Document:

Exhibit 10.11

 

AMENDMENT AND WAIVER

 

THIS AMENDMENT AND WAIVER (the “Amendment and Waiver”), dated August
11, 2003, executed by and among Kinetic Concepts, Inc., a Texas corporation
(the “Company”), each of the shareholders (the “Shareholders”) of the Company
that are parties to that certain Agreement Among Shareholders (as amended by
that certain Joinder and Amendment Agreement dated as of June 25, 2003, the
“Shareholder Agreement”), dated November 5, 1997, and JPMorgan Chase Bank, a
New York banking corporation (“Chase”), in its capacity as administrative agent
(together with its successors in such capacity, “Administrative Agent”) to that
certain Waiver and Consent (the “Waiver and Consent”), dated December 2002 but
effective for all purposes as of September 27, 2002.

 

WHEREAS, the Company and the Shareholders are subject to the
Shareholder Agreement;

 

WHEREAS, the Company, the Shareholders, Administrative Agent, and Chase
and Bank One, NA, in their capacity as lenders (together with their respective
successors and assigns, individually a “Lender” and collectively the “Lenders”)
and as issuing lenders entered into the Waiver and Consent;

 

WHEREAS, the Company expects to: 
(1) issue an aggregate of $205.0 million principal amount of 7 3/8%
senior subordinated notes due 2013 (the “New Notes”), (2) enter into a new
senior credit facility, consisting of a $480.0 million term loan facility and a
$100.0 million revolving credit facility (the “New Senior Credit Facility”),
(3) redeem all of its currently outstanding senior subordinated notes due 2007
on or shortly after the date of issuance of the New Notes for a purchase price
of 104.813% of their principal amount plus accrued and unpaid interest to the
date of redemption (the “Redemption”), (4) offer up to $270.0 million of
convertible preferred stock (the “Preferred Stock”), subject to the rights,
preferences, privileges and terms that the Company’s Board of Directors or any
committee thereof shall determine, (5) use approximately $590 million to offer
to repurchase some of the Company’s outstanding shares of common stock and
vested stock options (the “Initial Share Repurchase”), which may take place in
one or more tranches between the date of issuance of the New Notes and March
31, 2004, and (6) repurchase additional shares and vested stock options with
the net proceeds from (a) an antitrust settlement with Hillenbrand Industries,
Inc., on an after-tax basis, that it expects to receive in January 2004, (b)
the cash tax benefit to the Company from the Recapitalization in an amount not
to exceed $40 million and (c) the exercise of employee stock options
(collectively, the “Recapitalization”).

 

NOW THEREFORE, for valuable consideration hereby acknowledged, the
Company, Shareholders and Administrative Agent, hereby agree as follows:

 

 

1.               Amendment

 

a.               Section 1.11 of the Shareholder
Agreement is hereby amended and restated to read in its entirety as follows:

 

1.11                           “RCBA” means Blum
Capital Partners, L.P. and /or its Affiliates listed on Schedule 1.11.

 

b.              Section 3.01 of the Shareholder Agreement
is hereby amended and restated to read in its entirety as follows:

 

3.01                           The Shareholders agree that
each shall take such steps as are required to assure that after the Closing
Time, and continuing until such time as the Common Stock shall have been the
subject of a Public Offering registered under the Securities Act, the Board of
Directors of KCI shall have at least eight (8) members, one (1) of whom shall
be a person designated by Fremont, one (1) of whom shall be a person designated
by Fremont Partners III, L.P., two (2) of whom shall be persons designated by
RCBA, one (1) of whom shall be Dr. Leininger (so long as he shall own at least
fifteen percent (15%) of the outstanding equity of KCI), one (1) of whom shall
be Dennert O. Ware (provided, however, that if Dennert O. Ware for any reason
ceases to serve KCI as its chief executive officer, then the successor chief
executive officer shall be elected to serve as director in Mr. Ware’s place),
and two (2) or more of whom shall be independent outside directors, who shall
not be affiliated with Fremont or RCBA and who shall be designated by the
unanimous vote of the Nominating Committee of the Board of Directors of KCI,
which shall comprise Dr. Leininger, one (1) director designated by Fremont, and
one (1) director designated by RCBA.

 

c.               Section 3.03 of the Shareholder
Agreement is hereby amended and restated to read in its entirety as follows:

 

3.03                           After the Closing Time, and
until such time as the Common Stock shall have been the subject of a Public
Offering registered under the Securities Act, each of Fremont, Fremont Partners
III, L.P. and RCBA shall have the following rights with respect to KCI:  (i) the right to inspect the books and records
of KCI; and (ii) the right to inspect the properties and operations of
KCI.  The rights provided to Fremont,
Fremont Partners III, L.P. and RCBA in Section 3.01 above and in this Section
3.03 are intended to enable Fremont, Fremont Partners III, L.P. and RCBA to be
operated as a “venture capital operating company” within the meaning of the
regulations of the Department of Labor set forth in 29 CFR Section
2510.3-101(d), and Section 3.01 above and this Section 3.03 shall be
interpreted accordingly.

 

2

 

d.              A new Section 7.11 shall be added to the
Shareholder Agreement as follows:

 

7.11                           Securities
Convertible or Exchangeable into Common Stock.  The rights, obligations and restrictions set forth in Sections 2,
4 and 5 of the Shareholder Agreement, which prior to the date of this Amendment
applied to the Common Stock as that term is used in this Shareholder Agreement,
shall also apply in all respects to securities convertible or exchangeable into
Common Stock.

 

e.               Section 5.02(b) of the Shareholder
Agreement is hereby amended and restated to read in its entirety as follows:

 

(b)                                 If a Piggyback
Registration is an underwritten primary registration on behalf of KCI and the
managing underwriters advise KCI in writing that, in their opinion, the number
of total securities to be registered in such offering exceeds the number that
can be sold in an orderly manner within a price range acceptable to KCI, then
the number of securities that the managing underwriter believes may be sold in
such offering shall be allocated first to the shares being offered by KCI for
inclusion in the registration statement, then to the shares of the Shareholders
and the shareholders that are then a party to the Investors’ Rights Agreement
(the “Investors’ Rights Agreement”), dated August 11, 2003, including
any amendments thereto, by and among KCI, the Investors and the Sponsors (as
those terms are defined in the Investors’ Rights Agreement) submitted for
registration, pro rata among the Shareholders and such shareholders in accordance
with the number of shares they then hold that are entitled to registration
rights.

 

f.                 Section 5.02(c) of the Shareholder
Agreement is hereby amended and restated to read in its entirety as follows:

 

(c)                                  If a Piggyback
Registration is an underwritten secondary registration on behalf of the
shareholders of KCI’s securities and the managing underwriters advise KCI in
writing that, in their opinion, the number of total securities to be registered
in such offering exceeds the number that can be sold in an orderly manner
within a price range acceptable to the shareholders initially requesting such
registration, then the number of securities that the managing underwriter
believes may be sold in such offering shall be allocated among the Shareholders
and the shareholders that are then party to the Investors’ Rights Agreement who
are requesting shares to be included in such registration statement pro rata in
accordance with the number of shares they then hold that are entitled to
registration rights.

 

3

 

g.                                      Schedule
1.05 is hereby amended and restated to read in its entirety as set forth on Exhibit
A hereto.

 

h.                                      Schedule
1.06 is hereby amended and restated to read in its entirety as set forth on Exhibit
B hereto.

 

2.               Waiver and Consent

 

The Shareholders hereby (1) waive any and all rights and benefits under
the Shareholder Agreement that may otherwise arise or accrue to the
Shareholders in connection with the Recapitalization or any part thereof, and
(2) consent to the Recapitalization in its entirety and each part thereof.

 

The Shareholders acknowledge and agree that: (1) this Amendment and
Waiver shall apply in full force and effect to the Recapitalization or any part
thereof notwithstanding any amendment or modification of any of the terms
thereof as may be determined by the Board of Directors of the Company, any
committee thereof or any authorized officer of the Company; and (2) nothing
herein shall be a guarantee that the Recapitalization or any part thereof shall
be consummated on the terms and subject to the conditions presently
contemplated, if at all, and the Company, acting through its Board of Directors
or any committee thereof or any authorized officer of the Company, reserves the
right to determine not to consummate the Recapitalization or any part thereof
in its or their discretion, subject to applicable law.

 

3.               Recapitalization

 

The Company and the Shareholders agree to treat (a) the redemption of
Common Stock by the Company and the acquisition of Preferred Stock by the
Shareholders in connection with the Recapitalization  (to the extent that the Shareholder and not any affiliate
acquires Preferred Stock) as a recapitalization under section 368(a)(1)(E) of
the Internal Revenue Code of 1986, as amended (the “Code”) for United States
federal income tax purposes (and where applicable state and local tax purposes)
and (b) the receipt of cash pursuant to the redemption as a dividend for
purposes of section 356(a)(2) of the Code and as not constituting an exchange
for purposes of section 302(b) of the Code.

 

4.               General

 

Notwithstanding the foregoing, except as expressly set forth herein,
the Shareholder Agreement shall remain in full force and effect without
amendment or modification thereof.

 

This Amendment and Waiver may be executed in one or more counterparts,
each of which may be either an original or a facsimile and all of which
together shall be one and the same instrument.

 

4

 

The titles of the
Sections of this Agreement are for convenience only and shall not be
interpreted to limit or amplify the provisions of this Agreement.

 

Each provision of this Agreement shall be considered separable and if
for any reason any provision or provisions hereof are determined to be invalid
and contrary to any existing or future law, such invalidity shall not impair
the operation of or affect those portions of this Agreement that are valid.

 

 

[Signature Pages to Follow]

 

5

 

IN WITNESS WHEREOF, this Amendment and Waiver has been duly executed by
the parties as of the day and year first above written.

 

	
   

  	
  FREMONT PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  FP Advisors, L.L.C.

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fremont Group, L.L.C.

  
	
   

  	
   

  	
  Its:

  	
  Managing Member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fremont Investors, Inc.

  
	
   

  	
   

  	
  Its:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  BLUM CAPITAL PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Richard C. Blum & Associates, Inc.

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  James R. Leininger, M.D.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KINETIC CONCEPTS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

 

[SIGNATURE PAGE TO AMENDMENT AND WAIVER]

 

 

	
   

  	
  BLUM STRATEGIC PARTNERS II, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Blum Strategic GP II, L.L.C.

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

 

	
   

  	
  BLUM STRATEGIC PARTNERS II GmbH & Co. KG

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Blum Strategic GP II, L.L.C.

  
	
   

  	
  Its:

  	
  Managing Limited Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

 

	
   

  	
  STINSON CAPITAL PARTNERS II, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Blum Capital Partners, L.P.

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

 

	
   

  	
  RCBA-KCI CAPITAL PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Blum Capital Partners, L.P.

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

 

[SIGNATURE PAGE TO AMENDMENT AND WAIVER]

 

 

	
   

  	
  FREMONT PARTNERS SIDE-BY-SIDE, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Fremont Group, L.L.C.

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fremont Investors, Inc.

  
	
   

  	
   

  	
  Its:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  FREMONT-KCI CO-INVESTMENT COMPANY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  FP Advisors, L.L.C.

  
	
   

  	
  Its:

  	
  Member-Manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fremont Group, L.L.C.

  
	
   

  	
   

  	
  Its:

  	
  Managing Member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fremont Investors, Inc.

  
	
   

  	
   

  	
  Its:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

[SIGNATURE PAGE TO AMENDMENT AND WAIVER]

 

 

	
   

  	
  FREMONT ACQUISITION COMPANY II, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Fremont Partners, L.P.

  
	
   

  	
  Its:

  	
  Member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  FP Advisors, L.L.C.

  
	
   

  	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fremont Group, L.L.C.

  
	
   

  	
   

  	
  Its:

  	
  Managing Member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fremont Investors, Inc.

  
	
   

  	
   

  	
  Its:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  FREMONT ACQUISITION COMPANY IIA, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  FP Advisors, L.L.C.

  
	
   

  	
  Its:

  	
  Non-Member Manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fremont Group, L.L.C.

  
	
   

  	
   

  	
  Its:

  	
  Managing Member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fremont Investors, Inc.

  
	
   

  	
   

  	
  Its:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

[SIGNATURE PAGE TO AMENDMENT AND WAIVER]

 

 

	
   

  	
  FREMONT OFFSHORE PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  FP Advisors, L.L.C.

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fremont Group, L.L.C.

  
	
   

  	
   

  	
  Its:

  	
  Managing Member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fremont Investors, Inc.

  
	
   

  	
   

  	
  Its:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  FREMONT PARTNERS III, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  FP Advisors III, L.L.C.

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fremont Group, L.L.C.

  
	
   

  	
   

  	
  Its:

  	
  Managing Member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fremont Investors, Inc.

  
	
   

  	
   

  	
  Its:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  FREMONT-KCI CO-INVESTMENT COMPANY II, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  FP Advisors, L.L.C.

  
	
   

  	
   

  	
  Its:

  	
  Member-Manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fremont Group, L.L.C.

  
	
   

  	
   

  	
  Its:

  	
  Managing Member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fremont Investors, Inc.

  
	
   

  	
   

  	
  Its:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

[SIGNATURE PAGE TO AMENDMENT AND WAIVER]

 

 

	
   

  	
  FREMONT PARTNERS III SIDE-BY-SIDE, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Fremont Group, L.L.C.

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fremont Investors, Inc.

  
	
   

  	
   

  	
  Its:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

[SIGNATURE PAGE TO AMENDMENT AND WAIVER]

 

 

	
   

  	
  JPMORGAN CHASE BANK,

  
	
   

  	
  a New York banking corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

[SIGNATURE PAGE TO AMENDMENT AND WAIVER]

 

 

EXHIBIT A

 

Schedule 1.05

 

List of Affiliates of Fremont Partners, L.P.:

 

FP Advisors, L.L.C.

Fremont Group, L.L.C.

Fremont Investors, Inc.

Sequoia Ventures Inc.

Fremont Partners, L.L.C.

Fremont Acquisition Company II, L.L.C.

Fremont Acquisition Company IIA, L.L.C.

Fremont Offshore Partners, L.P.

Fremont Partners Side-by-Side, L.P.

Fremont-KCI Co-Investment Company, L.L.C.

Fremont Purchaser II, Inc.

Fremont-KCI Co-Investment Company II, LLC

FP Advisors III, LLC

Fremont Partners III, LLC

Fremont Partners III, L.P.

Fremont Partners III Side-by-Side, L.P.

 

 

EXHIBIT B

 

Schedule 1.06

 

Members of the Fremont/KCI Group:

 

Fremont Acquisition Company II, L.L.C.

Fremont Acquisition Company IIA, L.L.C.

Fremont Offshore Partners, L.P.

Fremont Partners Side-by-Side, L.P.

Fremont-KCI Co-Investment Company, L.L.C.

Fremont Purchaser II, Inc.

Fremont Partners, L.P.

Fremont Partners III, L.P.

Fremont Partners III Side-by-Side, L.P.

Fremont-KCI Co-Investment Company II, LLCExhibit
10.27

 

STANDARD OFFICE BUILDING

LEASE AGREEMENT

 

	
  STATE  OF

  	
  TEXAS

  	
  o

  
	
   

  	
   

  	
  o

  
	
  COUNTY OF

  	
  BEXAR

  	
  o

  

 

THIS AGREEMENT (“Lease”), dated July 31, 2002 for
identification purposes in connection with the letter of credit issued for the
benefit of Landlord (defined below), is entered into
this      day
of                                ,
2002, between

 

1.  LANDLORD

 

CKW San Antonio, L.P., a Delaware limited partnership, doing business
in Texas as San Antonio CKW, L.P., 
herein designated as “Landlord,” and

 

2.  TENANT

 

Kinetic Concepts,
Inc.                                                                                                 

herein designated as “Tenant.”

 

Prior to the date hereof, Tenant was the fee owner of
the Building (defined below) and occupied the Leased Premises (defined below)
in the operation of its business.  On
the date hereof, Tenant sold the Building to Landlord and now desires to lease
the Building from Landlord and continue its operations from the Leased
Premises.

 

3.  LEASED PREMISES

 

Landlord, in consideration of covenants and agreements
to be performed by Tenant and upon terms and conditions hereinafter stated,
does hereby lease to Tenant approximately 138,231 rentable square feet of space
(hereinafter called the “Leased Premises”) as more specifically described in
Exhibits “A-1” through “A-15” attached hereto, in the building known as KCI
Tower (the “Building”), located at 8023 Vantage Drive, San Antonio, Texas
78230, on a tract of land situated in the City of San Antonio, County of Bexar,
State of Texas, as described in Exhibit ”B” attached hereto.

 

4.  TERM

 

This Lease shall be for a term of ten (10) years,
beginning
on                                        and
ending
on                                          .

 

5.  USE

 

The Leased Premises shall be used and occupied during term of this
Lease by the Tenant for  no other
purpose than the following uses currently being made by Tenant in connection
with Tenant’s business: general office space; records and file storage, 24-hour
call center; computer server rooms; equipment show room; meeting rooms;
training center; research, development and engineering laboratory inclusive of
bio-medical testing and tissue storage; usage and storage of chemicals in
support of R&D operation; design and testing of beds and related items;
model mockup and testing; plastics molding of parts and models; mail and
document processing and shipping, and in the event of an assignment or sublease
for any lawful use permitted by applicable zoning laws, ordinances, and
regulations; provided, however, in no event shall the Leased Premises be
utilized by Tenant or any subtenant or assignee for (i) any use which violates
any non-compete clause in effect with respect to any other tenant in the
Building, (ii) a governmental entity or office which has a use that is highly
interactive with the general public and involves the ingress and egress of an
inordinate number of invitees upon the Building, (iii) a medical clinic or
office; (iv) any use which would result in a population density in the excess
of one (1) person for every 225 square feet of net rentable space; (v) any use
which would substantially increase the expenses or costs of providing building
services or be a burden on existing janitorial services or elevators in the
Building when compared to the use of the Leased Premises by Tenant prior to the
date hereof; and (vi) any use which would require parking in excess of one
space per 250 square feet of net rentable space.

 

 

6.  BASE RENTAL

 

A.            In
consideration of this Lease, Tenant promises to pay Landlord a total base
rental (“Base Rental”) in the sum of 
Thirty Million Five Hundred Forty Nine Thousand Fifty One and 24/100ths
Dollars ($30,549,051.24) in lawful money of the United States of America,
payable initially in monthly amounts of Two Hundred Thirty Thousand Three
Hundred Eighty Five and No/100ths Dollars ($230,385.00) ($20.00 per rentable
square foot of space in the Leased Premises), in advance, without demand,
offset or deduction (except as expressly provided herein), on the first day of
each and every calendar month during the term of this Lease, provided, however,
that the first such monthly Base Rental payment shall be due upon execution of
this Lease.  Should the term of this
Lease begin on a day other than the first day of a calendar month or terminate
on a day other than the last day of a calendar month, the Base Rental for such
partial month shall be proportionately reduced.

 

All rent and sums provided to be paid under this Lease
shall be paid to Landlord at the address stated in Section 42 of this
Lease.

 

B.            Adjustments to Base Rental.  The Base Rental shall be subject to
adjustment as follows:

 

	
  Term

  	
   

  	
  Annual

  Rent/Square
  Foot

  	
   

  	
  Monthly

  Adjusted
  Rent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Year 2

  	
   

  	
  $

  	
  20.50/SF

  	
   

  	
  $

  	
  236,144.63

  	
   

  
	
  Year 3

  	
   

  	
  $

  	
  21.00/SF

  	
   

  	
  $

  	
  241,904.25

  	
   

  
	
  Year 4

  	
   

  	
  $

  	
  21.50/SF

  	
   

  	
  $

  	
  247,663.88

  	
   

  
	
  Year 5

  	
   

  	
  $

  	
  22.00/SF

  	
   

  	
  $

  	
  253,423.50

  	
   

  
	
  Year 6

  	
   

  	
  $

  	
  22.50/SF

  	
   

  	
  $

  	
  259,183.13

  	
   

  
	
  Year 7

  	
   

  	
  $

  	
  23.00/SF

  	
   

  	
  $

  	
  264,942.75

  	
   

  
	
  Year 8

  	
   

  	
  $

  	
  23.25/SF

  	
   

  	
  $

  	
  267,822.56

  	
   

  
	
  Year 9

  	
   

  	
  $

  	
  23.50/SF

  	
   

  	
  $

  	
  270,702.38

  	
   

  
	
  Year 10

  	
   

  	
  $

  	
  23.75/SF

  	
   

  	
  $

  	
  273,582.19

  	
   

  

 

C.            Additional Rent.  
In addition to the payment of Base Rental, Tenant shall pay as
additional rental (“Additional Rental”), Tenant’s Pro Rata Share of Excess
Operating Expenses as provided in Section 8 of this Lease.  Base Rental and Additional Rental are
sometimes referred to herein together as “Rent” “Rents”, “Rental” or “Rentals”.

