Document:

Exhibit 10(h)

 

SUMMARY DESCRIPTION OF TRUSTEES’ COMPENSATION

 

The compensation paid to
each Individual Trustee and the Corporate Trustee is set forth in the Amendment
to the Agreement of Trust, dated as of October 25, 1982 (the “Amendment”).  The Amendment is filed as Exhibit 3(a) to
the Form 10-K.

 

Pursuant to the Amendment,
each Individual Trustee receives at least $20,000 in annual compensation for
services as Trustee.  Each year, annual
Trustee compensation is adjusted up or down (but not below $20,000) in
accordance with changes from the November 1981 level of 295.5 (the “1981
Escalation Level”) in the All Commodities Producer Price Index (with 1967 = 100
as a base).  The All Commodities Producer
Price Index is published by the U.S. Department of Labor.  The adjustment is made at the end of each
fiscal year and is calculated on the basis of the proportion between (a) the
level of such index for the November preceding the end of such fiscal
year, and (b) the 1981 Escalation Level. 
Each of the Individual Trustees received $36,340 in cash compensation
for services to the Trust during the fiscal year ended January 31, 2008.

 

Also pursuant to the
Amendment, Deutsche Bank Trust Company Americas, as the Corporate Trustee,
receives annual compensation in an amount equal to the greater of (i) $20,000,
or such other amount determined in accordance with the adjustments described in
the preceding paragraph, or (ii) one quarter of one percent (1/4 of 1%) of
the Trust Moneys, exclusive of proceeds of sale of any part of the Trust Estate
(as such terms are defined in the Agreement of Trust), received by the Trustees
and distributed to Trust Unitholders. 
The Corporate Trustee received $36,340 in cash compensation pursuant to
this provision for the fiscal year ended January 31, 2008.

 

Additionally, each year the Corporate Trustee receives
$62,500 (or more, if unanimously approved by the Individual Trustees) to cover
clerical and administrative services to Mesabi Trust other than services
customarily performed by a registrar or transfer agent.  In fiscal year 2008, the Trust paid the
Corporate Trustee $62,500 for such services.Exhibit 10.7
 

LEASE AGREEMENT

 

 

BY AND BETWEEN

 

 

DESTA FIVE PARTNERSHIP, LTD.

 

 

As LANDLORD,

 

 

and

 

 

MATINEE MEDIA CORP.

 

 

As TENANT

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I
  - LEASED PREMISES

  	
  1

  
	
  Section 1.01

  	
  Leased Premises

  	
  1

  
	
  Section 1.02

  	
  Lease Grant

  	
  1

  
	
  Section 1.03

  	
  Building Core and Shell

  	
  1

  
	
  ARTICLE
  II- LEASE TERM

  	
  2

  
	
  Section 2.01

  	
  Lease Term

  	
  2

  
	
  Section 2.02

  	
  Holding Over

  	
  2

  
	
  ARTICLE
  III – RENT

  	
  3

  
	
  Section3.01

  	
  Base Rent

  	
  3

  
	
  Section 3.02

  	
  Additional Rent

  	
  3

  
	
  Section 3.03

  	
  Prepaid Rent

  	
  7

  
	
  Section 3.04

  	
  Rent Payments

  	
  7

  
	
  Section 3.05

  	
  Security Deposit

  	
  8

  
	
  ARTICLE
  IV - UTILITIES AND SERVICES

  	
  8

  
	
  Section 4.01

  	
  Services to be Provided

  	
  8

  
	
  Section 4.02

  	
  Additional Services

  	
  10

  
	
  Section 4.03

  	
  Tenant’s Obligations

  	
  10

  
	
  Section 4.04

  	
  Service Interruptions

  	
  10

  
	
  Section 4.05

  	
  Modification

  	
  11

  
	
  ARTICLE V
  - USE AND OCCUPANCY

  	
  12

  
	
  Section 5.01

  	
  Use and Occupancy

  	
  12

  
	
  Section 5.02

  	
  Rules and Regulations

  	
  13

  
	
  Section 5.03

  	
  Quiet Enjoyment

  	
  14

  
	
  ARTICLE
  VI - REPAIRS, MAINTENANCE AND ALTERATIONS

  	
  14

  
	
  Section 6.01

  	
  Repair and Maintenance by
  Tenant

  	
  14

  
	
  Section 6.02

  	
  Alterations and Additions
  by Tenant

  	
  14

  
	
  Section 6.03

  	
  Mechanics’ Liens -
  Tenant’s Obligations

  	
  16

  
	
  ARTICLE
  VII - INSURANCE, FIRE AND CASUALTY

  	
  16

  
	
  Section 7.01

  	
  Tenant’s Insurance

  	
  16

  
	
  Section 7.02

  	
  Landlord’s Insurance

  	
  17

  
	
  Section 7.03

  	
  Fire or Other Casualty

  	
  17

  
	
  Section 7.04

  	
  Waiver of Subrogation

  	
  19

  
	
  ARTICLE
  VIII - CONDEMNATION

  	
  19

  
	
  ARTICLE
  IX - INDEMNIFICATIONS AND WAIVERS

  	
  20

  
	
  Section 9.01

  	
  Limitations on Liability
  of Landlord: Waiver

  	
  20

  
	
  Section 9.02

  	
  Tenant’s Indemnification
  of Landlord; Assumption; Employees’ Claims

  	
  21

  
	
  Section 9.03

  	
  No Implied Waiver

  	
  22

  
	
  Section 9.04

  	
  Waiver by Tenant

  	
  22

  
	
  Section 9.05

  	
  Hazardous Materials

  	
  23

  

 

ii

 

	
  ARTICLE X
  - ASSIGNMENT AND SUBLETTING

  	
  24

  
	
  Section 10.01

  	
  No Assignment or
  Subletting to Unaffiliated Parties Without Consent

  	
  24

  
	
  Section 10.02

  	
  Landlord’s Consent

  	
  24

  
	
  ARTICLE
  XI- DEFAULT

  	
  25

  
	
  Section 11.01

  	
  Default

  	
  25

  
	
  Section 11.02

  	
  Landlord’s Lien

  	
  28

  
	
  Section 11.03

  	
  Mitigation of Damages

  	
  29

  
	
  ARTICLE
  XII - MISCELLANEOUS PROVISIONS

  	
  30

  
	
  Section 12.01

  	
  Rights Reserved by
  Landlord

  	
  30

  
	
  Section 12.02

  	
  Taxes on Tenant’s Property

  	
  32

  
	
  Section 12.03

  	
  Attorneys’ Fees and Legal
  Expenses

  	
  33

  
	
  Section 12.04

  	
  Subordination

  	
  33

  
	
  Section 12.05

  	
  Estoppel Certificates

  	
  34

  
	
  Section 12.06

  	
  Financial Statements

  	
  34

  
	
  Section 12.07

  	
  Notices

  	
  34

  
	
  Section 12.08

  	
  Business Purpose

  	
  35

  
	
  Section 12.09

  	
  Severability

  	
  35

  
	
  Section 12.10

  	
  No Merger

  	
  35

  
	
  Section 12.11

  	
  Force Majeure

  	
  35

  
	
  Section 12.12

  	
  Gender

  	
  35

  
	
  Section 12.13

  	
  Joint and Several
  Liability/Personal Liability

  	
  36

  
	
  Section 12.14

  	
  No Representations

  	
  36

  
	
  Section 12.15

  	
  Entire Agreement;
  Amendments

  	
  36

  
	
  Section 12.16

  	
  Section Headings

  	
  36

  
	
  Section 12.17

  	
  Binding Effect

  	
  36

  
	
  Section 12.18

  	
  Counterparts

  	
  36

  
	
  Section 12.19

  	
  Rental Tax

  	
  36

  
	
  Section 12.20

  	
  No Personal Liability of
  Landlord

  	
  37

  
	
  Section 12.21

  	
  Authority to Sign Lease

  	
  37

  
	
  Section 12.22

  	
  Execution and Approval of
  Lease

  	
  37

  
	
  Section 12.23

  	
  Confidentiality

  	
  37

  
	
  ARTICLE
  XIII - ADDITIONAL AGREEMENTS

  	
  38

  
	
  Section 13.01

  	
  Parking

  	
  38

  
	
  Section 13.02

  	
  Right of Relocation

  	
  40

  
	
  ARTICLE
  XIV - EXHIBITS AND ATTACHMENTS

  	
  40

  

 

iii

 

BASIC LEASE
PROVISIONS

 

	
  Landlord:

  	
   

  	
  Desta Five Partnership, Ltd., a Texas
  limited partnership

  
	
   

  	
   

  	
   

  
	
  Landlord’s Address:

  	
   

  	
  6 Desta Drive, Suite 6500

  
	
   

  	
   

  	
  Midland, Texas 79705

  
	
   

  	
   

  	
  Attn: Mr. L. Paul Latham

  
	
   

  	
   

  	
  Telephone
  No. (432) 688-3212

  
	
   

  	
   

  	
  Fax
  No. (432) 688-3247

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with copy to:

  
	
   

  	
   

  	
  Desta
  Five Partnership, Ltd.

  
	
   

  	
   

  	
  2700
  Via Fortuna, Suite 140

  
	
   

  	
   

  	
  Austin, Texas 78746

  
	
   

  	
   

  	
  Attn: Mr. Rod Arend

  
	
   

  	
   

  	
  Telephone
  No. (512) 306-9093

  
	
   

  	
   

  	
  Fax
  No. (512) 306-9112

  
	
   

  	
   

  	
   

  
	
  Tenant:

  	
   

  	
  Matinee
  Media Corp., a Texas corporation

  
	
   

  	
   

  	
   

  
	
  Tenant’s Address prior

  	
   

  	
   

  
	
  to commencement date:

  	
   

  	
  2100 Northland Drive

  
	
   

  	
   

  	
  Austin, Texas 78756

  
	
   

  	
   

  	
  Telephone
  No.: (512) 467-0643

  
	
   

  	
   

  	
  Fax No.: (512) 458-2972

  
	
   

  	
   

  	
   

  
	
  Tenant’s  Address after

  	
   

  	
   

  
	
  commencement date:

  	
   

  	
  2801 Via Fortuna., Suite 675

  
	
   

  	
   

  	
  Austin, Texas 78746

  
	
   

  	
   

  	
  Telephone
  No.: (512) 329-5843

  
	
   

  	
   

  	
  Fax
  No. (512) 329-5844

  
	
   

  	
   

  	
   

  
	
  Land:

  	
   

  	
  The land described on Exhibit A
  attached hereto (the “Land”).

  
	
   

  	
   

  	
   

  
	
  Building:

  	
   

  	
  The office building and related parking
  garage locally known as Terrace VII, 2801 Via Fortuna, Austin, Texas 78746.

  
	
   

  	
   

  	
   

  
	
  Leased Premises:

  	
   

  	
  Suite 675 on the Sixth (6th) floor of
  the Building, which is generally depicted on the floor plan which is attached
  hereto as Exhibit B. As more fully set forth in
  Section 1.01, the Rentable Area of the Leased Premises includes not only
  the useable floor area of the Leased Premises, but also, a pro rata
  allocation of a portion of the Common Areas of the Building. For the purposes
  of this Lease the Leased Premises shall comprise 1,270 square feet of
  Rentable Area.

  

 

iv

 

	
  Total Building Area:

  	
   

  	
  192,000 square feet of Rentable Area.

  
	
   

  	
   

  	
   

  
	
  Base Rent:

  	
   

  	
  Beginning on the Commencement Date, Base
  Rent under this Lease will be payable in an amount set forth below:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lease Months

  	
   

  	
  Annual Rate

  	
   

  	
  Monthly Installments

  
	
   

  	
   

  	
  1-3

  	
   

  	
  $

  	
   0.00

  	
   

  	
  $

  	
   0.00

  
	
   

  	
   

  	
  4-58

  	
   

  	
  $

  	
   15.90

  	
   

  	
  $

  	
   1,682.75

  
	
   

  	
   

  	
   

  
	
  Rent:

  	
   

  	
  The Base Rent, Additional Rent (hereinafter
  defined), and all other amounts payable by Tenant to Landlord under this
  Lease.

  
	
   

  	
   

  	
   

  
	
  Tenant’s Percentage:

  	
   

  	
  Sixty-six hundredths
  percent (0.66%)

  
	
   

  	
   

  	
   

  
	
  Effective Date:

  	
   

  	
  October 18, 2004.

  
	
   

  	
   

  	
   

  
	
  Scheduled Commencement

  	
   

  	
   

  
	
  Date:

  	
   

  	
  November 15,  2004.

  
	
   

  	
   

  	
   

  
	
  Lease Term:

  	
   

  	
  Fifty-six (56)  months, commencing on the Commencement Date.

  
	
   

  	
   

  	
   

  
	
  Building Standard Hours:

  	
   

  	
  7:00 a.m. to 7:00 p.m. on each
  Monday through Friday (excluding Building Holidays) and 8:00 a.m. to
  5:00 p.m. on each Saturday (excluding Building Holidays).

  
	
   

  	
   

  	
   

  
	
  Building Holidays:

  	
   

  	
  New Years Day, Memorial Day, Independence
  Day, Labor Day, Thanksgiving Day and Christmas Day.

  
	
   

  	
   

  	
   

  
	
  Landlord’s Broker:

  	
   

  	
  Colliers of Texas Real Estate
  Services, Inc. 2700 Via Fortuna Drive, Suite 100 Austin, Texas
  78748

  
	
   

  	
   

  	
   

  
	
  Tenant’s Broker:

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  
	
  Security Deposit:

  	
   

  	
  $2,777.07

  
	
   

  	
   

  	
   

  
	
  Parking:

  	
   

  	
  Tenant shall be entitled to five
  (5) parking spaces, of which two (2) will be marked as reserved for
  Tenant.

  
	
   

  	
   

  	
   

  
	
  Permitted Use

  	
   

  	
  General office use by
  Tenant and/or Tenant’s permitted sublessee(s) or assign(s).

  

 

The Basic Lease Provisions set forth hereinabove are
hereby incorporated into and made a part of the Lease Agreement which is
attached hereto (the “Lease”). Each reference in the Lease to any of the
provisions or definitions set forth in these Basic Lease Provisions shall mean
and refer 

 

v

 

to the provisions and definitions hereinabove set
forth and shall be used in conjunction with the provisions of the Lease. In the  event of any direct conflict between
these Basic Lease Provision and the Lease, these Basic Lease Provisions shall
control; provided, however, that those provisions in the Lease (including all
exhibits and attachments thereto) which expressly require an adjustment or
modification to any of the matters set forth in these Basic Lease Provisions
shall supersede the adjusted or modified provisions of these Basic Lease
Provisions.

 

EXECUTED by the undersigned in multiple originals as
of the Effective Date set out herein above.

 

	
  LANDLORD:

  	
  DESTA FIVE PARTNERSHIP,
  LTD.,

  
	
   

  	
  a Texas limited
  partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  DESTA FIVE DEVELOPMENT
  CORP.,

  
	
   

  	
   

  	
  a Texas corporation, its
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/L Paul Latham

  
	
   

  	
   

  	
   

  	
  L. Paul Latham, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TENANT:

  	
  MATINEE MEDIA CORP.,

  
	
   

  	
  a Texas corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/Robert Walker

  
	
   

  	
  Name:

  	
   

  	
  Robert Walker

  
	
   

  	
  Title:

  	
   

  	
  President

  
								

 

vi

 

LEASE
AGREEMENT

 

This Lease Agreement (“Lease”) is entered into as of the Effective Date
specified in the Basic Lease Provisions by and between Landlord and Tenant. The
Basic Lease Provisions attached hereto and the defined terms set out therein
are hereby incorporated herein by reference.

 

ARTICLE I - LEASED PREMISES

 

Section 1.01 Leased Premises

 

The Leased Premises are depicted generally on Exhibit B
with Tenant occupying a portion of floor six. The term “Rentable Area”, as used
herein with respect to the Leased Premises, refers to the sum of (i) the
usable floor area of the Leased Premises, plus (ii) Tenant’s prorate share
of all corridors, lobbies, elevator foyers, restrooms, mechanical and
electrical rooms, janitor’s closets and other similar facilities of the
Building (such areas being herein referred to as “Common Areas”). “Rentable
Area” as used herein with respect to the Building, includes all space occupied
or to be occupied by tenants, together with the Common Areas. Upon the
completion of construction of improvements to the Leased Premises, the usable
and rentable area of the Leased Premises will be re-measured and such
re-measurement shall be set forth on and incorporated into this Lease on Exhibit B
effective on the Commencement Date. Landlord represents that all measurements
of square footage provided for herein have been conducted by an engineer or
architect using the American National Standard Method for measuring floor area
in office building ANSI/BOMA Z65.l -1996 (the “BOMA Method”) and that all
future measurements will be performed in the same manner. The re-measurement of
the Leased Premises shall be conducted by an engineer or architect reasonably
satisfactory to both parties using the BOMA Method. If it is determined that
the Rentable Area of the Leased Premises varies from the estimates set forth in
the Basic Lease Provisions, then the Rentable Area (and usable area) of the
Leased Premises, Tenant’s Percentage and the Base Rent will be appropriately
adjusted.

 

Section 1.02 Lease Grant

 

For the consideration and subject to the terms,
provisions and conditions set out below, Landlord lets and leases to Tenant and
Tenant leases from Landlord the Leased Premises.

 

Section 1.03 Building Core and Shell

 

Landlord will provide the improvements which are
listed and described on Exhibit C which is attached hereto and
incorporated herein by reference (the “Building Core and Shell “). The
improvements to be constructed by Landlord within the Leased Premises are set
forth in a tenant’s work letter which is attached to this Lease (the “Tenant’s
Work Letter”). Except as specifically set forth in this Lease and Tenant’s Work
Letter, Tenant acknowledges that Tenant is accepting the Lease Premises on an “AS
IS,” “WHERE IS” basis.

 

 

ARTICLE 11- LEASE TERM

 

Section 2.01 Lease Term

 

(a)                                  Subject to and upon the
terms and conditions set forth in the Lease, or in any exhibit attached hereto,
the primary term of this Lease shall commence on the Commencement Date and shall
expire on the last day of the fifty-sixth (56th)  month following the Commencement Date or
such earlier date as this Lease may terminate as provided herein, but in no
event later than August 31, 2009 (the “Expiration Date”). The “Lease Term”
of this Lease shall be the primary term specified in this Section 2.01, as
renewed or otherwise extended or earlier terminated pursuant to the terms and
provisions set forth herein. If the Commencement Date is not the first day of a
calendar month, then the Lease Term shall be extended by the time between the
Commencement Date and the first day of the next month.

 

(b)                                 After the Commencement Date,
Landlord and Tenant shall promptly, upon the request of either of them, execute
and deliver to each other an agreement setting forth the Commencement and
Expiration Dates.

 

(c)                                  Landlord and Tenant
currently anticipate that the Tenant Finish Work (as defined in the Tenant’s
Work Letter) will be Substantially Completed and possession of the Leased
Premises delivered to Tenant on or before November 15, 2004 (the “Scheduled
Commencement Date”). If the Tenant Finish Work is not Substantially Completed
on the Scheduled Commencement Date, (1) Landlord shall not be in default
hereunder or be liable for damages therefore, (ii) the Commencement Date
as defined in the Basic Lease Provisions shall be the date that Landlord
tenders the Leased Premises to Tenant Substantially Completed and (iii) Tenant
shall accept possession of the Leased Premises when Landlord tenders possession
thereof to Tenant Substantially Completed.

