Document:

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                                                                   Exhibit 10.55

                             2003 STOCK OPTION PLAN
                                       FOR
                            SILVERLEAF RESORTS, INC.

         This 2003 Stock Option Plan (the "Plan") is established by Silverleaf
Resorts, Inc. (the "Company"), a Texas corporation, and adopted by the Company
as of the 1st day of August, 2003.

                                    ARTICLE I
                               GENERAL PROVISIONS

         SECTION 1.1 PURPOSE OF THE PLAN. The Company desires to afford certain
of its directors, officers and key employees and the directors, officers and key
employees of any subsidiary corporation or parent corporation of the Company who
are responsible for the continued growth of the Company, an opportunity to
acquire a proprietary interest in the Company, and thus to create in such
directors, officers and key employees an increased interest in and a greater
concern for the welfare of the Company. The Company, by means of the Plan, seeks
to retain the services of persons now holding key positions and to secure the
services of persons capable of filling such positions.

         SECTION 1.2 SEPARATE INDUCEMENT. The stock options ("Options") offered
pursuant to the Plan are a matter of separate inducement and are not in lieu of
any salary or other compensation for the services of any director, officer or
key employee.

         SECTION 1.3 TYPES OF OPTIONS. The Options granted under the Plan are
intended to be either incentive stock options ("Incentive Options") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or options that do not meet the requirements for Incentive Options
("Non-Qualified Options"), but the Company makes no warranty as to the
qualification of any Option as an Incentive Option.

         SECTION 1.4 SHAREHOLDER APPROVAL. The Plan shall terminate if the
shareholders of the Company have not approved the Plan within twelve (12) months
of the date the Plan was adopted by the Company.

                                   ARTICLE II
                       AMOUNT OF STOCK SUBJECT TO THE PLAN

         SECTION 2.1 AGGREGATE NUMBER OF SHARES. The total number of shares of
common stock of the Company which may be purchased pursuant to the exercise of
Options granted under the Plan shall not exceed, in the aggregate, 2,209,614
shares of the authorized common stock, $0.01 par value per share, of the Company
(the "Shares").

         SECTION 2.2 SOURCE OF SHARES. Shares which may be acquired under the
Plan may be either authorized but unissued Shares, Shares of issued stock held
in the Company's treasury, or both, at the discretion of the Company. If and to
the extent that Options granted under the Plan expire or terminate without
having been exercised, new Options may be granted with respect to the Shares
covered by such expired or terminated Options, provided that the grant and the
terms of such new Options shall in all respects comply with the provisions of
the Plan.

                                   ARTICLE III
                       EFFECTIVE DATE AND TERM OF THE PLAN

         SECTION 3.1 EFFECTIVE DATE. The Plan shall become effective on the date
(the "Effective Date") on which it is adopted by the board of directors of the
Company (the "Board of Directors"); provided, however, that if the Plan is not
approved by the shareholders of the Company within twelve (12) months before or
after the Effective Date, the Plan and any Options granted thereunder shall
terminate.

         SECTION 3.2 DURATION OF PLAN AND GRANTING OF OPTIONS. The Company may,
from time to time during the period beginning on the Effective Date and ending
on the earlier of such date as is 10 years after the Effective Date or is 10
years after the Plan is approved by the Shareholders (the "Termination Date"),
grant to persons eligible to participate in the Plan Options under the terms of
the Plan. Options granted prior to the Termination Date may extend beyond that
date, in accordance with the terms thereof.

         SECTION 3.3 PARENT AND SUBSIDIARY DEFINED. As used in the Plan, the
terms "subsidiary corporation" and "parent corporation" shall have the meanings
ascribed to such terms, respectively, in Sections 424(f) and 424(e) of the Code.
<PAGE>

         SECTION 3.4 PARTICIPANT DEFINED. An employee, officer or director to
whom Options are granted hereunder may be referred to herein as a "Participant."

                                   ARTICLE IV
                                 ADMINISTRATION

         SECTION 4.1 COMPENSATION COMMITTEE. The Board of Directors shall
designate a Compensation Committee (the "Committee"), which shall consist of no
fewer than two directors, to administer the Plan. At least two members of the
Committee shall be "non-employee directors" within the meaning of Rule 16b-3 (or
any successor rule or regulation) promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act").

         SECTION 4.2 QUORUM AND MAJORITY. A majority of the members of the
Committee shall constitute a quorum, and the act of a majority of the members of
the Committee shall be the act of the Committee.

         SECTION 4.3 REMOVAL AND VACANCIES. Any member of the Committee may be
removed at any time either with or without cause by resolution adopted by the
Board of Directors, and any vacancy on the Committee may at any time be filled
by resolution adopted by the Board of Directors.

         SECTION 4.4 ACTIONS BY BOARD. Any or all powers and functions of the
Committee may at any time and from time to time be exercised by the Board of
Directors. Any reference in the Plan to the Committee shall be deemed also to
refer to the Board of Directors, to the extent that the Board of Directors is
exercising any of the powers and functions of the Committee.

         SECTION 4.5 AUTHORITY OF COMMITTEE. Subject to the express provisions
of the Plan, the Committee shall have the authority, in its discretion, to:

                  (a) determine the directors, officers and employees to whom
         Options shall be granted, the time when such Options shall be granted,
         the number of Shares which shall be subject to each Option, the
         purchase price or exercise price of each Share which shall be subject
         to each Option, the period(s) during which such Options shall be
         exercisable (whether in whole or in part), and the other terms and
         provisions of the respective Options (which need not be identical);

                  (b) construe the Plan and Options granted thereunder;

                  (c) prescribe, amend and rescind rules and regulations
         relating to the administration of the Plan; and

                  (d) make all other determinations necessary or advisable for
         administering the Plan.

         SECTION 4.6 NONCOMPETITION. Without limiting the foregoing, the
Committee also shall have the authority to require, in its discretion, as a
condition of the granting of any Option, that the Participant agree that in the
event of termination of directorship, office or employment of such Participant,
other than as a result of dismissal without cause, such Participant will not,
for a period to be fixed at the time of the grant of the Option, enter into any
employment or participate directly or indirectly in any business or enterprise
which is competitive with the business of the Company or any subsidiary
corporation or parent corporation of the Company, or enter into any employment
in which such employee will be called upon to utilize special knowledge obtained
through directorship, office or employment with the Company or any subsidiary
corporation or parent corporation thereof.

         SECTION 4.7 DISCRETION OF COMMITTEE. The determination of the Committee
on matters referred to in this Article IV shall be conclusive.

         SECTION 4.8 CONSULTANTS. The Committee may employ such legal counsel,
consultants and agents as it may deem desirable for the administration of the
Plan and may rely upon any opinion received from any such counsel or consultant
and any computation received from any such consultant or agent. Expenses
incurred by the Committee in the engagement of such counsel, consultant or agent
shall be paid by the Company.

         SECTION 4.9 NO LIABILITY FOR GOOD FAITH DECISIONS. No member or former
member of the Committee or of the Board of Directors shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option.
<PAGE>

                                    ARTICLE V
                                   ELIGIBILITY

         SECTION 5.1 NON-QUALIFIED PARTICIPANTS. Non-Qualified Options may be
granted only to directors, officers and other salaried key employees of the
Company, or of any subsidiary corporation or parent corporation of the Company
now existing or hereafter formed or acquired, except as hereinafter provided.

         SECTION 5.2 INCENTIVE OPTION PARTICIPANTS. An Incentive Option may be
granted only to salaried key employees of the Company or any subsidiary
corporation or parent corporation of the Company now existing or hereafter
formed or acquired, and not to any director or officer who is not also an
employee.

         SECTION 5.3 RETIRED EMPLOYEES. Any person who shall have retired from
active employment by the Company, although such person shall have entered into a
consulting contract with the Company, shall not be eligible to receive an
Option.

                                   ARTICLE VI
                   LIMITATION ON EXERCISE OF INCENTIVE OPTIONS

         SECTION 6.1 EXCESSIVE INCENTIVE OPTIONS. Except as otherwise provided
under the Code, to the extent that the aggregate fair market value of Shares
with respect to which Incentive Options are exercisable for the first time by an
employee during any calendar year (under all stock options plans of the Company
and any parent corporation or subsidiary corporation of the Company) exceeds
$100,000.00, such Options shall be treated as Non-Qualified Options.

         SECTION 6.2 DEFINITIONS FOR LIMITATION. For purposes of the limitation
set forth in Section 6.1:

                  (a)      the fair market value of Shares is determined as of
                           the time the Option is granted;

                  (b)      the limitation will be applied by taking into account
                           Options in the order in which they were granted; and

                  (c)      Incentive Options granted before 1987 shall not be
                           taken into account.

                                   ARTICLE VII
                           OPTIONS: PRICE AND PAYMENT

         SECTION 7.1 PURCHASE PRICE OF NON-QUALIFIED OPTIONS. The purchase price
for each Share purchasable under any Non-Qualified Option granted hereunder
shall be such amount as the Committee shall deem appropriate, but not less than
the par value thereof, if any.

         SECTION 7.2 PURCHASE PRICE OF INCENTIVE OPTIONS. The purchase price for
each Share purchasable under any Incentive Option granted hereunder shall be
such amount as the Committee shall, in its best judgment, determine to be not
less than one hundred percent (100%) of the fair market value per Share on the
date the Option is granted; provided, however, that in the case of an Incentive
Option granted to a Participant who, at the time such Incentive Option is
granted, owns stock of the Company or any subsidiary corporation or parent
corporation of the Company possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any
subsidiary corporation or parent corporation of the Company, the purchase price
for each Share shall be such amount as the Committee shall, in its best
judgment, determine to be not less than one hundred ten percent (110%) of the
fair market value per Share at the date the Option is granted. For purposes of
determining such ownership, the attribution rules of Section 424(d) of the Code
shall apply.

         SECTION 7.3 FAIR MARKET VALUE OF SHARES.

                  (a) NATIONAL EXCHANGE: If the Shares are listed on a national
         securities exchange in the United States on any date on which the fair
         market value per Share is to be determined, the fair market value per
         Share shall be deemed to be the average of the high and low quotations
         at which such Shares are sold on such national securities exchange on
         such date. If the Shares are listed on a national securities exchange
         in the United States on such date but the Shares are not traded on such
         date, or such national securities exchange is not open for business on
         such date, the fair market value per Share shall be determined as of
         the closest preceding date on which such exchange shall have been open
         for business and the Shares were traded. If the Shares are listed on
         more than one national securities exchange in the United States on the
         date any such Option is granted, the Committee shall, in good faith,
         determine which national securities exchange shall be used for the
         purpose of determining the fair market value per Share.
<PAGE>

                   (b) PUBLIC MARKET: If a public market exists for the Shares
         on any date on which the fair market value per Share is to be
         determined but the Shares are not listed on a national securities
         exchange in the United States, the fair market value per Share shall be
         deemed to be the mean between the closing bid and asked quotations in
         the over-the-counter market for the Shares on such date. If there are
         no bid and asked quotations for the Shares on such date, the fair
         market value per Share shall be deemed to be the mean between the
         closing bid and asked quotations in the over-the-counter market for the
         Shares on the closest date preceding such date for which such
         quotations are available.

                   (c) NO PUBLIC MARKET: If no public market exists for the
         Shares on any date on which the fair market value per Share is to be
         determined, the Committee shall, in its sole discretion and best, good
         faith judgment, determine the fair market value of a Share.

                  (d) COMMITTEE'S DECISION IS CONCLUSIVE: For purposes of this
         Plan, the determination by the Committee of the fair market value of a
         Share shall be conclusive.

         SECTION 7.4 PAYMENT UPON EXERCISE. Upon the exercise of an Option, the
Company shall cause the purchased Shares to be issued only when it shall have
received the full purchase price for the Shares in cash or by certified check;
provided, however, that in lieu of cash or certified check the Participant may,
if and to the extent the terms of the Option so provide and to the extent
permitted by applicable law, exercise an Option in whole or in part, by
delivering to the Company shares of common stock of the Company (in proper form
for transfer and accompanied by all requisite stock transfer tax stamps or cash
in lieu thereof) owned by such Participant having a fair market value equal to
the purchase price of the Shares as to which the Option is being exercised. The
fair market value of the stock so delivered shall be determined as of the date
immediately preceding the date on which the Option is exercised, or as may be
required in order to comply with or to conform to the requirements of any
applicable laws or regulations.

         SECTION 7.5 USE OF PROCEEDS. The cash proceeds of the sale of Shares
subject to Options are to be added to the general funds of the Company and used
for its general corporate purposes as the Board of Directors shall determine.

                                  ARTICLE VIII
            TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE

         SECTION 8.1 TERM OF OPTIONS. Any Option shall be exercisable at such
times, in such amounts and during such period or periods as the Committee shall
determine at the date of the grant of such Option; provided, however, that an
Incentive Option shall not be exercisable after the expiration of ten (10) years
from the date such Option is granted; and provided further that, in the case of
an Incentive Option granted to a Participant who, at the time such Option is
granted, owns stock of the Company or any subsidiary corporation or parent
corporation of the Company possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any
subsidiary corporation or parent corporation of the Company, such Option shall
not be exercisable after the expiration of five (5) years from the date such
Option is granted. For purposes of determining such ownership, the attribution
rules of Section 424(d) of the Code, shall apply.

         SECTION 8.2 ACCELERATION OF TERMS. Subject to the provisions of Section
8.10 and Section 12.2, the Committee shall have the right to accelerate, in
whole or in part, from time to time, conditionally or unconditionally, rights to
exercise any Option.

         SECTION 8.3 EXPIRATION OF OPTIONS. To the extent that an Option is not
exercised within the period of exerciseability specified therein, it shall
expire as to the then unexercised part.

         SECTION 8.4 NO FRACTIONAL SHARES. In no event shall an Option granted
hereunder be exercisable for a fraction of a Share.

