Document:

exhibit_10-2asip.htm

Exhibit 10.2

[***Indicates omitted material that is the subject of a confidential treatment request filed separately with the Commission.]

SUBLEASE

THIS SUBLEASE (the “Sublease”) is made and entered into as of the 7th day of July, 2012 (“Effective Date”) between Mannatech, Incorporated, a Texas corporation ("Sublessor"), with its principal place of business at 600 S. Royal Lane, Suite 200, Coppell, Texas 75019 and Integrated Distribution and Logistics Direct, LLC (d/b/a SPE Express), an Arizona limited liability company (“Subtenant”), with its principal place of business at 1610 N. Kolb Rd., Tucson, AZ 85715.

RECITALS

A.           Sublessor operates a distribution center in connection with its primary business located at 445 S. Royal Lane, Ste. 800 Coppell, Texas 75019.  Sublessor and Subtenant have entered into that certain Asset Purchase Agreement dated as of July 7, 2012 for certain assets pertaining to the distribution operations on this same date (the “Asset Purchase Agreement”).

B.           Subtenant is in the business of fulfillment, shipping, distribution and logistical services. Pursuant to the closing of the Asset Purchase Agreement, Sublessee is entering into a Services Agreement with Sublessor, this same date, to provide the same for Sublessor’s North American fulfillment, shipping, distribution and logistical needs (the “Services Agreement”).

C.           Subtenant desires to sublease and use the Leased Premises (as defined below) for its distribution operations, and to effectuate its obligations under the Services Agreement pursuant to the terms thereof.

AGREEMENT

1. PREMISES: In accordance with that certain Lease Agreement dated May 29, 1997 between Sublessor and MEPC Quorum Properties II, Incorporated predecessor in interest to Texas Dugan Limited Partnership (“Landlord”), as amended November 6, 1997, September 22, 2005 and March 18, 2011 to date ( the “Prime Lease”), Sublessor leases from Landlord certain premises containing approximately 74,476 square feet in the aggregate ("Leased Premises”) in the building located at 445 S. Royal Lane, Ste. 800 Coppell, TX 75019. The Leased Premises are further described in the Prime Lease, a copy of which is attached hereto as Exhibit A and is incorporated by reference herein.

2. DEMISE: In accordance with this Sublease, Sublessor hereby subleases to Subtenant, and Subtenant

hereby subleases from Sublessor, 73,036 square feet of the Leased Premises (“Subleased Premises”). The actual Subleased Premises is located within that portion of the Leased Premises identified by hatching on Exhibit B attached hereto.  Subtenant is subleasing all of the Leased Premises except for 1,440 square feet (the “Reserved Space”), as identified on Exhibit B.  Subject to the terms of the Prime Lease, at no additional charge to Subtenant (except such charges as may be included in Operating Costs in accordance with the terms of the Prime Lease), Subtenant shall have the right to use all associated common areas and shall have such other use and access rights as may be necessary for the exercise of its rights and the performance of its obligations hereunder, including, but not limited to, access to electrical, phone and data rooms, existing phone and data wiring infrastructure, and restrooms.

3. SUBLEASE: This Sublease is subject and subordinate to the Prime Lease and to the matters to which the Prime Lease is or shall be subject and subordinate.

  

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4. TERM: The term of this Sublease shall commence July 7, 2012, and shall expire on

March 19, 2018 (the "Term"), unless sooner terminated in accordance with this Sublease.

5. PRIME LEASE: The Prime Lease is incorporated herein by reference so that, except to the extent that

certain provisions of the Prime Lease are inapplicable or modified by this Sublease, or excluded below, each and every term, covenant and condition of the Prime Lease binding or inuring to the benefit of Landlord shall, in respect of the Sublease, bind or inure to the benefit of Sublessor, and each and every term, covenant and condition of the Prime Lease binding or inuring to the benefit of lessee thereunder shall, in respect to the Sublease, bind or inure to the benefit of Subtenant, with the same force and effect as if such terms, covenants and conditions were completely set forth in the Sublease, and as if the words “Lessor(s)” and “Lessee(s)”, or words of similar import, wherever the same appear in the Prime Lease, were construed to mean, respectively, “Sublessor” and “Subtenant” in the Sublease, and as if the words “Leased Premises”, “Premises”, “Leased Property”, or words of similar import, wherever the same appear in the Prime Lease, were construed to mean “Subleased Premises” in the Sublease, and as if the word

“Lease,” or words of similar import, wherever the same appear in the Prime Lease, were construed to mean the “Sublease.” If any of the express provisions of the Sublease shall conflict with any of the provisions of the Prime Lease incorporated by reference herein, such conflict shall be resolved in every instance in favor of the express provisions of the Sublease. Notwithstanding the foregoing or anything to the contrary contained herein, Subtenant shall not have the right to exercise any renewal options, expansion options, rights of first offer or similar rights set forth in the Prime Lease.

6. RENT: Subtenant shall pay a portion of the total rent paid by Sublessor, including base rent, additional

costs and other charges (collectively referred to herein as "Rent"), and excluding the Reserved Space, as set forth according to the following schedule:

	
i.  

	
First Year Post Effective Date

	
a.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the first month after the effective date;

	
b.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the second month following the effective date;

	
c.  

	
*** of the base rent and utilities and miscellaneous costs  required by the Prime Lease in the third month following the effective date;

	
d.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the fourth month following the effective date;

	
e.  

	
*** of the base rent and utilities and miscellaneous costs  required by the Prime Lease in the fifth month following the effective date;

	
f.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the sixth month following the effective date;

	
g.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the seventh month following the effective date;

	
h.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the eighth month following the effective date;

	
i.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the ninth month following the effective date;

	
j.  

	
*** of the baser rent and utilities and miscellaneous costs required by the Prime Lease in the tenth month following the effective date;

	
k.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the eleventh month following the effective date; and then

	
l.  

	
*** of the base rent and utilities and miscellaneous costs required by the Prime Lease in the twelfth month following the effective date.

  

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ii.  

	
Acceleration of Rent Due:  Notwithstanding the foregoing, in the event that Subtenant is able to secure additional clients for its distribution business for the unused portion of the demised premises more rapidly than the above schedule, the Subtenant shall pay additional base rent and utilities and miscellaneous costs in direct proportion to the amount of spaced utilized, rounded up to the nearest fifth percentile according to the above payment schedule.  Sublessor and Subtenant shall each designate a representative to determine the amount of space utilized.  If the representatives are unable to agree on the amount of space utilized, the Parties agree that rent will be paid based on the mid-point of the difference between each representative’s estimated usage rounded to the nearest fifth percentile in the above payment schedule.

	
iii.  

	
Each Successive Year Thereafter Post Effective Date:  After the expiration of the twelfth month post Effective Date, Subtenant shall be responsible for one-hundred percent (100%), excluding the Reserved Space, of the base rent and utilities and miscellaneous costs for each successive month following the one year anniversary of the closing.

	
iv.  

	
Procedure for Paying Rent:  Sublessor shall invoice Subtenant on the first day of each month for the previous month’s rent, utilities, and miscellaneous costs.  Subtenant shall remit rent to Sublessor in the form of a credit applied as an offset against the invoice for services rendered to Sublessor by Subtenant under the Services Agreement. If the credit does not completely offset the total amount owed by Sublessor, Sublessor shall remit the balance due in accordance with the terms of the Services Agreement. If the credit is in excess of what is owed under the invoice for services, Subtenant shall remit the balance owed to Sublessor under this Sublease within 10 days from the date of the invoice issued by Sublessor to Subtenant for rent.  In the event that the parties are no longer operating under the Services Agreement, payment of rent will be made in a manner agreed upon by the parties.

7. PERFORMANCE BY SUBLESSOR: Any obligations of Sublessor which are contained in the Sublease by the incorporation by reference of the provisions of the Prime Lease shall be observed or performed by Sublessor using reasonable efforts to cause the Landlord to observe and/or perform the same (which obligations include, without limitation, services to be provided by Landlord and restoration of damaged property), and Sublessor shall diligently enforce its rights to cause such observance or performance. Subtenant shall not in any event have any rights in respect of the Subleased Premises greater than Sublessor’s right with respect thereto under the Prime Lease.

8. NO BREACH OF PRIME LEASE:  Subtenant shall not do any act which may constitute a breach or violation of any term, covenant or condition of the Prime Lease by the lessee thereunder, whether or not such act or thing is permitted under the provisions of the Sublease. Sublessor shall not do or permit to be done any act which may constitute a breach or violation of any term, covenant or condition of the Prime Lease, including without limitation untimely payment of any obligation due from Sublessor to Landlord.

9. NO PRIVITY OF ESTATE: Nothing contained in the Sublease shall be construed to create privity of

estate or of contract between Subtenant and the Landlord.

10. RELEASES: Subtenant hereby releases the Landlord or anyone claiming through or under the

Landlord by way of subrogation or otherwise to the extent that Sublessor, as tenant, released the Landlord pursuant to the terms of the Prime Lease, and/or the Landlord was relieved of liability or responsibility pursuant to the provisions of the Prime Lease, and Subtenant will cause its insurance carriers to include any clauses or endorsements in favor of the Landlord which Sublessor is required to provide pursuant to the provisions of the Prime Lease with respect to the Subleased Premises.

  

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11. USE: Subtenant shall use and occupy the Subleased Premises solely for distribution, shipping, and logistical purposes and all lawful uses incidental thereto. Any other activities not specifically mentioned above regarding the use and occupancy of the Subleased Premises are subject to the prior written approval of Sublessor and Landlord.

12. CONDITION OF SUBLEASED PREMISES: Subtenant is leasing the Subleased Premises in its "as

is," "where is" condition on the date hereof.  Notwithstanding the foregoing, Sublessor represents that the Leased Premises (including systems, apparatus and appliances) are in working order as of the Effective Date.

13. CONSENT AND APPROVALS: Sublessor shall reasonably cooperate to seek Landlord's consent to any matter under the Prime Lease as may be reasonably requested by Subtenant.

14. NOTICES: Any notice, report, statement, approval, consent, designation, demand or request to be given under this Sublease shall be effective when made in writing, deposited for mailing with the United States Postal Service or with a recognized overnight delivery service and addressed to Sublessor or Subtenant at the following addresses:

SUBTENANT:

Integrated Distribution and Logistics Direct, LLC

Attn:   Mich Bayley                                           

1610 N. Kolb Rd.

Tucson, AZ 85715

SUBLESSOR:

Mannatech, Incorporated

Attn: Chief Financial Officer                                                      

600 S. Royal Lane, Suite 200

Coppell, Texas 75019

With a copy to:

Attn: Chief Legal Officer (at same address)

Sublessor shall promptly give written notice to Subtenant of (i) all claims, demands or controversies by or with the Landlord under the Prime Lease, and (ii) any events which require that Sublessor give notice to Landlord under the Prime Lease, which would materially affect Subtenant's rights or obligations hereunder.

15. TERMINATION: If for any reason the Prime Lease shall terminate prior to the expiration of the Sublease Term, this Sublease shall thereupon be terminated and Sublessor shall have no liability whatsoever to Subtenant by reason thereof (unless the termination occurred as a result of Sublessor's default or breach under the Prime Lease).

16. ASSIGNMENT AND SUBLETTING: Subtenant shall not sublet the Subleased Premises or any part

thereof or assign the Sublease or otherwise encumber or dispose of its interest therein without Sublessor’s and Landlord’s prior written consent in each instance, which consent may be withheld in Sublessor’s and/or Landlord’s sole discretion, except that Subtenant shall have the right, without Sublessor’s or Landlord’s consent, to assign this Sublease to any entity that controls, is controlled by, or under common control with Subtenant.

  

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17. INSURANCE: Subtenant shall, throughout the Term of this Sublease, maintain for the Subleased

Premises comparable insurance coverage as required of Sublessor under the Prime Lease. Such insurance shall, in addition to complying with the requirements of the Prime Lease, name Sublessor as an additional insured.

18. DEFAULT: The default provisions set forth in the Prime Lease are incorporated herein by reference,

provided that Subtenant shall have a ten (10) day notice and cure period for monetary default and a thirty (30) day notice and cure period for non-monetary default (unless such non-monetary default is not capable of cure within thirty (30) days, in which case Subtenant shall have a reasonable period of time in which to effect a cure, so long as Subtenant diligently prosecutes the cure to completion).  Notwithstanding the provisions of the Prime Lease, should Subtenant become insolvent; admit in writing that its inability to pay its debts; make a general assignment for the benefit of creditors; commence any case, proceeding or other action seeking to have an order for relief entered on its behalf as a debtor or to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or of any substantial part of its property; or take any action to authorize or in contemplation of any of the actions set forth above, Sublessor shall have the immediate right to terminate this Sublease.

19.  CROSS DEFAULT WITH ASSET PURHCASE AGREEMENT AND SERVICES AGREEMENT:  An event of default under the Asset Purchase Agreement and/or the Services Agreement will constitute and event of default under this Sublease, unless such default is remedied by the defaulting party in accordance with the terms thereof or is waived by the non-breaching party.

20. BROKERAGE: Each party represents and warrants to the other that no broker or other person had any part, or was instrumental in any way, in bringing about the Sublease.  Each party agrees to indemnify, defend and hold harmless the other from and against any claims made by any broker or other person (other than Broker) for a brokerage commission, finder’s fee, or similar compensation, by reason of or in connection with the Sublease, and any loss, liability, damage, cost and expense (including, without limitation, reasonable attorney’s fees) which may be incurred in connection with such claims if such other broker or other person (other than Broker) claims to have had dealings with such party. Sublessor shall be responsible for all payments due to Broker in connection with this Sublease pursuant to separate written agreements.

21. WAIVER OF JURY TRIAL AND RIGHT TO COUNTERCLAIM: Each party hereby waives all right to trial by jury in any action, proceeding or counterclaim arising out of or in any way connected with the Sublease, the relationship of Sublessor and Subtenant, the Subleased Premises and the use and occupancy thereof, and any claim of injury or damages.

22. MODIFICATIONS: The Sublease cannot be changed orally or in any manner other than by a written

agreement executed by both parties. Sublessor shall not amend the Prime Lease with respect to any material provision that would materially affect Subtenant's rights or obligations hereunder without Subtenant's prior written consent.

23. SUCCESSORS AND ASSIGNS: The provisions of the Sublease, except as herein otherwise specifically provided, shall extend to, bind and inure to the benefit of the parties hereto and their respective personal representatives, heirs, successors and permitted assigns.

24. INTERPRETATION: This Sublease shall be governed by and construed in accordance with the laws of the state in which the Subleased Premises are located. If any provision of the Sublease or application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, the remainder of the Sublease and the application of that provision to other persons or circumstances shall not be affected but rather shall be enforced to the extent permitted by law. The captions and headings are solely for convenience of reference and shall be construed without regard to any presumption or other rule requiring construction against the party causing the Sublease to be drafted.

  

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25. AUTHORITY: Each party represents and warrants that the undersigned has the full right, power and authority to execute this Sublease on behalf of the party indicated.

26. QUIET ENJOYMENT: Sublessor warrants that, upon payment of the Rent, as defined herein, and performance of all obligations, covenants and agreements of Subtenant hereunder, Subtenant shall peaceably and quietly have, hold and enjoy the Subleased Premises during the Sublease Term, subject however to the provisions of this Sublease.

27. PARKING: Subject to the terms and conditions of the Prime Lease, Sublessor shall, at no cost to

Subtenant, allow Subtenant the use of such parking as is made available to Sublessor under the Prime Lease with respect to the Subleased Premises.

28. LANDLORD’S CONSENT: This Sublease is expressly contingent upon and shall not be effective until receipt of Landlord’s approval and execution of the Landlord’s Consent attached hereto as Exhibit C and incorporated herein by this reference.

29.  MISCELANEOUS

	
i.  

	
Transition Period for Storage:  Sublessor and Subtenant agree that Sublessor shall have a period of 120 days from the Effective Date to remove any remaining property or assets in the Subleased Premises that were not part of the “Asset Purchase Agreement.”

	
ii.  

	
Subleased Premises to be used for Disaster Relief:  Sublessor and Subtenant agree that for a period of 12 months from the Effective Date, Sublessor has the right to utilize a portion of the Subleased Premises in the event that a Catastrophic Event renders Sublessor’s current corporate office (address noted above) inoperable for an extended period of time.  Subtenant agrees to provide Sublessor with enough space for up to 25 computers for all essential employees necessary for the day to day operations of Sublessor’s business for an interim period of time until Sublessor finds a permanent facility for those essential employees. For purposes of this Sublease, the term “Catastrophic Event” means a force majeure event defined under the Prime Lease and/or any event damaging or affecting the Sublessor’s internal computer systems.

	
iii.  

	
Removal of Installed Equipment:  Sublessor and Subtenant agree that at the expiration of this Sublease, Subtenant shall remove any and all warehouse equipment Subtenant has installed.

	
iv.  

	
Expiration of the Prime Lease: Upon the expiration of the Prime Lease, If Sublessor determines that it does not want to exercise its right to renew the Prime Lease, Subtenant will have the right to negotiate directly with the Landlord for the terms of a new lease for the Premises.

	
v.  

	
Repair of HVAC Units:  Sublessor agrees to repair the HVAC units identified in the Engineer’s Report, attached as Exhibit D, at its sole cost within one hundred twenty (120) days of the Effective Date.

30. COUNTERPARTS: This Sublease may be executed in multiple counterparts. Facsimile signatures shall be deemed originals.

31. PRIME LEASE: Sublessor has, and on the Effective Date will have, performed in all material respects the obligations required to be performed by it pursuant to Prime Lease, including timely payment of all amounts owed thereunder. Sublessor has not waived any material right under the Prime Lease.  The Prime Lease is fully enforceable by Sublessor in accordance with its stated terms.  No party to the Prime Lease has committed a breach, or act or permitted or causal omission that, with the passage of time or giving of notice, would constitute a breach thereunder.

  

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IN WITNESS WHEREOF, Sublessor and Subtenant have hereunto executed the Sublease as of the day and year first above written.

SUBLESSOR:

MANNATECH, INCORPORATED

By: /s/ Robert A. Sinnott

[Signature]

Name: Robert A. Sinnott

Title: CEO/CSO

Date: June 29, 2012

SUBTENANT:

INTEGRATED DISTRIBUTION AND LOGISTICS DIRECT, LLC

By: /s/ Michael K. Bayley

[Signature]

Name: Michael K. Bayley

Title: President and CEO

Date: July 2, 2012

Exhibit A – Prime Lease

Exhibit B – Subleased Premises

Exhibit C – Landlord Consent

Exhibit D – Engineer’s Report

  

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EXHIBIT A

PRIME LEASE

COMMERCIAL LEASE AGREEMENT

 

                           MEPC QUORUM PROPERTIES II INC.,

 

                                     as LANDLORD,

 

                                         and

 

                                   MANNATECH, INC.

 

                                      as TENANT

 

                           pertaining to 74,476 square feet

                    in Freeport North Industrial Park [Phase III]

                                    Coppell, Texas

 

________________________________________________________________________

 

                              COMMERCIAL LEASE AGREEMENT

 

     THIS COMMERCIAL LEASE AGREEMENT (this LEASE) is made and entered into by

and between MEPC QUORUM PROPERTIES II INC., a Delaware corporation (LANDLORD),

and MANNATECH, INC., a Texas corporation (TENANT).

 

     1.   PREMISES/LEASE TERM.  In consideration of the mutual obligations of

Landlord and Tenant set forth herein, Landlord leases to Tenant, and Tenant

hereby takes from Landlord, approximately 74,476 square feet (the PREMISES) in

the Building (hereinafter defined) to be constructed by Landlord on an

approximate 27.8 acre tract of land located in the Freeport North Industrial

Park, City of Coppell, Dallas County, Texas, as more particularly described on

EXHIBIT "A" attached hereto and incorporated herein by reference (the LAND)

and illustrated and illustrated on the Site Plan (herein so called) attached

hereto as EXHIBIT "C" and incorporated herein by reference, together with the

non-exclusive use of all rights, privileges, easements, appurtenances, and

amenities belonging to or in any way pertaining to the Project (hereinafter

defined) for a term (the LEASE TERM or the TERM OF THIS LEASE) beginning on

the Commencement Date (hereinafter defined) and ending at 11:59 p.m. on the

last day of the month that is one hundred twenty (120) complete calendar

months after the Rent Commencement Date (hereinafter defined). If the Rent

Commencement Date occurs on the first day of a calendar month, then the month

in which the Rent Commencement Date occurs shall be the first complete

calendar month after the occurrence of the Rent Commencement Date for purposes

of determining such one hundred twenty (120) complete calendar month period.

That portion of the Land upon which the Building (and its appurtenances) are

constructed, the Building (including the Premises comprising a part thereof)

and any other improvements constructed by or on behalf of Landlord on such

portion of the Land are collectively referred to herein as the PROJECT. The

Project is further described by illustration on the Site Plan.

 

     2.   IMPROVEMENTS TO BE CONSTRUCTED BY LANDLORD.

 

 

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          A.   BUILDING. Landlord agrees to construct on the Land an

approximate 297,902 square foot warehouse building structure (the BUILDING)

containing the features generally described on EXHIBIT "B" attached hereto and

incorporated herein by reference and generally situated as shown on the Site

Plan (herein so called) attached hereto as EXHIBIT "C" and incorporated herein

by reference. Landlord agrees to construct the Building in a good and

workmanlike manner.

 

          B.   CONSTRUCTION COSTS. Subject to the terms of this paragraph,

Landlord will pay all costs of constructing the Building and any other

improvements described on EXHIBIT "B". Notwithstanding the preceding sentence,

Tenant shall be responsible for the following:

 

               (1) If Landlord performs, at Tenant's request, any work over

     and above the work generally described on EXHIBIT "B" (herein, the

     ADDITIONAL WORK), the Additional Work together with the cost of preparing

     plans and specifications for same will be at Tenant's expense. Landlord

     will not be obligated to perform any such Additional Work until Tenant

     pays Landlord ten percent (10%) of the estimated cost of the Additional

     Work, as estimated by Landlord, with the actual cost of the Additional

     Work, less the initial payment by Tenant, being due within ten (10) days

     after substantial completion of the Additional Work.

 

               (2) All costs or expenses incurred or suffered by Landlord that

     are caused by Tenant Delays. A TENANT DELAY(S) shall mean any delay in

     the completion of the Building or any delay in the occurrence of the

     Commencement Date caused by a Tenant Party, any delay resulting from the

     installation by Tenant or any Tenant Party of any property or equipment

     of Tenant in or on the Premises prior to the Commencement Date, any delay

     resulting from any request by Tenant for any change or modification to

     the plans and specifications for the Building, any delay caused by any

     Additional Work requested by Tenant, and any delay due to interference by

     Tenant or any Tenant Party with Landlord's engineers, consultants,

     contractors or otherwise. As used in this Lease, a TENANT PARTY shall

     mean one or more of Tenant, its agents, employees, officers, partners or

     contractors.

 

 

 

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     3.   COMMENCEMENT DATE/ACCEPTANCE OF PREMISES.

 

          A.   COMMENCEMENT DATE. The COMMENCEMENT DATE shall be the date upon

which Landlord's architect reasonably determines that construction of the

Building shell has progressed to a point sufficient to allow Tenant to enter

the Premises and perform any finish work Tenant requires in the Premises (such

to be subject to Paragraph 6 below), provided that this date shall be adjusted

backward (I.E., to an earlier date) by one (1) day for each day that a Tenant

Delay exists. Subject to Tenant Delays and Force Majeure, Landlord agrees to

use reasonable efforts to cause the Commencement Date to occur by October 13,

1997. Tenant's entry into the Premises for purposes of commencing such finish

work shall constitute Tenant's acknowledgement that (i) it has inspected and

accepts the Building and the Project, (ii) the Premises is suitable for the

purpose for which it is leased, subject to completion by Tenant of any finish

work Tenant requires, (iii) the Building and the Project are in good and

satisfactory condition, and (iv) no representations as to the repair of the

Premises or the Project, nor promises to alter, remodel or improve the

Premises or the Project which have been made by Landlord remain unsatisfied.

Upon determination of the actual Commencement Date and Tenant's entry into the

Premises, Tenant agrees to execute an Acceptance of Premises Memorandum in the

form attached hereto and made a part hereof as EXHIBIT "E"; provided, however,

that Tenant's failure to execute the Acceptance of Premises Memorandum will

not delay the occurrence of the Commencement Date.

 

     4.   RENT.

 

          A.   BASE MONTHLY RENT. Tenant agrees to pay to Landlord rent for

the Premises, in advance, as follows (BASE MONTHLY RENT):

 

     -    Beginning on the Rent Commencement Date and continuing through the

          last day of the sixtieth (60th) complete calendar month after the

          month in which the Rent Commencement Date occurs, $20,170.58 per month

          ($242,046.96 on an annualized basis); and

 

     -    Beginning on the first day of the sixty-first (61st) calendar month

          after the month in which the Rent Commencement Date occurs, and

          continuing through the remainder of the Lease Term, $23,273.75 per

          month ($279,285 on an annualized basis).

 

          B.   ADDITIONAL RENT. Tenant agrees to reimburse Landlord for

Tenant's Proportionate Share (hereinafter defined) of (i) Real Property Taxes

(hereinafter defined), (ii) Landlord's actual cost of obtaining and

maintaining Landlord's Insurance (hereinafter defined), and (iii) the actual

cost of any maintenance performed by Landlord under Paragraph 12A(2) below or

which, in Landlord's reasonable discretion, is for the benefit of the Project

as a whole and not reasonably allocable to any specific tenant or tenants

(collectively, the ADJUSTMENTS). During each month of the term of this Lease,

on the same day that Base Monthly Rent is due hereunder, Tenant shall pay to

Landlord as additional Rent an amount equal to 1/12 of Tenant's Proportionate

Share of the estimated total annual cost of the Adjustments, as determined by

Landlord. Tenant authorizes Landlord to use such funds to pay such costs. The

initial monthly payments of Adjustments are based upon Landlord's good faith

estimates for the current Lease Year (hereinafter defined) and shall be

increased or decreased each Lease Year to reflect the projected actual cost of

all Adjustments. If Tenant's total payments are less than Tenant's

Proportionate Share of the actual costs of all such items, Tenant shall pay

the difference to Landlord within ten (10) days after demand. If the total

payments of Tenant are more than Tenant's Proportionate Share of the actual

costs of all such items, Landlord shall notify Tenant of such and retain such

excess and credit it against Tenant's next. monthly estimated payments of

Adjustments. The amount of the Base Monthly Rent and the estimated monthly

payments (based upon a complete calendar month) of Tenant's Proportionate

Share of the Adjustments for the Lease Year in which the date of this Lease

occurs are as follows:

 

 

 

   (1)  Base Monthly Rent                  $20,170.58

   (2)  Real Property Taxes                  $3,723.80

   (3)  Insurance                                   $310.32

   (4)  Maintenance                             $620.63

                                          ----------

   Initial Monthly Payment Total      $24,825.33

                                          ----------

                                          ----------

 

 

 

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     TENANT'S PROPORTIONATE SHARE, as used in this Lease, shall mean a

fraction, the numerator of which is the number of square feet of rentable area

contained in the Premises and the denominator of which is the entire number of

square feet of rentable area contained in the Building (as to costs which do

not materially vary based on the occupancy of the Building) or is the entire

rented area contained in the Building (as to costs which do materially vary

based on the occupancy of the Building). If the Project is part of a larger

development constructed by Landlord on the Land (the DEVELOPMENT) and the

Building and one or more other buildings on parts of the Development other

than the Project share the benefit of or may properly be allocated a portion

of any expense, Landlord shall reasonably allocate any such expense among the

Building and such other building(s) prior to applying Tenant's Proportionate

Share to such expense.

