Document:

exv10w15

 

Exhibit
10.15

WAREHOUSE LEASE

     THIS WAREHOUSE LEASE (“Lease”), dated August 25, 2006, is made between PIZZA INN, INC., a
Missouri corporation (“Landlord”) and THE SYGMA NETWORK, INC., a Delaware corporation (“Tenant”).

     In consideration of the mutual covenants contained in this Lease, Landlord and Tenant agree as
follows:

1. DEFINED TERMS; EXHIBITS; AND PREMISES.

     1.01. Defined Terms.

	 	 	 
	     Commencement Date:

	 	November 1, 2006
	 
	 	 
	     Expiration Date:

	 	September 30, 2009
	 
	 	 
	     Landlord’s Address:

	 	Pizza Inn, Inc.
	 

	 	3551 Plano Parkway
	 

	 	The Colony, Texas 75056
	 

	 	Attention:         Mr. Darrell G. Smith
	 

	 	                         Vice President of Development
	 

	 	Telephone No. 469.384.5101
	 

	 	Facsimile No.   469.384.5060

     Monthly Base Rent or Base Rent:

	 	 	 	 	 
	          Base Rent (PSF)

	 	Monthly Base Rent
	 	Annual Base Rent
	 
	 	 	 	 
	          $8.00

	 	$68,000
	 	$816,000

     Permitted Uses: Warehouse and distribution facility, with related offices

			
	     Premises:	 	The warehouse building consisting of approximately 102,000 square feet, which is
situated on that certain tract of real property described on Exhibit A attached hereto and
made a part hereof for all purposes.

     Premises Address: 3551 Plano Parkway, The Colony, Texas 75056

	 	 	 
	     Security Deposit:

	 	NONE
	 
	 	 
	     Tenant’s Address:

	 	The Sygma Network, Inc.
	 

	 	5550 Blazer Parkway, Suite 300
	 

	 	Dublin, Ohio 43017
	 

	 	Attention:     Mr. Ron Winters
	 

	 	                     Vice President, Distribution Services
	 

	 	Telephone:    614-734-2254
	 

	 	Facsimile:      614-734-2575

     Term: The period between the Commencement Date and the Expiration Date.

     The foregoing provisions constitute the defined terms (“Defined Terms”). Each reference in this Lease to

1

 

Article 1.01 or the Defined Terms shall be construed to incorporate the applicable Defined Terms in
this Article 1.01.

     1.02. Exhibits. The Exhibits listed below are attached to this Lease after the
signatures and by reference thereto are incorporated herein:

              Exhibit A Premises

     1.03. Premises. Landlord leases the Premises to Tenant, subject to the provisions of
this Lease. Except as otherwise expressly provided in this Lease, upon Tenant’s commencing
occupancy of the Premises, Tenant shall be deemed to have accepted the same in their condition
existing as of the date of such commencement of occupancy and subject to all applicable municipal,
county, state and federal statutes, laws, ordinances, including zoning ordinances, and regulations
governing and relating to the use, occupancy or possession of the Premises. Tenant acknowledges
that the only warranties and representations Landlord has made in connection with the physical
condition of the Premises or Tenant’s use of the same upon which Tenant has relied directly or
indirectly for any purpose, if any, are those expressly provided in this Lease.

     TENANT ACKNOWLEDGES THAT IT HAS (OR WILL HAVE BY SEPTEMBER 15, 2006) FULLY INSPECTED AND
ACCEPTS THE PREMISES IN THEIR PRESENT CONDITION, AND TENANT WARRANTS AND ACKNOWLEDGES TO AND AGREES
WITH LANDLORD THAT TENANT IS LEASING THE PREMISES IN AN “AS IS, WHERE IS” PHYSICAL CONDITION “WITH
ALL FAULTS” AND SPECIFICALLY AND EXPRESSLY WITHOUT ANY WARRANTY, REPRESENTATION OR GUARANTY, EITHER
EXPRESS OR IMPLIED, OF ANY KIND, NATURE OR TYPE WHATSOEVER FROM OR ON BEHALF OF THE LANDLORD,
EXCEPT AS EXPRESSLY PROVIDED IN THIS LEASE.

     Tenant shall perform an inspection of the Premises and its appurtenant systems and fixtures
prior to September 15, 2006, and shall provide Landlord with written notice of any reasonable and
material objection that it has regarding such physical condition of the Premises and its
appurtenant systems and fixtures (giving due consideration towards the age of the Premises, and
ordinary wear and tear thereto; provided that such consideration shall not prevent Tenant from
making an objection with respect to the Premises and its appurtenant systems and fixtures, or any
portion thereof, that is not in reasonably good and safe operating condition and repair) discovered
during its inspection on or before such date. If Landlord cannot or will not cure any or all of
Tenant’s objections, Landlord shall provide Tenant with written notice of such intention within
three (3) business days of Tenant’s notice; otherwise, Landlord shall be deemed to have elected to
cure Tenant’s objection to Tenant’s reasonable satisfaction. In the event that Landlord elects
not to give or fails to give such notice and further fails to cure Tenant’s objections, to Tenant’s
reasonable satisfaction, or if Seller gives such notice, then Tenant may, at its option,
either (i) terminate this Lease by written notice thereof to Landlord prior to the Commencement
Date, whereupon neither party shall have any further obligation to the other under this Lease, or
(ii) proceed to the Commencement Date, in which event there shall be no abatement in rent or other
terms (except as may be mutually agreed by the parties). In the event that Tenant does not
exercise the option described in (i) above within five (5) business days of any notice by Landlord
that it cannot or will not cure an objection, then Tenant shall be conclusively deemed to have
elected option (ii) above.

     Landlord retains risk of loss to the Premises prior to the Commencement Date, except to the
extent caused by the negligence or willful misconduct of Tenant or its employees, agents,
contractors and consultants. If prior to the Commencement Date, all or any portion of the Premises
is damaged or destroyed by fire or other casualty prior to the Commencement Date as a result of
events or circumstances other than the negligence or willful misconduct of Tenant or its employees,
agents, contractors and consultants, which damage or destruction will result in a material
disruption to Tenant’s planned operations at the Premises, in Tenant’s reasonable judgment, then
Tenant shall give prompt written notice to Landlord, and either of the parties may, at their
option, terminate this Lease by written notice to the other within ten (10) days of Tenant’s notice
to Landlord, whereupon neither party shall have any further obligation to the other under this
Lease. In the event that neither of the parties terminate this Lease, the provisions of Article 9

2

 

shall control.

     1.04. Term. The Term shall commence upon the Commencement Date and expire on the
Expiration Date specified in Article 1.01. The Term is subject to earlier termination as provided
herein.

     1.05. Holdover. In the event that Tenant desires to extend the Term of this Lease,
Tenant shall deliver written notice to Landlord not later than six (6) months prior to the
expiration of the Term. Upon Landlord’s receipt of such notice, the parties shall attempt to agree
on the terms for the extension of the Term. In the event of holding over by Tenant after
expiration of the Term or earlier termination of this Lease without the written consent of
Landlord, Tenant shall pay as Base Rental the sum of one and one-half times the scheduled Base Rent
for the entire holdover period. Notwithstanding the foregoing sentence, no holding over by Tenant
after the term of this Lease shall operate to extend this Lease and in the event of any
unauthorized holding over, Tenant shall indemnify Landlord against all claims for damages by
another lessee to whom Landlord may have leased all or any part of the Premises effective upon the
termination of this Lease. Any holding over with the consent of Landlord in writing shall
thereafter constitute this Lease as a lease from month to month.

     1.06. Tenant’s Access to Premises Prior to Commencement Date. Simultaneously with
the execution and delivery of this Lease, the parties will execute and deliver an access agreement
governing Tenant’s access to the Premises prior to the Commencement Date hereunder (the “Access
Agreement”), and Landlord will provide Tenant and its representatives and agents with access to the
Premises as provided in the Access Agreement.

     1.07 Transaction Documents. Pursuant to (i) that certain Distribution Service
Agreement of even date herewith (the “Distribution Agreement”), Tenant and Landlord have entered
into an agreement for Purchaser to be the primary approved distributor for Landlord and Landlord’s
franchisees, as more particularly described therein, and (ii) that certain Agreement for the
Assignment of Equipment Leases of even date herewith (the “Assignment”), Landlord has agreed to
assign to Tenant, and Tenant has agreed to assume the rights of Landlord in and to, certain
equipment leases, as more particularly described therein, and (iii) that certain Purchase and Sale
Agreement (Owned Personal Property) of even date herewith (the “Purchase Agreement”), whereby
Landlord has agreed to sell to Tenant, and Tenant has agreed to purchase, certain personal
property, as more particularly described therein. The foregoing agreements are collectively
referred to herein as the “Transaction Documents”. The parties acknowledge that the transactions
described herein are part of a larger transaction as reflected in the Transaction Documents, and
that the core transactions noted therein shall occur simultaneously (i.e. on the same date, which
is anticipated to be the “Closing Date” under the Purchase Agreement, Tenant shall purchase the
“Property” under the Purchase Agreement, assume the equipment leases under the Assignment, become
the Tenant hereunder and begin providing distribution services to Landlord under the Distribution
Agreement). As such, in the event that the Distribution Agreement is terminated prior to the
Commencement Date for any reason, then this Lease shall be automatically terminated.

2. RENT

     2.01. Base Rent. The Monthly Base Rent (or Base Rent) set forth in Article 1.01 shall
be payable in equal monthly installments. Tenant shall pay the Base Rent to Landlord in advance
upon the first day of each calendar month of the Term, at Landlord’s address or at such other place
designated by Landlord in a notice to Tenant, without any prior demand therefor and
without any deduction, abatement or setoff whatsoever. If the Term shall commence or end on a
day other than the first day of a calendar month, then Tenant shall pay, upon the Term Commencement
Date and the first day of the last calendar month of the Term, a pro rata portion of the Monthly
Base Rent, prorated on a per diem basis, with respect to the portions of this fractional calendar
month included in the Term.

     2.02.
Additional Rent. All charges required to be paid by Tenant hereunder, including
without limitation, payments for Tax Expenses, Insurance Expenses, Tenant’s Share of Operating
Expenses, and any other amounts payable hereunder, shall be considered additional rent for the
purposes of this Lease (“Additional Rent”). Unless another time shall be herein expressly provided
for the payment thereof, Tenant shall pay Additional Rent upon

3

 

written demand by Landlord or together with the next succeeding installment of Monthly Base Rent.
“Rent” shall mean Base Rent and Additional Rent. The Rent shall be absolutely net to Landlord, and
Landlord shall have no obligation under this Lease except as herein specifically provided.