         SECTION 8.5 EXERCISE OF OPTIONS. Any Option shall be exercised by the
Participant holding such Option as to all or part of the Shares covered by such
Option by giving written notice of such exercise to the Corporate Secretary of
the Company at the principal business office of the Company, specifying the
number of Shares to be purchased and specifying a business day not more than
fifteen (15) days from the date such notice is given, for the payment of the
purchase price against delivery of the Shares being purchased. Subject to the
terms of Sections 8.8, 11.5, and 12.1 of this Plan, the Company shall cause
certificates for the Shares so purchased to be delivered to the Participant at
the principal business office of the Company, against payment of the full
purchase price, on the date specified in the notice of exercise.

         SECTION 8.6 NONTRANSFERABILITY OF OPTIONS. No Option shall be
transferable, whether by operation of law or otherwise, other than by will or
the laws of descent and distribution, and any Option shall be exercisable,
during the lifetime of the Participant, only by such Participant.
<PAGE>

         SECTION 8.7 EXERCISE BY PARTICIPANT'S ESTATE. If an Option shall be
exercised by the legal representative of a deceased Participant, or by a person
who acquired an Option by bequest or inheritance or by reason of the death of
any Participant, written notice of such exercise shall be accompanied by a
certified copy of letters testamentary or equivalent proof of the right of such
legal representative or other person to exercise such Option.

         SECTION 8.8 PURCHASE FOR INVESTMENT. Except as hereafter provided, a
Participant shall, upon any exercise of an Option, execute and deliver to the
Company a written statement, in form satisfactory to the Company, in which such
Participant represents and warrants that such Participant is purchasing or
acquiring the Shares acquired thereunder for such Participant's own account, for
investment only and not with a view to the resale or distribution thereof, and
agrees that any subsequent offer for sale or sale or distribution of any of such
Shares shall be made only pursuant to either (a) a Registration Statement on an
appropriate form under the Securities Act of 1933, as amended (the "Securities
Act"), which Registration Statement has become effective and is current with
regard to the Shares being offered or sold, or (b) a specific exemption from the
registration requirements of the Securities Act, but in claiming such exemption
the holder shall, if so requested by the Company, prior to any offer for sale or
sale of such Shares, obtain a prior favorable written opinion, in form and
substance satisfactory to the Company, from counsel for or approved by the
Company, as to the applicability of such exemption thereto. The foregoing
restriction shall not apply to (i) issuances by the Company so long as the
Shares being issued are registered under the Securities Act and a prospectus in
respect thereof is current or (ii) reofferings of Shares by affiliates of the
Company (as defined in Rule 405 or any successor rule or regulation promulgated
under the Securities Act) if the Shares being reoffered are registered under the
Securities Act and a prospectus in respect thereof is current.

         SECTION 8.9 RESTRICTIONS ON TRANSFER OF STOCK. The Company may endorse
such legend or legends upon the certificates for Shares issued upon exercise of
an Option and may issue such "stop transfer" instructions to its transfer agent
in respect of such Shares as, in its discretion, it determines to be necessary
or appropriate to (i) prevent a violation of, or to perfect an exemption from,
the registration requirements of the Securities Act, (ii) implement the
provisions of the Plan and any agreement between the Company and the Participant
with respect to such Shares, or (iii) permit the Company to determine the
occurrence of a disqualifying disposition, within the meaning of Section 421(b)
of the Code, of Shares transferred upon exercise of an Incentive Option granted
under the Plan. No Shares acquired by a Participant pursuant to a Option shall
be sold or otherwise disposed of within a period of six (6) months following the
date of acquisition of such Shares, unless either the grant of the Option is
approved by the Board of Directors, or a committee of the Board of Directors
that is composed solely of two or more non-employee directors as defined in Rule
16b-3 of the Exchange Act, or the grant of the Option is approved or ratified,
in compliance with Section 14 of the Exchange Act, by either: the affirmative
votes of the holders of a majority of the securities of the Company present, or
represented, and entitled to vote at a meeting duly held in accordance with the
applicable laws of the state or other jurisdiction in which the Company is
incorporated, or the written consent of the holders of a majority of the
securities of the Company entitled to vote, provided that such ratification
occurs no later than the date of the next annual meeting of the shareholders.

         SECTION 8.10 SHAREHOLDER APPROVAL. Notwithstanding the provisions of
Section 8.2 and 10.3 hereof, no option granted hereunder may be exercised and no
Optionee will have any right to receive payment upon termination of the Options
granted hereunder, unless the Plan has been approved by the Shareholders of the
Company.

                                   ARTICLE IX
                TERMINATION OF DIRECTORSHIP, OFFICE OR EMPLOYMENT

         SECTION 9.1 EXPIRATION OF OPTIONS UPON TERMINATION. Upon termination of
the directorship, office or employment of any Participant with the Company and
all subsidiary corporations and parent corporations of the Company, any Option
previously granted to the Participant, unless otherwise specified by the
Committee in the Option, shall, to the extent not theretofore exercised,
terminate and become null and void, provided that:

                  (a) if the Participant shall die while serving as a director,
         officer or while in the employ of such corporation or during either the
         three (3) month or one (1) year period, whichever is applicable,
         specified in clause (b) below and at a time when such Participant was
         entitled to exercise an Option as herein provided, the legal
         representative of such Participant, or such person who acquired such
         Option by bequest or inheritance or by reason of the death of the
         Participant, may, not later than one (1) year from the date of death,
         exercise such Option, to the extent not theretofore exercised, in
         respect of any or all of such number of Shares as specified by the
         Committee in such Option; and

                  (b) if the directorship, office or employment of any
         Participant to whom such Option shall have been granted shall terminate
         by reason of the Participant's retirement (at such age or upon such
         conditions as shall be specified by the Committee), disability (as
         described in Section 22(e)(3) of the Code) or dismissal by the employer
         other than for cause (as defined below), and while such Participant is
         entitled to exercise such Option as herein provided, such Participant
         shall have the right to exercise such Option, to the extent not
         theretofore exercised, in respect of any or all of such number of
         Shares as specified by the Committee in such Option, at any time up to
         and including (i) three (3) months after the date of such termination
         of directorship, office or
<PAGE>

         employment in the case of termination by reason of retirement or
         dismissal other than for cause and (ii) one (1) year after the date of
         termination of directorship, office or employment in the case of
         termination by reason of disability.

         SECTION 9.2 NATURAL EXPIRATION OF OPTION. In no event, however, shall
any person be entitled to exercise any Option after the expiration of the period
of exerciseability of such Option as specified therein.

         SECTION 9.3 VOLUNTARY OR FOR CAUSE TERMINATION. If a Participant
voluntarily terminates his directorship, office or employment, or is discharged
for cause, any Option granted hereunder shall, unless otherwise specified by the
Committee in the Option, forthwith terminate with respect to any unexercised
portion thereof.

         SECTION 9.4 "FOR CAUSE" DEFINED. For the purposes of the Plan, the term
"for cause" shall mean (i) with respect to an employee who is a party to a
written agreement with, or, alternatively, participates in a compensation or
benefit plan of the Company or a subsidiary corporation or parent corporation of
the Company, which agreement or plan contains a definition of "for cause" or
"cause" (or words of like import) for purposes of termination of employment
thereunder by the Company or such subsidiary corporation or parent corporation
of the Company, "for cause" or "cause" as defined in the most recent of such
agreements or plans, or (ii) in all other cases, as determined by the Board of
Directors, in its sole discretion, (a) the willful commission by a Participant
of a criminal or other act that causes or probably will cause substantial
economic damage to the Company or a subsidiary corporation or parent corporation
of the Company or substantial injury to the business reputation of the Company
or a subsidiary corporation or parent corporation of the Company; (b) the
commission by a Participant of an act of fraud in the performance of such
Participant's duties on behalf of the Company or a subsidiary corporation or
parent corporation of the Company; (c) the continuing willful failure of a
Participant to perform the duties of such Participant to the Company or a
subsidiary corporation or parent corporation of the Company (other than such
failure resulting from the Participant's incapacity due to physical or mental
illness) after written notice thereof (specifying the particulars thereof in
reasonable detail) and a reasonable opportunity to be heard and cure such
failure are given to the Participant by the Board of Directors; or (d) the order
of a court of competent jurisdiction requiring the termination of the
Participant's employment, directorship or office. For purposes of the Plan, no
act, or failure to act, on the Participant's part shall be considered "willful"
unless done or omitted to be done by the Participant not in good faith and
without reasonable belief that the Participant's action or omission was in the
best interest of the Company or a subsidiary corporation or parent corporation
of the Company.

         SECTION 9.5 EMPLOYMENT DEFINED. For the purposes of the Plan, an
employment relationship shall be deemed to exist between an individual and a
corporation if, at the time of the determination, the individual was an
"employee" of such corporation for purposes of Section 422(a) of the Code. If an
individual is on maternity, military, or sick leave or other bona fide leave of
absence, such individual shall be considered an "employee" for purposes of the
exercise of an Option and shall be entitled to exercise such Option during such
leave if the period of such leave does not exceed ninety (90) days, or, if
longer, so long as the individual's right to reemployment with his employer is
guaranteed either by statute or by contract. If the period of leave exceeds
ninety (90) days, the employment relationship shall be deemed to have terminated
on the ninety-first (91) day of such leave, unless the individual's right to
reemployment is guaranteed by statute or contract.

         SECTION 9.6 TRANSFER OF EMPLOYMENT. A termination of employment shall
not be deemed to occur by reason of (i) the transfer of a Participant from
employment by the Company to employment by a subsidiary corporation or a parent
corporation of the Company or (ii) the transfer of a Participant from employment
by a subsidiary corporation or a parent corporation of the Company to employment
by the Company or by another subsidiary corporation or parent corporation of the
Company.

         SECTION 9.7 RIGHT TO TERMINATE EMPLOYMENT. The Plan shall not impose
any obligation on the Company or on any subsidiary corporation or parent
corporation thereof to continue the employment of any Participant; and it shall
not impose any obligation on the part of any Participant to remain in the employ
of the Company or of any subsidiary corporation or parent corporation thereof.

                                    ARTICLE X
              ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS

         SECTION 10.1 ADJUSTMENTS TO CAPITAL STRUCTURE. In the event of any
change in the outstanding Shares through merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, split-up, split-off, spin-off,
combination or exchange of shares, or other like change in capital structure of
the Company, an adjustment shall be made to each outstanding Option such that
each such Option shall thereafter be exercisable for such securities, cash
and/or other property as would have been received in respect of the Shares
subject to such Option had such Option been exercised in full immediately prior
to such change, and such an adjustment shall be made successively each time any
such change shall occur. The term "Shares" after any such change shall refer to
the securities, cash and/or property then receivable upon exercise of an Option.
In addition, in the event of any such change, the Committee shall make any
further adjustment as may be appropriate to the maximum number of Shares subject
to the Plan, the maximum number of Shares, if any, for which Options may be
granted to any one employee, and the number of Shares and price per Share
subject to outstanding Options as shall be equitable to prevent dilution or
enlargement of rights under such Options, and the determination of the Committee
as to these matters shall be
<PAGE>

conclusive. Notwithstanding the foregoing, (i) each such adjustment with respect
to an Incentive Option shall comply with the rules of Section 424(a) of the
Code, and (ii) in no event shall any adjustment be made which would render any
Incentive Option granted hereunder other than an "incentive stock option" for
purposes of Section 422 of the Code.

         SECTION 10.2 CHANGE IN CONTROL DEFINED. For purposes of the Plan, a
"change in control" of the Company occurs upon the sale of all or substantially
all of the assets of the Company or upon any merger, consolidation or similar
transaction in which the Company is not the surviving corporation.

         SECTION 10.3 EXPIRATION UPON CHANGE IN CONTROL. In the event of a
change in control of the Company (defined above), each Option outstanding
hereunder, the grant of which was approved by the Board of Directors, or a
committee of the Board of Directors that is composed solely of two or more
non-employee directors as defined in Rule 16b-3 of the Exchange Act, or by the
affirmative vote or written consent of the holders of the majority of the
securities of the Company, shall terminate as of the date of the change of
control, and such holder shall receive from the Company, with respect to each
Share subject to such Option, an amount of cash equal to the excess of the fair
market value of such Share immediately prior to the occurrence of such
transaction over the exercise price per Share of such Option. Notwithstanding
anything to the contrary herein, all of the provisions of this Section shall be
subject to the provisions of Section 8.10.

                                   ARTICLE XI
             ISSUANCE OF CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES

         SECTION 11.1 CERTIFICATES; BOOK ENTRY TRANSFER. Upon any exercise of an
Option and payment of the purchase price, a certificate or certificates for the
Shares as to which the Option has been exercised shall be issued by the Company
in the name of the person exercising the Option and shall be delivered to or
upon the order of such person or persons. At the direction of the Optionee and
in lieu of a certificate or certificates, the Company shall issue the Shares by
book-entry transfer to an eligible institution for the account of the Optionee;
provided, however, that Shares that are endorsed with any legend restricting
transfer thereof, may not be issued through book-entry transfer.

         SECTION 11.2 ENDORSEMENTS. The Company may endorse such legend or
legends upon the certificates for Shares issued upon exercise of an Option
granted hereunder and may issue such "stop transfer" instructions to its
transfer agent in respect of such Shares as, in its discretion, it determines to
be necessary or appropriate to (i) prevent a violation of, or to perfect an
exemption from, the registration requirements of the Securities Act, (ii)
implement the provisions of the Plan and any agreement between the Company and
the optionee with respect to such Shares, or (iii) permit the Company to
determine the occurrence of a disqualifying disposition, within the meaning of
Section 421(b) of the Code, of Shares transferred upon exercise of an Incentive
Option granted under the Plan.

         SECTION 11.3 TAXES AND FEES. The Company shall pay all issue or
transfer taxes with respect to the issuance or transfer of Shares, as well as
all fees and expenses incurred by the Company in connection with such issuance
or transfer.

         SECTION 11.4 SHARES FULLY PAID. All Shares issued as provided herein
shall be fully paid and non-assessable to the extent permitted by law.

         SECTION 11.5 WITHHOLDING TAXES. The Company may require an employee
exercising a Non-Qualified Option granted hereunder, or disposing of Shares
acquired pursuant to the exercise of an Incentive Option in a disqualifying
disposition (within the meaning of Section 421(b) of the Code), to reimburse the
corporation that employs such employee for any taxes required by any government
to be withheld or otherwise deducted or paid by such corporation in respect of
the issuance or disposition of such Shares. In lieu thereof, the employer
corporation shall have the right to withhold the amount of such taxes from any
other sums due or to become due from such corporation to the employee upon such
terms and conditions as the Committee shall prescribe. The employer corporation
may, in its discretion, hold the stock certificate to which such employee is
entitled upon the exercise of an Option as security for the payment of such
withholding tax liability, until cash sufficient to pay that liability has been
accumulated.

