Document:

Exhibit
10.22

 

BASIC LEASE INFORMATION

 

	
  Lease Date:

  	
   

  	
  March 7, 2008

  
	
   

  	
   

  	
   

  
	
  Tenant:

  	
   

  	
  ENTECH, Inc., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  Tenant’s Address:

  	
   

  	
  1077 Chisolm Trail,

  
	
   

  	
   

  	
  Keller, Texas 76248

  
	
   

  	
   

  	
   

  
	
  Contact:

  	
   

  	
  Scott Albertson; Telephone:

  	
  (757) 784-3460

  
	
   

  	
   

  	
   

  
	
  Guarantor:

  	
   

  	
  WorldWater & Solar Technologies Corp.,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  Guarantor’s Address:

  	
   

  	
  200 Ludlow
  Drive,

  
	
   

  	
   

  	
  Ewing, NJ 08638

  
	
   

  	
   

  	
   

  
	
  Contact:

  	
   

  	
  Larry L. Crawford; Telephone:

  	
  (609) 808-0700 ext. 18

  
	
   

  	
   

  	
   

  
	
  Landlord:

  	
   

  	
  Alliance Gateway No. 23, Ltd.

  
	
   

  	
   

  	
   

  
	
  Landlord’s Address:

  	
   

  	
  c/o Hillwood Development Company, LLC

  
	
   

  	
   

  	
  13600 Heritage Parkway, Suite 200

  
	
   

  	
   

  	
  Fort Worth, Texas 76177

  
	
   

  	
   

  	
  Attn:

  	
  Bill Burton

  
	
   

  	
   

  	
   

  
	
  With copy to:

  	
   

  	
  Hillwood Development Company, LLC

  
	
   

  	
   

  	
  Three Lincoln Centre

  
	
   

  	
   

  	
  5430 LBJ Freeway, Suite 800

  
	
   

  	
   

  	
  Dallas, Texas 75240

  
	
   

  	
   

  	
  Attn:

  	
  Tom Mason

  
	
   

  	
   

  	
   

  
	
  Contact:

  	
   

  	
  Bill Burton; Telephone:

  	
  (817) 224-6000

  
	
   

  	
   

  	
   

  
	
  Premises:

  	
   

  	
  Approximately 71,250 square feet, as indicated by the cross-hatched
  area on Exhibit “A” attached to the Lease, situated in the
  building commonly known, or to be known, as Alliance Gateway No. 23 (the
  “Building”) located or to be located on the land more particularly
  described on Exhibit “B” attached to the Lease (the “Land”).

  
	
   

  	
   

  	
   

  
	
  Project:

  	
   

  	
  Collectively, the Land, the Building and all other buildings, structures
  and improvements situated on the Land at any time during the Term.

  
							

 

 

i

 

 

 

	
  Term:

  	
   

  	
  120 months, commencing on the Commencement Date and ending at
  5:00 p.m. on the last day of the one hundred and twentieth (120th)
  full month following the Commencement Date, subject to adjustment and earlier
  termination as provided in the Lease.

  
	
   

  	
   

  	
   

  
	
  Base Rent:

  	
   

  	
  Months

  	
   

  	
  Monthly  

  Base Rent

  	
   

  	
  Annual  

  Base Rent

  	
   

  	
  Per Square Foot 

  Per Annum

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1-60

  	
   

  	
  $31,646.88

  	
   

  	
  $379,762.50

  	
   

  	
  $5.33

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  61-120

  	
   

  	
  $35,981.25

  	
   

  	
  $431,775.00

  	
   

  	
  $6.06

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Subject to adjustment as
  provided in the Lease)

  
	
   

  	
   

  	
   

  
	
  Initial Tenant’s
  proportionate

  share of Taxes:

  	
   

  	
  $8,075.00 per month

  
	
   

  	
   

  	
   

  
	
  Initial Tenant’s
  proportionate

  share of cost of insurance

  under Paragraph 10A:

  	
   

  	
  $356.25 per month

  
	
   

  	
   

  	
   

  
	
  Initial Tenant’s
  proportionate

  share of Common Area Charges:

  	
   

  	
  $1,983.13 per month

  
	
   

  	
   

  	
   

  
	
  Security Deposit:

  	
   

  	
  $100,000.00

  
	
   

  	
   

  	
   

  
	
  Tenant’s Proportionate

  Share:

  	
   

  	
  50% which is the percentage obtained by dividing (i) the
  approximately 71,250 square feet of area in the Premises by (ii) the
  142,500 square feet of area in the Building.

  
	
   

  	
   

  	
   

  
	
  Landlord’s Broker or Agent:

  	
   

  	
  Hillwood Realty Services
  Partnership

  
											

 

 

ii

 

 

TABLE OF CONTENTS

 

	
  1.

  	
   

  	
  PREMISES AND TERM

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  BASE RENT, SECURITY DEPOSIT AND ESCROW PAYMENTS

  
	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  COMMON AREA CHARGES

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  TAXES

  
	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  LANDLORD’S REPAIRS

  
	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  TENANT’S REPAIRS AND MAINTENANCE

  
	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  ALTERATIONS

  
	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  SIGNS

  
	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  UTILITIES

  
	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  INSURANCE

  
	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  FIRE AND CASUALTY DAMAGE

  
	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  LIABILITY AND INDEMNIFICATION

  
	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  USE

  
	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  INSPECTION

  
	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  ASSIGNMENT AND SUBLETTING

  
	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  CONDEMNATION

  
	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  HOLDING OVER

  
	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  QUIET ENJOYMENT

  
	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  EVENTS OF DEFAULT

  
	
   

  	
   

  	
   

  
	
  20.

  	
   

  	
  REMEDIES

  
	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  MORTGAGES

  

 

 

i

 

 

	
  22.

  	
   

  	
  MECHANIC’S LIENS

  
	
   

  	
   

  	
   

  
	
  23.

  	
   

  	
  HAZARDOUS MATERIALS

  
	
   

  	
   

  	
   

  
	
  24.

  	
   

  	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  25.

  	
   

  	
  NOTICES

  
	
   

  	
   

  	
   

  
	
  26.

  	
   

  	
  [INTENTIONALLY OMITTED]

  
	
   

  	
   

  	
   

  
	
  27.

  	
   

  	
  SECURITY SERVICE

  
	
   

  	
   

  	
   

  
	
  28.

  	
   

  	
  GUARANTY OF LEASE

  
	
   

  	
   

  	
   

  
	
  29.

  	
   

  	
  ADDITIONAL PROVISIONS

  

 

	
  EXHIBIT “A” — PREMISES

  
	
   

  
	
  EXHIBIT “B” — LAND

  
	
   

  
	
  EXHIBIT “C” — LEASEHOLD IMPROVEMENTS

  
	
   

  
	
  EXHIBIT “D” — MEMORANDUM OF ACCEPTANCE OF PREMISES

  
	
   

  
	
  EXHIBIT “E” — [INTENTIONALLY OMITTED]

  
	
   

  
	
  EXHIBIT “F” — RENEWAL OPTIONS

  
	
   

  
	
  EXHIBIT “G” — [INTENTIONALLY OMITTED]

  
	
   

  
	
  EXHIBIT “H” — FORM OF SNDA

  

 

 

ii

LEASE
AGREEMENT

 

                THIS LEASE
AGREEMENT, made and entered into by Alliance Gateway No. 23, Ltd., a Texas
limited partnership (“Landlord”) and ENTECH, Inc., a Delaware
corporation (“Tenant”);

 

WITNESSETH:

 

                1.             PREMISES AND TERM.  In consideration of the mutual obligations of
Landlord and Tenant set forth herein, Landlord leases to Tenant, and Tenant
hereby takes from Landlord, the Premises situated within the County of Tarrant,
State of Texas, more particularly described and indicated by the cross-hatched
area on Exhibit “A” attached hereto and incorporated herein by
reference (the “Premises”) which Premises are to constitute a portion of
the Building that has been constructed on the Land (defined below), together
with all rights, privileges, easements, appurtenances, and amenities belonging
to or in any way pertaining to the Premises, to have and to hold, subject to
the terms, covenants and conditions in this Lease.  Tenant’s rights under this Lease shall be
subject to all matters of public record, including, without limitation, all
easements, deed restrictions, covenants, conditions and restrictions, as may
exist from time to time (provided that any amendments to such deed
restrictions, restrictive covenants and other covenants, conditions and
restrictions as well as amendments to the “Alliance Development Guidelines”
shall not materially adversely interfere with the Permitted Use).  The term of this Lease (“Term”) shall
commence on the Commencement Date (hereinafter defined) and shall end on the
last day of the month that is one hundred and twenty (120) months after the
Commencement Date.  The Premises are
situated in the Building located on the “Land” described on Exhibit “B”
attached hereto and made a part hereof.

 

                A.            The “Commencement Date” shall
be the date that is the earlier of (i) the date on which Tenant first
occupies the Premises for the purpose of conducting its business or (ii) the
date upon which the Leasehold Improvements (hereinafter defined) to be erected
in accordance with the Working Drawings (hereinafter defined) described on Exhibit “C”
attached hereto and incorporated herein by reference have been substantially
completed and notice that a temporary or permanent Certificate of Occupancy has
been issued for the Premises (subject to Tenant’s obligation to install
fixtures if required by local ordinance) has been given to Tenant.  As used herein, the term “substantially
completed” shall mean that, in the opinion of Landlord or the architect
responsible for the Work (hereinafter defined), such improvements have been
completed in accordance with the Working Drawings and the Premises are in good
and satisfactory condition, subject only to completion of minor punch list
items that do not prevent Tenant from using the Premises for its intended use.  As soon as such improvements have been
substantially completed, Tenant shall notify Landlord in writing that the
Commencement Date has occurred.  To the
extent that Tenant, its employees, agents or contractors cause construction of
such improvements to be delayed, the Commencement Date shall be deemed to be
the date that, in the commercially reasonable opinion of Landlord, substantial
completion would have occurred if such delays had not taken place.  After the Commencement Date, Tenant shall,
upon demand, execute and deliver to Landlord a memorandum of acceptance of
delivery of the Premises in the form attached hereto as Exhibit “D”.

 

 

 

H-1

 

 

                B.            Notwithstanding the fact that the
Term of this Lease and Tenant’s obligation to pay rent does not commence until
the Commencement Date, this Lease shall nevertheless be binding upon the
parties in accordance with its terms when executed by Landlord and Tenant.

 

                C.            Landlord shall provide Tenant
vehicular parking spaces on the surface parking lot (the “Parking Lot”)
constructed on the Land as generally depicted on the site plan attached as Exhibit “A”.  During the Term of this Lease, Tenant shall
be permitted to use Tenant’s Proportionate Share of all of the vehicular parking
spaces located on the Parking Lot, subject to such terms, conditions and
regulations as are from time to time applicable to patrons of the Parking
Lot.  The parking spaces in the Parking
Lot shall be made available to Tenant on a first-come first-served basis, it
being agreed that Landlord shall have no obligation to patrol, police, or
monitor the Parking Lot or to take any other actions to ensure that Tenant has
the use of all such parking spaces; provided, upon notice from Tenant that such
spaces are not available to Tenant, Landlord shall reasonably cooperate, at no
cost to Landlord, with the tenants of the Building in an endeavor to resolve
any such situation.

 

                2.             BASE RENT, SECURITY DEPOSIT AND
ESCROW PAYMENTS.

 

                A.            Tenant agrees to pay to Landlord
base rent (“Base Rent”) for the Premises, in advance, without demand,
deduction or set off, at the following rates and amounts during the Term
hereof:

 

	
   

  	
   

  	
  Monthly

  	
   

  	
  Annual

  	
   

  	
  Per Square Foot

  
	
  Months

  	
   

  	
  Base Rent

  	
   

  	
  Base Rent

  	
   

  	
  Per Annum

  
	
  1-60

  	
   

  	
  $31,646.88

  	
   

  	
  $379,762.50

  	
   

  	
  $5.33

  
	
  61-120

  	
   

  	
  $35,981.25

  	
   

  	
  $431,775.00

  	
   

  	
  $6.06

  

 

                The first monthly
installment of Base Rent, plus the other monthly charges set forth in Paragraph 2C
below, shall be due and payable on the date hereof and subsequent monthly
installments shall be due and payable on or before the first day of each
calendar month succeeding the Commencement Date, except that all payments due
hereunder for any fractional calendar month shall be prorated.

 

                B.            In addition, Tenant agrees to
deposit with Landlord on the date hereof the sum of One Hundred Thousand and
No/100 Dollars ($100,000.00), which shall be held by Landlord as security for
the performance of Tenant’s obligations under this Lease, it being expressly
understood and agreed that this security deposit is not an advance rental
deposit or a measure of Landlord’s damages in case of Tenant’s default.  Upon each occurrence of an Event of Default
(hereinafter defined), Landlord may use all or part of the security deposit to
pay past due rent or other payments due Landlord under this Lease, and the cost
of any other damage, injury, expense or liability caused by such Event of
Default without prejudice to any other remedy provided herein or provided by
law.  On demand, Tenant shall pay
Landlord the amount that will restore the security deposit to its original
amount.  The security deposit shall be
deemed the property of 

 

 

 

H-2

 

 

Landlord, but any remaining balance of such security deposit shall be
returned by Landlord to Tenant when Tenant’s obligations under this Lease have
been fulfilled. Tenant acknowledges that Landlord’s obligation respecting the
Security Deposit is not that of a trustee and that no interest shall accrue
thereon.

 

                C.            In addition to Base Rent and Tenant’s
other obligations hereunder, Tenant agrees to pay its proportionate share (as
defined in the Basic Lease Information) of the following costs and expenses
(collectively, the “Reimbursable Expenses”):  (i) Taxes (hereinafter defined) payable
by Landlord pursuant to Paragraph 4A below, (ii) the cost of
jointly metered utilities payable pursuant to Paragraph 9 below, (iii) the
cost of maintaining insurance pursuant to Paragraph 10A below, (iv) Common
Area Charges (hereinafter defined) payable by Tenant in accordance with Paragraph 3
below, and (v) the cost of any repair, replacement, or capital
expenditures required under any governmental law or regulation that was not
applicable to the Building at the Commencement Date.  During each month of the Term of this Lease,
on the same day that Base Rent is due hereunder, Tenant shall escrow with
Landlord an amount equal to 1/12th of Tenant’s proportionate share of such
Reimbursable Expenses, as estimated by Landlord.  Tenant authorizes Landlord to use the funds deposited
with Landlord under this Paragraph 2C to pay such Reimbursable
Expenses.  Landlord shall be entitled to
revise its projection of such Reimbursable Expenses at any time and if Landlord
so revises such projection, Tenant shall pay to Landlord, on the same day as
Base Rent is due hereunder, an amount equal to 1/12th of Tenant’s proportionate
share of such Reimbursable Expenses pursuant to Landlord’s revised estimate
thereof.  By April 30 of each
calendar year (or as soon thereafter as may be practicable) during the Term
hereof Landlord shall determine the actual Reimbursable Expenses for the
preceding calendar year and shall notify Tenant thereof.  If Tenant’s total escrow payments are less
than Tenant’s actual proportionate share of all such Reimbursable Expenses,
Tenant shall pay the difference to Landlord within thirty (30) days after
receipt of invoices and appropriate supporting documentation.  If the total escrow payments of Tenant are
more than Tenant’s actual proportionate share of all such Reimbursable
Expenses, Landlord shall retain such excess and credit it against Tenant’s next
annual escrow payments.