     Commencing on the Commencement Date and continuing throughout the remainder of the Term,
Tenant shall pay to Landlord as Additional Rent, on the first day of each calendar month, an amount
equal to one-twelfth (1/12) of the estimated Additional Rent incurred with respect to each calendar
year in the Term of this Lease (the total amount paid by the Tenant in each Calendar Year being
referred to herein as the “Expense Adjustment Amount”). The Expense Adjustment Amount for each
calendar year shall be estimated from time to time by Landlord and communicated by written notice
to Tenant. Landlord shall cause to be kept books and records showing Additional Rent in accordance
with an appropriate system of accounts and account practices consistently maintained. Following
the close of each calendar year, Landlord shall cause the amount of the Expense Adjustment Amount
which should have been paid by Tenant for such calendar year (the “Final Expense Amount”) to be
computed on the basis of the actual Additional Rent for each Calendar Year, and Landlord shall
deliver to Tenant a statement of such Final Expense Amount. If the Final Expense Amount exceeds
the Expense Adjustment Amount, Tenant shall pay such deficiency within thirty (30) days after
receipt of such statement. If the Expense Adjustment Amount exceeds the Final Expense Amount, then
at Landlord’s option such excess shall be either credited against payments of Additional Rent next
due or refunded by Landlord, provided no Event of Default exists hereunder. Delay in computation
of the Final Expense Amount or any Expense Adjustment Amount shall not be deemed a default
hereunder or a waiver of Landlord’s right to collect the Final Expense Amount or Expense Adjustment
Amount, as the case may be. Landlord will provide Tenant with such supporting documentation
regarding the Additional Rent as Tenant may reasonably request.

     Notwithstanding the foregoing or anything herein to the contrary, in the event that any cost,
expense, liability or obligation included in Tenant’s obligation for Additional Rent is of the
nature of capital improvements then Tenant shall pay to Landlord a monthly “Capital Improvement
Amortization Charge” (as defined herein) to cover such cost, expense, liability or obligation,
which Capital Improvement Amortization Charge shall be due and payable together with each monthly
installment of Base Rent hereunder. The monthly Capital Improvement Amortization Charge shall be
equal to the aggregate dollar value of the cost, expense, liability or obligation, divided by the
useful life in months of the item(s) which are being funded or purchased therewith, as mutually
agreed by the parties or, if the parties are unable to agree, as determined by Internal Revenue
Service depreciation guidelines.

     2.03. Late Payment. Tenant hereby acknowledges and agrees that any payment of Rent
received by Landlord at any time after the due date thereof may cause Landlord to incur costs not
contemplated by this Lease (including, without limitation, bookkeeping, personnel, processing
charges, late charges and interest) and the exact amount of such costs may be impossible to
ascertain. Accordingly, in the event any rental is not received when due, for any reason
whatsoever, or if any rental payment is by check which is returned for insufficient funds, then in
addition to the past due amount Tenant shall pay to Landlord interest on the rental then due at the
maximum contractual rate which could legally be charged in the event of a loan of such rental to
Tenant (but in no event to exceed 1-1/2% per month), such interest to accrue continuously on any
unpaid balance due to Landlord by Tenant during the period commencing with the rental due date and
terminating with the date on which Tenant makes full payment of all amounts owing to Landlord at
the time of said payment. Any such late charge or interest payment shall be payable as Additional
Rent under this Lease, and shall be payable immediately on demand. Should
Tenant remit a partial payment for any outstanding Base Rent or Additional Rent due, Landlord
shall apply said partial payment to the outstanding Base Rent or Additional Rent as Landlord deems
necessary, in its sole discretion. This provision shall not relieve Tenant from payment of Rent at
the time and in the manner herein specified.

3.           TAXES

     3.01. Tenant’s Obligations. Tenant shall pay to Landlord, as Additional Rent, the Tax
Expenses. “Tax Expenses” shall include the sum of the following: all real estate taxes and other
taxes relating to the Premises

4

 

(including, without limitation, all improvements, fixtures and personal property thereon),
assessments, governmental charges, fees and levies, general and special, ordinary and
extraordinary, unforeseen as well as foreseen, of any kind and nature for public improvements,
services or benefits and all other fees or taxes which may be levied in lieu of any of the above,
which are assessed, levied, confirmed, imposed or become a lien upon the Premises, or become
payable during the Term; provided, however, that any sum payable by Tenant, which would not
otherwise be due until after the date of the termination of this Lease, shall be paid by Tenant to
Landlord upon such termination.

     3.02. Personal Property Taxes. Tenant shall pay or cause to be paid, prior to
delinquency, any and all taxes and assessments levied upon trade fixtures, inventories and other
personal property owned by Tenant and located in the Premises.

     3.03. Tax on Rents. Tenant shall pay, promptly when due as Additional Rent, any
sales, use, excise or other tax imposed on the rents or other sums payable to Landlord (to the
extent such tax is imposed by applicable law) and all taxes imposed upon Tenant’s business
operations in the Premises; provided, that this provisions shall not require Tenant to pay or
reimburse Landlord for any income taxes payable by Landlord with respect to rents or other sums
payable to Landlord hereunder.

4. INSURANCE

     4.01. Tenant’s Obligations. Tenant shall pay to Landlord, as Additional Rent, the
Insurance Expenses. “Insurance Expenses” shall include the cost of all premiums for insurance
maintained by Landlord on or related to the Premises, including without limitation, the cost of
premiums for insurance maintained under Article 4.02. The amount owed by Tenant for Insurance
Expenses, as set forth in this Article 4.01, shall be prorated between Landlord and Tenant so that
Tenant shall pay that proportion which the part of such period within the Term bears to the entire
period.

     4.02. Property Coverage. During the Term, Landlord shall procure and maintain in full
force and effect with respect to the building which is a part of the Premises (the “Building”), a
policy or policies of Fire and Extended Coverage Insurance. Such insurance, at Landlord’s
election, may include, but is not limited to sprinkler leakage, vandalism and malicious mischief
coverage, and any other endorsements required by the holder of any fee or leasehold mortgage.

     4.03. Public Liability. Tenant shall, at Tenant’s sole cost and expense, keep and
maintain in full force during the Term a policy or policies of comprehensive public liability
insurance, written by an insurance company approved by Landlord in the form customary to the
locality insuring Tenant’s activities and those of Tenant’s employees, agents, licensees and
invitees with respect to the Premises and/or Building against loss, damage or liability for
personal injury or death of any person or loss or damage to property occurring in, upon or about
the Premises in the amount of Two Million and No/100 Dollars ($2,000,000.00) combined single limit,
bodily injury and property damage, each occurrence; provided, however, that if at any time during
the Term Tenant shall have in full force and effect a blanket policy of public liability insurance
with the same coverage for the Premises as described above, as well as coverage of other premises
and properties of Tenant, or in which Tenant has some interest, such blanket insurance shall
satisfy the requirements hereof.

     4.04. Tenant’s Property and Fixtures. Tenant shall assume the risk of loss or damage
to Tenant’s fixtures, equipment, inventory, goods in the care, custody or control of Tenant, and
tenant improvements that Tenant has installed to the Premises.

     4.05. Insurance Certificates. All insurance required hereunder shall be in form and
in responsible companies reasonably satisfactory to Landlord. Tenant shall furnish to Landlord on
or before the Commencement Date and thereafter within thirty (30) days prior to the expiration of
each such policy, a certificate of insurance signed by an authorized agent of the insurance carrier
of each policy of insurance carried by Tenant pursuant hereto. Each

5

 

certificate shall expressly provide that such policies shall not be cancellable or
subject to reduction of coverage or otherwise be subject to modification except after thirty (30)
days’ prior written notice to the parties named as insureds in this Article 4.05. Landlord, its
successors and assigns, and any nominee of Landlord holding any interest in the Premises,
including, without limitation, any ground lessor and the holder of any fee or leasehold mortgage,
shall be named as insureds under each policy of insurance maintained by Tenant pursuant to this
Lease. Each policy shall be primary, irrespective of any policy in force for Landlord.

     4.06. Tenant’s Failure. If Tenant fails to maintain any insurance required in this
Lease, Tenant shall be liable for any loss or cost resulting from said failure. This Article 4.06
shall not be deemed to be a waiver of any of Landlord’s rights and remedies under any other article
of this Lease or at law or equity.

     4.07. Waiver of Subrogation. Any policy or policies of fire, extended coverage or
similar casualty insurance which either party obtains in connection with the Premises or Tenant’s
personal property therein, shall, to the extent the same can be obtained without undue expense,
include a waiver by the insurer of all right of subrogation against Landlord or Tenant in
connection with any loss or damage thereby insured against. Neither party, nor its agents,
employees or guests shall be liable to the other for loss or damage caused by any risk covered by
such insurance, provided such policies shall be obtainable.

     4.08.
Indemnification of Landlord. TENANT INDEMNIFIES AND HOLDS LANDLORD AND THE
PREMISES HARMLESS FROM AND AGAINST: (A) ANY AND ALL LIABILITIES, PENALTIES, LOSSES, DAMAGES, COSTS
AND EXPENSES, DEMANDS, CAUSES OF ACTION, CLAIMS OR JUDGMENTS ARISING FROM OR GROWING OUT OF ANY
INJURY TO ANY PERSON OR PERSONS OR ANY DAMAGE TO ANY PROPERTY AS A RESULT OF ANY ACCIDENT OR OTHER
OCCURRENCE DURING THE TERM OCCASIONED IN ANY WAY AS A RESULT OF TENANT’S OR TENANT’S OFFICERS’,
EMPLOYEES’, AGENTS’, SERVANTS’, SUBTENANTS’, CONCESSIONAIRES’, LICENSEES’, CONTRACTORS’, OR
INVITEES’ USE, MAINTENANCE, OCCUPATION OR OPERATION OF THE PREMISES DURING THE TERM, (B) ANY AND
ALL LIABILITIES, PENALTIES, LOSSES, DAMAGES, COSTS AND EXPENSES, DEMANDS, CAUSES OF ACTION, CLAIMS
OR JUDGMENTS ARISING FROM OR GROWING OUT OF ANY INJURY TO ANY PERSON OR PERSONS OR ANY DAMAGE TO
ANY PROPERTY BECAUSE OF THE NEGLIGENCE OF TENANT, TENANT’S OFFICERS, EMPLOYEES, AGENTS, SERVANTS,
SUBTENANTS, LICENSEES, CONTRACTORS, INVITEES OR CUSTOMERS, AND (C) ALL LEGAL COSTS AND CHARGES,
INCLUDING ATTORNEYS’ FEES, INCURRED IN CONNECTION WITH SUCH MATTERS AND THE DEFENSE OF ANY ACTION
ARISING OUT OF THE SAME OR IN DISCHARGING THE PREMISES ANY PART THEREOF FROM ANY AND ALL LIENS,
CHARGES OR JUDGMENTS WHICH MAY ACCRUE OR BE PLACED THEREON BY REASON OF ANY ACT OR OMISSION OF
TENANT OR ITS OFFICERS, EMPLOYEES OR AGENTS; PROVIDED, HOWEVER, THAT TENANT SHALL NOT BE REQUIRED
TO INDEMNIFY LANDLORD FOR ANY DAMAGE OR INJURY ARISING AS THE RESULT OF LANDLORD’S NEGLIGENCE OR
WILLFUL MISCONDUCT OR THAT OF LANDLORD’S AGENTS OR EMPLOYEES.

