. Any Trade Fixtures or Tenant Additions not removed by Tenant as
required herein shall be deemed abandoned and may be stored, removed and
disposed of by Landlord at Tenant’s expense, and Tenant waives all claims
against Landlord for any damages resulting from Landlord’s retention or
disposal of same. Moreover, any period following the termination or expiration
of this Lease during which there is Hazardous Material, Tenant Alterations or
Trade Fixtures which are not removed as herein required shall be considered a
holdover by Tenant and, in addition to all other remedies available to Landlord
hereunder, shall obligate Tenant to the increased rental payments pursuant to Section 27.2. Tenant shall be
entitled to no payment or offset for the value of any such property (even if
sold by Landlord) and shall pay on demand all costs incurred by Landlord in
connection with such removal or disposal. No retention,

 

14

 

disposal or sale or such
items shall limit remedies otherwise available to Landlord hereunder for a
breach by Tenant. All obligations of Tenant hereunder not fully performed as of
the termination or expiration of the Lease shall survive such termination or
expiration.

 

27.2                        Holding Over.  If
Tenant holds over or occupies the Premises beyond the term of this Lease (it
being agreed there shall be no such holding over or occupancy without
Landlord’s written consent), Tenant shall pay Landlord for each day of such
holding over a sum equal to twice the monthly rent applicable hereunder at the
expiration of the term (including Operating Expenses), prorated for the number
of days of such holding over. In such event, Tenant shall occupy the Premises
as a Tenant at sufferance, and all of the terms and provisions of this Lease
shall be applicable, with the exception of the rent applicable during such
holding over period, which shall be increased as aforesaid. Tenant agrees that
Landlord may institute a forcible detainer or similar action against Tenant or
any other party in possession of the Premises without serving any demand for
possession, demand to vacate, notice of termination or similar demand or notice
upon Tenant or such party in possession.

 

27.3                        Successors.  All
rights and liabilities herein given or imposed upon the respective parties
hereto shall bind and inure to the several respective heirs, successors,
administrators, executors and assigns of the parties and if Tenant is more than
one person, they shall be bound jointly and severally by this Lease. No rights,
however, shall inure to the benefit of any assignee of Tenant unless the
assignment is approved by Landlord as required herein.

 

28.                               Brokers or Finders.  Other than the Broker named in Section 1,
Tenant represents and warrants to Landlord, that it has engaged no broker or
finder and that no claims for brokerage commissions or finders’ fees will arise
in connection with the execution of this Lease and agrees to indemnify, defend
and hold Landlord harmless from any liability or expense (including attorney’s
fees) arising from any such claim.

 

29.                               Environmental Issues.

 

29.1                        Tenants Compliance with
Environmental Laws.  Tenant shall not cause or permit any
Hazardous Material to be brought upon, kept or used in or about the Premises by
Tenant, its agents, employees, contractors or invitees without the prior
written consent of Landlord, which Landlord shall not unreasonably withhold
provided Tenant demonstrates to Landlord’s satisfaction that such Hazardous
Material is necessary or useful to Tenant’s business. All Hazardous Materials
will be used, kept and stored in a manner that complies with all laws
regulating any such Hazardous Material so brought upon or used or kept in or
about the Premises. Landlord represents that the Premises was free of Hazardous
Materials prior to Tenant’s move-in.

 

29.2                        Indemnification.  In
addition to, and without limitation on the general indemnity obligations of
Tenant under this Lease, Tenant specifically agrees that it shall indemnify,
defend and hold Landlord harmless from any and all claims, judgments, damages,
penalties, fines, costs, injuries, liabilities or losses (including, without
limitation, diminution in value of the Premises or the Project, damages for the
loss or restriction on use of rentable or usable space or of any amenity of the
Premises or the Project, and sums paid in settlement of claims, attorneys’
fees, consultant fees and expert fees arising from related claims or suits)
which arise during or after the Lease term, or prior to the Lease Term if
Tenant had access to and use of the Premises or the Project during that time,
as a result of any breach by Tenant of its obligations under this
Section or any contamination of the Premises or the Project resulting from
the presence of Hazardous Materials on or about the Premises or the Project
caused or permitted by Tenant. This indemnification of Landlord by Tenant
includes, without limitation, costs incurred in connection with any
investigation of site conditions or any clean-up, detoxification, remediation,
removal or restoration work required by any federal, state or local
governmental agency or political subdivision because of Hazardous Material
present in the soil or air or ground water on, over or under the Premises or
the Project. Without limiting the foregoing, if the presence of any Hazardous
Material on the Premises or the Project caused or permitted by Tenant results
in any contamination of the Premises or the Project, Tenant shall promptly take
all actions at its sole expense as are necessary to return the Premises or the
Project to the condition existing prior to the introduction of any such
Hazardous Material to the Premises or the Project, provided that Landlord’s
approval of such actions shall first be obtained. Tenant further agrees to
defend Landlord, its agents, employees, and assigns in any administrative or
judicial proceeding commenced by private individuals or governmental entities
seeking recovery of damages for personal or bodily injury or property damage,
or recovery of civil penalties or fines arising out of, connected with, or
relating to any breach by Tenant of its obligations under this Section or
any contamination of the Premises or the Project resulting from the presence of
Hazardous Materials on or about the Premises or the Project caused or permitted
by Tenant. The foregoing indemnity shall survive the expiration or earlier
termination of this Lease.