 

                D.            With respect to the cost of
replacements or capital expenditures (as opposed to repairs) (i) required
under governmental law or regulation pursuant to Paragraph 2C(v) above,
it is agreed that if the replacement or expenditure is applicable to building
owners generally (and is not necessitated due to Tenant’s conduct of business
or particular operations from the Premises), or (ii) performed pursuant to
Paragraph 2C(iv) above, then the cost of any such item shall be
amortized over its useful life (at a per annum interest rate equal to the prime
rate of interest announced from time to time by JPMorgan Chase Bank, N.A., plus
two percentage points) in accordance with generally accepted accounting
principles and the portion of the cost that shall be included within Paragraph
2(C)(v) above shall be equal to the product of (i) the actual
cost of such item (together with such interest), multiplied by (ii) a
fraction the numerator of which is the number of years (including partial
years) remaining in the Term of this Lease as of the date of such replacement
or expenditure including the number of years in any renewal term under Exhibit “F”
attached hereto if the renewal option therefor has been exercised by Tenant
prior to the replacement or expenditure (up to but not greater than the
following described denominator), and the denominator of which is the useful
life of the item in question; provided that if subsequent to any such
replacement or expenditure Tenant exercises any renewal option, the 

 

 

 

H-3

 

 

portion of the cost included within Paragraph 2(C)(v) above
under this sentence shall be recalculated to include the length of the renewal
term in question.  Notwithstanding
anything to the contrary contained herein, it is agreed that the cost of any
replacement or capital expenditure under Paragraph 2(C)(v) above
that is necessitated due to Tenant’s use of the Premises shall not be so
amortized, or be allocated to Tenant based upon its proportionate share, but
shall, instead, be paid for in full by Tenant upon Landlord’s demand therefor.

 

Landlord agrees to keep and maintain books
and records reflecting the Reimbursable Expenses in accordance with sound
accounting principles consistently applied. 
Tenant shall have the right, upon at
least ten (10) days advance written notice to Landlord (“Audit Notice”)
and at Tenant’s sole expense, to audit Landlord’s books and records in order to
verify actual Reimbursable Expenses.  Any
such audit shall be performed during Landlord’s normal business hours.  Landlord shall have the right to dispute the
result of any such audit by Tenant.  If
Landlord so disputes such audit, and if Landlord and Tenant are unable to
resolve such dispute within thirty (30) days, then the dispute shall be
submitted to a reputable independent accounting firm reasonably acceptable to
Landlord and Tenant (“Firm”) for resolution.  The reasonable determination of the Firm
shall be binding on Landlord and Tenant. 
If the parties’ mutual agreement as to the Reimbursable Expenses in
question, or the determination of the Firm (as applicable), establishes that
Tenant underpaid or overpaid its proportionate share of Reimbursable Expenses
(as required pursuant to this Lease), then Landlord shall refund to Tenant any
such overpayment, or Tenant shall pay to Landlord any such underpayment (as
applicable), promptly upon the agreement of the parties or conclusion of  such determination (as the case may be).  In addition, if the Firm is engaged as
provided hereinabove and the determination of such Firm establishes: (i) that
Tenant overpaid or underpaid its proportionate share of Reimbursable Expenses
by five percent (5%) or more, then (A) Landlord shall pay all costs of
engaging the Firm and Tenant’s reasonable expenses in connection with such
audit in case of any such overpayment (provided that Landlord’s obligation to
pay such costs and expenses shall not apply to any overpayment made with
respect to the first year of the Term of this Lease in which case Tenant shall
pay all such costs and expenses), and (B) Tenant shall pay all costs of
engaging the Firm and Landlord’s reasonable expenses in connection with such
audit in case of any such underpayment; or (ii) that the variance was less
than five percent (5%), Tenant shall pay the entire cost of engaging the Firm
and Landlord’s reasonable expenses in connection with such audit.  In all other circumstances (other than those
provided in the immediately preceding sentence) each party shall pay its own
expenses in connection with any such audit. 
Notwithstanding anything to the contrary contained herein, Tenant’s
obligation to pay all amounts, and to perform all of its other obligations,
under this Lease shall not be abated, suspended or otherwise affected during
the pendency of the audit, dispute, reconciliation and determination procedure
set forth above.  Notwithstanding the foregoing, Tenant shall have the right to audit
Landlord’s books and records only with respect to the Reimbursable Expenses for
the calendar year immediately preceding the year in which Tenant gives the
Audit Notice (but in no event with respect to periods prior to the Commencement
Date).  Payment by Tenant of
Reimbursable Expenses shall not be deemed to constitute a waiver by Tenant of
its rights to audit Reimbursable Expenses.

 

                3.             COMMON AREA CHARGES.  In addition to other amounts required to be
paid by Tenant hereunder, Tenant shall pay to Landlord Tenant’s proportionate
share of the following costs and expenses (collectively, the “Common Area
Charges”):

 

 

 

H-4

 

 

                A.            The cost of repair, maintenance and
replacement of:  (i) the roof of the
Building (except as otherwise provided in Paragraph 5); (ii) the
exterior of the Building (including painting), other than those structural
repairs and replacements for which Landlord is responsible pursuant to Paragraph 5;
(iii) all mechanical, electrical, plumbing, sewer, sprinkler and other
life-safety equipment and systems forming a part of the Building or the Project
of which the Building forms a part (other than the cost of repair, replacement
and maintenance of the items which are Tenant’s responsibility pursuant to Paragraph 6
which shall be paid entirely by Tenant as provided in Paragraph 6);
(iv) [intentionally omitted]; and (v) all other common areas and
facilities constituting a part of the Building or the Project of which the
Building forms a part (including, but not limited to, all paved areas in and
about the Building).

 

                B.            The cost of maintenance and
replacement of the grass, shrubbery and other landscaping in and about the
Building and/or the Project.

 

                C.            The cost of operating and
maintaining in a good, neat, clean and sanitary condition all parking areas,
driveways, alleys and grounds in and about the Building (including trash
removal).

 

                D.            The cost of assessments under any
applicable Declaration of Covenants, Restrictions and Easements (as may be amended
from time to time) which are assessed by the applicable property owners
association.

 

                E.             Security services (if furnished by
Landlord), and the cost of operating and maintaining any property, facilities
or services provided for the common use of Tenant and other lessees of the
Building or the Project, which costs shall include, without limitation,
management fees (or if no management company is engaged by Landlord for the
management of the Project, wages and employee benefits payable to employees of
Landlord or affiliates of Landlord whose duties are connected with the
operation and maintenance of the Building); provided, however, such management
fees (or if no management company is engaged by Landlord, such wages and
benefits) shall not exceed an amount equal to three percent (3%) of the Base
Rent payable under this Lease.

 

                F.             As used herein, the term “Common Area Charges” shall specifically exclude
each of the following items:

 

(1)           Leasing
commissions, attorneys’ fees, costs and disbursements and other expenses
incurred in connection with negotiations for leases with tenants and/or other
occupants of the Project and similar costs incurred in connection with disputes
between Landlord and other tenants of the Project as well as cost of
advertising and public relations associated with the Building or Project;

 

(2)           Costs of renovating,
decorating or redecorating space for tenants, other occupants or prospective
tenant or occupants of the Building;

 

 

 

H-5

 

 

(3)           Interest on debt or amortization payments on any mortgage
or mortgages and rental under any ground or underlying leases or lease (except
to the extent the same may be made to pay or reimburse, or may be measured by,
ad valorem taxes);

 

(4)           Any charge for depreciation or amortization of the Land or
Building, except as otherwise permitted hereunder;

 

(5)           Amounts paid to any affiliate of Landlord for services,
goods or labor to the extent that same exceeds the cost of such services, goods
or labor rendered by unaffiliated third parties on a competitive basis in a
Fort Worth office/warehouse building comparable to the Building;

 

(6)           Costs or expenses of utilities directly metered to tenants
of the Building and paid separately by such tenants;

 

(7)           Cost incurred to remedy violations by Landlord or any
other tenant of building codes, statutes, laws or ordinances, and any interest,
fines or penalties resulting therefrom, that arise by reason of the failure of
the Building or Project to comply with any building codes, statutes, laws or
ordinances in effect on the Commencement Date;

 

(8)           The costs or expenses of any repair work made by Landlord,
the cost of which shall have been reimbursed by insurance, warranties
(including, without limitation roof warranties), or condemnation proceeds, or
other tenants of the Building;

 

(9)           Except as provided in Paragraphs 2D, 3A-E and 6A
hereof, any other capital repairs or replacements, other than those made in
order to reduce or minimize an increase in Common Area Charges (the cost of
which will be amortized in the same manner as provided in Paragraph 2E
above);

 

(10)         Income and franchise taxes of the Landlord which are
prohibited from being charged to Tenant as Taxes hereunder, unless such are
imposed, wholly or partially, in lieu of real property taxes or ad valorem
assessments against the Land, Building and/or Premises or as a sales tax on
rents;

 

(11)         Legal fees associated with the financing, refinancing or
sale of the Building;

 

(12)         Costs of repairing latent construction defects in the
Building;

 

(13)         Costs or expenses incurred in connection with negotiations
or disputes with other tenants, other occupants (if any) or prospective
tenants;

 

(14)         Costs or expenses solely attributable to a breach by
Landlord of its covenants, conditions, obligations and duties hereunder that
would not have been incurred at all, but for such breach by Landlord;

 

 

 

H-6

 

 

(15)         Cost paid or incurred in connection with the removal,
replacement, enclosure and capsulation or other treatment of any hazardous
materials brought into the Premises prior to the Commencement Date or that were
brought onto the Premises by Landlord or any other tenant subsequent to the
Commencement Date;

 

(16)         Salaries of Landlord’s employees above the position of
Building manager, including, but not limited to, administrative, executive and
partner wages and salaries;

 

(17)         Costs of any charitable or political contributions made by
Landlord;

 

(18)         Cost of acquiring, leasing, restoring, removing or replacing
sculpture, paintings or other objects of art;

 

(19)         To the extent any cost includable in Common Area Charges are
incurred with respect to both the Building and other properties, there shall be
excluded from the Common Area Charges a fair and reasonable percentage thereof
which is properly allocable to such other properties;

 

(20)         Cost of the original construction of the Building, “tap fees”
or water, gas or sewer connection fees payable in connection with the original
construction of the Building; and

 

(21)         All costs and expenses incurred by Landlord in connection
with the formation, and maintaining in good standing, of any corporate or other
legal entity that constitutes Landlord.

 

 

 

H-7

 

 

                4.             TAXES.

 

                A.            Landlord agrees to pay all taxes,
assessments and governmental charges of any kind and nature (collectively
referred to herein as “Taxes”) that accrue against the Premises, and/or
the Land and/or improvements of which the Premises are a part.  (For purposes of this Lease, the term “Taxes”
shall include the amount of any taxes that would otherwise be imposed but for
the provisions of any tax abatement agreement with respect to which Landlord is
a party which is entered into pursuant to chapter 312 of the Texas Tax Code;
and for purposes of this Lease, such abated taxes shall be deemed to be payable
by Landlord.)  Except as provided in the
following sentence, Taxes shall exclude franchise, inheritance, gift, gross
receipts or income tax, transfer or successor tax or other similar tax.  If at any time during the Term of this Lease,
there shall be levied, assessed or imposed on Landlord a capital levy or other
tax directly on the rents received herefrom and/or a franchise tax, assessment,
levy or charge measured by or based, in whole or in part, upon such rents from
the Premises and/or the Land and improvements of which the Premises are a part
(including, without limitation, any and all taxes assessed against Landlord and
attributable to taxable margin levied pursuant to Chapter 171 of the Texas Tax
Code or any amendment, adjustment or replacement thereof), then all such taxes,
assessments, levies or charges, or the part thereof so measured or based, shall
be deemed to be included within the term “Taxes” for the purposes hereof.  Landlord shall have the right to employ a tax
consulting firm to attempt to assure a fair tax burden on the building and
grounds within the applicable taxing jurisdiction.  Tenant agrees to pay its proportionate share
(which shall not exceed $2,500 per calendar year) of the cost of such
consultant.

 

                B.            Tenant shall be liable for all taxes
levied or assessed against any personal property or fixtures placed in the
Premises.  If any such taxes are levied
or assessed against Landlord or Landlord’s property and (i) Landlord pays
the same or (ii) the assessed value of Landlord’s property is increased by
inclusion of such personal property and fixtures and Landlord pays the
increased taxes, then, upon demand Tenant shall pay to Landlord such
taxes.  In addition, if the Building is a
multiple occupancy building and the cost of any improvements constructed to
Tenant’s Premises is disproportionately higher than the cost of improvements
constructed to the premises of other tenants of the Building, then upon demand
Tenant shall pay the amount of Taxes attributable to such disproportionately
more expensive improvements, in addition to Tenant’s proportionate share of
Taxes.

