Document:

Exhibit 10.23

 

 

COMMERCIAL GROUND LEASE

 

 

July 20,1999

 

 

LANDLORD:

 

THE FIRST AMERICAN FINANCIAL CORPORATION, 

a California corporation

 

 

TENANT:

 

MALIBU CENTERS, INC.,

a Delaware corporation

 

 

PREMISES LOCATION:

 

 

Mountasia of Willowbrook

17190 Tomball Parkway

Houston, Texas 77064

 

 

COMMERCIAL GROUND LEASE

 

This Commercial Ground
Lease (the “Lease”), is dated for reference purposes only as of July 20,
1999, is made by and between THE FIRST AMERICAN
FINANCIAL CORPORATION, a California corporation (“Landlord”), and MALIBU CENTERS, INC., a Delaware corporation (“Tenant”), with
reference to the recitals set forth below. All obligations hereunder of Tenant
are guaranteed by MALIBU ENTERTAINMENT
WORLDWIDE, INC., a Georgia corporation (“Guarantor”).

 

RECITALS

 

A.            Landlord
is the owner of that certain real property (the “Premises”), which legal
description is attached hereto and incorporated herein as Exhibit “A,”
commonly known as: Mountasia of Willowbrook, 17190 Tomball Parkway, Houston,
Texas 77064

 

B.            Landlord
desires to lease the Premises to Tenant, and Tenant desires to lease the
Premises from Landlord pursuant to the provisions of this Lease.

 

C.            This
Lease shall not be effective unless and until Tenant shall deliver a guaranty
executed by Guarantor in the form attached hereto as Exhibit “B”.

 

1.

 

DEFINITIONS

 

The following terms, when
used in this Lease, shall have the meaning set forth in this Section 1.

 

1.1           Lease
Year

 

The term “Lease Year”
shall mean the first twelve (12) full calendar months after the Commencement
Date (as defined in Section 3) and each subsequent twelve (12) month
period thereafter during the term and any Extensions.

 

1.2           Hazardous
Material

 

The term “Hazardous
Material” means any substance, material, or waste which is toxic, ignitable,
reactive, or corrosive and which is or becomes regulated by the local or state
governmental authority or the United States Government. The term “Hazardous
Material” includes, without limitation, any material or substance which is (i) defined
as a “hazardous waste,” “extremely hazardous waste,” “restricted hazardous
waste,” “hazardous substance,” or “hazardous material,” by any law, statute,
regulation, order, or rule now or hereafter promulgated by any
governmental entity, whether local, state, or federal, (ii) oil and
petroleum products and their by-products, (iii) asbestos, or
asbestos-containing materials, (iv) designated as a “hazardous substance”
pursuant to the Federal Water Pollution Control Act, (v) defined as a “hazardous
waste” pursuant to the Federal Resource Conservation and Recovery Act, or (vi) defined
as a “hazardous substance” pursuant to the Comprehensive Environmental
Response, Compensation

 

 

and Liability Act
or any other law, statute, regulation, order, or rule now or hereafter
promulgated by any governmental entity, whether local, state, or federal.

 

1.3           Environmental
Law

 

The term “Environmental
Law” shall mean any law, statute, regulation, order, or rule now or
hereafter promulgated by any governmental entity, whether local, state, or
federal, relating to air pollution, water pollution, noise control, and/or
transporting, storing, handling, discharge of or disposal of Hazardous
Material, including, without limitation, the following: the Clean Air Act; the
Resource Conservation and Recovery Act, as amended by the Hazardous Waste and
Solid Waste Amendments of 1984; the Comprehensive Environmental Response
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act of 1986; the Toxic Substances Control Act; the Federal
Insecticide, Fungicide and- Rodenticide Act, as amended; the Safe Drinking
Water Act; OSHA; the Hazardous Liquid Pipeline Safety Act; the Hazardous
Materials Transportation Act; and the National Environmental Policy Act, as the
same may be amended from time to time.

 

2.

 

PREMISES

 

Landlord leases to Tenant
and Tenant leases from Landlord the Premises on the terms and conditions set
forth in this lease.

 

2.1           Ownership
of Improvements

 

During the term of this
Lease, the buildings and other improvements which are permanently affixed to
the Premises (the “Improvements”; it being provided that the Premises shall
include the Improvements unless the context clearly indicates otherwise) shall
be and remain the property of Tenant; upon the expiration or earlier
termination of this Lease, the Improvements shall automatically become the
property of Landlord without any compensation therefor and Tenant shall execute
and deliver all such deeds and instruments of conveyance as may be
required to confirm such title in Landlord. All obligations of Tenant hereunder
with respect to the Premises shall also be obligations with respect to the
Improvements and Landlord shall have no obligations or otherwise (except as
expressly set forth herein) with respect to the Improvements (including,
without limitation, as to the payment of any Taxes, costs or expenses relating
to the same and Tenant shall be solely responsible therefore).

 

2.2           Title
and Condition

 

The Premises are demised
and let subject to (a) the existing state of the title thereof as of the
commencement of the term of this Lease, (b) any state of facts which an
accurate survey or physical inspection thereof might show, and (c) all
zoning regulations, restrictions, rules and ordinances, building
restrictions and other laws and regulations now in effect or hereafter adopted
by a governmental authority having jurisdiction. Tenant developed the Premises
and sold the Premises to Landlord; Tenant acknowledges that Tenant has
inspected the Premises and Tenant accepts the Premises in its existing
condition, “AS IS” and subject to all defects and conditions, whether patent or
latent, and subject further to all legal requirements such as taxes,

 

2

 

assessments,
zoning, use permit requirements and building codes, based solely on Tenant’s
own inspection, analysis and evaluation and not in reliance on any
representations, warranties or information provided by or on behalf of
Landlord. Landlord makes no representation or warranty with respect to the
condition of the Premises or its fitness or availability for any particular
use, or any related matter.

 

3.

 

TERM OF LEASE

 

The effective date (the “Commencement
Date”) of this Lease shall be the date of the recording of the deed transferring
ownership of the Premises from Tenant to Landlord. Concurrently with recording
the deed, the Memorandum of Lease, a copy of which is attached hereto and
incorporated herein as Exhibit “C” shall be recorded. The expiration date
of the term shall be last day of the month twenty-four (24) years thereafter (“Term”);
the foregoing period of approximately twenty-four years is referred to herein
as the “Initial Term”. The Term of Lease may be extended for two (2) additional
periods of five (5) years each (“Extension(s)”), commencing at midnight on
the date on which the Initial Term or any preceding Extension expires. Each
Extension shall be automatic and the parties shall be bound by this Lease for
such Extension unless Tenant gives Landlord notice, at least fifteen (15)
months prior to the expiration of the Initial Term or preceding Extension, that
Tenant does not intend any further Extension to occur, in which case the
Initial Term or the Extension shall expire at the end of the Initial Term or
the current Extension. References to the Term of the Lease shall include
extensions, if any. Except as otherwise expressly stated, the terms and
conditions of this Lease shall remain in effect during any Extension, renewal,
or holdover of the initial Term.

 

4.

 

MONTHLY BASE RENT

 

4.1           Net-Net-Net
Lease: Non-Terminability

 

(a)           This
is a completely ABSOLUTE NET LEASE. All costs and expenses arising out of the
use and occupancy of the Premises and the Improvements, including, but not
limited to, ad valorem taxes, maintenance, and insurance, as set forth below,
are payable by Tenant. It is the intention of Landlord and Tenant that the
Monthly Base Rent (as defined below) and other sums and charges provided herein
shall be absolutely net to Landlord. Tenant shall pay all costs, charges,
obligations, assessments, and expenses of every kind and nature against or
relating to the operation and/or use of the Premises and the Improvements,
which may arise, accrue or become due during the Term hereof, or which may pertain
to this transaction, whether or not now customary or within the contemplation
of the parties hereto, and which, except for the execution and delivery of this
Lease, would have been payable by Landlord.

 

(b)           Except
as otherwise expressly provided herein, this Lease shall not terminate, nor
shall Tenant have any right to terminate this Lease nor shall Tenant be
entitled to any abatement or reduction of rent hereunder, nor shall the
obligations of Tenant under this Lease be affected, by reason of (i) any
damage to or the destruction of all or any part of the Premises from
whatever

 

3

 

cause, (ii) the taking of the Premises or any portion thereof by
condemnation, requisition or otherwise for any reason (iii) the prohibition,
limitation or restriction of Tenant’s use of all or any part of the
Promises, or any interference with such use, (iv) Tenant’s acquisition or
ownership of all or any part of the Premises otherwise than pursuant to an
express provision of this Lease, or (v) any other cause whether similar or
dissimilar to the foregoing, any present or future law to the contrary
notwithstanding. It is the intention of the parties hereto that the obligations
of Tenant hereunder shall be separate and independent covenants and agreements,
that the Monthly Base Rent, the additional rent and all other sums payable by
Tenant hereunder shall continue to be payable in all events and that the
obligations of Tenant hereunder shall continue unaffected, unless the requirement to pay or perform the
same shall have been terminated pursuant to an express provision of this Lease.

 

(c)           So long as Landlord is not in default beyond
expiration of all applicable cure periods, Tenant agrees that it will remain
obligated under this Lease in accordance with its terms, and that it will not
take any action to terminate, rescind or avoid this Lease, notwithstanding (i) the
bankruptcy, insolvency, reorganization, composition, readjustment,
liquidations, dissolution, winding-up or other proceeding affecting Landlord or
any assignee of Landlord in any such proceeding and (ii) any action with
respect to this Lease which may be taken by any trustee or receiver of
Landlord or of any assignee of Landlord in any such proceeding or by any court
in any such proceeding.

 

Except
as otherwise expressly provided herein, and except to the extent such waiver is
invalid under applicable law, Tenant waives all rights which may now or
hereafter be conferred by law (i) to quit, terminate or surrender this
Lease or the Premises or any part thereof, of (ii) to any abatement,
suspension, deferment or reduction of the Monthly Base Rent, additional rent or
any other sums payable under this Lease.

 

4.2           Monthly Base Rent

 

Tenant
shall pay to Landlord as monthly rent the sum of Twenty One Thousand Five
Hundred Sixty-Three and No/100 Dollars U.S. ($21,563.00) (the “Monthly Base
Rent”) per month. Monthly Base Rent shall be payable by Tenant to Landlord in
advance in equal monthly installments on the first day of each calendar month, without
prior notice, invoice, demand, deduction, or offset whatsoever, except as
expressly set forth herein. Landlord shall have the right to accept all rent
and other payments, whether full or partial, and to negotiate checks and
payments thereof without any waiver of rights, irrespective of any conditions
to the contrary sought to be imposed by Tenant. All rent shall be paid to
Landlord at the address to which notices to Landlord are given. The Monthly
Base Rent for any partial month shall be prorated based upon a thirty (30) day
month. In the event that Tenant receives a written notice from Landlord’s
Lender (as defined in Section 13.7) instructing Tenant to pay Monthly Base
Rent and all other sums due or payable under this Lease directly to Landlord’s
Lender, Tenant shall make such payments to Landlord’s Lender and Tenant is
hereby released from liability to Landlord on account of any such payments made
by Tenant to Landlord’s Lender.

 

4

 

5.

 

INCREASES IN MONTHLY RENT

 

5.1           Monthly
Base Rent Adjustments

 

The capitalized terms
used in this Section 5.1 are defined below. Effective on each Adjustment
Date, Monthly Base Rent shall be increased by the increases in the CPI with the
percentage increase to be determined by multiplying the Monthly Base Rent then
in effect by a fraction, the numerator of which shall be the Variable Index and
the denominator of which shall be the Base Index. The product thus obtained
shall be payable in advance in consecutive monthly installments on the first
day of each month until the next Adjustment Date, or the expiration of the
Term, as the case may be. Notwithstanding anything contained herein to the
contrary, in no event shall the Monthly Base Rent in effect prior to an
Adjustment Date be reduced if the change in the percentage change in the CPI is
negative. Landlord’s delay or the failure of Landlord, beyond commencement of
any Adjustment Date, in computing or billing for these adjustments will not
impair the continuing obligation of Tenant to pay the rent adjustments. In
applying the foregoing formula for Monthly Base Rent adjustments, the following
terms shall have the following meanings:

 

5.1.1        “Adjustment
Date” shall mean, as the case may require, every fifth anniversary of the Commencement
Date during the Initial Term (and every fifth anniversary of the Commencement
Date thereafter during the Term in the event Tenant exercises its option(s) for
the Extension(s)); provided, however, if the Commencement Date is other than
the first day of the month, then “Adjustment Date” shall mean, as the case may require,
the first day of the first month occurring after every fifth anniversary of the
Commencement Date.

 

5.1.2        “Base
Index” shall mean the CPI for the first month of the first Lease Year.

 

5.1.3        “CPI”
shall mean the Consumer Price Index for All Urban Consumers, All Items Index
Base Year 1982 - 1984 = 100, as published by the Bureau of Labor Statistics,
United States Department of Labor (U.S. City Average), or, if such index is
discontinued, the most nearly comparable index published by the Bureau of Labor
Statistics or other official agency of the United States Government.

 

5.1.4        “Initial
Monthly Base Rent” shall mean the Monthly Base Rent payable by Tenant for the
first full calendar month of the first Lease Year.

 

5.1.5        “Variable
Index” shall mean the CPI for the month in which the Adjustment Date occurs.

 

6.

 

SUBSTITUTE RENT AND
INCREASES

 

This Section was deleted Intentionally

 

5

 

7.

 

SECURITY DEPOSIT

 

This Section was deleted Intentionally

 

8.

 

USE OF THE PREMISES

 

Tenant shall use the
Premises for a multi-purpose, interactive entertainment facility and, with the
prior written consent of Landlord which shall not be unreasonably withheld,
such other uses as permitted by applicable zoning and use regulations and
covenants, conditions and restrictions. Tenant has satisfied itself, and
represents to Landlord, that such use is lawful and conforms to all applicable
zoning and other use regulations, including without limitation all covenants,
conditions and restrictions, applicable to the Premises. Tenant shall, at
Tenant’s expense, comply promptly with all applicable statutes, ordinances,
rules, regulations, orders, covenants and restrictions of record, and
requirements in effect during the Term or any part of the Term hereof,
regulating the use by Tenant of the Premises, including, without limitation,
the obligation at Tenant’s cost, to alter, maintain, or restore the Premises in
compliance and conformity with all laws relating to the condition, use, or
occupancy of the Premises during the Term (including applicable requirements to
the extent set forth in the Americans with Disabilities Act). In the event that
the Premises shall cease to be operated primarily for a multipurpose,
interactive entertainment facility, other than a temporary interruption of
operation for the purpose of remodeling, or reconstruction following damage by
casualty, Landlord shall have the right to elect to terminate this Lease by
written notice given at anytime thereafter, and upon such termination Tenant’s
obligations under this Lease shall cease to accrue, provided Landlord’s right
to terminate shall expire six (6) months following Landlord’s receipt from
Tenant of written notice of Tenant’s cessation of operation of a multi-purpose,
interactive entertainment facility.

 

Landlord and Tenant
acknowledge and agree that that certain land area of approximately 2.1570
acres, as more particularly identified on that certain ALTA/ACSM Land Survey
for Mountasia of Willowbrook Project Site No. 1 prepared by Bock &
Clark’s National Surveyors Network dated as of July 8-10, 1996, and last
revised June 7, 1999, as Network Project No. 990267-1, described as “Proposed
Future Subdivision – 2.1570 Acres” (the “Excess Acreage”) is part of the
Premises demised under this Lease. Notwithstanding anything contained in this
Lease to the contrary, Tenant shall not have the right to develop, alter the
condition of or conduct its operations on the Excess Acreage without the prior
written consent of Landlord unless this Lease has been amended or a new lease
in respect of the Excess Acreage has been entered into between Tenant and
Landlord to provide for such use of the Excess Acreage as set forth in that
Purchase Agreement and Escrow Instructions dated as of May 5, 1999, as
amended by that certain First Amendment to Purchase Agreement and Escrow
Instructions dated as of June 28, 1999 by and between Tenant and Krausz
Companies, Inc., a California corporation.

 

6

 

9.

 

PROPERTY TAXES,
ASSESSMENTS AND UTILITIES

 

9.1           Tenant’s
Required Payments

 

As additional rent,
Tenant shall directly pay not later than forty-five (45) days prior to
delinquency, all ad valorem taxes, assessments, license fees, costs incurred
pursuant to covenants and restrictions affecting both Landlord’s and Tenant’s
interest in the Premises, and other charges (collectively referred to as “Taxes”)
levied or assessed against all merchandise, personal property, real property,
buildings and improvements, and any other obligations which are or may become
a lien or levied against the Premises. Tenant shall provide Landlord with
evidence of payment of Taxes promptly upon request. If at any time during the
Term, the state in which the Premises are located or any political subdivision
of the state, including any county, city, county and city, public corporation,
district, or any other political entity or public corporation of that state,
levies or assesses against Landlord a tax, fee, or excise on (i) rents,
including, if applicable, property taxes, insurance, maintenance, and other
costs incurred by Tenant by which Landlord may benefit; (ii) on the
square footage of the Premises; (iii) on the act of entering into this
Lease; or (iv) on the occupancy of Tenant, or levies or assesses against
Landlord any other tax, fee, or excise, however described, including, without
limitation, a so-called value added tax, as a direct substitution in whole or
in part for, or in addition to, any real property taxes, Tenant shall
directly pay before delinquency that tax, fee, or excise. It is the intention
of Tenant and Landlord that all new and increased ad valorem assessments,
taxes, fees, levies, and charges, and all similar assessments, taxes, fees,
levies, and charges be included within the definition of taxes for the purpose
of this Lease.

 

9.2           Payments
Not Required by Tenant

 

Notwithstanding the
foregoing, Tenant shall not be required to pay any municipal, county, state, or
federal income or franchise taxes of Landlord, or any inheritance, or transfer
taxes of Landlord, except to the extent levied in substitution for Taxes
payable under Section 9.1 hereinabove.

 

9.3           Assessments

 

If any assessment for a
capital improvement made by public or governmental authority shall be levied or
assessed against the Premises, and the assessment is payable either in a lump
sum or on an installment basis, then Tenant shall have the right to elect the
basis of payment. If Tenant shall elect to pay the assessment on the
installment basis, then Tenant shall pay only those installments, which shall
become due and payable or which shall accrue during the Term of this Lease.

 

9.4           Utility
Payments

 

As additional rent,
Tenant shall promptly pay when due all charges for water, gas, electricity, and
all other utilities furnished to or used upon the Premises, including all
charges for installation, termination, and relocations of such services,
whether such payment is to be made to Landlord or directly to the particular
utility provider.

 

7

 

9.5           Tenant’s
Right to Contest Utility Charges, Contest Taxes and Seek Reduction of Assessed
Valuation of the Premises

 

Tenant, at its sole cost,
shall have the right, at any time, to seek a reduction in the assessed
valuation of the Premises or to contest any taxes or utility charges that are
to be paid by Tenant. If Tenant seeks a reduction or contests any taxes or
utility charges, the failure on Tenant’s part to pay the taxes or utility
charges shall not constitute a default as long as Tenant complies with the
provisions of this Section 9. Tenant may use any means allowed by
statute to protest property tax assessments or utility charges as defined in
this Section 9 as long as Tenant remains current as to all other terms and
conditions of this Lease. If, during the protest period, any Lease defaults
occur and the protested taxes or assessments have not been paid, then Tenant
shall furnish to Landlord a surety bond issued by an insurance company
qualified to do business in the state where the Premises are located. The
amount of bond shall equal one hundred ten percent (110%) of the total amount
of taxes in dispute. The bond shall hold Landlord and the Premises harmless from
any damage arising out of the proceeding or contest and shall insure the
payment of any judgment that may be rendered.

 

9.6           Landlord
Not Required to Join in Proceedings or Contest Brought by Tenant

 

Landlord shall not be
required to join in any proceeding or contest brought by Tenant unless the
provisions of the law require that the proceeding or contest be brought by or
in the name of Landlord or the owner of the Premises. In that case, Landlord
shall join in the proceeding or contest or permit it to be brought in Landlord’s
name as long as Landlord is not required to bear any cost or incur any
liability. Tenant, on final determination of the proceeding or contest, shall
immediately pay or discharge any decision or judgment rendered, together with
all costs, charges, interest, and penalties incidental to the decision or
judgment.

 

10.

 

BUILDING AND
IMPROVEMENTS; TRADE FIXTURES

 

10.1         Building
and Improvements

 

During the Term of this
Lease provided Tenant is not in default, Tenant shall have the right to sell,
transfer, convey or mortgage any or all of Tenant’s Property without Landlord’s
consent. Tenant shall not demolish or remove the Improvements or any additions,
alterations, modifications and replacements thereto unless Tenant immediately
thereafter replaces the same with other Landlord-approved (if approval is
required pursuant to Section 12.1 hereof) improvements of at least equal
value and prior to such demolition or removal provides Landlord with reasonably
adequate assurance of its timely replacement of the Improvements to be
demolished or removed. All right, title, and interest of Tenant in the
Improvements and all additions, alterations, modifications, and replacements
thereto and thereof shall cease, expire, and vest exclusively in Landlord effective
as of the expiration or any termination of this Lease.

 

10.2         Depreciation
and Investment Tax Credit

 

During the Term of this
Lease, Tenant alone shall be able to claim depreciation and investment tax
credit for taxation purposes (or to permit its subtenants the right to such
benefits)

 

8

 

on any building
improvements and fixtures and any changes, additions, and alterations therein
and thereto and any replacements thereof.

 

10.3         Trade
Fixtures

 

Notwithstanding anything
contained herein to the contrary, Landlord acknowledges and agrees that the
furniture, trade fixtures, equipment, machinery, furnishings, signs, and other
articles of personal property (collectively, “Trade Fixtures”) now located or
hereafter placed or installed in, on, or about the Premises shall be and remain
the property of Tenant (except as hereinafter otherwise provided), Tenant shall
have the right, at any time during the Term, at Tenant’s sole cost and expense,
to install and affix in, to, or on the Premises, such Trade Fixtures for use in
Tenant’s trade or business as Tenant, in its sole and absolute discretion, may deem
advisable. Trade Fixtures that can be removed without structural damage to the
Premises or any building or improvements thereon shall remain the property of
Tenant and may be removed or replaced by Tenant at any time or times prior
to the expiration or earlier termination of this Lease, provided Tenant is not
in default under this Lease and as further set forth in Section 10.4
following. In the event of such removal, any damage occasioned to the Premises
shall be fully repaired at the sole cost and expense of Tenant.

 

10.4         Removal
of Trade Fixtures

 

At the expiration or
earlier termination of this Lease, provided Tenant is not in default, Tenant,
at its election, may remove (i) Tenant’s movable Trade Fixtures and
other personal property not permanently affixed to the Premises; and (ii) Tenant’s
signs (collectively, “Tenant’s Property”). All leasehold improvements, alterations
and additions to the Premises, HVAC equipment, permanently attached lighting
fixtures, electric switch boxes, plumbing, restroom fixtures, floor
coverings, and other like items which are permanently affixed to the Premises,
more commonly defined as fixtures, shall become the property of the Landlord
immediately following the expiration, or any termination of this Lease. Any of
Tenant’s Property not removed within sixty (60) days following the expiration
or earlier termination of this Lease shall be deemed abandoned by Tenant and,
at Landlord’s option, shall become the property of Landlord as owner of the
real property to which they are affixed. Tenant, at its sole cost and expense,
immediately shall repair any damage occasioned to the Premises by the removal
of Tenant’s Property. Upon the expiration or earlier termination of this Lease,
Tenant shall leave the Premises in a neat and clean condition, free of debris,
normal wear and tear excepted.

 

10.5         Waiver
of Landlord’s Lien

 

From time to time, some
or all of Tenant’s Property may be financed or owned by someone other than
Tenant. To the extent that any of Tenant’s Property is financed or owned by
someone other than Tenant, Landlord agrees that such Tenant’s Property is not
Landlord’s property no matter how the same is affixed to the Premises or used
by Tenant and agrees to recognize the rights of the lender, owner or secured
creditor or lessor (“Secured Party”) of Tenant’s Property. Landlord hereby
waives any claim arising by way of any Landlord’s lien (whether created by
statute or by contract, but excluding any judgment lien) or otherwise with
respect to Tenant’s Property and agrees, if confirmation of said waiver is
requested by Tenant, or Secured Party, to promptly sign and deliver to any such
Secured Party a waiver of any lien

 

9

 

Landlord may have
on Tenant’s Property (“Landlord’s Lien Waiver”). If said confirmation is
requested by Tenant or Secured Party, Landlord agrees to execute and deliver
Landlord’s Lien Waiver within fifteen (15) days from Tenant’s or Secured Party’s
request therefore or Landlord shall have conclusively deemed to have granted
confirmation of Landlord’s Lien Waiver thereafter and Landlord agrees that
tenant and any Secured Party may thereafter rely thereon and Landlord
shall be estopped from raising any claim of lien on Tenant’s Property. Landlord
also agrees that all of Tenant’s Property that is not subject to an interest
from Secured Party shall be the property and remain the property of Tenant or
Tenant’s assignee or transferee.

 

11.

 

MAINTENANCE OF THE
PREMISES

 

11.1         Obligation
to Maintain the Premises

 

During the Term of this
Lease, Tenant shall, at its own expense, keep and maintain the entire Premises
in good order and repair at least equal to the condition at the Commencement
Date, including, but not limited to, the interior, exterior, foundations,
floors, walls, roof, and structure of the building; and the sidewalks, curbs,
walls, trash enclosures, landscaping with sprinkler system (if installed),
light standards, and parking areas which are a part of the Premises.
Tenant shall make such repairs and replacements as may be necessary. The
Premises shall be returned to Landlord at the termination or expiration of this
Lease in good condition at least equal to the condition at the Commencement
Date, ordinary wear excepted. In the event of destruction of the Premises by
fire or casualty, the condition of Premises upon termination of this Lease
shall be governed by Section 14 or Section 15 respectively.

 

11.2         Obligation
to Keep the Premises Clean

 

Tenant shall keep the
Premises, including sidewalks adjacent to the Premises and loading area
allocated for the use of Tenant, reasonably clean and free from rubbish and
debris at all times. Tenant shall store all trash and garbage within the
Premises and arrange for regular pickup and cartage of such trash and garbage
at Tenant’s expense.

 

11.3         Compliance
with Law

 

Tenant shall, at its sole
expense, fully, diligently and in a timely manner comply with and shall cause
the Premises to comply with all applicable laws, building codes, regulations,
ordinances, rules, directives, covenants, or restrictions of record, the
requirements of any applicable insurance underwriter or rating bureau, which relate
in any manner to the Premises or any part thereof, including without
limitation all conditions imposed upon the development of the Premises
(collectively, “Applicable Requirements”), without regard to whether
such Applicable Requirements are now in effect or become effective hereafter,
including those which require the making of any structural, unforeseen or
extraordinary changes, whether or not any of the same, involve a change in
applicable law or requirements. Tenant shall, within 10 days after receipt of
Landlord’s written request (which request shall be made not more often than
annually, other than in connection with a sale or refinancing by Landlord as to
the Premises in which case

 

10

 

such request may be
made at any time), provide Landlord with copies of all permits and other
documents, and other information evidencing Tenant’s compliance with any
Applicable Requirements specified by Landlord, and shall immediately upon
receipt, notify Landlord in writing (with copies of any documents involved) of
any threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving the failure of Tenant or the Premises to comply with
any Applicable Requirements.

 

12.

 

REPAIRS AND ALTERATIONS

 

12.1         Right
to Make Alterations

 

(a)           At
all times during the Term of this Lease, except as provided in Section 17,
Tenant shall have the right to make alterations, additions, and improvements to
the Premises, including the redevelopment of the Premises for a new or related
use, as permitted by Section 8. In the event that Tenant shall perform construction,
erection, modification, repair, or alteration of the Premises (“Work”), Tenant
shall comply with the provisions of this Section 12. Except as specified
in Sections 10.1 and 10.4, any Improvements and any alterations, additions, or
replacements thereto which may be made or installed by Tenant shall remain
upon the Premises and, at the termination or expiration of this Lease, shall be
surrendered with the Premises to Landlord. It shall be a condition of the
performance of any Work that: (i) the market value of the Premises shall
not thereby be lessened, and (ii) all Work shall be done in a workmanlike
manner with only high quality building materials and shall comply with all
applicable building codes and other applicable laws, ordinances, regulations
and orders of all federal, state, county and local governmental agencies having
jurisdiction over the Premises and the requirements of any insurance policy
required to be maintained by Tenant hereunder and with the orders, rules and
regulations of the National Fire Protection Association or any other body
exercising similar functions. The Work and all additions, alterations,
substitutions and replacements of a value in excess of two hundred thousand
dollars ($200,000.00) will be done under the supervision of a certified
architect or engineer and shall be performed only by competent and qualified
contractors duly licensed under the laws of the State of Texas pursuant to
written contracts with such contractors. In the event that Work costing in
excess of five hundred thousand dollars ($500,000.00) is to be performed,
Landlord may require that Tenant’s contractor furnish performance and lien
payment bonds issued by a licensed corporate surety on terms and conditions and
in amounts satisfactory to Landlord.

 

12.2         Tenant
Shall Not Render Premises Liable For Any Lien

 

(a)           Tenant
shall have no right, authority, or power to bind Landlord, or any interest of
Landlord in the Premises, or right of lien for the payment of any claim for
labor, material, or for any charge or expense incurred to maintain, to repair,
or to make alterations, additions, and improvements to the Premises. Tenant
shall in no way be considered the agent of Landlord in the construction,
erection, modification, repair, or alteration of the Premises. At all times
during the Term, Tenant shall keep the Premises and all Improvements now or
hereafter located on the Premises free and clear of all liens and claims of
liens for labor, services, materials, supplies, or equipment performed on or
furnished to the Premises. Notwithstanding the above, Tenant shall

 

11

 

have the right to
contest the legality or validity of any lien or claim filed against the
Premises. No contest shall be carried on or maintained by Tenant after the time
limits in the sale notice of the Premises for any such lien or claim or beyond
30 days after service on Tenant of written request from Landlord to remove such lien
unless Tenant (i) shall have duly paid the amount involved under protest; (ii) shall
have procured and recorded a lien release bond from a bonding company
acceptable to Landlord in an amount not less than one and one-half (1-1/2)
times the amount involved; or (iii) shall have procured a stay of all
proceedings to enforce collection. Upon a final adverse determination of any
contest, Tenant shall pay and discharge the amount of the lien or claim
determined to be due, together with any penalties, fines, interest, cost, and
expense which may have accrued, and shall provide proof of payment to
Landlord. Should Tenant fail to pay and discharge or cause the Premises to be
released from any such lien or claim of lien within 30 days after service on
Tenant of written request from Landlord to do so, Landlord may pay,
adjust, compromise and discharge any such lien or claim of lien on such terms
and manner as Landlord may deem appropriate. In such event, Tenant shall,
on or before the first day of the next calendar month following any such
payment by Landlord, reimburse Landlord for the full amount paid by Landlord in
paying, adjusting, comprising, and discharging such lien or claim of lien,
including any attorneys’ fees and other costs expended by Landlord, together
with interest as provided herein from the date of payment by Landlord to the
date of repayment by Tenant.

 

(b)           Landlord shall, at any and all times during
the Term, have the right to post and maintain on the Premises and to record as
required by law any notice or notices of nonresponsibility provided for by the
mechanics’ lien laws of the State of Texas. Tenant shall give Landlord written
notice not less than 15 days’ prior to the time Landlord must file and post
such notice of non-responsibility for its full force and effect under the law.
In the event that Tenant shall perform the Work utilizing only its direct
employees, which employees are not hired specially for the performance of the
Work, and the value of materials used in performance of the Work, to the extent
the same are not fully paid for in advance of delivery to the Premises, is less
than twenty-five thousand dollars ($25,000.00), then Tenant need not give
Landlord notice as required in this subsection (b).

 

13.

 

INDEMNITY AND INSURANCE

 

13.1         Indemnification

 

Tenant shall indemnify,
defend, and protect Landlord, and hold Landlord harmless from any and all loss,
cost, damage, expense, liability (including, without limitation, court costs
and reasonable attorneys’ fees) incurred in connection with or arising at any
time and from any cause whatsoever in or about the Premises, other than damages
to the extent caused by the negligence or willful misconduct of Landlord or its
agents and employees, including, without limiting the generality of the
foregoing: (i) any default by Tenant in the observance or performance of
any of the terms, covenants, or conditions of this Lease on Tenant’s part to
be observed or performed: (ii) the use or occupancy of the Premises by
Tenant or any person claiming by, through, or under Tenant; (iii) the
condition of the Premises or any occurrence or happening on the Premises from
any cause whatsoever, or (iv) any acts, omissions, or negligence of Tenant
or any person

 

12

 

claiming by, through, or under Tenant, or of the contractors, agents,
servants, employees, or licensees of Tenant or any such person, in, on, or
about the Premises, either prior to or during the Term (including, without
limitation, any holdovers in connection therewith), including, without
limitation, any acts, omissions, or negligence in the making or performance of
any alterations. Tenant further agrees to indemnify and hold harmless Landlord,
Landlord’s agents, from the against any and all loss, cost, liability, damage,
and expense (including, without limitation, reasonable attorneys’ fees)
incurred in connection with or arising from any claims by any persons by reason
of injury to persons or damage to property occasioned by any use, occupancy,
condition, occurrence, happening, act, omission, or negligence referred to in
the preceding sentence. The provisions of this Section shall survive the
expiration or sooner termination of this Lease with respect to any claims or
liability occurring prior to such expiration or termination, and shall not be
limited by reason of any insurance carried by Landlord and Tenant.

 

13.2         Exculpation
of Landlord

 

Landlord
shall not be liable to Tenant for any damage to Tenant or Tenant’s property for
any cause, except for any damage to Tenant or Tenant’s property resulting from
the willful acts and negligence of Landlord or its authorized representatives.
Tenant waives all claims against Landlord for damage to person or property
arising, or asserted to have arisen, for any reason, except that Landlord shall
be liable to Tenant for any damage to Tenant resulting from the willful acts
and negligence of Landlord and its authorized agents, provided that under no
circumstances shall Landlord be liable for any injury to Tenant’s business or
for any loss of income or profit. Subject to the foregoing provisions, Landlord
agrees to, and does hereby indemnify and hold Tenant and its officers,
directors, employees, agents and affiliates and their respective assets free and
harmless against and from any and all liabilities, claims, losses, damages, and
expenses (including attorneys’ fees and court costs) resulting from or arising
out of Landlord’s failure to perform any of Landlord’s obligations under
this Lease when and as required by the terms hereof.

 

13.3         Insurance Company Requirement

 

Insurance
required by this Lease shall be issued by companies holding a general
policyholder’s rating of at least A VII as set forth in the most current issue
of Best’s Insurance Guide and authorized to do business in the state in
which the Premises are located. If this publication is discontinued, then
another insurance rating guide or service generally recognized as authoritative
shall be substituted by Landlord.

 

13.4         Insurance Certificate Requirements

 

13.4.1                Tenant
shall deliver to Landlord certificates evidencing the existence and amounts of
the insurance with loss payable clauses as required herein. No policy shall be
cancelable or subject to reduction of coverage or other modification except
after thirty (30) days’ prior written notice to Landlord.

 

13.4.2                The insurance required to be maintained herein
may be carried under blanket policies. The insurance shall provide for
payment of loss jointly to Landlord and

 

13

 

Tenant. A stipulated value or agreed amount
endorsement deleting the co-insurance provision to the building policy shall be procured.