 

          C.   PAYMENT OF RENT. Base Monthly Rent and Adjustments shall be due

and payable, in advance, beginning on that date which is ninety (90) days

after the Commencement Date (the RENT COMMENCEMENT DATE); provided that one

(1) full installment of Base Monthly Rent and Adjustments totalling $24,825.33

is due and payable on the date of this Lease, such to be applied to the first

installment of Base Monthly Rent and Adjustments due on the Rent Commencement

Date and thereafter applied to Base Monthly Rent and Adjustments until fully

applied. Any installment of Base Monthly Rent or Adjustments due for any

fractional calendar month shall be prorated based upon the actual number of

days in that month. If the Rent Commencement Date occurs on the first day of a

calendar month, then the month in which the Rent Commencement Date occurs

shall be the first complete calendar month after the occurrence of the Rent

Commencement Date for purposes of determining the date upon which Base Monthly

Rent adjusts. As used in this Lease, RENT shall mean the Base Monthly Rent and

all other amounts provided for in this Lease to be paid by Tenant to Landlord,

all of which shall constitute rental in consideration for this Lease and the

leasing of the Premises. All Rent (hereinafter defined) shall be paid at the

times and in the amounts provided for herein in legal tender of the United

States of America to Landlord at the address specified in Paragraph 32 hereof

or to such other person or at such other address as Landlord may from time to

time designate in writing. Rent shall be paid without notice, demand,

abatement, deduction or offset (unless expressly provided for elsewhere in

this Lease) and shall be a covenant of Tenant independent of any obligation of

Landlord under this Lease. Tenant's obligation to pay any installment of Rent

shall not be deemed satisfied until such installment of Rent has actually been

received by Landlord.

 

          D.   AUDIT OF ADJUSTMENTS. Within ninety (90) days after the end of

each Lease Year, Landlord will provide to Tenant a statement of Adjustments

paid by Landlord for the just ended Lease Year. Tenant may at any time within

thirty (30) days after its receipt of Landlord's statement, but in any event

upon ten (10) days advance written notice to Landlord, audit, inspect and copy

the books and records of Landlord with respect to the Adjustments and make any

written objections Tenant may have to Landlord's determination of same.

Landlord shall cooperate with Tenant in providing Tenant reasonable access to

its books and records during normal business hours for this purpose. If the

results of any inspection or audit show an overcharge to Tenant of more than

five percent (5%) of the actual amount of Adjustments owed by Tenant, then

Landlord shall pay the reasonable costs of such audit (assuming the audit is

performed by a third party unaffiliated with Tenant and not including the

travel, meal or incidental expenses of the auditor), and Landlord shall credit

or refund to Tenant any overcharge of such items as discovered by the

inspection or audit within thirty (30) days of completion of such inspection

or audit. In the event such audit discloses an overcharge to Tenant of up to

but no more than five percent, there will be no credit or refund to Tenant,

and Tenant will pay the cost of the audit. In the event such audit discloses

an undercharge of Adjustments billed to Tenant, Tenant shall pay Landlord the

amount of such undercharge within thirty (30) days of the completion of such

audit and the cost of the audit. In the event Landlord disputes the amount of

Adjustments or Tenant's Proportionate Share thereof, as determined by Tenant's

audit, Landlord shall have a period of thirty (30) days from its receipt of

Tenant's audit results to have its own independent auditor inspect Tenant's

audit and the books and records pertaining to the Adjustments and deliver the

results thereof to Tenant. Landlord's failure to conduct such an audit and

deliver the results thereof to Tenant within such thirty (30) day period shall

constitute acceptance by Landlord of the results of Tenant's audit.  If

Landlord delivers Tenant Landlord's audit within such thirty (30) day period,

Tenant shall have thirty (30) days to review and object to the results

thereof. The results of Landlord's audit shall be conclusive and binding upon

Tenant unless Tenant objects in writing, such objections to be specific, to

such results within such thirty (30) day period.

 

          E.   LEASE YEAR. A LEASE YEAR shall mean a twelve (12) month period

commencing each January 1st and ending on the following December 31st;

provided, however, Landlord may from time to time (but no more often than once

every eighteen (18) months) change the twelve (12) month period designated as

a Lease Year by notice thereof to Tenant, in which event the obligations of

Tenant measured by Lease Years shall be prorated as appropriate during any

 

 

 

11

 

Lease Year of less than twelve (12) months based on the number of days in any

such Lease Year divided by 365; and provided, further, the first and last

Lease Years and all obligations of Tenant measured by such Lease Years, shall

be prorated as appropriate based upon the number of days in the applicable

Lease Year during the term of this Lease divided by 365.

 

          F.   INTEREST ON DELINQUENT RENT. Any Rent due from Tenant to

Landlord which is not paid when due shall bear interest from and after the

expiration of any applicable cure or grace period until paid at the lower of

(i) eighteen percent (18%) per annum or (ii) the highest rate from time to

time allowed by applicable law, from the date such payment is due until paid,

but the payment of such interest shall not excuse or cure the default. This

provision for default interest shall be in addition to all of Landlord's other

rights and remedies hereunder or at law or equity and shall not be construed

as liquidated damages or as limiting Landlord's remedies in any manner. Any

assessed default interest will be additional Rent owed hereunder.

 

     5.   COMPLIANCE WITH LAWS.  Tenant shall comply with all Applicable Laws

in connection with Tenant's use and occupancy of the Premises and Tenant's

performance of its obligations under this Lease, all at Tenant's expense.  As

used herein the term APPLICABLE LAWS means and includes any and all federal,

state and local laws, ordinances, orders, deed restrictions (specifically

including the Declaration of Protective Covenants dated May 18, 1995 and

recorded in Volume 95098, Page 924, ET SEQ. of the Official Public Records of

Real Property in Dallas County, Texas (as amended, modified, supplemented,

restated and assigned from time to time, the DECLARATION)), easements of

record, rules, and regulations of all governmental bodies (state, federal, and

municipal) applicable to or having jurisdiction over the use, occupancy,

operation and maintenance of the Project, including without limitation, the

Americans With Disabilities Act of 1990, as amended from time to time (ADA),

and Environmental Laws (hereinafter defined), as such may be amended or

modified from time to time. Notwithstanding the above, if any improvement,

modification or alteration of the Premises or the Project, or any portion

thereof, is required to bring same into compliance with the ADA, or any other

Applicable Laws, and (i) Tenant is not otherwise expressly responsible for

such improvement, modification or alteration under this Lease, (ii) the

necessity for such improvement, modification or alteration was not caused, in

whole or in part, by Tenant or any Tenant Party, and (iii) the necessity for

such improvement, modification or alteration was not due to the specific use

of the Premises by Tenant, then Landlord will undertake such improvement,

modification or alteration and the cost thereof will be charged back to (A)

Tenant to the extent that the improvement, modification or alteration affects

only or is totally within the Premises, and (B) all tenants of the Project,

including Tenant, to the extent that the improvement, modification or

alteration affects the Project as a whole and not any one tenant's particular

leased premises, with each tenant paying its Proportionate Share thereof. Such

costs will be charged over the useful life of the subject improvement,

modification or alteration, as determined under generally accepted accounting

principles, with the assumption that the only portion of such expense

chargeable for any one Lease Year will be a fraction of such expense, the

numerator of which is one and the denominator of which is the estimated useful

life of the improvement, modification or alteration.

 

     6.   ALTERATIONS AND IMPROVEMENTS BY TENANT.

 

          A.   CONDITIONS PRECEDENT TO ALL ALTERATIONS AND IMPROVEMENTS.

Except as expressly permitted by this Paragraph 6, or unless otherwise agreed

to in writing between Landlord and Tenant, Tenant may not make or permit any

alterations, improvements, or additions in or to the Premises or the Project

without Landlord's prior written consent. All alterations and improvements

desired by Tenant are subject to the following conditions/requirements:

 

               (1)  Subject to subparagraph 6B below, all alterations,

     improvements and additions will be at the sole cost and expense of Tenant;

 

               (2)  All alterations, improvements and additions in and to the

     Premises requested by Tenant must be made in accordance with plans and

     specifications first approved in writing by Landlord;

 

               (3)  Tenant's contractors and subcontractors are subject to

     Landlord's prior approval. In addition, each of Tenant's contractor(s) and

     subcontractor(s) must deliver evidence satisfactory to Landlord that the

     insurance specified on EXHIBIT "F" (attached hereto and incorporated herein

     by reference) is in force prior to commencing work;

 

 

 

12

 

 

               (4)  All alterations, improvements and additions made by Tenant

     must comply with all Applicable Laws including, specifically, the ADA,

     and applicable building permits and certificates of occupancy. Landlord's

     approval of Tenant's plans and specifications for the alterations or

     improvements will not act as a confirmation or agreement by Landlord that

     the improvements and alterations comply with Applicable Laws;

 

               (5)  Tenant must deliver to Landlord evidence that Tenant has

     obtained all necessary governmental permits and approvals for the

     improvements, alterations and additions prior to starting any work;

 

               (6)  All alterations, improvements and additions must be done

     in a good and workmanlike manner so as not to damage or alter the primary

     structure or structural qualities or the utility or other systems of the

     Premises or the Building and is subject to approval by Landlord during

     and after construction, in its sole discretion. Tenant agrees to meet

     with Landlord's project manager, who for purposes of this Lease shall be

     Rob Ahmuty until further notice, as deemed reasonably necessary by such

     project manager during any construction by Tenant pursuant to this

     Paragraph 6 so that Landlord can evaluate the progress of such work and

     its impact on the remainder of the Project;

 

               (7)  Lien releases from each of Tenant's contractor(s) and

     subcontractor(s) satisfactory to Landlord must be submitted to Landlord

     within thirty (30) days after completion of the work performed by the

     contractor(s) or subcontractor(s); and

 

               (8)  Tenant shall be solely responsible for the safety and

     security of all equipment and property installed or placed in, on or

     about the Premises by Tenant or any Tenant Party.

 

          B.   FINISH ALLOWANCE. Notwithstanding subparagraph 6A(1) above,

Landlord grants Tenant an allowance in the amount of $223,425 (the FINISH

ALLOWANCE) to be utilized by Tenant in performing alterations and improvements

to the Premises to "finish-out" the Premises. Any improvements or alterations

performed by Tenant and paid for out of the Finish Allowance, including

without limitation, any work related thereto such as design, engineering, and

construction management services, is referred to herein as the TENANT FINISH

WORK. Landlord will pay such invoices up to, but not in excess of, the Finish

Allowance conditioned upon:

 

               (1)  Tenant shall submit all invoices received in connection

     with the Tenant Finish Work to Landlord for payment not less than fifteen

     (15) days prior to the due date of such invoice. Landlord, at its option,

     will not be obligated to pay any invoice not received by such date; and

 

               (2)  Landlord having reasonably satisfied itself that all

     conditions/requirements set forth in subparagraph 6A above have been

     satisfied; and

 

               (3)  Landlord having inspected and approved of the work for

     which payment is sought, such approval not to be unreasonably withheld,

     conditioned or delayed; and

 

               (4)  The Finish Allowance may not be used or allocated for any

     materials or property, or for the labor incurred in constructing or

     installing same, that would be characterized as Tenant's Property under

     subparagraph 6C below, it being the intention of both parties hereto

     that, without limiting subparagraph 6D below, all improvements and

     alterations paid for with the Finish Allowance will in all events and

     circumstances be Landlord's property.

 

     Any decision to pay or not pay any invoice will be made within ten (10)

business days after receiving the subject invoice, provided, however, that

Landlord may further condition such approval upon the satisfaction of any of

the conditions/requirements of Paragraph 6A or this Paragraph 6B that may not

have been satisfied within such ten (10) day period (I.E., lien waivers).

Failure to disapprove of an invoice within such ten (10) day period shall

constitute approval thereof. All invoices will be paid within fifteen (15)

days after Landlord has approved the invoice and is satisfied that all

conditions and requirements set forth in Paragraph 6A and this Paragraph 6B

have been satisfied. All cost and expenses incurred by Tenant in making any

alterations or improvements to the Premises or the Project in excess of the

Finish Allowance will be Tenant's sole cost and expense. If the Finish

Allowance has not been fully utilized within one (1) year

 

 

 

13

 

 

after the Commencement Date, and provided that Tenant is not then in default

under this Lease, the remaining balance will be applied to Base Monthly Rent

and Adjustments until the Finish Allowance is exhausted. At the end of such

year, Landlord will provide Tenant with a written accounting of the balance,

if any, of the Finish Allowance.

 

          C.   TENANT'S PROPERTY. Tenant, at its own cost and expense, may

erect such shelves, racks, bins and trade fixtures (collectively, TENANT'S

PROPERTY) within the Premises as it desires and without Landlord's prior

consent provided that (a) such items do not alter the basic character of the

Premises or the Building; (b) such items do not overload or damage the

Premises or the Building or the utility or other systems serving same; (c)

such items may be removed without material injury to the Premises and the

Building; and (d) the construction, erection or installation thereof complies

with all Applicable Laws, applicable building permits and certificates of

occupancy; and (e) provided that Tenant's installation of Tenant's Property

prior to the Commencement Date will be subject to Paragraph 5B above. All of

Tenant's Property shall remain the property of Tenant and shall be removed on

or before the earlier to occur of the date of termination of this Lease or

Tenant's vacating of the Premises. Tenant shall promptly repair any damage to

the Project or the Premises caused by the removal of any of Tenant's Property.

Any of Tenant's Property not so removed and any other property of Tenant not

removed prior to the termination of this Lease or Tenant's vacating of the

Premises shall thereupon be conclusively presumed to have been abandoned by

Tenant, and Landlord may, at its option, take over possession of any and all

of the foregoing and either (i) declare the same to be the property of

Landlord by written notice to Tenant at the address provided herein or (ii) at

the sole cost and expense of Tenant, remove, store, and/or dispose of the same

or any part thereof, all at Tenant's cost, in any manner that Landlord shall

choose without incurring liability to Tenant or any other person.

 

          D.   LANDLORD'S PROPERTY/RESTORATION OF PREMISES BY TENANT. Except

as provided in Paragraph 6C above, all alterations, additions, and

improvements made to, or fixtures or other improvements placed in or on, the

Premises, whether temporary or permanent in character are a part of the

Premises and are the property of Landlord when they are made to or placed in

or on the Premises, without compensation to Tenant; provided that, at

Landlord's option, upon the termination of this Lease, Landlord may require

Tenant, at Tenant's cost, to remove any improvements, other than the Tenant

Finish Work, made to the Premises or Project by Tenant and restore the

Premises to substantially the condition it was in upon the completion of the

Tenant Finish Work, reasonable wear and tear excepted; and further provided

that, if Tenant first properly requested and Landlord gave its consent to such

improvements, Landlord must make such election at the time of giving such

consent.

 

          E.   INDEMNITY. Tenant hereby indemnifies and holds Landlord

harmless from any claims, demands, actions, losses, and damages arising from

activities of Tenant or any Tenant Party, or any of their invitees, in

connection with any alterations, improvements or additions made or contracted

for by Tenant.

 

     7.   USE. Subject to Applicable Laws, the Premises shall be used only for

the purpose of general office, manufacturing, receiving, storing, shipping and

selling (other than retail) products, materials and merchandise made and/or

distributed by Tenant, and for such other lawful purposes as may be incidental

thereto. Provided that such use is permitted by Applicable Laws, any

manufacturing performed by Tenant at the Premises shall be limited to the

manufacture and/or assembly of pharmaceutical, diet supplement and/or other

human health related products. Outside storage, including without limitation,

storage of trucks and other vehicles, is prohibited without Landlord's prior

written consent. Tenant shall not permit any objectionable or unpleasant

odors, smoke, dust, gas, noise or vibrations to emanate from the Premises, nor

take any other action that would constitute a health or environmental hazard

or nuisance or that would disturb, interfere with, or endanger Landlord or the

occupant of any other land or buildings in the vicinity of the Project or any

other tenant of the Project. Tenant's use of the Premises must in any event

comply with all Applicable Laws including, without limitation, the Declaration

and Applicable Laws.  TENANT SHALL MAKE ITS OWN DETERMINATIONS AS TO THE

SUITABILITY OF THE PREMISES FOR ITS INTENDED USE. BY ENTERING INTO THIS LEASE,

TENANT REPRESENTS AND WARRANTS THAT IT HAS INVESTIGATED AND SATISFIED ITSELF

AS TO WHETHER OR NOT APPLICABLE LAWS PERMIT ITS INTENDED USE OF THE PREMISES

AND THAT TENANT IS RELYING SOLELY UPON SUCH INVESTIGATIONS, AND NOT UPON AND

REPRESENTATIONS OF LANDLORD, IN ENTERING INTO THIS LEASE. If Tenant's

particular use of the Premises requires that additional improvements or

modifications be made to the Premises or the Project by Landlord so that the

Premises and the Project complies in all respects with Applicable Laws, Tenant

shall be solely responsible for such costs.

 

 

 

14

 

 

     8.   HAZARDOUS MATERIALS.

 

          A.   HAZARDOUS MATERIALS DEFINED. As used in this Lease, the term

HAZARDOUS MATERIALS means and includes (i) any hazardous, toxic or dangerous

waste, substance or material, as defined for purposes of the Comprehensive

Environmental Response Compensation and Liability Act of 1980, as amended, the

Resource Conservation and Recovery Act of 1976, as amended, or any other

Applicable Laws applicable to the Premises and establishing liability,

standards, or regulating or requiring action as to the industrial hygiene,

use, generation, treatment, discharge, spillage, storage, uncontrolled loss,

seepage, filtration, disposal, removal, or existence of a hazardous, toxic or

dangerous waste, substance or material (collectively, ENVIRONMENTAL LAWS) and

(ii) any waste, substance or material which, even if not so regulated, is

known to pose a hazard to the health and safety of persons or property,

specifically including, without limitation, oil and petroleum products and

by-products and asbestos.

 

          B.   PROHIBITION OF HAZARDOUS MATERIALS/TENANT'S LIABILITY. Except

for Hazardous Materials that are used only as an incidental part of Tenant's

day-to-day business operations and not as an integral part thereof (E.G., fuel

for forklifts and similar equipment, office supplies, cleaning solvents),

Tenant may not use, treat, handle, store, generate, dispose of or release or

cause or permit any Tenant Party, or any of their invitees, to use, handle,

store, generate, treat, dispose of or release, in, on, under or from the

Premises or the Project any Hazardous Materials. Without limiting any of the

above:

 

                    (1)  Tenant covenants and agrees that it shall at its own

     expense procure, maintain in effect and comply with all conditions of any

     and all permits, licenses and other governmental and regulatory approvals

     required for Tenant's use of the Premises and any operations or conduct

     of Tenant involving the use, handling, generation, treatment, storage,

     disposal, management or release of any Hazardous Materials. Tenant shall

     cause any and all Hazardous Materials that are to be removed from the

     Premises to be transported solely by duly licensed haulers and to duly

     licensed facilities for final disposal of such Hazardous Materials.

     Tenant shall in all respects, handle, treat, deal with and manage any

     and all Hazardous Materials in, on, under or about the Premises as a

     result of the actions, conduct or any part of the business operations of

     Tenant or any Tenant Party, or any of their invitees, in complete

     conformity with all Applicable Laws and prudent industry practices

     regarding the management of such Hazardous Materials. All reporting

     obligations relating to Hazardous Materials in, on, under or about the

     Premises as a result of the actions, conduct or any part of the business

     operations of Tenant or any Tenant Party, or any of their invitees, are

     solely the responsibility of Tenant. Upon expiration or earlier

     termination of this Lease, Tenant covenants and agrees to cause all

     Hazardous Materials existing in, on, or under the Premises to be removed

     from the Premises and transported for use, storage or disposal in

     accordance and in compliance with all Applicable Laws. In addition, and

     unless Landlord instructs Tenant otherwise, at the expiration of the term

     of this Lease, Tenant shall remove all tanks or fixtures which were

     placed on the Premises by or on behalf of Tenant or any Tenant Party

     during the term of this Lease and which contain, have contained or are

     contaminated with, Hazardous Materials;

 

                    (2)  Tenant shall immediately notify Landlord in writing

     of (i) any Tenant Release (hereinafter defined), (ii) any enforcement,

     clean-up, removal or other governmental or regulatory action instituted,

     completed or threatened against Tenant, the Premises, the Project, or any

     part thereof pursuant to any Applicable Laws; (iii) any claim made or

     threatened by any person against Tenant, Landlord, the Premises, or the

     Project relating to damage, contribution, cost recovery, compensation,

     loss or injury resulting from or claimed to result from any Hazardous

     Materials, and (iv) any reports made to any environmental agency arising

     out of or in connection with any Hazardous Materials in, on or about or

     under the Premises or with respect to any Hazardous Materials removed

     from the Premises, including, any complaints, notices, warnings, reports

     or asserted violations in connection therewith. Tenant shall also provide

     to Landlord, as promptly, as possible, and in any event within five (5)

     business days after Tenant first received or sent the same, with copies

     of all claims, reports, complaints, notices, warnings or asserted

     violations relating in any way to the Premises or Tenant's use thereof.

     Tenant shall not take any remedial action in response to the presence of

     any Hazardous Materials in/on, about or under the Premises, nor enter

     into any settlement agreement, consent, decree or other compromise in

     respect to any claims relating to or in any way connected with the

     Premises without first notifying Landlord of Tenant's intention to do so

     and affording Landlord ample opportunity to appear, intervene or

     otherwise appropriately assert and protect Landlord's interest with

     respect thereto;

 

 

 

15

 

 

                    (3)  Tenant shall indemnify, at Landlord's option, defend

     (with counsel reasonably acceptable to Landlord), protect and hold

     Landlord and each of Landlord's officers, directors, partners, employees,

     agents, attorneys, successors and assigns free and harmless from and

     against any and all claims, liabilities, damages, costs, penalties,

     forfeitures, losses or expenses (including attorneys' fees) for death or

     injury to any person or damage to any property whatsoever (including

     water tables and atmosphere) arising or resulting in whole or in part,

     directly or indirectly, from the presence, release or discharge of

     Hazardous Materials in, on, under, upon or from the Premises to the

     extent that such presence, release or discharge was caused or permitted

     by Tenant or any Tenant Party, or any of their invitees, or from the

     transportation or disposal of Hazardous Materials to or from the Premises

     or the Project by Tenant or any Tenant Party, or any of their invitees

     (herein, a TENANT RELEASE).  Tenant's obligations hereunder shall

     include, without limitation, and whether foreseeable or unforeseeable,

     all costs of any required or necessary repairs, clean-up or

     detoxification or decontamination of the Premises or the Project and any

     other land contaminated or adversely effected by the Tenant Release and

     the presence and implementation of any closure, remedial action or other

     required plans in connection therewith, and shall survive the expiration

     of or early termination of this Lease;

 

                    (4)  Landlord may at any time commission an environmental

     audit of the Premises or the Project. If it is determined that a Tenant

     Release has in fact occurred, then, without limitation of any other remedy

     Landlord may have hereunder, Tenant shall reimburse the actual costs of the

     testing to Landlord on demand as additional Rent.

 

                    (5)  Tenant shall execute affidavits, representations, and

     the like from time to time at Landlord's request concerning Tenant's

     actual knowledge and belief regarding the presence of Hazardous Materials

     in, on or under the Premises.

 

          C.   ENVIRONMENTAL STUDIES. Landlord represents that, except as set

forth in any written studies or reports provided to Tenant, Landlord has no

actual knowledge of any adverse environmental conditions affecting the Land;

provided. however, that Landlord makes no representations or warranties

regarding the truth or accuracy of the environmental reports so provided and

Tenant shall rely upon such reports, if at all, at Tenant's sole risk.

 

          D.   SURVIVAL.  The respective covenants, rights and obligations of

Landlord and Tenant under this Paragraph 8 shall survive the expiration or

earlier termination of this Lease.

 

     9.   SIGNAGE. Any signage Tenant desires for the Premises shall be

subject to Landlord's written approval and shall be submitted to Landlord for

approval prior to the Commencement Date of this Lease. Tenant shall repair,

paint and/or replace the building facia surface to which its signs are

attached upon vacation of the Premises, or the removal or alteration of its

signage. Tenant shall not (i) make any changes to the exterior of the

Building, (ii) install any exterior lights, decorations, balloons, flags,

pennants, banners or painting, or (iii) erect or install any signs, windows or

door lettering, placards, decorations or advertising media of any type which

can be viewed from the exterior of the Building, without Landlord's prior

written consent. All signs, decorations, advertising media, blinds, draperies

and other window treatment or bars or other security installations visible

from outside the Building shall conform in all respects to the criteria

established by Landlord and Applicable Laws.

 

     10.  TAXES.

 

          A.   REAL PROPERTY TAXES. Subject to reimbursement by Tenant as

provided in Paragraph 4B above, Landlord shall pay all taxes, assessments and

governmental charges of any kind and nature and all assessments due to deed

restrictions and/or owner or community associations (collectively referred to

herein as REAL PROPERTY TAXES), that accrue against the Project, or any part

thereof. If at any time during the term of this Lease, there shall be levied,

assessed or unposed on Landlord a capital levy or other tax directly on the

Rent received under this Lease and/or a franchise tax, gross receipts tax (but

not a typical or customary state or federal income tax), assessment, levy or

charge measured by or based, in whole or in part, upon Rent paid under this

Lease, then all such taxes, assessments, levies or charges, or the part

thereof so measured or based, shall be deemed to be included within the term

REAL PROPERTY TAXES for the purposes hereof. Landlord shall have the right to

employ a tax consulting firm to attempt to assure a fair tax burden on the

Project and the Premises within the applicable taxing jurisdiction. Tenant

agrees to pay its Proportionate

 

 

 

16

 

 

Share of the cost of such consultant as additional Rent.

 

          B.   PERSONAL PROPERTY TAXES. Tenant shall be liable for all taxes

levied or assessed against Tenant's Property and any other personal property

or fixtures placed or installed in the Premises or the Project by or on behalf

of Tenant. If any such taxes are levied or assessed against Landlord or

Landlord's property and (i) Landlord pays the same, or (ii) the assessed value

of Landlord's property is increased by inclusion of such personal property and

fixtures and Landlord pays the increased taxes, then, Tenant shall pay to

Landlord such taxes within ten (10) days after demand. If Tenant later

contests such taxes and is successful in abating or reducing all or a portion

of same, and provided that Tenant has, in fact, reimbursed Landlord for the

taxes paid by Landlord, Landlord will return to Tenant the amount by which

such taxes were reduced or abated, up to the amount Tenant reimbursed Landlord.

 

     11.  UTILITIES. Landlord agrees to provide water, sewer and gas utility

lines to the outside of the exterior walls of the Building and electricity

service to be provided to a transformer located at the Project. Tenant shall

pay for all utilities servicing the Premises, including, without limitation

water, gas, heat, light, power, telephone, sewer, sprinkler charges and other

utilities and services used on or at the Premises, together with any taxes,

penalties, surcharges or the like pertaining to the Tenant's use of the

Premises, and any maintenance charges for utilities. Tenant shall pay its

Proportionate Share of all charges for jointly metered and common area

utilities as additional Rent. Landlord shall not be liable for any

interruption or failure of utility service at the Premises and all Rent owed

pursuant to the terms of this Lease shall continue to be due notwithstanding

such interruption.