 

7.             SECURITY
DEPOSIT

 

As security for performance by Tenant of Tenant’s
obligations under this Lease, and under the Other Master Leases (as hereinafter
defined) subject to the provisions set forth in this Paragraph 7, Tenant has
delivered to Landlord an irrevocable standby letter of credit (the “Letter of
Credit”) in favor of Landlord in the amount of $3,150,000.00, in the form
attached hereto as Exhibit H and issued by a financial institution
reasonably acceptable to Landlord.  The
Letter of Credit shall be for a term of one year, and shall be replaced by
Tenant annually at least thirty (30) days prior to the expiry date thereof
until the expiration of the fifth (5th) year of the term of this
Lease; provided, however, in the event that Tenant obtains a corporate credit
rating of BBB or better, as rated by Standard & Poor’s Ratings Group or its
legal successor and, if there is no default under this Lease by Tenant which
has not been cured, Landlord shall surrender the Letter of Credit or
Replacement Letter of Credit (as hereinafter defined), as the case may be, to
the issuer thereof, and Tenant shall be entitled to cancel the Letter of Credit
or Replacement Letter of Credit, as the case may  be.  Tenant agrees that
for so long as the Letter of Credit is required under this Lease, prior to the
expiry date of the Letter of Credit or any Replacement Letter of Credit, as the
case may be, Tenant shall provide to Landlord another Letter of Credit (a
“Replacement Letter of Credit”) in the same form, for the same length of term
and in the same amount as the Letter  of
Credit.  If Tenant fails to provide a
Replacement Letter of Credit to Landlord at least thirty (30) days prior to the
expiry date of the Letter of Credit or any Replacement Letter of Credit, as the
case may be, then Landlord shall be permitted to draw upon the Letter of Credit
or such Replacement Letter of Credit in the full amount thereof and to hold the
full amount of the proceeds of the Letter of Credit as security for the
performance of the obligations of Tenant under this Lease, until the earlier of
(i) the delivery by Tenant of a Replacement Letter of Credit, (ii) the
expiration of the fifth (5th) year of the term of this Lease, or
(iii) the date Tenant obtains a credit rating of BBB. Upon the happening of any
of the events described in (i), (ii) and (iii) above and, if there is no
default under this Lease by Tenant which has not been cured, Landlord shall
deliver to Tenant the full amount of the proceeds obtained by Landlord by
drawing on the Letter of Credit or Replacement Letter of Credit, as the case
may be.  Upon (i) the failure by Tenant
to pay any Rent under this Lease or the Other Master Leases (whether Base
Rental or Additional Rental), following the expiration of any applicable grace
or cure period, or (ii) the occurrence of any other default by Tenant not
involving the payment of Rent under this Lease or either of the Other Master
Leases (other than a default under Paragraph 31 of any of such leases (a
“Non-Curable Default”)), and if such default remains uncured following the
expiration of any applicable grace or cure period, and (a) has not been
disputed by Tenant by written notice to Landlord during such period, or (b)
involves more than $250,000.00, Landlord shall be entitled to present the
Letter of Credit or Replacement Letter of Credit, as the case may be, to the
issuer thereof for payment.  Such
presentation of the Letter of Credit or Replacement Letter of Credit for
payment must be accompanied by a sight draft thereof in the amount equal to (i)
the Rent Tenant has so failed to pay if the default is the failure to pay Rent
(whether Base Rental or Additional Rental), or (ii) the amount to be drawn to cure
any other default and such other documentary evidence as may be required by the
Letter of Credit or Replacement Letter of Credit.  If the event of any default by Tenant not involving the payment
of Rent (other than a Non-Curable Default) which has been timely disputed by
Tenant as provided hereinabove and which involves less than $250,000.00,
Landlord shall not be entitled to draw on the Letter of Credit until the
default has been

 

2

 

arbitrated in the manner
set forth herein, an award has been rendered in favor of Landlord for all or
any part of the amount which is disputed, and Tenant has failed to pay the
amount of the award to Landlord within ten (10) days after receiving written
notice of the award from Landlord, at which time Landlord shall be entitled to
draw on the Letter of Credit for the amount of the award.  In the event that Landlord makes a partial
draw on the Letter of Credit under any of the circumstances in which Landlord
is allowed to do under this Paragraph 7, Tenant shall be obligated to restore
the amount of the Letter of Credit to $3,150,000.00, within thirty (30) days
after Landlord has made a draw on the Letter of Credit, and if Tenant fails to
do so, Landlord shall be entitled to draw the full amount of the Letter of
Credit.  Landlord shall also be allowed
to draw the full amount of the Letter of Credit as a result of a default by
Tenant under Paragraph 31 of this Lease or either of the other two Master
Leases, or under any other circumstances under which Landlord has terminated
this Lease or either of the Other Master Leases, or terminated Tenant’s right
to possession of the Leased Premises under this Lease or either of the other
two Master Leases.  The Letter of Credit
and any proceeds drawn thereon are referred to herein as the “Security
Deposit.”  Landlord may, from time to
time, in accordance with the foregoing and without prejudice to any other
remedy, use the Security Deposit to the extent necessary to pay arrearages of
rent or to satisfy any other obligation of Tenant under this Lease or the Other
Master Leases, or to be applied to any damages to which Landlord is entitled to
receive from Tenant under this Lease or the Other Master Leases.  If Landlord transfers its interest in the
Leased Premises during the term of this Lease, Landlord may assign its rights
in the Security Deposit to the transferee and shall have no further liability
for the return thereof, provided that such assignee executes an agreement in
favor of Tenant acknowledging the receipt of the Security Deposit and assuming
Landlord’s obligations with respect thereto. 
Landlord shall refund to Tenant any unused portion of the Security
Deposit, provided Tenant is not then in default, at the expiration of the fifth
(5th) year of the term of this Lease, or in the event that the
Letter of Credit is drawn by Landlord in accordance with the foregoing and as a
result of any default by Tenant as provided herein, after Landlord has applied
the Security Deposit against all amounts owed by Tenant to Landlord, if there
is any amount of the Security Deposit remaining.  In the event that an arbitration is required pursuant to this
Paragraph 7, the parties agree that arbitration shall be conducted by the
American Arbitration Association and in accordance with the Rules for
Commercial Disputes of the American Arbitration Association with a request for
an expedited decision under the Fast Track process.  The parties may, if they are able to agree to an alternate
method, conduct the arbitration through one or more private arbitrators agreed
upon by the parties in order to further expedite the process.  In any event, in whichever manner the
arbitration is conducted, the award shall be final and binding upon both
parties and non-appealable.

 

8. OPERATING EXPENSES

 

The term “Base Year” shall mean calendar year
2002.  In the event Operating Expenses
(as defined below) of the Landlord upon the Building and the “Other Facilities”
as hereinafter defined, in any calendar year during Tenant’s occupancy, exceed
the Operating Expenses for the Base Year, Tenant agrees to pay, as Additional
Rental, Tenant’s Pro Rata Share of Excess Operating Expenses (as defined
below).  “Excess Operating Expenses”
shall be defined as the difference between actual Operating Expenses for a
given calendar year and Operating Expenses for the Base Year, the difference of
which shall be prorated for any partial calendar year in which the Tenant
occupies the Leased Premises and/or vacates the Leased Premises by Lease termination.  Computation of Additional Rental under this
Section shall operate as follows: 
Beginning with the first month of the second calendar year in which the
Tenant occupies the Leased Premises and each month thereafter during the Lease
Term, or any renewal thereof, Tenant shall pay, as Additional Rental to
Landlord, at the same time that Base Rental is paid, an amount equal to 1/12 of
the Landlord’s reasonable, good faith estimate (the “Estimate”) of Tenant’s Pro
Rata Share of Excess Operating Expenses, if any, for the particular calendar
year, such Pro Rata Share of Excess Operating Expenses being defined as the
product of Excess Operating Expenses times a fraction with the numerator being
the rentable square footage of the Leased Premises and the denominator being
the rentable square footage of the Building. 
As soon as practicable following the end of each calendar year, but in
no event later than 90 days from the end of the year, Landlord shall submit to
Tenant a statement setting forth the Estimate, if any.  Beginning with said statement for the third
calendar year, it shall also set forth actual Excess Operating Expenses for the
preceding year.  To the extent that
Tenant’s actual Pro Rata Share of Excess Operating Expenses exceeds the
Estimate for the same year, Tenant shall pay the difference to Landlord upon
demand in one lump sum.  To the extent
that Tenant’s actual Pro Rata Share of Excess Operating Expenses is less than
the Estimate, Landlord shall credit the difference against the next due
installments of Additional Rental payable under the provision of this
Section 8 until such credit is exhausted, or if the term of this Lease has
expired, Landlord will refund the difference to Tenant within thirty (30) days
following the date of termination.

 

Provided Tenant has paid the Additional Rental as
required hereunder, Tenant shall have the right, at its own expense and at
reasonable times, to audit Landlord’s books relevant to the Additional Rental
due under this Section.  Should Tenant
fail to object in writing to any Excess Operating Expenses within one hundred
twenty (120) days after receiving the statement setting forth actual Excess
Operating Expenses for the preceding year, Tenant shall be deemed to have
waived any objection.  If Tenant does
object in writing within the above specified time, Tenant shall have the right
to audit Landlord’s books and verify Operating Expenses, at the place where
Landlord maintains its books and records, but only with respect to Operating
Expenses for such preceding year, provided that (i) such audit commences within
thirty (30) days after Tenant’s notice to Landlord and thereafter proceeds
regularly and continuously to conclusion, (ii) Tenant or Tenant’s employee is
present at such location at all times during the audit, (iii) such audit does
not unreasonably interfere with the conduct of Landlord’s business, (iv) such
audit is performed by an auditing firm with an established and favorable
reputation, and (v) the auditor signs a nondisclosure agreement in favor of
Landlord, acceptable to Landlord in its reasonable discretion, agreeing that
such audit and information derived from such audit shall not be used directly
or indirectly in connection with soliciting additional auditing business from
other existing, prior or future tenants in the Building.  Landlord agrees to cooperate in good faith
with Tenant in the conduct of such audit. 
Notwithstanding anything to the contrary set forth in this Section 8,
however, in no event shall Tenant ever be permitted to audit or cause to be
audited Landlord’s records concerning Operating Expenses through, or with the
assistance of, auditors or others whose compensation is contingent upon, or the
amount of whose compensation is affected by, the outcome of such audit, in
whole or in part, or on any payment or reimbursement by Landlord to Tenant in
connection with such audit, or which is otherwise done in whole or in part on
any basis other than reasonable hourly charges for the hours

 

3

 

expended in the
performance of such audit, and reimbursement of reasonable out-of-pocket
expenses incurred by such auditors in connection with such audit.  Tenant hereby waives any audit or similar
rights which it may otherwise have, to the extent of such rights exceed the
specific rights granted to Tenant in this Section 8.  Notwithstanding the foregoing provisions of
this Section 8, in the event that the Base Year’s Operating Expenses shall
ever be greater than the Operating Expenses for any year of the Lease term,
Tenant shall not be entitled to any reduction in Base Rental, nor any credit,
refund, reduction of obligations, or other benefit in respect thereof.   In the event that Tenant’s audit verifies a
credit due Tenant, such payment by Landlord is then due within ten (10) days of
the completion of the audit.  If said
credit is an amount equal to or greater than 5% of Tenant’s Pro Rata Share of
Excess Operating Expenses as set forth on Landlord’s statement to Tenant, then
Landlord shall pay the auditor all fees incurred, or if Tenant has already paid
said fees, then Landlord shall reimburse Tenant for the same.  Unless otherwise agreed to by Tenant and
Landlord in writing, Tenant shall not be entitled to any reduction in Base
Rental or any reduction of obligations for any credit due under this
Section.  In addition to Tenant’s right
to audit, as provided herein, Tenant shall have the right, at its own expense
and at a reasonable times and with reasonable advance notice, to review
Landlord’s books relative to the Additional Rental with Tenant’s own personnel,
at any time.

 

The term “Operating Expenses” as used above shall mean
all reasonable and normal operating expenses, determined in accordance with
GAAP, incurred with respect to the maintenance and operation of the Building
and Other Facilities, including, without limitation, the following: on-site or
other security costs, except to the extent paid directly by Tenant, maintenance
and repair costs, electricity, gas, water, sewer, courtesy patrol, janitorial,
trash and snow removal, landscaping and pest control, reasonable management
fees, that portion of the wages and fringe benefits payable to employees of
Landlord or managing agents whose duties are connected with the operation and
maintenance of the Building and Other Facilities that is equal to the product
of that portion of the respective employee’s time spent providing such services
to the Building and Other Facilities multiplied by such employee’s total wages
and fringe benefits, all services, supplies, replacements or other expenses for
maintaining and operating the Building and Other Facilities, including common
area, paving and parking area(s), roof, driveway and plaza area maintenance,
all real property taxes, assessments and other governmental or quasi-governmental
levies of any nature whatsoever and installments of special assessments due to
deed restrictions and/or owner’s associations which accrue against the Building
and Other Facilities during the term of the Lease, as well as all insurance
premiums Landlord is required to pay or deems necessary to pay, including
public liability insurance, with respect to the Building (provided that the
expenses listed above would qualify as operating expenses, and not capital
expenditures under generally accepted accounting principles consistently
applied), capital improvement costs amortized over the useful life of such
improvements incurred to comply with changes in law, and the cost, amortized
over its useful life, of capital improvements or repairs made to the
Building  which are primarily for the
purpose of reducing Operating Expenses or otherwise improving the operating
efficiency of the Building and Other Facilities and which do in fact reduce
Operating Expenses or otherwise improve the operating efficiency of the
Building and Other Facilities (such capital improvements being referred to
herein as the “Included Capital Items”).

 

Notwithstanding any of the foregoing to the contrary,
it is expressly agreed that in no event shall 
Operating Expenses include any of the following: (i) any amounts
recovered from insurance policies taken out by Landlord which would otherwise
be included in Operating Expenses; (ii) costs of repairing or restoring any
portion of the Building damaged or destroyed by any casualty or peril whether
insured or uninsured; (iii) income taxes, inheritance or gift taxes, transfer
or excise taxes, gross receipts taxes, excess profit taxes, franchise taxes or
similar taxes of Landlord except to the extent imposed in lieu of ad valorem
taxes; (iv) taxes allocable to the tenant improvements of other tenants in the
Building; (v) legal fees and/or expenses incurred in leasing to or in procuring
tenants, leasing commissions, advertising expenses and expenses for the
renovating of space for new tenants; (vi) interest or principal payments on any
mortgage encumbering the Building; (vii) and/or any compensation or management
fee, or portion thereof, paid to an employee of Landlord or to any third party
(that when aggregated with all  other
such fees paid in that year of the Lease term exceed an amount equal to three
(3%) of Total Rentals; (viii) consulting costs and expenses paid by the
Landlord unless they relate to management or operation of the Building; (ix)
normal or capitalized tenant improvements for any other spaces leased to, or
held for lease to, other tenants; (x) any amounts for which Landlord has
received reimbursement from any other tenant of the Building, or for which any
other tenant is expressly liable for under the terms of its lease regardless of
whether Landlord has collected such amounts from said tenant; (xi) the cost of
repair or replacement for any item covered by a warranty in favor of the
Landlord; (xii) costs directly resulting from the gross negligence or willful
misconduct whether caused by action or omission of the Landlord or its agents,
contractors or employees; (xiii) costs or fees relating to the defense of the
Landlord’s title to or interest in the real estate containing the Building;
(xiv) any ground rents or similar payments to a ground lessor or any increases
thereon; (xv) costs of capital improvements that would be considered capital
expenditures under generally accepted accounting principles other than the
Included Capital Items; (xvi) with respect to Included Capital Items, any
amounts in excess of the cost of the capital item amortized over its useful
life and multiplied by a fraction with the numerator being the number of months
left in the Lease Term and the denominator being the number of months remaining
in the useful life of said capital item; (xvii) any amounts attributable to the
lease of any item that would qualify as a capital expenditure (other than an
Included Capital Item) had said item been purchased; (xviii) any costs, fines
or penalties incurred due to violations by Landlord of any governmental rule or
authority; (xix) costs arising from Landlord’s charitable or political
contributions; (xx) costs or expenses associated with the enforcement of any
leases by the Landlord, or the resolution of any disputes arising therefrom;
(xxi) the cost of overtime or other expense to Landlord in curing its defaults
or performing work expressly provided in this Lease to be borne at Landlord’s
expense; (xxii) any amounts paid for goods and services at greater than the
prevailing market rates for such goods and services at the time provided;
(xxiii) the cost of any work or service performed for any tenant of the
Building (other than Tenant) to a materially greater extent or in a materially
more favorable manner than furnished generally to the tenants and other
occupants (including Tenant) of the Building; and without limiting the
generality of the foregoing, this exclusion shall be deemed to include the cost
of HVAC provided in excess of that described in the Lease; (xxiv) any amounts
related to the repair, maintenance or operation of any vending machines or
concessions; (xxv) any fines, penalties, legal judgments or settlements of
claims or causes of actions by or against Landlord in connection with ownership
of the Building or in connection with Tenant’s Intellectual Property as defined
in Section 40 of this

 

4

 

Lease; (xxvi) any cost or
expenditure for which Landlord is reimbursed by condemnation proceeds; (xxvii)
depreciation (except amortization of Included Capital Items); (xxviii) any
reserves for future expenditures or liabilities which would be incurred
subsequent to the then current accounting year; (xxix) any bad debt loss, rent
loss or reserves for bad debt or rent loss which Landlord may make; (xxx) costs
of compliance with the Americans With Disabilities Act and the Architectural
Barriers Act for the Building, the Building common areas, or for any other
spaces leased to, or held for lease to, other tenants; (xxxi) the cost of
acquiring, renting and maintaining works of art or objects of art displayed in
the common areas; (xxxii) costs incurred in connection with the cleanup and
removal of any hazardous materials caused by other tenants; (xxxiii) costs or
expenses of preparation of reports, filings and other information (including,
without limitation, any and all income tax forms) furnished to any lender or an
affiliate, partner, employee or contractor of or in Landlord; and (xxxiv) in
the event that Landlord chooses to utilize an electric provider other than City
Public Service, any amounts paid for electricity at greater than the rates for
such electricity had City Public Service provided it; and (xxxix) any expenses
related to the operation of any parking facility for the building to the extent
they are less than the revenues directly related to the parking facility.

 

Landlord agrees to use efforts consistent with that of
a prudent and commercially reasonable Landlord of comparable office property in
San Antonio, Texas, to provide the services set forth in this Lease and operate
and maintain the Building and the Other Facilities in a cost efficient manner,
which shall include, without limitation, cost efficient delivery of power and
energy to the Building and Leased Premises. 
Other Facilities, for purposes of this Lease, shall include the parking
facility for the Building and the Fitness Facility, the Track, and the Courts
(as those terms are hereinafter defined).

 

9.  LATE CHARGE

 

If any Rent payment or other sum due by Tenant to
Landlord is received by Landlord later than five (5) days after its due date,
Tenant shall pay a late charge of five percent (5%) of such Rent payment or
other sum plus eighteen (18%) percent interest per annum until such Rent or
other sum is paid.  Landlord’s
acceptance of late rent or other sum shall not constitute permission for Tenant
to pay the rent or other sum late thereafter and shall not constitute a waiver
of Landlord’s remedies for subsequent late payments.  Late payment charges are due immediately upon notice or
demand.  All payments shall be by
check,  money order or electronic funds
transfer.  For each returned check marked
insufficient funds or no account, Tenant shall pay all applicable bank charges
incurred by Landlord plus $25.00. Payment of Rent by Tenant shall be an
independent covenant.  If a check from
Tenant is returned for insufficient funds or no account, Landlord may for the
next twelve (12) months require that all Rent and other sums due be paid by
cashier’s check, certified check, money order, or electronic funds transfer.

 

10.  SERVICES BY
LANDLORD

 

Landlord agrees to furnish Tenant, while occupying the
Leased Premises and subject to Section 8, water (hot, cold and
refrigerated) at those points of supply provided for general use of tenants;
electric current for ordinary office use; heated and refrigerated air
conditioning (HVAC) in season, 7:00 a.m. - 7:00 p.m. Monday through Friday and
8:00 a.m. - 1:00 p.m. on Saturday, and at such temperatures and in such amounts
as are consistent with comparable office buildings in Bexar County, Texas (for
after-hours HVAC requested by Tenant, the cost for such service shall initially
be $25.00 per hour per floor with a two (2) hour minimum and may be adjusted by
Landlord annually, to reflect actual increases in utility costs.  Tenant, upon receipt of an invoice by
Landlord, shall pay for such after-hours HVAC service at the same time Base
Rental is next due); janitor and cleaning services, five (5) days per week for
the Building and Leased Premises, but not carpet shampooing in the Leased
Premises; electric lighting service for all public areas, and replacement of
fluorescent light bulbs and ballasts in Building standard lighting fixtures
(but not incandescent light bulbs for nonstandard fixtures or for Tenant’s
lamps), and special service areas of the Building  in the manner and to the extent consistent with comparable office
buildings in Bexar County, Texas.  Landlord
acknowledges and agrees that the electric current used by Tenant in the Leased
Premises prior to the date hereof is acceptable to Landlord and shall not be
deemed in excess of that necessary for ordinary office use.  Landlord further agrees that it shall
provide electrical current to the Leased Premises in a capacity no less than
the current capacity used by Tenant in the Leased Premises prior to the date
hereof, at no additional cost to Tenant. 
In the event that Landlord chooses to utilize an electric provider other
than City Public Service, Landlord agrees to pay energy costs for the Building
and the Leased Premises to the extent such costs exceed the costs for the same
amount of energy consumption if provided by City Public Service.

 

Failure to furnish these services or any interruption
of these services, from any cause whatsoever, shall not make Landlord liable
for damage or loss to persons, property or Tenant’s business, shall not be
considered an eviction of Tenant and, except as expressly provided in this
section, shall not entitle Tenant to any refund or reduction of Rent, and shall
not relieve Tenant from compliance with any term or provision of this
Lease.  In the event any of the
equipment or facilities useful, but not essential or necessary, for provision
of the services for which Landlord is responsible hereunder breaks down or
ceases to function properly, Tenant shall immediately give Landlord written
notice thereof and Landlord shall use reasonable diligence to repair promptly
any such equipment or facilities, but Tenant shall have no claim for rebate or
abatement of Rent for damages resulting from such repair or from any
interruptions in service occasioned by such repair.  Tenant shall pay all utility costs occasioned by electrodata
processing machines, telephone equipment, computers and other equipment of high
electrical consumption which, as reasonably determined by Landlord, require
electric current in excess of Tenant’s current use, including, without
limitation, the cost of installing, servicing and maintaining any special or
additional inside of outside wiring or lines, meters or submeters,
transformers, poles, air conditioning costs, or the cost of any other equipment
or facilities necessary to increase the amount or type of electric current or
power available to the Leased Premises. 
If any essential services, including without limitation, HVAC,
elevators, electricity or water, supplied by Landlord are interrupted, the
interruption does not result from the negligence or willful misconduct of the
Tenant, and the interruption continues for more than seventy two (72)
consecutive hours after written notice from Tenant to Landlord, Base Rental and
Additional Rental shall be abated commencing on the fourth (4th) day
following Landlord’s receipt of Tenant’s notice and continuing until the
service is restored; provided, however, if repairs thereof are of the type or
nature that cannot be reasonably completed within seventy-two (72)

 

5

 

hours, and provided
Landlord has commenced restoration of services within such seventy-two (72)
hour period and thereafter continues to diligently pursue the same, no
abatement of Base Rental or Additional Rental shall occur unless such service
is not repaired prior to the tenth (10th) day following Landlord’s
receipt of Tenant’s notice. If such service is not repaired within such ten
(10) day period, Base Rental and Additional Rental shall be abated, and the
abatement shall be for the period commencing with the fourth (4th)
day following Landlord’s receipt of Tenant’s notice, and shall end when the
service is repaired.  Notwithstanding
the foregoing, Tenant shall only be entitled to an abatement of Base Rental and
Additional Rental to the extent that Base Rental and Additional Rental would be
reimbursed to Landlord pursuant to the rental abatement insurance required to
be carried by Landlord under this Lease.  
If the interruption continues for ninety (90) consecutive days, Tenant
shall have the option, at its sole discretion, to terminate the Lease by delivering
written notice to Landlord of such termination anytime after such ninety (90)
days, but before the services are restored, in which event this Lease shall
terminate on the date Tenant delivers such notice.  Additionally, notwithstanding the provisions of this paragraph
10, if the interruption is caused by fire or other casualty covered by
insurance required to be carried by Landlord pursuant to the terms of this
Lease, then the provisions of paragraph 27 shall be applicable and govern
rather than the provisions of this paragraph 10.

 

Landlord agrees that as long as Tenant is occupying at
least twenty-five percent (25%) of the rentable space in the Building, Landlord
shall provide on-site perimeter security for the Building, twenty-four (24)
hours per day, seven (7) days per week. 
Such security shall consist of a minimum of one (1) security guard to
control and monitor access to the Building. 
Landlord shall have no duty to provide any security or courtesy patrol
services of any kind except as expressly provided above or elsewhere in this
Lease.  Landlord shall not be liable to
Tenant or Tenant’s employees, family, customers, invitees, contractors, or
agents for injury, damage, or loss to person or property caused by criminal
conduct of persons other than Landlord, its agents and employees, including
theft, burglary, assault, vandalism or other crimes.  Tenant shall lock its office space doors when the last person
leaves such office space for the day. 
Tenant, its employees, agents, and invitees shall have access to the
Leased Premises twenty-four (24) hours per day, seven (7) days per week.  Tenant may, at its expense, and not as a
part of Operating Expenses, and with Landlord’s approval, which shall not be
unreasonably withheld, conditioned or delayed, provide security service to the
Building.  All security related
equipment installed and/or used by Tenant and/or its third party contractor
prior to or after the date hereof shall remain the property of Tenant and
Tenant shall be entitled to remove any such equipment upon the expiration or
earlier termination of this Lease, provided Tenant restores the building to its
original condition.