 

Section 2.02 Holding Over

 

Should Tenant hold the Leased Premises after
termination of this Lease, by lapse of time, default, or otherwise, such
holding over shall be construed as a tenancy at sufferance only, and Tenant shall
pay in advance, as Rent, for each day of such holding, a per diem amount equal
to 1/30 of one hundred fifty percent (150%), of the Rent payable for the last
month of the Lease Term. No receipt of money by Landlord from Tenant after
termination of this Lease shall reinstate or extend this Lease, or affect any
prior notice given by Landlord to Tenant, and no extension shall be valid
unless in writing, signed by Landlord and Tenant. The foregoing shall not be
construed as Landlord’s consent for any such holding over.

 

2

 

ARTICLE III - RENT

 

Section 3.01 Base Rent

 

Tenant shall pay the Base Rent to Landlord in
monthly installments in advance on or before the first day of each calendar
month during the Lease Term. If the Lease Term is extended for a partial month
under the terms of Section 2.01(a) hereinabove, then the Lease Months
referenced in the Base Rent table set out in the Basic Lease Provisions will
begin on the first day of the next full calendar month of the Commencement Date
and Base Rent will be calculated for the partial month at the beginning of the
Lease Term at the same rate as is provided with respect to the first Lease
Month. Base Rent for any partial calendar month will be prorated on a per diem
basis.

 

Section 3.02 Additional Rent

 

(a)                                  For purposes of this Lease “Operating
Expenses” means all of Landlord’s costs and expenses paid or incurred by
Landlord in owning, operating, managing and maintaining the Building for a
particular calendar year or portion thereof, determined in accordance with
sound accounting principles consistently applied, including by way of
illustration but not limitation: (i) all taxes, assessments and
governmental charges of any kind and nature whatsoever levied or assessed
against the Building;

(ii)     any and all assessments levied by the planned unit
development owner’s association; (iii) all premiums for any and all
insurance maintained in connection with the ownership, operation, maintenance,
and/or management of the Building (including but not limited to property and
liability coverage); (iv) water, sewer, electrical and other utility
charges; (v) service and other charges incurred in the operation and
maintenance of the elevators and the heating, ventilation and air-conditioning
system; (vi) cleaning and other janitorial services; (vii) tools and
supplies; (viii) repair costs; (ix) landscape maintenance costs; (x) security
services; (xi) license, permit and inspection fees other than that required for
Tenant’s interior improvements;(xii) reasonable management fees; (xiii) wages
and related benefits payable to employees at or below the grade of building
manager who render services to or for the benefit of the Building or tenants of
the Building and are not managerial services covered by the management fee;
(xiv) legal and accounting fees; (xv) trash removal; (xvi) garage maintenance
and operating costs; (xvii) the cost of electrical surveys; (xviii) capital
improvements costing less than Five Thousand Dollars ($5,000) in the aggregate,
which amount shall be amortized over the useful life of the improvement(s),
and, in general, all other costs and expenses which would generally be regarded
as operating and maintenance costs and expenses based on common industry
practices. Also included in Operating Expenses is the cost of any capital
improvement made to the Building by Landlord after the date of this Lease that
is required under governmental law or regulation not applicable to the Building
at the time the Building was constructed, amortized over the useful life of the
improvements based on generally accepted accounting principles.

 

3

 

All references in this Section 3.02(a) to
Operating Expenses mean actual Operating Expenses; provided, however, for any
calendar year or partial calendar year in which the rentable area of the
Building is not one hundred percent (l00%) occupied with all tenants in
occupancy and paying full rent, variable Operating Expenses (being management
fees, utilities and custodial charges) for that period shall be calculated in a
manner, and in the amount, that would have been incurred had the Building been
one hundred percent (100%) occupied with all tenants in occupancy and paying
full rent. Notwithstanding anything to the contrary in the preceding sentence,
in no event will Landlord bill tenants of the Building, or collect from tenants
of the Building, amounts for reimbursement of Operating Expenses which exceed,
in the aggregate, after all adjustments to correct and conform any estimated
billings to actual expenses, the actual amount of Operating Expenses incurred
by Landlord in any calendar year. If an adjustment is made pursuant to the
foregoing provisions, Landlord shall provide Tenant with written notice specifying
in reasonable detail the particulate variable Operating Expense(s) which
was adjusted and the related calculation. Said notice shall be provided at the
same time Landlord provides the statement(s) of actual Additional Rent as
specified in Section 3.02 (f) of this Lease.

 

If Landlord installs any device, improvement or
equipment after the Commencement Date of this Lease(i) which Landlord,
reasonably believes will improve the operating efficiency of any system within
the Building (e.g. solar collectors) or reduce Operating Expenses and Tenant
approves such installation, or (ii) that is required to be installed by
any government or governmental agency having authority to order that it be
installed, then Landlord may add to the Operating Expenses each year during the
useful life of the installed device, improvement, or equipment (as the useful
life is determined by generally accepted accounting principles) an amount equal
to the annual amortization of the cost of the installed device, improvement, or
equipment, but in no event more than the actual cost saved as a result of the
installation thereof during the year(s) the cost is added to the Operating
Expenses.

 

(b)                                 Operating Costs shall not
include costs for (i) repair, replacements and general maintenance paid by
proceeds of insurance or by Tenant or other third parties; (ii) interest,
amortization or other payments on loans to Landlord; (iii) leasing
commissions, marketing expenses or any other cost associated with the leasing
and or marketing of the Building or PUD(defined herein as the planned unit
development recorded in Real Property Records, Travis County Texas, Volume
10252, Page 0135, and sometimes also referred to as the “Terrace P.U.D.”);
(iv) legal or accounting expenses for services, other than those that
benefit the Building tenants generally (e.g., tax disputes); (v) renovating
or otherwise improving space for current or future occupants of the Building or
vacant space in the Building other than Common Areas; (vi) the costs
incurred by Landlord to bring the Building, the Land or any equipment
maintained therein in compliance with laws, ordinances, rules, regulations,
requirements, directives, guidelines and orders in effect and applicable to the
Building as of the Commencement Date; 

 

4

 

(vii) the
cost of any services or materials supplied to other tenants and not to Tenant; (viii) the
cost of any services or materials for which Landlord receives reimbursement
from other sources; (ix) depreciation on the Building; (x) federal,
state, county, city or any other income taxes imposed on or measured by the
income of Landlord from the operation of the Building; (xi) repairs,
alterations, additions, improvements, replacements made to rectify or correct any
defect in the design, materials or workmanship of the Building or Common Areas
other than repairs, alterations, additions, improvements or replacements made
as a result of ordinary wear and tear; (xii) damage and repairs attributable to
fire or other casualty; (xiii) damage and repairs necessitated by the gross
negligence or willful misconduct of Landlord, Landlord’s employees, contractors
or agents; (xiv) executive salaries or salaries of service personnel to the
extent that such services of such persons do not relate to the management,
operation, repair or maintenance of the Building; (xv) Landlord’s general
overhead expenses not related to the Building; (xvi) costs including permit,
license and inspection fees incurred in renovating or otherwise improving,
decorating or painting or altering space for current or prospective tenants or
other occupants or of vacant space (excluding Common Areas) in the Building;
(xvii) costs incurred due to a violation by Landlord or any other tenant of the
Building of the terms and conditions of a lease; (xviii) cost of any service
provided to Tenant or other occupants of the Building for which Landlord should
be or is reimbursed or should or has received reimbursement from another
source; and (xix) capital improvements made to the Building, other than capital
improvements described in Section 3.02(a) and except for items which,
though capital for accounting purposes, are properly considered maintenance and
repair items, such as painting of common areas, replacement of carpet in
elevator lobbies, and the like, with the cost of such maintenance and repair
items amortized over their useful life based on generally accepted accounting
principles.

 

For the purposes of calculating Tenant’s obligation
for the payment of Additional Rent under this Article, if any tenants of the
Building increase the cost of any category of Operating Expense (e.g.,
separately metered utilities) or receive any services or materials which are in
excess of the services or materials which are provided to Tenant at no
additional cost the amount of such additional cost will not be included in
Operating Expenses. For any category of Operating Expense for which one or more
tenants of the Building make(s) separate payments, Tenant’s Percentage
will be adjusted for that category of Operating Expense by excluding from  the denominator thereof the Rentable Area
of all tenants making separate payments with respect to such category.

 

5

 

 (c)                               In addition to
the Base Rent, Tenant shall pay to Landlord as Additional Rent for the Leased
Premises, in each calendar year, or partial calendar year, during the Lease
Term, an amount equal to Tenant’s Percentage of the Operating Expenses for the
calendar year or portion of the calendar year. Tenant shall not be required to
pay Additional Rent for the initial three (3) months of the Lease Term.

 

(d)                                 Landlord shall estimate
Tenant’s Additional Rent for each subsequent calendar year based on a budget which
is prepared in accordance with typical industry and accounting standards, and
give written notice thereof to Tenant as soon as reasonably possible. For each
calendar year (or partial calendar year) Tenant shall pay to Landlord each
month one twelfth (1/12) of such estimated amount, at the same time the Base
Rent is due. For any year during which Additional Rent is due for less than the
entire calendar year, Tenant shall pay to Landlord each calendar month during
such year, one-twelfth of the estimated Additional Rent that would have been
due if Additional Rent had been due throughout that calendar year.

 

(e)                                  If Operating Expenses
increase during a calendar year, Landlord may revise the estimated Additional
Rent during such year by giving Tenant at least thirty (30) days written notice
to that effect, and thereafter Tenant shall pay to Landlord, in each of the
remaining months of that calendar year, an additional amount equal to the
amount of the increase in the estimated Additional Rent divided by the number
of months remaining in the year.

 

(f)                                    Within one hundred twenty
(120) days after the end of each calendar year, or as soon thereafter as
figures are available, Landlord shall prepare and deliver to Tenant a statement
showing Tenant’s actual Additional Rent for that calendar year. The statement
shall separately set forth the basic components (in reasonable detail) of
Additional Rent for the prior calendar year. Within thirty (30) days after
receipt of the statements, Tenant shall pay to Landlord, or Landlord shall
credit against the next Additional Rent payment or payments due from Tenant, as
the case may be or pay immediately to Tenant if no payment is payable by
Tenant, the difference between Tenant’s actual Additional Rent for the
preceding calendar year and the estimated Additional Rent paid by Tenant during
the year.

 

(g)                                 Tenant will have the right,
for a period of one (1) year after Tenant’s receipt of any statement
provided for in subsection (f) above, (but not thereafter) to audit
Landlord’s books, at Tenant’s cost and expense. If Tenant does not request an
audit within one (1) year of Tenant’s receipt of the statements provided
for in subsection (f) above, then Tenant will be deemed to have waived any
right it may have to an adjustment to Tenant’s Percentage of any Operating
Expenses for such calendar year. If it is determined that Tenant’s actual share
of Additional Rent is different than Landlord’s computation of Tenant’s share
of Additional Rent, then Landlord shall refund to Tenant any overpayment of any
such costs for the year in question and for each year during the Term the same
error was made or Tenant shall pay to Landlord any underpayment of any such
costs for the year in question 

 

6

 

and
for each year during the Term the same error was made, as the case may be,
within thirty (30) days after notification of the error.

 

(h)                                 Tenant’s right to verify
Operating Expenses shall be subject to the following limitations and
conditions: (i) Tenant shall have provided Landlord with written notice of
its desire to verify Operating Expenses; (ii) such review or verification
shall take place in Landlord’s offices on a mutually acceptable date in Austin,
Texas; and (iii) Tenant and any third party auditor or reviewer employed
by Tenant shall execute and deliver to Landlord a confidentiality agreement
reasonably acceptable to Landlord and which shall include, among other terms,
the agreement of Tenant and such third party not to disclose to any other person
other than Tenant’s employees, accountants and attorneys the existence of the
review, the results of the review and the agreement of any third party not to
solicit verifications or reviews on the part of any other tenant of the
Building.

 

Section 3.03 Prepaid Rent

 

INTENTIONALLY OMITTED.

 

Section 3.04 Rent Payments

 

(a)                                  All Rent is payable by
Tenant at the times and in the amounts specified in this Lease in legal tender
of the United States of America to Landlord at Landlord’s management office in
the Building, or to any other person or at any other address as Landlord may
from time to time designate by prior notice to Tenant.

 

(b)                                 Rent is payable by Tenant
without notice, demand, abatement, deduction, or set-off, except as expressly
specified in this Lease. Tenant’s obligation to pay Rent is independent of any
obligation of Landlord under this Lease. If any installment of (i) Base
Rent or Additional Rent is not paid within five (5) days after it is due;
or (ii) any other Rent is not paid within fifteen (15) days after it is
due, Tenant shall pay to Landlord a late charge in an amount equal to five
percent (5%) of the delinquent installment of Rent when it pays the delinquent
installment. In addition, if Tenant fails to pay any Rent within five (5) days
of when the same is due (and which represents amounts not already specified as
bearing interest under other provisions of this Lease) then Tenant shall also
pay to Landlord interest on the unpaid Rent from the due date until the date
paid at the highest rate lawfully permitted to be contracted for, charged or
received pursuant to a written contract under applicable federal or state law
(whichever is higher) or such lower rate as may be assessed by Landlord (the “Interest
Rate”).

 

7

 

Section 3.05 Security Deposit

 

(a)                                  Tenant shall deliver the
Security Deposit to Landlord upon execution of this Lease as security for the
performance by Tenant of its obligations under this Lease. The Security Deposit
is not an advance payment of Rent or a measure of Landlord’s damages for a
default by Tenant. Upon an Event of Default, Landlord may, without prejudice to
any other remedy, use the Security Deposit to the extent necessary to make good
any arrearages in Rent or any other sum for which Tenant is in default and any
other damage, injury, expense, or liability caused to Landlord by the default.
If Landlord so applies any part of the Security Deposit, Tenant shall pay to
Landlord on demand the amount necessary to restore the Security Deposit to its
original amount.

 

(b)                                 If Tenant is not then in
default under this Lease, Landlord shall return any remaining balance of the
Security Deposit to Tenant upon termination or expiration of this Lease and
after surrender by Tenant of possession of the Leased Premises to Landlord in
accordance with this Lease.

 

(c)                                  If Landlord assigns its
interest in the Leased Premises, Landlord will assign the Security Deposit to
the assignee. Landlord will have no further liability for the return of the
Security Deposit after the assignment and Tenant shall look solely to the
assignee for the return of the Security Deposit. Tenant may not assign or
encumber or attempt to assign or encumber the Security Deposit. Landlord and
its successors and assigns are not bound by any actual or attempted assignment
or encumbrance of the Security Deposit by Tenant.

 

ARTICLE IV - UTILITIES AND SERVICES

 

Section 4.01 Services to be Provided

 

Landlord shall furnish or cause to be furnished to
the Leased Premises, the utilities and services described below, subject to the
conditions and in accordance with the standards set forth herein:

 

(a)                                  Landlord shall provide
automatic elevator service to the Leased Premises twenty-four (24) hours per
day, seven (7) days per week.

 

(b)                                 During Building Standard
Hours, Landlord agrees to ventilate the Leased Premises and furnish heat or air
conditioning, at such temperatures and in such amounts as is necessary and
appropriate for the comfortable occupancy of the Leased Premises, reasonably
consistent with the standards of “Class A” office buildings in Austin,
Texas. Landlord’s obligations to provide heating and air conditioning are
subject to any governmental requirements or standards relating to, among other
things, energy conservation. Landlord shall make available at Tenant’s expense
heat or air conditioning at times other than Building Standard Hours per Section 4.02.
The minimum charge and the hourly rate for the use of 

 

8

 

after
hours heat or air conditioning shall be determined from time to time by
Landlord and confirmed in writing to Tenant and shall be the same for all
tenants in the Building.

 

(c)                                  Electric lighting for the
Common Areas of the Building.

 

(d)                                 Toilet facilities and hot
and cold water for lavatory purposes (at temperatures prescribed by applicable
law).

 

(e)                                  Replacement, as necessary,
of all lamps and ballasts in the Building Standard light fixtures within the
Common Areas.

 

(f)                                    Window washing
of exterior windows not less than once each year.

 

(g)                                 Professional landscaping
services for all landscaped areas from time to time on the Land.

 

(h)                                 Display, throughout the
Lease Term and at Landlord’s sole cost and expense, on all Building directories
of Tenant’s name and suite number.

 

(i)                                     Janitorial services at times
and comparable and reasonably consistent in quality to those being provided by
other Class A office buildings in Austin, Texas.

 

(j)                                     Landlord shall furnish to
the Leased Premises at all times, subject to interruptions beyond Landlord’s
control and temporary interruptions necessary or appropriate for Building
maintenance or equipment installation, electricity sufficient to operate normal
office lighting and equipment up to a maximum of eight (8) watts per
square foot of useable area in the Leased Premises. Tenant shall not install or
operate in the Leased Premises any electrically operated machinery or equipment
which requires electricity consumption beyond that which would be considered to
be “normal office use”, regardless of electrical consumption by other tenants
in the Building. In no event may Tenant’s use of electricity exceed the
capacity of the feeders to the Building or the risers or wiring installation.
Electrical consumption in the Leased Premises, or in any portion of the Leased
Premises, may, at Landlord’s option, be separately metered at Landlord’s cost.
The obligation of Landlord to provide or cause to be provided electricity is
subject to the rules and regulations of the supplier of electricity and of
any municipal or other governmental authority regulating the business of
providing electricity to the Building, except as provided in Section 4.04.
Landlord is not liable or responsible to Tenant for any loss, damage or expense
Tenant sustains or incurs if either the quality or character of the electricity
is changed by the supplier or is no longer available or no longer suitable for
Tenant’s requirements for reasons attributable to the supplier. At any time
when Landlord is furnishing electricity to the Leased Premises under this
subsection, Landlord may, with prior written consent of Tenant, which consent
shall not be unreasonably withheld or delayed, 

 

9

 

discontinue
the furnishing of electricity. If Landlord gives a notice of discontinuance,
Landlord shall make all necessary arrangements with the public utility
supplying the electricity to the Building with respect to connecting electrical
service to the Leased Premises, but Tenant shall contract directly with the public
utility with respect to supplying the electrical service. Tenant shall not, in
any event, incur any expense related to the transfer of electrical services.

 

Section 4.02 Additional Services

 

Landlord may impose a reasonable charge, not to
exceed Landlord’s actual costs, for heating, ventilating and air conditioning
provided by Landlord at any time other than the Building Standard Hours or for
any use beyond what Landlord agrees to furnish or because of special
electrical, cooling, and ventilating needs created by Tenant’s telephone
equipment, computers, and other equipment or uses. After hours heating and air
conditioning shall be provided via an automated “on-demand” system and shall be
charged at actual costs which is currently estimated to be $25.00 per hour, per
one-half floor, with a two (2) hour minimum use charge required.