                                   ARTICLE XII
                            MISCELLANEOUS PROVISIONS

         SECTION 12.1 LISTING OF SHARES AND RELATED MATTERS. If at any time the
Board of Directors shall determine in its discretion that the listing,
registration or qualification of the Shares covered by the Plan upon any
national securities exchange or under any state or federal law, or the consent
or approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the sale or purchase of Shares under the
Plan, no Shares shall be issued unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained, or
otherwise provided for, free of any conditions not acceptable to the Board of
Directors.
<PAGE>

         SECTION 12.2 AMENDMENT OF THE PLAN. The Board of Directors or the
Committee may, from time to time, amend the Plan, provided that, notwithstanding
anything to the contrary herein, no amendment shall be made, without the
approval of the shareholders of the Company, that will (i) increase the total
number of Shares reserved for Options under the Plan (other than an increase
resulting from an adjustment provided for in Article X), (ii) reduce the
exercise price of any Incentive Option granted hereunder below the price
required by Article VII, or (iii) modify the provisions of the Plan relating to
eligibility. The Board of Directors or the Committee shall be authorized to
amend the Plan and the Options granted thereunder to permit the Incentive
Options granted thereunder to qualify as "incentive stock options" within the
meaning of Section 422 of the Code. The rights and obligations under any Option
granted before amendment of the Plan or any unexercised portion of such Option
shall not be adversely affected by amendment of the Plan or the Option without
the consent of the holder of the Option.

         SECTION 12.3 TERMINATION OR SUSPENSION OF THE PLAN. The Board of
Directors or the Committee may at any time and for any or no reason suspend or
terminate the Plan. The Plan, unless sooner terminated under Article III or by
action of the Board of Directors, shall terminate at the close of business on
the Termination Date. An Option may not be granted while the Plan is suspended
or after it is terminated. Options granted while the Plan is in effect shall not
be altered or impaired by suspension or termination of the Plan, except upon the
consent of the person to whom the Option was granted. The power of the Committee
under Article IV to construe and administer any Options granted prior to the
termination or suspension of the Plan shall continue after such termination or
during such suspension.

         SECTION 12.4 GOVERNING LAW. The Plan, such Options as may be granted
thereunder and all related matters shall be governed by, and construed and
enforced in accordance with, the laws of the State of Texas from time to time
obtaining.

         SECTION 12.5 PARTIAL INVALIDITY. The invalidity or illegality of any
provision herein shall not be deemed to affect the validity of any other
provision.

         SECTION 12.6 SUCCESSORS. This Plan shall be binding on the Company, its
successors and assigns.

         ADOPTED this 1st day of August, 2003.

                                     SILVERLEAF RESORTS, INC.

                                     By: /s/ ROBERT E. MEAD
                                         ---------------------------------------
                                         Robert E. Mead, Chief Executive Officer

                                     ATTESTED BY: /s/ SANDRA CEARLEY
                                                  ------------------------------
                                                  Sandra Cearley, Secretaryexv10w22

 

EXHIBIT 10.22

PANHANDLE ENERGY TOWER

5444 WESTHEIMER

HOUSTON, TEXAS

OFFICE LEASE AGREEMENT

BETWEEN

FRANKLIN POST OAK, LTD.

(“Lessor”)

AND

DEXTERITY SURGICAL, INC.

(“Lessee”)

October 13, 2003

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	1.	 	Leased Premises
	 	 	1	 
	2.	 	Net Rentable Area
	 	 	1	 
	3.	 	Term
	 	 	2	 
	4.	 	Use
	 	 	2	 
	5.	 	Base Rental
	 	 	3	 
	6.	 	Base Year
	 	 	3	 
	7.	 	Operating Expenses
	 	 	4	 
	8.	 	Security Deposit
	 	 	7	 
	9.	 	Utilities
	 	 	8	 
	10.	 	Water; HVAC; Maintenance; Lighting; Cleaning;
Electricity; Elevator Service; Building Directory
	 	 	8	 
	11.	 	Keys and Locks
	 	 	9	 
	12.	 	Graphics
	 	 	9	 
	13.	 	Peaceful Enjoyment
	 	 	9	 
	14.	 	Repairs by Lessor
	 	 	10	 
	15.	 	Payments By Lessee
	 	 	10	 
	16.	 	Repairs By Lessee
	 	 	10	 
	17.	 	Care of the Premises
	 	 	10	 
	18.	 	Assignment Or Sublease
	 	 	10	 

i

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	19.	 	Use, Alterations, Addition, Improvements
	 	 	11	 
	20.	 	Legal Use And Violations Of Insurance Coverage
	 	 	11	 
	21.	 	Laws, Regulations And Rules Of The Building
	 	 	11	 
	22.	 	Entry For Repair And Inspection
	 	 	11	 
	23.	 	Nuisance
	 	 	12	 
	24.	 	Subordination To Mortgage
	 	 	12	 
	25.	 	Estoppel Certificate
	 	 	12	 
	26.	 	Leasehold Improvements
	 	 	13	 
	27.	 	Limitation Of Lessor’s Personal Liability
	 	 	13	 
	28.	 	Parking
	 	 	13	 
	29.	 	Condemnation
	 	 	14	 
	30.	 	Damages From Certain Causes
	 	 	14	 
	31.	 	Lien For Rent
	 	 	14	 
	32.	 	Lessor’s Right To Relet
	 	 	15	 
	33.	 	Holding Over
	 	 	15	 
	34.	 	Fire Clause
	 	 	15	 
	35.	 	Attorneys Fees
	 	 	15	 
	36.	 	Amendments
	 	 	16	 
	37.	 	Assignment By Lessor
	 	 	16	 
	38.	 	Default By Lessee
	 	 	16	 
	39.	 	Non-Waiver
	 	 	17	 

ii 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	40.	 	Casualty Insurance
	 	 	17	 
	41.	 	Liability Insurance
	 	 	17	 
	42.	 	Hold Harmless
	 	 	19	 
	43.	 	Waiver Of Subrogation Rights
	 	 	19	 
	44.	 	Name Of Building
	 	 	19	 
	45.	 	Notices
	 	 	19	 
	46.	 	Relocation
	 	 	20	 
	47.	 	Survival
	 	 	20	 
	48.	 	Real Estate Brokers
	 	 	20	 
	49.	 	Telecommunications
	 	 	20	 
	50.	 	Fees for Lessee Requested Forms
	 	 	21	 
	51.	 	Lessee’s Vendors and Subcontractors
	 	 	21	 
	52.	 	Renewal Option
	 	 	21	 

iii 

 

SCHEDULES

	 
	Schedule 1 - Term-Substantial Completion

	Schedule 2 - Construction of Leasehold Improvements

	Schedule 3 - Monetary Matters

EXHIBITS

	 
	Exhibit A  - Floor Plan to Premises

	Exhibit A-1 - Property Description

	Exhibit B  - Rules and Regulations

	Exhibit C  - Janitorial Specifications

iv 

 

LEASE AGREEMENT

	 	 	 
	THE STATE OF TEXAS

	 	d
	

	 	d
	COUNTY OF HARRIS

	 	d

     THIS
LEASE AGREEMENT made and entered into on this the 13th day of
October, 2003 between FRANKLIN POST OAK, LTD. (hereinafter called “Lessor”)
whose address for purposes hereof is 5444 Westheimer, Suite 1500, Houston,
Texas 77056, and DEXTERITY SURGICAL, INC., (hereinafter called “Lessee”) whose
address for purposes hereof is 12961 Park Central, Suite 1300, San Antonio,
Texas 78216 prior to the commencement of the lease term and thereafter shall be
the Premises (defined below);

WITNESSETH:

     1. Leased Premises. Subject to and upon the terms and conditions
hereinafter set forth, and each in consideration of the covenants and
obligations of the other hereunder, Lessor does hereby lease, demise and let to
Lessee and Lessee does hereby lease and take from Lessor those certain premises
(hereinafter sometimes called the “Premises”) in the building located at 5444
Westheimer (hereinafter sometimes called the “Building”) in the City of
Houston, Harris County, Texas, such Premises being more particularly described
as follows:

A total of approximately Two Thousand Three Hundred Thirty (2,330) net
rentable square feet located on the nineteenth (19th) floor of the
Building, Suite 1970,

as reflected on the floor plan of such Premises attached hereto and made a part
hereof as Exhibit A.

     2. Net Rentable Area. The term “net rentable area”, as used herein, shall
refer to (i) in the case of a single tenant floor, all floor area measured from
the inside surface of the inner glass or (with respect to the basements)
exterior wall of the Building to the inside surface of the opposite outer wall
excluding only the areas (“service areas”) within the outside walls on the
particular floor used for building stairs, fire towers, elevator shafts, flues,
vents, stacks, vertical pipe shafts and vertical ducts, but including any such
service areas which are for the specific use of the particular tenant such as
special stairs or elevators, plus a proportionate part of the areas (“extra
areas”) used for building elevator, mechanical, electrical and plumbing room
and the central plant serving the Building, the truck dock, fire control
stations, and ground floor lobby, basement, and (ii) in the case of a floor to
be occupied by more than one tenant, all floor areas within the demising walls
(measured from the mid-point of the demising walls and in the case of exterior
walls, measured as defined in (i) above), plus a proportionate part of areas
(“common areas”) devoted to lobbies, corridors, elevator foyers, restrooms,
electrical, telephone and mechanical rooms, janitor closets, vending areas and
other similar facilities for the use of all tenants on the particular floor
plus a proportionate part of the
extra areas. The Lessee’s proportionate part of extra areas shall be
based upon the ratio of the Lessee’s net rentable area (excluding “extra
areas”) to the aggregate net rentable

-1-

 

area (excluding “extra areas”) of the
Building. The Lessee’s proportionate part of common areas shall be based upon
the ratio of the Lessee’s net rentable area (excluding “common” and “extra
areas”) to the aggregate net rentable area (excluding “common” and “extra
areas”) on such floor. No deductions shall be made in determining net rentable
areas for columns or projections necessary to the Building. The net rentable
area in the Premises has been calculated on the basis of the foregoing
definition and is hereby stipulated for all purposes hereof to be 2,330 square
feet, whether the same shall be more or less as a result of variations
resulting from actual construction and completion of the Premises for occupancy
so long as such work is done substantially in accordance with the terms and
provisions hereof.

3. Term. (a) Subject to and upon the terms and conditions set forth herein,
or in any exhibit or addendum hereto, this lease shall continue in force for a
term of thirty-six (36) full calendar months beginning on the later to occur of
(i) November 1, 2003 or Substantial Completion (as defined in Schedule 1
hereto) of the Premises (the later such date being herein referred to as the
“Commencement Date”) and ending thirty-six (36) full calendar months
thereafter, it being the intention of the parties that, in the event the
Commencement Date is not the first day of a month, the term of this lease shall
include any partial calendar month after the Commencement Date and prior to the
first full calendar month of the term hereof.

          (b) As more fully defined in Schedule 1 hereto, in the event the Premises
should not be ready for occupancy by November 1, 2003 for any reason, Lessor
shall not be liable or responsible for any claims, damages or liabilities in
connection therewith or by reason thereof, and the term of this lease shall
commence at the time that the Premises are Substantially Complete (as defined
in Schedule 1). Lessor and Lessee will, at the request of either, execute a
declaration specifying the Commencement Date. No rental under this lease shall
commence until the Commencement Date. The stated term in this lease shall
commence on the Commencement Date and the expiration date of this lease shall
be thirty-six (36) full calendar months after the Commencement Date and shall
include any partial calendar month at the beginning of the term after the
Commencement Date and prior to the first full calendar month of the term hereof
(in the event the Commencement Date is not the first day of a month).

     4. Use. The Premises shall be used and occupied by Lessee (and its
permitted assignees and sublessees) solely as general, administrative and
executive offices (including such ancillary uses in connection therewith as
shall be reasonably required by Lessee in the operation of its business);
provided, that in no event shall any of the following be permitted in the
Premises: (i) offices or agencies of a foreign government or political
subdivisions thereof; (ii) offices of any governmental bureau or agency of the
United States or any state or political subdivision thereof; (iii) personnel
agencies; or (iv) customer service offices of any public utility company. The
following uses shall not be permitted in the Premises except to the extent they
are ancillary to an otherwise permitted use: (v) data processing activities;
(vi) health care activities; (vii) schools or other training or educational
uses; (viii) clerical support services; (ix) reservation centers for airlines
or travel agencies; (x) retail or restaurant use; (xi) studios for radio,
television of other media; or (xii) storage. The Premises shall not be used
for any purpose which would, in Lessor’s reasonable opinion, lower the
first-class character of the
Building or any part thereof, create unreasonable or excessive elevator or
floor loads, interfere with any of the operations of the Building or any part
thereof or the proper and economic

-2-

 

heating, air-conditioning, cleaning or other
servicing of the Building or any part thereof or unreasonably interfere with
the use of the other areas of the Building by any other lessees.

5. Base Rental. (a) Commencing on the Commencement Date, Lessee agrees to pay
monthly rental (herein called “Base Rental”) as follows:

	 	 	 	 	 	 	 
	 	 	ANNUAL RATE PER NET	 	 
	PERIOD
	 	RENTABLE SQUARE FOOT
	 	MONTHLY RENT

	The partial calendar month, if any, following
	 	$	17.50	 	 	$3,397.92 [prorated
	the Commencement Date and prior to the first
	 	 	 	 	 	for such partial
	full calendar month of the term
	 	 	 	 	 	calendar month]
	Calendar Months 1 - 18
	 	$	17.50	 	 	$3,397.92
	Calendar Months 19 - 36
	 	$	18.00	 	 	$3,495.00

          (b) The Lessee shall also pay, as additional rent, all such other sums of
money as shall become due from and payable by Lessee to Lessor under this
lease. The Lessor shall have the same remedies for default in the payment of
additional rent as are available to Lessor in the case of a default in the
payment of Base Rental. Such Base Rental together with any adjustment of rent
provided for herein then in effect shall be due and payable in twelve (12)
equal installments on the first day of each calendar month during the term of
this lease and any extensions or renewals thereof, and Lessee hereby agrees to
so pay such rent to Lessor at Lessor’s address as provided herein (or such
other address as may be designated by Lessor from time to time) monthly in
advance without demand. If the Commencement Date is a date other than the
first day of a month or this lease terminates on other than the last day of a
month, then the installments of Base Rental and any additional rent for such
month or months shall be prorated and the installment or installments so
prorated shall be paid in advance. A five percent (5%) late penalty per month
shall be added to all past due installments of rent that are more than ten (10)
days overdue.

