Document:

SEATTLE DESIGN CENTER

EXHIBIT 10.38

 

SEATTLE DESIGN CENTER

LEASE

 

This Lease

made this 23rd  day of March, 2000, by and between Bay West Design

Center, LLC, a Delaware limited liability company, hereinafter called Lessor,

and EpicEdge, Inc., a Texas corporation, hereinafter called Lessee.

 

1.             PREMISES.  Lessor does hereby lease to Lessee those

certain premises being space in those certain buildings known as the Seattle

Design Center, (herein referred to as “the buildings”) to wit:

 

Approximately

8,725 rentable square feet of space, being Suite #600, located at 5601 Sixth

Avenue South, Seattle, Washington, 98108, as outlined in blue on Exhibit B

attached hereto (hereinafter called “Premises”) being situated upon land

described in Exhibit A attached hereto. 

Said square footage includes an agreed upon 10% load factor.

 

2.             TERM.  This Lease shall be for a term of five (5)

years commencing June 1, 2000, and terminating May 31, 2005.

 

3.             RENT/SECURITY

DEPOSIT/LETTER OF CREDIT.  Lessee

covenants and agrees to pay Lessor, at PO Box 24842, Seattle,

Washington 98124-0842, or to such other party or at such other place as Lessor

may hereafter designate, monthly rent in advance without offset or deduction,

on or before the first day of each month of the Lease term in the following

amount: Thirteen Thousand Eighty Seven and 50/100 Dollars ($13,087.50). (SEE PARAGRAPH 36)

 

Lessor

acknowledges receipt of the first month’s rent ($13,087.50) and operating

expense charge ($2,776.20).  Lessor

further acknowledges receipt from Lessee of a security deposit (the “Security

Deposit”) in the amount of Fifteen Thousand Ninety-Four and 25/100 Dollars

($15,094.25), which sum shall be held and owned by Lessor, without obligation

to pay interest, as security for the performance of Lessee’s covenants and

obligations under this Lease.  The

Security Deposit is not an advance rental deposit or a measure of damages

incurred by Lessor in case of Lessee’s default.  Upon the occurrence of any event of default by Lessee, Lessor may

from time to time, without prejudice to any other remedy provided herein or by

law, use such fund as a credit to the extent necessary to credit against any

arrears of Rent or other payments due to Lessor hereunder, and any other

damage, injury, expense or liability caused by such event of default, and

Lessee shall pay to Lessor, on demand, the amount so applied in order to

restore the Security Deposit to its original amount.  Although the Security Deposit shall be deemed the property of

Lessor, any remaining balance of such deposit shall be returned by Lessor to

Lessee at such time after termination of this Lease that all of Lessee’s

obligations under this Lease have been fulfilled, reduced by such amounts as

may be required by Lessor to remedy defaults on the part of Lessee in the

payment of Rent or other obligations of Lessee under this Lease, to repair

damage to the Premises, Building or Project caused by Lessee or any Lessee’s

Parties and to clean the Premises. 

Lessor may use and commingle the Security Deposit with other funds of

Lessor.

 

In addition to

the Security Deposit and as further security for the performance of the

obligations of this Lease by Lessee, upon execution of this Lease Lessee shall

provide to Lessor and cause to be in effect for the first twelve (12) months of

the term of this Lease, an unconditional, irrevocable letter of credit naming

Lessor as beneficiary, in the amount of Thirty Thousand Dollars ($30,000).  Lessor shall hold the letter of credit as

security for the performance of Lessee’s obligations under this Lease.  Lessor shall have the right to draw upon

said letter or credit, without prejudice to any other remedy of Lessor, upon

the failure of Lessee to pay to Lessor when due rent or additional rent or any

other charges after notice as provided in the Lease.  In the event Lessor draws upon the letter of credit, Lessee shall

have delivered to Lessor a revised letter of credit in the full amount required

to be provided as security.  Following

the end of the twelfth month of the Lease term, the letter of credit shall no

longer be required by Lessor.

 

4.             USE.  The premises shall be used only for the

purpose of

 

Office.

 

Lessee shall

at its own expense obtain any and all licenses and permits necessary for such

use, and shall comply with all governmental laws, ordinances, regulations,

orders, and directives applicable to the use of the Premises, except that

Lessor agrees to deliver the Premises in compliance with the Americans with

Disabilities Act and Lessee shall be responsible for maintaining the Premises

thereafter.  Lessee shall not occupy or

use, or permit any portion of the Premises to be occupied or used, for any

purpose which would increase the rate of fire insurance coverage on said

Premises, the buildings or their contents. 

In the event Lessee shall cause any increase above normal rates, Lessee

agrees to pay to Lessor, as additional rental, an amount equal to all such

increases.

 

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5.             RULES AND

REGULATIONS.  Lessee agrees to

comply with the Rules and Regulations attached hereto (Exhibit C), as well

as such other reasonable rules and regulations as may from time to time be

adopted by Lessor for the management and safety of common areas, the buildings,

and tenants.  Lessee shall be

responsible for the compliance with such rules and regulations by its

employees, agents, and invitees.  The

failure of Lessor to enforce any of such rules and regulations against Lessee

or any other tenant of the buildings shall not be deemed to be a waiver of

same.

 

6.             MAINTENANCE.  Lessee agrees by taking possession that the

Premises are in tenantable and good condition and that Lessor has made no

promises, agreements, or representations as to the decoration, repair or

alteration of the Premises or any other portion of the buildings except as expressly

set forth herein or as may otherwise be mutually agreed upon in writing.  Lessor shall maintain the heating and air

conditioning systems, roof, exterior walls (excluding windows, plate glass and

all doors in and to the Premises), grounds, parking areas, public restrooms,

hallways, entrances and other portions of the buildings used in common by all

tenants in good repair and condition, reasonable wear and tear excepted, and

the costs of such maintenance shall be shared as provided in paragraph 8, below.  Lessee shall be responsible for all other

maintenance and repairs required in connection with the Premises and shall

maintain the Premises in a neat, clean and sanitary condition.  Lessee shall also be responsible for repair

or replacement of any damage or injury to the Premises or the buildings caused

by Lessee, its agents, employees or invitees; provided, however, if Lessee

fails to make such repairs or replacements promptly, Lessor may do so, and the

cost thereof shall be additional rent due on the first of the following month.

 

7.             UTILITIES AND

SERVICES.  Lessor shall furnish

electricity for light, heat and air conditioning to the Premises, and in

addition shall furnish water, janitorial services, sewer and toilet facilities

to common areas in the buildings, and the cost of such utilities and services

shall be shared as provided in paragraph 8, below.  In the event that Lessee’s electrical needs exceed the building

standard requirements supplied by Lessor, Lessee shall have the right, at

Lessee’s sole cost and expense, to install additional electrical service

capacity to the Premises.  Lessee’s

plans and specifications shall be subject to the prior approval of Lessor, and

the additional electrical service shall include one or more separate meters in

order to permit Lessor to invoice Lessee directly for the additional electrical

usage.  Lessor shall not be liable for

any injury or damages suffered as a result of the interruption of utilities or

services by fire, or other casualty, strike, riot, vandalism, the making of

necessary repairs or improvements, or any other cause.

 

8.             MONTHLY

OPERATING EXPENSE ADJUSTMENTS. 

Lessee shall pay as additional monthly rent Lessee’s pro-rata share of

expenses incurred by Lessor for operation of the land and buildings described

on Exhibit A hereto during the term or any extension hereof, as follows:

 

(a)  Real estate taxes and assessments including

taxes, if any, direct or indirect, in whole or in part, upon the rents or the

income derived from real estate or rental property (excluding Federal or State

taxes on net income);

 

(b)  Usual and necessary costs of operation,

maintenance and repair as determined by standard accounting practice, including

without limitation, all utilities and services not metered or charged directly

to Lessee, insurance, painting, upkeep and repair of building exterior,

roofing, parking, landscaping, and all common areas and facilities, and

Lessor’s fee for supervision and administration of the items set forth in this

sub-paragraph, currently at 10%, but excluding depreciation, loan payments, and

replacement of major building structural elements.  Depreciation, as used in this section, is defined specifically to

be related to the purchase price of the building, subsequent improvements

within tenant spaces, and payments of lease commissions.

 

Lessor shall

from time to time estimate to Lessee its monthly pro-rata share of such

expenses based upon existing costs. 

Lessee’s pro-rata share shall be that percentage of the total expenses

as the square footage of Lessee’s Premises bears to the total applicable net

rentable square footage of the buildings or such other equitable apportionment

as may be adopted.  Such monthly

estimated amount shall be paid by Lessee on or before the first day of each

month.  Lessor, annually or upon

termination hereof, shall compute Lessee’s actual pro-rata share of such

expenses.  Any overpayment shall be

refunded or credited to Lessee, at its option, and any deficiency shall be paid

by Lessee within fifteen (15) days after date of Lessor’s statement.  Lessor’s records showing expenditures made

for such expenses shall be available for Lessee’s inspection at any reasonable

time.

 

9.             LESSOR’S

RESERVATIONS.  Lessor reserves the

right without liability to Lessee: (a) to inspect the Premises, to show them to

prospective tenants, and if they are vacated, to prepare them for reoccupancy;

(b) to retain at all times and to use in appropriate instances keys, to which

only authorized building personnel have access, to doors within and into the

Premises; (c) to make repairs, alterations, additions or improvements, whether

structural or otherwise, in or about the buildings, and for such purposes to

enter upon the Premises and during the continuance of any work, to close common

areas and to interrupt or temporarily suspend building services and facilities,

all without affecting any of Lessee’s

 

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obligations hereunder, so long

as the Premises are reasonably accessible; and (d) generally to perform any

acts relating to the safety, protection and preservation of the Premises or

building.

 

10.           POSSESSION.  If Lessor fails to deliver possession of the

Premises at the commencement date of the term hereof, Lessee may give Lessor

written notice of its intention to cancel this Lease unless possession is

delivered within sixty (60) days after receipt of such notice by Lessor;

provided such commencement date shall be extended a period of time equal to the

period of any delays resulting from causes beyond Lessor’s control.  Lessor shall not be liable for any damages

caused by failure to deliver possession of the Premises and Lessee shall not be

liable for any rent until such time as Lessor delivers possession.  A delay in possession shall not extend the

term of the termination date.  If Lessor

offers possession of the Premises prior to the commencement date of the term of

this Lease, and if Lessee accepts such early possession, both parties shall be

bound by the terms hereof during such period, including the payment of rent,

which shall be prorated.

 

11.           ASSIGNMENT AND

SUBLETTING.  Lessee shall not either

voluntarily or by operation of law assign, transfer, convey or encumber this

Lease or any interest under it, or sublet the Premises or any part thereof, or allow

any other person to occupy or use the Premises without Lessor’s prior written

consent.  Lessor reserves the right to

recapture the Premises in lieu of giving its consent by giving notice to Lessee

of such recapture within twenty (20) days after receipt of a written request

for assignment or subletting.  Such

recapture shall terminate this Lease as of the proposed date of assignment or

subletting, which shall be the last day of a calendar month and not earlier than

sixty (60) days after receipt of Lessee’s request hereunder.

 

In the event

that Lessor shall not elect to recapture the Premises and shall thereafter give

its consent, Lessee shall pay Lessor a reasonable fee, not to exceed $500.00,

to reimburse Lessor for processing costs. 

Lessor’s consent, if given, shall not release or discharge Lessee from

any liability under this Lease and shall not be deemed consent to any future

assignment or sublease.  Any assignment

or subletting without Lessor’s consent shall be void, and shall constitute a

default under this Lease.  A transfer by

the present majority shareholders of ownership or control of a majority of the

voting stock of a corporate Lessee shall be deemed an assignment for the

purpose of this paragraph.

 

12.           ALTERATIONS.  After prior written consent of Lessor,

Lessee may but is not obligated to make minor alterations, additions and

improvements in the Premises at its sole cost and expense.  In the performance of such work, Lessee

shall save Lessor harmless from any damage, loss, or expense and shall comply

with all laws, ordinances, rules and regulations of any proper public

authority.  Upon termination of this

Lease, such alterations, additions and improvements made in, to or on the

Premises (including without limitation partitions, draperies, carpeting,

lighting and other physically attached fixtures) shall remain upon and be

surrendered as a part of the Premises; provided, however, that upon Lessor’s

written request, Lessee shall promptly remove such additions, alterations, or

improvements, repair any damage caused thereby and restore the Premises to its

original condition at Lessee’s sole cost and expense.

 

13.           SIGNS.  Lessee shall not paint or install any signs

or symbols on the exterior doors, plate glass or walls of the Premises or

install any electrically lighted signs in or upon the Premises, without the

prior written consent of Lessor.  No

showcases or other fixtures or objects shall be placed by Lessee inside or

outside of the buildings, in the corridors, or elsewhere in or about the

buildings, other than within the Premises. 

Windows facing on corridors shall at all times be wholly clear and

uncovered (except for such signs as Lessor may approve) so that a full

unobstructed view of the interior of the Premises may be had from the

corridors.  No sign, tag, label,

picture, advertisement, or notice (other than price tags of customary size used

in marking samples) shall be displayed, distributed, inscribed, painted or

affixed by Lessee on any part of the outside or inside of the buildings or the Premises

without the prior written consent of Lessor.

 

14.           ACCIDENTS AND

LIABILITY.  Lessor or its agents

shall not be liable for any injury or damage to persons or property sustained

by Lessee or others in and about the Premises or the buildings, except to the

extent caused by Lessor’s negligence, if any. 

Lessee agrees to defend and hold Lessor and its agents harmless from any

claim, action and/or judgment for injury or damage to persons or property

suffered in or about the Premises by any person, firm or corporation, except to

the extent caused by Lessor’s negligence, if any.  Lessee shall, at its expense, carry public liability insurance,

such insurance to afford minimum protection to the combined limit of not less

than Five Hundred Thousand Dollars ($500,000.00) or such other reasonable

amount as Lessor may require in respect to injury or damage to persons or

property.  Lessee shall submit a

certificate of such insurance to Lessor and such insurance shall not be cancelable

without thirty (30) days prior written notice thereof to Lessor.

 

15.           DAMAGE OR

DESTRUCTION.  If the Premises or the

building shall be damaged or destroyed by fire or other casualty, Lessor shall

have the option either (a) to repair or rebuild within one hundred eighty (180)

days, or (b) not to repair or rebuild, and to cancel this Lease on thirty (30)

days notice.  If Lessor fails to give

Lessee written notice of its election within thirty (30) days from the date of

damage, or if the restoration of the Premises cannot be completed within one

hundred eighty (180) days

 

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from date of notice, Lessee may

cancel this Lease on thirty (30) days notice. 

During the period of untenantability, rent shall abate in the same ratio

as the portion of the Premises rendered untenantable bears to the whole of the

Premises.

 

16.           EMINENT DOMAIN.  If the whole of the Premises shall be taken

by any public authority under the power of eminent domain, or purchased by the

condemnor in lieu thereof, the term of this Lease shall cease as of the date

possession is taken by such public authority. 

If only a part of the Premises shall be so taken, the Lease shall

terminate only as to the portion taken, and shall continue in full force and

effect as to the remainder of said Premises, and the monthly rent shall be

reduced proportionately; provided, however, if the remainder of the Premises

cannot be made tenantable for the purposes for which Lessee has been using the

Premises or if more than twenty-five percent (25%) of the rentable square

footage of the Premises shall be so taken, then either party, by written notice

to the other, given at least thirty (30) days prior to the date that possession

must be surrendered to the public authority, may terminate this Lease effective

as of such surrender of possession.  If

any part of the buildings other than the Premises shall be so taken so as to

render in Lessor’s opinion the termination of this Lease beneficial to the

remaining portion of the buildings, Lessor shall have the right within sixty

(60) days of said taking to terminate this Lease upon thirty (30) days written

notice to Lessee.  In the event of any

taking, whether whole of partial, Lessor shall be entitled to all awards,

settlement, or compensation which may be given for the land and buildings.  Lessee shall have no claim against Lessor

for the value of any unexpired term of this Lease.

 

17.           LIENS AND

INSOLVENCY.

 

(a).  Tenant shall keep the Premises and the

building free from any lien or claim of lien arising out of any work performed

upon or materials furnished to the Premises by or on behalf of Tenant.  Tenant hereby agrees to indemnify and hold

Landlord harmless from any loss, cost, or liability resulting from any such

lien or claim of lien, performed at Tenant’s cost and expense at the direction

of Tenant.  In the event any lien or

claim of lien is filed against the building, the land or the Premises by any

person claiming by, through or under Tenant, Tenant shall, upon the request of

Landlord, immediately post in favor of Landlord, at Tenant’s expense, a bond in

form and amount satisfactory to Landlord (but not exceeding 150% of the

reasonably estimated liability for costs and expenses which Landlord may incur

in connection with the removal of the lien) and issued by a surety satisfactory

to Landlord, indemnifying Landlord against all liability, cost, and expenses,

including attorneys’ and collection agency fees, which Landlord may incur as a

result of the lien.  Provided that such

bond has been furnished to Landlord, Tenant, at its sole cost and expense and

after written notice to Landlord, may contest, by appropriate proceedings

conducted in good faith and with due diligence, any lien, encumbrance, or

charge against the Premises arising from work done or materials provided to the

Premises for or on behalf of Tenant, provided such proceedings suspend the

collection thereof and Landlord determines that neither the Premises, the

building nor any part thereof or interest therein is or will be in any danger

of being sold, forfeited or lost.

 

(b).  If Lessee shall be declared insolvent or

bankrupt, or if Lessee’s leasehold interest herein shall be levied upon or

seized under writ of any court of law, or if a trustee, receiver or assignee be

appointed for the property of Lessee, whether under operation of State or

Federal statutes, then Lessor may, at its option, immediately (notice being

expressly waived) terminate this Lease and take possession of said Premises,

without terminating Lessee’s obligations hereunder.

