Document:

EXHIBIT 4.2

 

Schedule of Director Stock
Options

 

	
  Name of
  Director

  	
   

  	
  Date
  of Grant

  	
   

  	
  Exercise
  Price

  	
   

  	
  No.
  of Shares

  
	
  Thomas H. Adams

  	
   

  	
  3/14/2000

  	
   

  	
  $

  	
  1.25

  	
   

  	
  15,000

  
	
   

  	
   

  	
  3/20/2001

  	
   

  	
  $

  	
  0.91

  	
   

  	
  15,000

  
	
   

  	
   

  	
  3/18/2002

  	
   

  	
  $

  	
  1.38

  	
   

  	
  15,000

  
	
   

  	
   

  	
  3/18/2003

  	
   

  	
  $

  	
  1.05

  	
   

  	
  15,000

  
	
  Darrel D. Brandt

  	
   

  	
  3/14/2000

  	
   

  	
  $

  	
  1.25

  	
   

  	
  15,000

  
	
   

  	
   

  	
  3/20/2001

  	
   

  	
  $

  	
  0.91

  	
   

  	
  15,000

  
	
   

  	
   

  	
  3/18/2002

  	
   

  	
  $

  	
  1.38

  	
   

  	
  15,000

  
	
   

  	
   

  	
  3/18/2003

  	
   

  	
  $

  	
  1.05

  	
   

  	
  15,000

  
	
  Robert Nelson

  	
   

  	
  3/18/2002

  	
   

  	
  $

  	
  1.38

  	
   

  	
  20,000

  
	
   

  	
   

  	
  3/18/2003

  	
   

  	
  $

  	
  1.05

  	
   

  	
  20,000

  
	
  Boris Popov

  	
   

  	
  3/14/2000

  	
   

  	
  $

  	
  1.25

  	
   

  	
  15,000

  
	
   

  	
   

  	
  3/20/2001

  	
   

  	
  $

  	
  0.91

  	
   

  	
  15,000

  
	
   

  	
   

  	
  3/18/2002

  	
   

  	
  $

  	
  1.38

  	
   

  	
  15,000

  
	
   

  	
   

  	
  3/18/2003

  	
   

  	
  $

  	
  1.05

  	
   

  	
  15,000

  
	
  Mark Thomas

  	
   

  	
  3/14/2000

  	
   

  	
  $

  	
  1.25

  	
   

  	
  15,000

  
	
   

  	
   

  	
  3/20/2001

  	
   

  	
  $

  	
  0.91

  	
   

  	
  15,000

  
	
   

  	
   

  	
  3/18/2002

  	
   

  	
  $

  	
  1.38

  	
   

  	
  15,000

  
	
   

  	
   

  	
  3/18/2003

  	
   

  	
  $

  	
  1.05

  	
   

  	
  15,000

  

 

Each Option Grant vests immediately, with a
term of five years from the date of grant.Exhibit 10.1

 

Lease Agreement Between

 

Beltway
8 Service Center Investors Ltd., Lessor,

 

And

 

Isolagen Technologies,
Inc., Lessee

 

 

Dated: February 16, 2005

 

 

LEASE SUMMARY

Beltway 8 Service Center

11275 West Sam Houston
Pkwy South

 

LESSOR:                                                                                                Beltway 8 Service Center Investors, Ltd.

 

LESSEE:                                                   Isolagen Technologies, Inc.

 

	
  COMMENCEMENT:

  	
   

  	
  March 1, 2005

  	
   

  	
  EXPIRATION:

  	
   

  	
  April 30, 2008

  	
   

  

 

1.                                      Lessor’s
address and telephone number:

LESSOR,
Richland Investments, Inc., General Partner, 1110 N, Post Oak Rd., Suite 170, Houston,
Texas 77055 713-682-5707.

 

2.                                      Lessee’s
address and telephone number:

Isolagen Technologies,
Inc., 2500 Wilcrest, 5th Floor Houston, TX 77042, 713-780-4754.

 

3.                                     Lessee’s
Trade Name:

Isolagen

 

4.                                     “Demised
Premises”: The premises contains approximately 14,849
square feet at Suite 300 West Sam Houston Pkwy South
Houston, TX 77031 of the Beltway 8 Service Center
(herein called the “Center”).

 

5.                                      Lease
Term: March 1, 2005 commencing on March 1, 2005, and ending April 30, 2008

 

6.                                     Minimum
Rental or Base Rent:

From:

 

	
  3/01/05 through 4/30/05

  	
   

  	
  Free Rent*

  	
   

  	
  Free Rent*

  	
   

  
	
  5/01/05 through
  4/30/06

  	
   

  	
  $

  	
  11,136.75

  	
   

  	
  $

  	
  133,641.00

  	
   

  
	
  5/01/06 through
  4/30/07

  	
   

  	
  $

  	
  11,879.20

  	
   

  	
  $

  	
  142,550.40

  	
   

  
	
  5/01/07 through
  4/30/08

  	
   

  	
  $

  	
  12,621.65

  	
   

  	
  $

  	
  151,459.80

  	
   

  

 

*Tenant will pay
the pro rata share of common operating expenses including, taxes, and insurance
on the first day of each two (2) month Free Rent period. Estimation is
$3,118.29 for each month.

 

7.                                      Operating
Expense liability based on 17% of all
expenses ($0.21/s.f. per square foot).

Initial monthly amount:        $3,118.29.

 

8.                                  Security
Deposit:    $15,739.94

 

9.                                  Liability
Insurance by Lessee: $100,000.00 per person, $300,000.00 per accident, and
$500,000.00 property damage.

 

10.                                 Business
days and hours of Lessee: no limitation

 

11.                                 Permitted
Use: general office, warehouse, processing and distribution

 

12.                                 Laws
of the State of Texas, County of Harris, City of Houston, will
govern the validity, performance and enforcement of this Lease.

 

 

Index to
Lease Agreement

 

	
  ARTICLE I

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  THE PREMISES

  	
   

  
	
  1.2

  	
  USE

  	
   

  
	
  1.3

  	
  AREA CALCULATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  RENT

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  LATE PAYMENTS

  	
   

  
	
  3.2

  	
  SECURITY DEPOSIT

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  TERM,
  COMMENCEMENT & ANNIVERSARY

  	
   

  
	
  4.2

  	
  ACKNOWLEDGEMENT
  OF LEASE COMMENCEMENT

  	
   

  
	
  4.3

  	
  DELIVERY OF POSSESSION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  CONSTRUCTION
  OBLIGATIONS OF LESSOR AND LESSEE

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  LESSOR RIGHTS AND ACCESS

  	
   

  
	
  6.2

  	
  LESSEE ACCESS
  AND QUIET POSSESSION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  UTILITIES AND
  SERVICES BY LESSOR

  	
   

  
	
  7.2

  	
  UTILITIES AND
  SERVICES BY LESSEE

  	
   

  
	
  7.3

  	
  INTERRUPTION
  OF UTILITIES OR SERVICES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  MAINTENANCE AND
  REPAIR BY LESSOR

  	
   

  
	
  8.2

  	
  MAINTENANCE AND
  REPAIRS BY LESSEE

  	
   

  
	
  8.3

  	
  TELECOMMUNICATIONS
  EQUIPMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1 

  	
  KEYS AND SECURITY

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1 

  	
  PARKING

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
   

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  OCCUPANCY, NUISANCE,
  AND HAZARDS

  	
   

  
	
  11.2

  	
  TAXES

  	
   

  
	
  11.3

  	
  PERSONAL PROPERTY TAXES

  	
   

  
	
  11.4

  	
  INSURANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
   

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  MUTUAL
  RELEASE AND WAIVER OF SUBROGATION

  	
   

  
	
  12.2

  	
  INDEMNITY AND HOLD
  HARMLESS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
   

  

 

 

	
  13.1

  	
  ALTERATIONS BY LESSEE

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  	
   

  
	
   

  	
   

  
	
  14.1

  	
  REMOVAL OF PROPERTY
  BY LESSEE

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XV

  	
   

  
	
   

  	
   

  	
   

  
	
  15.1

  	
  SUBLETTING AND
  ASSIGNMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XVI

  	
   

  
	
   

  	
   

  	
   

  
	
  16.1

  	
  DESTRUCTION
  BY FIRE OR OTHER CASUALTY

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XVII

  	
   

  
	
   

  	
   

  	
   

  
	
  17.1

  	
  CONDEMNATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVIII

  	
   

  
	
   

  	
   

  	
   

  
	
  18.1

  	
  DEFAULT BY LESSOR

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTIC`LE
  XIX

  	
   

  
	
   

  	
   

  	
   

  
	
  19.1

  	
  DEFAULT BY LESSEE

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XX

  	
   

  
	
   

  	
   

  	
   

  
	
  20.1

  	
  LIEN FOR
  RENT

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XXI

  	
   

  
	
   

  	
   

  	
   

  
	
  21.1

  	
  ATTORNEY’S
  FEES, INTEREST, AND OTHER EXPENSES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXII

  	
   

  
	
   

  	
   

  	
   

  
	
  22.1

  	
  NON-WAIVER

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXIII

  	
   

  
	
   

  	
   

  	
   

  
	
  23.1

  	
  RULES AND REGULATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXIV

  	
   

  
	
   

  	
   

  	
   

  
	
  24.1

  	
  TRANSFER OF
  OWNERSHIP BY LESSOR

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XXV

  	
   

  
	
   

  	
   

  	
   

  
	
  25.1

  	
  MORTGAGES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXVI

  	
   

  
	
   

  	
   

  	
   

  
	
  26.1

  	
  SURRENDER OF PREMISES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXVII

  	
   

  
	
   

  	
   

  	
   

  
	
  27.1

  	
  HOLDING OVER

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXVIII

  	
   

  
	
   

  	
   

  	
   

  
	
  28.1

  	
  SIGNS AND CENTER NAME

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXIX

  	
   

  
	
   

  	
   

  	
   

  
	
  29.1

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XXX

  	
   

  
	
   

  	
   

  	
   

  
	
  30.1

  	
  ESTOPPEL CERTIFICATE

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXXI

  	
   

  

 

 

	
  31.1

  	
  BINDING ON SUCCESSORS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXXII

  	
   

  
	
   

  	
   

  
	
  32.1

  	
  leasing broker or
  agent commission

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXXIII

  	
   

  
	
   

  	
   

  	
   

  
	
  33.1

  	
  representation
  and warranties by lessor

  	
   

  
	
  33.2

  	
  representations
  and warranties by lessee

  	
   

  
	
  33.3

  	
  financial
  statement requirements

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXXIV.

  	
   

  
	
   

  	
   

  	
   

  
	
  34.1

  	
  place and performance

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXXV

  	
   

  
	
   

  	
   

  	
   

  
	
  35.1

  	
  amendments

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXXVI

  	
   

  
	
   

  	
   

  	
   

  
	
  36.1

  	
  joint and several
  liability

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXXVII

  	
   

  
	
   

  	
   

  	
   

  
	
  37.1

  	
  NO merger

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXXVIII

  	
   

  
	
   

  	
   

  	
   

  
	
  38.1

  	
  governing law

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXXIX

  	
   

  
	
   

  	
   

  	
   

  
	
  39.1

  	
  separability

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XL

  	
   

  
	
   

  	
   

  	
   

  
	
  40.1

  	
  force majeure

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XLI

  	
   

  
	
   

  	
   

  	
   

  
	
  41.1

  	
  confidentiality

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XLII

  	
   

  
	
   

  	
   

  	
   

  
	
  42.1

  	
  miscellaneous

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XLIII

  	
   

  
	
   

  	
   

  	
   

  
	
  43.1

  	
  special conditions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XLIV

  	
   

  
	
   

  	
   

  	
   

  
	
  44.1

  	
  lessee signature
  requirements

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XLV

  	
   

  
	
   

  	
   

  	
   

  
	
  45.1

  	
  guaranty

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XLVI

  	
   

  
	
   

  	
   

  	
   

  
	
  46.1

  	
  exhibit list.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XLVII

  	
   

  
	
   

  	
   

  	
   

  
	
  47.1

  	
  lease dates and
  signatures

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  A

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
   

  

 

 

	
  EXHIBIT C 

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT D 

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT E 

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT F

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT G

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT H

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT I 

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT J

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT K

  	
   

  

 

 

LEASE
AGREEMENT

 

This Lease Agreement (“Lease”)
is made and entered into as of the 16  day of February, 2005 by and between Beltway 8 Service Center Investors, Ltd.(“Lessor”), and Isolagen
Technologies, Inc., a Delaware Corporation.(“Lessee”).

 

ARTICLE I.