5. REPAIRS AND MAINTENANCE

     5.01. Tenant Repairs and Maintenance. Tenant shall, at Tenant’s own expense, keep,
maintain, repair and replace the entirety of the interior of the Premises, including without
limitation all doors, entryways, subfloors and floor coverings, all plumbing fixtures and systems,
electrical wiring, ceilings, interior walls, interior surfaces of exterior walls, signs, all
heating, ventilating and air conditioning systems, all loading doors, loading docks and pads, all
fire sprinkler systems, all doors and locks, all skylights and other fixtures and equipment in good
repair and in a clean and safe condition, casualties covered by insurance excepted to the extent of
proceeds received. Tenant shall, at Tenant’s sole expense, immediately replace all broken glass,
including skylights, in the Premises with glass equal to the specification and quality of the
original glass. Tenant shall, at Tenant’s sole expense, repair any area damaged by

6

 

Tenant, Tenant’s agents, employees, licensees and visitors, provided that, for repairs in excess of
$10,000, Tenant obtains Landlord’s prior approval with respect to the method and quality of such
repair, such approval not to be unreasonably withheld. All repairs shall be completed by
contractors approved by Landlord, such approval not to be unreasonably withheld. Any replacements
required of Tenant shall be made with equipment and/or materials equal to the specification and
quality of the original. All damage to the concrete of the parking areas resulting from Tenant’s
use of forklifts or other equipment shall be repaired by Landlord at Tenant’s sole cost and
expense. Tenant shall maintain the exterior of the Premises in neat and attractive condition.
Tenant shall not store supplies, work in process, inventory or other materials, or waste or garbage
outside the Building. Tenant shall obtain any containers or dumpsters desired by Tenant for trash,
garbage or rubbish at Tenant’s expense and shall contract and pay for all trash, garbage and
rubbish disposal and removal. Tenant shall maintain the areas around such trash containers and any
dumpster in clean, orderly and sanitary condition.

     5.02. Landlord Repairs and Maintenance. Landlord shall, at Landlord’s expense, after
written notice from Tenant, repair in a prompt and diligent manner any damage to structural
portions of the Building, and the roof of the Building. In the event Landlord elects, in
Landlord’s sole discretion, to replace the roof or paint the exterior walls of the Building, such
replacement or painting shall be at Landlord’s sole expense. However, if such damage is caused or
such replacement or painting is made necessary by an act or omission of Tenant, then Tenant shall
reimburse Landlord for Landlord’s expense in performing such repairs, replacements or painting.
There shall be no abatement of Rent during the performance of any work described in this Article
5.02. LANDLORD SHALL NOT BE LIABLE TO TENANT FOR INJURY OR DAMAGE THAT MAY RESULT FROM ANY DEFECT
IN THE CONSTRUCTION OR CONDITION OF THE PREMISES, NOR FOR ANY DAMAGE THAT MAY RESULT FROM
INTERRUPTION OF TENANT’S USE OF THE PREMISES DURING ANY REPAIRS BY LANDLORD, UNLESS CAUSED BY
LANDLORD’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Tenant waives any right to repair at the
expense of Landlord under any law, regulation, statute or ordinance, now or hereafter in effect.
Landlord shall have no obligation to maintain or repair the Premises except as specifically
provided by this Lease.

     5.03. Operating Expenses. Tenant shall pay to Landlord, as Additional Rent, Tenant’s
Share of the Operating Expenses. “Operating Expenses” shall include all expenses, unless expressly
excepted in this Section 5.03, which Landlord shall pay or become obligated to pay for the
administration, management, cleaning, maintenance, painting, and repair of the Premises (including
without limitation, any landscaping, parking lots and other common areas related to the Premises).
Operating Expenses shall not include (a) the cost of utilities relating to the Premises, whether or
not such utilities are separately metered to the Premises, the costs of such utilities being fully
payable by Tenant pursuant to Article 7 hereof; (b) Insurance Expenses and Tax Expenses; (c) any
items not considered to be operating expenses under generally accepted accounting principles; or
(d) items of maintenance and repair allocated to Landlord under Section 5.02. Any Operating
Expenses attributable to a period which falls only partially within the Term shall be prorated
between Landlord and Tenant so that Tenant shall pay only that proportion thereof which the part of
such period within the Term bears to the entire period. Where used in this Section 5.03, “Tenant’s
Share” shall mean thirty-four percent (34%), which is equal to the total number of gross acres
comprising the land contained within the Premises divided by the total number of gross acres of
land owned by Landlord (whether comprised within the Premises and/or otherwise adjacent to or
contiguous with the Premises).

     5.04. Inspection of Premises. Landlord and Landlord’s authorized agents may enter the
Premises at any reasonable time, in order to inspect the same, to inspect the performance by Tenant
of the terms and conditions hereof, to affix reasonable signs and displays, to show the Premises to
prospective purchasers, tenants and lenders, and for all other purposes as Landlord shall
reasonably deem necessary. If Tenant shall not be personally present to permit an entry into the
Premises when for any reason an entry therein shall be permissible, Landlord may enter the same by
master key or, in the event of an emergency, by the use of force without rendering Landlord liable
therefor and without in any manner affecting Tenant’s obligations under this Lease. Neither the
performance of work on the Premises by Landlord, whether done to discharge Landlord’s obligations
hereunder or to prevent waste or deterioration, nor the placement in the Premises of supplies and
materials necessary for such work, shall be deemed to

7

 

constitute a partial or total eviction of Tenant, and neither the Rent nor any other obligation of
Tenant hereunder shall abate or be reduced while any entry or work by Landlord hereunder is being
performed. Landlord shall, however, use reasonable efforts in the conduct of any such work to
minimize any interference with Tenant’s use of the Premises. In no case of entry shall Landlord
have any liability to Tenant, and Tenant shall have no claim against Landlord hereunder. None of
Landlord’s rights under this Article shall be deemed to impose upon Landlord any obligation for the
inspection, maintenance or repair of the Premises not specifically imposed upon Landlord by any
terms, provision or conditions of this Lease.

     5.05. Liens. Tenant shall promptly pay and discharge all claims for labor performed,
supplies furnished or services rendered at the request of Tenant and shall keep the Property free
of all mechanic’s and materialmen’s liens in connection therewith. Tenant shall bond or discharge
any such lien within 45 days. If Tenant fails to so bond or discharge, Landlord may, but shall not
be required to, take such action as may be necessary to remove such lien; and Tenant shall pay to
Landlord, as Additional Rent, any such amounts expended by Landlord within five (5) days after
notice is received from Landlord of the amount expended by Landlord.

6. FIXTURES, PERSONAL PROPERTY AND ALTERATIONS

     6.01.
Fixtures and Personal Property. Tenant, at Tenant’s sole expense, may install
any necessary trade fixtures, equipment, machinery and furniture in the Premises, provided that
such items are installed and are removable without damage to the structure of the Building. Such
improvements must be submitted for Landlord’s written approval prior to installation, consent not
to be unreasonably withheld, or Landlord may remove or replace such items at Tenant’s sole expense.
Excepting fixtures which are bolted to or incorporated into the Premises, which fixtures shall not
be removed by Tenant unless and until Landlord instructs Tenant in writing to do so (provided, that
Tenant shall be permitted to remove owned racking which is bolted to the Premises), said trade
fixtures, equipment and furniture shall remain Tenant’s property and shall be removed by Tenant
prior to expiration of the Term or earlier termination of this Lease; provided, however, that
Tenant shall not have the right to remove any such personal property of Tenant or any of Tenant’s
trade fixtures at any time in which Tenant is in default under any term, condition or provision of
this Lease. Upon Landlord’s prior written approval, not to be unreasonably withheld, Tenant may
install temporary improvements in the interior of the Premises, provided that such temporary
improvements are installed and removable without structural damage to the Building. Such temporary
improvements shall remain Tenant’s property and shall be removed by Tenant on expiration of the
Term or earlier termination of this Lease. Tenant shall assume the risk of damage to any of
Tenant’s fixtures, unless caused by Landlord’s gross negligence or willful misconduct. Tenant
shall repair, at Tenant’s sole expense, all damage caused by the installation, replacement or
removal of trade fixtures, equipment, furniture or temporary improvements. If Tenant fails to
remove the foregoing items on expiration of the Term or earlier termination of this Lease, Landlord
may keep and use them or remove any of them and cause them to be stored or sold in accordance with
applicable law.

     6.02.
Alterations. Tenant shall not make or allow to be made any alterations,
additions or improvements to the Premises, either at the inception of this Lease or subsequently
during the Term, without obtaining the prior written consent of Landlord, which may not be
unreasonably withheld but may be conditioned upon Tenant’s removing such alterations, additions or
improvements and repairing any damage caused by such removal upon the expiration of the Term or the
earlier termination of this Lease

7. UTILITIES. Tenant agrees that it shall not install any equipment which will exceed or overload
the capacity of any existing utility facilities and that if any equipment installed by Tenant shall
require additional utility facilities, the same shall be installed at Tenant’s expense in
accordance with plans and specifications to be approved in writing by Landlord. Tenant shall pay
all bills for all utilities, including without limitation water, telephone, gas, electricity, fuel,
light, heat and power, and other energy furnished to or used by Tenant on or about the Premises and
all sewerage disposal or sewerage service charges for the Premises. If Tenant does not pay such
charges, Landlord may pay the same, and such amount so paid shall be due and payable to Landlord by
Tenant, on demand, as Additional Rent. In no event shall Landlord be liable to Tenant for an
interruption or failure in the supply of any utilities to the Premises,

8

 

nor shall Landlord be liable for damages from any of the fixtures, equipment or utility
systems in the Building being out of repair, or for injury to persons or property caused by any
defects in the water, sewer, electrical or sprinkler systems, if any, or in the heating, air
conditioning, ventilating or other equipment, or for any damages arising out of the failure to
furnish heating, air conditioning, ventilating, water, electricity or other utility service.