 

13.5         Minimum Acceptable Insurance Coverage
Requirements

 

13.5.1                Tenant shall, at Tenant’s expense, obtain and
keep in full force during the Term of this Lease a policy of combined single
limit bodily injury and property damage insurance insuring Tenant (with
Landlord as an additional insured) against any liability arising out of the
ownership, use, occupancy, or maintenance of the Premises and all of its
appurtenant areas. The insurance shall be in an amount not less than Three
Million and No/100 Dollars ($3,000,000.00) per occurrence. The policy shall
provide blanket contractual liability coverage. In addition, Tenant shall, at
Tenant’s expense, obtain and keep in full force during the Term of this Lease
an umbrella liability policy in an amount not less, than Ten Million and No/100
Dollars ($10,000,000.00) in excess of primary insurance. The insurance required
to be carried by Tenant hereunder shall be primary and not contributory to any
other insurance maintained by Landlord.

 

13.5.2                Tenant shall, at Tenant’s expense, obtain and
keep in force during the Term of this Lease a policy or policies of insurance
covering loss or damage to the Premises. The insurance shall be in an amount
not less than the replacement value of the building(s) less slab, foundation,
supports and other customarily excluded improvements against all perils of
fire, extended coverage, vandalism, malicious mischief, and special extended
perils (“All Risks,” as such term is used in the insurance industry). The
policy shall include a code upgrade endorsement. In addition, Tenant shall, at
Tenant’s expense, obtain and keep in force during the Term of this Lease a
policy or policies of insurance covering loss or damage due to earthquake
and/or flood, subject to reasonable and customary limits and provisions for
Texas.

 

13.5.3                Tenant shall also obtain and keep in force
during the Term of this Lease a policy of Business Interruption insurance
covering loss of income against all perils listed in Section 13.5.2, on an
actual loss sustained basis for a period of recovery required (or that would
have been required, subject to a maximum of twelve (12) months) to resume
normal operations.

 

13.5.4                Tenant shall also obtain and keep in force
during the Term of this Lease a worker’s compensation policy, insuring against
and satisfying Tenant’s obligations and liabilities under the worker’s compensation
laws of the state in which the Premises are located, including Employer’s
Liability insurance, in an amount of not less Five Hundred Thousand and No/100
Dollars ($500,000.00).

 

13.6         Additional Insureds

 

Tenant
shall name as additional Insureds on all insurance, Landlord, Landlord’s
successor(s), assignee(s), nominee(s), nominator(s), and agents with an
insurable interest as follows:

 

[                            ,
ITS OFFICERS, DIRECTORS, AND ALL SUCCESSOR(S), ASSIGNEE(S), SUBSIDIARIES,

 

14

 

CORPORATIONS, PARTNERSHIPS,
PROPRIETORSHIPS, JOINT VENTURES, FIRMS, AND INDIVIDUALS AS HERETOFORE, NOW, OR
HEREAFTER CONSTITUTED ON WHICH THE NAMED INSURED HAS THE RESPONSIBILITY FOR
PLACING INSURANCE AND FOR WHICH SIMILAR COVERAGE IS NOT OTHERWISE MORE
SPECIFICALLY PROVIDED.]

 

13.7         Mortgage
Endorsement

 

If requested by Landlord,
the policies of insurance required to be maintained hereunder shall bear a
standard first mortgage endorsement in favor of any holder or holders of a
first mortgage lien or security interest in the Premises (excluding the
Improvements) (“Landlord’s Lender”) with loss payable to such holder or holders
as their interests may appear.

 

13.8         Renewals,
Lapses or Deficiencies

 

Tenant shall, at least
thirty (30) days prior to the expiration of such policies, furnish Landlord
with renewal certificates of insurance or renewal binders. Should Tenant fail
to provide to Landlord the renewals or renewal binders, or in the event of a
lapse or deficiency of any insurance coverage specified herein for any reason,
Landlord may immediately replace the deficient insurance coverage with a
policy of insurance covering the Premises of the type and in the limits set
forth above. Upon written notice from Landlord of the placement of insurance,
Tenant shall immediately pay to Landlord, as additional rent, an amount equal
to the total cost of premiums and expense of such insurance placement. Tenant
shall not do or permit to be done anything, which shall invalidate the insurance
policies. If Tenant does or permits to be done anything which shall increase
the cost of the insurance policies, then upon Landlord’s demand Tenant shall
immediately pay to Landlord, as additional rent, an amount equal to the
additional premiums attributable to any acts or omissions or operations of
Tenant causing the increase in the cost of insurance.

 

13.9         Adjustment
of Claims

 

Insurance claims by
reason of damage to or destruction of any portion of the Premises shall be
adjusted by Tenant, but Landlord and Landlord’s Lender shall have the right to
join with Tenant in adjusting any such loss, and Tenant shall provide them both
with ample notice and opportunity to do so. If the entire amount of any
proceeds paid pursuant to any such claim shall not exceed $100,000 then such
proceeds paid pursuant to any such claim shall be paid to Tenant by the
recipient thereof but only upon certificates of Tenant, delivered to Landlord
from time to time as the work of rebuilding, replacing and repairing the damage
or destruction to the Premises required hereunder progresses, each such
certificate describing such work for which Tenant is requesting payment, the
cost incurred by or payment sought from Tenant in connection therewith and
stating that Tenant has not theretofore received payment for such work. If the
entire amount of any proceeds paid pursuant to any such claim shall exceed
$100,000 then such proceeds paid pursuant to any such claim shall be held in a
trust fund or construction disbursement escrow designated by Landlord, which may be
administered by Landlord’s Lender or established at a place and with a trustee
or administrator of Landlord Lender’s choosing, and disbursed to Tenant

 

15

 

in a commercially
reasonable manner that assures the lien free completion of the rebuilding,
replacements and repairs; provided, however, that any insurance proceeds
remaining after the repair, restoration, reconstruction and/or replacement of
the damaged or destroyed buildings or improvements has been completed to the
satisfaction of Landlord (the “Remaining Insurance Proceeds”) shall be
allocated between Tenant and Landlord as follows: (i) that percentage of
the Remaining Insurance Proceeds which equals the percentage of the unexpired
portion of the Initial Term, at the time the repair, restoration,
reconstruction and/or replacement of the damaged or destroyed buildings has
been completed, shall belong to and be the sole property of Tenant; and that
percentage of the Remaining Insurance Proceeds which equals the percentage of
the expired portion of the Initial Term, at the time the repair, restoration,
reconstruction and/or replacement of the damaged or destroyed buildings has
been completed, shall belong to and be the sole property of Landlord. No
payment of any proceeds shall be made to Tenant pursuant to this Section if
any default shall have happened and be continuing under this Lease unless and
until such default shall have been cured or removed; during the pendency of
such default if this Lease has not been terminated, Landlord shall either hold
such proceeds in an escrow or similar account for application subject to the
provisions hereof or apply the same to the restoration of the Improvements or
if the Lease has been terminated Landlord shall retain all such proceeds.

 

13.10       Separate
Insurance

 

Tenant shall not obtain
or carry separate insurance concurrent in form or contributing in the
event of loss with that required in this Section 13 to be furnished by
Tenant unless Landlord is included therein as a named insured, with loss
payable as in this Lease provided. Tenant shall immediately notify Landlord
whenever any such separate insurance is obtained and shall deliver to Landlord
the policies or certificates evidencing the same.

 

13.11       Waiver
of Subrogation

 

Without affecting any
other rights or remedies hereunder, Landlord and Tenant each hereby release and
relieve the other, and waive their right to recover damages against the other,
for loss of damage to its respective property arising out of or incident to the
perils required to be insured against herein and actually so insured. The
effect of such releases and waivers is not limited by the amount of insurance
carried or required, or by any deductibles applicable thereto. Landlord and
Tenant agree to have their respective property damage insurance carriers waive
any right to subrogation that such companies may have against Landlord or
Tenant, as the case may be, so long as the insurance is not invalidated
thereby.

 

14.

 

PARTIAL AND TOTAL
DESTRUCTION OF THE PREMISES

 

14.1         Obligation
to Repair and Restore

 

In the event any part or
all of the Premises shall at any time during the Term of this Lease be damaged
or destroyed, regardless of cause, Tenant shall give prompt notice to Landlord.
Tenant shall substantially repair and restore the Premises to its original
condition, including buildings and all other improvements on the Premises, as
soon as circumstances permit. Tenant

 

16

 

shall hold
Landlord free and harmless from any and all liability of any nature whatsoever
resulting from such damage or destruction, and such repairs and restoration.
Tenant, and not Landlord, shall be responsible for paying for any cost of
repairs and restoration in excess of the proceeds available from insurance
policies procured by Tenant.

 

14.2         Termination
of Lease If Repair or Restoration Not Feasible

 

Notwithstanding the
provisions of Section 14.1, in the event any substantial portion or all of
the Premises shall at any time during the Term of this Lease be damaged or
destroyed, regardless of cause, and the Premises cannot be legally repaired or
restored to substantially the same condition and use in existence prior to such
damage or destruction (Tenant hereby agrees that it shall use its best efforts
to so repair or restore the Premises, including, without limitation, applying
for and prosecuting all necessary governmental approvals), Tenant shall have
the right to terminate this Lease by giving Landlord sixty (60) days written
notice of its intention to terminate the Lease, provided that (i) Tenant
has maintained all insurance required by this Lease, (ii) the loan by
Landlord’s Lender is paid in full prior to such termination and (iii) all
insurance proceeds relating to the Premises (including the Improvements),
including any excess coverage maintained by Tenant, shall be first applied to
the payment in full of the loan by Landlord’s Lender, including, if necessary,
the continuation of the debt service payments under said loan until a
defeasance is permitted under said loan, and thereafter Tenant shall be
entitled to and receive a portion of the remaining insurance proceeds in an
amount equal to the product of (a) the remaining insurance proceeds after
the loan by the Landlord’s Lender has been paid in full multiplied by (b) the
percentage of the unexpired portion of the Initial Term at the time of such
damage or destruction and Landlord shall be entitled to and receive a portion
of the remaining insurance proceeds in an amount equal to the product of (c) the
remaining insurance proceeds after the loan by the Landlord’s Lender has been
paid in full multiplied by (d) the percentage equal to the expired portion
of the Initial Term at the time of such damage or destruction. In the event of
such damage or destruction and the Premises cannot be repaired or restored to
substantially the same condition and use in existence prior to such damage or
destruction and Tenant elects not to terminate this Lease as provided above,
all insurance proceeds relating to the Premises (including the Improvements),
including any excess coverage maintained by Tenant, shall be allocated between
Tenant and Landlord as follows: Tenant shall be entitled to and receive a
portion of the insurance proceeds for such damage or destruction in an amount
equal to the product of (w) the insurance proceeds for such damage or
destruction multiplied by (x) the percentage of the unexpired portion of the
Initial Term at the time of such damage or destruction and Landlord shall be
entitled to and receive a portion of the insurance proceeds for such damage or
destruction in an amount equal to the product of (y) the insurance proceeds for
such damage or destruction multiplied by (z) the percentage equal to the
expired portion of the Initial Term at the time of such damage or destruction
and Tenant shall not be entitled to any rent abatement.

 

14.3         Damage
or Destruction During Last Five Years of Lease Term

 

Notwithstanding the
provisions of Sections 14.1 and 14.2, in the event that any part or all of
the Premises shall be damaged or destroyed, regardless of cause, during the
last five (5) years of the Term, then Tenant may terminate this Lease
and shall not be obligated to restore the Premises, provided that (i) Tenant
has maintained at least all insurance required by this Lease,

 

17

 

(ii) all
insurance proceeds relating to the Improvements, including any excess coverage
maintained by Tenant, shall be paid to Landlord prior to such termination and
shall be retained by Landlord and (iii) the loan by Landlord’s Lender
(defined in Section 13.7) is paid in full prior to such termination.
Tenant is not otherwise entitled to any rent abatement during or resulting from
any disturbance on or partial or total destruction of the Premises.

 

15.

 

CONDEMNATION

 

15.1         Condemnation
Damages

 

In the event of the
taking or conveyance of the whole or any part of the Premises by reason of
condemnation by any public or independently in seeking damages before the
condemning body, each party shall be entitled to the amount awarded
respectively to each, except that Landlord and Tenant further agree as follows.

 

15.1.1                Notwithstanding anything herein to the
contrary, the compensation or damages awarded or payable for the taking of the
Premises (including, without limitation, the Improvements) shall first be
applied to the payment in full of the loan by Landlord’s Lender, including, if
necessary, the continuation of the debt service payments under said loan until
a defeasance is permitted under said loan;

 

15.1.2                That percentage of the compensation or damages
awarded or payable for the taking of improvements which equals the percentage
of the expired portion of the Initial Term at the time of the taking shall
belong to and be the sole property of Landlord and the percentage equal to the
unexpired portion of the Initial Term at the time of the taking shall belong to
and be the sole property of Tenant.

 

15.1.3                Any portion of the award attributable to
Tenant’s furniture, fixtures, and equipment installed in the Premises in
accordance with this Lease which are to remain in the Premises as a result of
such taking shall belong to Tenant.

 

15.1.4                All compensation or damages awarded or payable
for the taking by eminent domain of any land that is part of the Premises
shall be paid to and be the sole property of Landlord free and clear of any
claim of Tenant or any person claiming rights to the Premises through or under
Tenant.

 

15.1.5                For purposes of this Section any
compensation or damages awarded or payable because of the taking by eminent
domain of all or any portion of the Premises shall be allocated between the
land and any improvements so taken in accordance with any allocation made by
the court in any eminent domain proceeding. If the court does not make any such
allocation, or if Landlord should voluntarily convey title to all or a portion
of the Premises pursuant to section 15.1.6 below, then that portion of any
compensation or damages awarded which is equal to the then fair market value of
any land within the Premises that is taken by eminent domain (the “Land Value”)
shall be deemed compensation or damages awarded for the taking of such land,
and the remainder of any compensation or damages awarded shall be deemed to be
compensation or

 

18

 

damages awarded for the taking of any improvements
constructed or located on the Premises taken by eminent domain. The Land Value
shall be determined as though the Premises were not subject to this Lease or
any other lease or encumbrance and shall be established as follows:

 

(i)            Landlord and Tenant shall attempt in good
faith to agree on the Land Value. If Landlord and Tenant do not agree on the
Land Value within ten business days after such taking, the Land Value shall be
determined by appraisal in accordance with paragraphs (ii) through (iv) below.

 

(ii)           Within ten business days after any taking,
each party hereto shall deliver to the other a written notice appointing as such
party’s appraiser a disinterested person with at least 10 years’ experience as
a real estate appraiser, who shall be a member of a recognized society of real
estate appraisers and shall have had experience in appraising industrial
properties in Houston, Texas and its environs.

 

(iii)          Within ten business days after the appointment
of the second of the two appraisers, the two appraisers shall jointly appoint a
third appraiser whose qualifications meet the standards set forth above.

 

(iv)          Within 30 days after the appointment of the
second appraiser, the first two appraisers shall make their respective
determinations of the Land Value and shall submit their appraisal reports to
Landlord and Tenant.

 

The Land Value shall be
conclusively deemed to be the arithmetic average of the two fair market values
shown in the appraisal reports submitted by the first two appraisers; provided,
however, that if within 30 days after the appointment of the second appraiser
only one appraisal report shall have been submitted, the Land Value shall be
conclusively deemed to the fair market value shown in such appraisal report;
and provided further that if two appraisal reports are submitted within 30 days
after the appointment of the second appraiser and if the difference between the
two appraised values is greater than 10% of the higher appraised value, then
upon the written request of either Landlord or Tenant made within five business
days after the submission of the second appraisal report, the third appraiser
shall be instructed to select as the Land Value one of the appraised values
determined by the first two appraisers. The value so selected shall be
conclusively deemed to be the Land Value.

 

15.1.6                      Landlord
reserves the right in its sole discretion to voluntarily convey title to all or
a portion of the Premises to a public or quasi-public agency or entity in lieu
of and under threat by such agency or entity to take the same by eminent domain
proceedings, provided that Landlord shall give Tenant prior notice of intent or
willingness to voluntarily convey title. Such voluntary conveyance by Landlord
of title to all or a portion of the Premises to a public or quasi-public agency
or entity in lieu of and under threat by such agency or entity to take the same
by eminent domain proceedings shall be considered a taking of title to all or
such portion of the Premises under the power of eminent domain subject to the
provisions of this Section 15.

 

19

 

15.2         Termination of Lease Due to Condemnation

 

In
the event that the Condemnation materially adversely affects the use, operation
or economic viability of the Premises, Tenant may terminate the Lease by
giving Landlord sixty (60) days’ written notice of its intention to terminate
the Lease after receiving notice of the Condemnation from the condemning
authority, provided the loan by Landlord’s Lender is paid in full prior to such
termination. The effective date of the termination shall be the actual date of
such taking. In the event of termination, the rent for the last month of Tenant’s
occupancy shall be prorated and Landlord shall refund to Tenant any rent paid
in advance and Tenant shall thereupon be released from its obligation to pay
rent.

 

16.

 

ASSIGNMENT AND SUBLETTING

 

16.1         Tenant’s Right of Assignment and Subletting

 

Except
as otherwise provided in this Section 16.1, Tenant shall not voluntarily
or by operation of law assign its interest in this Lease or in the Premises, or
sublease all or any substantial part of the Premises, or allow any other
person or entity to occupy all or use any substantial part of the
Premises, without first obtaining the written consent of Landlord, which
consent shall not be unreasonably withheld. Subject to Section 16.4,
Tenant, without the consent of Landlord, shall be permitted to assign its
interest in this Lease or sublease all or any substantial part of the
Premises to an affiliate of Tenant or to any other entity who acquires all or,
substantially all of Tenant’s assets. Any assignment or sublease of all or any
substantial part of the Premises without Landlord’s consent (if so
required) shall be voidable and, at Landlord’s election, shall constitute a
default. It shall not be unreasonable for Landlord to withhold its consent to
any proposed assignment or subletting if the proposed transferee does not meet
certain criteria, including, but not limited to, the transferee’s financial
condition, the nature, quality, and character of the transferee, the identity
or business character of the transferee, the nature of the use and occupancy
and the transferee’s business experience. It shall be a condition of any
transfer of Tenant’s interest under this Lease that Tenant provide Landlord
with the written consent of all guarantors of Tenant’s, obligations under this
Lease (collectively, the “Guarantors”) to such transfer and the Guarantors’
written acknowledgement of their continuing liability under the guarantees and
Lease. In connection with any permitted transfer hereunder, Tenant may provide
Landlord with additional direct Guarantor(s) affiliated with such proposed
transferee, provided that neither Tenant nor any Guarantor shall be released of
their respective obligations under this Lease as the result of any such
transfer.

 

16.2         Landlord’s Option to Preserve Subtenancies

 

In
the event of Tenant’s surrender of this Lease or the termination of this Lease
in any other manner, Landlord may, at its option, either terminate any or all
subtenancies or succeed to the interest of Tenant as sublandlord thereunder. No
merger shall result from Tenant’s sublease of the Premises under this Section,
Tenant’s surrender of this Lease, or the termination of this Lease in any other
manner.

 

20

 

16.3         Tenant’s
Assignment of All Rent from Subletting as Security for Tenant’s Obligation

 

Intentionally Omitted.

 

16.4         Continuing
Obligation of Tenant

 

No transfer permitted by
this Section 16 shall release Tenant or change Tenant’s primary liability
to pay the rent and to perform all other obligations of Tenant under this
Lease, nor shall any transfer release any Guarantor or change any Guarantor’s
liability to pay rent or perform any other obligation of Tenant under this
Lease. Landlord’s acceptance of rent from any other person is not a waiver of
any provision of this Section. Consent to one transfer is not a consent to any
subsequent transfer. If Tenant’s transferee defaults under this Lease, Landlord
may proceed directly against Tenant without pursuing remedies against the
transferee. Landlord may consent to subsequent assignments or
modifications of this Lease by Tenant’s transferee, without notifying Tenant or
obtaining its consent and without relieving Tenant’s liability under this
Lease. No assignment or sublease made as permitted by this Section 16
shall affect or reduce any of the obligations of Tenant hereunder, and all such
obligations shall continue in full effect as obligations of a principal and not
as obligations of a guarantor or surety, to the same extent as though no
assignment or subletting had been made. No sublease or assignment made as
permitted by this Section 16 shall impose any obligations on Landlord or
otherwise affect any of the rights of Landlord under this Lease. Tenant shall,
within 10 days after the execution and delivery of any such assignment, deliver
a conformed copy thereof to Landlord, and within 10 days after the execution
and delivery of any such sublease, Tenant shall give notice to Landlord of the
existence and term thereof, and of the name and address of the sublessee
thereunder.

 

16.5         Fees
and Costs with Regard to Proposed Assignment or Sublease

 

If Tenant requests
Landlord to consent to a proposed assignment or sublease, Tenant shall pay to
Landlord, whether or not consent is ultimately given, Landlord’s reasonable
attorneys’ fees and other costs incurred in connection with each such request.

 

16.6         Landlord’s
Right of Assignment

 

Landlord shall be free at
all times, without need of consent or approval by Tenant, to assign its
interest in this Lease and/or to convey fee title to the Premises. Each
conveyance by Landlord of Landlord’s interest in the Lease or the Premises
prior to expiration or termination hereof shall be subject to this Lease and
shall relieve the grantor of any further obligations or liability as Landlord,
and Tenant shall look solely to Landlord’s successor in interest for all future
obligations of Landlord. Tenant hereby agrees to attorn to Landlord’s
successors in interest, whether such interest is acquired by sale, transfer,
foreclosure, deed in lieu of foreclosure, or otherwise. The term “Landlord” as
used in this Lease, so far as
covenants and obligations on the part of Landlord are concerned, shall be
limited to mean and include only the owner at the time in question of the fee
title of the Premises. Without further agreement, the transferee of such title
shall be deemed to have assumed and agreed to observe and perform any and
all obligations of Landlord hereunder during its ownership of the Premises.

 

21

 

17.

 

DEFAULT

 

17.1         Default

 

Any
of the following occurrences or acts shall constitute an event of default (“Event
of Default”) under this Lease: (i) if Tenant, at any time during the
continuance of this Lease (and regardless of the pendency of any bankruptcy,
reorganization, receivership, insolvency or other proceedings, in law, in
equity, or before any administrative tribunal, which have or might have the
effect of preventing Tenant from complying with the terms of this Lease), shall
(a) fail to make any payment of Monthly Base Rent, additional rent or
other sum herein required to be paid by Tenant when due, and Tenant shall fail
to make any such payment within ten (10) days of written notice to Tenant
of such default, provided, however, that after Tenant has failed to timely make
such payment on three (3) occasions during the preceding five (5) year
period during the term of this Lease, said ten (10) day period shall be
reduced to five (5) days for any monetary default thereafter occurring
after such payment has become due; or (b) fail to observe or perform any
other provision hereof for thirty (30) days after Landlord shall have delivered
to Tenant notice of such failure (provided that Landlord shall in no event be
required to deliver a notice to Tenant in connection with Tenant’s failure to
provide a notice to Landlord as required under this Lease) (further provided,
that in the case of any default referred to in this clause (b) which
cannot with diligence be cured within such thirty (30) day period, if Tenant
shall proceed promptly to cure the same and thereafter shall prosecute the
curing of such default with diligence, then the time within which such failure may be
cured shall be extended for such period not to exceed an additional sixty (60)
days as may be necessary to complete the curing of the same with
diligence; provided, however, that Tenant shall not be entitled to cure such
breach or default that is not susceptible to cure or that is non-curable
according to the terms hereof); or (ii) the abandonment or vacation of the
Premises by Tenant; or (iii) any voluntary or involuntary assignment,
transfer, encumbrance or subletting of this Lease in violation of the
provisions hereof; or (iv) if Tenant shall file a petition in bankruptcy
or for reorganization or for an arrangement pursuant to any present or future
federal or state bankruptcy law or under any similar federal or state law, or
shall be adjudicated a bankrupt or insolvent or shall make an assignment for
the benefit of its creditors or shall admit in writing its inability to pay its
debts generally as they become due, or if a petition or answer proposing the
adjudication of Tenant as a bankrupt or its reorganization under any present or
future federal or state bankruptcy law or any similar federal or state law
shall be filed in any court and such petition or answer shall not be discharged
or denied within 90 days after the filing thereof; or (v) if a receiver,
trustee or liquidator of Tenant of all or substantially all of the assets of
Tenant or of the Premises shall be appointed in any proceeding brought by
Tenant, or if any such receiver, trustee or liquidator shall be appointed in
any proceeding brought against Tenant and shall not be discharged within 90
days after such appointment, or if Tenant shall consent to or acquiesce in such
appointment.

 

17.2         Remedies

 

Upon
the occurrence of any Event of Default, and without the giving of any
additional notice not otherwise required hereunder or by law, Landlord may exercise
the following rights

 

22

 

and remedies in
addition to all other rights and remedies provided by law or equity, either
cumulatively or in the alternative:

 

(a)           Terminate
this Lease by giving notice thereof to Tenant in which event Tenant shall
immediately vacate and deliver possession of 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 or other sums owed under
this Lease enter upon and take possession of the Premises and expel or remove
Tenant and any other person who may be occupying the Premises, or any part thereof,
by force, if necessary, without being liable for prosecution or any claim of
damages therefor, and Tenant hereby agrees to pay to Landlord on demand the
amount of all loss and damage which Landlord may suffer by reason of such
termination, whether through inability to relet the Premises on satisfactory
terms or otherwise, including (i) all reasonable expenses necessary to
relet the Premises which shall include the cost of renovating, repairing and
altering the Premises for a new tenant or tenants, advertisements and brokerage
fees and (ii) any increase in insurance premiums caused by the vacancy of
the Premises. Nothing contained in this Lease shall limit or prejudice the
right of Landlord to prove for and obtain in proceedings for bankruptcy or
insolvency by reason of the termination of this Lease, an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, the damages are to be proved, whether
or not the amount be greater, equal to, or less than the amount of the loss or
damages referred to above.

 

(b)           Enter upon
and take possession of the Premises and expel or remove Tenant or any other
person who may be occupying the Premises, or any part thereof;
without having any civil or criminal liability therefor and, without
terminating this Lease, Landlord may (but shall be under no obligation to,
except in connection with Landlord’s duty, if any, to mitigate its damages)
relet the Premises or any part thereof for the account of Tenant, in the
name of Tenant or Landlord or otherwise, without notice to Tenant for such term
or terms (which may be greater or less than the period which would
otherwise have constituted the balance of the term of this Lease) and on such
conditions (which may include concessions or free rent) and for such uses
as Landlord in its sole and absolute discretion may determine and Landlord
may collect and receive any rents payable by reason of such reletting; and
Tenant agrees to pay Landlord on demand all reasonable expenses necessary to
relet the Premises which shall include the costs of renovating, repairing and altering
the Premises for a new tenant or tenants, advertisements and brokerage fees,
and Tenant further agrees to pay Landlord on demand any deficiency that may arise
by reason of such reletting. Landlord shall not be responsible or liable for
any failure to relet the Premises or any part thereof or for any failure
to collect any rent due upon any such reletting. No such re-entry or taking of
possession of the Premises by Landlord shall be construed as an election on
Landlord’s part to terminate this Lease unless a notice of such
termination is given to Tenant pursuant to Section 17.2(a) above.

 

(c)           Enter upon
the Premises without having any civil or criminal liability therefor, and do
whatever Tenant is obligated to do under the terms of this Lease and Tenant
agrees to reimburse Landlord on demand for any expenses which Landlord may incur
in thus effecting compliance with Tenant’s obligations under this Lease, and
Tenant further

 

23

 

agrees that Landlord shall not be liable for any
damages resulting to Tenant from such action (Tenant hereby WAIVING any claim
against Landlord therefor), EVEN IF CAUSED OR ALLEGED TO BE CAUSED IN WHOLE OR
IN PART BY THE NEGLIGENCE OF LANDLORD OR ANYONE FOR WHOM LANDLORD IS
RESPONSIBLE EXCEPT IF CAUSED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF
LANDLORD OR ANYONE FOR WHOM LANDLORD IS RESPONSIBLE.

 

No repossession of
or re-entering on the Premises or any part thereof pursuant to this Section 17.2
and no reletting of the Premises or any part thereof pursuant to this Section 17.2
shall relieve Tenant or any guarantor of its liabilities and obligations
hereunder, all of which survive such repossession or re-entering.

 

Landlord shall
have the right and option, upon the occurrence and during the continuance of an
event of default hereunder, to change the locks and other security devices
within or about the Premises without notice to Tenant. Landlord shall have no
obligation to provide Tenant access to the Premises subsequent thereto or
provide Tenant keys therefor or to post any notices of any kind on the door to
the Premises.

 

No right or remedy
herein conferred upon or reserved to Landlord is intended to be exclusive of
any other right or remedy, and each and every right and remedy shall be
cumulative and in addition to any other right or remedy given hereunder or now
or hereafter existing at law or in equity. In addition to other remedies
provided in this Lease, Landlord shall be entitled, to the extent permitted by
applicable law, to injunctive relief in case of the violation, or attempted or
threatened violation, of any of the covenants, conditions or provisions of this
Lease, or to a decree compelling performance of any of the covenants,
conditions or provisions of this Lease, or to any other remedy allowed to
Landlord at law or in equity.

 

Notwithstanding
the preceding provisions of this Section 17.2, Tenant shall not be
entitled to receive, nor shall Landlord be obligated to furnish, any notice or
opportunity to cure provided for in the preceding provisions of this Section 17.2
with respect to an event of default, and Landlord may proceed to exercise
any or all of its rights and remedies in respect of such event of default
without furnishing any notice or opportunity to cure, if the same or similar
type of event of default shall have occurred two (2) or more times during
the immediately preceding twelve (12) month period.

 

In connection with
the exercise by Landlord of its rights and remedies in respect of any event of
default on the part of Tenant, to the extent (but no further) that
Landlord is required by applicable Texas law to mitigate damages, or to use
efforts to do so, and such requirement cannot be lawfully and effectively
waived (it being the intention of Landlord and Tenant that such requirements be
and are hereby WAIVED to the maximum extent permitted by applicable law),
Tenant agrees in favor of Landlord that Landlord shall not be deemed to have
failed to mitigate damages, or to have used the efforts required by law to do so,
because:

 

(1)           Landlord
leases other space which is vacant prior to re-letting the Premises;

 

24

 

(2)           Landlord
refuses to relet the Premises to any affiliate of Tenant, or any principal of
Tenant, or any affiliate of such principal (for purposes hereof, “affiliate”
shall mean and refer to any person or entity controlling, under common control
with, or controlled by, the party in question);

 

(3)           Landlord
refuses to relet the Premises to any person or entity whose creditworthiness
Landlord in good faith deems unacceptable;

 

(4)           Landlord
refuses to relet the Premises to any person or entity because the use proposed
to be made of the Premises by such prospective tenant of a type and nature
inconsistent with that of the other tenants of the Premises or because such use
would, in the good faith opinion of Landlord, impose unreasonable or excessive
demands upon the Premises’ systems, equipment or facilities;

 

(5)           Landlord
refuses to relet the Premises to any person or entity, or any affiliate of such
person or entity, who has been engaged in litigation with, or who has
threatened litigation against, Landlord or any of its affiliates, or whom
Landlord in good faith deems to be unreasonably or excessively litigious;

 

(6)           Landlord
refuses to relet the Premises because the tenant or the terms and provisions of
the proposed lease are not approved by the holders of any liens or security
interests in the Premises or any part thereof, or would cause Landlord to
breach or be in default of, or to be unable to perform any of its
covenants under, any agreements between Landlord and any third party;

 

(7)           Landlord
refuses to relet the Premises because the proposed tenant is unwilling to
execute and deliver Landlord’s standard lease form without tenant-oriented
modifications (it being agreed that this Lease or a lease in form substantially
similar to this Lease shall be construed as “Landlord’s standard lease form”)
or such tenant requires improvements to the Premises to be paid at Landlord’s
cost and expense; or

 

(8)           Landlord
refuses to relet the Premises to a person or entity whose character or
reputation, or the nature of whose business, Landlord in good faith deems
unacceptable;

 

and it is further
agreed that each and all of the grounds for refusal set forth in clauses (1) through
(8), both inclusive, of this sentence are reasonable grounds for Landlord’s
refusal to relet the Premises, or (as to all other provisions of this Lease)
for Landlord’s refusal to issue any approval, or take any other action, of any
nature whatsoever under this Lease.

 

In the event the
waiver set forth in the preceding sentence shall be ineffective, Tenant further
agrees in favor of Landlord, to the maximum extent to which it may lawfully
and effectively do so, that the following efforts to mitigate damages if made
by Landlord (and without obligating Landlord to render such efforts) shall be
conclusively deemed reasonable if: Landlord places the Premises on its
inventory of available space; Landlord makes such inventory available to
brokers

 

25

 

who request same;
and Landlord shows the Premises to prospective tenants (or their brokers) who
request to see it.

 

17.3         Landlord’s
Self-Help

 

If Tenant fails to perform any
affirmative duty or obligation under this Lease within ten (10) business
days after written notice (or in case of an emergency, without notice), the
Landlord may, at its option, perform such duty or obligation on Tenant’s
behalf, including the obtaining of reasonably required bonds, insurance
policies, or governmental permits, licenses and approvals. The costs and
expenses of any such performance by Landlord shall be due and payable by Tenant
as additional rent upon Landlord’s written demand. If any check given to
Landlord by Tenant shall not be honored by the bank upon which it is drawn,
Landlord, at its option, may require that all future payments by Tenant to
Landlord be made by bank cashier’s check or wire transfer of immediately
available funds.

 

17.4         Intentionally
Omitted

 

17.5         No
Waiver

 

The waiver by Landlord of
any breach by Tenant of any of the provisions of this Lease shall not
constitute a continuing waiver or a waiver of any subsequent breach by Tenant
either of the same or a different provision of this Lease. No waiver, benefit,
privilege or service voluntarily given or performed by either party shall give
the other any contractual right by custom, estoppel or otherwise. The
subsequent acceptance of rent pursuant to this Lease shall not constitute a
waiver of any preceding default by Tenant other than default in the payment of
the particular rental payment so accepted, regardless of Landlord’s knowledge
of the preceding breach at the time of accepting the rent, nor shall acceptance
of rent or any other payment after termination constitute a reinstatement,
extension or renewal of the Term or revocation of any notice or other act by
Landlord.

 

17.6         Late
Charge

 

If Tenant fails to pay
within five (5) days of the due date of any payment of rent or other
charges which Tenant is obligated to pay to Landlord under this Lease, there
shall be a late charge, immediately payable by Tenant as additional rent, in
the amount of one percent (1%) of each such obligation. Landlord and Tenant
agree that this sum is reasonable to compensate Landlord for accounting and
administrative expenses incurred by Landlord. In addition to the late charge,
any and all rent or other charges which Tenant is obligated to pay to Landlord
under this Lease which are unpaid shall bear interest at an annual rate of the
lesser of (a) the highest nonusurious rate permitted by law and (b) eighteen
percent (18%) from the date said payment was due until paid, said interest to
be payable by Tenant as additional rent. Landlord and Tenant agree that this
sum is reasonable to compensate Landlord for the loss of the use of funds.