 

15

 

29.3                        Hazardous Material.  As
used herein, the term “Hazardous Material” means any pollutant, toxic
substance, hazardous waste, hazardous material, hazardous substance, oil
hydrocarbon, asbestos or similar item as defined in or pursuant to the Resource
Conservation and Recovery Act, as amended, the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended, the Federal Clean Water
Act, as amended, the Safe Drinking Water Act, as amended, the Federal Water
Pollution Control Act, as amended, the Texas Water Code, as amended, the Texas
Solid Waste Disposal Act, as amended, or any other federal, state or local
environmental or health and/or safety related law, regulation, ordinance, rule,
or bylaw, whether existing as of the date hereof, previously enforced or
subsequently enacted (collectively the “Environmental Laws”).

 

29.4                        Notice of Certain Events.  Tenant and
Landlord shall immediately advise each other in writing of (a) any governmental
or regulatory actions instituted or threatened under any Environmental Law
affecting either party or the Premises, (b) all claims made or threatened by
any third party against either Tenant or Landlord or the Premises relating to
damage, contribution, cost recovery, compensation, loss or injury resulting
from any Hazardous Materials, (c) the discovery of any occurrence or condition
on any real property adjoining or in the vicinity of the Premises that could
cause the Premises or the Project or Land to be classified in a manner which
may support a claim under any Environmental Law, and (d) the discovery of any
occurrence or condition on the Premises, the Project or Land or any real
property adjoining or in the vicinity of the Premises, the Project or Land
which could subject Tenant or Landlord, the Premises, the Project or the Land
to any restrictions in ownership, occupancy, transferability or use of the
Premises, the Project or the Land under any Environmental Law. Landlord may
elect to join and participate in any settlements, remedial actions, legal
proceedings or other actions initiated in connection with any claims under any
Environmental Law caused or alleged to have been caused by Tenant, it agents,
employees, contractors or invitees and to have its reasonable attorney’s fees
paid by Tenant. Landlord represents that it is the sole owner of the Premises
and the Project. At its sole cost and expense, Tenant agrees when applicable or
upon request of Landlord to promptly and completely cure and remedy every
violation of an Environmental Law caused by Tenant, its agents, employees,
contractors or invitees.

 

29.5                        Environmental Review.  In
the event reasonable evidence exists of the occurrence or existence of the
violation of any Environmental Law or the presence of any Hazardous Material on
the Premises, the Project or the Land, caused by Tenant, its agents, employees,
contractors, or invitees, Landlord (by its officers, employees and agents) at
any time and from time to time may contract for the services of persons (the
“Site Reviewers”) to perform environmental site assessments (“Site
Assessments”) on the Premises, the Project, Land or neighboring properties for
the purpose of determining whether there exists on the Premises, the Project,
Land or neighboring properties any environmental condition which could
reasonably be expected to result in any liability, cost or expense to Landlord.
The Site Reviewers are hereby authorized to enter upon the Premises for
purposes of conducting Site Assessments. The Site Reviewers are further
authorized to perform both above and below the ground testing for environmental
damage or the presence of Hazardous Materials and such other tests on the
Premises, the Project, Land or neighboring properties as may be necessary to
conduct the Site Assessments in the reasonable opinion of the Site Reviewers.
Tenant agrees to supply to the Site Reviewers such historical and operational
information regarding the Premises as may be reasonably requested by the Site
Reviewers to facilitate the Site Assessments and will make available for
meetings with the Site Reviewers appropriate personnel having knowledge of such
matters. The results of Site Assessments shall be furnished to Tenant upon
request. The cost of performing such Site Assessments shall be paid by Tenant
if such reports establish Tenant as the liable party.