 

C.            Tenant
shall have the right (unless Landlord shall in good faith agree to contest, at
Tenant’s sole expense, such tax increase) to contest or resist, in good faith,
diligently and by appropriate proceedings, the validity of the amount or rate
of any increase or proposed increase in the Taxes, all at Tenant’s sole expense.  If Landlord shall agree to contest such
Taxes, Landlord shall do so at Tenant’s expense (the cost of which contest, if
involving the property of Landlord in addition to the Premises, shall be
allocated to Tenant on a reasonable and equitable basis but subject to the last
sentence of Paragraph 4A), under the direction and control of Landlord
(which shall make all decisions in connection therewith, subject to Tenant’s
right to monitor Landlord’s conduct of such contest proceeding); if Landlord
elects not to contest such Taxes or, having elected to contest such Taxes,
fails to contest such Taxes diligently and in good faith, and such failure
continues uncured beyond a reasonable time following written notice from Tenant
to Landlord, or if Tenant reasonably determines that Landlord is not pursuing
an 

 

 

 

H-8

 

 

adequately aggressive position with respect to such tax contest and
Landlord fails to comply with Tenant’s reasonable request with respect thereto,
Tenant shall have the right to itself contest such Taxes.  It shall be a condition precedent to Tenant’s
right to contest any such Taxes that Tenant provide Landlord with security (in
a form reasonably acceptable to Landlord and Landlord’s mortgagee) in an amount
reasonably necessary to assure full payment of such Taxes being contested,
together with all penalties, fines and interest and other fees and amounts that
could be collected by the taxing authority in case the contest is unsuccessful
(but in any event not less than the amount reasonably required by Landlord’s
mortgagee in connection with such contest of Taxes).  In determining the security required pursuant
to the immediately preceding sentence, due regard shall be given to Tenant’s
contractual obligations with respect to Taxes pursuant to Paragraph 2(C) above.  Tenant shall in all events pay all such
contested Taxes (together with all penalties, fines, interest and such other
fees and amounts) at least thirty (30) days prior to the date on which the Premises
(or any portion thereof) are scheduled for any unstayed foreclosure on account
of nonpayment thereof.  Tenant shall
indemnify and hold harmless Landlord from and against any and all expenses,
liabilities and claims (including but not limited to attorneys’ fees) incurred
by or asserted against Landlord or the Project arising as a result of any such
contest by Tenant.  Landlord and Tenant
agree to reasonably cooperate with one another in connection with all contests
of Taxes under this Lease.

 

                5.             LANDLORD’S REPAIRS.

 

                A.            Tenant understands and agrees that
Landlord’s maintenance, repair and replacement obligations are limited to those
expressly set forth in this Paragraph 5. 
Landlord, at its own cost and expense, shall be responsible only for
repair and replacement of the foundation (below slab on grade) and the
structural members of the roof (including the roof membrane and metal decking
to the extent covered by any existing warranties, but subject to any
penetrations performed by or at the request of Tenant [other than the Leasehold
Improvements] which shall be Tenant’s responsibility if performed by
a Tenant engaged contractor not certified by the manufacturer or otherwise by
Tenant or its contractors in a manner that would void any applicable warranty) and exterior
walls of the Building, reasonable wear and tear excluded.  The term “walls” as used herein shall not
include windows, glass or plate glass, doors, special store fronts or office
entries.  Tenant shall immediately give
Landlord written notice of defect or need for repairs after which Landlord
shall have reasonable opportunity to repair same or cure such defect.  In addition to the foregoing, Landlord shall,
at its sole expense (not subject to reimbursement as a Common Area Charge),
repair any damage to the Premises or the Building caused by the negligent or
intentional acts or omissions of Landlord or Landlord’s employees, agents or
invitees, or caused by Landlord’s default hereunder.

 

                B.            Additionally, Landlord shall repair,
maintain and replace (subject to Tenant’s reimbursement obligations pursuant to
Article 2) those items listed in Paragraphs 3A - 3C (other
than the repair, replacement and maintenance of the items which are Tenant’s
responsibility pursuant to Paragraph 6) in a commercially
reasonable manner consistent with the manner in which projects of a similar
type, character and location are maintained. 
Landlord shall promptly commence and diligently pursue to completion the
performance of all repairs or maintenance that are the responsibility of
Landlord under the Lease and in performing such shall use commercially
reasonable efforts to avoid material interference with Tenant’s operations in
the 

 

 

 

H-9

 

 

Premises.  Further, Landlord agrees
to use commercially reasonable efforts, consistent with the Landlord’s usual
practices, to enforce warranties available to Landlord with respect to any
repairs required of Landlord under this Lease.

 

                6.             TENANT’S REPAIRS AND MAINTENANCE.

 

                A.            Subject to the provisions of Article 5
above and Article 11 below, Tenant, at its own cost and expense,
shall (i) maintain all parts of the Premises (including, but not limited
to, the floor slab of the Premises and the mechanical, electrical, plumbing,
sewer, sprinkler and other life-safety equipment, fixtures and systems forming
a part of the Premises), in good, neat, clean, sanitary and operable condition
and (ii) promptly make all necessary repairs and replacements to the
Premises in a good and workmanlike manner. 
In addition to the foregoing, Tenant shall, at its sole expense, repair
any damage to the Premises or the Building caused by the negligent or
intentional acts or omissions of Tenant or Tenant’s employees, agents or
invitees, or caused by Tenant’s default hereunder.

 

                B.            In addition to Tenant’s other
obligations hereunder, Tenant, at its own cost and expense, shall enter into a
regularly scheduled preventive maintenance/service contract with a maintenance
contractor approved by Landlord for servicing all hot water, heating and air
conditioning and elevator systems and equipment within or serving the
Premises.  The service contract must
include all services suggested by the equipment manufacturer in its
operations/maintenance manual (to  be provided to Tenant at the time of
substantial completion of the Leasehold Improvements) and an executed copy of
such contract must be provided to Landlord prior to the date Tenant takes
possession of the Premises.

 

                C.            Tenant’s obligations with respect to
the “floor slab” of the Premises pursuant to Paragraph 6A(i) above
(i) shall be construed as referring to the slab on grade of the Premises
and not the foundation of the Building, and (ii) shall apply only to the
extent that the repair and maintenance of the floor slab is not caused by the
failure of the foundation of the Building or by a defect in materials or
workmanship in the initial pouring of such slab.

 

                7.             ALTERATIONS.

 

A.            Tenant
shall not make any alterations, additions or improvements to the Premises
without the prior written consent of Landlord provided, however, Tenant may,
without Landlord’s consent, make alterations which are non-structural in
character, do not affect the Building systems, and the cost of which does not
exceed $10,000.00 during the Term of this Lease (“Permitted Non-Structural
Alterations”).  Tenant, at its own
cost and expense, may erect such shelves, racks, bins, machinery and trade
fixtures as it desires.  Notwithstanding
the foregoing, the installation of such shelves, racks, bins, machinery, trade
fixtures and Permitted Non-Structural Alterations shall be subject to the
conditions that:  (i) such items do
not alter the basic character of the Premises or the Building and/or
improvements of which the Premises are a part; (ii) such items do not
overload or damage the Premises, the Building or such improvements; (iii) such
items may be removed without injury to the Premises; and (iv) the
construction, erection or installation thereof complies with all applicable
governmental laws, ordinances, regulations and with Landlord’s specifications
and requirements.  All alterations,
additions, 

 

 

 

H-10

 

 

improvements and partitions erected by Tenant shall be and remain the
property of Tenant during the Term of this Lease.  All Permitted Non-Structural Alterations,
shelves, racks, bins, machinery and trade fixtures installed by Tenant shall be
removed on or before the earlier to occur of the date of termination of this
Lease or vacating of the Premises by Tenant, at which time, subject to Paragraph
11, Tenant shall restore the Premises to their original condition,
reasonable wear and tear excepted; notwithstanding the foregoing, Tenant shall
not be required to remove (i) any Permitted Non-Structural Alterations, if
prior to installation, Tenant obtains Landlord’s express written consent for
such alterations to remain after termination; and (ii) the skylights and
associated ductwork shown on the Plans (as defined in Exhibit “C”),
if, prior to lease termination, Landlord provides Tenant with express, written
consent to leave such in place.  All
alterations, installations, removals and restoration shall be performed in a
good and workmanlike manner so as not to damage or alter the primary structure
or structural qualities of the Building and other improvements situated on the
Premises or of which the Premises are a part. 
Notwithstanding anything to the contrary contained herein, it is agreed
that the use of and access to the roof of the Building is expressly reserved to
Landlord and is expressly denied to Tenant. 
Tenant shall not penetrate the roof of the Building in any manner, nor
install or construct any alterations, additions or improvements thereon, nor
otherwise use or occupy the roof at any time during the Term hereof, without
the Landlord’s prior written consent, which may be withheld in Landlord’s sole
discretion.

 

B.            Tenant
and AIL Investment, L.P., an affiliate of Landlord, have entered into that
certain License Agreement dated on or about the date hereof (“Solar License”),
regarding Tenant’s right to install and operate a solar photovoltaic system on
property situated near the Building.  Any
default by Tenant under that Solar License shall be an Event of Default
hereunder.

 

                8.             SIGNS.  Any signage, decorations, advertising media,
blinds, draperies, window treatments, bars, and security installations Tenant
desires for the Premises shall be subject to Landlord’s prior written approval
and shall be submitted to Landlord prior to the Commencement Date.  Tenant shall repair, paint, and/or replace
the Building facia surface to which its signs are attached upon vacation of the
Premises, or the removal or alteration of its signage, all at Tenant’s sole
cost and expense.  Tenant shall not (i) make
any changes to the exterior of the Premises, (ii) install any exterior
lights, decorations, balloons, flags, pennants, banners or painting, or (iii) erect
or install any signs, windows or door lettering, placards, decorations or
advertising media of any type which can be viewed from the exterior of the
Premises, without Landlord’s prior written consent.  All signs, decorations, advertising media,
blinds, draperies and other window treatment or bars or other security
installations visible from outside the Premises shall conform in all respects
to the criteria established by Landlord and to the requirements of all
covenants, conditions and restrictions applicable to the Premises and the
Building (including, but not limited to, approval by the Development Review Board).

 

                9.             UTILITIES.  Tenant shall timely pay for all separately
metered or sub-metered water, gas, heat, light, power, telephone, sewer,
sprinkler charges and other utilities and services used on or at the Premises,
together with any taxes, penalties, deposits, surcharges or the like pertaining
to Tenant’s use of the Premises, and any maintenance charges for
utilities.  Other than costs described in
Paragraph 3F(20), Tenant shall pay all impact or other fees associated
with 

 

 

 

H-11

 

 

utility hook-ups, meter installations or services to the Premises.  Landlord shall have the right to cause any of
said services to be separately metered to Tenant at Tenant’s expense.  Tenant shall pay its proportionate share of
all usage charges for jointly metered utilities (including, but not limited to
the cost of utilities consumed in connection with providing electrical power
for the Building’s canopy lighting, the lighting of the parking facilities and
other common areas and facilities associated with the Building, the Building’s
fire pump room and irrigation system, as well as other electricity gauged by
the “house meter”).  Landlord shall not
be liable for any interruption or failure of utility service on the Premises
unless caused by Landlord’s negligence or willful misconduct in which case
Landlord shall promptly cause such service to be restored.

 

                10.           INSURANCE.

 

                A.            Landlord shall maintain insurance
covering the Building of which the Premises are a part (including the Leasehold
Improvements to be installed by Landlord pursuant to Exhibit “C”)
in an amount not less than the “replacement cost” thereof insuring against the
perils and costs of Fire, Lightning, Extended Coverage, Vandalism and Malicious
Mischief and such other insurance as Landlord shall deem necessary.

 

                B.            Tenant, at its own expense, shall
maintain during the Term of this Lease a policy or policies of worker’s
compensation and commercial general liability insurance, including personal
injury and property damage, with contractual liability coverage, in the amount
of Two Million Dollars ($2,000,000.00) for property damage and Two Million
Dollars ($2,000,000.00) per occurrence for personal injuries or deaths of
persons occurring in or about the Premises. 
Tenant, at its own expense, also shall maintain during the Term of this
Lease (i) “All Risks” or “Special Causes of Loss” property insurance
covering the replacement cost of all alterations, additions, partitions and
improvements installed or placed on the Premises by Tenant or by Landlord on
behalf of Tenant (other than the Leasehold Improvements to be installed by
Landlord pursuant to Exhibit “C”), and all of Tenant’s personal
property contained within the Premises and (ii) business interruption
insurance insuring loss of profits in the event of an insured peril damaging
the Premises.  Said policies shall (i) name
Landlord and Landlord’s property manager (currently, Hillwood Alliance
Services, LLC) as additional insureds and insure Landlord’s and Landlord’s
property manager’s contingent liability under this Lease (except for the worker’s
compensation policy, which instead shall include a waiver of subrogation
endorsement in favor of Landlord and Landlord’s property manager), (ii) be
issued by an insurance company which is acceptable to Landlord, but in no event
with a carrier having an A. M. Best rating lower than A-VII, (iii) provide
that said insurance shall not be cancelled unless thirty (30) days prior
written notice shall have been given to Landlord, and (iv) include a
waiver of subrogation in favor of Landlord, Landlord’s property manager, and
Landlord’s mortgagee.  In addition, such
insurance provided by Tenant shall be primary coverage for Landlord (and
Landlord’s property manager, if applicable) when any policy issued to Landlord
(and Landlord’s property manager, if applicable) is similar or duplicate in
coverage, and Landlord’s policy shall be excess over Tenant’s policies.  All insurance policies carried by Tenant
hereunder shall expressly provide (by endorsement or otherwise) that Landlord’s
rights thereunder shall be assignable to Landlord’s mortgagee who shall be
shown as an additional insured thereon. 
Said policy or policies or certificates thereof shall be delivered to
Landlord by Tenant upon commencement of the Term of the Lease and upon each
renewal of said insurance.

 

 

 

H-12

                C.            Tenant
will not permit the Premises to be used for any purpose or in any manner that
would (i) void the insurance thereon, (ii) increase the insurance
risk, or (iii) cause the disallowance of any sprinkler credits, including
without limitation, use of the Premises for the receipt, storage or handling of
any product, material or merchandise that is explosive or highly
inflammable.  If any increase in the cost
of any insurance on the Premises or the Building of which the Premises are a
part is caused by Tenant’s use of the Premises, or because Tenant, in default
hereof, vacates the Premises prior to the expiration of this Lease, then Tenant
shall pay the amount of such increase to Landlord.

 

                11.           FIRE AND CASUALTY DAMAGE.

 

                A.            If the Premises or the Building of
which the Premises are a part should be damaged or destroyed by fire or other
peril, Tenant immediately shall give written notice to Landlord.  If the Building of which the Premises are a
part should be totally destroyed by any peril which would be covered by the
insurance which Landlord is required to maintain under Paragraph 10A
above, or if they should be so damaged thereby that, in Landlord’s estimation,
rebuilding or repairs cannot be completed within one hundred eighty (180) days
after Landlord’s receipt of all insurance proceeds with respect to such damage
and receipt of permits and licenses required to commence reconstruction, this
Lease shall terminate and the rent shall be abated during the unexpired portion
of this Lease, effective upon the date of the occurrence of such damage.