 

26

 

17.7         Multiple
Remedies. No Waiver

 

No right or remedy herein
conferred upon or reserved to Landlord is intended to be exclusive of any other
right or remedy, and each and every right and remedy shall be cumulative and in
addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity or by statute or elsewhere provided in this Lease.
The failure of Landlord to insist at any time upon the strict performance of
any covenant or agreement or to exercise any option, right, power or remedy
contained in this Lease shall not be construed as a waiver or relinquishment
thereof for the future. A receipt by Landlord of any Monthly Base Rent, any
additional rent or any other sum payable hereunder with knowledge of the breach
of any covenant or agreement contained in this Lease shall not be deemed a
waiver of such breach, and no waiver by Landlord of any provision of this Lease
shall be deemed to have been made unless expressed in writing and signed by
Landlord. In addition to other remedies provided in this Lease, except as
expressly otherwise provided, Landlord shall be entitled, to the extent permitted
by applicable law, to injunctive relief in case of the violation, or attempted
or threatened violation, of any of the covenants, agreements, conditions or
provision of this Lease, or to a decree compelling performance of any of the
covenants, agreements, conditions or provisions of this Lease, or to any other
remedy allowed to Landlord at law or in equity.

 

17.8         Tenant
Waiver

 

Tenant hereby waives and
surrenders for itself and all those claiming under it, including creditors of
all kinds, (i) any right and privilege which it or any of them may have
under any present or future constitution, statute or rule of law to redeem
the Premises or to have a continuance of this Lease for the term hereby demised
after termination of Tenant’s right or occupancy by order or judgment of any
court or by any legal process or writ, or under the terms of this Lease, or
after the termination of the term of this Lease as herein provided, and (ii) the
benefits of any present or future constitution, statute or rule of law which
exempts property from liability for debt or for distress for rent.

 

17.9         Default
by Landlord

 

Landlord shall be in
default if Landlord fails to perform any provision of this Lease required
of it and the failure is not cured within thirty (30) days after notice has
been given to Landlord. If, however, the failure cannot reasonably be cured
within the cure period, Landlord shall not be in default of this Lease if
Landlord commences to cure the failure within the cure period and diligently
and in good faith continues to cure the failure. Notices given under this Section 17.9
shall specify the alleged breach and the applicable Lease provisions. If
Landlord shall at any time default beyond the applicable notice and cure
period, Tenant shall have the right to cure such default on Landlord’s behalf.
Any sums expended by Tenant in doing so, and all reasonably necessary
incidental costs and expenses incurred in connection therewith, shall be
payable by Landlord to Tenant within thirty (30) days following demand therefor
by Tenant, provided, however, that Tenant shall not be entitled to any
deduction or offset against any rent otherwise payable to Landlord under this
Lease.

 

27

 

18.

 

RIGHT OF INSPECTION

 

Landlord and Landlord’s
authorized representatives shall have the right after written notice to Tenant,
to enter upon the Premises at all reasonable hours for the purpose of
inspecting the Premises and for the purpose of exhibiting the Premises to
prospective tenants, purchasers, or others. Provided Tenant is not in default
beyond any applicable cure period, Landlord shall not exhibit any “for
sale” signs during the Term of the Lease.

 

19.

 

WAIVER OF BREACH

 

No waiver by Landlord of
any breach of any one or more of the terms, covenants, conditions, or
agreements of this Lease shall be deemed to imply or constitute a waiver of any
succeeding or other breach. Failure of Landlord to insist upon the strict
performance of any of the terms, conditions, covenants, and agreements of this
Lease shall not constitute or be considered as a waiver or relinquishment of
Landlord’s rights to subsequently enforce any default, term, condition,
covenant, or agreement, which shall all continue in full force and effect. The
rights and remedies of Landlord under this Lease shall be cumulative and in
addition to any and all other rights and remedies which Landlord has or may have.

 

20.

 

NOTICES

 

20.1         Notice
Requirements

 

All notices, requests, or
demands herein provided to be given or made, or which may be given or made
by either party to the other, shall be given or made only in writing and shall
be deemed to have been duly given: (i) when delivered personally at the
address set forth below, or to any agent of the party to whom notice is being given;
or (ii) on the date delivered when sent via Overnight Mail, properly
addressed and postage prepaid; or (iii) on the date sent via facsimile
transmission; or (iv) seventy-two (72) hours after the time the same is
deposited in the United States mail, properly addressed and first class postage
prepaid, return receipt requested. The proper address to which notices,
requests, or demands may be given or made by either party shall be the
address set forth at the end of this Section or to such other address or
to such other person as any party shall designate. Such address may be
changed by written notice given to the other party in accordance with this
Section.

 

28

 

 

	
  If to Landlord:

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
  Krausz
  Companies, Inc.

  Attn: F. Ron Krausz

  2212 Madrona Ave.

  St. Helena, California 94574

  Phone: (707) 963-7516

  Fax: (707) 963-7596

  	
   

  	
  Orrick,
  Herrington & Sutcliffe LLP

  Attn: Richard C. Mendelson, Esq.

  777 S. Figueroa Street, Suite 3200

  Los Angeles, California 90017

  Phone: (213) 612-2480

  Fax: (213) 612-2499

  
	
   

  	
   

  	
   

  
	
  and

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Krausz
  Companies, Inc.

  Attn: Mr. Amos Z. Krausz

  651 Gateway Boulevard, Suite 1010

  South San Francisco, California 94080

  Fax: (650) 871-4063

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If to Tenant:

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
  Malibu
  Centers, Inc.

  Attn: R. Scott Wheeler, CFO

  717 North Harwood, Suite 1650

  Dallas, Texas 75201

  Phone Number: (214) 210-8760

  Fax Number: (214) 210-8702

  	
   

  	
  Munsch
  Hardt Kopf & Harr, P.C.

  Attn: Michael A. Krywucki, Esq.

  1445 Ross Avenue, Suite 4000

  Dallas, Texas 75202

  Phone Number: (214) 855-7522

  Fax Number: (214) 855-7584

  

 

20.2         Payments
Under Lease

 

Rent and all other
payments due to Landlord under this Lease shall be paid in lawful money of the
United States of America without offset or deduction to the name and at the
address first given above or to such other persons or parties or at such other
places as Landlord may from time to time designate in writing.

 

21.

 

RELATIONSHIP OF THE
PARTIES

 

This Lease shall not be
deemed or construed by the parties, nor by any third party, as creating the
relationship of (i) principal and agent, (ii) partnership, or (iii) joint
venture between the parties. Neither the method of computation of rent nor any
other provision of this Lease, nor any acts of the parties are other than in the
relationship of Landlord and Tenant.

 

29

 

22.

 

SUBORDINATION,
ATTORNMENT AND ESTOPPEL

 

22.1         Subordination
and Non-Disturbance

 

Subject to the provisions
of this Section, this Lease and the leasehold estate created hereby shall be,
at the option and upon written declaration of Landlord, subject, subordinate,
and inferior to the lien and estate of any liens, trust deeds, and encumbrances
(“Mortgages”), and all renewals, extensions, or replacements thereof, now or
hereafter imposed by Landlord upon the Premises; provided, however, that this
Lease shall not be subordinate to any Mortgage or any renewal, extension, or
replacement thereof, unless and until Landlord provides Tenant with an
agreement (“Non-Disturbance Agreement”), signed and acknowledged by each holder
of any such interest setting forth that so long as Tenant is not in default
hereunder, Landlord’s and Tenant’s rights and obligations hereunder shall
remain in force and Tenant’s right to possession shall be upheld. The
Non-Disturbance Agreement may contain additional provisions as are
customarily requested by secured lenders with liens encumbering real property
security similar to the Premises. Tenant shall, promptly follow a request by
Landlord and after receipt of the Non-Disturbance Agreement, execute and
acknowledge any subordination agreement or other documents required to
establish of record the priority of any such encumbrance over this Lease, so
long as such agreement does not otherwise increase Tenant’s obligations or
diminish Tenant’s rights hereunder. Without limiting Tenant’s obligations
hereunder, Tenant acknowledges that the Subordination and Non-Disturbance
Agreement attached hereto as Exhibit “D” is in compliance with the
requirements of this Section and Tenant agrees to execute a Subordination
and Non-Disturbance Agreement in such form with appropriate changes made
thereto to include references to Texas law.

 

22.2         Attornment

 

In the event of
foreclosure of any Mortgage, whether superior or subordinate to this Lease,
then (i) this Lease shall continue in force; (ii) Tenant’s quiet
possession shall not be disturbed if Tenant is not in default beyond any
applicable cure period hereunder; (iii) Tenant shall attorn to and
recognize the mortgagee or purchaser at foreclosure sale (“Successor Landlord”)
as Tenant’s landlord for the remaining Term of this Lease; and (iv) the
Successor Landlord shall not be bound by (a) any payment of rent for more
than one month in advance; (b) any amendment, modification, or ending of
this Lease without the Successor Landlord’s consent after the Successor
Landlord’s name is given to Tenant, unless the amendment, modification, or
ending is specifically authorized by the original Lease and does not require
Landlord’s prior agreement or consent; and (c) any liability for any act
or omission of a prior Landlord. At the request of the Successor Landlord,
Tenant shall execute a new lease for the Premises, setting forth all of the
provisions of this Lease except that the Term of the new lease shall be for the
balance of the Term of this Lease.

 

22.3         Estoppel
Certificate

 

Tenant or Landlord, as
the case may be, shall execute and deliver to the other party, within
thirty (30) days after receipt of request therefor, any estoppel certificate or
other statement

 

30

 

to be furnished to
any prospective purchaser of or any lender against the Premises. Such estoppel
certificate shall acknowledge and certify each of the following matters, to the
extent each may be true: that the Lease is in effect and not subject to
any rental offsets, claims, or defenses to its enforcement; the commencement
and termination dates of the term; that Tenant is paying rent on a current
basis; that any improvements required to be furnished under the Lease have been
completed in all respects; that the Lease constitutes the entire agreement
between Tenant and Landlord relating to the Premises; that Tenant has accepted
the Premises and is in possession thereof; that the Lease has not been
modified, altered, or amended except in specified respects by specified
instruments; and that such party has no notice of any prior assignment,
hypothecation, or pledge of rents or the Lease. Such estoppel certificate shall
also set forth any other matter pertaining to this Lease which a party may reasonably
require the other to certify. Without limiting the foregoing, Tenant shall
also, upon request of Landlord, certify and agree for the benefit of any lender
against the Premises or the building (“Lender”) that Tenant will not look to
such Lender: as being liable for any act or omission of Landlord; as being
obligated to cure any defaults of Landlord under the Lease which occurred prior
to the time Lender, its successors or assigns, acquired Landlord’s interest in
the Premises by foreclosure or otherwise, as being bound by any payment of rent
or additional rent by Tenant to Landlord for more than one (1) month in
advance; or as being bound by Landlord to any amendment or modification of the
Lease without Lender’s written consent.

 

22.4         Protection
of Landlord’s Mortgagee

 

If Landlord encumbers its
interest in the Premises by mortgage, Landlord or its Mortgagee(s) may give
Tenant written notice of that fact, which notice shall state the name and
address of the mortgagee. If Tenant shall be so notified in writing of such
encumbrance and of the name and address of the Mortgagee named therein, then so
long as such encumbrance shall continue in force, notice of the default in the
performance of any of the covenants contained in this Lease, of the same kind
and in the same manner and for the same length of time as is required to be
given to the Landlord, shall also be given to such Mortgagee, extended as set
forth herein, before Tenant may terminate this Lease or otherwise, as
against such Mortgagee, take advantage of any default by Landlord. Upon elapse
of the time permitted Landlord to cure without Landlord effecting a cure,
Tenant shall give Landlord’s Mortgagee(s) a second written notice stating such
fact. Such Mortgagee shall have the right to cure any such default within
forty-five (45) days after such second notice if the same can be cured by the
payment of money, or as to other defaults, to undertake in writing to perform and
thereafter pursue in good faith the performance of all the covenants of this
Lease capable of performance by the Mortgagee or its assigns, and in such event
Landlord shall have no right to terminate this Lease by reason of such default.
In the event of such cure or undertaking, the Mortgagee shall be subrogated to
the rights of Tenant against Landlord with respect to such default.

 

23.

 

TENANT’S FINANCIAL
STATEMENTS

 

During the Term of the
Lease, Tenant shall provide Landlord (a) within forty-five (45) days after
the end of each fiscal quarter of Tenant’s parent company, quarterly operating
statements detailing property specific operating results as to the Premises for
such period and (b)

 

31

 

current financial
statements within one hundred twenty (120) days of the end of each fiscal year,
which shall include Tenant’s and each Guarantor’s profit and loss statement,
balance sheet, statement of changes in financial positions and notes to the
financial statements, and property specific operating results as to the
Premises. All such financial statements and information shall be certified by
Tenant’s Chief Financial Officer or each Guarantor’s Chief Financial Officer,
respectively, as applicable.

 

24.

 

ATTORNEYS’ FEES

 

24.1         Recovery
of Attorneys’ Fees and Costs of Suit

 

Tenant shall reimburse
Landlord, upon demand, for any costs or expenses incurred by Landlord in
connection with any breach or default under this Lease, whether or not suit is
commenced or judgment entered. Such costs shall include legal fees and costs
incurred for the negotiation of a settlement, enforcement of rights, or
otherwise. Furthermore, if any action for breach of or to enforce the
provisions of this Lease is commenced, the court in such action shall award to
the party in whose favor a judgment is entered, a reasonable sum as attorneys’
fees and costs. Such attorneys’ fees and costs shall be paid by the losing
party in such action.

 

24.2         Party
to Litigation

 

Tenant shall indemnify
Landlord against and hold Landlord harmless from all costs, expenses, demands,
and liability incurred by Landlord if Landlord becomes or is made a party to
any claim or action (i) instituted by Tenant, or by any third party
against Tenant, or by or against any person holding any interest under or using
the Premises by license of or agreement with Tenant; (ii) for foreclosure
of any lien for labor or material furnished to or for Tenant or such other
person; (iii) otherwise arising out of or resulting from any action or
transaction of Tenant or such other person; or (iv) necessary to protect
Landlord’s interest under this Lease in a bankruptcy proceeding, or other
proceeding under Title 11 of the United States Code, as amended. Tenant shall
defend Landlord against any such claim or action at Tenant’s expense with
counsel reasonably acceptable to Landlord or, at Landlord’s election, Tenant
shall reimburse Landlord for any legal fees or costs incurred by Landlord in
any such claim or action.

 

24.3         Landlord’s
Consent

 

Tenant shall pay Landlord’s
reasonable attorneys’ fees and other costs incurred in connection with Tenant’s
request for Landlord’s consent under Section 16, “Assignment, and
Subletting,” or in connection with any other act which Tenant proposes to do
and which requires Landlord’s consent.

 

32

 

25.

 

LEASEHOLD
MORTGAGE

 

25.1         Tenant’s Right to Encumber

 

Tenant
may, at any time and from time to time during the Term, with the written
consent of Landlord’s Lender, which consent shall not be unreasonably withheld,
mortgage, collaterally assign or otherwise encumber any interest that Tenant
has in this Lease or in the improvements located on the Premises (the “Leasehold
Estate”) to any nationally recognized bank, insurance company or other institutional
lender or such other lender as may be approved by Landlord (such approval
not to be unreasonably withheld), herein called “Tenant’s Mortgagee” by
deed of trust or mortgage or other security instrument (as applicable, the “Security
Instrument” or “Mortgage”) as security for an indebtedness (“Debt”),
on the further condition, with respect to all permitted financings, that:

 

(a)           The Security Instrument and all rights
acquired under it shall, by its express terms, be subject to each and all of
the covenants, conditions and restrictions stated in this Lease and to all
rights and interests of Landlord;

 

(b)           Tenant shall deliver to Landlord (i) a
complete and correct copy of the Security Instrument and all related promissory
notes, loan agreements, security agreements, indemnity agreements, guarantees,
financing statements and other loan documents executed by Tenant or for Tenant’s
benefit in connection therewith (the “Loan Documents”), each as fully
executed and delivered, within ten (10) business days after the execution
thereof, and (ii) a complete and correct of the recorded Security
Instrument, conformed by the recorder to show the date or recordation and other
recording information, within five business days after the date of recordation;

 

(c)           The Security Instrument shall expressly
provide that any proceeds from fire or extended coverage insurance shall be
used to repair or rebuild the damaged or destroyed improvements on the Premises
or as otherwise expressly provided herein;

 

(d)           The Security Instrument shall contain a
provision that all notices of default under the Loan Documents must be sent to
Landlord and Tenant and that Landlord shall have fifteen (15) business days in
which to cure any default after the time for Tenant to cure it has expired
(provided that if Landlord requires possession of the Premises in order to cure
the default, then Landlord shall have, in addition to such 15 day period, such
further time as is needed to terminate Tenant’s right to possession of the
Premises), and neither Landlord’s right to cure any default nor any exercise of
such right shall constitute an assumption of liability under any Loan Document;

 

(e)           Tenant shall immediately reimburse Landlord
for the cost of any default cured by Landlord with interest thereon as provided
in Section 17;

 

(f)            No encumbrance incurred by Tenant pursuant to
this Section or otherwise shall, and Tenant shall not have power to incur
any encumbrance that will, constitute in any way a lien or encumbrance on
Landlord’s fee title to the Premises or on any other interest of Landlord in
the

 

33

 

Premises. Landlord and Tenant hereby agree that no merger of estates
shall occur if Tenant subsequently acquires Landlord’s fee interest in the
Premises; and

 

(g)           The Security Instrument shall provide that (i) upon
a foreclosure of the Security Instrument, Tenant’s Mortgagee shall not remove
the Improvements on the Premises from the Premises and (ii) following a
foreclosure Tenant’s Mortgagee shall operate the Premises in accordance with
the terms of this Lease.

 

25.2         Rights of Tenant’s Mortgagee

 

25.2.1                If Tenant enters into a Mortgage in accordance
with the provisions of Section 25.1 and Tenant’s Mortgagee notifies
Landlord of the execution of a Mortgage and names the place for service of
notice upon Mortgagee, then:

 

25.2.2                Landlord shall make such changes or
modifications to this Lease, with the exception of those provisions of this
Lease concerning rent, length of term or other economic matters, as are
reasonably requested by any potential Tenant’s Mortgagee.

 

25.2.3                Landlord will give to any Tenant’s Mortgagee,
simultaneously with service on Tenant, notices of all demands made by Landlord
on Tenant and no such notice to Tenant shall be effective unless a copy is so
served upon Tenant’s Mortgagee.

 

25.2.4                Tenant’s Mortgagee shall have the privilege,
in accordance with the provisions hereof, of performing any of Tenant’s
covenants, curing any defaults by Tenant, and exercising any election, option
or privilege conferred upon Tenant by the terms of this Lease.

 

25.2.5                Landlord shall not terminate this Lease or
Tenant’s right of possession for any default of Tenant if, within a period of
thirty (30) days after the expiration of the period of time within which Tenant
might cure such default, such default is cured or caused to be cured by Tenant’s
Mortgagee or, if within a period of thirty (30) days after the expiration of
the period of time within which Tenant might commence to eliminate the cause of
such default, Tenant’s Mortgagee diligently commences to eliminate the cause of
such default and within sixty (60) days thereafter cures such default.

 

25.2.6                No liability for the payment of Rent or the
performance of any of Tenant’s covenants and obligations of this Lease shall
attach to or be imposed upon any Tenant’s Mortgagee, while not in possession of
the Premises, all such liability being hereby expressly waived by Landlord.

 

25.2.7                No provision of this Lease which restricts the
use of the Premises to less than for any lawful purpose, requires the Premises
to be used for a particular purpose, or requires or implies specified times of
business operation shall be binding upon a Tenant’s Mortgagee in possession or
its successors in interest; provided however that in all events there shall be
no derogation or diminishment of Landlord’s right to terminate this lease upon
a cessation of use or change in use from a multi-purpose, interactive
entertainment facility, as set forth in Section 8 of this Lease, further
provided that upon Tenant’s Mortgagee’s written request, the time for Landlord’s
election to terminate shall be tolled,

 

34

 

and Landlord shall not by reason of such cessation of
use terminate this Lease, during such period of time during which Tenant’s
Mortgagee diligently and in good faith seeks to sublease or assign Tenant’s
leasehold interest to a transferee who will operate the Premises as a
multi-purpose, interactive entertainment facility.

 

25.2.8                No amendments or modifications of this Lease
shall occur without the prior written consent of Tenant’s Mortgagee, not to be
unreasonably withheld or delayed.

 

25.2.9                Tenant’s Mortgagee shall have the right to
participate in casualty and condemnation settlements as Tenant’s
successor-in-interest.

 

26.

 

AUTHORITY TO MAKE LEASE;
COVENANT OF QUIET ENJOYMENT

 

26.1         Full Power and Authority to Enter Lease

 

The
parties covenant and warrant that each has full power and authority to enter
into this Lease. Each party shall, within 15 days after request, deliver to the
other party satisfactory evidence of such authority.

 

26.2         Quiet Enjoyment

 

Landlord
covenants and warrants that Tenant, so long as Tenant performs all of its
obligations hereunder, shall have and enjoy full, quiet, and peaceful
possession of the Premises, its appurtenances and all rights and privileges
incidental thereto during the Term, subject to the provisions of this Lease and
any title exceptions or defects in existence at the time of the conveyance of
the Premises to Landlord by Tenant.

 

26.3         No Violation of Covenants and Restrictions

 

Tenant
shall not violate or cause Landlord to violate any recorded covenants and
restrictions affecting the Premises. Tenant shall defend, indemnify, and hold
harmless Landlord from any costs or expenses incurred from such a violation.

 

27.

 

HAZARDOUS MATERIAL

 

27.1         Environmental Compliance

 

Tenant
shall not cause or permit any Hazardous Material to be used in or about the
Premises in violation of applicable Environmental Laws by Tenant, its agents,
employees, contractors, or invitees, without the prior written consent of
Landlord (which consent shall not be required as long as Tenant demonstrates to
Landlord’s reasonable satisfaction that such Hazardous Material is necessary or
useful to Tenant’s business and will be used, kept, and stored in a manner that
complies with all laws relating to such Hazardous Material.) Notwithstanding
the foregoing, Landlord acknowledges that Tenant’s use of racing and
entertainment equipment

 

35

 

requires the use
and storage of petroleum and other automotive related products on the Premises,
which will not be in violation of this Section so long as Tenant’s use
complies with applicable Environmental Laws. Tenant acknowledges that Landlord
acquired the Premises in a purchase from Tenant and that at no time has
Landlord been in occupancy of the Premises; Tenant agrees that Tenant and not
Landlord shall be responsible for any contamination of the Premises in
violation of applicable Environmental Laws to the extent that Landlord did not
cause such contamination. If Tenant breaches the obligations stated herein or
if there is contamination of the Premises in violation of applicable
Environmental Laws and Landlord did not cause such contamination, then Tenant
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 Premises, damages for the loss
or restriction on use of rentable or usable space or of any amenity of the
Premises, damages arising from any adverse impact on marketing of space of the
Premises, and sums paid in settlement of claims, attorneys’ fees, consultation
fees, and expert fees) which arise during or after the Term of the Lease as a
result of such contamination. This indemnification of Landlord by Tenant
includes, without limitation, costs incurred in connection with any
investigation or site conditions or any cleanup, remedial, 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
ground water on or under the Premises. Without limiting the foregoing, if the
presence of any Hazardous Material on the Premises not caused by Landlord
results in any contamination of the Premises in violation of applicable
Environmental Laws, Tenant shall promptly take all actions at its sole expense
as are recommended by environmental engineers hired by Tenant and are necessary
to return the Premises to a condition in compliance with applicable
Environmental Laws; provided that Landlord’s approval of such actions shall
first be obtained, which approval shall not be unreasonably withheld so long as
such actions would not potentially have any material adverse long-term effect
on the value of Premises.

 

27.2         Tenant’s
Responsibility for Hazardous Materials

 

Landlord and Tenant
acknowledge that Landlord may become legally liable for the costs of
complying with Laws relating to Hazardous Material which are not the
responsibility of Landlord or the responsibility of Tenant including the
following: (i) Hazardous Material present in the soil or ground water on
the Premises prior to the Commencement Date of the Lease; (ii) a change in
Laws which relate to Hazardous Material which make Hazardous Material present
on the Premises as of the Commencement Date, whether known or unknown to
Landlord, a violation of such new Laws; (iii) Hazardous Material that
migrates, flows, percolates, diffuses, or in any way moves on to or under the
Premises before or after the Commencement Date; (iv) Hazardous Material
present or under the Premises as a result of any discharge, dumping, or spilling
(whether accidental or otherwise) on the Premises by other tenants of the
Premises or their agents, employees, contractors, or invitees, or by others.
Accordingly, Landlord and Tenant agree that the cost of complying with Laws
relating to Hazardous Material on the Premises for which Landlord is legally
liable shall be the responsibility and shall be paid by Tenant, except to the
extent caused by Landlord. To the extent any such expense relating to Hazardous
Material is subsequently recovered or reimbursed through insurance, or recovery
from responsible third parties, or other action, Tenant shall be entitled to a
reimbursement to the extent it has paid the maintenance expense to which such
recovery or reimbursement relates.

 

36

 

27.3         Survival

 

Provisions of this
Section 27 shall survive termination of this Lease.

 

27.4         Reporting
and Inspections

 

(a)           Handle,”
“Handled” or “Handling” shall mean any installation, handling, generation,
storing, treatment, use, disposal, discharge, release, manufacture, refinement,
emission, abatement, removal, transportation, presence or migration of any
Hazardous Materials brought on the Premises by Tenant or Tenant’s
Representatives, or any other activity or any type in connection with or
involving Hazardous Materials. “Tenant’s Representatives” shall mean all
Tenant’s officers, employees, contractors, representatives, assignees,
sublessees, agents, invitees, and any trespassers on the Premises.

 

(b)           Tenant
shall deliver to Landlord prior to delivery to, or promptly after receipt from,
any governmental authority or other person or entity copies of all permits,
manifests, closure or remedial action plans, notices, investigations,
inquiries, claims, citations, summons, complaints, writs, orders and all other
communications or documents relating to (i) the Handling of Hazardous Materials
at or about the Premises, (ii) the actual, alleged or threatened violation of
Environmental Law or (iii) the liability of Tenant for environmental losses.
Any communications, written or oral, regarding any release, discharge, emission
or any other occurrence posing an imminent threat of damage or contamination to
the Premises or the environment shall be delivered or, if oral, communicated,
to Landlord within 24 hours after receipt. All other communications shall be
delivered to Landlord within 10 days after receipt. Landlord shall have no
obligation to review or evaluate any such communication and shall not be deemed
to have approved, consented to or participated in any act or omission described
or required by such communication.

 

(c)           Tenant
shall maintain, at its own expense, a written program to ensure and monitor
Tenant’s continued compliance with this Section 27 and all Environmental
Requirements. At Landlord’s request, Tenant shall provide Landlord with a copy
of such program, including monitoring results; provided, however, that Tenant
acknowledges that such program will be supplied to Landlord solely for
informational purposes, and that Landlord shall have no obligation to review
the information provided, shall not be deemed to have approved or consented to
any matter set forth therein, and shall have no liability for any deficiencies
therein. Landlord agrees not to disclose to any third parties the contents of
any such written program provided by Tenant, unless Tenant consents to such
disclosure; provided, however, Landlord may disclose such information on a
confidential basis to its attorneys, property managers or its other agents, or
as required in connection with the procurement of insurance or financing, or as
required pursuant to any contract pertaining to Landlord, or as required by
law. Tenant shall, at its sole expense, prior to the expiration or termination
of this Lease, promptly remove from the Premises, using the then best available
technology, all Hazardous Materials Handled by Tenant or Tenant’s
Representatives during the Term (collectively, “Lease Closure”),
notwithstanding any lesser standard of removal or remediation which might be allowable
under applicable law or governmental policies, and perform or cause to be
performed all actions necessary, as determined by Landlord in its reasonable
business judgment, to ensure that Lease Closure has been completed, including
inspection, testing and post-Lease Closure monitoring. Tenant, at its

 

37

 

sole expense, shall
repair any damage caused by such work and unless otherwise requested by
Landlord, shall close, at the completion of all testing and monitoring, in
accordance with applicable law, any and all monitoring and extraction wells and
boreholes installed as a result of or in connection with Tenant’s occupancy of
the Premises or otherwise installed by Tenant, or at Tenant’s direction. All consultants
or contractors performing work on behalf of Tenant pursuant to this Section 27
shall be qualified and licensed to undertake the applicable work and shall be
selected by Tenant; provided that Landlord shall be notified of the selected
consultant(s) at least 10 business days prior to the commencement of any work
by such consultant(s) (except in an emergency, in which case Landlord shall be
notified within one business day after the selection of the consultant(s)) and
Landlord shall have the right to disapprove the use of such consultant(s) in
the exercise of Landlord’s reasonable business judgment. All work required to
be performed under this Section
27, and Tenant’s and Tenant’s Representatives’ Handling of all Hazardous
Materials, shall be performed in a good, safe and workmanlike manner and in a
manner that will not interfere with the use, operation, leasing or sale of the
Premises.

 

(d)           Tenant
shall deliver to Landlord copies of all permits, authorizations, plans and
reports, and supporting documentation therefor, including any Hazardous
Materials management plan, which are required by law or by any governmental
authority with respect to Tenant’s use or proposed use of the Land and the
Work, including any Handling of Hazardous Materials. The provisions of this Section
27 shall apply to all Hazardous Materials, whether or not Landlord has
given Tenant its consent to Handle such Hazardous Materials. Tenant’s and
Tenant’s Representatives’ Handling of all Hazardous Materials shall comply at
all times with all Environmental Laws and Tenant shall, at its own expense,
promptly take all actions required by any governmental authority in connection
with Tenant’s or Tenant’s Representatives Handling of Hazardous Materials at or
about the Premises. Tenant shall keep Landlord fully and promptly informed of
all Handling of Hazardous Materials on the Premises, including notifying
Landlord as soon as possible after any spill, release, discharge or emission.

 

(e)           Landlord,
Landlord’s Lender, and either of their representatives and consultants shall
have the right, but not the obligation, to enter the Premises at any reasonable
time upon 24 hours’ prior notice (except in the case of an emergency) not more
than once each calendar year or at any time in connection with a sale or
refinancing of the Premises or if Landlord has reason to believe that a
violation of applicable requirements or a contamination exists (i) to inspect
the condition of the Premises and review all permits, reports, plans and other
documents regarding the Handling of Hazardous Materials (and Tenant shall, at
its option, have the right to have its own representative present during any
onsite inspections), (ii) to confirm Tenant’s compliance with the provisions of
this Section 27, including the right to physically investigate the
condition of the Land and the Work and review all permits, reports, plans, and
other documents regarding the Handling of Hazardous Materials, (iii) to perform
Tenant’s obligations under this Section 27 if Tenant has failed to timely do
so. Tenant shall pay the costs of Landlord’s consultants’ fees and all other
costs incurred by Landlord pursuant to clauses (i) and (ii) above if such
investigation is undertaken because Tenant has failed to provide full and
complete information regarding any release, discharge or other Handling of
Hazardous Materials and shall pay, in any case, all such costs incurred
pursuant to clause (iii) above and shall pay all reasonable costs of Landlord
incurred with respect to the above in the event a violation of applicable
requirements or a contamination is found to exist or be imminent, so long as
such inspection is reasonably related

 

38

 

to the violation or
contamination, or the inspection is requested or ordered by a governmental
authority.

 

(f)            Landlord
shall have the right, but not the obligation, to require, annually during the
Term and again within five (5) business days after the termination or
expiration of the Term, that a detailed review (“Environmental Audit”)
be undertaken to determine whether the Premises and Tenant’s Handling of all
Hazardous Materials comply with this Section 27. Tenant shall pay all
costs incurred in connection with any Environmental Audit required by Landlord,
including without limitation, the costs and expenses of all consultants and
sampling and analysis, in the event that (i) as a result of the Environmental
Audit, it is determined that the Premises or Tenant’s Handling of all Hazardous
Materials do not comply with this Paragraph 27, or (ii) the
Environmental Audit is undertaken at the termination or expiration of the Term.
In all other cases, Landlord shall pay the costs of any Environmental Audit it
requires pursuant to this Section 27. The Environmental Audit shall be
conducted by independent, qualified, licensed environmental consultants
selected by Tenant and reasonably acceptable to Landlord. If the consultants
chosen by Tenant are unacceptable to Landlord, Landlord shall be entitled to
engage its own consultants to conduct the Environmental Audit, and Tenant shall
pay Landlord’s consultants’ fees and all costs incurred by Landlord in
performing the Environmental Audit. The Environmental Audit shall include an
inspection of the Premises, interviews with the occupants of the Premises and
any other matters which the consultants believe, in the exercise of their
professional judgment, are necessary to ascertain whether the Premises are in
compliance with this Section 27, including the installation of
monitoring wells, and soils and water testing. Tenant shall fully cooperate
with the consultants and comply with all information requests. After the
completion of the Environmental Audit, a written report shall be prepared and
copies shall be distributed to both Landlord and Tenant. In connection with any
Environmental Audits, Landlord shall use commercially reasonable efforts not to
interfere with Tenant’s use or operations of the Premises.

 

(g)           In
the event of any release, discharge or other event caused or contributed to by
the acts or omissions of Tenant or Tenant’s Representatives which poses a
threat of damage or contamination to the Premises or the environment, whether
discovered by Landlord or Tenant, Tenant shall fully document the facts
relating to the event, including the circumstances existing prior to and after
the occurrence of the event, the precise nature of the release, discharge or
event, including specific compounds and quantities involved, and all actions
Tenant has taken and will take to remediate the release, discharge or event.
Tenant shall provide such documentation to Landlord promptly after the
occurrence in question. Tenant shall pay the reasonable costs and fees charged
by Landlord’s environmental consultants to review such documentation and
provide peer review confirming the adequacy of the measures, past and future,
taken by Tenant to remediate the problem.

 

(h)           Landlord
and Tenant agree that the statute of limitations shall be tolled from the date
of this Lease through the expiration or termination of this Lease (including
any Extension Periods) for any and all claims Landlord may have against Tenant
arising out of any leak, release or discharge of Hazardous Materials or in
connection with any remediation of any such leak, release or discharge.

 

39

 

28.

 

GENERAL PROVISIONS

 

28.1         Gender;
Number

 

The use of (i) the neuter
gender includes the masculine and feminine and (ii) the singular number
includes the plural, whenever the context requires.

 

28.2         Captions

 

Captions in this Lease
are inserted for the convenience of reference only and do not define, describe,
or limit the scope or the intent of this Lease or any of its terms.

 

28.3         Exhibits

 

All attached exhibits are a part of this Lease and are
incorporated in full by this reference. Except as specifically provided herein,
if any provision contained in any exhibit hereto is inconsistent or in conflict
with any provisions of this Lease, the provisions of this Lease shall supersede
the provisions of such exhibit and shall be paramount and controlling.

 

28.4         Entire
Agreement

 

This Lease contains the entire agreement between the
parties relating to the transactions contemplated hereby and all prior or
contemporaneous agreements, understandings, representations and statements,
oral or written, are merged into this Lease.

 

28.5         Drafting

 

This Lease shall not be construed more strictly
against one party than the other because it may have been drafted by one of the
parties or its counsel, each having contributed substantially and materially to
the negotiation and drafting hereof.

 

28.6         Modification

 

No modification, waiver, amendment, discharge, or
change of this Lease shall be valid unless it is in writing and signed by the
party against which the enforcement of the modification, waiver, amendment,
discharge, or change is or may be sought.