 

1.1                                The
Premises.

Subject to the
terms of this Lease, Lessor leases to Lessee, and Lessee leases from Lessor the
interior space known as Suite 300 (the
“Premises”) shown by hash marks on the floor plan attached as Exhibit A. The
dimensions are shown on such Exhibit A, in the building located at 11275 West Sam Houston Parkway South and
known as Beltway 8 Service Center on
a tract of land legally described in Exhibit C.

 

As used in this
Lease, the term “Center” includes the land and all improvements thereon. “Common
Facilities” shall mean the parking areas, lighting, sidewalks, driveways,
loading areas, management office and other improvements commonly used by all
tenants. Lessee shall have exclusive use of the Premises and the non-exclusive
use of the Common Facilities.

 

1.2                                Use.

Lessee
shall continuously occupy and use the Premises only for general office,
warehousing, processing and distribution (the “Permitted Use”) and shall comply
with all laws relating to the use, condition, access to, and occupancy of the
Premises. The Premises shall not be used for any use, which is disreputable,
creates extraordinary fire hazards, or results in an increased rate of
insurance on the Center or its contents, or for the storage of any hazardous
materials or substances. The Permitted Use shall be subject to the Center’s
Rules and Regulations attached as Exhibit F. If, because of Lessee’s acts, the
rate of insurance on the Center or its contents increases, then such acts shall
be an Event of Default, Lessee shall pay to Lessor the amount of such increase
on demand, and acceptance of such payment shall not waive any of the Lessor’s
other rights. Lessee shall conduct its business so as not to create any
nuisance or unreasonably interfere with other lessees or Lessor in its
management of the Center. The name of Lessee’s business will be Isolagen Technologies, Inc.

 

1.3                                Area
Calculation

The
Premises contains or will contain approximately 14,849 square feet as measured to the outside of exterior
walls and the midpoint of common walls between tenants. Reasonable variation of
dimensions and square footages are permitted. If shortages or overages in the
area calculations are discovered, adjustment will be made in the Rent; however
such errors will not terminate this Lease.

 

 

ARTICLE II.

 

2.1                                Rent.

(a)                                   Base
Rent.  “Base Rent” (herein so called)
shall be in accordance with paragraph 1 of Exhibit B attached hereto.

 

(b)                                  Payment.
Lessee shall timely pay to Lessor Base Rent and all additional sums to be paid
by Lessee to Lessor under this Lease (collectively, the “Rent”), without deduction
or set off. Base Rent, adjusted as herein provided, shall be payable monthly in
advance, and shall be accompanied by all applicable state and local sales or
use taxes. The first monthly installment of Base Rent shall be payable
contemporaneously with the execution of this Lease; thereafter, Base Rent shall
be payable on the first day of each month beginning on the first day of the
second full calendar month of the Term. The monthly Base Rent for any partial
month at the beginning of the Term shall equal the product of 1/365 of the
annual Base Rent in effect during the partial month and the number of days in
the partial month from and after the Commencement Date, and shall be due on the
Commencement Date.  The Rent shall be
paid to Lessor at its offices 1110 North Post Oak Rd. Suite 170 Houston, Texas
77055 in Harris County, Texas, or such other address as Lessor shall designate.

 

(c)                                   Pro
rata Allocation of Common Operating Expenses of the Center. In addition to the
monthly Base Rent in Paragraph 2.1(a), Lessee shall pay additional rent on a
monthly basis, equivalent to Lessee’s pro rata share of common operating
expenses for the entire Center. Exhibit I attached hereto contains definitions
and procedures for the foregoing.

 

ARTICLE III.

 

3.1                                Late
Payments.

If any Rent
payment or other sum due by Lessee to Lessor is received and accepted by Lessor
later than five (5) days after its due date, Lessee shall pay a late charge of
5% of such Rent payment or other sums to reimburse Lessor for its cost and inconvenience
incurred as a consequence of Lessee’s delinquency. In no event, however, shall
the charges permitted under this Paragraph 3.1 or elsewhere in this Lease to
the extent they are considered to be interest under law, exceed the maximum
lawful rate of interest. Lessor’s acceptance of late rent or other sum shall
not operate to allow Lessee to pay the Rent or other sum late thereafter and
shall not constitute a waiver of Lessor’s remedies for subsequent late
payments. Late payment charges are due immediately when incurred without notice
or demand. All payments for any purpose shall be by check or money order on a
local bank, not cash. For each returned check, Lessee shall pay all applicable
bank charges incurred by Lessor plus $20.00. Payment of any kind received by
Lessor on behalf of the Lessee may be applied at Lessor’s option to non-rent
items first, then to Rent. Payment of Rent by Lessee shall be an independent
covenant, without right of set off or deduction. If Lessee has not timely paid
rentals and other sums due on two or more occasions, or if a check from Lessee
is returned for insufficient funds or no account, Lessor may for the next
twelve (12) months require that all rent and other sums due be paid by cashier’s
check, certified

 

2

 

check, or money order, without prior notice. Notwithstanding the
foregoing, a Late Charge shall not be due from Tenant until the second (2nd)
late payment of Rent 

 

3.2                                Security
Deposit.

At the time of execution
of the Lease, Lessee shall deposit with Lessor Fifteen
Thousand Seven Hundred Thirty-Nine and 94/100 Dollars ($15,739.94) (the “Security Deposit”) to secure the
performance of Lessee’s lease obligations. The Security Deposit is not an
advance payment of Rent or a measure or limit of Lessor’s damages upon an Event
of Default (defined in Paragraph 19.1). If Lessee fails to pay any sum when due
under the Lease, Lessor may, without prejudice to any other remedy, apply the
Security Deposit toward the amounts due and unpaid by Lessee or perform any
obligation Lessee fails to perform hereunder. Lessee shall immediately restore
the Security Deposit to its original amount after any portion of it is applied
to amounts due and unpaid by Lessee. If, at the end of the Term of this Lease
(as defined in Paragraph 4.1 hereof,), Lessee is not in default, beyond any
applicable notice or cure period, in the performance of any provision of this
Lease, the Security Deposit, or any balance thereof remaining, will be refunded
to Lessee within thirty (30) days after the Term ends. The Security Deposit may
be commingled with other funds, and no interest shall be paid thereon. If
Lessor transfers its interest in the Premises and the transferee assumes Lessor’s
obligations under this Lease, then Lessor may assign the Security Deposit to
the transferee and Lessor thereafter shall have no further liability for the
return of the Security Deposit.

 

ARTICLE IV.

 

4.1                                Term,
Commencement & Anniversary.

The original term of this Lease shall be for a period of thirty-eight (38) months commencing on March 1,2005
(the “Commencement Date”) and expiring at midnight April 30,
2008 (the “Ending Date”) (the “Term”). The “Annual Anniversary Date”
shall be the Commencement Date. Lessor shall provide Lessee with access to the
Premises beginning on March 1, 2005 or earlier
if possible for the purpose of Lessee’s preparing the space for use
and occupancy, including, without limitation, installation of telephone and
computer lines, workstations and other equipment. Prior to such access being
provided, Lessee’s shall deliver to Lessor evidence of insurance. If Lessor
fails to deliver the Premises to Lessee within 10 days following the
Commencement Date, Lessee shall have the right to terminate the Lease.

 

Within six (6)
months of the Ending Date and upon reasonable prior notice and at reasonable
times, Lessor will have the right to enter and show the Premises for the
purpose of re-letting said Premises.

 

4.2                                Acknowledgement
of Lease Commencement.

Upon
commencement of this Lease, Lessor and Lessee shall execute an Acknowledgment
of this Lease, which is attached, as Exhibit D and which will confirm the
Commencement Date, Ending Date, and Annual Anniversary Date of the Lease.

 

3

 

4.3                                Delivery
of Possession.

Subject to early entry right set forth above, Lessor’s anticipated
delivery date of possession is March 1,2005. If
Lessor delays delivering possession of the Premises, Rent shall be abated until
the Premises is ready for occupancy; and neither Lessor nor its agents shall be
liable for any damages; and the Lease shall not terminate.

 

ARTICLE V.

 

5.1                                Construction
Obligations of Lessor and Lessee.

The
respective obligations of Lessor and Lessee for construction and payment of tenant
improvements (“Tenant Improvements”) are set forth in Exhibit E. (a) The Tenant
Improvements shall be installed only in accordance with plans and
specifications submitted to and approved in writing by Lessor. No alterations
or physical additions in or to the Premises may be made without Lessor’s prior
written consent, which shall not be unreasonably withheld or delayed; however,
Lessor may withhold its consent to any alteration or addition that would affect
the Center’s structure or its HVAC, plumbing, electrical, or mechanical
systems. Lessee shall not paint or install lighting or decorations, signs,
window or door lettering, or advertising media of any type on or about the
Premises without the prior written consent of Lessor, which shall not be unreasonably
withheld or delayed; however, Lessor may withhold its consent to such painting
or installation which would affect the appearance of the exterior of the Center
or of any common areas of the Center. All alterations, additions, or
improvements made in or upon the Premises shall, at Lessor’s option, either be
removed by Lessee prior to the end of the Term (and Lessee shall repair damage
caused thereby at Lessee’s sole expense), or shall remain on the Premises at
the end of the Term without compensation to Lessee. All alterations, additions,
and improvements shall be constructed, maintained, and used by Lessee, at its
risk and expense, in accordance with all laws; Lessor’s approval of the plans
and specifications therefore shall not be a representation by Lessor that such
alterations, additions, or improvements comply with any law. Lessor may change,
from time to time, traffic patterns, and the dimension, location, identity and
type of any structures comprising the Center and may construct additional buildings
or additional storage on existing buildings, automatic teller machines, or
other improvements at the Center, provided that such changes and construction
do not materially affect access or parking for the Premises.

 

ARTICLE VI

 

6.1                                Lessor
Rights and Access.

Provided
that the exercise of such rights does not unreasonably interfere with Lessee’s
occupancy of the Premises, Lessor shall have the following rights:

 

(a)                               To
decorate and to make inspections, repairs, alterations, additions, changes, or improvements,
whether structural or otherwise, in and about the Center, or any part thereof;

 

(b)                              To
take such reasonable measures as Lessor deems advisable for the security of the
Center and its occupants;

 

4

 

(c)                               To
enter the Premises at all reasonable times and upon reasonable prior notice for
reasonable business purposes and to show the Premises to prospective
purchasers, lenders, or, to tenants.

 

6.2                                
Lessee Access and Quiet Possession.

If Lessee is current and
in compliance with all of its obligations under the Lease, Lessee shall be
entitled to peaceful and quiet possession and enjoyment of the Premises,
subject to the terms and conditions of the Lease. Lessee shall have access to
the common parking areas at all times, subject to the Rules and Regulations
referred to in Paragraph 23.1 and attached hereto as Exhibit F. Lessor shall
make diligent efforts to have all other tenants in the Center comply with
certain Center Rules and Regulations. Otherwise, failure of other tenants to
comply with such Rules and Regulations shall not be considered a default by
Lessor. Construction noise or vibrations shall not be considered a default by
Lessor. Lessor shall not permit amusement activities, such as rides or games,
in the common areas, unless for periodic promotional purposes.

 

ARTICLE VII.

 

7.1                                Utilities
and Services by Lessor.

Lessor shall pay for and
furnish to Lessee in a timely and diligent manner, the utilities and services
listed below, and no others, subject to Paragraph 2.1(c):

 

(a)                                 water
and wastewater services for common facilities;

 

(b)                                trash
dumpster services for common facilities but not for the Premises;

 

(c)                                 electricity
for common facilities;

 

(d)                                 pest
control services for common facilities as needed in the reasonable judgment of
Lessor;

 

(e)                                 repair
and maintenance services for common facilities;

 

(f)                                   other
repairs and maintenance services pursuant to Paragraph 8.1;

 

Costs of such services
and utilities are considered common operating expenses to be allocated among
all tenants under Paragraph 2. l(c) and Exhibit I attached hereto.

 

7.2                              Utilities
and Services by Lessee.

Except
for utilities and services provided by Lessor in Paragraph 7.1, Lessee shall
furnish and pay for all utilities and services necessary for the Premises,
including trash collection services for the Premises. Lessee shall timely pay
for any utilities which are individually metered or separately sub-metered for
the Premises or specially connected to the Premises by the utility company such
as telephone, TV cable, Muzak, etc. Service for individual meters which only
serve the Premises shall be in the name of Lessee. Utility company or
contractor charges for connecting or hooking up utilities to lines brought to
the Premises shall be paid for by Lessee.