 

                B.            If the Building of which the
Premises are a part should be damaged by any peril which would be covered by
the insurance which Landlord is required to maintain under Paragraph 10A
above, and in Landlord’s estimation, rebuilding or repairs can be substantially
completed within one hundred eighty (180) days after the date of Landlord’s
receipt of all insurance proceeds with respect to such damage and receipt of
permits and licenses required to commence reconstruction, this Lease shall not
terminate, and Landlord shall restore the Premises to substantially its
previous condition, except that Landlord shall not be required to rebuild,
repair or replace any part of the partitions, fixtures, additions and other
improvements that may have been constructed, erected or installed in, or about
the Premises for the benefit of, or by or for Tenant, other than the Leasehold
Improvements described in Exhibit “C.” 
Effective upon the date of the occurrence of such damage and ending upon
substantial completion, if the Premises are untenantable in whole or part
during such period, the rent shall be reduced to such extent as may be fair and
reasonable under all of the circumstances. 
If such repairs and rebuilding have not been substantially completed
within one hundred eighty (180) days after the date of Landlord’s receipt of
all insurance proceeds and receipt of permits and licenses required to commence
reconstruction (subject to Force Majeure Delays [hereinafter defined] and any
delays caused by Tenant or its employees, agents or contractors), Tenant, as
Tenant’s exclusive remedy, may terminate this Lease by delivering written
notice of termination to Landlord in which event the rights and obligations
hereunder shall cease and terminate (except as expressly provided to the
contrary herein).

 

                C.            Notwithstanding anything herein to
the contrary (i) in no event shall Landlord be required to expend a sum
greater than the net insurance proceeds actually received by Landlord 

 

H-13

 

with respect to the damage in question in connection with Landlord’s
repair and restoration obligations hereunder, and (ii) in the event the
holder of any indebtedness secured by a mortgage or deed of trust covering the
Premises requires that the insurance proceeds be applied to such indebtedness,
then Landlord shall have the right to terminate this Lease by delivering
written notice of termination to Tenant within fifteen (15) days after such
requirement is made known by any such holder, whereupon all rights and
obligations hereunder shall cease and terminate (except as expressly provided
to the contrary herein).

 

                D.            Landlord hereby waives and releases
Tenant (but only to the extent of the insurance coverage required to be
maintained by the respective parties hereunder) of and from any and all rights
of recovery, claim, action or cause of action, against Tenant and its agents,
officers and employees, for any liability, loss or damage that may occur to the
Premises, improvements or the Building of which the Premises are a part, or
personal property (building contents) within the Building and/or Premises as
the result of any fire or other casualty required to be insured against under
this Lease. Tenant hereby waives and releases Landlord and Landlord’s property
manager (but only to the extent of the insurance coverage required to be
maintained by the respective parties hereunder) of and from any and all rights
of recovery, claim, action or cause of action, against Landlord and Landlord’s
property manager, and their agents, officers and employees, for any liability,
loss or damage that may occur to the Premises, improvements or the Building of
which the Premises are a part, or personal property (building contents) within
the Building and/or Premises as the result of any fire or other casualty
required to be insured against under this Lease.  Each party to this Lease agrees immediately
after execution of this Lease to give each insurance company, which has issued
to it policies of fire and extended coverage insurance, written notice of the
terms of the mutual waivers contained in this subparagraph and to have the
insurance policies properly endorsed to reflect such waivers.

 

                12.          LIABILITY AND INDEMNIFICATION.  EXCEPT FOR
ANY CLAIMS, RIGHTS OF RECOVERY AND CAUSES OF ACTION THAT TENANT HAS RELEASED,
LANDLORD SHALL INDEMNIFY, PROTECT, HOLD HARMLESS AND DEFEND TENANT, ITS AGENTS,
EMPLOYEES, CONTRACTORS, PARTNERS, DIRECTORS, OFFICERS AND ANY AFFILIATES OF THE
ABOVE-MENTIONED PARTIES (COLLECTIVELY, THE “TENANT AFFILIATES”) FROM AND
AGAINST ANY AND ALL OBLIGATIONS, SUITS, LOSSES, JUDGMENTS, ACTIONS, DAMAGES,
CLAIMS OR LIABILITY (INCLUDING, WITHOUT LIMITATION, ALL COSTS, ATTORNEYS’
FEES, AND EXPENSES INCURRED IN CONNECTION THEREWITH) (I) FOR ANY INJURY OR DAMAGE TO ANY PERSON IN, ON OR ABOUT THE
PREMISES OR ANY PART THEREOF AND/OR THE BUILDING OF WHICH THE PREMISES ARE
A PART, WHEN SUCH INJURY OR DAMAGE SHALL BE CAUSED BY THE ACT, NEGLECT, FAULT
OF, OR OMISSION OF ANY DUTY WITH RESPECT TO THE SAME BY LANDLORD, ITS AGENTS,
SERVANTS AND EMPLOYEES OR (II) ARISING FROM A BREACH, VIOLATION OR
NONPERFORMANCE OF ANY TERM, PROVISION, COVENANT OR AGREEMENT OF LANDLORD
HEREUNDER, OR A BREACH OR VIOLATION BY LANDLORD OF ANY COURT ORDER OR ANY LAW,
REGULATION OR ORDINANCE OF ANY FEDERAL, STATE, OR LOCAL AUTHORITY (EXCEPT TO
THE EXTENT THE INDEMNIFIED LOSS IS CAUSED BY THE NEGLIGENCE OR INTENTIONAL 

 

H-14

 

MISCONDUCT OF TENANT AND/OR ANY
TENANT AFFILIATES, IN WHICH EVENT THIS INDEMNITY SHALL NOT APPLY TO THE
ALLOCABLE SHARE OF SUCH LOSS RESULTING FROM THE NEGLIGENCE OR INTENTIONAL
MISCONDUCT OF TENANT AND/OR ANY TENANT AFFILIATES).  EXCEPT FOR ANY CLAIMS, RIGHTS OF
RECOVERY AND CAUSES OF ACTION THAT LANDLORD HAS RELEASED, TENANT SHALL
INDEMNIFY, PROTECT, HOLD HARMLESS AND DEFEND LANDLORD, ITS AGENTS, EMPLOYEES,
CONTRACTORS, PARTNERS, DIRECTORS, OFFICERS AND ANY AFFILIATES OF THE
ABOVE-MENTIONED PARTIES (COLLECTIVELY THE “LANDLORD AFFILIATES”) FROM
AND AGAINST ANY AND ALL OBLIGATIONS, SUITS, LOSSES, JUDGMENTS, ACTIONS,
DAMAGES, CLAIMS OR LIABILITY (INCLUDING, WITHOUT LIMITATION, ALL COSTS,
ATTORNEYS’ FEES, AND EXPENSES INCURRED IN CONNECTION THEREWITH) IN CONNECTION
WITH ANY LOSS, INJURY OR DAMAGE (I) TO ANY PERSON OR PROPERTY WHATSOEVER
OCCURRING IN, ON OR ABOUT THE PREMISES OR ANY PART THEREOF AND/OR OF THE
BUILDING OF WHICH THE PREMISES ARE A PART, THE USE OF WHICH TENANT MAY HAVE
IN ACCORDANCE WITH THIS LEASE, WHEN SUCH INJURY OR DAMAGE SHALL BE CAUSED BY
THE ACT, NEGLECT, FAULT OF, OR OMISSION OF ANY DUTY WITH RESPECT TO THE SAME BY
TENANT, OR ANY TENANT AFFILIATES, OR INVITEES, OR (II) ARISING FROM A
BREACH, VIOLATION OR NON-PERFORMANCE OF ANY TERM, PROVISION, COVENANT OR
AGREEMENT OF TENANT HEREUNDER, OR A BREACH OR VIOLATION BY TENANT OF ANY COURT
ORDER OR ANY LAW, REGULATION, OR ORDINANCE OF ANY FEDERAL, STATE OR LOCAL
AUTHORITY, EXCEPT TO THE EXTENT THE INDEMNIFIED LOSS IS CAUSED BY THE
NEGLIGENCE OR INTENTIONAL MISCONDUCT OF LANDLORD AND/OR LANDLORD AFFILIATES IN
WHICH EVENT THIS INDEMNITY SHALL NOT APPLY TO THE ALLOCABLE SHARE OF SUCH LOSS
RESULTING FROM THE NEGLIGENCE OR INTENTIONAL MISCONDUCT OF LANDLORD AND/OR
LANDLORD AFFILIATES.  IF ANY CLAIM IS
MADE AGAINST LANDLORD OR LANDLORD AFFILIATES, OR AGAINST TENANT OR TENANT
AFFILIATES (AS APPLICABLE), THE INDEMNIFYING PARTY, AT ITS SOLE COST AND
EXPENSE, SHALL DEFEND ANY SUCH CLAIM, SUIT OR PROCEEDING BY OR THROUGH
ATTORNEYS SATISFACTORY TO THE INDEMNIFIED PARTY.  THE PROVISIONS OF THIS PARAGRAPH 12
SHALL SURVIVE THE EXPIRATION OR TERMINATION OF THIS LEASE WITH RESPECT TO ANY
CLAIMS OR LIABILITY OCCURRING PRIOR TO SUCH EXPIRATION OR TERMINATION.

 

                13.           USE. 
The Premises shall be used only for the purpose of research and
development, receiving, storing, assembling, manufacturing, shipping and
selling (other than retail) products, materials and merchandise made and/or
distributed by Tenant and for such other lawful purposes as may be incidental
thereto.  Tenant acknowledges that it
does not intend to use the Premises to serve the public.  Outside storage, including without
limitation, storage of trucks and other vehicles, is prohibited without
Landlord’s prior written consent.  Tenant
shall comply with (i) all governmental laws, ordinances and regulations
applicable to the use and occupancy of the Premises, and promptly shall comply
with all governmental orders and directives for the 

 

H-15

 

correction, prevention and abatement of nuisances in or upon, or connected
with, the Premises, all at Tenant’s sole expense, (ii) the requirements of
all deed restrictions, restrictive covenants and other covenants, conditions
and restrictions affecting the Building and/or the Land, and (iii) the
requirements of “Alliance Development Guidelines” as may exist from time to
time, and all amendments thereto (provided that any amendments to such deed
restrictions, restrictive covenants and other covenants, conditions and
restrictions as well as amendments to the “Alliance Development Guidelines”
shall not materially adversely interfere with the Permitted Use).  Tenant shall not permit any objectionable or
unpleasant odors, smoke, dust, gas, noise or vibrations to emanate from the
Premises, nor take any other action that would constitute a nuisance or would
disturb, unreasonably interfere with, or endanger Landlord or any other lessees
of the Building of which the Premises are a part.  Tenant
shall, at Tenant’s sole cost, obtain all permits required for Tenant’s use of
the Premises.

 

                14.           INSPECTION.  Landlord and Landlord’s agents and
representatives shall have the right to enter the Premises at any time, upon at
least 24 hours’ prior notice (which may be telephonic notice), and accompanied
by a representative of Tenant (which representative Tenant agrees to make
available for the purpose of such entry), to (i) inspect the Premises, (ii) make
such repairs as may be required or permitted pursuant to this Lease, and (iii) show
the Premises to prospective purchasers of, or parties who are anticipated to
provide financing with respect to, the Building.  Notwithstanding the foregoing, Landlord shall
have the right to enter the Premises at any time, without notice to Tenant, in
case of an emergency posing a threat to persons or property.  During the period that is six (6) months
prior to the end of the Term of this Lease, upon telephonic notice to Tenant,
Landlord and Landlord’s representatives may enter the Premises upon at least 24
hours’ prior notice (which may be telephonic notice), and accompanied by a
representative of Tenant (which representative Tenant agrees to make available
for the purpose of such entry) during business hours for the purpose of showing
the Premises.  In addition, Landlord shall
have the right to erect a suitable sign on the Premises stating the Premises
are available.  Tenant shall notify
Landlord in writing at least thirty (30) days prior to vacating the Premises
and shall arrange to meet with Landlord for a joint inspection of the Premises
prior to vacating.  If Tenant fails to
give such notice or to arrange for such inspection, then Landlord’s inspection
of the Premises shall be deemed correct for the purpose of determining Tenant’s
responsibility for repairs and restoration of the Premises.

 

                15.           ASSIGNMENT AND SUBLETTING

 

                A.            Tenant shall not assign (either
voluntarily, nor permit assignment by operation of law), sublet, transfer or
encumber this Lease, or any interest therein (each, a “Transfer”),
without the prior written consent of Landlord. 
Any attempted Transfer by Tenant in violation of the terms and covenants
of this Paragraph shall be void.  No
Transfer, whether consented to by Landlord or not, shall relieve Tenant of its
liability hereunder.  In the event Tenant
desires to effect a Transfer, Tenant shall give written notice thereof to
Landlord within a reasonable time prior to the proposed commencement date of
such Transfer, which notice shall set forth the name of the proposed sublessee,
assignee or other Transferee (as defined below), the relevant terms of any
sublease or assignment and copies of financial reports and other relevant
financial information of the proposed Transferee (a “Transfer Request”).  Landlord shall be entitled to charge Tenant a
reasonable fee for processing Tenant’s request for any Transfer (other than to
an 

 

H-16

 

Affiliate [defined below]), including, but not limited to, Landlord’s
reasonable out-of-pocket expenses and attorneys’ fees.

 

                B.            In addition to, but not in
limitation of, Landlord’s right to approve of any Transferee (other than any
Affiliate), Landlord shall have the option, in its sole discretion, in the
event of any proposed Transfer (other than to an Affiliate), to terminate this
Lease, or in case of a proposed subletting of less than the entire Premises, to
recapture the portion of the Premises to be sublet, as of the date the Transfer
is to be effective.  The option shall be
exercised, if at all, by Landlord giving Tenant written notice thereof (“Recapture
Notice”) within sixty (60) days following Landlord’s receipt of the
Transfer Request as required above.  If
this Lease shall be terminated with respect to the entire Premises pursuant to
this Paragraph, the Term of this Lease shall end on the date stated in the Recapture
Notice as if that date had been originally fixed in this Lease for the
expiration of the Term hereof (“Cancellation Date”); provided, however,
that effective on the Cancellation Date Tenant shall pay Landlord all amounts,
as estimated by Landlord, payable by Tenant to such date with respect to taxes,
insurance, repairs, maintenance, restoration and other obligations, costs or
charges which are the responsibility of Tenant hereunder.  Further, upon any such cancellation Landlord
and Tenant shall have no further obligations or liabilities to each other under
this Lease, except with respect to obligations or liabilities which have
accrued hereunder as of such Cancellation Date (in the same manner as if such
Cancellation Date were the date originally fixed in this Lease for the
expiration of the Term hereof) and except for those obligations and liabilities
which, by the express terms of this Lease, are to survive any expiration or
termination hereof.  If Landlord recaptures
only a portion of the Premises under this Paragraph, the Base Rent during the
unexpired Term hereof shall abate proportionately based on the rent per square
foot contained in this Lease as of the date immediately prior to such
recapture.  Tenant shall, at Tenant’s own
cost and expense, discharge in full any outstanding commission obligation which
may be due and owing as a result of any proposed Transfer, whether or not the
Premises are recaptured pursuant hereto and rented by Landlord to the proposed
tenant or any other tenant.