 

18.           DEFAULT AND

REENTRY.  If Lessee fails to keep or

perform any of the covenants and agreements herein contained, then the same

shall constitute a breach hereof.  If

Lessee has not remedied such breach within three (3) days after written notice

thereof from Lessor if the breach is non-payment of rent or other charges, or

within twenty (20) days after written notice thereof from Lessor in the event

of the breach of any other covenant, then Lessor may, at its option, without

further notice or demand:

 

(a)  Cure such breach for the account and at the

expense of Lessee and such expense shall be deemed additional rent due on the

first of the following month; or

 

(b)  Reenter the premises, remove all persons

therefrom, take possession of the Premises and remove all equipment, fixtures,

and personal property therein at Lessee’s risk and expense, and (1) terminate

this Lease, or (2) without terminating the Lease or in any way affecting the

rights and remedies of Lessor or the obligations of Lessee, re-let the whole or

any part of the Premises as agent for Lessee, upon such terms and conditions

and for such term as Lessor may deem advisable.  In either event, the rents received and any last month’s rent

deposit held under this Lease may first be applied by Lessor to the costs and

expenses of re-letting, including without limitation, cleaning and necessary

renovation and alteration, and the balance of such rent shall be applied toward

payment of all sums due or to become due to Lessor hereunder, and Lessee shall

pay to Lessor any deficiency; however, Lessor shall not be required to pay any

excess to Lessee.  The above remedies of

Lessor are cumulative and in addition to any other remedies now or hereafter

allowed by law or elsewhere provided for in this Lease.

 

19.           REMOVAL OF PROPERTY.  Any goods or fixtures of Lessee removed by

Lessor in accordance with paragraph 18 above may be stored by Lessor at the

cost and expense of Lessee or may be deposited on any sidewalk or delivery area

adjacent to the buildings, at the sole risk of Lessee and without any further

responsibility on the part of Lessor, and Lessor may without removing said

goods or

 

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fixtures or after removing said

goods and fixtures, without obligation to do so and without any notice to

Lessee, sell or dispose of the same at public or private sale for the account

of Lessee, in which event the proceeds may be applied by Lessor upon any

indebtedness due from Lessee to Lessor. 

Lessee hereby waives all claims for damages that may be caused by Lessor

re-entering and taking possession of the Premises and removing or disposing of

said goods and fixtures and herein provided.

 

20.           COSTS AND

ATTORNEY’S FEES.  If by reason of

any default or breach on the part of either party in the performance of any of

the provisions of this Lease, a legal action is instituted, the prevailing

party shall be entitled to all reasonable costs and attorney’s fees in

connection therewith.  Any action

brought hereunder shall be maintained in the Superior Court in King County,

Washington.

 

21.           SUBROGATION

WAIVER.  Lessor and Lessee each

herewith and hereby releases and relieves the other and waives its entire right

of recovery against the other for loss or damage arising out of or incident to

the perils described in “all risk” insurance policies, including earthquake and

flood insurance endorsements, approved for use in the State of Washington which

occurs in, on or about the Premises, whether due to the negligence of either

party, their agents, employees or otherwise.

 

22.           RELOCATION OF

PREMISES.  Lessee agrees that Lessor

may at any time during the term or any extension hereof after at least thirty

(30) days prior written notice, require Lessee to move to other space elsewhere

in the buildings at the cost and expense of Lessor.  In lieu of such relocation, Lessee shall have the option to

terminate this lease, effective on the date Lessee is required to move, by

written notice to Lessor within fifteen (15) days after delivery of Lessor’s

notice.

 

23.           HOLDING OVER.  If Lessee, with the implied or express

consent of Lessor, shall hold over after the expiration of the term of this

Lease, Lessee shall remain bound by all the covenants and agreements herein,

except that the tenancy shall be from month to month, and the monthly rent

shall be at the rate of one hundred fifty percent (150%) of the last paid rent.

 

24.           SUBORDINATION.  Lessee agrees that this Lease shall be

subordinate to the lien of any mortgages or deeds of trust now or hereafter

placed against the real property of which the Premises comprise a part, and to

all renewals and modifications, supplements, consolidations and extensions

thereof; provided, however, in the event that any mortgagee or beneficiary

shall elect to subordinate its lien to this Lease, Lessor reserves the right to

subordinate said mortgage lien to this Lease upon the terms required by such

mortgagee or beneficiary.

 

25.           SURRENDER OF

POSSESSION.  Lessee, prior to the

termination of this Lease or of Lessee’s right to possession, shall remove from

the Premises all of Lessee’s furniture, trade fixtures and other unattached

personal property, and such alterations, additions, improvements or signs

required by Lessor to be removed, and shall repair or pay for all damage to the

Premises caused by such removal.  All

such property remaining and every interest of Lessee in the same shall be

conclusively presumed to have been conveyed by Lessee to Lessor under this

Lease as a bill of sale, without compensation, allowance, or credit to

Lessee.  Lessee shall upon termination

of this Lease or of Lessee’s right of possession, deliver all keys to Lessor

and peacefully quit and surrender the Premises without notice, neat and clean,

and in as good condition as when Lessee took possession, except for reasonable

wear and tear as determined by Lessor.

 

26.           LATE PAYMENT AND

INTEREST.  If any amount due from

Lessee is not received in the office of Lessor on or before the tenth (10th)

day following the date upon which such amount is due and payable, a late charge

of ten percent (10%) of said amount shall become immediately due and payable,

which late charge Lessor and Lessee agree represents and fair and reasonable

estimate of the processing and accounting costs that Lessor will incur by

reason of such late payment.  All past

due amounts owing to Lessor under this Lease, including rent and the above late

charge, shall be assessed interest at the annual percentage rate of eighteen

percent (18%) from the date due or date of invoice, whichever is earlier, until

paid.

 

27.           NOTICE.  Any notice required to be given by either

party to the other pursuant to the provisions of this Lease or any law, present

or future, shall be in writing and shall be deemed to have been duly given or

sent if delivered personally or if properly deposited in the United States Mail

by registered or certified mail, return receipt requested, addressed to the

Lessor at 5701 Sixth Avenue South, Suite 440, Seattle, WA 98108 or to Lessee at

the following address, or to such other address as either party may designate

to the other in writing from time to time.

 

5601 Sixth Avenue South, Suite 600, Seattle, Washington 98108

and

3200 Wilcrest, Suite 370, Houston, TX 77042

 

28.           CONDUCT OF

BUSINESS.  Intentionally deleted.

 

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29.           NO WAIVER OF

COVENANTS.  Time is of the essence

of this Lease.  Any waiver by either

party of any breach hereof by the other shall not be considered a waiver of any

future similar or other breach.  This

Lease contains all the agreements between the parties; and there shall be no

modification of the agreements contained herein except by written instrument.

 

30.           BINDING ON HEIRS,

SUCCESSORS AND ASSIGNS.  The

covenants and agreements of this Lease shall be binding upon the heirs,

executors, administrators, successors and assigns of both parties hereto,

except as hereinabove provided.

 

31.           ASSIGNMENT OF

LEASE.  Lessee acknowledges that

Lessor, in connection with its mortgage financing upon the real property of

which the Premises are a part, may assign this Lease for additional security

purposes, and that pursuant to the terms of that assignment, unless and until

the Lessee shall have received notice from such lender to the contrary, Lessee

shall pay all rents and other monies due under this Lease as specified herein.

 

32.           PAYMENTS TO

LESSOR.  In the event any payment

due form Lessee to Lessor is made by a party other than Lessee, such payments

shall be deemed to have been made by and for the account of Lessee, and the

party making such payment shall have no rights under this Lease.

 

33.           CORPORATE

AUTHORITY.  Lessee warrants that all

necessary corporate actions have been duly taken to permit Lessee to enter into

this Lease and that each undersigned officer has been duly authorized and

instructed to execute this Lease.

 

34.           LIABILITY OF

LESSOR.  Lessee agrees that no

trustee, officer, employee, agent, manager, or individual partner of Lessor, or

its constituent entities, shall be personally liable for any obligation of

Lessor hereunder, and that Lessee must look solely to the interest of Lessor or

its constituent entities in the subject real estate for the enforcement of any

claims against Lessor arising hereunder.

 

35.           ESTOPPEL

CERTIFICATE.  Within ten (10) days

after notice from Lessor, Lessee shall execute and deliver to Lessor a

certificate stating that this Lease is unmodified and in full force and effect,

or in full force and effect as modified, and stating the modifications.  The certificate also shall state the amount

of total rent, the dates to which the rent has been paid in advance, the amount

of any security deposit or prepaid rent, the fact that there are no current

defaults under the Lease by either Lessor or Lessee except as specified in such

statement, and such other matters as may reasonably be requested by Lessor or

any purchaser or lender of Lessor. 

Lessee acknowledges that any statement delivered pursuant to this

paragraph may be relied upon by any mortgagee, beneficiary, purchaser or

prospective purchaser of the buildings or any interest therein.  Failure to deliver the certificate within

said ten (10) day period shall constitute a material breach of this Lease and

shall be deemed a conclusive admission by Lessee that this Lease is in full force

and effect and has not been modified except as may be represented by Lessor.

 

36.           RENT ADJUSTMENT.  Effective June 1, 2003, the monthly rent as

provided for in Paragraph 3 of the Lease shall be Fifteen Thousand Ninety Four

and 25/100 Dollars ($15,094.25).

 

37.           TENANT

IMPROVEMENTS.  Lessor agrees to

provide up to Thirty Thousand and 00/100 Dollars ($30,000.00) so that Lessor

can complete the following improvements to the Premises:

 

1.             Paint

 

2.             Carpet

 

The Thirty Thousand and 00/100 Dollars ($30,000.00) for tenant

improvements shall include but not be limited to contractor’s profit which

shall not exceed 7%, construction costs, construction management: fee of seven

percent (7%) payable to Lessor, building permits, permit fees, architectural

fees, directory sign updates, suite keys and Washington State Sales Tax.

 

Any additional tenant improvements that exceed the scope of work

described above, for which the Lessee is responsible or has requested, shall be

at the sole expense of the Lessee.

 

38.           PARKING.  Lessee shall have the right to up to ten (10)

unreserved parking stalls in the building garage in an area specified by

Lessor.  Lessee recognizes that Lessor

currently has no parking attendant and/or parking control system implemented by

Lessor.  Parking shall be free of charge

to Lessee unless and until all tenants at Seattle Design Center are charged for

parking in a uniform way.

 

39.           NON DISCLOSURE.  Neither Lessee, nor any of its officers,

shareholders, directors, employees, or representatives, shall disclose,

divulge, communicate or otherwise reveal to any person the existence, or any of

the provisions or contents, of this Agreement, except and only to the extent,

Lessee

 

6

 

becomes legally compelled (by

deposition, interrogatory, request for documents, subpoena, civil investigative

demand or similar process or requirements of Federal Securities’ laws) to

disclose the existence, or any of the provisions or contents, of this

Agreement, in which event Lessee shall provide Lessor with prompt prior written

notice of such requirement so that Lessor may seek a protective order or other

appropriate remedy and/or waive compliance with terms of this Paragraph.  Lessee warrants and represents that neither

the provisions nor the intention of this Paragraph have been violated at any

time prior to the execution by Lessee of this Agreement.  This violation of the provisions or the

intention of this Paragraph, whether said violation occurred or occurs prior

to, on, or after the execution by Lessee of this Agreement, shall be deemed an

“Event of Default” under the Lease, and shall entitle Lessor to exercise any or

all of its rights and remedies under the Lease, at law or in equity.

 

	

  Lessor:

  	

  Lessee:

  
	

   

  	

   

  
	

  Bay West

  Design Center, LLC,

  	

  EpicEdge,

  Inc.,

  
	

  a Delaware

  limited liability company

  	

  a Texas

  corporation,

  
	

   

  	

   

  
	

  By:

  	

  BW Seattle

  Corp.,

  a Washington corporation

  its manager

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ Timothy

  Treadway

  	

   

  	

  By:

  	

  /s/ Jeff

  Sexten

  	

   

  
	

  Timothy

  Treadway, Executive Vice President

  	

  Jeff Sexten,

  President & COO

  
							

 

7

 

EXHIBIT A

 

LEGAL DESCRIPTION

SEATTLE DESIGN CENTER

 

Those portions of Blocks 1 and

2, Georgetown Riverfront Addition, and Blocks 26 and 27, Commercial Street

Steam Motor Addition, City of Seattle, King County, Washington, described as

follows:

 

Beginning at

the Northwest corner of Lot 1, Block 27, of the Plat of Commercial Street Steam

Motor Addition, according to plat recorded in Volume 3 of Plats, Page 85, in

King County, Washington; thence N 00o46’18” E along the northerly extension of

the west line of said Lot 1 a distance of 10.00 feet to the south margin of

South Orcas Street as established by Vacation Ordinance No. 60786, records of

the City of Seattle; thence S 89o05’18” E along said south margin a distance of

567.58 feet; thence along a curve to the right having a radius of 15.00 feet,

an arc distance of 24.47 feet through a central angle of 93o29’10” to the west

margin of Sixth, Avenue South as established by Acceptance Ordinance No. 98789

and Vacation Ordinance No, 98793, records of the City of Seattle; thence S

04o23’52” W along said west margin a distance of 196.42 feet; thence along a

curve to the right having a radius of 15.00 feet an arc distance of 22.65 feet

through a central angle of 86o31’59” to the south line of Block 2 of the Plat

of Georgetown Riverfront Addition, according to Plat recorded in Volume 11 of

Plats, Page 5, in King County, Washington; thence N 89o04’09” W along said

south line of Block 2 and of Block 1 of said Plat of Georgetown Riverfront Addition

a distance of 514.75 feet of the east line of Lot 1 of said Block 1; thence

N  00o48’13”  E along said east line of Lot 1 and its northerly extension a

distance of 107.93 feet to the alley centerline 8 feet north of the north line

of said Lot 1; thence N 89o04’09” W along said centerline a distance of 40.36

feet to the southerly extension of the west line of said Lot 1, Block 27, Plat

of Commercial Street Steam Motor Addition; thence N 00o46’18” E along the

southerly extension of said Lot 1 and along the west line of said Lot 1 of

Block 27 of the Plat of Commercial Street steam Motor Addition, a distance of

107.95 feet to the point to beginning.

 

Also, Lots 1 through 18

inclusive of Block 17 of the plat of Commercial Street Steam Motor Addition to

the City of Seattle, recorded in Volume 3 of Plats, Page 85, in King County,

Washington, together with vacated alley and portion of South Findlay Street

adjoining, vacated per city Ordinance No. 110210.

 

[INITIALS]

 

 

EXHIBIT B

 

[FLOORPLAN]

 

 

[INITIALS]

 

 

EXHIBIT C

 

RULES AND REGULATIONS

 

1.     Any directories provided by

Lessor for the Building will be for the display of the name and location of

tenants only unless otherwise approved by Lessor.

 

2.     Lessee shall not place any

new or additional locks on any doors of the Premises, nor re-key any existing

locks without the consent of Lessor.

 

3.     Lessor reserves the right

to close and keep locked all common entrances and exits during such hours as

Lessor may deem advisable.  Entrance by

tenants to the Buildings on Building holidays and weekends, other than Show

Days, shall be limited to those doors designated by Lessor.

 

4.     Lessor reserves the right

to exclude or expel from the buildings any person who, in the judgment of

Lessor, is intoxicated, under the influence of drugs or whose conduct is

otherwise disturbing to others, or who shall in any manner violate any of the

rules and regulations.

 

5.     Lessee shall not do or

permit to be done within the Premises anything which would unreasonably annoy

or interfere with the rights of other tenants of the Buildings.

 

6.     Lessor will not be

responsible for lost or stolen personal property, equipment or money from the

Buildings at any time.

 

7.     Lessee shall not permit its

employees or invitees to loiter in or about the common areas, to obstruct any

of the entries, passages, corridors of common areas, nor to place any rubbish,

litter, merchandise or material of any nature into any Building, delivery,

parking, traffic or other common areas except as designated by Lessor.

 

8.     Canvassing, soliciting, or

peddling in and about the Buildings are prohibited, and Lessee shall cooperate

to prevent such activity.

 

9.     During non-business hours

and days, Lessor may refuse access to the Buildings or the Premises by

master-key controlled by Lessor unless the person seeking access is known to

Lessor's employees, has a pass, or is properly identified.  Lessor shall not be liable for damages for

any error in admitting or excluding any person from the Buildings or Premises.

 

10.   Lessee shall not make or

permit any use of the Premises which may be dangerous to life, limb, or

property, nor permit any noise, odor, or vibrations to emit from the Premises

which are objectionable to Lessor or to other occupants of the Buildings.  Lessee shall not cause a nuisance or

violation of any regulation of any governmental agency within the Premises or

the Buildings.

 

11.   Lessee shall not commit any

waste, damage, or injury to the Premises, the Buildings or parking, loading,

and other common areas.

 

12.   Lessee shall not at any time

display a "For Rent" sign upon the Premises.

 

13.   No vehicles or animals shall

be brought into the Buildings.

 

14.   Lessee and its employees

shall park only in such areas as may be designated by Lessor.

 

15.   Lessee shall not use any

person or contractor who has not been approved by Lessor to perform window

washing, cleaning, decorating, repair or other work in the Premises.

 

16.   Lessor reserves the right to

prescribe the weight, size and position of all safes and other heavy equipment

brought into the Buildings and also the time and the manner of moving such

items, merchandise, furniture and similar items in and out of the

Buildings.  Movements of Lessee's

property in, out, or within the Buildings are entirely at the risk and

responsibility of Lessee.

 

17.   Lessee shall not keep or use

in or upon the Premises any oil, burning fluid, gasoline or other combustible

or explosive materials.

 

18.   Lessee agrees that it will

install on its entrance doors decals supplied by Lessor that shall read

"Showrooms are not open to the public. 