 

     12.  REPAIRS AND MAINTENANCE.

 

          A.   LANDLORD'S OBLIGATION TO REPAIR AND MAINTAIN.

 

                    (1) Landlord, at its own cost and expense, shall maintain

     the structural soundness of the Building's roof, foundation and exterior

     walls in good repair, except for reasonable wear and tear and except for

     damage caused by any act or omission of Tenant or any Tenant Party or

     their invitees. Landlord may elect to repair any damage caused by Tenant

     or any Tenant Party or their invitees, and if Landlord so elects, Tenant

     shall pay Landlord the cost or anticipated cost of such repair on demand,

     subject to Paragraph 13C hereof. The term WALLS as used herein shall not

     include windows, glass or plate glass, doors, special store fronts or

     office entries. Tenant shall promptly give Landlord written notice of any

     defect or need for repairs, after which Landlord shall have reasonable

     opportunity to repair same or cure such defect.

 

                    (2)  Landlord shall maintain or cause to be maintained all

     exterior painting, parking areas (inclusive of striping) and landscaped

     areas of the Project and utility lines outside the exterior walls of the

     Building in good condition and repair, other than those areas that are

     expressly Tenant's obligations under Paragraph 12B below. Tenant shall

     reimburse Landlord for Tenant's Proportionate Share of any costs incurred

     by Landlord under this paragraph, net of the Adjustments being escrowed

     monthly for maintenance under Paragraph 4B above.  Notwithstanding any of

     the above, if it is determined that any specific repair or maintenance

     otherwise required to be performed by Landlord under this subparagraph is

     caused solely by Tenant, any Tenant Party or any of their invitees,

     Tenant shall be solely responsible for the cost of such repair or

     maintenance and such shall be paid to Landlord outside of and in addition

     to the Adjustments. All such amounts payable under this subparagraph

     shall be owed to Landlord as additional Rent.

 

                    (3) In the event the Building or the Premises is damaged

     or becomes out of repair and such is the obligation of Landlord to repair

     or maintain hereunder, Tenant shall provided prompt written notice to

     Landlord thereof stating the nature of the needed repairs. Landlord will

     then have thirty (30) days to make any necessary repairs or such longer

     time as is reasonably necessary with the exercise of due diligence if

     such repairs cannot reasonably be completed in thirty (30) days.

     Additionally, in the event of an emergency, defined for purposes of this

     subparagraph as a condition that if allowed to continue to exist without

     repair would result in damage, injury or death to property or person, and

     assuming that it is not reasonably feasible for Tenant to give the

     required notice to Landlord, then Tenant may make such repairs as are

     reasonably necessary to prevent further immediate damage or injury to

     person or property; provided that Tenant gives Landlord prompt written

     notice of the nature of the emergency and the action taken by Tenant. In

     such event, Landlord shall reimburse

 

 

 

17

 

 

Tenant within thirty (30) days of invoice for the actual costs of such

repairs made by Tenant.

 

          B.   TENANT'S OBLIGATION TO REPAIR AND MAINTAIN. Except only for

maintenance, repair and replacement performed by Landlord pursuant to

Paragraph 12A hereof, Tenant, at its own cost and expense, shall maintain in

good condition and promptly make all necessary repairs and replacements to

(i) all parts of the Premises, (ii) all utility lines and appurtenances from

the exterior walls of the Building to and within the Premises, and (iii) any

and all overhead doors, loading docks, loading dock levelers and loading

dock equipment.  Additionally, Tenant shall maintain the walkways, parking

areas and facilities, driveways and alleys located within the Adjacent Area,

as illustrated on EXHIBIT "C" attached hereto, in a reasonably clean and

sanitary condition. Tenant, at its own cost and expense, shall enter into a

regularly scheduled preventive maintenance/service contract with a

maintenance contractor approved by Landlord for servicing all hot water,

heating and air conditioning systems and equipment within the Premises; which

service contract must include all services suggested by the equipment

manufacturer in its operations/maintenance manual and must become effective

within thirty (30) days of the date Tenant takes possession of the Premises.

 

     Landlord reserves the right to perform any of Tenant's obligations set

forth under this paragraph including utility line maintenance and any other

items that are otherwise Tenant's obligations under this paragraph to the

extent that Tenant fails to perform its obligations thereunder within the

time frames set forth in Paragraph 18F. In such event, Landlord shall be

entitled to an administrative fee of ten percent (10%) of the costs and

expense of all of the foregoing, and Tenant shall be liable for the cost and

expense of such repair, replacement, maintenance and other such items, as

well as the administrative fee.

 

     13.  INSURANCE.

 

          A.   LANDLORD'S INSURANCE. Landlord shall maintain insurance

covering the Building (except that Landlord shall not be required to insure

any part of the partitions, fixtures, additions and other improvements that

may have been constructed, erected or installed in or about the Premises or

for the benefit of, or by or for Tenant, including, without limitation, the

Tenant Finish Work) in an amount not less than one hundred percent (100%) of

the replacement cost thereof insuring against the perils of Fire, Lightning,

Extended Coverage, Vandalism and Malicious Mischief (collectively, LANDLORD'S

INSURANCE).

 

          B.   TENANT'S INSURANCE. Tenant, at its own expense, shall maintain

during the term of this Lease a policy or policies of worker's compensation

(or its equivalent provided such is approved by Landlord, such not to be

unreasonably withheld) and commercial general liability insurance, including

personal injury and property damage, with contractual liability endorsement,

in the amount of Five Hundred Thousand Dollars ($500,000.00) for property

damages and One Million Dollars ($1,000,000.00) per occurrence for personal

injuries or deaths of persons occurring in or about the Premises and the

Project; provided, such limits may be adjusted upward in Landlord's

reasonable discretion based upon inflation or upon the type of business

conducted by Tenant in the Premises. Said policies shall (i) name Landlord as

an additional insured and insure Landlord's contingent liability under this

Lease (except for the worker's compensation policy, which instead shall

include waiver of subrogation endorsement in favor of Landlord), (ii) be

issued on an occurrence (not claims made) basis, (iii) be issued by an

insurance company which is acceptable to Landlord, and (iv) provide that said

insurance shall not be cancelled unless thirty (30) days prior written notice

shall have been given to Landlord. In addition to the above, Tenant shall

maintain insurance insuring the interest of Tenant and covering all of

Tenant's property and all partitions, fixtures, additions and other

improvements that may have been constructed, erected or installed in or about

the Premises or for the benefit of, or by or for Tenant, inclusive of the

Tenant Finish Work, and covering all contents of the Premises, in an amount

not less than one hundred percent (100%) of the replacement cost thereof

insuring against the perils of Fire, Lightning, Extended Coverage, Vandalism

and Malicious Mischief. Said policy or policies or certificates thereof shall

be delivered to Landlord by Tenant upon commencement of the term of the Lease

and at least thirty (30) days prior to the effective date of each renewal of

said insurance.

 

     Tenant will not permit the Premises to be used for any purpose or in any

manner that would (i) void the insurance thereon, (ii) increase the insurance

risk, or (iii) cause the disallowance of any sprinkler credits, including

without limitation, use of the Premises for the receipt, storage or handling

of any product, material or merchandise that is explosive or highly

inflammable. If any increase in the cost of any insurance on the Premises or

the Building is caused by Tenant's use of the Premises, or because Tenant

vacates the Premises, then Tenant shall pay the amount of such increase to Landlord upon demand.

 

 

18

 

 

          C.   WAIVER OF SUBROGATION. NOTWITHSTANDING ANY OTHER PROVISION OF

THIS LEASE, LANDLORD AND TENANT HEREBY WAIVE ANY RIGHTS EACH MAY HAVE AGAINST

THE OTHER ON ACCOUNT OF ANY LOSS OR DAMAGE OCCASIONED TO LANDLORD OR TENANT,

AS THE CASE MAY BE (WHETHER OR NOT SUCH LOSS OR DAMAGE IS CAUSED BY THE FAULT

OR SOLE OR CONCURRENT NEGLIGENCE OF, WITH RESPECT TO LOSS OR DAMAGE TO THE

PROPERTY OF TENANT, LANDLORD OR ANY LANDLORD PARTY, OR, WITH RESPECT TO ANY

LOSS OF DAMAGE TO ANY PROPERTY OF LANDLORD, OF TENANT, ANY TENANT PARTY OR

ANY OF THEIR INVITEES), TO THEIR RESPECTIVE PROPERTY, THE PREMISES, ITS

CONTENTS OR TO ANY OTHER PORTION OF THE BUILDING OR THE PROJECT ARISING FROM

ANY RISK THAT WOULD BE COVERED BY ANY INSURANCE REQUIRED TO BE CARRIED UNDER

THIS LEASE (WHETHER OR SUCH INSURANCE IS ACTUALLY CARRIED OR MAINTAINED), OR

OTHERWISE CARRIED BY THE WAIVING PARTY (BUT, AS TO ANY SUCH INSURANCE

OTHERWISE CARRIED, ONLY TO THE EXTENT OF SUCH INSURANCE PROCEEDS ACTUALLY

RECOVERED).  THE PARTIES HERETO EACH, ON BEHALF OF THEIR RESPECTIVE INSURANCE

COMPANIES INSURING THE PROPERTY OF EITHER LANDLORD OR TENANT AGAINST ANY SUCH

LOSS, WAIVE ANY RIGHT OF SUBROGATION THAT IT MAY HAVE AGAINST LANDLORD OR

TENANT, AS THE CASE MAY BE. EACH PARTY TO THIS LEASE AGREES IMMEDIATELY TO

GIVE TO EACH SUCH INSURANCE COMPANY WRITTEN NOTIFICATION OF THE TERMS OF THE

MUTUAL WAIVERS CONTAINED IN THIS PARAGRAPH, AND TO HAVE SAID INSURANCE

POLICIES PROPERLY ENDORSED, IF NECESSARY, TO PREVENT THE INVALIDATION OF SAID

INSURANCE COVERAGES BY REASON OF SAID WAIVERS.

 

     14.  LIABILITY/INDEMNIFICATION.

 

          A.   LANDLORD'S LIABILITY AND INDEMNITY.

 

                    (1)  RELEASE FROM LIABILITY. Except as otherwise

     expressly provided in this Lease, neither Landlord nor any Landlord

     Party (hereinafter defined) will be liable to Tenant or any Tenant Party

     or any of their invitees for any death or injury to person or damage to

     property on or about the Premises or the Project caused by or arising

     out of, in whole or in part, (i) the negligence of, or act or omission

     of, Tenant or any Tenant Party or any of their invitees, (ii) the

     Premises or the Project becoming out of repair, (iii) the leakage of

     gas, oil, water or steam or by electricity emanating from any part of

     the Premises or the Project, or (iv) any other cause, unless and then

     only to the extent such death or injury to person or damage to property

     is due to the negligence or willful misconduct of Landlord or any

     Landlord Party. As used in this Paragraph 14, a LANDLORD PARTY shall

     mean one or more of Landlord's officers, partners, shareholders,

     employees, agents or contractors.

 

                    (2)  LANDLORD'S INDEMNITY OF TENANT. Except for any

     claims, rights of recovery and causes of action that Tenant has

     expressly herein waived or released or for which Landlord is not

     responsible hereunder, Landlord shall indemnify and hold Tenant and each

     Tenant Party harmless from and against any and all fines, suits, losses,

     costs, liabilities, claims, demands, actions and judgments of every kind

     and character, including reasonable court costs and attorneys fees,

     suffered by, recovered from, or asserted against Tenant or any Tenant

     Party for any injury or death to any person or damage to any property

     in, on, or about the Premises or the Project to the extent, and only to

     the extent, that such death or injury to person or damage to property is

     caused by the negligence or willful misconduct of Landlord or any

     Landlord Party. Upon the occurrence of an event which Landlord is

     required to indemnify Tenant against, and upon demand by Tenant,

     Landlord shall employ counsel reasonably acceptable to Tenant and defend

     Tenant against any liability for such event, all at Landlord's cost.

 

          B.   TENANT'S INDEMNITY. Except for any claims, rights of recovery

and causes of action that Landlord has expressly herein waived or released or

for which Tenant is not responsible hereunder, Tenant shall indemnify and

hold Landlord and each Landlord Party harmless from and against any and all

fines, suits, losses, costs, liabilities, claims, demands, actions and

judgments of every kind and character, including reasonable court costs and

attorneys fees, suffered by, recovered from, or asserted against Landlord or

any Landlord Party (i) arising by reason of any breach, violation or

 

 

 

19

 

 

non-performance by Tenant of any term, provision, covenant, condition or

agreement to be performed or abided by Tenant hereunder, (ii) arising on

account of death, injury or damage to person or property in, on, or about the

Premises or the Project when such death, injury or damage is caused or arises

out of the negligence or willful misconduct of Tenant, any Tenant Party or

any of their invitees, and (iii) with respect to any action brought by a

Tenant Party or any invitee of Tenant or any Tenant Party, arising out of any

matter for which neither Landlord nor any Landlord Party is liable or

responsible hereunder. Upon the occurrence of an event which Tenant is

required to indemnify Landlord or a Landlord Party against, and upon demand

by Landlord, Tenant shall employ counsel reasonably acceptable to Landlord

and defend Landlord or such Landlord Party against any liability for such

event, all at Tenant's cost.

 

          C.   LIABILITY FOR ACTS OF TENANT AND LANDLORD PARTIES. The

individual(s) executing this Lease on behalf of Landlord or Tenant, as

applicable, are doing so in their representative capacity only, solely as a

representative of Landlord or Tenant, as applicable, and any liability to

Landlord or any Landlord Party or Tenant or any Tenant Party arising or

resulting hereunder based upon the actions of such individual(s) or any other

Landlord Party or Tenant Party, as applicable, shall merely be that of

Landlord (as to any Landlord Party) or Tenant (as to any Tenant Party) and

not such individual(s) or Landlord Party or Tenant Party.

 

          D.   SURVIVAL. The releases, indemnities and covenants of Landlord

and Tenant in this Paragraph 14 are in addition to, and not in limitation of,

any other indemnities made by Landlord or Tenant elsewhere in this Lease. The

provisions of this Section 14 shall survive the expiration or termination of

this Lease with respect to any claims or liability arising out of events

occurring prior to such expiration or termination.

 

     15.  CASUALTY.

 

          A.   TERMINATION OF LEASE. If the Premises should be damaged or

destroyed by fire or other peril, Tenant immediately shall give written

notice to Landlord. If: (i) the Building should be totally destroyed by any

peril not covered by the insurance to be provided by Landlord under Paragraph

13A above; or if (ii) the Premises should be so damaged thereby that, in

Landlord's estimation, rebuilding or repairs cannot be completed within one

hundred eighty (180) days after the date of such damage; or if (iii) the

Premises should be so damaged thereby that, in Landlord's estimation,

rebuilding or repairs of the portion thereof required to be insured by

Landlord can be substantially completed within one hundred eighty (180) days

after the date of such damage, but the insurance proceeds available to

Landlord will not, in Landlord's estimation, be sufficient to complete such

rebuilding or repairs (due to such insurance proceeds being applied to

mortgage debt or otherwise) and Landlord is either unable or unwilling to

advance sufficient funds to complete such rebuilding or repairs; then in any

of such events this Lease shall cease and terminate as if and to the extent

the effective date of such termination had been the date originally scheduled

for the expiration of the term of this Lease, and the Rent shall be abated

during the previously unexpired term of this Lease, effective upon the date

of the occurrence of such damage. Landlord's determinations under this

paragraph must be made in writing to Tenant within forty-five (45) days after

the subject casualty.

 

          B.   RESTORATION OF PREMISES BY LANDLORD. Subject to the provisions

of Section 15.A above, if the Premises should be damaged by any peril covered

by the insurance to be provided by Landlord under Paragraph 13A above, and in

Landlord's estimation, rebuilding or repairs of the portion thereof required

to be insured by Landlord can be substantially completed within one hundred

eighty (180) days after the date of such damage, this Lease shall not

terminate, and Landlord shall restore the Premises to substantially its

previous condition, except that Landlord shall not be required to rebuild,

repair or replace any part of the partitions, fixtures, additions and other

improvements that may have been constructed, erected or installed in, or

about the Premises or for the benefit of, or by or for Tenant. During any

period of rebuilding, repair and restoration, Landlord shall allow Tenant a

reasonable reduction in Rent based upon, among other things, the adverse

effect such casualty and restoration have on Tenant's business operations.

Subject to Force Majeure, if such repairs and rebuilding of the Premises have

not been substantially completed within one hundred eighty (180) days after

the date of such damage, Tenant, as Tenant's exclusive remedy, may give

Landlord notice of Tenant's intention to terminate the Lease effective as of

the date specified in such notice, which date shall be not less that thirty

(30) days after the notice. If the repairs and rebuilding have not been

substantially completed by the date specified in such notice, Tenant, as

Tenant's exclusive remedy, may immediately terminate this Lease by delivering

written notice of termination to Landlord, in which event the rights and

obligations hereunder shall cease and terminate as if and to the extent the

effective date of such termination had been the date originally scheduled for

the expiration of the term 

 

  

20

  

of this Lease, and Rent shall be abated during the previously unexpired term of this

Lease, effective upon the date of the termination.

 

     16.  CONDEMNATION.

 

          A.   MATERIAL TAKING. If any portion of the Premises or the

Project is taken for any public or quasi-public use under governmental law,

ordinance or regulation, or by right of eminent domain, or by private

purchase in lieu thereof and the taking materially interferes with the use of

the Premises for the purpose for which they were leased to Tenant or causes

the Premises or the exclusive parking area designated for Tenant to be in

noncompliance with Applicable Laws, then within thirty (30) days after such

taking Landlord shall notify Tenant as to whether or not Landlord will

reconstitute the Premises or the Project such that the Premises or the

Project once again complies with Applicable Laws or replicate the Premises or

the Project to substantially the condition it was in prior to such taking, as

applicable, within one hundred eighty (180) days after such taking.  If

Landlord notifies Tenant that it will not replicate or reconstitute the

Premises or the Project, as applicable, or otherwise fails to complete the

reconstitution or replication within one hundred eighty (180) days after such

taking, then this Lease shall terminate and the Rent shall be abated during

the unexpired portion of this Lease, effective as of the date of such taking.

If Landlord notifies Tenant that it will replicate or reconstitute the

Premises or the Project, as applicable, then this Lease shall not terminate

but Rent accruing after the date of such taking shall be reduced to such

extent as may be fair and reasonable under all of the circumstances (which

may include a abatement of all Rent), effective as of the date of such taking

until the Premises or the Project as applicable, is fully reconstituted or

replicated, at which time Rent will again adjust to the amounts set forth in

Paragraph 4.

 

          B.   OTHER TAKING. With respect to any taking not covered by

Paragraph 16A above, this Lease shall not terminate, but the Rent payable

hereunder during the unexpired portion of this Lease shall be reduced to such

extent as may be fair and reasonable under all of the circumstances,

effective as of the date of such taking.

 

          C.   CONDEMNATION PROCEEDS. All compensation awarded in connection

with or as a result of any eminent domain or condemnation proceedings shall

be the property of Landlord, and Tenant hereby assigns any interest in any

such award to Landlord; provided, however, Landlord shall have no interest in

any award made to Tenant for loss of business or goodwill or for the taking

of Tenant's fixtures and improvements, if a separate award for such items is

made to Tenant or reasonably allocable to Tenant for the taking of Tenant's

fixtures and improvements that Tenant would be permitted to remove upon

termination of this Lease.

 

     17.  ASSIGNMENT AND SUBLETTING.

 

          A.   PROHIBITION ON ASSIGNMENT AND SUBLETTING. Tenant shall not

have the right to assign, sublet, transfer or encumber this Lease, or any

interest therein, without the prior written consent of Landlord.  Any

attempted assignment, subletting, transfer or encumbrance by Tenant in

violation of the terms and covenants of this paragraph shall be void. If

Tenant requests Landlord's consent to an assignment of this Lease or

subletting of all or a part of the Premises, it shall submit to Landlord, in

writing, the name of the proposed assignee or subtenant, the commencement

date of such assignment or subletting, the nature and character of the

business of the proposed assignee or subtenant and the proposed rates, terms

and other pertinent conditions of such assignment or subletting. Upon receipt

of a request for consent to an assignment or subletting, and unless such

request pertains to an assignment or sublease governed by Paragraph 17B

below, Landlord shall have the option (to be exercised within thirty (30)

days from the submission of Tenant's written request) to (i) cancel this

Lease (or the applicable portion thereof as to a partial subletting) as of

the commencement date stated in the above-mentioned notice of subletting or

assignment, unless Tenant withdraws the proposal to sublet or assign within

ten (10) days after Landlord's notice of cancellation is given, (ii) permit

such assignment or subletting, or (iii) reasonably withhold its consent to

such assignment or subletting. If Landlord elects to cancel this Lease and

Tenant does not withdraw the proposal to sublet or assign, then the term of

this Lease (as to the applicable portion of the Premises), and the tenancy

and occupancy of the applicable portion of the Premises by Tenant hereunder,

shall cease, terminate, expire, and come to an end as if the cancellation

date was the original termination date of this Lease with respect to the

applicable portion of the Premises. In the event Landlord consents to a

proposed assignment or subletting and the rent due and payable by any such

assignee or sublessee under any such permitted assignment or sublease (or a

combination of the rent payable under such assignment or sublease plus any

bonus or any

 

 

 

21

 

 

other consideration therefor or any payment, incident thereto) exceeds the

Base Monthly Rent payable under Paragraph 3 of this Lease for the applicable

space, net of Tenant's actual reasonable costs incurred in connection with

such assignment or subletting (E.G., attorneys' fees, marketing costs (but

not Tenant's internal costs)) and net of any finish out allowance granted by

Tenant in connection with any assignment or sublease not in excess of market

(E.G., Tenant may not recover any finish out allowance in excess of that

which would granted to a similarly situated tenant for similar space in

similar properties in the Dallas/Fort Worth area), Tenant shall pay to

Landlord all such excess rent and other excess consideration within ten (10)

days following receipt thereof by Tenant, whether or not such assignment or

subletting pertains to an assignment or subletting permitted under Paragraph

17B below.

 

          B.   PERMITTED ASSIGNMENTS/SUBLEASES. Notwithstanding the

provisions of Paragraph 17A, Tenant may, without the consent of Landlord, at

any time assign or otherwise transfer this Lease or any portion thereof to

any Affiliate (hereinafter defined); or any Corporation resulting from the

consolidation or merger of Tenant into or with any other entity; or to any

person, firm, entity or corporation acquiring a majority of Tenant's issued

and outstanding capital stock or substantially all of Tenant's assets. As

used herein, the term AFFILIATE shall mean a person or entity, corporate or

otherwise, that directly or indirectly through one or more intermediaries,

controls or is controlled by, or is under common control with Tenant. The

term CONTROL means the right and power, direct or indirect, to direct or

cause the direction of the management and policies of a person or business

entity, corporation or otherwise, through ownership or voting securities, by

contract or otherwise; provided, however, that in the event of an assignment,

the assignee shall assume in writing the terms and conditions set forth

herein to be observed and performed by the Tenant in a form reasonably

approved by Landlord. A sublease or assignment pursuant to this Paragraph 17B

shall not be subject to Landlord's recapture rights set forth in Paragraph

17A above.

 

          C.   ASSIGNMENTS IN BANKRUPTCY.

 

                    (1)  If this Lease is assigned to any person or entity

     pursuant to the provisions of the Bankruptcy Code, 11 U.S.C. Section 101

     et. seq. (the BANKRUPTCY CODE), any and all monies or other

     consideration payable or otherwise to be delivered in connection with

     such assignment shall be paid or delivered to Landlord, shall be and

     remain the exclusive property of Landlord and shall not constitute

     property of Tenant or of the estate of Tenant within the meaning of the

     Bankruptcy Code. Any and all monies or other considerations constituting

     Landlord's property under the preceding sentence not paid or delivered

     to Landlord shall be held in trust for the benefit of Landlord and be

     promptly paid or delivered to Landlord.

 

                    (2)  Any person or entity to which this Lease is assigned

     pursuant to the provisions of the Bankruptcy Code, shall be deemed,

     without further act or deed, to have assumed all of the obligations

     arising under this Lease on and after the date of such assignment. Any

     such assignee shall upon demand execute and deliver to Landlord an

     instrument confirming such assumption.

 

          D.   EFFECT OF ASSIGNMENT. Any assignee, sublessee or transferee of

Tenant's interest in this Lease (all such assignees, sublessees and

transferees being hereinafter referred to as TRANSFEREES), by assuming

Tenant's obligations hereunder, shall assume liability to Landlord for all

amounts paid to persons other than Landlord by such Transferees in

contravention of this Paragraph 17. No assignment, subletting or other

transfer, whether consented to by Landlord or not or permitted hereunder

shall relieve the Tenant named herein of any liability hereunder for the

obligations of the "Tenant". If an event of default occurs while the Premises

or any part thereof are assigned or sublet, then Landlord, in addition to any

other remedies herein provided, or provided by law, may collect directly from

such Transferee all rents payable to the Tenant and apply such rent against

any sum due Landlord hereunder. No such collection shall be construed to

constitute a novation or a release of Tenant from the further performance of

Tenant's obligations hereunder.

 

     18.  DEFAULT BY TENANT. The following events (herein individually

referred to as EVENT OF DEFAULT) each shall be deemed to be events of default

by Tenant under this Lease:

 

          A.   Tenant shall fail to pay any installment of the Rent herein

reserved when due, or any other payment or reimbursement to Landlord required

herein when due, and such failure shall continue for a period of ten (10) days

after receipt of written notice from Landlord; provided, however, that an

event of default will occur without any

 

 

 

 

22

 

 

obligation of Landlord to deliver any notice if Landlord has given Tenant

written notice under this Paragraph 18A on two (2) or more occasions during

the twelve (12) month period preceding the current failure by Tenant to

timely pay Rent (though Tenant in such instances is granted a five (5) day

grace period from the date upon which the subject payment was due).

 

          B.   Tenant or any guarantor of the Tenant's obligations hereunder

shall (i) become insolvent; (ii) admit in writing its inability to pay its

debts; (iii) make a general assignment for the benefit of creditors; (iv)

commence any case, proceeding or other action seeking to have an order for

relief entered on its behalf as a debtor or to adjudicate it a bankrupt or

insolvent, or seeking reorganization, arrangement, adjustment, liquidation,

dissolution or composition of it or its debts under any law relating to

bankruptcy, insolvency, reorganization or relief of debtors or seeking

appointment of a receiver, trustee, custodian or other similar official for

it or for all or of any substantial part of its property; or (v) take any

action to authorize or in contemplation of any of the actions set forth above

in this paragraph.

 

          C.   Any case, proceeding or other action against the Tenant or any

guarantor of the Tenant's obligations hereunder shall be commenced seeking

(i) to have an order for relief entered against it as debtor or to adjudicate

it a bankrupt or insolvent; (ii) reorganization, arrangement, adjustment,

liquidation, dissolution or composition of it or its debts under any law

relating to bankruptcy, insolvency, reorganization or relief of debtors;

(iii) appointment of a receiver, trustee, custodian or other similar official

for it or for all or any substantial part of its property, and such case,

proceeding or other action (a) results in the entry of an order for relief

against it which it is not fully stayed within seven (7) business days after

the entry thereof or (b) shall remain undismissed for a period of forty-five

(45) days.

 

          D.   OMITTED.

 

          E.   Tenant shall fail to discharge any lien placed upon the

Premises or the Project in violation of Paragraph 28 hereof within sixty (60)

days after any such lien or encumbrance is filed against the Premises or the

Project; provided, however, that if Tenant in good faith disputes such lien,

Tenant may contest the lien without being in default hereunder provided that

Tenant bonds the lien to Landlord's reasonable satisfaction and the lien is

in any event removed or extinguished no later than one hundred and twenty

(120) days after filing.

 

          F.   Tenant shall fail to comply with any other terms in this Lease

other than those for which an event of default has been described in this

Paragraph 18, and such failure is not cured within thirty (30) days after

written notice thereof to Tenant, such notice to specify the nature of the

default and the action required to cure same, or if such failure cannot

reasonably be cured in thirty (30) days, such time as is reasonable under the

circumstances, not to exceed ninety (90) days, and provided that Tenant must

diligently proceed to cure the default.