 

Section 4.03 Tenant’s Obligations

 

Tenant shall cooperate fully at all times with
Landlord and abide by all regulations and requirements Landlord may prescribe
for the use of all utilities and services that are consistent with the terms of
this Lease and with the use of utilities and service in Class “A” office
buildings in Austin, Texas.

 

Section 4.04 Service Interruptions

 

(a)                                  Landlord does not warrant
that the services provided by Landlord will be free from any slow-down,
interruption, or stoppage by governmental bodies, regulatory agencies,
utility companies, and others supplying services or caused by the maintenance,
repair, replacement, or improvement of any equipment involved in the furnishing
of the services or caused by changes of services, alterations, strikes,
lockouts, labor controversies, fuel shortages, accidents, acts of God, the
elements, or other causes beyond the reasonable control of Landlord.

 

(b)                                 Landlord shall use diligent
and reasonable efforts to restore any service that becomes unavailable;
however, such unavailability shall not render Landlord liable for any damages
caused thereby, be a constructive eviction of Tenant, constitute a breach of
any implied warranty, or, except as provided in the next sentence, entitle
Tenant to any abatement of Tenant’s obligations hereunder unless such
unavailability is caused by Landlord’s negligence or intentional misconduct.
However, if because of the unavailability of any such service Tenant is
prevented from making reasonable use of a portion of the Leased Premises for
more than fifteen (15)  consecutive
business days then Tenant’s obligation to pay Base Rent and Tenant’s share of
Additional Rent in respect of the portion of the Leased Premises rendered
untenantable thereby shall be abated for each 

 

10

 

consecutive
day (after such fifteen (15)  day
period) that Tenant is so prevented from making reasonable use of such portion
of the Leased Premises. If any such unavailability or interruption of services
occurs rendering the Leased Premises untenantable (other than because of a
taking or Casualty, as defined in Section 7.03(a), as to which Article VIII
and Section 7.03 shall control), and Landlord fails to restore such
services to the Leased Premises within ninety (90) days following delivery of
written notice from Tenant to Landlord, Tenant may (a) terminate this
Lease by written notice to Landlord, or (b) commence to restore such
services unless Landlord is diligently performing the work that may be
necessary to restore such services. All actual third-party costs incurred by
Tenant in connection with restoring such services shall be paid by Landlord to
Tenant within thirty (30) days following written demand therefore to Landlord,
accompanied by invoices substantiating such claim. Tenant’s right to perform
work under this Section 4.04(b) is subject to the following
conditions:

 

(1)                                      all such work
shall be performed in a good and workmanlike manner and in accordance with law;

 

(2)                                      except in an
emergency, all such work shall be performed in accordance with plans and
specifications approved by Landlord (which approval shall not be unreasonably
withheld), whose approval shall be deemed given if Landlord fails to disapprove
any submitted plans and specifications within three (3) business days
after Tenant delivers such plans to Landlord;

 

(3)                                      all such work
shall be performed by contractors reasonably acceptable to Landlord which
maintain commercial liability insurance in an amount not less than $1,000,000
per occurrence naming Landlord as an additional insured; Landlord’s approval
shall be deemed given if Landlord fails to disapprove any contractor within
three (3) business days after Tenant delivers to Landlord a request for
its consent thereto; and

 

(4)                                      Tenant delivers
to Landlord “as-built” plans of the work performed by Tenant.

 

Section 4.05 Modification

 

Landlord reserves the right from time to time to
make reasonable and nondiscriminatory modifications to the above standards for
utilities and services by giving written notice to Tenant.

 

11

 

ARTICLE V - USE AND OCCUPANCY

 

Section 5.01
Use and Occupancy

 

(a)                                  The Leased
Premises may be used and occupied by Tenant only for general business offices
and incidental uses and for no other purpose. Tenant shall use and maintain the
Leased Premises in an operable, attractive condition (ordinary wear and tear
and damage by casualty and condemnation excepted) and shall comply with all
laws, ordinances, orders, rules, regulations and requirements of any kind
imposed by any governmental authority (state, federal, county and municipal)
applicable to or having jurisdiction over the use, occupancy, operation, and
maintenance of the Leased Premises, including without limitation, all
applicable environmental laws and the Americans With Disabilities Act of 1990
(ADA) (those laws, ordinances, orders, rules, decisions, and regulations
hereafter referred to as “Applicable Law” or “Applicable Laws”). Landlord shall
comply with all Applicable Laws relating to the use, condition, access to and
occupancy of the Building and the Common Areas. Landlord represents that to the
best of its knowledge on the Commencement Date the Leased Premises (if planned
by Landlord’s architect and constructed by a contractor selected by Landlord
and the Building shall comply with Title III of the Americans With Disabilities
Act and if the Leased Premises do not so comply, then Landlord (at its cost and
not as a part of Operating Expenses) shall cause the Leased Premises and the
Building to so comply within a reasonable time thereafter.

 

(b)                                 Tenant may not
deface or injure the Leased Premises or the Building or any part thereof or
overload the floors of the Leased Premises. Tenant may not commit waste or
permit waste to be committed or cause or permit any nuisance on or in the
Leased Premises or the Building. Tenant shall pay Landlord on demand as Rent
for any damage to the Leased Premises or to any other part of the Building
caused by any negligence or willful act or any misuse or abuse (whether or not
the misuse or abuse results from negligence or willful acts) by Tenant or
Tenant’s agents, employees, licensees, or contractors (hereafter referred to as
“Tenant Party” or “Tenant Parties”). In no event shall Tenant pay for any
negligence, willful act, misuse or abuse, damage or other injury or defacement
caused by any party that is not a Tenant party, including Landlord or any of
its agents, employees, or contractors (hereinafter referred to as “Landlord
Party” or “Landlord Parties”).

 

(c)                                  Tenant may not
use or allow the Leased Premises to be used for any purpose prohibited by any
Applicable Law applicable to the Building. Tenant and each Tenant Party shall
conduct its business and occupy the Leased Premises and control all Tenant
Parties so as not to create any nuisance or interfere with, annoy, or disturb
any other tenants in the Building or Landlord in its management of the Building
(or its occupancy of portions of the Building) so as not to injure the
reputation of the Building.

 

12

 

(d)                                 Except as provided herein,
Tenant and each Tenant Party shall not erect, place, or allow to be placed any
sign, symbol, advertising matter, stand, booth, or showcase in or upon the
doorsteps, vestibules, halls, corridors, doors, walls, windows, or pavement of
the Building visible outside the Leased Premises (except for lettering on the
door or doors to the Leased Premises as allowed by the Rules and
Regulations attached hereto as Exhibit D) without the prior consent
of Landlord.

 

(e)                                  Tenant may not use or allow
or permit the Leased Premises to be used in any way or for any purpose that:

 

(1)                               is hazardous on
account of the possibility of fire or other casualty, or hazardous substances;

 

(2)                               increases the
rate of fire or other insurance for the Building or its contents or in respect
of the operation of the Building; or

 

(3)                               renders the
Building uninsurable at normal rates by responsible insurance carriers
authorized to do business in the State of Texas or renders void or voidable any
insurance on the Building.

 

If insurance premiums are increased because of a use
of the Leased Premises which is not contemplated herein and such increase is
documented by Landlord’s insurance provider(s), then, in addition to any other
remedies Landlord may have, Tenant shall pay the amount of the increase to
Landlord as Rent if Tenant does not modify or eliminate the use related to the
increase within ten (10) business days after demand.

 

Section 5.02 Rules and Regulations

 

Tenant and each Tenant Party shall comply with the rules and
regulations (as changed from time to time as hereinafter provided) attached as Exhibit D
(the “Rules and Regulations”). Landlord may at any time change the Rules and
Regulations or promulgate other Rules and Regulations as Landlord deems
advisable for the safety, care, cleanliness, or orderliness of the Building,
and shall promptly provide Tenant with notice of any changes or additions to
the Rules and Regulations. Landlord shall use reasonable efforts to
enforce compliance by all other tenants with the Rules and Regulations
from time to time in effect, but Landlord is not responsible to Tenant for
failure of any person other than a Landlord Party to comply with the Rules and
Regulations. All such changes and/or additions to the Rules and
Regulations must be reasonable and no such change or addition shall alter or
amend the terms or provisions of this Lease.

 

13

 

Section 5.03 Quiet Enjoyment

 

If Tenant pays the Rent when due and timely performs
all other obligations of Tenant under this Lease, then Tenant may peaceably and
quietly enjoy the Leased Premises during the Lease Term without any disturbance
from Landlord or from any other person claiming by, through, or under Landlord,
subject to the terms of this Lease.

 

ARTICLE VI- REPAIRS, MAINTENANCE AND ALTERATIONS

 

Section 6.01 Repair and Maintenance by
Tenant

 

(a)                                  Tenant shall keep the Leased
Premises and all fixtures installed by or on behalf of Tenant in good and
tenantable condition (ordinary wear and tear and damage by casualty and
condemnation excepted). Tenant shall promptly make all necessary non-structural
repairs and replacements thereto at Tenant’s expense. All repairs and
replacements must be equal in quality to the original work, and all contractors
and subcontractors performing such repairs and replacements must comply with
the conditions specified in Section 6.02(a) herein below. Without
diminishing this obligation of Tenant, if Tenant fails to commence to make any
repairs and replacements within fifteen (15) days after notice from Landlord
and thereafter diligently pursue such repairs or replacements, Landlord may at
its option make the repairs and replacements and Tenant shall pay Landlord on
demand as Rent the costs incurred by Landlord plus an administrative fee equal
to ten percent (10%) of the costs.

 

(b)                                 Tenant shall pay the cost of
repairs and replacements caused by any malfunction or misuse of any equipment
installed by or on behalf of Tenant. This amount is payable by Tenant to
Landlord with five (5) days of demand as Rent. If Tenant requests Landlord
to perform any maintenance or repairs to the Leased Premises, over and above
the services required to be performed by Landlord pursuant to Article IV,
Tenant shall pay the actual cost thereof, plus a reasonable administrative fee
not to exceed ten percent (10%) of the actual cost thereof, to Landlord as Rent
within five (5) business days after demand.

 

Section 6.02 Alterations and Additions by
Tenant

 

(a)                                  Tenant may not make or
permit any alterations, improvements (other than cosmetic improvements, such as
painting, re-carpeting or similar non-structural improvements) or additions in
or to the Leased Premises or the Building without Landlord’s prior written
consent, which shall not be unreasonably withheld, conditioned or delayed.. All
alterations, additions and improvements made to, or fixtures or other improvements
placed in or upon, the Leased Premises, whether temporary or permanent in
character, by either party (except only Tenant’s movable trade fixtures, office
furniture and equipment) are a part of the Building and are the property of
Landlord when they are placed in the Leased Premises unless otherwise agreed by
Landlord and Tenant. Alterations, improvements and additions in and to the
Leased Premises requested by Tenant must be made in 

 

14

 

accordance
with plans and specifications approved in advance in writing by Landlord. All
work must be performed at Tenant’s expense either by Landlord or by contractors
and subcontractors approved in advance by Landlord. If the work is not
performed by Landlord, then all work performed by Tenant’s contractors and
subcontractors is subject to the following conditions:

 

(i)                                  Each contractor
and subcontractor must deliver evidence satisfactory to Landlord that the
insurance specified by Landlord is in force prior to commencing work.

 

(ii)                               Tenant shall
insure that all workers are cooperative with Building personnel and comply with
all Building Rules and Regulations.

 

(iii)                            Tenant must
deliver to Landlord evidence that Tenant has obtained all necessary
governmental permits and approvals for the improvements or alterations prior to
starting any work.

 

(iv)                           All
construction must be done in a good and workmanlike manner and is subject to
approval by Landlord during and after construction, in its reasonable
discretion.

 

(v)                              Lien releases
from each contractor and subcontractor (subject to final retainage payments)
must be submitted to Landlord within five days after completion of the work
performed by the contractor or subcontractor.

 

(vi)                           Within thirty
(30) days after completion of any improvements or alterations, Tenant, at its
cost, shall deliver to Landlord two reproducible copies of “as-built” plans and
specifications (1/8” scale) for each floor where alterations or improvements
were made.

 

(b)                                 All alterations and
improvements must comply with all Applicable Laws. If Tenant’s alterations or
additions to the Leased Premises causes Landlord to make any alterations or
improvements to the Building to comply with the provisions of ADA or any other
Applicable Laws, Tenant shall reimburse Landlord for the cost of the
alterations or improvements within five (5) days
of demand as additional Rent. Neither Landlord’s approval of Tenant’s plans and
specifications for the alterations or improvements nor Landlord’s acceptance of
Tenant’s as-built plans is a confirmation or agreement by Landlord that the
improvements and alterations comply with Applicable Laws.

 

15

 

Section 6.03 Mechanics’ Liens - Tenant’s
Obligations

 

Tenant may not cause or permit any mechanic’s or
materialman’s lien to be placed upon Landlord’s interest in the Building or the
Leased Premises or any part thereof or against Landlord’s interest under this
Lease by any architect, contractor, subcontractor, laborer, or materialman
performing any labor or furnishing any materials to Tenant for any improvement,
alteration, or repair of or to the Leased Premises, the Building, or any part
thereof. If any lien is filed on Landlord’s interest in the Building or Tenant’s
interest in the Leased Premises, Tenant shall cause the same to be discharged
of record or bonded around in accordance with the applicable provisions of
Texas law within twenty (20) days after filing. If Tenant does not discharge
the lien within the twenty (20) day period, then, in addition to any other
right or remedy of Landlord, Landlord may, but is not obligated to, discharge
the lien by paying the amount claimed to be due or by procuring the discharge
of the lien by deposit in court or bonding. Any amount paid by Landlord
relating to any lien not caused by Landlord, and all reasonable legal and other
expenses of Landlord, including reasonable attorneys’ fees, in defending any
action or in procuring the discharge of any lien, with interest thereon at the
Interest Rate from date of payment by Landlord until paid by Tenant, is payable
by Tenant to Landlord on demand as Rent.

 

ARTICLE VII- INSURANCE, FIRE AND CASUALTY

 

Section 7.01 Tenant’s Insurance

 

(a)                                  Tenant shall, at its
expense, maintain at all times a policy or policies of insurance insuring
Tenant against all liability for injury to or death of a person or persons and
for damage to or destruction of property occasioned by or arising out of or in
connection with the use or occupancy of the Leased Premises or by the condition
of the Leased Premises (including Tenant’s contractual liability to indemnify
and defend Landlord) with a combined single limit of $1,000,000.00 for bodily
injury and property damages or with increased limits as may be reasonably
required from time to time by Landlord by giving notice to Tenant not to exceed
a combined single limit in excess of $1,000,000.00. Tenant’s policies must be
written by an insurance company or companies reasonably satisfactory to
Landlord and licensed to do business in the State of Texas with Landlord and
Landlord’s manager named as additional insureds without restriction. If Tenant
has an umbrella or excess policy, Tenant shall name Landlord and Landlord’s
manager as additional insureds without restriction on all layers of umbrella or
excess policies. Tenant shall obtain a written obligation on the part of each
insurance company to notify Landlord at least fifteen (15)  days prior to cancellation of the
insurance.

 

(b)                                 Tenant shall deliver copies
of its insurance policies or duly executed certificates of insurance to
Landlord prior to occupying any part of the Leased Premises. Tenant shall
deliver satisfactory evidence of renewals of the insurance policies to Landlord
at least thirty (30) days prior to the expiration of the respective policies.
If Tenant fails to comply with these insurance requirements, Landlord may
obtain 

 

16

 

the
insurance and Tenant shall pay to Landlord on demand as additional Rent the
premium cost thereof plus interest at the Interest Rate from the date of
payment by Landlord until paid by Tenant.

 

(c)                                  Tenant shall insure that all
contractors, subcontractors, moving companies and others performing work of any
type for Tenant in the Building shall comply with the insurance requirements
set out on Exhibit E attached hereto and incorporated herein by
reference, as such requirements may be revised from time to time by Landlord
and Tenant is informed of same.

 

Section 7.02 Landlord’s Insurance

 

Landlord shall, at all times during the Lease Term,
maintain a policy of insurance insuring the Building against loss or damage by
fire, explosion or other hazard and contingencies in amounts determined by
Landlord. Tenant agrees that all personal property upon the Leased Premises
shall be at the risk of Tenant only and that Landlord shall not be liable for
any damage thereto or theft thereof Tenant will not permit anything to be done
which will in any way increase the rate of fire and casualty insurance on the
building or contents. If by reason of any act or conduct of business of Tenant
there shall be any increase in the rate of insurance on the Building or
contents created by Tenant’s acts or conduct of business, such act or conduct
shall constitute an Event of Default under this Lease and Tenant agrees to pay
Landlord the amount of such increase on demand.

 

Section 7.03 Fire or Other Casualty

 

(a)                                  If the Leased Premises or
any part thereof are damaged by fire or other casualty (a ‘Casualty”), Tenant
shall give prompt notice thereof to Landlord. If the Leased Premises or the
Building is damaged by a Casualty, subject to the provisions of Section 7.03(b),
Landlord shall, within sixty (60) days after such Casualty deliver to Tenant a
good faith estimate (the “Damage Notice”) of the date on which the repair of
the damage caused by such Casualty will be substantially completed (such date
is herein called the “Estimated Restoration Completion Date”). If any portion
of the Leased Premises is rendered untenantable by such Casualty (which shall
include damage to the Building, but not the Leased Premises, which
substantially interferes with the use of the Leased Premises for their intended
purposes), then Base Rent and Additional Rent shall abate as of the date of the
Casualty with respect to such portion of the Leased Premises until the earlier
of(i) substantial completion of repairs to the Leased Premises and
elevator access and other services are available to the Leased Premises, or the
Building (as applicable) for conduct of Tenant’s business or (ii) the date
on which Tenant conducts business in such portion of the Leased Premises.

 

17

 

(b)                                 If (i) a Casualty
damages a material portion of the Building, and (ii) Landlord makes a good
faith determination to demolish the remainder of the Building or Landlord’s
Mortgagee requires any of the insurance proceeds be applied to the indebtedness
secured by its Mortgage, then Landlord or Tenant may terminate this Lease by
giving written notice of its election to terminate to the other party within
thirty (30) days after the Damage Notice has been delivered to Tenant. In case
of any such termination under this Section 7.03(b), Base Rent and
Additional Rent shall abate in full as of the date of the Casualty. Landlord
will not have the right to terminate this Lease pursuant to this Section 7.03(b) unless
Landlord also terminates the leases of all other Tenants in the Building.

 

(c)                                  If the Leased Premises or
the Building is damaged by Casualty, then

 

(i)                                         if the
Estimated Restoration Completion Date is later than one hundred eighty (180)
days after the date of the Casualty, Tenant may terminate this Lease by
delivering written notice to Landlord of its election to terminate within
thirty (30) days after the Damage Notice has been delivered to Tenant or, if no
such notice is delivered by Landlord, within ninety (90) days after the
Casualty; and

 

(ii)                                      if Tenant does
not or does not have the right to terminate this Lease pursuant to Section 7.03(c)(i) and
such damage is not repaired by the Casualty Restoration Termination Date
(defined below), Tenant may terminate this Lease by delivering written notice
to Landlord of its election to terminate before the earlier of (A) ten
days after the Casualty Restoration Termination Date (defined below) or (B) the
completion of such repairs.