Authorized professional buyers only".

 

19.   Lessee shall at all times

keep clean the glass of all showroom windows and doors.  Lessor reserves the right to require window

treatments of specified types on windows of the Premises which are visible from

Atriums or Common Areas.

 

20.   Lessee shall not waste

electricity or water and shall cooperate fully with Lessor to assume the most

effective and economical operation of the Buildings' lighting, heating, air

conditioning, and other utilities systems. 

Lessee shall refrain from adjusting any controls other than room

thermostats installed for Lessee's use.

 

21.   Lessor reserves the right to

approve the installation our use of any light fixtures, office or showroom

equipment which would cause the electrical usage within the Premises to exceed

a maximum allowable electrical load of 2.35 watts per square foot of

Premises.  Lessor also reserves the

right to approve connections to electric current other than through existing

electrical outlets provided for Lessee's use.

 

22.   Lessee shall keep Lessor

advised of the current telephone number(s) of Lessee's employees who may be

contacted in an emergency, i.e., fire, break-in, vandalism, etc.  If Lessor shall deem it necessary to respond

to such emergency on Lessee's behalf in order to protect the Premises or the

Buildings, Lessee shall pay all reasonable costs incurred, including any time

spent by Lessor's employees in responding to such emergency.

 

23.   Lessor is not responsible to

any tenant for the non-observance or violation of the rules and regulations by

any other tenant.

 

 

LESSEE:

 

	

  STATE OF

  	

  Texas

  	

  )

  
	

   

  	

   

  	

  )  ss.

  
	

  COUNTY OF 

  	

  Travis

  	

  )

  

 

On this 1st day of May 2000, personally

appeared before me Jeffrey Sexton, to me known to be the President & COO of

the corporation that executed the within instrument, and acknowledged to me

that       was authorized to sign the same on

behalf of the corporation as its free and voluntary act and deed for the uses

and purposes therein mentioned.

 

	

  [SEAL]

  	

   

  	

  SANDRA M. ROY

  	

   

  	

  /s/ Sandra

  M. Roy

  
	

   

  	

   

  	

  MY COMMISSION EXPIRES

  	

   

  	

  NOTARY

  PUBLIC in and for the

  
	

   

  	

   

  	

  October 31, 2000

  	

   

  	

  State of

  Texas, residing at

  
	

   

  	

   

  	

   

  	

   

  	

  100 Lido Cr

  P-3, Austin, TX 78734. 

  
	

   

  	

   

  	

   

  	

   

  	

  My

  commission expires: 10/31/2000.

  

 

 

LESSOR:

 

	

  STATE OF

  	

  Washington

  	

  )

  
	

   

  	

   

  	

  )  ss.

  
	

  COUNTY OF 

  	

  King

  	

  )

  

 

On this 4th day of May 2000, before me

personally appeared Timothy Treadway, to me known to be the Executive Vice

President of BW Seattle Corp., a Washington corporation, which is manager of

Bay West Design Center, LLC, a Delaware limited liability company, Lessor, that

executed the within and foregoing instrument, and acknowledged the said

instrument to be the free and voluntary act and deed of said property manager,

for the uses and purposes therein mentioned, and on oath stated that he was

authorized to execute the said instrument.

 

IN WITNESS WHEREOF I have

hereunto set my hand and affixed my official seal the day and year first above

written.

 

	

  TIA BOCOCK

  	

   

  	

  /s/ Tia

  Bocock

  
	

  NOTARY PUBLIC

  	

   

  	

  NOTARY

  PUBLIC in and for the

  
	

  COMMISSION EXPIRES

  	

   

  	

  State of

  Washington residing

  
	

  12-9-02

  	

   

  	

  at Seattle

  
	

  STATE OF WASHINGTON

  	

   

  	

  My

  commission expires: 12-9-02.

  

 

 

	

  Property #

  3002

  	

   

  	

  Tenant # 530

  	

   

  	

  Unit # 600

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  RENTAL

  PAYMENT COUPON - July 2000

  	

   

  	

   

  	

   

  
	

  Property Address:

  	

   

  	

  Payment Due:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  EpicEdge, Inc.

  	

   

  	

  Rent

  	

   

  	

  $

  	

  13,087.50

  	

   

  
	

  5601 6 Ave S, Suite 600

  	

   

  	

  CAM

  	

   

  	

  2,776.20

  	

   

  
	

  Seattle WA 98108

  	

   

  	

  Storage

  	

   

  	

  0.00

  	

   

  
	

   

  	

   

  	

  Total

  Payment due on 7/1/00

  	

   

  	

  $

  	

  15,863.70

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Remittance Address:

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Bay West Design Center, LLC

  	

   

  	

  Late Charge

  	

   

  	

  1,586.37

  	

   

  
	

  P O Box 24842

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Seattle WA 98124-0842

  	

   

  	

  Total if

  payment received 

  after 7/10/00

  	

   

  	

  $

  	

  17,450.07

  	

   

  

 

	

  Property # 3002

  	

   

  	

  Tenant # 367

  	

   

  	

  Unit # 600

  	

   

  	

  RENTAL

  PAYMENT COUPON - August 2000

  	

   

  	

   

  	

   

  
	

  Property Address:

  	

   

  	

  Payment Due:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  EpicEdge, Inc.

  	

   

  	

  Rent 

  	

   

  	

  $

  	

  13,087.50

  	

   

  
	

  5601 6 Ave S, Suite 600

  	

   

  	

  CAM

  	

   

  	

  2,776.20

  	

   

  
	

  Seattle WA 98108

  	

   

  	

  Storage

  	

   

  	

  0.00

  	

   

  
	

   

  	

   

  	

  Total

  Payment due on 8/1/00

  	

   

  	

  $

  	

  15,863.70

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Remittance Address:

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Bay West Design Center, LLC

  	

   

  	

  Late Charge

  	

   

  	

  1,586.37

  	

   

  
	

  P O Box 24842

  	

   

  	

  Total if

  payment received 

  after 8/10/00

  	

   

  	

   

  	

   

  
	

  Seattle WA 98124-0842

  	

   

  	

   

  	

  $

  	

  17,450.07

  	

   

  

 

	

  Property #

  3002

  	

   

  	

  Tenant # 530

  	

   

  	

  Unit # 600

  	

   

  	

  RENTAL

  PAYMENT COUPON - Sept 2000

  	

   

  	

   

  	

   

  
	

  Property Address:

  	

   

  	

  Payment Due:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  EpicEdge, Inc.

  	

   

  	

  Rent

  	

   

  	

  $

  	

  13,087.50

  	

   

  
	

  5601 6 Ave S, Suite 600

  	

   

  	

  CAM

  	

   

  	

  2,776.20

  	

   

  
	

  Seattle WA 98108

  	

   

  	

  Storage

  	

   

  	

  0.00

  	

   

  
	

   

  	

   

  	

  Total

  Payment due on 9/1/00

  	

   

  	

  $

  	

  15,863.70

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Remittance Address:

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Bay West Design Center, LLC

  	

   

  	

  Late Charge

  	

   

  	

  1,586.37

  	

   

  
	

  P O Box 24842

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Seattle WA 98124-0842

  	

   

  	

  Total if

  payment received 

  after 9/10/00

  	

   

  	

  $

  	

  17,450.07

  	

   

  

 

 

	

  Property #

  3002

  	

   

  	

  Tenant # 530

  	

   

  	

  Unit # 600

  	

   

  	

  RENTAL

  PAYMENT COUPON - October 2000

  	

   

  	

   

  	

   

  
	

  Property Address:

  	

   

  	

  Payment Due:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  EpicEdge, Inc.,

  	

   

  	

  Rent

  	

   

  	

  $

  	

  13,087.50

  	

   

  
	

  5601 6 Ave S, Suite 600

  	

   

  	

  CAM

  	

   

  	

  2,776.20

  	

   

  
	

  Seattle WA 98108

  	

   

  	

  Storage

  	

   

  	

  0.00

  	

   

  
	

   

  	

   

  	

  Total

  Payment due on 10/1/00

  	

   

  	

  $

  	

  15,863.70

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Remittance Address:

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Bay West Design Center, LLC

  	

   

  	

  Late Charge

  	

   

  	

  1,586.37

  	

   

  
	

  P O Box 24842

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Seattle WA 98124-0842

  	

   

  	

  Total if

  payment received 

  after 10/10/00

  	

   

  	

  $

  	

  17,450.07

  	

   

  

 

	

  Property #

  3002

  	

   

  	

  Tenant # 530

  	

   

  	

  Unit # 600

  	

   

  	

  RENTAL

  PAYMENT COUPON - Nov 2000

  	

   

  	

   

  	

   

  
	

  Property Address:

  	

   

  	

  Payment Due:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  EpicEdge, Inc.,

  	

   

  	

  Rent

  	

   

  	

  $

  	

  13,087.50

  	

   

  
	

  5601 6 Ave S, Suite 600

  	

   

  	

  CAM

  	

   

  	

  2,776.20

  	

   

  
	

  Seattle WA 98108

  	

   

  	

  Storage

  	

   

  	

  0.00

  	

   

  
	

   

  	

   

  	

  Total

  Payment due on 11/1/00

  	

   

  	

  $

  	

  15,863.70

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Remittance Address:

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Bay West Design Center, LLC

  	

   

  	

  Late Charge

  	

   

  	

  1,586.37

  	

   

  
	

  P O Box 24842

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Seattle WA 98124-0842

  	

   

  	

  Total if

  payment received 

  after 11/10/00

  	

   

  	

  $

  	

  17,450.07

  	

   

  

 

	

  Property #

  3002

  	

   

  	

  Tenant # 530

  	

   

  	

  Unit # 600

  	

   

  	

  RENTAL

  PAYMENT COUPON - Dec 2000

  	

   

  	

   

  	

   

  
	

  Property Address:

  	

   

  	

  Payment Due:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  EpicEdge, Inc.

  	

   

  	

  Rent

  	

   

  	

  $

  	

  13,087.50

  	

   

  
	

  5601 6 Ave S, Suite 600

  	

   

  	

  CAM

  	

   

  	

  2,776.20

  	

   

  
	

  Seattle WA 98108

  	

   

  	

  Storage

  	

   

  	

  0.00

  	

   

  
	

   

  	

   

  	

  Total

  Payment due on 12/1/00

  	

   

  	

  $

  	

  15,863.70

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Remittance Address:

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Bay West Design Center, LLC

  	

   

  	

  Late Charge

  	

   

  	

  1,586.37

  	

   

  
	

  P O Box 24842

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Seattle WA 98124-0842

  	

   

  	

  Total if

  payment received 

  after 12/10/00

  	

   

  	

  $

  	

  17,450.07

  	

   

  

 

 

	

  [WELLS FARGO

  BANK LOGO]

  	

  ESTOPPEL AGREEMENT

  

 

Loan #85-0200161

 

Tenant’s Trade Name: Epic Edge

 

This ESTOPPEL AGREEMENT

(“Agreement”) is made as of the date set forth below, by Epic Edge, Inc., a

Texas Corporation (“Tenant”), based upon the following facts and understandings

of Tenant:

 

RECITALS

 

A.            Bay West Design

Center, LLC, (“Owner”) is or is about to become the owner of the land and

improvements commonly known as the Seattle Design Center (“Property”) and the

owner of the landlord’s interest in the lease identified in Recital B below

(“Lease”).

 

B.            Tenant is the owner

of the tenant’s interest in that lease dated 03/23/00, which was originally

executed by Timothy Treadway, Executive Vice President, as landlord, and by

Jeff Sexton President & COO as tenant. 

(Said lease and the referenced amendment(s) thereto are collectively

referred to herein as the “Lease”).

 

C.            Owner, as borrower

or as co-borrower with one or more other co-borrower(s), has a loan (“Loan”),

with LaSalle Bank National Association, as Trustee for Bear Steams Commercial

Mortgage Securities Inc., Commercial Mortgage Pass-Through Certificates Series

1999-WF2, Wells Fargo Bank, N.A. as Master Servicer Wells Fargo Bank, N.A.

(“Lender”) which is secured by, among other things, a mortgage, deed of trust,

trust indenture or deed to secure debt encumbering the Property (“Mortgage”).

 

D.            As a condition to

the release of certain impounds under the Loan, Lender has required that Tenant

furnish certain assurances to, and make certain agreements with, Lender, as set

forth below.

 

THEREFORE, Tenant warrants and

represents to, and agrees with, Lender as follows:

 

1.             ESTOPPEL.  Tenant warrants and represents to Lender, as of the date hereof,

that:

 

1.1           Lease Effective.  The Lease has been duly executed and

delivered by Tenant and, subject to the terms and conditions thereof, the Lease

is in full force and effect, the obligations of Tenant thereunder are valid and

binding, and there have been no modifications or additions to the Lease,

written or oral, other than those, if any, which are referenced above in

Recital B.

 

1.2           Tenant Improvement; Occupancy.  All Tenant improvements required to be

constructed by Owner under the Lease have been fully completed to Tenant’s

satisfaction and Tenant has accepted the leased premises and is currently

occupying them.

 

1.3           No Default.  To the best of Tenant’s knowledge: (a) there exists no breach,

default, or event or condition which, with the giving of notice or the passage

of time or both, would constitute a breach or default under the Lease either by

Tenant or Owner; and (b) Tenant has no existing claims, defenses or offsets

against rental due or to become due under the Lease.

 

1.4                                 Entire Agreement.  The Lease constitutes the entire agreement between

Owner and Tenant with respect to the Property, and Tenant claims no rights of

any kind whatsoever with respect to the Property, other than as set forth in

the Lease.

 

1

 

1.5                                 Minimum Rent.  The annual minimum rent under the Lease is $833412, subject to

any escalation, percentage rent and/or common area maintenance charges provided

in the Lease.

 

1.6                                 Rental Payment Commencement Date.  The rents stated in Section 1.5 above will

begin or have begun on 5/1/00.

 

1.7                                 Rentable area.  The rentable area of the leased premises is

8725 square feet.

 

1.8                                 Commencement Date.  The term of the Lease commenced or will

commence on 5/1/00.

 

1.9                                 Expiration Date.  The term of the Lease will expire on

5/31/05.

 

1.10                           No Deposits or Prepaid Rent.  No deposits or prepayments of rent have been

made in connection with the Lease, except as follows: 15,094.25(if none, write

“None”).

 

1.11                           No Other Assignment.  Tenant has received no notice, and is not

otherwise aware of, any other assignment of the landlord’s interest in the

Lease.

 

1.12                           No Purchase Option or Refusal Rights.  Tenant does not have any option or

preferential right to purchase all or any part of the Property, except as

follows: None (if none, write “None”).

 

2.                                       HEIRS, SUCCESSORS AND ASSIGNS.  The covenants herein shall be binding upon,

and inure to the benefit of, the heirs, successors and assigns of the parties

hereto.  Whenever necessary or

appropriate to give logical meaning to a provision of this Agreement, the term

“Owner” shall be deemed to mean the then current owner of the Property and the

landlord’s interest in the Lease.

 

3.                                       ATTORNEYS’ FEES.  If any legal action, suit or proceeding is

commenced between Tenant and Lender regarding their respective rights and obligations

under this Agreement, the prevailing party shall be entitled to recover, in

addition to damages or other relief, all costs and expenses, attorneys’ fees

and court costs (including, without limitation, expert witness fees).  As used herein, the term “prevailing party”

shall mean the party which obtains the principal relief it has sought, whether

by compromise settlement or judgment. 

If the party which commenced or instituted the action, suit or

proceeding shall dismiss or discontinue it without the concurrence of the other

party, such other party shall be deemed the prevailing party.

 

4.                                       LENDER’S AGREEMENT.  Lender’s acceptance of this Agreement shall

constitute Lender’s agreement to be bound hereby.

 

IN WITNESS WHEREOF, Tenant has

executed this instrument as of                         , 19     

..

 

“Tenant”

 

	

  NAME OF

  FIRST TENANT HERE

  
	

   

  
	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Its:

  	

   

  	

   

  

 

2A

EXHIBIT 10.39

 

A.S.C. MANAGEMENT, INC.

3724 Jefferson, Suite 306

Austin, Texas  78731

(512) 452-9902

(512) 453-8412 (Fax)

 

March 28, 2002

 

Lease Modification

 

Summary

of Basic Lease Provisions

 

	

  1.

  	

   

  	

  Landlord:

  	

   

  	

  ASC

  Management, Inc.

  
	

  2.

  	

   

  	

  Tenant:

  	

   

  	

  EpicEdge, Inc.

  
	

  3.

  	

   

  	

  Leased

  Premises:

  	

   

  	

  Suite No.

  300

  
	

  4.

  	

   

  	

  Office

  Building:

  	

   

  	

  5508 Highway

  290 West

  Austin, Texas 78735

  

 

Whereas that certain lease

entered into on October 14, 2000 and last amended on September 18, 2001,

covering 9890.99 rentable square feet of retail space located in the city of

Austin, Texas, is hereby modified as follows:

 

*

Addition of 1254.65 rentable square feet at a base rate of $16 per square foot

plus $7.50 per square foot for Operating Expenses

 

	

  Period

  	

   

  	

  Base

  Rate

  	

   

  	

  Additional

  Rental

  	

   

  	

  Operating

  Expenses

  	

   

  	

  Add. Monthly

  Payment

  
	

  4/30/02 –

  12/31/02

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  1,500.00

  
	

  1/1/03 –

  12/31/03

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  1,600.00

  
	

  1/1/04 –

  12/31/04

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  1,700.00

  
	

  1/1/05 –

  12/31/05

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  1,800.00

  

 

Contingent on mutual agreement

[ILLEGIBLE]

 

All other terms and provisions

of this lease remain in full force and effect.