6. Base Year. There is established under this lease a “Base Year,” which for
these purposes is the calendar year 2004. In the event that the Actual
Operating Expenses (hereinafter defined) of Lessor’s operation of the Project
(hereinafter defined) during any calendar year, all or any portion of which is
within the term hereof, after the Base Year shall differ from the Actual
Operating Expenses of Lessor therefor during the Base Year, Lessee shall pay to
Lessor a sum equal to Lessee’s Share (hereinafter defined) of the amount by
which (a) the Actual Operating Expenses of Lessor for such subsequent calendar
year exceed (b) the Actual Operating Expenses of Lessor for the Base Year (such
excess, if any, being herein referred to as the “Actual Excess Operating
Expenses” for each calendar year after the Base Year). Lessee’s
Share of Actual Excess Operating Expenses shall be prorated for any partial
calendar year during the term of this lease. If Actual Operating Expenses for
any year, all or any portion of which is within the term hereof, after the Base
Year are less than the Base Year’s Actual Operating Expenses, Lessee shall not
be obligated for rental in excess of the

-3-

 

Base Rental stated in Section 5.

     7. Operating Expenses. (a) “Actual Operating Expenses,” as said term is
used herein, shall consist of all operating expenses of the Project which shall
be computed on the accrual basis and shall consist of all reasonable costs by
Lessor to maintain all facilities in operation during any year and such
additional facilities in subsequent years as may be determined by Lessor to be
necessary or generally beneficial for the Project. All operating expenses
shall be determined in accordance with generally accepted accounting principles
which shall be consistently applied. The term “Project” as used herein means
and includes the Building, Garage, and the tract or tracts of land on which
they are located. The term “operating expenses” as used herein shall mean all
expenses, costs and disbursements (but not replacement of capital investment
items except as specifically provided below nor specific costs especially
billed to and paid by specific tenants) of every kind and nature which Lessor
shall pay or become obligated to pay because of or in connection with the
ownership, management and operation of the Project including but not limited to
the following:

	 	(1)	 	Wages and salaries and related expenses and benefits of all on-site
and off-site employees engaged in the supervision, operation and
maintenance, or access control, of the Project and personnel who may
provide traffic control relating to ingress and egress to and from the
Project to the adjacent public streets and the costs (based upon fair
market rental rates) of a management office in the Project.
	 
	 	(2)	 	All supplies, tools, equipment and materials used in operation and
maintenance of the Project.
	 
	 	(3)	 	Cost of all utilities for the Project including the cost of water
and power, heating, lighting, air conditioning and ventilating for the
Project (excluding those costs separately paid by specific tenants).
	 
	 	(4)	 	Cost of all maintenance and service agreements for the Project and
the equipment therein, including, but not limited to, access control
service, window cleaning, elevator maintenance, landscaping and
janitorial services.
	 
	 	(5)	 	Cost of all insurance relating to the Project including, but not
limited to, the cost of casualty and liability insurance, worker’s
compensation, group and health insurance and rental abatement insurance
applicable to the Project and Lessor’s personal property used in
connection therewith.
	 
	 	(6)	 	All taxes and assessments and governmental charges with respect to
the Project whether federal, state, county or municipal, and whether
they be by taxing districts or authorities presently taxing the
Premises or by others, subsequently created or otherwise, and any other
taxes and assessments attributable to the Project or its
operation. It is agreed that Lessee shall be responsible for ad
valorem taxes on its personal property and on the value of leasehold
improvements to the extent that same exceed building standard
allowances.

-4-

 

	 	(7)	 	Cost of repairs and general maintenance of the Project (excluding
repairs and general maintenance paid by proceeds of insurance or by
Lessee or other third parties, and alterations attributable solely to
preparation of space for occupancy by tenants of the Building other
than Lessee).
	 
	 	(8)	 	Amortization (together with reasonable financing charges) of the
cost of supplying and installation of capital investment items which
are intended for the purpose of reducing operating costs, as long as a
savings is realized or which may be required by governmental authority.
All such costs shall be amortized over the reasonable life of the
capital investment items with the reasonable life and amortization
schedule being determined in accordance with generally accepted
accounting principles and in no event to extend beyond the reasonable
life of the Building. In the case of installations for the purpose of
reducing operating costs, Lessor shall, upon request, provide a cost
justification for its practicality.
	 
	 	(9)	 	Lessor’s central accounting costs and audit fees attributable to
the Project.
	 
	 	(10)	 	The cost of payment and performance of the Lessor’s obligations
with respect to all of the above expenses in connection with the bridge
connecting the Project to the Garage and the driveways serving the
Project.
	 
	 	(11)	 	A management cost recovery equal to any and all reasonable fees
paid by Lessor for property management services to the Project but not
to exceed four percent (4%) of the gross rent of the Project.

Notwithstanding the foregoing, “Actual Operating Expenses” shall not include
any of the following exclusions:

	 	(1)	 	Repairs or other work occasioned by fire, windstorm or other
casualty of an insurable nature or by the exercise of the right of
eminent domain;
	 
	 	(2)	 	Leasing commissions, attorney’s fees, costs and disbursement and
other expenses incurred in connection with negotiations or disputes
with tenants, other occupants, or prospective tenants or other
occupants;
	 
	 	(3)	 	Expenses incurred in renovating or otherwise improving or
decorating, painting or redecorating space for tenants or other
occupants or vacant space;
	 
	 	(4)	 	Lessor’s costs of electricity and other services sold to tenants
and for which Lessor is entitled to be reimbursed by tenants as an
additional charge or rental over and above the basic rent payable under
the lease with such tenant;
	 
	 	(5)	 	Except as otherwise provided herein, costs incurred by Lessor for
alterations which are considered capital improvements and replacements
under generally accepted accounting principles;

-5-

 

	 	(6)	 	Expenses in connection with services or other benefits of a type
which are not provided to Lessee but which are provided to another
tenant or occupant;
	 
	 	(7)	 	Costs incurred due to violation by Lessor or any tenant of the
terms and conditions of any lease;
	 
	 	(8)	 	Overhead and profit increment paid to subsidiaries or affiliates of
Lessor for services on or to the real property, to the extent only that
the costs of such services exceed competitive costs of such services
were they not so rendered by a subsidiary or affiliate;
	 
	 	(9)	 	Interest on debt or amortization payments on any mortgage or
mortgages, and rental under any ground or underlying leases or lease;
	 
	 	(10)	 	Lessor’s general partnership overhead;
	 
	 	(11)	 	Any compensation paid to clerks, attendants, or other persons in
commercial concessions operated by Lessor;
	 
	 	(12)	 	All items and services for which Lessee reimburses Lessor or pays
third persons;
	 
	 	(13)	 	Advertising and promotional expenditures;
	 
	 	(14)	 	Any costs, fines or penalties incurred due to violations by Lessor
of any governmental rule or authority.
	 
	 	(15)	 	The cost of correcting defects in the structure of the Building or
Premises;
	 
	 	(16)	 	Salaries of officers and executives of Lessor above the grade of
Building Manager;
	 
	 	(17)	 	The cost of any work or service performed for any facility other
than the Building, the Garage, the land or the Premises;
	 
	 	(18)	 	The cost of any items for which Lessor is reimbursed by insurance
or otherwise to the extent such reimbursement;
	 
	 	(19)	 	All penalties, interest, fines, legal fees and related expenses
incurred due to Lessor’s failure or delay in compliance with its
obligations or applicable laws, regulations, ordinances and the like;

     (b) “Forecast Operating Expenses,” as that term is used herein, shall mean
the Actual Operating Expenses as reasonably projected by Lessor for any
calendar year after the Base Year.
“Lessee’s Share,” as that term is used herein, shall mean a fraction, the
numerator of which is the number of net rentable square feet in the Premises
and the denominator of which is the greater of 95% of the net rentable area in
the Building or the total net rentable area leased to and occupied by tenants
of the Building. For each calendar year, all or any portion of which is within
the term hereof, after the Base Year, a statement of the projected amount of
the Forecast Operating Expenses shall be

-6-

 

furnished by Lessor to Lessee no less
than thirty (30) days prior to the beginning of said calendar year.
Concurrently with each installment payment of Base Rental, Lessee shall pay to
Lessor one-twelfth (1/12th) of Lessee’s Share of a sum equal to the amount by
which the Forecast Operating Expenses for each calendar year, all or any
portion of which is within the term hereof, exceed the Actual Operating
Expenses for the Base Year (such excess being herein referred to as the
“Forecast Excess Operating Expenses”).

     (c) If Lessee’s Share of Actual Excess Operating Expenses for any
calendar year, all or any portion of which is within the term hereof, after
Base Year is greater than payments theretofore made by Lessee on account of
Lessee’s Share of Forecast Excess Operating Expenses, Lessee shall pay to
Lessor within thirty (30) days after Lessee’s receipt of the annual statements
referred to in (e) below the amount of such excess. However, if Lessee’s Share
of Actual Excess Operating Expenses for such calendar year is less than
payments theretofore made by Lessee on account of Lessee’s Share of Forecast
Excess Operating Expenses, Lessor shall pay to Lessee within thirty (30) days
after Lessee’s receipt of such statement the amount of such difference.

     (d) Any sums payable by Lessee under this Section 7 shall be deemed
additional rent.

     (e) Within one hundred fifty (150) days (or as soon thereafter as
reasonably practicable) after the expiration of a calendar year all or any
portion of which is within the term hereof, Lessor shall deliver to Lessee a
written statement itemized in reasonable detail and certified to by Lessor,
showing Actual Operating Expenses for the calendar year in question and a

statement of Lessee’s Share of Actual Excess Operating Expenses.

     (f) Notwithstanding any other provision herein to the contrary, it is
agreed that in the event the Building is not fully occupied during any year or
in the event all of the Building is not provided with building standard
services during any year, an adjustment (the “Operating Expense Adjustment”)
shall be made in computing the Actual Operating Expenses for such year so that
the Actual Operating Expenses shall be computed for such year as though the
building had been ninety five percent (95%) occupied during such year.

     (g) Lessee at its expense shall have the right at any reasonable time
within 24 months after the end of a calendar year to audit Lessor’s books and
records relating to operating expenses for any calendar year or at Lessor’s
sole discretion, Lessor will provide such audit prepared by a certified public
accountant.

     8. Security Deposit. Lessee hereby agrees to pay Lessor a security
deposit of Three Thousand Three Hundred Ninety Seven and 92/100 dollars
($3,397.92) payable on the date this lease is executed by Lessee. Upon the
occurrence of any event of default by Lessee, Lessor may, from time to time,
without prejudice to any other remedy, use the security deposit paid to Lessor
by Lessee as herein provided to the extent necessary to
make good any arrears of rent or any additional rent, or any other damage,
injury, expense or liability caused to Lessor by such event of default, any
remaining balance of such security deposit to be returned by Lessor to Lessee
within a reasonable period of time after the termination of this lease.
However, the security deposit shall not be

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considered an advance payment of
rental or a measure of Lessor’s damages in case of default by Lessee.

     9. Utilities. Lessor agrees to use reasonable efforts to cause public
utilities to furnish the electricity, gas and water utilized in operating any
and all facilities serving the Premises.

     10. Water; HVAC; Maintenance; Lighting; Cleaning; Electricity; Elevator
Service; Building Directory. Lessor agrees to furnish (the cost of which is
part of operating expenses of the Project) Lessee while occupying the Premises:

          (a) Hot and cold water at those points of supply provided for
general use of other lessees in the Building; central heat and air
conditioning in season, at such temperatures and in such amounts as are
considered by Lessor to be standard in comparable buildings in the West
Loop Galleria submarket, but such service at times during week days
other than normal business hours for the Building, on Saturday
afternoons, Sundays and holidays to be furnished only upon the request
of Lessee, who shall bear the entire cost thereof; routine maintenance
and electric lighting service for all extra areas, service areas, and
common areas of the Building in the manner and to the extent deemed by
Lessor to be standard. For the purposes of this lease, normal business
hours are defined as 7:00 AM to 6:00 PM Monday through Friday and from
8:00 AM to 1:00 PM on Saturday. Holidays are as follows: New Year’s
Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. In the event a holiday falls on a Saturday or Sunday,
the Building Holiday shall be the nationally recognized day either
preceding or following such holiday.

Lessor shall provide the following minimum standards for air conditioning and
heating (“Building Standard HVAC”):

	 	 	 	 	 
	

	 	When outdoor conditions are as follows:
	

	 	Summer:
	 	96 degrees F. Dry Bulb
	

	 	 	 	80 degrees F. Wet Bulb
	

	 	Winter:
	 	28 degrees F. Dry Bulb
	 
	 	 	 	 
	

	 	Conditions in the Building shall be at least as follows:
	

	 	Summer:
	 	Maximum - 76 degrees F. Dry Bulb
	

	 	 	 	Minimum - 72 degrees F. Dry Bulb
	

	 	 	 	50% Relative Humidity
	

	 	Winter:
	 	Maximum - 76 degrees F. Dry Bulb
	

	 	 	 	Minimum - 72 degrees F. Dry Bulb

          (b) Janitor services on a five (5) day week basis in accordance
with the specifications attached hereto as Exhibit “C”; provided,
however, if any of Lessee’s floor coverings or other improvements are
other than building standard, Lessee shall pay the additional cleaning
cost attributable thereto plus fifteen percent (15%) for management cost
recovery as additional rent. Lessee shall pay said additional rent upon
presentation of a statement therefor by Lessor, and Lessee’s failure to
pay shall constitute default hereunder.