 

Any termination right of Tenant not timely exercised
shall be deemed waived, time being of the essence with respect thereto. In case
of any termination under Section 7.03(c) above, Base Rent and
Additional Rent shall abate in full as of the date of the Casualty. In case of
any termination under Section 7.03(c) above, the portion of the Base
Rent for the portion of the Leased Premises affected thereby not theretofore
abated shall abate as of the date of termination. Unless Landlord and Tenant
agree in writing otherwise, the “Casualty Restoration Termination Date” shall
be thirty (30) days after the later of (i) one hundred eighty (180) days
after the Casualty, or (ii) the Estimated Restoration Completion Date, not
to exceed one hundred eighty (180) days.

 

(d)                                 If neither party elects to
terminate this Lease following a Casualty, then Landlord shall , within a reasonable
time after such Casualty, commence to repair the Building and the Leased
Premises and shall proceed with reasonable diligence to restore the Building
and Leased Premises to substantially the same condition as they existed
immediately before such Casualty (including the work set out in the Work Letter
attached hereto); however, Landlord shall not be required to repair or replace
any part of the furniture, equipment, fixtures, and other improvements (other
than that set forth in the Work Letter attached hereto) which may have been
placed by, or at the request of, Tenant or other occupants in the Building or
the 

 

18

 

Leased
Premises, and Landlord’s obligation to repair or restore the Building or Leased
Premises shall be limited to the extent of the insurance proceeds paid for the
casualty in question.

 

(e)                                  Any insurance carried by
Landlord or Tenant against loss or damage to the Building or to the Leased
Premises is for the sole benefit of the party carrying the insurance and under
its sole control.

 

Section 7.04
Waiver of Subrogation

 

Each party waives all claims that arise or may arise
in its favor against the other party, or anyone claiming through or under them,
by way of subrogation or otherwise, during the Lease Term or any extension or
renewal thereof, for any injury to or death of any person or persons or the
theft, destruction, loss of, or damage to, any of its property (a “Loss”)
caused by casualty, theft, fire, third parties, or any other matter, to the
extent the same is insured against by it under any insurance policy that covers
the Building, the Leased Premises, Landlord’s or Tenant’s fixtures, personal
property, leasehold improvements, or business, or is required to be insured
against by it under the terms hereof (whether or not the loss or damage is
caused by the fault or negligence of the other party or anyone for whom the
other party is responsible). These waivers are in addition to, and not in
limitation of, any other waiver or release in this Lease with respect to any
Loss. Since these mutual waivers preclude the assignment of any claim by way of
subrogation (or otherwise) to an insurance company (or any other person), each
party shall immediately give each insurance company issuing to it policies of
fire and extended coverage insurance written notice of the terms of these
mutual waivers, and have the insurance policies properly endorsed, if
necessary, to prevent the invalidation of the insurance coverages by reason of
these waivers.

 

ARTICLE VIII - CONDEMNATION

 

(a)                                  If all or substantially all
of the Building is taken for any public or quasi-public use under any
governmental law, ordinance or regulation or by right of eminent domain or is
sold to the condemning authority in lieu of condemnation, then this Lease will
terminate as of the date when physical possession of the portion of the
Building is taken by the condemning authority. If less than all or
substantially all of the Building is taken or sold, Landlord (whether or not
the Leased Premises are affected) may terminate this Lease by giving notice to
Tenant within sixty (60) days after the right of election accrues, in which
event this Lease will terminate as of the date when physical possession of the
portion of the Building is taken by the condemning authority.

 

19

 

(b)                                 If this Lease is not
terminated by Landlord upon any taking or sale of less than all or
substantially all of the Building and Tenant does not terminate this Lease as
provided below:

 

(i)                                  The Rent will
be reduced by an amount representing that part of the Rent properly allocable
to the portion of the Leased Premises taken or sold, if any; and

 

(ii)                               Landlord shall,
at Landlord’s sole expense, restore the Building to substantially its former
condition to the extent reasonably deemed feasible by Landlord, but:

 

(A)                                  Landlord’s
restoration obligation does not exceed the scope of the work done by Landlord
in originally constructing the Building and installing Tenant finish improvements
in the Leased Premises; and

 

(B)            Landlord is not required to
spend for the work an amount in excess of the amount received by Landlord as
compensation or damages (over and above amounts going to the mortgagee of the
property taken) for the part of the Building so taken.

 

(c)                                  If such taking prevents
Tenant from conducting its business in the Leased Premises in a manner
reasonably comparable to that conducted immediately before such taking, then
Tenant may terminate this Lease as of the date of such taking by giving
Landlord written notice within sixty (60) days after the taking, and Rent shall
be apportioned as of the date of such taking.

 

(d)                                 Landlord is entitled to
receive all of the compensation awarded upon a taking of any part or all of the
Building, including any award for the value of the unexpired Lease Term. Tenant
is not entitled to and expressly waives all claim to any compensation;
provided, Tenant is entitled to separately pursue a claim against the condemnor
for the value of Tenant’s personal property, moving costs, loss of business,
and other claims it may have.

 

ARTICLE IX - INDEMNIFICATIONS AND WAIVERS

 

Section 9.01 Limitations on Liability of
Landlord: Waiver

 

(a)                                  Landlord is not liable to
any Tenant or any Tenant Party or any other person, and Tenant waives any
liability of Landlord, for:

 

(1)                     any injury or damage to person or property due to the condition or design
of, or any defect in, the Leased Premises that exists now or occurs in the
future, except for Landlord’s or any Landlord Party’s negligence or willful
misconduct;

 

20

 

(2)                     any injury
or damage to person or property due to the Building or related improvements or
appurtenances out of repair, or defects in or failure of pipes or wiring, or
backing up of drains, or the bursting or leaking of pipes, faucets and plumbing
fixtures, or gas, water, steam, electricity, or oil leaking, escaping, or
flowing into the Leased Premises, unless caused by Landlord’s willful
misconduct or negligence;

 

(3)                     any loss or
damage caused by the acts or omissions of other tenants in the Building or of
any other persons, excepting only the willful misconduct or negligence of
Landlord or any Landlord’s Party; or

 

(4)                     any loss or
damage to property or person occasioned by theft, fire, act of God, public
enemy, injunction, riot, insurrection, war, court order, requisition, order of
governmental authority, and any other cause beyond the control of Landlord.

 

(b)            Notwithstanding the foregoing or anything else to the contrary contained
in this Lease, the liability of Landlord to Tenant or any Tenant Party for any
default or indemnity by Landlord under this Lease is limited to the interest of
Landlord in the Building. No partner, employee, agent, director, or officer of
Landlord has any personal liability for any amounts payable or obligations
performable by Landlord under this Lease.

 

Section 9.02
Tenant’s Indemnification of Landlord; Assumption; Employees’ Claims

 

(a)                                   Tenant shall indemnify, defend, and hold Landlord harmless from:

 

(i)                        all fines,
suits, losses, costs, liabilities, claims, demands, actions, and judgments of
every kind and character by reason of any breach by Tenant under this Lease;
and

 

(ii)                    all claims,
demands, actions, damages, losses, costs, liabilities, expenses, and judgments
suffered by, recovered from, or asserted against Landlord due to injury or
damage to person or property to the extent that the damage or injury is caused,
either proximately or remotely, wholly or in part, by an act, omission,
negligence, or misconduct of Tenant or any Tenant Party, or when the injury or
damage is the result, proximate or remote, of the violation by Tenant or any
Tenant Party of any Applicable Law, or when the injury or damage in any other
way arises out of the occupancy or use by Tenant or any Tenant Party of the
Leased Premises or the Building.

 

21

 

(b)            Tenant is not required to indemnify, defend, or hold Landlord harmless
from any claim, demand, fine, suit, loss, liability, action or judgment arising
solely from Landlord’s negligence or willful misconduct.

 

(c)                                   If Landlord
is made a party to any litigation commenced by or against Tenant or any Tenant
Party or relating to this Lease or to the Leased Premises, then Tenant shall
pay all costs and expenses, including attorneys fees and court costs, incurred
by or imposed upon Landlord by virtue of the litigation to the extent of
comparative responsibility assessed to Tenant. The amount of all costs and
expenses, including attorney’s fees and court costs, is a demand obligation
payable by Tenant to Landlord as additional Rent, bearing interest at the
Interest Rate from the date of payment by Landlord until paid by Tenant.

 

(d)            Tenant, for itself and all Tenant Parties, assumes all risks of injury or
damage to person or property, either proximate or remote, by reason of the
condition or design of, or any defects in, the Leased Premises and the
Building.

 

(e)                                   All
personal property in the Leased Premises is at the sole risk of Tenant.

 

(f)                                     The provisions of this Section 9.02 survive the expiration or
earlier termination of this Lease.

 

Section 9.03 No
Implied Waiver

 

The failure of Landlord to insist at any time upon the strict
performance of any of the terms of this Lease or to exercise any option, right,
power or remedy contained in this Lease is not a waiver of the right or remedy
for the future. The waiver of any breach of this Lease or violation of the Rules and
Regulations attached hereto does not prevent a subsequent act, which would have
originally constituted a breach or violation, from having all the force and
effect of an original breach or violation. No express waiver affects any terms
other than the ones specified in the waiver and those only for the time and in the
manner specifically stated. Acceptance by Landlord of any Rent after the breach
of any of the terms of this Lease or violation of any Rule or Regulation
is not a waiver of the breach or violation or the right to collect applicable
late charges and interest, and no waiver by Landlord of any of the terms of
this Lease is effective unless expressed in writing and signed by Landlord.

 

Section 9.04 Waiver
by Tenant

 

Tenant waives and surrenders for itself and all persons or entities
claiming by, through, and under it, including creditors of all kinds: (i) any
right and privilege which it or any of them has under any present or future
constitution, statute, or rule of law to redeem the Leased Premises or to
have a continuance of this Lease for the Lease Term after termination of Tenant’s
right of occupancy by order or judgment of any court or by any 

 

22

 

legal process or writ, or under the terms of this Lease, (ii) the
benefits of any present or future constitution, statute, or rule of law
that exempts property from liability for debt or for distress for Rent, (iii) any
provision of law relating to notice or delay in levy of execution in case of
eviction of a Tenant for nonpayment of Rent, and (iv) any rights, privileges,
and liens set out under Sections 91.004 and 93.003 of the Texas Property Code
(as amended), and Tenant exempts Landlord from any liability or duty
thereunder.

 

Section 9.05 Hazardous
Materials

 

(a)                                   Tenant has no
liability or responsibility with respect to Hazardous Substances, if any, which
were placed or located within the Leased Premises or the Building prior to the
Effective Date, but Tenant may not:

 

(i)                                    cause or permit
the escape, disposal, or release in the Leased Premises or the Building of any
biologically active, chemically active, or hazardous substances or materials
(hereafter referred to as “Hazardous Substances”); or

 

(ii)                                 bring or permit
or allow any Tenant Party to bring, any Hazardous Substances into the Leased
Premises or the Building.

 

The term Hazardous Substances includes, but is not
limited to, those described in the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601
et seq., the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901
et seq., the Texas Water Code, the Texas Solid Waste Disposal Act, and other
applicable state or local environmental laws and the regulations adopted under
those acts. Hazardous Substances will not include, however, any hazardous
substance used or stored on the Leased Premises in a manner and quantity
necessary for the ordinary performance of Tenant’s business, and then in
compliance with all applicable laws.

 

(b)                                  If any lender
or governmental agency requires testing to ascertain whether or not a release
of Hazardous Substances has occurred in or on the Leased Premises or the
Building based on probable cause that a release occurred and was caused by any
Tenant or Tenant Party, then Tenant shall reimburse the reasonable costs of the
testing to Landlord on demand as Rent.

 

(c)                                   Tenant shall
execute affidavits, representations, and the like from time to time at Landlord’s
request and in form and substance reasonably accepted to Tenant concerning
Tenant’s best knowledge and belief regarding the presence of Hazardous
Substances in the Leased Premises and the Building.

 

23

 

(d)                                  Tenant shall
indemnify Landlord in the manner elsewhere provided in this Lease from any
release of Hazardous Substances in or on the Leased Premises or the Building
caused or permitted by any Tenant or Tenant Party.

 

(e)                                   The provisions
of this Section 9.05 survive the expiration or earlier termination of this
Lease.

 

ARTICLE X - ASSIGNMENT AND SUBLETTING

 

Section 10.01 No
Assignment or Subletting to Unaffiliated Parties Without Consent.

 

(a)                                   Tenant may not,
without Landlord’s prior written consent (which shall not be unreasonably
withheld, conditioned or delayed): (i) assign or transfer this Lease or
any interest therein; (ii) permit any assignment of this Lease or any
interest therein by operation of law; (iii) sublet the Leased Premises or
any part thereof, (iv) grant any license, concession, or other right of
occupancy of any portion of the Leased Premises; (v) mortgage, pledge, or
otherwise encumber its interest in this Lease; or (vi) permit the use of
the Leased Premises by any parties other than Tenant and its employees.
Notwithstanding the foregoing, Tenant may, with fifteen (15) days prior written
notice to but without the prior written consent of Landlord, assign this Lease
(in whole or in part) and/or sublease all or a portion of the Leased Premises
to subsidiaries or affiliate parties of Tenant. As used herein the term
affiliate means a company of which majority ownership is held by the same
entity which owns a majority interest in Tenant and which has as good as or
better financial strength.

 

(b)                                  In the event
Tenant desires the consent of Landlord to an assignment or subletting, Tenant
shall submit to Landlord not less than fifteen (15)  days prior to the effective date of the assignment or
subletting a written notice of such fact which shall include copies of the
final form of the documentation of the assignment or sublease. Landlord shall
either approve or reject Tenant’s request within ten (10) business days of
receipt of Tenant’s written notice.

 

Section 10.02 Landlord’s
Consent

 

(a)                                   Landlord’s
consent to any sublease or assignment which requires Landlord’s consent
hereunder shall not be unreasonably withheld; provided, however, in granting or
withholding its consent Landlord shall be entitled to take into consideration
all relevant factors including without limitation, the nature of the business
of the proposed subtenant or assignee (including without limitation proposed
uses and parking requirements). Landlord may, if it so elects, withhold its
consent if the proposed subtenant or assignee is a government entity. Landlord
may withhold or condition its consent subject to execution and delivery of an
appropriate sublease or assignment which shall include such terms and
conditions as Landlord may reasonably require including provisions for notice
to Landlord, prohibition on further assignment or subleasing without Landlord’s
consent and 

 

24

 

indemnification of Landlord
by the subtenant or assignee (only to the extent of the assigned or subleased
space) for matters that Tenant indemnifies Landlord under the Lease. Landlord
may withhold its consent to any proposed assignment or sublease if an Event of
Default has occurred and is continuing, or an event has occurred which, with
the giving of notice, or the passage of time, or both, could constitute any
Event of Default. Landlord’s consent to any assignment or subletting is not a
waiver of Landlord’s right to approve or disapprove any subsequent assignment
or subletting.

 

(b)                                  For any
approved sublease or assignment which requires Landlord’s consent, in the event
the Base Rent paid by any assignee or subtenant under such lease exceeds the
Base Rent due from Tenant, Landlord shall be entitled to receive one-half (1/2)
of such excess in addition to the Base Rent after deducting all reasonable
sublease expenses, including, without limitation, cost of leasehold improvements,
rental abatement and brokerage fees. In calculating Tenant’s cost basis in the
sublet premises, Tenant may amortize its own improvement costs over the lease
term at a ten percent (10%) rate of interest.

 

(c)                                   Notwithstanding
the consent by Landlord to any assignment or subletting, Tenant and any
guarantor of Tenant’s obligations under this Lease shall remain jointly and
severally liable for the payment of Rent and performance of all other
obligations under this Lease, unless Landlord has agreed in writing to release
Tenant and any guarantor from such obligations.

 

ARTICLE XI- DEFAULT

 

Section 11.01 Default

 

(a)                                   Each of the
following shall constitute an “Event of Default” by Tenant:

 

(i)                                    Tenant’s
failure to pay Rent, or any other sums due from Tenant to Landlord under the
Lease and such failure shall continue for a period of five (5) days after
written notice from Landlord to Tenant;

 

(ii)                                 The filing of a
petition to declare Tenant a bankrupt or to delay, reduce or modify Tenant’s
debts or obligations, or for the appointment of a receiver or trustee of Tenant
or its property or for the winding up or liquidation of its affairs (however,
if any such petition is filed against Tenant, then the filing thereof shall not
constitute an Event of Default, if such petition is dismissed within ninety
(90) days after the filing thereof); or if Tenant makes a general assignment of
the benefits of Tenant’s creditors or admits in writing Tenant’s inability to
pay the debts due; and

 

25

 

(iii)                               The failure of
Tenant to fulfill or perform in whole or in part, any agreement or provision of
this Lease which is an obligation upon Tenant, other than the payment of Rent,
Additional Rent or any other money amounts due hereunder, and such failure or
nonperformance shall continue for a period of thirty (30) days after written
notice thereof has been given by Landlord to Tenant; provided, however, the
thirty (30) day period shall be extended if a cure cannot be effected within
such period due to the nature of the default and provided Tenant commences to
cure within the thirty (30) day period of time and diligently carries such cure
to completion.

 

(b)                                 Upon the
occurrence of any Event of Default, Landlord shall have the option to do any
one or more of the following without any notice or demand, in addition to and
in limitation of any other remedy permitted by law or by this Lease:

 

(i)                                     Landlord may
terminate this Lease and forthwith repossess the Leased Premises and be
entitled to recover forthwith as damages a sum of money equal to the total of: (i) the
cost of recovering the Leased Premises (including attorneys’ fees and costs of
suit); (ii) the unpaid Rent earned at the time of termination, plus
interest thereon at the Interest Rate; (iii) an amount equal to (A) the
entire amount of the total Rent payable during the remainder of the Lease Term
discounted to present value at a per annum rate equal to the “Discount Rate”
(i.e., the rate charged on loans to depository institutions by the Federal Reserve
Banks) as published on the date this lease is terminated by the Wall Street
Journal, Southwest Edition, in its listings of “Money Rates”; and (iv) any
other sum of money and damages owed by Tenant to Landlord.

 

(ii)                                  Landlord may
terminate Tenant’s right of possession (but not this Lease) and may repossess
the Leased Premises by forcible entry or detainer suit or otherwise, and
without terminating this Lease, in which event Landlord may shall make a good
faith effort to (but shall be under no obligation to do so) relet the Leased
Premises for the account of Tenant for such rent and upon such terms as shall
be satisfactory to Landlord, in Landlord’s sole and absolute discretion. For
the purpose of such reletting, Landlord is authorized to make any repairs,
changes, alterations, or additions in or to Leased Premises which Landlord may
consider to be necessary, in Landlord’s reasonable judgment. If Landlord shall
fail or refuse to relet the Leased Premises, then Tenant shall pay to Landlord
as damages a sum equal to the amount of the Rent and all other sums due
hereunder, plus the cost of recovering possession of the Leased Premises, plus
interest on all of the foregoing at the Interest Rate. If the Leased Premises
are relet and a sufficient sum is not realized from such reletting (after
paying the cost of recovering possession of the Leased Premises, plus all of
the costs and expenses of repairs, changes, alterations, and additions to the
Leased Premises, plus all expenses of reletting the Leased Premises, plus
interest 

 

26

 

on
all of the foregoing at the Interest Rate) to satisfy the Rent provided for in
this Lease to be paid, plus all other sums owed by Tenant to Landlord, plus
interest on all of the foregoing at the Interest Rate, then Tenant shall
satisfy and pay any such deficiency to Landlord upon demand therefore from time
to time, and Tenant agrees that Landlord may file suit to recover any sums
falling due under the terms of this paragraph from time to time, and that no
delivery or recovery of any portion due Landlord hereunder shall be any defense
to any subsequent action brought for any amount not theretofore reduced to
judgment in favor of Landlord, nor shall such reletting be construed as an
election on the part of Landlord to terminate this Lease unless a written
notice of such intention be given to Tenant by Landlord. Notwithstanding any
such reletting without termination, Landlord may at any time thereafter elect
to terminate this Lease for such previous breach.