 

     19.  LANDLORD'S REMEDIES. Upon the occurrence of any event of default

specified in this Lease, Landlord, at its option, may exercise one (1) or

more of the following remedies, in addition to all other rights and remedies

provided at law or in equity.

 

          A.   Landlord may, without judicial process, terminate this Lease

(whereupon all obligations and liabilities of Landlord hereunder shall

terminate) and without further notice repossess the Premises without having

any liability therefor (including specifically any liability or duty under

Section 93.002 of the Texas Property Code which is specifically superseded by

this Paragraph 19A) and be entitled to recover all loss and damage Landlord

may suffer by reason of such termination, whether through inability to relet

the Premises on satisfactory terms or otherwise, including without

limitation, accrued Rent and interest thereon, accrued late charges and

interest thereon, the unamortized cost of the Tenant Finish Work made at

Landlord's expense pursuant to Paragraph 2 hereof or otherwise, broker's fees

and commissions, attorneys' fees, moving allowance and any other costs

incurred by Landlord in connection with making or executing this Lease, the

cost of recovering the Premises and the costs of reletting the Premises

(including without limitation advertising costs, brokerage fees, leasing

commissions, reasonable attorneys' fees and refurbishing costs). If such

termination is caused by the failure to pay Rent, Landlord may elect, by

sending written notice thereof to Tenant, to receive liquidated damages in an

amount equal to the product of (i) the sum of the all Rent and other charges

payable hereunder for the month during which this Lease is terminated

multiplied by (ii) the lesser of (x) the product of sixty percent (60%)

multiplied by the number of full calendar months which would have remained in

the term of this Lease but for such termination or (y) twenty-four (24). Such

liquidated damages shall be in lieu of the payment of loss and

 

 

 

23

 

 

damage accruing after the date of such termination, but shall not be in lieu

of or reduce in any way any amounts or damages payable by Tenant to Landlord

and accruing prior to the date of termination, which for all purpose shall

include, but not be limited to, accrued Rent and interest thereon, late

charges and interest thereon the unamortized cost of the Tenant Finish Work,

broker's fees and commissions, attorneys' fees, any moving allowances and any

other costs incurred by Landlord in connection with making or executing this

Lease. Nothing contained in this Lease shall limit or prejudice the right of

Landlord to prove for and obtain in proceedings for bankruptcy or insolvency

by reason of the termination of this Lease, an amount equal to the maximum

allowed by any statute or rule of law in effect at the time when, and

governing the proceedings in which, the damages are to be proved, whether the

amount be greater, equal to, or less than the amount of the loss or damages

referred to above.

 

          B.   Landlord may, without judicial process, immediately terminate

Tenant's right of possession of the Premises by delivering to Tenant written

notice of such termination (whereupon all obligations and liability of

Landlord hereunder shall terminate), but not terminate this Lease, and,

without notice or demand, enter upon the Premises or any part thereof and

take absolute possession of the same, expel or remove Tenant and any other

person or entity who may be occupying the Premises, by force if necessary,

change the locks, without having any liability therefor (including

specifically any liability or duty under Section 93.002 of the Texas Property

Code which is specifically superseded by this Paragraph 19B) and at

Landlord's option, Landlord may relet the Premises or any part thereof for

such terms and such rents as Landlord may in its sole discretion elect. In

the event of a termination of Tenant's possession of the Premises under this

Part B and notwithstanding anything in Section 93.002 of the Texas Property

Code to the contrary, Landlord shall have no obligation whatsoever to tender

to Tenant a key for new locks installed in the Premises and Tenant shall have

no further right to possession of the Premises. In the event Landlord shall

elect so to relet, then rent received by Landlord from such reletting shall

be applied first, to the payment of any indebtedness other than Rent due

hereunder from Tenant to Landlord (in such order as Landlord shall

designate), second, to the payment of any cost of such reletting, including,

without limitation, refurbishing costs, reasonable attorneys' fees,

advertising costs, brokerage fees and leasing commissions, and third, to the

payment of Rent due and unpaid hereunder (in such order as Landlord shall

designate), and Tenant shall satisfy and pay any deficiency upon demand

thereof from time to time. No re-entry or taking of possession of the

Premises by Landlord pursuant to this Paragraph 19B shall be construed as an

election on Landlord's part to terminate this Lease unless a written notice

of such termination is given to Tenant pursuant to Paragraph 19A above and,

notwithstanding any such reletting without termination, Landlord may at any

time thereafter elect to terminate this Lease for such previous breach. If

Landlord relets the Premises, either before or after the termination of this

Lease for a rental rate greater than the Rent provided in this Lease, then

for that portion of the Premises that is subject to such new lease, all such

excess rentals shall be and remain the exclusive property of Landlord, and

Tenant shall not be, at any time, entitled to recover said excess rental.

 

          C.   Landlord may, without judicial process enter upon the

Premises, by force if necessary, without having any civil or criminal

liability therefor (including specifically any liability or duty under

Section 93.002 of the Texas Property Code which is superseded by this

Paragraph 19C), and do whatever Tenant is obligated to do under the terms of

this Lease, and Tenant agrees to reimburse Landlord on demand for any

expenses which Landlord may incur in effecting compliance with Tenant's

obligations under this Lease plus an administrative fee equal to ten percent

(10%) of the amount of such reimbursement. Tenant further agrees that

Landlord shall not be liable for any damages resulting to Tenant from such

action, whether caused by the negligence of Landlord or otherwise.

 

          D.   Any repossession of or re-entering on the Premises by Landlord

under this Article shall be without liability or responsibility for damages

to Tenant. No repossession of or re-entering upon the Premises or any part

thereof pursuant to Paragraphs 19B or 19C or otherwise and no reletting of

the Premises or any part thereof pursuant to Paragraph 19B shall relieve

Tenant or any guarantor of its liabilities and obligations hereunder, all of

which shall survive such repossession or re-entering. In the event of any

such repossession of or re-entering upon the Premises or any part thereof by

reason of the occurrence of an event of default Tenant will continue to pay

to Landlord Rent required to be paid by Tenant.

 

          E.   No right or remedy herein conferred upon or reserved to

Landlord is intended to be exclusive of any other right or remedy, and each

and every right and remedy shall be cumulative and in addition to any other

right or remedy given hereunder or now or hereafter existing at law or in

equity or by statute. In addition to the other remedies provided in this

 

  

24

  

Lease, Landlord shall be entitled, to the extent permitted by applicable law,

to injunctive relief in case of the violation, or attempted or threatened

violation, of any of the covenants, agreements conditions or provisions

of this Lease, or to a decree compelling performance of any of the covenants,

agreements, conditions or provisions of this Lease, or to any other remedy

allowed to Landlord at law or in equity. Tenant shall indemnify and hold 

Landlord harmless from any and all costs, expenses (including reasonable

attorneys' fees), claims and causes of action arising from or in connection

with any default by Tenant under this Lease.

 

     F.   If Landlord repossesses the Premises pursuant to the authority

herein granted or provided at law or in equity, then Landlord shall have the

right to (i) keep in place and use or (ii) remove and store all of the

furniture, fixtures and equipment at the Premises, including that which is

owned by or leased to Tenant at all times prior to any foreclosure thereon by

Landlord or repossession thereof by any lessor thereof or third party having

a superior lien thereon. Landlord also shall have the right to relinquish

possession of all or any portion of such furniture, fixtures, equipment and

other property to any person (CLAIMANT) who presents to Landlord a copy of

any instrument represented by Claimant to have been executed by Tenant (or

any predecessor of Tenant) granting Claimant the right under various

circumstances to take possession of such furniture, fixtures, equipment or

other property, without the necessity on the part of Landlord to inquire into

the authenticity or legality of said instrument. The rights of Landlord

herein stated shall be in addition to any and all other rights that Landlord

has or may hereafter have at law or in equity; and Tenant stipulates and

agrees that the rights herein granted Landlord are commercially reasonable.

 

          G.   To the extent required under Texas law, Landlord agrees to use

reasonable efforts to mitigate any of its damages arising from the occurrence

of an event of default by Tenant involving Tenant's abandonment of the

Premises. Tenant agrees that this requirement to use reasonable efforts will

have been satisfied by Landlord: (i) notifying its leasing agent of the

availability of the Premises for rent, and (ii) showing the Premises to

prospective tenants who request to see the Premises and to prospective

tenants referred to Landlord by Tenant. In no event shall Landlord be deemed

not to have mitigated its damages if Landlord chooses to lease some or all of

other space in the Building or the Project or, as applicable, the

Development, to a prospective tenant, rather than some or all of the Premises.

 

     20.  DEFAULT BY LANDLORD AND TENANT'S REMEDIES. If Landlord fails to

perform any of its obligations hereunder within thirty (30) days after

written notice from Tenant specifying such failure, or if such obligations

cannot reasonably be accomplished in thirty (30) days, Landlord has not

commenced performance within such thirty (30) day period and thereafter

diligently prosecutes performance through completion, Tenant's exclusive

remedy shall be an action for actual damages. In no event shall Landlord be

liable to Tenant for consequential, punitive or special damages (or any

similar types of damages) by reason of a failure to perform (or a default) by

Landlord hereunder or otherwise. Unless and until Landlord fails to so cure

any default after such notice, Tenant shall not have any remedy or cause of

action by reason thereof. All obligations of Landlord hereunder will be

construed as covenants, not conditions; and all such obligations will be

binding upon Landlord only during the period of its ownership of the Premises

and not thereafter. The term "Landlord" shall mean only the owner, for the

time being, of the Premises, and in the event of the transfer by such owner

of its interest in the Premises, such owner shall thereupon be released and

discharged from all covenants and obligations of the Landlord thereafter

accruing, but such covenants and obligations shall be binding during the term

of this Lease upon each new owner for the duration of such owner's ownership.

Notwithstanding any provisions of this Lease to the contrary, the liability of

Landlord to Tenant for any default by Landlord under the terms of this Lease

shall be limited to Landlord's interest in the Project, and Tenant agrees to

look solely to Landlord's interest in the Project and for recovery of any

judgment from Landlord, it being intended and agreed that Landlord shall not

be personally liable for any judgment or deficiency.

 

     21.  BANKRUPTCY.

 

          A.   Notwithstanding anything in this Lease to the contrary, all

amounts payable by Tenant to or on behalf of Landlord under this Lease,

whether or not expressly denominated as Rent, shall constitute rent for the

purposes of Section 502(b)(6) of the Bankruptcy Code.

 

          B.   This a contract under which applicable law excuses Landlord

from accepting performance from (or rendering performance to) any person or

entity other than Tenant within the meaning of Sections 365(c) and 365 (e)(2)

of the Bankruptcy Code.

 

     22.  SECURITY DEPOSIT. Tenant agrees to deposit with Landlord on the

date hereof an amount equal to

 

 

 

25

 

 

$24,825.33 which shall be held by Landlord, without obligation for interest,

as security for the performance of Tenant's obligations under this Lease, it

being expressly understood and agreed that this deposit is not an advance

rental deposit or a measure of Landlord's damages in case of Tenant's

default. Upon each occurrence of an event of default by Tenant, Landlord may

use all or part of the deposit to pay past due Rent or other payments due

Landlord under this Lease, and the cost of any other damage, injury, expense

or liability caused by such event of default without prejudice to any other

remedy provided herein or provided by law. On demand, Tenant shall pay

Landlord the amount that will restore the security deposit to its original

amount. The security deposit shall be deemed the property of Landlord, but

any remaining balance of such deposit shall be returned by Landlord to Tenant

when Tenant's obligations under this Lease have been fulfilled and this Lease

terminated, all in accordance with Applicable Laws.

 

     23.  WAIVER OF SECURITY INTEREST. Landlord hereby waives and negates any

and all contractual liens and security interests, statutory liens and

security interests or constitutional liens and security interests arising by

operation of law or otherwise to which Landlord might now or hereafter be

entitled on all property of Tenant now owned or hereafter placed in or upon

the Premises (except for judgment liens which may hereafter arise in favor of

Landlord).

 

     24.  SURRENDER UPON TERMINATION. At the termination of this Lease, by

its expiration or otherwise, Tenant immediately shall deliver possession of

the Premises to Landlord in good condition and repair and with all repairs

and maintenance required herein to be performed by Tenant completed,

including, without limitation, repairs and maintenance of all heating and air

conditioning systems and equipment therein, reasonable wear and tear and

damage due to fire or other casualty excepted. All obligations of Tenant

hereunder not fully performed as of the expiration or earlier termination of

the term of this Lease shall survive the expiration or earlier termination of

the term hereof.

 

     25.  HOLDING OVER. If, for any reason, Tenant retains possession of the

Premises after the expiration or termination of this Lease, unless the

parties hereto otherwise agree in writing, such possession shall be subject

to termination by either Landlord or Tenant at any time upon not less than

ten (10) days advance written notice, and all of the other terms and

provisions of this Lease shall be applicable during such period, except that

Tenant shall pay Landlord from time to time, upon demand, as rental for the

period of such possession, an amount equal to 150% of the Base Monthly Rent

in effect on the termination date, computed on a daily basis for each day of

such period. No holding over by Tenant, whether with or without consent of

Landlord, shall operate to extend this Lease except as otherwise expressly

provided. The preceding provisions of this Paragraph 25 shall not be

construed as consent for Tenant to retain possession of the Premises in the

absence of written consent thereto by Landlord. In addition to the above,

Tenant shall be liable to Landlord for Landlord's actual damages resulting as

a result of any holdover by Tenant.

 

     26.  QUIET ENJOYMENT. Landlord covenants that on or before the

Commencement Date it will have good title to the Premises, free and clear of

all liens and encumbrances, excepting only the lien for current taxes not yet

due, such mortgage or mortgages as are permitted by the terms of this Lease,

zoning ordinances and other building and fire ordinances and governmental

regulations relating to the use of such property, and easements, restrictions

and other conditions of record. Landlord agrees that so long as Tenant pays

all amounts due hereunder and performs all other covenants and agreements

herein set forth, Tenant shall peaceably and quietly have, hold and enjoy the

Premises for the term of this Lease without hindrance or molestation from

Landlord, subject to the terms and provisions of this Lease.

 

     27.  ENTRY BY LANDLORD. Landlord and Landlord's agents and

representatives shall have the right to enter the Premises at any reasonable

time during business hours, to inspect the Premises and to make such repairs

as may be required or permitted pursuant to this Lease or to make such

repairs or installations as are necessary for other tenants in the Building.

During the period that is six (6) months prior to the end of the term of this

Lease, upon telephonic notice to Tenant, Landlord and Landlord's

representatives may enter the Premises during business hours for the purpose

of showing the Premises. In addition, Landlord shall have the right to erect

a suitable sign on the Premises stating the Premises are available. Landlord

shall also have the right (but not the obligation) to enter the Premises at

any time, and by force if necessary, in the case of an emergency. Tenant

shall notify Landlord in writing at least thirty (30) days prior to vacating

the Premises and shall arrange to meet with Landlord for a joint inspection

of the Premises prior to vacating. If Tenant fails to give such notice or to

arrange for such inspection, then Landlord's inspection of the Premises shall

be deemed correct for the purpose of determining Tenant's responsibility for

repairs and restoration of the Premises.

 

 

 

26

 

 

     28.  MECHANICS LIENS. Tenant has no authority, express or implied, to

create or place any lien or encumbrance of any kind or nature whatsoever

upon, or in any manner to bind the interest of Landlord or Tenant in the

Premises or the Project or to charge the Rent payable hereunder for any claim

in favor of any person dealing with Tenant, including those who may furnish

materials or perform labor for any construction or repairs. Tenant covenants

and agrees that it will pay or cause to be paid all sums legally due and

payable by it on account of any labor performed or materials furnished in

connection with any work performed at the Premises or the Project and that it

will indemnify and hold Landlord harmless from and against any and all loss,

cost or expense based on or arising out of asserted claims or liens against

the leasehold estate or against the right, title and interest of Landlord in

the Premises or the Project or under the terms of this Lease. Tenant agrees

to give Landlord immediate written notice of the placing of any lien or

encumbrance against the Premises or the Project.

 

     29.  WAIVER. No waiver by either party hereto of any provision of this

Lease or of any default, event of default or breach by the other shall be

deemed to be a waiver of any other provision of this Lease, or of any

subsequent default, event of default or breach by such party of the same or

any other provision. A party's consent to or approval of any act by the other

that requires such approval or consent shall not be deemed to render

unnecessary the obtaining of such consent to or approval of any subsequent

act of such party. No act or thing done by Landlord or Landlord's agents

during the term of this Lease shall be deemed an acceptance of a surrender of

the Premises, unless done in writing signed by Landlord. The delivery of the

keys to any employee or agent of Landlord shall not operate as a termination

of this Lease or a surrender of the Premises. The acceptance of any Rent by

Landlord following a default, event of default or breach of this Lease by

Tenant shall not constitute a waiver by Landlord of such default, event of

default or breach or any other default, event of default or breach unless

such waiver is expressly stated in writing and signed by Landlord.

 

     30.  SUBORDINATION. Conditioned upon the beneficiary of any mortgages

and/or deeds of trust now existing or hereafter placed upon the Premises

entering into an agreement (herein an ATTORNMENT AGREEMENT) with Tenant in

which such beneficiary agrees not to disturb the possession and other rights

of Tenant under this Lease so long as Tenant is not in default in the

performance of its obligations hereunder, and, in the event of the

acquisition of title by such beneficiary through foreclosure proceedings or a

deed in lieu of foreclosure, to accept Tenant as tenant of the Premises under

the terms and conditions of this Lease, Tenant accepts this Lease subject and

subordinate to any mortgages and/or deeds of trust now or hereafter

constituting a lien or charge upon the Premises, provided, however, that if

the mortgagee, trustee, or holder of any such mortgage or deed of trust

elects to have Tenant's interest in this Lease superior to any such

instrument, then by notice to Tenant from such mortgagee, trustee or holder,

this Lease shall be deemed superior to such lien, whether this Lease was

executed before or after said mortgage or deed of trust.  Subject to the

foregoing, Tenant, at any time hereafter on demand, shall execute any

instruments, releases or other documents that may be required by any

mortgagee for the purpose of subjecting and subordinating this Lease to the

lien of any such mortgage.  For purposes of this section, Landlord will be

deemed to have satisfied the condition of obtaining an Attornment Agreement

if the form thereof required by the mortgagee is a type of form that is

customarily given by institutional lenders, provided that Tenant shall have

the right to attempt to negotiate more favorable terms.

 

     31.  TENANT ESTOPPELS.  Tenant agrees, from time to time, within ten

(10) days after request of Landlord to deliver to Landlord, or Landlord's

designee, a certificate of occupancy and an estoppel certificate stating that

this Lease is in full force and effect, the date to which Rent has been paid,

the unexpired term of this Lease and such other factual matters pertaining to

this Lease as may be requested by Landlord. It is understood and agreed that

Tenant's obligation to furnish such estoppel certificates in a timely fashion

is a material inducement for Landlord's execution of this Lease.

 

     32.  NOTICES. All notices, requests, approvals, and other communications

required or permitted to be delivered under this Lease must be in writing and

are effective (i) on the business day sent if sent by telecopier during

normal business hours and the sending telecopier generates a written

confirmation of sending, (ii) the next business day after delivery to a

nationally-recognized-overnight-courier service for prepaid overnight

delivery; (iii) if orderly delivery of the mail is not then disrupted or

threatened, in which event some method of delivery other than the mail must

be used, three (3) days after being deposited in the United States mail,

certified, return receipt requested, postage prepaid; or (iv) upon actual

receipt by the addressee if delivered personally or by any method other than

by telecopier (with written confirmation),

nationally-recognize-overnight-courier service, or mail, in each instance

addressed to Landlord or Tenant,

 

 

 

27

 

 

as the case may be, addressed:

 

     if to Landlord, as follows:

 

                                   MEPC Quorum Properties II Inc.

                                   15303 Dallas Parkway, Suite 100, LB 10

                                   Dallas, Texas 75248

                                   Attn: Property Manager

                                   Telecopy: (972) 851-7012

 

     and, if to Tenant, as follows:

 

                                   Mannatech, Inc.

                                   600 S. Royal Lane

                                   Suite 200

                                   Coppell, Texas 75019

                                   Attn: Ronald E. Kozak

                                   Telecopy: (972) 471-7389

 

or to such other address or to the attention of such other person as shall be

designated by the applicable party and on fifteen (15) days notice from time to

time in writing and sent in accordance herewith.

 

     33.  PARKING. Tenant and its employees, customers and licensees shall

have the exclusive right to use any parking areas that have been specifically

designated for such exclusive use by Landlord on the Site Plan, subject to

(i) all rules and regulations promulgated by Landlord in its reasonable

discretion, and (ii) rights of ingress and egress of other lessees of the

Project or the Development, as applicable. Tenant and its employees,

customers and licensees shall not have the right to use any parking area that

are from time to time specifically designated by Landlord for exclusive use

by another lessee, except to the extent necessary for ingress and egress.

Landlord shall not be responsible for enforcing Tenant's parking rights

against any third parties. Tenant agrees not to use more spaces than so

provided.

 

     34.  OPTION TO RENEW.

 

          A.   If Tenant is not in default under this Lease at the time of the

exercise of this option or at the commencement of the applicable Lease Term

extension, Tenant is granted the option (the OPTION) to extend the Lease Term

for one (1) extension term of five (5) years commencing on the next day after

the expiration of the initial Lease Term by giving Landlord all extension

notice at least nine (9) months, but not more than twelve (12) months, prior

to the expiration of the initial Lease Term. Tenant's lease of the Premises

during the extended Lease Term will be upon the same terms as in the Lease

for the initial Lease Term, except that (i) Base Monthly Rent will adjust on

the first day of the extended Lease Term to the Market Rate (defined below),

and (ii) during the extended Lease Term Tenant will have no further options

or rights to extend the Lease Term.

 

          B.   Within thirty (30) days after Landlord receives Tenant's written

notice of its exercise of the Option, Landlord shall deliver a notice to Tenant

(the MARKET RATE NOTICE) specifying the Market Rate for the extended Lease Term,

such to be based upon Landlord's reasonable and good-faith determination of

rents being charged for comparable space in similar properties in the

Freeport North Industrial Park, Coppell, Texas, for terms commensurate with

the extended Lease Term and for tenants similarly situated. Tenant shall have

fifteen (15) days (the EXAMINATION PERIOD) from its receipt of the Market

Rate Notice to accept or reject Landlord's designation of the Market Rate. If

Tenant accepts Landlord's designation of the Market Rate, the MARKET RATE

will be as set forth in the Market Rate Notice, and Tenant's election to

exercise the Option shall be irrevocable. If Tenant fails to accept in

writing Landlord's designation of the Market Rate set forth in the Market

Rate Notice during the Examination Period, Tenant shall be deemed to have

rejected Landlord's designation of the Market Rate.  If Tenant rejects or is

deemed to have rejected Landlord's designation of the Market Rate and

Landlord and Tenant cannot agree in writing on the Market Rate within the

earlier to occur of (i) fifteen (15) days after the date Landlord receives

Tenant's written rejection of Landlord's designation of

 

 

 

28

 

 

the Market Rate set forth in the Market Rate Notice, or (ii) fifteen (15)

days after the expiration of the Tenant is deemed to have rejected Landlord's

designation of the Market Rate as set forth in the Market Rate Notice (in

either of such instances, the NEGOTIATION PERIOD), then Tenant will be deemed

to have elected to revoke its exercise of the Option, and this Lease will

expire in accordance with Paragraph 1 above.

 

          C.   Tenant may not assign the Option to any assignee (except an

Affiliate) or sublessee of this Lease. No sublessee and no assignee (except an

Affiliate) may exercise the Option.

 

          D.   If the Lease Term is extended under this Paragraph 34, Landlord

shall prepare, and Landlord and Tenant will execute and deliver an amendment

to the Lease extending the Lease Term within fifteen (15) days after the

Market Rate is determined but in no event later than the date that the

applicable extension term commences; provided, however, that the failure of

the parties to enter into such an amendment will not affect the validity of

Tenant's exercise of the Option or the obligations of the parties during the

extended Lease Term.

 

     35.  RIGHT OF FIRST REFUSAL ON ADJACENT SPACE.

 

          A.   If at any time during the first three (3) years of the Lease

Term Landlord receives a bona fide offer from a third party (the THIRD PARTY

OFFER) for the lease of that space shown on the Site Plan as the Refusal

Space, such consisting of approximately 24,600 square feet, or any portion

thereof, that Landlord wants to accept, and conditioned upon Tenant not then

being in default hereunder, Landlord will first provide Tenant with written

notice (the REFUSAL NOTICE) thereof. Tenant will have seven (7) business days

(the REFUSAL PERIOD) from the date it receives the Refusal Notice to elect to

lease all, but not less than all, of the Refusal Space. If Tenant has not

notified Landlord in writing of such election prior to the expiration of the

Refusal Period, then Tenant shall be deemed to have elected not to lease the

Refusal Space. If Tenant timely and properly elects to lease the Refusal

Space, such lease, shall be on the same terms and conditions for the

Premises, as defined in Paragraph 1 above, provided that Base Monthly Rent

and Adjustments shall be increased proportionately and further provided that

the Work Allowance for the Refusal Space shall be an amount equal to the

product of $3.00 per square foot of the actual Refusal Space multiplied by a

fraction, the numerator of which is the number of months then remaining in

the Lease Term (without giving effect to any option to extend the Lease Term)

and the denominator of which is 122. Tenant's election to lease the Refusal

Space shall be irrevocable once given and from and after the date thereof,

the term PREMISES shall mean and include not only the Premises as defined in

Paragraph 1 above, but also the Refusal Space.

 

          B.   In the event Tenant does not elect (or is deemed to have not

elected) to lease the Refusal Space, Landlord shall have a period of two

hundred seventy (270) days from the date the Refusal Period expires (the

MARKETING PERIOD) to market the Refusal Space, or any portion thereof, for

lease on terms wholly within Landlord's discretion and during which period

Landlord will not have any obligations to Tenant under this Paragraph 35. If

Landlord has not entered into a binding lease with a third party during the

Marketing Period, the right of first refusal set forth in this Paragraph 35

shall again become effective and Landlord may not lease the Refusal Space, or

any portion thereof, without compliance with this Paragraph 35; provided,

however, that all rights of Tenant in and under this Paragraph 35 shall in

any event expire on that date which is the third anniversary of the date of

this Lease if not exercised by Tenant prior to such time.

 

          C.   Tenant may not assign its rights under this Paragraph 35 to

any assignee or sublessee of this Lease, nor may any sublessee or assignee

have any rights under this Paragraph 35.

 

          D.   If Tenant leases the Refusal Space, Landlord shall prepare,

and Landlord and Tenant will execute and deliver an amendment to the Lease

confirming the lease of the Refusal Space and the new Base Monthly Rent and

Adjustments; provided, however, that the failure of the parties to enter into

such an amendment will not affect the validity of Tenant's lease of the

Refusal Space or the obligations of the parties with respect thereto.

 

     36.  MISCELLANEOUS.

 

          A.   REQUIRED CONSENT. To the extent the approval or consent is

required of any party hereto, such party agrees that such consent or approval

may not be unreasonably withheld, delayed or conditioned unless the provision

 

 

 

29

 

 

where the requirement for such consent or approval is imposed includes an

express statement that such approval or consent may be withheld in such

party's sole discretion.