 

28.7         Joint
and Several Liability

 

If any party consists of more than one person or
entity, the liability of each such person or entity signing this Lease shall be
joint and several.

 

28.8         Governing
Law

 

Any action brought by Landlord against Tenant in
connection with this Lease or any matter that in any way relates to the
transactions contemplated by this Lease may be brought by Landlord in any court
of competent jurisdiction, wherever located, having personal jurisdiction

 

40

 

over Tenant. The judgment
in any such action may be enforced by any court of competent jurisdiction
wherever located. Any action brought by Tenant against Landlord in connection
with this Lease or any matter that in any way relates to the transactions
contemplated by this Lease shall be brought by Tenant in any court of competent
jurisdiction in the State of Texas. Regardless of who initiates an action or
the jurisdiction and/or venue in which such action is brought, the Lease and
all matters that in any way relate to the transactions contemplated by this
Lease shall be governed by the laws of the state in which the Premises are
located (without regards to questions as to conflicts of law).

 

28.9         Attorneys’
Fees

 

With respect to Section 24 and any other provision in
this Lease providing for payment or indemnification of attorneys’ fees, such
fees shall be deemed to include reasonable fees incurred through any applicable
appeal process, and shall include fees attributable to legal services provided
by both outside counsel and any in-house counsel and staff to the prevailing or
indemnified party. For purposes hereof, the services of in-house counsel and
their staff shall be valued at rates for independent counsel prevailing in the
metropolitan area in which such counsel and staff practice.

 

28.10       Time
of Essence

 

Time is of the essence of every provision of this
Lease.

 

28.11       Severability

 

In the event any term, covenant, condition, or
provision of this Lease is held to be invalid, void, or otherwise unenforceable
by any court of competent jurisdiction, the fact that such term, covenant,
condition, or provision is invalid, void, or otherwise unenforceable shall in
no way affect the validity or enforceability of any other term, covenant,
condition, or provision of this Lease.

 

28.12       Successors
and Assigns

 

Except as otherwise provided herein, all terms of this
Lease shall be binding upon, inure to the benefit of, and be enforceable by the
parties and their respective legal representatives, successors, and assigns.

 

28.13       Independent
Covenants

 

This Lease shall be construed as though the covenants
herein between Landlord and Tenant are independent and not dependent, and
Tenant hereby expressly waives the benefit of any statute to the contrary and
agrees that if Landlord fails to perform its obligations set forth herein,
Tenant shall not be entitled to make any repairs or perform any acts hereunder
at Landlord’s expense or to any offset of the rent or other amounts owing
hereunder against Landlord; provided, however, the foregoing shall in no way
impair the right of Tenant to commence a separate action against Landlord for
any violation by Landlord of the provisions hereof so long as notice is first
given to Landlord and any holder of a mortgage or deed of trust covering all or
any portion of the Premises (of whose address Tenant has theretofore been

 

41

 

notified) and an
opportunity is granted to Landlord and such holder to correct such violation as
provided above.

 

28.14       Right
of First Offer

 

At such time and from time to time, should Landlord
desire to sell Landlord’s Interest in the Premises, or any larger tract of land
of which the Premises may be a part (“Landlord’s Interest”) to a third party
unaffiliated with Landlord, Landlord shall give Tenant written notice of such
desire. Within thirty (30) days of Tenant’s receipt of such notice, Tenant, if
Tenant desires to purchase Landlord’s Interest, shall give Landlord notice of
its intention to purchase Landlord’s Interest and the price and other material
economic terms and conditions on which it offers to make such purchase. In the
event Tenant does not provide Landlord with such offer within said thirty (30)
day period, Landlord may thereafter sell Landlord’s Interest to such persons or
entities and on such terms as Landlord may choose in its sole and absolute
discretion and after any such sale such right of first offer shall not apply to
any subsequent sales. In the event that Tenant timely provides to Landlord its
offer to purchase Landlord’s Interest, Landlord will have an option to either
sell Landlord’s Interest to Tenant on the terms and conditions set forth in
Tenant’s notice (such option to be exercised by notice to Tenant within one
year after the giving of Tenant’s notice) or to sell the Premises to a third
party for a price not less than 95% of the price (taking into account such
other material economic terms and conditions and Tenant’s obligations to pay
the Tenant Closing Costs), or to not sell Landlord’s Interest until such time
as Landlord again gives notice to Tenant under this subsection 28.14. If
Landlord shall notify Tenant within such one year period that it has sold the
Premises at a price which is not less than 95% of the price set forth in
Landlord’s offering notice (but no such sale shall be made at a price less than
95% of the same price offered by Tenant without first sending Tenant a new
notice as to the changed price and any such changed terms and conditions, in
which event Tenant shall have a further period in which to elect to purchase at
the new price or on the changed terms and conditions, as aforesaid, said
further period to be thirty (30) days), all rights of Tenant under this
subsection 28.14 shall be deemed void and of no further force and effect. In
addition, if a sale to a third party is not effected by Landlord within the
aforesaid one year period, and Tenant does not at such time elect to purchase the
Premises at the price and other material economic terms on which Tenant made
its original offer, the rights of Tenant under this subsection 28.14 shall also
be deemed void and of no further force and effect. Notwithstanding anything in
this subsection 28.14 to the contrary, this subsection 28.14 shall not apply to
a transfer of Landlord’s Interest: (i) to any entity or person which is related
to, affiliated with, or under common or shared control with Landlord or any
person or entity which owns or controls any portion of Landlord’s Interest in
the Premises, or with any constituent partner or member of either of the
foregoing, (ii) to or from an intermediary in connection with Landlord’s
effectuation of an exchange involving the Premises pursuant to and including,
without limitation, applicable case law or Section 1031 of the Internal Revenue
Code, as amended, or (iii) made pursuant to a mortgage or deed of trust
covering the Premises which does not involve a transfer, sale or other
conveyance of fee title to the Premises. Notwithstanding anything to the
contrary contained herein, Tenant’s rights under this Section 28.14 are and
shall remain unconditionally subordinate and junior to any deed of trust or
security instrument encumbering Landlord’s interest in the Premises by Landlord
in favor of Landlord’s Lender (defined in Section 13.7) and any transfer or
sale of Landlord’s interest in the Premises to Tenant shall be subject to the
terms of the Lender’s Documents

 

42

 

(defined in Section
28.25) pertaining to any such transfer or sale of the Landlord’s interest in
the Premises.

 

28.15       Procedure
Upon Purchase

 

(a)           In the
event of the purchase of the Premises or any part thereof by Tenant pursuant to
any provision of this Lease, Landlord need not transfer and convey to Tenant or
its designee any better title thereof than existed on the date of the
commencement of this Lease (as such title may have been altered in accordance
with the provisions hereof), and Tenant shall accept such title, subject,
however, to all liens, encumbrances, charges, exceptions and restrictions on,
against or relating to the Premises and to all applicable laws, regulations and
ordinances, but free of the lien of Landlord’s Mortgage (if not assumed) and
free of liens, encumbrances, charges, exceptions and restrictions which have
been created by or resulted from acts of Landlord after the commencement of
this Lease, to the extent the same are not permitted hereunder.

 

(b)           Upon the
date fixed for any such purchase of the Premises pursuant to any provision of
this Lease, Tenant shall pay to Landlord at its address set forth above, or at
any other place designated by Landlord, the purchase price therefor specified
herein, and Landlord shall deliver to Tenant (i) a special warranty deed which
describes the Premises or portion thereof then being sold to Tenant and conveys
and transfers the title thereto which is described in paragraph 18(a), together
with (ii) such other instruments as shall be necessary to transfer to Tenant or
its designee any other property then required to be sold by Landlord pursuant
to this Lease. Tenant shall pay all charges incident to such conveyance and
transfer, including its own counsel fees, one-half of the escrow fees and recording
fees, the entire amount of title insurance premiums and all applicable federal,
state and local taxes (other than any income or franchise taxes levied upon or
assessed against Landlord) which may be incurred or imposed by reason of such
conveyance and transfer and by reason of the delivery of said deed and other
instruments (the “Tenant Closing Costs”).

 

28.16       Information
Provided

 

Tenant warrants and represents that all information
Tenant has provided to Landlord is accurate and correct and Tenant acknowledges
that Landlord has relied upon such information in entering into this Lease

 

28.17       No
Lease Until Accepted

 

Landlord’s delivery of unexecuted copies or drafts of
this Lease is solely for the purpose of review by the party to whom delivered
and is in no way to be construed as an offer by Landlord nor in any way implies
that Landlord is under any obligation to Lease the Premises. When this Lease
has been executed by both Landlord and Tenant, it shall constitute a binding
agreement to lease the Premises upon the terms and conditions provided herein
and Landlord and Tenant agree to execute all instruments and documents and take
all actions as may be reasonably necessary or required in order to consummate
the lease of the Premises as contemplated herein.

 

43

 

28.18       Counterparts

 

This Lease may be executed in any number of
counterparts, each of which shall be deemed and original. The counterparts
shall together constitute but one agreement. Any signature on a copy of this
Lease or any document necessary or convenient thereto sent by facsimile shall
be binding upon transmission by facsimile and the facsimile copy may be
utilized for the purposes of this Lease.

 

28.19       Limitation
on Landlord’s Liability

 

The obligations of Landlord under this Lease shall not
constitute personal obligations of Landlord or its individual directors,
officers, employees or affiliates, and Tenant shall look to the Premises, and
not to any other assets of Landlord, for the satisfaction of any liability of
Landlord with respect to this Lease, and shall not seek recourse against
Landlord or its individual directors, officers, employees or affiliates, or any
of their personal assets for such satisfaction.

 

28.20       Consents

 

Whenever the consent, approval, judgment or
determination of Landlord is required or permitted under any provision of this
Lease, Landlord may exercise its good faith business judgment in granting or
withholding such consent or approval or in making such judgment or
determination without reference to any extrinsic standard of reasonableness,
unless the provision for such consent, approval, judgment or determination
specifies that Landlord’s consent or approval is not to be unreasonably
withheld, or that such judgment or determination is to be reasonable, or
otherwise specifies the standards under which Landlord may withhold its
consent. If it is determined that Landlord failed to give its consent where it
was required to do so under this Lease, Tenant shall be entitled to specific
performance but not to monetary damages for such failure. Landlord’s actual
reasonable costs and expenses (including architects’, attorneys’, engineers’
and other consultants’ fees) incurred in the consideration of, or response to,
a request by Tenant for any Landlord consent, including consents to an assignment,
a subletting or the presence or use of a Hazardous Materials, shall be paid by
Tenant upon receipt of an invoice and supporting documentation therefor.
Landlord’s consent to any act, assignment or subletting shall not constitute an
acknowledgment that no Event of Default by Tenant of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Event of Default,
except as may be otherwise specifically stated in writing by Landlord at the
time of such consent. The failure to specify herein any particular condition to
Landlord’s consent shall not preclude the imposition by Landlord at the time of
any future consent of such further or other conditions as are then reasonable
with reference to the particular matter for which consent is being given. In
the event that either party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within 10 business days after such request. The review or approval by Landlord
of any item to be reviewed or approved by Landlord under the terms of this
Lease shall not impose upon Landlord any liability for accuracy or sufficiency
of any such item or the quality or suitability of such item for its intended
use. Any such review or approval is for the sole purpose of protecting
Landlord’s interest in the Premises or under this Lease, and no third parties,
including Tenant or the representatives and visitors or Tenant or any person or
entity claiming by, through or under Tenant, shall have any rights hereunder.

 

44

 

28.21       Reservations
of Landlord

 

Landlord reserves to itself the right, from time to
time and without the consent or joinder of Tenant, to grant such easements,
rights and dedications as Landlord may deem necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements, rights,
dedications, maps and restrictions do not unreasonably interfere with the use,
operation or economic viability of the Premises by Tenant. Tenant agrees to
sign any documents reasonably requested by Landlord to effectuate any such
easement rights, dedication, map or restrictions.

 

28.22       Construction
of Lease

 

This Lease shall be construed fairly as to all parties
and not in favor of or against any party, regardless of which party prepared
this Lease. Whenever the context requires, all words used in the singular will
be construed to have been used in the plural, and vice versa, and each gender
will include any other gender. The captions of the sections and paragraphs of
this Lease are for convenience only and do not define or limit any terms or
provisions. Unless otherwise specifically provided, references in this Lease to
sections, paragraphs and exhibits shall be to sections, paragraphs and exhibits
of or to this Lease. All exhibits hereto are incorporated herein by the
references thereto in this Lease. The use in this Lease of the word “include” or
any derivative thereof shall be construed as providing examples or illustration
only and shall not limited the generality of any provision in which it is used.
As used in this Lease, the term “business day” means any day on which
commercial banks are open for business in the State of Texas, and the term
“day” means a calendar day when not expressly stated to be a business day. If
any period or deadline specified in this Lease ends or falls on a day that is
not a business day, such period or deadline shall be extended to end or fall on
the next succeeding business day. Wherever used in this Lease, the symbol “$”
refers to dollars in currency of the United States of America.

 

28.23       Waiver
of Trial by Jury

 

To the maximum extent to which the parties may lawfully
and effectively so agree under applicable law, Landlord and Tenant each (a)
covenants and agrees not to elect a trial by jury in any suit, action or
proceeding arising out of this Lease or the relationship between the parties as
landlord and tenant, and (2) waives any right to a trial by jury in any such
suit, action or proceeding with respect to any issue triable of right by a
jury, to the extent that any such right exists now or in the future. This
waiver of rights to a trial by jury in separately given by each party, knowingly
and voluntarily and with the advice or opportunity for advice of the parties’
respective legal counsel.

 

28.24       Real
Estate Broker

 

Each party hereto warrants and represents to the other
that no real estate broker or salesman has been involved in this Lease, and
each party agrees to indemnify and hold the other harmless from and against any
and all claims of any other real estate broker or salesman for commissions or
other compensation in respect of this Lease due to acts of the indemnifying
party or its representatives.

 

45

 

28.25       Conflict
Between Terms of Lease and Loan Documents of Landlord’s Lender

 

In the event of a conflict or inconsistency between
the terms and provisions of this Lease and the terms and provisions of the loan
documents evidencing a loan by Landlord’s Lender (the “Lender’s Documents”),
Tenant agrees that such conflicting or inconsistent terms and provisions of the
Lender’s Documents shall govern and control; provided, however, that such
conflicting or inconsistent terms and provisions of the Lender’s Documents
shall be reasonably acceptable to Tenant. Notwithstanding the foregoing, Tenant
acknowledges and agrees that the terms and provisions of the Lender’s Documents
of Northland/Marquette Capital Group, Inc., which may be the initial Landlord’s
Lender, are reasonable and shall govern and control in the event of any
conflict or inconsistency with the terms and provisions of this Lease. Landlord
agrees to use reasonable efforts to cause the requirements of any future
Lender’s Documents not to be in conflict or inconsistent with the requirements
contained in this Lease.

 

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

– SIGNATURE PAGE TO FOLLOW]

 

46

 

IN WITNESS WHEREOF, the parties have executed this Lease as of
the dates set forth in their respective acknowledgments.

 

 

	
  LANDLORD:

  	
  TENANT:

  
	
   

  	
   

  
	
  THE
  FIRST AMERICAN FINANCIAL

  CORPORATION, a California corporation

  	
  MALIBU
  CENTERS, INC.,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Anthony Alosi

  	
   

  	
  By:

  	
  /s/
  R. Scott Wheeler

  	
   

  
	
  Name:

  	
   

  	
  Anthony Alosi

  	
   

  	
  Name:

  	
   

  	
  R. SCOTT WHEELER

  	
   

  
	
  Title:

  	
   

  	
  Attorney-in-Fact

  	
   

  	
  Title:

  	
   

  	
  VICE PRESIDENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
  July 20, 1999

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Holly J. Feagins

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Holly J. Feagins

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Attorney-in-Fact

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  July 20, 1999

  	
   

  	
   

  	
   

  	
   

  
															

 

47

 

LAND AND
BUILDING LEASE AGREEMENT

 

EXHIBIT “A”

 

LEGAL DESCRIPTION OF REAL PROPERTY

 

PREMISES LOCATION: Commonly
known as Mountasia of Willowbrook, 17190 Tomball Parkway, Houston, Texas 77064

 

(Metes and Bounds
description to be taken from the Commitment for Policy of Title Insurance)

 

(See Attached)

 

A-1

 

Tract 1: Being a 9.1720
acre tract (393,532.4 square feet), more or less, of land being all of that
certain 9.1708 acre tract out of the G. W. Childress Survey, Abstract 217,
Harris County, Texas; which said 9.1708 acre tract of land was conveyed by
First Heights Bank to M.F.G. of Willowbrook, L.P. by deed dated December 1,
1993 of record in Film Code No. 194-60-3017 of the film code records of said
Harris County, Texas; and said 9.1720 acre tract of land “Restricted Reserve A
in Block 1 of Mountasia Willowbrook, an addition in Harris County, Texas
according to the map or plat thereof recorded in Film Code No. 358119 of the
Map records of said Harris County, Texas” being more particularly described on
Exhibit “A” attached. . Said tract being the same property as described on
Exhibit II attached to that certain Amended and Restated Covenants, Conditions
and Restrictions Agreement recorded under Clerk’s File No. P765897 of the Real
Property Records of Harris County, Texas.

 

Tract 2: Rights of
access, ingress and egress over “Ring Road” and the “Entrance Magazines”
appurtenant to Tract l herein as set forth in that certain Amended and Restated
Covenants, Conditions and Restrictions Agreement recorded under Clerk’s File
No. P765897 of the Real Property Records of Harris County, Texas.

 

 

EXHIBIT “A”

 

	
  Legal Description:

  	
  9.1720 Acres of Land

  (399,532.4 Square Feet)

  G. W. Childress Survey, Abstract 217

  Harris County, Texas

  

 

BEING a 9.1720 acre tract
(399,532.4 square feet) parcel of
land being all of that certain 9.1708 acre tract our of the G.W. Childress Survey, Abstract 217, Harris
County, Texas; which said 9,1708 acre tract of land was conveyed by First
Heights Bank to M.F.G. of Willowbrook, L.P.
by deed dated December 1, 1993 of record in Film Code No. 194-60-3017 of the
film code records of said Harris County, Texas and said 9.1720 acre tract of
land “Restricted Reserve A in Block 1 of Mountasia Willowbrook, an addition in
Harris County, Texas according to the map or plat thereof recorded in film Code
No. 358119 of the map records of said Harris County, Texas” and being more
particularly described as follows:

 

Note:      All bearings are based on
the East line of said 9.1708 acre tract as being South 21 deg. 15 min. 45 sec.
East

 

BEGINNING at a point at a West corner of said
9.1708 acre tract and being in a Southeast line of an 18.366 acre tract as
conveyed by May Centers Associates Corporation to Primary Properties
Corporation by deed dated December 28,1990 of record in Film Code No.
###-##-#### of the film code records of said Harris County,  Texas and being in a Southeast line of an
access road and being in the Northeast right-of-way line of State Highway 249
(Tomball Parkway) width varies as conveyed by First Heights Bank to the State
of Texas by deed dated March 10,1992 of record in Film Code No. 017- 47-1118 of
the film code records of said Harris Country, Texas;

 

THENCE North 40 deg. 28
min. 10 sec. East (deed call North 40 deg. 28 min. 13 sec. East) along and with
a Northwest line of said 9.1708 acre tract, same being a Southeast line of said
18.366 acre tract and said access road a distance of 165.05 feet (formerly a
record distance of 165.01 feet to a L” iron pipe found at the P.C. of a curve;

 

THENCE in a Northeasterly
direction continuing along and with a Northwest line of said 9.1708 acre tract,
same being a Southeast line of said 18.366 acre tract and said access road and
curve to the right having a central angle of 70 deg. 05 min. 09 sec. (deed call
70 deg. 03 min. 46 sec.), a radius of 49.01 feet, a long chord that bears North
75 deg. 31 min. 52 sec. East 56.28 feet and an arc distance of 59.95 feet
(formerly a record distance of 59.92 feet) to a 1st iron pipe found
at the P.T. of said curve, same being the P.C. of another curve;

 

THENCE in a Northeasterly
direction along and with a North line of said 9.1708 acre tract, same being a
South line of said 18.366 acre tract and curve to the left having a

 

 

central angle of 45 deg.
49 min. 59 sec. (deed call 45 deg. 49 min. 56 sec.), a radius of 691.00 feet, a
long chord that bears North 87 deg. 38 min. 04 sec. East 538.14 feet and an are
distance of 552.76 feet (formerly a record distance of 552.75 feet) to a punch
mark made in concrete for point of compound curve;

 

THENCE in a Northeasterly
direction continuing along and with a North line of said 9.1708 acre tract,
same being a South line of said 18.366 acre tract and curve to the left having
a central angle of 02 deg. 14 min. 06 sec., a radius of 1-101.00 feet, a long
chord that bears North 63 deg. 36 min. 03 sec. East 42.95 feet and an arc
distance of 42.95 feet to a 5/8” iron rod found at the Northeast corner of said
9.1708 acre tract, same being the Northwest corner of a 5.505 acre tract a replat
of (Sports club Willowbrook) of record in Film Code No. 359086 of the map
records of said Harris County, Texas;

 

THENCE South 21 deg. 15
min. 45 sec. East along and with the East line of said 9.1708 acre tract, same
being the West line of said 5.505 acre tract (Sports Club Willowbrook) a
distance of 592.90 feet (formerly a record distance of 592.93 feet) to a 5/8”
iron rod found at the Southeast corner of said 9.1708 acre tract, same being
the Southwest corner of said 5.505 acre tract (Sports Club Willowbrook) and
being in a curve in the North right-of-way line of Greens Road (100 feet in
width);

 

THENCE in a Southwesterly
direction along and with a Southeast line of said 9.1708 acre tract, same being
the Northwest right-of-way line of said Greens Road (100 feet in width) and
curve to the left having central angle of 03 deg. 42 min. 39 sec. (deed call 03
deg. 42 min. 28 sec. ), a radius of 2050.00 feet, a long chord that bears South
49 deg. 16 min. 45 sec. West 132.75 feet and an arc distance of 132.77 feet
(formerly a record distance of 132.66 feet) to a punch mark made in concrete at
the P.T. of said curve and being in the Northeast right-of-way line of said
State Highway 249 (Tomball Parkway) width varies;

 

THENCE South 50 deg. 32
min. 08 sec West (deed call South 50 deg. 30 min. 44 sec. West) continuing
along and with the Southeast line of said 9.1708 acre tract, same being the
Northeast right-of-way line of said State Highway 249 (Tomball Parkway) width
varies a distance of 120.10 feet (formerly a record distance of 120.00 feet) to
an iron rod with aluminum cap found;

 

THENCE South 84 deg. 21
min. 12 sec. West (deed call South 84 deg. 14 min, 37 sec. West) continuing
along and with the Southeast line of said 9.1708 acre tract, same being the
Northeast right-of-way line of said State Highway 249 (Tomball Parkway) width
varies a distance of 105.44 feet (formerly a record distance of 105.50 feet) to
an iron rod with aluminum cap found at the South corner of said 9.1708 acre
tract and being in a

 

 

curve in Northeast
right-of-way line of said State Highway 249 (Tomball Parkway) width varies;

 

THENCE in a Northwesterly
direction along and with the Southwest line of said 9.1708 acre tract, same
being the Northeast right-of-way line of said State Highway 249 (Tomball
Parkway) width varies and curve to the right having a central angle of 02 deg.
44 min. 25 sec. (deed call 02 deg. 44 min. 28 sec. ), a radius of 16988.73
feet, a long chord that bears North 52 deg. 19 min. 40 sec. West 812.40 feet
are distance of 711.76 feet pass an iron rod with aluminum cap found and
continue on total arc distance of 812.48 feet (formerly a record distance of
812.76 feet) to an iron rod with aluminum cap found at the Southwest corner of
said 9.1708 acre tract;

 

THENCE North 05 deg. 16
min. 58 sec. West (deed call North 05 deg. 12 min. 28 sec. West) along and with
a West line of said 9.1708 acre tract, same being the Northeast right-of-way
line of said State Highway 249 (Tomball Parkway) width varies a distance of
42.11 feet (formerly a record distance of 41.92 feet) to an iron rod with
aluminum cap found at an angle corner of said 9.1708 acre tract;

 

THENCE North 49 deg. 32
min. 26 sec. West (deed call North 49 deg. 31 min. 47 sec. West) continuing
along and with a West line of said 9.1708 acre tract, same being the Northeast
right-of-way line of said State Highway 249 (Tomball Parkway) width varies a
distance of 10.00 feet to the PLACE OF
BEGINNING, containing 9.1720 acres (399,532.4 square feet) of land,
more or less, as calculated by the above courses and distances were determined
within the precision requirements of a Class Urban ALTA/ACSM Land Title Survey
of 1992.

 

 

EXHIBIT “B”

 

GUARANTY

 

See
Attached

 

B-1

 

 LEASE GUARANTY

 

This LEASE GUARANTY (the
“Lease Guaranty”) is executed as of the
             day
of July, 1999, by MALIBU ENTERTAINMENT WORLDWIDE INC., a Georgia corporation
(“Guarantor”), for the benefit of THE FIRST AMERICAN FINANCIAL CORPORATION, a
California corporation (“Landlord”), with reference to the following facts:

 

A.            Pursuant
to that certain Commercial Ground Lease of even date herewith (the “Lease”),
Landlord has agreed to lease to Malibu Centers, Inc., a Delaware corporation
(“Tenant”) the Premises (as described and defined in the Lease) located in the
City of Houston, Texas (all capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Lease).

 

B.            As
a condition to entering into the Lease with Tenant, Landlord has required that
Guarantor guarantee the obligations of Tenant under the Lease in accordance
with the terms of this Lease Guaranty.

 

NOW, THEREFORE, in
consideration of Landlord’s agreement to enter into the Lease and as a material
inducement to Landlord to do so, Guarantor covenants and agrees with Landlord
as follows:

 

ARTICLE 1 - REPRESENTATIONS
AND WARRANTIES

 

Guarantor makes the
following representations and warranties which shall be continuing
representations and warranties until this Lease Guaranty expires in accordance
with the provisions contained herein:

 

1.1           Existence
and Rights. Guarantor is a corporation duly incorporated and validly
existing under the laws of the State of Georgia without limitation as to the
duration of its existence and is in good standing. Guarantor has the requisite
corporate powers and adequate authority, rights and franchises to own its
property and to carry on its business as now owned and carried on and is duly
qualified and in good standing in each jurisdiction in which the property owned
by it or the business conducted by it makes such qualification necessary, and
Guarantor has the requisite corporate power and adequate authority to make and
carry out this Lease Guaranty.

 

1.2           Lease
Guaranty Authorized and Binding. The execution, delivery and performance of
this Lease Guaranty are duly authorized and do not require the consent or
approval of any governmental body or other regulatory authority; are not in
contravention of, or in conflict with, any law or regulation or any term or
provision of the Articles of Incorporation or Bylaws of Guarantor; and this
Lease Guaranty is a valid and legally binding obligation of Guarantor
enforceable in accordance with its terms.

 

1.3           No
Conflict. The execution and delivery of this Lease Guaranty are not, and
the performance of this Lease Guaranty will not be, in contravention of, or in
conflict with, any agreement, indenture or undertaking to which Guarantor is a
party or by which it or any of its

 

 

property is or may be
bound or affected and do not, and will not cause any security interest, lien or
other encumbrance to be created or imposed upon any such property.

 

1.4           Financial Condition. Guarantor’s financial statements, which have
heretofore been submitted in writing by Guarantor to Landlord in connection
herewith, are true and correct and fairly present the financial condition of
Guarantor for the period covered thereby. Since the date of said financial
statements, there has been no materially adverse change in Guarantor’s
financial condition. Guarantor has no knowledge of any liabilities, contingent
or otherwise, as of the date of said financial statements which are not
reflected in said financial statements; and, other than in the ordinary course
of its business, Guarantor has not entered into any commitments or contracts
which are not reflected in said financial statements or which may have a
materially adverse effect upon its financial condition, operations or business
as now conducted.

 

1.5           Solvency. The execution and delivery of this Lease Guaranty will not (i) render
Guarantor insolvent under generally accepted accounting principles or render it
Insolvent (as defined below), (ii) leave Guarantor with remaining assets which
constitute unreasonably small capital given the nature of Guarantor’s business,
and (iii) result in the incurrence of Debts (as defined below) beyond
Guarantor’s ability to pay them when and as they mature. For the purposes of
this Section 1.5, “Insolvent” means that the present fair salable value of
assets is less than the amount that will be required to pay the probable
liability on existing Debts as they become absolute and matured. For the
purposes of this Section 1.5, “Debts” includes any legal liability for
indebtedness, whether matured or unmatured, liquidated or unliquidated,
absolute, fixed or contingent.

 

1.6           Financial or other Benefit or Advantage. Guarantor hereby acknowledges and warrants
that it has derived or expects to derive a financial or other benefit or
advantage from the Lease.

 

1.7           Guarantor’s Assumption of Guaranty Risks. Guarantor is fully aware of the financial
condition of Tenant. Guarantor delivers this Lease Guaranty based solely upon
Guarantor’s own independent investigation and in no part upon any
representation or statement of Landlord with respect thereto. Guarantor is in a
position to and hereby assumes full responsibility for obtaining any additional
information concerning Tenant’s financial condition as Guarantor may deem
material to Guarantor’s obligations hereunder and Guarantor is not relying
upon, nor expecting Landlord to furnish Guarantor, any information in
Landlord’s possession concerning Tenant’s financial condition. By acceptance
hereof, Landlord and Guarantor agree that Guarantor hereby knowingly accepts
jointly and severally the full range of risk encompassed within a guaranty
contract, such as this Lease Guaranty, that includes a “Continuing Guaranty,”
which risk includes, without limitation, the possibility that Tenant will incur
additional indebtedness for which Guarantor may be liable hereunder after
Tenant’s financial condition or ability to pay its lawful debts when they fall
due has deteriorated.

 

ARTICLE
2 - AGREEMENTS

 

2.1           Lease Guaranty. Guarantor hereby unconditionally and
irrevocably guarantees (i) the due and punctual payment of Monthly Base Rent
and all other amounts due under or required

 

2

 

to
be made under the Lease, including, without limitation, reimbursement of
Landlord’s expenses in connection with a default under the Lease (and all
renewals, extensions, modifications and rearrangements thereof), and (ii) the
full and faithful performance of all of the terms, covenants, conditions and
agreements contained in the Lease (and all renewals, extensions, and
modifications thereof) (collectively, the “Guaranteed Obligations”).

 

The
Guaranteed Obligations shall not be modified, reduced, or exonerated in any
manner other than pursuant to an express written agreement executed by
Landlord. Therefore, as an example and not in any way of limitation, a
subsequent modification of the Lease or of Tenant’s obligations thereunder
pursuant to court order or operation of law or through any reorganization case
concerning Tenant (whether by reason of the rejection or assignment of the
Lease, any limitation of the amount of Landlord’s allowed claim in such case,
or otherwise) shall not affect the obligation of Guarantor to pay and perform
the Guaranteed Obligations in full compliance with the terms of the Lease,
irrespective of any modification, reduction, or exoneration of Tenant’s
obligations under the Lease. THIS IS A GUARANTY OF PAYMENT AND PERFORMANCE AND
NOT OF COLLECTION ONLY.

 

2.2           Obligations Absolute. The obligations of Guarantor hereunder shall
remain in full force and effect without regard to, and shall not be affected or
impaired by the following, any of which may be taken without the consent of, or
notice to, Guarantor, nor shall any of the following give Guarantor any
recourse or right of action against Landlord:

 

(a)           Any express or implied amendment,
modification, renewal, addition, supplement, extension (including, without
limitation, extensions beyond the Term) or acceleration of or to any of the
Lease;

 

(b)           Any exercise or non-exercise by Landlord of
any right or privilege under this Lease Guaranty or the Lease;

 

(c)           Any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to Guarantor or Tenant, or any guarantor (which term shall, for the
purposes of this Lease Guaranty, include any other party at any time directly
or contingently liable for any of the Tenant’s obligations under the Lease) or
any affiliate of Tenant, or any action taken with respect to this Lease
Guaranty by any trustee or receiver, or by any court, in any such proceeding,
whether or not Guarantor shall have had notice or knowledge of any of the
foregoing;

 

(d)           Any release or discharge of the Tenant from
its liability under the Lease or any release or discharge of any guarantor or
of any other party at any time directly or contingently liable for the
Guaranteed Obligations;

 

(e)           Any assignment or other transfer of the Lease
or this Lease Guaranty in whole or in part; and/or

 

(f)            Any acceptance of partial performance of the
Guaranteed Obligations.

 

3

 

2.3           Waivers.
Guarantor unconditionally waives any defense to the enforcement of this Lease
Guaranty, including, without limitation:

 

(a)           All presentments, demands for performance,
notices of nonperformance, protests, notices of protest, notices of dishonor,
and notices of acceptance of this Lease Guaranty;

 

(b)           Any right to require Landlord to proceed
against Tenant or any guarantor at any time or to proceed against or exhaust
any security (including the Deposit, if any) held by Landlord at any time or to
pursue any other remedy whatsoever at any time;

 

(c)           The defense of any statute of limitations
affecting the liability of Guarantor hereunder, the liability of Tenant or any
guarantor under the Lease, or the enforcement hereof, to the extent permitted
by law;

 

(d)           Any defense arising by reason of any
invalidity or unenforceability of all or any portion of the Lease or any
disability of Tenant or any guarantor or of any manner in which Landlord has
exercised its rights and remedies under the Lease, or by any cessation from any
cause whatsoever of the liability of Tenant or any guarantor;

 

(e)           Any defense based upon an election of remedies
by Landlord;

 

(f)            Any duty of Landlord to advise Guarantor of
any information known to Landlord regarding the financial condition of Tenant
and all other circumstances affecting Tenant’s ability to perform its
obligations to Landlord, it being agreed that Guarantor assumes the
responsibility for being and keeping informed regarding such condition or any
such circumstances;

 

(g)           Any rights of subrogation, reimbursement,
exoneration, contribution and indemnity, and any rights or claims of any kind
or nature against Tenant which arise out of or are caused by this Lease
Guaranty, and any rights to enforce any remedy which Landlord now has or may hereafter
have against Tenant and any benefit of, and any right to participate in, any
security (including the Deposit, if any) now or hereafter held by Landlord,
until all of the Guaranteed Obligations have been fully paid and performed; and

 

(h)           Without limiting the generality of the
foregoing or any other provision hereof, any rights and benefits which might
otherwise be available to Guarantor as a surety or guarantor under statute or
common law.

 

(i)            Guarantor consents and agrees that Landlord
shall be under no obligation to marshal any assets in favor of Guarantor or any
of them, or against or in payment of any or all of the Guaranteed Obligations.

 

2.4           Subrogation. Guarantor understands that the exercise by Landlord of certain rights
and remedies may affect or eliminate Guarantor’s right of subrogation against
Tenant or any guarantor and that Guarantor may therefore incur partially or
totally nonreimbursable liability hereunder. Nevertheless, Guarantor hereby
authorizes and empowers Landlord, its successors, endorsees and/or assigns, to
exercise in its or their sole discretion, any rights and

 

4

 

remedies, or any
combination thereof, which may then be available, it being the purpose and
intent of Guarantor that the obligations hereunder shall be absolute,
continuing, independent and unconditional under any and all circumstances.