 

                C.            Upon the occurrence of a Transfer
(other than to an Affiliate), whether or not consented to by Landlord, or
mandated by judicial intervention, Tenant hereby assigns, transfers and conveys
to Landlord all rents or other sums received or receivable by Tenant under any
such assignment or sublease, which are in excess of the rents and other sums
payable by Tenant under this Lease (or in case of a sublease, which are in
excess of the rents and other sums payable by Tenant with respect to the
portion of the Premises that is subleased), and agrees to pay such amounts to
Landlord within ten (10) days after receipt.

 

                D.            If this Lease is assigned to any
person or entity pursuant to the provisions of the United States Bankruptcy
Code, 11 U.S.C. § 101 et. seq. (the “Bankruptcy Code”), and except
as otherwise provided in the Bankruptcy Code or orders of the applicable
bankruptcy court, any and all monies or other consideration payable or
otherwise to be delivered in connection with such assignment shall be paid or
delivered to Landlord, shall be and remain the exclusive property of Landlord
and shall not constitute property of Tenant or of the estate of Tenant within
the meaning of the Bankruptcy Code.  Any
and all monies or other considerations constituting Landlord’s property under
the preceding sentence not paid or delivered to Landlord shall be held in trust
for the benefit of Landlord and be promptly paid or delivered to Landlord.  Any person or 

 

H-17

 

entity to which this Lease is assigned pursuant to the provisions of
the Bankruptcy Code, shall be deemed, without further act or deed, to have
assumed all of the obligations arising under this Lease on and after the date
of such assignment.  Any such assignee
shall upon demand execute and deliver to Landlord an instrument confirming such
assumption.

 

                E.             Any assignee, sublessee or
transferee of Tenant’s interest in this Lease (all such assignees, sublessees
and transferees being hereinafter referred to as “Transferees”), by accepting
any such Transfer shall be deemed to have assumed Tenant’s obligations
hereunder, and shall be deemed to have assumed liability to Landlord for all
amounts paid to persons other than Landlord by such Transferees.  No Transfer, whether consented to by Landlord
or not or permitted hereunder, shall relieve Tenant of its liability
hereunder.  If an Event of Default occurs
while the Premises or any part thereof are assigned or sublet, then Landlord,
in addition to any other remedies herein provided, or provided by law, may
collect directly from such Transferee all rents payable to Tenant and apply
such rent against any sums due Landlord hereunder.  No such collection shall be construed to
constitute a novation or a release of Tenant from the further performance of
Tenant’s obligations hereunder.

 

                F.             Notwithstanding any provision of
this Lease to the contrary, Tenant may, without Landlord’s consent, but upon
prior reasonable notice to Landlord, assign the Lease or sublet the Premises or
any portion thereof to any person or entity (i) which controls, is
controlled by, or is under common control with Tenant, or (ii) (provided
such person or entity would have a tangible net worth [determined in accordance
with generally accepted accounting principles consistently applied] immediately
following such acquisition that is equal to or greater than the net worth of
Tenant as of the date immediately prior to such acquisition) which acquires
substantially all the assets of Tenant as a going concern (each such corporation,
person or entity described in clauses (i)-(ii) above, an “Affiliate”);
provided, however, that the Affiliate assumes in writing all of Tenant’s
obligations under the Lease.

 

                G.            Landlord
agrees that it shall not unreasonably withhold its consent to any assignment or
subletting proposed to be entered into by Tenant.  In considering whether it should consent to
any subletting or assignment requested by Tenant, Landlord may take into
consideration (among other factors) the credit standing of the proposed assignee
or subtenant, the purpose for which the Premises would be used by the proposed
assignee or subtenant (including whether such use would violate any exclusive
use rights that might be in existence and by which Landlord may be bound, or
violate any deed restrictions, restrictive covenants, covenants, conditions and
restrictions, or the “Alliance Developments Guidelines”, as may then be in
existence, it being understood and agreed that Landlord shall have the right to
refuse its consent if the proposed use by the assignee or subtenant would
result in any such violation), the length of the proposed sublease, the
business reputation of the proposed assignee or subtenant, whether the proposed
assignee’s or subtenant’s operations would involve use of hazardous substances,
and all other relevant factors.  Notwithstanding the foregoing, it is agreed
that Landlord’s determination as to the credit standing and the business
reputation of the proposed assignee or sublessee may be made in Landlord’s sole
and absolute discretion it being understood and agreed that Landlord shall have
the right to refuse its consent if such credit standing or reputation is
unacceptable to Landlord. 
Notwithstanding anything to the contrary contained herein, Landlord, in
its sole and absolute discretion, may refuse to consent to a sublease or
assignment of any portion of the 

 

H-18

 

Premises to (i) any party who is a then current tenant of Landlord
or an affiliate of a then current tenant of Landlord or a then current tenant
of an affiliate of Landlord or an affiliate of a then current tenant of an
affiliate of Landlord, or (ii) any other party who owns property in (or
who is a user or occupant of property in) the Alliance development or the Circle
T development but, in each case, only if Landlord or an affiliate of Landlord
has space (in shell condition or better condition) available (at the time
Landlord’s consent is sought) which is sufficient to satisfy the applicable
needs of the proposed assignee or subtenant and is located within or in the
vicinity of the Alliance development or the Circle T development.

 

                16.           CONDEMNATION.  If any portion of the Project is taken which
in Landlord’s judgment would materially impair the ownership or operation of
the Building or as a result of such taking Landlord’s mortgagee accelerates the
payment of indebtedness secured by the Project, then upon written notice by
Landlord this Lease shall terminate and the rent shall be apportioned as of
such date. If more than twenty-five percent (25%) of the Premises are taken for
any public or quasi-public use under governmental law, ordinance or regulation,
or by right of eminent domain, or by a conveyance in lieu thereof, and the
taking prevents or materially interferes with the use of the Premises for the
purpose for which they were leased to Tenant, this Lease shall terminate and
the rent shall be abated during the unexpired portion of this Lease, effective
on the date of such taking.  If less than
twenty-five percent (25%) of the Premises are taken for any public or
quasi-public use under any governmental law, ordinance or regulation, or by
right of eminent domain, or by a conveyance in lieu thereof, this Lease shall
not terminate (except as may be permitted in the first grammatical sentence of
this Paragraph 16), but the rent payable hereunder during the unexpired portion
of this Lease shall be reduced to such extent as may be fair and reasonable
under all of the circumstances.  All
compensation awarded in connection with or as a result of any of the foregoing
proceedings shall be the property of Landlord; and Tenant hereby assigns any
interest in any such award to Landlord; provided, however, Landlord shall have
no interest in any award made to Tenant for loss of business or goodwill or for
the taking of Tenant’s fixtures and improvements, if a separate award for such
items is made to Tenant.

 

                17.           HOLDING OVER.  At the termination of this Lease by its
expiration or otherwise, Tenant immediately shall deliver possession of the
Premises to Landlord with all repairs and maintenance required herein to be
performed by Tenant completed.  If, for
any reason, Tenant retains possession of the Premises or any part thereof after
such termination, or fails to complete any repairs required hereby, then
Landlord may, at its option, serve written notice upon Tenant that such holding
over constitutes either (i) the creation of a month to month tenancy, upon
the terms and conditions set forth in this Lease, or (ii) creation of a
tenancy at sufferance, in any case upon the terms and conditions set forth in
this Lease; provided, however, that the monthly rental (or daily rental under
(ii)) shall, in addition to all other sums which are to be paid by Tenant
hereunder, whether or not as additional rent, be equal to double the rental
being paid monthly to Landlord under this Lease immediately prior to such
termination (prorated in the case of (ii) on the basis of a 365-day year
for each day Tenant remains in possession). 
If no such notice is served, then a tenancy at sufferance shall be
deemed to be created at the rent in the preceding sentence.  Tenant shall also pay to Landlord all damages
sustained by Landlord resulting from retention of possession by Tenant,
including the loss of any proposed subsequent tenant for any portion of the
Premises.  The provisions of this
paragraph shall not constitute a 

 

H-19

 

waiver by Landlord of any right of re-entry as herein set forth; nor
shall receipt of any rent or any other act in apparent affirmance of the
tenancy operate as a waiver of the right to terminate this Lease for a breach
of any of the terms, covenants, or obligations herein on Tenant’s part to be
performed.  No holding over by Tenant,
whether with or without consent of Landlord, shall operate to extend this Lease
except as otherwise expressly provided. 
The preceding provisions of this Paragraph 17 shall not be
construed as consent for Tenant to retain possession of the Premises in the
absence of written consent thereto by Landlord.

 

                18.           QUIET ENJOYMENT.  Landlord has the authority to enter into this
Lease and so long as Tenant pays all amounts due hereunder and performs all
other covenants and agreements herein set forth, Tenant shall peaceably and
quietly have, hold and enjoy the Premises for the Term hereof without hindrance
from Landlord subject to the terms and provisions of this Lease.  If this Lease is a sublease, then Tenant
agrees to take the Premises subject to the provisions of the prior leases.

 

                19.           EVENTS OF DEFAULT.  The following events (herein individually
referred to as an “Event of Default”) each shall be deemed to be an
event of default by Tenant under this Lease:

 

                A.            Tenant shall fail to pay any
installment of the Base Rent herein reserved when due, or any other payment or
reimbursement to Landlord required herein when due, and such failure shall
continue until the later to occur of (i) a period of five (5) days
from the date such payment was due or (ii) five (5) days after written
notice of delinquency is delivered to Tenant; provided, however, Tenant shall
be entitled to the written notice and opportunity to cure in clause (ii) on
only one (1) occasion during any twelve (12) month period.

 

                B.            Any guarantor of Tenant’s obligations
hereunder shall:  (i) become
insolvent; (ii) admit in writing its inability to pay its debts; (iii) make
a general assignment for the benefit of creditors; (iv) commence any case,
proceeding or other action seeking to have an order for relief entered on its
behalf as a debtor or to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution or
composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or of
any substantial part of its property; or (v) take any action to authorize
or in contemplation of any of the actions set forth above in this Paragraph.

 

                C.            Any case, proceeding or other action
against any guarantor of Tenant’s obligations hereunder shall be commenced
seeking:  (i) to have an order for
relief entered against it as debtor or to adjudicate it a bankrupt or
insolvent; (ii) reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors; (iii) appointment
of a receiver, trustee, custodian or other similar official for it or for all
or any substantial part of its property, and such case, proceeding or other
action (a) results in the entry of an order for relief against it which is
not fully stayed within seven (7) business days after the entry thereof or
(b) shall remain undismissed for a period of forty-five (45) days.

 

H-20

 

                D.            Subject to Paragraph 20K
below, Tenant shall (i) fail to take possession of the Premises upon
substantial completion of the Leasehold Improvements, (ii) vacate, desert,
or abandon all or a substantial portion of the Premises, or threaten to do so
or (iii) fail to continuously operate its business at the Premises for the
permitted use set forth herein, whether or not Tenant is in default in payment
of the rental payments due under this Lease.

 

                E.             Tenant shall fail to discharge (or
bond around as provided in Paragraph 22) any lien placed upon the
Premises in violation of Paragraph 22 hereof within thirty (30) days
after Tenant has received notice of any such lien or encumbrance.

 

                F.             Tenant shall fail to comply with
any term, provision or covenant of this Lease (other than those listed above in
this Paragraph 19), and shall not cure such failure within thirty (30)
days after written notice thereof to Tenant, or such longer time period (not to
exceed ninety (90) days) if Tenant is unable to reasonably cure such failure
within thirty (30) days so long as Tenant commences such cure within thirty
(30) days and diligently pursues such cure to completion.

 

                G.            Tenant, its bankruptcy trustee, or
any entity authorized by court order to act on behalf of Tenant, shall reject
this Lease under 11 U.S.C. sec. 365(a) or any other provision of Title 11
of the United States Code, or the deemed rejection of this Lease by operation
of law under 11 U.S.C. sec. 365(d)(4). 
Any such rejection of this Lease terminates this Lease, without notice
of any kind to Tenant, effective on the later of:  (1) the date Tenant vacates the Premises
following such rejection; (2) the date the Bankruptcy Court with
jurisdiction over Tenant’s bankruptcy case enters an order on its docket
authorizing Tenant to reject this Lease; or (3) the date this Lease is
deemed rejected under 11 U.S.C. sec. 365(d)(4).

 

                H.            Failure to deliver subordination or
attornment instruments or any estoppel certificate within the time period set
forth in Section 21 and Section 24(d) of this Lease and such
failure continues for more than ten (10) days after notice thereof.

 

                20.           REMEDIES.

 

                A.            Upon each occurrence of an Event of
Default, Landlord shall have the option to pursue, without any notice or
demand, any one or more of the following remedies and/or any other remedies to
which Landlord is entitled at law or in equity:

 

                                                                (1)           Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord. 
If Tenant fails to do so, Landlord may, without any further notice and
without prejudice to any other remedy Landlord may have for possession or arrearages
in rental, enter upon and take possession of the Premises and remove Tenant and
its effects without being liable for prosecution or any claim for damages
therefor, and Tenant shall indemnify Landlord for all loss and damage which
Landlord may suffer by reason of such termination, whether through inability to
relet the Premises or otherwise, including any loss of rental for the remainder
of the Term.

 

H-21

 

                                                                (2)           If the Event of Default relates to nonpayment of Base Rent
or any other monetary sum due hereunder, or the desertion, vacation or
abandonment of the Premises, terminate this Lease, in which event Tenant’s
default shall be deemed a total and entire breach of Tenant’s obligations under
this Lease and Tenant immediately shall become liable for damages in an amount
equal to the excess of (i) the total rental for the remainder of the Term,
discounted at the Prime Rate (hereinafter defined) to the then present value,
together with all other expenses incurred by Landlord in connection with Tenant’s
default, all sums due pursuant to Paragraph 20B below, and the unpaid
rental due as of the date of termination, over (ii) the fair market rental
value of the Premises for the balance of the Term, discounted at the Prime Rate
to the then present value.  For the
purposes of clause (i) above, the components of monthly rent (other than
Base Rent) for the remainder of the Term shall be deemed to be equal to the
respective monthly amounts thereof as were due and payable during the month in
which the Lease was terminated.  It is
acknowledged, intended and agreed that the amounts which Landlord is entitled
to recover under this Paragraph 20A(2) constitute liquidated
damages and not a penalty for Tenant’s defaults related to nonpayment of
rental, or the desertion, vacation or abandonment of the Premises.  Such amounts constitute the parties’ best,
good faith, and reasonable estimate of the damages which would be suffered by
Landlord in the event any such default occurs, the exact amount of such damages
being difficult or impractical to calculate.