 

11.  PAYMENTS AND
PERFORMANCE

 

Tenant agrees to pay all Rents and all other sums
required to be paid to Landlord at the times and in the manner provided in this
Lease.  The obligation of Tenant to pay
Rent is an independent covenant and, except as expressly provided in this
Lease, under no circumstances shall Tenant be released from its obligation to
pay Rent.

 

12.  REPAIRS AND
REENTRY

 

Tenant will maintain the non-structural portion of the
Leased Premises in sound condition, at Tenant’s expense, and, subject to the
provisions of Sections 23, 27 and 29 of this Lease, shall repair, using only
contractors approved by Landlord, any damage done to the Building or any part
of the Building by Tenant or Tenant’s agents, contractors, employees and
invitees.  If Tenant fails to make such
repairs, within fifteen (15) days after Tenant has received written notice from
Landlord or is otherwise aware of such damage, or, if such repair is of the
type or nature that cannot reasonably be completed within fifteen (15)
days,  then such longer period of time
as is necessary, provided Tenant has commenced such repair within such fifteen
(15) day period and thereafter continues to diligently complete such repair,
Landlord shall thereafter have the option to make such repairs itself and
Tenant shall reimburse Landlord for the cost of the repairs on demand.  Tenant shall not commit nor allow any waste
or damage to be committed on any part of the Leased Premises, and at the time
of termination of this Lease, shall deliver the Leased Premises to Landlord in
as good condition as existed on the date of Tenant’s taking possession,
ordinary wear and tear and casualty damage excepted, and Landlord shall have
the right to reenter and resume possession.

 

Landlord shall, at its expense, repair, maintain and
replace the structural elements of the Leased Premises and Building, exterior
walls, the roof, the foundation, Building common areas, and Building mechanical,
electrical, plumbing and other systems above the ceiling and below the
floors.  Landlord shall keep such items
in good order, condition and repair. 
Landlord shall not be required to make any required repairs until
Landlord has received written notice of the need thereof or has otherwise
obtained knowledge of the necessity of rendering such repair(s).  Landlord shall also be responsible for
maintenance and repair of the Building HVAC, plumbing, electrical and
mechanical equipment.  Landlord shall be
responsible for repairing, at its sole cost and expense (and the cost thereof
shall not be passed through to Tenant as an Operating Expense), all structural
defects and all latent defects.  If
Landlord fails to promptly make any repair that materially interferes with
Tenant’s use and enjoyment of the Leased Premises within fifteen (15) days
after written notice, or such repair is of the type or nature that cannot
reasonably be completed within fifteen (15) days, such longer period of time as
is necessary, provided Landlord has commenced such repair within such fifteen
(15) day period and thereafter continues to diligently complete such repair,
Tenant may make such repair and offset the cost thereof against Base Rental and
other amounts due under the Lease or may recover the amount thereof from
Landlord, in addition to its other legal or equitable remedies.

 

13.  INTENTIONALLY
DELETED

 

14.  ALTERATIONS AND
ADDITIONS

 

 Tenant shall
make no alterations, additions or improvements to the Leased Premises, in excess
of $100,000.00 per occurrence including the installation of trade fixtures,
without the prior written consent of Landlord, which shall not be unreasonably
withheld, conditioned

 

6

 

or delayed.  Landlord may impose, as a condition to its
consent, requirements as to the manner in which, the times at which, and the
contractor by whom such work shall be done. 
All such alterations, additions or improvements shall be made by Tenant
at its sole cost and expense, and excluding trade fixtures, shall be part of
the Building, shall become the property of the Landlord at the time they are
placed on the Leased Premises, and shall be surrendered with the Leased
Premises upon termination of this Lease. 
Landlord may, however, by written notice to Tenant given at least thirty
(30) days prior to the end of the term, require Tenant, at Tenant’s sole cost
and expense, to remove all partitions, counters, railings, cabling, wiring and
the like installed by Tenant in the Leased Premises after the commencement date
of this Lease, and in any Expansion Space (as defined in Section 48
herein), after the Expansion Space Commencement Date, and to repair any damage
caused by such removal; provided however, Tenant shall not be obligated to
remove any improvements if at the time Tenant obtains Landlord’s approval
thereof Landlord has agreed that Tenant will not be obligated to remove
them.  Notwithstanding  anything to the contrary in this Lease,
Tenant shall retain ownership of, and shall have the right, at its option, to
remove from the Building upon the expiration or earlier termination of this
Lease, any and all UPS equipment or systems, raised flooring, generators
serving computer rooms and all other computer/communications related equipment.
All construction work done by Tenant within the Leased Premises shall be
performed in a good and workmanlike manner, in compliance with all governmental
requirements, and in such manner as to cause a minimum of interference with
other construction in progress and with the transaction of business in the
Building.  Tenant agrees to defend,
indemnify and hold Landlord harmless from and against any loss, liability,
claim or damage resulting from such work. 
In addition, Tenant agrees to indemnify and hold Landlord harmless from
and against any and all claims for mechanics, materialmen or other liens in
connection with any of Tenant’s alterations, additions or improvements,
including trade fixtures.  In addition,
with respect to alterations, improvements or additions for which Landlord’s
prior consent is required, Tenant shall, if required by Landlord, furnish such
waiver or waivers of lien in form reasonably satisfactory to Landlord before
commencing any work on such alterations, additions or improvements, including
trade fixtures.  Landlord reserves the
right to enter the Leased Premises for the purpose of posting any notices of
nonresponsibility as may be permitted by law or desired by Landlord.

 

Landlord acknowledges and
agrees that the location of all telephone, telecommunications and computer
equipment and related cables and wiring used by Tenant in the Leased Premises
and Building prior to the date hereof is acceptable to Landlord, and Tenant
shall not be required to relocate, remove or change in any manner the location
or type of such equipment.

 

Landlord agrees that
Tenant shall be entitled to move furniture or office equipment in or out of the
Building, or dispatch or receive any merchandise or materials which requires
use of elevators or stairways, or movement through Building entrances or the
lobby at any time twenty-four (24) hours per day, seven (7) days per week;
provided, however, Tenant shall not unreasonably interfere with or exclude
other tenants in the Building from also utilizing elevators or stairways or
their movement through Building Entrances or the lobby areas, and shall make
reasonable efforts to coordinate its activities with those of other tenants;
and provided, further, that any time that Tenant occupies less than twenty-five
percent (25%) of the rentable space in the Building, Tenant shall first obtain
Landlord’s written consent for and give reasonable notice to Landlord of such
activities.  Subject to the provisions
of Sections 19, 27 and 29, Tenant agrees to assume all risk as to damage to
articles moved and injury to persons or public engaged or not engaged in such
movement, including equipment, property and personnel of Landlord if damaged or
injured as a result of acts in connection with carrying out this service for
Tenant from time of entering property to completion of work; and Landlord shall
not be liable for acts of any person engaged in, or any damage or loss of any
of said property or persons resulting from, any act in connection with such
service performed for Tenant. All damage done to the Building by the improper
placing of such heavy items will be repaired at the sole expense of Tenant.

 

15.  LEGAL USE -
VIOLATIONS OF INSURANCE COVERAGE - NUISANCE

 

Tenant will not use the Leased Premises nor allow the
Leased Premises to be used for any purpose other than that stated in this Lease
or for any purpose which is unlawful, disreputable, or extra hazardous on
account of fire, explosion or other casualty, nor permit any act which would
impair, invalidate or increase the fire and casualty insurance on the Building
or its contents.  Furthermore, Tenant
will not do anything which might emit offensive odors or fumes or make undue
noise or vibrations.   If insurance
rates on the Building or its contents are increased due to action, conduct or
business of Tenant, Tenant will pay such amount of insurance rates increase to
Landlord on demand.  Tenant will not
create a nuisance or unreasonably interfere with other tenants or Landlord, nor
allow Tenant’s agents, employees or invitees to do so.

 

16. PERSONAL PROPERTY TAXES

 

Tenant shall be liable for all taxes levied against
personal property and trade fixtures placed by Tenant in the Leased
Premises.  If any such taxes are levied
against Landlord or Landlord’s property and if Landlord elects to pay the same
or if the assessed value of the Landlord’s property is increased by inclusion
of personal property and trade fixtures placed by Tenant in the Leased Premises
and Landlord elects to pay the taxes based on such increase, Tenant shall pay
to Landlord upon demand that part of such taxes for which Tenant is primarily
liable hereunder.

 

17. SUBSTITUTE TAX FOR REAL OR PERSONAL PROPERTY

 

If at any time during the primary term of this Lease
or any renewal or extension hereof, a tax or excise on Rents or other tax
however described (except any franchise, estate, inheritance, capital stock,
income or excess profits tax imposed upon Landlord) is levied or assessed
against Landlord by any lawful taxing authority on account of Landlord’s
interest in this Lease or the Rents or other charges reserved hereunder, as a
substitute in whole or in part for, or in addition to, the general taxes
described in Section 8 or Section 16 above, Tenant agrees to pay
Landlord upon demand, and in addition to the Rentals and other charges
prescribed in this Lease, the amount of such tax or excise.  In the event any such tax or excise is
levied or assessed directly against Tenant, then Tenant shall be responsible
for and shall pay the same at such times and in such manner as the taxing
authority shall require.

 

7

 

18.  HAZARDOUS
MATERIAL

 

Tenant will maintain the Leased Premises in a clean
condition, will procure at its sole expense any permits and licenses required
for the transaction of business in the Leased Premises and will comply with all
laws, ordinances, orders, rules and regulations of any governmental authority
having jurisdiction over the use, condition or occupancy of the Leased
Premises.

 

Throughout the term of this Lease and any renewal term
hereof, Tenant shall not permit the presence, use, generation, release,
discharge, storage, disposal or transportation of any “Hazardous Materials” (as
hereinafter defined) on, under, in, above, to or from the Leased Premises other
than in compliance with all applicable federal, state and local laws, rules,
regulations and orders.  For purposes of
this provision, the term “Hazardous Materials” shall mean and refer to any
wastes, chemicals, materials or other substances of any kind or character which
are or become regulated as hazardous or toxic wastes, chemicals or substances
and/or which are prohibited or require notification, reporting or special
handling or treatment in their presence, use, generation, release, discharge,
storage, disposal or transportation under any applicable federal, state or
local law, rule, regulation or order. 
Tenant will immediately notify Landlord of (i) any enforcement, clean
up, removal or other governmental or regulatory action instituted, completed or
threatened pursuant to any Regulations (defined below), (ii) any claim made or
threatened by any person against Tenant, Landlord or the Leased Premises
relating to damages, contribution, cost recovery compensation, loss or injury
resulting from or claimed to result from any Hazardous Materials and (iii) any
reports made to any environmental agency arising out of or in connection with
any Hazardous Materials in or removed from the Leased Premises (other than
compliance reports and correspondence related to normal Tenant operations and
research and development activities), including any complaints, notices,
warnings or asserted violations in connection therewith.  Tenant also will supply to Landlord as
promptly as possible, and in any event within ten (10) business days after
Tenant receives or sends the same, copies of all claims, reports, complaints,
notices or warnings of asserted violations, relating in any way to the Leased
Premises or Tenant’s use thereof.  Tenant
will deliver promptly to Landlord copies of hazardous waste manifests
reflecting the legal and proper disposal of Hazardous Materials from the Leased
Premises.  Tenant shall indemnify,
defend and hold Landlord harmless from and against (i) any fines,
penalties, liabilities or other sums or charges levied or imposed under any
applicable federal, state or local law, rule, regulation or order, or by any
governmental agency, authority or political subdivision having jurisdiction
over the Leased Premises, arising in connection with the presence, use,
generation, release, discharge, storage, disposal or transportation of any
Hazardous Materials by Tenant on, under, in, above, to or from the Leased
Premises, (ii) any loss, cost, expense, claim or liability arising out of
any investigation, monitoring, cleanup, containment, removal, storage or
restoration work (for convenience, referred to herein as “Remedial Work”)
required by, or incurred by Landlord or any other person or party in a
reasonable belief that such Remedial Work is required by any applicable
federal, state or local law, rule, regulation or order, or by any governmental
agency, authority or political subdivision having jurisdiction over the Leased
Premises, insofar as such Remedial Work pertains or relates to the presence,
use, generation, release, discharge, storage, disposal or transportation of any
Hazardous Materials by Tenant on, under, in, above, to or from the Leased
Premises and (iii) any claims paid by Landlord, after consultation with
Tenant, to third parties for loss, injury, expense or damage arising out of the
presence, use, generation, release, discharge, storage, disposal or
transportation of any Hazardous Materials by Tenant on, under, in, above, to or
from the Leased Premises.  In the event
any Remedial Work is so required under any applicable federal, state or local
law, rule, regulation or order, or by any governmental agency, authority or
political subdivision having jurisdiction over the Leased Premises,  Tenant shall promptly notify Landlord and,
unless Landlord elects, in its sole and absolute discretion, to perform the
Remedial Work at Tenant’s expense, Tenant shall promptly perform or cause to be
performed such Remedial Work in compliance with such law, rule, regulation or
order, or in strict compliance with the requirements of such governmental
agency, authority or political subdivision. 
Provided Landlord does not elect to perform the Remedial Work, in the
event Tenant shall fail to commence the Remedial Work in a timely fashion, or
shall fail to prosecute and diligently perform the Remedial Work to its
completion, such failure shall constitute an event of default on the part of
Tenant under the terms of this Lease and Landlord, in addition to any other
rights or remedies afforded it hereunder or at law or in equity, may, but shall
not be obligated to, cause the Remedial Work to be performed, and Tenant shall
promptly reimburse Landlord for the cost and expense thereof upon demand.

 

Tenant acknowledges that there are in effect federal,
state and local laws, rules, regulations and orders (collectively referred to
in this Section 18 as the “Regulations”) and that additional Regulations
may hereinafter be enacted or go into effect relating to or affecting the
Leased Premises and/or the Building and concerning the impact on the
environment of construction, land use, maintenance and operation of structures
and conduct of business.  Tenant will
not cause, or permit to be caused, any act or practice, by negligence, omission
or otherwise, that would adversely affect the environment, or do anything or
permit anything to be done that would violate any of said Regulations.  Moreover, Tenant shall have no claim against
Landlord by reason of any changes Landlord may make in the Leased Premises and/or
the Building pursuant to said Regulations or any charges imposed upon Tenant,
Tenant’s customers or other invitees pursuant to same.

 

The indemnity provisions of this section shall
survive the termination of this Lease.

 

19.  INDEMNITY AND
LIABILITY

 

By moving into the Leased Premises, Tenant
acknowledges that the same are received by it in a good state of repair,
accepts the Leased Premises as suitable for the purposes for which same are
leased, waives , subject to Landlord’s repair obligations, any and all defects
of the Leased Premises and assumes all risks of damage to persons, property or
Tenant’s business, except to the extent caused by the negligence or willful
misconduct (whether caused by action or omission) of Landlord.  Tenant agrees that Tenant shall repair the
existing conditions related to the balconies and the planters on the balconies,
at Tenant’s expense, but thereafter these shall be a part of Landlord’s repair
and maintenace obligation.  Landlord
shall not be liable for any injury to person, damage to property or to Tenant’s
business arising from any acts or omissions of Landlord or from any cause
whatsoever except Landlord’s gross negligence or willful misconduct (whether
caused by action or omission).  Subject
to the provisions of Section 29 of this Lease, and except to the extent of
Landlord’s sole or gross negligence or willful misconduct

 

8

 

(whether caused by action
or omission), Tenant will indemnify and hold Landlord harmless from all suits,
actions, damages, liability and expense in connection with loss of life, bodily
or personal injury or property damage arising from the use or occupancy by
Tenant of the Leased Premises, and from any acts or omissions of Tenant, its
agents, contractors, employees or invitees. 
In addition, if Landlord should, without fault on its part, be made a
party to any action by or against Tenant, Tenant shall pay all costs, expenses
and reasonable attorney’s fees of Landlord.

 

Subject to the provisions of Section 29 of this
Lease, Landlord will indemnify and hold Tenant harmless from all suits,
actions, damages, liability and expense in connection with loss of life, bodily
or personal injury or property damage arising from or caused by the sole or
gross negligence or willful misconduct of Landlord, its agents or employees
(whether caused by action or omission), or Landlord’s breach of this Lease.

 

20.  RULES OF BUILDING

 

Tenant, Tenant’s agents, contractors, employees and
invitees, will comply fully with all Building rules and regulations which are attached
to this Lease and made a part of it by this reference and any reasonable
amendments or changes to such rules and regulations hereafter implemented by
Landlord, provided the rules and regulations are non-discriminatory and
enforced in a fair and non-discriminatory manner.  Landlord may amend or change the rules and regulations as it may
deem advisable to provide for the safety, protection, care and cleanliness of
the Building, and Landlord shall give Tenant a written copy of all such rules
and amendments.  In the event of any
conflict or contrary provisions between this Lease and any rule or regulation,
this Lease shall control.

 

9

 

21.  LANDLORD’S RIGHT
OF ENTRY

 

Provided Landlord provides prior notice and is
accompanied by an employee, agent or other representative of Tenant if
requested by Tenant, Landlord and its agents and representatives may enter the
Leased Premises at any time during Tenant’s normal business hours to inspect,
clean and make repairs, alterations or additions to the Building as Landlord
deems necessary, or to show the Leased Premises to prospective purchasers or
lenders, or, during the last six (6) months of the Lease term, prospective
tenants.  Tenant will not be entitled to
reduction or abatement of rent due to Landlord’s entry for such purposes.  Landlord shall not unreasonably interfere
with Tenant’s operations during any such entry.  In the event of an emergency, Landlord shall not be required to
notify Tenant prior to entering the Leased Premises for the purpose of taking
measures necessary to address the emergency situation.  Notwithstanding anything to the contrary
herein, in no event, other than an emergency, shall Landlord be entitled to
enter any portion of the Leased Premises as may be designated, from time to
time, by Tenant as “Secure Access Areas”, the presently designated area of such
portion is shown or described on Exhibit “C” attached hereto.  Tenant reserves the right to designate areas
other than that shown on Exhibit “C” as Secure Access Areas, as deemed
reasonably necessary by Tenant.

 

22. INTENTIONALLY DELETED

 

23.  CONDEMNATION

 

In the event that the whole or a substantial part of the Leased
Premises shall be condemned or taken in any manner for any public or quasi-public
use, and as a result thereof, the Leased Premises cannot be used for
substantially the same purpose or in substantially the same capacity as prior
to such taking, this Lease shall cease and terminate as of the earlier of the
date title vests in the condemning authority or the date possession is taken by
the condemning authority, and Landlord shall be entitled to receive the entire
award, Tenant hereby assigning to Landlord its interest in said award except to
the extent of the claims it expressly reserves below. There shall be refunded
to Tenant any portion of prepaid Rent covering the period subsequent to such
date of termination.  Notwithstanding
the foregoing, Tenant may make claim for a separate condemnation award in an
amount equal to the value of Tenant’s fixtures and improvements as well as
Tenant’s moving expenses (if applicable); Tenant shall make no claim for the
value of any unexpired Lease term.

 

If less than the whole or a substantial part of the
Leased Premises shall be so condemned or taken, and after such taking the
Leased Premises can be used by Tenant for substantially the same purpose and in
substantially the same capacity as prior thereto, the Lease term shall cease
only on the part so taken, as of the earlier of the date title vests in the
condemning authority or the date possession is taken by the condemning
authority, and Tenant shall pay full Rent up to that date (with appropriate
refund by Landlord of such Rent as may have been paid in advance for any period
subsequent to such taking) and thereafter the Rent shall be equitably adjusted.
Landlord shall, at its expense, make all necessary repairs or alterations to
the Building so as to constitute the Leased Premises a complete architectural
unit, provided that Landlord shall not be obligated to undertake any such
repairs and alterations if the cost thereof exceeds the award resulting from
such taking.  Notwithstanding anything
to the contrary herein, if less than the whole Leased Premises is taken by
condemnation, Tenant can elect to terminate this Lease if the remaining portion
of the Premises is rendered unsuitable for Tenant’s continued use of the Leased
Premises, by giving notice to Landlord within sixty (60) days after the nature
and extent of the taking have been finally determined, setting forth the date
of termination, which shall not be earlier than thirty (30) days nor later than
ninety (90) days after delivery of the notice.

 

24.  WAIVER OF
LANDLORD’S LIEN AND SECURITY INTEREST

 

Landlord hereby expressly waives any and all liens in Landlord’s favor,
whether created hereunder or by law, against the personal property of Tenant
located in the Leased Premises.

 

25.  ABANDONED
PROPERTY

 

Notwithstanding any rule or provision of law to the
contrary, all of Tenant’s furniture, movable trade fixtures and personal
property not removed from the Leased Premises within thirty (30) days of
Landlord’s written request at the termination of this Lease, whether such
termination occurs by lapse of time or otherwise, shall be conclusively presumed
abandoned by Tenant, and Landlord may declare such property to be the property
of Landlord or may dispose of the property by any method it deems advisable.

 

26.  HOLDING OVER

 

It is agreed and understood that any holding over by
the Tenant of the Leased Premises at the termination of this Lease, whether
such termination occurs by lapse of time or otherwise, shall not under any
circumstances operate to renew or extend the term of this Lease and shall only
be construed as a tenancy at will at a daily rental equal to 1/30th of an
amount equal to one and one-half (11⁄2) the monthly Rental payable during the
last month prior to termination of this Lease. 
Such tenancy shall be subject to all other terms and provisions of this
Lease except any right of renewal.

 

27.  CASUALTY

 

In the event the Leased Premises or any material
portion of the Building are damaged by fire or other casualty which would be
covered by the casualty insurance carried or required to be carried by Landlord
under the provisions of this Lease, Landlord shall, within seven (7) days
following such damage, cause an architect to provide an estimate of the number
of days required to repair the damage. 
The architect shall provide its estimate to Landlord and Tenant within
twenty (20) days following the damage. 
If the damage cannot be repaired within one hundred eighty (180) days,
this Lease may be terminated by either Landlord or Tenant by written notice
within thirty (30) days after receipt of the architect’s damage certification
and shall then terminate as of the date of the casualty damage.  In the event this Lease is so terminated,

 

10

 

Tenant shall pay all Rent
due under this Lease, prorated to the date of such damage, and all other sums
owing at that time and shall surrender possession of the Leased Premises to
Landlord no later than ninety (90) days from the date of Tenant’s notice of
termination.