 

2.5           Independent
and Separate Obligations. The obligations of Guarantor hereunder are
independent of the obligations of Tenant under the Lease and, in the event of
any default hereunder, a separate action or actions may be brought and
prosecuted against Guarantor whether or not Guarantor is the alter ego of
Tenant and whether or not Tenant is joined therein or a separate action or actions
are brought against Tenant. Landlord’s rights hereunder shall not be exhausted
until all of the Guaranteed Obligations have been fully paid and performed.

 

2.6           Bankruptcy
No Discharge; Repayments. So long as any of the Guaranteed Obligations
hereunder shall be owing to Landlord, Guarantor shall not, without the prior
written consent of Landlord, commence or join with any other party in
commencing any bankruptcy, reorganization or insolvency proceedings of or
against Tenant. Guarantor understands and acknowledges that by virtue of this
Lease Guaranty, it has specifically assumed any and all risks of a bankruptcy
or reorganization case or proceeding with respect to Tenant. If claim is ever
made upon Landlord for repayment of any amount or amounts received by Landlord
in payment of the obligations under the Lease and Landlord repays all or any
part of said amount, then, notwithstanding any revocation or termination of
this Lease Guaranty or the cancellation of the Lease, Guarantor shall be and
remain liable to Landlord for the amount so repaid to the same extent as if
such amount had never originally been received by Landlord.

 

2.7           Payments
and Performance. Guarantor agrees that whenever Guarantor shall make any
payment to Landlord or otherwise perform any of the Guaranteed Obligations
hereunder on account of the liability hereunder, Guarantor will deliver such
payment or tender such performance to Landlord at the address provided in
Section 3.9 below or at such other address as may be required by Landlord and
notify Landlord in writing that such payment is made or performance tendered
under this Lease Guaranty for such purpose. It is understood that Landlord,
without impairing this Lease Guaranty, may apply payments from Tenant to the
Guaranteed Obligations or to such other obligations owed by Tenant to Landlord
in such amounts and in such order as Landlord in its complete discretion
determines. No payment made hereunder by Guarantor to Landlord shall constitute
Guarantor as a creditor of Landlord.

 

2.8           Continuing
Obligations. In the event of the death or dissolution of Guarantor, this
Lease Guaranty shall continue in effect against Guarantor’s estate or in any
dissolution, receivership or “winding up.”

 

2.9           Acknowledgement
of Separate Actions. Guarantor acknowledges and agrees that any final
determination by a court of competent jurisdiction of the amount of the
Guaranteed Obligations or any obligations and liabilities owing by Tenant or
Guarantor to Landlord shall be conclusive and binding upon Guarantor irrespective
of whether Guarantor was a party to the suit or action in which such
determination was made.

 

5

 

ARTICLE 3 - MISCELLANEOUS

 

3.1           Exercise
of Remedies; Successors; Etc. No delay or failure by Landlord to exercise
any remedy against Tenant or Guarantor will be construed as a waiver of that
right or remedy. All remedies of Landlord are cumulative. If Guarantor consists
of more than one person or entity, the obligations hereunder shall be joint and
several. Any married person executing this Lease Guaranty agrees that recourse
may be had against community assets and against such person’s separate property
for the satisfaction of the obligations hereby guaranteed. When the context in
which the words are used in this Lease Guaranty indicates that such is the
intent, words in the singular number shall include the plural and vice-versa.
If any one or more of the provisions of this Lease Guaranty should be
determined to be illegal or unenforceable, all other provisions shall remain
effective. The Guarantor shall not have the right to assign any of its rights
or obligations under this Lease Guaranty.

 

3.2           Governing
Law; Consent to Jurisdiction. THIS LEASE GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. AS PART OF THE
CONSIDERATION FOR LANDLORD’S ENTERING INTO THE LEASE WITH TENANT, GUARANTOR
HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING DIRECTLY OR INDIRECTLY
HEREUNDER MAY, AT THE OPTION OF LANDLORD, BE LITIGATED IN COURTS WITHIN HARRIS
COUNTY, TEXAS, AND GUARANTOR HEREBY EXPRESSLY CONSENTS TO THE JURISDICTION OF
ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN HARRIS COUNTY, TEXAS AND
SERVICE OF PROCESS MAY BE MADE BY PERSONAL SERVICE UPON GUARANTOR WHEREVER GUARANTOR
MAY BE THEN LOCATED, OR BY CERTIFIED OR REGISTERED MAIL DIRECTED TO GUARANTOR
AT GUARANTOR’S LAST KNOWN ADDRESS, OR OTHERWISE IN ACCORDANCE WITH APPLICABLE
LAW.

 

3.3           Assignability
by Landlord. Landlord may, at any time and from time to time, assign, conditionally
or otherwise, all of the rights of Landlord, under the Lease and under this
Lease Guaranty, whereupon such assignee shall succeed to all rights of Landlord
hereunder. Landlord, or each successor landlord, may give written notice to
Guarantor of any such assignment, but any failure to give, or delay in giving,
such notice shall not affect the validity or enforceability of any such
assignment.

 

3.4           Demands.
Each demand by Landlord for performance or payment hereunder shall be in
writing and shall be made in the manner set forth in Section 3.9 below. A dated
statement signed by an officer of Landlord setting forth the amount of Monthly
Base Rent or other amounts at the time owing to Landlord by Tenant under the
Lease shall be conclusive evidence thereof as between Guarantor and Landlord in
any legal proceedings against Guarantor in connection with this Lease Guaranty.

 

3.5           Term.
The obligations of Guarantor under this Lease Guaranty shall continue in full
force and effect so long as any obligations under the Lease remain due to
Landlord, and said obligations are subject to revival and renewal pursuant to
section 2.6 hereof.

 

6

 

3.6           Expenses;
Attorneys’ Fees and Costs. Guarantor agrees to pay all expenses incurred by
Landlord in connection with enforcement or post-default analysis or
representation of Landlord’s rights in connection with the Guaranteed
Obligations and otherwise under the Lease or under this Lease Guaranty,
including, but not limited to, fees and costs of attorneys, accountants,
appraisers, environmental consultants and other professionals, as well as court
costs, as any of the foregoing may be incurred through all appeals to final
judgment in connection with collection thereof.

 

3.7           MUTUAL
WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMMERCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT TRIER OF FACT AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAW TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. EACH OF
THE PARTIES HERETO SPECIFICALLY WAIVES SUCH PARTY’S RIGHT TO TRIAL BY JURY OF
ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY
OTHER CLAIM (COLLECTIVELY “CLAIMS”) ASSERTED BY LANDLORD AGAINST TENANT OR
GUARANTOR, OR BY TENANT OR GUARANTOR AGAINST LANDLORD, LANDLORD’S WAIVER
HEREUNDER BEING EVIDENCED BY ITS ACCEPTANCE OF THIS LEASE GUARANTY. THIS WAIVER
EXTENDS TO ALL SUCH CLAIMS, INCLUDING, WITHOUT LIMITATION, CLAIMS WHICH INVOLVE
PERSONS OR ENTITIES OTHER THAN LANDLORD, TENANT, AND GUARANTOR; CLAIMS WHICH
ARISE OUT OF OR ARE IN ANY WAY CONNECTED TO THE RELATIONSHIP BETWEEN LANDLORD
AND TENANT OR GUARANTOR; AND ANY CLAIMS FOR DAMAGES, BREACH OF CONTRACT ARISING
OUT OF THE GUARANTEED OBLIGATIONS OR THIS AGREEMENT, SPECIFIC PERFORMANCE, OR
ANY EQUITABLE OR LEGAL RELIEF OF ANY KIND.

 

WITH REFERENCE TO THE
FOREGOING WAIVER, GUARANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL
AND SUFFICIENT CONSIDERATION THEREFOR AND THAT SUCH WAIVER BY GUARANTOR IS A
MATERIAL INDUCEMENT FOR LANDLORD ENTERING INTO THE TRANSACTIONS COVERED BY THE
LEASE AND THIS LEASE GUARANTY.

 

3.8           Severability.
Wherever possible each provision of this Lease Guaranty shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Lease Guaranty shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Lease Guaranty.

 

3.9           Notices.
All notices and demands hereunder shall be deemed to have been duly given if
personally delivered or mailed by United States registered or certified mail,
with return receipt requested, postage prepaid to the parties at the following
addresses (or at such other addresses as shall be given by written notice by
any party to the others) or if deposited with a

 

7

 

nationally
recognized overnight courier requiring a signed receipt for delivery thereof,
with all charges prepaid, and shall be deemed complete upon any such mailing or
deposit:

 

	
  To Guarantor:

  	
   

  	
  Malibu Entertainment
  Worldwide, Inc.,

  Attn: Scott Wheeler, CFO

  1717 North Harwood, Suite 1650

  Dallas, Texas 75201

  Phone: 214-210-8760

  Fax: 214-210-8702

   

  
	
  with
  a copy to:

  	
   

  	
  Munsch
  Hardt Kopf & Harr, P.C.

  Attn: Michael A. Krywucki, Esq.

  1445 Ross Avenue, Suite 4000

  Dallas, Texas 75202

  Phone Number: (214) 855-7522

  Fax Number: (214) 855-7584

   

  
	
  To
  Landlord:

  	
   

  	
  The
  First American Financial Corporation

  421 North Main Street

  Santa Ana, California 92701

   

  
	
  with
  a copy to:

  	
   

  	
  Krausz
  Companies, Inc.

  Attn: F. Ron Krausz

  2212 Madrona Ave.

  St. Helena, California 94574

  Phone: (707) 963-7516

  Fax: (707) 963-7596

   

  
	
  with
  a copy to:

  	
   

  	
  Krausz
  Companies, Inc.

  Attn: Mr. Amos Z. Krausz

  651 Gateway Boulevard, Suite 1010

  South San Francisco, California 94080

  Fax: (650) 871-4063

   

  
	
  with
  a copy to:

  	
   

  	
  Orrick,
  Herrington & Sutcliffe LLP

  Attn: Richard C. Mendelson, Esq.

  777 S. Figueroa Street, Suite 3200

  Los Angeles, California 90017

  Phone: (213) 612-2480

  Fax: (213) 612-2499

  

 

3.10         Complete
Agreement. This Lease Guaranty supersedes any prior negotiations,
discussions or communications between Guarantor and Landlord and constitutes
the entire agreement between Landlord and Guarantor with respect to the
Guaranteed Obligations.

 

8

 

IN WITNESS WHEREOF, the
undersigned has executed this Lease Guaranty as of the date first above
written.

 

	
   

  	
   

  	
   

  	
  GUARANTOR:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MALIBU ENTERTAINMENT
  WORLDWIDE, INC.,

  a Georgia corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
								

 

9

 

EXHIBIT “C”

 

WHEN
RECORDED MAIL TO:

 

Michael
A. Krywucki, Esq.

Munsch Hardt Kopf & Harr, P.C.

1445 Ross Avenue, Suite 4000

Dallas, Texas 75202

 

MEMORANDUM OF LEASE

 

This
Memorandum of Lease is made by and between
                                                    ,
a corporation (“Landlord”), with a mailing address of
                                                    ,
and MALIBU CENTERS, INC., a
Delaware corporation (“Tenant”), with a mailing address of
                                                    ,
pursuant to that certain Commercial Ground Lease dated
              ,
1999 (the “Lease”) pursuant to which Landlord has demised to Tenant, and Tenant
has accepted such demise from Landlord, the Premises (later defined) upon the
following terms:

 

Date
of Lease:
                              ,
1999

 

Description
of Premises: See Exhibit “A” attached hereto

 

Commencement
Date: The Term of this Lease shall begin on
                                        ,
1999

 

Expiration
Date: 

 

Term:
Two Hundred Eighty-Eight (288) full calendar months

 

Renewal
Option(s); Two (2) sixty (60) month options

 

Right
of First Offer: Tenant has a right of first offer in accordance with the terms
and conditions of the Lease should Landlord offer the Premises for sale.

 

The
purpose of this Memorandum of Lease is to give record notice of the Lease and
of the rights created thereby, all of which are hereby confirmed.

 

C-1

 

IN
WITNESS WHEREOF, the parties have executed this Memorandum of
Lease as of the dates set forth in their respective acknowledgments.

 

 

	
   

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MALIBU
  CENTERS, INC.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MALIBU
  CENTERS, INC.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LANDLORD:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a(n)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a(n)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
														

 

C-2

 

[NOTARIES AND EXHIBIT A TO BE ATTACHED]

 

C-3

 

EXHIBIT “D”

 

SUBORDINATION, NONDISTURBANCE AND

ATTORNMENT AGREEMENT

 

See Attached

 

D-1

 

RECORDING REQUESTED BY

AND WHEN RECORDED MAIL TO:

 

Attn:

 

Loan
No.:

 

SPACE ABOVE THIS LINE RESERVED FOR RECORDER’S USE

 

SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT

 

NOTICE: THIS SUBORDINATION, NONDISTURBANCE AND
ATTORNMENT AGREEMENT RESULTS IN YOUR LEASEHOLD ESTATE BECOMING SUBJECT TO AND OF
LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.

 

This
Subordination, Nondisturbance and Attornment Agreement (“Agreement”) is entered
into as of the            day
of
                            ,
199     by and among Malibu Centers, Inc., a Delaware
corporation (“Tenant”),
                                                                                
(“Borrower”) and
                                                          
(“Bank”).

 

Factual
Background

 

A.            Borrower owns certain real property in the
County of
                  ,
State of California, more particularly described in the attached Exhibit A. The
term “Property” herein means that real property together with all improvements
(the “Improvements”) located on it.

 

B.            Bank has made or agreed to make a loan to
Borrower in the principal amount of
$              
(the “Loan”) as provided in a loan agreement (the “Loan Agreement”). The Loan
is or will be evidenced by a promissory note (the “Note”) which is or will be
secured by a deed of trust encumbering the Property (the “Deed of Trust”) with
an assignment of rents. The Loan Agreement, the Note, the Deed of Trust, this
Agreement and all other documents and instruments identified in the Loan
Agreement as “Loan Documents” shall be collectively referred to herein as the
“Loan Documents.”

 

C.            Tenant and Borrower (as landlord) entered into
a lease dated
                ,
199   (the “Lease”) under which Borrower leased to Tenant a portion
of the Improvements located within the Property and more particularly described
in the Lease (the “Premises”).

 

D.            It is a requirement of the Loan to Borrower
that Tenant agree, among other things, to subordinate Tenant’s rights under the
Lease to the lien of the Loan Documents and to attorn to Bank on the terms and
conditions of this Agreement. Tenant is willing to agree to such

 

1

 

subordination and
attornment and other conditions, provided that Bank agrees to a nondisturbance
provisions, all as set forth more fully below.

 

Agreement

 

Therefore, the parties
agree as follows:

 

1.             Subordination.
The Loan Documents and all supplements, amendments, modifications, renewals,
replacements and extensions of and to them shall unconditionally be and remain
at all times a lien on the Property prior and superior to the Lease, to the
leasehold estate created by it, and to all rights and privileges of Tenant
under it. The Lease and leasehold estate, together with all rights and
privileges of Tenant under that Lease, are hereby unconditionally made
subordinate to the lien of the Loan Documents in favor of Bank. Tenant consents
to Borrower and Bank entering into the Deed of Trust and the other Loan
Documents. Tenant further declares, agrees and acknowledges that in making
disbursements under the Loan Documents Bank has no obligation or duty to, nor
has Bank represented that it will, see to the application of such proceeds by
the person or persons to whom they are disbursed by Bank, and any application
or use of such proceeds for purposes other than those provided for in the Loan
Documents shall not defeat the subordination made in this Agreement, in whole
or in part.

 

2.             Definitions
of “Transfer of the Property” and “Purchaser.” As used herein, the term
“Transfer of the Property” means any transfer of Borrower’s interest in the
Property by foreclosure, trustee’s sale or other action or proceeding for the
enforcement of the Deed of Trust or by deed in lieu thereof. The term
“Purchaser,” as used herein, means any transferee, including Bank, of the
interest of Borrower as a result of any such Transfer of the Property and also
includes any and all successors and assigns, including Bank, of such
transferee.

 

3.             Nondisturbance.
The enforcement of the Deed of Trust shall not terminate the Lease or disturb
Tenant in the possession and use of the Premises unless at the time of
foreclosure Tenant is in default past all applicable notice and cure periods
under the Lease or this Agreement, and Bank so notifies Tenant in writing at or
prior to the time of the foreclosure sale that the Lease will be terminated by
foreclosure because of such default. The nondisturbance herein granted is
subject to section 5 below. This nondisturbance applies to any option to extend
or renew the Lease term which is set forth in the Lease as of the date of this
Agreement.

 

4.             Attornment.
Subject to Section 3 above, if any Transfer of the Property should occur,
Tenant shall and hereby does attorn to Purchaser, including Bank if it should
be the Purchaser, as the landlord under the Lease, and Tenant shall be bound to
Purchaser under all of the terms, covenants and conditions of the Lease for the
balance of the Lease term and any extensions or renewals of it which may then
or later be in effect under any validly exercised extension or renewal option
contained in the Lease, all with the same force and effect as if Purchaser had
been the original landlord under the Lease. This attornment shall be effective
and self-operative without the execution of any further instruments upon
Purchaser’s succeeding to the interest of the landlord under the Lease.

 

5.             Subordination
of Options and Rights of First Refusal. The Loan Documents and all
supplements, amendments, modifications, renewals, replacements and extensions
of and to them shall unconditionally be and remain at all times a lien on the
Property prior and superior to

 

2

 

any existing or future
rights of Tenant, whether arising out of the Lease or otherwise, to exercise any
option or right of first refusal to:

 

(a)           purchase
the Premises or the Property or any interest or portion in or of either of
them; or

 

(b)           expand
into other space in the Improvements.

 

except that following
foreclosure sale or a sale by Bank after Bank acquires possession of the
Property, subsequent purchasers shall be bound by the right of first offer set
forth in Section           
of the Lease. Tenant specifically agrees and acknowledges that upon any
Transfer of the Property, any other such purchase or expansion option of right
of first refusal, whether now existing or in the future arising, shall
terminate and be inapplicable to the Property notwithstanding the
nondisturbance granted to Tenant in Section 3 above. If any option or right of
first refusal to purchase is exercised prior to a Transfer of the Property, any
title so acquired to all or any part of the Property shall be subject to the
lien of the Loan Documents, which lien shall in no way be impaired by the
exercise of such option or right of first refusal. Bank specifically reserves
all of its rights to enforce any accelerating transfer, due on sale, due on
encumbrance or similar provision in the Deed of Trust or any other Loan
Document.

 

6.             Notices
of Default: Material Notices; Bank’s Rights to Cure Default. Tenant shall
send a copy of any notice of default or similar statement with respect to the
Lease to Bank at the same time such notice or statement is sent to Borrower. In
the event of any act or omission by Borrower which would give Tenant the right
to terminate the Lease or to claim a partial or total eviction, Tenant shall
not exercise any such right or make any such claim until it has given Bank
written notice of such act or omission and has given Bank either thirty (30)
days to cure the default if the default is monetary or a reasonable time for
Bank to cure the default if the default is nonmonetary. Nothing in this
Agreement, however, shall be construed as a promise or undertaking by Bank to
cure any default of Borrower.

 

7.             Limitation
on Bank’s Performance. Nothing in this Agreement shall be deemed or
construed to be an agreement by Bank to perform any covenant of Borrower as
landlord under the Lease, until such time as Bank takes possession of the
Property. Tenant agrees that if Bank becomes Purchaser then, upon subsequent
transfer of the Property by Bank to a new owner, Bank shall have no further
liability under the Lease after said transfer.

 

8.             Limitation
on Liability. No Purchaser who acquires title to the Property shall have
any obligation or liability beyond its interest in the Property.

 

9.             Tenant’s
Covenants. Tenant agrees that during the term of the Lease, without Bank’s
prior written consent, Tenant shall not:

 

(a)           pay
any rent or additional rent more than one month in advance to any landlord
including Borrower; or

 

(b)           cancel,
terminate or surrender the Lease, except at the normal expiration of the Lease
term or as provided in Section 6 above; or

 

3

 

(c)           enter
into any amendment, modification or other agreement relating to the Lease; or

 

(d)           assign
or sublet any portion of the Lease or the Premises, except as expressly
permitted in the Lease.

 

10.           Bank
Not Obligated. Bank, if it becomes the Purchaser or if it takes possession
under the Deed of Trust, and any other Purchaser shall not (a) be liable for
any damages or other relief attributable to any act or omission of any prior
Landlord under the Lease including Borrower; or (b) be subject to any offset or
defense not specifically provided for in the Lease which Tenant may have
against any prior landlord under the Lease; or (c) be bound by any prepayment
by Tenant of more than one month’s installment of rent; or (d) be obligated for
any security deposit not actually delivered to Purchaser; or (e) be bound by
any modification or amendment of or to the Lease unless the amendment or
modification shall have been approved in writing by the Bank.

 

11.           Tenant’s
Estoppel Certificate.

 

(a)           True
and Complete Lease. Tenant represents and warrants to Bank that Exhibit B
accurately identifies the Lease and all amendments, supplements, side letters
and other agreements and memoranda pertaining to the Lease, the leasehold
and/or the Premises.

 

(b)           Tenant’s
Option Rights. Tenant has no right or option of any nature whatsoever,
whether arising out of the Lease or otherwise, to purchase the Premises or the
Property, or any interest or portion in or of either of them, to expand into
other space in the Improvements or to extend or renew the term of the Lease,
except as described in the attached Exhibit C.

 

(c)           No
Default. As of the date of this Agreement, Tenant represents and warrants
that to the best of Tenant’s knowledge there exist no events of default or
events that with notice or the passage of time or both would be events of
default under the Lease on either the Tenant’s part or the Borrower’s, nor is
there any right of offset against any of Tenant’s obligations under the Lease,
except as described in the attached Exhibit D. Tenant represents and warrants
that the Lease is in full force and effect as of the date of this Agreement.

 

(d)           Hazardous
Substances. Tenant represents and warrants that it has not used, generated,
released, discharged, stored or disposed of any Hazardous Substances on, under,
in or about the Property other than Hazardous Substances used in the ordinary
and commercially reasonable course of Tenant’s business in compliance with all
applicable laws. Except for such legal and commercially reasonable use by
Tenant, Tenant has no actual knowledge that any Hazardous Substance is present
or has been used, generated, released, discharged, stored or disposed of by any
party on, under, in or about the Property. As used herein “Hazardous Substance”
means any substance, material or waste (including petroleum and petroleum
products), which is designated, classified or regulated regulated as being
“toxic” or “hazardous” or a “pollutant” or which is similarly designated,
classified or regulated under any federal, state or local law, regulation or ordinance.

 

4

 

12.           Integrated;
Etc. This Agreement integrates all of the terms and conditions of the
parties’ agreement regarding the subordination of the Lease to the Loan
Documents, attornment, nondisturbance and the other matters contained herein.
This Agreement supersedes and cancels all oral negotiations and prior and other
writings with respect to (a) such subordination (only to such extent, however,
as would affect the priority between the Lease and the Loan Documents),
including any provisions of the Lease which provide for the subordination of
the Lease to a deed of trust or to a mortgage and (b) such attornment,
non-disturbance and other matters contained herein. If there is any conflict
between the terms, conditions and provisions of this Agreement and those of any
other agreement or instrument, including the Lease, the terms, conditions and
provisions of this Agreement shall prevail. This Agreement may not be modified
or amended except by a written agreement signed by the parties or their
respective successors in interest. This Agreement may be executed in
counterparts, each of which is an original but all of which shall constitute
one and the same instrument.

 

13.           Notices.
All notices given under this Agreement shall be in writing and shall be given
personal delivery, overnight receipted courier or by registered or certified
United States mail, postage prepaid, sent to-the party at its address appearing
below. Notices shall be effective upon receipt (or on the date when proper
delivery is refused.) Addresses for notices may be changed by any party by
notice to all other parties in accordance with this Section. Service of any
notice on any one Borrower shall be effective service on the Borrower for all purposes.

 

	
  To Bank:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  To Borrower:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  To Tenant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

14.           Attorney’s
Fees. If any lawsuit, judicial reference or arbitration is commenced which
arises out of or relates to this Agreement, the prevailing party shall be
entitled to recover from each other party such sums as the court, referee or
arbitrator may adjudge to be reasonable attorneys’ fees, including the costs
for any legal services by in-house counsel, in addition to costs and expenses
otherwise allowed by law.

 

15.           Miscellaneous
Provisions. This Agreement shall inure to the benefit of and be binding
upon the parties and their respective successors and assigns. This Agreement is
governed by the laws of the State of California without regard to the choice of
law rules of that State. This Agreement satisfies any condition or requirement
in the Lease relating to the granting of a nondisturbance agreement by the
Bank. As used herein, the word “include(s)” means “include(s) without
limitation,” and the word “including” means “including but not limited to.”
Bank, at its sole discretion, may but shall not be obligated to record this
Agreement.

 

5

 

16.           Arbitration:
Judicial Reference. Bank and Borrower have agreed in the Loan Agreement
that any dispute shall be resolved by arbitration or judicial reference.
Therefore any controversy or claim between or among the parties hereto
(including Tenant) which arises out of or relates to this Agreement, including
any claim based on or arising from an alleged tort, shall also be determined by
arbitration or judicial reference as set forth below.

 

(a)           Judicial
Reference. In any judicial action between or among the parties, including
any action or cause of action arising out of or relating to this Agreement or
based on or arising from an alleged tort, all decisions of fact and law shall
at the request of any party be referred to a referee in accordance with
California Code of Civil Procedure Sections 638 et seq. The parties shall
designate to the court a referee or referees selected under the auspices of the
American Arbitration Association (“AAA”) in the same manner as arbitrators are
selected in AAA-sponsored proceedings. The presiding referee of the panel, or
the referee if there is a single referee, shall be an active attorney or
retired judge. Judgment upon the award rendered by such referee or referees
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.

 

(b)           Mandatory
Arbitration. After the Bank’s Deed of Trust has been released, fully
reconveyed or extinguished, any controversy or claim between or among the
parties, including those arising out of or relating to this Agreement or any
claim based on or arising from an alleged tort, shall at the request of any
party be determined by arbitration. The arbitration shall be conducted in
accordance with the United States Arbitration Act (Title 9, U.S. Code),
notwithstanding any choice of law provision in this Agreement, and under the
Commercial Rules of the AAA. The arbitrator(s) shall give effect to statutes of
limitation in determining any claim. Any controversy concerning whether an
issue is arbitrable shall be determined by the arbitrator(s). Judgment upon the
arbitration award may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.

 

(c)           Real
Property Collateral. Notwithstanding the provisions of Subsection (b), no
controversy or claim shall be submitted to arbitration without the consent of
all parties if, at the time of the proposed submission, any obligation of
Borrower to Bank is secured by real property collateral. If all parties do not
consent to submission of such a controversy or claim to arbitration, the controversy
or claim shall be determined by judicial reference as provided in Subsection
(a).

 

(d)           Provisional
Remedies. Self-Help and Foreclosure. No provision of this Section shall
limit the right of any party to this Agreement to exercise self-help remedies
such as setoff, foreclosure against or sale of any real or personal property
collateral or security, or to obtain provisional or ancillary remedies from a
court of competent jurisdiction before, after, or during the pendency of any
arbitration or other proceeding. The exercise of a remedy does not waive the
right of a party to resort to arbitration or reference. At Bank’s option,
foreclosure under a deed of trust or mortgage may be accomplished either by
exercise of power of sale under the deed of trust or mortgage or by judicial
foreclosure.

 

6

 

(e)           The
parties agree that this arbitration and judicial reference provision shall not
prohibit or limit summary proceedings to obtain possession of real property pursuant
to Chapter 4 of the California Code of Civil Procedure (Section 1159 et seq.)
as amended from time to time, or any similar law, statute or ordinance now or
hereafter in effect.

 

NOTICE:
THIS AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE PERSON OBLIGATED ON YOUR
LEASE TO OBTAIN A LOAN, A PORTION OF WHICH MAY BE EXPENDED FOR PURPOSES OTHER
THAN IMPROVEMENT OF THE PROPERTY.

 

	
  TENANT:

  	
  MALIBU CENTERS, INC.,

  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BORROWER:

  	
   

  	
  ,

  
	
   

  	
   

  	
  a

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BANK:

  	
   

  	
  ,

  
	
   

  	
   

  	
  a

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
												

 

7

 

EXHIBIT A

 

PROPERTY DESCRIPTION

 

A-1

 

EXHIBIT B

 

IDENTIFY LEASE AND LIST
ALL AMENDMENTS,

SUPPLEMENTS, SIDE LETTERS AND OTHER AGREEMENTS

AND MEMORANDA PERTAINING TO LEASE, PREMISES OR PROPERTY

 

B-1

 

EXHIBIT C

 

LIST OF PURCHASE,
EXPANSION, FIRST REFUSAL,

EXTENSION AND RENEWAL OPTIONS

 

C-1

 

EXHIBIT D

 

LIST ANY EXISTING
DEFAULTS OR OFFSETS UNDER LEASE

 

D-1

 

ASSIGNMENT AND ASSUMPTION OF COMMERCIAL GROUND LEASE

 

THIS ASSIGNMENT
AND ASSUMPTION OF COMMERCIAL GROUND LEASE (this “Assignment”) is made and
entered into as of the 5 day of July,
2002, by and between THE KRAUSZ FAMILY TRUST (“Landlord”), MALIBU CENTERS,
INC., a Delaware corporation (“Assignor”), and FESTIVAL FUN PARKS, LLC, a
Delaware limited liability company dba PALACE ENTERTAINMENT (“Assignee”), with
reference to the following facts:

 

A.            WHEREAS,
Landlord’s predecessor-in-interest, The First American Financial Corporation, a
California corporation, as landlord, and Assignor, as tenant, entered into that
certain commercial ground lease dated July 20, 1999 (the “Ground Lease”),
demising the real property commonly known as Mountasia of Willowbrook, 17190
Tomball Parkway, Houston, Texas 77064, more particularly described in Exhibit
A attached hereto (“Real Property”);

 

B.            WHEREAS,
Assignor desires to assign to Assignee, as of the Effective Date (defined
below), all of its right, title, interest in, to and under the Ground Lease, and
Assignee desires to receive from Assignor such assignment and to assume each
and all of the obligations of the “Tenant” under the Ground Lease to be
performed from and after the Effective Date, all pursuant to the terms and
conditions of this Assignment.

 

NOW THEREFORE, in
consideration of the foregoing recitals, the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

 

1.             Definitions.
All capitalized terms used in this Assignment which are not defined herein
shall have the same meanings ascribed to such terms in the Ground Lease.

 

2.             Representation
and Warranty of Assignor. Assignor hereby represents and warrants to
Assignee that, immediately prior to the Effective Date and the assignment of
the Ground Lease as contemplated by this Assignment, Assignor was the duly
acting “Tenant” under the Ground Lease and enjoyed the rights and benefits and
performed the duties and obligations of “Tenant” under the Ground Lease.

 

3.             Assignment.
Assignor hereby assigns and transfers to Assignee all of its right, title and
interest in and to the Ground Lease, and Assignor conveys, assigns and
transfers to Assignee any and all buildings, improvements and appurtenances
located on the Real Property (“Improvements”), all effective as of July 5, 2002
(the “Effective Date”), provided, however, that said Assignment does not
release Assignee or change

 

 

Assignee’s primary
liability to pay the rent and to perform all other obligations of Tenant under
the Lease.

 

4.             Assumption.
Assignee hereby assumes, effective as of the Effective Date, all of Assignor’s
right, title and interest under the Ground Lease and all obligations of
Assignor as the “Tenant” under the Ground Lease to be performed under the
Ground Lease from and after the Effective Date, and agrees to be bound by and
perform all of the covenants, duties and obligations to be performed by the
“Tenant” under the Ground Lease from and after the Effective Date.
Notwithstanding the foregoing, Assignee shall have no obligation, liability or
responsibility whatsoever for any liability, cost, expense or obligation of
Assignor under the Ground Lease which is attributable to any period prior to
the Effective Date.

 

5.             Assignment
of Ground Lease. Landlord hereby acknowledges that its consent is not
required pursuant to Section 16.4 of the Ground Lease to the assignment of the
Ground Lease by Assignor to Assignee. Landlord further acknowledges that
Antares Capital Corporation is Tenant’s Mortgagee upon the effective date of
the Assignment. This Assignment does not release any Guarantor or change any
Guarantor’s liability to pay rent or perform any other obligation of Tenant
under the Lease and in connection herewith Guarantor shall deliver its consent
to the Assignment and Guarantors’ reaffirmation of its Guaranty in accordance
with the provisions of Section 16 of the Lease and the same shall be a
condition to the effectiveness hereto. A further condition to the effectiveness
hereto shall be Assignee’s delivery to Landlord on the Effective Date evidence
of insurance required under the lease, including, though not limited to a
standard form mortgagee clause in favor of Texas State Bank - Riverway, Five
Riverway, Houston, Texas 77056, and Assignee’s delivery to Landlord within
fifteen (15) days after the Effective Date payment in the amount of $7,500 for
costs and fees pursuant to Section 16.5 of the Ground Lease.

 

6.             Indemnification
by Assignor. Assignor for itself, its (past and present) officers,
directors, shareholders, attorneys, legal representatives, and constituent
parent, subsidiary and affiliate corporations and each of their past and
present partners, officers, agents and employees, and each of their successors
and assigns (collectively, the “Assignor Parties”) hereby agrees to indemnify,
defend and hold harmless Assignee and the Assignee Parties (as defined below)
from and against any and all claims, demands, obligations, duties, liabilities,
damages, expenses, indebtedness, debts, breaches of contract, duty or
relationship, acts, omissions, misfeasance, malfeasance, causes of action, sums
of money, accounts, compensation, contracts, controversies, promises, damages,
costs, losses and remedies therefor, causes of action, rights of indemnity or
liability of any type, kind, nature, description or character whatsoever, and
irrespective of how, why or by reason of what facts, whether known or unknown,
whether heretofore now existing or hereafter arising, whether liquidated or
unliquidated related to the Ground Lease and/or the Real Property
(collectively, “Claims”) which Assignee or the Assignee Parties may incur or
which may be asserted against Assignee or the Assignee

 

2

 

Parties by reason of any
alleged obligation, undertaking or omission of Assignor as “Tenant” under the
Ground Lease, which Claims arise or arose from events occurring prior to the
Effective Date.

 

7.             Indemnification
by Assignee. Assignee for itself, its (past and present) officers,
directors, shareholders, attorneys, legal representatives, and constituent
parents, subsidiaries and affiliates and each of their past and present
partners, officers, agents and employees, and each of their successors and
assigns (collectively, the “Assignee Parties”) hereby agrees to indemnify,
defend and hold harmless Assignor and the Assignor Parties (as defined above)
from and against any and all Claims which Assignor or the Assignor Parties may
incur or which may be asserted against Assignor or the Assignor Parties by
reason of any alleged obligation, undertaking or omission of Assignee as the
successor “Tenant” under the Ground Lease, which Claims arise or arose from
events occurring from and after the Effective Date.

 

8.             Notice
and Identity of Tenant’s Mortgagee. For purposes of notice pursuant to the
Ground Lease (including, without limitation, Sections 20.1 and 25 of the Ground
Lease) and Tenant’s Mortgagee’s rights pursuant to the Ground Lease, until
Landlord receives written notice indicating otherwise from Tenant, Tenant’s
Mortgagee or their respective successors or assigns, as applicable:

 

the address of Tenant
shall be:

 

	
   

  	
  Festival Fun Parks, LLC

  
	
   

  	
  d/b/a Palace
  Entertainment

  
	
   

  	
  18300 Von Karman, Suite
  900

  
	
   

  	
  Irvine, California
  92612

  
	
   

  	
  Attn:

  	
  Gary Fitzpatrick, Esq.,

  
	
   

  	
   

  	
  General Counsel

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
  Paul, Hastings,
  Janofsky & Walker LLP

  
	
   

  	
  555 South Flower
  Street, 23rd Floor

  
	
   

  	
  Los Angeles, California
  90071-2371

  
	
   

  	
  Attention: Robert A.
  Miller, Jr., Esq.