 

                                                                (3)           Enter upon and take possession of the Premises as Tenant’s
agent without terminating this Lease and without being liable for prosecution
or any claim for damages therefor, and Landlord may relet the Premises as
Tenant’s agent and receive the rental therefor, in which event Tenant shall pay
to Landlord on demand all sums due pursuant to Paragraph 20B below,
together with any deficiency that may arise by reason of such reletting.

 

                                                                (4)           Do whatever Tenant is obligated to do under this Lease and
enter the Premises, without being liable for prosecution or any claim for
damages therefor, to accomplish such purpose. 
Tenant shall reimburse Landlord immediately upon demand for any expenses
which Landlord incurs in thus effecting compliance with this Lease on Tenant’s
behalf, together with interest thereon at the highest lawful rate from the date
Landlord incurs the expense in question until Landlord is reimbursed therefor.

 

                                                                (5)           Require Tenant to pay any rental in quarterly installments
in advance of each calendar quarter during the Term by certified or cashier’s
check.

 

                                                                (6)           Without notice, alter the locks and any other security
device or devices which allow Tenant access to the Premises or the Building of
which the Premises form a part, and Landlord shall not be required to provide a
new key or right of access to Tenant, and restrict or terminate any right to
use parking facilities associated with the Building as well as utility services
to the Premises.  This Paragraph 20A(6) is
intended to and shall supersede the provisions of Section 93.002 of the
Texas Property Code.

 

H-22

 

                                                                (7)           Landlord shall have a duty to mitigate damages under this
Lease to the same extent required under Texas law.

 

                B.            Upon the occurrence of an Event of Default, in addition
to any other sum provided to be paid herein, Tenant also shall be liable for
and shall pay to Landlord:  (i) brokers’
fees incurred by Landlord in connection with reletting the whole or any part of
the Premises; (ii) the costs of removing and storing Tenant’s or other
occupant’s property; (iii) the costs of repairing, altering, remodeling or
otherwise putting the Premises into condition acceptable to a new tenant or
tenants; (iv) all reasonable expenses incurred in marketing the Premises
and (v) all reasonable expenses incurred by Landlord in enforcing or
defending Landlord’s rights and/or remedies. 
If either party hereto institutes any action or proceeding to enforce
any provision hereof by reason of any alleged breach of any provision of this
Lease, the prevailing party shall be entitled to receive from the losing party
all reasonable attorneys’ fees and all court costs in connection with such
proceeding.  If Tenant files a voluntary
petition under any chapter of title 11 of the United States Code, or if an
involuntary petition is filed against Tenant seeking relief under any chapter
of title 11 of the United States Code, Tenant acknowledges that Landlord may,
at its option, retain an attorney to represent Landlord in such bankruptcy case
and all attorneys’ fees and expenses (including expenses of consulting or
testifying expert witnesses) incurred by Landlord in connection with such
bankruptcy case shall be recoverable by Landlord as additional rent under this
Lease and shall constitute part of the cure required under 11 U.S.C. sec.
365(b)(1)(A) if Tenant seeks to assume or assume and assign this Lease.

 

                C.            In the event Tenant fails to make
any payment due hereunder when payment is due (subject to any notice and cure
periods provided herein), to help defray the additional cost to Landlord for
processing such late payments, Tenant shall pay to Landlord on demand a late
charge in an amount equal to five percent (5%) of such payment; and the failure
to pay such amount within five (5) days after demand therefor shall be an
additional Event of Default hereunder. 
The provision for such late charge shall be in addition to all of
Landlord’s other rights and remedies hereunder or at law and shall not be
construed as liquidated damages or as limiting Landlord’s remedies in any
manner.

 

                D.            Exercise by Landlord of any one or
more remedies hereunder granted or otherwise available shall not be deemed to
be an acceptance of surrender of the Premises by Landlord, whether by agreement
or by operation of law, it being understood that such surrender can be effected
only by the written agreement of Landlord and Tenant.  Tenant and Landlord further agree that forbearance
by Landlord to enforce its rights pursuant to this Lease, at law or in equity,
shall not be a waiver of Landlord’s right to enforce one or more of its rights
in connection with that or any subsequent default.

 

                E.             The term “Prime Rate” as
used herein shall mean the per annum “prime rate” of interest as published, on
the date on which this Lease is terminated in accordance with this Paragraph
20, by The Wall Street Journal, Southwest Edition, in its listing of “Money
Rates”, or if The Wall Street Journal is not published on the date on which
this Lease is terminated, then the “prime rate” of interest as published in The
Wall Street Journal on the most recent date prior to the date on which this
Lease is so terminated.

 

 

H-23

                F.             If Landlord fails to perform any of its obligations
hereunder within thirty (30) days after written notice from Tenant specifying
in detail such failure (or if the failure cannot be corrected, through the
exercise of reasonable diligence, within such thirty (30)-day period, if
Landlord does not commence to correct same within such thirty (30)-day period
and thereafter diligently prosecute same to completion), Tenant’s sole and
exclusive remedy shall be an action for damages.  Unless and until Landlord fails to so cure
any default after such notice, Tenant shall not have any remedy or cause of
action by reason thereof.  All
obligations of Landlord hereunder will be construed as covenants, not
conditions; and all such obligations will be binding upon Landlord only to the
extent accruing during the period of its possession of the Premises and not
thereafter.  The term “Landlord” shall
mean only the owner, for the time being of the Premises, and in the event of
the transfer by such owner of its interest in the Premises, such owner shall
thereupon be released and discharged from all covenants and obligations of
Landlord thereafter accruing, but such covenants and obligations shall be
binding during the Term of this Lease upon each new owner for the duration of such
owner’s ownership.  Notwithstanding any
other provision hereof, Landlord shall not have any personal liability
hereunder.  In the event of any breach or
default by Landlord of any term or provision of this Lease, Tenant agrees to
look solely to the equity or interest then owned by Landlord in the Premises or
of the Building of which the Premises are a part; however, in no event, shall
any deficiency judgment of any kind be sought or obtained against Landlord
following Tenant’s realization upon the equity or interest then owned by
Landlord in the Premises or the Building of which the Premises are a part.

 

                G.            If Landlord repossesses the Premises
pursuant to the authority herein granted, then Landlord shall have the right to
(i) keep in place and use or (ii) remove and store, all of the
furniture, fixtures and equipment at the Premises, including that which is
owned by or leased to Tenant at all times prior to any foreclosure thereon by
Landlord or repossession thereof by any landlord thereof or third party having
a lien thereon.  Landlord also shall have
the right to relinquish possession of all or any portion of such furniture,
fixtures, equipment and other property to any person (“Claimant”) who
presents to Landlord a copy of any instrument represented by Claimant to have
been executed by Tenant (or any predecessor of Tenant) granting Claimant the
right under various circumstances to take possession of such furniture,
fixtures, equipment or other property, without the necessity on the part of
Landlord to inquire into the authenticity or legality of said instrument.  The rights of Landlord herein stated shall be
in addition to any and all other rights that Landlord has or may hereafter have
at law or in equity; and Tenant stipulates and agrees that the rights herein
granted Landlord are commercially reasonable.

 

                H.            Notwithstanding anything in this
Lease to the contrary, all amounts payable by Tenant to or on behalf of
Landlord under this Lease, whether or not expressly denominated as rent, shall
constitute rent.

 

                I.              This is a contract under which
applicable law excuses Landlord from accepting performance from (or rendering
performance to) any person or entity other than Tenant.

 

                J.             Subject to the fourth sentence of Paragraph
17 above, but notwithstanding anything to the contrary, neither Landlord
nor Tenant will ever be liable under this Lease for consequential damages,
punitive damages, exemplary damages or special damages.

 

 

 

H-24

 

                K.            Notwithstanding
anything to the contrary contained herein, if an Event of Default exists
hereunder solely because of the event described in Paragraph 19D of this
Lease (i.e., no other Event of Default exists under this Lease except for the
Event of Default described in said Paragraph 19D), and so long as Tenant
keeps the Premises secure from vandalism and unauthorized users, Landlord’s
sole remedy on account of such Event of Default shall be to terminate this
Lease by written notice delivered to Tenant (without pursuing any damages
against Tenant and without Tenant being required to indemnify Landlord against
any damages suffered as a result of any such termination) in which event this
Lease shall terminate and the parties shall have no further rights or
obligations hereunder (other than such rights and obligations as have accrued
as of the effective date of such termination and such rights and obligations as
are expressly provided herein as surviving the expiration or termination of
this Lease).  The limitation on Landlord’s
remedies contained in the immediately preceding sentence shall not apply if
another Event of Default (in addition to the Event of Default described in Paragraph
19D) exists, or if Tenant fails to so keep the Premises secure from
vandalism and unauthorized users, in which event Landlord shall be entitled to
pursue any one or more of its remedies under this Lease, at law and/or in
equity.

 

                21.           MORTGAGES.  Tenant accepts this Lease subject and
subordinate to any mortgages and/or deeds of trust now or at any time hereafter
constituting a lien or charge upon the Premises or the improvements situated
thereon or the Building of which the Premises are a part; provided, however,
that if the mortgagee, trustee, or holder of any such mortgage or deed of trust
elects to have Tenant’s interest in this Lease superior to any such instrument,
then by notice to Tenant from such mortgagee, trustee or holder, this Lease
shall be deemed superior to such lien, whether this Lease was executed before
or after said mortgage or deed of trust. 
Tenant, at any time hereafter within fifteen (15) days after demand
therefor, shall execute any instruments, releases or other documents that may
be required by any mortgagee, trustee or holder for the purpose of subjecting
and subordinating this Lease to the lien of any such mortgage or deed of
trust.  Landlord agrees to obtain and
deliver to Tenant a subordination non-disturbance and attornment agreement in
substantially the form attached hereto as Exhibit “H” and made
a part hereof (“SNDA”) executed by Landlord’s current mortgagee with
respect to the Building.  Tenant agrees
to enter into the SNDA with such mortgagee promptly upon Landlord’s request
therefor.  Notwithstanding the foregoing, the subordination of this Lease to any
mortgage or deed of trust that is hereafter placed upon the Building is
expressly conditioned upon Tenant and the mortgagee or beneficiary under any
such mortgage or deed of trust entering into an SNDA in a form reasonably
acceptable to Tenant (Tenant hereby agreeing that an SNDA substantially in the
form that is attached hereto as Exhibit “H” and made a part hereof is acceptable to Tenant).  Tenant agrees to enter into such SNDA with
any such mortgagee or beneficiary promptly upon Landlord’s request
therefor.  If any future mortgagee or
beneficiary under a mortgage or deed of trust hereafter placed upon the
Building desires to subordinate its mortgage or deed of trust to this Lease,
Tenant agrees that it shall promptly execute such instrument as may be
reasonably required by such mortgagee or beneficiary in order to effect such
subordination.

 

                22.           MECHANIC’S LIENS.  Tenant has no authority, express or implied,
to create or place any lien or encumbrance of any kind or nature whatsoever
upon, or in any manner to bind, the interest of Landlord or Tenant in the
Premises or to charge the rentals payable hereunder for 

 

H-25

 

any claim in favor of any person dealing with Tenant, including those
who may furnish materials or perform labor for any construction or
repairs.  Tenant covenants and agrees
that it will pay or cause to be paid all sums legally due and payable by it on
account of any labor performed or materials furnished in connection with any
work performed on the Premises and that it will save and hold Landlord harmless
from any and all loss, cost or expense based on or arising out of asserted
claims or liens against the leasehold estate or against the right, title and
interest of Landlord in the Premises or under the terms of this Lease.  Tenant agrees to give Landlord immediate
written notice of the placing of any lien or encumbrance against the
Premises.  If any mechanics’ or materialmen’s lien (“M&M Lien”) is ever
asserted or placed against or attaches to the Project or any portion thereof as
a result of any act or omission of Tenant or its agents, then in lieu of paying
the claim relating to such M&M Lien Tenant shall have the right to contest
the assertion, placement or attachment of such M&M Lien so long as (i) prior
to any such contest (and no later than thirty (30) days after such lien has
been filed) Tenant at its sole expense provides to Landlord a bond indemnifying
against such M&M Lien that complies with Chapter 53, Subchapter H of the
Texas Property Code (as amended from time to time) or its successor law, and (ii) Tenant
contests such M&M Lien diligently and in good faith; provided, however, the
foregoing right of Tenant to contest any such M&M Lien shall not impair or
otherwise affect Tenant’s indemnification obligations with respect to such
M&M Lien.  If any lien is asserted
against the Premises due to acts of Landlord or its agents or contractors,
Tenant shall not be obligated to remove such lien (it being agreed that the
removal of such lien shall be Landlord’s obligation).

 

                23.           HAZARDOUS MATERIALS.  Tenant shall never incorporate into, or
dispose of, at, in or under the Premises, the Building or the Land any toxic or
hazardous materials (as defined hereafter). 
Tenant further agrees not to use at, place in, or store at the Premises
any toxic or hazardous materials, except for those toxic or hazardous materials
that are either (a) office supplies, (b) materials stored in the
normal course of Tenant’s business, or (c) kitchen cleaning materials that
are generally considered to be a household cleaner and are purchased in a
container not larger than one (1) gallon and then only if (i) all
such toxic or hazardous materials, supplies and materials are properly labeled
and contained, (ii) all such toxic or hazardous materials are stored,
handled, transported and disposed of in accordance with highest accepted
industry standards and all applicable laws, rules and regulations
(including, without limitation, necessary governing permits obtained by Tenant
in connection with such use), and (iii) if a material safety data sheet is
required under applicable laws to accompany the toxic or hazardous materials,
supplies or materials, a copy of such current material safety data sheet is
provided to Landlord.  For purposes of
this Lease, “toxic or hazardous materials” shall mean hazardous or toxic
chemicals or any materials containing hazardous or toxic chemicals at levels or
content which cause such materials to be classified as hazardous or toxic as
then prescribed by the highest industry standards or by the then current levels
or content as set from time to time by the U.S. Environmental Protection Agency
(“EPA”) or the U.S. Occupational Safety and Health Administration (“OSHA”)
or as defined under 29 CFR 1910 or 29 CFR 1925 or other applicable governmental
laws, rules or regulations.  In the
event there is a spill of toxic or hazardous materials (other than permitted
office supplies and kitchen cleaning supplies) at the Premises, the Building or
the Land, Tenant shall notify Landlord of the method, time and procedure for
any clean-up and removal of such toxic or hazardous materials; and, Landlord
shall have the right to require changes in such method, time or procedure in
Landlord’s sole discretion.  In the event
there is a spill of a toxic or hazardous material that comes from office
supplies in the Premises, 

 

 

H-26

 

 

Tenant shall notify Landlord if the spill would in any way endanger or
pose a threat to Tenant’s employees, Building maintenance or custodial
personnel, other Building tenants or the general public.  In the event of any breach of this provision
by Tenant or any contamination of the Premises, the Building or the Land, by
Tenant, Tenant shall pay all costs for the removal or abatement or clean-up of
any toxic or hazardous materials at the Premises, the Building and the Land
and  Tenant at its sole cost and expenses
shall remove any contamination to a level satisfactory to Landlord , but in no
event to a level and in a manner less than that which complies with the
applicable laws. If any lender or governmental agency shall ever require
testing to ascertain whether or not there has been any release of hazardous
materials during Tenant’s occupancy of the Premises, then the reasonable costs
thereof shall be reimbursed by Tenant to Landlord upon demand as additional
charges if such requirement applies to the Premises.  In addition, Tenant shall execute affidavits,
representations and the like from time to time at Landlord’s request concerning
Tenant’s best knowledge and belief regarding the presence of hazardous
substances or materials on the Premises. Except as may be required by law,
Tenant agrees not to enter into any agreement with any person, including
without limitation any governmental authority regarding the removal of
hazardous materials without the written consent of Landlord.