 

However, if the damage can be repaired within one
hundred eighty (180) days or if it cannot be repaired within such time but
neither party exercises its option to terminate this Lease, Landlord shall,
within thirty (30) days of such damage, proceed with reasonable diligence to
restore the Leased Premises and/or the Building to the same condition as existed
immediately prior to the occurrence of such casualty.  The Rent shall be abated during the time and to the extent the
Leased Premises are unfit for occupancy. 
Landlord shall not be required to rebuild, repair or replace any of the
furniture or equipment, which may have been placed on the Leased Premises by
Tenant.  In the event that the insurance
proceeds from policies carried or required to be carried by Landlord under the
provisions of this Lease would be inadequate to rebuild the Building or if any
mortgagee under a deed of trust, security agreement or mortgage on the Building
should require that the insurance proceeds be used to retire the mortgage debt,
Landlord shall have no obligation to rebuild and this Lease shall terminate at
Landlord’s election not to rebuild, upon written notice to Tenant, effective as
of the date of the casualty damage. 
Notwithstanding the foregoing provisions of this Section 27, Tenant
agrees that if the Leased Premises or any other part of the building is damaged
by fire or other casualty caused by the fault or negligence of Tenant or
Tenant’s agents, employees or invitees, Tenant shall have no option to
terminate this Lease, even if the damage cannot be repaired within one hundred
eighty (180) days, and the rent shall not be abated or reduced before or during
the repair period except to the extent that Landlord is covered for such rental
loss under the Landlord’s rental abatement insurance.

 

28.  FORCE MAJEURE

 

In the event Landlord or Tenant shall be delayed,
hindered or prevented from the performance of any act required under this Lease
by reason of acts of God; acts of common enemies; fire, storm, flood, explosion
or other casualty; strikes, lockouts; labor disputes; labor troubles; inability
to procure materials; failure of power; restrictive governmental laws or
regulations; riots, insurrection; war; settlement of losses with insurance
carriers; injunction; order of any court or governmental authority; or other
cause not within the reasonable control of Landlord or Tenant, as the case may
be, then the performance of such act shall be excused for the period of the
delay and the period for the performance of any such act shall be extended for
a period equivalent to the period of such delay.

 

29.  SUBROGATION;
INSURANCE

 

A.            Subrogation:  Landlord and Tenant hereby waive and release
any and all rights, claims, demands and causes of action each may have against
the other on account of any loss or damage occasioned to Landlord or to Tenant,
as the case may be, their respective businesses, properties, real and personal,
the Leased Premises or its contents, arising from any risk or peril insurable
under any policy of insurance required to be maintained by Landlord or Tenant
under this Lease or otherwise covered by any insurance policy carried by either
party.  Inasmuch as the above mutual
waivers will preclude the assignment of any aforesaid claim by way of
subrogation (or otherwise) to an insurance company (or any other person), each
party hereto hereby agrees immediately to give to its respective insurance
companies written notice of the terms of said mutual waivers, and to have said
insurance policies properly endorsed, if necessary, to prevent the invalidation
of said insurance coverages by reason of said waivers.

 

B.            Liability
Insurance:  Tenant shall procure and
maintain throughout the term of this Lease a policy or policies of insurance,
at its sole cost and expense, insuring Tenant against any and all liability for
property damage or injury to or death of person or persons occasioned by or
arising out of or in connection with the use or occupancy of the Leased
Premises, the limits of such policy or policies to be in an amount not less
than $10,000,000 with respect to injuries to or death of any one person, in an
amount not less than $10,000,000 with respect to any one accident or disaster,
and in an amount not less than $1,000,000.00 with respect to property damaged
or destroyed.  Tenant shall furnish
evidence satisfactory to Landlord of the maintenance of such insurance and
shall obtain a written obligation on the part of each insurance company to
notify Landlord at least thirty (30) days prior to cancellation of such
insurance.  Tenant shall cause Landlord
to be named as an additional insured under such policies.

 

Landlord shall procure and maintain throughout the
term of this Lease a policy or policies of insurance insuring Landlord against
any and all liability for property damage or injury to or death of person or
persons occasioned by or arising out of or in connection with the use or
occupancy of the Building, the limits of such policy or policies to be in an
amount not less than $10,000,000 with respect to injuries to or death of any
one person, in an amount not less than $10,000,000 with respect to any one
accident or disaster, and in an amount not less than $1,000,000 with respect to
property damaged or destroyed.  Landlord
shall furnish evidence satisfactory to Tenant of the maintenance of such
insurance and shall obtain a written obligation on the part of each insurance
company to notify Tenant at least thirty (30) days prior to cancellation of
such insurance.

 

C.            Property
Insurance:  Tenant shall, at its sole cost and expense, procure
and maintain throughout the term of this Lease a policy or policies of
insurance causing Tenant’s fixtures, furniture, equipment and other contents
within the Leased Premises to be insured under standard fire and extended
coverage insurance to the full insurable value thereof.  Tenant shall furnish evidence satisfactory
to Landlord of the maintenance of such insurance and shall obtain a written
obligation on the part of each insurance company to notify Landlord at least
thirty (30) days prior to cancellation of such insurance.

 

Landlord shall procure and maintain throughout the
term of this Lease a policy or policies of insurance causing the Building to be
insured under standard fire and extended coverage insurance in the amount of
the full replacement value of the Building as the value may

 

11

 

exist from time to time,
and a policy of rental abatement insurance in an amount equal to or greater
than the amount of at least six (6) months of Base Rental and Additional
Rental.  Landlord shall furnish evidence
satisfactory to Tenant of the maintenance of such insurance.

 

D.            Insurance
Companies.  All policies of
insurance required to be carried by either party under this Lease shall be
carried by insurance companies authorized to do business in Texas and having a
financial rating of at least AA or higher by Best’s Insurance Reports.

 

30.  TRANSFER OF
LANDLORD’S RIGHTS

 

Landlord shall have the right to transfer and assign,
in whole or in part, all and every feature of its rights and obligations under
this Lease and in the Building and property referred to in this Lease.  In such event, Landlord shall be released
from any further obligation under this Lease and Tenant agrees to look solely
to Landlord’s successor for the performance of such obligations.  Tenant further agrees that it will attorn to
and recognize any such successor in interest to Landlord as its landlord for
the unexpired balance of the term of this Lease and any renewals or extensions
hereof to the extent appropriately exercised. 
Any security given by Tenant to secure performance of Tenant’s
obligations hereunder may be assigned and transferred by Landlord to such
successor in interest and Landlord shall, upon such assignment and provided
such successor expressly assumes in writing such security, thereby be
discharged of any further obligations relating thereto.

 

31.  BANKRUPTCY

 

Bankruptcy, insolvency or inability to pay its debts
as such become due of Tenant or any guarantor of this Lease; filing by or
against Tenant or any guarantor in any court pursuant to any statute either of
the United States or of any State of a petition in bankruptcy or insolvency or
for reorganization, arrangement or for the appointment of a receiver or trustee
of all or a portion of Tenant’s or any such guarantor’s property; or the making
by Tenant or any such guarantor of a general assignment for the benefit of
creditors, shall constitute a default by Tenant under this Lease and this Lease
shall terminate, and Landlord shall have all of its remedies for an event of a
default as provided under Paragraph 33 hereof. 
Tenant shall then immediately surrender the Leased Premises to Landlord.
If Tenant fails to do so, Landlord may expel or remove Tenant and its property
and retake possession of the Leased Premises without liability for any
prosecution or any claim for damages by reason of such re-entry.

 

32.  DEFAULT

 

The following shall constitute events of default by
Tenant under this Lease:

 

(a)           Tenant’s
failure to pay Rent and other sums due and payable by Tenant under this Lease
within seven (7) days following receipt of written notice from Landlord that
such Rent and/or other sum is past due; provided, however, Landlord shall not
be required to give written notice of default of the payment of Rent or any
other sum more often than twice in any consecutive twelve (12) month period.

 

(b)           Any
transfer of a material portion of Tenant’s property by Tenant for the purpose
of defrauding Landlord or defeating the collection of Rent due or to become due
under this Lease.

 

(c)           Any
assignment or sublease by Tenant in violation of the terms of this Lease;

 

(d)           Tenant’s
failure to maintain any insurance required to be maintained by Tenant under
this Lease, if such failure continues for a period of ten (10) days following
receipt of written notice from Landlord of such failure;

 

(e)           Tenant’s
failure to restore any amount drawn under the Letter of Credit as required
under Paragraph 7 hereof; and

 

(f)            Tenant’s
failure to comply with other provisions of this Lease, and such failure
continues for a period of thirty (30) days following receipt of written notice
from Landlord of such failure; provided, that if such failure cannot be cured
within such thirty (30) day period, so long as Tenant has commenced to cure
such failure within such thirty (30) day period and continues with diligence to
effect such cure, Tenant shall have a reasonable period of time following such
thirty (30) day period to effect such cure not to exceed, however, a total of
one hundred twenty (120) days.

 

33.  REMEDIES

 

A.            Upon
the occurrence of any event of default under this Lease, Landlord shall have
the right, at its option, then or at any time thereafter during the continuance
of such event of default, to pursue any one or more of the following remedies,
in addition to all other rights or remedies provided herein or at law or in
equity, without any notice or demand of any kind or nature whatsoever to Tenant
or to any other party liable, in whole or in part, for the performance of
Tenant’s obligations under this Lease:

 

(1)           Landlord
may do or cause to be done whatever Tenant is obligated to do under the terms
of this Lease and, if necessary to such end, Landlord may enter upon the Leased
Premises, by picking or changing the locks if necessary, without being liable
for prosecution or any claim for damages therefor (Tenant hereby waiving any
claim by reason of such entry).  Such
action on the part of Landlord, if taken, shall in no event or circumstance be
construed as or deemed to be a waiver by Landlord of the event of default on
the part of Tenant hereunder. Further, Tenant agrees that Landlord shall not be
liable for any damages resulting to Tenant from Landlord’s actions in effecting
compliance with Tenant’s obligations hereunder, except to the extent caused by
the sole or gross negligence or willful misconduct (whether by

 

12

 

action or omission) of
Landlord, or otherwise.  All sums
expended by Landlord in effecting compliance with Tenant’s obligations under
this Lease (including, without limitation, reasonable attorneys’ fees and
related legal costs), together with interest thereon at a rate  equal to the  lesser of  (i) one
and one-half percent (1-1/2%) per month or (ii) the maximum rate permitted
by applicable law from the date of the making of any such expenditure to the
date of repayment thereof to Landlord, shall be payable to Landlord on demand.

 

(2)           Landlord
may terminate this Lease by written notice to Tenant, in which event Tenant
shall immediately surrender the Leased Premises to Landlord, and if Tenant
fails to do so, Landlord may, without prejudice to any other remedy which
Landlord may have for possession or arrearages in Rent (including any interest
which may have accrued thereon), enter upon and take possession of the Leased
Premises and property therein, by picking or changing the locks if necessary,
and lock out, expel and remove Tenant and/or any other person or party who may
be occupying all or any portion of the Leased Premises, without being liable
for prosecution or any claim for damages therefore (Tenant hereby waiving any
claim by reason of such entry, taking possession or removal or by issuance of
any distress warrant or writ of sequestration, or otherwise), and upon any such
entry and taking possession by Landlord, Tenant’s right to possession of the
Leased Premises and leasehold estate and options hereunder shall immediately
cease and terminate. Landlord shall be entitled to recover damages from Tenant
by reason of any such termination of this Lease, such damages to include the
unpaid rentals and other sums and charges due at the time of termination, plus
interest thereon at a rate equal to the lesser of (i) one and one-half
percent (1-1/2%) per month or (ii) the maximum rate permitted by
applicable law from the date due, and all other sums of money or damages to
which Landlord is rightfully entitled hereunder and/or otherwise at law or in
equity.

 

(3)           Landlord
may terminate Tenant’s right of possession of the Leased Premises (without
terminating this Lease) and, without prejudice to any other remedy which
Landlord may have for possession or arrearages in Rent (including any interest
which may have accrued thereon), enter upon and take possession of the Leased
Premises and property therein, by picking or changing the locks if necessary,
and lock out, expel and remove Tenant and/or any other person or party who may
be occupying all or any portion of the Leased Premises, without being liable
for prosecution or any claim for damages therefore (Tenant hereby waiving any
claim by reason of such entry, taking possession or removal or by issuance of
any distress warrant or writ of sequestration, or otherwise).  Notwithstanding any such entry by Landlord
and termination of Tenant’s right of possession of the Leased Premises as
aforesaid, same shall not work a termination of this Lease, nor shall Tenant be
relieved of its obligation to pay Rentals and to perform its other obligations
under this Lease, it being understood that Tenant shall remain liable for the
payment of all Rentals and other sums and charges due or to become due
hereunder and for the performance of all other obligations of Tenant
hereunder.  On any such termination of
Tenant’s right of possession of the Leased Premises, Landlord shall be
obligated to use commercially reasonable efforts to relet the Leased Premises
for the account of Tenant for such rent and on such terms and conditions as
Landlord, in its sole discretion, may determine; provided, however, in the
event Landlord, in its sole discretion, shall elect to relet the Leased
Premises, such action by Landlord shall not be deemed as an acceptance of
Tenant’s surrender of the Leased Premises unless Landlord expressly notifies
Tenant of such acceptance in writing, Tenant hereby acknowledging that Landlord
shall be reletting as Tenant’s agent and Tenant furthermore agreeing to pay to
Landlord on demand any deficiency. 
Landlord shall have the right to collect from Tenant any sums due
Landlord under the terms of this subparagraph 33(A)(3) by suits or proceedings
brought from time to time on one or more occasions without Landlord being
obligated to wait until the expiration of the term of this Lease.  Landlord shall have the right to allow such
sums to accumulate and to bring an action on several or all of the accrued sums
at one time.  Any such suit shall not
prejudice in any way the right of Landlord to bring a similar action for any
subsequent sum becoming due hereunder; and no delivery or recovery of any
portion due Landlord hereunder shall be any defense in any action to recover
any amount not theretofore reduced to judgment in favor of Landlord, nor shall
any reletting be construed as an election on the part of Landlord to terminate
this Lease unless a written notice of such intention and election is given to
Tenant by Landlord.  Notwithstanding any
reentry and repossession of the Leased Premises by Landlord pursuant to this
subparagraph 33(A)(3) without termination of this Lease, Landlord may at any
time thereafter elect to terminate this Lease and recover from Tenant such sums
and damages to which Landlord is then entitled.

 

(4)           With
or without terminating this Lease, Landlord may elect to treat such event of
default as an entire breach of this Lease, whereupon Tenant will immediately
become liable to Landlord, as damages for such entire breach, for an amount
equal to the total of (a) all unpaid Rentals and other sums and charges
then due to Landlord hereunder, including interest thereon at a rate equal to
the lesser of (i) one and one-half percent (1-1/2%) per month or
(ii) the maximum rate permitted by applicable law from the date due,
(b) in the event the Leased Premises have not been leased to another
tenant, the present value [discounted at the rate of eight percent (8%) per
annum] of the balance of the Rentals and other sums and charges becoming due
hereunder for the remainder of the term of this Lease reduced by the reasonable
cash market value of the Lease for such period, (c) in the event the
Leased Premises have been leased to another tenant, the Rentals and other sums
and charges becoming due hereunder for the remainder of the term of this Lease
reduced by the amounts to be received from the new tenant (but in no event
shall Tenant be liable for any damages under this subparagraph 33(A)(4)(c)
which would exceed the amount of damages calculated under subparagraph
33(A)(4)(b)), and (d) any other sums of money or damages owed by Tenant to
Landlord or to which Landlord is entitled hereunder and/or otherwise at law or
in equity.

 

B.            Landlord
shall be entitled to the benefit of all provisions of applicable laws
respecting the speedy recovery of lands and tenements held over by Tenant and
proceedings in forcible entry and detainer. 
Tenant hereby waives notice of reentry, of institution of legal
proceedings to that end and/or the intention of Landlord to recover attorneys’
fees in connection therewith, and any right of redemption, reentry or
repossession with respect to the Leased Premises or any of Tenant’s property
therein which may be repossessed by Landlord hereunder.

 

13

 

C.            It
is expressly agreed that in determining the “Rentals and other sums and charges
due hereunder,” as such phrase is used throughout subparagraphs
33(A)(2)-33(A)(4) above, there shall be added to the Base Rental as provided
for in this Lease a sum equal to Tenant’s Pro Rata Share of Excess Operating
Expenses as provided in Section 8 hereof plus all other sums and charges
for which Tenant is responsible for paying pursuant to this Lease.

 

D.            It
is further agreed that, in addition to payments required pursuant to
subparagraphs 33(A)(1) –33(A)(4) above (but only to the extent Landlord has not
otherwise been compensated therefor pursuant to subparagraphs 33(A)(1)
–33(A)(4), and as long as the maximum benefit recovered by Landlord does not
exceed the lesser of (i) the Base Rental and Additional Rental which Tenant
would have been required to pay under the terms of this Lease), and (ii) the
actual damages (subject to any mitigation thereof in accordance with applicable
law) Landlord would have been entitled to recover under applicable law and this
Lease, Tenant shall compensate Landlord for all expenses incurred by Landlord
in retaking possession of the Leased Premises and/or any of Tenant’s property
therein (including, among other expenses, any increase in insurance premiums
caused by a vacancy of the Leased Premises), all reasonable expenses incurred
by Landlord in reletting (including, among other reasonable expenses, repairs,
remodeling, replacements, advertisements and brokerage fees), all concession
granted to a new tenant upon reletting (including, among other concessions,
free rent period and renewal options), all losses incurred by Landlord as a
direct or indirect result of Tenant’s default (including, among other losses,
any adverse reaction by Landlord’s mortgagee or by any other tenants or
potential tenants of the building) and a reasonable allowance for Landlord’s
administrative efforts, salaries and overhead attributable directly or
indirectly to Tenant’s default and Landlord’s pursuing the rights and remedies
provided herein and under applicable law.

 

E.             Notwithstanding
any rule or provision of law to the contrary, in the event Landlord shall, for
the purpose of reentering or regaining possession of the Leased Premises, or
for the purpose of excluding Tenant therefrom, or for the purpose of taking
possession of any of Tenant’s property located within the Leased Premises, as
authorized by law and/or the terms of this Lease, change the lock(s) to the
Leased Premises, Landlord shall not be obligated to provide Tenant with the new
key(s) to the Leased Premises or otherwise provide Tenant with access to the
Leased Premises unless and until Tenant shall have first (1) brought
current all Rentals and other sums or charges due to Landlord under the
provisions of this Lease [but if Landlord has theretofore formerly terminated
Tenant’s right of possession of the Leased Premises or has terminated this
Lease pursuant to the provisions above, then Landlord shall be under no
obligation to provide the new key(s) to Tenant regardless of Tenant’s payment
of past due Rentals or other sums or charges due hereunder, damages or any
other payments or amounts of any kind or nature whatsoever]; (2) fully
cured and remedied to Landlord’s reasonable satisfaction all other defaults by
Tenant of which Tenant has received notice under this Lease; and (3) given
Landlord security and assurances satisfactory in all material respects to
Landlord, in Landlord’s reasonable discretion, that Tenant intends to and is
able to meet and comply with Tenant’s future obligations under this Lease, both
monetary and nonmonetary.  Further, the
provisions of this Lease pertaining to Landlord’s waiver of notice and demand
in the event of the exercise of any right or remedy by Landlord hereunder shall
supersede the provisions of any statute or provision of law pertaining to the
affixation of notice on the door of the Leased Premises advising of any lockout
and/or disclosing the time at which, and/or person from whom, the new key(s) to
the Leased Premises may be obtained, and Tenant hereby waives the requirement
of any such notice.

 

F.             Tenant
agrees to look solely to the estate and interest of Landlord in the Project for
the collection of any judgement or other judicial process requiring the payment
of money by Landlord in the event of a default or breach by Landlord with
respect to this Lease, and no other assets of Landlord shall be subject to levy
of execution or other procedures for the satisfaction of Tenant’s rights.

 

G.            Notwithstanding
anything to the contrary in this Lease, in the event of any default by Tenant,
Landlord shall use commercially reasonable effort to mitigate any damages which
may arise from any such default.

 

34.  NO WAIVER

 

No action by Landlord or its agents shall constitute
an acceptance of an attempted surrender of the Leased Premises and no agreement
to accept such a surrender of the Leased Premises shall be valid unless in
writing.  Reentry of the Leased Premises
by Landlord shall not constitute an election by Landlord to terminate this
Lease unless Landlord so notifies Tenant in writing.  Acceptance of rent by Landlord following the occurrence of an
event of default shall not waive such default, except to the extent such
payment cures in full such default, nor shall the receipt by Landlord of rent
from any assignee, subtenant or occupant of the Leased Premises other than
Tenant be deemed a waiver of Section 62 of this Lease, Landlord’s waiver
of any default or breach of the terms of this Lease (including any violation or
failure to enforce the Building Rules and Agreed Regulations attached hereto)
or failure by Landlord to enforce one or more of the remedies provided herein
upon such default or breach shall not constitute a waiver of any other default
or breach of this Lease.  No provision
of this Lease shall be deemed waived by Landlord unless evidence in writing,
Landlord’s rights and remedies under this Lease shall be cumulative of every
other right or remedy Landlord may have otherwise at law or in equity, and
Landlord’s exercise of one or more of the rights or remedies shall not bar or
in any way impair Landlord’s exercise of other rights and remedies.

 

35.  SUBORDINATION

 

As a condition precedent to Tenant’s obligations under
this Lease, Landlord shall deliver to Tenant concurrently with the execution of
this Lease by Landlord a subordination and non-disturbance agreement in form
and substance acceptable to Tenant pursuant to which tenant subordinates its
interest in this lease and each lender holding an interest superior to this
Lease agrees that if there is not an uncured event of default by Tenant under
this Lease, then upon foreclosure or other acquisition by any such lender,
Tenant’s right to continue in possession of the Leased Premises shall not be
disturbed.  Similarly, Tenant shall
subordinate its interest under this Lease to any future deed of trust or other
lien

 

14

 

but only if and when the
prospective lienholder furnishes to Tenant a subordination and non-disturbance
agreement in form and substance reasonably satisfactory to Tenant.  Tenant agrees that a subordination and
non-disturbance agreement in the form attached hereto as Exhibit I, or
in a substantially similar form, is and will be reasonably satisfactory to
Tenant.  However, notwithstanding the
foregoing provisions of this Section 35, Tenant agrees that any such
mortgagee shall have the right at any time to subordinate any such deeds of
trust, mortgages or other instruments of security to this Lease on such terms
and subject to such conditions as such mortgagee may deem appropriate in its
discretion.  Provided Tenant has been
provided with a non-disturbance agreement reasonably acceptable to Tenant, Tenant
further agrees, upon demand by Landlord’s mortgagee at any time, before or
after the institution of any proceedings for the foreclosure of any such deeds
of trust, mortgages or other instruments of security, or sale of the Building
pursuant to any such deeds of trust, mortgages or other instruments of
security, to attorn to such purchaser upon any such sale and to recognize such
purchaser as “Landlord” under this Lease.