  
	
   

  	
   

  
	
  and Tenant’s Mortgagee
  shall be Antares Capital Corporation, having an address of:

  
	
   

  	
   

  
	
   

  	
  Antares Capital
  Corporation

  
	
   

  	
  311 South Wacker Drive,
  Suite 6400

  
	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
  Attn: Portfolio Manager
  – Palace Entertainment

  

 

3

 

9.             Successors
and Assigns. This Assignment shall be binding on and inure to the benefit
of the parties hereto, their heirs, executors, administrators, successors in
interest, sublessees and assigns.

 

10.           Attorneys’
Fees. If any dispute should arise between the parties hereto regarding the
terms or subject matter of this Assignment or the enforcement or breach of such
terms, then the party prevailing in such dispute, whether by out-of-court
settlement or final judicial determination, shall be entitled to recover from
the non-prevailing party all costs and expenses of such dispute incurred by
such prevailing party, including, without limitation, reasonable attorneys’
fees.

 

11.           Construction;
Reaffirmation. Except for this Assignment, all of the terms and conditions
of the Ground Lease shall remain unmodified and in full force and effect. In
the event of a conflict between the terms and conditions of the Ground Lease
and the terms and conditions of this Assignment, the terms and conditions of this
Assignment shall govern and prevail.

 

12.           Counterparts.
This Assignment may be executed in multiple counterparts, each of which shall
be deemed an original, but all of which, together, shall constitute one and the
same instrument, binding on the parties hereto. The signature of any party
hereto to any counterpart hereof shall be deemed a signature to, and may be
appended to another counterpart hereof. Facsimile signatures shall be fully
binding and effective for all purposes as if they were original signatures.

 

[No Further Text On This Page]

 

4

 

IN WITNESS
WHEREOF, the undersigned have executed this Assignment on the date first above
written.

 

	
  “ASSIGNOR”

  	
   

  
	
   

  	
   

  
	
  MALIBU CENTERS, INC.,

  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  R. Scott Wheeler

  	
   

  
	
  Name:

  	
  R. Scott Wheeler

  	
   

  
	
  Title:

  	
  CFO
  / VP

  	
   

  
					

 

 

	
  “ASSIGNEE”

  
	
   

  
	
  FESTIVAL FUN PARKS,
  LLC,

  a Delaware limited liability company dba PALACE ENTERTAINMENT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Gary
  Fitzpatrick

  	
   

  
	
  Name:

  	
  Gary
  Fitzpatrick

  	
   

  
	
  Title:

  	
  VP
  Gen. Counsel

  	
   

  
					

 

 

	
  “LANDLORD”

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE KRAUSZ FAMILY TRUST

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ F. Ron Krausz

  	
   

  	
   

  
	
   

  	
  F. Ron Krausz, as
  Designated Agent

  for Dorian Krausz, Sole Trustee of The

  Krausz Family Trust u/t/a dated March 12,1998

  	
   

  
					

 

5

 

EXHIBIT A

 

LEGAL DESCRIPTION OF REAL PROPERTY

 

6

 

EXHIBIT “A”

 

	
  Legal
  Description:

  	
   

  	
  9.1720
  Acres of Land

  
	
   

  	
   

  	
  (399,532.4
  Square Feet)

  
	
   

  	
   

  	
  G. W. Childress Survey, Abstract 217

  
	
   

  	
   

  	
  Harris
  County, Texas

  

 

BEING
a 9.1720 acre tract (399,532.4 square feet) parcel of land being all of that
certain 9.1708 acre tract out of the G. W. Childress Survey, Abstract 217,
Harris County, Texas; which said 9.1708 acre tract of land was conveyed by
First Heights Bank to M.F.G. of Willowbrook, L.P. by deed dated December 1, 1993
of record in Film Code No. 194-60-3017 of the film code records of said Harris
County, Texas and said 9.1720 acre tract of land “Restricted Reserve A in Block
1 of Mountasia Willowbrook, an addition in Harris County, Texas according to
the map or plat thereof recorded in Film Code No. 358119 of the map records of
said Harris County, Texas” and being more particularly described as follows:

 

Note:  All bearings are based on
the East line of said 9.1708 acre tract as being South 21 deg. 15 min. 45 sec.
East.

 

BEGINNING
at a point at a West corner of said 9.1708 acre tract and being in a Southeast
line of an 18.366 acre tract as conveyed
by May Centers Associates Corporation to Primary Properties Corporation by deed
dated December 28, 1990 of record in Film Code No. 196-80-1490 of the film code
records of said Harris County, Texas and being in a Southeast line of an access
road and being in the Northeast right-of-way line of State Highway 249 (Tomball
Parkway) width varies as conveyed by First Heights Bank to the State of Texas
by deed dated March 10, 1992 of record in Film Code No. 017-47-1118 of the film
code records of said Harris County, Texas;

 

THENCE
North 40 deg. 28 min. 10 sec. East (deed call North 40 deg. 28 min. 13 sec.
East) along and with a Northwest line of said 9.1708 acre tract, same being a
Southeast line of said 18.366 acre tract and said access road a distance of
165.05 feet (formerly a record distance of 165.01 feet to a 1” iron pipe found
at the P.C. of a curve;

 

THENCE
in a Northeasterly direction continuing along and with a Northwest line of said
9.1708 acre tract, same being a Southeast line of said 18.366 acre tract and
said access road and curve to the right having a central angle of 70 deg. 05
min. 09 sec. (deed call 70 deg. 03 min. 46 sec.), a radius of 49.01 feet, a
long chord that bears North 75 deg. 31 min. 52 sec. East 56.28 feet and an arc
distance of 59.95 feet (formerly a record distance of 59.92 feet) to a 1” iron
pipe found at the P.T. of said curve, same being the P.C. of another curve;

 

THENCE
in a Northeasterly direction along and with a North line of said 9.1708 acre
tract, same being a South line of said 18.366 acre tract and curve to the left
having a

 

 

central
angle of 45 deg. 49 min. 59 sec.
(deed call 45 deg. 49 min. 56 sec.), a radius of 691.00 feet, a long chord that
bears North 87 deg. 38 min. 04 sec. East 538.14 feet and an arc distance of
552.76 feet (formerly a record distance of 552.75 feet) to a punch mark made in
concrete for point of compound curve;

 

THENCE in a Northeasterly direction continuing along and with a North
line of said 9.1708 acre tract, same being a South line of said 18.366 acre
tract and curve to the left having a central angle of 02 deg. 14 min. 06 sec.,
a radius of 1101.00 feet, a long chord that bears North 63 deg. 36 min. 03 sec.
East 42.95 feet and an arc distance of 42.95 feet to a 5/8” iron rod found at
the Northeast corner of said 9.1708 acre tract, same being the Northwest corner
of a 5.505 acre tract a replat of (Sports Club Willowbrook) of record in Film
Code No. 359086 of the map records of said Harris County, Texas;

 

THENCE
South 21 deg. 15 min. 45 sec. East along and with the East line of said 9.1708
acre tract, same being the West line of said 5.505 acre tract (Sports Club
Willowbrook) a distance of 592.90 feet (formerly a record distance of 592.93
feet) to a 5/8” iron rod found at the Southeast corner of said 9.1708 acre
tract, same being the Southwest corner of said 5.505 acre tract (Sports Club
Willowbrook) and being in a curve in the North right-of-way line of Greens Road
(100 feet in width);

 

THENCE
in a Southwesterly direction along and with a Southeast line of said 9.1708
acre tract, same being the Northwest right-of-way line of said Greens Road (100
feet in width) and curve to the left having a central angle of 03 deg. 42 min.
39 sec. (deed call 03 deg. 42 min. 23 sec.), a radius of 2050.00 feet, a long
chord that bears South 49 deg. 16 min. 45 sec. West 132.75 feet and an arc
distance of 132.77 feet (formerly a record distance of 132.66 feet) to a punch
mark made in concrete at the P.T. of said curve and being in the Northeast
right-of-way line of said State Highway 249 (Tomball Parkway) width varies;

 

THENCE
South 50 deg. 32 min. 08 sec. West (deed call South 50 deg. 30 min. 44 sec.
West) continuing along and with the Southeast line of said 9.1708 acre tract,
same being the Northeast right-of-way line of said State Highway 249 (Tomball
Parkway) width varies a distance of 120.10 feet (formerly a record distance of
120.00 feet) to an iron rod with aluminum cap found;

 

THENCE
South 84 deg. 21 min. 12 sec. West (deed call South 84 deg. 14 min. 37 sec.
West) continuing along and with the Southeast line of said 9.1708 acre tract, same being the Northeast
right-of-way line of said State Highway 249 (Tomball Parkway) width varies a
distance of 105.44 feet (formerly a record distance of 105.50 feet) to an iron
rod with aluminum cap found at the South corner of said 9.1708 acre tract and
being in a

 

 

curve
in Northeast right-of-way line of said State Highway 249 (Tomball Parkway)
width varies;

 

THENCE
in a Northwesterly direction along and with the Southwest line of said 9.1708
acre tract, same being the Northeast right-of-way line of said State Highway
249 (Tomball Parkway) width varies and curve to the right having a central
angle of 02 deg. 44 min. 25 sec. (deed call 02 deg. 44 min. 28 sec.), a radius
of 16988.73 feet, a long chord that bears North 52 deg. 19 min. 40 sec West
812.40 feet at an arc distance of 711.76 feet pass an iron rod with aluminum cap
found and continue on a total arc distance of 812.48 feet (formerly a record
distance of 812.76 feet) to an iron rod with aluminum cap found at the
Southwest corner of said 9.1708 acre tract;

 

THENCE
North 05 deg. 16 min. 58 sec. West (deed call North 05 deg. 12 min. 28 sec.
West) along and with a West line of said 9.1708 acre tract, same being the
Northeast right-of-way line of said State Highway 249 (Tomball Parkway) width
varies a distance of 42.11 feet (formerly a record distance of 41.92 feet) to
an iron rod with aluminum cap found at an angle corner of said 9.1708 acre
tract;

 

THENCE
North 49 deg. 32 min. 26 sec. West (deed call North 49 deg. 31 min. 47 sec.
West) continuing along and with a West
line of said 9.1708 acre tract, same being the Northeast right-of-way line of
said State Highway 249 (Tomball Parkway) width varies a distance of 10.00 feet
to the PLACE OF BEGINNING,
containing 9.1720 acres (399,532.4 square feet) of land, more or less, as
calculated by the above courses and distances which were determined within the
precision requirements of a Class Urban ALTA/ACSM Land Title Survey of 1992.Exhibit 10.24

 

LEASE

 

THIS LEASE is made and entered into as of the 15th day
of June, 1979 by and between Stemmons Perk Ltd. A Limited Partnership.

 

(hereinafter referred to as “Landlord”) and MALIBU GRAND PRIX CORP., A
Delaware corporation (hereinafter referred to as “Tenant”).

 

It is mutually agreed as follows:

 

1.                          Demised
Premises.

 

Landlord hereby leases to Tenant, and Tenant hereby
rents from Landlord, upon the terms, covenants and conditions hereinafter set
forth, that certain real property in the City of Dallas Dallas County, Texas.

 

as more particularly described in Exhibit A annexed hereto and
made a part hereof (hereinafter called the “demised premises”).

 

2.                          Term.

 

The Lease term shall commence on July 15, 1979
and shall continue for a term of ten (10) years, subject to termination
prior to the expiration of such year term as provided in Section 5 hereof.
Tenant shall have the right to extend the term of this Lease for two (2) additional
periods of five (5) years each upon the terms and conditions set forth in Section 26
hereof.

 

 

3.                          Rent.

 

3.1                    Rental
Amount. Tenant will pay to Landlord as rent hereunder the amount set forth
in the Rent Schedule which is annexed hereto as Exhibit B and made a part hereof.

 

3.2                    Manner
of Payment. The rent and all other sums payable to Landlord hereunder shall
be paid to Landlord in lawful money of the United States o£ America, without
offset, at the address specified in Section 20 hereof.

 

4.                          Use
of Demised Premises.

 

The demised premises shall be used and occupied only
for the construction and operation of a so-called commercial recreational
center and the conduct of food, beverage, souvenir and amusement operations and
businesses in connection therewith. For clarification purposes a commercial
recreational center shall include, miniature golf courses, baseball batting
cages, bumper boats & midget grand prix automobile race course.

 

5.                          Permits
and Termination.

 

5.1                    Obtaining
Permits. Tenant, at its sole cost and expense, shall promptly commence and
diligently pursue the preparation, completion, filing and processing (in
cooperation with Landlord) of all applications, plans, documents and materials
it is required to obtain, including all zone variances or conditional use
permits necessary to construct and operate a commercial recreation center on
the demised premises, including all building and other permits required for the
construction of the improvements on the demised premises. Landlord shall
cooperate with Tenant so that all applications for such variances and permits
are filed with the appropriate
governmental authorities under Landlord’s supervision and, if Landlord elects,
in Landlord’s name or the names of Landlord and

 

2

 

Tenant. All fees and costs for filings, bonds and other items shall be
paid by Tenant. Landlord shall act expeditiously in cooperating with Tenant to
avoid delays in the filing and processing of all applications.

 

5.2                    Termination
If Permits Not Issued. If all variances and permits required to construct
and operate a commercial recreation center and the improvements on the demised
premises as described in Section 5.1 hereof are not obtained by July 11,
1979, Tenant may terminate this Lease by written notice delivered to
Landlord. If Tenant exercises its termination right, this Lease shall terminate
ten (10) days following the date such notice is given and Tenant shall
have no further rights or interest in the demised premises and the duty of
Tenant to make further rental payments shall cease effective the termination
date.

 

5.3                    Termination
of Impossibility of Performance. If by reason of any statute, ordinance or
other form of governmental action Tenant is prevented from using the
demised premises to operate a midget grand prix race course, then tenant may terminate
this Lease by written notice delivered to Landlord. If Tenant exercises its
termination right, this Lease shall terminate ten (10) days following the
date such notice is given and Tenant shall have no further rights or interest
in the demised premises and the duty of Tenant to make further rental payments
shall cease effective the termination date.

 

6.                          Construction
of Improvements.

 

Upon obtaining the variances and permits referred to
in Section 5 above, Tenant, at its sole cost and expense, shall promptly
commence and diligently proceed to completion, in

 

3

 

compliance with the plans and specifications approved by Landlord, the
construction of a commercial recreation center.

 

7.                          Compliance
with Law.

 

Tenant, at its sole cost and expense, shall comply
with and faithfully observe all of the requirements of all municipal, county,
state, federal and other authorities having jurisdiction now in force or which may hereafter
be in force pertaining to or concerning the construction, maintenance and
repair of structures and improvements upon the demised premises or the use and
occupancy of the demised premises or of any building or fixtures situated
thereon.

 

8.                          Taxes.

 

8.1                    Payment
of Taxes by Tenant. As additional rent hereunder, Tenant shall pay to
Landlord, at least ten (10) days prior to delinquency, Tenant’s
proportionate share of all real property taxes and assessments levied against
or imposed upon the demised premises and the improvements thereon. Landlord
shall endeavor to obtain a separate tax bill for the demised premises and, if
separate bills are obtained, Tenant shall pay, prior to the delinquency, the
amount payable thereunder directly to the taxing authorities and submit proof
of payment to Landlord in the form of a cancelled check or photocopy of
the paid tax bill.

 

8.2                    Proration
of Taxes. All such taxes and assessments for the first and last years of
this lease term, or any extension of such term, shall be prorated between
Landlord and Tenant on the basis of the
tax fiscal year of the taxing authority.

 

4

 

8.3                    Taxes
Excluded. Nothing herein contained requires, or shall be construed as
requiring, Tenant to pay any property, gift, estate, inheritance, or other tax
assessed against Landlord, his heirs, or successors or assigns not directly
concerned with the real property herein leased or the activities of Tenant
thereon, or any income, or other tax, assessment, charge, or levy on the rent
payable by Tenant under this Lease. But if any of the foregoing shall become a
lien on the demised premises or any part thereof, or if Tenant shall be
required by law to pay any such tax, charge, or levy, or interest or penalty
thereon, or if Tenant shall be required to pay any such tax, charge, or levy in
order to protect its leasehold in the property from any foreclosure or other
proceeding that may be taken by any government or governmental agency,
office, or body, to recover such tax, charge, or levy as may have been
levied, assessed, or imposed as hereinabove set forth, or interest or penalty
thereon, he shall have and is hereby granted a lien against the demised
premises by reason of said payment and to the extent thereof. Any such amount
so paid by Tenant for or on behalf of Landlord, his heirs or successors or
assigns shall be repaid by Landlord, his heirs, or successors or assigns to
Tenant, provided, however, that in the event Landlord, his heirs, or successors
or assigns refuses or fails to repay the amount on written demand therefor,
Tenant shall have the right to deduct the amount of said payment from
subsequent rental payments as may be due hereunder.

 

8.4                    Contest
of Taxes. Tenant, at its sole cost and expense, may contest
(after prior written notice to Landlord) by appropriate proceedings conducted
in good faith and with due diligence, the amount or validity of any taxes or
assessments

 

5

 

with respect to the demised premises provided that Tenant shall make
payment of all contested amounts, under protest if it desires, unless such
proceedings shall suspend the collection of taxes or assessments.

 

9.                          Indemnification
by Tenant.

 

Tenant will protect, indemnify and save harmless
Landlord from and against all liabilities, obligations, claims, demands,
damages, causes of action, costs and expenses (including, without limitation,
attorneys’ fees, interest and penalties, but excluding any income or excess
profits, franchise or other similarly imposed taxes of Landlord determined on
the basis of general income or revenue or any interest or penalties in respect
thereof) imposed upon or incurred by or asserted against Landlord or the
demised premises by reason of or arising from or out of any of the following: (i) the
conditions, use, misuse or occupancy of the demised premises or any building or
improvement thereon or any occurrence in, upon or at the demised premises or
any building or improvement thereon, except for acts or occurrences resulting
solely from Landlord’s willful act or gross negligence; (ii) any failure
on the part of Tenant to perform or comply with any of the terms of
this Lease; or (iii) performance of any labor or services or the
furnishing of any materials or other property in respect of the demised
premises or any building or improvement thereon.

 

10.                    Insurance.

 

(a)                      Tenant,
at its expense, will maintain at all

 

6

 

times during the term of this Lease: (i) insurance with respect to
all buildings, structures and improvements upon the demised premises insuring
against loss or damage by fire and all other perils from time to time included
under “extended coverage” policies, in an amount sufficient to prevent Landlord
or Tenant from becoming a co-insurer of any partial loss under the applicable
policies, which shall be written on a replacement cost basis, or blanket
coverage subject to the ninety percent (90%) co-insurance clause; (ii) public
liability insurance applicable to the demised premises in an amount not less
than $3,000,000 combined single limit for bodily injury and property damage.
Said liability insurance shall also cover a 30’ temporary road to be
constructed from the South end of Malibu Drive (proposed) to Walnut Hill Lane.

 

(b)                     All insurance maintained by Tenant pursuant
to subparagraph (a) shall: (i) name Landlord, Tenant and any
mortgagee or deed of trust beneficiary of the fee Interest in the demised
premises as insureds, as their respective interests may appear, and shall
include, if reasonably obtainable, an effective waiver by the issuer of such
insurance of all rights of subrogation against any named insured or such
insured’s interest in the demised premises;

 

7

 

(ii) provide that no cancellation, reduction in amount or material
change in coverage thereof shall be effective until at least ten (10) days
after Landlord’s receipt of written notice thereof, and (iii) be subject
to approval by Landlord, which approval shall not be unreasonably withheld.

 

(c)                      Upon the execution of this Lease and
thereafter not less than thirty (30) days prior to the expiration date of any
policy delivered pursuant to this Section 10, Tenant will deliver to
Landlord the original of any policy or renewal policy, as the case may be,
required by this Lease, evidencing the payment of premiums; except that, in
lieu of any such original policy, Tenant may deliver a certificate of the
insurer, satisfactory to Landlord as to the issuance and effectiveness of such
policy and the amount of coverage afforded thereby.

 

11.                    Damage or Destruction.

 

11.1              Termination by Reason of Damage or Destruction. In the event there is any substantial damage
to or substantial destruction of the demised premises or the buildings and
improvements thereon, Tenant may terminate this Lease by written notice
delivered to Landlord. The expressions “substantial damage” and “substantial
destruction” as used herein shall mean any damage or destruction which prevents
the Tenant from operating a commercial recreation center upon the demised
premises for a period of more than ninety (90) days. If Tenant exercises such
termination right, this Lease shall terminate ten (10) days following the
date such notice is given and Tenant shall have no further rights or interest
in the demised premises and the duty of Tenant to make further rental

 

8

 

payment shall cease effective the termination
date. If Tenant elects to terminate all insurance proceeds payable by reason of
any substantial damage or substantial destruction shall be paid to be paid to
and retained by the Landlord. Not withstanding the wording in section 11.1
herein the tenant must reconstruct the improvements if substantial damage or
destruction occurs within the first 8 years of the lease term.

 

11.2              Repair of Damage or Destruction by Tenant. In the event there is substantial damage or
substantial destruction of the demised premises or the buildings and
improvements thereon and the Tenant does not elect to terminate this Lease as
provided in Section 11.1 hereof or in the event there is any damage to in
any destruction of the demised premises or the buildings and improvements
thereon and such damage or destruction is not substantial, Tenant (whether or
not the insurance proceeds, if any, on account of such damage or destruction
shall be sufficient for the purpose), at its expense, shall promptly commence
and complete the repair and restoration thereof to the condition which existed
immediately prior to such damage or destruction. Provided Tenant is not then in
default hereunder, insurance proceeds shall be paid to Tenant or as Tenant may direct,
from time to time as the work progresses, to pay (or reimburse Tenant for) the
cost of such repair or restoration work. Disbursement shall be made upon
written request of Tenant, accompanied by evidence satisfactory to Landlord
that the amount requested has been paid or is then due and payable and is
properly a part of such cost, and that the balance of said proceeds after
making the payment requested will be sufficient to pay the balance of the cost
of the work. Upon completion of the work and provided that there are no
mechanics’ or similar liens for labor or materials supplied in connections
therewith, the balance, if any, of such insurance proceeds shall, unless Tenant
is in default hereunder, be paid to Tenant or as Tenant may direct.

 

9

 

12.                    Liens.

 

Tenant shall keep the demised premises free of
mechanics’, materialmen’s, judgment, tax and all other liens arising out of any
construction or other work done for or debts incurred by Tenant. Not less than
seven (7) days prior to the commencement of any construction, alteration
or addition to the premises, Tenant shall notify Landlord in writing of its
intention to commence the same and Landlord shall have the right to post and
maintain on the demised premises such notices of nonresponsibility as are
provided for under applicable law.

 

13.                    Maintenance
and Repairs.

 

Tenant, at its sole cost and expense, shall keep and
maintain the demised premises, including the building and all other
improvements thereon and the adjoining sidewalks, curbs, streets and ways, and
every part thereof; in good and clean order and condition and will promptly
make or cause others to make all necessary or appropriate repairs, replacements
and renewals. All repairs, replacements and renewals shall be equal in quality
and class to the original work. Tenant hereby waives all rights which it may have
under any laws, now or hereafter in force, to make any repairs at the expense
of Landlord.

 

14.                    Utilities.

 

Tenant shall pay all charges for water, gas, heat,
light, power, telephone or other utilities and services supplied to the demised
premises, including all connection or tap fees.

 

10

 

15.                    Condemnation.

 

(a)                      If the whole or any part of the demised
premises shall be taken or condemned by any competent authority for any public
use or purpose during the term of this Lease, whether by condemnation
proceedings or otherwise, the entire award made with respect to such taking or
condemnation shall be paid and belong to Landlord, except for any award which
shall be made to Tenant as hereinafter provided for the then depreciated value
of any improvements constructed by Tenant upon the demised premises and for
damage to or cost of removal of stock, equipment, trade fixtures, furniture and
other personal property of Tenant then situated on the demised premises.

 

(b)                     In the event that a part of the demised
premises shall be condemned and: (i) the part so condemned includes
the building and/or ten percent (10%) or more of the recreation center or (ii) the
part so taken shall consist
of twenty-five percent (25%) or more of the total parking area of the demised
premises; or (iii) notwithstanding the percentage taken, such condemnation
shall materially and adversely affect the use of the remaining portion of the
use intended by this Lease; or (iv) such condemnation shall result in cutting
off or diverting direct access to the demised premises as such access is in
existence at the time of the condemnation, then and in any event, Tenant may at
any time either prior to or within a period of sixty (60) days after the date
when possession of the demised premises shall be required by the condemning
authority, elect to terminate this Lease.

 

(c)                      In the event there is a taking by eminent
domain, condemnation, or by any other means, and this Lease continues and is
not terminated by Tenant, this Lease shall

 

11

 

terminate as to the part taken, the rent payable hereunder shall
be abated by the percentage that the demised premises is reduced by the eminent
domain, condemnation or other taking and the percentages in subsections (i) and
(ii) of Section 15(b) hereof shall thereafter apply to the
property remaining subject to this Lease.

 

(d)                     In
the event there is taking of all or part of the demised premises, Tenant
shall have the right to claim and recover from the condemning authority, but
not from Landlord, such compensation as may be separately awarded to
Tenant on account of the then depreciated value of all improvements constructed
on the demised premises by Tenant and on account of damage to or cost of
removal of, for the value of stock, equipment, trade fixtures, furniture and
other personal property belonging to Tenant and to receive any award therefor.

 

16.                    Improvements.

 

Upon the termination or expiration of this Lease, all
improvements to the demised premises (except for customary trade fixtures)
shall constitute the property of the Landlord and shall vest in Landlord
without any compensation therefor to Tenant. Refrigeration and air-conditioning
equipment installed in or on the demised premises shall not constitute trade
fixtures but shall become Landlord’s property. Tenant may remove its trade
fixtures at any time during or upon the expiration of the Lease, so long as
Tenant shall not then be in default hereunder. Any damage caused to the
improvements by such removal shall be repaired by Tenant at its sole cost and
expense. Landlord shall have the option of requiring Tenant to remove all the
improvements constructed on the demised premises.

 

12

 

17.                    Assignment.

 

Tenant shall not have the right to assign this Lease
in whole or in part, nor sublet all or any part of the demised premises,
without Landlord’s prior written consent which shall not be unreasonably
withheld. Provided that no event of default shall have occurred and be
continuing hereunder, Landlord hereby consents to the assignment of this Lease
by Tenant to any person, firm or corporation which acquires all or
substantially all of Tenant’s assets or to any corporation controlled by,
controlling, or under common control with, Tenant, provided that any such
assignee shall have a net worth, determined in accordance with generally
accepted accounting principles, at least equal to or greater than Tenant’s net
worth at the time of the assignment. In the event of any such assignment or
subletting consented to by Landlord, Tenant shall not be relieved of its
obligations under this Lease. Before any assignment is made to this lease by
Tenant, notification must be made to Tenants parent company, Warner Communications, Inc.
for their approval in writing, a copy of which will be forwarded to Landlord.

 

18.                    Partial
Invalidity.

 

In the event that any of the provisions of this Lease
shall be determined by court order to be invalid, such invalidation shall affect
only the provisions so determined to be invalid, and shall not invalidate the
remaining provisions of this Lease.

 

19.                    Successors
and Assigns.

 

Subject to the provisions of Section 18 above,
the terms and conditions of this Lease shall be binding upon and inure to the
benefit of the heirs, administrators, executors, successors and assigns of the
parties hereto.

 

13

 

20.                    Notices.

 

All notices which may be required or desired to
be given to either party shall be in writing, and shall be delivered personally
or sent by United States mail, certified or registered, return receipt
requested, addressed to Tenant at 21300 Califa Street, Woodland Hills, CA.
91367 and to Landlord at 315 Laurel Street San Diego, CA 92101. Either party may change
the address for the mailing of notices by written request to the other.

 

21.                    Attorneys’
Fees.

 

In the event of any action or proceeding brought by
either party against the other to enforce any of the terms and conditions of
this Lease, the prevailing party shall be entitled to reasonable attorneys’
fees in addition to costs of suit.

 

22.                    Accord
and Satisfaction.

 

No payment by Tenant or receipt by Landlord of a
lesser amount than the monthly rent and other sums herein stipulated shall be
deemed to be other than an account of the earliest stipulated rent or other
sums due, nor shall any endorsement or statement or any check accompanying any
check or payment of rent or otherwise be deemed an accord and satisfaction; and
Landlord may accept such check or payment without prejudice to Landlord’s
right to recover the balance of such rent or other sum or pursue any other
remedy provided in this Lease.

 

23.                    Default
of Tenant.

 

(a)                      The
occurrence of any one or more of the following events shall constitute an event
of default hereunder:

 

14

 

(i)                          Tenant
shall fail to pay when due any rent or other charges payable hereunder and such
failure shall continue for ten (10) days after Landlord shall have given
Tenant written notice specifying such failure; or

 

(ii)                       Tenant
shall fail to perform any other term, condition or covenant of this Lease
and shall fail to remedy the same within thirty (30) days after Landlord shall
have given Tenant written notice specifying such failure; or

 

(iii)                    Tenant shall file or consent to the
filing of, a petition in bankruptcy or for reorganization or for the adoption
of an arrangement under the Bankruptcy Act (as now or in the future amended);
or by its making an assignment of all
or of a substantial part of its property for the benefit of its creditors;
or by the appointment of a receiver for all or a substantial part of its
property and such receivership is not vacated within ninety (90) days; or by
its being adjudicated a bankrupt or insolvent and such adjudication becoming
final; or

 

(iv)                   Tenant
shall abandon or surrender the demised premises or suffer this Lease to be
taken under any writ of execution.

 

(b)                     If
any event of default occurs, then Landlord, besides other rights or remedies it
may have, shall have the immediate right of re-entry and may remove
all persons and property from the demised premises, and Landlord may either:

 

15

 

(i)                          terminate this Lease in which event Landlord
shall be entitled to recover from Tenant the aggregate of:

 

(1)                       any unpaid rent and other charges which had
been due and payable as of the date of termination;

 

(2)                       any unpaid rent and other charges which would
have become due and payable after the date of termination throughout the
remainder of the lease term reduced by any loss which Tenant proves could have
been reasonably avoided.

 

(ii)                       without terminating this Lease, relet the
demised primises or any part thereof, as the agent and for the account of
Tenant upon such terms and conditions as Landlord may deem advisable, in
which event the rents received on such reletting shall be applied first to the
payment of any indebtedness other than rent due hereunder from Tenant to
Landlord; second, to the payment of al1 costs and expenses of such reletting
(including necessary renovation and alteration of the demised premises,
reasonable attorneys’ fees and real estate commissions paid); third, to the
payment of rent due and unpaid hereunder, and the residue, if any, to be held
by Landlord and applied in payment of future rent as the same may become
due and payable hereunder. If rentals received from such reletting during any
month are less than the rent due hereunder, Tenant

 

16

 

shall pay any such deficiency to Landlord monthly. No
such re-entry or taking possession of the demised premises by Landlord shall be
construed as an election on its part to terminate this Lease unless a
written notice of termination is given by Landlord to Tenant. Notwithstanding
any such reletting without termination, Landlord may at any time
thereafter elect to terminate this Lease for such previous events of default,
and in such event, the provisions of Section 23(b)(i) hereof shall be
applicable.

 

24.                    No waste.

 

Tenant shall not commit or
suffer to be committed any waste on or about the demised premises or any
nuisance or act or thing which might disturb the quiet enjoyment of others.

 

25.                    Inspection; Offset Statement.

 

Upon reasonable notice given
in advance, Landlord or its agent shall have the right to enter the demised
premises at customary business hours to inspect the same or to show them to
prospective lenders or purchasers. If Landlord’s prospective lender or
purchaser shall desire a statement from Tenant as to claims against Landlord on
account of prepaid rent or otherwise, Tenant shall deliver, in form reasonably
required by such lender or purchaser, an offset statement certifying (if such
be the case) that this Lease is in full force and effect and unmodified (or
stating the modifications) and that there are no defenses or offsets to its
obligations under this Lease (or stating those

 

17

 

claimed by Tenant)
and stating the date at which rent or other charges have been paid by Tenant hereunder.

 

26.                    Tenant’s Option to Extend Term.

 

Tenant shall have, and is
hereby granted two (2) options to renew the term of this Lease for
additional periods of five (5) years each. The rental payable during each
renewal period shall be the amount set forth in the Rent Schedule which is
annexed hereto as Exhibit B and made a part hereof. Each such renewal
term shall be upon the same terms and conditions as herein set forth with
respect to the original term. Tenant must exercise its option with respect to
the first five (5) year renewal term by giving Landlord written notice
thereof not less than one hundred eighty (180) days prior to the expiration of
the original term; and Tenant must exercise its option with respect to the 2nd
              (5) year
renewal terms by giving Landlord written notice thereof not less than one
hundred eighty(180) days prior to the expiration of the
1st              renewal
terms. Tenant may not exercise its option with respect to the 2nd
              renewal
terms unless it has exercised its option with respect to the prior renewal
term; and no exercise of option by Tenant shall be effective hereunder if an
event of default has occurred and remains uncured.

 

27.                    Holding Over.

 

Any holding over after the
expiration of the term or any extension of such term, with the consent of the
Landlord, shall be construed to be a tenancy from month to month at the highest
monthly rental provided for herein and shall otherwise be on the terms and
conditions herein specified.

 

18

 

28.                    Performance
on Behalf of Tenant or Landlord.

 

28.1              Performance
on Behalf of Tenant. In the event that Tenant shall fail to make any
payment or perform any act required hereunder to be made or performed by
Tenant, then Landlord (after such notice to Tenant, if any, as may be
reasonable under the circumstances) may, but shall be under no obligation to,
make such payment or perform such act with the same effect as if made or
performed by Tenant. Entry by Landlord upon the demised premises for such
purpose shall not waive or release Tenant from any obligation or default
hereunder. Tenant, upon demand, shall reimburse Landlord for all sums so paid
by Landlord and for all costs and expenses incurred by Landlord in connection
with the performance of any such act, plus simple interest thereon at the rate
of ten percent (10%) per annum.

 

28.2              Performance
on Behalf of Landlord. Landlord covenants that the demised premises are not
subject to any lien, claim or encumbrance except as set forth in Exhibit D,
which is annexed hereto and made a part hereof, and that he is not in
default or arrears in the making of any payment or the performance of any
obligation relating to the demised premises. Landlord shall on the commencement
date of the term of this Lease place Tenant in quiet possession of the demised
premises and shall secure for Tenant the quiet possession thereof against all
persons lawfully claiming the same during the entire lease term and any
extensions thereof. In the event that Landlord shall fail to make any payment
or perform any act required hereunder to be made or performed by Landlord
to enable Tenant to enjoy such quiet possession, including but not limited to
making payment to prevent any foreclosure (whether by judicial process or
pursuant to a power of sale under mortgage or deed of trust), then Tenant

 

19

 

(after such notice to Landlord, if any, as may be reasonable,
under the circumstances) may, but shall be under no obligation to, make such
payment or perform such act with the same effect as if made or performed
by Landlord. Landlord, upon demand, shall reimburse Tenant for all sums so paid
by Tenant and for all costs and expenses incurred by Tenant in connection with
the performance of any such act, plus simple interest thereon at the rate of
ten percent (10%) per annum. In the event Landlord fails or refuses to make
such reimbursement, Tenant may deduct all sums paid, plus interest, from
any rent or other sums which may become due and payable to Landlord under
this Lease.