 

	

  Landlord

  	

   

  	

   

  	

   

  	

  Tenant

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  /s/

  [ILLEGIBLE]

  	

   

  	

   

  	

   

  	

  /s/ [ILLEGIBLE]

  	

   

  	

  3/29/2002

  	

   

  
	

  ASC

  Management, Inc.

  	

   

  	

  Date

  	

   

  	

  EpicEdge,

  Inc.

  	

   

  	

  Date

  	

   

  

 

 

A.S.C. MANAGEMENT, INC.

3724 Jefferson, Suite 306

Austin, Texas  78731

(512) 452-9902

(512) 453-8412 (Fax)

 

September 18, 2001

 

LEASE MODIFICATION

 

Whereas that certain lease

entered into on October 4, 2000, and amended November 29, 2000 and January 11,

2001, by and between ASC Management, Inc., as Landlord and EpicEdge, Inc., as Tenant

is hereby modified as follows:

 

1.   Landlord and Tenant agree to terminate the lease on the second

floor space and release each other from any other obligations for that Lease.

 

2.   In compensation for Landlord releasing Tenant from the second

floor lease, Tenant will pay Landlord a $150,000 fee to cover the cost of back

rent and finish out costs.

 

a)   $75,000 of $150,000 will be deducted from

the $110,000 finish out contribution amount on deposit with the Landlord.

b)   The remaining $75,000 will be paid to the

Landlord in fifteen $5000 monthly payments to begin October 1, 2001.  If any of these payments are not made, it

will be considered a Default under the revised Lease.

c)   The remainder of the $110,000 ($35,000)

finish out contribution will be converted to a security deposit and be added to

the existing $80,000 (for a $115,000 total) security deposit to remain on

deposit with the Landlord until the end of the Lease.  The provision in the Lease requiring Landlord to refund back

portions of the finish out contribution will be deleted from the Lease.

 

3.   Tenant will pay all brokerage commissions (up to 6%) due on

release of the second floor space.  If

Tenant cannot pay in cash those commissions, Landlord will advance the Lease

commissions to the brokers.  The Tenant

will then repay the commissions to the Landlord at the rate of no less than

$5000 per month until the Landlord has been repaid.  Failure to make any of these payments will be considered a

Default under the revised Lease.  The

commission repayment installments are to be paid consecutively upon the payment

of the fifteen $5000 payments for the Lease cancellation fee. 

 

All other terms and provisions

of this Lease remain in full force and effect.

 

 

	

  Landlord

  	

   

  	

   

  	

   

  	

  Tenant

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  /s/ [ILLEGIBLE]

  	

   

  	

  9/21/01

  	

   

  	

  /s/

  [ILLEGIBLE]

  	

   

  	

  9/21/01

  	

   

  
	

  ASC

  Management, Inc.

  	

   

  	

  Date

  	

   

  	

  EpicEdge,

  Inc.

  	

   

  	

  Date

  	

   

  

 

 

September 14, 2001

 

Epic Edge

Lease Revision:

 

1.)           Landlord

and tenant agree to terminate the lease on the second floor space and release

each other from any other obligations for that lease.

 

2.)           In

compensation for landlord releasing tenant from the second floor lease tenant

will pay landlord a $150,000 fee to cover the cost of back rent and finish out

costs.

A)          $75,000

of $150,000 will be deducted from the $110,000 finish out contribution amount

on deposit with the landlord.

B)            The

remaining $75,000 will be paid to the landlord in fifteen $5000.00 monthly

payments to begin October 1, 2001.  If

any of these payments are not made it will be considered a default under the

revised lease.

C)            The

remainder of the $110,000 ($35,000) finish out contribution will be converted

to a security deposit and be added to the existing $80,000 ($115,000.) security

deposit to remain on deposit with the landlord until the end of the lease.  The provision in the lease requiring

landlord to refund back portions of the finish out contribution will be deleted

from the lease.

 

3.)           Tenant

will pay all brokerage commission (up to 6%) due on the release of the second

floor space.  If tenant cannot pay in

cash those commissions landlord will advance the lease commissions to the

brokers.  The tenant will then repay the

commissions to the landlord at the rate of no less than $5000.00 per month

until the landlord has been repaid. 

Failure to make any of these payments will be considered a default under

revised lease.  The commission repayment

installments to be paid consecutively upon the payment of the fifteen $5000.00

payments for the lease cancellation fee.

 

 

OFFICE LEASE AGREEMENT

 

This Office Lease Agreement (this “Lease”) is executed effective as

the 4th day of October, 2000, between ASC Management, Inc., a Texas corporation (“Landlord”), and EpicEdge, Inc. (“Tenant”), a Texas

corporation.

 

1)    DEFINITIONS

 

a)     Definitions.  As used in this Lease, the following terms

shall have the meanings set forth below:

 

b)    “Base

Amount” the actual Basic Operating Costs incurred by Landlord for

calendar year 2001.

 

c)     “Base

Rental” means an annual sum equal to the product obtained by

multiplying the “Rental Rate” (as shown in the table below by the number of

square feet of Rentable Area in the Premises, payable in equal monthly

installments.  The Base Rental for any

partial month at the beginning of the Lease Term shall be pro-rated and paid at

the rental rate applicable during the first full month of the Lease Term.  Any such pro-rated Base Rental shall be due

upon receipt of an invoice from Landlord. 

The Base Rental due for the first (1st) full month of the Lease Term

shall be deposited with Landlord on or before the Commencement Date of this

Lease.

 

	

  Lease Year

  	

   

  	

  Base Rental (per rsf/per year)

  	

   

  	

  Monthly Base Rental

  	

   

  
	

  1

  	

   

  	

  $

  	

  22.00

  	

   

  	

  $

  	

  36,667

  	

   

  
	

  2

  	

   

  	

  $

  	

  22.75

  	

   

  	

  $

  	

  37,917

  	

   

  
	

  3

  	

   

  	

  $

  	

  23.50

  	

   

  	

  $

  	

  39,167

  	

   

  
	

  4

  	

   

  	

  $

  	

  24.25

  	

   

  	

  $

  	

  40,417

  	

   

  
	

  5

  	

   

  	

  $

  	

  25.00

  	

   

  	

  $

  	

  41,667

  	

   

  

 

d)    “Basic Operating

Costs” shall have the meaning given to such term in Section 3 of

this Lease.

 

e)     “Building”

means the office building located upon the real property at 5508

Highway 290 West, Austin, Travis County, Texas 78745 (the “Land”), as more particularly described in

Exhibit “A” attached hereto.  Landlord and Tenant agree that the Rentable

Area of the Building is hereby deemed to be 70,000 square feet.

 

f)     “Building

Standard” means the quality and type of materials, finishes and

workmanship specified by Landlord for the Building and discussed in Exhibit “D” attached hereto.

 

g)    “Commencement

Date” means the later of (i) the Completion Date (hereafter defined)

or (ii) October 15, 2000; provided, however, in the event the Completion Date

occurs prior to October 15, 2000, Landlord shall be entitled to advance the

October 15, 2000 date to the date which is 2 weeks following the Completion

Date by providing 2 weeks prior written notice to Tenant.  If the Commencement Date is other than the

first day of a calendar month, the Lease Term will be extended and will be

calculated as if the Commencement Date were the first day of the next full

calendar month and the Rent hereunder will be prorated for the first partial

month.  Tenant’s obligation to pay Rent

shall commence on the Commencement Date.

 

h)    “Completion

Date” means the date on which the Building is completed to Base

Building Condition (as defined in “Exhibit D”),

the Premises are completed to Base Premises Condition (as such is defined in “Exhibit D”) and the Tenant Improvements to

be constructed by Landlord within the Premises (defined below) are (i)

Substantially Complete; and (ii) Ready for Occupancy (as such terms are defined

below).

 

i)      “Common

Areas” means all areas, spaces, facilities and equipment (whether or

not located within the Building) made available by Landlord for the common and

joint use of Landlord, Tenant and other tenants of the Building and their

respective employees, invitees, agents and representatives, including, but not

limited to, tunnels, loading docks, walkways, sidewalks and driveways necessary

for access to the Building, Parking Areas, Building lobbies, atriums,

landscaped areas, public corridors, public rest rooms, Building stairs,

elevators open to the public, service elevators (provided that such service

elevators shall be available only for tenants of the Building and others

designated by Landlord), drinking fountains and any such other areas and

facilities available for the common and joint use of Landlord, Tenant and other

tenants of the Building and their respective employees, invitees, agents and

representatives.

 

j)      “Complex”

means the Land, the Building, and the Parking Areas.

 

1

 

k)     “Lease

Term” means a period of sixty (60) months (plus the partial month at

the beginning of the Lease Term, if applicable) which shall commence on the

Commencement Date and terminate on the last day of the sixtieth (60th)

full month after the Commencement Date, unless this Lease is terminated as otherwise

provided herein or is renewed in accordance with Exhibit “G” attached hereto.

 

l)      “Lease

Year” means a period of twelve (12) consecutive calendar

months.  The first Lease Year shall

begin on the first day of the first month following the Commencement Date

unless the Commencement Date occurs on the first day of a month, in which event

the first Lease Year shall begin on the Commencement Date.

 

m)    “Normal

Business Holidays” means New Years Day, Memorial Day, July 4th

(Independence Day), Labor Day, Thanksgiving, Christmas Day and any other day

which is recognized by offices in Austin, Texas as a national holiday on which

professional employees are not typically required to work.

 

n)    “Normal

Business Hours” for the Building means 7:00 a.m. to 6:30 p.m. Mondays

through Fridays and 8:00 a.m. to 1:30 p.m. on Saturdays, exclusive of Normal

Business Holidays.

 

o)    “Parking

Areas” means those areas and structures located upon the Land so

designated by Landlord from time to time, subject however, to the provisions

set forth in Exhibit “E”.

 

p)    “Premises”

means 20,000 square feet of office space consisting of Suite           on the second floor of the Building

(10,000 square feet) and Suite            

on the third floor of the Building (10,000 square feet) as outlined on

the floor plans attached to this Lease as

Exhibit “B.”  The Rentable

Area of the Premises is hereby deemed to be 20,000 square feet, irrespective of

whether the same should be more or less as a result of variations resulting

from later re-measurement or actual construction and completion of the Premises

for occupancy.

 

q)    “Punchlist

Items” means touch-up, minor finish, mechanical adjustment, or

decorator items that do not unreasonably interfere with the occupancy and use

of the Premises by Tenant.

 

r)     “Ready

for Occupancy” means a final Certificate or Certificates of  Occupancy have been issued for all of the

Premises by all appropriate governmental authorities.

 

s)     “Rentable

Area” means all floor area measured from the inside surface of the

outer glass of the Building, excluding only the Service Areas within the

outside wall used for the Building’s stairs, fire towers, elevator shafts,

vertical penetrations of the Building’s central atrium, flues, vents, stacks,

pipe shafts, and vertical ducts (which areas shall be measured from the

mid-point of walls enclosing such areas, but including any Service Areas which

are for the specific and exclusive use of Tenant, such as special stairs or

elevators, plus a pro rata share of the square footage of the Building’s

Service Areas and Common Areas.

 

t)     “Security

Deposit” means the sum of $80,000 in cash, to be deposited with

Landlord in accordance with the terms of this Lease.

 

u)    “Service

Areas” means those areas, spaces, facilities and equipment serving

only the Building (whether or not located within the Building), but to which

Tenant and other tenants of the Building will not have general access,

including, but not limited to, mechanical, telephone, electrical, janitorial

and similar rooms.

 

v)    “Substantially

Complete” means that the Tenant Improvements to be constructed by

Landlord within the Rentable Area have been completed in substantial accordance

with the Space Plans and the Plans and Specifications (excluding Punchlist

Items) as determined by an architect and/or space planner mutually acceptable

to both Tenant and Landlord and the Premises are capable of being occupied by

Tenant for its intended purpose.

 

w)    “Tenant

Improvements” means those improvements to be constructed in the

Premises according to the Tenant Improvements Agreement attached to this Lease

as Exhibit “D” (“Tenant

Improvements Agreement”).

 

x)     “Tenant

Improvement Deposit” means the sum of $220,000, $110,000 of which

shall be deposited by Tenant with Landlord at such time as Landlord receives

the building permit from the City of Austin for the construction of the Tenant

Improvements, and $110,000 of which shall be payable on the Completion 

 

2

 

Date.  Tenants failure to timely deposit the Tenant Improvement Deposit

with Landlord shall constitute a Tenant Delay. 

The Tenant Improvement Deposit will be used by Landlord to reimburse

Landlord for the costs of installing the Tenant Improvements.  If Tenant is not in default at the

termination of this Lease, then Landlord shall repay the Tenant Improvement

Deposit to Tenant within thirty (30) days following the termination of this

Lease.  If Landlord transfers its

interest in the Building during the term of this Lease, Landlord may assign its

obligation to repay the Tenant Improvement Deposit to the transferee and upon

assumption by such transferee of such obligation, Landlord shall have no

further liability for the return of the Tenant Improvement Deposit.

 

y)    “Tenant’s

Share” means 28.57%, representing a fraction, the numerator of which

is the Rentable Area of the Premises and the denominator of which is the

Rentable Area of the Building, subject to future adjustment pursuant to the

terms of this Lease.

 

2)    GENERAL

LEASE PROVISIONS

 

a)     Grant of

Lease.  Subject to the

provisions contained herein, Landlord hereby leases the Premises to Tenant, and

Tenant hereby rents and leases the Premises from Landlord, for the duration of

the Lease Term.  During the Lease Term,

Tenant shall have the right to use, in common with others and in accordance

with the Rules and Regulations attached hereto as Exhibit “C”, the Common Areas.

 

b)    Quiet

Enjoyment.  Provided that

Tenant fully and timely performs all the terms of this Lease on Tenant’s part

to be performed, including payment by Tenant of all Rent, Tenant shall have,

hold and enjoy the Premises during the Term without hindrance or disturbance

from or by Landlord; subject, however, to all of the terms, conditions and

provisions of any and all ground leases, deeds to secure debt, mortgages,

governmental laws, casements, protective covenants, and other encumbrances now

or hereafter affecting the Premises, the Building and/or the Complex.

 

c)     Lease

Effectiveness.  From and

after the execution date of this Lease by both Landlord and Tenant, the terms

of this Lease shall be operable and in full force; provided however, that the

Lease Term shall not be deemed to commence nor shall Rent or other charges

begin to accrue until the occurrence of the Commencement Date (defined above).

 

d)    Delays in

Completion Date.

 

i)              If the occurrence of the

Completion Date is delayed due to an omission, delay or default attributable to

Tenant or anyone acting under Tenant’s direction (such omission, delay or

default referred to herein as a “Tenant

Delay”), Landlord shall have no liability for such delay, and the

obligations of Tenant under this Lease (including, without limitation, the

obligation to pay Rent) shall nonetheless commence as of the date that the

Completion Date would have occurred but for such Tenant Delay.

 

ii)             In the event the Completion Date

fails to occur on or before December 1, 2000, for any reason whatsoever save

and except for Tenant Delays, then Landlord agrees to pay to Tenant the sum of

$500 per day for each day which elapses from December, 2000 to the Completion

Date, which sum represents liquidated damages for the damages suffered by

Tenant by reason of Landlord’s failure to deliver the Premises within the time

frame established by this Lease, the parties agreeing that Tenants actual

damages would be difficult and impractical to calculate.

 

iii)            Notwithstanding anything contained

herein to the contrary, if the Completion Date does not occur on or before

January 1, 2000 (the “Outside Completion

Date”), for any reason whatsoever save and except for Tenant Delays,

Tenant shall have the option, but not the obligation, to terminate this Lease

at any time prior to the occurrence of the Completion Date, in which event

Landlord shall immediately return to Tenant that portion of the Tenant

Improvement Deposit previously deposited by Tenant with Landlord.

 

iv)           Neither the liquidated damages

provision set forth above, nor Tenant’s ability to terminate this Lease if the

Completion Date does not occur by the Outside Completion Date shall alter

Landlord’s obligation to diligently pursue the completion of the Tenant

Improvements and Landlord agrees that, in addition to the other remedies

provided for herein, Tenant shall be entitled to bring an action against

Landlord to specifically enforce such obligation.

 

3

 

v)            On or about the Commencement Date,

Landlord and Tenant shall execute a Form of Commencement Notice attached hereto

as “Exhibit F” which confirms the

Commencement Date of the Lease and other information set forth thereon.

 

e)     Use.

The Premises shall be used for general office purposes and uses reasonably

incidental thereto and for no other purposes.

 

3)     RENT

 

a)     Payment

of Rent.  The term “Rent” shall mean, collectively, the Base

Rental, Tenant’s Share of any increases in Basic Operating Costs as provided

herein, and all other sums of money becoming due and payable to Landlord under

this Lease.  Except as otherwise

expressly provided in this Lease, from and after the Commencement Date, the

Rent shall be due and payable to Landlord in advance, in monthly installments

on the first (1st) day of each calendar month during the Lease Term,

at Landlord’s address as provided on the signature page of this Lease or to

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

designate in writing.  The Rent shall be

paid without notice, demand, abatement, deduction or offset, except as

otherwise expressly provided in this Lease. 

If the Lease Term commences or ends on other than the first day of a

calendar month, then the installment of Base Rental for such partial month(s)

shall be prorated.  Notwithstanding the

foregoing, in the event Tenant is not then in default of its obligations under this

Lease, the monthly Base Rental payment payable by Tenant in months 12, 18, 24,

30, 36, 42, 48, and 54 of the Lease Term shall be reduced by $27,500.

 

b)    Basic

Operating Costs.  In addition

to the Base Rental, Tenant shall also pay Tenant’s Share of the amount, if any,

by which the total Basic Operating Costs for any calendar year after 2001

exceeds the total Base Amount.