 

36.  ESTOPPEL
CERTIFICATES

 

From time to time, upon ten (10) days prior written
request from Landlord, Tenant shall execute and deliver to Landlord the
estoppel certificate attached as Exhibit “D” (as may be changed as reasonably
required by a prospective purchaser or lender) signed by Tenant and if true,
certifying that this Lease is then presently in full force and effect and
unmodified; that the term of this Lease has commenced and the full Rental is
then accruing hereunder; that Tenant has accepted possession of the Leased
Premises and that any improvements required (if any) by the terms of this Lease
to be made by Landlord have been completed to the satisfaction of Tenant; that
no Rent under this Lease has been paid more than thirty (30) days in advance of
its due date; that the address for notices to be sent to Tenant is as set forth
in this Lease; that Tenant, to its knowledge, as of the date of such
certificate, has no charge, lien or claim of offset under this Lease or
otherwise against Rent or other charges due or to become due hereunder; and
that to the knowledge of Tenant, Landlord is not then in default under this Lease.  The certificate shall also contain an
agreement by Tenant with such prospective purchaser or lender that, from and
after the date of such certificate, Tenant will not pay any Rent under this
Lease more than thirty (30) days in advance of its due date, will not surrender
or consent to the modification of any of the terms of this Lease nor to the
termination of this Lease by Landlord, and will not seek to terminate this
Lease by reason of any act or omission of Landlord until Tenant shall have
given written notice of such act or omission to the prospective purchaser or
lender (at such prospective purchaser or lender’s last address furnished to
Tenant) and until the same period of time which Landlord would have to cure
such act or omission shall have elapsed following the giving of such notice,
during which period such prospective purchaser or lender shall have the right,
but shall not be obligated, to remedy such act or omission; provided, however,
that (i) the agreement of Tenant described in this sentence will be of no
effect under such certificate unless Tenant is furnished by such prospective
purchaser or lender with a copy of any assignment to such prospective purchaser
or lender of Landlord’s interest in this Lease within one hundred twenty (120)
days after the date of such certificate, and (ii) the agreement of Tenant with
such prospective purchaser or lender that is embodied in such certificate shall
terminate upon the subsequent termination of any such assignment.

 

15

 

37.  JOINT AND SEVERAL LIABILITY

 

The obligations imposed upon Tenant (if more than one)
under this Lease shall be joint and several. 
If Tenant has a guarantor or guarantors, the obligations of Tenant under
this Lease shall be joint and several obligations of Tenant and any
guarantor(s).  Landlord may proceed
against any guarantor without first proceeding against Tenant, and no guarantor
shall be released from its guaranty for any reason, including, but not limited
to, any amendment of this Lease, any waiver of Landlord’s rights, failure of
Landlord to give Tenant or any guarantor any notices, or release of any party
liable for payment and performance of Tenant’s obligations under this Lease.

 

38.  ATTORNEY’S FEES

 

If Landlord or Tenant brings any action under this
Lease or consults or places this Lease or any amount payable under it with an
attorney for the enforcement of any of Landlord’s or Tenant’s rights under this
Lease, the non-prevailing party agrees in each case to pay the prevailing party
reasonable attorney’s fees and other costs and expenses incurred by such
prevailing party in connection therewith.

 

39.  QUIET POSSESSION

 

If Tenant is current and in compliance with all of
Tenant’s obligations under this Lease, Tenant shall be entitled to peaceful and
quiet possession and enjoyment of the Leased Premises, subject to the terms and
conditions of this Lease.  Tenant shall
have access to the Building common areas, the Building parking garage and
common parking areas at all times, subject to all applicable Building Rules and
Agreed Regulations.  Landlord shall make
diligent efforts to have all other tenants in the Building comply with Building
rules.  Otherwise, failure of other
tenants to comply with such rules shall not be considered a default by
Landlord.

 

40.  BUILDING NAME

 

Landlord understands that “KCI,” “KCI Tower,” “Kinetic
Concepts, Inc.,” and any logos or designs associated with foregoing are
registered or unregistered trademarks, service marks, trade names, and/or
business names of Tenant and/or Tenant’s related companies (collectively,
“Tenant’s Intellectual Property”), and Landlord acknowledges that Tenant and/or
Tenant’s related companies, as the case may be, shall retain sole ownership of
Tenant’s Intellectual Property.  The
name of the Building shall continue to be “KCI Tower,” as long as Tenant
occupies at least twenty-five percent (25%) of the space in the Building.  Landlord hereby agrees that Tenant shall be
entitled to maintain and continue to display and erect all existing signage of
Tenant, whether located within or on the exterior of the Leased Premises,
within any common area of the Building, or on the exterior of the Building or
on the land upon which the Building is located, so long as Tenant continues to
occupy at least twenty-five percent (25%) of the space in the Building.  Further, so long as Tenant occupies at least
twenty-five percent (25%) of the space in the Building, Tenant shall be
entitled to install and/or erect any sign on the exterior of the Leased
Premises, the interior or exterior of the Building, and/or the land upon which
the Building is located, so long as such signage complies with all applicable
laws, ordinances, and regulations.  So
long as Tenant continues to occupy at least twenty-five percent (25%) of the
space in the Building, Landlord shall not alter, change, or otherwise modify
the appearance or location of the name of the Building or any other signage
embodying Tenant’s Intellectual Property without the express written approval
of Tenant.  Except as expressly provided
herein, Landlord shall not use Tenant’s Intellectual Property in any manner
whatsoever without the prior written approval of Tenant.   Tenant specifically authorizes Landlord, so
long as the name of the Building is KCI Tower, to use that name in Landlord’s
marketing materials, on any letterhead of Landlord related to the Building, or
similar type materials relating to the Landlord’s ownership and management of
the Building.  If Tenant completely
vacates the Leased Premises, within thirty (30) days of such vacation, Landlord
at its sole expense shall remove from public view all embodiments of Tenant’s
Intellectual Property then remaining at the Leased Premises.  Tenant shall at such time as the name of the
Building is changed from KCI Tower, remove all signs of Tenant from the
exterior of the Building or the interior of the Building and the land upon
which the Building is located, at Tenant’s expense, reflecting such name.  Tenant shall be responsible for the repair
of any damage to the Building caused by Tenant’s removal of such signs.

 

41.  PARKING

 

41.           PARKING.  Landlord agrees that Tenant shall be
entitled to the exclusive use of 476 of the 586 parking spaces contained within
the parking garage (the “Tenant Spaces”) which is located upon the land upon
which the Building is located (see the KCI Tower Parking Garage Parking Plan
attached hereto as Exhibits E-1 through E-8).  The Tenant Spaces shall be marked KCI-RES, and shall consist of
spaces numbered 1-48, 52-70, 84-90, 92-96, 99-107, 115-117, 120-126, 128-131,
138-144, 148-153, 159-161, 175-207, 224-229, 234-235, 237-239, 245, 262-273,
and 277-576, as shown in Exhibits E-1 through E-8.  Landlord acknowledges that in addition to the Tenant Spaces, 29
parking spaces, consisting of spaces numbered 162-174 and 208-223, shall be
designated as visitor parking spaces for the Building (the “Visitor Spaces”) as
identified as spaces marked with a “V” on the Visitor Parking Plan attached
hereto as Exhibit “F”.  Any
parking spaces located in the parking garage which have not previously been
specifically reserved or otherwise allocated for Tenant or other tenants of the
Building or visitors of the Building may be used by Tenant and other tenants of
the Building (the “Third Party Tenants”) on a first come, first served basis,
or as previously agreed upon between Tenant and the Third Party Tenants.  Landlord and Tenant agree that the total
number of parking spaces set forth above is based on a ratio of 3.44 parking
spaces per 1000 rentable square feet of space occupied by Tenant (the “Parking
Ratio”), and to the extent the rentable square footage occupied by Tenant from
time to time during the term of this Lease changes, the total number of Tenant
Spaces shall also change based on the Parking Ratio.  It is further agreed that if in the future any lease space
currently occupied by Tenant should be vacated by Tenant for any reason other
than a subletting of such space by Tenant, additional parking spaces for new
Third Party Tenants shall be provided based on applying the Parking Ratio to
the amount of rentable square feet of lease space taken over by said Third
Party Tenants.  The location of such new
Third Party Tenants’ spaces shall be determined as follows: thirty percent
(30%) of the total number of spaces (the “Low Spaces”) derived in accordance
with such application of the Parking Ratio shall be assigned to consecutively

 

16

 

numbered spaces beginning
with the space identified as space number 298 and continuing with each
consecutive higher numbered space until all such Low Spaces are assigned, and
seventy percent (70%) of such spaces (the “High Spaces”) shall be assigned to
consecutively numbered spaces beginning with the space identified as space  number 576, and continuing with each
consecutive lower numbered space until all such High Spaces are assigned.  In the event of a subletting of any lease
space currently occupied by Tenant, there shall be no change to the Tenant
Spaces, and Tenant shall have the right to designate which of the Tenant Spaces
shall be available for use by Tenant’s subtenant. Landlord and Tenant agree to
make a good faith effort to adjust Tenant space and Third Party Tenant space
within the parking garage so as to consolidate Third Party Tenant parking in
consecutive spaces on Levels L2, L1 and the Lobby level to the extent possible,
with consideration for such issues as oversized vehicles and spaces for senior
management personnel of Tenant, so as not to disrupt existing arrangements for
such spaces.

 

In addition to the foregoing Landlord hereby grants to
Tenant an irrevocable license to use the loading dock and freight elevator
twenty-four (24) hours per day, seven (7) days per week.  Pursuant to such license, Tenant shall be
entitled to utilize the loading dock, freight elevators and all portions of the
Building appurtenant thereto at any time; provided, however, Tenant shall not
unreasonably interfere with or exclude other tenants in the Building from also
utilizing the loading dock, freight elevators, and all portions of the Building
appurtenant thereto, and shall make reasonable efforts to coordinate its
activities with those of other tenants; and provided, further, that any time
that Tenant occupies less than twenty-five percent (25%) of the rentable space
in the Building, Tenant shall first obtain Landlord’s written consent to and
give reasonable notice to Landlord of such activities.  Additionally, Landlord agrees that, as long
as Tenant occupies at least twenty-five percent (25%) of the rentable space in
the Building, Tenant shall be entitled to the exclusive use of six (6) of the
nine (9) parking spaces in the parking area located appurtenant to the loading
dock as more specifically shown on Exhibit “G” attached hereto.

 

42.  NOTICES

 

Whenever written notice is required or permitted under
this Lease, such notice shall be in writing and shall be either (a) hand
delivered personally to the party being notified, (b) hand delivered to or
inside such party’s mailing address, (c) delivered via facsimile, or (d)
delivered at such party’s mailing address by certified mail, return receipt
requested, postage prepaid, or by overnight delivery to such party’s mailing
address  by a recognized overnight
delivery service.  Notice delivered by
facsimile shall be effective upon receipt of confirmation of successful
transmission by the transmitting facsimile, or if such confirmation is received
after five o’clock p.m. (5:00 p.m.) on the day of transmission, the next
business day thereafter.  Notice
deposited in the mail in the manner set forth above shall be effective three
(3) days after it is so deposited. 
Notice deposited with a recognized overnight courier shall be effective
the next business day after it is so deposited.  Notice sent by hand delivery shall be effective upon
delivery.  The mailing address of
Landlord shall be the address set forth below unless Landlord notifies Tenant
of a different address in writing.  The
mailing address of Tenant shall be the addresses set forth below, unless Tenant
notifies Landlord of a different address in writing.  Hand delivered notice is required only when expressly required in
the Lease.  Notice by non-certified mail
is sufficient if actually received by the addressee or an employee or agent of
addressee.  The term “notice” shall be
inclusive of notices, billings, requests, and demands.

 

	
  If to LANDLORD:

  	
   

  	
  If to TENANT:

  
	
   

  	
   

  	
   

  
	
  Philip W. Capron

  	
   

  	
  Manager of Facilities

  
	
  President

  	
   

  	
  KCI

  
	
  Kennedy-Wilson Austin, Inc.

  	
   

  	
  8023 Vantage Drive

  
	
  5929 Balcones Dr., Suite 100

  	
   

  	
  San Antonio, Texas 78230

  
	
  Austin, Texas 78731

  	
   

  	
  Fax #: (210) 341-0241

  
	
  Fax #: (512) 451-3773

  	
   

  	
   

  

 

17

 

	
  With a copy to:

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
  Robert L. Davis

  	
   

  	
  VP Human Resources

  
	
  Brown McCarroll, L.L.P.

  	
   

  	
  KCI

  
	
  111 Congress Ave., Suite 1400

  	
   

  	
  8023 Vantage Drive

  
	
  Austin, Texas 78701

  	
   

  	
  San Antonio, Texas 78230

  
	
  Fax #  (512)
  479-1101

  	
   

  	
  Fax # (210) 255-6925

  
	
  and to:

  	
   

  	
  and to:

  
	
   

  	
   

  	
   

  
	
  William H. Muenzberg

  	
   

  	
  General Counsel

  
	
  Senior Investment Manager

  	
   

  	
  KCI

  
	
  Cargill Financial Services Corp.

  	
   

  	
  8023 Vantage Drive

  
	
  12700 Whitewater Drive

  	
   

  	
  San Antonio, Texas 
  78230

  
	
  Minnetonka, Minnesota 55343

  	
   

  	
  Fax#:  (210)
  255-6990

  
	
  Fax: (952) 984-3905

  	
   

  	
   

  
	
   

  	
   

  	
  and to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CFO

  
	
   

  	
   

  	
  KCI

  
	
   

  	
   

  	
  8023 Vantage Drive

  
	
   

  	
   

  	
  San Antonio, Texas 
  78230

  
	
   

  	
   

  	
  Fax#:  (210)
  255-6993

  

 

Either party may change its address as designated
above by written notice to the other party. 
Notices, requests, or agreements to, from, or with one of multiple
Tenants shall be deemed to be to, from, or with all such Tenants.

 

43.  FINANCIAL STATEMENTS

 

Tenant shall furnish Landlord, from time to time when,
if requested by Landlord, but not more often than once in any calendar year,
and not later than ten (10) days following such request, the consolidated 10K
of Tenant most recently filed with the Securities and Exchange Commission as of
the date of the request by Landlord.

 

44.  LEASEHOLD IMPROVEMENTS

 

If the Leased Premises are not ready for occupancy by
Tenant on the Lease commencement date, because Tenant’s leasehold improvements
are not substantially complete or for any other reason, the obligations of
Landlord and Tenant shall nevertheless continue in full force and effect.  In the event the Leased Premises are not
ready for occupancy for reasons other than any delay in the installation of
Tenant’s leasehold improvements due to any changes or additions ordered by
Tenant, then the Rent hereinabove provided shall abate and not commence until
the date the leasehold improvements to the Leased Premises are substantially
complete; but such abatement of Rent shall constitute full settlement of all
claims that Tenant might otherwise have against Landlord by reason of the
Leased Premises not being ready for occupancy by Tenant on the Lease
commencement date.  If the Leased
Premises are not ready for occupancy by Tenant on the Lease commencement date,
the term of this Lease shall be extended by the period of time which elapses
between the Lease commencement date and the date the Leased Premises are ready
for occupancy by Tenant, and the parties agree to execute an agreement between
them confirming any such extension of the Lease term.

 

45.  COMMUNICATION
DEVICES

 

Landlord grants Tenant an irrevocable license during
the Lease term, as it may be extended from time to time without any additional
rental charge, to (i) maintain as it exists on the date hereof, Tenant’s
communication devices and equipment on the roof of the Building, and (ii) with
Landlord’s prior written consent, which will not be unreasonably withheld,
conditioned or delayed to install, operate, and maintain on the roof of the
Building at Tenant’s sole cost and expense and in such areas mutually agreeable
between Landlord and Tenant, such communications devices and equipment and
necessary related equipment and cabling to portions of the Leased Premises
through riser space in the Building as Tenant deems desirable and/or necessary
during the term of this Lease (collectively, the “Communications Equipment”),
subject to the following conditions:

 

(a)                                  Prior
to installation, Tenant must obtain Landlord’s written approval of the type,
size, height, weight, location, and method of installation of each individual
piece of Communications Equipment.

 

(b)                                 Tenant
shall bear all costs to install, maintain, operate, and repair the
Communications Equipment.

 

(c)                                  Prior
to commencement of installation, Tenant shall:

 

18

 

(i)            submit
to Landlord and obtain Landlord’s written approval of plans and specifications
for all Communications Equipment; and

 

(ii)           obtain
all necessary approvals for the Communications Equipment from the Federal
Communications Commission or any other governmental agency having jurisdiction
over the installation or use of the Communications Equipment, if any.

 

(d)                                 Installation
of the Communications Equipment on the roof of the Building must be performed
so as not to void any applicable roof warranty.  Cables and transmission lines must be routed, anchored, and
attached in accordance with good industry practices.

 

Tenant shall have the right, at its option, to remove
any Communications Equipment from the Building upon the expiration or earlier
termination of this Lease.  Tenant shall
be responsible for any damage caused to the roof of the Building from Tenant’s
installation, maintenance or removal of any Communications Equipment.

 

46.  FITNESS FACILITY,
RUNNING TRACK AND ATHLETIC COURTS

 

As of the date hereof, the top of the parking garage
serving the Building includes a premises used as a fitness facility and
exercise room (the “Fitness Facility”), and contains certain fitness and
exercise equipment.  In addition, a
walking/jogging track (the “Track”)  and
two (2) multi-purpose athletic courts (the “Courts”) are located on the roof of
such parking garage.  Landlord hereby
acknowledges and agrees that the location of the Fitness Facility, the Track
and the Courts is acceptable to Landlord, and Landlord shall not relocate,
remove or change in any manner the location of the Fitness Facility, Track or
Courts nor shall Landlord remove any of the equipment from the Fitness Facility
other than to replace worn or obsolete equipment with new suitable
equipment.  Landlord further
acknowledges that the Fitness Facility, the Track and the Courts are and shall
remain during the term of this Lease, as it may be extended from time to time,
part of the common area of the Building, accessible to all tenants of the
Building, and as part of the common area, maintained and repaired by Landlord
in accordance with Section 8 of this Lease.  Notwithstanding that the Fitness Facility, the Track and the
Courts are part of the common area of the Building, Landlord hereby grants
Tenant, and Tenant’s employees, agents, and invitees, a non-exclusive,
irrevocable license during the term of this Lease, as it may be extended from
time to time, to use the Fitness Facility, Track and Courts in common with
other tenants of the Building from 5 a.m. until midnight, seven (7) days per
week.

 

47.  RENEWAL OPTION

 

Provided there is not then any uncured default  or event of default by Tenant hereunder,
Tenant shall have two (2) options (each referred to herein as an “Option”) to
renew the Lease for a term of three (3) or five (5) years each (each referred
to herein as a “Renewal Term”) at the then prevailing terms and conditions for renewing
tenants, including the Prevailing Market Rental Rate (as defined below).  Tenant may exercise its options by providing
prior written notice to Landlord at least six (6) months prior to the
expiration of the then existing term. 
The term “Prevailing Market Rental Rate” shall mean the rental rate for
properties of equivalent quality, size, utility and location, with the length
of the lease term, and credit standing of the tenant, as determined by Landlord
in its reasonable discretion, taken into account.  Additionally, Landlord shall provide Tenant with a tenant
improvement allowance, if any, in addition to any other inducements and
benefits available to renewing tenants consistent with the then current renewal
market for tenants comparable to Tenant in a building comparable to the
Building.  These allowances, inducements
and benefits along with the Prevailing Market Rental Rate shall together
constitute the “Prevailing Market Terms”.

 

Upon notification from Tenant of the exercise of an
Option, Landlord shall, within fifteen (15) days thereafter, notify Tenant in
writing of the proposed Prevailing Market Terms for the applicable Renewal
Term; Tenant shall, within fifteen (15) days following receipt of same, notify
Landlord in writing of its acceptance or rejection of the proposed Prevailing
Market Terms.  If Tenant rejects
Landlord’s proposal and Tenant and Landlord have not agreed on the Prevailing
Market Terms for the extended term within fifteen (15) days of such rejection
notice (the “Negotiation Period”), then within ten (10) days after the end of
the Negotiation Period, Tenant may withdraw its extension notice and this Lease
shall terminate at the end of the then current term, or Tenant may elect to
invoke the appraisal process to determine the Prevailing Market Terms.  If Tenant does timely invoke the appraisal
process, the Prevailing Market Rental Terms shall be determined in accordance
with the following:

 

Within fifteen (15) days of Tenant’s election to
invoke the appraisal process, Landlord and Tenant shall each appoint a
disinterested and qualified real estate brokerage or appraisal professional
(the “Professional” or “Professionals”). 
If the Professionals cannot agree upon the Prevailing Market Rental Terms
within fifteen (15) days following their appointment, the Professionals shall
forthwith select a third disinterested and qualified Professional, and the
decision of any two Professionals shall be binding.  Notification in writing of this decision shall be made by the
Professionals to Landlord and Tenant within fifteen (15) days following the
selection of the third Professional. 
Landlord and Tenant shall bear the expense of the Professional appointed
by each, and the expense of the third Professional shall be shared jointly by
both parties.

 

19

 

In the event Tenant fails to exercise its first Option
within the time and in the manner provided herein, such Option as well as the
second Option shall be deemed waived by Tenant and shall not be exercisable
thereafter.  In the event Tenant fails
to exercise its second Option within the time and in the manner provided
herein, such Option shall be deemed waived by Tenant and shall not be
exercisable thereafter.

 

48.  RIGHT OF FIRST
OFFER

 

During the first three years of the term of this
Lease, Tenant shall have the right of first offer (the “Right of First Offer”),
to lease space located in the Building from time to time as such space may
“become available” (defined below), provided that at the time Tenant exercises
the Right of First Offer, the Lease is in full force and effect and there is
not any uncured default or event of default by Tenant hereunder.

 

Subject to the other terms of this Section 48,
after any space in the Building other than the Leased Premises (hereinafter
referred to as the “Expansion Space”) has or will “become available” (defined
below), Landlord shall not, during the first three years of the term of this
Lease, offer on the market or lease to another tenant the Expansion Space
within the Building that has or will become available without first offering
Tenant the right to lease the Expansion Space on the terms described
below.  Expansion Space shall be deemed
to become available when the lease for the current occupant of the Expansion Space
expires or is otherwise terminated. 
Notwithstanding anything to the contrary herein, Expansion Space shall
not be deemed to become available if the Expansion Space is (1) assigned or
subleased by the current tenant of the Expansion Space, (2) relet by the
current tenant of the Expansion Space by renewal, extension, or renegotiation,
or (3) subject to a specific expansion right of another tenant in the Building
existing as of the date hereof.

 

Landlord shall not offer any such Expansion Space on
the open market unless and until Landlord has first notified Tenant in writing
(the “First Offer Leasing Notice”) that Landlord intends to offer the
designated Expansion Space to third parties and until a period of ten (10) days
has elapsed from the date that Landlord has delivered to Tenant the First Offer
Leasing Notice without Tenant having notified Landlord in writing of Tenant’s
desire to lease all of the Available Expansion Space (defined below). The First
Offer Leasing Notice shall (1) advise Tenant that Landlord intends to offer on
the market the Available Expansion Space, (2) describe the amount and location
of the Expansion Space that has or will become available (the “Available
Expansion Space”) and attach a floor plan showing the Available Expansion Space
cross-hatched, and (3) state the date on which the Available Expansion Space
will be available for leasing by Tenant which shall not be more than six (6)
months after the date of the First Offer Leasing Notice.