 

5

 

Any utilities sub-metered
for the Premises shall be billed to and paid by Lessee at Lessor’s average per
unit cost (per KWH, cfs, gallon, etc.). Lessor reserves the right to sub-meter
water.  Any water sub-metering shall be
billed to and paid by Lessee at Lessor’s average cost per gallon and no more,
and shall include corresponding wastewater averages (if any). 

 

7.3                                Interruption
of Utilities or Services.

Temporary interruption or malfunction of utilities,
services, and/or telephones shall not render Lessor liable for any damages
caused thereby, be a constructive eviction of Lessee, constitute a breach of
any implied warranty, entitle Lessee to any, rent abatements, or release Lessee
from any of its obligations hereunder. Lessor shall use reasonable diligence to
restore interrupted utilities or services.

 

ARTICLE VIII.

 

8.1                               Maintenance
and Repair by Lessor.

Lessor shall act
timely and diligently to provide for the cleaning, repair, maintenance, reconnection
of interrupted utilities or services, and landscaping of common facilities and
to repair and maintain roofs, exterior walls (excluding glass, signage,
exterior wall signage repair), foundations, outside lighting; and any exterior
improvements serving other tenants in the Center. Lessee hereby assigns to
Lessor a right of enforcement of all warranties and guaranties furnished to
Lessee by manufacturers or installers of equipment in or serving the Premises,
to the extent legally possible. Lessor may temporarily close any part of the
common facilities if reasonably necessary for repair or construction. Repairs
and maintenance shall be in accordance with applicable governmental
requirements.

 

8.2                               Maintenance
and Repairs by Lessee.

Lessee shall act timely and
diligently to maintain and repair Lessee’s exterior sign(s) and maintain the
Premises in a clean, safe, and operable condition and shall not permit or allow
to remain any waste or damage to any portion of the Premises, including (a)
HVAC systems, hot water heaters, lighting, walls, floors, ceiling, doors,
hardware, and electrical and plumbing lines exclusively serving the Premises,
(b) equipment in the Premises, and (c) all other interior improvements. HVAC
filters shall be timely replaced by Lessee. Lessee’s exterior signs, doors,
plate glass, and windows shall be maintained, cleaned and replaced by Lessee as
reasonably determined by Lessor, subject to sign replacement limitations
imposed on Lessee in Exhibit G. Lessor hereby assigns to Lessee a right of
enforcement of all warranties and guaranties furnished to Lessor by
manufacturers or installers of equipment to the extent legally possible. Lessee
shall not damage or allow others to damage any portion of the Premises. Lessor
shall have the right, but not the obligation, to perform Lessee’s repair and
maintenance duties at Lessee’s expense if Lessee fails to perform them within
fifteen (15) days after the occurrence of any damage. Lessee shall reimburse
Lessor for the cost of repair, maintenance or replacement for which Lessee is
liable under this Lease or which is caused inside the Premises by Lessee,
Lessee’s employees, franchisees, concessionaires, agents, contractors, family,
or customers or outside the Premises by Lessee or Lessee’s employees, agents,
or contractors within ten (10) days after Lessor has invoiced Lessee therefore.
Lessor may require advance payment from Lessee prior to repair or replacement.
Lessor shall have the right of prior approval of all contractors or personnel

 

6

 

repairing or maintaining HVAC, electrical, plumbing, or structural
improvements in the Premises. Lessee shall cause all contractors and
subcontractors to procure and maintain insurance coverage naming Lessor as an
additional insured against such risks, in such amounts, and with such companies
as Lessor may reasonably require. If Lessee’s workmen or contractors repair,
alter, or modify the Premises, Lessee shall warrant that no mechanic or
materialman’s lien shall be filed against the Premises or the Center for any
work performed, materials furnished, or obligation incurred by or at the
request of Lessee. If such a lien is filed, then Lessee shall, within ten (10)
days after Lessor has delivered notice of the filing thereof to Lessee, either
pay the amount of the lien or diligently contest such lien and deliver to
Lessor a bond or other security reasonably satisfactory to Lessor. If Lessee
fails to timely take either such action, then Lessor may pay the lien claim,
and any amounts so paid, including expenses and interest, shall be paid by
Lessee to Lessor within ten (10) days after Lessor has invoiced Lessee therefore.
All such work, including repairs and maintenance, shall be performed in
accordance with all laws, applicable governmental requirements and in a good
and workmanlike manner so as not to damage the Premises, the Center or the
components thereof. Notwithstanding anything in this Section to the contrary,
Tenant shall not be responsible for costs to repair, maintain or replace any
portion of the Premises exceeding $500 on an individual basis and $5,000 on an
aggregate basis during the Term, unless such arises as a result of Tenant’s
gross negligence or willful misconduct.

 

8.3                                Telecommunications
Equipment.

All telecommunications
equipment necessary to serve Lessee shall be located in the Premises and shall
be paid for by Lessee, or at Lessor’s option and at Lessee’s expense in a
lockable enclosure in a common area, the location of which shall be designated
by Lessor.

 

ARTICLE IX.

 

9.1                                Keys
and Security.

If
locks are changed, Lessor may specify to Lessee the kind and brand of locks,
placement, installation and number of keys to Lessor. Lessee shall provide
Lessor with a key to the Premises, promptly each time the locks are changed by
Lessee. Lessor shall use such key only in any emergency or in connection with
Lessor remedies for default by Lessee under this Lease. Lessor shall have no
duty to provide security service unless expressly provided in this Lease.

 

ARTICLE X.

 

10.1                         Parking.

Lessor
shall have sole control over all parking and may designate parking areas and
service areas. Parking rules are contained in the Center Rules and Regulations
in Exhibit F. If vehicles are parked in violation of Lessor parking Rules and
Regulations or in violation of state statutes, Lessor may exercise vehicle
removal remedies under Articles 6701g-l and 6701g-2 of the Texas Civil Statutes
upon compliance with statutory notice. Lessee shall have the right to park up
to two (2) delivery vehicles overnight at the Premises.

 

7

 

ARTICLE XI.

 

11.1                         Occupancy, Nuisance, and Hazards.

The Premises shall be
continuously occupied by Lessee and used for the use specified in Paragraph 1.2
hereof and shall not be used entirely for storage. Lessee and Lessee’s agents,
employees, family, licensees, and contractors shall comply with all federal,
state, and local laws relating to occupancy and criminal conduct while such
persons are on the Premises. Lessee and the persons listed above shall not (a)
use or permit the use of the Premises for any activity dangerous to life or
property, (b) permit any nuisance, (c) disturb the quiet enjoyment of other
tenants, (d) cause offensive odors or fumes, (e) make undue noise or
vibrations, (f) permit anything which could cancel coverage or increase rates
for insurance on the Center or contents, or (g) otherwise damage the Premises.

 

11.2                         Taxes.

Lessor
shall timely pay all taxes on the Center land and improvements and such taxes shall
be included in the Center common operating expense allocations pursuant to
Paragraph 2.1(c).

 

11.3                         Personal
Property Taxes.

Lessee shall be
liable for all taxes levied or assessed against personal property, furniture,
or fixtures placed by Lessee in the Premises. If any taxes for which Lessee is
liable are levied or assessed against Lessor or Lessor’s property and Lessor
elects to pay the same, or if the assessed value of Lessor’s property is
increased by inclusion of such personal property, furniture or fixtures and
Lessor elects to pay the taxes based on such increase, then Lessee shall pay to
Lessor, upon demand, the part of such taxes for which Lessee is primarily
liable hereunder; however, Lessor shall not pay such amount if Lessee notifies
Lessor that it will contest the validity or amount of such taxes before Lessor
makes such payment, and thereafter diligently proceeds with such contest in
accordance with law and if the non-payment thereof does not pose a threat or
seizure of the Center or interest of Lessor therein.

 

11.4                      Insurance.

Lessor and Lessee shall
comply with the respective insurance obligations as set forth below:

 

(a)                              Lessor. Lessor shall maintain (i) fire and
extended coverage insurance, including vandalism and malicious mischief, on the
Center, and (ii) comprehensive general liability insurance. The amounts shall
be as required by Lessor’s mortgagees or as Lessor may reasonably deem
appropriate, whichever is greater. Lessor shall have no responsibility to
maintain fire and extended coverage insurance on Lessee’s contents. The portion
of Lessor’s insurance premiums reasonably due to Lessee’s acts or omissions or
Lessee’s special use, or Improvements, shall be paid for by Lessee in
accordance with Exhibit I.

 

(b)                             Lessee. Lessee shall maintain throughout
the Term the following insurance policies: (1) comprehensive general liability
insurance in amounts of $100,000 per person, $300,000 per accident and $500,000
property damage, or such other amounts as Lessor may from time to time reasonably
require, insuring Lessee, Lessor, Lessor’s agents and their respective

 

8

 

affiliates against all liability for injury to or
death of a person or persons or damage to property (including vandalism and
malicious mischief) arising from the use and occupancy of the Premises; (2)
insurance covering the full value of Lessee’s property including fixtures,
furniture, equipment, supplies, inventory, Tenant Improvements and other
personal property (including property of others) in the Premises. Lessee
expressly understands that such property is not covered by Lessor’s insurance;
(3) contractual liability insurance sufficient to cover Lessee’s indemnity
obligations hereunder; (4) worker’s compensation insurance, containing a waiver
of subrogation endorsement acceptable to Lessor and (5) business interruption
insurance. All such insurance policies shall be in form, and issued by
companies, reasonably satisfactory to Lessor.

 

(c)                                  Insurance Certificates. Lessee shall provide
Lessor with a certificate of Lessee’s insurance and such other evidence
satisfactory to Lessor of the maintenance of all insurance coverage required
hereunder, as required above within ten (10) days after Lessee initially occupies
the Premises or any portion thereof. Lessor and Lessor’s managing agent (if
any) shall be named as additional insured on Lessee’s liability insurance
policy.  Upon written request by Lessor,
changes in the name of Lessor or Lessor’s agents and their respective
affiliates shall be reflected on such certificate. Failure by Lessee to provide
such certificate is an Event of Default.

 

(d)                                 Notices From Lessee’s Insurance Carrier. All
policies of insurance to be provided by Lessee shall contain a provision (to
the extent legally permitted) that the insurance company shall give Lessor
thirty (30) days notice in writing in advance of any cancellation or non-renewal
of the policy, any reduction in the policy amount, any deletion of additional
insureds or any material changes of any such insurance policies.

 

ARTICLE XII.

 

12.1                         Mutual
Release and Waiver of Subrogation.

(a)                                 To
the extent that the coverage of their respective insurance policies are not
adversely affected, Lessor and Lessee release each other and their respective
officers, directors, employees, and agents from any claims for loss or damage
to any person or property on the Premises which is caused by or which results
from risks insured against under the policies carried by Lessor or Lessee and
in force at the time of any such loss or damage. The foregoing release shall
not apply to property losses or damages in excess of policy limits or to losses
or damages not covered by insurance due to a deductible clause in the policy.

 

(b)                                Upon
written request after signing this Lease, but not before any loss or damage
occurs, Lessor and Lessee may require that the other party’s respective
fire/casualty and liability insurance policy provide a waiver for all right of
recovery by way of subrogation in connection with any loss or damage covered by
such insurance policies. Provided, however, the foregoing release shall not
apply to property losses or damages in excess of policy limits or to losses or
damages not covered by insurance due to a deductible in the policy.

 

(c)                                 Notwithstanding
the foregoing, if such waiver of subrogation is not incorporated into the
policy and cannot be procured or if it can be procured only with an

 

9

 

additional premium charge, such party shall furnish to
the other party written evidence from the insurance company or insurance agent,
verifying that such waiver is (i) not obtainable or (ii) not obtainable without
additional premiums. Thereafter, within a reasonable time after receiving such notice,
the party for whose benefit the waiver is sought may (ii) agree to pay any
additional premium necessary to obtain the waiver of subrogation or (ii) place
the insurance with a company which is reasonably satisfactory to the other
party and to such party’s mortgagees with a policy of the same terms and
coverage, the extra cost of which will be entirely borne by the party for whose
benefit the waiver of subrogation is sought.

 

(d)                                Upon
written request, Lessor and Lessee shall furnish to each other copies of the
insurance referred to in this Lease or satisfactory evidence of same.

 

12.2                         Indemnity
and Hold Harmless.

Lessee shall indemnify
Lessor for and shall hold Lessor harmless from all fines, claims, liabilities,
and suits (including costs and expenses of defending against same) to the
extent resulting from any breach or nonperformance of the Lease by Lessee or
Lessee’s agents, employees, family, licensees, or invitees. Lessor shall
indemnify Lessee for and hold Lessee harmless from all fines, claims,
liabilities, and suits (including costs and expenses for defending against
same) to the extent resulting from any breach or nonperformance of the Lease by
Lessor or Lessor’s agents, employees, family, licensees, or invitees. Lessor
and Lessee shall not be liable to the other or the other’s agents, employees,
or family for any damage to personal property resulting from any act, omission,
or negligence of any other tenant or occupant of the Center.