 

          B.   FINANCIAL STATEMENTS. During each Lease Year, and upon written

request by Landlord, Tenant shall provide to Landlord true, correct and complete

copies of Tenant's year end financial statements and quarterly, non-audited,

balance sheets certified by the chief financial officer (or its equivalent) of

Tenant.

 

          C.   CONFIDENTIALITY. Tenant shall keep the terms and provisions of

this Lease confidential at all times and not disclose the terms and provisions

hereof to any party without Landlord's prior written consent, which may be

withheld by Landlord in its sole discretion. Landlord hereby consents to the

disclosure of the terms and provisions of this Lease to employees of Tenant,

Tenant's attorneys and to any financial institution Tenant is seeking financing

from in connection with this Lease and/or Tenant's operations at the Premises.

The terms of this paragraph and Tenant's agreement thereto are a material

inducement to Landlord entering into this Lease, and Tenant agrees that Landlord

may be severely damaged by a breach of this paragraph and the confidentiality

obligations herein contained. Tenant agrees that in the event of a breach of

this paragraph, Landlord may, in addition to any other remedies it may have

under this Lease or at law or equity, seek injunctive relief against Tenant

and/or recover damages from Tenant.

 

          D.   HEADINGS/GENDER. Words of any gender used in this Lease shall

be held and construed to include any other gender, and words in the singular

number shall be held to include the plural, unless the context otherwise

requires. The captions inserted in this Lease are for convenience only and in

no way define, limit or otherwise describe the scope or intent of this Lease,

or any provision hereof, or in any way affect the interpretation of this

Lease.

 

          E.   RUN WITH THE LAND. The terms, provisions and covenants and

conditions contained in this Lease shall run with the land and shall apply to,

inure to the benefit of, and be binding upon, the parties hereto and upon their

respective heirs, executors, personal representatives, legal representatives,

successor and assigns, except as otherwise herein expressly provided.  Landlord

shall have the right to transfer and assign, in whole or in part, its rights and

obligations in the Premises, Building and/or Project that are the subject of

this Lease. Each party agrees to furnish to the other, promptly upon demand,

a corporate resolution, proof of due authorization by partners, or other

appropriate documentation evidencing the due authorization of such party to

enter into this Lease.

 

          F.   ORGANIZATION AND AUTHORITY.

 

               (i) Tenant represents and warrants to Landlord that (i) Tenant is

     a duly organized and existing Texas corporation and has the full right and

     authority to enter into this Lease and to perform all of its obligations

     hereunder, (ii) all requisite authorizing actions have been taken by Tenant

     in connection with the entering into of this Lease, and (iii) each of the

     persons signing this Lease on behalf of Tenant is authorized to do so. Upon

     request by Landlord, Tenant will provide a certified copy of the

     resolutions of the board of directors of Tenant authorizing the entering

     into of this Lease by Tenant and the execution hereof by the persons who

     sign this Lease on behalf of Tenant;

 

               (ii) Landlord represents and warrants to Tenant that (i) Landlord

     is a duly organized and existing Delaware corporation and has the full

     right and authority to enter into this Lease and to perform all of its

     obligations hereunder, (ii) all requisite authorizing actions have been

     taken by Landlord in connection with the entering into of this Lease, and

     (iii) each of the persons signing this Lease on behalf of Landlord is

     authorized to do so. Upon request by Tenant, Landlord will provide a

     certified copy of the resolutions of the board of directors of Landlord

     authorizing the entering into of this Lease by Landlord and the execution

     hereof by the persons who sign this Lease on behalf of Landlord.

 

          G.   RECORDING. Tenant may not record this Lease or any memorandum

thereof.

 

          H.   ENTIRE AGREEMENT. This Lease constitutes the entire

understanding and agreement of the Landlord and Tenant with respect to the

subject matter of this Lease, and contains all of the covenants and

agreements of Landlord and Tenant with respect thereto. Landlord and Tenant

each acknowledge that no representations, inducements, promises or

agreements, oral or written, have been made by Landlord or Tenant, or anyone

acting on behalf of Landlord or Tenant, which are not contained herein, and

any prior agreements, promises, negotiations, or representations not

expressly

 

 

 

30

 

 

set forth in this Lease are of no force or effect. This Lease may not be

altered, changed or amended except by all instrument in writing signed by

both parties hereto.

 

          I.   FORCE MAJEURE. As used in this Lease, FORCE MAJEURE shall mean

a delay caused by reason of fire, acts of God, unreasonable delays in

transportation, embargo, weather (I.E., rain and rain related conditions,

humidity, temperature, wind, etc.), strike, other labor disputes,

governmental preemption of priorities or other controls in connection with a

national or other public emergency, governmental delays in permitting, delays

caused by any governmental disapproval of, or required revisions to, the

Finish Plans, or shortages of fuel, supplies or labor or any similar cause

not within Landlord's reasonable control.  Landlord shall not be held

responsible for delays in the performance of its obligations hereunder caused

by Force Majeure, and such delays shall be excluded from the computation of

the time allowed for the performance of such obligations. It is expressly

agreed that the number of delay days may include not only the day or days

upon which the event of Force Majeure occurred but the number of days

thereafter that work could not resume due to the occurrence of such event of

Force Majeure. By way of example only, rain on a Sunday, which is not

scheduled as a normal work day, may prevent work for several days thereafter

due to mud conditions.

 

          J.   SEVERABILITY. If any clause or provision of this Lease is

illegal, invalid, or unenforceable under present or future laws effective

during the term of this Lease, then and in that event, it is the intention of

the parties hereto that the remainder of this Lease shall not be affected

thereby, and it is also the intention of the parties to this Lease that in

lieu of each clause or provision of this Lease that is illegal, invalid or

unenforceable, there be added, as a part of this Lease, a clause or provision

as similar in terms to such illegal, invalid or unenforceable clause or

provision as may be possible and be legal, valid and enforceable.

 

          K.   DATE OF LEASE. All references in this Lease to "the date

hereof" or similar references shall be deemed to refer to the last date, in

point of time, on which all parties hereto have executed this Lease.

 

          L.   BROKERS.

 

                    (1) Tenant represents and warrants that, except for The

     Amend Group (BROKER), Tenant has not dealt with any broker, agent or other

     person in connection with this transaction and that, except for Broker, no

     broker, agent or other person brought about this transaction through the

     acts of or employment by Tenant, and, except with respect to any commission

     or fee owed to Broker, Tenant agrees to indemnify and hold Landlord

     harmless from and against any claims by any broker, agent or other person

     claiming a commission or other form of compensation by virtue of having

     dealt with Tenant with regard to this leasing transaction.

 

                    (2)  Landlord represents and warrants that, except for

     Broker, Landlord has not dealt with any broker, agent or other person in

     connection with this transaction and that, except for Broker, no broker,

     agent or other person brought about this transaction through the acts of

     or employment by Landlord. Landlord has agreed to pay Broker a commission

     pursuant to a separate written agreement between Landlord and Broker, and

     Landlord agrees to indemnify and hold Tenant harmless from and against any

     claims by Broker or any broker, agent or other person claiming a commission

     or other form of compensation by virtue of having dealt with Landlord with

     regard to this leasing transaction.

 

          M.   COUNTERPARTS. This Lease may be executed in counterparts, each

being deemed an original, but together constituting only one instrument.

 

          N.   TIME FOR PERFORMANCE. TIME IS OF THE ESSENCE WITH RESPECT TO ALL

PERFORMANCE OBLIGATIONS CONTAINED IN THIS LEASE.

 

          O.   ATTORNEYS FEES. In the event it becomes necessary for either

party hereto to file a suit to enforce this Lease or any provisions contained

herein, the party prevailing in such action shall be entitled to recover, in

addition to all other remedies or damages, reasonable attorneys fees incurred

in such suit.

 

          P.   LAW GOVERNING. This Lease shall be construed and interpreted in

accordance with the laws of the

 

 

 

31

 

 

State of Texas and the obligations of the parties hereto are and shall be

performable in, and venue for any claim or cause of action shall reside in,

Dallas County, Texas.

 

          Q.   AMENDMENTS. This Lease may not be modified or amended, except

by an agreement in writing signed by Landlord and Tenant. The parties may

waive any of the conditions contained herein or any of the obligations of the

other party hereunder, but any such waiver shall be effective only if in

writing and signed by the party waiving such conditions or obligations,

except as specifically set forth herein.

 

     EXECUTED BY Landlord, this 29TH day of MAY, 1997.

 

                                       MEPC QUORUM PROPERTIES II INC., a

                                       Delaware corporation

 

 

                                       By: /s/ PETER JOHNSON

                                          ----------------------------------

                                       Name:   PETER JOHNSON

                                            --------------------------------

                                       Title:  Executive Vice President

                                             -------------------------------

 

 

                                       By: /s/ DAVID L. CARLSON

                                          ----------------------------------

                                       Name:   DAVID L. CARLSON

                                            --------------------------------

                                       Title:  Vice President

                                             -------------------------------

 

 

     EXECUTED BY Tenant, this 29TH day of MAY, 1997.

 

                                       MANNATECH, INC., a Texas corporation

 

 

                                       By: /s/ CHARLES E. FIORETTI

                                          ----------------------------------

                                       Name:   CHARLES E. FIORETTI

                                            --------------------------------

                                       Title:  Chairman of the Board

                                             -------------------------------

 

 

 

EXHIBITS:

 

Exhibit A: Legal Description of 28 Acre Tract

Exhibit B: Shell Building Construction Features

Exhibit C: Site Plan

Exhibit D: Omitted

Exhibit E: Acceptance of Premises Memorandum

Exhibit F: Contractor Insurance Requirements

 

 

 

 

32

 

 

                                 EXHIBIT "A"

 

                    LEGAL DESCRIPTION OF 28 ACRE TRACT

 

Being a tract or parcel of land situated in the William S. Payne Survey,

Abstract No. 1140 and the C. S. Dunnagan Survey, Abstract No. 1655, City of

Coppell, Dallas County, Dallas, Texas, same being a portion of "Freeport

North", a Preliminary-Final Plat recorded in Volume 84203, Page 1835, Dallas

County Plat Records, same also being all of that certain 27.8527 acre Tract 5

conveyed to T/E Freeport North Land, Ltd. by instrument of record in Volume

94222, Page 1168, Dallas County Deed Records, said tract being more

particularly described by metes and bounds as follows:

 

BEGINING at a 1/2 inch iron rod set in the Easterly line of that certain

157.929 acre tract of land conveyed to San Antonio Savings Association, F.A.

by instrument of record in Volume 92104, Page 4313, Dallas County Deed

Records, same being in the Northwesterly corner of said 27.8527 acre tract,

same being in the Southerly line of Northpoint Drive, 80 feet wide, from

which a 1/2 inch iron rod found bears North 00 degrees 13 minutes 53 seconds

West, 80.21 feet;

 

THENCE, along said Southerly line, South 89 degrees 45 minutes 41 seconds

East, 1268.29 feet to a 1/2 inch iron rod set for corner;

 

THENCE, continuing along said Southerly line, South 28 degrees 41 minutes 54

seconds East, 14.50 feet to a 1/2 inch iron rod set for corner in the

Westerly line of Royal Lane, 100 feet wide;

 

THENCE, along said Westerly line the following five (5) courses:

 

     1)  81.48 feet along the arc of a non-tangent curve to the right having

         a radius of 950.00 feet, a central angle of 04 degrees 54 minutes 51

         seconds and a chord bearing and distance of South 35 degrees 16 minutes

         31 seconds West, 81.45 feet to a 1/2 inch iron rod set for a point of

         tangency;

 

     2)  South 37 degrees 43 minutes 57 seconds West, 170.92 feet to a 1/2

         inch iron rod set for the beginning of a curve;

 

     3)  684.33 feet along the arc of a tangent curve to the left having a

         radius of 1050.00, a central angle of 37 degrees 20 minutes 31 seconds

         and a chord bearing and distance of South 19 degrees 03 minutes 41

         seconds West, 672.28 feet to a 1/2 inch iron rod set for a point of

         tangency;

 

     4)  South 00 degrees 23 minutes 26 seconds West, 279.79 feet to a 1/2

         inch iron rod set for corner;

 

     5)  South 45 degrees 23 minutes 26 seconds West, 21.21 feet to a 1/2

         inch iron rod set for corner in the Northerly line of Gateview

         Boulevard, 60 feet wide;

 

THENCE, departing said Westerly line and along said Northerly line the

following four (4) courses:

 

     1)  North 89 degrees 36 minutes 34 seconds West, 150.17 feet to a 1/2

         inch iron rod set for the beginning of a curve;

 

     2)  299.43 feet along the arc of a tangent curve to the left having a

         radius of 530.00 feet, a central angle of 32 degrees 22 minutes 11

         seconds and a chord bearing and distance of South 74 degrees 12

         minutes 20 seconds West, 295.46 feet to a 1/2 inch iron rod set for

         a point of reverse curvature;

 

     3)  262.43 feet along the arc of a tangent curve to the right having a

         radius of 470.00 feet, a central angle of 32 degrees 00 minutes 00

         seconds and a chord bearing and distance of South 74 degrees 01 minutes

         15 seconds West, 259.10 feet to a 1/2 inch iron rod set for a point

         of tangency;

 

     4)  North 89 degrees 58 minutes 45 seconds West, 199.72 feet to a 1/2

         inch iron rod set for corner in the common line of said 157.929 acre

         tract and said 27.8527 acre tract;

 

THENCE along said common line, North 00 degrees 02 minutes 58 seconds East,

305.12 feet to a 5/8 inch iron rod found for corner:

 

THENCE continuing along said common line, North 00 degrees 13 minutes 53

seconds West, 995.31 feet to the POINT OF BEGINNING and CONTAINING 27.8527

acres, 1,213,263 square feet, more or less, of land area within these metes

and bounds.

 

 

 

33

 

 

                                   MANNATECH

 

                                   EXHIBIT B

 

                     SHELL BUILDING CONSTRUCTION FEATURES

 

 

SHELL BUILDING CONSTRUCTION FEATURES

 

  -   Painted exterior concrete tilt wall construction

  -   30' Clear Height to the bottom of the roof joist

  -   40' x 41' column bay dimensions

  -   Four-ply built-up roof system

  -   6" thick reinforced concrete floor slab

  -   6" thick reinforced concrete truck paving

  -   5" thick reinforced concrete car parking

  -   ESFR fire sprinkler system

  -   (9) 9' x 10' Vertical lift overhead doors

  -   (5) 30,000 CFM Rooftop exhaust fans

  -   4' x 4' skylights

  -   The building Fire Pump Room (approx. 12' x 18') is located

       within this lease space

 

 

 

CLARIFICATIONS AND EXCLUSIONS

 

  -   Fire alarm, security, and/or phone systems excluded

  -   In-rack fire sprinklers or modifications to overhead system excluded

  -   Dumpster/compactor power and/or screening excluded

  -   Draft curtains or modifications/additions to smoke removal

       system are excluded

 

 

34

 

 

         EXHIBIT "C"

 

                                  [FLOORPLAN]

 

 

35

 

 

                                   EXHIBIT "D"

 

                                     OMITTED

 

 

 

36

 

 

                                   EXHIBIT "E"

 

                        ACCEPTANCE OF PREMISES MEMORANDUM

 

          This memorandum is being executed pursuant to the Commercial Lease

Agreement (the LEASE) executed on the ___ day of ______, 1997, between MEPC

QUORUM PROPERTIES II INC., a Delaware corporation (LANDLORD), and MANNATECH,

INC., a TEXAS (TENANT).

 

Landlord and Tenant hereby agree that:

 

1.   Tenant acknowledges that (i) it has inspected and accepts the Building and

     the Project, (ii) the Premises is suitable for the purpose for which it is

     leased, subject to completion by Tenant of any finish work Tenant requires,

     (iii) the Building and the Project are in good and satisfactory condition,

     and (iv) no representations as to the repair of the Premises or the

     Project, nor promises to alter, remodel or improve the Premises or the

     Project which have been made by Landlord remain unsatisfied.

 

2.   The Commencement Date of the Lease is the ____ day of _________, 199__.

 

3.   The Rent Commencement Date of the Lease is the ____ day of _______, 199__.

 

4.   The expiration date of the Lease is the ____ day of _________, 1997___.

 

5.   All capitalized terms not defined herein shall have the meaning assigned to

     them in the Lease.

 

Agreed and Executed this ___ day of _______, 1997.

 

LANDLORD                                   TENANT

 

MEPC QUORUM PROPERTIES II INC.,            MANNATECH, INC., a TEXAS corporation

     a Delaware corporation

 

 

By:                                        By:

   ------------------------------             ------------------------------

   Name:                                      Name:

        -------------------------                  -------------------------

   Title:                                     Title:

         ------------------------                   ------------------------

 

 

 

 

By:

   ------------------------------

   Name:

        -------------------------

   Title:

         ------------------------

 

 

 

37

 

 

                                   EXHIBIT "F"

 

 

                        CONTRACTOR INSURANCE REQUIREMENTS

 

All contractors, subcontractors, suppliers, service providers, moving companies,

and others performing work of any type for Tenant at the Premises shall:

 

     -    carry the insurance listed below with companies acceptable to

          Landlord; and

 

     -    furnish Certificates of Insurance to Landlord evidencing required

          coverages at least ten (10) days prior to entry in the Premises and

          Renewal Certificates at least thirty (30) days prior to the expiration

          dates of Certificates previously furnished.

 

Certificates of Insurance must provide for thirty (30) days' prior written

notice of cancellation or material change to Landlord.

 

(1)  WORKERS COMPENSATION: Statutory workers compensation insurance covering

     full liability under applicable Workers Compensation Laws at the required

     statutory limits.

 

(2)  EMPLOYERS' LIABILITY: Employers' liability insurance with the following

     minimum limits of liability:

 

          $100,000  Each Accident

          $500,000  Disease-Policy Limit

          $100,000  Disease-Each Employee

 

 

(3)  COMMERCIAL GENERAL LIABILITY: This insurance policy must:

 

     (a)  Be written on a standard liability policy form (sometimes known as

          commercial general liability insurance) BUT WITHOUT exclusionary

          endorsements that may delete coverage for products/completed

          operations, personal and advertising injury, blanket contractual,

          fire legal liability, or medical payments.

 

     (b)  Be endorsed to provide that:

 

          -    aggregate limits, if any, apply separately to each of the

               insured's jobs or projects away from premises owned by or rented

               to the insured;

 

          -    the insurance is primary and non-contributory to any insurance

               provided by Landlord; and

 

          -    include the following minimum limits:

 

               $1,000,000     General Aggregate

               $1,000,000     Products-Completed Operations Aggregate

               $1,000,000     Personal & Advertising Injury

               $1,000,000     Each Occurrence

               $   50,000     Fire Damage (Any one fire)

               $    5,000     Medical Expense (Any one person)

 

 

(4)  AUTOMOBILE LIABILITY: Automobile liability insurance for claims of

     ownership, maintenance, or use of owned, non-owned, and hired motor

     vehicles at, upon, or away from the Premises with the following minimum

     limits:

 

                 $500,000     Combined Single Limit Bodily Injury and Property

                              Damage per Occurrence

 

 

 

38

 

 

(5)  EXCESS LIABILITY: Following form excess liability insurance with coverages

     at least as broad as the required commercial general liability insurance

     with the following minimum limits:

 

               $1,000,000     Each Occurrence

               $2,000,000     Aggregate

 

 

(6)  GENERAL REQUIREMENTS: All policies must be:

 

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

 

     -    endorsed to name as additional insureds Landlord, and its respective

          officers, directors, employees, agents, partners, and assigns;

 

     -    endorsed to waive any rights of subrogation against Landlord and its

          respective officers, directors, employees, agents, partners, and

          assigns; and

 

     -    primary and non-contributing with, and not in excess of, any other

          insurance available to Tenant and Landlord (or any other entity

          named as an additional insured).

 

 

 

39

 

 

                 FIRST AMENDMENT TO COMMERCIAL LEASE AGREEMENT

 

     THIS FIRST AMENDMENT TO COMMERCIAL LEASE AGREEMENT (this "AMENDMENT") is

entered into by and between MEPC QUORUM PROPERTIES II INC., a Delaware

corporation (LANDLORD) and MANNATECH, INC., a Texas corporation (TENANT)

effective as of November 6, 1997.

 

     A.   Landlord and Tenant have heretofore entered into a Commercial Lease

Agreement (the LEASE) pursuant to which Landlord leased to Tenant

approximately 74,476 square feet in the Building (as defined in the Lease)

located on the Land described on EXHIBIT "A" attached to the Lease and

located in the Freeport North Industrial Park, Coppell, Texas;

 

     B.   Landlord and Tenant now wish to amend the Lease.

 

     NOW THEREFORE, for good and valuable consideration, the receipt and

sufficiency of which being hereby acknowledged, Landlord and Tenant hereby

agree as follows:

 

     1.   COMMENCEMENT DATE. Landlord and Tenant agree that the COMMENCEMENT

DATE, as that term is used in the Lease, as amended hereby, shall be October

27, 1997.

 

     2.   IMPROVEMENTS/TENANT FINISH. Paragraph 2 of the Lease shall be, and

hereby is, deleted and replaced with the following Paragraph 2:

 

          "2.  IMPROVEMENTS TO BE CONSTRUCTED BY LANDLORD

 

               A.   BUILDING. Landlord agrees to construct on the Land an

     approximate 297,902 square foot warehouse building structure (the BUILDING)

     containing the features generally described on EXHIBIT "B" attached hereto

     and incorporated herein by reference and generally situated as shown on the

     Site Plan (herein so called) attached hereto as EXHIBIT "C" and

     incorporated herein by reference.

 

               B.   TENANT FINISH.  Landlord agrees to construct within the

     Premises the improvements described in the plans and specifications

     prepared by Meinhardt & Quintana (ARCHITECT) and set forth on EXHIBIT "G"

     attached hereto and incorporated herein by reference (collectively, the

     FINISH PLANS). The improvements to be constructed pursuant to the Finish

     Plans are collectively referred to herein as the TENANT FINISH WORK). The

     Building, the Tenant Finish Work and any other improvements constructed by

     Landlord on the Land from time to time, whether pursuant to this Lease or

     otherwise, are collectively referred to herein as the IMPROVEMENTS.

 

 

40

 

               C.   CONSTRUCTION COSTS. Subject to the terms of this paragraph,

     Landlord will pay (i) the cost of all Tenant Finish Work up to, but not in

     excess of the $220,928.00 (the WORK ALLOWANCE), which includes any costs

     incurred by Landlord in connection with the preparation of the Finish

     Plans, and (ii) the cost of constructing the Building and any other

     improvements described on EXHIBIT "B". Notwithstanding the preceding

     sentence, Tenant shall be responsible for the following:

 

                         (1)  If prior to commencement of the Tenant Finish Work

          Landlord determines that the actual cost of the Tenant Finish Work

          will exceed the Work Allowance, or if during construction the actual

          cost of the Tenant Finish Work exceeds the Work Allowance, Landlord

          will not be obligated to commence the Tenant Finish Work or continue

          its construction until it receives from Tenant ten percent (10%) of

          the estimated cost by which such amount is in excess, in Landlord's

          estimation, of the Work Allowance, with the actual amount of such

          excess, less the initial payment by Tenant, being due on the Rent

          Commencement Date.

 

                         (2)  If Tenant requests any redrawing of the Finish

          Plans, Tenant will be responsible for the costs of any redrawing of

          such plans in connection with such change(s) and shall reimburse

          Landlord for such costs upon demand.

 

                         (3)  If Landlord performs, at Tenant's request, any

          work over and above the work generally described in the Finish Plans

          or described on EXHIBIT "B" (herein, the ADDITIONAL WORK), including

          any additional work which has been approved by written change order

          or work order, then, subject to the exhaustion of the Work Allowance,

          the Additional Work together with the cost of preparing plans and

          specifications for same will be at Tenant's expense. Landlord will not

          be obligated to perform any such Additional Work until Tenant pays

          Landlord ten percent (10%) of the estimated cost

          of the Additional Work, as estimated by Landlord, with the actual cost

          of the Additional Work, less the initial payment by Tenant, being due

          on the Rent Commencement Date.

 

                         (4)  All costs or expenses incurred or suffered by

          Landlord that are caused by Tenant Delays. A TENANT DELAY(S) shall

          mean any delay in the completion of the Improvements or any delay in

          the occurrence of the Commencement Date caused by a Tenant Party,

          including, without limitation, any delay resulting from the

          installation by Tenant or any Tenant Party of any property or

          equipment of Tenant in or on the Premises prior to the Rent

          Commencement Date, any delay resulting from any request by Tenant for

          any change or modification to the Finish Plans, any delay caused by

          any Additional Work requested by Tenant, and any delay due to

          interference by Tenant or any Tenant Party with Landlord's engineers,

          consultants, contractors or otherwise. As used in this Lease, a TENANT

          PARTY shall mean one or more of Tenant, its agents, employees,

          officers, partners or contractors.

 

 

41

 

     Additionally, Landlord shall receive an administration fee in the total

     amount of 2.50% of the total construction costs of the Tenant Finish Work,

     as determined by the general contract for the Tenant Finish Work, as same

     may be modified by work or change orders.  Such fee shall be charged

     against the Work Allowance upon the entering into of such general contract

     and at the time the cost of any Additional Work is determined. If there is

     no remaining balance of the Work Allowance at any time the administration

     fee is owed, such shall be paid by Tenant upon demand. Lastly, all

     oversight costs charged by Architect in connection with the Tenant Finish

     Work shall be charged against the Work Allowance until exhausted and

     thereafter paid by Tenant upon demand.

 

               D.  MANNER OF CONSTRUCTION. Landlord agrees to construct the

     Improvements in a good and workmanlike manner.

 

               E.  OWNERSHIP OF IMPROVEMENTS.  All Tenant Finish Work and the

     other Improvements constructed by or on behalf of Landlord shall at all

     times be the sole property of Landlord."

 

     3.   RENT COMMENCEMENT/ACCEPTANCE OF PREMISES. Paragraph 3 of the Lease

shall be, and hereby is, deleted and replaced with the following:

 

     "3.  RENT COMMENCEMENT DATE/ACCEPTANCE OF PREMISES.

 

               A.  RENT COMMENCEMENT DATE. The RENT COMMENCEMENT DATE shall be

     the earlier to occur of (i) ninety (90) days after the Commencement Date,

     or (ii) the date Tenant takes possession or commences use of the Premises

     for any purpose other than merely to perform any work that may be permitted

     under Paragraph 6 below.

 

               B.  ACCEPTANCE OF PREMISES. Not less than five (5) days prior to

     the date Landlord estimates the Tenant Finish Work will be substantially

     complete Landlord will notify Tenant of the estimated date that the Tenant

     Finish Work will be substantially completed.  The term SUBSTANTIALLY

     COMPLETED or SUBSTANTIALLY COMPLETE as used herein, means that, in the

     reasonable opinion of Landlord's architect, the Tenant Finish Work has been

     completed in substantial accordance with the Finish Plans and that the

     Premises is in good and satisfactory condition, subject only to completion

     of minor punch list items.  Upon receipt of Landlord's notification, Tenant

     shall verbally notify Landlord of the date Tenant intends to make its

     walk-through inspection of the Premises, such date to be on the date

     specified in Landlord's notice for the Tenant Finish Work to be

     substantially complete or within three (3) days prior to that date.