 

If Tenant delivers to Landlord written notice of
Tenant’s desire to lease all of the Available Expansion Space within the ten
(10) day period, the Available Expansion Space shall be leased by Tenant on the
terms and conditions set forth in this Section 48.  If Tenant declines or fails to effectively
exercise the Right of First Offer as provided herein, Landlord shall thereafter
be free to offer the particular Available Expansion Space previously identified
in such First Offer Leasing Notice on the open market and to lease some or all
of such Available Expansion Space at any time without regard to the
restrictions in this Section 48 and on whatever terms Landlord may decide
in its sole discretion.  If Tenant
leases any Expansion Space under this Section 48, the following terms and
conditions shall apply to such Expansion Space:

 

(1)           Tenant
shall be entitled to finish out the Expansion space in the same manner and
quality as the remainder of the Leased Premises.  Landlord shall provide to Tenant an allowance which shall be used
by Tenant to recarpet and repaint the Expansion Space.  The allowance shall be an amount sufficient
to recarpet and repaint the Expansion Space in the manner and to the extent
consistent with a class “A” office building in Bexar County, Texas.  The allowance shall be paid to Tenant within
thirty (30) days of Landlord receiving each of Tenant’s invoices therefore,
provided each invoice is accompanied by each of the vendors’ and contractors’
invoices for the improvements and the work shown on the invoice has been
substantially completed.

 

(2)           The
commencement date of the lease for each particular Expansion Space (the
“Expansion Space Commencement Date”) shall be the earlier to occur of (i) the
date Tenant  completes its standard
finish out of the Expansion Space and (ii) thirty (30) days after such
Expansion Space is delivered to the tenant broom clean, free of tenants or
other occupants, and otherwise in reasonably good condition, and the
termination date shall be the same as the termination date for this Lease,
including any extension or renewal terms;

 

(3)           Any
improvements made by Tenant to the Expansion space other than its standard
finish out shall be subject to Section 14 of this Lease;

 

(4)           As
of the Expansion Space Commencement Date, the Base Rental shall be increased by
an amount equal to the product of the rentable square feet for the Expansion
Space multiplied by the then current per square foot Base Rental rate;

 

(5)           As
of the Expansion Space Commencement Date, the Tenant’s Pro Rata Share of Excess
Operating Expenses shall be increased by an amount computed by multiplying
Excess Operating Expenses by a fraction with the numerator being the rentable
square footage of the Expansion Space and the denominator being the rentable
square footage of the Building;

 

(6)           Any
Expansion Space taken by Tenant shall be deemed part of the Leased Premises as
of the Expansion Space Commencement Date;

 

20

 

(7)           As
of the Expansion Space Commencement Date, Tenant’s allotment of parking spaces
shall be increased to include, in addition to all spaces provide din this
Lease, the exclusive use of all parking spaces previously allocated to the
former tenant(s) of the applicable Expansion Space; and

 

(8)           Except
as modified by items (1) through (7) above, all of the terms and conditions of
this Lease shall apply to the Expansion Space.

 

Landlord shall use commercially reasonable efforts to
remove any holdover tenants or other occupants from any Expansion Space which
Tenant leases under this Section 48. 
Although Landlord shall not be liable for any damages for any holdover
tenant or other occupant of any Expansion Space leased by Tenant, (unless
Landlord is not using commercially reasonable efforts to remove the holdover
tenant or other occupant), all of Tenant’s obligations regarding any such
Expansion Space shall be abated until the holdover tenant or other occupant is
removed and such Expansion Space Commencement Date shall be delayed until the
holdover tenant or other occupant is removed.

 

The parties shall, within thirty (30) days after each
notice from Tenant that it elects to add any Expansion Space, confirm in
writing (1) the commencement date for such Expansion Space, (2) the Expansion
Space that will be leased showing that space cross-hatched, (3) the additional
Base Rental to be paid for such Expansion Space, (4) the increased Pro Rata
Share of Excess Operating Expenses allocated to such Expansion Space, and (5)
any other terms related to such Expansion Space or this Lease that either party
reasonably requests to be confirmed.

 

49.  ENTIRE AGREEMENT

 

This Lease contains the entire agreement of the
parties.  No other written or oral
promises or representations have been made, and none shall be binding.  This Lease supersedes and replaces any
previous lease between the parties on Tenant’s office space, including any
renewals or extensions or options thereunder. 
Except for reasonable changes in written rules, this Lease shall not be
amended or changed except by written instrument, signed by both Landlord and
Tenant.  Landlord’s agents do not and
will not have authority to (1) make exceptions, changes or amendments to this
Lease, or factual representations not expressly contained in this Lease, (2)
waive any right, requirement, or provision of this Lease, or (3) release Tenant
from all or part of this Lease, unless such action is in writing.  Under no circumstances shall Landlord or
Tenant be considered an agent of the other. 
Nonsubstantial errors in space footage calculations shall entitle the
parties to correct the rental figures in the Lease and adjust previously paid
rentals accordingly, but not to terminate the Lease.  The Lease shall not be construed against either party more or
less favorably by reason of authorship or origin of language.  If any date of performance or exercise of a
right ends on a Saturday, Sunday, or state holiday, such date shall be
automatically extended through the next business day.  Time is of the essence and all performance dates, time schedules,
and conditions precedent to exercising a right shall be strictly adhered to
without delay except where otherwise expressly provided.

 

50.  SEVERABILITY

 

If any provision of this Lease is illegal, invalid or
unenforceable under present or future laws during the term of this Lease, it is
the intention of both parties that the remainder of this Lease shall not be
affected, and that a clause be added to this Lease as similar to such illegal,
invalid or unenforceable clause as possible and be legal, valid and
enforceable.

 

51.  CAPTIONS

 

The captions of each paragraph of this Lease are added
as a matter of convenience only and shall not be considered in the construction
or interpretation of any part of this Lease.

 

21

 

52.  BINDING EFFECT

 

The provisions of this Lease shall be binding upon and
inure to the benefit of Landlord and Tenant, and any guarantors, respectively,
and to their heirs, legal and personal representatives, successors and assigns,
subject to the provisions of Section 30 above.

 

53.  APPLICABLE LAW

 

The laws of the state of Texas shall govern the
interpretation, construction, validity, performance and enforcement of this
Lease.  Venue for any action arising
under this Lease shall be Bexar County, Texas.

 

54. LEASING AGENT COMMISSIONS

 

Tenant represents that it has not had any dealings
with any real estate broker or other person with respect to this Lease in any
manner, except for Kennedy-Wilson, who shall be compensated by Landlord.

 

55.  REPRESENTATIONS
AND WARRANTIES BY LANDLORD

 

Landlord warrants that Landlord is the sole owner of
the land and improvements comprising the Building and that Landlord has full
right to enter into this Lease. 
Landlord’s duties and warranties are limited to those expressly stated
in this Lease and shall not include any implied duties or implied warranties,
now or in the future.  No
representations or warranties have been made by Landlord other than those
expressly contained in this Lease. 
Landlord expressly disclaims any warranty of suitability that may
otherwise have arisen by operation of law. 
Landlord does not warrant that there are no latent defects in the
facilities that are vital to the Tenant’s use of the Leased Premises for their
intended commercial purpose and that these essential facilities will remain in
a suitable condition.  Subject to
Landlord’s obligations under this Lease, Tenant expressly agrees to the
property “as is”, whether suitable or not, and expressly waives the implied
warranty of suitability.

 

56. REPRESENTATIONS AND WARRANTIES BY TENANT

 

Tenant warrants to Landlord that (1) there has been no
significant adverse change in Tenant’s financial condition since the date of
the financial statements, (2) the financial statements fairly represent the
financial condition of Tenant upon those dates and at the time of execution
hereof, (3) there are no delinquent taxes due and unpaid by Tenant, and (4)
Tenant has never declared bankruptcy. 
Tenant warrants that Tenant has disclosed in writing to Landlord, by
providing to Landlord copies of its 10Q and 10K statements, all material
lawsuits pending or threatened against Tenant and, to the best of Tenant’s
knowledge, Tenant has made no material misrepresentation or material omission
of facts regarding Tenant’s financial condition or business operations.  All financial statements must be dated and
signed by Tenant.  Tenant acknowledges
that Landlord has relied on the above information furnished by Tenant to Landlord
and that Landlord would not have entered into this lease otherwise.

 

As used in this Lease, the phrase “to the best of
Tenant’s knowledge,” or any similar phrase shall refer to and mean the current
actual, conscious knowledge of Rush E. Cone, Vice President, Human Resources
and Chuck E. Williams, Corporate Facilities Manager, without any duty of
inquiry, review or investigation.

 

57.  NO MERGER

 

The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, will not work a merger, and, at the
option of Landlord, will terminate all or any existing subleases or
subtenancies or operate as an assignment to Landlord of any or all of such
subleases or subtenancies.

 

58.  NO LIGHT, AIR OR
VIEW EASEMENT

 

Any diminution or shutting off of light, air or view
of any structure that may be erected on lands adjacent to the Building in no
way will affect this Lease or impose any liability on Landlord.

 

59.   AUTHORITY

 

Each person executing this Lease on behalf of the
Tenant hereby covenants and warrants that: (i) the entity on whose behalf such
person is signing is duly organized and validly existing under the laws of its
state of organization; (ii) such entity has and is qualified to do business in
Texas; (iii) such entity has full right and authority to enter into this Lease
and to perform all of Tenant’s obligations hereunder; and (iv) each person
executing this Lease on behalf of Tenant is duly and validly authorized to do
so.

 

60. AMERICANS WITH DISABILITIES ACT AND ARCHITECTURAL
BARRIERS ACT

 

The Americans with Disabilities Act (“ADA”) and the
Architectural Barriers Act (“ABA”) deal with the rights of the disabled in
employment, use of public transportation, and access to places of public
accommodation and commercial business. 
To the extent that the ADA or the ABA is applicable to the Leased
Premises, the Building and/or the parking, Landlord shall be responsible for
making all necessary modifications to all areas other than the Leased Premises
and Tenant shall be responsible for making all other necessary modifications to
the Leased Premises in full compliance with all requirements of the ADA or the
ABA in order to furnish services in a non-discriminatory manner.  Landlord and Tenant shall use their best
efforts to comply with the ADA  and the
ABA to the extent the ADA and the ABA are applicable to the Building or parking,
or the Leased Premises, respectively.  
Notwithstanding the foregoing, however, Landlord shall have no
obligation to Tenant to make any modifications to the Leased Premises to the
extent that they are not currently in compliance with ADA or ABA, and Tenant
expressly accepts the Building and the Leased Premises in their current
condition.

 

22

 

61.  LANDLORD DEFAULT

 

Except as expressly provided otherwise in this Lease,
if Landlord defaults in the observance or performance of any term or covenant
required to be performed by it under the Lease, Tenant, after not less than
thirty (30) days written notice to Landlord, may, but shall not be obligated
to, remedy such default and in connection therewith may pay expenses and employ
counsel, provided, however, in the event of an emergency, Tenant shall have the
right to stabilize the situation so as to prevent additional damage to the
Building or Leased Premises or to other property or persons without notice to Lessor.  All sums expended or obligations incurred by
Tenant in connection therewith shall be paid by Landlord to Tenant upon
demand.  Landlord shall not be
considered to be in default of this Lease if within said thirty (30) day period
landlord takes action to cure such default but is unable, by reason of the
nature of the work involved, to cure the same within such period, provided
Landlord continues diligently and without unnecessary delays to take whatever
action is necessary to effect such cure; provided, however, Landlord shall be
in default of this Lease if such cure is not completed within one hundred
twenty (120) days following receipt of Tenant’s notice.  Tenant shall not be entitled to claim a
constructive eviction from the Leased Premises unless Tenant has first notified
Landlord in writing of the condition giving rise thereto and Landlord fails to
cure such condition in accordance with the foregoing provisions.  If Landlord does not reimburse Tenant for
the expenses so incurred and Tenant obtains a final, non-appealable judgment in
its favor against Landlord, Tenant may set off the amount o the judgment
against the Rent payable to Landlord under this Lease.  Notwithstanding anything herein to the
contrary, Tenant shall not have the right to terminate this Lease as a result
of any default by Landlord, or otherwise, except as expressly provided herein.

 

62.  SPECIAL CONDITIONS

 

A.            Right
to Assign or Sublease.  Subject to
the terms of this Section 62. A., Tenant shall, during the course of this
Lease, have the right to assign or sublease any and all of the Leased Premises
to new tenants approved in advance in writing by Landlord at Rental rates no
less than the rates set forth in this Lease. 
If any portion of the Leased Premises is so assigned to a new tenant in
accordance with the foregoing, Tenant shall be released from all liability and
obligations under this Lease with respect to such space arising on or after the
date of the release, except that Tenant shall be responsible for all expenses
associated with tenant improvements and leasing commissions for any such new
tenant.  If any portion of the Leased
Premises is subleased to a new tenant in accordance with the foregoing and the
term of the sublease is coterminous with the term of this Lease, such sublease
shall be assigned to Landlord and Landlord shall assume all obligations of
lessor under such sublease arising on or after the date of the release, and
Tenant shall be released from all liability and obligations under this Lease
with respect to such subleased space arising on or after the date of the
release, except that Tenant shall be responsible for all expenses associated
with tenant improvements and leasing commissions for any such new tenant.  In the event that prior to giving Landlord
the notice contemplated by Section 62. B., and without having engaged any
independent real estate agent and/or broker, Tenant has located and secured a
party to whom it  desires to assign or
sublease any of the Leased Premises, it must so notify Landlord at least thirty
(30) days in advance of the date on which Tenant desires to make such
assignment or sublease.  Tenant must
provide Landlord with a copy of the proposed assignment or sublease and such
information as Landlord might reasonably request concerning the proposed
assignee or sublessee to allow Landlord to make informed judgments as to the
financial condition, reputation and operations of such proposed assignee or
sublessee.  Within fifteen (15) days
after Landlord’s receipt of notice of Tenant’s proposed assignment or sublease,
Landlord must provide notice to Tenant of its approval or rejection of such
assignment or sublease.  Notwithstanding
anything herein to the contrary, Landlord shall have the right to approve or
disapprove, in its sole discretion, any proposed assignment or sublease and,
additionally, Landlord may, as a condition to its approval for release of
Tenant, require that the proposed new tenant enter into a new lease with
Landlord, on Landlord’s standard form lease, rather than doing an assignment or
sublease, in which event, upon execution of the new lease between Landlord and
the new tenant, an amendment to this Lease shall be entered into between
Landlord and Tenant, excluding the space covered by the new lease from this
Lease and reducing the rental to be paid by Tenant under this Lease by the
rental previously contracted to be paid by Tenant for the space covered by the
new lease.  Tenant shall not under any
circumstance be entitled to be released in connection with an assignment to an
Affiliate (as hereinafter defined). 
Tenant shall be obligated to reimburse Landlord  for all reasonable actual out-of-pocket
expenses incurred by Landlord in reviewing any tenants proposed by Tenant as to
which Tenant requests a release from liability.

 

In the event that any sublease for a new tenant
approved in advance in writing by Landlord would expire prior to the end of the
term of this Lease, Tenant may at its option pay an early termination fee to
Landlord upon commencement of such new tenant sublease in an amount equal to
fifty percent (50.0%) of the total Base Rental payable for the time period
between the expiration date of this Lease and the expiration date of any such
sublease, and upon payment of such fee, Tenant shall be relieved of all
liabilities and obligations related to that portion of the Leased Premises
subleased by the new tenant, and such new tenant sublease shall be assigned to
Landlord and Landlord shall assume all obligations of the lessor under such
lease.  For example, if a new tenant
were to commence a lease on the first day of the seventh month after the date
hereof which was to expire pursuant to its terms eighteen months prior to the
expiration of this Lease, Tenant would at its option make a payment to Landlord
in an amount equal to nine (9) months Base Rental under the new tenant
sublease, which nine (9) months is fifty percent (50.0%) of the eighteen (18)
months of time remaining on this Lease following the end of the new tenant
sublease.  If, however, Tenant does not
elect to pay the early termination fee upon commencement of the applicable
sublease, then Tenant shall remain liable for all Rents and expense
reimbursements for such space during the entire seven-year term of this Lease,
as well as for all expenses related to tenant finishout and leasing commissions
for the space.

 

In the event that any new tenants located by Tenant or
its broker (any such engagement being subject to the expiration of the
exclusive period in favor of Landlord’s broker described in Section 62.
B.) are not acceptable to Landlord for acceptance of the assignment or sublease
to such tenant and release of the Tenant as provided hereinabove, Tenant shall
nonetheless have the right to sublease its space to such new tenant

 

23

 

without the payment of
any fee contemplated by Section 62. B.; provided however, that (i) the
proposed use of such space by such new tenant is in compliance with all
applicable zoning laws, ordinance and regulations, does not violate any non-compete
clause in effect with respect to any other tenant, and does not conflict with
the permitted uses under this Lease; (ii) the proposed subtenant is not a
governmental entity or office which has a use that is highly interactive with
the general public and involves the ingress and egress of an inordinate number
of invitees to and from the Building, (iii) the proposed subtenant is not a
medical clinic or office; (iv) the population density of the proposed subtenant
will not exceed a ratio of one (1) person for every 225 square feet of net
rentable space; (v) the character of the business to be conducted by the
proposed subtenant is not likely to substantially increase the expenses or
costs of providing Building services or be a burden on existing janitorial
services or elevators in the Building; and (vi) the proposed subtenant will not
be permitted parking in excess of one space per 250 square feet of net rentable
space; provided, however, Tenant shall remain liable for all Rents and expense
reimbursements for such space during the entire seven-year term of this Lease,
as well as for all expenses related to tenant finishout and leasing commissions
for the space.

 

Except as expressly set forth above, and except for an
assignment or sublease (which shall not release Tenant from liability under
this Lease) to (i) any entity that purchases all or substantially all of the
assets of Tenant, (ii) a parent, subsidiary or Affiliate of Tenant (it being
hereby agreed that the term “Affiliate” shall mean, for the purposes hereof,
any corporation, partnership, or other business entity which controls or is
controlled by, or is under common control with, Tenant, and the term “control”
[including “controlled by,” “under common control with,” and “controlling”] as
used herein with respect to any corporation, partnership or other business
entity shall mean the possession of the power to direct or cause the direction
of the management and policies of such corporation, partnership or other
business entity, whether through the ownership of voting securities or
contract), or (iii) any corporation or other entity into which or with which
Tenant, or Tenant’s permitted successors or assigns, has merged or
consolidated, in accordance with the applicable statutory provisions governing
merger and consolidation of entities, Tenant shall not assign or sublease, in
whole or in part, all or any portion of the Leased Premises.  The transfer of shares of common stock of
Tenant shall not constitute an assignment of this Lease.

 

B.            Leasing
Fees.  Tenant  or its broker shall notify Landlord in
writing of its intent to vacate and/or sublease space leased under this Lease
and make such space available for lease no later than sixty (60) days prior to
the planned date of vacation.  Upon
receipt of such written notification by Landlord, any broker hired by
Landlord  shall have the exclusive right
to lease the space to be vacated for the period commencing on the date such
notice is received and ending on the date that is thirty (30) days following
the date identified in the notice as the vacation date (such period being
referred to herein as the “Exclusive Listing Period”).  In the event Landlord’s broker locates and
secures a tenant for such space prior to the expiration of the Exclusive
Listing Period, Tenant shall pay Landlord’s broker a commission equal to four
percent (4%) if no other broker is involved, and six percent (6%) if an outside
broker is involved, permitting payment of a four percent (4%) fee to such
outside broker and a two percent (2%) fee to Landlord’s broker.  The method of calculation of the above
broker commissions shall be set forth in a written Commission Agreement by and
among Landlord, Landlord’s Broker, and Tenant. 
In the event Landlord’s broker is unable to secure a tenant for the
space to be vacated prior to the expiration of the Exclusive Listing Period,
Landlord’s broker shall be entitled to continue to attempt to locate a tenant
for such space, but Tenant or its broker shall also be entitled to locate and
secure a tenant for such space.  Any
tenant secured by Landlord’s broker following the expiration of the Exclusive
Listing Period shall entitle Landlord’s broker to receive the same commission
from Tenant that Landlord’s broker would receive for securing a tenant during
the Exclusive Listing Period.  If Tenant
or its broker locates and secures a tenant following the expiration of the
Exclusive Listing Period, no commission shall be payable to Landlord’s broker.

 

C.            Release
of Space.  With respect to any
portion of the Leased Premises that Tenant, in accordance with (B) above, has
notified Landlord that it desires to vacate, and for which (i) Landlord has
located a replacement tenant to whom it desires to lease such space, Landlord
shall notify Tenant in writing of any lease agreement it reaches with any new
tenant for any such space, and Tenant shall notify Landlord in writing of its
approval or disapproval of such new lease within ten (10) days after receipt of
Landlord’s notice.  If Tenant approves
(which approval or disapproval shall be in Tenant’s sole discretion) of such
new lease, Tenant shall vacate the space subject to the new lease within thirty
(30) days after delivering its written approval of the new lease to Landlord
and, thereafter, Tenant shall have no liability under this Lease (for Rent or
otherwise) with respect to such space. 
In no event shall Landlord or any third party interfere with Tenant’s
right to occupy any space leased under this Lease until the expiration of thirty
(30) days following delivery by Tenant to Landlord of its notice of approval of
any new lease.  If, following the
expiration of the Exclusive Listing Period, Tenant or its broker locates and
secures any such new tenant for the portion of the Leased Premises to be
vacated for a term at least as long as the then remaining current term of this
Lease and Landlord approves of such new tenant, Tenant shall be released
from  its obligations under this Lease
with respect to that portion of  the
Leased Premises to be vacated in accordance with the first paragraph of
Section 61(A) above.  If, however,
the term of the lease for such new tenant is shorter than the then remaining
current term of this Lease, Tenant shall have the option to pay an early
termination fee to Landlord in accordance with the second paragraph of
Section 62(A) above, and upon payment of such fee, Tenant shall be
relieved of its obligations related to that portion of the Leased Premises to
be vacated.  In the event Landlord does
not approve of the new tenant which Tenant or its broker has secured, Tenant
shall still have the right to sublease that potion of the Leased Premises to be
vacated provided the new tenant meets the criteria set forth in the third
paragraph of Section 62(A) above, but upon such subletting, Tenant shall
not be released from its obligations under this Lease.

 

63.  CROSS-DEFAULT

 

Landlord and Tenant have entered into two other lease
agreements of even date herewith, one relating to Building A of KCI Plaza and
one relating to Building B of KCI Plaza (the “Other Master Leases”).  Any default under the terms of either of the
Other Master Leases shall also constitute an event of default by Tenant under
this Lease and any default under this Lease shall also constitute a default under
each of the Other Master Leases.  Notwithstanding
anything herein to the contrary, in the event that Landlord sells the Property
subject to one of the Other Master

 

24

 

Leases, this Lease shall,
effective upon the date of the conveyance of such property by Landlord to a
third party, cease to be cross-defaulted with such Other Master Lease, and
default under such Other Master Lease shall no longer constitute a default
under this Lease, and a default under this Lease shall no longer constitute a
default under such Other Master Lease, and the obligations of Tenant under the
Other Master Lease shall no longer be secured by the Letter of Credit or the
Security Deposit under Paragraph 7 hereof.