8. USE OF PREMISES

     8.01. General. The Premises shall be used only for the Permitted Uses. By commencing occupancy
of the Premises, Tenant accepts the Premises in the condition existing as of the date of such
entry, subject to all applicable municipal, county, state and federal statutes, laws, ordinances,
and private restrictive covenants, including zoning ordinances and regulations governing and
relating to the use, occupancy and possession of the Premises (collectively “Regulations”). Tenant
shall, at Tenant’s sole expense, comply with all Regulations now in force or which may hereafter be
in force relating to the Premises and the use of the Premises, and Tenant shall secure any permits
therefor. Furthermore, Tenant agrees, by Tenant’s entry, that Tenant has conducted an
investigation of the Premises and the acceptability of the Premises for Tenant’s use, to the extent
that such investigation might affect or influence Tenant’s execution of this Lease. Tenant shall
not commit waste, subject the Premises to any use which would damage the Premises or raise or
violate any insurance coverage required by this Lease. Tenant shall strictly comply with all
statutes, laws, ordinances, rules, regulations, and precautions now or hereafter mandated or
advised by any federal, state, local or other governmental agency with respect to the use,
generation, storage, or disposal of hazardous, toxic, or radioactive materials (collectively
“Hazardous Materials”). Landlord shall have the right at all reasonable times to inspect the
Premises and to conduct tests and investigations to determine whether Tenant is in compliance with
the foregoing provisions, the costs of all such inspections, tests and investigations to be borne
by Tenant. Tenant shall not cause, or allow anyone else under the control of Tenant to cause, any
Hazardous Materials to be used, generated, stored, or disposed of on or about the Premises or the
Building without the prior written consent of Landlord, which consent may be withheld in the sole
discretion of Landlord, and which consent may be revoked at any time. TENANT’S INDEMNIFICATION OF
LANDLORD PURSUANT TO ARTICLE 4.08, ABOVE, SHALL EXTEND TO ALL LIABILITY, INCLUDING ALL FORESEEABLE
AND UNFORESEEABLE CONSEQUENTIAL DAMAGES, DIRECTLY OR INDIRECTLY ARISING OUT OF THE USE, GENERATION,
STORAGE, OR DISPOSAL OF HAZARDOUS MATERIALS BY TENANT INCLUDING, WITHOUT LIMITATION, THE COST OF
ANY REQUIRED OR NECESSARY REPAIR, CLEANUP, OR DETOXIFICATION AND THE PREPARATION OF ANY CLOSURE OR
OTHER REQUIRED PLANS, WHETHER SUCH ACTION IS REQUIRED OR NECESSARY PRIOR TO OR FOLLOWING THE
TERMINATION OF THIS LEASE, TO THE FULL EXTENT THAT SUCH ACTION IS ATTRIBUTABLE, DIRECTLY OR
INDIRECTLY, TO THE USE, GENERATION, STORAGE, OR DISPOSAL OF HAZARDOUS MATERIALS BY TENANT. Neither
the written consent by Landlord to the use, generation, storage, or disposal of Hazardous Materials
nor the strict compliance by Tenant with all statutes, laws, ordinances, rules, regulations, and
precautions pertaining to Hazardous Materials shall excuse Tenant from Tenant’s obligation of
indemnification pursuant to this subsection. Tenant’s obligations pursuant to the foregoing
indemnity shall survive the termination of this Lease.

     8.02. Signs. Tenant shall not install any advertisement, sign or other notice on the interior
or exterior of the Premises or Building without obtaining Landlord’s specific prior written
consent, subject to the following provisions. Any sign placed by Tenant on the Premises or
Building shall be installed at Tenant’s sole cost and expense. All signs so permitted by
Landlord shall comply with all applicable requirements of all governmental authorities, applicable
recorded restrictions, and all requirements of Landlord for coordinating Tenant’s signs with the
signs of other tenants in the Building. Any sign, except in the interior of the Premises, shall
contain only Tenant’s name or the name of any affiliate of Tenant actually occupying the Premises
and no advertising matter. Tenant shall maintain all Tenant’s signs in good and neat condition and
repair throughout the Term. Tenant shall remove any such sign upon expiration of the Term or
earlier termination of this Lease and shall return the Premises to their condition prior to the
placement or erection of said sign.

9

 

     8.03.
Parking Access. In addition to the general obligation of Tenant to comply with laws and
without limitation thereof, Landlord shall not be liable to Tenant nor shall this Lease be affected
if any parking privileges appurtenant to the Premises are impaired by reason of any moratorium,
initiative, referendum, statute, regulation, or other governmental decree or action which could in
any manner prevent or limit any parking rights of Tenant hereunder. Any governmental charges or
surcharges or other monetary obligations imposed relative to parking rights with respect to the
Premises or the Building shall be considered as Tax Expenses and shall be payable by Tenant under
the provisions of Article 3 hereinabove. Tenant shall not use the Premises for the placement of
dumpsters, refuse collection, outdoor storage or parking of cars and/or trucks which are not in
working order. Tenant shall neither park nor allow the parking on the Premises of any recreational
vehicles, satellite dishes, non-motorized vehicles or other items of equipment.

     8.04. Floor Load. Tenant shall not place a load upon any floor of the Premises which exceeds
the load per square foot which such floor is designed to carry and which is then allowed by law.

9. DAMAGE AND DESTRUCTION

     9.01. Determination as to Reconstruction. Tenant shall give immediate written notice to
Landlord of any damage by fire or other casualty to the Premises. If all or any part of the
Premises shall be damaged or destroyed by fire or other casualty, the Lease shall continue in full
force and effect unless terminated as hereinafter provided, and Landlord shall repair, restore or
rebuild the Premises to their condition as initially constructed by Landlord; provided, however,
Landlord shall not be obligated to commence such repair or restoration or rebuilding until
insurance proceeds are received by Landlord, and Landlord’s obligation hereunder shall be limited
to the proceeds actually received by Landlord under any insurance policy or policies, if any, which
have not been required to be applied towards the reduction of any indebtedness secured by a
mortgage covering the Premises or any portion thereof.

     No damage or destruction to the Premises shall allow Tenant to surrender possession of the
Premises nor affect Tenant’s liability for the payment of Rent except as may be specifically
provided in this Lease.

     Notwithstanding anything to the contrary contained in this Article or elsewhere in this Lease,
in the event that 50% or more of the Premises has been rendered unusable by such fire or other
casualty, Landlord, at its option and in its discretion, may decline to repair the Premises and
terminate this Lease upon thirty (30) days’ notice to Tenant.

     If the Premises shall be damaged or destroyed and in the event that Landlord has elected to
continue this Lease, Landlord and Tenant shall commence their respective obligations under this
Article as soon as is reasonably possible and prosecute the same to completion with all due
diligence.

     In the event of any termination of this Lease under the provisions of this Article, this Lease
shall terminate on the date such notice of termination is given.

     9.02 Reconstruction Obligations. Landlord’s obligations to repair, replace and/or rebuild the
Premises shall not apply to any improvements installed by Tenant on the Premises (the same having
been paid for entirely or partially by Tenant) or Tenant’s personal property.

     9.03 Rent Abatement. Rent due and payable hereunder shall be abated proportionately during any
period in which, by reason of any such damage or destruction, Landlord reasonably determines that
there is substantial interference with the operation of Tenant’s business in the Premises, having
regard to the extent to which Tenant may be required to discontinue its business in the Premises;
PROVIDED, HOWEVER, IF THE DAMAGE IS DUE TO THE FAULT OR NEGLECT OF TENANT OR ITS EMPLOYEES, AGENTS
OR INVITEES, THERE SHALL BE NO ABATEMENT OF RENT. Such abatement shall continue for the period
commencing with such damage or destruction and ending with the earlier to occur of (i) the
substantial completion by Landlord of the work of repair or reconstruction which Landlord is
obligated or undertakes to do or (ii) total or partial resumption of

10

 

business by Tenant in the Premises (provided, that if the resumption is only partial, such
abatement shall continue but be reasonably adjusted to reflect the then-current condition of the
Premises).

     9.04. Waiver. With respect to any destruction which Landlord may elect to repair under the
terms of this Article 9, Tenant hereby waives all rights, if any, to terminate this Lease pursuant
to rights otherwise presently or hereafter accorded to tenants under the laws of the state of
Texas.

10. EMINENT DOMAIN

     10.01. Total Condemnation. If the whole of the Premises is acquired or condemned by eminent
domain, inversely condemned or sold in lieu of condemnation, for any public or quasi public use or
purpose (“Condemned”), then the Term shall terminate as of the date of title vesting in such
proceeding, and Rent shall be adjusted as of the date of such termination. Landlord shall thereupon
refund to Tenant any prepaid Rent, and Tenant shall pay to Landlord any rent or charges due
Landlord under the Lease, each of such payments to be prorated as of the date of termination.
Tenant shall immediately notify Landlord of any such occurrence.

     10.02. Partial Condemnation. If any part of the Premises is partially Condemned, and such
partial condemnation renders the Premises unusable for the business of the Tenant, as reasonably
determined by Landlord, then the Term shall terminate as of the date of title vesting in such
proceeding, and Rent shall be adjusted to the date of termination. If such condemnation is not
sufficiently extensive to render the Premises unusable for the business of Tenant as reasonably
determined by Landlord, then Landlord shall promptly restore the Premises to a condition comparable
to its condition immediately prior to such condemnation less the portion thereof lost in such
condemnation, and this Lease shall continue in full force and effect except that after the date of
such title vesting the Base Rent shall be appropriately reduced as reasonably determined by
Landlord.

     10.03.
Landlord’s Award. If the Premises are wholly or partially Condemned, then Landlord
shall be entitled to the entire award paid for such condemnation, and Tenant waives any right or
claim to any part thereof from Landlord or the condemning authority.

     10.04. Notice and Execution. Landlord shall, immediately upon service of process in connection
with any condemnation or potential condemnation, give Tenant notice in writing thereof. Tenant
shall immediately execute and deliver to Landlord all instruments that may be required to
effectuate the provisions of this Article 10.

11. DEFAULT

     11.01. Events of Default. The occurrence of any of the following events shall, at the election
of Landlord, constitute an “Event of Default” on the part of Tenant;

     (a) [Intentionally deleted]

     (b) Payment. Landlord fails to receive any installment of Base Rent, Additional Rent or other
monies due and payable hereunder upon the date when said payment is due after a five (5) day cure
period following notice from Landlord (it being agreed that if more than two (2) such
notices are given during any calendar year, then no further notice shall be required of
Landlord, and only a five (5) day grace period shall be afforded to Tenant for any subsequent
payment failures during the remainder of the Term);

     (c) Performance. Failure to perform any of Tenant’s covenants, agreements or obligations
hereunder (except default in the payment of Rent, Additional Rent or other monies) within twenty
(20) days after written notice thereof from Landlord, provided that as to a default which is not
susceptible of being cured within such twenty (20) day period, then within sixty (60) days after
written notice from Landlord, so long as Tenant commences to cure such failure within such twenty
(20) day period and diligently pursues its attempt to cure such failure;

11

 

     (d) Assignment. A general assignment by Tenant for the benefit of creditors;

     (e) Bankruptcy. The filing of a voluntary petition by Tenant, or the filing of an involuntary
petition by any of Tenant’s creditors seeking the rehabilitation, liquidation or reorganization of
Tenant under any law relating to bankruptcy, insolvency or other relief of debtors, and any such
involuntary proceeding not being dismissed within twenty (20) days after filing;

     (f) Receivership. The appointment of a receiver or other custodian to take possession of
substantially all of Tenant’s assets or of this leasehold and any such receiver or custodian not
being discharged within twenty (20) days after appointment;

     (g) Insolvency, Dissolution, Etc. Tenant shall become insolvent or unable to pay its debts or
shall fail generally to pay its debts as they become due; or any court shall enter a decree or
order directing the winding up or liquidation of Tenant or of substantially all of its assets; or
Tenant shall take any action toward the dissolution or winding up of its affairs or the cessation
or suspension of its use of the Premises; or

     (h) Attachment. Attachment, execution or other judicial seizure of substantially all of
Tenant’s assets or this leasehold.

     (i) Default under Distribution Agreement. Tenant shall be in material default under the
Distribution Agreement, which material default Tenant fails to cure within twenty (20) days after
written notice thereof from Landlord, provided that as to a material default which is not
susceptible of being cured within such twenty (20) day period, then within sixty (60) days after
written notice from Landlord, so long as Tenant commences to cure such failure within such twenty
(20) day period and diligently pursues its attempt to cure such material default.