 

29.                    Conveyance
by Landlord.

 

The term “Landlord” as used in this Lease, so far as
the covenants and obligations on the part of Landlord are concerned, shall
mean only the owner or owners of the demised premises, and in the event of any
transfer or transfers of title thereto, the Landlord named (and in the case of
any subsequent transfer, the then grantor) shall be released from and after the
date of such transfer of all personal liability as respects the performance of
any covenants or obligations by the Landlord thereafter to be performed;
provided that any funds in the hands of the Landlord or the then grantor, at
the time of such transfer, in which Tenant has an interest shall be delivered
to the grantee. It is the intent of the foregoing that the Landlord’s covenants
and obligations hereunder shall be binding on Landlord, its successors and
assigns, only during and in respect of their respective successive periods of
ownership of the demised premises.

 

20

 

30.                    Waiver.

 

The waiver by either party of any breach of any term,
covenant or condition herein contained shall not be deemed to be a waiver of
such term, covenant or condition or any subsequent breach of the same or any
other term, covenant or condition herein contained. The subsequent acceptance
of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any
term, covenant or condition of this Lease, other than the failure of Tenant to
pay the particular rental so accepted, regardless of Landlord’s knowledge of
such preceding breach at the time of acceptance of such rent. No covenant, term
or condition of this Lease shall be deemed to have been waived by either party, unless such waiver be in
writing by such party.

 

31.                    Cumulative
Rights.

 

Each right, power and remedy of Landlord provided for
in this Lease or now or hereafter existing at law or in equity or by statute or
otherwise shall be cumulative and concurrent and shall be in addition to every
other right, power or remedy provided for in this Lease or now or hereafter
existing at law or in equity or by statute or otherwise, and the exercise or beginning
of the exercise by Landlord of any one or more of any of such rights, powers or
remedies shall not preclude the simultaneous or later exercise by Landlord of
any or all such other rights, powers or remedies.

 

32.                    Acceptance
of Surrender.

 

No modification, termination or surrender of this
Lease or surrender of the demised premises or any part thereof or

 

21

 

of any interest therein by Tenant shall be valid or effective unless
agreed to and accepted in writing by Landlord, and no act by any representative
or agent of Landlord, other than such a written agreement and acceptance by
Landlord, shall constitute an acceptance thereof.

 

33.                    Entire
Agreement.

 

This Lease sets forth all the covenants, promises, agreements,
conditions and understandings between Landlord and Tenant concerning the
demised premises and there are no covenants, promises, agreements, conditions
or understandings, either oral or written, between them other than are herein
set forth. 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.

 

34.                    Surrender
of premises.

 

At the termination or expiration of this Lease,
Tenant, if requested by Landlord, shall execute and deliver to Landlord an
appropriate release in recordable form of all of the Tenant’s interests in
the demised premises.

 

35.                    Net
Lease.

 

It is intended that the rent provided in this Lease
shall be an absolute net return to Landlord for the term hereof, free of any
loss, costs, expenses or charges with respect to the demised premises,
including, without limitation, maintenance, repairs, cost of replacement of
buildings or improvements, insurance, taxes and assessments.

 

22

 

36.                    Lease Subject to Declarations.

 

This Lease and Tenant’s
interest hereunder in the demised premises are subject to all easements,
covenants, conditions and restrictions (collectively “declarations”) of record
on the date hereof.

 

37.                    Paragraph Headings .

 

The paragraph headings
contained herein are for convenience only, and are not intended to, nor do
they, construe, modify or interpret the contents of this Lease.

 

38.                    Short Form Lease.

 

Upon Tenant’s request, Landlord
will execute a short form of this Lease, suitable for recordation.

 

39.                    Commencement of Rent.

 

Rent will commence on
12/15/79,

 

40.                    Lease Guarantee.

 

Prior to the Commencement of Construction, Tenant
agrees to obtain from parent company Warner Communications and guarantee of
lease. The guarant of lease attached here to as exhibit C.

 

	
   

  	
  LANDLORD

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Illegible

  	
   

  
	
   

  	
  Illegible

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TENANT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NALIBU GRAND PRIX CORP.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Illegible

  	
   

  
				

 

23

 

FIELD
NOTES

FOR

TRACT ND. 1

BLOCK 4/6512

CITY OF DALLAS, DALLAS COUNTY, TEXAS

 

Being a tract or parcel of land situated in
the City of Dallas, Dallas County, Texas; and being part of the Edward W.
Hunt Survey, Abstract 590, and also being part of Block 6512 in the City
of Dallas, Texas and being more particularly described as follows:

 

BEGINNING at the intersection of the
projection of the proposed south line of Southwell Road (28 feet from centerline)
with the west line of I-35 (Stemmons Freeway, 360 feet wide);

 

THENCE South 0° 15’ 00” West a distance of
639.12 feet to a point for corner in the west right-of-way line of I-35
(Stemmons Freeway);

 

THENCE southwesterly along a curve to the
left, said curve having a radius of 225.00 feet, a central angle of 55° 05’ 49”
and an arc length of 216.37 feet to a point of tangency;

 

THENCE southwesterly along a curve to the
right said curve having a radius of 169.86 feet, a central angle of 88° 22’ 49”
and an arc length of 262.01 feet to a point of tangency;

 

THENCE North 89° 20’ 50” West a distance of
294.11 feet to a point for corner in the proposed east right-of-way line of
Malibu Drive (56 feet wide);

 

THENCE North 0° 15’ 00” East along the
proposed east right-of-way line of Malibu Drive a distance of 972.96 Feet to a point
for corner;

 

THENCE North 45° 18’ 05” East along the
proposed southeasterly cut-off line of the intersection of the proposed
Mallbu Drive with Southwell Road a distance of 14.13 feet to a point for
corner;

 

THENCE South 89° 38’ 50” East along the proposed
south right-of-way line of Southwell Road a distance of 557.75 feet to the
POINT OF BEGINNING and containing 12.0000+ acres of land, more or less.

 

EXHIBIT “A”

 

 

RENT SCHEDULE

 

Tenant will pay Landlord as rent hereunder the sums set forth in the following
rent schedule:

 

a)                          Ten
Year Term

 

	
  July 15, 1979 through December 14, 1979

  	
   

  	
  0 per month

  
	
  December 15, 1979 through July 14, 1981

  	
   

  	
  $

  	
  13,000 per month

  
	
  July 15, 1981 through July 14, 1983

  	
   

  	
  $

  	
  14,300 per month

  
	
  July 15, 1983 through July 14, 1985

  	
   

  	
  $

  	
  15,730 per month

  
	
  July 15, 1985 through July 14, 1987

  	
   

  	
  $

  	
  17,303 per month

  
	
  July 15, 1987 through July 14, 1989

  	
   

  	
  $

  	
  19,033 per month

  

 

b)                         First
Five Year Renewal Option

 

	
  July 15, 1989 through July 14, 1991

  	
   

  	
  $

  	
  20,936 per month

  
	
  July 15, 1991 through July 14, 1993

  	
   

  	
  $

  	
  23,030 per month

  
	
  July 15, 1993 through July 14, 1994

  	
   

  	
  $

  	
  25,333 per month

  

 

c)                          Second
Five Year Renewal Option

 

	
  July 15, 1994 through July 14, 1995

  	
   

  	
  $

  	
  25,333 per month

  
	
  July 15, 1995 through July 14, 1997

  	
   

  	
  $

  	
  27,867 per month

  
	
  July 15, 1997 through July 14, 1999

  	
   

  	
  $

  	
  30,653 per month

  

 

Exhibit B

 

 

GUARANTY OF LEASE

 

Recitals

 

(a)       Warner
communications Inc., a Delaware corporation, hereinafter called “Warner” is the
sole shareholder of Malibu Grand Prix Corp., a Delaware corporation,
hereinafter called “Lessee”.

 

(b)       Lessee
has or proposes to enter into a lease with Stemmons Park Ltd., a limited
partnership, hereinafter called “Lessor”, whereby Lessor will lease to Lessee
certain real property described in Exhibit A attached hereto.

 

Guaranty

 

NOW, THEREFORE, in consideration of the premises and
in consideration of the execution and delivery of such lease to Lessee, Warner
promises as follows:

 

1.                           Warner
guarantees the prompt payment by Lessee of all rentals and other sums payable
by Lessee under said lease and the faithful and prompt performance by Lessee of
each and every one of the terms and conditions and covenants of said lease to
be kept and performed by Lessee.

 

2.                           In
the event there is any failure or refusal of Lessee to perform any of the
terms, conditions or covenants of said lease, Lessor shall give prompt written
notice to Warner of such failure or refusal to perform.

 

 

GUARANTY OF LEASE

 

Recitals

 

(a)                      Warner
Communications Inc., a Delaware corporation, hereinafter called “Warner” is the
sole shareholder of Malibu Grand Prix Corp., a Delaware corporation,
hereinafter called “Lessee”.

 

(b)                     Lessee
has or proposes to enter into a lease with                                                         ,
hereinafter called “Lessor”, whereby Lessor will lease to Lessee certain real
property described in Exhibit A attached hereto.

 

Guaranty

 

NOW, THEREFORE, in consideration of the premises and
in consideration of the execution and delivery of such lease to Lessee, Warner
promises as follows:

 

1.                           Warner
guarantees the prompt payment by Lessee of all rentals and other sums payable
by Lessee under said lease and the faithful and prompt performance by Lessee of
each and every one of the terms and conditions and covenants of said lease to
be kept and performed by Lessee.

 

2.                           In
the event there is any failure or refusal of Lessee to perform any of the
terms, conditions or covenants

 

EXHIBIT C

 

 

of said lease, Lessor shall give prompt written notice to Warner of
such failure or refusal to perform.

 

3.                           Any
modification to such lease which materially affects any of the terms and
conditions or covenants thereof shall cause this Guaranty to terminate unless
Warner has given its prior written consent to such modification.

 

4.                           Any
assignment of such lease by Lessee shall cause this Guaranty to terminate
unless Warner has given its prior written consent to such assignment.

 

5.                           Any
notice given to Warner pursuant to this Guaranty shall be in writing and shall
be delivered personally or by United states mail, first class, postage prepaid,
addressed as follows:

 

Warner
Communications Inc.

Attention: General Counsel 

75 Rockefeller Plaza 

New York, New York 10019

 

Warner may at any time or from time to tine by written notice
given to Lessor change the address designated herein for notices.

 

6.                           This
Guaranty shall inure to the benefit of Lessor, its successors and assigns.

 

IN WITNESS WHEREOF, Warner has executed this Guaranty
this            day of                               ,
19      .

 

	
   

  	
  WARNER
  COMMUNICATIONS INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  

 

2

 

3.                           Any
modification to such lease which materially affects any of the terms and
conditions or covenants thereof shall cause this Guaranty to terminate unless
Warner has given its prior written consent to such modification.

 

4.                           Any
assignment of such lease by Lessee shall cause this Guaranty to terminate
unless Warner has given its prior written consent to such assignment.

 

5.                           Any
notice given to Warner pursuant to this Guaranty shall be in writing and shall
be delivered personally or by United States mail, first class, postage prepaid,
addressed as follows:

 

Warner Communications Inc. 

Attention: General Counsel 

75 Rockefeller Plaza 

New York, New York 10019

 

Warner may at any time or from time to time by written notice
given to Lessor change the address designated herein for notices.

 

6.                           This
Guaranty shall inure to the benefit of Lessor, its successors and assigns.

 

IN WITNESS WHEREOF, Warner has executed this Guaranty
this 17th day of August, 1979.

 

	
   

  	
  WARNER
  COMMUNICATIONS INC.

  
	
  [Corporate
  Seal]

  	
   

  
	
   

  	
  By

  	
  /s/
  Albert Sarnoff

  	
   

  
	
   

  	
   

  	
  Albert
  Sarnoff 

  	
   

  
	
  Attest:

  	
   

  	
  Senior Vice President 

  and Treasurer

  	
   

  
	
   /s/ Mark M. Weinstein

  	
   

  	
   

  	
   

  	
   

  
	
  Mark
  M. Weinstein 

  Assistant Secretary

  	
   

  	
   

  	
   

  
					

 

 

AMENDMENT TO LEASE

 

This AMENDMENT TO LEASE (this “Amendment”) is entered
into by and among STEMMONS PARK, LTD. (“Landlord”), and MALIBU GRAND PRIX CORP.
(“Tenant”).

 

RECITALS:

 

i.                             Landlord
and Tenant have entered into that certain Lease dated as of June 15, 1979
(the “Lease”), pursuant to which Landlord leased to Tenant, and Tenant leased
from Landlord, certain premises (as described in the Lease) located at 11130
and 11150 Malibu Drive, Dallas, Texas.

 

ii.                          Landlord
and Tenant desire to make certain modifications to the Lease upon the terms set
forth below.

 

AGREEMENTS:

 

NOW THEREFORE, for and in consideration of the mutual
reliance of the undersigned parties and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Landlord and
Tenant agree as follows:

 

1.                          Exhibit A
to the Lease is hereby amended to include an additional 66,662 square feet of
land owned by Landlord (the “Additional Land”). The general location of the
Additional Land is shown on Schedule I attached hereto and incorporated
herein for all purposes. All references in the Lease to “demised premises”
shall include the Additional Land, in addition to that originally set forth on Exhibit A
thereto. Notwithstanding the change in the size of the demised premises, there
shall be no change in the base rent payment to Landlord except as specifically
set forth in Section 3 below.

 

2.                          Section 2
of the Lease is hereby amended by labeling the sole paragraph thereof as “2.1”
and adding the following provision as a new paragraph to the end of said
section:

 

“2.2             The
Lease term shall be continued, following the terms described above, for a term
(the “Extended Lease Term”) of twenty (20) years, commencing on July 15,
1999. Tenant shall have the right to extend the Extended Lease

 

 

Term for one (1) additional period of ten (10) years
upon the terms and conditions set forth in Section 26.2 hereof.”

 

3.                          Exhibit B
of the Lease is hereby amended by inserting the following provisions:

 

“d)                 Extended
Lease Term

 

	
  July 15, 1999 through July 31, 1999:

  	
   

  	
  $31,445 per month (prorated 

  over 31 days)

  
	
   

  	
   

  	
   

  
	
  August 1, 1999 through July 31, 2000:

  	
   

  	
  $31,445 per month

  

 

Beginning August 1, 2000, fixed, base rent shall
be increased (but not, in any event, decreased) annually on August 1 of
each successive year to reflect any increase (but not, in any event, a
decrease) in the cost of living (as defined below) during the preceding twelve
(12) months.

 

Percentage rent payments for the period beginning February 1,
1997 and ending on the earlier of the expiration or termination of this Lease
shall be paid to Landlord, in addition to the fixed, base rent payments
described above, at the times and in the amount and manner set forth below:

 

(a) 10% of gross income from business revenues
derived from sales at the park at the demised premises in excess of $6,500,000
per calendar year (with such base amount increasing annually by any increase in
the cost of living from and after January 1, 1998), if there are no water
park attractions at the demised premises, or

 

(b) 10% of gross income from business revenues
derived from sales at the park at the demised premises in excess of $7,000,000
per calendar year (with such base amount increasing annually by any increase in
the cost of living from and after January 1, 1998), if there is a water
park attraction at the demised premises;

 

(c) notwithstanding the foregoing subsections (a) and
(b), in the event that a significant entertainment element and/or attraction is
added to the demised premises in lieu of a water park attraction, the
percentage rent payment shall be 10% of gross income from business revenues
derived from sales at the park at the demised premises in excess of $6,500,000
per calendar year plus one-third of the cost of such element/attraction, not to
exceed, in total, $7,000,000 of gross income and cost.

 

2

 

(d) Such percentage rent payments shall be made
in arrears within 45 days after the end of each calendar year or after the
termination or expiration of this Lease, as applicable, with the percentage
rent payments with respect to gross revenues during the year 1997 being
prorated over the months of February 1997 through December 1997
(i.e., 1l/12ths of the percentage rent payments otherwise payable for the
calendar year 1997).

 

(e) In the event that Tenant purchases the
demised premises pursuant to the terms of Section 41, 46 or otherwise, or
in the event of the termination or expiration of this Lease, the annual
percentage rental payable by Tenant to Landlord for the year in which the
purchase, termination or expiration occurs shall be annualized for the 12 month
period beginning January 1 preceding the closing date, termination date or
expiration date, as applicable (with the gross income for any month following
such date being deemed to equal the gross income for such month during the
previous year) and then prorated to the closing date based on the number of
days elapsed during such year .

 

(f) Tenant shall keep full and accurate records
and books in accordance with generally accepted accounting principles,
consistently applied, and as and to the extent required by federal and state
securities laws: Such books and records pertaining to this Lease and the
demised premises shall be retained by Tenant for a period of three (3) years
after the close of each calendar year and shall be available for inspection and
audit by Landlord, at its expense and at all reasonable times after reasonable
advance notice, not to exceed, however, two times in any calendar year. If it
shall be determined as a result of such audit that there has been a deficiency
in the payment of percentage rental, then such deficiency shall become
immediately due and payable with interest at the maximum lawful rate from the
date when said payment should have been made. In addition, if Tenant
understates gross revenues by more than two percent (2%) and if Landlord is
entitled to any additional percentage rental as a result of said
understatement, then Tenant shall pay to Landlord all reasonable costs and
expenses (including reasonable auditor and attorney fees) which may be
incurred by Landlord in conducting such audit and collecting such underpayment,
if any.

 

For the purposes of this Exhibit B, the term “increase
in the cost of living” shall mean an annual increase in the rate of the U.S.
Consumer Price Index (which shall mean the Consumer Price Index for all Urban
Consumers, All Items (1982-84=100), from

 

3

 

time to time published by the Bureau of Labor
Statistics, United States Department of Labor for Dallas, Texas, U.S.A.).

 

4.                          Section 5.3
of the Lease is hereby deleted.

 

5.                          Section 6
of the Lease is hereby amended by labeling the sole paragraph thereof as “6.1”
and adding the following provision as a new paragraph to the end of such section:

 

“6.2             During
the Term hereof (including the Extended Lease Term), Tenant, in order to
maximize the attractiveness or profitability of the demised premises, may improve
or make additions to the demised premises, in the form of added
attractions, physical improvements, or otherwise, with Landlord’s prior
consent, not to be unreasonably withheld, conditioned or delayed. Notwithstanding
the foregoing, however, Landlord acknowledges that the demised premises are to
be used as a family and/or active entertainment center and agrees not to
withhold its consent to such improvements or additions that contain any type of
entertainment element without a significant and justifiable cause. Furthermore,
any such response (as to Landlord’s approval or disapproval) shall be provided
to Tenant within ten business (10) days of its delivery to Landlord of
detailed plans and specifications and its request for an approval of same.
Landlord’s failure to approve or disapprove such a request within said ten (10) day
period shall be deemed to be an approval. Notwithstanding the foregoing
approval rights. Landlord acknowledges that it has approved the preliminary
site plans attached hereto as Schedule II and that its approval is given
for the improvements and additions contemplated therein (or similar thereto).
Notwithstanding the foregoing, however, any material change in the elements
described thereon shall require Landlord’s approval, as set forth above.

 

6.                          Section 26
of the Lease is hereby amended by labeling the sole paragraph thereof as “26.1”
and adding the following provision as a new paragraph to the end of said
section:

 

“26.2       Tenant shall have, and is hereby granted, the
option to extend the Extended Lease Term for one (1) additional period of
ten (10) years. Tenant may exercise the ten (10) year extension
at any time by providing written notice thereof to Landlord prior to the
termination of the Extended Lease Term. If Tenant provides such notice at any
time from July 15, 1999, to July 15, 2002, there will be no charge or
fee incurred by Tenant in connection with the exercise of such option. However,
if the Tenant provides such notice at any time after July 15, 2002, Tenant
will be required to pay to Landlord a fee of $200,000, payable to Landlord on
the commencement of the extension period. The rental payable during such
renewal period shall be the amount

 

4

 

set forth in the Rent Schedule and shall be upon
such terms and conditions as herein set forth with respect to the Extended
Lease Term.”

 

7.                          The Lease is hereby amended by inserting the following provisions after Section 40
of the Lease:

 

“41.              Purchase Requirement.

 

From January 1, 1998,
through December 31, 2002, Landlord may require Tenant to purchase
the demised premises by delivering written notice thereof to Tenant. The terms
of the purchase shall be negotiated between the parties in a commercially
reasonable manner, and must include the following terms and conditions: (i) at
Tenant’s option, completion of the sale and purchase may occur up to
thirteen (13) months following the date Tenant was notified of the requirement
to purchase the demised premises by Landlord; (ii) the purchase price
shall be due and payable in cash (or other immediately available funds) at closing;
(iii) the purchase price shall be calculated by capitalizing the annual
rental income (as hereinafter defined) at 9.5% (i.e., dividing annual rental
income by 9.5%); and (iv) title to the demised premises shall be conveyed
to Tenant free and clear of all liens and free and clear of all encumbrances
and exceptions other than those shown on the title commitment issued January 29,
1997 to be effective January 21, 1997 (a copy of which has been provided
to Landlord) or otherwise approved by Tenant in its sole discretion.”

 

For purposes of this Section 41,
the “annual rental income” shall be (a) the projected base rental income
and billboard rental income (if such billboard income accrues to the owner of
the demised premises) for the twelve (12) month period following the date
established for closing, including a reasonable estimate of the cost of living
adjustment (which shall be made as of the first day of the said twelve (12)
month period and based on the prior twelve (12) month period), and (b) the
actual percentage rental income for the twelve (12) month period preceding the
month in which the closing date occurs.

 

42.                    Capital Improvements.

 

42.1             During
1997, Tenant shall make capital improvements to the demised premises of at
least $4,600,000 (if there are no water park attractions at the demised
premises) or $6,600,000 (if there is a water park attraction at the demised
premises). Tenant shall provide Landlord with lien releases following the
completion of the improvements and shall provide Landlord with documentation
reasonably evidencing the total cost of the

 

5

 

improvements.
No portion of the improvements purchased from an affiliate of Tenant shall
constitute a part of the foregoing capital improvement requirement without Landlord’s prior written
consent, not to be unreasonably withheld, conditioned or delayed. Tenant’s
completion of any demolition or construction work commenced on the demised
premises will be guaranteed by Tenant’s parent, Mountasia Entertainment
International, Inc., pursuant to a guaranty agreement to be reasonably
negotiated in good faith by the parties, executed and delivered to Landlord
prior to the commencement of any such demolition or construction work.

 

42.2             In
addition to the payments described above, Tenant shall make additional
improvements to the demised premises, in the form of renovations,
replacements or expansions to the facilities, of at least $1,000,000 in the
aggregate during the first ten (10) years of the Extended Lease Term, $
1,000,000 in the aggregate during the second ten (10) years of the
Extended Lease Term, and $1,000,000 in the aggregate during the ten (10) year
extension period, if exercised in accordance herewith.

 

43.                    Restrictive Covenants.

 

Landlord agrees to execute,
and record in the real property records of Dallas County, Texas, restrictive
covenants that will run with the land and that will restrict all land currently
owned by Landlord and located adjacent to or within the vicinity of the demised
premises may not be used for any business or businesses which (i) offer
or operate family or active entertainment attractions which are, at that time,
currently being offered, operated or in the process of being implemented on the
demised premises (such that any family or active entertainment attractions on
such property must be compatible and complimentary to those being offered at
the demised premises, rather than being competitive therewith); (ii) create
strong, unusual or offensive odors, fumes, dust or vapors; (iii) are a
public or private nuisance; (iv) emit noise or sounds that are
objectionable due to intermittence, beat, frequency, shrillness or loudness; (v) are
used, in whole or in part, for the warehousing, dumping or disposing of waste,
hazardous materials, garbage or refuse, (vi) sell indecent or pornographic
literature, adult entertainment or any other form of sexually oriented
business; and (vii) operate gasoline refining and/or 24 hour manufacturing
operations. By way of example, with respect to item (i) above, if Tenant
is offering a bumper boat ride, then Landlord may not offer a bumper boat
attraction on such restricted property (but may operate a bumper car
facility). Such restrictive covenants shall expire at the end of the lease term
(including any extension thereof), unless Tenant purchases the demised
premises, in which case the restrictive covenants shall continue in perpetuity
thereafter.

 

6

 

44.                    Hazardous Wastes.

 

(a)       Tenant agrees to use all reasonable efforts to ensure that
applicable environmental laws and ordinances affecting the demised premises are
complied with in connection with the operation of Tenant’s business at the
demised premises and its lease of said demised premises.

 

(b)       Tenant agrees to indemnify and hold harmless, Landlord, its
partners, attorneys, successors and assigns (“Indemnified Parties”) against any
and all damages, claims, costs, losses and other expenses (including, without
limitation, attorneys fees and court costs) which may be imposed upon,
incurred by, or asserted against, any of the Indemnified Parties by any entity
or persons, including without limitation, a governmental entity, based on (1) the
use, generation, manufacture, production, handling, storage, release, or
threatened release of Hazardous Materials by the Tenant, (2) any violation
of any environmental law committed by Tenant with respect to the demised
premises after the commencement date of the Lease or (3) Hazardous
Materials to the extent the Hazardous Substances are introduced to the demised
premises by Tenant, or (4) liability under the Comprehensive Environmental
Response, Compensation and Liability Act (“CERCLA”) 42 U.S.C. Sections 9601, et
seq., or similar laws and regulations, as amended from time to time arising
from Hazardous Materials introduced to the demised premises by the Tenant.
Tenant’s obligation to indemnify, defend and hold harmless includes, without
limitation, costs incurred by Indemnified Parties for or in connection with (x)
any investigation of site conditions or any cleanup, remedial, monitoring,
restoration or closure work required by any federal, state or local government
agency because of any Hazardous Materials introduced to the demised premises by
Tenant and present in the soil, air, surface, or groundwater at, in, under or
about the demised premises, and (y) any government agency requirements which
are a condition of any permit or land use entitlement, including clean-up
requirements imposed as a condition of obtaining rezoning or a conditional use
permit needed by Tenant to operate its business. In the event that Tenant fails
to respond to claims or requests from government agencies and/or third parties
seeking investigation or remedial action in connection with Hazardous Materials
introduced to the demised premises by Tenant, Landlord may, with reasonable
prior notice except in the case of an emergency, proceed to take the
appropriate action and shall be reimbursed by Tenant therefor to the extent
that the action was required by applicable law and was a reasonable response
for current use and condition of the demised premises. This indemnity shall
survive the termination of this Lease.

 

7

 

 (c)      As
used herein, “Hazardous Materials” shall mean all hazardous substances,
hazardous wastes, hazardous materials, toxic materials, or toxic substances and any other substances, including
asbestos, petroleum and its byproducts, the cleanup, disposal, storage,
production, possession, or use of which is regulated by federal, state or local
laws, ordinances, rules, regulations, permit conditions, administrative orders
and similar requirements affecting the health and safety of people or the
environment, including, but not limited to, those materials or substances
referenced in CERCLA, the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the Clean
Water Act, the Clean Air Act, Safe Drinking Water Act, and the release of which
would be considered nuisance or trespass.

 

(d)       Review and/or approval of corrective action plans and other
work plans by a government agency for the investigation and cleanup of
Hazardous Materials introduced to the demised premises by Tenant and required
to be remedied by applicable law does not relieve Tenant of further
investigation and cleanup obligations as provided herein. Landlord has the
right to require stricter cleanup standards than those allowed by a government
agency, to background or non-detect levels, if possible and if reasonably
required to protect human health or the environment with respect to Hazardous
Materials at, in, or under the demised premises which are introduced by the
Tenant and are required to by remediated by applicable law. All work plans and
reports submitted by Tenant or its consultant to local, state, or federal
agencies or to third parties shall be submitted to Landlord ten (10) days
prior to submission to a government agency or third party for Landlord review
and consideration.

 

(e)       For purposes of this Lease, Hazardous Materials found after
the commencement date of the Lease are presumed to have resulted from Tenant’s
activities at the demised premises, unless Tenant can reasonably demonstrate:
that Tenant did not utilize the type or quantity of Hazardous Materials
involved; that, if Tenant did utilize such Hazardous Materials, it can account
for its usage and disposal; or that the Hazardous Materials more than likely
are the result of another party’s activity. This does not constitute a waiver
of Tenant’s cost recovery rights against any responsible third party.

 

(f)        Tenant and any consultants hired by it to perform investigations
and/or clean up obligations under this Lease shall comply with all local, state
and state and federal laws, rules, regulations and guidelines governing the
investigation, clean up, removal, transportation and storage of Hazardous
Materials. When required by such laws, regulations or guidelines, Tenant shall
obtain or cause to be obtained, all regulatory permits, inspections and
approvals and shall be responsible for any government oversight fees

 

8

 

associated
with oversight of its activities and shall file or cause to be filed all necessary
reports with appropriate government agencies.

 

(g)       Tenant represents and warrants that is has complied or
immediately will comply with all local, state and federal laws, regulations,
requirements and guidelines for the monitoring, maintenance, retrofitting,
removal, cleanup and disposal of any underground storage tanks, or Hazardous
Materials from such underground storage tanks, currently known to be located at
the demised premises or installed by Tenant in the future. Tenant acknowledges
that during the term of this Lease it has sole and exclusive liability for any
and all legal obligations relating to underground storage tanks known by Tenant
to be located at the demised premises. Notwithstanding any provision of this
Lease to the contrary, Tenant shall not have liability for any Hazardous
Materials released from an underground storage tank prior to, or after, the
date of this Lease.

 

45.                    Mortgagee Provisions.

 

(a)       Landlord covenants and represents that there are no mortgages
or liens, recorded or otherwise, secured by the fee estate of the demised
premises or Landlord’s interest therein.

 

(b)       Notwithstanding anything else herein to the contrary, Tenant may mortgage,
collaterally assign or otherwise encumber any interest that Tenant has in this
Lease or in the improvements located on the demised premises (“Mortgage”) as
security for indebtedness (“Debt”). Landlord agrees to that it will not
unreasonably withhold, condition or delay its consent to any changes or
modifications to this Lease, with the exception of those provisions of this
Lease concerning the amount of any rental payments or the length of the term of
the Lease (including any extensions) as are reasonably requested by any
potential mortgagee or collateral assignee (“Mortgagee”) to facilitate the
mortgaging of the leasehold estate.

 

(c)       There shall be no merger of the fee estate and leasehold
estate in the event that Tenant were to obtain fee title to the demised
premises.

 

(d)       If a Mortgagee notifies Landlord of the actual or intended
execution of a Mortgage and names the place for service of notice upon
Mortgagee, then, without limiting the generality of Subsection 45(b) above:

 

(i)        Landlord will give to such Mortgagee, simultaneously with
service on Tenant, notices of all demands made by Landlord on Tenant.

 

9

 

 (ii)      Mortgagee shall have the privilege of
performing any of Tenant’s covenants, curing any defaults by Tenant, and
exercising any election, option or privilege conferred upon Tenant by any terms
of this Lease.

 

(iii)      Landlord shall not terminate this Lease or Tenant’s right of
possession for any default of Tenant if, within a period of 30 days after the
expiration of the period of time within which Tenant might cure such default,
such default is cured or caused to be cured by Mortgagee, or if within a period
of 30 days after the expiration of the period of time within which Tenant might
commence to eliminate the cause of such default, Mortgagee diligently commences
to eliminate the cause of such default. Mortgagee’s cure of Tenant’s default
shall include payment of Landlord’s reasonable attorneys’ fees and costs (if
any) payable under applicable provisions of this Lease.

 

(iv)      No liability for the payment of rent or the performance of any
of Tenant’s covenants and obligations of this Lease shall attach to or be
imposed upon any Mortgagee, while not in possession of the demised premises,
all such liability being hereby expressly waived by Landlord.

 

(v)       Mortgagee shall have the right to participate in casualty and
condemnation settlements.

 

(vii)     Landlord agrees to recognize Mortgagee (or a purchaser at
foreclosure or assignee in the event of an assignment in lieu of foreclosure)
as the tenant under this Lease in the event that the Mortgage is foreclosed in
accordance with its terms or in the event of an assignment of this Lease in
lieu of foreclosure.

 

(viii)    Landlord will execute and deliver an estoppel letter certifying
to such matters regarding this Lease as Mortgagee shall reasonably request.

 

46.                    Purchase Option.

 

At any time during the
calendar year 2020, Tenant may exercise an option (the “Option”) to
purchase the demised premises from Landlord at a purchase price, for cash
payable at closing, equal to the greater of (a) the appraised value of the
demised premises or (b) the then annual rental payments hereunder
capitalized at 9%. The annual
rental payments shall be determined in the same manner as set forth in Section 41.
Landlord and Tenant agree to

 

10

 

negotiate the remainder of the sales terms and the
method by which the fair market value shall be determined in a reasonable
business manner, and the closing of such purchase shall occur on a date
designated by Tenant within 6 months after Tenant’s notification to Landlord of
its exercise of the Option. Landlord grants the Option to Tenant as an interest
in real property (which is not severable from the remainder of this Lease) and
not as an executory contract, and, notwithstanding anything else herein to the
contrary, Tenant shall have the right, if necessary, to seek specific
performance to enforce the Option.

 

47.                   Arbitration.

 

Notwithstanding anything else herein to the contrary,
in the event that a dispute between the parties arises with respect to (i) the
amount of percentage rent payable by Tenant to Landlord, (ii) the
calculation of the purchase price of the demised premises pursuant to Sections
41 or 46, (iii) Tenant’s compliance with the capital improvements
requirement set forth in Section 42, or (iv) the application of the
restrictive covenants referenced in Section 43 to a specific improvement
proposed by Landlord, then, either party may submit this issue to the
American Arbitration Association (the “AAA”), and the issue shall be resolved
by binding arbitration before the AAA, conducted in Dallas, Texas. Such
resolution will be final and binding upon the parties. The cost of such
arbitration shall be borne equally by Landlord and Tenant.

 

48.                   Late Fee.

 

The base rental payments payable by Tenant hereunder
are due and payable to Landlord on the 1st day of each month. If such rental
payments are not received by Landlord within ten (10) days of the date
such payments are due, then a six percent (6%) late payment penalty shall be
imposed on the delinquent amount, and shall become due and payable to Landlord
hereunder.”

 

8.         The terms of such
restrictive covenants referenced in the new Section 43 above shall be
negotiated between the parties in a reasonable business manner and shall be
finalized, executed and recorded within thirty (30) days of the date hereof.

 

9.         This Amendment may be
executed in any number of counterparts, each of which shall be deemed to be an
original and all of which together shall constitute but one agreement.
Facsimile signature shall be deemed originals for the purposes hereof.

 

11

 

10.       The terms and conditions of the Lease,
except as otherwise amended and/or modified hereby, remain in full force and
effect. All capitalized terms not otherwise defined herein shall have the
meaning set forth in the Lease.

 

11.       Time shall be of the
essence in interpreting the provisions of this Amendment.

 

12

 

EXECUTED by the
undersigned to be effective as of the 31st day of January, 1997.