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          (c) Electrical facilities to furnish sufficient power for
standard office equipment and other machines of similar low electrical
consumption; (total electrical power requirement not to exceed 4 watt
per square foot of net rentable area; but not including electricity
required for duplicating and electronic data processing equipment,
special lighting in excess of building standard, and any other item of
electrical equipment, or that requires a voltage other than 120 volts
single phase and provided that if the installation or operation of said
electrical equipment requires additional air conditioning capacity above
that provided by the building standard system, then the additional air
conditioning installation and operating costs will be the obligation of
Lessee).

          (d) All building standard fluorescent bulb (and ballast)
replacement in all areas and all incandescent bulb replacement in public
areas, toilet and rest room areas and stairwells.

          (e) Non-exclusive elevator service to the Premises during normal
business hours; and at least one elevator serving the Premises available
for use at all times.

          To the extent that the services described above require electricity, gas
or water supplied by public utilities, Lessor’ obligations shall require only
that Lessor use reasonable efforts to cause the utilities to furnish the same
and shall be subject to any curtailment of utilities supplied. Failure by
Lessor to any extent to furnish the foregoing defined services, or any
cessation thereof, shall not render Lessor liable in any respect for damages to
either person or property, nor be construed as an eviction of Lessee, nor work
an abatement of rent, nor relieve Lessee from fulfillment of any covenant or
agreement hereof. Additionally, should any of the equipment or machinery used
in connection with the Project break down, or for any cause cease to function
properly, Lessee shall have no claim for rebate or abatement of rent or damages
on account of an interruption in service occasioned thereby or resulting
therefrom.

     11. Keys and Locks. Lessor agrees to furnish, at Lessor’s cost, up to
seven (7) keys for each corridor door entering the Premises and up to seven (7)
electronic Building access cards. Additional keys and access cards will be
furnished at a reasonable charge by Lessor on an order signed by Lessee or
Lessee’s authorized representative. All such keys shall remain the property of
Lessor. No additional locks shall be allowed on any door of the Premises
without Lessor’s permission, and Lessee shall not make, or permit to be made
any duplicate keys, except those furnished by Lessor. Upon termination of this
Lease, Lessee shall surrender to Lessor all keys of the Premises, and give
Lessor the explanation of the combination of all locks for safes, safe cabinets
and vault doors, if any, in the Premises.

     12. Graphics. Lessor agrees to provide and install, at Lessor’s cost,
Building Standard all letters or numerals at the entrance to the Premises.
Lessor also agrees to provide and install, at Lessor’s expense, a listing of
Lessee’s name and office number on the Building Directory Board. No signs,
numerals, letters or other graphics shall be used or permitted on the exterior
of, or which may be visible from outside the Premises unless approved in
writing by Lessor.

     13. Peaceful Enjoyment. Lessor covenants that Lessee shall, and may
peacefully have, hold and enjoy the Premises, subject to the other terms
hereof, provided that Lessee pays the rental and other sums herein recited to
be paid by Lessee and performs all of Lessee’s covenants and

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agreements herein
contained. It is understood and agreed that this covenant and any and all
other covenants of Lessor contained in this lease shall be binding upon Lessor
and its successors only with respect to breaches occurring during its and their
respective ownership’s of the Lessor’s interest hereunder.

     14. Repairs by Lessor. Unless otherwise stipulated herein, Lessor shall
not be required to make any improvements to or repairs of any kind or character
on the Premises during the term of this lease, except such repairs as may be
deemed necessary by Lessor for normal maintenance operations. The obligation
of Lessor to maintain and repair the Premises shall be limited to building
standard items. Special leasehold improvements shall, at Lessee’s written
request, be maintained by Lessor at Lessee’s expense, at a cost or charge equal
to the costs incurred in such maintenance plus an additional charge to cover
overhead, not to exceed fifteen percent (15%).

     15. Payments By Lessee. Lessee agrees to pay all rent and sums provided
to be paid to Lessor hereunder at the times and in the manner herein provided.

     16. Repairs By Lessee. Subject to Section 43, hereof, at its own cost and
expense, Lessee agrees to repair or replace any damage or injury done to the
Building, or any part thereof, caused by Lessee or Lessee’s agents,
contractors, employees, invitees, or visitors, provided, however, if Lessee
fails to make such repairs or replacement promptly, Lessor may, at its option,
make repairs or replacements, and Lessee shall repay the cost thereof to the
Lessor on demand, subject to Section 43.

     17. Care of the Premises. Lessee agrees to not commit or allow any waste
or damage to be committed on any portion of the Premises and at the termination
of this lease, by lapse of time or otherwise, to deliver up said Premises to
Lessor in as good condition as at date of possession by Lessee, ordinary wear
and tear excepted, and upon such termination of this lease, Lessor shall have
the right to re-enter and resume possession of the Premises.

     18. Assignment Or Sublease. In the event Lessee should desire to assign
this lease or sublet the Premises or any part thereof, Lessee agrees to give
Lessor written notice of such desire (and the proposed effective date thereof)
at least thirty (30) days in advance of the date on which Lessee desires to
make such assignment or
sublease. Lessor shall then have a period of fifteen (15) days following
receipt of such notice within which to notify Lessee in writing that Lessor
elects either (i) to terminate this lease as to the space so affected as of the
date so specified by Lessee in which event Lessee will be relieved of all
further obligation hereunder as to such space, or (ii) to permit Lessee to
assign this lease or sublet such space, subject, however, to written approval
of the proposed assignee or sublessee by Lessor, and further subject to the
requirement that Lessee enter into written agreements with Lessor, and with
Assignee or Sublessee, that any profit realized by Lessee as a result of such
assignment or sublease (meaning the consideration agreed upon between Lessee
and Assignee or the difference between the rental rate agreed upon between
Lessee and Sublessee and the rent then required to be paid under this lease
multiplied by the number of months in the term of the sublease, shall, to the
extent such profit is immediate, be due and payable by Lessee to Lessor upon
the execution of an assignment or sublease, and, to the extent such profit is
deferred, be payable to Lessor by Assignee or Sublessee as it accrues. , or
(iii) to refuse to consent to Lessee’s assignment of this lease or sublease of
such space and to continue this lease in full force and effect as to the entire
Premises. If Lessor should fail to notify Lessee in writing of such election

-10-

 

within the stated fifteen (15) day period, Lessor shall be deemed to have
elected option (iii) above. No consent by Lessor to any assignment or sublease
shall be deemed to be consent to a use not permitted under this lease, to any
act in violation of this lease, or to any other or subsequent assignment or
sublease, and no assignment or sublease by Lessee shall relieve Lessee of any
obligation under this lease. Any attempted assignment or sublease by Lessee in
violation of the terms and covenants of Section 18 shall be void. For the
purposes of this Lease, where Lessor’s consent is required, Lessor will not
unreasonably withhold or delay such consent

     19. Use, Alterations, Addition, Improvements. Lessee agrees that it shall
not permit the Premises to be used for any purpose other than that stated in
the use clause hereof, or make or allow to be made any alterations or physical
additions in or to the Premises, or place signs on the Premises which are
visible from outside the Premises, or place safes, vaults or other heavy
furniture or equipment within the Premises, without first obtaining the written
consent of Lessor. Any and all such alterations, physical additions, or
improvements, when made to the Premises by Lessee, shall at once become the
property of Lessor and shall be surrendered to Lessor upon termination of this
lease by lapse of time or otherwise; provided, however, this clause shall not
apply to movable equipment, trade fixtures or furniture owned by Lessee.
Lessee agrees specifically that no food, soft drink or other vending machine or
cooking equipment (except microwave, refrigerator and coffee maker) will be
installed within the Premises without the written consent of Lessor.

     20. Legal Use And Violations Of Insurance Coverage. Lessee agrees to not
occupy or use, or permit any portion of the Premises to be occupied or used for
any business or purpose which is unlawful, disreputable or deemed to be
extra-hazardous on account of fire, or permit anything to be done which would
in any way increase the rate of fire or liability or any other insurance
coverage on the Building and/or its contents, including but not limited to the
use, storage, disposal or transportation of hazardous materials other than
drinking cups, office supplies and similar substances commonly found in
commercial office buildings in quantities or concentrations that do not violate
any legal requirement.

     21. Laws, Regulations And Rules Of The Building. Lessee covenants to
comply with all laws, ordinances, rules and regulations (state, federal,
municipal and other agencies or bodies having any jurisdiction thereof)
relating to the use, condition or occupancy of the Premises. Lessee will
comply with the rules adopted and altered by Lessor from time to time for the
safety, care and cleanliness of the Premises and Building and Project and for
preservation of good order therein, all of which will be sent by Lessor to
Lessee in writing and shall be thereafter carried out and observed by Lessee.

     22. Entry For Repair And Inspection. Lessee agrees to permit Lessor or
its agents or representatives to enter into and upon any part of the Premises
at all reasonable hours to inspect the same, clean or make repairs, alterations
or additions to the Project, as Lessor may deem necessary or desirable upon
verbal notification. In connection with any repairs, maintenance, improvements
or alterations, in or about the Project, Lessor may erect scaffolding and other
structures reasonably required, and during such operations may enter upon the
Premises and take into and upon or through the Premises, all materials required
to make such repairs, maintenance, alterations or improvements, and may close
public entry ways, other public areas, restrooms, stairways or corridors, and
Lessee shall not be entitled to any abatement or reduction of rent by reason
thereof.

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     23. Nuisance. Lessee agrees to conduct its business and control its
agents, employees, invitees, and visitors in such manner as not to create any
nuisance, or interfere with, annoy or disturb any other tenant or Lessor in its
operation of the Building.

     24. Subordination To Mortgage. Lessor covenants and agrees with Lessee
that (a) This Lease is subject and subordinate to each mortgage (an
“Underlying Mortgage”) and each underlying financing or ground lease (an
“Underlying Lease”) which may now or subsequently affect Lessor’s interest in
the Building. In the event of the enforcement by the holder of any Underlying
Mortgage of the remedies provided for by law or by such Underlying Mortgage, or
in the event of the termination of an Underlying lease, Lessee shall, upon
request of any person succeeding to the interest of such holder or upon the
request of the lessor under such Underlying Lease, automatically become the
lessee of such successor in interest or such lessor, as the case may be,
without change in the terms or provisions of this Lease; provided, that neither
such successor in interest nor such lessor shall be (i) bound by any payment of
the Base Rent or Lessee’s Proportionate Share for more than one month in
advance except prepayment in the nature of security for the performance by
Lessee of its obligations under this lease; (ii) bound by any amendment or
modification of this lease made without the consent of such successor in
interest or such lessor; or (iii) liable for any act or omission of a prior
lessor under this lease.

          (b) Anything in Section 24(a) to the contrary notwithstanding, the
subordination of this lease to any future Underlying Mortgage or Underlying
Lease shall be conditioned upon the holder of each Underlying Lease and
Underlying Mortgage executing an agreement providing that upon the holder of
same succeeding to Lessor’s interest because of a default by Lessor, the holder
shall not terminate this lease so long as Lessee shall comply with its
obligations hereunder, subject to the conditions specified in Section 24(a)(i)
- (iii) above.

     25. Estoppel Certificate. Within ten (10) business days after request
therefor by Lessor, Lessee shall:

          (a) execute estoppel certificates addressed to (i) any mortgagee or
prospective mortgagee of Lessor, (ii) any purchaser or prospective purchaser
of all or any portion of, or interest in, the Building, or (iii) any
investor in the Building, certifying to the best of Lessee’s knowledge (i)
that this Lease is unmodified and in full force and effect (or if there have
been modifications, identifying such modifications and certifying that the
Lease, as modified, is in full force and effect); (ii) the dates to which
the Base Rental has been paid; (iii) that the Lessor is not in default under
any provision of this Lease (or if Lessor is in default, specifying each
such default); (iv) the address to which notices to Lessee shall be sent;
and (v) other matters as such mortgagee(s), purchaser(s) or investor may
reasonably require; provided, however, in no event shall Lessee be required
to execute any such estoppel certificate which effects an amendment to any
of the terms or provisions of this lease; and

          (b) deliver to Lessor such information regarding the net worth and
financial condition of Lessee as Lessor may reasonably request in connection
with such mortgage, sale or investments.

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     26. Leasehold Improvements. (a) Lessee shall comply with the provisions
of Schedule 2 attached hereto entitled “Construction of Initial Leasehold
Improvements.” Lessor shall be responsible only for the costs and expenses
described in Schedule 3 and only to the extent that they do not exceed the
respective allowances indicated in Schedule 3. All installations in excess
thereof shall be for Lessee’s account, and Lessee shall pay, as additional rent
hereunder, to Lessor an amount equal to Lessor’s actual cost therefor,
including associated architectural and engineering fees, if any, plus a
management cost recovery fee of ten percent (10%) to cover overhead within ten
(10) days after being invoiced therefor. Additionally, Lessee shall pay all ad
valorem taxes and increased insurance premiums that are payable on account of
any of the leasehold improvements that are in addition to those items (or the
quantities thereof) described on Schedule 3 hereto. Failure by Lessee to pay
any sums described in Section 26(a) or the Schedules hereto in full within ten
(10) days after its receipt of an invoice therefor will constitute failure to
pay rent when due and an event of default by Lessee hereunder, giving rise to
all remedies available to Lessor under this lease and at law for nonpayment of
rent. Lessee shall deliver to Lessor a copy of the “as-built” plans and
specifications made in or to the Premises. It is stipulated that time is of
the essence in connection with Lessee’s compliance with the terms of Schedule
2.

          (b) Lessee shall not be deemed to be the agent or representative of
Lessor in making any such alterations, physical additions or improvements to
the Premises, and shall have no right, power or authority to encumber any
interest in the Project in connection therewith other than Lessee’s leasehold
estate under this Lease. However, should any mechanics’ or other liens be
filed against any portion of the Project or any interest therein (other than
Lessee’s leasehold estate hereunder) by reason of Lessee’s acts or omissions or
because of a claim against Lessee or its contractors, Lessee shall cause the
same to be cancelled or discharged of record by bond or otherwise within ten
(10) days after notice by Lessor. If Lessee shall fail to cancel or discharge
said lien or liens, within said ten (10) day period, which failure shall
be deemed to be a default hereunder, Lessor may, at its sole option and in
addition to any other remedy of Lessor hereunder, cancel or discharge the same
and upon Lessor’s demand, Lessee shall promptly reimburse Lessor for all costs
incurred in canceling or discharging such lien or liens.