 

(iii)                               Landlord may
make such payments and/or take such actions (including, without limitation,
entering upon or within the Leased Premises, by force if necessary) and do
whatever Tenant is obligated to do under the terms of this Lease, and Tenant
covenants and agrees to reimburse Landlord on demand for any expenses which
Landlord may incur in effecting compliance with Tenant’s obligations under this
Lease, together with interest thereon at the Interest Rate from the date paid
by Landlord.

 

(iv)                              At any time
after an any failure by Tenant to pay any sum of money due or owing to Landlord
hereunder, Landlord shall have the right to change or modify door locks on
entry doors to the Leased Premises, and such right to modify or change locks
shall continue so long as Tenant is in default of its payment obligations
hereunder. Landlord shall not be obligated to furnish Tenant with a new key or
to allow Tenant to enter the Leased Premises, or until and unless Tenant has
paid all sums due and owing hereunder. Landlord may take such action as is
reasonably required to cure any breach or default by Tenant hereunder and bill
Tenant for any expenses incurred by Landlord in curing such breach, and Tenant
shall be obligated to pay such bill immediately upon its receipt by Tenant.

 

(v)                                 Landlord shall
have the right to cause a receiver to be appointed in any action against Tenant
to take possession of the Leased Premises and/or to collect the rents or
profits derived therefrom. The appointment of such receiver shall not
constitute an election on the part of Landlord to terminate this Lease unless
notice of such intention is given to Tenant.

 

27

 

(vi)          After
terminating this Lease or Tenant’s right to possession of the Leased Premises,
Landlord may, without notice to Tenant or any other party, remove any and all
personal property located in the Leased Premises and either dispose of or store
such personal property at Tenant’s expense.

 

(vii)         In addition to
the other remedies provided in this Lease, Landlord shall be entitled, to the
extent permitted by applicable law, to injunctive relief in case of the
violation or attempted or threatened violation, of any of the provisions of
this Lease, or to a decree compelling performance of any other provisions of
this lease, or to any other remedy allowed at law or in equity.

 

Notwithstanding any other remedy or provision set forth in this Lease: (i) this
Lease may be terminated by Landlord only by written notice of such termination
to Tenant given in accordance with the notice provisions of this Lease, and no
other act or omission of Landlord shall be construed as a termination of this
Lease; (ii) all rights and remedies of Landlord herein or existing at law
or in equity are cumulative and the exercise of one or more rights or remedies
shall not be taken to exclude or waive the right to the exercise of any other; (iii) Tenant
agrees that acceptance of full or partial payments by Landlord after notice of
termination or forfeiture will not constitute a waiver of the default,
termination, or forfeiture unless Landlord agrees to a waiver in writing, nor
affect any legal proceedings taken or to be taken by Landlord except to reduce
Tenant’s obligations to Landlord by the amount of such payment; and (iv) waiver
by Landlord of any defaults or breaches by Tenant of any provisions of this
Lease shall not bar Landlord thereafter from requiring prompt performance by
Tenant of the obligations of this Lease, nor shall Landlord be barred
thereafter from immediate exercise of any of Landlord’s rights or remedies in
case of continuing or subsequent default or violation by Tenant.

 

Section 11.02 Landlord’s
Lien

 

Tenant hereby grants to Landlord a security interest to secure payment
of all rent and other sums of money coming due hereunder from Tenant, and to
secure payment of any damages or loss which Landlord may suffer by reason of
the breach by Tenant of any covenant, agreement, or condition contained herein,
upon all equipment, fixtures, furniture, improvements and other personal
property of Tenant presently or which may hereafter be situated on the Leased
Premises, and all proceeds therefrom. Such property shall not be removed from
the Leased Premises at any time without the consent of the Landlord until all
arrearages in rent as well as any other sums of money then due to Landlord
hereunder shall first have been paid and discharged, and all the covenants,
agreements, and conditions hereof have been fulfilled and performed by Tenant.
In addition to any other remedies provided herein, in the event of default,
Landlord may enter the Leased Premises and take possession of any and all
equipment, fixtures, furniture, improvements and other personal property of
Tenant situated upon the Leased Premises without liability for trespass or
conversion. Landlord may sell the same at a public or private sale, with or
without having such property at the sale, after giving Tenant reasonable notice
as to the time and place of the sale. At such sale, Landlord or its 

 

28

 

assigns may purchase the Property unless such purchase is otherwise
prohibited by law. Unless otherwise provided by law, the requirement of
reasonable notice shall be met if such notice is given to Tenant at the address
hereafter prescribed at least fifteen (15)  days
prior to the time of the sale. The proceeds of any such disposition, less all
expenses connected with the taking of possession and sale of the property,
including a reasonable attorney’s fee, shall be applied as a credit against the
indebtedness secured by the security interest granted in this paragraph. Any
surplus shall be paid to Tenant and Tenant shall pay any deficiencies upon
demand. Upon request by Landlord, Tenant will execute and deliver to Landlord a
financing statement in a form sufficient to perfect the security interest of
the Landlord in the aforementioned property and the proceeds thereof under the
provision of the uniform commercial code in force in the State of Texas. The
statutory lien for rent is not waived; the security interest herein granted is
in addition and supplementary thereto.

 

Section 11.03 Mitigation
of Damages

 

(a)           Both Landlord and Tenant shall each use commercially
reasonable efforts to mitigate any damages resulting from a default of the
other party under this Lease.

 

(b)           Landlord and Tenant agree to the following criteria
in connection with Landlord’s obligation to mitigate damages after a default by
Tenant under this Lease:

 

(i)            Landlord will have no obligation to solicit
or entertain negotiations with any other prospective tenants of the Leased
Premises until and unless Landlord obtains full and complete possession of the
Leased Premises, including without limitation, either Tenant’s waiver of all
claims to the Lease Premises or the final and unappealable legal right to relet
the Leased Premises free of any claim of Tenant.

 

(ii)           Landlord will not be obligated to offer the
Leased Premises to a prospective tenant when other premises suitable for that
prospective tenant’s use are (or soon will be) available in the Building or in
the Terrace P.U.D. by Landlord or Landlord’s affiliates, unless such
prospective tenant is delivered by Tenant or Tenant’s agent. For all purposes
under this Lease, affiliates of Landlord shall mean and include (i) any
person or entity owning or holding (directly or indirectly) any interest in
Landlord; and (ii) any entity in which Landlord or any person or entity
owning or holding any interest (directly or indirectly) in Landlord, owns or
holds any interest (directly or indirectly).

 

(iii)          Landlord will not have any obligation to
lease the Leased Premises for any rental less than the current rate then
prevailing for similar space in the Building (or if no similar space is
available in the Building, the current fair market rental then prevailing for
similar space in comparable buildings in the same market area as the Building)
nor shall Landlord be obligated to enter into a new lease under any terms or
conditions that are unacceptable 

 

29

 

to Landlord under Landlord’s then current
leasing policies for comparable space in the Building.

 

(iv)          Landlord will
not be obligated to enter into any lease with any prospective tenant whose
presence or operations in the Building would: (i) violate any restriction,
covenant or requirement contained in the lease of another tenant in the
Building; (ii) adversely affect the reputation of the Building; or (iii) be
incompatible with the operation of the Building as a first class office
building.

 

(v)           Landlord will
not be obligated to enter into a lease with any prospective tenant which does
not have, in Landlord’s sole judgment and opinion, sufficient financial
resources and operating experience to operate the Leased Premises in a first
class manner and meet its financial obligations.

 

(vi)          Landlord will
not be required to expend any amount of money to alter, remodel or otherwise
make the Leased Premises suitable for use by any prospective tenant.

 

(vii)         Landlord will
have no obligation to expend any material sums of money to market the Leased
Premises.

 

If
Landlord makes the Leased Premises available for reletting under the criteria
set forth hereinabove, Landlord will be deemed to have fully satisfied Landlord’s
obligation to mitigate damages under this Lease and under any law or judicial
ruling in effect on the date of this Lease or at the time of Tenant’s default,
and Tenant hereby waives and releases, to the fullest extent legally
permissible, any right to assert in any action by Landlord to enforce the terms
of this Lease, any defense, counterclaim, or rights of set-off or recoupment
respecting the mitigation of damages by Landlord (or alleged failure by
Landlord to adequately mitigate its damages), unless and to the extent Landlord
maliciously or in bad faith fails to act in accordance with the requirements of
this Section 11.03.

 

ARTICLE XII - MISCELLANEOUS PROVISIONS

 

Section 12.01 Rights
Reserved by Landlord

 

Landlord
reserves the following rights, which may be exercised by Landlord at any time
and from time to time without notice and without liability to Tenant or Tenant
Party for damage or injury to property, persons, or business. Tenant agrees
that the exercise by Landlord of any of the following rights will not create or
give rise to any eviction, constructive or actual, or disturbance of Tenant’s
use or possession or giving rise to any claim for set-off or abatement of Rent.
The rights reserved by Landlord hereunder are as follows:

 

30

 

(a)           To change the Building’s name or street address.

 

(b)           To install, affix, and maintain any signs on the
exterior and interior of the Building.

 

(c)           To designate and approve, prior to installation, all
types of window shades, blinds, drapes, awnings, window ventilators, and
similar equipment, and to control all internal lighting that is visible from
the exterior of the Building.

 

(d)           To designate, restrict, and control all sources
within the common areas of the Building where Tenant may obtain ice, drinking
water, towels, toilet supplies, catering, food and beverages, and like.

 

(e)           To enter upon the Leased Premises at reasonable
hours to inspect, clean, or make repairs or alterations to the Leased Premises
(but without any obligation to do so, except as expressly specified in this
Lease), to make repairs or alterations to any part of the Building or the
Building systems (including adjacent premises), to show the Leased Premises to
prospective lenders, purchasers, and, during the last twelve (12) months of the
Lease Term, to show the Leased Premises to prospective tenants at reasonable
hours and, if the Leased Premises are vacant, to prepare them for re-occupancy.

 

(f)            To retain at all times, and to use in appropriate
instances, keys to all doors within and into the Leased Premises.

 

(g)           To decorate and make repairs, alterations,
additions, changes, or improvements, whether structural or otherwise, in and
about the Building and for those purposes to enter upon the Leased Premises
(after giving Tenant reasonable notice thereof, which may be oral notice,
except in cases of real or apparent emergency, in which case no notice will be
required) and, during the continuance of the work, temporarily close doors,
entryways, public space, and corridors in the Building, to interrupt or
temporarily suspend Building services and facilities, and to change the
arrangement and location of entrances or passageways, doors and doorways,
corridors, elevators, stairs, toilets, or other public parts of the Building,
all without abatement or set-off of Rent or affecting any of Tenant’s
obligations under this Lease, so long as the Leased Premises are reasonably
accessible.

 

(h)           To have and retain a paramount title to the Leased
Premises and the Building free and clear of any act of Tenant purporting to
burden or encumber the Leased Premises or the Building.

 

31

 

(i)            To grant to anyone the exclusive right to conduct
any business or render any service in or to the Building, provided the
exclusive right does not operate to exclude Tenant from the uses expressly
permitted in this Lease or from operating its insurance business in the Leased
Premises.

 

(j)            To approve the weight, size, and location of safes,
heavy equipment, file cabinets, book shelves, and other heavy items in and
about the Leased Premises and the Building and to require all those items and
all furniture to be moved into and out of the Building and the Leased Premises
only at times and in a manner reasonably specified by Landlord. Movements of
Tenant’s property into or out of the Building and within the Building are
entirely at the risk and responsibility of Tenant. To require permission before
allowing Tenant’s property to be moved into or out of the Building.

 

(k)           To have access for Landlord and other tenants in the
Building to any mail chutes or other depositories located on the Leased
Premises according to the rules of the United States Postal Service.

 

(1)           To take reasonable measures as Landlord deems
advisable for the security of the Building and its occupants including, without
limitations the search of all persons entering or leaving the Building, the
evacuation of the Building for cause, suspected cause, or for drill purposes,
the temporary denial of access to the Building, and the closing of the Building
after Building Standard Hours, subject to Tenant’s right to admittance when the
Building is closed after Building Standard Hours under reasonable regulations
Landlord may prescribe from time to time.

 

(m)          To transfer, assign or convey, in whole or in part,
the Building and Landlord’s rights under this Lease. If Landlord transfers,
assigns, or conveys its rights under this Lease, then so long as the assignee
assumes Landlord’s obligations hereunder in writing. Landlord shall be released
from any further (but not prior) obligations under this Lease and Tenant shall
look solely to the successor in interest of Landlord for performance of the
obligations of “Landlord” under this Lease, from and after the date of such
assignment.

 

Section 12.02 Taxes
on Tenant’s Property

 

Tenant shall pay, and indemnify, defend, and hold Landlord harmless
against, all taxes levied or assessed against personal property, furniture,
fixtures, or other improvements placed by or for Tenant in the Leased Premises.
If any taxes for which Tenant is liable are levied or assessed against Landlord
or Landlord’s property and if Landlord is required to pay the taxes or if the
assessed value of Landlord’s property is increased by inclusion of personal
property, furniture, fixtures, or other improvements placed by or for Tenant in
the Leased Premises and Landlord elects to pay the increased taxes, Tenant
shall pay to Landlord on demand as additional Rent that part of the taxes for
which Tenant is liable under this Section 12.02.

 

32

 

Section 12.03 Attorneys’
Fees and Legal Expenses

 

If either party files litigation concerning the interpretation or
enforcement of this Lease, the prevailing party is entitled to recover from the
losing party the prevailing party’s reasonable attorneys’ fees, court costs,
and expenses, both at the trial level and at the appellate level.

 

Section 12.04 Subordination

 

(a)            This Lease and all rights of
Tenant under this Lease are subject and subordinate to:

 

(i)            any mortgage or deed of trust secured by a
lien against the Building (a “Mortgage”), or any ground lease or master lease
(a “Primary Lease”) that now or hereafter covers all or any part of the Leased
Premises (the mortgagee under any Mortgage or the lessor under any Primary
Lease is referred to herein as “Landlord’s Mortgagee”); and

 

(ii)           all increases, renewals, modifications,
consolidations, replacements, and extensions of any Mortgage or Primary Lease.

 

Contemporaneously with the execution hereof, Tenant
agrees to execute a Subordination, Attornment and Non-Disturbance Agreement,
substantially in the form of Exhibit G attached hereto (“SNDA”).
Tenant shall, upon demand at anytime or times, execute, acknowledge, and
deliver to Landlord, or to Landlord’s mortgagee, any instruments that may be
reasonably requested by Landlord or any mortgagee of Landlord’s to more
effectively effect or evidence this subordination to any mortgage or deed of
trust.

 

(b)                                  If any mortgage
or deed of trust against the Building is foreclosed, Tenant shall, upon request
by the purchaser at the foreclosure sale:

 

(i)                                    attorn
to the purchaser and recognize the purchaser as “Landlord” under this Lease;
and

 

(ii)           execute,
acknowledge, and deliver to the purchaser an agreement confirming such
attornment as such purchaser may reasonably request, with such purchaser
recognizing the Lease and agreeing not to disturb Tenant pursuant to the terms
of the Lease.

 

(c)            Tenant waives the provisions
of any statute or rule of law, now or hereafter in effect, that may give
or purport to give Tenant any right or election to terminate or otherwise
adversely affect this Lease and the obligations of Tenant under this Lease if
any foreclosure sale occurs. This Lease is not affected in any way whatsoever
by any foreclosure sale unless the holder(s) of the indebtedness or 

 

33

 

other obligations secured by
the mortgages or deeds of trust declare otherwise pursuant to the terms of the
SNDA with such holder(s).

 

Section 12.05 Estoppel
Certificates

 

Tenant shall, from time to time within ten (10) days after receipt
of a request for same, execute, acknowledge, and deliver to Landlord an
Estoppel Certificate in substantially the form attached as Exhibit F.

 

Section 12.06 Financial
Statements

 

Tenant will, from time to time, within twenty (20) days after receipt
of a request for same, but not more than twice in any one twelve (12) month
period, furnish to Landlord Tenant’s most recent financial statements
including, without limitation, the latest audited statements of Tenant plus its
most recent balance sheets reflecting the current assets and liabilities of Tenant
as of the date of such statements. Landlord will be authorized to deliver such
financial statements to any existing or proposed partner, investor, lender or
purchaser, or any agent or employee of any such parties. Landlord will use its
best efforts to obtain a confidentiality agreement in form and substance
satisfactory to Tenant prior to releasing such information to any third party.

 

Section 12.07 Notices

 

All notices, requests, approvals, and other communications required or
permitted to be delivered under this Lease must be in writing and are
effective:

 

(a)            on the same business day
sent, if sent by telecopier prior to 5:00 P.M., Austin, Texas time and the
sending telecopier generates a written confirmation of sending;

 

(b)           the next business day after
delivery on a business day to a nationally-recognized-overnight-courier service
for prepaid overnight delivery;

 

(c)            if orderly delivery of the
mail is not then disrupted or threatened, in which event some method of
delivery other than the mail must be used, three (3) days after being
deposited in the United States mail, certified, return receipt requested,
postage prepaid; or

 

(d)           upon receipt if delivered
personally or by any method other than by telecopier (with written
confirmation), nationally-recognized-overnight-courier service, or mail; in
each instance addressed to Landlord or Tenant, as the case may be, at the
address or the addresses (if more than one) specified for such party in the
Basic Lease Provisions, or to any other address or addresses either party may
designate by ten (10) days’ prior notice to the other party.

 

34

 

Section 12.08 Business
Purpose

 

Tenant represents that this Lease is executed by Tenant, and all
obligations of Tenant arising out of this Lease are, primarily for business or
commercial purposes and not for personal, family, or household purposes.

 

Section 12.09 Severability

 

Each of the terms of this Lease is, and must be construed to be,
separate and independent. If any of the terms of this Lease or its application
to any person or circumstances is to any extent invalid and unenforceable, the
remainder of this Lease, or the application of that term to persons or
circumstances other than those as to which it is invalid or unenforceable, are
not affected thereby.

 

Section 12.10 No
Merger

 

The fact that the same person may acquire or hold, directly or
indirectly, this Lease or the leasehold estate hereby created or any interest
in this Lease or in the leasehold estate as well as the fee estate in the
Leased Premises or any interest in the fee estate does not cause a merger of
this Lease or of the leasehold estate hereby created with the fee estate in the
Leased Premises.