 

30.                               Miscellaneous.

 

30.1                        Partial Invalidity.  If
any term, covenant, condition or provision of this Lease is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the provisions hereof shall remain in full force and effect and shall in no way
be affected, impaired or invalidated thereby.

 

30.2                        Captions.  The
various headings and numbers herein and the grouping of the provisions of this
Lease into Sections are for the purpose of convenience only and shall not be
considered a part hereof unless expressly stated to the contrary.

 

30.3                        Gender; Number. 
Words of any gender used in this Lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, and vice versa, unless the context otherwise requires.

 

16

 

30.4                        Corporation as Tenant.  If a
corporation executes this Lease as Tenant, it shall promptly furnish Landlord
with copies of certified corporate resolutions attesting to the authority of
the officers executing this Lease on behalf of such corporation.

 

30.5                        Applicable Law.  This
Lease shall be governed by the laws of the State of Texas.

 

30.6                        Time.  Time
is of the essence of this Lease.

 

30.7                        Joint and Several Liability.  If
Tenant is a partnership or other business organization the members of which are
subject to personal liability, the liability of each such member shall be
deemed to be joint and several.

 

30.8                        Accord and Satisfaction. 
Landlord is entitled to accept, receive and cash or deposit any payment
made by Tenant for any reason or purpose or in any amount whatsoever, and apply
the same at Landlord’s option to any obligation of Tenant and the same shall
not constitute payment of any amount owed except that to which Landlord has
applied the same. No endorsement or statement on any check or letter of Tenant
shall be deemed an accord and satisfaction or otherwise recognized for any
purpose whatsoever. The acceptance of any such check or payment shall be
without prejudice to Landlord’s right to recover any and all amounts owed by
Tenant hereunder and the Landlord’s right to pursue any other available remedy.

 

30.9                        Entire Agreement. 
There are no representations, covenants, warranties, promises,
agreements, conditions or undertaking, oral or written, between Landlord and
Tenant other than herein set forth. Except as otherwise provided herein, no
subsequent alteration, amendment, change or addition to this Lease shall be
binding upon Landlord or Tenant unless in writing and signed by them. The normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of the
Lease or any exhibits or addendums hereto. The person(s) executing this Lease
represent that they are duly authorized to execute it in the capacity
indicated.

 

30.10                 No Partnership. 
Landlord does not, in any way or for any purpose, become a partner,
employer, principal, master, agent or joint venturer of or with Tenant.

 

30.11                 Force Majeure.  If
either party hereto shall be delayed or hindered in or prevented from the
performance of any act required hereunder by reason of acts of God, unavoidable
casualties, the elements, inclement weather preventing work, strikes, lockouts,
labor troubles, inability to procure material, failure of power, restrictive
governmental laws or regulations, riots, insurrection, war or other reason of a
like nature, not the fault of the party delayed in performing work or doing
acts required under this Lease, the period for the performance of any such act
shall be extended for a period equivalent to the period of such delay. Tenant
shall not be excused from any obligations for payment of rent, percentage rent,
additional rent or any other payments required by the terms of this Lease when
same are due, and all such amounts shall be paid when due.

 

30.12                 Financial Statements. 
Tenant shall, within ten (10) days of request of Landlord or Landlord’s
lender, furnish Tenant’s most recent audited financial statements in reasonable
detail and certified as complete and correct by an authorized officer or a
principal of Tenant.

 

30.13                 Determining Charges. 
Landlord and Tenant are knowledgeable and experienced in commercial
transactions and agree that the provisions of this Lease for determining
charges, amounts and additional rental payable by Tenant (including without
limitation, payments under Sections 1, 3 and 5 hereof regarding operating
expenses, taxes, and utilities, etc.) are commercially reasonable and valid,
and as to each such charge or amount, constitute a “method by which the charge
is to be computed” for purposes of Section 93.004 of the Texas Property
Code, as enacted by House Bill 2186, 77th Legislature.

 

30.14                 Attorney’s Fees and Waiver
of Jury Trial.  In the event the Landlord finds it necessary
to retain an attorney in connection with the default by Tenant in any of the
agreements or covenants contained in this Lease, Tenant shall pay reasonable
attorney’s fees to said attorney. In the event of any litigation regarding this
Lease, the losing party shall pay to the prevailing party reasonable attorney’s
fees. Without limitation on the foregoing, Tenant agrees that should Landlord
ever file a forcible detainer action or a forcible entry and detainer action,
Landlord shall be entitled to its reasonable attorney’s fees and costs in such
action, and Landlord shall not be required to give Tenant written notice to
vacate or any other notice in order to recover such attorney’s fees and costs

 

17

 

as provided in
Section 24.006 of the Texas Property Code, as amended, or similar
statutes. Landlord and Tenant acknowledge the
delay, expense and uncertainty associated with a jury trial involving a complex
commercial lease of this nature, and in recognition of these inherent problems
hereby waive their rights to a jury trial and agree that any litigation
regarding this Lease will be tried without a jury.