 

ARTICLE XIII.

 

13.1                         Alterations
by Lessee.

Lessee
may not make any alterations to the Premises without Lessor’s written consent
which may not be unreasonably withheld. “Alterations” include but are not
limited to improvements glued, screwed, nailed or otherwise permanently
attached to the Center, structural changes, roof and wall penetrations, and all
plumbing, electrical, and HVAC changes. Requests for Lessor’s approval shall be
in writing and shall be detailed to Lessor’s reasonable satisfaction.
Alterations shall be done only by Lessor’s contractors or employees or by third
parties approved by Lessor in writing. Subject to the provisions of Exhibit E
regarding Tenant Improvements and Construction Allowance, Lessee shall pay in
advance for any requested alterations which are approved and performed by
Lessor. If same are performed by Lessee with Lessor’s approval, Lessee shall
not allow liens to be placed against the Premises as a result of such
Alterations. Alterations shall comply with all applicable laws. Changes in
Lessee’s Alterations which may be later required by governmental actions shall
also be paid by Lessee.

 

ARTICLE XIV.

 

14.1                         Removal
of Property by Lessee.

Lessee may remove its unattached trade fixtures, furniture, equipment
and personal property upon termination of this Lease. Lessee shall pay all
costs of removal. Lessee shall have no rights to property remaining on the
Premises after move out. Lessee may not remove any

 

10

 

alterations defined
in Paragraph 5.1 or Paragraph 13.1 or improvements such as wall to wall
carpeting, book shelves, window coverings, drapes, cabinets, paneling,
counters, kitchen or break room built-ins, shelving, wall coverings, and
anything else attached to the floor, walls, or ceilings. If Lessor requests in
writing, Lessee shall, immediately prior to moving out, remove any alterations,
fixtures, equipment, and other property installed by Lessee. Lessee shall pay
for cleaning or repairing damages caused by Lessee’s removal of any property.
All items not so removed shall be deemed to have been abandoned by Lessee and
may be appropriated, sold, stored, destroyed, or otherwise disposed of by
Lessor without notice to Lessee and without any obligation to account for such
items. The provisions of this Paragraph 14.1 shall survive the end of the Term.

 

ARTICLE XV.

 

15.1                        Subletting and
Assignment.

Lessee may not sublet, assign, pledge, or
mortgage this Lease and may not grant licenses, commissions, or other rights of
occupancy to all or any part of the Premises without Lessor’s prior written
approval. Sale, transfer, or merger of the majority of the voting shares or
voting partnership interests in Lessee (if a corporation or partnership) shall
be considered an assignment; likewise for issuance of treasury stock or
admission of a new general partner. Lessor shall not be obligated to approve
any proposed sublease or assignment. However, if Lessor gives such approval,
Lessor shall be entitled to 75% of any excess between Lessee’s rental per
square foot under the Lease and the rental per square foot under the sublease
or assignment,. The foregoing is consideration of additional management
performed or to be performed by Lessor under such sublease or assignment. In
addition to the foregoing, Lessor may charge Lessee a one-time fee equal to one
month’s lease rental for such administrative, investigative and management
services. Breach of this Lease by sub-lessees or assignees shall be deemed a
violation by Lessee.

 

Approval by Lessor of any sublease or
assignment shall not release Lessee from any obligations under this Lease and
shall not constitute approval for subsequent subletting or assignment. Upon
default by Lessee, any sub-lessee shall pay all sub-lessee rentals and other
sums due Lessee, direct to Lessor, to be credited against the sums owed by
Lessee to Lessor under this Lease. Sub-lessees or assignees shall be liable for
all of Lessee’s obligations under this Lease unless otherwise specified in
writing. Unless otherwise agreed in writing, no sublease or assignment shall be
valid unless (a) a copy of this Lease is attached thereto, (b) the sub-lessee
or assignee agrees in writing to be liable for all of Lessee’s obligations
under this Lease, and (c) Lessor’s written approval is attached to the sublease
or assignment.

 

Notwithstanding anything herein to the
contrary, Lessee shall be permitted to assign this Lease without any consent of
the Lessor provided such assignment is in connection with an acquisition,
merger or other change in control provided that such transaction involves the
majority of Lessee’s business operations

 

11

 

ARTICLE XVI.

 

16.1                        Destruction by Fire
or Other Casualty.

 

(a)                               Total
Destruction, Rent Abatement, and Restoration.  If the Premises is totally damaged by fire or
other casualty (the “Casualty”) so that it cannot be reasonably used by Lessee
and if this Lease is not terminated as provided in subparagraph (d) below,
there shall be a total abatement of Lessee’s rent and Lessee’s obligation to
pay Center operating expenses until the Premises is restored by Lessor and
Lessee. There shall be no abatement of percentage rentals.

 

(b)                             Partial Destruction,
Rent Abatement and Restoration.  If the Premises is
partially destroyed or damaged by a Casualty so that it can only be partially
used by Lessee for the purposes allowed in this Lease and if this Lease is not
terminated as provided in subparagraph (d) below, there shall be a partial
abatement of Lessee’s rent and Lessee’s obligation to pay Center operating
expenses which fairly and reasonably corresponds to the time and extent to
which the Premises cannot reasonably be used by Lessee.

 

(c)                                Restoration.
 If neither party elects to terminate this
Lease as provided in subparagraph (d) below, then Lessor shall, within a
reasonable time after such Casualty, begin to repair the Center and the
Premises and shall proceed with reasonable diligence to restore the center and
Premises to substantially the same condition as they existed immediately before
such Casualty; however, Lessor shall not be required to repair or replace any
of the furniture, equipment, fixtures, and Tenant Improvements which may have
been placed by, or at the request of, Lessee or other occupants in the Center
or the Premises, and Lessor’s obligation to repair or restore the Center or
Premises shall be limited to the extent of the insurance proceeds actually received
by Lessor for the Casualty in question.

 

(d)                               Lease
Termination.  If
the Premises or the Center is so badly damaged that restoration and repairs
cannot be completed within one (1) month after the Casualty in Lessor’s sole opinion, then this Lease
may be terminated as of the date of the Casualty by either Lessor or Lessee by
serving written notice upon the other. 
Termination notice must be delivered within thirty (30) days after the
Casualty.

 

ARTICLE XVII.

 

17.1                        Condemnation.

If any part of the Center or Premises is taken
by condemnation or by deed in lieu of condemnation by any governmental
authority, this Lease shall terminate one day prior to such taking. If any part
of the Center’s parking lot is so taken, Lessee’s right to use such portion
shall terminate one day prior to such taking; and Lessee’s rent shall be
reduced only to the extent that such partial taking reduces the fair market
value of the Premises. Lessor shall pay for all costs associated with
construction reasonably necessary to render the Premises usable for Lessee’s
permitted purposes after such partial taking. All compensation awarded for any
partial or total taking of the Center shall be the property of the Lessor.
Lessor shall have no interest in any award made to Lessee for loss of business,
moving costs, or for taking of Lessee’s fixtures and other property within the
Premises if a separate award for such items is made to Lessee.

 

12

 

ARTICLE XVIII.

 

18.1                        Default by Lessor.

The liability of Lessor to Lessee for any
default by Lessor under the terms of this Lease shall be limited to Lessee’s
actual direct, but not consequential, damages therefor and shall be recoverable
only from the interest of Lessor in the Center, and Lessor shall not be
personally liable for any deficiency. Lessee shall not seek to enforce any remedy
it may have for any default on the part of Lessor without first giving written
notice by certified mail, return receipt requested, specifying the default in
reasonable detail, to any Lessor’s Mortgagee whose address has been given to
Lessee, and affording such Lessor’s Mortgagee a reasonable opportunity to
perform Lessor’s obligations hereunder.

 

ARTICLE XIX.

 

19.1                        Default
by Lessee.

(a)                                Definition of Default. The occurrence of any
of the following (each one of which is herein referred to as an “Event of
Default”) shall constitute a default by Lessee: (1) failure to pay Rent or any
sum due by Lessee under this Lease within ten (10) days after written demand
therefor by Lessor, however, an Event of Default shall occur hereunder without
any obligation of Lessor to give any notice if Lessor has given Lessee written
notice under this Paragraph 19.1 (a) on more than two occasions during the
twelve (12) month interval preceding such failure by Lessee; (2) failure to
vacate on or before the last day of the Term, renewal term, or extension
period; (3) unauthorized early move-out or notice of same as set forth below;
(4) acquisitions of Lessee’s interest in the Lease by a third party by judicial
or non-judicial process; (5) the filing of a petition by or against Lessee (the
term “Lessee” shall include, for the purpose of this Paragraph 19.1 (a), any
guarantor of Lessee’s obligations hereunder) (a) in any bankruptcy or other
insolvency proceeding; (b) seeking any relief under any state or federal debtor
relief law; (c) for the appointment of a liquidator or receiver for all or
substantially all of Lessee’s property or for Lessee’s interest in this Lease;
or (d) for the reorganization or modification of Lessee’s capital structure;
however, if such a petition is filed against Lessor, then such filing shall not
be an Event of Default unless Lessee fails to have the proceedings initiated by
such petition dismissed within ninety (90) days after the filing thereof; or
(6) failure to comply with any other provision of the Lease (including Rules
and Regulations) if failure to comply is not cured (with in ten (10) days) after
delivery of written notice by Lessor to Lessee.

 

(b)                                Remedies. Upon any Event of Default, Lessor
may, in addition to all other rights and remedies afforded Lessor hereunder or
by law or equity, take any of the following actions:

 

(i)                                   Terminate this Lease by giving Lessee written
notice thereof, in which event Lessee shall pay to Lessor the sum of (1) all
Rent accrued hereunder through the date of termination, (2) all amounts due
under Paragraph 19.1 (c), and (3) an amount equal to (i) the total Rent that
Lessee would have been required to pay for the remainder of the Term discounted
to present value at a per annum rate equal to the “Prime Rate” as published on
the date this Lease is terminated by The Wall Street Journal, Southwest

 

13

 

Edition, in its listing of “Money Rates” minus
one percent, minus (ii) the then present fair rental value of the Premises for
such period, similarly discounted. 
Lessor’s agents have authority to terminate this Lease only by written
notice given pursuant to Paragraph 29.1.

 

(ii)                               Terminate Lessee’s right to possess the
Premises without terminating this Lease by giving written notice thereof to
Lessee, in which event Lessee shall pay to Lessor (1) all Rent and other
amounts accrued hereunder to the date of termination of possession, (2) all
amounts due from time to time under Paragraph 19.1 (c), and (3) all Rent and
other net sums required hereunder to be paid by Lessee during the remainder of
the Term, diminished by any net sums thereafter received by Lessor through
re-letting the Premises during such period, after deducting all costs incurred
by Lessor in re-letting the Premises. Lessor shall use reasonable efforts to
re-let the Premises on such terms as Lessor in its sole discretion may
determine (including a term different from the Term, rental concessions, and
alterations to, and improvement of, the Premises); however Lessor shall not be
obligated to re-let the Premises before leasing other portions of the Center.
Lessor shall not be liable for, nor shall Lessee’s obligations hereunder be
diminished because of, Lessor’s failure to re-let the Premises or to collect
rent due for such re-letting. Lessee shall not be entitled to the excess of any
consideration obtained by re-letting over the Rent due hereunder. Reentry by
Lessor in the Premises shall not affect Lessee’s obligations hereunder for the
un-expired Term; rather, Lessor may, from time to time, bring an action against
Lessee to collect amounts due by Lessee, without the necessity of Lessor’s
waiting until the expiration of the Term. Unless Lessor delivers written notice
to Lessee expressly stating that it has elected to terminate this Lease, all
actions taken by Lessor to dispossess or exclude Lessee from the Premises shall
be deemed to be taken under this Section 19.1 (b). If Lessor elects to proceed
under this Section 19.1 (b), it may at any time elect to terminate this Lease
under Section 19.1 (a).

 

(iii)                          Door locks. Lessor may change or
modify door locks or other security devices on all entry doors of the Premises
to deprive Lessee of access thereto until all such sums are paid in full;
provided, however, Lessor shall immediately thereafter post a notice on the
primary entry door to the Premises, stating that Lessor has exercised such
lockout rights. Lessor’s right to modify or change locks shall occur
automatically and without notice if Lessee’s rent is accelerated under subparagraph
(e) below relating to unlawful early move out. However, Lessee shall not be in
default under sub-clause (6) above if Lessee promptly commences to cure such noncompliance
and diligently proceeds in good faith to cure same after receiving written notice
of such default.