 

64.  INTENTIONALLY
DELETED

 

65.  EXHIBITS

 

The following exhibits are attached hereto and incorporated herein and
made a part of this Lease for all purposes:

 

	
  Rules and Regulations

  	
   

  	
   

  
	
  Exhibit “A-1 through A-15”

  	
  -

  	
  Floor Plan of Leased Premises

  
	
  Exhibit “B”

  	
  -

  	
  Legal Description

  
	
  Exhibit “C”

  	
  -

  	
  Secure Access Areas

  
	
  Exhibit “D”

  	
  –

  	
  Estoppel Certificate

  
	
  Exhibit “E1 through E-8”

  	
  –

  	
  Tenant Parking Plan

  
	
  Exhibit “F”

  	
  –

  	
  Visitor Spaces

  
	
  Exhibit “G”

  	
  –

  	
  Loading Dock Spaces

  
	
  Exhibit “H”

  	
  -

  	
  Letter of Credit

  
	
  Exhibit “I”

  	
  -

  	
  Subordination, Non-Disturbance and Attornment
  Agreement

  

 

SUBMISSION OF THIS INSTRUMENT FOR EXAMINATION OR
SIGNATURE BY TENANT DOES NOT CONSTITUTE A RESERVATION OF OR OPTION FOR LEASE,
AND IT IS NOT EFFECTIVE AS A LEASE OR OTHERWISE UNTIL EXECUTION AND DELIVERY BY
BOTH LANDLORD AND TENANT.

 

The names and signatures of all parties shown below have been
duly authorized to sign.

 

	
   

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  KINETIC CONCEPTS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CKW SAN ANTONIO, L.P., a Delaware

  limited partnership

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  KWC General Partner, Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
									

 

25

 

ACKNOWLEDGMENT

 

	
  STATE OF TEXAS

  	
  o

  
	
   

  	
  o

  
	
  COUNTY OF TRAVIS

  	
  o

  

 

 

BEFORE ME, the undersigned, on this day personally
appeared Stephen A. Pyhrr, Executive Vice President of KWC San Antonio General
Partner, Inc., as general partner of CKW San Antonio, L.P., on behalf of said
limited partnership.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE this
       day of
                         ,
2002.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public, State of Texas

  

 

26

 

CORPORATE ACKNOWLEDGMENT

 

	
  STATE OF 

  	
  o

  
	
   

  	
  o

  
	
  COUNTY OF

  	
  o

  

 

 

BEFORE ME, the undersigned, a Notary Public in and for
said County and State, on this day personally appeared
                                                            ,
known to me to be the person whose name is subscribed to the foregoing
instrument, and acknowledged to me that the same was the act of Kinetic
Concepts, Inc., and acknowledged to me that he/she executed the same for the
purposes and consideration therein expressed, and in the capacity therein
stated.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE this
          day of
                               ,
200   .

 

 

	
   

  	
  Notary Public, State of

  

 

27

 

BUILDING RULES AND AGREED REGULATIONS

 

1.             Landlord
will initially provide one (1) master entry card and/or key for each one
thousand two hundred (1,200) square feet of Rentable Area in the Premises.  Tenant shall reimburse Landlord for the cost
(plus an administrative charge equal to ten percent (10%) of the cost plus
applicable sales tax) of each additional card and/or key and for each
replacement card and/or key for any card and/or key lost by or stolen from
Tenant.  Tenant agrees to surrender all
master entry cards and/or keys in its possession upon the expiration or earlier
termination of this Lease.  Any lost
cards and/or keys shall be canceled.

 

2.             Tenant
will refer all contractors, contractor’s representatives and installation technicians
rendering any service to Tenant to Landlord for Landlord’s supervision,
approval and control before performance of any contractual service.  This provision shall apply to all work
performed in the Building, including installations of telephones, telephone
wiring or fiber optics, telegraph equipment, electrical devices and
attachments, and installations of any nature affecting floors, walls, woodwork,
trim, windows, ceilings, equipment, or any other physical portion of the
Building.

 

3.             Landlord
hereby agrees that Tenant shall be entitled to maintain and continue to display
and erect all existing signage of Tenant, whether located within or on the
exterior of the Leased Premises, within any common area of the Building, or on
the exterior of the Building or on the land upon which the Building is located,
so long as Tenant continues to occupy any portion of the Leased Premises.  Further, so long as Tenant occupies any
portion of the Leased Premises, Tenant shall be entitled to install and/or
erect any sign on the exterior of the Leased Premises, the interior or exterior
of the Building, and/or the land upon which the Building is located, so long as
such signage complies with all applicable laws, ordinances, and regulations.

 

4.             With
respect to movement in or out of the Building of furniture or office equipment,
or dispatch or receipt by Tenant of any merchandise or materials which requires
use of elevators or stairways, or movement through building entrances or the
lobby, Tenant is to assume all risk as to damage to articles moved and injury
to persons or public engaged or not engaged in such movement, including
equipment, property and personnel of Landlord if damaged or injured as a result
of acts in connection with carrying out this service for Tenant from time of
entering property to completion of work; and Landlord shall not be liable for
acts of any person engaged in, or any damage or loss of any of said property or
persons resulting from, any act in connection with such service performed for
Tenant. All damage done to the Building by the improper placing of heavy
equipment or objects which may overstress any portion of the floor will be
repaired at the sole expense of Tenant.

 

5.             No
portion of Tenant’s area or any other part of Building shall at any time be
used or occupied as sleeping or lodging quarters.

 

6.             Tenant
shall not place, install or operate on the Leased Premises, or in any part of
the Building, any engine, stove or machinery, or conduct mechanical operations
or cook thereon or therein, excepting a microwave oven, or place or use in or
about the Leased Premises any explosives, gasoline, kerosene, oil, acids,
caustics or any other flammable (including Christmas trees and ornaments),
explosive or hazardous material without the prior written consent of
Landlord.  Tenant is responsible for the
cost and installation of any fire extinguishers required by the fire marshal.

 

7.             Landlord
will not be responsible for lost or stolen personal property, equipment, money
or jewelry from Tenant’s area or from public rooms, regardless of whether such
loss occurs when area is locked against entry or not.

 

8.             No
birds or animals shall be brought into or kept in or about the Building, except
those assisting the disabled.

 

28

 

9.             Employees
of Landlord shall not receive or carry messages for or to Tenant or other
person, nor contract with or render free or paid services to Tenant or Tenant’s
agents, employees, or invitees.

 

10.           Landlord
will not permit entrance to Tenant’s offices by use of pass keys controlled by
Landlord to any person at any time without written permission by Tenant, except
employees, contractors, or service personnel directly supervised by
Landlord.  Tenant may not add locks,
change locks, or rekey locks without written permission of Landlord.  Locks may be changed at Tenant’s request and
expense.  If locks to the office space
are changed, Landlord may specify kind and brand of locks, placement,
installation, master key compatibility, etc.

 

11.           Sidewalks,
doorways, vestibules, halls, stairways, and similar areas shall not be
obstructed nor shall refuse, furniture, boxes or other items be placed therein
by Tenant or its officers, agents, servants, and employees, or used for any
purpose other than ingress and egress to and from the Leased Premises, or for
going from one part of the Building to another part of the Building.  Tenant shall be responsible, at its sole
cost, for the removal of any large boxes or crates not used in the ordinary
course of business.  Nothing shall be
swept or thrown into the corridors, halls, elevator shafts or stairways.  Canvassing, soliciting, distributing
handbills, advertising and peddling in the Building are prohibited.

 

12.           Landlord
desires to maintain the highest standards of environmental comfort and
convenience for the tenantry.  It will
be appreciated if any undesirable conditions or lack of courtesy or attention
are reported directly to the management.

 

13.           Tenant
shall not tamper with or attempt to adjust temperature control thermostats in
the Leased Premises unless Tenant is paying electricity by separate meter.
Landlord shall adjust thermostats as required to maintain temperatures as
provided in Section 10 of the Lease.

 

14.           Tenant
shall permit Landlord six (6) months prior to the termination of this Lease to
show Leased Premises during business or non-business hours to prospective
tenants or, with reasonable notice, at any time to a potential buyer or lender,
and to advertise the Leased Premises for rent; however, Landlord shall not
unreasonably disturb Tenant’s business.

 

15.           The
parties to this Lease Agreement do hereby acknowledge that this is a
“Clean-Air” facility, and specifically that no smoking is permitted within the
Building itself, and no closer than fifteen (15) feet from an entrance or exit
of the Building.  Smoking will be
permitted outdoors in designated areas only.

 

16.           Plumbing
fixtures and appliances shall be used only for the purpose for which
constructed, and no unsuitable material shall be placed therein.  Any stoppage or damage to any such fixtures
or appliances from misuse on the part of Tenant or Tenant’s officers, agents,
contractors, employees, guests and customers shall be paid by Tenant, and
Landlord shall not in any case be responsible therefore.

 

17.           Corridor
doors, when not in use, shall be kept closed.

 

18.           No
bicycles, motorcycles or similar vehicles will be allowed in the Building.

 

19.           Landlord
has the right to evacuate the Leased Premises in the event of an emergency or
catastrophe.  Tenant shall cause its
officers, partners and employees to participate in any fire safety or emergency
evacuation drills scheduled by Landlord.

 

29

 

20.           Tenant
will not locate furnishings or cabinets adjacent to mechanical or electrical
access panels or over air conditioning outlets so as to prevent operating
personnel from servicing such units as routine or emergency access may
require.  The cost of moving such
furnishings for Landlord’s access will be at Tenant’s expense.  Tenant shall instruct all of its employees
to refrain from any attempts to adjust thermostats.  The lighting and air conditioning equipment of the Building will remain
the exclusive charge of personnel designated by Landlord.

 

21.           No
supplemental heating, air ventilation or air conditioning equipment, including
space heaters and fans, shall be installed or used by Tenant without the prior
written consent of Landlord.

 

22.           No
unattended children shall be allowed within the Building.

 

23.           During
other than normal business hours, Building access will be limited and will be
by entry card or key entry together with Landlord’s registration procedures.

 

24.           Landlord
reserves the right to rescind any of these rules and regulations and make such
other and further rules and regulations as in its judgment shall from time to
time be necessary or advisable for the operation of the Building, providing
that such rules and regulations are in writing and uniformly enforced against
all other tenants of the Building and are not discriminatory towards
Tenant.  Such rules and regulations
shall be binding upon Tenant upon delivery to Tenant of notice thereof in
writing.

 

25.           In
the event of any inconsistency between these rules and regulations and the
terms of the Lease, the terms of the Lease shall control.

 

30

 

EXHIBIT  “A-1” through
“A-15”

FLOOR PLAN OF LEASED PREMISES

 

Exhibits A-1 through A-15 are to be attached prior to
execution of the Lease.

 

 

EXHIBIT “B”

KCI TOWER LEGAL DESCRIPTION

 

	
  

  

 

FIELD
NOTES FOR 1.974 ACRES

 

OUT OF LOT 5, BLOCK 23.  NEW
CITY BLOCK 13627, OMNI/GRANDVIEW SUBDIVISION, SAN ANTONIO, BEXAR COUNTY, TEXAS,
ACCORDING TO THE PLAT THEREOF RECORDED IN VOLUME 9506.  PAGE 107 OF THE DEED AND PLAT RECORDS OF
BEXAR COUNTY, TEXAS, BEING THAT SAME TRACT RECORDED IN VOLUME 2667, PAGE 280 OF
THE OFFICIAL PUBLIC RECORDS OF REAL PROPERTY OF BEXAR COUNTY, TEXAS, AND BEING
MORE PARTICULARLY DESCRIBED BY METES AND BOUNDS AS FOLLOWS.

 

	
  COMMENCING:

  	
  At a found “+” Scribed on concrete at the
  intersection of the southeast right-of-way line of Callaghan Road (60’ wide
  public right-of-way), and the east right-of-way line of Interstate Highway 10
  (right-of-way varies, 300” minimum), the northwest corner of the remaining portion
  of Lot 4, Block 23, New City Block 13627, GREENBRIAR UNIT 12, as recorded in
  Volume 5870, Page 201;

  
	
   

  	
   

  
	
  THENCE:

  	
  South 14°11’50”
  East (bearings are based on the plat recorded in Volume 9506, Page 107) (this
  line held for rotation) 175 00” with the east right-of-way line I.H. 10 to a
  found 1/2” rebar, the northwest corner of Lot 5,
  the northwest corner and POINT OF BEGINNING of this tract;

  
	
   

  	
   

  
	
  THENCE:

  	
  North 75°42’15”
  East 35.99’ with the northwest line of Lot 5 to found 1/2”
  rebar, an angle point;

  
	
   

  	
   

  
	
  THENCE:

  	
  North 41°09’01”
  East 131.01’ with the northwest line of Lot 5 to a found nail and shiner, an
  angle point;

  
	
   

  	
   

  
	
  THENCE:

  	
  North 08°37’18”
  West 151.43’ with the northwest line of Lot 5 to a found 1/2”
  rebar, the north corner of 1 of 5;

  
	
   

  	
   

  
	
  THENCE:

  	
  South 48°47’26”
  Fast 214.77’ with the northeast line of Lot 5 to a found 1/2”
  rebar, an angle point;

  
	
   

  	
   

  
	
  THENCE:

  	
  South 48°50’31”
  Ease 168.48’ to a found 1/2” rebar on the
  northwest line of Vantage Drive, a 60’ ingress and egress basement described
  by deed recorded in Volume 2683, Page 661 of the Official Public Records of
  Real property, the east corner of the tract;

  
	
   

  	
   

  
	
  THENCE:

  	
  South 41°07’20”
  West 77.78’ with the northwest line of Vantage Drive to a found 1/2”
  rebar, the beginning of a curve to the right’

  

 

	
   

  	
  150 West Rhapsody Drive
  • San Antonio, Texas 78216

  [210] 366-4600 - FAX [210] 366-4673

  

 

 

	
  THENCE:

  	
  With the northwest line of Vantage Drive and the
  curve to the right, concave to the northwest, having a radius of
  370.00’,  a delta of 34°36’01”,
  and an arc length of 223.44’ and a chord bearing South 58°28’46”
  West to a found 1/2” rebar;

  
	
   

  	
   

  
	
  THENCE:

  	
  South 75°44’17”
  West 77.12’ with the northwest line of Vantage Drive to a found 1/2”
  rebar, the beginning of a curve to the right joining I.H. 10

  
	
   

  	
   

  
	
  THENCE:

  	
  With the northwest line of Vantage Drive and the
  curve to the right concave to the northeast, having a radius of 25.00’, a
  delta of 90°08’08”, an arc
  length of 39 33’ and a chord bearing North 59°10’54”
  West to a found 1/2” rebar on the
  aforementioned east right-of-way line of I.H. 10

  
	
   

  	
   

  
	
  THENCE:

  	
  North 14°11’50”
  West 174.97’ with the east right-of-way line of I.H. 10 to the POINT OF
  BEGINNING, containing 1.974 acres of land.

  

 

THESE FIELD NOTES TOGETHER WITH A SURVEY MAP WERE PREPARED FROM AN
ACTUAL SURVEY MADE ON THE GROUND BY EMPLOYEES OF GIBBONS SURVEYING &
MAPPING, INC. WHO WERE WORKING UNDER MY SUPERVISION AND DIRECTION.

 

	
  Gary A. Gibbons, R.P.L.S. #4716

  GIBBONS SURVEYING & MAPPING, INC

  Date: September 13, 1991; January 2, 1992.

  October 31, 1997; November 19, 2001; Up-dated June 10, 2002

  Job No.: 91-0053-02; Doc I.D.: fnKCI-Tower; GAG/ps

  	
  [SEAL]

  

 

 

EXHIBIT “C”

 

SECURE ACCESS AREA

 

 

 

 

 

 

 

 

 

 

Loan Number
030812147

 

EXHIBIT “D”

 

TENANT ESTOPPEL CERTIFICATE

 

                   ,

 

Christine H. Moran

Greenwich Capital Financial Products, Inc.

550 West Jackson Boulevard

Suite 1700

Chicago, Illinois 60661

 

Re: Lease between
                                          ,
as Landlord or its assignees (“Landlord”) and
                                                                              
as Tenant (“Tenant”) dated
                    ,
         for approximately
                
square feet of space in
                
(the “Project”) as amended by the following amendments [list or if none, say None”]:

 

 

 

 

Dear Ms. Moran:

 

The undersigned Tenant understands and acknowledges
that
                                                
(“Borrower”) has obtained or is in the process of obtaining a mortgage loan
from Greenwich Capital Financial Products, Inc. (“Lender”) which loan is or
will be evidenced by a note secured by a deed of trust upon the captioned
property and that Lender, in making the loan, is relying upon Tenant’s
certification herein.

 

Tenant hereby certifies to Borrower and Lender that:

 

The
Lease attached hereto (the “Lease”) is a true and exact copy of the complete
Lease together with all amendments, modifications, side letters, guaranties,
letters of credit and other documents evidencing, governing or securing the
Tenant’s obligations under the Lease; there are no other agreements, either
written or oral, between the Landlord and the Tenant;

 

The
Lease is in full force and effect; there are no amendments or modifications of
any kind to the Lease except as referenced above; there are no other promises,
agreements, understandings, or commitments between Landlord and Tenant relating
to the premises leased under the Lease; and Tenant has not given Landlord any
notice of termination hereunder;

 

There
has not been and is now no subletting of the leased premises, or any part
thereof, or assignment by Tenant of the Lease, or any rights therein, to any
party, except as follows [if none so state]:

 

 

 

 

 

The Lease has commenced pursuant to its terms and is
in full force and effect and except as otherwise set forth in the Lease, the
Tenant has no right to vacate the Demised Premises or cease to operate its
business therefrom;

 

No
uncured default, event of default, or breach by Landlord exists under the
Lease, no facts or circumstances exist that, with the passage of time or giving
of notice, will or could constitute a default, event of default, or breach
under the Lease.  Tenant has made no
claim against Landlord alleging Landlord’s default under the Lease;

 

Except
as otherwise expressly agreed in writing, Lender, and its successors and
assigns, assume no liability or obligations under the Lease, or any extension
or renewal thereof, either by virtue of assignment or any receipt or collection
of rents under the Lease.

 

Tenant
is open for business and in operation in the Project.

 

Tenant
is in full and complete possession of its leased premises in the Project and
has accepted its leased premises in the Project, including any work of Landlord
performed thereon pursuant to the terms and provisions of the Lease, and all
common areas of the Project (including, without limitation, parking areas,
sidewalks, access ways and landscaping) are in compliance with the Lease and
are satisfactory for Tenant’s purposes;

 

To the
best of Tenant’s knowledge and belief, there are no rental, lease, or similar
commissions payable with respect to the Lease, except as may be expressly set
forth therein;

 

The term of the Lease commenced on
                    ,
         and terminates on
                            
,         , unless sooner terminated in
accordance with the terms of the Lease. 
Tenant has no option to renew or extend the lease term except as follows
[if none, so state:

 

 

 

                                                                 .

 

Tenant
is current with respect to, and is paying the full rent and other charges
stipulated in the Lease (including, without limitation, common area maintenance
charges) with no offsets, deductions, defenses or claims; and Tenant is not in
default under the Lease.

 

The
amount of my last rental payment was
                            
and the date of my last rental payment was                                 .

 

This rental payment was comprised of the following
charges:

 

	
  Base Rent:

  	
   

  	
  $

  	
   

  	
   

  
	
  Operating Expense

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total:

  	
   

  	
  $

  	
   

  	
   

  

 

 

As of
the date hereof, Tenant is not entitled to any credits, reductions, offsets,
defenses, free rent, rent concessions or abatements of rent under the Lease or
otherwise against the payment of rent or other charges under the Lease;

 

We will deliver to Lender
a copy of all notices we serve on or receive from the Landlord to Greenwich
Capital Financial Products, Inc., c/o Christine H. Moran, 550 West Jackson
Boulevard, Suite 1700, Chicago, Illinois 60661.

 

All of
the obligations of the Landlord under the Lease have been duly performed and
completed including, without limitation, any obligations of the Landlord to
make or to pay the Tenant for any improvements, alterations or work done on the
Demised Premises, and the improvements described in the Lease have been
constructed in accordance with the plans and specifications therefor and have
been accepted by us.

 

The Lease is in full
force and effect, no advance rentals have been paid, and we have no unsatisfied
claims against the Landlord.

 

A
letter of credit in the amount of
$                      
has been given by Tenant under the terms of, or with respect to, the Lease.

 

Tenant has no option or right to purchase the property
of which the premises are a part, or any part thereof;

 

Tenant has not at any time and does not presently use
the leased premises for the generation, manufacture, refining, transportation,
treatment, storage or disposal of any hazardous substance or waste or for any
purpose which poses a substantial risk of imminent damage to public health or
safety or to the environment, except in compliance with all applicable laws.

 

The undersigned representative of Tenant is duly
authorized and fully qualified to execute this instrument on behalf of Tenant
thereby binding Tenant;

 

Tenant
understands and acknowledges that you are about to make a loan to Landlord and
receive as part of the security for such loan (i) a Mortgage/Deed of Trust
encumbering Landlord’s fee interest in the Project (of which the demised
premises are a potion) and the rents, issues and profits of the Lease (the
“Mortgage”), and (ii) an Assignment of Leases and Rents (“Assignment of
Leases”) which affects the Lease, and that you (and persons or entities to whom
the Mortgage and/or Assignment of Leases may subsequently be assigned) are
relying upon the representations and warranties contained herein in making such
loan.  Further, Tenant has notice that
the Lease and the rent and all other sums due thereunder have been assigned or
are to be assigned to you as security for the aforesaid loan secured by the
Mortgage.  In the event that you (or any
person or entity to whom the Mortgage and/or Assignment of Leases may
subsequently be assigned) notify Tenant of a default under the Mortgage of
Assignment of Leases and demand that Tenant pay its rent and all others sums
due under the Lease to you (or such future lender) Tenant shall honor such
demand, to the extent permitted by applicable law, and pay its

 

 

rent
and all other sums due under the Lease directly to you (or such future lender)
or as otherwise required pursuant to such notice.

 

Neither Tenant nor any
guarantor of the Lease is presently the subject of any proceeding pursuant to
the United States Bankruptcy Code of 1978, as amended.

 

Tenant
acknowledges and agrees that Landlord and Lender shall be entitled to rely on
Tenant’s certifications set forth herein. 
Tenant hereby further agrees for a period of thirty (30) days from the
date hereof to notify Landlord and Lender in writing at the address set forth
above of any changes in the trust and accuracy of any of the certifications
contained herein promptly upon Tenant’s learning of each such change.

 

	
   

  	
  TENANT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (please type or print name of Tenant)

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

EXHIBIT “E-1 through E-8”

TENANT PARKING PLAN

 

 

 

EXHIBIT
“E-2”

KCI
TOWER PARKING GARAGE PARKING PLAN

 

 

 

EXHIBIT
“E-3”

KC TOWER
PARKING GARAGE PARKING PLAN

 

 

 

EXHIBIT
“E-4”

KCI
TOWER PARKING GARAGE PARKING PLAN

 

 

 

EXHIBIT
“E-5”

 

 

 

EXHIBIT
“E-6”

KCI
TOWER PARKING GARAGE PARKING PLAN

 

 

 

EXHIBIT
“E-7”

KCI
TOWER PARKING GARAGE PARKING PLAN

 

 

 

EXHIBIT
“E-8”

KCI
TOWER PARKING GARAGE PARKING PLAN

 

 

 

EXHIBIT “F”

VISITOR SPACES

 

 

 

 

 

EXHIBIT
“H”

LETTER
OF CREDIT

 

DRAFT FOR DISCUSSION
PURPOSES ONLY

 

DATE: 

 

IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER:  

 

 

	
  BENEFICIARY

  	
  APPLICANT

  
	
  CKW SAN ANTONIO, L.P.