 

Section 12.11 Force
Majeure

 

When this Lease prescribes a period of time for action to be taken by
Landlord or Tenant, other than the payment of Rent, Landlord or Tenant shall
not be liable or responsible for, and there is excluded from the computation
for the period of time, any delays due to strikes, acts of God, shortages of
labor or materials, war, governmental laws, regulations, restrictions, or any
other cause of any kind that is beyond the control of Landlord or Tenant.

 

Section 12.12 Gender

 

Words of any gender used in this Lease include any other gender and
words in the singular number include the plural, unless the context otherwise
requires.

 

35

 

Section 12.13 Joint
and Several Liability/Personal Liability

 

If
there is more than one Tenant, the obligations imposed upon Tenant under this
Lease are joint and several. If Tenant is a general or limited partnership,
each general partner of Tenant is jointly and severally liable for the
obligations imposed upon Tenant under the Lease.

 

Section 12.14 No
Representations

 

Landlord
or Landlord’s agents made no representations or promises with respect to the
Leased Premises or the Building except as expressly set forth in this Lease. No
rights, easements, or licenses are acquired by Tenant by implication or
otherwise except as expressly set forth in this Lease.

 

Section 12.15 Entire
Agreement; Amendments

 

This
Lease is the entire agreement between the parties and supersedes all
negotiations, considerations, representations, and understandings between
Landlord and Tenant prior to the date hereof No act or omission of any employee
or agent of Landlord or of Landlord’s Broker may alter, change, or modify any
of the terms of this Lease. No amendment or modification of this Lease is
binding unless expressed in a written instrument executed for that purpose by
Landlord and Tenant.

 

Section 12.16 Section Headings

 

The
section headings in this Lease are for convenience only and in no way enlarge
or limit the scope or meaning of the paragraphs in this Lease.

 

Section 12.17 Binding
Effect

 

All terms of this Lease are
binding upon the respective heirs, personal representatives, successors, and,
to the extent assignment is permitted, assigns of Landlord and Tenant.

 

Section 12.18 Counterparts

 

This
Lease may be executed in two or more counterparts, each of which is deemed an
original and all of which together constitute one and the same instrument.

 

Section 12.19 Rental
Tax

 

Tenant shall pay as Rent all licenses, charges, and
other fees of every kind and nature as and when they become due to the
appropriate governmental entity arising out of or in connection with Tenant’s
use and occupancy of the Leased Premises and the Building, including but not
limited to license fees, business license taxes, and privilege, sales, excise,
or other taxes (other than income) imposed upon Rent or upon services provided
by Landlord or upon Landlord in an amount measured by Rent received by
Landlord.

 

36

 

Section 12.20
No Personal Liability of Landlord

 

If Landlord shall fail to perform any covenant, term
or condition of this Lease and, as a consequence, if Tenant shall recover a
money judgment against Landlord, such judgment shall be satisfied only out of
the proceeds received at a judicial sale upon execution and levy against the
right, title and interest of Landlord in the Building and in the rents or other
income from the Building receivable by Landlord, and Landlord’s affiliate
companies nor their respective owners, partners, venturers, shareholders,
directors or officers shall have any personal, corporate or other liability
hereunder. Tenant covenants and agrees not to bring suit against: (i) the
owners, limited partners, venturers, shareholders, directors or officers of
Landlord and/or affiliate of Landlord; or (ii) any affiliate of Landlord.

 

Section 12.21
Authority to Sign Lease

 

If Tenant is a corporation or a partnership (general
or limited), each person(s) signing this Lease as an officer or partner of
Tenant represents to Landlord that such person(s) is authorized to execute
this Lease without the necessity of obtaining any other signature of any other
officer or partner, that the execution of this Lease has been authorized by the
board of directors of the corporation or by the partners of the partnership, as
the case maybe, and that this Lease is fully binding on Tenant. Landlord
reserves the right to request evidence of the approval of this Lease and
authorization of Tenant’s signatories to bind Tenant, which evidence shall be
satisfactory in form and content to Landlord and its counsel.

 

Section 12.22
Execution and Approval of Lease

 

Employees and agents of Landlord and Tenant and of
Landlord’s or Tenant’s Broker have no authority to make or agree to make a
lease or any other agreement or undertaking in connection herewith. The
submission of this Lease for examination and negotiation is not an offer to
lease, agreement to reserve, or option to lease the Leased Premises. This Lease
is effective and binding on Landlord and Tenant only upon the execution and
delivery of this Lease by Landlord and Tenant.

 

Section 12.23
Confidentiality

 

Tenant must keep the terms and contents of this
Lease strictly confidential and may only disclose the terms and contents hereof
to Tenant’s employees, accountants, attorneys or representatives who have a
legitimate need to know the terms and contents of this Lease or as may be
required by applicable law, regulation or court order.

 

37

 

ARTICLE XIII - ADDITIONAL AGREEMENTS

 

Section 13.01 Parking

 

(a)                                   During the
initial Lease Term and any renewals of the Lease, Landlord shall provide to
Tenant, at no expense, four (4) spaces for each 1,000 square feet of
rentable area included with the Leased Premises, two (2) of which shall be
reserved parking spaces in the location shown on Exhibit B-1. All of such
parking spaces will be in the parking garage (the “Garage”) for the Building
and Landlord will issue to Tenant one parking permit for each parking space.
Prior to issuance of the parking permits, Tenant must deliver to Landlord a
list of the automobile license numbers of Tenant’s employees who will be using
the permit. If any permit is lost, damaged or not returned to Landlord on
request, payment of a reasonable replacement fee must be delivered to Landlord
before a replacement permit is issued to Tenant. Tenant shall not have the
right to lease or otherwise use more parking spaces than the number set forth
in the Basic Lease Provisions.

 

(b)                                  All Tenant
Parties must comply with all traffic, security, safety, and other rules and
regulations promulgated from time to time with respect to the Garage.

 

(c)                                   Landlord shall
not be responsible for money, jewelry, automobiles or other personal property
lost in or stolen from the Garage regardless of whether such loss or theft
occurs when the Garage or other areas therein are locked or otherwise secured
against entry. Except as caused by the gross negligence or willful misconduct
of Landlord, Landlord shall not be liable for any loss, injury or damage to
persons using the Garage or automobiles or other property therein, it being
agreed that, to the fullest extent permitted by law, the use of the Garage and
the spaces shall be at the sole risk of Tenant and its employees.

 

(d)                                  Landlord shall
have the right from time to time to promulgate reasonable rules and
regulations regarding the Garage, the spaces and the use thereof, including,
but not limited to, rules and regulations controlling the flow of traffic
to and from various parking areas, the angle and direction of parking and the
like. Tenant shall comply with and use reasonable efforts to cause its
employees to comply with all such rules and regulations as well as all
reasonable additions and amendments thereto.

 

(e)                                   Tenant shall
not store or permit its employees to store any automobiles in the Garage
without the prior written consent of Landlord. Except for emergency repairs,
Tenant and its employees shall not perform any work on any automobiles while
located in the Garage or on the Property.

 

(f)                                     Landlord shall
have the right to temporarily close the Garage or certain areas therein in
order to perform necessary repairs, maintenance and improvements to the Garage.

 

38

 

 (g)                               Tenant shall not assign or
sublease any of the spaces without the consent of Landlord.

 

(h)                                  For each
parking space covered under this Agreement, Tenant will have one (1) parking
permit which may be evidenced and controlled by a parking sticker or other
mechanism, device or system specified by Landlord from time to time. With
respect to such permits, Tenant covenants and agrees as follows:

 

(i)                                    Only one (1) vehicle
per permit shall have access to the Garage.

 

(ii)           Tenant shall at all times
maintain with Landlord a list of permits held by Tenant, which list shall be in
form, scope, and substance reasonably satisfactory to Landlord, and shall
identify each individual to whom a permit has been issued, the vehicle used by
such individual, and the license plate number of such vehicle.

 

(iii)          Tenant shall immediately
report to Landlord any lost permit, and Tenant shall pay Landlord’s then
current charge for replacement permits. Tenant shall be charged for each permit
which is not surrendered to Landlord at the time such surrender is required
hereunder.

 

(iv)          Tenant shall be responsible
for any damage to the Garage caused by any person using a permit which has been
issued to Tenant.

 

(v)                                In the event of
unauthorized or improper use of a permit, as determined by Landlord in
reasonable sole judgment, Landlord may withdraw the permit and terminate Tenant’s
right to use the permit if the unauthorized or improper use is not remedied by
Tenant within five (5) days of its receipt of Landlord’s written notice
alleging such misuse, all without terminating or otherwise affecting Tenant’s
responsibilities, obligations, and liabilities under this Lease.
Notwithstanding the foregoing, however, if such unauthorized or improper use of
a permit is made by an employee of Tenant without Tenant’s knowledge, consent,
or approval, then such employee may be barred by Landlord from using the permit
and any parking spaces in the Garage, and Landlord may permit Tenant to reissue
the permit to another employee of Tenant subject to the provisions of this
parking agreement.

 

(vi)          Each permit shall at all
times remain the property of Landlord, and Tenant shall surrender all permits
to Landlord immediately upon termination of this Lease.

 

(vii)         Tenant shall indemnify and hold
harmless Landlord from and against all claims, losses, liabilities, damages,
costs, and expenses (including, but not limited to, attorneys’ fees and court
costs) arising or alleged to arise out of the use of any parking permit issued
hereunder. If any of the parking 

 

39

 

spaces covered by the permits provided to Tenant
hereunder become unavailable for use by Tenant at any time or from time to time
during the Lease Term, whether due to casualty or any other cause, the charges
hereunder with respect to the applicable permits shall abate until such spaces
again become available for use by Tenant, but otherwise this Lease shall
continue in full force and effect.

 

Section 13.02 Right
of Relocation

 

During the term of this Lease, Tenant grants Landlord the right to
relocate Tenant upon not less than six (6) months prior written notice to
another lease space of comparable size located in the Terrace P.U.D., upon the
same terms contained in this Lease. If Landlord exercises the right of
relocation granted herein, Landlord shall reimburse Tenant for all reasonable
costs associated with Tenant’s move (including, without limitation, data
cabling and changes of stationery) to the replacement lease space provided by
Landlord. Said moving cost shall be direct-billed to Landlord and after Tenant
has completed its move, Tenant shall promptly submit third-party invoices to
Landlord for any moving expenses Tenant incurs as they are received Landlord
shall pay each invoice as the same becomes due, according to its terms.

 

ARTICLE XIV - EXHIBITS AND ATTACHMENTS

 

The following exhibits are
attached to and made a part of this Lease: Exhibit A [Land], Exhibit B
[Leased Premises], Exhibit B-1 [Reserved Parking], Exhibit C
[Building Core and Shell], Exhibit D [Building Rules and
Regulations], Exhibit E [Insurance Requirements], Exhibit F
[Estoppel Certificate], and Exhibit G [Subordination, Attornment
and Non-Disturbance Agreement]. The Tenant’s Work Letter is also attached.

 

40

 

This Lease is executed in multiple originals as of
the Effective Date.

 

	
  LANDLORD:

  	
  DESTA FIVE PARTNERSHIP,
  LTD.,

  
	
   

  	
  a Texas limited
  partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  DESTA FIVE DEVELOPMENT
  CORP.,

  
	
   

  	
   

  	
  a Texas corporation, its
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/L Paul Latham

  
	
   

  	
   

  	
   

  	
  L. Paul Latham, President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TENANT:

  	
  MATINEE MEDIA CORP.,

  
	
   

  	
  a Texas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/Robert Walker

  
	
   

  	
  Name:

  	
   

  	
  Robert Walker

  
	
   

  	
  Title:

  	
   

  	
  President

  
								

 

EXHIBITS AND ATTACHMENTS:

 

	
  Exhibit A:

  	
   

  	
  Land

  
	
  Exhibit B:

  	
   

  	
  Leased Premises

  
	
  Exhibit B-1:

  	
   

  	
  Reserved Parking

  
	
  Exhibit C:

  	
   

  	
  Building Core and Shell

  
	
  Exhibit D:

  	
   

  	
  Building Rules and Regulations

  
	
  Exhibit E:

  	
   

  	
  Insurance Requirements

  
	
  Exhibit F:

  	
   

  	
  Estoppel Certificate

  
	
  Exhibit G:

  	
   

  	
  Subordination, Attornment and Non-Disturbance
  Agreement

  
	
  Tenant’s Work Letter

  

 

41

 

EXHIBIT A

 

to Lease by and between

 

Desta Five Partnership, Ltd.

 

and

 

Matinee Media Corp.

 

LAND
DESCRIPTION

 

Lot 1, Block “E”, THE TERRACE, SECTION SIX, a
subdivision in Travis County, Texas, according to the map or plat thereof,
recorded under Document No. 200000362 of the Official Public Records of
Travis County, Texas; TOGETHER WITH a non-exclusive easement for vehicular and
pedestrian traffic, created in that certain Declaration of Easements and
Restrictions dated December 4, 2000, recorded in Document No. 2000193470
of the Official Public Records of Travis County, Texas, and being over and
across a 0.3 109 acre parcel of land, more or less, as described in Exhibit “A-2”
therein, the same being a portion of Lot 3, Block “B”, THE TERRACE, SECTION SEVEN,
a subdivision in Travis County, Texas, according to the map or plat thereof,
recorded under Document No. 200100072 of the Official Public Records of
Travis County, Texas.

 

 

EXHIBIT B

 

to Lease by and between

Desta Five Partnership, Ltd.

 

and

 

Matinee
Media Corp.

 

FLOOR PLANS

 

 

EXHIBIT B-1

 

to
Lease by and between

 

Desta
Five Partnership, Ltd.

 

and

 

Matinee
Media Corp.

 

RESERVED PARKING

 

 

EXHIBIT C

 

to
Lease by and between

 

Desta
Five Partnership, Ltd.

 

and

 

Matinee
Media Corp.

 

BUILDING CORE AND SHELL

 

Landlord shall furnish to the Premises at its
expense and have in place and ready for Tenant’s use:

 

·                                           Electrical
power shall be provided 208/120 volt and at 480/277 volt power panels connected
to a vertical bus duct system. Note: Landlord reserves the right to separately
meter the Tenant’s Leased Premises.

 

·                                           Ceiling grid
(2x2) and ceiling tile stacked in the Leased Premises.

 

·                                           All HVAC shell
duct work, and vav boxes at a ratio of 1/1000 per usable square foot with 3.5
tons per VAV and pre-programmed controls shall be installed.

 

·                                           Separate
electrical telephone rooms on each floor. Tenant’s communications equipment
shall be installed in the Leased Premises.

 

·                                           Potable water
and sanitary sewer connections at designated points.

 

·                                           All “core”
functions including, but not limited to, restrooms, drinking fountains, HVAC
mechanical room(s), telephone and electrical rooms, ground floor elevator
lobby, exit signs at corridors, fire stairwells and all fire and life safety
equipment, etc.

 

·                                           Sprinklers:
temporary protection consisting of mains, laterals and up rights, installed
according to building code and on a ratio of one head per 225 usable square
feet.

 

·                                           3 lamp electronic
ballast energy efficient parabolic light features stacked on each lease space
floor (approximately 100 square feet/fixture allocation).

 

·                                           Mini-blinds
installed - in plastic bags.

 

·                                           Perimeter
interior walls - drywall (not painted).

 

·                                           Ability to
install additional HVAC via a split system on the roof of the Building or in a
mutually agreeable location outside the Building.

 

 

EXHIBIT  D

 

to Lease by and between

 

Desta Five Partnership, Ltd.

 

and

 

Matinee Media Corp.

 

BUILDING RULES AND REGULATIONS

 

1.             No birds, animals,
reptiles or any other creatures (other than seeing eye dogs) may be brought
into or about the Building.

 

2.             Nothing may be swept
or thrown into the corridors, halls, elevator shafts, stairways or other Common
Areas.

 

3.             Tenant may not make
or permit any improper noises in the Building, create a nuisance or do or
permit anything which, in Landlord’s sole judgment, interferes in any way with
or annoys other tenants or persons having business with them.

 

4.             No equipment of any
kind may be operated on the Leased Premises that could create noise that would
in any way annoy any other tenant in the Building.

 

5.             Tenant shall
cooperate with Building employees in keeping the Leased Premises neat and
clean.

 

6.             Corridor doors, when
not in use, must be kept closed.

 

7.             No bicycles or
similar vehicles are allowed in the Building.

 

8.             Tenant shall refer
all third party contractors, contractor’s representatives, and installation
technicians rendering any service on or to the Leased Premises for Tenant to
Landlord for Landlord’s approval, such approval not to be unreasonably
withheld, and supervision for performance of any contractual service. This
provision applies to all work performed by third parties in the Building,
including installation of telephones, telephone equipment, electrical devices,
and attachments and installations of any nature affecting floors, walls,
woodwork, trim, windows, ceiling, equipment, or any other physical portion of
the Building.

 

9.             No bolts or screws
maybe driven into or inserted in any part of the Building except by Building
maintenance personnel.

 

10.           Sidewalks, doorways,
vestibules, halls, stairways and similar areas may not be obstructed 

 

 

by Tenant or used for any purpose other than
ingress and egress to and from the Leased Premises, or for going from one part
of the Building to another part of the Building. No furniture may be placed in
front of the Building or in any lobby or corridor without prior consent of
Landlord.

 

11.           Any Tenant who desires
to enter the Building after Building Standard Hours, may be required to sign in
at the Building security station, if applicable, upon entry and sign out upon
leaving, giving the location during their stay and their time of arrival and
departure.

 

12.           All deliveries must be
made via the service entrance and service elevator during Building Standard
Hours or at other times as Landlord may determine. Prior approval must be
obtained from the Landlord for all deliveries (other than meals and office
supplies) that are received after Building Standard Hours.

 

13.           Landlord or its agents
or employees may enter the Leased Premises to examine the same or to make repairs,
alterations, or additions as Landlord deems necessary for the safety,
preservation, or improvement of the Building.

 

14.           Landlord may require
Tenant and any Tenant Party to evacuate the Building in the event of an
emergency or catastrophe.

 

15.           Tenant may not do
anything, or permit anything to be done, in or about the Building, or bring or
keep anything in the Building that in any way increases the possibility of fire
or other casualty, or do anything in conflict with the valid laws, rules, or regulations
of any governmental authority.

 

16.           Tenant shall notify the
Building manager when safes or other equipment are to be taken into or out of
the Building. Moving of those items must be done under the supervision of the
Building manager, after receiving approval from Landlord.

 

17.           Landlord may prescribe
the weight and position of safes and other heavy equipment that may over-stress
any portion of the floor. All damage done to the Building by the improper
placing of heavy items that over-stress the floor will be repaired at the sole
expense of the Tenant.

 

18.           No food may be
distributed from Tenant’s office to persons other than Tenant’s employees or
invitees without the prior approval of the Building manager.

 

19.           No additional locks may
be placed on any doors without the prior consent of Landlord. All necessary
keys must be furnished by Landlord and must be surrendered to Landlord upon
termination of this Lease. Tenant shall then give Landlord the combination for
all locks on the doors and vaults.