 

(iv)                            Utilities and
Services. Lessor may terminate utilities to the Premises, without notice. Lessor’s
right to terminate such utilities or services shall occur automatically and
without notice if Lessee’s rent is accelerated under subparagraph (vi) below,
relating to unlawful early move out.

 

(v)                                Acceleration After
Notice of Rental Delinquency, If Lessee is in default for nonpayment of rent
or other sums due and if Lessee fails to pay same in full within ten (10) days
after Lessor delivers to Lessee or to the Premises a written notice of Lessor’s

 

14

 

intent to accelerate, then all rent for the
remainder of the lease term shall be accelerated, due and delinquent at the end
of such ten (10) day notice period without further notice. Such acceleration
rights are in consideration of the rentals for the entire being payable in monthly
installments rather than in one lump sum at the beginning of the lease term. If
Lessee has already vacated the leased premises, notice of acceleration may be
delivered to Lessee pursuant to Paragraph 29.1. Liability for additional rents
accruing in the future (over and above any base rents) shall not be waived by
such acceleration.

 

(vi)                            Acceleration Upon
Early Move Out. If Lessee is lawfully evicted, or if Lessee moves out or
gives oral or written notice (in person or by an authorized employee or agent)
of intent to move out prior to the end of the Term without the Rent being paid
in full for the entire remainder of the Term or renewal or extension period or
without prior written consent of Lessor, all remaining rents for the remainder
of the Term shall be accelerated immediately and automatically without demand
or notice. Such accelerated rents shall be due and delinquent without notice
before or after such acceleration. Such acceleration shall occur even if the
rent for the current month has been paid in full.

 

(vii)                        Termination of
possession. If Lessee is in default as defined in subparagraph (a) above and if Lessee
remains in default for three (3) days after Lessor gives notice of such default
to Lessee, or if Lessee abandons the Premises, Lessor may (with or without
demand for performance) terminate Lessee’s right of possession by giving one
(1) day written notice to vacate; and Lessor shall be entitled to immediate
possession without termination of Lessee’s obligations under the Lease. Lessor’s
repossession shall not be considered an election to terminate this Lease unless
written notice of such intention to terminate is given to Lessee by Lessor.
Repossession may be by voluntary agreement or by eviction lawsuit. Commencement
of an eviction lawsuit shall not preclude Lessor’s remedies of landlord’s lien,
lock change, utilities termination, or other rights and remedies of Lessor.

 

(viii)                    Damages. In addition to all
other remedies, Lessor may recover actual damages incurred.

 

(c) Payment by Tenant. Upon any Event of
Default, Lessee shall pay upon Lessor’s demand all costs incurred by Lessor
(including court costs and reasonable attorney’s fees and expenses) in (1)
obtaining possession of the Premises, (2) removing and storing Lessee’s or any
other occupant’s property, (3) repairing, restoring, altering, remodeling and
otherwise putting the Premises into condition acceptable to a new tenant, (4)
if Lessee is dispossessed of the Premises and this Lease is not terminated,
re-letting all or part of the Premises (which in no event shall be less than
one month’s rent), including leasing commissions, rent concessions (whether in
the form of assuming or buying out lease remainders elsewhere, free rent for a
period of time, or reduced rental rates), utilities during the vacancy,
advertising costs, administrative overhead cost of tenant finish work, and
other costs incidental to such re-letting, (5) performing Lessee’s obligations
which Lessee failed to perform including (a)all rent and other indebtedness due
from Lessee to Lessor through the date of termination of Lessee’s right of
possession and (b) all rent and other sums required to be paid by Lessee during
the remainder of the entire Term, subject to

 

15

 

the
acceleration paragraphs above and (6) enforcing or advising Lessor of its
rights, remedies and recourses arising out of the Event of Default. To the full
extent permitted by law, Lessor and Lessee agree that the federal and state
courts of Texas shall have exclusive jurisdiction over any matter relating to
or arising from this Lease and the parties rights and obligations under this
Lease.

 

Lessor’s acceptance of any partial payment of
Rent shall not waive Lessor’s rights with regard to the remaining portion of
the Rent that is due, regardless of any endorsement or other statement on any
instrument delivered in payment of Rent or any writing delivered in connection
therewith; accordingly, Lessor’s acceptance of a partial payment of Rent shall
not constitute an accord and satisfaction of the full amount of the Rent that
is due.

 

ARTICLE XX.

 

20.1                         Lien for Rent. Intentionally deleted.

 

ARTICLE XXI.

 

21.1                        Attorney’s Fees,
Interest, and Other Expenses.

If Lessee is in default and if Lessor places
the Lease in the hands of an attorney in order to enforce lease rights or
remedies, the Lessor may recover reasonable attorney’s fees from the Lessee
even if suit has not been filed. In any lawsuit enforcing lease rights, the
prevailing party shall be entitled to recover reasonable attorney’s fees from
the non prevailing party, plus all out of pocket expenses. Trial shall be to
court only; and all parties waive jury trial. All delinquent sums due from
Lessee shall bear interest at the maximum lawful rate of interest, compounded
annually, from date of default until paid, plus any late payment fees. Late
payment fees as set forth in Paragraph 3.1 shall be considered reasonable
liquidated damages for the time, trouble, inconvenience, and administrative
overhead expenses incurred by Lessor in collecting late rentals, such elements
of damages being uncertain and difficult to ascertain. Late payment fees shall
not be liquidated damages for attorney’s fees or for Lessor’s loss of use of
such funds during the time of delinquency.

 

ARTICLE XXII.

 

22.1                        Non-waiver.

Lessor’s acceptance of monies past due or
failure to complain of any action, non action, delayed payment or Event of
Default, whether singular or repetitive, shall not constitute a waiver of
rights or obligations under the Lease. Lessor’s waiver of any right or any
default shall not constitute waiver of any other rights, other Events of
Default, or subsequent Default. No act or omission by Lessor or Lessor’s agents
shall be deemed an acceptance or surrender of the Premises and no agreement by
Lessor to accept a surrender of the Premises shall be valid unless it is in
writing and signed by a duly authorized agent of Lessor. Lessor’s acceptance of
any partial payment of Rent shall not waive Lessor’s rights with regard to the
remaining portion of the Rent that is due, regardless of any endorsement or
other statement on any instrument delivered in payment of Rent or any writing
delivered in connection therewith; accordingly, Lessor’s acceptance of a
partial

 

16

 

payment of Rent shall not constitute an accord and satisfaction of the
full amount of the Rent that is due.

 

ARTICLE XXIII.

 

23.1                        Rules and
Regulations.

Lessee
shall comply with the Rules and Regulations for the Center which are attached
hereto as Exhibit F. Lessor may from time to time, change such Rules and
Regulations for the safety, care or cleanliness of the Center and related
facilities, provided that such changes are applicable to all tenants of the
Center and do not unreasonably interfere with Lessee’s use of the Premises.

 

ARTICLE XXIV.

 

24.1                        Transfer of Ownership
by Lessor.

If Lessor transfers ownership of the Center or
any portion thereof, (other than security for a mortgage) and if Lessor has
delivered to transferee all of Lessee’s security deposits and any prepaid
rents, Lessor shall be released from all liability under the Lease; and such
transferee shall become liable as Lessor.

 

ARTICLE XXV.

 

25.1                        Mortgages.

This Lease shall be subordinate to any deed of
trust, mortgage, or other security instrument, or any ground lease, master
lease, or primary lease, that now or hereafter covers all or part of the
Premises (the mortgagee under any such mortgage or the Lessor under such lease
is referred to herein as a (“Lessor’s Mortgagee”) provided such Lessor Mortgage
agrees to not disturb Lessee’ occupancy under this Lease. Any Lessor’s
Mortgagee may elect, at any time, unilaterally, to make this Lease superior to
its mortgage, ground lease, or other interest in the Premises by so notifying
Lessee in writing. Lessee shall attorn to any party succeeding to Lessor’s
interest in the Premises, whether by purchase, foreclosure, deed in lieu of
foreclosure, power of sale, termination of lease, or otherwise, upon such party’s
request and agreement to not disturb Tenant’s occupancy under this Lease, and
shall execute such agreements confirming such attornment as such party may
reasonably request.

 

ARTICLE XXVI.

 

26.1                       Surrender of Premises.

No act by Lessor shall be deemed an acceptance
of a surrender of the Premises, and no agreement to accept a surrender of the
Premises shall be valid unless it is in writing and signed by Lessor. At the
expiration or termination of this Lease, Lessee shall deliver to the Lessor the
Premises with all improvements located therein in good repair and condition,
broom clean in the same condition as on the Commencement Date (as changed or
improved from time to time in accordance with this Lease), less ordinary wear
and tear and shall deliver to Lessor all keys to the Premises. Removal of
Lessee’s property from the Premises is subject to Paragraph 14.1.

 

17

 

ARTICLE XXVII.

 

27.1                        Holding Over. 

If Lessee fails to vacate the Premises at the
end of the Term, then Lessee shall be a tenant at will and, in addition to all
other damages and remedies to which Lessor may be entitled for such holding
over, Lessee shall pay, in addition to the other Rent, a daily Base Rent equal
to the greater of (a) 150% of the daily Base Rent payable during the last month
of the Term, or (b) 125% of the prevailing rental rate in the Center for
similar space.

 

ARTICLE XXVIII.

 

28.1                        Signs and Center
Name.

Lessee’s exterior sign must be installed in
accordance with the signage criteria in Exhibit G, attached hereto, prior to
Lessee’s commencement of business. Except for Lessee’s initial signage
contemplated in Exhibit G, Lessee may not have temporary or permanent signs,
symbols, awnings, advertising matter, decorations, or identifying marks on any
windows or exterior surfaces of the Premises or in the common facilities
without Lessor’s prior written approval. Permitted signs and lettering shall
conform to Lessor’s criteria in Exhibit G. Lessor may remove all unapproved
signs without prior notice to Lessee at Lessee’s expense. Lessor may change the
name of the Center upon three (3) months written notice to Lessee.

 

ARTICLE XXIX.

 

29.1                         Notices.

All notices and other communications given
pursuant to this Lease, shall be in writing and shall be either (a) hand
delivered personally to the party being notified, (b) hand delivered to or
inside such party’s mailing address, (c) delivered at such party’s mailing
address by certified mail, return receipt requested, postage prepaid or (d)
sent by prepaid telegram, cable, facsimile transmission or telex followed by a
confirmation letter. The mailing address of Lessor shall be the address to
which Lessee normally mails or delivers the monthly rent unless Lessor notifies
Lessee of a different address in writing. The mailing address of Lessee shall
be the Premises under the Lease. However, if Lessee moves out, it shall be
Lessee’s last known address by Lessor. Hand delivered notice is required only
when expressly required in the Lease. Notice by non-certified mail is
sufficient if actually received by the addressee or an employee or agent of
addressee. The term “notice” shall be inclusive of notices, billings, requests,
or demands.

 

ARTICLE XXX.

 

30.1                       Estoppel Certificate.

From time to time, upon ten
(10) days prior written request from Lessor, Lessee shall execute and deliver
to Lessor or furnish to any party designated by Lessor the estoppel certificate
attached as Exhibit H. The form in Exhibit H may be changed by Lessor as may be
reasonably required by a prospective purchaser or lender to confirm such
factual certifications and representations as to this Lease as Lessor may
reasonably request. If any statement in the estoppel certificate form is
contrary to the facts existing at the time of execution of such form,

 

18

 

Lessee
may correct same before signing. The estoppel certificate may be conclusively
relied upon by Lessor and by any prospective lienholder or purchaser of the
Premises. If Lessee fails to comply with the foregoing by the end of the ten
(10) day period, it shall be conclusively presumed that (a) this Lease is in
full force and effect without any sublease or assignments and is un-amended or
modified except for amendments verified by affidavit of Lessor to the
prospective lienholder or purchaser, (b) no rents, security deposits, or other
charges have been prepaid, (c) the statements contained in the estoppel
certificate form are correct, (d) there are no uncured defaults by Lessor, (e)
Lessee has no right of offset or rescission, and (f) any prospective purchaser
or lienholder may conclusively rely on such silence or noncompliance by Lessee
and may conclusively assume no Lessor defaults within the one hundred twenty
(120) days following Lessee’s receipt of Lessor’s request for an estoppel
certificate.

 

ARTICLE XXXI.