 

i)              No later than December 15, 2001,

and no later than fifteen (15) days prior to the commencement of each

subsequent calendar year during the Lease Term, Landlord shall provide Tenant

with a then current estimate of Basic Operating Costs for the upcoming calendar

year, and thereafter Tenant shall pay, as additional rental, in twelve equal

monthly installments, Tenant’s Share of the positive difference between

Landlord’s estimate of the Basic Operating Costs for the subject calendar year

and the Base Amount, if any.  If

Landlord’s estimate of the Basic Operating Costs for the subject calendar year

is less than the Base Amount, Tenant shall not be required to make any

installment payments towards the Basic Operating Costs for such calendar year.

 

ii)             If the Commencement Date occurs on

a date other than the first day of January, or if the Lease Term ends on a date

other than the last day of December, Tenant’s Share of the Basic Operating

Costs for the year in which the Commencement Date or the termination date

occurs (as applicable), shall be prorated. 

Tenant shall pay a portion of Tenant’s Share of Basic Operating Costs

for the partial year as determined by a fraction, the numerator of which shall

be the number of days during such fractional year falling within the Lease

Term, and the denominator of which is 365 (or 366, in the case of a leap

year).  The provisions of this Section

shall survive the expiration date or any sooner termination provided for in

this Lease.

 

iii)            The failure of Landlord to estimate

Basic Operating Costs shall in no event relieve Tenant of its obligation to pay

the Tenant’s Share of total Basic Operating Cost increases over the total Base

Amount.  Notwithstanding the foregoing,

until Tenant receives Landlord’s estimate of Basic Operating Costs for an

upcoming or current calendar year falling within the Lease Term, Tenant shall

not be obligated to make (or increase the amount of, as applicable) any monthly

installment of Tenant’s Share of Basic Operating Costs for such upcoming or

current calendar year.

 

iv)           If the Building is not at least

ninety-five percent (95%) occupied during any year of the Lease Term (including

the calendar year in which the Lease Term commences), the Basic Operating Costs

shall be “grossed up” by increasing those components of Basic Operating Costs

which vary with occupancy and which are attributable to the year or part of

year (as applicable) in which less than 95% of the Rentable Area of the

Building is occupied to an amount which Landlord reasonably projects would have

been incurred had the Building been ninety-five percent (95%) occupied for such

year or part of such year.

 

4

 

v)            On or before April 1 of each

calendar year during the Lease Term (including the calendar year following the

year in which the Lease Term is terminated), or as soon thereafter as is

possible, Landlord shall furnish to Tenant a statement of Tenant’s Share of actual

Basic Operating Costs payable by Tenant for the prior calendar year (the “Statement”).  Within thirty (30) days after Tenant receives the Statement, an

appropriate adjustment shall be made between Landlord and Tenant to reflect any

overpayment or underpayment of Basic Operating Costs for the prior calendar

year attributable to the difference between the amount, if any, collected by

Landlord from Tenant for Tenant’s Share of Basic Operating Costs and the actual

amount of Tenant’s Share of Basic Operating Costs.  In the event of an underpayment by Tenant, Tenant shall pay the

amount of such underpayment to Landlord within thirty (30) days following

delivery of the Statement.  In the event

of an overpayment by Tenant, within thirty (30) days following the delivery of

the Statement.  Landlord shall, if no

Event of Default exists hereunder, make a cash payment to Tenant in the amount

of such overpayment, or, if an Event of Default exists hereunder, credit such

overpayment against delinquent Rent and make a cash payment to Tenant for the

balance.

 

c)     “Basic

Operating Costs” means all reasonable costs and expenses incurred in

each calendar year for operating, maintaining, repairing, managing the Building

save and except those costs and expenses which Landlord is to be reimbursed by

tenants of the Building. Basic Operating Costs include, but are not limited to,

the following:

 

i)              Wages and salaries of all

employees engaged in the direct operation and maintenance of the Building,

employer’s social security taxes, unemployment taxes or insurance and any other

taxes which may be levied on such wages, salaries, other compensation and the

cost of medical, disability and life insurance and pension or retirement

benefits for such employees;

 

ii)             Except as otherwise indicated

herein, costs of purchasing all supplies, tools, equipment and materials used

in the operation, maintenance, repair (of a non-capital nature) and management

of the Building;

 

iii)            Costs of utilities used in or by all

areas of the Building.  Utilities shall

be deemed to include water, sewer, power, electricity, gas, fuel, lighting and

other necessary utilities used within the Building (but shall exclude cable

television and all “nonessential” utilities);

 

iv)           Costs of all maintenance and service

agreements for the Building, including, but not limited to, janitorial service,

pest control, security service, traffic control equipment leasing, energy

management system leasing, landscape maintenance, alarm service, window

cleaning, metal finishing and elevator maintenance;

 

v)            Costs of all insurance relating to

the Building, including, but not limited to, fire and extended coverage

insurance and liability insurance applicable to the Building and Landlord’s

personal property used solely in connection therewith, plus the cost of all

deductible payments made by Landlord in connection therewith (but only to the

extent not already deducted as a Basic Operating Cost);

 

vi)           All taxes and assessments and

governmental charges, whether federal, state, county or municipal and whether

they be by taxing districts or authorities presently taxing the Building or by

others, subsequently created or otherwise, and any other taxes, association

dues and assessments attributable to the Building or its operation, excluding,

however, federal and state income taxes, franchise taxes, inheritance, estate,

gift, corporation, net profits or any similar tax for which Landlord becomes

liable and/or which may be imposed upon or assessed against Landlord

(collectively referred to herein as “Taxes”).  If the amount of Taxes payable for any

calendar year, including year contemplated in the determination of the Base

Amount, is changed by final determination of legal proceedings, settlement, or

otherwise, such changed amount shall be the Taxes for such year;

 

vii)          Costs of non-capitalized repairs and

general maintenance for the Building (excluding such repairs and general

maintenance paid by insurance proceeds, by Tenant or other tenants or third

parties);

 

5

 

viii)         Legal expenses incurred with respect to

the Building which relate directly to the operation of the Building and which

benefit all of the tenants of the Building generally, such as legal proceedings

to abate offensive activities or uses or to reduce property taxes (including

the cost of non-attorney tax consultants) (but excluding legal fees and

expenses incurred with respect to disputes with individual tenants,

negotiations of tenant leases, or with respect to the sale, leasing, financing

or refinancing of the Building and other matters relating to the ownership

rather than the operation of the Building);

 

ix)            Fees for management services,

whether provided by an independent management company, by Landlord or by any

affiliate of Landlord, but only to the extent that the costs of such services

do not exceed competitive costs for comparable services in comparable buildings

of the class, type, size, age and location as the Building, in the office

market of the Austin, Texas area (the “Market

Area”);

 

x)             Expenses incurred in order to

comply with any federal, state or municipal law, code or ordinance, or

regulation which was not promulgated or in effect, or which was promulgated or

in effect but not applicable to the Building, as of the Commencement Date of

this Lease; and

 

xi)            Amortization of the cost of

improvements or equipment which are capital in nature and which are for the

primary purpose of reducing Operating Costs of the Building, up to the amount

saved as a result of the installation thereof. 

All such costs, including interest, shall be amortized on a

straight-line basis, as reasonably determined by Landlord, but in no event

beyond the reasonable useful life of such improvement.  Except as expressly permitted by this

Subsection, Basic Operating Costs shall not include depreciation or

amortization of the Building or its contents or components.

 

d)    Exclusions

from Basic Operating Costs. 

Notwithstanding any provision set forth in this Lease to the contrary,

Basic Operating Costs shall not include and shall specifically exclude the

following:

 

i)              Specific costs for any capital

repairs, replacements or improvements, except as otherwise expressly provided

above;

 

ii)             Expenses for which Landlord is

reimbursed or indemnified (either by an insurer, condemnor, tenant, warrantor

or otherwise);

 

iii)            Expenses incurred in leasing or

procuring tenants (including but not limited to, leasing commissions,

advertising expenses, expenses associated with renovating space for tenants,

attorney’s fees in connection with the negotiation and preparation of letters,

deal memos, letters of intent, leases, subleases and/or assignments, costs for

space planning, and all other costs and expenses incurred in connection with

lease, sublease and/or assignment negotiations and transactions with present or

prospective tenants or other occupants of the Building);

 

iv)           Payments for rented equipment, the

cost of which would constitute a capital expenditure not permitted pursuant to

the foregoing if the equipment were purchased;

 

v)            Interest, principal, points and fees

on debts or amortization on any mortgage or mortgages or any other debt

instrument encumbering the Complex, the Building or any portion(s) thereof;

 

vi)           Any ground lease rental and other

ground lease related payments, if any;

 

vii)          Costs representing an amount paid to

Landlord or an affiliate of Landlord which is in excess of the amount which

would have been paid in a competitive “arms length” transaction between

non-affiliated parties;

 

viii)         Costs of services provided, taxes

attributable to, and costs incurred in connection with, the operation of any

retail, restaurant and/or similar operations on the Complex or any portion

thereof;

 

ix)            Costs of installing, maintaining and

operating any specialty service such as an observatory, broadcasting facility,

luncheon club or an athletic or recreational club, or any other special tenant

amenity not otherwise existing as of the Commencement Date;

 

6

 

x)             Costs billed to specific tenants,

including but not limited to utility costs for which any tenant directly

contracts with the local public services company;

 

xi)            Costs of correcting defects in the

construction of the Building, except that conditions (not occasioned by

construction defects) resulting from ordinary wear and tear will not be deemed

defects for the purpose of this category;

 

xii)           Costs of any repairs made by Landlord

attributable to the total or partial destruction of the Building or the total

or partial condemnation of the Building (whether or not Landlord receives

reimbursement therefor);

 

xiii)          Costs of tools and equipment used

initially in the construction, operation, repair, remodeling and/or maintenance

of the Building;

 

xiv)          Costs incurred by Landlord due to the

violation by Landlord or any tenant of the Building of the terms and conditions

of any lease of space within the Building;

 

xv)           Costs of performing work, repairs,

maintenance, and replacements expressly provided in this Lease to be borne at

Landlord’s expense;

 

xvi)          Amounts paid by Landlord (including

interest and penalties) in order to cause the Building to comply with or cure

violations of statutes, laws, notes or ordinances promulgated and/or enacted as

of the Commencement Date;

 

xvii)         Costs for sculpture, paintings or other

objects of art;

 

xviii)        Costs (including in connection therewith

all attorneys’ fees and costs of settlement, judgments and payments in lieu

thereof) arising from claims, disputes or potential disputes in connection with

potential or actual claims, litigation or arbitration pertaining to Landlord,

the Complex and/or the Building or any parts thereof;

 

xix)          Insurance costs related to the

non-Building Standard improvements of other tenants in the Building; and

 

xx)           Costs and expenses incurred by

Landlord (including but not limited to attorneys’ fees, appraisal fees and

consulting fees) in any condemnation or eminent domain action or claim.

 

There shall be no duplication

of costs or reimbursement.

 

c)     Disputes

Regarding Basic Operating Costs. 

If there exists any dispute as to the calculation of the Basic Operating

Costs and/or Tenant’s Share of Basic Operating Costs (such dispute referred to

herein as an “Operating Cost Dispute”)

Tenant shall so notify Landlord in writing within thirty (30) days after

receipt of the Statement.  Such notice

shall specify the items which constitute the Operating Cost Dispute.  Subject to the satisfaction of the

conditions specified below, within ten (10) business days after Tenant delivers

such notice to Landlord, Landlord shall provide Tenant with written

documentation and other supplementary information which substantiates

Landlord’s calculation of the amount of Basic Operating Costs and/or Tenant’s

Share of the Basic Operating Costs for the applicable calendar year.  Notwithstanding the existence of an

Operating Cost Dispute, Tenant shall timely pay the amount in dispute as and

when required under this Lease; provided however, that in no event shall such

payment be deemed to prejudice or otherwise limit Tenant’s position and/or

rights.  Landlord shall not be required

to provide any written documentation or other supplementary information to

Tenant unless all sums shown to be due by Tenant on the Statement are paid in

full.  If an Operating Cost Dispute is

resolved in favor of Tenant , Landlord shall, within ten (10) days after the

resolution of such dispute, refund any overpayment to Tenant.  If Landlord and Tenant are unable to resolve

such Operating Cost Dispute within thirty (30) days after Tenant delivers the initial

notice of the Operating Cost Dispute to Landlord, the Operating Cost Dispute

shall be referred to a mutually satisfactory third party certified public

accountant for final resolution, subject to the audit rights of Tenant set

forth below.  The cost of such certified

public accountant shall be paid by the party found to be least accurate (in

terms of dollars in dispute).  The

determination of such certified public accountant shall be final and binding,

subject to the audit rights of Tenant set forth below, and final settlement

shall be made within thirty (30) days after receipt of such accountant’s

decision.  If Tenant fails to dispute

the calculation of Tenant’s Share of Basic Operating Costs in accordance with

the procedures and within the time periods specified in this Subsection, or to

request an audit of the Basic Operating Costs in accordance

 

7

 

with the procedures set forth

below, the Statement shall be considered final and binding for the calendar

year in question.

 

f)     Tenant’s

Audit Rights.  Tenant, at

Tenant’s expense, shall have the right, no more frequently than once per twelve

(12) month period, following ten (10) days’ prior written notice to Landlord,

to audit Landlord’s books and records relating to the Basic Operating Costs the

Building and the Complex for the immediately preceding twenty-four (24) month

period only; provided that such audit does not unreasonably interfere with the

conduct of Landlord’s business.  Without

limitation upon the foregoing, Tenant’s right to audit Landlord’s books and

records shall be subject to the following conditions:

 

i)              Such audit shall be conducted

during normal business hours and at the location where Landlord customarily

maintains its books and records;

 

ii)             Tenant shall deliver to Landlord a

copy of the results of such audit within ten (10) days after receipt of such

results by Tenant;

 

iii)            No audit shall be permitted if

Tenant is in monetary default under this Lease;

 

iv)           Tenant shall reimburse Landlord

within ten (10) days following written demand for the costs of all copies

requested by Tenant’s auditor; provided however, that in no event shall the per

page copy cost exceed $0.10;

 

v)            Such audit must be conducted by an

independent nationally recognized accounting firm or a local accounting firm

reasonably acceptable to Landlord and Tenant;

 

vi)           No subtenant will have the right to

conduct an audit;

 

vii)          If, during any twelve (12) month

period, an assignee of Tenant (as permitted by this Lease) has conducted an

audit of Landlord’s books and records, Tenant will be prohibited from auditing

during such twelve (12) month period; and, similarly, if Tenant has audited

such calendar year or given such notice, any assignee of Tenant shall be

prohibited from conducting an audit during such twelve (12) month period; and 

 

viii)         Any assignee’s audit right will be

limited to the period after the effective date of the assignment.

 

Unless Landlord in good faith

disputes the results of such audit, an appropriate adjustment shall be made

between Landlord and Tenant to reflect any overpayment or underpayment of Basic

Operating Costs within thirty (30) days after delivery of such audit’s results

to Landlord.  In the event of an overpayment

by Tenant, within thirty (30) days following the delivery of such audit,

Landlord shall, if no monetary Event of Default exists hereunder, make a cash

payment to Tenant in the amount of such overpayment, or, if a monetary Event of

Default exists hereunder, credit such overpayment against delinquent Rent and

make a cash payment to Tenant for the balance. 

If Landlord in good faith disputes the results of any such audit, the

parties shall in good faith attempt to resolve any disputed items.  If Landlord and Tenant are able to resolve

such dispute, final settlement shall be made within ten (10) days

thereafter.  If the parties are unable

to resolve any such dispute, any sum on which there is no longer dispute shall

be paid and any remaining disputed items shall be referred to a mutually satisfactory

third party certified public accountant for final resolution.  The cost of such certified public accountant

shall be paid by the party found to be least accurate (in terms of dollars in

dispute).  The determination of such

certified public accountant shall be final and binding and final settlement

shall be made within ten (10) days after receipt of such accountant’s decision.

 

g)    Late

Payments; Dishonored Checks.

 

i)              If any installment of Rent is not

received within five (5) days after the date due (without in any way implying

Landlord’s consent to such late payment), Tenant, to the extent permitted by

law, agrees to pay, in addition to such installment of Rent, a late payment

charge equal to five percent (5%) of the installment of Rent due, it being understood

that such late payment charge shall be for the purpose of reimbursing Landlord

for the additional costs and expenses which Landlord presently expects to incur

in connection with the handling and processing of late payments.

 

8

 

ii)             Notwithstanding the foregoing, the

late payment charge shall be increased to ten percent (10%) of the installment

of Rent then due if Tenant becomes responsible for a late payment charge more

than twice during any consecutive twelve (12) month period.  Such charge shall revert to five percent

(5%) after Tenant has paid Rend for twelve (12) consecutive months without

incurring a late charge.  In the event

of any such late payment(s) by Tenant, the additional costs and expenses so

resulting to Landlord will be difficult to ascertain precisely and the

foregoing charge constitutes a reasonable and good faith estimate by the

parties of the extent of such additional costs and expenses.  Acceptance of such late charge by Landlord

shall in no event constitute a waiver of Tenant’s default with respect to such

overdue amount, nor prevent Landlord from exercising any other rights or

remedies granted hereunder unless such default is otherwise cured within the

time period provided in this Lease.

 

iii)            In addition to the late payment

charge set forth above, all Rent, if not paid within thirty (30) days of the

date due, shall, at the option of Landlord, and to the extent permitted by law,

bear interest from the date due until paid at the lesser of (1) the rate of

eighteen percent (18%) per annum or (2) the maximum rate of interest then

permissible for a commercial loan to Tenant in the State of Texas (the “Default Rate”).

 

iv)           If any check is tendered by Tenant

and not duly honored with good funds, Tenant shall, in addition to any other

remedies available to Landlord under this Lease, pay Landlord a “NSF” fee of

$25.00.

 

h)    Security

Deposit.  The Security

Deposit shall be deposited with Landlord by Tenant contemporaneously with the

delivery by Tenant to Landlord of this Lease. 