     Landlord and Landlord's architect shall accompany Tenant on the

     walk-through inspection so as to mutually determine the punch list of

     items to be completed or repaired by Landlord within a reasonable time

     after the date of the walk-through inspection (the PUNCH LIST). At the

     conclusion of the walk-through inspection, Tenant will be deemed to have

     acknowledged that, subject only to Landlord's completion of the Punch List,

     (i) it has inspected and accepts the Premises and the Project, (ii) the

     Premises is suitable for the purpose for which it is leased, (iii) the

     Premises and the Project are in good and satisfactory condition, and

     (iv) no representations as to the repair of the Premises or the Project,

     nor promises to alter, remodel or improve the Premises or the Project which

     have been made by Landlord remain unsatisfied. At the conclusion of the

     walk-through inspection Tenant further agrees to execute an Acceptance of

     Premises Memorandum in the form attached hereto and made a part hereof as

     EXHIBIT "E", whereupon possession of the Premises will be delivered to

     Tenant and Tenant will be deemed to have accepted the Premises, and Tenant

 

 

 

42

 

 

     may thereafter occupy the Premises.  Tenant's failure to conduct a

     walk-through inspection or execute the Acceptance of Premises Memorandum

     will not delay the occurrence of the Rent Commencement Date."

 

     4.   PAYMENT OF RENT. Paragraph 4C of the Lease shall be, and hereby is,

deleted and replaced with the following:

 

          "C. PAYMENT OF RENT. Base Monthly Rent and Adjustments shall be due

     and payable, in advance, beginning on the Rent Commencement Date; provided

     that one (1) full installment of Base Monthly Rent and Adjustments totaling

     $24,825.33 is due and payable on the date of this Lease, such to be applied

     to the first installment of Base Monthly Rent and Adjustments due on the

     Rent Commencement Date and thereafter applied to Base Monthly Rent and

     Adjustments until fully applied.  Any installment of Base Monthly Rent or

     Adjustments due for any fractional calendar month shall be prorated based

     upon the actual number of days in that month. If the Rent Commencement Date

     occurs on the first day of a calendar month, then the month in which the

     Rent Commencement Date occurs shall be the first complete calendar month

     after the occurrence of the Rent Commencement Date for purposes of

     determining the date upon which Base Monthly Rent adjusts. As used in this

     Lease, RENT shall mean the Base Monthly Rent and all other amounts provided

     for in this Lease to be paid by Tenant to Landlord, all of which shall

     constitute rental in consideration for this Lease and the leasing of the

     Premises. All Rent (hereinafter defined) shall be paid at the times and in

     the amounts provided for herein in legal tender of the United States of

     America to Landlord at the address specified in Paragraph 32 hereof or to

     such other person or at such other address as Landlord may from time to

     time designate in writing. Rent shall be paid without notice, demand,

     abatement, deduction or offset (unless expressly provided for elsewhere in

     this Lease) and shall be a covenant of Tenant independent of any obligation

     of Landlord under this Lease. Tenant's obligation to pay any installment

     of Rent shall not be deemed satisfied until such installment of Rent has

     actually been received by Landlord."

 

     5.   IMPROVEMENTS/ALTERATIONS BY TENANT. Paragraphs 6A, 6B, and 6C of

the Lease shall be, and hereby are, deleted and replaced with the following:

 

               "A.  AFTER COMMENCEMENT DATE. Except as expressly permitted by

     this Paragraph 6, Tenant may not make or permit any alterations,

     improvements, or additions in or to the Premises without Landlord's prior

     written consent. All alterations and improvements desired by Tenant are

     subject to the following conditions:

 

                         (1)  All alterations, improvements and additions will

          be at the sole cost and expense of Tenant;

 

                         (2)  All alterations, improvements and additions in and

          to the Premises requested by Tenant must be made in accordance with

          plans and specifications first approved in writing by Landlord;

 

                         (3)  Tenant's contractors and subcontractors are

          subject to Landlord's prior approval. In addition, each of Tenant's

          contractor(s) and subcontractor(s) must deliver evidence satisfactory

          to Landlord that the insurance specified on EXHIBIT "F" (attached

          hereto and incorporated herein by reference) is in force prior to

          commencing work;

 

                         (4)  All alterations, improvements and additions made

          by Tenant must comply with all Applicable Laws including,

          specifically, the ADA, and applicable building permits and

          certificates of occupancy. Landlord's approval of Tenant's plans and

          specifications for the alterations or improvements will not act as a

          confirmation or agreement by Landlord that the improvements and

          alterations comply with Applicable Laws;

 

                         (5)  Tenant must deliver to Landlord evidence that

          Tenant has obtained all necessary governmental permits and approvals

          for the improvements, alterations and additions prior to starting any

          work;

 

                         (6)  All alterations, improvements and additions must

          be done in a good and workmanlike manner so as not to damage or alter

          the primary structure or structural qualities or the utility or other

          systems of the Premises or the Building and is subject to approval by

          Landlord during and after construction, in its sole discretion;

 

 

 

43

 

 

                         (7)  Lien releases from each of Tenant's contractor(s)

          and subcontractor(s) must be submitted to Landlord within ten (10)

          days after completion of the work performed by the contractor(s) or

          subcontractor(s); and

 

                         (8) Tenant shall be solely responsible for the safety

          and security of all equipment and property installed or placed in, on

          or about the Premises by a Tenant Party.

 

               B. PRIOR TO THE RENT COMMENCEMENT DATE. Prior to the Rent

     Commencement Date, and upon written request by Tenant, Tenant and its

     contractors may enter the Premises so that Tenant may perform other work

     and decorations Tenant wants in the Premises. This license to enter prior

     to the Rent Commencement Date is subject to the conditions set forth in

     Paragraph 6A above and, in addition, the following conditions:

 

                         (9)  Tenant's contractor(s) must work in harmony and

          not interfere with Landlord's contractors and subcontractors; and

 

                         (10) Landlord may revoke this license if the entry

          causes interference with the construction of the Improvements and

          Tenant does not immediately cease such interference (or cause its

          contractors to immediately cease such interference, as the case may

          be) after receipt of notice from Landlord, which notice may be

          verbal. Any such interference may be deemed a Tenant Delay.

 

               C.   TENANT'S PROPERTY. Tenant, at its own cost and expense, may

     erect such shelves, racks, bins and trade fixtures (collectively, TENANT'S

     PROPERTY) within the Premises as it desires and without Landlord's prior

     consent provided that (a) such items do not alter the basic character of

     the Premises or the Building; (b) such items do not overload or damage the

     Premises or the Building or the utility or other systems serving same; (c)

     such items may be removed without material injury to the Premises and the

     Building; and (d) the construction, erection or installation thereof

     complies with all Applicable Laws, applicable building permits and

     certificates of occupancy; and (e) provided that Tenant's installation of

     Tenant's Property prior to the Rent Commencement Date will be subject to

     Paragraph 6B above. All of Tenant's Property shall remain the property of

     Tenant and shall be removed on or before the earlier to occur of the date

     of termination of this Lease or Tenant's vacating of the Premises. Tenant

     shall promptly repair any damage to the Project or the Premises caused by

     the removal of any of Tenant's Property. Any of Tenant's Property not so

     removed and any other property of Tenant not removed prior to the

     termination of this Lease or Tenant's vacating of the Premises shall

     thereupon be conclusively presumed to have been abandoned by Tenant, and

     Landlord may, at its option, take over possession of any and all of the

     foregoing and either (i) declare the same to be the property of Landlord

     by written notice to Tenant at the address provided herein or (ii) at the

     sole cost and expense of Tenant, remove, store, and/or dispose of the same

     or any part thereof all at Tenant's cost, in any manner that Landlord shall

     choose without incurring liability to Tenant or any other person."

 

     6.   EXHIBITS. EXHIBIT "E" to the Lease shall be, and hereby is, deleted

and replaced with EXHIBIT "E" as attached to this Amendment. The Lease shall

be, and hereby is, further amended to add as EXHIBIT "G" thereto the Finish

Plans attached to this Amendment as EXHIBIT "G". EXHIBITS "A"-"D" and "F" are

omitted from this Amendment.

 

     7.   COUNTERPARTS. This Amendment may be executed in counterparts.

Facsimile signatures will have the same effect as originals.

 

     8.   RATIFICATION. The Lease, as amended hereby, is ratified and

confirmed by the parties as being in full force and effect. To the extent of

any conflict between the terms of the Lease and this Amendment, this

Amendment shall govern. All capitalized terms herein shall have the same

meaning as set forth in the Lease unless otherwise noted herein. This

Amendment is binding on the parties and their successors and assigns.

 

     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment

effective as of the latter of the two dates set forth below.

 

               LANDLORD:      MEPC QUORUM PROPERTIES INC., a Delaware

                              corporation

 

 

                              By: /s/ Ab Atkins

                                 ---------------------------------

 

 

 

44

 

 

                              Name:     Ab ATKINS

                                   -------------------------------

                              Title:  SENIOR VICE PRESIDENT

                                    ------------------------------

 

                              By: /s/ Peter Johnson

                                 ---------------------------------

 

                              Name:     PETER JOHNSON

                                   -------------------------------

                              Title:  SENIOR VICE PRESIDENT

                                    ------------------------------

 

               TENANT:        MANNATECH, INC. a Texas corporation

                              By: /s/ (Illegible)

                                 ---------------------------------

                              Name:

                                   -------------------------------

                              Title: C.O.O.

                                    ------------------------------

 

 

 

45

 

 

                               EXHIBITS "A" - "D"

 

                                    OMITTED

 

 

 

46

 

 

                                  EXHIBIT "E"

 

                       ACCEPTANCE OF PREMISES MEMORANDUM

 

     This memorandum is being executed pursuant to the Commercial Lease

Agreement (the LEASE) executed on the _____ day of____________,1999, between

MEPC QUORUM PROPERTIES II INC., a Delaware corporation (LANDLORD), and

MANNATECH, INC., a Texas corporation (TENANT).

 

Landlord and Tenant hereby agree that:

 

1.   Except for the Punch List Items (as shown on the attached Punch List),

     Landlord has fully completed the construction work required under the

     terms of the Lease and the Finish Plans attached thereto. Landlord will use

     reasonable efforts to complete the Punch List Items within thirty (30) days

     after the date hereof.

 

2.   Tenant acknowledges that, subject to the Punch List Items, (i) it has

     inspected and accepts the Premises, (ii) the buildings and improvements

     comprising the same are suitable for the purpose for which the Premises are

     leased, (iii) the Premises are in good and satisfactory condition, and (iv)

     no representations as to the repair of the Premises, nor promises to alter,

     remodel or improve the Premises which have been made by Landlord remain

     unsatisfied.

 

3.   The Rent Commencement Date of the Lease is the ____ day of ___________,

     199___.

 

4.   The expiration date of the Lease is the ____ day of__________, _____.

 

5.   All capitalized terms not defined herein shall have the meaning assigned to

     them in the Lease.

 

Agreed and Executed this ______day of ______________, 1998.

 

               LANDLORD                           TENANT

 

     MEPC QUORUM PROPERTIES II INC.,    MANNATECH, INC., a Texas corporation

     a Delaware corporation             a Texas corporation

 

 

     By:                                By:

        --------------------------         --------------------------------

     Name:                              Name:

          ------------------------           ------------------------------

     Title:                             Title:

           -----------------------            -----------------------------

 

 

 

 

     By:

        --------------------------

     Name:

          ------------------------

     Title:

           -----------------------

 

 

47

 

 

                                  EXHIBIT "F"

                                    OMITTED

 

 

48

 

 

                                  EXHIBIT "G"

 

         Attached hereto are the site plans for the leased property.

 

 

  

49

  

 

LEASE ABSTRACT

 

	  	  	  
	
LEASE AMENDMENT:

	  	
Second Amendment

	
ABSTRACT PREPARED BY:

	  	
Gallini and Lester

	
LANDLORD:

	  	
TEXAS DUGAN LIMITED PARTNERSHIP

	
PROPERTY NAME:

	  	
Freeport III

	
TENANT NAME:

	  	
MANNATECH INCORPORATED

	
TENANT CONTACT:

	  	
Rick Leonard

	
TENANT PHONE:

	  	
972-471-1561

	
ADDRESS:

	  	
445 South Royal Lane, Suite 800, Coppell, TX 75019

	
TENANT SQ.FT.

	  	
74,476

	
LEASE EXECUTION DATE:

	  	  
	
TYPE OF LEASE:

	  	
RENEWAL

	  	  
	
LEASE TERM IN MONTHS:

	  	
122

	
COMMENCEMENT:

	  	
20-Jan-07

	
EXPIRATION:

	  	
19-Mar-17

	
RENEWAL OPTIONS:

	  	
2 five year options at market rate

 

	
  

	
RENT:

 

	  	  	  	  	  	  	  	  	  
	
Year

[Missing Graphic Reference]

	
  

	
Dates:

[Missing Graphic Reference]

	
  

	
Amount per month

[Missing Graphic Reference]

	
  

	
Amount per year

[Missing Graphic Reference]

	
  

	
Annual PSF

[Missing Graphic Reference]

	
0

	
  

	
01/20/2007-03/19/2007

	
  

	
$0.00 per month

	
  

	  	
  

	  
	
1-3

	
  

	
03/20/2007-03/19/2010

	
  

	
$23,273.75 per month

	
  

	
$279,285.00

	
  

	
$3.75

	
2-5

	
  

	
03/20/2010-03/19/2012

	
  

	
$23,894.38 per month

	
  

	
$286,732.56

	
  

	
$3.85

	
6-10

	
  

	
03/20/2012-03/19/2017

	
  

	
$25,135.65 per month

	
  

	
$301,627.80

	
  

	
$4.05

 

	  	  	  	  	  
	
SECURITY DEPOSIT:

	
  

	
$24,825.33

	
  

	  
	
EXPENSES:

	
  

	
Tenant pays all expenses

	
  

	  
	
TENANT IMPROVEMENT ALLOWANCE

	
  

	
$37,238.00

	
  

	  

 

OPTIONS:

 

Expansion: To take adjacent space, if exercised in years 1-5 of term

 

	  	  	  	  	  	  	  
	
Year

[Missing Graphic Reference]

	
  

	
Dates:

[Missing Graphic Reference]

	
  

	
Annual PSF for

less than 20%

office finish

[Missing Graphic Reference]

	
  

	  
	
1-3

	
  

	
01/20/2007-01/19/2010

	
  

	
$3.75

	
  

	  
	
2-5

	
  

	
01/20/2010-01/19/2012

	
  

	
$3.85

	
  

	  
	
6-10

	
  

	
03/20/2012 - 03/19/2017

	
  

	
$4.05

	
  

	  
	  	  	  	  
	
Year

[Missing Graphic Reference]

	
  

	
Dates:

[Missing Graphic Reference]

	
  

	
Annual PSF for

over 20%

office finish

[Missing Graphic Reference]

	
  

	  
	
1-3

	
  

	
01/20/2007-01/19/2010

	
  

	
$4.15

	
  

	  
	
2-5

	
  

	
01/20/2010-01/19/2012

	
  

	
$4.25

	
  

	  
	
6-10

	
  

	
03/20/2012 - 03/19/2017

	
  

	
$4.40

	
  

	  

 

Expansion: To take adjacent space, if exercised in years 6-10 of term rate will be at market

 

	  	  	  
	
Cancellation if Tenant has not exercised Expansion Option:

	  	
  

	
Tenant has right to cancel at 62nd month on 12 months notice.

	
Cancellation fee:

	
  

	
$105,290.45 plus unamortized tenant finish allowance of $18,619.00

	  
	
Cancellation if Tenant has exercised Expansion Option:

	  	
  

	
Tenant has right to cancel at 62nd month on 12 months notice.

	
Cancellation fee:

	
  

	
$86,761.45 plus unamortized tenant finish allowance of $18,619.00

 

 

 

50

 

 

SECOND AMENDMENT TO LEASE

 

THIS SECOND AMENDMENT TO LEASE is made as of this day of g^WW’/- 2005, by and between TEXAS DUGAN LIMITED PARTNERSHIP, a Delaware limited partnership (hereinafter referred to as “Landlord”) and’ MANNATECH INCORPORATED (previously identified as Mannatech, Inc., as Tenant), a Texas corporation (hereinafter referred to as “Tenant”).

 

WITNESSETH:

 

WHEREAS, MEPC Quorum Properties II Inc. and Tenant entered into that certain Commercial Lease Agreement dated May 29, 1997; as amended by that certain First Amendment to Lease Agreement dated November 6, 1997 (hereinafter collectively referred to as the “Lease”) for the lease of approximately 74,476 square feet of space (hereinafter the “Leased Premises”) in a building commonly known as Freeport HI (the “Building”) located at 445 South Royal Lane, Suite 800, Coppell, Texas 75019, and within Freeport North Industrial Park (the “Park”), which space is more particularly described in the Lease; and

 

WHEREAS, Texas Dugan Limited Partnership succeeded to the interest of the landlord under the Lease and is the Landlord with respect to the Leased Premises; and

 

WHEREAS. Landlord and Tenant desire to enter into a second amendment to the Lease to extend the term of the Lease upon the terms and conditions set forth herein (the “Second Amendment to Lease”).

 

NOW, THEREFORE, for and in consideration of Ten and No/100 Dollars ($10.00) and other good and valuable consideration paid by Landlord and Tenant to one another, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree to amend the Lease as follows:

 

1. Incorporation of Recitals. The above recitals are hereby incorporated into this Amendment as if fully set forth herein.

 

2. Premises/Lease Term. Effective as of January 20, 2007 (the “Effective Date”) the term of the Lease is hereby extended through midnight on March 19, 2017 (the “Extension Term”) with an option of early termination as set forth in Article 9 hereof.

 

3. Improvements To Be Constructed by Landlord. Section 2 of the Lease is deleted in its entirety and is replaced with the following:

 

“A. Landlord’s Obligations. Tenant has personally inspected the Leased Premises and accepts the same “AS IS” without representation or warranty by Landlord of any kind and with the understanding that Landlord shall have no responsibility with respect thereto except to construct and install within the Leased Premises, in a good and workmanlike manner, hereinafter referred to as the “Tenant Improvements”.

 

B. Construction Drawings. Cost Statement and Allowance.

 

(1) Promptly following the date hereof, Tenant will work with Landlord’s space planner to develop a space plan for the Leased Premises that is reasonably acceptable to Landlord (the “Space Plan”). Tenant shall deliver the Space Plan to Landlord within ten (10) days after the date of this Lease. Within twenty (20) days after Landlord’s receipt of the Space Plan, Landlord shall prepare and submit to Tenant (i) a set of construction drawings (the “CD’s”) covering all work to be performed by Landlord in constructing the Tenant Improvements in accordance with the Space Plan, and (ii) a statement of the cost to construct and install the Tenant Improvements (the “Cost Statement”). Tenant acknowledges and agrees that (A) the Cost Statement shall include design fees and a fee payable to the project’s general contractor, and (B) such general contractor may be comprised of a subsidiary, affiliate or employees of Landlord. Tenant shall have five (5) days after receipt of the CD’s and the Cost Statement in which to review both the CD’s and the Cost Statement and to give Landlord written notice of Tenant’s approval of the CD’s or its requested changes thereto. Tenant shall have no right to request any changes to the CD’s that would materially alter the exterior appearance or basic nature of the Building or the Building systems. If Tenant fails to approve or request changes to the CD’s within ten (10) days after its receipt thereof, then Tenant shall be deemed to have approved the CD’s and the Cost Statement and the same shall thereupon be final. If Tenant requests any changes to the CD’s, Landlord shall make those changes which are reasonably requested by Tenant and shall within ten (10) days of its receipt of such request submit the revised portion of the CD’s (and, to the extent applicable, the revised Cost Statement) to Tenant. Tenant shall have an additional five (5) business days to review the revised CD’s (the “Revision Review Period”) and shall not unreasonably disapprove the revised portions of the CD’s unless Landlord has unreasonably failed to incorporate reasonable comments of Tenant and, subject to the foregoing, the CD’s and the Cost Statement, as modified by said revisions, shall be deemed to be final upon the submission of said revisions to Tenant unless Tenant objects, in writing prior to the end of the Revision Review Period, Tenant shall at all times in its review of the CD’s and the Cost Statement, and of any revisions thereto, act reasonably and in good faith. Without limiting the foregoing, Tenant agrees to confirm Tenant’s consent to the CD’s and acknowledge the Cost Statement in writing within three (3) days following Landlord’s written request therefore.

 

 

51

 

 

(2) Tenant shall be responsible for the cost to construct and install the Tenant Improvements only to the extent that the Cost Statement, taking into account any increases or decreases resulting from any Change Orders (as hereinafter defined), exceeds Thirty Seven Thousand Two Hundred Thirty Eight and 00/100 Dollars (537,238.00) (the “Allowance”). If, following Tenant’s approval (or deemed approval) of the CD’s, the Cost Statement shows that the cost to construct and install the Tenant Improvements will exceed the Allowance, Tenant shall deliver to Landlord, within ten (10) days following Landlord’s written request, an amount equal to one-half (1/2) of such excess. Following Substantial Completion (as hereinafter defined) of the Tenant Improvements and acceptance by Tenant, which shall not be unreasonably withheld. Tenant shall pay to Landlord the difference between the Cost Statement (taking into account any increases or decreases resulting from any Change Orders) and the Allowance within ten (10) days of Landlord’s request therefor. Tenant’s failure to deliver the payments required in this paragraph shall entitle Landlord to stop the construction and installation of the Tenant Improvements until such payment is received, and any resulting delay shall constitute a Tenant Delay (as hereinafter defined) hereunder. In addition, all delinquent payments shall accrue interest at 15% per annum. Upon Substantial Completion of the Tenant Improvements, a representative of Landlord and a representative of Tenant together shall inspect the Leased Premises and generate a punchlist of defective or uncompleted items relating to the completion of construction of the Tenant Improvements. Tenant may withhold one hundred fifty percent (150%) of the cost of the uncompleted items identified on the punchlist, without penalty or delinquency charge, pending satisfactory resolution of any outstanding items contained in the punchlist. If the Allowance exceeds the Cost Statement (taking into account any increases or decreases resulting from any Change Orders), such savings shall be the property of Landlord.

 

C. Completion. Landlord shall use commercially reasonable speed and diligence to complete the Tenant Improvements. On the Effective Date Tenant shall be deemed to have accepted the Leased Premises and that the condition of the Leased Premises and the Building was at the time satisfactory and in conformity with the provisions of this Lease in all respects, subject to any punchlist items. Tenant acknowledges that Landlord will be constructing the Tenant Improvements to the Leased Premises during normal business hours and agrees to cooperate with Landlord so as not to interfere with Landlord’s completion of the Tenant Improvements. For purposes of this Amendment “Substantial Completion” (or any grammatical variation thereof) shall mean completion of construction of the Tenant Improvements, subject only to punchlist items to be identified by Landlord and Tenant in a joint inspection of the Leased Premises.

 

D. Change Orders. Tenant shall have the right to request changes to the CD’s at any time following the date hereof by way of written change order (each, a “Change Order”, and collectively, “Change Orders”). Provided such Change Order is reasonably acceptable to Landlord, Landlord shall prepare and submit promptly to Tenant a memorandum setting forth the impact on cost and schedule resulting from said Change Order (the “Change Order Memorandum of Agreement”). Tenant shall, within three (3) days following Tenant’s receipt of the Change Order Memorandum of Agreement, either (a) execute and return the Change Order Memorandum of Agreement to Landlord, or (b) retract its request for the Change Order. At Landlord’s option, Tenant shall pay to Landlord (or Landlord’s designee), within ten (10) days following Landlord’s request, any reasonable increase in the cost to construct the Tenant Improvements resulting from the Change Order, as set forth in the Change Order Memorandum of Agreement. Landlord shall not be obligated to commence any work set forth in a Change Order until such time as Tenant has delivered to Landlord the Change Order Memorandum of Agreement executed by Tenant and, if applicable, Tenant has paid Landlord in full for said Change Order.”

 

4. Rent. Section 4 of the Lease is hereby amended as follows:

 

A. Base Monthly Rent. Section 4A of the Lease is hereby amended to provide that Tenant shall pay to Landlord the Base Monthly Rent, in advance, without deduction or offset, beginning on the Effective Date and on or before the first day of each and every calendar month thereafter during the Extension Term as set forth below:

 

	  	  	  	  	  	  
	
01/20/2007-03/19/2007

	
  

	
$0.00 per year

	
  

	
$ 0.00 per month

	
*

	
03/20/2007-03/19/2010

	
  

	
$279,285.00 per year

	
  

	
$23,273.75 per month

	  
	
03/20/2010-03/19/2012

	
  

	
$286,732.60 per year

	
  

	
$23,894.38 per month

	  
	
03/20/2012-03/19/2017

	
  

	
$301,627.80 per year

	
  

	
$25,135.65 per month

	  

 

“‘Monthly Rental Installments shall be abated during Months ] through 2 of the Lease Term but Tenant shall be responsible for Tenant’s Proportionate Share of Adjustments.

 

B. Additional Rent. The first sentence of Section 4(B) is deleted in its entirety and replaced with the following:

 

“Tenant agrees to reimburse Landlord for Tenant’s Proportionate Share of (i) Real Property Taxes, (ii) Landlord’s actual cost of obtaining and maintaining Landlord’s Insurance, (iii) the actual cost of any maintenance performed by Landlord under Paragraph 12A(2) of the Lease or which, in Landlord’s reasonable discretion, is for the benefit of the Project as a whole and not reasonably allocable to any specific tenant or tenants, and (iv) management fees (such management fees shall not exceed 3% of the total gross revenue of the Building) (collectively, the “Adjustments”).

 

 

52

 

 

5. Indemnity. Section 6(F) of the Lease is hereby deleted and replaced with the following provision:

 

“Tenant hereby indemnifies and holds Landlord harmless from any claims, demands, actions, losses, and damages arising from activities of Tenant or any Tenant Party, or any of their invitees, in connection with any alterations, improvements or additions made or contracted by Tenant.

 

Landlord hereby indemnifies and holds Tenant harmless from any claims, demands, actions, losses and damages arising from work performed by its contractors and/or subcontractors, as the case may be, in connection with Section 2 of this Second Amendment to Lease, except to the extent that any work is performed at the request of the Tenant outside the scope of the Allowances.”

 

6. Notices. Section 32 of the Lease is hereby amended to reflect Landlord’s current addresses for notices and payments as follows:

 

	  	  	  
	
Landlord:

	
  

	
Texas Dugan Limited Partnership

	  	
  

	
c/o Duke Realty Corporation

5495 Belt Line Road, Suite 360

Dallas, Texas 75254

Attn: Senior Property Manager

	  	  
	
With a copy to:

	
  

	
Duke Realty Corporation

3950 Shackleford Road, Suite 300

Duluth, Georgia 30096-8268

Attn: Legal Department - TX Market

	  	  
	
With Payments to:

	
  

	
Texas Dugan Limited Partnership

75 Remittance Drive, Suite 1493

Chicago, IL 60675-1493

	  	  
	
Tenant (following occupancy):

	
  

	
Mannatech Incorporated

445 South Royal Lane Suite 800

Coppell, Texas 75019

Attn: Jeff Bourgoyne, Senior Vice President

	  	  
	
With a copy to:

	
  

	
Mannatech Incorporated

600 South Royal Lane Suite 400

Coppell, Texas 75019

Attn: General Counsel

 

7. Option to Renew. The Option to Renew as set forth in Section 34 of the Lease is hereby deleted in its entirety and is replaced with the following:

 

A. Grant and Exercise of Option. Provided that (i) no default has occurred and is then continuing; (ii) the credit worthiness of Tenant is then reasonably acceptable to Landlord using reasonably accepted business judgment and practices in determining such creditworthiness; and (iii) Tenant originally named herein remains in possession of and has been continuously operating in the entire Leased Premises throughout the term immediately preceding the Extension Term (as defined below); however, this requirement will be waived by Landlord if Landlord has approved a sublease of less than fifty percent (50%) of the Leased Premises as indicated in Paragraph 16 of the Lease, Tenant shall have the option to extend the Lease Term for two (2) additional periods of five (5) years each (the “Extension Term(s)”). Each Extension Term shall be upon the same terms and conditions contained in the Lease except (x) this provision giving two (2) extension options shall be amended to reflect the remaining options to extend, if any, and (y) any improvement allowances or other concessions applicable to the Leased Premises under the Lease shall not apply to the Extension Term, and (z) the Minimum Annual Rent shall be adjusted as set forth below (the “Rent Adjustment”). Tenant shall exercise each option by (i) delivering to Landlord, no later than six (6) months prior to the expiration of the preceding term, written notice of Tenant’s desire to extend the Lease Term, Tenant’s failure to timely exercise such option shall be deemed a waiver of such option and any succeeding option. Landlord shall notify Tenant of the amount of the Rent Adjustment no later than ninety (90) days prior to the commencement of the Extension Term. Tenant shall be deemed to have rejected the Rent Adjustment if it fails to deliver to Landlord a written objection thereto within ten (10) business days after receipt thereof. If Tenant properly exercises its option to extend. Landlord and Tenant shall execute an amendment to the Lease (or, at Landlord’s option, a new lease on the form then in use for the Building) reflecting the terms and conditions of the Extension Term within thirty (30) days after Tenant’s acceptance (or deemed acceptance) of the Rent Adjustment.