     11.02.
Landlord’s Remedies.

     (a) Upon the occurrence of any such Event of Default, Landlord shall have the right 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:

(i) Without any further notice or demand whatsoever, Tenant shall be obligated to
reimburse Landlord for the damages suffered by Landlord as a result of the event of
default, plus interest on such amount at the maximum contractual rate which could
legally be charged in the event of a loan of such amount to Tenant (but in no event
to exceed 1-1/2% per month); and Landlord may pursue a monetary recovery from
Tenant.

(ii) Without any further notice or demand whatsoever, Landlord may take any one or
more of the actions permissible at law to insure performance by Tenant of Tenant’s
covenants and obligations under this Lease. In this regard, and without limiting
the generality of the immediately preceding sentence, if Tenant deserts or vacates
the Premises, Landlord may enter upon and take possession of such Premises in order
to protect them from deterioration and continue to demand from Tenant the monthly
rentals and other charges provided in this Lease, without any obligation to relet;
however, if Landlord does, at its sole discretion, elect to relet the Premises,
such action by Landlord shall not be deemed as an acceptance of Tenant’s surrender
of the Premises.

(iii) Landlord may terminate this Lease by written notice to Tenant, in which event
Tenant shall immediately surrender the 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 late charge or interest which
may have accrued pursuant to this Lease), enter upon and take possession of the
Premises and expel or remove Tenant and any other person who may be

12

 

occupying said Premises or any part thereof, by force if necessary, without being
liable for prosecution or any claim for damages therefor. Tenant hereby waives any
statutory requirement of prior written notice for filing eviction or damage suits
for nonpayment of rent. In addition, Tenant agrees to pay to Landlord on demand the
amount of all loss and damage which Landlord may suffer by reason of any
termination effected pursuant to this subsection, said loss and damage to be
determined by either of the following alternative measures of damages:

(1) Until Landlord is able, through reasonable efforts, the nature of
which efforts shall be at the sole discretion of Landlord, to relet the
Premises under terms satisfactory to Landlord in its sole discretion,
Tenant shall pay to Landlord on or before the first day of each calendar
month the monthly rentals and other charges provided in this Lease. If
and after the Premises have been relet by Landlord, Tenant shall pay to
Landlord on the twentieth (20th) day of each calendar month the difference
between the monthly rentals and other charges provided in this Lease for
such calendar month and that actually collected by Landlord for such
month. If it is necessary for Landlord to bring suit in order to collect
any deficiency, Landlord shall have a right to allow such deficiencies to
accumulate and to bring an action on several or all of the accrued
deficiencies at one time. Any such suit shall not prejudice in any way the
right of Landlord to bring a similar action for any subsequent deficiency
or deficiencies. Any amount collected by Landlord from subsequent tenants
for any calendar month in excess of the monthly rentals and other charges
provided in this Lease, shall be credited to Tenant in reduction of
Tenant’s liability for any calendar month for which the amount collected
by Landlord will be less than the monthly rentals and other charges
provided in this Lease; but Tenant shall have no right to such excess
other than the above-described credit.

(2) When Landlord desires, Landlord may demand a final settlement. Upon
demand for a final settlement, Landlord shall have a right to, and Tenant
hereby agrees to pay, the difference between the total of all monthly
rentals and other charges provided in this Lease for the remainder of the
term and the reasonable rental value of the Premises for such period, such
difference to be discounted to present value at a rate equal to the rate
of interest which is allowed by law in the State of Texas when the parties
to a contract have not agreed on any particular rate of interest (or, in
the absence of such law, at the rate of six percent (6%) per annum). The
parties agree that the foregoing satisfies any duty of mitigation on the
part of the Landlord, and the Tenant waives any further duty of mitigation
on the part of the Landlord.

(iv) Lessor may alter locks and other security devices at the Premises and prevent
Lessee from entering the Premises, in accordance with Section 93.002 of the Texas
Property Code, as amended from time to time.

If Landlord elects to exercise any remedy prescribed above, this election shall in no way
prejudice Landlord’s right at any time thereafter to cancel said election in favor of any
other remedy prescribed above or in other sections of this Lease and any other remedies
provided by law. Forbearance by Landlord to enforce one or more of the remedies herein
provided upon an event of default shall not be deemed or construed to constitute a waiver
of such default.

     (b) It is expressly agreed that in determining “the monthly rentals and other charges provided
in this Lease,” as that term is used throughout this Section, there shall be added to the Base
Monthly Rent a sum equal to the charges for Tax Expenses and Insurance Expenses

     (c) It is further agreed that, in addition to payments required above, Tenant shall
reimburse and/or otherwise

13

 

compensate Landlord for all expenses incurred by Landlord in repossession of the Premises and the
enforcement of its rights under this Lease.

     (d) In the event that any one or more provisions of this Lease authorizes Landlord to enter
the Premises, Landlord is entitled and is hereby authorized, without any notice to Tenant, to enter
upon the Premises by use of a duplicate key, a master key, a locksmith’s entry procedures or any
other means not involving personal confrontation, and to alter or change the door locks on all
entry doors of the Premises, thereby permanently excluding Tenant. In such event Landlord shall not
be obligated to place any written notice on the Premises explaining Landlord’s action; moreover, if
a reason for Landlord’s action is the failure of Tenant to pay any one or more rentals when due
pursuant to this Lease, Landlord shall not be required to provide the new key (if any) to Tenant
until and unless all rental defaults of Tenant have been fully cured.

12. ASSIGNMENT AND SUBLETTING.

     12.01 Assignment by Tenant. Tenant shall not assign, mortgage, pledge, hypothecate or
otherwise transfer Tenant’s interest in or under this Lease, in whole or in part, nor sublet or
permit occupancy by any party other than Tenant of all or any part of the Premises, without the
prior written consent of Landlord in each instance, which consent may be granted or withheld in
Landlord’s sole discretion. No assignment or subletting by Tenant shall relieve Tenant of any
obligation under this Lease, including Tenant’s obligation to pay Rent hereunder. Any purported
assignment or subletting contrary to the provisions hereof without consent shall be void. The
consent by Landlord to any assignment or subletting shall not constitute a waiver of the necessity
for such consent to any subsequent assignment or subletting. As Additional Rent hereunder, Tenant
shall reimburse Landlord for reasonable legal and other expenses incurred by Landlord in connection
with any request by Tenant for consent to assignment or subletting. If Tenant is a corporation,
partnership or other entity and if at any time during the term of this lease the person or entity
owning a majority of either the outstanding voting rights or the outstanding ownership interests of
Tenant at the time of the execution of this lease cease to own a majority of such voting rights or
ownership interests or otherwise lose control, then such loss of a majority of such voting rights
or ownership interests or control is deemed to be an assignment of this lease by Tenant and,
therefore, subject in all respects to the provisions of this Section 12. The previous sentence does
not apply, however, if at the time of the execution of this lease, Tenant is a corporation and the
outstanding voting shares of capital stock of Tenant are listed on a recognized security exchange
or over-the-counter market.

     12.02. Release. Landlord shall have the right at any time to convey all or any portion of its
interest in the Premises. Whenever Landlord conveys any interest in the Premises, Landlord shall be
automatically released from the further performance of covenants on the part of Landlord herein
contained and from any and all further liability, obligations, costs and expenses, demands, causes
of action, claims or judgments arising from or growing out of, or connected with this Lease after
the effective date of said release. The effective date of said release shall be the date the
assignee executes an assumption of such an assignment whereby the assignee expressly agrees to
assume all of Landlord’s obligations, duties, responsibilities and liabilities with respect to this
Lease. If requested, Tenant shall execute a form of release and such other documentation as may be
required to further effect the provisions of this Article 12.02

13. ESTOPPEL CERTIFICATE, ATTORNMENT AND SUBORDINATION

     13.01. Estoppel Certificate. Within ten (10) days after request therefor by Landlord, Tenant
shall deliver, in recordable form, a certificate to any proposed mortgagee or purchaser,
and to Landlord, certifying (if such be the case) as follows: (i) that to Tenant’s best
knowledge, there is no outstanding and uncured Event of Default under this Lease, and that this
Lease is in full force and effect; (ii) that no modifications have been made in this Lease since
the original execution of the same or, if there have been modifications, stating the modifications;
(iii) the expiration date of this Lease; (iv) the date through which rent has been paid; (v) that
Tenant has no claims, defenses or offsets to any action for collection of rents thereafter accruing
under this Lease; and (vi) no more than one month’s Monthly Base

14

 

Rent has been paid in advance. In addition, such certificate shall contain such other information
as Landlord may reasonably require. Tenant hereby acknowledges that prospective purchasers or
encumbrancers of the Premises may incur obligations or extend credit in reliance upon the
representations of Tenant contained in such statement.

     13.02. Attornment. Tenant shall (i) in the event any proceedings are brought for the
foreclosure of, or in the event of exercise of the power of sale under any mortgage or deed of
trust made by the Landlord, its successors or assigns, encumbering the Premises, or any part
thereof, or (ii) in the event of termination of a ground lease, if any, or (iii) in the event of a
sale or conveyance by Landlord of all or any part of the Premises, and if so requested, attorn to
the purchaser upon such foreclosure, sale or conveyance, or upon any grant of a deed in lieu of
foreclosure, and recognize such purchaser as the Landlord under this Lease.

     13.03. Subordination. The rights of Tenant hereunder are and shall be, at the election of the
mortgagee, subject and subordinate to the lien of such mortgage, or the lien resulting from any
other method of financing or refinancing, now or hereafter in force against the Premises, and to
all advances made or hereafter to be made upon the security thereof; provided, however, that
notwithstanding such subordination, so long as Tenant is not in default under any of the terms,
covenants and conditions of this Lease, neither this Lease nor any of the rights of Tenant
hereunder shall be terminated or subject to termination by any trustee’s sale, any action to
enforce the security, or by any proceeding or action in foreclosure. If requested, Tenant agrees to
execute whatever documentation may be required to further effect the provisions of this Article
within seven (7) days after receipt by Tenant of such request.

14. NOTICES. All notices required to be given hereunder shall be in writing and mailed postage
prepaid by certified or registered mail, return receipt requested, or by personal delivery, to the
appropriate address indicated below or at such other place or places as either Landlord or Tenant
may, from time to time, respectively, designate in a written notice given to the other. Notices
shall be deemed sufficiently served, whether actually received or not, on the date of mailing
thereof in accordance with the foregoing provisions.

To Landlord: At the Landlord’s Address specified in Article 1.01 hereof.

To Tenant: At the Tenant’s Address, as specified in Article 1.01 hereof, or at the address of the
Premises.

15. SUCCESSORS BOUND. Subject to the provisions of Article 12, Tenant may not assign this Lease or
any interest herein without the prior written consent of Landlord, which may be granted or withheld
in Landlord’s sole discretion. Subject to the foregoing, this Lease and each of its covenants and
conditions shall be binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, successors and legal representatives and their respective assigns, subject to the
provisions hereof. Whenever in this Lease a reference is made to the Landlord, such reference shall
be deemed to refer to the person in whom the interest of the Landlord shall be vested, and Landlord
shall have no obligation hereunder as to any claim arising after the transfer of its interest in
the Premises. Any successor or assignee of the Tenant who accepts an assignment or the benefit of
this Lease and enters into possession or enjoyment hereunder shall thereby assume and agree to
perform and be bound by the covenants and conditions thereof. Nothing herein contained shall be
deemed in any manner to give a right of assignment to Tenant without the written consent of
Landlord.