 

30.15                 Exhibits.  The
following Exhibits are attached to this Lease and are incorporated herein by
reference:

 

Exhibit “A” = Premises/Site Plan

Exhibit “B” = Legal Description of Project

Exhibit “C” = Sign Criteria

 

30.16                 Additional Provisions.

 

a)                                   Project Condition. 
Tenant’s acceptance of occupancy from Landlord shall constitute
acknowledgment by Tenant that Tenant has inspected the Premises and the Project
of which the Premises are a part and that same are suitable for Tenant’s
intended use thereof as stated in this Lease. Tenant recognizes and agrees that
Landlord is making no warranties, expressed or implied, as to the suitability
of the Premises or the Project for any particular use. Tenant accepts the space
“AS IS” with all faults. Landlord represents that the Premises and the Project
comply with all applicable laws and regulations of pertinent governmental
authorities as of completion of construction and as of the date of Tenant
move-in.

 

b)                                   Flex Provision.  If
after the expiration of thirty-six (36) months of the Initial Term of the Lease
Tenant desires to terminate this Lease, Landlord will allow Tenant to terminate
this Lease with six (6) months’ prior written notice from Tenant to Landlord
provided such notice is received by Landlord during the thirty (30) day period
immediately preceding the six (6) months’ notice period.

 

30.17                 Addenda.  The
following addendums are attached hereto and incorporated herein for all
purposes (check as applicable):

 

ý Construction Addendum

o Guaranty

ý Existing Rules and Regulations

 

IN WITNESS WHEREOF, Landlord and Tenant have signed this Lease as of the day and year
first above written.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  270 SHARYLAND, L.P.

  
	
   

  	
  By:  F-Star Management, L.L.C., General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:
  

  	
  /s/
  Jerry C. Ayoub

  	
   

  
	
   

  	
   

  	
   

  	
  Jerry
  C. Ayoub, President

  	
   

  
	
   

  	
  Address:
  12190 Rojas Drive, El Paso, Texas 79936

  
	
   

  	
  Phone:
  915-860-4500 Fax: 915-860-4504

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  THE WORNICK COMPANY RIGHT AWAY DIVISION

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Keith Frase

  	
   

  
	
   

  	
  Name
  & Title:

  	
  Keith
  Frase, President

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:
  200 N. 1st Street, McAllen, Texas 78501

  
	
   

  	
  Phone
  & Fax: 956-687-9401; 956-631-0857

  
							

 

18

 

ASSIGNMENT AND ASSUMPTION OF LEASE

 

ASSIGNMENT AND ASSUMPTION OF LEASE (this “Agreement”), entered into as
of June 30, 2004, by and among The Wornick Company Right Away Division,
L.P., a Texas limited partnership (“Assignor”); and The Wornick Company Right
Away Division, L.P., a Delaware limited partnership (“Assignee”). Assignor and
Assignee are referred to collectively herein as the “Parties.”

 

W  I  T  N
E  S  S  E  T  H:

 

WHEREAS, Assignor, as “Tenant,” and 270 Sharyland, L.P., a Texas
limited partnership, as “Landlord,” are parties to the Standard Industrial
Lease dated March 4, 2003 (the “Lease”), presently covering certain
premises (the “Premises”) located at 5700 South International Parkway, Suites B
& C, McAllen, Texas, a copy of which Lease is attached hereto as Exhibit A;
and

 

WHEREAS, Assignor, as “Seller,” and Assignee, as “Buyer,” are parties
to an Assets Purchase and Sale Contract dated December 3, 2003 (the
“Purchase Agreement”), pursuant to which, subject to the terms and conditions
set forth therein, Assignee will purchase substantially all of the assets (and
assume certain of the liabilities) of Assignor, including all of Seller’s
right, title and interest in, under and to the Lease; and

 

WHEREAS, simultaneously with the closing of the transactions
contemplated by the Purchase Agreement, the Parties mutually desire (a) that
Assignor assign all of its right, title and interest in, under and to the Lease
to Assignee, (b) that Assignee accept such assignment from Assignor and assume
all of Assignor’s obligations as Tenant under the Lease, and (c) that Landlord
consent to the assignment contemplated hereby, all on the terms and conditions
hereinafter set forth.