 

31.1                        Binding on
Successors.

This Lease shall inure to the benefit of and
be binding upon the parties and any guarantors of this Lease and upon their
respective successors and assigns. In the event of foreclosure by any lien
holder of the Center, Lessee shall not have the right to terminate this Lease.
This Lease is for the sole benefit of Lessor and Lessee, and, other than Lessor’s
mortgagee, no third party shall be deemed a third party beneficiary hereof.

 

ARTICLE XXXII.

 

32.1                        Leasing Broker or Agent Commission.

Neither Lessor nor Lessee has dealt with any
broker or agent in connection with the negotiation or execution of this Lease,
other than Jim Nelson and Kirk Guilanshah whose
commission shall be paid by Lessor. Lessee and Lessor shall each indemnify the
other against all costs, expenses, attorneys’ fees, and other liability for
commissions or other compensation claimed by any broker or agent claiming the
same by, through, or under the indemnifying party. No leasing commission shall
be due by Lessor to any broker or agent unless in writing. Commission
agreements executed by Lessor shall be binding on subsequent owners if the
Lessee is in possession of the Premises at the time of transfer of ownership of
the Center.

 

ARTICLE XXXIII.

 

33.1                         Representation and Warranties by Lessor.

Lessor warrants that Lessor is the sole owner
of the land and improvements comprising the Center and that Lessor has full
rights to enter into this Lease. Lessor duties are limited to those expressly
stated in the Lease and shall not include any implied duties or warranties, now
or in the future. No representations or promises have been made by Lessor other
than those contained in the Lease. Lessor warrants that any construction work
performed by Lessor or Lessor’s contractors shall be in compliance with
applicable law at time of construction.

 

33.2                         Representations
and Warranties by Lessee.

Lessee warrants to Lessor that (a) the
financial statements of Lessee heretofore furnished are true

 

19

 

and
correct, (b) there has been no significant adverse change in Lessee’s financial
condition since the date of the financial statement, and (c) the financial
statement represents the financial condition of Lessee upon those dates and at
the time of execution hereof, (d) there are no delinquent taxes due and unpaid
by Lessee, and (e) Lessee and none of the officers and partners of Lessee (if
Lessee is a partnership or corporation) have ever declared bankruptcy. Lessee
has disclosed all lawsuits pending or threatened against Lessee, and Lessee has
made no material misrepresentation or material omission of facts regarding
Lessee’s financial condition or business operation. All financial statements
must be dated and signed by Lessee. Lessee acknowledges that Lessor has relied
on the above information furnished by Lessee to Lessor and that Lessor would
not have entered into this Lease otherwise. Lessee’s failure to notify Lessor
of such material adverse changes in Lessee’s financial condition shall
constitute an Event of Default under the Lease.

 

33.3                        Financial Statement
Requirements.

Prior to execution of this Lease, Lessee shall
furnish to Lessor a financial statement of Lessee’s condition in a reasonably
satisfactory form. Subsequently, at any time during the Term and within fifteen
(15) days after Lessor’s request, Lessee will furnish Lessee’s most recent
audited financial statements (including any notes to them) to Lessor, or, if no
such audited statements have been prepared, such other financial statements
(and notes to them) as may have been prepared by an independent certified
public accountant or, failing those, Lessee’s internally prepared financial
statements.  Lessor will not disclose any
aspect of Lessee’s financial statements that Lessee designates to Lessor as
confidential except (1) to Lessor’s lenders or prospective purchasers of the
Center, (2) in litigation between Lessor and Lessee, or (3) if required by
court order. All financial statements shall be originally signed and dated by
Lessee. The requirements of this Section shall be deemed satisfied by deliver
of those financial statements on file with the Securities and Exchange
Commission.

 

ARTICLE XXXIV.

 

34.1                        Place and
Performance.

All obligations under this Lease shall be
performed in the county where the Center is located, unless otherwise expressly
stated in this Lease.

 

ARTICLE XXXV.

 

35.1                        Amendments.

This Lease contains the entire agreement
between the parties. No other written or oral promises or representations have
been made, and none shall be binding. This Lease supersedes and replaces any
previous lease between the parties on the Premises, including renewals or
extensions thereunder. Except for reasonable changes in the Rules and
Regulations, this Lease shall not be amended or changed except by written
instrument, signed by both Lessee and Lessor. Lessor’s agents do not and will
not have the authority to (a) make exceptions, changes or amendments to this
Lease, or factual representations not expressly contained in this Lease, (b)
waive any right, requirement, or provision of this Lease, or (c) release Lessee
from all or part of this Lease, unless such action is in writing and no custom
or practice which may evolve between the parties in the

 

20

 

administration
of the terms hereof shall waive or diminish the right of Lessor to insist upon
the performance by Lessee in strict accordance with the terms hereof. 

 

ARTICLE XXXVI.

 

36.1                        Joint and Several
Liability.

Multiple Lessees shall be jointly and
severally liable under this Lease. Notices, requests, or agreements to, from,
or with one of multiple Lessees shall be deemed to be to, from, or with all
such Lessees.

 

ARTICLE XXXVII.

 

37.1                        No Merger.

Under no circumstance shall Lessor or Lessee
be considered an agent of the other. There shall be no merger of the leasehold
estate hereby created with the fee estate in the Premises or any part thereof
if the same person acquires or holds, directly or indirectly, this Lease or any
interest in this Lease and the fee estate in the leasehold Premises or any
interest in such fee estate.

 

ARTICLE XXXVIII.

 

38.1                         Governing Law.

This Lease shall be governed by and construed
in accordance with the laws of the State of Texas, without regard to the
conflicts of laws provisions, which might otherwise be applicable.

 

ARTICLE XXXIX.

 

39.1                        Separability.

If any clause or provision of this Lease is
illegal, invalid, or unenforceable under present or future laws, then the
remainder of this Lease shall not be affected thereby and in lieu of such
clause or provision, there shall be added as a part of this Lease a clause or
provision as similar in terms to such illegal, invalid, or unenforceable clause
or provision as may be possible and be legal, valid, and enforceable.

 

ARTICLE XL.

 

40.1                       Force Majeure.

Other than for Lessee’s
obligations under this Lease that can be performed by the payment of money
(e.g., payment of Rent and maintenance of insurance), whenever a period of time
is herein prescribed for action to be taken by either party hereto, such party
shall not be liable or responsible for, and there shall be excluded from the
computation of any such period of time, any delays due to strikes, riots, acts
of God, shortages of labor or materials, war, governmental laws, regulations,
or restrictions, or any other causes of any kind whatsoever which are beyond
the control of such party.

 

21

 

ARTICLE XLI.

 

41.1                        Confidentiality.

Lessee acknowledges that the terms and
conditions of this Lease are to remain confidential for Lessor’s benefit, and
may not be disclosed by Lessee to anyone, by any manner or means, directly or
indirectly, without Lessor’s prior written consent. The consent by Lessor to
any disclosures shall not be deemed to be a waiver on the part of Lessor of any
prohibition against any future disclosure.

 

ARTICLE XLII.

 

42.1                        Miscellaneous.

The Lease shall not be construed against
either party more or less favorably by reason of authorship or origin of
language. If any date of performance or exercise of a right ends on a Saturday,
Sunday, or state holiday, such date shall automatically extend through the next
business day. Time is of the essence; and all performance date, time schedules,
and conditions precedent to exercising a right shall be strictly adhered to
without delay except where otherwise expressly provided.

 

ARTICLE XLIII.

 

43.1                        Special Conditions.

Special conditions of this Lease are attached
in Exhibit B.

 

ARTICLE XLIV.

 

44.1                         Lessee Signature
Requirements.

Lessee is ( ) an individual,
( ) several individuals, ( ) a general partnership, ( ) a limited partnership,
( ) limited liability corporation ( ) a joint venture, ( ) an unincorporated
association, ( ) a professional association, ( ) a professional corporation, or
(X) a corporation (Check one). Such partnership, joint venture, unincorporated
association, or corporation is organized or chartered under the laws of the
State of Texas. Lessee’s name stated at the beginning of this Lease ( ) is or
(X ) is not an assumed name. If so, an assumed name certificate has been or
will be filed by Lessee in the county where the Center is located or with the
Texas Secretary of State’s Office in Austin, Texas, whichever is appropriate.
Lessee shall disclose to Lessor the names and addresses of all partners or venturers
of Lessee if Lessee is a partnership or joint venture. Corporate seals are
unnecessary under Texas law.

 

ARTICLE XLV.

 

45.1                         Guaranty.

This Lease ( ) is or (X ) is not guaranteed by
others. The names and titles of any guarantors are shown on the signature
page(s) at the end of this Lease. The specific obligations of such guarantors,
if any, shall be pursuant to the attached Exhibit K entitled “Lease Guaranty”,
if applicable. Such guaranty shall continue and shall be unaffected by any
modification or

 

22

 

amendment
to this Lease or any renewal or extension thereof. The signature requirements
and corporate resolution requirements for any guarantors shall conform to the
requirements for Lessees in Paragraph 44.1 above.

 

ARTICLE XLVI.

 

46.1                        Exhibit List.

The exhibits and attachments attached to this
Lease are listed below. All exhibits and attachments are incorporated herein by
this reference and are a part of this Lease except for those, which are lined
out.

 

Exhibit A                                         Floor Plan of the
Premises

Exhibit B                                           Special Conditions

Exhibit C                                           Legal Description of
the Center

Exhibit D                                          Acknowledgment of
Lease

Exhibit E                                           Construction
Obligations of Lessor and Lessee

Exhibit F                                            Center Rules and
Regulations

Exhibit G                                           Signage Criteria

Exhibit H                                         Estoppel Certificate

Exhibit I                                              Pro-ration of Center
Operating Expenses

Exhibit J                                             Lessee Signature
Requirements

Exhibit K                                         Lease Guaranty

 

ARTICLE XLVII.

 

47.1                         Lease Dates and Signatures.

The effective date on which this Lease becomes
binding is the date on which the Lease has been signed by all parties,
including guarantors if any. The commencement date of the lease term and the
commencement date for payment of rent are set forth in Paragraph 4.1. The name
and signatures of all parties are shown below; and all persons signing have
been duly authorized to sign.

 

 

	
  LESSOR: Beltway 8 Service Center
  Investors, Ltd.

  	
  LESSEE: Isolagen Technologies,
  Inc.

  
	
  Richland Investments, General Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Edna Meyer-Nelson

  	
   

  	
  By:

  	
  /s/ Jeffrey W. Tomz

  
	
   

  	
  Edna Meyer-Nelson, President

  	
   

  	
  Jeffrey W. Tomz, CFO

  
	
   

  	
   

  	
   

  	
   

  
	
  2/16/05

  	
   

  	
  2-16-05

  
	
  Date signed

  	
   

  	
  Date signed

  

 

23

 

EXHIBIT A

 

FLOOR PLAN OF THE
PREMISES
 (see Paragraph 1.1 of the Lease)

 

The
parties have agreed on the location and dimensions of the Premises as shown
below

 

 

24

 

EXHIBIT B

 

SPECIAL CONDITIONS

(see Paragraphs 2.1 and 43.1 of the Lease)

 

1.                                       The Base Rent,
annually and monthly for the Term shall be as follows:

 

	
  Lease
  Term

  	
   

  	
  Monthly Rent Aggregate Rent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3/01/05
  through 4/30/05

  	
   

  	
  Free Rent*

  	
   

  	
  Free Rent*

  	
   

  
	
  5/01/05
  through 4/30/06

  	
   

  	
  $

  	
  11,136.75

  	
   

  	
  $

  	
  133,641.00

  	
   

  
	
  5/01/06
  through 4/30/07

  	
   

  	
  $

  	
  11,879.20

  	
   

  	
  $

  	
  142,550.40

  	
   

  
	
  5/01/07
  through 4/30/08

  	
   

  	
  $

  	
  12,621.65

  	
   

  	
  $

  	
  151,459.80

  	
   

  

 

* Tenant will pay the pro rata share of common
operating expenses including, taxes, and insurance on the first day of each two
(2) month Free Rent period. Estimation is $3,118.29 for each month.

 

2.                                       In addition to the
above referenced Base Rent, Lessee shall pay to Lessor, as additional rent,
Lessee’s pro rata share of common operating expenses including, taxes and
insurance.  Lessor has estimated these
expenses for 2005, based on actual expenses during the previous year, to be
$0.21 per square foot, or $3,118.29 per month.

 

3.                                       There shall be no
obligation for Lessee to install any signage at the Premises. Any signage must
be approved by the Landlord prior to installation and is the sole cost of the
Lessee.

 

4.                                       Lessee is aware that
the key issued by Lessor upon execution of the lease is a “vacant master key”
and that other individuals may have copies of the key. Lessor advises Lessee to
re-key the entry lock to the space. Any cost incurred regarding keys/locks
shall be at Lessee’s expense.