  	
  KINETIC CONCEPTS, INC.

  
	
  5929 BALCONES DR., SUITE 100

  	
  8023 VANTAGE DRIVE

  
	
  AUSTIN, TX
  7873            1

  	
  SAN ANTONIO, TX 78230

  
	
  ATTN: PHILIP W. CAPRON

  	
   

  

 

	
   

  	
  AMOUNT: $3,150,000.00

  

 

THREE MILLION ONE HUNDRED AND FIFTY THOUSAND US
DOLLARS

 

	
   

  	
  EXPIRATION

  
	
   

  	
  , 2003

  

 

WE HEREBY
ESTABLISH IN YOUR FAVOR OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. 
                                
WHICH IS AVAILABLE WITH BANK OF AMERICA, N.A. 333 S. BEAUDRY AVE. 19TH
FLOOR, LOS ANGELES, CA  90017. BY
PAYMENT AGAINST PRESENTATION OF THE ORIGINAL OF THIS LETTER OF CREDIT AND YOUR
DRAFTS AT SIGHT DRAWN ON BANK OF AMERICA, N.A., ACCOMPANIED BY THE FOLLOWING
DOCUMENT:

 

A CERTIFICATE OF THE BENEFICIARY CERTIFYING THAT, IN
ACCORDANCE WITH SECTION 7 OF THAT CERTAIN STANDARD OFFICE BUILDING LEASE
AGREEMENT (THE “LEASE”) DATED
                ,
2002, AS THE SAME MAY BE AMENDED FROM TIME TO TIME BY AND BETWEEN
BENEFICIARY, AS LANDLORD, AND KINETIC CONCEPTS, INC., AS TENANT, THE
BENEFICIARY IS ENTITLED TO PRESENT THE ACCOMPANYING SIGHT DRAFT FOR PAYMENT.

 

WE HEREBY AGREE WITH THE BENEFICIARY THAT DRAFTS DRAWN AND DOCUMENTS
PRESENTED TO OUR OFFICE IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF THIS
LETTER OF CREDIT WILL BE DULY HONORED AS SPECIFIED HEREIN.

 

THIS LETTER OF CREDIT IS VALID UNTIL
                        ,
2003, PROVIDED, HOWEVER, THAT THIS LETTER OF CREDIT WILL BE AUTOMATICALLY
EXTENDED WITHOUT FURTHER ACTION OR AMENDMENT FOR ONE (1) YEAR FROM THE PRESENT
OR ANY FUTURE EXPIRATION DATE HEREOF, BUT IN NO CASE PAST 
                        ,
2007, UNLESS FORTY-FIVE (45) DAYS PRIOR TO ANY SUCH EXPIRATION DATE WE ELECT
NOT TO RENEW THIS LETTER OF CREDIT AND GIVE YOU NOTICE OF SUCH ELECTION, WHICH
NOTICE SHALL BE DEEMED GIVEN WHEN RECEIVED BY YOU.  ANY SUCH NOTICE SHALL BE IN WRITING AND DELIVERED BY COURIER OR
BY CERTIFIED MAIL (RETURN RECEIPT REQUESTED) AT THE ADDRESS ABOVE (OR SUCH
OTHER ADDRESS FOR ANY SUCH NOTICES WHICH YOU MAY HEREAFTER SPECIFY IN A WRITTEN
NOTICE DELIVERED TO US.)

 

PARTIAL DRAWINGS ARE PERMITTED.

 

THIS LETTER OF CREDIT IS TRANSFERABLE. 
TRANSFER OF THIS LETTER OF CREDIT MAY BE EFFECTED UPON PRESENTATION
TO US OF THIS ORIGINAL LETTER OF CREDIT, A TRANSFER REQUEST IN THE FORM OF
EXHIBIT A ATTACHED HERETO AND PAYMENT OF OUR TRANSFER FEE.

 

 

THIS LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICE
1998 (“ISP98”), INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION 590.

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AUTHORIZED SIGNATURE

  	
   

  	
  AUTHORIZED SIGNATURE

  

 

 

EXHIBIT “A”

 

REQUEST FOR ENTIRE
ABSOLUTE AND IRREVOCABLE TRANSFER OF

LETTER OF CREDIT
WITHOUT SUBSTITUTION OF INVOICES

 

                                                ,
20                    

NAME                                  

LETTEROF CREDIT NO.

ADDRESS

ISSUED BY 

 

 

TO:         BANK OF AMERICA, N.A.

 

WE REQUEST YOU TO
TRANSFER ALL OF OUR RIGHTS AS BENEFICIARY UNDER THE LETTER OF CREDIT REFERENCED
ABOVE TO THE NEW BENEFICIARY NAMED BELOW:

 

NAME OF NEW BENEFICIARY

 

ADDRESS

 

BY THIS TRANSFER, ALL OUR
RIGHTS AS THE ORIGINAL BENEFICIARY, INCLUDING ALL RIGHTS TO MAKE DRAWINGS UNDER
THE LETTER OF CREDIT, GO TO THE NEW BENEFICIARY.  THE NEW BENEFICIARY SHALL HAVE SOLE RIGHTS AS BENEFICIARY,
WHETHER EXISTING NOW OR IN THE FUTURE, INCLUDING SOLE RIGHTS TO AGREE TO ANY
AMENDMENTS, INCLUDING INCREASES OR EXTENSIONS OR OTHER CHANGES.  ALL AMENDMENTS WILL BE SENT DIRECTLY TO THE
NEW BENEFICIARY WITHOUT THE NECESSITY OF CONSENT BY OR NOTICE TO US.

 

WE ENCLOSE THE ORIGINAL
LETTER OF CREDIT AND ANY AMENDMENTS. 
PLEASE INDICATE YOUR ACCEPTANCE OF OUR REQUEST FOR THE TRANSFER BY
ENDORSING THE LETTER OF CREDIT AND SEND IT TO THE NEW BENEFICIARY WITH YOUR
CUSTOMARY NOTICE OF TRANSFER.

 

FOR YOUR TRANSFER FEE:

 

ENCLOSED IS OUR
CHECK FOR $250.00

 

YOU MAY DEBIT
MY/OUR ACCOUNT NO.            

 

WE ALSO AGREE TO PAY YOU
ON DEMAND ANY EXPENSES WHICH MAY BE INCURRED BY YOU IN CONNECTION WITH
THIS TRANSFER.

 

 

THE SIGNATURE AND TITLE
AT THE RIGHT CONFORM WITH THOSE SHOWN IN OUR FILES AS AUTHORIZED TO SIGN  FOR 
THE BENEFICIARY.  POLICIES
GOVERNING SIGNATURE AUTHORIZATION AS REQUIRED FOR WITHDRAWALS FROM CUSTOMER
ACCOUNTS SHALL ALSO BE APPLIED TO THE AUTHORIZATION OF SIGNATURES ON THIS FORM.

 

	
   

  	
   

  
	
  NAME OF BANK

  
	
   

  
	
   

  	
   

  
	
  AUTHORIZED SIGNATURE
  AND TITLE

  

 

	
   

  	
   

  
	
  NAME OF BENEFICIARY

  
	
   

  
	
   

  
	
   

  	
   

  
	
  NAME OF AUTHORIZED SIGNER
  AND TITLE

  
	
   

  
	
   

  	
   

  
	
  AUTHORIZED SIGNATURE

  
			

 

 

Loan Number: 030812147

EXHIBIT “I”

 

SUBORDINATION,
NON-DISTURBANCE

 

AND ATTORNMENT AGREEMENT

 

NOTICE: THE SUBORDINATION PROVIDED FOR IN THIS
AGREEMENT RESULTS IN YOUR LEASEHOLD ESTATE IN THE PROPERTY BECOMING SUBJECT TO
AND OF LOWER PRIORITY THAN THE SECURITY INTEREST IN  THE PROPERTY CREATED BY SOME
OTHER OR LATER INSTRUMENT.

 

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT
AGREEMENT (this “Agreement”), made as of the
             day
of                    ,
         between Greenwich Capital
Financial Products, Inc., a Delaware corporation (“Lender”),
                                                    ,
a                                                    
(“Tenant”), and
                                                                        
(“Landlord”).

 

WITNESSETH:

 

WHEREAS, the Property, as hereinafter defined, is to
be encumbered by a Deed of Trust (hereinafter called the “Mortgage”); covering
the real property described in Exhibit “A” attached hereto and made a part
hereof for all purposes, and the buildings and improvements thereon
(collectively, the “Property”) securing the payment of a promissory note
payable to the order of Lender (the “Note”); and

 

WHEREAS, by that certain Lease Agreement entered into
as of
                                ,
between Landlord and Tenant (the “Lease”), Landlord has leased all or portion
of the Property (the “Premises”) to Tenant; and

 

WHEREAS, Lender will not make the loan secured by the
Mortgage unless Tenant subordinates the Lease and Tenant’s rights thereunder to
the lien and provisions of the Mortgage; and

 

WHEREAS, Tenant and Lender desire to confirm their
understanding with respect to the Lease and the Mortgage.

 

NOW, THEREFORE, in consideration of the premises, the
covenants, conditions, provisions and agreement set forth herein, and other
good and valuable consideration, receipt and sufficiency of which whereof is
hereby acknowledged, Lender, Tenant and Landlord do hereby mutually represent,
acknowledge, covenant and agree as follows:

 

1.  The
Lease.  The Lease is in good
standing, and in full force and effect without any modification or amendment as
of the date hereof. The Lease shall not be amended without the written approval
of Lender and shall not be terminated or canceled except as expressly provided
in the Lease.

 

2.  Subordination.  Tenant hereby subordinates in all respects
and at all times its interests in the Lease and to the Premises under and
pursuant to the Lease to all of the terms, conditions and provisions of the
Mortgage insofar as it affects the Property of which the Premises form a part,
to all advances made or to be made thereunder, to the full extent of the
principal sum and interest thereon from time to time secured thereby, and to
any renewals, modifications and extensions or modifications thereof including
any increase in the indebtedness secured thereby or supplements thereto,
subject to the terms and conditions set forth in

 

 

this Agreement.

 

3.  Non-disturbance.  So long as Tenant is not in default (beyond
any period(s) given under the Lease to Tenant to cure such default) in (i) the
payment of any monetary obligation under the Lease, or (ii) the performance of
any of the other terms, covenants or conditions with which Tenant is obligated
to comply pursuant to the Lease, then:

 

(a)  The right
of possession of Tenant to the Premises shall not be affected or disturbed by
Lender in the exercise of any of its rights under the Mortgage or the Note; nor
shall Tenant be named as a party defendant to any foreclosure of the lien of
the Mortgage, nor in any other way be deprived of its rights under the Lease
except in accordance with the terms of the Lease.

 

(b)  In the
event Lender or any party that acquires title through any foreclosure proceeding
or through a deed in lieu of foreclosure (such party being referred to herein
as a “Purchaser’) succeeds to the interest of Landlord under the Lease, the
Lease shall not be terminated or affected thereby, and any sale of the Premises
by Lender or pursuant to the judgment of any court in an action to enforce the
remedies provided for in the Mortgage, shall be made subject to the Lease and
the rights of Tenant thereunder.

 

4.  Recognition
and Attornment.  If Lender or any
Purchaser succeeds to the interest of Landlord under the Lease and all terms
therein, and the rights of Tenant thereunder, the Lease shall continue in
effect, shall not be altered, terminated, or disturbed, and Tenant shall be
bound to Lender or such Purchaser under all of the terms, covenants and
conditions of the Lease for the balance of the term of the Lease as specified
in the Lease (the “Term”), with the same force and effect as if Lender or such
Purchaser were the landlord under the Lease except that, notwithstanding
anything to the contrary herein or in the Lease, the provisions of the Mortgage
will govern with respect to the disposition of proceeds of insurance policies
or condemnation or eminent domain awards. In such event, Tenant shall attorn to
Lender or such Purchaser as its landlord, such attornment to be effective and
self-operative without the execution of any other instruments on the part of
Lender, such Purchaser or Tenant, immediately upon Lender or such Purchaser
succeeding to the interest of Landlord under the Lease. Provided, however,
Tenant shall be under no obligation to pay any monetary obligation set forth in
the Lease to Lender or such Purchaser until Tenant receives written notice from
Lender or such Purchaser that Lender has succeeded to the interest of Landlord
under the Lease. Upon receipt by Tenant of such notice from Lender or such
Purchaser, Tenant shall make all payments due by Tenant under the Lease to
Lender or such Purchaser or as Lender or such Purchaser may in writing direct.
The respective rights and obligations of Tenant and Lender or such Purchaser
upon such attornment, to the extent of the then remaining balance of the Term,
shall be and are the same as are then in existence, as set forth in the Lease.

 

5.  Rights
Under the Lease.  If Lender shall
succeed to the interests of Landlord in and to the Premises or under the Lease,
Lender shall not be:

 

(a) liable for any acts or omissions of any prior
landlord (including, but not limited to, Landlord); or

 

(b)  subject to
any offsets, deductions or defenses which Tenant might have arising out of acts
or omissions of any prior landlord (including, but not limited to Landlord),
which offsets or deductions are in amounts greater than, or which defenses
relate to claims for amounts which are greater than, one (1) month’s then
current rent, and with respect to which Tenant has provided Lender with any
required notice and opportunity to cure in accordance with paragraph 7
hereinbelow;

 

 

(c)  obligated
to give Tenant a credit for and/or acknowledge any rent or additional rent
which Tenant has paid to Landlord or any prior landlord more than one (1) month
in advance of the due date for such rent or additional rent, unless such
payment is provided for in the Lease as presently existing or as amended in
accordance with this Agreement; or

 

(d)  bound by
any agreement or modification of the Lease made after the date hereof without
Lenders consent, except as permitted by the Mortgage.

 

The foregoing provisions shall be self-operative and
effective without the execution of any further instruments on the part of
either party hereto. However, Tenant agrees to execute and deliver to Lender or
to any person to whom Tenant herein agrees to attorn such other instruments as
either shall request in order to effectuate said provisions.

 

6.  Collection
of Rents and/or Possession of the Premises by Lender.  Upon receipt of written notice from Lender,
Landlord and Tenant agree that Tenant shall pay all rent and other amounts
owing under the Lease to a bank account or accounts designated by Lender. Any
such payment by Tenant made in the manner directed by Lender shall be credited
against the rental obligations of Tenant under the Lease in the direct order of
maturity of the rental and other installments due thereunder, and Landlord
hereby releases Tenant from all claims and liabilities as to the payment of
rent or any other amount due under the Lease if such payment is made pursuant
to the written direction of Lender.

 

7.  Notice
and Opportunity to Cure Landlord Default. 
Tenant shall furnish to Lender copies of all notices (each, a “First
Notice”) which Landlord is entitled to receive under the Lease, and upon
request by Lender, Tenant agrees to certify in writing to Lender whether or not
any default on the part of Landlord exists under the Lease and the nature of
any such default. Furthermore, Tenant shall provide notice (“Landlord Default
Notice”) to Lender in writing of the occurrence of any default by Landlord (if
no cure period is associated with a First Notice and the facts and circumstances
associated with a First Notice constitute a default on the part of Landlord, a
Landlord Default Notice may be given at the same time as the respective First
Notice and shall permit Lender a period of thirty (30) days from the date of
such notice (the “Cure Period”) in which to cure such default prior to
proceeding to exercise any of the rights or remedies of Tenant under the Lease,
including termination of the Lease, abatement of rental payments due
thereunder, or performance of Landlord’s covenants or obligations which Tenant
asserts to be in default.  The Cure
Period for defaults, other than Exigent Circumstances Defaults (as defined
below), (i) shall be extended by a reasonable period of time so long as Lender
is diligently pursuing the cure of a default which can not reasonably be
expected to be cured within the initial thirty (30) day Cure Period, and (ii)
shall not be deemed to commence until after any period of time during which
Lender is pursuing acquisition of title to the Premises through foreclosure or
otherwise, such period to include, without limitation, any period of time
during which Lender’s acquisition of title to the Premises is stayed by any
proceeding in bankruptcy, any injunction or other judicial process.  With respect to defaults which are personal
to Landlord, such as bankruptcy, and thus not capable of being cured by Lender,
or with respect to defaults which are not capable of being cured without
possession of the Premises, then Lender shall be deemed to be diligently
pursuing a cure of such default if, within the above described thirty (30) day
Cure Period, Lender commences and thereafter pursues (subject to any judicial
stays, injunctions or other delays) foreclosure proceedings for the Premises.  Furthermore, in the case of defaults
personal to Landlord, Lender shall be deemed to have cured such defaults upon
final foreclosure of the Premises. 
Notwithstanding anything herein to the contrary, in the event of the
occurrence of any facts or circumstances which, if allowed by Landlord to
continue, would constitute a default of a type that would deprive Tenant of any
essential service or would result in a condition that constitutes an emergency
or involves other exigent circumstances that may reasonably be expected to
cause Tenant, its employees, agents or invitees material harm if Tenant were
required to provide Lender a

 

 

Landlord Default Notice
and the Cure Period (such condition being referred to herein as an “Exigent
Circumstances Default”), Lender shall have the same period of time (an “Exigent
Circumstances Cure Period”) from the date Tenant delivers a First Notice to
Lender, as Landlord would have following Tenant’s delivery of such First Notice
to Landlord, in which to cure such potential Exigent Circumstances Default, prior
to Tenant proceeding to exercise any of the rights or remedies of Tenant under
the Lease.  In no event shall any
Exigent Circumstances Cure Period be extended beyond the period of time set
forth above.

 

8.  Limitation
of Lender Liability.  Notwithstanding
anything to the contrary contained in this Agreement or the Lease, in the event
of any default or breach by Lender with respect to any of the terms, covenants
and conditions of the Lease to be observed, honored or performed by Lender as
Landlord, Tenant shall look solely to the estate and property of Lender in the
Premises for the recovery of any judgment (or any other judicial procedures
requiring the payment of money by Lender) from Lender, it being agreed that
Lender shall never be personally liable for any such judgment and that no
property or assets of Lender other than Lenders interest in the Premises shall
be subject to levy, execution or other procedures for satisfaction of Tenant’s
remedies. Lender shall not be required to respond in monetary damages from any
of its properties or assets other than Lenders interests in the Premises.

 

9.  Succession
in Interest.  For purposes of this
Agreement, Lender will be deemed to have succeeded to the interest of Landlord
under the Lease upon (i) the transfer of title to the Premises to Lender,
whether by virtue of foreclosure, sale or transfer in lieu of foreclosure, or
pursuant to the exercise of any rights and remedies under the Mortgage or
otherwise, or (ii) the occurrence of any other event as a result of which
Lender may acquire the right, title and interest of Landlord in and to the
Lease or the Premises.

 

10.  Notices.  All notices, requests and communications
(“Notice”) hereunder shall be given in writing or by telegram confirmed in
writing, and shall be delivered or mailed by first class registered or
certified mail, postage prepaid, return receipt requested to Lender, Landlord
or Tenant, as the case may be, at the addresses listed next to the signature of
each of the foregoing parties. Any Notice provided for herein shall become
effective only upon and at the time of receipt by the party to whom it is
given, unless such Notice is mailed by registered or certified mail, in which
case it shall be deemed to be received on the earlier of (i) the second business
day observed by Lender following the mailing thereof, or (ii) the day of its
receipt if such day is a business day of Lender (or if not a business day, the
first business day thereafter). Any party may, by proper written notice
hereunder to the other parties, change the individual address to which such
Notice shall thereafter be sent to such party.

 

11.  Binding
Agreement.  This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, legal representatives, successors
and assigns where permitted by the Agreement. For purposes of this Agreement,
all references herein to “Lender” shall be deemed to include also any
subsequent holder of the Mortgage who has given notice to Tenant of its
ownership of the Mortgage and who has furnished to Tenant its mailing address
and/or any other person succeeding to title to the Premises and/or the Lease
encumbered by the Mortgage or any part thereof and who claims by, through or
under Lender, whether by virtue of foreclosure, or sale or transfer in lieu of
foreclosure, or pursuant to the exercise of any rights and remedies under the
Mortgage or otherwise.

 

12.  Attorney’s
Fees.  In the event any legal action
or proceeding is commenced to interpret or enforce, the terms of, or
obligations arising out of this Agreement, or to recover damages for the breach
thereof; the party prevailing in any such action or proceeding shall be
entitled to recover from the nonprevailing party all reasonable attorney’s fees,
costs and expenses incurred by the prevailing party as shall be plead and
proven by such party and awarded by a court of competent jurisdiction.

 

 

13.  Severability.  In case any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed as if such invalid, illegal, or unenforceable provision
had never been contained herein.

 

14.  Headings.  The headings of this Agreement are for
convenience of reference only.

 

15.  Modification.  This Agreement may not be modified other
than by an agreement in writing signed by the parties hereto or their
respective successors.

 

16.  Counterparts.  This Agreement may be signed in
counterparts.

 

17.  Termination.  From and after payment in full of the loan
secured by the Mortgage and the recordation of a release or satisfaction
thereof, without the transfer of the Properly to Lender as a purchaser, this
Agreement shall become void and of no further force or effect.

 

18.  Governing
Law.  THE INTERPRETATION, VALIDITY
AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE
LAWS OF THE STATE OF TEXAS.

 

 

IN WITNESS
WHEREOF, the parties hereto have caused this instrument to be duly executed
effective as of the day and year first above written although actually executed
on the date(s) set forth in the acknowledgments below:

 

	
  LENDER ADDRESS:

  	
  LENDER:

  
	
   

  	
   

  
	
  600 Steamboat Road

  Greenwich, Connecticut 06830

  	
  Greenwich Capital Financial Products, Inc., a

  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LANDLORD ADDRESS:

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  TENANT ADDRESS:

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
  STATE OF ILLINOIS

  	
  o

  
	
   

  	
  o

  
	
  COUNTY OF COOK

  	
  o

  

 

On this
             day of
                    ,
        , before me, the undersigned, a
Notary Public in and for the State of Illinois, personally appeared
                                        ,
to me personally known, who, being by me duly sworn, did say that he is the
                                        
of said corporation executing the foregoing instrument to which this is
attached, that said instrument was signed and sealed on behalf of said
corporation by authority of its Board of Directors and that
                                        
as such officer acknowledged the execution of said instrument to be the
voluntary act and deed of said corporation, by it and by him voluntarily
executed.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public in and for the State of Illinois

  

 

 

	
  THE STATE OF TEXAS

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF

  	
  §

  

 

Before
me, a Notary Public, on this day personally appeared
                     ,
known to me to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that he executed the same for the purpose and
consideration therein expressed.

 

Given under my hand and seal of office this
         day of
            , 2002.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public, State of Texas

  
	
   

  	
  Commission Expires:

  	
   

  
				

 

 

 

	
  THE STATE OF TEXAS

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF

  	
  §

  

 

Before
me, a Notary Public, on this day personally
appeared         , known to me to
be the person whose name is subscribed to the foregoing instrument and
acknowledged to me that he executed the same for the purpose and consideration
therein expressed.

 

Given under my hand and seal of office this
         day of
                ,
2002.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public, State of Texas

  
	
   

  	
  Commission Expires:

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