16. MISCELLANEOUS

     16.01. Waiver. No waiver of any default or breach of any covenant by either party hereunder
shall be implied from any omission by either party to take action on account of such default if
such default persists or is repeated, and no express waiver shall affect any default other than the
default specified in the waiver, and then said waiver shall be operative only for the time and to
the extent therein stated. Waivers of any covenant, term or condition contained herein by either
party shall not be construed as a waiver of any subsequent breach of the same covenant, term or
condition. The consent or approval by either party to or of any act by either party requiring
further consent or approval shall not be deemed to waive or render unnecessary their consent or
approval to or of any

15

 

subsequent similar acts.

     16.02. Easements. Landlord reserves the right to (i) alter the boundaries of the Premises and
(ii) grant easements on the Premises and dedicate for public use portions thereof without Tenant’s
consent; provided, however, that no such grant or dedication shall materially interfere with
Tenant’s use of the Premises and that if such boundary change or easement shall materially reduce
or impair Tenant’s use of the Premises, the Base Rent shall be adjusted equitably. From time to
time, and upon Landlord’s demand, Tenant shall execute, acknowledge and deliver to Landlord, in
accordance with Landlord’s instructions, any and all documents, instruments, maps or plats
necessary to effectuate Tenant’s covenants hereunder.

     16.03. No Light, Air or View Easement. Any diminution or shutting off of light, air or view to
the Premises by any structure which may be erected on lands adjacent to or in the vicinity of or
within the Building shall in no way affect this Lease or impose any liability on Landlord.

     16.04. Corporate or Partnership Authority. Each of the persons executing this Lease on behalf
of Tenant hereby covenants and warrants that: (a) Tenant is a duly authorized and existing
corporation; (b) Tenant is qualified to do business in the state of Texas; (c) Tenant has full
right and authority to enter into this Lease; (d) each of the persons executing this Lease on
behalf of Tenant is authorized to do so; and (e) this Lease constitutes a valid and legally binding
obligation of Tenant, enforceable in accordance with its terms.

     (b) If Tenant executes this Lease as a partnership or joint venture, each of the persons
executing this Lease on behalf of Tenant hereby covenants and warrants that: (i) Tenant is a duly
authorized and existing partnership or joint venture; (ii) Tenant is qualified to do business in
the State of Texas; (iii) Tenant has full right and authority to enter into this Lease; (iv) each
of the persons executing this Lease on behalf of Tenant is authorized to do so; and (v) this Lease
constitutes a valid and legally binding obligation of Tenant, enforceable in accordance with its
terms.

     (c) Tenant acknowledges that, prior to the execution of this Lease, Tenant has delivered to
Landlord such documentation as may be required by Landlord to evidence the matters referenced in
parts (a) and (b) above of this Article 16.04, including without limitation corporate or
partnership resolutions. Tenant further represents and warrants that all such documentation is
true and correct in all material respects.

     16.05. Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount
than the Rent herein stipulated shall be deemed to be other than on account of the Rent, nor shall
any endorsement or statement on any check or any letter accompanying any check or payment as Rent
be deemed an accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord’s right to recover the balance of such Rent or pursue any other remedy
provided in this Lease or available at law or in equity.

     16.06. Limitation of Landlord’s Liability. The obligations of Landlord under this Lease shall
not constitute personal obligations of the Landlord; Tenant shall look solely to the real estate
that is the subject of this Lease and to no other assets of Landlord for satisfaction of any
liability in respect of this Lease; and Tenant shall not seek personal recourse against Landlord
for such satisfaction.

     16.07. Time. Time is of the essence of every provision hereof.

     16.08. Attorneys’ Fees. In any action or proceeding which the Landlord or the Tenant may be
required to prosecute to enforce its respective rights hereunder, the unsuccessful party therein
agrees to pay all costs incurred by the prevailing party therein, including reasonable attorneys’
fees to be fixed by the court, and said costs and attorneys’ fees shall be made a part of the
judgment in said action. In any situation in which a dispute is settled other than by action or
proceeding, Tenant shall pay all Landlord’s costs and attorneys’ fees relating thereto.

     16.09.Captions and Article Numbers. The captions, article numbers and table of contents
appearing in this

16

 

Lease are inserted only as a matter of convenience and in no way define, limit, construe or
describe the scope or intent of such sections or articles of this Lease nor in any way affect this
Lease.

     16.10. Severability. If any term, covenant, condition or provision of this Lease, or the
application thereof to any person or circumstance, shall to any extent be held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, covenants,
conditions or provisions of this Lease, or the application thereof to any person or circumstance,
shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

     16.11. Applicable Law. This Lease, and the rights and obligations of the parties hereto, shall
be construed and enforced in accordance with the laws of the state of Texas.

     16.12. Surrender. Upon the expiration or earlier termination of this Lease, Tenant shall
surrender the Premises to Landlord in good order, condition and repair, except for reasonable wear
and tear or as otherwise provided herein, and Tenant shall surrender all keys for the Premises to
Landlord at the place then fixed for the payment of Rent and shall inform Landlord of all
combinations on locks, safes and vaults, if any, in the Premises. Tenant shall not commit or allow
any waste or damage to be committed on any portion of the Premises. Any of Tenant’s personal
property that is not removed from the Premises prior to the date of termination of this Lease shall
become the property of Landlord. Landlord may cause any of said personal property that is not
removed from the Premises within thirty (30) days after the date of any termination of this Lease
to be removed from the Premises and stored at Tenant’s expense, or, at Landlord’s election said
personal property thereafter shall belong to Landlord without the payment of any consideration,
subject to the rights of any person holding a perfected security interest therein.

     16.13. No Nuisance. Tenant shall conduct its business and control its agents, employees,
invitees and visitors in such a manner as not to create any nuisance.

     16.14. Broker. Tenant warrants that it has had no dealings with any real estate broker or
agent in connection with the negotiation of this Lease and that it knows of no other real estate
broker or agent who is entitled to any commission or finder’s fee in connection with this Lease.
Tenant agrees to indemnify Landlord, defend by counsel acceptable to Landlord and hold Landlord
harmless from and against any and all claims, demands, losses, liabilities, lawsuits, judgments,
costs and expenses (including without limitation, attorneys’ fees and costs) with respect to any
leasing commission or equivalent compensation alleged to be owing on account of Tenant’s dealings
with any real estate broker or agent.

     Landlord warrants that, except for The Staubach Company, who represents Landlord in connection
with this transaction, it has had no dealings with any real estate broker or agent in connection
with the negotiation of this Lease and that it knows of no other real estate broker or agent who is
entitled to any commission or finder’s fee in connection with this Lease. Landlord agrees to
indemnify Tenant, defend by counsel acceptable to Tenant and hold Tenant harmless from and against
any and all claims, demands, losses, liabilities, lawsuits, judgments, costs and expenses
(including without limitation, attorneys’ fees and costs) with respect to any leasing commission or
equivalent compensation alleged to be owing on account of Landlord’s dealings with any real estate
broker or agent.

     16.15. Landlord’s Right to Perform. Upon Tenant’s failure to perform any obligation of Tenant
hereunder, including without limitation, payment of Tenant’s insurance premiums, and
charges of contractors who have supplied materials or labor to the Premises, Landlord shall
have the right to perform such obligation of Tenant on behalf of Tenant and/or to make payment on
behalf of Tenant to such parties. Tenant shall reimburse Landlord the reasonable cost of Landlord’s
performing such obligation on Tenant’s behalf, including reimbursement of any amounts that may be
expended by Landlord, plus interest at the maximum rate permitted by law, as Additional Rent.

     16.16. Nonliability. Landlord shall not be in default hereunder or be liable for any
damages directly or

17

 

indirectly resulting from, nor shall the rental herein reserved be abated by reason of (i) the
interruption of use of the Premises as a result of the routine installation of any equipment in
connection with the Premises or Building or (ii) any failure to furnish or delay in furnishing any
services required to be provided by Landlord when such failure or delay is caused by accident or
any condition beyond the reasonable control of Landlord or by the making of necessary repairs or
improvements to the Premises or to the Building, or the limitation, curtailment, rationing or
restriction on use of water, electricity, gas or any other form of energy or any other service or
utility whatsoever serving the Premises or the Building. Landlord shall use reasonable efforts to
remedy any interruption in the furnishing of such services. If Landlord is delayed or prevented
from performing any of its obligations under this Lease by reason of strike, labor disputes, or any
cause whatsoever beyond Landlord’s reasonable control, the period of such delay or such prevention
shall be deemed added to the time herein provided for the performance of any obligation by
Landlord.

     16.17. [Intentionally deleted]

     16.18. Landlord’s Right to Terminate Upon Abandonment. Tenant shall have the right to cease
doing business in the Premises, so long as (a) Tenant delivers written notice of its intent to
cease business no later than ninety (90) days prior to its ceasing business, (b) Tenant continues
to comply with all other terms and conditions of the Lease, including, without limitation, the
payment of Base Rent and Additional Rent, (c) Tenant shall pay to Landlord any expenses incurred by
Landlord as a result of Tenant’s cessation of doing business in the Premises, such as increases in
insurance premiums, and (d) Tenant shall take all reasonable precautions to secure the Premises. At
any time when Tenant has exercised its right to cease doing business in the Premises, Landlord
shall have the right, upon written notice to Tenant, to recapture the Premises, and upon delivery
of such written notice to Tenant, this Lease shall terminate (other than any obligations of the
parties which have accrued prior to such date or which by the terms hereof survive the termination
or expiration of this Lease).

     16.19. Recording. Neither Landlord nor Tenant shall record this Lease nor a short form
memorandum thereof without the prior written consent of the other; provided, that Landlord and
Tenant shall cooperate to record a reasonable short-form memorandum giving notice of the existence
of this Lease and the Term hereof, at Tenant’s sole cost and expense. Tenant shall, at its sole
cost and expense, prepare and record a termination of such memorandum upon the expiration or
earlier termination of this Lease.

     16.20. Entire Agreement. This Lease, including any Exhibits and Riders attached hereto, sets
forth all covenants, promises, agreements, conditions and understandings between Landlord and
Tenant concerning the Premises. There are no covenants, promises, agreements, conditions or
understandings, either oral or written, between Landlord and Tenant other than as are herein set
forth. Except as herein otherwise provided, no subsequent alteration, amendment, change or addition
to this Lease shall be binding upon Landlord or Tenant unless reduced to writing and signed by
Landlord and Tenant. EXCEPT FOR THE MATTERS EXPRESSLY SET FORTH IN THIS LEASE AND EXCEPT WITH
RESPECT TO THE TRANSACTION DOCUMENTS DESCRIBED HEREIN, TENANT ACKNOWLEDGES AND AGREES THAT (A)
NEITHER LANDLORD NOR ANY PARTY ACTING ON LANDLORD’S BEHALF HAS MADE ANY AGREEMENT, REPRESENTATION,
WARRANTY, COMMITMENT OR STATEMENT IN ANY WAY PERTAINING TO THE PREMISES, (B), TENANT HAS NOT RELIED
UPON ANY AGREEMENT, REPRESENTATION, WARRANTY, COMMITMENT OR STATEMENT IN MADE OR PURPORTEDLY MADE
BY OR ON BEHALF OF LANDLORD WITH RESPECT TO THE PREMISES,
AND (C) TENANT HAS RELIED SOLELY UPON TENANT’S OWN EVALUATIONS, EXAMINATIONS, STUDIES,
REPORTS, AND INFORMATION WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS LEASE.