 

NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other valuable consideration, the receipt and adequacy of which are
expressly acknowledged, the Parties agree as follows:

 

1.                                       Effective
Date. For all purposes under this Agreement, the term “Effective Date”
shall mean that date, if any, on which the closing of the transactions
contemplated by the Purchase Agreement is consummated.

 

2.                                       Assignment
and Assumption.

 

(a)                                  Effective
as of the Effective Date, Assignor hereby assigns, transfers and sets over unto
Assignee all of Assignor’s right, title and interest in, under and to (i) the
Lease and (ii) the aggregate security deposit heretofore made by Assignor
pursuant to the Lease. Assignor will deliver possession of the Premises to
Assignee on the Effective Date.

 

(b)                                 Assignee
hereby accepts the foregoing assignment and hereby agrees to perform all of the
terms and conditions of the Lease to be performed on the part of Assignor and
assumes all of the liabilities and obligations of Assignor under the Lease, as
amended hereby, arising or accruing on or after the Effective Date, including,
without limitation, liability for the

 

 

payment of rent and for the due performance of all the terms, covenants
and conditions of the tenant pursuant to the Lease as amended hereby.

 

3.                                       Consent
to Assignment. Effective as of the Effective Date, Landlord has consented
to the assignment effected hereby.

 

4.                                       Representation
of Assignor. The Assignor hereby represents to the Assignee and agrees as
follows:

 

(a)                                  The
Lease attached hereto as Exhibit A is a true, correct and complete copy of the
Lease, the Lease has not been amended or modified except as set forth above and
the same is the only agreement between the Landlord and the Assignor with
respect to the subject matter thereof.

 

(b)                                 The
Lease is in full force and effect with no defaults (or events which, with the
passage of time, would become defaults) thereunder on the part of either party
in the performance of its obligations under such Lease.

 

(c)                                  The
minimum or base rent and all other rentals and other payments due, owing and
accruing under the Lease have been paid through the due date thereof
immediately preceding the Effective Date.

 

(d)                                 The
current amount of tenant’s expense and tax contribution is $82,249.98 per
month.

 

(e)                                  Landlord
is currently holding a security deposit with respect to the Lease in the amount
of $59,912.65.

 

5.                                       Miscellaneous.

 

(a)                                  Headings.
The section headings used herein are inserted for convenience only and
shall not affect in any way the meaning or interpretation of this Agreement.

 

(b)                                 Governing
law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas.

 

(c)                                  Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which together will constitute one and the
same instrument.

 

2

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

 

 

	
  ASSIGNOR

  	
  ASSIGNEE

  	
   

  
	
   

  	
   

  	
   

  
	
  The Wornick Company Right Away

  Division, L.P., a Texas limited

  partnership

  	
  The Wornick Company Right Away Division, L.P., a Delaware limited
  partnership

  	
   

  
	
   

  	
   

  	
   

  
	
  By: Right Away Management Corporation,

  	
  By: Right Away Management Corporation,

  	 

	
  a Texas corporation,

  	
  a Delaware corporation,

  	
   

  	 

	
  its general partner

  	
  its general partner

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  By:

  	
    /s/ Keith E. Frase

  	
   

  	
  By:

  	
  /s/ Robert B. McKeon 

  	
   

  	 

	
   

  	
   

  	
  Keith E. Frase, President

  	
   

  	
   

  	
   

  	
  Robert B. McKeon, President

  	
   

  	 

											

 

3

 

	
  STATE OF NEW YORK

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY OF NEW YORK

  	
   

  	
  §

  

 

This instrument was acknowledged before me on June 30, 2004, by
Keith E. Frase, President of Right Away Management Corporation, a Texas
corporation, the general partner of The Wornick Company Right Away Division,
L.P., a Texas limited partnership.

 

	
     /s/ Janna Gabriel

  	
   

  
	
  Notary Public

  
	
  Printed Name: 

  	
  Janna Gabriel

  	
   

  
	
  My Commission Expires:

  
	
  9/24/05

  	
   

  
					

 

 

	
  STATE OF NEW YORK

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY OF NEW YORK

  	
   

  	
  §

  

 

This instrument was acknowledged before me on June 30, 2004 by
Robert B. McKeon, President of Right Away Management Corporation, a Delaware
corporation, the general partner of The Wornick Company Right Away Division,
L.P., a Delaware limited partnership.

 

	
     /s/ Elaine Gerace

  	
   

  
	
  Notary Public

  
	
  Printed Name:

  	
    Elaine Gerace

  	
   

  
	
  My Commission Expires:

  
	
  5/18/06

  	
   

  
				

 

4

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