 

5.                                       Landlord will provide
at no additional expense, a pad site on the exterior of the building for the Lessee
to install a 70 KVA back up generator at its sole cost and expense.

 

6.                                       Landlord will provide
a 200 sq. ft. ground surface for exterior storage area to be used for CO2
Storage at no additional expense to the Lessee. Lessee to provide storage
facility at its sole cost and expense.

 

7.                                       Lessee, upon giving
Landlord not more than twelve (12) months and not less than three (3) months
prior written notice in each instance, shall have the right to renew the lease
with respect to all or part of the space than under lease to Lesee for two (2)
additional periods of up to three (3) years at current market rate based on
similar properties in the same area.

 

8.                                       Lessee, will have four
(4) parking spaces per one thousand (1,000) based on rentable square feet or
approximately sixty (60) parking space. Landlord is providing these spaces with
some in the front of the leased space and some in the rear of the leased space.

 

25

 

EXHIBIT C

 

LEGAL DESCRIPTION OF
THE PROPERTY

 

All
that certain 5.2412 acres, situated in the John Reinerman Survey, A-642, Harris
County, Texas, said 5.2412-acre tract is part of that certain 13.64 acre tract
conveyed to A. J, Mendive, as recorded in Volume 1438, Page 46 of the Harris
County Deed Records. Said 5.2412-acre tract is more particularly described by
metes and bounds as follows: 

 

COMMENCING
at the point of intersection of the northerly right-of-way line of Missouri,
Kansas and Texas Railroad (100’ right-of-way), with the easterly right-of-way
line of Post Oak Road (80’ wide); thence North 01 degrees 50 minutes 33 seconds
West, along the easterly right-of-way line of Post Oak Road, for a distance of
701.04 feet to a 1/2” iron rod found for the POINT OF BEGINNING of the herein
described 5.2412-acre tract;

 

THENCE
North 01 degrees 50 minutes 33 seconds West, continuing along the
aforementioned easterly right-of-way line, for a distance of 422.80 feet to a
5/8” iron rod found for corner;

 

THENCE
North 88 degrees 18 minutes 59 seconds East, leaving the aforementioned
easterly right-of-way line, for a distance of 547.11 feet to an “X” found in
concrete for corner;

 

THENCE
South 00 degrees 01 minutes 15 seconds West, for a distance of 422.60 feet to a
5/8” iron rod found for corner;

 

THENCE
South 88 degrees 16 minutes 30 seconds West, for a distance of 533.37 feet to
the POINT OF BEGINNING, containing within these metes and bounds 5.2412 acres
(228,307 square feet) of land area, more or less.

 

Address of Property is: 11275 W. Sam Houston
Parkway Suite 300

Houston, Texas 77031

 

26

 

Left
Blank Intentionally

 

27

 

EXHIBIT D

 

ACKNOWLEDGMENT OF LEASE

(see Paragraph 4.2 of the Lease)

 

	
  THE STATE OF TEXAS

  	
  }

  	
   

  
	
   

  	
  }

  	
   

  
	
  COUNTY OF Harris

  	
  }

  	
   

  

 

KNOW
ALL MEN BY THESE PRESENTS:

 

The undersigned parties
acknowledge that the Lease described below is in full force and effect and that
Lessee has taken possession of the space.

 

	
  Date of Lease:

  	
   

  	
  February 16, 2005

  
	
  Lessor:

  	
   

  	
  Beltway 8 Service Center
  Investors, Ltd. and Richland Investments, Inc., General Partner

  
	
  Lessee:

  	
   

  	
  Isolagen Technologies, Inc.

  
	
  Suite No.:

  	
   

  	
  Suite 300

  
	
  Square feet of rentable area:

  	
   

  	
  14849 s.f.

  
	
  Center Address:

  	
   

  	
  11275 West Sam Houston Parkway
  S. Houston, TX 77031

  
	
  Center legal description:

  	
   

  	
  See Exhibit C

  

 

The
Commencement Date, Annual Anniversary Date, and Ending Date of the initial Term
as defined in paragraph 4.1 of the Lease are as follows:

 

Commencement Date (month, day, year):                                                                         March 1, 2005

Annual Anniversary Date (month, day):                          May 1

Ending Date (month, day, year):                                                                       April 30, 2008

 

The parties acknowledge that
the Lease has not been amended or modified and that this acknowledgment may be
filed of record with the Texas Secretary of State or with the county where the
Center is located in order to record Lessee’s possession rights to the Premises.
The entire Lease is hereby affirmed and incorporated herein. The Lease will
cease to be an encumbrance to Lessor’s title if Lessor files an affidavit of
record, stating that Lessee no longer occupies the Premises and that Lessee’s
right of possession has been lawfully terminated.

 

	
  LESSEE

  	
  LESSOR

  
	
  (to be signed at time of
  move in)

  	
  (to be signed at time of
  move in)

  
	
   

  	
   

  
	
  LESSEE:

  	
  LESSOR:

  
	
  Isolagen Technologies, Inc.

  	
  Beltway 8 Investors, Ltd.,
  General Partner

  
	
   

  	
  Richland Investors, Inc.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jeffrey W. Tomz

  	
   

  	
  By:

  	
  /s/ Edna Meyer-Nelson

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jeffrey W. Tomz, CFO

  	
   

  	
   

  	
  Edna Meyer-Nelson,
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date signed:

  	
  2-16-05

  	
   

  	
  Date signed:

  	
  /s/ Edna Meyer-Nelson

  	
   

  
									

 

28

 

EXHIBIT E

 

CONSTRUCTION OBLIGATIONS OF LESSOR
AND LESSEE

(see
Paragraph 5.1 of the Lease)

 

Landlord will provide at its sole cost a build out allowance of $3.25  per NRSF or $48,259.25.

 

Lessee
shall provide Landlord with all work release associated with any work performed
inside or outside of the Leased premises.

 

No
additional allowance will be allocated for space planning, construction
drawings, permits, inspections, or construction management fees.

 

29

 

EXHIBIT F

 

CENTER
RULES AND REGULATIONS

(See Paragraphs 10.1 and 23.1 of Lease)

 

Lessor desires to maintain in the Center the
highest standard of dignity and good taste consistent with comfort and
convenience for all tenants. Any action or condition not meeting this high
standard should be reported directly to the Center manager. Cooperation by all
tenants will be sincerely appreciated. The following rules and regulations
apply to all tenants in the Center and their agents, employees, family,
licensees, invitees, visitors, and contractors unless otherwise stated. Lessor
may rescind these rules, make reasonable modifications thereto, and make other
reasonable rules and regulations for the safety care and cleanliness of the
Center and for the preservation of good order.

 

1.                                       CONTROL OF COMMON FACILITIES. The common
facilities shall remain under Lessor’s sole operation and control. Except for
normal daily business operations, movement into or out of the Center of
furniture, fixtures, and equipment shall be restricted to hours designated by
Lessor. All such movement shall be under the supervision of the Center manager
and carried out in a manner agreed between Lessee and the Center manager, by
pre-arrangement. Pre-arrangement shall include time, method, routing and any
limitations imposed for reasons of safety or non-disturbance of others. Lessor
may require that movement of furniture or equipment that interferes with normal
Center traffic shall be made at hours other than normal business hours.

 

2.                                       OBSTRUCTION OR LITTERING OF COMMON
FACILITIES. No common facility passageways or parking areas may be blocked or
obstructed. No rubbish, trash, litter, or materials of any nature may be
emptied or thrown into these areas. These areas may be used only ingress,
egress, or parking.

 

3.                                       SAFES. Safes and other heavy articles shall
be carried onto the leased premises only at such times and in such manner as
prescribed by Lessor. Lessor shall have the right to specify weight limitations
and positioning of safes or other heavy articles. Any damage done to the Center
by installation, presence, or removal of a safe or other article owned or
controlled by Lessee on the leased premises, shall be paid by Lessee.

 

4.                                       REMOVAL OF FURNITURE. Removal of Lessee’s
furniture or equipment from the Center after Lessee’s normal business hours
shall require presentation of written authorization by an authorized
representative of Lessor. Security guards, watchmen, and other Center employees
will have the right to challenge all persons leaving the Center with such items
during non-business hours.

 

5.                                       PERMITS AND LICENSES. Lessee shall procure at
its own expense, any permits and licenses required for the transaction of
business in the leased premises.

 

30

 

6.                                       HAZARDOUS MATERIALS. Lessee shall not place
or install, on the leased premises or any part of the Center, any explosive,
gasoline, kerosene, oil, acids, caustics, or any other inflammable, explosive,
or hazardous materials without written consent of the Center manager. Lessee
shall not operate electric space heaters, stoves, engines, or other equipment
not typical of a Center without written consent of the Center manager.

 

7.                                       ENTRY BY LESSOR. Lessor shall have the right
to enter for reasonable business purposes at all times.

 

8.                                       PLUMBING. Plumbing fixtures and appliances
shall be used only for the purposes for which they were constructed. No
sweeping, rubbish, rags, or other unsuitable materials may be thrown or placed
in plumbing fixtures or appliances. The cost of any stoppage or damage resulting
from negligence or improper use of these fixtures and appliances by Lessee or
Lessee’s agents, employees, family, invitees, licensees, or visitors shall be
paid for by the Lessee.

 

9.                                       THEFT AND DAMAGES. Lessor shall not be
responsible for lost or stolen personal property, equipment, money, or jewelry,
from the Center, regardless of whether such loss occurs when the area is locked
against entry. Lessor will not be liable to Lessee or Lessee’s employees,
customers, or invitees for any damage or losses to persons or property caused
by other lessees in the Center or for damages or losses caused by theft,
burglary, assault, vandalism, or other crimes. Owner shall not be liable for
personal injury or loss of Lessee’s property from fire, flood, water leaks, rain,
hail, ice, snow, smoke, lightning, wind, explosions, interruption of utilities,
or other occurrences unless such injury or damage is caused by negligence of
Lessor. Lessor strongly recommends that Lessee secure Lessee’s own insurance to
protect against the above occurrences.

 

10.                                 ANIMALS. Unless part of
inventory for sale, no birds, fowl, or animals (except guide dogs) shall be
brought into or kept in or about the Center without prior written approval of Lessor.

 

11.                                 BICYCLES. Unless part of inventory for sale,
no bicycles, motorcycles, or similar vehicles shall be allowed inside Lessee’s
space.

 

12.                                 RESIDENTIAL USE. No sleeping, cooking,
clothes cleaning, or laundering is permitted on the leased premises without
written consent of Lessor unless the primary use in paragraph 1.2 of the lease
necessitates such uses.

 

13.                                 INTOXICATION. Lessor reserves the right to
exclude or expel from the Center any person who in the reasonable judgment of
Lessor, is intoxicated or under the influence of liquor or drugs, or who shall
in any manner do any act in violation of any rules and regulations of the
Center.

 

14.                                 DISTURBANCES. Lessee shall not obstruct,
disturb, or interfere with the rights of other Lessees or occupants or in any
way injure or annoy them. Lessee shall not make any

 

31

 

noises by any means, which, in
the reasonable judgment of Lessor, are likely to disturb other Lessees or
occupants of the Center. Flashing lights, exterior lights, exterior loud
speakers, exterior antennas, and noxious fumes are prohibited. 

 

15.                                 COMPLIANCE WITH SAFETY AND SANITATION LAWS.
Lessee shall comply with all laws relating to fire, safety, and sanitation, and
shall comply with any reasonable requirements of Lessor’s insurance company with
respect to fire prevention, safety standards, and sanitation.

 

16.                                 CLEANING. Lessee shall keep Lessee’s space in
a reasonably clean condition.

 

17.                                 SOLICITING. Canvassing, soliciting, or
peddling in other areas of the Center is prohibited without written permission
of Lessor, and Lessee shall cooperate to prevent same.

 

18.                                 SIGNS. No storefront, exterior, or window
signs are allowed unless in accordance with the sign criteria set forth in the
signage criteria Exhibit to the lease. No “for sale” signs are allowed on
vehicles parked in the Center.

 

19.                                 NOTICE OF PERSONAL INJURIES OR UTILITY OR
MECHANICAL PROBLEMS. Lessee shall give prompt notice to the Center manager, to
the best of Lessee’s knowledge, of any significant accidents involving injury
to persons or property, including plumbing, electrical, heating, air
conditioning, stairwell, corridor, and elevator problems and /or personal
damage caused thereby.