The Security Deposit shall be held by Landlord as security for the

performance by Tenant of Tenant’s covenants and obligations under this Lease,

it being expressly understood that the Security Deposit shall not be considered

an advance payment of Rent or a measure of Tenant’s liability for damages in

case of default by Tenant.  Landlord

may, from time to time, without prejudice to any other remedy, use the Security

Deposit to the extent necessary to make good any arrearages of Rent or to

satisfy and other covenant or obligation of Tenant hereunder.  Following any such application of the

Security Deposit, Tenant shall pay to Landlord, on demand, the amount so

applied in order to restore the Security Deposit to its original amount.  If Tenant is not in default at the

termination of this Lease, the balance of the Security Deposit remaining after

any such application shall be returned by Landlord to Tenant within thirty (30)

days following the termination of this Lease. 

If Landlord transfers its interest in the Building during the term of

this Lease, Landlord may assign the Security Deposit to the transferee and upon

assumption by such transferee of liability for the Security Deposit, Landlord

shall have no further liability for the return of such Security Deposit.

 

4)    TENANT

PARKING

 

a)     Unreserved

Parking.  Tenant shall be

entitled to use one (1) parking space per 250 square feet of Rentable Area of

the Premises, for a total of 80 parking spaces.  70 of those spaces shall be provided on an unassigned basis

within the Parking Areas at no charge to Tenant during the Lease Term

(including any renewals thereof), and 10 of the spaces shall be reserved

spaces, as hereafter provided.

 

b)    Reserved

Parking.  In addition to the

unassigned parking spaces available to Tenant as specified above, Tenant shall

be entitled to the exclusive use of 10 reserved covered parking spaces, at no

charge to Tenant during the Lease Term (and any renewals thereof).  Such spaces are identified on Exhibit “E.”

 

c)     Parking

Rules.  Tenant’s use of the

Parking Areas shall be subject to the terms and conditions set forth on Exhibit “E”.  If Tenant fails to observe the Parking Rules specified in Exhibit

“E” with respect to the Parking Areas, then Landlord shall have the right to

remove from the Parking Areas many vehicle belonging to Tenant or its

employees, licenses or invitees which is in violation of such Parking Rules.

 

d)    Parking

Availability.  Notwithstanding any provision contained in this Lease to the contrary,

Landlord shall ensure that the Parking Areas will at all times accommodate the

number of parking spaces allocable to Tenant and other tenants in the

Complex.  If parking permits are

required for the use of the Parking Areas, Landlord shall issue to Tenant

parking permits in an amount sufficient to accommodate the total number of

parking spaces allocated to Tenant as set forth in this Section.  Landlord shall not be obligated to provide

Tenant with any additional parking permits.

 

9

 

5)    LANDLORD

SERVICES

 

a)     Services

to be Furnished by Landlord. 

So long as no material Event of Default exists under this Lease,

Landlord shall furnish Tenant, the Building and the Premises (as applicable)

with the following services:

 

i)              Potable hot and cold water (and

the facilities required therefor) and chilled water at drinking fountains (and

the drinking fountain facilities) at those points of supply provided for

general use of other tenants in the Building and as necessary to service any

kitchen facilities within the Premises approved by Landlord and provided solely

for the use of Tenant and its employees. 

If Tenant requires water supply other than as provided in the preceding

sentence, or if Tenant requires chilled water in connection with any

supplemental air conditioning equipment servicing the Premises, Landlord may

install separate meters at the cost of Tenant. 

Landlord may elect to have all charges for the water services (including

chilled water) separately metered to the Premises billed directly to Tenant and

Landlord shall make a corresponding adjustment to Tenant’s Share of Basic

Operating Costs;

 

ii)             Central heating, air conditioning

and ventilation in season, in the Premises, the Building and appropriate Common

Areas, during Normal Business Hours, at such temperatures and in such amounts

as are considered to be standard for similar class office buildings within the

Market Area or as required by statutes, codes, ordinances or other mandates

issued by governmental authorities;

 

iii)            Routine maintenance and electric

lighting service for all Common Areas and Service Areas of the Building and the

Complex in the manner and to the extent as to be considered standard for

similar class office buildings within the Market Area or as required by

statutes, codes, ordinances or other mandates issued by governmental

authorities;

 

iv)           Janitorial services within the

Premises and the Building not less than five (5) workdays per week (exclusive

of Normal Business Holidays) at a level comparable to that provided in similar

class office buildings within the Market Area.

 

v)            Replacement, as necessary, of all

Building Standard fluorescent and incandescent bulbs, lamps and ballasts in

Building Standard light fixtures within the Premises, the Common Areas and the

Service Areas.

 

vi)           Electricity and facilities in the

amounts and types sufficient for lighting the Premises and for the operation

therein of typewriters, computers, computer servers, voicewriters, calculating

machines, work processing equipment, photographic and reproduction equipment,

copying machines, personal computers, and similar items of business equipment

which consume and require the greater of either (i) the wattage and voltage

specified in Tenant’s finish-out plans and specifications; or (ii) six (6)

watts or less per square foot of Rental Area of the Premises and a voltage of

120 volts single phase or less (such amounts and types deemed to be Building

Standard.)  If Landlord determines that

Tenant will require, or is consuming, lighting in excess of Building Standard

or power in excess of the Building Standard, Tenant shall reimburse Landlord

for the cost of any additional equipment, such as transformers, risers and

supplemental air conditioning equipment, which Landlord’s engineer reasonably

deems necessary to accommodate such above standard consumption.  Landlord may install, at Tenant’s cost,

separate meters to all or a portion of the Premises to monitor such above

standard consumption.  If separate

utility meters are provided to the Premises or to other areas of the Building

that are leased or leasable to other tenants, Landlord may elect to have all

charges for the separately metered utilities billed directly to the party using

such utilities, and Landlord shall make a corresponding adjustment to Tenant’s

Share of the Basic Operating Costs, as applicable.

 

vii)          Passenger elevator service in common

with other tenants of the Building for ingress to and egress from the floor(s)

upon which the Premises are situated, twenty-four (24) hours a day, seven (7)

days a week, and non-exclusive freight elevator service to the Premises during

Normal Business Hours and at other times upon one (1) day’s prior notice to

Landlord.  The foregoing elevator

service shall be subject to the Rules and Regulations for the Building and

temporary cessation for ordinary repair and maintenance and during times when

life safety systems override normal Building operating systems.

 

10

 

b)    Additional

Services.  If Tenant requires

services, including cleaning services, for hours or days in addition to the

hours and days specified above, Landlord shall, if possible, provide such

additional service(s) after reasonable prior written request therefor from

Tenant, and Tenant shall reimburse Landlord for the actual costs for such

additional service(s).  Heating and air

conditioning for periods other than during Normal Business Hours shall be

furnished on demand via a card key, telephone dial-in or other system which

provides Tenant with immediate availability of such services, and Tenant shall

bear the cost thereof at the rate equal to Landlord’s actual cost for providing

such heating and air conditioning services. 

If any other tenant within the same HVAC zone as the Premises also

requests after hours heating or air conditioning service during the same period

as Tenant, Landlord shall equitably allocate the cost thereof among all tenants

within the same zone requesting such service. 

Landlord shall have no obligation to provide any additional service to

Tenant at any time Tenant is in material default under this Lease unless Tenant

pays to Landlord, in advance, the cost of such additional service(s).

 

c)     Access to

Building.  Subject to

reasonable security measures conducted by Landlord, the Building shall be

accessible twenty-four hours a day, seven days a week.

 

d)    Interruption

of Services.  No failure to

furnish, or any stoppage of, the services referred to in this Section which

results from any cause beyond the reasonable control of Landlord shall make

Landlord liable in any respect for damages to any person, property or business,

or be construed as an eviction of Tenant, or entitle Tenant to any abatement of

Rent or other relief from any of Tenant’s obligations under this Lease.  Should any malfunction of any system or

facilities occur within the Building or the Premises or should maintenance or

alterations of such systems or facilities become necessary; Landlord shall

repaid the same promptly and with reasonable diligence, and Tenant shall have

no claim for rebate, abatement of Rent, or damages because of malfunctions or

any such interruptions in service unless caused by Landlord’s gross negligence

or willful misconduct.  Notwithstanding

the foregoing, if Tenant is prevented from making reasonable use of the

Premises due to an interruption, curtailment or a suspension of services or

closure of the Premises or the Building occasioned directly by reason of

Landlord’s gross negligence or willful misconduct (collectively, an

“Interruption”) and (i) if such Interruption shall continue for more than two

(2) consecutive days; and (ii) such Interruption has not been caused by an act

of Tenant, or Tenant’s servants, employees or contractors, then Tenant shall be

entitled to an abatement of Rent beginning on the third (3rd)

consecutive day of such Interruption and ending on the date such Interruption

ceases.

 

6)    SIGNAGE

 

a)     Interior

Signage.  Landlord shall, at

Landlord’s sole cost and expense, provide and install one (1) Building Standard

identification sign per floor within the Premises and add Tenant’s name and

suite number to all Building directories in the lobby (the “Base Building

Signage”).

 

b)    Exterior

Signage.  Upon Landlord’s

prior written approval (which such approval shall not be unreasonably withheld,

conditioned or delayed), Tenant may, at Tenant’s sole cost and expense, erect

signage consisting of Tenant’s name and logo on the Building tower (such

signage referred to herein as the “Exterior

Signage”).  The exact size,

design and location of the Exterior Signage shall be mutually agreed upon

between Landlord and Tenant and must comply with all applicable governmental

regulations, laws and codes.

 

c)     Removal

of Signage.  Tenant, at its

sole cost and expense, shall remove all non-standard building signage upon the

termination of this Lease and shall repair any damage caused by such removal.

 

7)    REPAIR

AND MAINTENANCE

 

a)     Repair

and Maintenance by Landlord. 

Except for those repairs required to be made by Tenant as set forth

below, Landlord shall be responsible for the maintenance and repair of (i) all

exterior and load-bearing walls; (ii) floors (but not floor coverings); (iii)

mechanical, electrical, plumbing and HVAC systems and equipment servicing the

Building and Common Areas (save and except non-Building standard systems

servicing only the Premises; (iv) the roof of the Building; (v) the Common

Areas; (vi) the Service Areas; (vii) the Parking Areas; and (viii) all restroom

areas (whether or not such areas are deemed as part of the Common Areas).  In no event shall Landlord be responsible

for the maintenance or repair of improvements made by or at the request of

Tenant which are not Building Standard and which service only the Premises.  All requests for repairs must be submitted

to Landlord in writing, except in the case of an

 

11

 

emergency.  The cost of repairs and maintenance by

Landlord pursuant to this Section are included in Basic Operating Costs, except

to the extent otherwise expressly excluded.

 

b)    Maintenance

by Tenant.  Tenant shall

maintain the Premises in a clean and orderly condition and shall not commit or

allow any waste to be committed on any portion of the Premises, and at the

termination of this Lease shall deliver up the Premises to Landlord in as good

condition as at the Commencement Date, ordinary wear and tear and damage by

fire or casualty loss (unless caused by Tenant) excepted.

 

c)     Repairs

by Tenant.  Tenant shall, at

Tenant’s cost, repair or replace any damage to the Premises (including doors

and door frames, interior windows and any kitchen equipment such as

dishwashers, sinks, refrigerators, trash compactors and non-Building Standard

plumbing and other mechanical systems related thereto) that is not (i) caused

by Landlord or Landlord’s employees, agents, contractors, representatives or

invitees; (ii) included as part of Landlord’s repair responsibilities set forth

above; or (iii) contemplated as part of the responsibilities of Landlord under

the Tenant Improvements Agreement, if any. 

Furthermore, Tenant shall, at Tenant’s cost, repair or replace any

damage to the Complex, or any part thereof, caused by Tenant or any employee,

officer, contractor, agent, subtenant, guest, licensee or invitee of Tenant

(except that with respect to any such damage outside of the Premises or below

floor coverings, above ceilings or behind walls or columns, such damage shall

be repaired by Landlord, but at the cost of Tenant (plus an administrative

charge equal to five percent (5%) of cost.)) 

Unless otherwise contested in good faith by Tenant, if Tenant fails to

make such repairs or replacements within thirty (30) days after receipt of

written notice from Landlord, Landlord may, at Landlord’s option, make such

repairs or replacements at the cost of Tenant (plus an administrative charge

equal to five percent (5%) of cost). The cost of all repairs performed by

Landlord pursuant to this Subsection shall be payable by Tenant to Landlord

within fifteen (15) business days following Tenant’s receipt of an invoice as

additional Rent.  Notwithstanding

anything contained herein to the contrary, if any such damage is covered by

Landlord’s insurance, in whole or in part, Tenant’s liability under this

Subsection shall be limited to the deductible payable by Landlord and any

portion of such cost not covered by Landlord’s insurance.  In connection with repairs by Tenant, Tenant

shall provide Landlord with a copy of the contractor agreement regarding such

repairs, copies of certificates of insurance evidencing contractor coverage

satisfactory to Landlord, copies of “as-built” plans and specifications and

other information or documentation reasonably required by Landlord.  Further, Tenant shall not be responsible for

repair of any part of the Premises covered by a contractor’s or manufacturer’s

warranty or guaranty, and Landlord shall be responsible for any such repairs.

 

8)    ALTERATIONS

AND IMPROVEMENTS

 

a)     Alterations,

Additions, Improvements to Premises.  Tenant will make no alterations, changes, improvements,

replacements or additions to the Premises, without the prior written consent of

Landlord (which consent shall not be unreasonably withheld, conditioned or

delayed) if such alterations, changes, improvements, replacements or additions will

affect, in any way, the mechanical, electrical, plumbing, HVAC and/or

structural components of the Building (such alterations, changes, improvements,

replacements or additions collectively referred to herein as the “Structural Alterations”).  Landlord may, at its option, require Tenant

to submit plans and specifications to Landlord for approval prior to commencing

any Structural Alterations.  All

Structural Alterations shall be performed by a contractor on Landlord’s

approved list (a copy of which may be obtained from the Building manager).  All alterations, changes, improvements,

replacements or additions, whether or not deemed to be Structural Alterations

(collectively referred to herein as the “Alterations”),

shall be done in a good and workmanlike manner and in compliance with all

applicable laws or ordinances, including, but not limited to, Title III of the

American With Disabilities Act of 1990 or Tex. Civ. Stat. Ann. art. 9102

(collectively, the “Disability Laws”)

and the Texas Architectural Barrier Statute. 

Tenant shall require that any contractors used by Tenant to perform

Alterations carry a commercial liability (including builder’s risk) insurance

policy in such amounts as Landlord may reasonably require and shall provide

Landlord with proof of such insurance if requested in writing by Landlord prior

to the commencement of any Structural Alterations.  TENANT SHALL INDEMNIFY AND HOLD

LANDLORD HARMLESS FROM, AND REIMBURSE LANDLORD FOR AND WITH RESPECT TO, ANY AND

ALL COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEY’S FEES), DEMANDS, CLAIMS,

CAUSES OF ACTION AND LIENS ARISING FROM AND IN CONNECTION WITH ANY ALTERATIONS

PERFORMED BY TENANT.  All

persons performing work in the Building at the request of Tenant shall register

with the Building manager prior to initiating any work.  Upon completion of any Structural

 

12

 

Alterations, Tenant shall

provide Landlord with a copy of its building permit, final inspection tag and

final “as built” plans and specifications, if applicable.  Except for the Tenant Improvements (which

shall be governed by the Tenant Improvements Agreement), all installations and

improvements now or hereafter placed on the Premises at the request of Tenant

shall be at Tenant’s cost and if Landlord performs such installations or

improvements on Tenant’s behalf, such cost (plus a construction management fee

equal to three percent (3%) of hard costs) shall be payable by Tenant to

Landlord within fifteen (15) business days following Tenant’s receipt of an

invoice as additional Rent.

 

b)    Removal of

Alterations.  Upon the

termination of this Lease, Tenant may remove its trade fixtures, office

supplies, desk or workspace partitions, cubicles, power strips and related

equipment, and movable office furniture and equipment not materially attached

to the Building provided (1) such removal is made prior to the termination or

expiration of the Lease Term; (2) Tenant is not then in default in the timely

performance of any material obligation or covenant under this Lease; and (3)

Tenant promptly repairs all damage caused by such removal.  Save and except for the items, fixtures and

equipment specified above, all articles attached or affixed to the floor, wall,

or ceiling of the Premises shall, immediately upon installation, be deemed the

property of Landlord and shall be surrendered with the Premises at the

termination or expiration of this Lease, without payment or compensation

therefor.  If, however, Landlord so requests

in writing, Tenant will, at Tenant’s sole cost and expense, prior to the

termination or expiration of the Lease Term, remove any and all trade fixtures,

office supplies and office furniture and equipment placed or installed by

Tenant in the Premises, and any non-Building Standard Alterations (other than

the Tenant Improvements) installed by Tenant or installed by Landlord at

Tenant’s request in the Premises and which Landlord designated as being subject

to removal at the time of approval, and will repair any damage caused by such

removal. Notwithstanding the foregoing, Tenant shall not be responsible for

removing any telephone or data network cabling from the Premises or the

Building, unless Landlord expressly makes such removal a condition precedent to

approving Tenant’s installation thereof.

 

9)    COMPLIANCE

WITH STATUTES, LAWS AND RULES

 

a)     Tenant’s

Compliance with Laws. 