 

                Landlord
shall have access to, and a right to perform inspections and tests of, the
Premises to determine Tenant’s compliance with environmental requirements, its
obligations under this Paragraph 23, or the environmental condition of
the Premises.  Access shall be granted to
Landlord upon Landlord’s prior notice to Tenant and at such times so as to
minimize, so far as may be reasonable under the circumstances, any disturbance
to Tenant’s operations (further, Tenant may require that during such access
Landlord’s personnel be accompanied by a representative of Tenant [which
representative Tenant agrees to make available for the purpose of such entry]).  Such
inspections and tests shall be conducted at Landlord’s expense, unless such
inspections or tests reveal that Tenant has not complied with any material
environmental requirement, in which case Tenant shall reimburse Landlord for
the reasonable cost of such inspection and tests.  Landlord’s receipt of or satisfaction with
any environmental assessment in no way waives any rights that Landlord holds
against Tenant.  Tenant shall promptly
notify Landlord of any communication or report that Tenant makes to any
governmental authority regarding any possible violation of environmental
requirements or release or threat of release of any hazardous materials onto or
from the Premises.  Except to the extent
prohibited by law, Tenant shall, within five (5) days of receipt thereof,
provide Landlord with a copy of any documents or correspondence received from
any governmental agency or other party relating to a possible violation of
environmental requirements or claim or liability associated with the release or
threat of release of any hazardous materials onto or from the Premises

 

                In all events,
Tenant shall indemnify Landlord in the manner elsewhere provided in this Lease
from any release of hazardous materials on the Premises occurring while Tenant
is in possession thereof or elsewhere in or about the Project if caused by
Tenant or persons acting under Tenant. 
This Paragraph 23 shall survive the expiration or any termination
of this Lease.

 

 

H-27

 

 

                24.           MISCELLANEOUS.

 

                A.            Words of any gender used in this
Lease shall be held and construed to include any other gender, and words in the
singular number shall be held to include the plural, unless the context
otherwise requires.  The captions
inserted in this Lease are for convenience only and in no way define, limit or
otherwise describe the scope or intent of this Lease, or any provision hereof,
or in any way affect the interpretation of this Lease.

 

                B.            The terms, provisions and covenants
contained in this Lease shall run with the land and shall apply to, inure to
the benefit of, and be binding upon, the parties hereto and upon their
respective heirs, executors, personal representatives, legal representatives,
successors and assigns, except as otherwise herein expressly provided.  Landlord shall have the right to transfer and
assign, in whole or in part, its rights and obligations in the Building and
property that are the subject of this Lease. 
Upon any Landlord’s conveyance of the Building or the Land, and the
assignment of its rights under this Lease, to another party (“Successor”),
such Landlord shall be released from its obligations hereunder and the
Successor shall become the “Landlord” hereunder from and after the date of any
such conveyance and assignment and shall thereafter have all of the rights and
obligations of Landlord hereunder, in accordance with the terms hereof, during
the period of its ownership of the Building. 
Each party agrees to furnish to the other, promptly upon demand, a
corporate resolution, proof of due authorization by partners, or other
appropriate documentation evidencing the due authorization of such party to
enter into this Lease.

 

                C.            Neither party shall be held
responsible for delays in the performance of its obligations hereunder (other
than monetary obligations) when caused by material shortages, weather, acts of
God, labor disputes or other causes beyond the reasonable control of such party
(collectively, the “Force Majeure Delays”).

 

                D.            Tenant agrees, from time to time,
within fifteen (15) days after request by Landlord, to deliver to Landlord or
Landlord’s designee, a certificate of occupancy, financial statements and an
estoppel certificate stating (1) that this Lease is in full force and
effect, (2) the date to which rent is paid, (3) that there is no
default on the part of Landlord or Tenant under this Lease, (4) that
Tenant does not have any right of offset, claims or defenses to the performance
of its obligations under this Lease, and (5) such other factual matters
pertaining to this Lease as may be requested by Landlord.

 

                E.             This Lease constitutes the entire
understanding and agreement of Landlord and Tenant with respect to the subject
matter of this Lease, and contains all of the covenants and agreements of
Landlord and Tenant with respect thereto. 
Landlord and Tenant each acknowledge that no representations,
inducements, promises or agreements, oral or written, have been made by
Landlord or Tenant, or anyone acting on behalf of Landlord or Tenant, which are
not contained herein, and any prior agreements, promises, negotiations, or
representations not expressly set forth in this Lease are of no force or
effect.  This Lease may not be altered,
changed or amended except by an instrument in writing signed by both parties
hereto.

 

 

H-28

 

 

                F.             All obligations of Tenant hereunder
not fully performed as of the expiration or earlier termination of the Term of
this Lease shall survive the expiration or earlier termination of the Term
hereof, including without limitation, all payment obligations with respect to
taxes and insurance and all obligations concerning the condition and repair of
the Premises.  Upon the expiration or
termination of this Lease (or termination of Tenant’s right of possession, if
sooner), Tenant agrees to deliver up the Premises in the condition and state of
repair required pursuant to this Lease (reasonable wear and tear and damage by
fire or other casualty excepted).

 

                G.            If any clause or provision of this
Lease is illegal, invalid or unenforceable under present or future laws
effective during the Term of this Lease, then and in that event, it is the
intention of the parties hereto that the remainder of this Lease shall not be
affected thereby, and it is also the intention of the parties to this Lease
that in lieu of each clause or provision of this Lease that is illegal, invalid
or unenforceable, there be added, as a part of this Lease, a clause or
provision as similar in terms to such illegal, invalid or unenforceable clause
or provision as may be possible and be legal, valid and enforceable.

 

                H.            All references in this Lease to “the
date hereof” or similar references shall be deemed to refer to the last date,
in point of time, on which all parties hereto have executed this Lease.

 

                I.              Tenant represents and warrants
that it has dealt with no broker, agent or other person in connection with this
transaction and that no broker, agent or other person brought about this
transaction, other than the brokers or agents identified in the Basic Lease
Information, and Tenant agrees to indemnify and hold Landlord harmless from and
against any claims by any other broker, agent or other person claiming a
commission or other form of compensation by virtue of having dealt with Tenant
with regard to this leasing transaction. 
Landlord will pay a commission to the brokers or agents identified in
the Basic Lease Information pursuant to a separate written agreement.

 

                J.             If and when included within the
term “Landlord”, as used in this instrument, there is more than one person,
firm or corporation, all shall jointly arrange among themselves for their joint
execution of a notice specifying some individual at some specific address for
the receipt of notices and payments to Landlord.  If and when included within the term “Tenant”,
as used in this instrument, there is more than one person, firm or corporation,
all shall jointly arrange among themselves for their joint execution of a
notice specifying some individual at some specific address within the continental
United States for the receipt of notices and payments to Tenant.  All parties included within the terms “Landlord”
and “Tenant”, respectively, shall be bound by notices given in accordance with
the provisions of Paragraph 25 hereof to the same effect as if each had
received such notice.

 

                K.            By taking possession of the
Premises, Tenant shall be deemed to have: (a) acknowledged that the
Premises and the improvements to be constructed pursuant to Exhibit “C”
attached hereto are substantially complete except for “punch list” items (if
any) and are accepted “as is” and “with all faults”; (b) accepted the
Premises as suitable for the purposes for which the Premises are leased; and (c) acknowledged
that the Premises are in a good and satisfactory condition.  Landlord expressly disclaims, and Tenant
hereby waives to the full extent 

 

 

H-29

 

 

permitted by law, any implied warranty that the Premises or the
Building are suitable for Tenant’s intended commercial purpose, and any and all
other implied warranties (whether arising by virtue of statute, case law or
otherwise).  The foregoing shall not be
construed to relieve Landlord from its obligations which are expressly set
forth in this Lease.

 

                L.             Submission of this Lease shall not
be deemed to be a reservation of the Premises. 
Landlord shall not be bound hereby until its delivery to Tenant of an
executed copy hereof signed by Landlord, already having been signed by Tenant,
and until such delivery Landlord reserves the right to exhibit and lease the
Premises to other prospective tenants. 
Notwithstanding anything contained herein to the contrary, Landlord may
withhold delivery or possession of the Premises from Tenant until such time as
Tenant has paid to Landlord the security deposit required by Paragraph 2B
hereof and one month’s rent as set forth in Paragraph 2A hereof.

 

                M.           Landlord and Tenant agree that the
terms and conditions of this Lease are confidential and the parties hereto
agree not to disclose the terms of this Lease to any third party (other than to
its attorneys and accountants and other than to parties who propose to purchase
or finance the Building, or the Project of which the Building forms a part, or
who propose to become investors in Landlord) except as may be required by law
or by the order of a court of competent jurisdiction.

 

                N.            [Intentionally Omitted].

 

                O.            Tenant agrees that after the
Commencement Date Landlord or an affiliate of Landlord may include Tenant’s
name and logo in marketing literature for the Alliance development, the Circle
T development, and other developments owned and/or operated by Landlord or an
affiliate of Landlord, for the limited purpose of informing third parties that
Tenant is occupying the Project or the larger development of which the Project
is a part.

 

                25.           NOTICES.  Each provision of this instrument or of any
applicable governmental laws, ordinances, regulations and other requirements
with reference to the sending, mailing or delivering of notice or the making of
any payment by Landlord to Tenant, or with reference to the sending, mailing or
delivering of any notice or the making of any payment by Tenant to Landlord,
shall be deemed to be complied with when and if the following steps are taken:

 

                (a)           All rent and other payments required
to be made by Tenant to Landlord hereunder shall be payable to Landlord at the
address for Landlord set forth in the Basic Lease Information or at such other
address as Landlord may specify from time to time by written notice delivered
in accordance herewith.  Tenant’s
obligation to pay rent and any other amounts to Landlord under the terms of
this Lease shall not be deemed satisfied until such rent and other amounts have
been actually received by Landlord.  In
addition to Base Rent due hereunder, all sums of money and all payments due
Landlord hereunder shall be deemed to be additional rental owed to Landlord.

 

 

H-30

 

 

                (b)           All payments required to be made by Landlord to Tenant
hereunder shall be payable to Tenant at the address set forth in the Basic
Lease Information, or at such other address within the continental United
States as Tenant may specify from time to time by written notice delivered in
accordance herewith.

 

                (c)           Any written notice or document
required or permitted to be delivered hereunder shall be deemed to be delivered
and received, whether actually received or not, when deposited, postage
prepaid, in the United States Mail, Certified or Registered Mail, or with a reputable
overnight courier service (such as Federal Express or UPS), addressed to the
parties hereto at the respective addresses set out in the Basic Lease
Information, or at such other address as they have theretofore specified by
written notice delivered in accordance herewith.

 

                26.           LANDLORD’S LIEN WAIVED.  Landlord waives all constitutional, statutory
and contractual landlords’ liens.  Within
thirty (30) days after written request from Tenant (but not more than once in
any calendar year), Landlord will confirm such waiver in writing.

 

                27.           SECURITY
SERVICE.  Tenant acknowledges and agrees
that, while Landlord may (but shall not be obligated to) patrol the Project,
Landlord is not providing any security services with respect to the Premises
and that Landlord shall not be liable to Tenant for, and Tenant waives any
claim against Landlord with respect to, any loss by theft or any other damage
suffered or incurred by Tenant in connection with any unauthorized entry into
the Premises or any other breach of security with respect to the Premises.

 

                28.           GUARANTY OF LEASE.  As a condition precedent to Landlord’s
obligations hereunder, Tenant shall cause Guarantor to guarantee this Lease on
the form approved by Landlord.

 

                29.           ADDITIONAL PROVISIONS.  See Exhibits “A” — “H” attached
hereto and incorporated by reference herein.

 

[signatures on the following pages]

 

 

H-31

 

 

 

                EXECUTED
BY LANDLORD, this 7 day of March, 2008.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ALLIANCE GATEWAY NO. 23,
  LTD.,

  
	
   

  	
  a Texas limited
  partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Hillwood Alliance Management, L.P.,

  
	
   

  	
   

  	
   

  	
  a Texas limited partnership,

  
	
   

  	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Hillwood Alliance GP, LLC,

  
	
   

  	
   

  	
   

  	
   

  	
  a Texas limited liability company,

  
	
   

  	
   

  	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Michael K. Berry

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  
									

 

[Tenant’s signature on the following page]

 

 

H-32

 

 

                EXECUTED
BY TENANT, this 7 day of March, 2008.

 

	
   

  	
  TENANT:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ENTECH, INC.

  	
   

  
	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry L. Crawford

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
				

 

 

H-33Exhibit 10.23

 

LEASE GUARANTY

 

THIS LEASE GUARANTY (“Guaranty”)
is made this    7    day of  March             , 2008, by the undersigned
(hereinafter referred to as “Guarantor”, whether one or more) in favor
of Alliance Gateway No. 23, Ltd., a Texas limited partnership (“Landlord”).