 

20.                                 REQUESTS BY LESSEE. Except in emergencies,
requests by Lessee shall be attended to only after written request by Lessee to
the Center management. Lessor’s employees are not allowed to perform or do
anything outside their regular duties unless pursuant to special orders from
Lessor. Lessee may not contract with Lessor’s employees for the performance of
paid or free services to Lessee. If, at the request of
Lessee, Lessor or Lessor’s agents furnish services, goods, labor, or material
to Lessee which are not required to be furnished by Lessor under this lease.
Lessee shall pay for same upon delivery of a written statement therefore to
Lessee.

 

21.                                 TRAFFIC SIGNS. All persons parking in the
parking areas (or parking garage, if any) shall observe posted signs and
markings regarding speed, stop signs, traffic lanes, reserved parking, no
parking, parking stripes, etc.

 

22.                                 VEHICLE TRASH. All persons shall refrain from
throwing trash, ashtray contents, or other debris on the parking areas.

 

23.                                 INOPERABLE VEHICLES. Inoperable vehicles and
vehicles with flat tires are prohibited.

 

24.                                 PARKING OF EMPLOYEE VEHICLES. Lessor may from
time to time designate specific areas in which vehicles owned by Lessee and
Lessee’s employees, sub-lessees, assignees, licensees, and concessionaires
shall be parked. Lessee shall use its best efforts to see that such

 

32

 

vehicles are parked in such areas. Upon request by
Lessor, Lessee shall furnish Lessor a complete list of license numbers of all
vehicles operated by Lessee and the above listed persons. Lessor may charge
reasonable parking fees for such vehicles not parked in the designated areas.

 

25.                                 PARKING OF TRUCKS AND DELIVERY VEHICLES.
Without Lessor’s prior written approval, no trailers or large trucks may be
parked in the Center parking areas except for temporary loading or unloading.
Service and delivery vehicles may be parked in loading zones only when
necessary. Lessor acknowledges that Lessee may park up to two (2) delivery
vehicles at the Center and such may be parked overnight.

 

26.                                 BUSINESS IN COMMON AREA. Lessee shall not
solicit business or display merchandise within the common facilities, or
distribute handbills therein, or take any action, which would interfere with
the rights of other persons to sue the common facilities.

 

27.                                 BANKRUPTCY DISTRESS SALES. Lessee shall not
conduct on the leased premises any fire, auction, liquidation or bankruptcy
sale.

 

28.                                 TRASH COLLECTION. All trash and garbage shall
be kept in an area designated by Lessor in the kind of container specified by
Lessor and placed outside of Lessee’s space daily. It shall be prepared for
collection at the times and places specified by Lessor. Lessor may designate a
particular company for exclusive collection of refuse and garbage.

 

33

 

EXHIBIT G

 

SIGNAGE CRITERIA

(see
Paragraph 28.1 of the Lease)

 

Intentionally deleted

 

34

 

EXHIBIT
H

 

ESTOPPEL CERTIFICATE 

(Paragraph 30.1)

 

The purpose of this
certificate is to confirm the current status of matters relating to the lease
described below. It is for the benefit of the owner or prospective purchaser or
mortgagee of the building in which the leased premises are located.

 

4.                                       The lease is in good standing and in full
force and effect. To the knowledge of Lessee, Lessor is not in default. Lessee
agrees to give notice of any Lessor default to any purchaser or lender making
written requests to Lessee for same.

 

5.                                       Except for rents (if any) which may be due
under the lease for the current month, there are no rents or other charges
which have been prepaid by the undersigned Lessee to Lessor under the lease
other than the following:

 

6.                                       The amount of security deposit currently
posted by Lessee with Lessor is $15,739.94 in the form of (ý) cash or (o) an irrevocable,
unconditional letter of credit issued by in favor of Lessor which is still
valid.

 

7.                                       Lessee acknowledges that the space being
leased consists of 14,849 rentable square feet according to the lease, that the
improvements to be constructed by Lessor have been satisfactorily completed,
that the lease space has been accepted by Lessee, that Lessee now occupies the
lease space, and that the commencement date for the lease term was 3/1/05and the expiration date for the lease
term 4/30/08.

 

8.                                       There are no rentals, which are due and
unpaid. Rentals are fully paid (if required by the lease) through the last day
of the month in which this estoppel certificate has been executed.

 

9.                                       There are no known offsets or credits against
rentals except as expressly provided by the terms of the lease. There is no
known right of rescission and no known defense to Lessee’s future obligations
to pay the specified rentals at the times and in accordance with the lease
terms. Lessee has not received any concession (rental or otherwise) or similar
compensation not expressed in the lease which is presently in effect.

 

10.                                 Lessee has no options or rights of refusal
regarding the leased premises or additional rental space other than as set out
in the lease.

 

11.                                 Lessee has not: (a) made a general assignment
for the benefit of creditors; (b) commenced any case, proceeding or other
action seeking reorganization, arrangement, adjustment, liquidation, dissolution
or composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors; or (c) had any involuntary
case, proceeding or other action commenced against it which seeks to have an
order for relief entered against it, as debtor, or seeks reorganization
arrangement, adjustment, liquidation, dissolution or composition of it or its debts
under any law relating to bankruptcy, insolvency, reorganization or relief of
debtors; or (d) concealed, removed, or permitted to be concealed or removed,
any part of its property, with

 

35

 

intent to hinder, delay or defraud its creditors or
any of the, or made or suffered a transfer of any of its property which may be
fraudulent under any bankruptcy, fraudulent conveyance or similar law; or made
any transfer of its property to or for the benefit of a creditor at a he when
other creditors similarly situated have not been paid; or (c) had a trustee, receiver,
custodian or other similar official appointed for or take possession of all or
any part of its property or had any court take jurisdiction of my other of its
property.

 

12.                                 Lessee agrees to famish Lessor with estoppel
letters on this form within 10 days (stating the then-current facts) after
written request by Lessor or subsequent owners of the building.

 

13.                                 Lessee acknowledges that, upon 10 days’ prior
written request of lessor’s mortgagee at any time after foreclosure proceedings
or a deed in lieu of foreclosure, Lessee shall attorn to the mortgage or
foreclosure purchaser by recognizing such new owner as Lessor under the lease
provided that such purchaser shall recognize the rights of tenant under the
lease as long as tenant is not in default. The agreement of Lessee to attorn
shall survive any foreclosure sale or deed in lieu of foreclosure. Lessee
shall, upon 10 days’ written notice from Lessor’s mortgagee any time before or
after foreclosure sale, execute, acknowledge, and deliver to Lessor’s mortgagee
all instruments and certificates that in the reasonable judgment of Lessor’s
mortgagee may be necessary or proper to confirm such attornment.

 

14.                                 Lessee acknowledges that this estoppel
certificate and the statements therein may be conclusively relied upon by
Lessor and by any prospective purchaser or lien holder of the leased premises.

 

15.                                 The form of this estoppel certificate may
vary, depending on lender or purchaser requirements. It is agreed that this
certificate may be modified to conform to reasonable requests by lenders or purchasers.

 

16.                                 This agreement shall be binding upon and
shall inure to the benefit of the Lessor, any present or future mortgagee, any
prospective buyer or master lessee of the property, and their successors and
assigns.

 

	
  Dated
  this               day
  of                       ,
  20   .

  
	
   

  	
   

  
	
   

  	
   

  
	
  LESSEE:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
			

 

36

 

EXHIBIT
I

 

PRORATION OF CENTER OPERATING EXPENSES

(Paragraph 2.l(c))

 

1.                                       CALCULATION OF “ESTIMATED” CENTER OPERATING
EXPENSE. On or before the beginning of each calendar year, Lessor shall
calculate the estimated center operating expense for that calendar year,
according to the criteria in paragraph 3 below. One-twelfth of Lessee’s pro
rata share of estimated center operating expense shall be due on the first of
each month as additional rent. Lessee’s pro rata share is defined in paragraph
5 below. If significant unanticipated expenses are incurred during the year,
the estimated operating expense allocation may be adjusted from time to time.

 

2.                                       YEAR END ADJUSTMENT FOR OVERPAYMENT OR
UNDERPAYMENT BY LESSEE BECAUSE OF DIFFERENCES BETWEEN “ESTIMATED” AND “ACTUAL”
CENTER OPERATING EXPENSES. After each calendar year of the lease term and
renewal or extension periods, Lessor shall determine the actual center
operating expense for that calendar year. If actual expenses are less than
estimated expenses and if Lessee’s estimated pro rata share was too much,
Lessor shall promptly refund to Lessee the excess amount paid by Lessee or show
a credit on Lessee’s next invoice. If actual expenses were more than estimated
expenses and if Lessee’s estimated pro rata share was insufficient, Lessor
shall invoice Lessee for Lessee’s underpayment. Payment shall be due 30 days
after delivery of invoice to Lessee.

 

3.                                       DEFINITION OF COMMON AREA MAINTENANCE
EXPENSES. Common area maintenance expenses for each calendar year shall
include: all ad valorem taxes and assessments becoming due on the center in
such period; utilities and HVAC for enclosed common areas, common facilities,
and on-site management offices; premiums for fire, extended coverage,
vandalism, rent, and liability insurance (except as provided in paragraph 4
below) on the center and on personal property used in on-site management and
maintenance; security expenses; landscape planting, maintenance, and replacement; seasonal and permanent
decorating expenses; supplies; painting, striping, concrete, electrical,
plumbing, roofing and other maintenance expenses; licenses; permits,
promotional advertising; maintenance salaries, bonuses, and other payroll
taxes; on-site management office and personnel expenses, all other reasonable
operating expenses which are reasonably related to the operation of the
property; and management fees in the amount of 5% of the total gross income
derived from the property. In the event the center is managed by an affiliated
or non-affiliated, professional management company rather than by Lessor’s own
staff, a reasonable management fee may be included as an operating expense of
the center. No expense category shall include more than 12 months’ worth of
expenses. Center operating expenses shall also include the following
improvements if amortized over the useful life of such improvements for IRS
purposes together with interest at 12% per annum on the un-amortized cost; (a)
improvements to reduce operating expenses, (b) improvements required by laws
enacted following completion of the center, and (c) carpeting, floor covering,
draperies, and wall coverings for any common areas of the center. Center
operating expenses shall be calculated on an accrual basis in accordance with
generally accepted accounting principles, consistently applied.

 

Common area maintenance expenses shall NOT
include: principal and interest payments on mortgages, depreciation or
improvements which IRS requires to be depreciated (except as provided above);
expenses of repairing damage of the type normally covered by fire and EC
insurance; any expense to the extent it is paid or reimbursed from insurance
proceeds; costs of repairing damage for which Lessor is entitled to
reimbursement from others; remodeling costs for new or existing tenants;
insurance costs billed directly to tenants pursuant to paragraph 4 below; any
utility and air conditioning

 

37

 

or heating costs or other expenses which are
separately billed to specific tenants; franchise and income taxes of Lessor;
leasing commissions; and expenses of marketing and leasing vacant space in the
center.

 

4.                                       INSURANCE ON TENANT IMPROVEMENTS AND SPECIAL
USES. The portions of fire, extended coverage, and vandalism insurance premiums
reasonably allocated to Lessee’s tenant finish-out and leasehold improvements
shall be paid for solely by Lessee and shall be added to Lessee’s pro rata
share of estimated and actual center operating expenses. Excess insurance costs
due solely to Lessee’s high risk usage for a portion of the center (such as a
restaurant) will be handled in a like manner.

 

5.                                       DEFINITION OF PRO RATA SHARE. Lessee’s pro
rata share of estimated and actual common area maintenance expenses is the
percentage result of dividing the square footage of Lessee’s space with the
square footage in the entire center as reasonably determined by Lessor, using
the same measurement criteria. For any partial year, such amount shall be
further prorated on a time basis.

 

6.                                       DELAY IN IMPLEMENTATION. At Lessor’s option,
adjustments may be delayed. Lessor’s delay in implementing such adjustments
will not waive Lessor’s right thereto, and the most recent monthly rental
figures shall continue to be paid during such delay. If Lessor delays in timely
calculating adjustments, such adjustments shall be retroactive to the
respective date on which Lessor had a right to make such adjustment; and such
delayed rent adjustments shall become due upon written notice to Lessee.

 

7.                                       EXAMINATION OF RECORDS. Upon reasonable
notice, Lessee may examine Lessor’s accounting records for common area
maintenance expenses and other data used in calculating additional rents or
rent adjustments. Such examination shall be during normal business hours.

 

38

 

EXHIBIT J

 

LESSEE’S SIGNATURE
REQUIREMENTS

 

Intentionally Deleted

 

39

 

EXHIBIT K

 

LEASE GUARANTY

(see Paragraph 45.1 of the Lease)

 

Intentionally Deleted

 

40

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