     27. Limitation Of Lessor’s Personal Liability. Lessee specifically agrees
to look solely to Lessor’s interest in the Project for the recovery of any
judgment from Lessor, it being agreed that Lessor (and its partners and
shareholders) shall never be personally liable for any such judgment. The
provision contained in the foregoing sentence is not intended to, and shall
not, limit any right that Lessee might otherwise have to obtain injunctive
relief against Lessor or Lessor’s successors in interest, or any other action
not involving the personal liability of Lessor to respond in monetary damages
or from assets of Lessor or any partner of Lessor other than Lessor’s interest
in the Project or any suit or action in connection with enforcement or
collection of amounts which may become owing or payable under insurance
policies maintained by Lessor.

     28. Parking. (a) Lessee shall, at all times during the term of this
lease agreement, have parking rights, but not the obligation for up to six (6)
unreserved parking spaces in the parking garage below the Building and one
(1) reserved parking space in the parking garage below the Building (the
“Garage”). No specific spaces in the Garage are to be assigned to Lessee,
except the one (1) reserved space, but Lessor will issue to Lessee the
aforesaid number of parking stickers, each of which will authorize parking in
the Garage of a vehicle on which the sticker is displayed, or

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Lessor will
provide a reasonable alternative means of identifying and controlling vehicles
authorized to park in the Garage. Lessor may designate the area or areas of the
Garage within which each such vehicle may be parked, and Lessor may change such
designations from time to time. Lessor may make, modify and enforce rules and
regulations relating to the parking of vehicles in the Garage, and Lessee will
abide by and cause its agents, employees and invitees to comply with such rules
and regulations. Lessor may provide parking for visitors to the Building in an
area designated by Lessor and in a capacity determined by Lessor to be
appropriate for the Building. Lessor reserves the right to charge and collect
a fee for parking in the visitor parking area in an amount determined by Lessor
to be appropriate. Lessor, at its sole discretion, may change the designated
area for the visitor parking and the fee to be charged for its use.

          (b) As the Basic Parking Charge, Lessee covenants and agrees to pay
Lessor during the initial term of this Lease, as additional rental hereunder,
$45.00 for each unreserved parking space and $75.00 for each reserved parking
space leased hereunder, such sum to be payable monthly in advance on the first
day of each and every calendar month during the lease term, and a pro rata
portion of such sum shall be payable for the first partial calendar month of
the term of this lease in the event the lease term commences on a date other
than the first day of a calendar month. Lessee’s obligation to pay the Basic
Parking Charge shall be considered an obligation to pay rent for all purposes
hereunder and shall be secured in like manner as is Lessee’s obligation to pay
rent. Default in payment of such Basic Parking Charge (after notice as
hereinafter provided) shall be deemed a default in payment of rent. All
parking charges are subject to applicable sales tax. Notwithstanding the
foregoing provisions of this Section 28(b) to the contrary, Lessor agrees that
the Basic Parking Charge (and all sales taxes applicable thereto)
for up to six (6) unreserved and one (1) reserved parking spaces will be
abated beginning on the Commencement Date and continuing for the next
thirty-six (36) full calendar months thereafter, including the partial calendar
month, if any, after the Commencement Date and prior to the first full calendar
month of the term hereof (in the event the Commencement Date is not the first
day of a month).

     29. Condemnation. Lessor and Lessee mutually covenant and agree that if
the Premises is taken or condemned for any public purpose to such an extent as
to render the Premises untenantable, this lease shall, at the option of either
party, forthwith cease and terminate. All proceeds from any taking or
condemnation of the Premises shall belong to and be paid to Lessor.

     30. Damages From Certain Causes. Lessor and Lessee mutually covenant and
agree that Lessor and Lessee shall not be liable or responsible to either party
for any loss or damage to any property or person occasioned by theft, fire, act
of God, public enemy, injunction, riot, strike, insurrection, war, court order,
requisition or order of governmental body or authority, or any cause beyond
either party’s reasonable control, or for any damage or inconvenience which may
arise through repair or alteration of any part of the Project, or failure to
make any such repairs.

     31. Lien For Rent. In consideration of the mutual benefits arising under
this Lease, Lessee hereby grants to Lessor a lien and security interest on all
property of Lessee now or hereafter placed in or upon the Premises, and such
property shall be and remain subject to such lien and security interest of
Lessor for payment of all rent and other sums agreed to be paid by Lessee
herein. The provisions of Section 31 relating to said lien and security
interest shall constitute a security agreement under the Uniform Commercial
Code so that Lessor shall have and may enforce a security

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interest on all
property of Lessee now or hereafter placed in or on the Premises, including but
not limited to all fixtures, machinery, equipment, furnishings and other
articles of personal property now or hereafter placed in or upon the Premises
by Lessee excluding the inventory of Lessee’s merchandise. Lessee agrees to
execute as debtor such financing statement or statements as Lessor may now or
hereafter reasonably request in order that such security interest or interests
may be protected pursuant to said Code. Lessor may at its election at any time
file a copy of this lease as a financing statement. Lessor, as secured party,
shall be entitled to all of the rights and remedies afforded a secured party
under said Code in addition to and cumulative of the Lessor’s liens and rights
provided by law or by the other terms and provisions of this lease.

     32. Lessor’s Right To Relet. In the event of default by Lessee in any of
the terms or covenants of this lease or in the event the Premises are abandoned
(and Lessee failed to pay rent therefore) or vacated for thirty (30)
consecutive days by Lessee, Lessor and Lessee mutually covenant and agree that
Lessor shall have the right, but not the obligation, to relet same for the
remainder of the term provided for herein, and if the rent received through
reletting does not at least equal the rent provided for herein, Lessee shall
pay and satisfy the deficiency between the amount of the rent so provided for
and that received through reletting, including, but not limited to, the cost of
reletting and related commissions, renovating, altering and decorating for a
new occupant. Nothing herein shall be construed as in any way denying Lessor
the right, in the event of abandonment of the Premises or other breach of this
lease by Lessee, to treat the same as an entire breach and at Lessor’s option
to terminate this Lease and/or immediately seek recovery for the entire breach
of this Lease and any and all damages which Lessor suffers thereby.

     33. Holding Over. In the event of holding over by Lessee after expiration
or termination of this Lease without the written consent of Lessor, Lessor and
Lessee mutually covenant and agree that Lessee shall pay as liquidated damages
one hundred fifty percent (150%) of the then existing base rental and
additional rental. No holding over by Lessee after the term of this lease
shall be construed to extend the Lease; in the event of any unauthorized
holding over, Lessee shall indemnify Lessor against all claims for damages by
any other tenant to whom Lessor may have leased all or any part of the Premises
effective upon the termination of this lease. Any holding over with the
consent of Lessor in writing shall thereafter constitute this Lease a lease
from month to month.

     34. Fire Clause. In the event of a fire in the Premises, Lessor and
Lessee mutually covenant and agree that Lessee shall immediately give notice
thereof to Lessor. If the Premises, through no gross negligence of Lessee, its
agents, employees, invitees or visitors, shall be partially or entirely
destroyed by fire or other casualty so as to render the Premises untenantable,
the rental provided for herein shall abate thereafter until such time as the
Premises are made tenantable as determined by Lessor (but in no event shall
Lessor’s obligation exceed Building
Standard Improvements). In the event of the destruction of the Premises
through no gross negligence of Lessee, its agents, employees, invitees or
visitors, or if from any cause the same shall be so damaged that Lessor shall
decide not to rebuild, then Lessor or Lessee may terminate this Lease and all
rent owed up to the time of such damage, destruction or termination shall be
paid by Lessee and thenceforth this Lease shall cease and come to an end.

     35. Attorneys Fees. In any action or proceeding brought by Lessor or
Lessee regarding the performance of any of the terms, covenants, agreements or
conditions contained in this Lease, Lessor

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and Lessee mutually covenant and
agree that the prevailing party shall be entitled to recover from the other
party its reasonable attorney’s fees, investigations costs and court costs.

     36. Amendments. This Lease may not be altered, changed or amended, except
by an instrument in writing signed by both parties hereto.

     37. Assignment By Lessor. Lessor shall have the right to transfer and
assign, in whole or in part, all its rights and obligations hereunder and in
the Building and property referred to herein, and in such event and upon such
transfer (any such transferee to have the benefit of, and be subject to, the
provisions of Sections 13 and 27 hereof) no further liability or obligation
shall thereafter accrue against Lessor hereunder or under any agreement
relating to this lease.

     38. Default By Lessee. If default shall be made in the payment of any sum
to be paid by Lessee under this Lease, and default shall continue for ten (10)
days, or default shall be made in the performance of any of the other covenants
or conditions which Lessee is required to observe and to perform, and such
default shall continue for twenty (20) days, or if the interest of Lessee under
this Lease shall be levied on under execution or other legal process, or if any
petition shall be filed by or against Lessee to declare Lessee a bankrupt or to
delay, reduce or modify Lessee’s debt or obligations, or if any petition shall
be filed or other action taken to reorganize or modify Lessee’s capital
structure if Lessee be a corporation or other entity, or if Lessee be declared
insolvent according to law, or if any assignment of Lessee’s property shall be
made for the benefit of creditors, or if a receiver or trustee is appointed for
Lessee or its property, or if Lessee shall abandon or vacate the Premises
during the term of this lease or any renewals or extensions thereof, or if
Lessee is a corporation and Lessee shall cease to exist as a corporation in
good standing under the laws of the State of Texas or if Lessee is a
partnership or other entity and shall be dissolved or otherwise liquidated,
then Lessor may treat the occurrence of any one or more of the foregoing events
as a breach of this lease (provided that no such levy, execution, legal process
or petition filed against Lessee shall constitute a breach of this Lease if
Lessee shall vigorously contest the same by appropriate proceedings and shall
remove or vacate the same within thirty (30) days from the date of its
creation, service or filing) and thereupon, at Lessor’s option, may have any
one or more of the following described remedies in addition to all other rights
and remedies available at law or in equity:

     (a) Lessor may terminate this Lease and forthwith repossess the
Premises and be entitled to recover forthwith as damages a sum of money
equal to the total of (i) the reasonable cost of recovering the
Premises, (ii) the unpaid rent earned at the time of
termination, plus interest thereon at the maximum non-usurious rate
per annum from the due date, (iii) the balance of the rent for the
remainder of the term less the fair market rental value of the Premises
for said period and (iv) any other sum of money and damages owed by
Lessee to Lessor.

     (b) Lessor may terminate Lessee’s right of possession (but not the
lease) and may repossess the Premises by forcible entry or detainer suit
or otherwise, without demand or notice of any kind to Lessee and without
terminating this lease, in which event Lessor may, but shall be under no
obligation to do so, relet the same for the account of Lessee for such
rent and upon such terms as shall be satisfactory to Lessor. For the
purpose of such

-16-

 

reletting Lessor is authorized to decorate or to make
any repairs, changes, alterations or additions in or to the Premises
that may be necessary or convenient, and (i) if Lessor shall fail or
refuse to relet the Premises, or (ii) if the same are relet and a
sufficient sum shall not be realized from such reletting after paying
the unpaid basic and additional rent due hereunder plus interest at the
maximum non-usurious rate thereon, the cost of recovering possession,
and all of the costs and expenses of such decorations, repairs, changes,
alterations and additions and the expense of such reletting and of the
collection of the rent accruing therefrom to satisfy the rent provided
for in this lease to be paid, then Lessee shall pay to Lessor as damages
a sum equal to the amount of the rental reserved in this lease for such
period or periods, or if the Premises have been relet, the Lessee shall
satisfy and pay any such deficiency upon demand therefor from time to
time and Lessee agrees that Lessor may file suit to recover any sums
falling due under the terms of Section 38(b) from time to time, and that
no delivery to or recovery of any portion due Lessor hereunder shall be
any defense in any action to recover any amount not theretofore reduced
to judgment in favor of Lessor, nor shall such reletting be construed as
an election on the part of Lessor to terminate this lease unless a
written notice of such intention be given to Lessee by Lessor.
Notwithstanding any such reletting without termination, Lessor may at
any time thereafter elect to terminate this Lease for such previous
breach.

     39. Non-Waiver. Failure of Lessor to declare any default immediately upon
occurrence thereof, or delay in taking any action in connection therewith,
shall not waive such default, but Lessor shall have the right to declare any
such default at any time and take such action as might be lawful or authorized
hereunder, either in law or in equity.

     40. Casualty Insurance. Lessor shall maintain fire and extended coverage
insurance on the base building portion of the Building and on Building Standard
Improvements within the Premises. Said insurance shall be maintained with an
insurance company authorized to do business in Texas, in amounts desired by
Lessor (but no less than 80% of the insurable value of the insurable portion of
the Building (exclusive of foundations), including replacement cost
endorsement) and at the expense of Lessor (which expense shall be an operating
expense pursuant to Section 7(a)(5) of this lease) and payments for losses
thereunder shall be made solely to Lessor and Lessor’s mortgagees. Lessee
shall maintain, at its expense, fire and extended coverage insurance on all of
its personal property, including removable trade fixtures, located in the
Premises and on all additions and leasehold improvements to the Premises which
exceed Building Standard. If the annual premiums to be paid by Lessor shall
exceed the standard rates because Lessee’s operations, contents of the
Premises, or leasehold improvements with respect to the
Premises beyond Building Standard, result in extra-hazardous exposure or
increased costs, Lessee shall promptly pay the excess amount of the premium
upon request by Lessor.

     41. Liability Insurance. Lessor shall, at its expense (which expense shall be
an operating expense pursuant to Section 7(a)(5) of this lease), maintain a
policy or policies of comprehensive general liability insurance with the
premiums thereon fully paid on or before the due date, issued by and binding
upon some solvent insurance company, such insurance to afford minimum
protection (such insurance to inure to the benefit of Lessor only, and not to
Lessee) of not less than $1,000,000 in respect of personal injury or death in
respect of any one occurrence and of not less than $250,000 for property damage
in any one occurrence.