 

	
   

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  STEMMONS
  PARK, LTD.,

  a California limited partnership

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Richard Dentt

  	
   

  
	
   

  	
   

  	
   

  	
  Richard Dentt, General Partner

  

 

 

	
   

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MALIBU
  GRAND PRIX CORP.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  L Scott Demeroy

  	
   

  
	
   

  	
   

  	
   

  	
  L
  Scott Demeroy, President

  

 

13

 

Schedule 1

DESCRIPTION OF

66,662 Sq. Ft. in Lot 2

BLOCK 4/6512

City of Dallas, Texas

 

Being a tract of land situated in the Edward W. Hunt Survey, Abstract
590, City of Dallas, Dallas County, Texas and also being part of Lot 2,
Block 4/6512 Malibu Grand Prix Addition on addition to the City of Dallas,
Texas as recorded in Volume
79215, Page 0001 of the Deed Records of Dallas County, Texas and being
more particularly described as follows:

 

Beginning at a part in the west line of Malibu Drive (58’ R.O.W.)
and point being South 0”15”00” West along the west line of Malibu Drive (58’
R.O.W.) A distance of 860.63 feet from its intersection with the cut off
line between the said west line of Malibu Drive (58’ R.O.W.) and the south line
of Southwell Road;

 

THENCE South 0°15’00” West along the west line of Malibu Drive (58’
R.O.W.) A distance of 187.04 feet to a point for corner in the north line of a
100 foot wide Dallas Power and Light R.O.W. as recorded in Volume 4658, Page 243
of the Deed Records of Dallas County, Texas.

 

THENCE North 89°20’50” West along the north line of said Dallas Power
and Light R.O.W. and the south line of Lot 2, Block 4/8512 a distance of 358.16
feet to a point for corner in the east line of Goodnight Lane (28 feet from
centerline);

 

THENCE North 0°05’36” East along the ease line of Goodnight Lane (28’
from centerline) a distance of 187.04 feet to a point for corner;

 

THENCE South 85°20’50” East a distance of 356.67 feet to the POINT OF
BEGINNING and containing 68,682 square feet or 1.148 acres more or less of
which 16,662 square feet lies within a drainage casement.

 

1

 

 

2

 

Schedule 2

 

 

1

 

 

2

 

SECOND AMENDMENT TO LEASE

 

This SECOND AMENDMENT TO LEASE (the “Second Amendment”)
is entered into as of this 9th day of June, 1998, by and between STEMMONS PARK,
LTD., a California limited partnership (“Landlord”), and MALIBU GRAND PRIX
CORPORATION, a Delaware corporation (“Tenant”).

 

RECITALS:

 

1.                          Landlord
and Tenant entered into that certain Lease dated as of June 15, 1979 (the “Lease”),
pursuant to which Tenant leased from Landlord those certain premises located at
11130 and 11150 Malibu Drive, Dallas, Texas, (as more particularly described in
the Lease, the “Premises”), which Lease was amended by that certain Amendment
to Lease dated effective as of January 31, 1997 (the “First Amendment”)
(the Lease and the First Amendment are collectively referred to as the “Lease”).

 

2.                          Landlord
and Tenant now desire to further modify the Lease to, among other things,: (i) eliminate
the percentage rent provision; (ii) increase the base rent payable by ten
percent (10%) per year; (iii) establish an annual minimum and maximum
percentage increase of the Consumer Price Index for rental calculations
commencing August 1, 2000; and (iv) reflect the additional monthly
payment due by Tenant to Landlord in consideration for Landlord’s termination
of the Billboard Lease (defined hereinafter).

 

AGREEMENT:

 

NOW, THEREFORE, for and in consideration of the mutual
reliance of the undersigned parties and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Landlord and
Tenant agree as follows:

 

1.                          Exhibit B
of the Lease, as amended in the First Amendment, is hereby deleted in its
entirety and replaced by the following provisions:

 

Rent Schedule. Tenant will pay
Landlord as rent hereunder the sums set forth in the following rent schedule:

 

(a)                      Ten
Year Term

 

	
  July 15,
  1979 through December 14, 1979

  	
   

  	
  - 0 - per month

  	
   

  
	
  December 15,
  1979 through July 14, 1981

  	
   

  	
  $

  	
  13,000 per month

  	
   

  
	
  July 15,
  1981 through July 14, 1983

  	
   

  	
  $

  	
  14,300 per month

  	
   

  
	
  July 15,
  1983 through July 14, 1985

  	
   

  	
  $

  	
  15,730 per month

  	
   

  
	
  July 15,
  1985 through July 14, 1987

  	
   

  	
  $

  	
  17,303 per month

  	
   

  
	
  July 15,
  1987 through July 14, 1989

  	
   

  	
  $

  	
  19,033 per month

  	
   

  

 

 

 (b) First
Five Year Renewal Option

 

	
  July 15,
  1989 through July 14, 1991

  	
   

  	
  $

  	
  20,936 per month

  	
   

  
	
  July 15,
  1991 through July 14, 1993

  	
   

  	
  $

  	
  23,030 per month

  	
   

  
	
  July 15,
  1993 through July 14, 1994

  	
   

  	
  $

  	
  25,333 per month

  	
   

  

 

(c) Second Five Year Renewal Option

 

	
  July 15,
  1994 through July 14, 1995

  	
   

  	
  $

  	
  25,333 per month

  	
   

  
	
  July 15,
  1995 through July 14, 1997

  	
   

  	
  $

  	
  27,867 per month

  	
   

  
	
  July 15,
  1997 through June 30, 1998

  	
   

  	
  $

  	
  30,653 per month

  	
   

  
	
  July 1,
  1998 through June 30, 1999

  	
   

  	
  $

  	
  34,635 per month

  	
   

  

 

(d) Extended Lease Term

 

	
  July 1,
  1999 through June 30, 2000

  	
   

  	
  $

  	
  35,506 per month

  	
   

  

 

Beginning July 1, 2000, fixed, base rent shall be
increased (but not, in any event, decreased) annually on August 1 of each
successive year to reflect any increase (but not, in any event, a decrease) in
the cost of living (as defined below) during the preceding twelve (12) months.
This annual adjustment will be subject to a minimum of three percent (3%) with
a maximum of eight percent (8%) in any given year.

 

For the purposes of this Exhibit B, the term “increase
in the cost of living” shall mean an annual increase in the rate of the U.S.
Consumer Price Index (which shall mean the Consumer Price Index for all Urban
Consumers, All Items (1982-84=100), from time to time published by the Bureau
of Labor Statistics, United States Department of Labor for Dallas, Texas, U.S.A.).

 

2.                          This
Second Amendment may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall
constitute one agreement. Facsimile signatures shall be deemed originals for
the purposes hereof.

 

3.                          The
terms and conditions of the Lease, as amended, except as otherwise amended
and/or modified hereby, remain in full force and effect. All capitalized terms
not otherwise defined herein shall have the meaning set forth in the Lease, as
amended.

 

[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

SECOND AMENDED AND RESTATED ABSTRACT OF LEASE

 

THIS SECOND AMENDED AND RESTATED ABSTRACT OF LEASE is
executed as of June 9, 1998, with respect to that certain Lease dated as
of June 15, 1989, by and between STEMMONS PARK, LTD., as landlord (“Landlord”),
and MALIBU GRAND PRIX CORP., as tenant (“Tenant”), as amended by that certain
Amendment to Lease by and between Landlord and Tenant dated as of January 31,
1997 (collectively, the “Lease”), as evidenced by that certain Abstract of
Lease executed by Landlord and Tenant as of June 15, 1979, recorded April 3,
1980, in Volume 80068, Page 2072, Real Property Records, Dallas County,
Texas, and that certain Amended and Restated Abstract of Lease executed January 31,
1997, by Landlord and Tenant and recorded on April 25, 1997, in Volume
97081, Page 4621 of the Real Property Records of Dallas County, Texas.

 

1.                          Tenant
leases from Landlord the real property described in Exhibit A, which is
annexed hereto and made a part hereof for all purposes (the “Demised
Premises”).

 

2.                          The
term of the Lease commenced as of July 15, 1979 and ends on July 15,
2019.

 

3.                          Tenant
has an option to extend the term of the Lease for one (1) additional
period of ten (10) years.

 

4.                          The
Lease grants Landlord the right to require Tenant to purchase from the
Landlord, and grants Tenant the right to require Landlord to sell to Tenant,
the Demised Premises under certain conditions.

 

5.                          This
Second Amended and Restated Abstract of Lease may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall constitute one agreement. Facsimile signatures shall be
deemed originals for the purpose hereof.

 

THIS SECOND AMENDED AND RESTATED
ABSTRACT OF LEASE REPLACES IN ITS ENTIRETY THAT CERTAIN AMENDED AND RESTATED
ABSTRACT OF LEASE RECORDED ON APRIL 25, 1997, IN VOLUME 97081, PAGE 4621
OF THE REAL PROPERTY RECORDS OF DALLAS COUNTY, TEXAS, AND IS BEING FILED TO
INCORPORATE SOME ADDITIONAL LAND IN THE LEGAL DESCRIPTION WHICH WAS
INADVERTENTLY OMITTED FROM THE LEGAL DESCRIPTION ATTACHED TO THE AMENDED AND
RESTATED ABSTRACT OF LEASE.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

EXECUTED as of the date and year first written above.

 

	
   

  	
   

  	
  STEMMONS PARK, LTD.,

  a California limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Richard C. Dentt

  	
   

  
	
   

  	
   

  	
   

  	
  Richard
  C. Dentt, General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Sohrab Arjmand

  	
   

  
	
   

  	
   

  	
   

  	
  Sohrab
  Arjmand, General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MALIBU GRAND PRIX CORP.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Richard M. FitzPatrick

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard
  M. FitzPatrick

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
						

 

 

	
  STATE OF California

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY OF San Diego

  	
   

  	
  §

  

 

BEFORE ME, the undersigned Notary Public, on this day
personally appeared Richard C. Dentt, General Partner of Stemmons Park, Ltd., a
California limited partnership, whose name is subscribed to the foregoing
instrument, and acknowledged to me that the same for the purposes and
consideration therein expressed, as the act and deed of said corporation and in
the capacity therein stated.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 3rd
of July, 1998.

 

	
   

  	
   

  	
  /s/
  Jayne T. Bowman

  	
   

  
	
   

  	
   

  	
  Notary
  Public

  	
   

  
					

 

My Commission
Expires:

Sept 2, 2000

 

	
  [SEAL]

  	
   

  	
  JAYNE T. BOWMAN

  Commission # 1110168

  Notary Public — California

  San Diego County

  My Comm. Expires Sep 2, 2000

  	
   

  

 

	
  STATE OF California

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY OF San Diego

  	
   

  	
  §

  

 

BEFORE ME, the undersigned Notary Public, on this day
personally appeared Sohrab Arjmand, General Partner of Stemmons Park, Ltd., a
California limited partnership, whose name is subscribed to the foregoing
instrument, and acknowledged to me that he executed the same for the purposes
and consideration therein expressed, as the act and deed of said corporation,
and in the capacity therein stated.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 3rd
of July, 1998.

 

	
   

  	
   

  	
  /s/
  Jayne T. Bowman

  	
   

  
	
   

  	
   

  	
  Notary
  Public

  	
   

  
					

 

My Commission
Expires:

Sept 2, 2000

 

	
  [SEAL]

  	
   

  	
  JAYNE T. BOWMAN

  Commission # 1110168

  Notary Public — California

  San Diego County

  My Comm. Expires Sep 2, 2000

  	
   

  

 

 

	
  STATE OF TEXAS

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY OF DALLAS

  	
   

  	
  §

  

 

BEFORE ME, the undersigned Notary Public, on this day
personally appeared Richard FitzPatrick, Vice President of Malibu
Grand Prix Corp., a Delaware corporation, whose name is subscribed to the foregoing
instrument, and acknowledged to me that he executed the same for the purposes
and consideration therein expressed as the act and deed of said corporation,
and in the capacity therein stated.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 22nd of
June, 1998.

 

	
   

  	
   

  	
  /s/
  Janice L. Ward

  	
   

  
	
   

  	
   

  	
  Notary
  Public in and for the State of Texas

  

 

My Commission
Expires:

3/25/2002

 

	
  [SEAL]

  	
   

  	
  JANICE L. WARD

  COMMISSION EXPIRES

  MARCH 25, 2002

  	
   

  

 

RECORDING
REQUESTED BY, AND

WHEN
RECORDED, RETURN TO:

 

Michael A.
Krywucki, Esq.

Munsch Hardt Kopf
Harr & Dinan, P.C.

1445 Ross Avenue, Suite 4000

Dallas, Texas
75202

 

 

EXHIBIT “A”

 

TRACT I

 

Being a tract or parcel of land situated in the City of Dallas, Dallas
County, Texas; and being part of the Edward W. Hunt Survey, Abstract 590,
and also being part of Block 6512 in the City of Dallas, Texas and being
more particularly described as follows:

 

BEGINNING at the intersection of the projection of the proposed
south line of Southwell Road (28 feet from centerline) with the west line of
I-35 (Stemmons Freeway, 360 feet wide)

 

THENCE South 0°15’00” West a distance of 639.12 feet to a point for
corner in the west right-of-way line of I-35 (Stemmons Freeway);

 

THENCE southwesterly along a curve to the left, said curve having a
radius of 225.00 feet, a central angle of 55°05’49” and an arc length of 216.37
feet to a point of tangency;

 

THENCE southwesterly along a curve to the right, said curve having a
radius of 169.86 feet, a central angle of 88°22’49” and an arc length of 262.01
feet to a point of tangency;

 

THENCE North 89°20’50” West a distance of 294.11 feet to a point for
corner in the proposed east right-of-way line of Malibu Drive (56 feet wide);

 

THENCE North 0°15’00” East along the proposed east right-of-way line of
Malibu Drive a distance of 972.96 feet to a point for corner;

 

THENCE North 45°18’05” East along the proposed southeasterly cut-off
line of the intersection of the proposed Malibu Drive with Southwell Road
a distance of 14.13 feet to a point for corner;

 

THENCE South 89°38’50” East along the proposed south right-of-way line
of Southwell Road a distance of 557.75 feet to the POINT OF BEGINNING and
containing 12.0000 (plus or minus) acres of land, more or less.

 

TRACT II

 

Being a tract of land situated in the Edward W. Hunt Survey, Abstract
590, City of Dallas, Dallas County, Texas and also being part of Lot 2,
Block 4/6512, MALIBU GRAND PRIX ADDITION, an addition to the City of Dallas,
Texas as recorded in Volume 79215, Page 0001 of the Deed Records of Dallas
County, Texas and being more particularly described as follows:

 

Beginning at a point in the west line of Malibu Drive (56’ R.O.W.), and
point being South 0°15’00” West along the west line of Malibu Drive (56’
R.O.W.) a distance of 860.63 feet from its intersection with the cut off
line between the said west line of Malibu Drive (56’ R.O.W.) and the south line
of

 

 

Southwell Road;

 

THENCE South 0°15’00” West along the west line of Malibu
Drive (56’ R.O.W.) a distance of 187.04 feet to a point for corner in the north
line of a 100 foot wide Dallas Power and Light R.O.W. as recorded in Volume
4656, Page 243 of the Deed Records of Dallas County, Texas;

 

THENCE North 89°20’50” West along the north line of said
Dallas Power and Light R.O.W. and the south line Lot 2, Block 4/6512 a distance
of 356.16 feet to a point for corner in the east line of Goodnight Lane (28
feet from centerline);

 

THENCE North 0°05’36” East along the east line of Goodnight
Lane (28’ from centerline) a distance of 187.04 feet to a point for corner;

 

THENCE South 85°20’50” East a distance of 356.67 feet to the
POINT OF BEGINNING and containing 66,662 square feet or 1.148 acres more or
less of which 16,662 square feet lies within a drainage easement.

 

 

IN WITNESS WHEREOF, our
signatures have been set as of the date first above written.

 

	
   

  	
   

  	
   

  	
  STEMMONS PARK, LTD.,

  a California limited partnership

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Richard C. Dentt

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Richard C. Dentt, General Partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Sohrab Arjmand

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Sohrab Arjmand, General Partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MALIBU GRAND PRIX CORPORATION,

  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Richard M. FitzPatrick

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Richard
  M. FitzPatrick

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice
  President

  	
   

  

 

 

THIRD AMENDMENT TO,

AND ASSIGNMENT AND ASSUMPTION OF, LEASE

 

THIS THIRD AMENDMENT TO, AND ASSIGNMENT AND ASSUMPTION
OF, LEASE (this “Amendment and Assignment”) is made and entered into as of the 5 day of July, 2002, by and between STEMMONS PARK, LTD.,
a California limited partnership (“Landlord”), MALIBU GRAND PRIX CORPORATION, a
Delaware corporation (“Assignor”), and FESTIVAL FUN PARKS, LLC, a Delaware
limited liability company dba PALACE ENTERTAINMENT (“Assignee”), with reference
to the following facts:

 

A.             WHEREAS,
Landlord, as “Landlord,” and Assignor, as “Tenant,” entered into that certain
lease dated June 15, 1979 (as amended by the First Amendment (as defined
below) and the Second Amendment (as defined below), the “Ground Lease”),
demising that certain real property located in the City of Dallas, Dallas County,
Texas, commonly known as 11130 and 11150 Malibu Drive, consisting of an
approximately 12.00 acre parcel of real property, as more particularly
described in Exhibit A attached hereto (“Premises”). The Ground
Lease was first amended pursuant to that certain Amendment to Lease dated January 31,
1997 (the “First Amendment”) by and between Landlord and Assignor, whereby,
among other things, the term of the Ground Lease was extended, and the Premises
were expanded to include an additional 66,662 square feet of land owned by
Landlord. The Ground Lease was further amended pursuant to that certain Second
Amendment to Lease dated June 9, 1998 (the “Second Amendment”) by and
between Landlord and Assignor, whereby, among other things, the schedule of
rental payments was modified;

 

B.             WHEREAS,
Landlord and Assignor desire to amend the Ground Lease pursuant to the terms
and conditions of this Amendment and Assignment; and

 

C.             WHEREAS,
Assignor desires to assign to Assignee, as of the Effective Date (defined
below), all of its right, title, interest in, to and under the Ground Lease,
and Assignee desires to receive from Assignor such assignment and to assume
each and all of the obligations of the “Tenant” under the Ground Lease to be
performed from and after the Effective Date, all pursuant to the terms and
conditions of this Amendment and Assignment; provided, however, any and all
provisions of the Ground Lease relating to the acquisition, sale, development,
operation and/or other disposition by “Tenant” of the Premises prior to the
Effective Date shall not in any way be construed against or made applicable to
Assignee.

 

NOW THEREFORE, in consideration of the foregoing
recitals, the mutual covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

 

1.  Definitions.
All capitalized terms used in this Amendment and Assignment which are not
defined herein shall have the same meanings ascribed to such terms in the
Ground Lease.

 

2.  Representation
and Warranty of Landlord and Assignor. Landlord and Assignor hereby
represent and warrant to Assignee that, immediately prior to the Effective Date
and the assignment of the Ground Lease as contemplated by this Amendment and
Assignment, Assignor was the duly acting “Tenant” under the Ground Lease and
enjoyed the rights and benefits and performed the duties and obligations of “Tenant”
under the Ground Lease.

 

3.  Amendments.
The Ground Lease is hereby amended as follows:

 

(a)                                                                                          Section 41
of the Ground Lease is hereby deleted in its entirety. In consideration for
Landlord’s deletion of Section 41 of the Ground Lease, Assignee shall send
to Landlord (at the address set forth in the notice provision in the Ground
Lease), within ten (10) days after the date of this Amendment and
Assignment, a cashier’s check made payable to Landlord in the amount of
$40,000, such payment to be non-refundable to Assignee. Assignee’s failure to
make the foregoing payment to Landlord within the foregoing time period shall
be a breach of the Ground Lease.

 

(b)                                                                                         The
following language is hereby incorporated at the beginning of Section 45(d) of
the Ground Lease: “Notwithstanding anything herein to the contrary,”

 

(c)                                                                                          Section 45(d)(iii) of
the Ground Lease is hereby amended by adding the following language at the end
of the first sentence (after the words “cause of such default” and prior to the
period): “; provided, however, notwithstanding anything to the contrary set
forth in this Lease, if any default of Tenant is personal to Tenant or not
susceptible of being cured by Mortgagee or a party acquiring title to Tenant’s
leasehold estate, such default shall be deemed waived by Landlord upon
completion of the foreclosure proceeding or deed-in-lieu of foreclosure or
acquisition of Tenant’s interest as a result of Mortgagee’s exercise of its
remedies, and Landlord will not terminate this Lease or take any other action
as a result of such default that is not susceptible of being cured; provided,
however, any claims that Landlord may have against Tenant (as opposed to
Mortgagee, its successors and assigns) shall not be deemed waived as against
Tenant.” Section 45(d)(iii) of the Ground Lease is hereby further
amended by adding the following sentence at the end of such section: “Furthermore,
there shall be no cancellation, surrender, or acceptance of surrender of this
Lease, or material amendment and/or modification of this Lease, without, in
each case, at least ten (10) days’ prior written notice to Mortgagee or its
appointed agent(s).”

 

(d)                                                                                         Section 45(d)(vii) of
the Ground Lease is hereby deleted in its entirety and replaced with the
following: “Landlord hereby consents to: (i) the foreclosure of a
Mortgage, (ii) any sale of Tenant’s interest in this Lease and the demised

 

 

premises in connection with a foreclosure, whether by judicial
proceedings or by virtue of any power of sale contained in the Mortgage, and (iii) any
conveyance of Tenant’s interest in this Lease and the demised premises from
Tenant to the Mortgagee or its nominee or designee by virtue of or in lieu of
foreclosure or other appropriate proceedings. If the Mortgagee or its nominee
or designee become the holder of Tenant’s interest in this Lease and the
demised premises, then the conveyance of such interest and assignment of this
Lease by the Mortgagee or its nominee or designee shall require the prior
written consent of Landlord, not to be unreasonably withheld. Furthermore, if
the Mortgagee or its nominee or designee becomes the Tenant under this Lease,
all of the obligations and liabilities of the Mortgagee or its nominee or
designee shall cease and terminate upon assignment of this Lease in accordance
with the terms hereof by Mortgagee or its nominee or designee.”

 

(e)                                                                                          The
following new Section 45(ix) is hereby added to Section 45 of
the Lease:

 

“(ix) Landlord and Tenant acknowledge and agree
that if and to the extent that Tenant has any right to approve or disapprove
Landlord’s rejection of this Lease in any bankruptcy proceeding, such right of
approval or disapproval shall be assigned to (and shall be exercised solely by)
the Mortgagee having the most senior Mortgage during such time as such Mortgage
encumbers Tenant’s interest in the Premises.”

 

(f)                                                                                            The
following new Section 45(xi) is hereby added to Section 45 of the
Lease:

 

“(xi) Landlord acknowledges and agrees that the
acquisition by a Mortgagee of the direct or indirect ownership of the equity
interests in Tenant (i) shall not constitute a prohibited transfer or
Tenant default under this Lease, (ii) shall not require the consent or
approval of Landlord, and (iii) shall be fully effective notwithstanding
any provision to the contrary contained in this Lease.”

 

(g)                                                                                         The
following new Section 45(xii) is hereby added to Section 45 of the
Lease:

 

“(xii) Notwithstanding anything to the contrary set
forth in this Lease, if any mortgagee, trustee or ground lessor having an
interest in Landlord’s fee interest requests that Tenant or any Mortgagee
subordinate its interests to that of such mortgagee, trustee or ground lessor,
then Tenant and/or such Mortgagee shall do so provided that such party,
concurrently with or prior to such subordination, delivers to Tenant and such
Mortgagee a fully-executed recordable non-disturbance agreement in a form reasonably
acceptable to Tenant and such Mortgagee.”

 

3

 

 (h)                  The following
new Section 45(xiii) is hereby added to Section 45 of the Lease:

 

“(xiii) In the event that Tenant’s interest under this
Lease shall be sold, assigned, assigned or transferred pursuant to the exercise
of any remedy of any Mortgagee, or pursuant to any judicial proceeding, at such
Mortgagee’s option, Landlord shall execute and deliver to such Mortgagee a new
lease (the “New Lease”) demising the Premises to Mortgagee. The New Lease shall
be for a term equal to the then remaining term of this Lease before giving
effect to such termination and shall contain the same covenants, agreements,
terms, provisions and limitations as this Lease. Upon the execution and
delivery of the New Lease, Mortgagee, in its own name or in the name of
Landlord, shall have the right, but not the obligation, to take all appropriate
steps as shall be necessary to remove the previous lessee from the Premises and
any improvements located thereon; provided, however, that Landlord shall not be
subject to any liability for the payment of fees, including reasonable attorney’s
fees, costs or expenses in connection with such removal, and Mortgagee shall
pay for all costs and expenses, including reasonable attorney’s fees, for such
removal. Mortgagee shall be liable for the performance of the obligations
imposed on the ‘Tenant’ under this Lease only for and during the period that
Mortgagee is in possession and/or ownership of the leasehold estate created by
the New Lease.”

 

4.  Assignment.
Assignor hereby assigns and transfers to Assignee all of its right, title and
interest in and to the Ground Lease (as amended by this Amendment and
Assignment), and Assignor conveys, assigns and transfers to Assignee any and
all buildings, improvements and appurtenances located on the Premises (“Improvements”),
all effective as of                                      ,
2002 (the “Effective Date”).

 

5.  Assumption.
Assignee hereby assumes, effective as of the Effective Date, all of Assignor’s
right, title and interest under the Ground Lease and all obligations of
Assignor as the “Tenant” under the Ground Lease to be performed under the
Ground Lease from and after the Effective Date, and agrees to be bound by and
perform all of the covenants, duties and obligations to be performed by
the ‘Tenant” under the Ground Lease from and after the Effective Date.
Notwithstanding the foregoing, Assignee shall have no obligation, liability or
responsibility whatsoever for any liability, cost, expense or obligation of
Assignor under the Ground Lease which is attributable to any period prior to
the Effective Date.

 

6.  Consent
to Assignment of Ground Lease and Conveyance of Improvements.
Notwithstanding anything to the contrary contained in the Ground Lease,
Landlord hereby consents to the assignment of the Ground Lease by Assignor to
Assignee and the transfer of Assignor’s right, title and interest in and to the
Ground Lease. Notwithstanding anything to the contrary contained in the Ground
Lease, Landlord hereby further consents to the conveyance, assignment and
transfer of the

 

4

 

Improvements by Assignor to Assignee pursuant to the terms and
conditions of this Amendment and Assignment.

 

7.  Notice
and Identity of Mortgagee. For purposes of notice pursuant to the Lease
(including, without limitation, Sections 20 and 45 of the Lease) and Mortgagee’s
rights pursuant to the Lease, until Landlord receives written notice indicating
otherwise from Tenant, Mortgagee or their respective successors or assigns, as
applicable:

 

	
  the address of Tenant

  
	
  shall be:

  	
  Festival Fun Parks, LLC

  
	
   

  	
  d/b/a Palace Entertainment

  
	
   

  	
  18300 Von Karman, Suite 900

  
	
   

  	
  Irvine, California 92612

  
	
   

  	
  Attn: Gary Fitzpatrick, Esq.,

  
	
   

  	
  General Counsel

  
	
   

  	
   

  
	
  with a copy to:

  	
  Paul, Hastings, Janofsky & Walker LLP

  
	
   

  	
  555 South Flower Street, 23rd Floor

  
	
   

  	
  Los Angeles, California 90071-2371

  
	
   

  	
  Attention: Robert A. Miller, Jr., Esq.

  
	
   

  	
   

  
	
  and the Mortgagee shall be Antares Capital
  Corporation, having an address of:

  
	
   

  	
   

  
	
   

  	
  Antares Capital Corporation

  
	
   

  	
  311 South Wacker Drive, Suite 6400

  
	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
  Attn: Portfolio Manager – Palace Entertainment

  

 

8.  Indemnification
by Assignor. Assignor for itself, its (past and present) officers,
directors, shareholders, attorneys, legal representatives, and constituent
parent, subsidiary and affiliate corporations and each of their past and
present partners, officers, agents and employees, and each of their successors
and assigns (collectively, the “Assignor Parties”) hereby agrees to indemnify,
defend and hold harmless Assignee and the Assignee Parties (as defined below)
from and against any and all claims, demands, obligations, duties, liabilities,
damages, expenses, indebtedness, debts, breaches of contract, duty or
relationship, acts, omissions, misfeasance, malfeasance, causes of action, sums
of money, accounts, compensation, contracts, controversies, promises, damages,
costs, losses and remedies therefor, causes of action, rights of indemnity or
liability of any type, kind, nature, description or character whatsoever, and
irrespective of how, why or by reason of what facts, whether known or unknown,
whether heretofore now existing or hereafter arising, whether liquidated or
unliquidated related to the Ground Lease and/or the Premises (collectively, “Claims”)
which Assignee or the

 

5

 

Assignee Parties may incur or which may be asserted against
Assignee or the Assignee Parties by reason of any alleged obligation,
undertaking or omission of Assignor as “Tenant” under the Ground Lease, which
Claims arise or arose from events occurring prior to the Effective Date.

 

9.  Indemnification
by Assignee. Assignee for itself, its (past and present) officers,
directors, shareholders, attorneys, legal representatives, and constituent
parents, subsidiaries and affiliates and each of their past and present
partners, officers, agents and employees, and each of their successors and
assigns (collectively, the “Assignee Parties”) hereby agrees to indemnify,
defend and hold harmless Assignor and the Assignor Parties (as defined above)
from and against any and all Claims which Assignor or the Assignor Parties may incur
or which may be asserted against Assignor or the Assignor Parties by
reason of any alleged obligation, undertaking or omission of Assignee as the
successor “Tenant” under the Ground Lease, which Claims arise or arose from
events occurring from and after the Effective Date.

 

10.  Delivery
of Subordination or Non-Disturbance Agreement. Landlord hereby represents
and warrants that no person or entity has any mortgage, deed of trust or any
other hypothecation for security upon the Premises as of the date of this
Amendment and Assignment.

 

11.  Successors
and Assigns. This Amendment and Assignment shall be binding on and inure to
the benefit of the parties hereto, their heirs, executors, administrators,
successors in interest, sublessees and assigns.

 

12.  Attorneys’
Fees. If any dispute should arise between the parties hereto regarding the
terms or subject matter of this Amendment and Assignment or the enforcement or
breach of such terms, then the party prevailing in such dispute, whether by
out-of-court settlement or final judicial determination, shall be entitled to
recover from the non-prevailing party all costs and expenses of such dispute
incurred by such prevailing party, including, without limitation, reasonable
attorneys’ fees.

 

13.  Construction;
Reaffirmation. Except as expressly amended hereby, all of the terms and
conditions of the Ground Lease shall remain unmodified and in full force and
effect. In the event of a conflict between the terms and conditions of the
Ground Lease and the terms and conditions of this Amendment and Assignment, the
terms and conditions of this Amendment and Assignment shall govern and prevail.
The Ground Lease, as amended by this Amendment and Assignment, is hereby
reaffirmed.

 

14.  Counterparts.
This Amendment and Assignment may be executed in multiple counterparts, each
of which shall be deemed an original, but all of which, together, shall
constitute one and the same instrument, binding on the parties hereto. The
signature of any party hereto to any counterpart hereof shall be deemed a
signature to,

 

6

 

and may be appended to, ay other counterpart hereof.
Facsimile signatures shall be fully binding and effective for all purposes as
if they were original signatures.

 

[No Further Text On This
Page]

 

7

 

IN WITNESS WHEREOF, the undersigned have executed this
Amendment and Assignment on the date first above written.

 

	
  “ASSIGNOR”

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MALIBU
  GRAND PRIX CORP.,

  a Delaware corporation

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ R.
  Scott Wheeler

  	
   

  	
   

  	
   

  
	
  Name:

  	
  R.
  Scott Wheeler

  	
   

  	
   

  	
   

  
	
  Title:

  	
  VP/

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  “ASSIGNEE”

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FESTIVAL
  FUN PARKS, LLC,

  a Delaware limited liability company dba PALACE ENTERTAINMENT

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Gary
  FitzPatrick

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Gary
  FitzPatrick

  	
   

  	
   

  	
   

  
	
  Title:

  	
  VP
  Gen. Counsel

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  “LANDLORD”

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  STEMMONS
  PARK, LTD.,

  a California limited partnership

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Richard C. Dentt

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Richard
  C. Dentt

  	
   

  	
   

  	
   

  
	
  Title:

  	
  General
  Partner

  	
   

  	
   

  	
   

  
							

 

8

 

EXHIBIT A

 

LEGAL DESCRIPTION OF REAL
PROPERTY

 

9

 

Legal description of land:

 

TRACT I

 

Being a tract or parcel of land situated in the City of Dallas, Dallas
County, Texas; and being part of the Edward W. Hunt Survey, Abstract 590,
and also being part of Block 6912 in the City of Dallas, Texas and being
more particularly described as follows:

 

BEGINNING at the intersection of the projection of the proposed
south line of Southwell Road (28 feet from centerline) with the west line of
I-35 (Stemmons Freeway, 360 feet wide)

 

THENCE South 0”15’00” West a distance of 619.12 feet to a point Attached to and made a part of Stewart
Title Guaranty Company Commitment for Title Insurance File No. : 96302235

 

for corner in the west
right-of-way line of I-35 (Stemmons Freeway);

 

THENCE southwesterly along a
curve to the left, said curve having a radius of 225.00 feet, a central angle
of 55”05’49”  and an arc length of 216.37 feet to a point of
tangency;

 

THENCE southwesterly along a curve
to the right, said curve having a radius of 169.86 feet, a central angle of 88”22’49” and an arc
length of 262.01 feet to a point of tangency;

 

THENCE North 89”20’50” West a
distance of 294.11 feet to a point for corner in the proposed east right-of-way
line of Malibu Drive (56 feet wide);

 

THENCE North 0”15’00” East
along the proposed east right-of-way line of Malibu Drive a distance of 972.96
feet to a point for corner;

 

THENCE North 45”18’05” East
along the proposed southeasterly cut-off line of the intersection of the
proposed Malibu Drive with Southwell Road a distance of 14.13 feet to a point
for corner;

 

THENCE South 89”38’50” East
along the proposed south right-of-way line of Southwell Road a distance of 557.75 feet to the POINT OF BEGINNING and
containing 12.0000 (plus or minus) acres of land, more or less.

 

TRACT II

 

Being a tract of land
situated in the Edward W. Hunt Survey, Abstract 590, City of Dallas, Dallas
County, Texas and also being part of Lot 2, Block 4/6512, MALIBU GRAND
PRIX ADDITION, an addition to the City of Dallas, Texas as recorded in Volume 79215, Page 0001
of the Deed Records of Dallas County, Texas and being more particularly
described as follows:

 

Beginning at a point in the
west line of Malibu Drive (56’ R.O.W.), and point being South 0”15’00” West
along the west line of Malibu Drive (56’ R.O.W.) a distance of 860.63 feet from
its intersection with the cut off line between the said west line of
Malibu Drive (56’ R.O.W.) and the south line of Southwell Road;

 

THENCE South 0”15’00” West
along the west line of Malibu Drive (56’ R.O.W.) a distance of 187.04 feet to a
point for corner in the north line of a 100 foot wide Dallas Power and Light
R.O.W. as recorded in Volume 4656, Page 243 of the Deed Records of Dallas
County, Texas;

 

THENCE North 89”20’50” West
along the north line of said Dallas Power and Light R.O.W. and the south line
Lot 2, Block 4/6512 a

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}]]