 

20.           All Tenant Parties
shall comply with parking rules and regulations as may be posted and
distributed from time to time.

 

 

21.           Plumbing and appliances
may be used only for the purposes for which constructed. No sweeping, rubbish,
rags, or other unsuitable material may be thrown or placed therein. Any stoppage or
damage resulting to any fixtures or appliances from misuse by any Tenant or
Tenant Party is payable by Tenant.

 

22.           No signs, posters,
advertisements, or notices may be painted or affixed on any windows, doors, or
other parts of the Building, except in colors, sizes, and styles, and in
places, approved in advance by Landlord. Landlord has no obligation or duty to
give this approval. Building standard suite identification signs will be
prepared by a sign writer approved by Landlord. The cost of the Building
standard signs is payable by Tenant. Landlord may remove all unapproved signs
without notice to Tenant, at the expense of Tenant. Directories will be placed
by Landlord, at Landlord’s expense, in conspicuous places in the Building. No
other directories are permitted.

 

23.           No portion of the
Building may be used as lodging rooms or for any immoral or unlawful purposes.

 

24.           Tenant may not operate,
or allow the operation of any coin or token operated vending machine or similar
device for the sale of any goods, wares, merchandise, food, beverages, or
services, including but not limited to pay lockers, pay toilets, scales,
amusement devices and machines for the sale of beverages, foods, candy,
cigarettes or other commodities, without the prior consent of Landlord.

 

25.          Tenant must obtain
Landlord’s prior written approval, which is at Landlord’s sole discretion, for
installation of any solar screen material, window shades, blinds, drapes,
awnings, window ventilators, or other similar equipment and any window
treatment of any kind whatsoever. Landlord may control all internal lighting
that is visible from the exterior of the Building and may change any unapproved
lighting without notice to Tenant, at Tenant’s expense.

 

26.           Landlord may, pursuant
to the terms of this Lease, rescind any of these Rules and Regulations and
make other future Rules and Regulations as in the judgment of Landlord are
from time to time needed for the safety, protection, care, and cleanliness of
the Building, the operation thereof, the preservation of good order therein,
and the protection and comfort of its tenants, their agents, employees, and
invitees. Those rules, when made and notice thereof given to a Tenant, are
binding upon the Tenant in the same manner as the original rules.

 

27.           Tenant shall at all
times keep a chair pad under every chair that has rollers and is located in a
carpeted office area.

 

28.           No smoking of cigars,
cigarettes or other tobacco or non-tobacco products shall be allowed in the
Building.

 

 

EXHIBIT E

 

to Lease by and between

 

Desta Five Partnership, Ltd.

 

and

 

Matinee Media Corp.

 

INSURANCE REQUIREMENTS

 

All
contractors, subcontractors, suppliers, service providers, moving companies and
others performing work of any type for Tenant in the Building shall:

 

·                             carry the insurance listed
below with companies acceptable to Landlord; and

 

·                             furnish
Certificates of Insurance to Landlord evidencing required coverages at least
ten (10) days prior to the expiration dates of certificates previously
furnished.

 

Certificates
of Insurance must provide for thirty (30) days’ prior written notice of
cancellation or material change to Landlord, do ClayDesta, L.P., Six Desta
Drive, Suite 2750, Midland, Texas 79705, Attention: Senior Property
Manager.

 

1.                                        Commercial
General Liability: This insurance policy must:

 

a.                                       Be
written on a standard liability policy form (sometimes known as commercial
general liability insurance) but without exclusionary endorsements that
may delete coverage for products/completed operation, personal and advertising
injury, blanket contractual, fire legal liability or medical payments.

 

b.                                      Be
endorsed to provide that:

 

·                                          aggregate
limits, if any, apply separately to each of the injured’s jobs or projects away
from premises owned by or rented to the insured;

 

·                                           the
insurance is primary and non-contributory to any insurance provided by
Landlord; and

 

·                                           include the
following minimum limits:

 

	
  $

  	
  1,000,000

  	
   

  	
  General
  Aggregate

  	
   

  
	
  $

  	
  1,000,000

  	
   

  	
  Products -
  Completed Operations Aggregate

  	
   

  
	
  $

  	
  500,000

  	
   

  	
  Personal &
  Advertising Injury

  	
   

  
	
  $

  	
  500,000

  	
   

  	
  Each
  Occurrence

  	
   

  

 

 

	
  $

  	
  50,000

  	
   

  	
  Fire Damage
  (Any one fire)

  	
   

  
	
  $

  	
  5,000

  	
   

  	
  Medical
  Expense (Any one person)

  	
   

  

 

2.                                        Automobile
Liability: Automobile liability insurance for claims of ownership,
maintenance or use of owned, non-owned and hired motor vehicles at, upon or
away from the Building with the following minimum limits:

 

$ 500,000 Combined Single Limit Bodily Injury
and Property Damage per Occurrence

 

3.                                        General
Requirements: All policies must be:

 

·                                           written
on an occurrence basis and not on a claims-made basis;

 

·                                           endorsed
to name as additional insured Landlord, Manager and their respective officers,
directors, employees, agents, partners and assigns;

 

·                                           primary
and non-contributing with, and not in excess of, any other insurance available
to Tenant, Landlord and Manager (or any other entity named as an additional
insured); and

 

·                                           written
by an insurer authorized to do business in the State of Texas for the type of
insurance provided in the policy.

 

 

EXHIBIT F

 

to Lease by and between

 

Desta Five Partnership, Ltd.

 

and

 

Matinee Media Corp.

 

ESTOPPEL CERTIFICATE

 

                                            ,                  

 

 

                                                               

                                                               

                                                               

 

RE:          Office
Lease dated
                                        ,
          ,  between Desta Five Partnership, Ltd. (“Landlord”)
and                                                   
(“Tenant”), a
                                                                      
(as amended, the “Lease”), covering square feet of space on floors
                        (the “Leased Premises”) in
the                                ,                                                  ,
Austin, Texas (the “Building”).

 

Dear
                                  :

 

Tenant
understands that either (1) you are purchasing the Building from Landlord
and are relying on this Estoppel Certificate in making your purchase or (2) you
are making a loan to Landlord that will be secured by the Building and you are
relying on this Estoppel Certificate in making your loan.

 

For $10.00 and
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged, Tenant ratifies the Lease and certifies and agrees as follows:

 

1.             Tenant is occupying
and conducting business in the Leased Premises.

 

2.             The Base Rent under
the Lease is $                                                                        per
month payable in advance on the first day of each calendar month. Base Rent is
paid through
                .

 

 

3.             The Lease is in full
force and effect and Tenant has not assigned or subleased any portion of its
interest in the Lease except as specified on Schedule A attached to this
Estoppel Certificate.

 

4.             A true and correct
copy of the Lease and all amendments thereto is attached as Schedule  B
to this Estoppel Certificate.

 

5.             The Lease is the
entire agreement between Landlord and Tenant concerning the Leased Premises.

 

6.             The Lease Term
expires on
                                    ,                          .

 

7.             Each of the
obligations of Landlord to be performed to date under the Lease has been performed
except as specified on Schedule A. Without limitation on the foregoing, Tenant
agrees and represents that to Tenant’s actual knowledge, Landlord has satisfied
all of its obligations, if any, regarding the installation of leasehold
improvements except as specified on Schedule B.

 

8.             To Tenant’s actual
knowledge, no Event of Default by Tenant or default by Landlord has occurred
under the Lease and is continuing and no act or omission has occurred that with
the giving of notice or passage of time or both would constitute an Event of
Default by Tenant except as specified on Schedule A.

 

9.             At this time, Tenant
is riot entitled to any abatements, set-offs, or deductions from Rent under the
Lease except as specified in the Lease or Schedule A.

 

10.           No Rent has been paid
more than one month in advance.

 

11.           The Security Deposit is
$                                    .

 

12.           Tenant agrees that upon
the acquisition of the Building by any purchaser of the Building (“Purchaser”)
or by any lender foreclosing any lien against the Building (“Lender”), Tenant
will attorn and does attorn and agrees to recognize and does recognize such
Purchaser or Lender as landlord on the condition that such Purchaser or Lender
agrees to recognize the Lease subject to the rights and remedies thereunder of
Landlord in the event of a default by Tenant; provided however, that such
Purchaser or Lender shall have no liability or responsibility to Tenant,
whether arising out of the Lease, by operation of law, or otherwise, for any
cause of action or matter known to Tenant on the date hereof which is not
disclosed herein.

 

13.           Tenant agrees to
execute such documents as any Purchaser or Lender reasonably requests for the
purpose of subordinating the Lease to any mortgage or deed of trust to be
placed upon the Building from time to time, provided that such subordination is
subject to Tenant’s continued quiet enjoyment of the Leased Premises for so
long as Tenant is not in default under the Lease.

 

 

14.           Tenant certifies that
there are no unpaid bills relating to any materials furnished or labor
performed in connection with the construction of any improvements to the Leased
Premises by, through or under Tenant, and no liens have been filed against the
Leased Premises or the Building in connection with the construction of any
improvements to the Leased Premises or the Building by, through or under
Tenant.

 

15.           This Tenant Estoppel
Agreement is made and given with the understanding that any Purchaser or Lender
may rely on it in purchasing the Building or in making a loan which is secured
by a lien against the Building, and that the certifications and representations
made herein shall survive such acquisition or loan.

 

Defined terms in the Lease have the same meanings in this Estoppel
Certificate.

 

	
   

  	
                                                             ,
  a

  	
   

  
	
   

  	
                                      

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

 

SCHEDULE A

 

1.                                        List any
assignments or subleases or state NONE:

 

2.                                        List any Events
of Default by Tenant or defaults by Landlord that have occurred and are
continuing or any acts or omissions that have occurred that with the giving of
notice of passage of time or both would constitute an Event of Default by
Tenant or state NONE:

 

3.                                        List any
abatements, set-offs or deductions from Rent to which Tenant is entitled at
this time or state NONE:

 

 

SCHEDULE B

 

COVER PAGE FOR COPIES OF LEASE AND AMENDMENTS

 

 

EXHIBIT G

 

to
Lease by and between

 

Desta
Five Partnership, Ltd.

 

and

 

Matinee
Media Corp.

 

SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE AGREEMENT

 

THIS SUBORDINATION,
ATFORNMENT AND NON-DISTURBANCE AGREEMENT (this “Agreement”) is made and
entered into as of
the              
day of
                    ,
by and among FACILITY INSURANCE CORPORATION, (hereinafter referred to as “Tenant”),
Desta Five Partnership, Ltd. a limited liability company (“Landlord”), and
                                          ,  a national banking association (“Mortgagee”);

 

WHEREAS, Mortgagee is the
owner of a certain promissory note (herein, as the same may have been or may be
from time to time renewed, extended, amended or supplemented, called the “Note”),
dated
                                                    
and executed by Landlord payable to the order of Mortgagee, in the original
principal amount
of                        ,
bearing interest and payable as therein provided, secured by, among other
things, a Deed of Trust, Assignment, Security Agreement and Financing Statement
(herein, as it may have been or may be from time to time renewed, extended,
amended or supplemented, called  the
“Mortgage”) recorded in the real property records of Travis County,
Texas in Volume           Page          
covering, among other property, the land (the “Land”) described in Exhibit “A”
which is attached hereto and incorporated herein by reference, and the
improvements thereon (such Land and improvements being herein together called
the “Property”);

 

WHEREAS, Tenant is the
tenant under a lease (the “Lease”) from Landlord, dated
                ,
200      , pertaining to certain office space
(the “Premises”) on the Land; and

 

WHEREAS, the term “Landlord”
as used herein means Landlord as the transferee, successor and/or assignee
under the Lease or, if Landlord’s interest is transferred in any manner, the
successor(s) or assign(s) occupying the position of landlord under
the Lease at the time in question, but not Mortgagee or any Purchaser;

 

THEREFORE, for and in
consideration of Ten Dollars ($10.00), and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged and
confessed, and in consideration of the mutual covenants and agreements herein
contained, Tenant, Landlord, and Mortgagee hereby agree as follows:

 

 

1.                                       Subordination. Tenant hereby
agrees and covenants that the Lease, all of Tenant’s rights thereunder, Tenant’s
leasehold estate created thereby, including all purchase rights, if any, all of
Tenant’s right, title and interest in and to the property covered by the Lease,
and any lease hereafter executed by Tenant covering any part of the Property,
are and shall be completely and unconditionally subject, subordinate and
inferior to (a) the lien of the Mortgage, including any and all increases,
amendments, renewals, modifications, substitutions, consolidations and
extensions thereof, and the rights of Mortgagee thereunder, and all right,
title and interest of Mortgagee in the Property, and (b) all other
security documents now or hereafter securing payment of any indebtedness of the
Landlord (or any prior landlord) to Mortgagee which cover or affect the
Property (the “Security Documents”). This Agreement is not intended and
shall not be construed to subordinate the Lease to any mortgage, deed of trust
or other security document other than those, referred to in the preceding
sentence, securing indebtedness to Mortgagee. Without limitation of any other
provision hereof, Mortgagee may at its option and without joinder or further
consent of Tenant, Landlord, or anyone else, at any time after the date hereof
subordinate the lien of the Mortgage (or any other lien or security interest
held by Mortgagee which covers or affects the Property) to the Lease by executing
an instrument which is intended for that purpose and which specifies such
subordination; and in the event of any such election by Mortgagee to
subordinate, Tenant will execute any documents reasonably required to evidence
such subordination; provided however, notwithstanding that the Lease may, by
unilateral subordination by Mortgagee, hereafter be made superior to the lien
of the Mortgage, the provisions of the Mortgage relative to the rights of
Mortgagee with respect to proceeds arising from insurance payable by reason of
damage to or destruction of the Premises shall be prior and superior to and
shall control over any contrary provisions in the Lease.

 

2.                                       Non-Disturbance. Mortgagee
hereby agrees that so long as the Lease is in full force and effect and no
Event of Default by Tenant has occurred in the payment of rent, percentage
rent, taxes, utility charges or other sums payable by Tenant under the terms of
the Lease, or under any of the other terms, covenants or conditions of the
Lease on Tenant’s part to be performed (beyond the period, if any, specified in
the Lease within which Tenant may cure such default), (a) Tenant’s
possession of the Premises under the Lease shall not be disturbed or interfered
with by Mortgagee in the exercise of any of its rights under the Mortgage,
including any foreclosure, and (b) Mortgagee will not join Tenant as a
party defendant for the purpose of terminating Tenant’s interest and estate
under the Lease in any proceeding for foreclosure of the Mortgage.

 

3.                                       Attornment.

 

(a)                                Tenant
covenants and agrees that in the event of foreclosure of the Mortgage, whether
by power of sale or by court action, or upon a transfer of the Property by
conveyance in lieu of foreclosure (the purchaser at foreclosure or the
transferee in lieu of foreclosure, including Mortgagee if it is such purchaser
or transferee, and their successors and assigns being herein called “Purchaser”),
Tenant shall attorn to Purchaser as Tenant’s new landlord, and agrees that the
Lease shall continue in full force and effect as a direct lease between Tenant
and Purchaser upon all of the terms, covenants, conditions and agreements set
forth in the Lease and Purchaser shall be bound to Tenant under all the terms,
covenants and conditions of the Lease and Tenant 

 

 

shall have the same remedies against
Purchaser for the breach of an agreement contained in the Lease that
Tenant might have had under the Lease against Landlord if Purchaser had not
succeeded to the interest of Landlord; provided, however, that in no event
shall the Purchaser be: (a) liable for any act or omission of any previous
landlord (including Landlord); (I,) subject to any offset, defense or
counterclaim which Tenant might be entitled to assert against any previous
landlord (including Landlord); (c) bound by any payment of rent or
additional rent made by Tenant to any previous landlord (including Landlord)
for more than one (1) month in advance; (d) bound by any amendment or
modification of the Lease hereafter made without the written consent of Mortgagee;
or (e) liable for any deposit that Tenant may have given to any previous
landlord (including Landlord) which has not, as such, been transferred to
Purchaser.

 

(b)          The provisions of this Agreement
regarding attornment by Tenant shall be self-operative and effective without
the necessity of execution of any new lease or other document on the part of
any party hereto or the respective heirs, legal representatives, successors or
assigns of any such party. Tenant agrees, however, to execute and deliver at any
time and from time to time, upon the request of Landlord or of any holder(s) of
any of the indebtedness or other obligations secured by the Mortgage any
instrument or certificate which, in the reasonable judgment of Landlord or of
such holder(s), may be necessary or appropriate in any such foreclosure
proceeding or otherwise to evidence such attornment, including, if requested, a
new lease of the Premises on the same terms and conditions as the Lease for the
then unexpired term of the Lease.

 

4.                                     Estoppel
Certificate. Tenant agrees to execute and deliver from time to
time, upon the request of Landlord or of any holder(s) of any of the
indebtedness or other obligations secured by the Mortgage and Security
Documents, a certificate regarding the status of the Lease, consisting of
statements, if true (or if not, specifying why not), (i) that the Lease is
in full force and effect, (ii) the date through which rentals have been
paid, (iii) the date of the commencement of the term of the Lease, (iv) the
nature of any amendments or modifications of the Lease, (v) that no
default, or state of facts which with the passage of time or notice (or both)
would constitute a default, exists under the Lease, and (vi) such other
matters as may be reasonably requested.

 

5.                                     Acknowledgment
and Agreement by Tenant. Tenant hereby acknowledges and agrees as
follows:

 

(a)                                Tenant
acknowledges and recognizes the Mortgage and the agreements evidencing and
securing the loan evidenced by the Note.

 

(b)                               Tenant
acknowledges that it is aware that Landlord’s interest in the Lease has been
assigned to Mortgagee in connection with the financing of the Property and that
Mortgagee will rely upon this instrument in connection with such financing.

 

(c)                                Mortgagee, in
making any disbursements to Landlord, is under no obligation or duty to oversee
or direct the application of the proceeds of such disbursements, and such
proceeds maybe used by Landlord for purposes other than improvement of the
Property.

 

 

(d)                               From and after
the date hereof, in the event of any default by Landlord under the Lease or any
act or omission by Landlord which would give Tenant the right, either
immediately or after the lapse of time, to terminate the Lease or to claim a
partial or total eviction, Tenant will not exercise any such right (i) until
it has given written notice of such default, act or omission to the Mortgagee;
and (ii) until the same period of time as is given to Landlord under the
Lease to cure such act or omission shall have elapsed following receipt of such
notice by Mortgagee, which time periods may run concurrently.

 

(e)                                Tenant has
notice that the rent and all other sums due under the Lease have been assigned
to Mortgagee as additional security. Tenant shall not prepay any rents or other
sums due under the Lease for more than one (1) month in advance of the due
dates therefore. In the event that Mortgagee notifies Tenant of a default under
the Mortgage and demands that Tenant pay its rent and all other sums due under
the Lease directly to Mortgagee, Tenant shall honor such demand and pay its
rent and all other sums due under the Lease directly to Mortgagee or as
otherwise required pursuant to such notice. Landlord hereby authorizes Tenant
to make such payments to Mortgagee and hereby releases and discharges Tenant of
and from any liability to Landlord resulting from Tenant’s payment to Mortgagee
in accordance with this Agreement.