-17-

 

             Lessor shall, at its expense (which expense shall be an operating expense
pursuant to Section 7(a)(5) of this lease) maintain fire and extended coverage
insurance on the Building and leasehold improvements in such amounts as the
Lessor’s mortgagees may require. Such insurance shall be maintained at the
expense of Lessor, and payments for losses thereunder shall be made solely to
the Lessor or the mortgagees of Lessor, as their interests may appear. Lessee
shall maintain, at its expense, fire and extended coverage insurance on all of
its personal property, including removable trade fixtures, located in the
Premises. If the annual premiums to be paid by Lessor shall exceed the
standard rates because of Lessee’s operations, contents on the Premises, or
leasehold improvements with respect to the Premises beyond Building Standard,
or if same result in Extra-hazardous exposure or increased costs, Lessee shall
promptly pay the excess amount of the premium upon request by Lessor.

     During the term of this Lease, Lessee shall, at its sole expense, carry
insurance for the benefit of the parties hereof as follows:

	 	(A)	 	Worker’s Compensation insurance providing coverage for statutory
benefits in the state(s) where work is to be performed under this Lease
and as may be required by local law in the operation area in which
Lessee may become legally obligated to pay benefits.
	 
	 	(B)	 	Employers Liability insurance with limits of not less than $500,000
each Accident for Bodily Injury by Accident and $500,000 each employee
and policy limit for Bodily Injury by Disease.
	 
	 	(C)	 	Commercial Automobile Liability insurance covering owned, hired and
non-owned vehicles with limits of not less than $1,000,000 combined
single limit each occurrence for bodily injury and property damage.
	 
	 	(D)	 	Commercial General Liability insurance with limits of not less than
$1,000,000 each occurrence and $2,000,000 General Aggregate for Bodily
Injury and Property Damage combined. Such insurance shall be written
on an “occurrence” form and shall be endorsed to include the Premises.
	 
	 	(E)	 	Umbrella or Excess Liability insurance with limits of not less than
$2,000,000 each occurrence and aggregate where applicable in excess of
the coverages and limits of the liability of the policies set forth in
Paragraphs (B), (C), and (D) above.
	 
	 	 	 	All of Lessee’s and any sublessee’s policies (except for Workers’
Compensation) shall be endorsed to:

	 	(1)	 	Name Lessor, its subsidiaries, affiliates, partnerships, directors,
officers, partners and employees as Additional Insureds, except this
requirement shall not apply to Paragraph (A) above;
	 
	 	(2)	 	waive Underwriters’ rights of subrogation or recovery against
Lessor, its subsidiaries, affiliates, partnerships, directors,
officers, partners and employees;

-18-

 

	 	(3)	 	provide thirty (30) days’ prior written notice of cancellation of
or material change in coverage to Lessor, and;
	 
	 	(4)	 	stipulate that Lessee’s insurance will be primary to and
non-contributory with any other insurance carried by Lessor.

             Losses not covered by Lessee’s insurance, including but not limited to
deductibles, co-insurance penalties and defense costs, shall be borne by
Lessee. All of Lessee’s insurance described above shall be placed with
insurance companies satisfactory to Lessor. Certificates of Lessee’s insurance
and proof of Lessee’s payment of premium shall be mailed to Owner within thirty
(30) days of each renewal of such insurance. When requested by Lessor, Lessee
shall furnish complete certified copies of all its policies to Lessor.

     42. Hold Harmless. Lessor shall not be liable to Lessee, or to Lessee’s
agents, servants, employees, customers or invitees for any injury or damage to
person or property caused by any act, omission or neglect of Lessee, its
agents, servants, or employees, and Lessee agrees to indemnify and hold Lessor
harmless from all liability and claims for any such damage or bodily injury.
Lessee shall not be liable to Lessor, or to Lessor’s agents, servants,
employees, customers or invitees for any damage to person or property caused by
any act, omission or neglect of Lessor, its agents, servants or employees, and
Lessor agrees to indemnify and hold Lessee harmless from all claims for such
damage or injury.

     43. Waiver Of Subrogation Rights. Anything in this lease to the contrary
notwithstanding, Lessor and Lessee each hereby waive any and all rights of
recovery, claim, action or cause of action, against the other, its agents,
officers, or employees, for any loss or damage that may occur to the Premises,
or any leasehold improvements thereto, or said Building of which the Premises
are a part, or any improvements thereto, or any personal property of such party
therein, by reason of fire, the elements, or any other cause which could be
insured against under the terms of standard fire and extended coverage
insurance policies referred to in Section 40 hereof, regardless of cause or
origin, including negligence of the other party hereto, its agents, officers or
employees, and agrees that no insurer under such policies shall hold any right
of subrogation against such other party.

     44. Name Of Building. Lessor may change the name of the Building at any
time without notice to Lessee and Lessee shall not use the name of the Building
for any purpose other than its mailing address.

     45. Notices. Any notice which may or shall be given under the terms of
this Lease shall be in writing and shall be either delivered by hand, delivered
by a commercially recognized express mail or messenger service, or sent by
United States Mail, certified or registered, return receipt requested, postage
prepaid, to the addresses noted for the respective. Such addresses may be
changed from time to time by either party by giving written notice as provided
herein. Notice shall be deemed given upon the date of delivery if by hand or
messenger service (or attempted delivery if such delivery is unsuccessful), as
evidenced by the records of the express mail or messenger service or the return
receipt, as applicable.

-19-

 

     46. Relocation. Lessee agrees that Lessor may substitute for the Premises
other premises (herein referred to as the “new premises”) in the Building
provided: (i) the new premises shall be comparable, to the Premises in area and
view; (ii) Lessor shall give Lessee at least sixty (60) days’ written notice
before making such change, and the parties shall execute an amendment to the
lease confirming the change and (iii) if Lessee shall already have taken
possession of the Premises: (a) Lessor shall pay the direct, out-of-pocket,
reasonable expenses of Lessee in moving from the Premises to the new Premises,
and improving the new premises so that they are substantially similar to the
Premises. In addition, Lessor shall pay costs incurred by Lessee as a result
of the relocation, including without limitation costs incurred in changing
addresses on stationery, business cards, directories, advertising and other
such items. In the event the new premises exceeds the size of the Premises,
Lessee shall only be obligated to pay the rent as it would have applied to the
Premises.

     47. Survival. All of Lessee’s covenants and obligations contained in this
Lease shall survive the expiration or earlier termination of this Lease. No
provision of this Lease providing for termination in certain events shall be
construed as a limitation or restriction of Lessor’s rights and remedies at law
or in equity available upon a breach by Lessee of this Lease.

     This lease shall be binding upon and inure to the benefit of the
successors and assigns of Lessor, and shall be binding upon and inure to the
benefit of Lessee, its successors, and, to the extent assignment may be
approved by Lessor hereunder, Lessee’s assigns. The pronouns of any gender
shall include the other genders, and either the singular of the plural shall
include the other.

     All rights and remedies of Lessor under this lease shall be cumulative and
none shall exclude any other rights or remedies allowed by law; and this lease
is a Texas contract, and all of the terms hereof shall be construed according
to the laws of the State of Texas.

     48. Real Estate Brokers. Lessee represents to Lessor that Lessee has not
dealt with any broker in connection with this Lease, other than Tanglewood
Property Management Company on behalf of Lessor and Strategis, L.L.P. on behalf
of Lessee.

     49. Telecommunications. (a) Lessor reserves the right as promulgated by
state and federal laws, rules and regulations to oversee and manage the
telecommunication issues, equipment and cabling in the Building. Lessee
will notify Lessor of any telecommunication needs, requirement and issues as
required or deemed necessary by the Lessee. The Lessor will not unreasonably
delay any request by the Lessee regarding any telecommunications issues or
needs. The Lessor will not unreasonably deny or discriminate regarding entry
to the Building by any telecommunications provider, but will seek a fair and
reasonable agreement based on available space in the Building; health, safety
and engineering issues and other issues that directly effect the Building and
the Building’s tenants.

          (b) Lessor reserves the right now or in the future to install a minimum
point of entry cable facility and a cable/fiber riser system within the
Building and require all telecommunication providers to equally utilize this
location or area depending on the space available and utilize the cable or
fiber riser system as each telecommunications provider chronologically seeks to
enter the Building. If the telecommunications providers currently have
equipment and cabling in the Building riser when the Lessor institutes the
Building cable facility, the Lessor will give that

-20-

 

telecommunications provider(s) ninety (90) days written notice that the Lessor will be completing
a new cable riser facility in the Building and that the telecommunications
provider will be required to move to the minimum point of entry and connect to
the Building’s cable riser system.

          (c) Lessee agrees to indemnify and hold the Lessor, Lessor’s partners,
agents, employees and contractors harmless from all liabilities and damages
regarding telecommunication services and issues as well as the
telecommunications riser facility installed or present in the Building by any
telecommunications company or provider.

          (d) Telecommunications will evolve and increase in need during the term
of this Lease agreement. The Lessor will use best efforts to accommodate all
reasonable needs and requirements of all tenants and all telecommunications
providers.

     50. Fees for Lessee Requested Forms. During the term of this Lease,
Lessee may request certain specific forms which may be necessary for the Lessor
to prepare, review, consent or approve.

     The fees for such forms are as follows:

	 	 	 	 	 
	Form
	 	Fee per occurrence

	Subordination and Non-Disturbance Agreement
	 	$	600.00	 
	Landlord’s Waiver & Consent
	 	$	600.00	 
	Sub-Lease Agreement
	 	$	600.00	 
	Miscellaneous Amendments (Lessee Name Change,
	 	$	600.00	 
	Early Termination, or any document that does not
create income for the Lessor)
	 	 	 	 

     51. Lessee’s Vendors or Subcontractors. Lessee acknowledges that Lessor
requires all vendors or subcontractors hired by Lessee to provide evidence of
insurance coverage prior to commencing any service on the Premises.

     52. Renewal Option. (a) As long as Lessee is not in uncured default in
the performance of its covenants under this lease of which Lessor has given
Lessee written notice, Lessee is hereby granted the option to renew the term of
this lease for one (1) additional period of three (3) years, the “Renewal
Term” to commence at the expiration of the initial term of this lease. Lessee
shall exercise its option to renew as follows: Lessee shall deliver written
notice to Lessor no greater than 9 months but not less than six (6) months
prior to the expiration of the term of this lease, that Lessee may exercise its
renewal option. Within thirty (30) days of Lessor’s receipt of Lessee’s
written notice, Lessor shall notify Lessee in writing of the Market Base Rental
Rate (hereinafter defined) that Lessee shall pay during such renewal term.
Within sixty (60) days after receipt of such written notice from Lessor, Lessee
shall, if it elects, deliver written notice to Lessor of its election to
exercise its renewal option hereunder. If Lessee does not respond within such
sixty (60) day period, Lessee’s right to renew hereunder shall terminate. All
terms of this lease shall apply to such renewal option, except (i) the Base
Rental (hereinafter defined) during the Renewal Term shall be the then
prevailing Market Base Rental Rate at the time Lessee exercises the respective
renewal option, (ii) Lessee shall not have an option to renew this lease beyond
the expiration of the Renewal Term, (iii) Lessee shall not have the right to
assign its renewal rights to any sublessee or assignee of the Premises nor may
a

-21-

 

sublessee or assignee exercise such renewal right, and (iv) the leasehold
improvements will be provided in their then existing condition (i.e. on an
“as-is” basis) at the time the Renewal Term commences.

          (b) As used in this lease, the term “Market Base Rental Rate” shall mean
the net effective rate per square foot of net rentable area at which a willing
lessor and a willing lessee would agree to lease comparable space to that for
which the Market Base Rental Rate is being determined in comparable office
buildings in the West Loop/Galleria area of Houston, Texas, which rate shall
take into account all relevant economic and non-economic factors, including but
not limited to: the credit-worthiness, reputation and other qualities of such
lessee, the quality and reputation of the management of the building in
question, the amount of space being offered for lease, the location within the
building of such offered space, whether the space being offered is a full floor
or a portion of a multi-tenant floor, the quality and finish of the offered
space as it then exists, the age and quality of such building, the lease term
and renewal options, the scheduled or actual commencement date, add-on factors,
basis for paying operating expenses, parking charges and market inducements,
such as free rent, moving expenses, and architectural, construction and lease
assumption allowances.

          (c) Whenever Lessee is to pay the Market Base Rental Rate for space under
the terms of this lease, Lessee shall, in addition, pay its share of the
Forecast Operating Expenses (hereinafter defined) utilizing the hereinafter
defined procedures. The Base Year shall be the calendar year that the Market
Base Rental Rate is determined for that calendar year.

     IN TESTIMONY WHEREOF, the parties hereto have executed this lease as of
the date aforesaid.

	 	 	 	 	 	 	 
	LESSOR:	 	LESSEE:
	 
	 	 	 	 	 	 
	FRANKLIN POST OAK, LTD.,	 	DEXTERITY SURGICAL, INC.,
	a Texas limited partnership	 	a Delaware corporation
	 
	 	 	 	 	 	 
	By:

	 	A-Group Holdings, Inc.,	 	 	 	 
	

	 	a Delaware corporation,	 	 	 	 
	

	 	the sole general partner	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Louis B. Trenchard III
	 	By:
	 	/s/ Randall K. Boatright
	

	 	

	 	 	 	

	Name:

	 	Louis B. Trenchard III
	 	Name:
	 	Randall K. Boatright
	Title:

	 	President
	 	Title:
	 	Executive Vce President and
	

	 	 	 	 	 	Chief Financial Officer

-22-

 

SCHEDULE 1

TERM - SUBSTANTIAL COMPLETION

     The term shall commence upon the later to occur of (i) Substantial
Completion of the Premises or (ii) November 1, 2003 (the later of such dates
being herein called the “Commencement Date”), and, except as otherwise provided
herein or in any exhibit or addendum hereto, shall continue in full force for a
period of thirty-six (36) full calendar months thereafter (the last day of the
term of this lease being herein referred to as the “Term Expiration Date”). The
term shall include any partial calendar month following and including the
Commencement Date and prior to the first full calendar month of the term hereof
(in the event the Commencement Date is not the first day of a month). The
parties estimate that the Commencement Date will occur on or about November 1,
2003 (the “Scheduled Commencement Date”). If the Premises are not Substantially
Complete by the Scheduled Commencement Date for any reason, Lessor shall not be
liable for any claims, damages or liabilities in connection therewith or by
reason thereof, but the Commencement Date shall be determined as provided
above. The Term Expiration Date shall be determined as provided above to
provide for the lease being effective for its full term of thirty-six (36) full
calendar months. Lessor shall provide Lessee with as much notice as
circumstances allow of the date when Lessor expects to achieve Substantial
Completion, based upon the progress of the work. Should the Commencement Date
be a date other than the Scheduled Commencement Date, either Lessor or Lessee,
at the request of the other, shall execute a declaration specifying the
Commencement Date.