 

FOR VALUE RECEIVED, Guarantor
hereby unconditionally, irrevocably and absolutely guarantees to Landlord the
prompt and full payment and performance, when due, subject to any notice and
cure rights of Tenant set forth in the Lease, of all obligations and covenants
of ENTECH, Inc. (“Tenant”), fixed or contingent, arising out of the
Lease Agreement dated                                                                ,
2008, executed by and between Tenant and Landlord and any and all renewals,
extensions, amendments, and modifications thereof (collectively, the “Lease”),
or which Tenant, or its successors or assigns, may in any other manner now or
at any time hereafter owe Landlord in connection with the Lease, including, but
not limited to, rent, taxes, insurance, operating expenses, maintenance costs,
damages and expenses resulting from Tenant’s default under the Lease, interest
and collection costs (collectively, the “Obligations”).

 

1.             CONTINUING GUARANTY.  This is a continuing Guaranty and shall apply
to the Obligations and any renewals, extensions, amendments, modifications,
waivers and transfers thereof.

 

2.             OTHER REMEDIES.  Landlord shall not be required to pursue any
other remedies before invoking the benefits of this Guaranty; specifically,
Landlord shall not be required to take any action against Tenant or any other
person, to exhaust its remedies against any other guarantor of the Obligations,
any collateral or other security, or to resort to any balance of any deposit
account or credit on the books of Landlord in favor of Tenant or any other
person.

 

3.             OBLIGATIONS NOT IMPAIRED.  Prior to performance and satisfaction in full
of the Obligations, the liability of Guarantor under this Guaranty shall not be
released or impaired without the prior written consent of Landlord, except as
provided in Section 18 hereof. 
Without limiting the generality of the foregoing, the liability of
Guarantor shall not be released or impaired on account of any of the following
events:

 

(a)           the voluntary or involuntary
liquidation, sale or other disposition of all or substantially all of the
assets of Tenant, or any receivership, insolvency, bankruptcy, reorganization
or other similar proceedings affecting Tenant or any of its assets;

 

(b)           the addition of a new guarantor or
guarantors;

 

(c)           any bankruptcy or insolvency
proceedings against or by Tenant, its property, or its estate or any
modification, discharge or extension of the Obligations resulting from the
operation of any present or future provision of the United States Bankruptcy
Code or any other similar federal or state statute, or from the decision of any
court, it being the intention hereof that Guarantor shall remain liable on the
Obligations notwithstanding any act, omission, order, judgment or event which
might, but for the provisions hereof, otherwise operate as a legal or equitable
discharge of Guarantor;

 

 

 

 

(d)           Landlord’s failure to use diligence
in preserving the liability of any person on the Obligations, or in bringing
suit to enforce collection of the Obligations;

 

(e)           the substitution or withdrawal of
collateral, or release of collateral, or the exercise or failure to exercise by
Landlord of any right conferred upon it herein or in any collateral agreement;

 

(f)            if Tenant is not liable for any of
the Obligations because the act of creating the Obligations is ultra vires, or
the officers or persons creating the Obligations acted in excess of their
authority, or for any reason the Obligations cannot be enforced against Tenant;

 

(g)           any payment by Tenant to Landlord if
such payment is held to constitute a preference under the bankruptcy laws, or
if for any other reason Landlord is required to refund such payment to Tenant
or pay the amount thereof to any other party;

 

(h)           if this Guaranty is ever deemed
invalid or unenforceable as to the Guarantor;

 

(i)            any extension, renewal, amendment,
or modification of the Lease; or

 

(j)            any assignment of the Lease or
subletting of all or any portion of the premises leased pursuant to the Lease
except as expressly permitted therein without Landlord’s consent.

 

4.             BENEFIT TO GUARANTOR.  Guarantor acknowledges and warrants that it
derives or expects to derive financial and other advantage and benefit,
directly or indirectly, from the Lease, the Obligations and the release of
collateral or other relinquishment of legal rights made or granted or to be
made or granted by Landlord to Tenant. 
Guarantor acknowledges that, in entering into the Lease, Landlord is
relying on Guarantor’s agreements contained in this Guaranty and on Guarantor’s
creditworthiness.  Guarantor acknowledges
that Landlord would not have entered into the Lease without Guarantor’s
guarantee of the Obligations pursuant to the terms hereof.

 

5.             JOINT AND SEVERAL
LIABILITY.  Unless the
context clearly indicates otherwise, “Guarantor” shall mean the guarantor
hereunder, or any of them, if more than one. 
The obligations of said guarantors hereunder if more than one, shall be
joint and several.  Suit may be brought
against said guarantors jointly and severally, and against any one or more of
them, or less than all, without impairing the rights of Landlord against the
others of said guarantors; and Landlord may compromise with any one of said
guarantors for such sums or sum as it may see fit and release such of said
guarantors from all further liability to Landlord for such indebtedness without
impairing the right of Landlord to demand and collect the balance of such
indebtedness from others of said guarantors not so released; but it is agreed
among said guarantors themselves, however, that such compromising and release
shall not impair the rights and obligations of said guarantors as among
themselves.

 

6.             CHANGE IN
COMPOSITION.  Should the
status, composition, structure or name of Tenant change, including, but not
limited to, by reason of a merger, dissolution, 

 

 

2

 

 

consolidation or
reorganization, this Guaranty shall continue and also cover the indebtedness
and Obligations of Tenant under the new status, composition structure or name
according to the terms hereof.  If Tenant
is a general or limited partnership, no termination of said partnership, nor
withdrawal therefrom by, or termination of any ownership interest therein owned
by, any general or limited partner of such partnership shall alter, limit or
modify Guarantor’s obligations set forth in this Guaranty or otherwise affect
this Guaranty in any manner whatsoever, all of which obligations of Guarantor
shall remain in effect as herein written.

 

7.             WAIVER AND
SUBROGATION OF GUARANTOR’S RIGHTS AGAINST TENANT.  Until all of Tenant’s obligations under the
Lease are fully performed, Guarantor

 

a.                                       waives
any rights that Guarantor may have against Tenant by reason of any one or more
payments or acts in compliance with the obligations of Guarantor under this Guaranty;
and

 

b.                                      subordinates
any liability or indebtedness of Tenant held by Guarantor to the obligations of
Tenant to Landlord under the Lease.

 

8.             DEATH OR DISSOLUTION OF
GUARANTOR.  Upon the
death, dissolution or bankruptcy of Guarantor, the liability of Guarantor shall
continue against its assets as to all Obligations which shall have been
incurred by Tenant.

 

9.             FINANCIAL STATEMENTS.  The Guarantor warrants and represents to
Landlord that all financial statements heretofore delivered by Guarantor to Landlord
are true and correct in all material respects and there are no material adverse
changes with respect thereto as of the date hereof.  Guarantor further agrees to deliver true,
correct and complete current, audited financial statements (which shall include,
at a minimum, a balance sheet, profit and loss statement), bank references and
Dun & Bradstreet reports on Guarantor, if available within ten (10) days
after the same are publicly released and ten (10) business days written
notice from Landlord.

 

10.           WAIVER OF NOTICE.  Guarantor waives diligence on the part of
Landlord in the collection and enforcement of the Obligations, protest, and all
extensions that may be granted to Tenant with respect thereto.  Guarantor waives notice of acceptance of this
Guaranty.  Guarantor additionally waives
grace, demand, presentment, notice of demand and all other notices (to the
extent allowed by law).

 

11.           LIMITATION ON INTEREST.  To the extent that any law limiting the
amount of interest that may be contracted for, charged or received is
applicable to the indebtedness of Guarantor under this Guaranty, no provision
of this Guaranty shall require the payment or permit the collection of any sum
in excess of the maximum lawful amount of interest applicable to Guarantor’s
indebtedness under this Guaranty.  If any
sum in excess of the maximum lawful amount applicable to Guarantor’s
indebtedness under this Guaranty is provided for herein, the provision of this
paragraph shall govern, and Guarantor shall not be obligated to pay any sum in
excess of the maximum lawful amount applicable to Guarantor’s indebtedness
under this Guaranty.  The intention of
Guarantor and Landlord hereunder is to comply with all laws applicable to this
Guaranty and Guarantor’s liability hereunder.

 

 

3

 

12.           MODIFICATION OR CONSENT.  No modification, consent or waiver of any
provision of this Guaranty, nor consent to any departure by Guarantor
therefrom, shall be effective unless the same shall be in writing and signed by
Landlord, and then shall be effective only in the specific instance and for the
purpose for which given.  No notice to or
demand on Guarantor, in any case shall, of itself, entitle Guarantor to any other
or further notice or demand in similar or other circumstances.  No delay or omission by Landlord in
exercising any power or right hereunder shall impair any such right or power or
be construed as a waiver thereof or any acquiescence therein, nor shall any
single or partial exercise of any such power preclude other or further exercise
thereof or the exercise of any other right or power hereunder.  All rights and remedies of Landlord hereunder
are cumulative of each other and of every other right or remedy which Landlord
may otherwise have at law or in equity or under any other contract or document,
and the exercise of one or more rights or remedies shall not prejudice or
impair the concurrent or subsequent exercise of other rights or remedies.

 

13.           INDUCEMENT TO LANDLORD.  Guarantor acknowledges that this Guaranty is
given to induce Landlord to enter into the Lease and to extend credit to Tenant
which would not be extended except in reliance upon this Guaranty.

 

14.           ATTORNEYS’ FEES.  If a lawsuit is instituted in connection with
this Guaranty, then Guarantor agrees to pay to Landlord all expenses incurred
in connection with such lawsuit (including, but not limited to, reasonable
attorneys’ fees and costs of court).

 

15.           SUCCESSORS AND ASSIGNS.  This Guaranty is for the benefit of Landlord,
and its successors or assigns.  Landlord
may assign its rights hereunder in whole or in part; and, upon any such
assignment, all the terms and provisions of this Guaranty shall inure to the
benefit of such assignee, to the extent so assigned.  The liability of Guarantor hereunder shall be
binding upon all heirs, estates, executors, administrators, legal
representatives, successors and assigns of Guarantor.

 

16.           HEADINGS.  The section headings hereof are inserted for
convenience of reference only and shall not alter, define or be used in
construing the text of this instrument.

 

17.           PLACE OF PERFORMANCE.  Guarantor agrees that this agreement is
performable in Tarrant County, Texas. 
Suit on this Guaranty may be brought in any state or federal court in
Tarrant County, Texas and Guarantor waives the right to be sued elsewhere.  This Guaranty shall be deemed to have been
made under and shall be governed by the laws of the State of Texas in all
respects.

 

18.           TERM.  This Guaranty shall terminate only when all
of the Obligations have been fully performed and satisfied.

 

19.           GUARANTY OF PAYMENT AND
PERFORMANCE.  This is a
guaranty of payment and performance and not a guaranty of collection.

 

20.           PAST DUE AMOUNTS.  All past due payments of the Obligations
shall bear interest at the lesser of (a) the maximum lawful rate, or (b) eighteen
percent (18%).

 

 

4

 

21.           REPRESENTATIONS.  Guarantor represents and warrants to Landlord
that (i) Guarantor has executed this Guaranty of its free will and accord;
(ii) Guarantor has read and understands the terms of this Guaranty and the
Lease; (iii) Guarantor has had the opportunity to have this Guaranty and
the Lease reviewed by an attorney of Guarantor’s choice; and (iv) this
Guaranty is duly authorized and valid, and is binding upon and enforceable
against Guarantor.

 

22.           ENTIRE AGREEMENT.  Guarantor acknowledges and agrees that this
Guaranty accurately represents and contains the entire agreement between
Guarantor and Landlord with respect to the subject matter hereof, that
Guarantor is not relying, in the execution of this Guaranty, on any
representations (whether written or oral) made by or on behalf of Landlord
except as expressly set forth in this Guaranty, and that any and all prior
statements and/or representations made by or on behalf of Landlord to Guarantor
(whether written or oral) in connection with the subject matter hereof are
merged herein.  This Guaranty shall not
be waived, altered, modified or amended as to any of its terms or provisions
except in writing duly signed by Landlord and Guarantor.

 

23.           SEVERABILITY.  A determination that any provision of this
Guaranty is unenforceable or invalid shall not affect the enforceability or
validity of any other provision.

 

24.           WAIVER OF RIGHT TO
JURY TRIAL.  GUARANTOR, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY KNOWINGLY,
INTENTIONALLY, IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY, WITH AND UPON THE
ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES ALL RIGHT
TO A TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO THIS GUARANTY OR THE LEASE OR ANY
CONDUCT, ACT, FAILURE TO ACT OR OMISSION OF OR BY LANDLORD OR GUARANTOR, OR ANY
OF THEIR RESPECTIVE DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS
OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LANDLORD OR GUARANTOR, IN
EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE,
OR IN THE ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS OF THIS GUARANTY OR THE
LEASE.  IT IS AGREED AND UNDERSTOOD THAT
THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL
PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO
ARE NOT PARTIES TO THIS GUARANTY.  THIS
WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY GUARANTOR, AND GUARANTOR
HEREBY REPRESENTS THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY
ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY
OR NULLIFY ITS EFFECT.  GUARANTOR FURTHER
REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS
GUARANTY AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS
HAD THE OPPORTUNITY TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF
ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER
WITH COUNSEL.  Neither this provision nor
any provision in the Lease regarding waiver of jury trial or submission to jurisdiction
or venue in any court is intended or shall be construed to be in derogation of
any provision herein or in the Lease for arbitration of any controversy or
claim.

 

 

5

 

25.           STATE SPECIFIC
PROVISIONS.  To the extent
allowed by law, this Guaranty shall be effective as a waiver of, and Guarantor
waives, any and all rights to which Guarantor may otherwise have been entitled
under any suretyship laws or similar laws in effect from time to time
including, but not limited to, Chapter 34 of the Texas
Business and Commerce Code, Rule 31 of the Texas Rules of Civil Procedure, and Section 17.001
of the Texas Civil Practice &
Remedies Code.

 

[signatures on the following page]

 

 

6

 

IN WITNESS WHEREOF, Guarantor
has executed this Guaranty as of the day and year first written above.

 

	
   

  	
   

  	
  GUARANTOR:

  
	
   

  	
   

  	
   

  
	
  ADDRESS OF GUARANTOR:

  	
   

  	
  WorldWater & Solar Technologies Corp.,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Larry L. Crawford

  
	
  200 Ludlow Drive, Ewing, NJ 08638

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  THE STATE OF

  	
   

  	
  §

  	
   

  	
   

  
	
   

  	
   

  	
  §

  	
   

  	
   

  
	
  COUNTY OF

  	
   

  	
  §

  	
   

  	
   

  
									

 

This instrument was
acknowledged before me on the         
day of
                        ,
2008, by                                             
                                                                               
of WorldWater & Solar Technologies Corp., on behalf of said
corporation.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary Public, State of ______________

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  My Commission Expires:

  	
   

  	
  Notary’s Printed/Typed Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
				

 

 

7

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