Tenant, at Tenant’s sole cost and expense, shall comply with all current

and subsequent federal, state, municipal and other laws and ordinances

(collectively referred to herein as the “Laws”)

applicable to the use of the Premises, the employees, agents, visitors and

invitees of Tenant, and the business conducted in the Premises by Tenant,

including, without limitation, all environmental laws and regulations; will not

engage in any activity which would cause Landlord’s fire and extended coverage

insurance to be canceled or the rate increased (or, at Landlord’s option,

Tenant will pay any such increase); and will not commit any act which is a

nuisance or annoyance to Landlord or to other tenants in the Building or which

might, in the reasonable judgment of Landlord, appreciably damage Landlord’s

goodwill or reputation, or tend to injure or depreciate the value of the

Building.  Without limiting the

foregoing, Tenant shall not place or permit to remain within the Premises any

“hazardous materials” as such term is now or hereafter defined under applicable

environmental laws, except cleaning supplies, copier toner or other similar

type products commonly found in commercial office space, provided such items

are properly labeled, stored and disposed of in accordance with all applicable

governmental requirements. 

Notwithstanding the foregoing, nothing in this Subsection shall be

construed as requiring Tenant to be responsible for any legal requirements

applicable to the structural portions of the Premises, the Common Areas, any

restrooms within the Building (other than restrooms constructed by or at the

special request of Tenant) or the Building Standard mechanical, electrical,

plumbing or HVAC systems, unless the failure to comply with any such legal

requirements is caused by Tenant or anyone acting for Tenant.

 

b)    Tenant’s

Compliance with Rules and Regulations.  Tenant will comply with the Rules and Regulations of the Building

as reasonably adopted and altered by Landlord from time to time in accordance

with the provisions of Exhibit “C”.  All changes to such rules and regulations

will be sent by Landlord to Tenant in writing. 

The current rules and regulations for the Building are attached hereto

as Exhibit “C”.

 

c)     Landlord’s

Compliance with Laws and Enforcement of Rules.  Landlord, at Landlord’s sole cost and

expense, shall comply with all current and subsequent Laws applicable to the

operation and maintenance of the Building, the Common Areas and the Complex and

shall use all commercially reasonable efforts to ensure that other tenants of

the Building and their respective employees, agents, visitors and invitees

comply with all such Laws and the Rules and Regulations governing the use of

the 

 

13

 

Building, the Common Areas and

the Complex, Landlord shall enforce the Rules and Regulations uniformly among

all tenants of the Building and their respective employees, agents, visitors

and invitees.

 

d)    Compliance

with Disability Laws. 

Tenant, at its sole cost, shall be responsible for compliance with

Disability Laws with respect to (1) the Premises (excluding the Tenant

Improvements, if any), (2) the Tenant Improvements if Tenant engaged the

architect that prepared the Plans and Specifications, (3) all Alterations made

to the Premises or any other acts of Tenant after the Commencement Date, (4)

all requirements of Disability Laws that relate to the employer-employee

relationship or that are necessitated by the special needs of any employee,

agent, visitor or invitee of Tenant and that are not required to be provided

generally, including, without limitation, requirements related to auxiliary

aids and graphics installed by or on behalf of Tenant (other than Base Building

Signage), and (5) all requirements of Disability Laws that relate to private

restrooms constructed by or at the special request of Tenant.  Landlord, at its sole cost and expense,

shall be responsible for compliance with Disability Laws with respect to the

Common Areas (including restrooms located upon full floors leased by Tenant)

and the Service Areas and the Tenant Improvements if Landlord engaged the

architect that prepared the Plans and Specifications.  Neither party shall be in default under this Subsection for its

failure to comply with Disability Laws so long as the responsible party is

either contesting in good faith, and by legal means, the enforcement of

Disability Laws, or undertaking diligent efforts to comply with Disability

Laws.

 

10)  ACCESS

TO PREMISES

 

Tenant agrees to permit

Landlord and its employees, agents, contractors or representatives to enter

into and upon any part of the Premises at all reasonable hours upon reasonable

prior written notice (and in the case of emergencies at all times and without

notice) to inspect the same or to clean or make repairs, alterations or

additions thereto.  During the last

sixty (60) days of the Lease Term (or any renewal thereof, if applicable),

Landlord and/or its employees, agents or representatives may enter into and

upon any part of the Premises during reasonable hours and upon reasonable prior

written notice to show the Premises to prospective purchasers, mortgagees,

insurers or tenants.  Tenant shall not

be entitled to any abatement or reduction of Rent by reason of Landlord’s

exercise of its rights granted pursuant to this Section provided however, that

Landlord uses commercially reasonable efforts to minimize any disruption to the

conduct of Tenant’s business by reason of any such entry.  No notice shall be required with respect to

entry by Landlord, or its employees, agents or contractors to perform routine

janitorial services occurring after Normal Business Hours.

 

11)  ASSIGNMENT

AND SUBLETTING

 

a)     No

General Assignment and Subletting by Tenant.  Except as otherwise set forth in this

Section or elsewhere in this Lease, Tenant shall not assign this Lease or

sublease the Premises or any part thereof or mortgage, pledge or hypothecate

its leasehold interest or grant any concession or license within the Premises

(any such assignment, sublease, mortgage, pledge, hypothecation, or grant of a

concession or license being hereinafter referred to as a “Transfer”) without the prior written

consent of Landlord, which consent shall not be unreasonably conditioned,

withheld, or delayed, and any attempt to effect a Transfer without such consent

of Landlord shall be void and of no effect. 

In order for Tenant to make a Transfer, Tenant must request in writing

Landlord’s consent at least ten (10) business days in advance of the date on

which Tenant desires to make a Transfer and pay Landlord a $250.00 fee for

reviewing such request (the “Review Fee”). 

Such request shall include the name of the proposed assignee or

sublessee, current financial information on the proposed assignee or sublessee

and the terms of the proposed Transfer (including the date Tenant desires to

make such Transfer).  Landlord shall,

within ten (10) business days following receipt of such request, notify Tenant,

in writing, if (i) Landlord will permit Tenant to assign or sublet such space

in accordance with the terms provided to Landlord (in which case such

assignment or subletting may take place promptly thereafter), or (ii) Landlord

will refuse to permit such assignment or subletting and shall continue this

Lease in full force and effect as to the entire Premises.  If Landlord shall fail to notify Tenant in

writing of such election within such ten (10) business day period, Landlord

shall be deemed to have elected option (ii) above.  If Landlord elects option (ii) above, Landlord shall return the

Review Fee to Tenant.  If Landlord

elects to exercise option (i) above, Tenant agrees to provide, at its expense,

direct access from any sublet space or concession area to a public corridor of

the Building, and such other improvements, alterations or additions as may be

required by applicable law, if any.

 

14

 

b)    Permitted

Assignment or Subletting by Tenant.  Notwithstanding

the foregoing or anything else to the contrary in this Lease, Tenant shall have

the right, without obtaining Landlord’s prior consent, to assign this Lease or

sublet all or any portion of the Premises to (i) any person or entity who

controls or owns, is controlled or owned by, or is under common control or

ownership with the original Tenant named in this Lease; or (ii) to any person

or entity who may be “incubated” by or partnered with Tenant for the purposes

of intellectual property development, research, sales or similar activity (an “Affiliate Transfer”).  The term “control” shall mean the

possession, directly or indirectly, of the power to direct or cause the

direction of the management or policies of the controlled or owned person or

entity.  Tenant shall provide Landlord

with written notice of any Affiliate Transfer within twenty (20) business days

following the effective date thereof.

 

c)     Provisions

Relating to Transfers and Affiliated Transfers.  Notwithstanding that the prior express

written consent of Landlord to a Transfer may have been obtained under the

provisions of this Section or that such permission is not required, the

following shall apply to all Transfers (including Affiliate Transfers):

 

i)              In the event of an assignment or

sublease, Tenant shall (A) in the case of an assignment, cause the assignee to

expressly assume in writing and to agree to perform, all of the covenants,

duties and obligations of Tenant hereunder, and such assignee shall be jointly

and severally liable therefor along with Tenant; and (B) agree with Landlord

that, except in the case of an Affiliate Transfer, if the rent or other

consideration due and payable by a sublessee or assignee under any such

permitted sublease or assignment exceeds the Rent for the portion of the

Premises so transferred, then Tenant shall pay Landlord as additional rental

hereunder fifty percent (50%) of all such excess rental and other consideration

immediately upon receipt thereof by Tenant from such transferee; provided

however, that the amount of excess rental shall be calculated only after Tenant

has deducted all reasonable costs and expenses incurred by it in connection

with such Transfer;

 

ii)             No usage of the Premises different

from the usage herein provided to be made by Tenant shall be permitted, and all

of the terms and provisions of this Lease shall continue to apply after a

Transfer; and

 

iii)            Tenant will nevertheless remain

directly and primarily liable for the performance of all the covenants, duties

and obligations of Tenant hereunder (including, without limitation, the

obligation to pay Rent), and Landlord shall be permitted to enforce the

provisions of this Lease against the undersigned Tenant or any transferee, or

both, without demand upon or proceeding in any way against any other persons.

 

d)    No Deemed

Consent for Subsequent Transfers. 

The consent by Landlord to a particular Transfer shall not be deemed a

consent to any other subsequent Transfer. 

If this Lease, the Premises or the Tenant’s leasehold interest therein,

or if any portion of the foregoing is Transferred, or if the Premises are

occupied in whole or in part by anyone other than Tenant without obtaining the

prior consent of Landlord as may be required herein, Landlord may nevertheless

collect rent from the transferee or other occupant and apply the net amount

collected to the Rent payable hereunder, but no such transaction or collection

of rent or application thereof by Landlord shall be deemed a waiver of the

provisions hereof or a release of Tenant from the further performance by Tenant

of its covenants, duties and obligations hereunder.

 

12)  LIENS

 

Tenant will not permit any

mechanic’s liens, materialmen’s liens or other liens to be placed upon the

Premises or the Complex for any work performed by or at the request of Tenant,

or any assignee, sublessee or licensee of Tenant, and nothing in this Lease

shall be deemed or construed in any way as constituting the consent or request

of Landlord, express or implied, by inference or otherwise, to any person for

the performance of any labor or the furnishing of any materials to the

Premises, or any part thereof, nor as giving Tenant any right, power, or

authority to contract for or permit the rendering of any services or the

furnishing of any materials that would give rise to any mechanic’s or other

liens against the Premises or the Complex. 

If any such lien is attached to the Premises or the Complex and not

discharged by payment, bonding or otherwise (or is not diligently contested by

Tenant) within twenty (20) days after receipt of written notice from Landlord,

then, in addition to any other right or remedy of Landlord, Landlord may, but

 

15

 

shall not be obligated to,

discharge the same.  Any amount paid by

Landlord for the aforesaid purpose shall be paid by Tenant to Landlord on

demand as additional Rent and bear interest at the Default Rate until paid.

 

13)  INSURANCE

 

a)     Property

Insurance.

 

i)              Landlord shall maintain a policy

or policies of all risk extended coverage insurance on the portion of the

Building that is the property of Landlord, including Alterations by Tenant that

have become the property of Landlord, in an amount equal to the replacement

cost thereof.  Such insurance shall be

maintained at the expense of Landlord (as a part of the Basic Operating Costs),

and payments for losses thereunder shall be made solely to Landlord or the

mortgagees of Landlord as their interests shall appear.  If insurance premiums for the Building

increase due to:  (1) the Tenant

Improvements to the Premises in excess of Building Standard or any subsequent

improvements made by Tenant to the Premises (such improvements to be made only

in accordance with this Lease) or made by Landlord at Tenant’s request, or (2)

as a result of Tenant’s use, Landlord may elect to invoice Tenant directly for

such increased premiums rather than including same in Basic Operating Costs, in

which event, Tenant will pay such invoice within fifteen (15) business days of

receipt.

 

ii)             Tenant shall maintain a policy or

policies of all risk extended coverage insurance on all of its personal

property, including removable trade fixtures, located on the Premises, in an

amount equal to full replacement cost and endorsed to provide that Tenant’s

insurance is primary in the event of any overlapping coverage with the

insurance carried by Landlord.  Such

insurance shall be maintained at the expense of Tenant and payment for losses

thereunder shall be made solely to Tenant or the lienholders of Tenant as their

interests shall appear.  Tenant shall,

upon Landlord’s reasonable request from time to time, provide Landlord with a

current certificate of insurance evidencing Tenant’s compliance with this

Subsection.  Tenant shall obtain the

agreement of Tenant’s insurers to notify Landlord that a property insurance

policy is due to be canceled or expire at least thirty (30) days prior to such

cancellation or expiration.

 

b)    Liability

Insurance.

 

i)              Landlord shall (as a part of Basic

Operating Costs) maintain a policy or policies of commercial general liability

insurance covering the Building and all Common Areas and Service Areas, but

excluding the Premises, insuring against claims for personal or bodily injury

or death or property damage occurring upon, in or about the Building or Common

Areas and Services Areas (including contractual indemnity and liability

coverage) affording protection to the limit of not less than $1,000,000.00

combined single limit in respect to injury or death to any number of persons or

property damage arising out of any one occurrence.  Landlord’s insurance shall contain an endorsement that Landlord’s

insurance is primary for claims arising out of an incident or event occurring

within the Common Areas and Service Areas. 

Landlord’s insurance shall include coverage for the contractual

liability of Landlord to indemnify Tenant pursuant to the provisions set forth

below and will name Tenant as an additional insured.

 

ii)             Tenant shall maintain a policy or

policies of commercial general liability insurance covering the Premises and Tenant’s

use thereof against claims for personal or bodily injury or death or property

damage occurring upon, in or about the Premises (including contractual

indemnity and liability coverage) with the premiums thereon fully paid on or

before the due date, issued by and binding upon an insurance company licensed

to do business in the State of Texas and having an A.M.  Best Rating of “A-VI” or better.  Such insurance shall provide minimum

protection of not less than $1,000,000.00 combined single limit primary coverage

per occurrence of bodily injury, property damage or combination thereof.  Tenant’s insurance shall contain an

endorsement that Tenant’s insurance is primary for claims arising out of an

incident or event occurring within the Premises.  Tenant’s insurance shall contain a provision naming Landlord (and

any mortgagee designated by Landlord) as an additional insured and include

coverage for the contractual liability of Tenant to indemnify Landlord pursuant

to the provisions set forth below. 

Tenant shall, prior to occupancy of the Premises and upon Landlord’s

reasonable request from

 

16

 

time to time,

provide Landlord with a current certificate of insurance evidencing Tenant’s

compliance with this Subsection.  Tenant

shall obtain the agreement of Tenant’s insurers to notify Landlord that a

liability insurance policy is due to be canceled or expire at least thirty (30)

days prior to such cancellation or expiration.

 

c)     Waiver of

Subrogation Rights:  NOTWITHSTANDING

ANY PROVISION IN THIS LEASE TO THE CONTRARY, TO THE EXTENT THAT AND SO LONG AS

THE SAME IS PERMITTED UNDER THE LAWS AND REGULATIONS GOVERNING THE WRITING OF

INSURANCE WITHIN THE STATE OF TEXAS, ALL INSURANCE CARRIED BY EITHER LANDLORD

OR TENANT SHALL PROVIDE FOR A WAIVER OF RIGHTS OF SUBROGATION AGAINST LANDLORD

AND TENANT ON THE PART OF THE INSURANCE CARRIER.  UNLESS THE WAIVERS CONTEMPLATED BY THIS SENTENCE ARE NOT

OBTAINABLE FOR THE REASONS DESCRIBED IN THIS SUBSECTION, LANDLORD AND TENANT

EACH HEREBY WAIVE ANY AND ALL RIGHTS OF RECOVERY, CLAIMS, ACTIONS OR CAUSES OF

ACTION AGAINST THE OTHER, ITS AGENTS, OFFICERS, OR EMPLOYEES, FOR ANY LOSS OR

DAMAGE TO PROPERTY OR ANY INJURIES TO OR DEATH OF ANY PERSON WHICH IS COVERED

OR WOULD HAVE BEEN COVERED UNDER THE INSURANCE POLICIES REQUIRED UNDER THIS

LEASE.  THE FOREGOING RELEASE SHALL NOT

APPLY TO LOSSES OR DAMAGES IN EXCESS OF ACTUAL OR REQUIRED POLICY LIMITS

(WHICHEVER IS GREATER) NOR TO ANY DEDUCTIBLE (UP TO A MAXIMUM OF $5,000)

APPLICABLE UNDER ANY POLICY OBTAINED BY THE WAIVING PARTY.  THE FAILURE OF A PARTY (THE “DEFAULTING PARTY”) TO TAKE OUT OR MAINTAIN

ANY INSURANCE POLICY REQUIRED TO BE OBTAINED AND MAINTAINED UNDER THIS LEASE

SHALL BE A DEFENSE TO ANY CLAIM ASSERTED BY THE DEFAULTING PARTY AGAINST THE

OTHER PARTY HERETO BY REASON OF ANY LOSS SUSTAINED BY THE DEFAULTING PARTY THAT

WOULD HAVE BEEN COVERED BY ANY SUCH REQUIRED POLICY.  THE WAIVERS SET FORTH IN THE IMMEDIATELY PRECEDING SENTENCE SHALL

BE IN ADDITION TO, AND NOT IN SUBSTITUTION FOR, ANY OTHER WAIVERS, INDEMNITIES,

OR EXCLUSIONS OF LIABILITIES SET FORTH IN THIS LEASE.

 

14)  INDEMNITY

OBLIGATIONS

 

a)     Tenant

Indemnity Obligations. 