 

 

53

 

 

B. Rent Adjustment. The Minimum Annual Rent for the applicable Extension Term shall be an amount equal to the Minimum Annual Rent then being quoted by Landlord to prospective renewal tenants of the Building for space of comparable size and quality and with similar or equivalent improvements as are found in the Building, and if none, then in similar buildings in the vicinity; provided, however, that in no event shall the Minimum Annual Rent during any Extension Term be less than the highest Minimum Annual Rent payable during the immediately preceding term. The Monthly Rental Installments shall be an amount equal to one-twelfth (1/12) of the Minimum Annual Rent for the Extension Term and shall be paid at the same time and in the same manner as provided in the Lease.

 

8. Right of First Refusal on Adjacent Space. The Right of First Refusal as set forth in Section 35 of the Lease is deleted in its entirety and replaced with the following Right of First Offer:

 

“35. Right of First Offer.

 

A Provided that (i) no default has occurred and is then continuing, (ii) the creditworthiness of Tenant is then reasonably acceptable to Landlord, and (iii) Tenant originally named herein or its Permitted Transferee remains in possession of and has been continuously operating in the entire Leased Premises throughout the Lease Term, and subject to any rights of other tenants to the Offer Space (as defined herein) and Landlord’s right to renew or extend the lease term of any other tenant with respect to the portion of the Offer Space now or hereafter leased by such other tenant, Landlord shall, before entering into a lease with a third party for any space in the Building that becomes vacant (the “Offer Space”), notify Tenant in writing of the availability of the Offer Space for leasing and setting forth the terms and conditions upon which Landlord is willing to lease the Offer Space to Tenant (“Landlord’s Notice”). Tenant shall have five (5) business days from its receipt of Landlord’s Notice to deliver to Landlord a written notice agreeing to lease the Offer Space on the terms and conditions contained in Landlord’s Notice (“Tenant’s Acceptance”). In the event Tenant fails to deliver Tenant’s Acceptance to Landlord within said five (5)-business day period, such failure shall be conclusively deemed a rejection of the Offer Space and a waiver by Tenant of this right of first offer, whereupon, except as provided in (c) below, Tenant shall have no further rights with respect to the Offer Space and Landlord shall be free to lease the Offer Space to a third party.

 

B. The term for the Offer Space (the “Offer Space Term”) shall be coterminous with the term for the then existing Leased Premises (the “Existing Premises”); provided, however, that the minimum term for the Offer Space shall be five (5) years and the term for the Existing Premises shall be extended, if necessary, to be coterminous with the term for the Offer Space. If the Lease Term for the Existing Premises is extended as provided above, the Minimum Annual Rent for such extension term shall be an amount equal to the Minimum Annual Rent then being quoted by Landlord to prospective renewing tenants of the Building for space of comparable size and quality and with similar or equivalent improvements as are found in the Building, and if none, then in similar buildings in the vicinity; provided, however, that in no event shall the Minimum Annual Rent during such extension term be less than the highest Minimum Annual Rent payable during the immediately preceding term. The Minimum Annual Rent for the Offer Space shall be as set forth below:

 

(i) If Tenant exercises its right of first offer during years one (1) through five (5) of the Extended Term, the Minimum Annual Rent for the Offer Space shall be as follows:

 

(A) In the event the Offer Space contains less than twenty percent (20%) of office space, then during the Offer Space Term, the Minimum Annual Rent for the Offer Space shall be payable at the rates set forth below:

 

	  	  	  
	
01/20/2007 - 01/19/2010

	  	
$3.75, per rentable square foot of the Offer Space

	
01/20/2010-01/19/2012

	  	
$3.85 per rentable square foot of the Offer Space

	
01/20/2012 - 01/19/2017

	  	
$4.05 per rentable square foot of the Offer Space; or

 

(B) In the event the Offer Space contains twenty percent (20%) or more of office space, then the Minimum Annual Rent for the Offer Space shall be as follows:

 

	  	  	  
	
01/20/2007 - 01/19/2010

	  	
$4.15 per rentable square foot of the Offer Space

	
01/20/2010-01/19/2012

	  	
$4.25 per rentable square foot of the Offer Space

	
01/20/2012 - 01/19/2017

	  	
$4.40 per rentable square foot of the Offer Space

 

(ii) If Tenant exercises its right of first offer during years six (6) through ten (10) of the Extended Term, the Minimum Annual Rent for the Offer Space shall be an amount equal to the Minimum Annual Rent then being quoted by Landlord to prospective renewing tenants of the Building for space of comparable size and quality and with similar or equivalent improvements as are found in the Building, and if none, then in similar buildings in the Park; provided, however, that in no event shall the Minimum Annual Rent during this Extended Term be less than the highest Minimum Annual Rent payable during the immediately preceding term.

 

 

54

 

 

C. If Tenant properly exercises the right of first offer, Landlord and Tenant shall enter into an amendment to this Lease adding the Offer Space to the Premises upon the terms and conditions set forth herein and making such other modifications to this Lease as are appropriate under the circumstances. If Tenant shall fail to enter into such amendment within ten (10) days following Tenant’s Acceptance, then Landlord may terminate this right of first offer by notifying Tenant in writing, in which event Tenant shall have no further rights with respect to the Offer Space and Landlord shall be free to lease the Offer Space to a third party. This right of first offer shall be an ongoing right of first offer, which shall mean that if Tenant waives its right of first offer pursuant to subsection (a) above and all of the Offer Space is subsequently leased to a third party (“New Tenant”), Landlord shall not lease the Offer Space to a third party (other than the New Tenant) without notifying Tenant of the availability of the Offer Space, in which case Tenant shall again have a right of first offer to lease the Offer Space in accordance with this Section 35.”

 

9. Option to Terminate. Provided that (a) no default has occurred and is then continuing, and (b) Tenant originally named herein remains in possession of and has been continuously operating in the entire Premises throughout the Lease Term, however, this requirement will be waived by Landlord if Landlord has approved a sublease of less than fifty percent (50%) of the Leased Premises as indicated in Paragraph 16 of the Lease, then Tenant shall have the following termination rights:

 

(a) If Tenant has not exercised its Right of First Offer as set forth above. Tenant shall have a one time right to terminate the Lease effective as of the end of the sixty-second (62nd) month from the Effective Date. In order to exercise such termination right, Tenant shall notify Landlord of such exercise in writing at least twelve (12) months prior to the effective date of such termination, and together with such notice, Tenant shall deliver to Landlord, as an agreed upon termination fee, an amount equal to One Hundred Five Thousand Two Hundred Ninety and 45/100 Dollars ($105,290.45). Such payment is made in consideration for Landlord’s grant of this option to terminate to compensate Landlord for rental and other concessions given to Tenant and for other good and valuable consideration. The termination fee does not constitute payment of rent to Landlord. If Tenant fails to notify Landlord by the deadline set forth above, Tenant shall have waived Tenant’s termination right for the remainder of the term of the Lease and any extensions thereof. In the event Tenant exercises the Right of First Offer as set forth above, this option to terminate shall thereafter be void and of no further force or effect; or

 

(b) If Tenant has exercised its right of first offer as set forth above prior to the end of the 50th month of the Extension Term, Tenant shall have the right to terminate this Lease effective as of the end of the fifth (5th) anniversary of the commencement date of the Offer Space on the terms and conditions set forth below. In order to exercise such termination right, Tenant shall notify Landlord of such exercise in writing at least twelve (12) months prior to the effective date of such termination, and together with such notice, Tenant shall deliver to Landlord, as an agreed upon termination fee, an amount equal to Eighty-Six Thousand Seven Hundred Sixty-One and 45/100 Dollars ($86,761.45) plus the unamortized portion of any tenant finish improvements. Such payment is made in consideration for Landlord’s grant of this option to terminate to compensate Landlord for rental and other concessions given to Tenant and for other good and valuable consideration. The termination fee does not constitute payment of rent to Landlord. If Tenant fails to notify Landlord by the deadline set forth above, Tenant shall have waived Tenant’s termination right for the remainder of the term of the Lease and any extensions thereof.

 

10. Brokers. Section 36L of the Lease is deleted in its entirely and is replaced with the following:

 

Except for Gallini & Lester Corporate Realty Services, whose commission shall be paid by Landlord, Landlord and Tenant each represent and warrant to the other that neither party has engaged or had any conversations or negotiations with any broker, finder or other third party concerning the matters set forth in this Amendment who would be entitled to any commission or fee based on the execution of this Amendment. Landlord and Tenant each hereby indemnifies the other against and from any claims for any brokerage commissions and all costs, expenses and liabilities in connection therewith, including, without limitation, reasonable attorneys’ fees and expenses, for any breach of the foregoing. The foregoing indemnification shall survive the termination of the Lease for any reason.

 

11. Except as expressly modified by this Second Amendment to Lease, all provisions, terms and conditions of the Lease shall remain in full force and effect.

 

12. This Second Amendment to Lease is ratified and confirmed by the parties as being in full force and effect. To the extent of any conflict between the terms of the Lease and this Second Amendment to Lease, this Second Amendment shall govern. All terms herein shall have the same meaning as set forth in the Lease unless otherwise noted herein.

 

13. This Second Amendment to Lease shall not be of any legal effect or consequence unless signed by Landlord and Tenant, and once signed by Landlord and Tenant it shall be binding upon and inure to the benefit of Landlord, Tenant, and their respective legal representatives, successors and assigns. This Second Amendment to Lease may be executed in counterparts, including facsimile counterparts, with the same force and effectiveness as if it were executed in one complete document.

 

14. This Second Amendment to Lease has been executed and shall be construed under the laws of the State of Texas.

 

[Execution signatures contained on the following page]

 

 

55

 

 

IN WITNESS WHEREOF, the undersigned have caused this Second Amendment To Lease to be executed under seal and delivered as of the day and year first above written.

 

	  	  	  	  	  
	
LANDLORD:

	  
	
TEXAS DUGAN LIMITED PARTNERSHIP,

a Delaware limited partnership

	  	  
	
By:

	  	
DUGAN GENERAL PARTNER LLC,

a Delaware limited liability company, its general partner

	  	  	  
	  	  	
By:

	  	
DUGAN TEXAS LLC,

a Delaware limited liability company, its sole member

	  	  	  
	  	  	
By:

	  	
DUKE REALTY LIMITED PARTNERSHIP,

an Indiana limited partnership, its Manager

	  	  	  
	  	  	
By:

	  	
DUKE REALTY CORPORATION,

an Indiana corporation, its General Partner

	  	  
	  	  	
TENANT:

	  	  
	  	  	
MANNATECH, INC.,

a Texas corporation

	  	  	  
	  	  	
By:

	  	
/s/    TERRY L. PERSINGER        

	  	  	
Name:

	  	
Terry L. Persinger

	  	  	
Title:

	  	
President

	  	  
	  	  	
ATTEST:

	  	  	  
	  	  	
By:

	  	
/s/    BETTINA SIMON        

	  	  	
Name:

	  	
Bettina Simon

	  	  	
Title:

	  	
Sr. VP & General Counsel

	  	  
	  	  	
[Corporate Seal]

 

END OF EXECUTION SIGNATURES

 

 

  

56

  

 

PHG/AS/kc

 

03116/11

 

 

THIRD LEASE AMENDMENT

 

THIS THIRD  LEASE  AMENDMENT (the "Amendment") is executed  as of the _18th_ day of March,   2011,   by  and  between   TEXAS   DUGAN   LIMITED   PARTNERSHIP,  a  Delaware   limited partnership  ("Landlord"),  and  MANNATECH INCORPORATED (previously  identified  as  Mannatech, Inc.), a Texas corporation ("Tenant").

 

   WITNESSETH:

WHEREAS,  MEPC Quorum  Properties II Inc., as predecessor  in interest to Landlord, and Tenant entered  into a Commercial  Lease Agreement  dated May 29, 1997, as amended  by a First Amendment  to Commercial  Lease Agreement dated November 6, 1997 (the "First Lease Amendment"), and by a Second Amendment   to   Commercial    Lease   Agreement    dated   September    22,   2005   (the   "Second   Lease Amendment"),  (collectively,   the  "Lease"),   whereby   Tenant   leases   from  Landlord   certain   premises consisting of approximately  74,476 rentable square feet of space (the "Premises")  located in a building commonly  known as Freeport III (the "Building''), located at 445 South Royal Lane, Suite 800, Coppell, Texas 75019 within Freeport North Industrial Park (the "Park"); and

 

WHEREAS, Landlord and Tenant desire to extend the Lease Term; and

 

WHEREAS, Landlord and Tenant desire to amend certain  provisions of the Lease to reflect such extension and any other changes to the Lease;

 

NOW, THEREFORE, in consideration of the  foregoing  premises,  the mutual  covenants  herein contained and each act performed hereunder by the parties, Landlord and Tenant hereby enter into this Amendment.

1. Incorporation of Recitals.                                          The above recitals are hereby incorporated into this Amendment as if fully set forth herein.

2. Extension of Term.                                The Lease Term is hereby extended through March 31, 2018.

 

3. Amendment of Section 2.                                                    Improvements to be Constructed by Landlord.  Commencing April 1, 2011, Section 2 of the Lease is hereby amended by incorporating the following:

 

"Tenant is currently in possession  of the Premises and accepts the same "AS IS" without representation  or warranty by Landlord of any kind."

4.           Amendment of Section 4.   Rent      Commencing  April  1, 2011, Section 4 of the Lease is hereby amended to provide that Tenant shall pay to Landlord the following Base Monthly Rent:

April 1, 2011 – April 30, 2011                                                                                   $6,889.03 per month

May 1, 2011 – December 31, 2011                                                                           $23,894.38 per month

January 1, 2012 – March 31, 2018                                                                           $19,674.08 per month

 

  

57

  

 

5.           Amendment of Section 19.   Landlord’s Remedies.   Section 19 of the Lease is hereby amended by incorporating the following additional subsection:

 

 

"G.  As consideration for Tenant's performance under this Lease, Tenant acknowledges that the Rent under this Amendment is reduced conditionally over the remainder of the initial Extension Term (as defined in the Second Lease Amendment).   In the event Tenant defaults under the terms of the Lease and/or this Amendment and fails to cure within any applicable cure period, then (i) the total sum of such Rent so conditionally excused shall become immediately due and payable; and (ii) Tenant's obligation to pay Rent shall automatically revert to the un­ amended amounts of the original Rent set forth in this Lease prior to this Amendment, which shall apply thereafter in lieu of the amounts set forth in this Amendment."

6.           Amendment of Section 32.   Section 32 of the Lease is hereby amended to reflect Landlord’s current address for notices and payments as follows:

 

 

	
  

	
"Landlord:

	
Texas Dugan Limited Partnership c/o Duke Realty Corporation

Attn:           Texas Market                      Vice President,

                      Asset Management & Customer Service

                      14241 Dallas Parkway, Suite 1000

                      Dallas, Texas 75254

 

             With a

             Copy to:          Texas Dugan Limited Partnership

                Attn: Texas Market Attorney

                  14241 Dallas Parkway, Suite 1000

                  Dallas, Texas 75254

 

With

                  Payments to:     Texas Dugan Limited Partnership

                     75 Remittance Drive, Suite 1493

                     Chicago, Illinois 60675-1493"

7.           Amendment of Section 34.  Option to Renew.  Section 34 (b} of the Lease (as amended by the Second Lease Amendment) is hereby deleted in its entirety and the following is substituted in lieu thereof:

 

“(b)           Rent Adjustment.   The minimum annual Rent for the Extension Term shall be an amount equal to the minimum annual Rent then being quoted by Landlord to prospective renewing tenants of the Building for space of comparable size and quality and with similar or equivalent improvements as are found in the Building, and if none, then in similar buildings in the vicinity; provided, however, that in no event shall the minimum annual Rent during the first Extension Term be less than Four Dollars and Five Cents ($4.05) per square foot of the Premises and during the second Extension Term be less than the highest minimum annual Rent payable during the immediately preceding term.  The Base Monthly Rent shall be an amount equal to one-twelfth (1/12) of the minimum annual Rent for the Extension Term and shall be paid at the same time and in the same manner as provided in the Lease.”

 

  

58

  

 

8.           Amendment of Section 34.   Miscellaneous.   Section 34 of the Lease is hereby amended by adding the following additional subsections:

 

“R           Patriot Act.    Each of Landlord and Tenant, each as to itself, hereby represents its compliance and its agreement to continue to comply with all applicable anti-money laundering laws, including, without limitation, the USA Patriot Act, and the laws administered by the United States Treasury Department’s Office of Foreign Assets Control, including without limitation, Executive Order 13224 (“Executive Order”).  Each of Landlord and Tenant further represents (such representation to be true throughout the Lease Term) (i) that it is not, and it is not owned or controlled directly or indirectly by any person or entity, on the SDN List published by the United States Treasury Department’s Office of Foreign Assets Control and (ii) that it is not a person otherwise identified by government or legal authority as a person with whom a U.S. Person is prohibited from transacting business.  As of the date hereof, a list of such designations and the text for the Executive Order are published under the internet website address www.ustreas.gov/offices/enforcement/ofac.

 

9.           Amendment of Section 35.   Right of First Offer.   Section 35 of the Lease is hereby deleted in its entirety and shall be of no further force or effect.

 

10.           Amendment of Section 9 of Second Lease Amendment.  Option to Terminate. Section 9 of the Second Lease Amendment is hereby deleted in its entirety and shall be of no further force or effect

 

11.           Broker.   Tenant represents and warrants that, except for Duke Realty Services, LLC representing Landlord and Jones Lang LaSalle Americas, Inc. representing Tenant, no other real estate broker or brokers were involved in the negotiation and execution of this Amendment.  Tenant shall indemnify  Landlord  and  hold  it  harmless  from  any  and  all  liability  for  the  breach  of  any  such representation and warranty on its part and shall pay any compensation to any other broker or person who may be deemed or held to be entitled thereto.

 

12.           Representations.

	
(a)  

	
Tenant hereby represents that (i) Tenant is duly organized, validly existing and in good

standing (if applicable) in accordance with the laws of the State under which it was organized; (ii) Tenant is authorized to do business in the State where the Building is located; and (iii) the individual(s) executing and delivering this Amendment on behalf of Tenant has been properly authorized to do so, and such execution and delivery shall bind Tenant to its terms.

(b) Landlord hereby represents that (i) Landlord is duly organized, validly existing and in good standing (if applicable) in accordance with the laws of the State under which it was organized; (ii) Landlord is authorized to do business in the State where the Building is located; and (iii) the individual(s) executing and delivering this Amendment on behalf of Landlord has been properly authorized to do so, and such execution and delivery shall bind Landlord to its terms.

 

13.           Examination of Amendment.   Submission of this instrument for examination or signature to Tenant does not constitute  a  reservation or option, and  it is not effective until execution  by and delivery to both Landlord and Tenant.

 

  

59

  

 

     14.            Definitions.   Except as otherwise  provided herein, the capitalized  terms used in this Amendment shall have the definitions set forth in the Lease.

 

15.            Incorporation.   This .Amendment shall be incorporated into and made a part of the Lease, and all provisions of the Lease not expressly modified or amended hereby shall remain in full force and effect.

[SIGNATURES CONTAINED ON THE FOLLOWING PAGE]

 

  

60

  

 

IN WITNESS  WHEREOF,  the parties  have caused  this Amendment  to be executed  on the day and year first written above.

 

LANDLORD:

 

TEXAS  DUGAN LIMITED  PARTNERSHIP, a

 

Delaware  limited partnership

 

	
  

	
By: Dugan General Partner LLC, a Delaware limited liability company, its Sole General Partner

 

	
  

	
By: Dugan Texas LLC, a Delaware limited liability company, its Sole Member

 

By: Duke Realty Limited Partnership, an

 

Indiana limited partnership authorized  to do business in the State of Texas under the name Duke Indiana Realty Limited Partnership, its Manager

 

	
  

	
By: Duke Realty Corporation, an Indiana corporation  authorized  to do business in the State of Texas under the name Indiana Duke Realty Corporation, its General  Partner

 

Dated:  March 18, 2011                                            

                                                                                 

                                                        Senior Vice President

 

                            TENANT:

 

                   MANNATECH INCORPORATED, a Texas corporation

 

Dated: March 18, 2011                                                                                       

 

                                           

                         Printed: Steve Fenstermacher

                                              Title: CEO & CFO

 

 

  

61

  

EXHIBIT B

SUBLEASED PREMISES

 

 

 

 

 

  

62

  

EXHIBIT C

LANDLORD’S CONSENT

05/04/12

 

CONSENT AND ACCEPTANCE

 

 

TEXAS DUGAN LIMITED PARTNERSHIP, a Delaware limited partnership, as Landlord under the Prime Lease, hereby consents to the Sublease of the Prime Lease as set forth above; provided, however, that such Sublease does not affect or release any liability of Sublessor under the terms and obligations of the Prime Lease.

 

This Consent and Acceptance of the foregoing Sublease shall not constitute a consent by Landlord to any further subletting or assignments of the entire or any portion of the Leased Premises.

 

This Consent and Acceptance does not constitute approval by Landlord of any of the provisions of the Sublease, or agreement thereto or therewith, but only approval of the sublet of the Subleased Premises to Subtenant.

 

Notwithstanding anything to the contrary in the Sublease, in no event shall Landlord be deemed to be in privity of contract with Subtenant or owe any obligation or duty to Subtenant under the Prime Lease or Sublease, any duties of Landlord under the Prime Lease are required by law being in favor of, for the benefit of, and enforceable soley by Sublessor.

 

	
 

	
"LANDLORD"

 

                  TEXAS DUGAN LIMITED PARTNERSHIP,

                                                                           a Delaware limited partnership

 

	
  

	
By:

	
Dugan General Partner LLC, a Delaware limited liability company, its Sole General Partner

 

	
  

	
By:

	
Dugan Texas LLC, a Delaware limited liability company, its Sole Member

 

                                                            By: Duke Realty Limited Partnership, an Indiana limited partnership authorized to do business in the State of Texas under the name Duke                                             Indiana Realty Limited Partnership, its Manager 

 

	
  

	
By: Duke Realty Corporation, an Indiana corporation authorized to do business in the State of Texas under the name

                              

                                                                                       

                                             Senior Vice President

Dated:            06/11/12 

 

  

63

 

EXHIBIT D

ENGINEER’S REPORT

 

 

 

500 S. Kealy St.

Lewisville, TX. 75057

972-221-4373

TACLA001216C

 

 

Bill To:                                                      Work Address:

National Property Inspections

2201 Hazy Meadows                                             445 S. Royal Ln. Suite #800

Flower Mound, TX. 75028                                           Coppell, TX. 75019

 

Date of inspection 2/10/11 – Invoice #229370

 

Work to be performed: Inspect 12 HVAC systems

 

All systems appear to have had ongoing maintenance and over all conditions are good. They do have some age on them but repairs have been kept up. A typical lifetime of a roof top unit in our region is 15-20 years and is dependent upon proper maintenance.