     16.21. Tenant’s Notice to Landlord of Default. Should Landlord be in default under any of the
terms of this Lease, Tenant shall give Landlord prompt written notice thereof in the manner
specified herein, and Tenant shall allow Landlord a reasonable length of time in which to cure such
default, which time shall not in any event be less than thirty (30) days from the date of such
notice.

18

 

     16.22. Test Kitchen. Notwithstanding anything to the foregoing in this Lease, Landlord shall
have the ongoing right to access, utilize and use the existing test kitchen located within the
Premises without cost to Landlord, except as set forth in this Section 16.22. Within a reasonable
time after the Commencement Date, Landlord shall have the test kitchen separately metered for
electricity, and such the utility costs for the test kitchen during Landlord’s usage of the same
shall be at Landlord’s sole expense. The right of Landlord to use the kitchen shall continue for
such time as Pizza Inn, Inc. is the occupant of the office space adjacent to the Premises.

     16.23. Special Condition. Notwithstanding anything to the contrary contained in this Lease, on
or before October 16, 2006, Landlord shall either (i) confirm to Tenant in writing its ability to
deliver good title to the Racking System (as defined in the Purchase Agreement) to Tenant as
contemplated in the Purchase Agreement, or (ii) propose to Tenant in writing an alternate plan for
the Racking System, which must (1) furnish Tenant with the use of the Racking System for the entire
Term, (2) include the consent of the lessor of the Racking System, (3) provide for Landlord’s
payment of all lease, license, rental or other costs or fees relating to obtaining use and
possession of the Racking System for Tenant during the continuation of such alternate plan, and (4)
be otherwise reasonable acceptable to Tenant. If an alternate plan is proposed, Tenant shall have
ten (10) days after receipt of such notice to accept such alternate plan in writing. If Tenant
accepts such alternate plan in writing, then (a) Landlord will implement such alternate plan, (b)
Landlord will indemnify Tenant against loss, cost or damage suffered by Tenant if Tenant is
dispossessed of the Racking System during the Term, or if Tenant’s use of the Racking System is
materially interfered with during the Term, (c) Tenant will have the option to terminate this Lease
and/or the Distribution Agreement upon such dispossession or material interference, and (d) Tenant
will have the option to require Landlord to continue to pursue the purchase and transfer of the
Racking System to Tenant as contemplated by the Purchase Agreement.

     In the event that (i) Landlord fails to confirm transfer of the Racking System to Tenant or
fails to propose an alternate plan meeting the conditions above, or (ii) Tenant fails to accept
such alternate plan as described above, or (iii) Tenant otherwise does not have title to or
possession and use of the Racking System as of November 1, 2006, then Tenant shall have the right
to terminate this Lease by giving written notice (which may be given by fax, email or any other
reasonable means) to Landlord on or before November 1, 2006, whereafter all such rights to
terminate shall expire.

19

 

IN
WITNESS WHEREOF, the parties have executed this Lease as of the date first above written.

	 	 	 	 	 	 	 
	 	 	“LANDLORD”	 	 
	 
	 	 	 	 	 	 
	 	 	PIZZA INN, INC.	 	 
	 	 	a Missouri corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 	/s/ Timothy P. Taft 	 	 
	 

	 	  Name:  
	Timothy P. Taft 

	 	 
	 

	 	  Title: 
	President
/ CEO 

	 	 
	 

	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	“TENANT”	 	 
	 
	 	 	 	 	 	 
	 	 	THE SYGMA NETWORK,
INC.,	 	 
	 	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	/s/ Ronald H. Epple, Sr V.P. 	 	 
	 

	 	  Name:
	Ronald H. Epple 

	 	 
	 

	 	  Title:
	Sr
V.P. & CFO 

	 	 
	 

	 	 	 

	 	 

20

 

Exhibit A

Premises/Property Drawing

21

 

22exv10w16

 

Exhibit 10.16

IN THE MATTER OF ARBITRATION BETWEEN

	 	 	 	 	 
	RONALD W. PARKER

	 	§
	 	American Arbitration
	 

	 	§
	 	Association
	 

	 	§	 	 
	      -and-

	 	§
	 	No. 71 166 00025 05
	 

	 	§	 	 
	PIZZA INN, INC.

	 	§	 	 

Compromise and Settlement Agreement

     This Compromise and Settlement Agreement (the “Agreement”) is entered into by and between
Ronald W. Parker (“Parker”), on the one hand, and Pizza Inn, Inc. (“Pizza Inn”) on the other hand.
(Parker and Pizza Inn are sometimes referred to jointly as the “Parties”.)

Recitals

     WHEREAS the above-styled arbitration proceeding (the “Arbitration”) commenced following Pizza
Inn’s termination of Parker’s employment as Pizza Inn CEO in December 2004; and

     WHEREAS Parker and Pizza Inn have alleged various claims against each other and the pleadings
filed in the Arbitration more fully describe their respective allegations and positions with
respect to the claims being made; and

     WHEREAS the Parties now desire to resolve by settlement any and all disputes between them
including the claims being made in the Arbitration.

Settlement Terms and Provisions

     NOW, THEREFORE, for good and valuable consideration, the adequacy, receipt, and sufficiency of
which is hereby acknowledged, the Parties hereby agree as follows:

 

 

     1. Pizza Inn agrees to pay to Parker the sum of $2,800,000 for Parker’s claims of defamation,
defamation per se, loss of reputation, malicious civil prosecution, breach of contract and any
other claims, known or unknown, to be paid as follows:

	 	 	 	 	 
	 

	 	First Installment:
	 	$100,000 payable upon execution by Parker of this Agreement
and no later than September 24, 2006.
	 
	 	 	 	 
	 

	 	Second Installment:
	 	$200,000 payable 45 days following Parker’s execution
of this Agreement.
	 
	 	 	 	 
	 

	 	Third Installment:
	 	$150,000 payable 75 days following Parker’s execution of
this Agreement.
	 
	 	 	 	 
	 

	 	Fourth Installment:
	 	$100,000 payable 105 days following Parker’s execution
of this Agreement.
	 
	 	 	 	 
	 

	 	Fifth Installment:
	 	$100,000 payable 135 days following Parker’s execution
of this Agreement.
	 
	 	 	 	 
	 

	 	Sixth Installment:
	 	$100,000 payable 165 days following Parker’s execution
of this Agreement.
	 
	 	 	 	 
	 

	 	Final Installment:
	 	The remaining balance shall be payable on the earlier of
(i) 180 days following execution of this Agreement by Parker or (ii) the date
of closing of any sale by Pizza Inn of the main office building or warehouse
at Pizza Inn’s corporate headquarters located at or near 3551 Plano Parkway.
In the event the closing of any sale of the main office building or warehouse
at Pizza Inn’s corporate headquarters occurs prior to 180 days following
Parker’s execution of this Agreement, the full amount of $2.8 million (less
any amounts already paid) will be due at the closing of any such sale.

     2. Pizza Inn agrees to pay interest of 5% per annum on any unpaid balance due to Parker
pursuant to Paragraph 1. Such interest shall begin to

			
	 	 	 
	COMPROMISE AND SETTLEMENT AGREEMENT
	 	Page 2

 

 

accrue on the date of Parker’s execution of this Agreement. Upon Pizza Inn’s payment of
the First Installment interest shall accrue on the $2.7 million unpaid balance; after payment by
Pizza Inn of the Second Installment, interest will accrue on the $2.5 million unpaid balance and so
forth. The accrued interest shall be due and payable upon payment of the Final Installment
referenced in Paragraph 1 above.

     3. Parker agrees that all payments or other claims allowed by this Agreement are not and will
not be secured by a lien on any assets of Pizza Inn and will be subordinate to Pizza
Inn’s indebtedness to Wells Fargo Bank or its assigns.

     4. Parker agrees to sell all shares of Pizza Inn stock that he directly or indirectly owns
within 60 days from the date he is paid in full the amounts referenced in Paragraphs 1 and 2 above.

     5. Parker agrees that he will not attend Pizza Inn’s 2006 annual meeting of shareholders
currently scheduled for December 13, 2006 (or any other meeting if the currently scheduled meeting
is adjourned, postponed or rescheduled). However, this prohibition shall not apply if any payment
referenced in Paragraph 1 or 2 is past due to Parker.

     6. Parker, his heirs, assigns, agents, representatives, insurers, and attorneys hereby forever
release, acquit and discharge Pizza Inn, its directors, officers, employees, agents, representatives, attorneys, heirs and assigns and Newcastle
Partners, L.P., its affiliated entities and their officers, employees, directors, shareholders
(hereafter collectively “Newcastle”) from any and all

			
	 	 	 
	COMPROMISE AND SETTLEMENT AGREEMENT
	 	Page 3

 

 

claims, obligations, demands, actions, causes
of action, complaints, lawsuits (pending or otherwise), costs, charges, judgments, attorneys’ fees,
damages and liabilities of any kind whatsoever, known or unknown, direct or indirect, asserted or
unasserted, liquidated or unliquidated, in tort, contract, or any other legal theory, statutory or
otherwise, arising out of, resulting from, or in any manner related to any cause or thing
whatsoever that was brought, or that could have been brought in the Arbitration or a lawsuit,
including but not limited to any and all claims relating to Parker’s employment at Pizza Inn or the
termination of Parker’s employment at Pizza Inn.

     7. Pizza Inn, its directors, officers, employees, assigns, agents, representatives, insurers,
attorneys and Newcastle hereby forever release, acquit and discharge Parker, his agents,
representatives, attorneys, heirs and assigns from any and all claims, obligations, demands,
actions, causes of action, complaints, lawsuits (pending or otherwise), costs, charges, judgments,
attorneys’ fees, damages and liabilities of any kind whatsoever, known or unknown, direct or
indirect, asserted or unasserted, liquidated or unliquidated, in tort, contract, or any other legal
theory, statutory or otherwise, arising out of, resulting from, or in any manner related to any
cause or thing whatsoever that was brought, or that could have been brought in the Arbitration or
a lawsuit, including but not limited to any and all claims relating to Parker’s employment at Pizza Inn,
Parker’s service as a director or board member, the termination of Parker’s employment at Pizza Inn
or any of the allegations or claims asserted in Cause No. 04-10265 in the 191st District
Court of Dallas County, Texas (the “Akin

			
	 	 	 
	COMPROMISE AND SETTLEMENT AGREEMENT
	 	Page 4

 

 

Gump Lawsuit”). Nothing in this Paragraph 7 shall be
construed as a release by Pizza Inn of its claims against Akin Gump Strauss Hauer & Feld, L.L.P.
and Kenneth Menges, Jr. If any director, officer or employee of Pizza Inn or Newcastle initiates a
lawsuit or legal proceeding against Parker concerning a matter being released in this Paragraph 7,
then Parker’s release of that person only pursuant to this Agreement is withdrawn and is no longer
binding on Parker.