     “Substantial Completion” shall mean (and the Premises shall be deemed
“Substantially Complete”) when (i) installation of all leasehold improvements
has occurred, (ii) Lessee has access to the elevator lobby on the floor where
the Premises are located, and (iii) Building services are ready to be furnished
to the Premises (or could be furnished to the Premises if all the leasehold
improvements were completed). Substantial Completion shall be deemed to have
occurred notwithstanding a requirement to complete “punchlist” or similar
corrective work. The existence of construction work in other portions of the
Building or the Project shall not affect the determination of the date of
Substantial Completion of the Premises.

 

 

SCHEDULE 2

CONSTRUCTION OF INITIAL LEASEHOLD IMPROVEMENTS

Notwithstanding anything to the contrary, Lessee is leasing the Premises in an
“as-is” condition with no modifications required by the Lessor, except Lessor
shall modify at its sole cost and expense, the Premises according to the
preliminary drawing attached hereto as Exhibit “A”.

Architectural services, etc., if needed, will be paid by the Lessor.

 

 

SCHEDULE 3

MONETARY MATTERS

Lessor shall be responsible for costs and expenses incurred in connection with
Schedule 2 above only to the limits described therein. It is agreed and
understood that minor changes may occur in developing the actual construction
documents due to minor omissions or clarification. Lessor agrees that such
minor changes will be done; however, Lessor is not obligated to perform or
install any improvement that is a material change to the plan or has a material
cost increase to the project. In addition, Lessor shall be responsible an
asbestos survey and all associated architectural and engineering services.

Any written requests made by Lessee that is outside of the scope of work being
provided by Lessor, and such request results in an increase in cost, then
Lessee shall pay such additional cost within thirty (30) days of receipt of
invoice and such shall be subject to the construction overhead fee according to
Section 26 of the Lease.

 

 

EXHIBIT “B”

RULES AND REGULATIONS

	1.	 	All tenants will refer all contractors’, representatives and installation
technicians who are to perform any work within the Building to Lessor for
Lessor’s supervision, approval and control before the performance of any
such work. This provision shall apply to all work performed in the
Building including, but not limited to, installation of telephones,
telegraph equipment, electrical devices and attachments, and any and all
installations of every nature affecting floors, walls, woodwork, trim,
windows, ceilings, equipment, and any other physical portion of the
Building. Lessee shall not mark, paint, drill into (except to hang office
fixtures, pictures and photos), or in any way deface any part of the
Building or the Leased Premises, except with the prior written consent of
the Lessor, and as the Lessor may direct.

	2.	 	The work of the janitorial or cleaning personnel shall be performed after
3:00 PM but before 5:00 PM, and such work may not be done at any time when
the offices are vacant. The windows, doors, and fixtures may be cleaned
at any time. Lessee shall provide adequate waste and rubbish receptacles,
necessary to prevent unreasonable hardship to Lessor in discharging it’s
obligations regarding cleaning services.

	3.	 	Movement of furniture or office equipment in or out of the Building, or
dispatch or receipt by Lessee of any heavy equipment, bulky material or
merchandise which requires use of elevators or stairways, or movement
through the Building’s service dock or lobby entrance shall be restricted
to such hours as Lessor shall designate. All such movement shall be in a
manner to be agreed upon between Lessee and Lessor in advance. Such prior
arrangements shall be initiated by Lessee. The time, method, and routing
of movement and limitations for safety or other concern which may prohibit
any articles, equipment or other items from being brought into the
Building shall be subject to Lessor’s discretion and control. Any hand
trucks, carryalls, or similar appliances used for the delivery or receipt
of merchandise or equipment shall be equipped with rubber tires, side
guards, and such other safeguards as the Building shall require. Although
Lessor or it’s personnel may participate in or assist in the supervision
of such movement, Lessee assumes final responsibility for all risks as to
damage to articles moved and injury to other persons or property engaged
in such movement, including equipment, property and personnel of Lessor if
damaged or injured as a result of acts in connection with carrying out
this service for Lessee, from the time of entering the property to
completion of work. Lessor shall not be liable for the acts of any person
engaged in, or any damage or loss to any of said property or persons
resulting from any act in connection with such service performed by
Lessee.

 

 

	4.	 	No sign, advertisement or notice shall be displayed, painted or affixed
by Lessee, it’s agents, servants or employees, in or on any part of the
outside or inside of the Building or Leased Premises without prior written
consent of Lessor and then only of such color, size, character, style and
material and in such places as shall be approved and designated by Lessor.
Signs on doors and entrances to the Leased Premises shall be placed
thereon by Lessor.

	5.	 	Lessee shall not place, install or operate on the Leased Premises or in
any part of the Building any engine, heating or air conditioning
apparatus, stove, or machinery, or conduct mechanical operations, except
that machinery used to the assembly of jewelry, or place or use in or
about the Leased Premises any inflammable, explosive, hazardous or odorous
solvents or materials without the prior written consent of Lessor. No
portion of the Leased Premises shall at any time be used for cooking,
sleeping, or lodging quarters, or manufacturing jewelry.

	6.	 	Lessee shall not make or permit any loud or improper noises in the
Building or otherwise interfere in any way with other tenants.

	7.	 	Lessor will not be responsible for any lost or stolen personal property
or equipment from the Leased Premises or public areas, regardless of
whether such loss occurs when the area is locked against entry or not,
unless such loss is due to Lessor’s gross negligence.

	8.	 	Lessee, or the employees, agents, servants, visitors or licensees of
Lessee, shall not, at any time or place, leave or discard rubbish, paper,
articles or objects of any kind whatsoever outside the doors of the Leased
Premises or in the corridors or passageways of the Building or attached
garage. No animals (except seeing-eye dogs), bicycles or vehicles of any
description shall be brought into or kept in or about the Building.

	9.	 	No additional lock or locks shall be placed by Lessee on any door in the
Building unless written consent of Lessor shall have first been obtained.
Additional keys required must be obtained from Lessor. A charge will be
made for each additional key furnished. All keys shall be surrendered to
Lessor upon termination of tenancy.

	10.	 	None of the entries, passages, doors, hallways, or stairways in the
Building shall be blocked or obstructed.

	11.	 	Lessor shall have the right to determine and prescribe the weight and
proper position of any unusually heavy equipment, including computers,
safes, large files, etc., that are to be placed in the Building, and only
those which in the exclusive judgement of the Lessor will not do damage to
the floors, structure and/or elevators may be moved into the Building.
Any damage caused by installing, moving or removing such aforementioned
articles in the Building shall be paid for by Lessee.

	12.	 	All Christmas and other decorations must be constructed of flame
retardant materials. Natural Christmas trees, garland, etc. are not
permitted in the Building due to their potential fire hazard.

 

 

	13.	 	Lessee shall provide Lessor with a list of all personnel authorized to
enter the Building after hours (6:00 p.m. to 6:00 a.m. Monday through
Friday and 24 hours a day on weekends and holidays).

	14.	 	Anyone entering or leaving the Building after hours must sign their name,
company, suite number and time on the Building Register and show proper
identification, if requested.

	15.	 	After hours air conditioning/heating (6:00 p.m. through 7:00 a.m. Monday
through Friday, 1:00 P.M. to 12:00 midnight Saturday, all day Sundays and
holidays) must be requested in writing by noon of a regular work day prior
to the day for which additional air conditioning is requested. Lessee
shall be charged the prevailing hourly rate, which is $53.00/hour with a
four (4) hour minimum.

	16.	 	Any furniture or equipment removed from the Building after hours must be
listed in the Building Register. Description and serial numbers should be
included. Pass-out orders on Lessee’s stationery must be surrendered to
the security officer in the lobby when any articles are being removed from
the Building.

	17.	 	All routine deliveries to a Lessee’s Leased Premises shall be made
through the freight elevators. Passenger elevators are to be used only
for the movement of persons, unless an exception is approved by the
Management Office.

	18.	 	Names to be placed on or removed from the directory board in the lobby of
the Building should be furnished to the Property Manager in writing on
Lessee’s letterhead. Lessee shall have use of the same percent of the
directory board as Lessee’s Net Rentable Area is to the Total Net Rentable
Area of the Building.

	19.	 	Any additional services as are routinely provided to tenants, not
required by the Lease to be performed by Lessor, which Lessee requests
Lessor to perform, and which are performed by Lessor, shall be billed to
Lessee at Lessor’s cost plus 15%.

	20.	 	All doors leading from the public corridors to the Leased Premises are to
be kept closed when not in use.

	21.	 	Canvassing, soliciting or peddling in the Building is prohibited, and
Lessee shall cooperate to prevent same.

	22.	 	Lessee shall give immediate notice to the Management Office in case of
accidents in the Leased Premises or in the Building or of defects therein
or in any fixtures or equipment or of any known emergency in the Building.

	23.	 	Lessee shall not use the Leased Premises or permit the Leased Premises to
be used for photographic, multilith or multigraph reproduction, except in
connection with it’s own business.

 

 

	24.	 	The requirements of Lessee will be attended to only upon application at
the Management Office. Employees of Lessor shall not perform any work or
do anything outside of their regular duties, unless under special
instructions from the Management Office.

	25.	 	Lessee, or the employees, agents, servants, visitors, or licensees of
Lessee, shall abide by the Rules and Regulations for the Garage.

	26.	 	Smoking is NOT permitted in elevators, stairwells, hallways, restrooms or
any common areas. Employees of non-smoking offices MUST exit the Building
when smoking, and may smoke outside the Building only in designated
smoking areas. Offices which permit smoking must install air cleaning
equipment to prevent the smoke odors from entering other tenant offices or
common areas of the Building.

	27.	 	Firearms or weapons of any kind are not permitted in the building at any
time.

Lessor reserves the right to rescind any of these Rules and Regulations of
the Building, and to make such other, reasonable and further rules and
regulations as in its judgment shall from time to time be needful for the
safety, protection, care, and cleanliness of the Building, the Leased Premises,
and the attached garage, the operation thereof, the preservation of good order
therein and the protection and comfort.

 

 

EXHIBIT “C”

JANITORIAL SPECIFICATIONS

Service to 5599 San Felipe will be performed Monday through Friday, five nights
per week. Restroom supplies and plastic trash liners will be furnished by the
Lessor. All other equipment and janitorial items will be supplied by Sanitors
or other reputable cleaning contractor under contract to and paid by the
Lessor. Service to be furnished shall include the following:

	A.	 	Daily General Cleaning
	 
	1.	 	All carpeting will be vacuumed and spot cleaned.
	 
	2.	 	All trash receptacles will be emptied and bagged trash placed in the
dumpster.
	 
	3.	 	Ashtrays and smoke stands will be emptied and dusted.
	 
	4.	 	All horizontal surfaces of desks, enclosures, and horizontal surfaces of
all other furniture, files, woodwork, etc., shall be damp dusted with
clean or treated cloth.
	 
	5.	 	All desk accessories will be dusted and returned to proper place.
	 
	6.	 	Drinking fountains will be cleaned and disinfected, and exposed metal
shall be polished to a clear finish.
	 
	7.	 	All hard surfaces including doors, walls, floors, ceramic tile, etc.,
will be wiped or mopped clean where liquid and other foreign materials
have been spilled on the surface.
	 
	8.	 	All interior doors and partition panels will be cleaned to remove smudge
marks, fingerprints, and dust.
	 
	9.	 	All glass doors and glass panels including bright metal finishes and
handrails will be cleaned, rubbed and polished.
	 
	10.	 	Blackboards, chalk trays, and erasers will be cleaned daily when the
blackboard has been erased by the office occupant.
	 
	11.	 	Exterior porches and entry areas will be swept and mopped.

	B.	 	Daily Restroom Cleaning
	 
	1.	 	All restroom fixtures to include sinks, toilet bowls, and urinals, will
be scoured and disinfected and kept free of scale at all times. All
bright metal accessories, including hardware on plumbing fixtures,
partitions, and dispensing accessories shall be cleaned and polished.
	 
	2.	 	Sanitary napkin receptacles will be emptied, cleaned and disinfected.
All other receptacles will be emptied and damp dusted on the inside.
	 
	3.	 	Soap, towel, and tissue dispensers will be filled nightly.
	 
	4.	 	All mirrors will be cleaned and polished clear.
	 
	5.	 	Restroom walls and partitions will be kept free of spots, smudges, and
foreign matter.
	 
	6.	 	Restroom floors will be cleaned by mopping and rinsing with a
disinfectant mopping solution.

	C.	 	Elevator Service
	 
	1.	 	Carpet will be vacuumed daily, spot cleaned as necessary, and shampooed
weekly.

 

 

	2.	 	Exterior and interior doors and trim will be dusted and polished nightly.
	 
	3.	 	Cabs will be dusted nightly.
	 
	4.	 	Control and dispatch panels will be dusted and polished nightly.
	 
	5.	 	Elevator thresholds will be cleaned nightly.

	D.	 	Floor Service
	 
	1.	 	Lobbies - Dust mop and damp mop nightly, scrub and refinish weekly.
	 
	2.	 	Office Areas - Dust mop and damp mop nightly, scrub and refinish monthly.

	E.	 	Carpet Care
	 
	1.	 	Thorough nightly vacuuming.
	 
	2.	 	Correct spot removal.
	 
	3.	 	Antistatic electricity treatment as requested.

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