 

 

	
System Number

	
1

	
 

	
 

	
 

	
Make

	
 

	
York

	
 

	
 

	
Model

	
 

	
D6CG036N04046C

	
 

	
 

	
Serial

	
 

	
NME_42987

	
 

	
 

	
Size

	
 

	
3

	
 

	
 

	
Age

	
 

	
1996

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 

	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 

	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 

	
Blower Motor Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 2 Bearings

	
 

	
N/A

	
 

	
 

	
Blower Contactor

	
 

	
Good

	
1 pole

	
 

	
Compressor 1 Contactor

	
 

	
Good

	
3 pole

	
 

	
Compressor 2 Contactor

	
 

	
N/A

	
 

	
 

	
Heat Exchanger

	
 

	
Good

	
 

	
 

	
Belt

	
 

	
N/A

	
 

	
 

	
Notes:

	
(2) 14x20x1, (1) 14x25x1 Filters/Clean

	
 

	
 

	
 

	
 System appears to have been maintained

	
 

	
 Cooling ΔT 20 ̊

	
 

	
 No recommended repairs needed

 

 

 

 

 

64

 

 

 

 

 

 

 

	
System Number

	
2

	
 

	
 

	
 

	
Make

	
 

	
York

	
 

	
 

	
Model

	
 

	
D3CG120N16546JSD

	
 

	
 

	
Serial

	
 

	
NHFM101456

	
 

	
 

	
Size

	
 

	
10

	
 

	
 

	
Age

	
 

	
1997

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 

	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 

	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 

	
Blower Motor Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 

	
Blower Contactor

	
 

	
Pitted

	
2 pole

	
Needs Replaced

	
Compressor 1 Contactor

	
 

	
Good

	
3 pole

	
 

	
Compressor 2 Contactor

	
 

	
Good

	
3 pole

	
 

	
Heat Exchanger

	
 

	
BAD

	
See Pictures

	
Needs Replaced

	
Belt

	
 

	
1 – A56

	
Worn

	
Needs Replaced

	
Notes:

	
 (4) 18x24x2 Filters/Dirty

	
 

	
 Heat exchanger needs replaced * Holes

	
 

	
 

 (1) A56 Belt needs replaced

 

	
 

	
 Cooling ΔT 27 ̊

	

	
 System appears to have been maintained

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65

 

 

 

	
System Number

	
3

	
 

	
 

	
 

	
Make

	
 

	
York

	
 

	
 

	
Model

	
 

	
D3CG120N16546JSD

	
 

	
 

	
Serial

	
 

	
NLFM126111

	
 

	
 

	
Size

	
 

	
10

	
 

	
 

	
Age

	
 

	
1997

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 

	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 

	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 

	
Blower Motor Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 

	
Blower Contactor

	
 

	
Good

	
2 pole

	
 

	
Compressor 1 Contactor

	
 

	
Good

	
3 pole

	
 

	
Compressor 2 Contactor

	
 

	
Good

	
3 pole

	
 

	
Heat Exchanger

	
 

	
Good

	
 

	
 

	
Belt

	
 

	
1 – A56

	
Good

	
 

	
Notes:

	
 (2) 16x24x2, (2)18x24x2 Filters/Dirty

	
 

	
 

	
 

	
 

	
 

	
 Cooling ΔT 21 ̊

	
 

	
 System appears to have been maintained

 

 

66

 

 

 

	
System Number

	
4

	
 

	
 

	
 

	
Make

	
 

	
York

	
 

	
 

	
Model

	
 

	
D3CG120N16546JSD

	
 

	
 

	
Serial

	
 

	
NHFM101472

	
 

	
 

	
Size

	
 

	
10

	
 

	
 

	
Age

	
 

	
1997

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 

	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 

	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 

	
Blower Motor Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 

	
Blower Contactor

	
 

	
Good

	
2 pole

	
 

	
Compressor 1 Contactor

	
 

	
Good

	
3 pole

	
 

	
Compressor 2 Contactor

	
 

	
Good

	
3 pole

	
 

	
Heat Exchanger

	
 

	
Good

	
 

	
 

	
Belt

	
 

	
1 – A56

	
Good

	
 

	
Notes:

	
 (2) 16x24x2, (2)18x24x2 Filters/Clean

	
 

	
 Drain line is dislocated

	
 

	
 

	
 

	
 Cooling ΔT 23 ̊

	
 

	
 System appears to have been maintained

 

 

67

 

 

 

	
System Number

	
5

	
 

	
 

	
 

	
Make

	
 

	
York

	
 

	
 

	
Model

	
 

	
D1CG300N24046D

	
 

	
 

	
Serial

	
 

	
NMFM132880

	
 

	
 

	
Size

	
 

	
25

	
 

	
 

	
Age

	
 

	
1997

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 

	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 

	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 

	
Blower Motor Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Contactor

	
 

	
Good

	
2 pole

	
 

	
CDFM 2 Contactor

	
 

	
Good

	
2 pole

	
 

	
Blower Contactor

	
 

	
Good

	
3 pole

	
 

	
Compressor 1 Contactor

	
 

	
Good

	
3 pole

	
 

	
Compressor 2 Contactor

	
 

	
Good

	
3 pole

	
 

	
Compressor 3 Contactor

	
 

	
Good

	
3 pole

	
 

	
Heat Exchanger

	
 

	
Good

	
 

	
 

	
Belt

	
 

	
2-BX83

	
Good

	
 

	
Notes:

	
 (6) 16x20x2, (3) 14x20x2 Filters/Dirty

	
 

	
 

 (1) Fan Blade out of balance

 

	
 

	
 Needs Ignition Module Replaced

	
 

	
 Cooling ΔT 24 ̊

	
 

	
 System appears to have been maintained

 

 

 

68

 

 

 

	
System Number

	
6

	
 

	
 

	
 

	
Make

	
 

	
York

	
 

	
 

	
Model

	
 

	
D1CG300N240460

	
 

	
 

	
Serial

	
 

	
NMFM132879

	
 

	
 

	
Size

	
 

	
25

	
 

	
 

	
Age

	
 

	
1997

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 

	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 

	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 

	
Blower Motor Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Contactor

	
 

	
Good

	
2 pole

	
 

	
CDFM 2 Contactor

	
 

	
Good

	
2 pole

	
 

	
Blower Contactor

	
 

	
Good

	
3 pole

	
 

	
Compressor 1 Contactor

	
 

	
Good

	
3 pole

	
 

	
Compressor 2 Contactor

	
 

	
Good

	
3 pole

	
 

	
Compressor 3 Contactor

	
 

	
Good

	
3 pole

	
 

	
Compressor 4 Contactor

	
 

	
Good

	
3 pole

	
 

	
Heat Exchanger

	
 

	
Good

	
 

	
 

	
Belt

	
 

	
2-BX83

	
Good

	
 

	
Notes:

	
 (6) 16x20x2, (3) 14x20x2 Filters/Dirty

	
 

	
 

	
 

	
 

	
 

	
 Cooling ΔT 22 ̊

	
 

	
 System appears to have been maintained

 

 

 

 

69

 

 

 

	
System Number

	
7

	
 

	
 

	
 

	
Make

	
 

	
York

	
 

	
 

	
Model

	
 

	
D1CG300N240460

	
 

	
 

	
Serial

	
 

	
NMFM136203

	
 

	
 

	
Size

	
 

	
25

	
 

	
 

	
Age

	
 

	
1997

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 

	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 

	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 

	
Blower Motor Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Contactor

	
 

	
Good

	
2 pole

	
 

	
CDFM 2 Contactor

	
 

	
Good

	
2 pole

	
 

	
Blower Contactor

	
 

	
Good

	
2 pole

	
 

	
Compressor 1 Contactor

	
 

	
BAD

	
3 pole

	
Needs Replaced

	
Compressor 2 Contactor

	
 

	
BAD

	
3 pole

	
Needs Replaced

	
Compressor 3 Contactor

	
 

	
BAD

	
3 pole

	
Needs Replaced

	
Compressor 4 Contactor

	
 

	
Good

	
3 pole

	
 

	
Heat Exchanger

	
 

	
Good

	
 

	
 

	
Belt

	
 

	
2-BX83

	
Good

	
 

	
Notes:

	
  (6) 16x20x2, (3) 14x20x2 Filters/Dirty

	
 

	
 

	
 

	
 

	
 

	
 Cooling ΔT 22 ̊

	
 

	
 System appears to have been maintained

 

 

 

 

70

 

 

	
System Number

	
8

	
 

	
 

	
 

	
Make

	
 

	
York

	
 

	
 

	
Model

	
 

	
D1CG300N240460

	
 

	
 

	
Serial

	
 

	
NMFM132878

	
 

	
 

	
Size

	
 

	
25

	
 

	
 

	
Age

	
 

	
1997

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 

	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 

	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 

	
Blower Motor Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Contactor

	
 

	
Good

	
2 pole

	
 

	
CDFM 2 Contactor

	
 

	
Good

	
2 pole

	
 

	
Blower Contactor

	
 

	
Good

	
3 pole

	
 

	
Compressor 1 Contactor

	
 

	
Good

	
3 pole

	
 

	
Compressor 2 Contactor

	
 

	
Good

	
3 pole

	
 

	
Compressor 3 Contactor

	
 

	
Good

	
3 pole

	
 

	
Compressor 4 Contactor

	
 

	
Good

	
3 pole

	
 

	
Heat Exchanger

	
 

	
Good

	
 

	
 

	
Belt

	
 

	
2-BX83

	
Good

	
 

	
Notes:

	
  (6) 16x20x2, (3) 14x20x2 Filters/Dirty

	
 

	
 

	
 

	
 

	
 

	
 Cooling ΔT 24 ̊

	
 

	
 System appears to have been maintained

 

 

 

71

 

 

 

	
System Number

	
9

	
 

	
 

	
 

	
Make

	
 

	
York

	
 

	
 

	
Model

	
 

	
D3CG120N16546JSD

	
 

	
 

	
Serial

	
 

	
NHFM101454

	
 

	
 

	
Size

	
 

	
10

	
 

	
 

	
Age

	
 

	
1997

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Condenser Coil

	
 

	
Straight / Clean

	
 

	
 

	
Evaporator Coil

	
 

	
Straight / Clean

	
 

	
 

	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 

	
Blower Motor Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 

	
Blower Contactor

	
 

	
Good

	
2 pole

	
 

	
Compressor 1 Contactor

	
 

	
Good

	
3 pole

	
 

	
Compressor 2 Contactor

	
 

	
Good

	
3 pole

	
 

	
Heat Exchanger

	
 

	
Good

	
 

	
 

	
Belt

	
 

	
1-A56

	
Good

	
 

	
Notes:

	
 (2) 16x24x2, (2)18x24x2 Filters/Dirty

	
 

	
 

	
 

	
 

	
 

	
 Cooling ΔT 19 ̊

	
 

	
 System appears to have been maintained

 

 

 

72

 

 

 

	
System Number

	
10

	
 

	
 

	
 

	
Make

	
 

	
Carrier

	
 

	
 

	
Model

	
 

	
48TMD008-A-601

	
 

	
 

	
Serial

	
 

	
1903G30553

	
 

	
 

	
Size

	
 

	
8

	
 

	
 

	
Age

	
 

	
2003

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Condenser Coil

	
 

	
Straight/Clean

	
 

	
 

	
Evaporator Coil

	
 

	
Straight/Clean

	
 

	
 

	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 

	
Blower Motor Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 

	
Blower Contactor

	
 

	
Good

	
2 pole

	
 

	
Compressor 1 Contactor

	
 

	
Good

	
2 pole

	
 

	
Compressor 2 Contactor

	
 

	
Good

	
2 pole

	
 

	
Heat Exchanger

	
 

	
Good

	
 

	
 

	
Belt

	
 

	
1-A48

	
Good

	
 

	
Notes:

	
 (4) 16x20x2 Filters/Clean

	
 

	
 

	
 

	
 

	
 

	
 Cooling ΔT 23 ̊

	
 

	
 System appears to have been maintained

 

 

73

 

 

 

	
System Number

	
11

	
 

	
 

	
 

	
Make

	
 

	
Lennox

	
 

	
 

	
Model

	
 

	
HS29-036-2P

	
 

	
 

	
Serial

	
 

	
5803D8167

	
 

	
 

	
Size

	
 

	
3

	
 

	
 

	
Age

	
 

	
2003

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Condenser Coil

	
 

	
Straight/Clean

	
 

	
 

	
Evaporator Coil

	
 

	
Straight/Clean

	
 

	
 

	
Blower Wheel Bearings

	
 

	
N/A

	
 

	
 

	
Blower Motor Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 2 Bearings

	
 

	
N/A

	
 

	
 

	
Blower Contactor

	
 

	
AHU

	
 

	
 

	
Compressor 1 Contactor

	
 

	
Good

	
1 pole

	
 

	
Compressor 2 Contactor

	
 

	
N/A

	
 

	
 

	
Heat Exchanger

	
 

	
N/A

	
 

	
 

	
Belt

	
 

	
N/A

	
 

	
 

	
Notes:

	
 

 (1) 20x20x1 Filter/Clean

 

	
 

	
 AHU M#CB29M-41-1P, S#5803D01657

	
 

	
Compressor is pulling locked rotor amps and needs replaced

	
 

	
 

	
 

	
 

	
 

	
 Cooling ΔT SYSTEM DOWN ̊

	
 

	
 System appears to have been maintained

 

 

74

 

 

 

	
System Number

	
12

	
 

	
 

	
 

	
Make

	
 

	
Carrier

	
 

	
 

	
Model

	
 

	
48TMD028-611BA

	
 

	
 

	
Serial

	
 

	
2707U19776

	
 

	
 

	
Size

	
 

	
25

	
 

	
 

	
Age

	
 

	
2007

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Condenser Coil

	
 

	
Straight/Clean

	
 

	
 

	
Evaporator Coil

	
 

	
Straight/Clean

	
 

	
 

	
Blower Wheel Bearings

	
 

	
Good

	
 

	
 

	
Blower Motor Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 2 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 3 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 4 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 5 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 6 Bearings

	
 

	
Good

	
 

	
 

	
CDFM 1 Contactor

	
 

	
Good

	
2 pole

	
 

	
CDFM 2 Contactor

	
 

	
Good

	
2 pole

	
 

	
CDFM 3 Contactor

	
 

	
Good

	
2 pole

	
 

	
CDFM 4 Contactor

	
 

	
Good

	
2 pole

	
 

	
CDFM 5 Contactor

	
 

	
Good

	
2 pole

	
 

	
CDFM 6 Contactor

	
 

	
Good

	
2 pole

	
 

	
Blower Contactor

	
 

	
Good

	
3 pole

	
 

	
All Compressor Contactors

	
 

	
Good

	
3 pole

	
 

	
Heat Exchanger

	
 

	
Good

	
 

	
 

	
Belt

	
 

	
2-B47

	
Good

	
 

	
 

	
 

	
 

	
 

	
 

	
Notes:

	
 

	
 

	
 

	
 

	
 

	
 (4) 16x20x2, (4) 20x20x2 Filters/Dirty

	
 

	
 System was fully functional as of 2/23/2012 with no signs of problems at the time of the inspection. Uncertain of problem that kept the system from operating on previous inspections. Problem was apparently fixed by other contractor.

	
 

	
 

	
 

	
 

	
 

	
 

 

 

75

 

 

 

Additional Work Recommended

	
System #

	
 

	
Recommended Work

	
 

	
Cost

	
 

	
1

	
 

	
None

	
 

	
 

	
 

	
2

	
 

	
Replace Air Filters

	
 

	
$40.55

	
 

	
 

	
 

	
Replace Blower Contactor

	
 

	
$161.94

	
 

	
 

	
 

	
Replace A56 Belt

	
 

	
$62.95

	
 

	
 

	
 

	
Replace Heat Exchanger

	
 

	
$6,064.00

	
 

	
 

	
 

	
***Alternate / Replace Unit***

	
 

	
 

	
$12,804.00

	
 

	
 

	
 

	
 

	
$6,329.44

	
Subtotal #2

	
3

	
 

	
Replace Air Filters

	
 

	
$40.55

	
 

	
4

	
 

	
Replace Air Filters

	
 

	
$40.55

	
 

	
 

	
 

	
Repair Drain Line

	
 

	
$126.30

	
 

	
 

	
 

	
 

	
 

	
$166.85

	
Subtotal #4

	
5

	
 

	
Replace Air Filters

	
 

	
$40.55

	
 

	
 

	
 

	
Replace Fan Blade

	
 

	
$237.82

	
 

	
 

	
 

	
Replace Ignition Module

	
 

	
$623.20

	
 

	
 

	
 

	
 

	
 

	
$901.57

	
Subtotal #5

	
6

	
 

	
Replace Air Filters

	
 

	
$40.55

	
 

	
7

	
 

	
Replace Air Filters

	
 

	
$40.55

	
 

	
 

	
 

	
Replace Contactor

	
 

	
$180.08

	
 

	
 

	
 

	
Replace Contactor

	
 

	
$180.08

	
 

	
 

	
 

	
Replace Contactor

	
 

	
$180.08

	
 

	
 

	
 

	
 

	
 

	
$580.79

	
Subtotal #7

	
8

	
 

	
Replace Air Filters

	
 

	
$40.55

	
 

	
9

	
 

	
Replace Air Filters

	
 

	
$40.55

	
 

	
10

	
 

	
None

	
 

	
 

	
 

	
11

	
 

	
Replace Outdoor Unit 3Ton/3phase

	
$4,905.65

	
 

	
12

	
 

	
Replace Air Filters

	
 

	
$64.59

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

 

  

76Exhibit 10.1

SILVER FALCON MINING, INC.

2012 EMPLOYEE, CONSULTANT AND ADVISOR STOCK COMPENSATION PLAN

1.

Purpose; Effectiveness of the Plan.

a)

The purpose of this Plan is to advance the interests of the Company and its Stockholders by permitting the Company to discharge, through the issuance of shares of Stock, certain liabilities for compensation due to employees, consultants, and advisors for services rendered.

b)

This Plan will become effective on the date of its adoption by the Board, and will remain in effect until terminated by the Board under section 8 hereof.

2.

Certain Definitions. Unless the context otherwise requires, the following defined terms (together with any other capitalized terms defined elsewhere in this Plan or in a Stock Payment Agreement entered into under the Plan) will govern the construction of this Plan, and of any such Stock Payment Agreement:

"1933 Act" means the federal Securities Act of 1993, as amended;

"Board" means the Board of Directors of the Company;

"Code" means the Internal Revenue Code of 1986, as amended;

"Company" means Silver Falcon Mining, Inc., a Delaware corporation;

"Eligible Person" has the same meaning as the term "employee" in Form S- 8.

"Fair Market Value" means, with respect to securities as of any date, the market price of such securities determined as follows:

a)

If the securities were traded on a national securities exchange on the date in question, then the Fair Market Value will be equal to the closing price reported by the applicable composite- transactions report for such date;

b)

If the securities were traded over-the-counter on the date in question and the last-transaction reporting was available for the securities, then the Fair Market Value will be equal to the last- transaction price reported for such date;

c)

If the securities were traded over-the-counter on the date in question but last-transaction reporting was not available for the securities, then the Fair Market Value will be equal to the average of the last reported representative bid and asked prices quoted for such date; and

d)

If none of the foregoing provisions is applicable, then the Fair Market Value will be determined by the Board in good faith on such basis as it deems appropriate.

"Form S-8" means Form S-8 as adopted by the U.S. Securities and Exchange Commission.

"Participant" means an Eligible Person to whom Stock is issued hereunder;

"Plan" means this 2012 Employee, Consultant and Advisor Stock Compensation Plan of the Company; 

"Stock" means shares of the Company's Common Stock, $0.0001 par value;

"Stock Payment Agreement" means an agreement between the Company and a Participant, in form and substance satisfactory to the Board in its sole discretion, authorizing the issuance of Stock to the Participant under this Plan, whether a form of Stock Payment Agreement specifically approved by the Board or an agreement under which the Participant is performing services for the Company, a form of which is attached hereto as Exhibit A;

"Subsidiary" has the same meaning as the term "subsidiary corporation" in section 424(f) of the Code;

3.

Eligibility. The Company may issue stock under this Plan only to an Eligible Person and only to discharge accrued liabilities for compensation due to such person for services rendered to the Company or a Subsidiary, or as a retainer for future services to be rendered the Company or a Subsidiary, provided that such issuance qualifies for registration on Form S-8.

4.

Issuance Price. Unless otherwise specifically provided in a Board resolution authorizing an issuance of Stock under this Plan, or as otherwise specified in a Stock Payment Agreement with the Participant, the per share issuance price of such Stock will be equal to the average of the Fair Market Values per share on the 10 trading days immediately preceding the execution of a Stock Payment Agreement by a duly authorized officer of the Company, and the issuance of the Stock under this Plan will satisfy an amount of liability equal to the lesser of: (i) the Fair Market Value of the shares on the issue date or (ii) the sum of the Fair Market Value of any unsold shares and the actual net proceeds received by the Participant from the sale of part or all of the shares as of the ninetieth day after the issue date.

5.

Administration.

a)

Authority and Discretion of Board. The Board will administer the Plan, and will have full and final authority in its discretion, at any time and from time to time, subject only to the express terms, conditions and other provisions of the Company's charter and by-laws, this Plan, and the specific limitations on such discretion set forth herein:

1)

to select and approve the persons who will be issued Stock under this Plan from among Eligible Persons, and to authorize the issuance of shares of Stock under the Plan to any person so selected in such number as the Board may determine consistent with Section 4 hereof; and

2)

to interpret this Plan, to prescribe, amend, and rescind rules and regulations relating to the Plan, and to make all other determinations necessary or advisable for the operation and administration of the Plan.

b)

Stock Payment Agreements. Stock may be issued hereunder only upon the execution and delivery of a Stock Payment Agreement by a Participant and a duly authorized officer of the Company.

6.

Shares Reserved for Issuance.

a)

Issuance Pool. The aggregate number of shares of Stock that may be issued pursuant to this Plan may not exceed 40,000,000 (the "Issuance Pool").    

b)

Adjustments Upon Changes in Stock. In the event of any change in the outstanding Stock of the Company as a result of a stock split, reverse stock split, stock dividend, recapitalization, combination or reclassification, appropriate proportionate adjustments will be made in the aggregate number of shares of Stock in the Issuance Pool that have not been issued hereunder;

7.

Terms of Stock Payment Agreements. Each issuance of Stock under this Plan will be evidenced by a Stock Payment Agreement. Without limiting the foregoing, each Stock Payment Agreement (unless otherwise stated therein) will be deemed to include the following terms and conditions.

a)

Qualification of Stock. The right to receive Stock authorized for issuance under this Plan will be subject to the requirement that if at any time the Board determines, in its discretion, that the listing, registration or qualification of the shares of Stock to be received upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory authority, is necessary or desirable as a condition of or in connection with the issuance or the acceptance of such shares by the Participant, such shares may not be issued, unless and until such listing, registration, qualification, consent or approval is effected or obtained free of any conditions not acceptable to the Board, in its discretion.

b)

Representations, Warranties, and Agreements of Participants. By accepting Stock under this Plan, a Participant will be deemed to represent, warrant and agree as follows:

1)

The Participant understands that transfer of the Stock issued hereunder requires full compliance with the provision of all applicable laws.

2)

Unless an exemption is available or a registration statement is in effect with respect to the sale of Stock issued hereunder, the Participant will accept the stock for the Participant's own account and not with a view to distribution within the meaning of the 1933 Act, other than as may be effected in compliance with the 1933 Act and the rules and regulations promulgated thereunder.

c)

Compliance with Law. Notwithstanding any other provision of this Plan, Stock may be issued hereunder only after there has been compliance with all applicable federal and state securities laws, and such issuances will be subject to this overriding condition. The Company will not be required to register or qualify Stock issued hereunder with the Securities and Exchange Commission or any state agency.

d)

Stock Certificates. Certificates representing the Stock issued hereunder will bear any legends required by law and necessary to effectuate this Plan's provisions. The Company may place a "stop transfer" order against shares of Stock issued hereunder until all restrictions and conditions set forth in this Plan and in the legends referred to in this section 7(d) have been complied with.

e)

Other Provisions. The Stock Payment Agreement may contain such other terms and conditions, including special forfeiture conditions, rights of repurchase, rights of first refusal and other restrictions on transfer of Stock not inconsistent with this Plan, as may be determined by the Board in its sole discretion.

f)

Withholding Taxes. As a condition to the issuance of shares of Stock under this Plan, the Participant will pay to the Company in cash, or in such other form as the Board may determine in its discretion, the amount of any tax withholding liability of the Company required in connection with such issuance. For these purposes, "tax withholding liability" will mean all federal and state income taxes, social security tax, and any other taxes applicable to the compensation income arising from the transaction required by applicable law to be withheld by the Company. The Board, in its discretion, may permit a particular Participant to pay all or a portion of the tax withholding liability either by surrendering securities of the Company already owned by such Participant or by withholding shares of Stock to be issued under the particular Stock Payment Agreement, if the Board determines that the Fair Market Value of such surrendered securities or withheld Stock is equal to the corresponding portion of the tax withholding liability to be paid.

8.

Amendments and Discontinuance. The Board may amend, suspend or discontinue this Plan at any time or from time to time.

9.

Citations to Statutes. References in this Plan to any statutes, regulations, official forms or portions thereof are intended to refer to the statutes, regulations, official forms or portions thereof in force at the time of the Plan's adoption by the Board and as subsequently amended, or to any substantially similar successor statutes, regulations, official forms or portions thereof resulting from recodification, renumbering, or other enactment or promulgation.

10.

Notices. Any notice to be given to the Company under the terms of this Plan or under a Stock Payment Agreement may be addressed to the Company at its principal executive office, Attention: Corporate Secretary, or at such other address as the Company may designate in writing. Any notice to be given to a Participant will be addressed to the Participant at the address set forth in the applicable Stock Payment Agreement or otherwise provided to the Company by the Participant. Any such notice will be deemed to have been duly given if and when enclosed in a properly sealed envelope, addressed as aforesaid, registered and deposited, postage and registry fee prepaid, in a post office or branch post office regularly maintained by the United States Government.

11.

Governing Law. This Plan will be governed by, and construed in accordance with, the laws of the State of Florida, without regard to the choice of law provisions of the law of the State of Florida.

12.

Copies of Plan. A copy of this Plan will be delivered to each Participant at or before the time the Participant executes a Stock Payment Agreement.

EXHIBIT A

SILVER FALCON MINING, INC.

2012 EMPLOYEE, CONSULTANT AND ADVISOR STOCK COMPENSATION PLAN

STOCK PAYMENT AGREEMENT

1.

Agreement to Accept and Issue Shares.  The undersigned employee, consultant or advisor (the "Participant") participating in the 2012 Employee, Consultant and Advisor Stock Compensation Plan (the "Plan") of Silver Falcon Mining, Inc., a Delaware corporation (the "Company"), hereby agrees to accept, and the Company agrees to issue, shares of the Company's $0.0001 par value Common Stock, in accordance with Section 2 of this Agreement. A copy of the Plan has been delivered to the Participant. This Agreement is subject to all the terms and conditions set forth herein as well as the terms and conditions of the Plan, which are incorporated herein by reference. If there is any inconsistency or discrepancy between the terms and conditions of this Agreement and the Plan, the terms and conditions of the Plan will prevail.

2.

Numbers and Purpose of Shares to be issued.

a)

The services for which compensation is being made pursuant to this Agreement were rendered for the following services: _______________________________________.

b)

The services for which compensation is being made pursuant to this Agreement were rendered for services rendered for the following period of time:__________________. 

c)

The number of the shares to be issued and delivered by the Company and accepted by the Participant under the Plan, and the amount of the Company's compensation liability to the Participant to be extinguished by such issuance, are set forth below:

		
	No. of Shares

	Compensation Liability Extinguished

	 	 

The Participant agrees that the number of shares issued to the Participant shall satisfy an amount of liability equal to the lesser of: (i) the Fair Market Value of the shares on the issue date or (ii) the sum of the Fair Market Value of any unsold shares and the actual net proceeds received by the Participant from the sale of part or all of the shares as of the ninetieth day after the issue date. The amount of liability extinguished by the issuance of the shares shall be deemed the Fair Market Value of the shares on the date of issuance, unless then Participant notifies the Company otherwise within 105 days of the date of issuance.

d)

Any amount for wages described above is based upon the gross wages of the Participant less any and all applicable tax and other withholdings and deductions required by law, which the Company shall remit directly to the appropriate authorities if and when due and owing.

3.

Representation of Participant. The Participant represents and acknowledges that the Participant:

a)

has received, reviewed and understands the contents of the document prepared by the Company entitled "Information for Participants," which contains information on the Plan, includes a copy of the Plan as Exhibit A, and constitutes a prospectus under Section 10(a) of the Securities Act of 1933, as amended;

b)

has had an opportunity to request and, if so requested, to copy or examine all documents, records and books pertaining to the Participant's participation in the Plan, including all documents specifically incorporated by reference in the prospectus discussed above;

c)

has had an opportunity to ask questions of and, if asked, to receive satisfactory answers from the Company, through its executive officers and other representatives acting on its behalf, concerning the terms and conditions for the Plan and the business, affairs and prospects of the Company;

d)

understands that the Company has not guaranteed the amount of gross or net proceeds realizable to the Participant upon any sale of shares of Common Stock of the Company received by the Participant under the Plan;

e)

rendered bona fide services to the Company or a subsidiary of the Company, or is party to a binding agreement to render bona fide services to the Company or a subsidiary of the Company, as a result of which the compensation liability to be extinguished by the Company's performance of this Agreement arose, and such services were not rendered in connection with the offer or sale of securities in a capital-raising transaction or to promote or maintain a market in the Company's Common Stock.

4.

General

a)

Binding Agreement; Non-Assignability. The terms and conditions of this Agreement shall be binding upon and inure to the benefit of the personal representatives, heirs, devisees, successors and assigns of the respective parties hereto; but none of the rights or obligations of the Participant under this Agreement are assignable.

b)

Entire Agreement. This Agreement and any documents incorporated herein by Reference constitute the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements or understandings, written or oral, and no amendment, modification, or alteration of the terms of this Agreement shall be binding unless the same is in writing, dated after the date hereof and duly approved and executed by each of the parties hereto.

c)

Severability. Every provision of this Agreement is intended to be severable. If any term or provision hereof is deemed to be illegal or invalid for any reason whatever, such illegality or invalidity shall not affect the validity of the remainder of this Agreement.

d)

Headings. The headings of this Agreement are inserted for convenience and identification only, and are in no way intended to describe, interpret, define or limit the scope, extent or intent hereof.

e)

Application of Florida Law. This Agreement, and the application and interpretation thereof, shall be governed exclusively by its terms and conditions and by the laws of the State of Florida, without regard to the choice of law provisions of the State of Florida. Venue for purposes of enforcing this agreement shall be exclusively in the City of Bradenton, Florida.

f)

Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement on the dates set forth beneath their signatures below.

		
	SILVER FALCON MINING, INC.

By:______________________________

Printed Name:_____________________

Title:____________________________

Date:____________________________

	PARTICIPANT:

Signature:_____________________________

Printed Name: _________________________

Residence Address:_____________________

_____________________________________

Date:_________________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00205-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00205-of-00352.parquet"}]]