 

(f)                                  Tenant shall
send a copy of any notice or statement regarding Landlord’s default under the
Lease to Mortgagee at the same time such notice or statement is sent to
Landlord, by registered or certified mail, postage prepaid, at the address of
Mortgagee set forth in this Agreement or such other address as Mortgagee may
designate in writing to Tenant.

 

(g)                               Tenant has no
right or option of any nature whatsoever, whether pursuant to the Lease or
otherwise, to purchase the Premises or the Property, or any portion thereof or
any interest therein, and to the extent that Tenant has had, or hereafter
acquires, any such right or option, same is hereby acknowledged to be subject
and subordinate to the Mortgage and is hereby waived and released as against
Mortgagee.

 

(h)                               This Agreement
satisfies any condition or requirement in the Lease relating to the granting of
a non-disturbance agreement, and Tenant waives any requirement to the contrary
in the Lease.

 

(i)                                   Mortgagee and
any Purchaser shall have no obligation or incur any liability with respect to
the erection or completion of the improvements in which the Premises are
located or for completion of the Premises or any improvements for Tenant’s use
and occupancy, either at the commencement of the term of the Lease or upon any
renewal or extension thereof provided the foregoing shall not constitute a
waiver of Tenant’s rights, if any, under the Lease with respect to such
matters.

 

(j)                                     Mortgagee and
any Purchaser shall have no obligations nor incur any liability with respect to
any warranties of any nature whatsoever, express or implied, made to Tenant by
Landlord, any agent or employee of Landlord, or any other party, whether
pursuant to the Lease or otherwise, including, without limitation, any
warranties respecting use, compliance with zoning, Landlord’s title, Landlord’s
authority, habitability, fitness for purpose or possession provided the
foregoing shall not constitute a waiver of Tenant’s rights, if any, under the
Lease 

 

 

with respect to such matters.

 

(k)                                  In the event
that Mortgagee or a Purchaser shall acquire title to the Premises or the
Property through foreclosure, deed in lieu of foreclosure, or otherwise,
Mortgagee or such Purchaser, shall have no obligation, nor incur liability,
beyond Mortgagee’s or Purchaser’s then equity interest, if any, in the Property
or the Premises, and Tenant shall look solely to such equity interest of
Mortgagee or Purchaser, if any, for the payment and discharge of any
obligations imposed upon Mortgagee or Purchaser hereunder or under the Lease or
for recovery of any judgment from Mortgagee, or Purchaser, and in no event
shall Mortgagee, or Purchaser, ever be personally liable for such judgment.

 

(l)                                     Nothing herein
contained is intended, nor shall it be construed, to abridge or adversely
affect any right or remedy of Landlord under the Lease in the event of any
default by Tenant in the payment of rent or in the performance of any of the
other terms, covenants or conditions of the Lease on Tenant’s part to be
performed.

 

(m)                               Landlord has
not agreed to any abatement of rental or period of “free rent” for the Premises
unless same is specifically provided in the Lease, and Tenant agrees that in
the event Mortgagee, or any Purchaser, becomes the owner of the Property, no
agreement for abatement of rent not specifically provided in the Lease will be
binding on Mortgagee or Purchaser.

 

(n)                                 Tenant has
never permitted, and will not permit, the generation, treatment, storage or
disposal of any hazardous substance as defined under federal, state or local
law on the Leased Premises except for such substances of a type and only in a
quantity normally used in connection with the occupancy or operation of
buildings (such as non-flammable cleaning fluids and supplies normally used in
the day to day operation of first-class offices), which substances are being
held, stored, and used in strict compliance with federal, state, and local
laws.

 

6.                                     Acknowledgment
and Agreement by Landlord. Landlord, as landlord under the Lease and
grantor under the Mortgage, acknowledges and agrees for itself and its
successors and assigns, that: (a) this Agreement does not constitute a
waiver by Mortgagee of any of its rights under the Mortgage, Note, or Security
Documents or in any way release Landlord from its obligations to comply with
the terms, provisions, conditions, covenants, agreements and clauses of the
Mortgage, Note, or Security Documents; (b)the provisions of the Mortgage, Note,
and Security Documents remain in full force and effect and must be complied
with by Landlord; and (c) in the event of a default under the Mortgage,
Note, or Security Documents Tenant may pay all rent and all other sums due
under the Lease to Mortgagee as provided in the Mortgage, Note, and Security
Documents or any separate assignment. Landlord represents and warrants to
Mortgagee that a true and complete copy of the Lease has been delivered by
Landlord to Mortgagee.

 

7.                                     Lease Status. Landlord and
Tenant certify to Mortgagee that neither Landlord nor Tenant has knowledge of
any default on the part of the other under the Lease, that the Lease is bona
fide and contains all of the agreements of the parties thereto with respect to
the letting of the Leased Premises and that all of the agreements and
provisions therein contained are in full force and effect. Tenant hereby agrees
that it will not amend, alter, terminate, or waive any 

 

 

provision of, or consent to the amendment, alteration, termination or
waiver of any provision of the Lease without the prior written consent of
Mortgagee, and that no termination of the Lease, whether pursuant to the terms
of the Lease or otherwise, will be effective without the prior written consent
of Mortgagee.

 

8.                                     Notices. All notices,
requests, consents, demands and other communications required or which any
party desires to give hereunder shall be in writing and shall be deemed
sufficiently given or furnished if delivered by personal delivery, by telegram,
telex, or facsimile, by expedited delivery service with proof of delivery, or
by registered or certified United States mail, postage prepaid, at the
addresses specified at the end of this Agreement (unless changed by similar
notice in writing given by the particular party whose address is to be
changed). Any such notice or communication shall be deemed to have been given
either at the time of personal delivery or, in the case of delivery service or
mail, as of the date of first attempted delivery at the address and in the
manner provided herein, or, in the case of telegram, telex, or facsimile, upon
receipt. Notwithstanding the foregoing, no notice of change of address shall be
effective except upon receipt. This Section shall not be construed in any
way to affect or impair any waiver of notice or demand provided in this
Agreement or in the Lease or in any document evidencing, securing or pertaining
to the loan evidenced by the Note or to require giving of notice or demand to
or upon any person in any situation or for any reason.

 

9.                                     Miscellaneous.

 

(a)                                This Agreement
supersedes any inconsistent provision of the Lease.

 

(b)                               Nothing
contained in this Agreement shall be construed to derogate from or in any way
impair or affect the lien, security interest or provisions of the Mortgage.

 

(c)                                This Agreement
shall inure to the benefit and shall be binding upon Mortgagee, Landlord,
Tenant, and their respective successors and permitted assigns, and any
Purchaser, and its heirs, personal representatives, successors and assigns;
provided, however, that in the event of the assignment or transfer of the
interest of Mortgagee, all obligations and liabilities of the assigning
Mortgagee under this Agreement shall terminate, and thereupon all such
obligations and liabilities shall be the responsibility of the party to whom
Mortgagee’s interest is assigned or transferred; and provided further that the
interest of Tenant under this Agreement may not be assigned or transferred
without the prior written consent of Mortgagee.

 

(d)                                 If any
provision of this Agreement shall be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not apply to or affect any other provision hereof, but this Agreement
shall be construed as if such invalidity, illegality, or unenforceability did
not exist.

 

(e)                                  This Agreement
and its validity, enforcement and interpretation, shall be governed by the laws
of the State of Texas and applicable United States federal law except only to
the extent, if any, that the laws of the state in which the Property is located
necessarily control.

 

(f)                                    The words “herein,”
“hereof,” “hereunder” and other similar compounds of the 

 

 

word
“here” as used in this Agreement refer to this entire Agreement and not to any
particular section or provision.

 

(g)                                 This Agreement
may not be modified orally or in any manner other than by an agreement in
writing signed by the parties hereto or their respective successors in
interest.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

 

	
  MORTGAGEE:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Matinee Media Corp.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
											

 

 

LANDLORD:

 

DESTA FIVE PARTNERSHIP,
LTD.,

A Texas limited partnership

 

	
  By:

  	
  Desta Five Development Corp.,

  	
   

  	
   

  
	
   

  	
  its general partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
								

 

 

	
  Address of Mortgagee:

  
	
   

  
	
   

  
	
   

  
	
  Attention:

  	
   

  	
   

  
	
  Address of Tenant:

  
	
   

  
	
   

  
	
   

  
	
  Address of Landlord:

  
	
   

  	
   

  
				

 

 

 

	
  THE STATE OF TEXAS

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF

  	
  §

  

 

This instrument was acknowledged before me on
                        ,
by                             
of
                                          
a national banking association, on behalf of said association.

 

[SEAL]

 

	
   

  	
   

  
	
   

  	
  Notary Public, State of
  Texas

  

 

 

	
  THE STATE OF TEXAS

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF

  	
  §

  

 

This instrument was acknowledged before me on
                                                        ,
by

 

                    ,
                                        
of
                                              ,
a
                                ,
on behalf of said                               .

 

 [SEAL]

 

	
   

  	
   

  
	
   

  	
  Notary Public, State of
  Texas

  

 

 

	
  THE STATE OF TEXAS

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF

  	
  §

  

 

This instrument was acknowledged before me on this
           day of
                        ,
by
                                            ,
as
                                                    
of                                           ,
a                                                       ,
general partner of                               ,
a
                                ,
on behalf of said
                                        .

 

[SEAL]

 

	
   

  	
   

  
	
   

  	
  Notary Public, State of
  Texas

  

 

 

EXHIBIT
A

 

Legal description of the
Land

 

 

TENANT’S WORK LETTER

 

This Tenant’s Work Letter is
attached to and made a part of and is entered into of even date with that
certain Lease Agreement (“the Lease”) by and between DESTA FIVE PARTNERSHIP, LTD. (“Landlord”) and MATINEE MEDIA CORP. (“Tenant”). All terms
defined in the Lease and delineated herein by initial capital letters have the
same meanings herein as are ascribed to such terms in the Lease, except to the
extent that the meaning of any such term is specifically modified by the
provisions hereof.

 

In consideration of the
mutual covenants herein contained, Landlord and Tenant mutually agree as
follows:

 

1.                                       RKP Architects
(“Architect”) has been requested to prepare and submit to Landlord and Tenant a
space plan depicting Tenant’s proposed improvements to the Leased Premises
(herein referred to as the “Space Plan”).

 

2.                                       After Landlord
and Tenant have approved the Space Plan, Architect will utilize the Space Plan
to prepare design development drawings which shall include, but not be limited
to electrical and lighting requirements (the “Design Development Drawings”).
The Design Development Drawings shall be submitted for approval by Landlord on
or before September 15, 2004. Architect will utilize the Design
Development Drawings to prepare the following architectural and mechanical
drawings and specifications: a.) complete finished and detailed architectural
drawings and specifications for Tenant’s partition layout, built-ins, reflected
ceiling, telephone and electrical outlets, and finish schedule for improvements
to the Leased Premises; and, b.) complete mechanical drawings and
specifications necessary for installation of air conditioning and heating
systems and ductwork, and electrical facilities for the Leased Premises
(together the “Working Drawings”). Architect will provide the Working Drawings
for approval by Landlord on or before October 7, 2004 in order for
Landlord to have Working Drawings available for bidding by not less than three (3) contractors
on October 7, 2004.

 

3.             All construction will be performed by a contractor
retained by Landlord after consultation with Tenant. Landlord will provide
Tenant a construction allowance (the “Allowance”) to: (a) pay for the cost
of preparing space plans, architectural and engineering drawings and
specifications and related services, mechanical drawings and specifications and
permitting fees including the fee owed to the above-described Architect; and (b) to
pay for the actual cost and charges for material and labor, each contractor’s
profit and each contractor’s general overhead incurred by Landlord in
constructing leasehold improvements (including, without limitation, building
standard and nonstandard improvements, signage and cabling) in and about the
Leased Premises in accordance with the Working Drawings, including, without
limitation, sales and use taxes; and (c) a fee of five percent (5%) for Landlord’s construction
management services; and (d) the cost to prepare the Working Drawings; and
(e) reimburse Tenant for any other sums owed by Tenant for professional
services in connection with the Lease or improvements described herein. The
Allowance shall be an amount calculated by 

 

 

multiplying the Rentable
Area of the Leased Premises as defined in the Section 1.01 by Thirty-five
and no/100 Dollars ($35.00)  per
square foot. For purposes of this Tenant’s Work Letter “Work” shall mean all
leasehold improvements to be constructed by Landlord on the Leased Premises
pursuant to this Work Letter.

 

4.                                       There will be no
rebate to Tenant because of Tenant’s desire to utilize less than the total
amount of the Allowance to finish the Leased Premises; provided, however, if
the cost of finishing the improvements to the Leased Premises in accordance
with the Working Drawings is less than the amount of the Allowance, Tenant may
utilize such sums to install additional improvements in the Leased Premises. If
Tenant desires to change or substitute improvements to the Leased Premises from
those in the Working Drawings, credits, if any, for the omitted or added items
must be agreed upon in writing by Landlord (which agreement shall not be
unreasonably withheld or delayed) before the Work is commenced.

 

5.                                      Tenant may make
changes in the Working Drawings provided if changes are made: (a) Tenant
will be responsible for the consequences of any delay resulting from such
changes including the obligation to accept the Leased Premises after October 7,
2004 if such changes are responsible for the Commencement Date being after October 7,
2004; and, (b) all changes must be accomplished through written change
orders which are submitted to Landlord and approved in writing by Landlord not
to be unreasonably withheld or delayed. All Change Orders estimated by the
General Contractor and Sub-Contractors shall be quoted at a total ten (10%)
markup up overhead and profit.

 

6.                                       Landlord shall
construct the leasehold improvements for the Leased Premises in accordance with
the Working Drawings. The cost of completing the improvements which shall
include space planning, data cabling, and telecommunications costs) to the
Leased Premises in accordance with the Working Drawings will be paid by
Landlord out of the Allowance; provided, however, that if the cost of
completing the improvements to the Leased Premises in accordance with the
Working Drawings exceeds the Allowance, then Tenant will pay the full amount of
such excess (the “Allowance Excess”). Within ten (10) days of the date the
contract is awarded for construction of the tenant improvements, Tenant shall pay
to Landlord the Allowance Excess based upon the amounts of the construction
contracts and estimates of all other costs.

 

7.                                       The
construction of the leasehold improvements for the Leased Premises by Landlord
pursuant to this Work Letter shall be done in a good and workmanlike manner,
employing new materials, in accordance and in conformance in all details with
the Working Drawings. Landlord agrees to proceed with due diligence to
construct and complete the leasehold improvements for the Leased Premises as
soon hereafter as reasonably possible. Tenant’s obligation for the payment of
Rent under the Lease shall not commence until the later of(i) November 15,
2004, or (ii) the leasehold improvements are Substantially Completed. “Substantially
Completed” or “Substantial Completion” means completion of the construction of
the leasehold improvements for the Leased Premises in accordance with the
Working Drawings, except for minor cosmetic defects to be promptly corrected by
Landlord and the issuance of a final certificate of occupancy by 

 

 

the City of Austin for the
Leased Premises. Upon Substantial Completion, Landlord and Tenant shall make a
punch list of items of the work for the leasehold improvements to be corrected
or repaired. Landlord shall cause all such punch list items to be corrected or
repaired within thirty (30) days of the date of Substantial Completion of the
leasehold improvements for the Leased Premises. Landlord warrants that the
construction of the leasehold improvements for the Leased Premises pursuant to
this Work Letter shall be free from defects in materials and workmanship for a
period of one year following the Commencement Date of the Lease. In the event
any such defects appear or arise within such one year period, Landlord shall
promptly cause the same to be repaired or replaced.

 

If Landlord shall be delayed
in causing the leasehold improvements to be Substantially Completed by November 15,  2004, by reason of any of the following,
each of which are considered to be “Tenant Delay” as that term is used herein.

 

(a)                                  Tenant’s
specification of non-building standard materials, finishes or installations
which because of lead times or other ordering limitations can not be
incorporated into the completed Leased Premises by November 15, 2004; or

 

(b)                                 Tenant’s
request for changes subsequent to October 7, 2004, to the materials,
finishes or installations specified in the Working Drawings; or

 

(c)                                  The
non-performance of any work by a person, firm or corporation employed by Tenant
and delay of completion of said work by said person, firm or corporation which
causes the Leased Premises to be Substantially Complete after November 15,
2004.

 

then, in addition to all of Tenant’s other
obligations hereunder, Tenant will pay to Landlord, within ten (10) days after
demand and the day of Substantial Completion, an amount equal to the product
of: (i) the number of days of Tenant Delay; multiplied by (ii) a per
diem amount determined by prorating the initial month Rent amount which Tenant
will be required to pay after the Commencement Date. After the leasehold
improvements are Substantially Completed, Landlord and Tenant, will, within ten
(10) days after the request of either, execute a declaration of the
Commencement Date, which shall be made a part of the Lease.

 

8.                                       Tenant shall
pay to Landlord as Rent, for the purpose of reimbursing Landlord for actual
additional expenses which may be incurred by Landlord, including but not
limited to rescheduling and overtime charges, resulting from Tenant Delay as
hereinafter defined.

 

9.                                       Failure by
Tenant to pay timely any sum due hereunder shall constitute an Event of Default
by Tenant under the Lease giving rise to all remedies available to Landlord
under the Lease, and also giving rise to all other remedies available to Landlord
at law  for such nonpayment.
Unless otherwise specified, any such amounts billed to Tenant shall be paid by
Tenant within ten (10) days after receipt of an invoice. All past due
amounts shall bear interest at the Interest Rate.

 

 

10.                                 Landlord shall
permit Tenant and its agents to enter the Leased Premises prior to the
Commencement Date, at the same time that Landlord’s contractors are working in
the Leased Premises, in order that Tenant may perform such other work and
decorations through its own contractors approved in advance in writing by
Landlord which approval shall not be unreasonably withheld or delayed, in
accordance with the Lease and in a manner and upon terms and conditions and at
times satisfactory to and approved in advance in writing by Landlord, which
approval shall not be unreasonably withheld or delayed. This license to enter
prior to the Commencement Date is conditioned upon Tenant’s workmen and
mechanics working in harmony and not interfering with the workmen employed by
Landlord, Landlord’s mechanics or contractors, or by any other tenant or their
contractors. Such license is further conditioned upon Tenant’s providing
insurance coverage and certificates as required under the terms of the Lease.
Such entry shall be deemed to be under all of the terms, covenants, provisions
and conditions of the Lease except as to the covenant to pay Rent.

 

11.                                 Landlord agrees
to provide Tenant with copies of each request for payment from the contractor
within thirty (30) days of the Commencement Date.

 

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  Desta
  Five Partnership, Ltd.

  	
   

  	
  Matinee
  Media Corp.

  
	
  a Texas limited
  partnership

  	
   

  	
  a Texas corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  DESTA FIVE DEVELOPMENT
  CORP.,

  	
   

  	
  By:

  	
        /s/Robert
  Walker

  	
   

  
	
   

  	
  its general partner

  	
   

  	
  Name: 

  	
        Robert
  Walker

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
         President

  	
   

  
	
   

  	
  By:

  	
  /s/L. Paul Latham

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  L. Paul Latham,

  	
   

  	
   

  
	
   

  	
   

  	
  President

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