     8. In addition to the release in Paragraph 7 above, Pizza Inn agrees to sign a release in a
form similar to Paragraph 7 with respect to potential claims, if any, by Pizza Inn against Shawn
Preator (the “Preator Release”). However, Pizza Inn shall only be obligated to execute the Preator
Release upon the execution by Mr. Preator of a release in a form similar to Paragraph 7 with
respect to potential claims, if any, by Mr. Preator against Pizza Inn.

     9. The parties wish both (1) to allow the parties to make comments and express opinions
concerning the Arbitration and claims made therein and (2) to prevent their engaging in negative or
harmful communications about each other. Therefore the parties agree to each of the specific
undertakings set forth in paragraphs 10-13 below.

     10. Parker agrees to strictly refrain from making any disparaging statements about Pizza Inn,
its directors, officers, employees and Newcastle. Pizza Inn, its directors, officers, employees and
Newcastle agree to strictly refrain from making any disparaging statements about Parker. For
purposes of this paragraph, “disparage” shall mean any “false or injurious statement of fact that
discredits or detracts from the reputation” of Parker or Pizza Inn, its directors,

			
	 	 	 
	COMPROMISE AND SETTLEMENT AGREEMENT
	 	Page 5

 

 

officers,
employees or Newcastle. The Parties further agree and acknowledge that this provision shall
survive the execution and delivery of this Agreement.

     11. In addition to the provisions of Paragraph 10, Parker agrees that he will not knowingly
make any oral or written statement that is critical of or casts in a negative light Pizza Inn’s
business model, business strategies, financial performance, current management (including its
officers, directors and employees), or Newcastle. Pizza Inn, its directors, officers, employees
and Newcastle agree that they will not knowingly make an oral or written statement that is critical
of or casts Parker in a negative light. The Parties agree that nothing in this Agreement shall
prohibit the Parties from commenting or stating their opinions regarding the allegations or claims
made in the Arbitration (AAA No. 71-166-00025-05), including but not limited to comments or
opinions about the dispute between the Parties, the settlement amount, or comments or opinions
regarding the outcome of the Arbitration and any such statements by the Parties shall not be a
violation of this Agreement. The Parties agree and acknowledge that this provision shall survive
the execution and delivery of this Agreement

     12. Pizza Inn, its directors, officers and employees and Parker further agree that they shall
not knowingly make or publish, or cause to be made or published, any oral or written statement to
any person or entity: (i) that discusses or otherwise discloses the substance of any settlement
discussions or negotiations relating to the claims asserted in the Arbitration prior to the
settlement of the Arbitration (other than the specific terms of this Agreement); or (ii) regarding
the reasonableness or necessity of legal fees and expenses

			
	 	 	 
	COMPROMISE AND SETTLEMENT AGREEMENT
	 	Page 6

 

 

incurred by Parker or Pizza Inn in the
Arbitration or any related litigation. The Parties agree and acknowledge that this provision shall
survive the execution and delivery of this Agreement

     13. In addition, Parker further agrees not to knowingly initiate or voluntarily communicate
with any third-party regarding any claim or potential claim by such third-party against Pizza Inn,
its officers or directors. Pizza Inn, its officers and directors and Newcastle agree not to
knowingly initiate or voluntarily communicate with any third-party regarding any claim or potential
claim by such third-party against Parker. The Parties agree and acknowledge that this provision
shall survive the execution and delivery of this Agreement

     14. Notwithstanding the provisions of Paragraphs 10-13 above, the Parties agree that Pizza
Inn, its witnesses and Parker shall have absolute immunity for statements made in filings or
testimony provided in the Akin Gump Lawsuit. The Parties further agree that any alleged breach of
Paragraphs 10-13 of this Agreement shall not entitle Pizza Inn to delay, withhold, or not make any payment
scheduled to be made under this Agreement.

     15. The Parties agree to cooperate to take all action necessary to effectuate the dismissal of
the Arbitration with prejudice. In this regard, the Parties agree to execute and cause to be filed
an Agreed Order of Dismissal with Prejudice in the form of Exhibit A attached.

     16. The Parties do not release one another from their respective obligations under this
Agreement or for torts or other wrongful acts committed after the execution of this Agreement.

			
	 	 	 
	COMPROMISE AND SETTLEMENT AGREEMENT
	 	Page 7

 

 

     17. Parker and Pizza Inn represent and warrant (which representations and warranties shall
survive the execution and delivery of this Agreement) the following:

	 	a.	 	Each party possesses all capacities, including but not limited to, the legal capacity
and authority to execute this Agreement;
	 
	 	b.	 	No party has received or relied upon any oral or written representation of
any other party or any other party’s employees, agents, partners, or representatives
regarding any fact in executing this Agreement, other than those specifically included
in this Agreement;
	 
	 	c.	 	Breach of this Agreement, if any, shall not affect the non-breaching party’s
continuing right to full observance of the release; and
	 
	 	d.	 	Each party solely owns and has not assigned or otherwise transferred to any
person, party, or entity any of the claims, causes of action, liabilities, or
potential liabilities being released hereby or any portion thereof.

     18. This Agreement and any proceedings taken hereunder are not and shall not in any way be
construed as or deemed to be evidence of or any
admission or concession of wrongdoing or liability on the part of either Party, their counsel, or
any of them, which liability is expressly denied.

     19. This Agreement, including all matters of construction, validity and performance, shall be
governed by and construed and enforced in accordance with the laws of the State of Texas. The
Parties agree that the American Arbitration Association in Dallas County, Texas shall be the
exclusive forum for any litigation arising under or relating to this Agreement, including
enforcement thereof.

			
	 	 	 
	COMPROMISE AND SETTLEMENT AGREEMENT
	 	Page 8

 

 

     20. This Agreement contains the entire understanding and agreement of the Parties with respect
to the matters addressed herein, and supersedes all prior and contemporaneous agreements,
negotiations, correspondence, undertakings and communications of the parties or their
representatives, oral or written, with respect to the subject matter set forth in this Agreement.
No amendment, modification, waiver or cancellation of any term or condition of this Agreement shall
be effective unless executed in writing by all of the Parties.

     21. Each Party acknowledges on its own behalf that it has been represented by independent
legal counsel of its own choice throughout all of the negotiations that have preceded the execution
of this Agreement, and that its respective legal counsel had the requisite experience and
sophistication to understand, interpret, and provide advice regarding the particular language of
the provisions hereof. Each Party further acknowledges that it has executed this Agreement
voluntarily and of its own free will, without duress.

     22. This Agreement shall inure to the benefit of, and shall be binding upon, the undersigned
Parties and each of their respective successors, heirs and assigns.

     23. Any captions and headings contained in this Agreement are inserted only as a matter of
convenience and in no way define, limit, extend or describe the scope of this Agreement or the
intent of any provision hereof. Whenever the text hereof requires, use of a singular number shall
include the appropriate plural number.

			
	 	 	 
	COMPROMISE AND SETTLEMENT AGREEMENT
	 	Page 9

 

 

     24. The provisions of this Agreement are severable, and if any part of it is found to be
unenforceable, the other portions shall remain fully valid and enforceable to the extent possible
while maintaining the essential purposes of this Agreement.

     25. This Agreement may be signed in any number of counterparts and via facsimile with the same
effect as if the signatures to each counterpart were upon a single instrument, and all such
counterparts together shall be deemed to be an original of this Agreement.

Executed as of the 24th day of September 2006.

	 	 	 	 	 
	 	 	 
	Ronald W. Parker	 	 
	 
	 	 	 	 
	PIZZA INN, INC.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Rod McDonald, Secretary	 	 

Newcastle Partners, L.P. and its affiliates execute this Agreement for the purposes of agreeing to
and acknowledging the provisions of Paragraphs 6-7, 10-13.

Newcastle Partners, L.P. and its affiliates

	 	 	 	 	 
	By:

	 	Newcastle Capital Management, L.P.

Its general partner
	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Steven J. Pully

President	 	 

			
	 	 	 
	COMPROMISE AND SETTLEMENT AGREEMENT
	 	Page 10

 

 

Acknowledgment

	 	 	 	 	 
	State of Texas

	 	§
	 	 
	 

	 	§	 	 
	County of                                         

	 	§	 	 

     Before me, the undersigned authority, on this day personally appeared Ronald W. Parker, who is
known to me and who, after having been by me duly sworn according to law upon his oath, deposed and
said that he is the person named in the above document, and that he executed the document for the
purposes and consideration therein contained.

	 	 	 
	 

	 	 
	 

	 	Ronald W. Parker

     Subscribed and sworn to before me on the ___day of September 2006, to certify which witness
my hand and official seal.

	 	 	 	 	 
	 

	 	 

Notary Public, State of Texas
	 	 

			
	 	 	 
	COMPROMISE AND SETTLEMENT AGREEMENT
	 	Page 11

 

 

Acknowledgment

	 	 	 	 	 
	State of Texas

	 	§
	 	 
	 

	 	§	 	 
	County of Dallas

	 	§	 	 

     Before me, the undersigned authority, on this day personally appeared Rod McDonald, who is
known to me and who, after having been by me duly sworn according to law upon his oath, deposed and
said that he is the Secretary of Pizza Inn, Inc., and he is authorized to execute this
Acknowledgement on its behalf, and that Pizza Inn, Inc. has executed the above document for the
purposes and consideration therein contained.

	 	 	 	 	 
	 

	 	 

Rod McDonald
	 	 

     Subscribed and sworn to before me on the                     day of September 2006, to certify which witness
my hand and official seal.

	 	 	 	 	 
	 

	 	 

Notary Public, State of Texas
	 	 

			
	 	 	 
	COMPROMISE AND SETTLEMENT AGREEMENT
	 	Page 12

 

 

Acknowledgment

	 	 	 	 	 
	State of Texas

	 	§
	 	 
	 

	 	§	 	 
	County of Dallas

	 	§	 	 

     Before me, the undersigned authority, on this day personally appeared Steven J. Pully, who is
known to me and who, after having been by me duly sworn according to law upon his oath, deposed and
said that he is the President of Newcastle Capital Management, L.P., the General Partner of
Newcastle Partners, L.P., that he is authorized to execute this Acknowledgment on behalf of
Newcastle Partners, L.P., and that Newcastle Partners, L.P. and its affiliates have executed the
above document for the purposes and consideration therein contained.

	 	 	 	 	 
	 

	 	 

Steven J. Pully
	 	 

     Subscribed and sworn to before me on the ___day of September 2006, to certify which witness
my hand and official seal.

	 	 	 	 	 
	 

	 	 

Notary Public, State of Texas
	 	 

			
	 	 	 
	COMPROMISE AND SETTLEMENT AGREEMENT
	 	Page 13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]