TENANT SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS LANDLORD AND ANY

OFFICER, DIRECTOR, MEMBER, PARTNER OR EMPLOYEE OF LANDLORD (HEREIN COLLECTIVELY

CALLED A “LANDLORD RELATED PARTY”)

FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, DAMAGES, CLAIMS, SUITS,

LOSSES, CAUSES OF ACTION, LIENS, JUDGMENTS AND EXPENSES (INCLUDING COURT COSTS,

ATTORNEY’S FEES AND COSTS OF INVESTIGATION) OF ANY KIND, NATURE OR DESCRIPTION

RESULTING FROM ANY INJURIES TO OR DEATH OF ANY PERSON OR ANY DAMAGE TO PROPERTY

WHICH ARISES, OR IS CLAIMED TO ARISE FROM: 

(1) AN INCIDENT OR EVENT WHICH OCCURRED WITHIN OR ON THE PREMISES; OR

(2) THE OPERATION OR CONDUCT OF TENANT’S BUSINESS WITHIN THE PREMISES

(COLLECTIVELY, THE “TENANT CLAIMS”).  IF ANY SUCH TENANT CLAIM IS MADE AGAINST ANY

LANDLORD RELATED PARTY, TENANT SHALL, AT TENANT’S SOLE COST AND EXPENSE, DEFEND

SUCH CLAIM BY OR THROUGH ATTORNEYS REASONABLY ACCEPTABLE TO LANDLORD.  The indemnity obligations of Tenant under

this Subsection shall not apply to any claim arising out of the negligence,

gross negligence or intentional misconduct of any Landlord Related Party.

 

b)    Landlord

Indemnity Obligations. 

LANDLORD SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS TENANT AND ANY

OFFICER, DIRECTOR, MEMBER, PARTNER OR EMPLOYEE OF TENANT (HEREIN COLLECTIVELY

CALLED A “TENANT RELATED PARTY”)

FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, DAMAGES, CLAIMS, SUITS,

LOSSES, CAUSES OF ACTION, LIENS, JUDGEMENTS AND EXPENSES (INCLUDING COURT

COSTS, ATTORNEYS’ FEES AND COSTS OF INVESTIGATION) OF ANY KIND, NATURE OR

DESCRIPTION RESULTING FROM ANY INJURIES TO OR DEATH OF ANY PERSON OR ANY DAMAGE

TO PROPERTY WHICH ARISES, OR IS CLAIMED TO ARISE FROM, (1) AN INCIDENT OR EVENT

WHICH OCCURRED WITHIN OR ON THE COMMON AREAS OR THE SERVICE AREAS; OR (2) THE

OPERATION OR CONDUCT OF LANDLORD’S BUSINESS WITHIN THE COMMON AREAS OR THE

SERVICE AREAS (COLLECTIVELY, THE “LANDLORD

CLAIMS”).

 

17

 

IF ANY SUCH LANDLORD CLAIM IS

MADE AGAINST ANY TENANT RELATED PARTY, LANDLORD SHALL, AT LANDLORD’S SOLE COST

AND EXPENSE, DEFEND SUCH CLAIM BY OR THROUGH ATTORNEYS REASONABLY ACCEPTABLE TO

TENANT.  The indemnity obligations of

Landlord under this Subsection shall not apply to a claim arising out of the

negligence, gross negligence or intentional misconduct of any Tenant Related

Party.

 

c)     Survival

of Indemnity Obligations. 

The indemnity obligations of Tenant and Landlord as set forth in this

Section shall survive the expiration or other termination of this Lease.

 

15)  CASUALTY

AND CONDEMNATION

 

a)     Casualty

Damage.  If the Premises or

any part thereof shall be damaged by fire or other casualty, Tenant shall give

prompt written notice thereof to Landlord. 

In case the Building or any part thereof (including the Premises, if

applicable) shall be so damaged by fire or other casualty that substantial alteration

or reconstruction of the Building (i.e. such alteration or reconstruction costs

would equal or exceed 50% of the fair market value of the Building) shall, in

the reasonable judgment of an independent architect selected by Landlord, be

required (whether or not the Premises shall have been damaged by such fire or

other casualty), or if any mortgagee under a first mortgage or first deed of

trust covering the Building should require that the insurance proceeds payable

as a result of such fire or other casualty be used to retire the mortgage debt,

Landlord may, at its option, terminate this Lease by notifying Tenant in

writing of such termination within five (5) days following the earlier to occur

of either (i) the date on which Landlord receives the estimated cost of

reconstruction for the Building or the determination by a mortgagee to take the

proceeds; or (ii) thirty (30) days from the date of such fire or casualty, in

which event the Rent hereunder shall be abated as of the date of such fire or

other casualty.  If Landlord does not

elect to terminate this Lease (or fails to timely terminate the Lease in

accordance with the provisions hereof), within ninety (90) following the date

on which such fire or other casualty occurred, Landlord shall have completed

the repair and restoration of the Premises and/or the Building, as applicable,

to substantially the same condition which it was in immediately prior to the

happening of the fire or other casualty, except that Landlord shall not be

required to rebuild, repair, or replace any part of Tenant’s furniture,

fixtures and equipment removable by Tenant under the provisions of this Lease

or any Alterations to the Premises made by Tenant following the Commencement

Date which were not approved by Landlord in writing.  Notwithstanding the foregoing, Landlord shall not in any event be

required to spend for such work an amount in excess of the insurance proceeds

actually received by Landlord as a result of the fire or other casualty plus

any deductible amounts thereunder.  If

Landlord determines that insurance proceeds will be insufficient to restore the

Building as required by this Subsection, Landlord may, at its option, elect to

either (1) terminate this Lease by written notice to Tenant, or (2) provide the

extra funds necessary to complete the restoration.  If Landlord did not originally construct any Alterations to be

repaired, the time for Landlord to commence and complete such repairs shall be

extended by the amount of time necessary for Landlord to obtain detailed

working drawings of the Alterations to be repaired.  If Landlord does not complete the repairs to the Building within

ninety (90) days after the date of such damage, Tenant may terminate the Lease

by written notice thereof to Landlord given no later than thirty (30) days

following the date on which Landlord was to complete such repairs.  Except to the extent caused by the gross

negligence or intentional misconduct of any Landlord Related Party, Landlord

shall not be liable for any inconvenience or annoyance to Tenant or injury to

the business of Tenant resulting from such damage or the repair thereof, except

that, subject to the provisions of the next sentence, Landlord shall allow

Tenant an equitable abatement of Rent during the time and to the extent the

Premises are unfit for occupancy and vacated by Tenant.  If the Premises, the Building or any other

portion of the Complex is damaged by fire or other casualty resulting from the

gross negligence or intentional acts of Tenant or any employee, officer, contractor,

agent, subtenant, or licensee of Tenant, the Rent hereunder shall not be abated

during the repair of such damage, and Tenant shall remain liable for the

payment thereof.

 

b)    Condemnation.  If the whole or substantially the whole of

the Building or the Complex (i.e. more than 30% of the Building and/or the

Complex), or (ii) the whole or such portion of the Premises as shall render the

remainder reasonably unfit for Tenant’s use, shall be taken for any public or

quasi-public use, by right of eminent domain or otherwise, or sold in lieu of condemnation,

then this Lease shall terminate as of the date when physical possession of the

Building or the Premises are taken by the condemning authority.  If this Lease is not so terminated upon any

such taking or sale, the Base Rental payable hereunder shall be equitably

diminished by an amount representing that portion of Base Rental applicable to

the portion of the 

 

18

 

Premises subject to such taking

or sale, and Landlord shall, to the extent commercially feasible, restore the

Building and the Premises to substantially their former condition, except that

Landlord shall not be required to rebuild, repair, or replace any Alterations

to the Premises made by Tenant following the Commencement Date which were not

approved by Landlord in writing, nor shall Landlord in any event be required to

spend for such work an amount in excess of the amount received by Landlord as

compensation for such taking.  All

amounts awarded upon a taking of any part or all of the Land, Building or the

Premises shall belong to Landlord, and Tenant shall not be entitled to and

expressly waives all claims to any such compensation except that Tenant may

make a separate claim upon the condemning authority for expenses related to

relocation and the unamortized cost of leasehold improvements paid for by

Tenant.

 

c)     Damages

From Certain Causes. 

NOTWITHSTANDING ANY PROVISION CONTAINED IN THIS LEASE TO THE CONTRARY,

AND SUBJECT TO THE INDEMNITY AND WAIVER OF SUBROGATION PROVISIONS SET FORTH ABOVE,

NEITHER LANDLORD NOR ANY LANDLORD RELATED PARTY SHALL BE LIABLE FOR DAMAGES TO

TENANT OR ANY PARTY CLAIMING THROUGH TENANT FOR ANY INJURY TO OR DEATH OF ANY

PERSON OR DAMAGE TO PROPERTY OR FOR INTERRUPTION OR DAMAGE TO BUSINESS

RESULTING FROM ANY OF THE FOLLOWING REASONS: 

(a) ANY ACT, OMISSION OR NEGLIGENCE OF TENANT OR TENANT’S EMPLOYEES,

AGENTS, CONTRACTORS, OFFICERS, SUBTENANTS, ASSIGNEES, LICENSEES, INVITEES OR

CUSTOMERS;  (b) ANY ACT, OMISSION OR

NEGLIGENCE OF ANY OTHER TENANT WITHIN THE BUILDING, OR ANY OF THEIR RESPECTIVE

EMPLOYEES, AGENTS, CONTRACTORS, TENANTS, ASSIGNEES, LICENSEES, INVITEES OR

CUSTOMERS; (c) THE REPAIR, ALTERATION, MAINTENANCE, DAMAGE OR DESTRUCTION OF

THE PREMISES OR ANY OTHER PORTION OF THE BUILDING (INCLUDING THE CONSTRUCTION

OF LEASEHOLD IMPROVEMENTS FOR OTHER TENANTS OF THE BUILDING) EXCEPT TO THE

EXTENT CAUSED BY THE NEGLIGENCE OR WILLFUL MISCONDUCT OF LANDLORD OR ANY

LANDLORD RELATED PARTY OR LANDLORD IS OTHERWISE EXPRESSLY RESPONSIBLE THEREFOR

UNDER THE TERMS OF THIS LEASE; (d) VANDALISM, THEFT, BURGLARY AND OTHER

CRIMINAL ACTS (OTHER THAN THOSE COMMITTED BY LANDLORD RELATED PARTIES); (e) ANY

DEFECT IN OR FAILURE OF EQUIPMENT, PIPES, WIRING, HEATING OR AIR CONDITIONING

EQUIPMENT, STAIRS, ELEVATORS, OR SIDEWALKS; THE BURSTING OF ANY PIPES OR THE

LEAKING, ESCAPING OR FLOWING OF GAS, WATER, STEAM, ELECTRICITY, OR OIL; BROKEN

GLASS; OR THE BACKING UP OF ANY DRAINS, EXCEPT TO THE EXTENT CAUSED BY THE

NEGLIGENCE OR WILLFUL MISCONDUCT OF LANDLORD OR ANY LANDLORD RELATED PARTY; (f)

INJURY DONE OR OCCASIONED BY WIND, SNOW, RAIN OR ICE, FIRE, ACT OF GOD, PUBLIC

ENEMY, INJUNCTION, RIOT, STRIKE, INSURRECTION, WAR, COURT ORDER, REQUISITION,

ORDER OF ANY GOVERNMENTAL BODY OR AUTHORITY, OR (g) ANY OTHER CAUSE BEYOND THE

REASONABLE CONTROL OF LANDLORD.  UNDER

NO CIRCUMSTANCES SHALL LANDLORD BE LIABLE FOR DAMAGES RELATED TO BUSINESS

INTERRUPTION OR LOSS OF PROFITS.  THE

PROVISIONS OF THIS SUBSECTION SHALL NOT LIMIT THE OBLIGATIONS OF LANDLORD OR

THE RIGHTS OF TENANT UNDER THIS LEASE NOT INVOLVING A CLAIM FOR DAMAGES.

 

16)  DEFAULT

 

a)     Default

by Tenant.  The following

events shall be deemed to be events of default by Tenant under this Lease (each

hereinafter called an “Event of Default”):

 

i)              Tenant shall fail to timely pay

any Rent when due and such failure shall continue for a period of five (5) days

after written notice of such default shall have been delivered to Tenant;

provided however, once Landlord has given Tenant two (2) such notices during

any twelve (12) month period (whether as to one or more than one failures to

pay) it shall not be required to give further notice and thereafter the failure

or refusal by Tenant to timely make any payment of Rent when due hereunder

within the following twelve (12) months shall be an Event of Default without

further notice;

 

ii)             Tenant shall fail to comply with

any provision of this Lease or any other agreement between Landlord and Tenant

not requiring the payment of Rent and such failure shall continue

 

19

 

for a period

of thirty (30) days after written notice of such failure is delivered to Tenant

or, if such failure cannot reasonably be cured within such thirty (30) day

period, Tenant shall fail to commence to cure such failure within such thirty

(30) day period and/or shall thereafter fail to prosecute such cure diligently

and continuously to completion within sixty (60) days of the date of Landlord’s

notice of default;

 

iii)            Tenant takes any action to, or

notifies Landlord that Tenant intends to file a petition under any section or

chapter of the United States Bankruptcy Code, as amended from time to time, or

under any similar law or statute of the United States or any state thereof, or

a petition shall be filed against Tenant under any such bankruptcy or similar

statute and not be dismissed within sixty (60) days thereafter;

 

iv)           A receiver or trustee shall be

appointed for Tenant’s leasehold interest in the Premises or for all or a

substantial part of the assets of Tenant; or

 

v)            Except in the event of fire,

casualty or condemnation, Tenant abandons all or any substantial portion of the

Premises, or refuses to take occupancy thereof.

 

b)    Remedies.  Upon the occurrence of any Event of Default,

the giving of notice by Landlord and the expiration of the applicable cure

periods, Landlord may, at its option and without further notice to Tenant and

without judicial process, in addition to all other remedies given hereunder or

by law or equity, do any one or more of the following:

 

i)              Terminate this lease, in which

event Tenant shall immediately surrender possession of the Premises to

Landlord;

 

ii)             Enter upon and take possession of

the Premises and expel or remove Tenant therefrom, with or without having

terminated this Lease;

 

iii)            Apply all or any portion of the

Security Deposit, if any, to cure such Event of Default;

 

iv)           Make such payment, perform such

obligation, and/or remedy such other default for the account of Tenant (and may

enter the Premises for such purpose), and Tenant shall, within fifteen (15)

days following written demand therefor, pay all costs, expenses and

disbursements (including attorneys’ fees) incurred by Landlord in taking such

remedial action, plus, at the option of Landlord, interest thereon at the

Default Rate;

 

v)            Change or re-key all locks to

entrances to the Premises, and Landlord shall have no obligation to give Tenant

a new key to the Premises until such Even of Default is cured; and

 

vi)           Remove from the Premises any

furniture, fixtures, equipment or other personal property of Tenant, without

liability for trespass or conversion, and store such items either in the

Complex or elsewhere at the sole cost of Tenant and without liability to

Landlord; provided Landlord uses reasonable care in the removal and storage of

such property.  Landlord may retain

control over all such property for the purpose of foreclosing the contractual

landlord’s lien as created pursuant to the provisions of this Lease.  Any of such furniture, fixtures, equipment

or personal property not claimed within thirty (30) days from the date of

removal shall be deemed abandoned.

 

c)     No

Surrender.  Exercise by

Landlord of any one or more remedies hereunder shall not constitute forfeiture

or an acceptance of surrender of the Premises by Tenant, it being understood

that such surrender can be effected only by the written agreement of Landlord

and Tenant.

 

d)    Damages.

 

i)              If Landlord terminates this Lease

by reason of an Event of Default, Tenant shall pay to Landlord the sum of (1)

the cost of recovering the Premises, (2) the unpaid Rent and all other

indebtedness accrued hereunder to the date of such termination, (3) the

unamortized portion, upon the date of termination, of all leasing commissions,

tenant improvement costs and allowances, architectural costs and allowances and

any other allowances provided by Landlord under this Lease; (4) all expenses

reasonably incurred by Landlord in enforcing Landlord’s remedies, including

attorney’s fees and court costs; (4) the total Rent which Landlord would have

received under this Lease for the remainder of the Lease Term minus the Fair

Market Rental Value 

 

20

 

(hereinafter

defined) of the Premises for the same period, both discounted to present value

at the Prime Rate (hereinafter defined) in effect upon the date of

determination, and (5) any other damages or relief which Landlord may be

entitled to at law or in equity.  For

the purposes of this section, “Fair Market

Rental Value” shall be the rental rate that would be received from a

comparable tenant for a comparable lease for premises and other properties of

equivalent quality, size, condition and location as the Premises, taking into

account any free rent or other concessions, which are generally prevailing in

the market place after Tenant’s default, market conditions and the period of

time the Premises may reasonably be expected to remain vacant before Landlord

is able to re-let the Premises to a suitable new tenant.  For purposes of this section, “Prime Rate” shall mean the per annum rate

of interest announced or published from time to time by, Bank of America, N.A.

(or its successors or assigns) as its prime commercial lending rate.

 

ii)             If Landlord repossesses the

Premises without terminating this Lease, then Tenant shall pay to Landlord (1)

the cost of recovering the Premises, (2) the unpaid Rent and other indebtedness

accrued to the date of such repossession, (3) all expenses reasonably incurred

by Landlord in enforcing Landlord’s remedies, including attorneys’ fees and

court costs; and (4) the total Rent which Landlord would have received under

this Lease for the remainder of the Lease Term minus any net sums thereafter

received by Landlord through reletting the Premises during such period after

deducting expenses reasonably incurred by Landlord in connection with such

reletting, including advertising costs, brokerage commissions, tenant

improvement costs and allowances and any other allowances or concessions

provided by Landlord.  Re-entry by

Landlord will not affect the obligations of Tenant for the unexpired term of

this Lease.  Actions to collect amounts

due by Tenant may be brought on one or more occasions, without the necessity of

Landlord’s waiting until the expiration of the Lease Term.  In addition, Landlord may at any time

following repossession of the Premises without termination of the lease elect

to terminate the Lease as provided above and pursue the remedies available to

Landlord above in lieu of the remedies available to Landlord pursuant to this

Subsection.

 

e)     Default

by Landlord.  Landlord shall

be in default under this Lease if Landlord fails to perform any of its

obligations hereunder and such failure continues for a period of thirty (30)

days after Tenant delivers written notice of such failure to Landlord and to

the holder(s) of any indebtedness or other obligations secured by any mortgage

or deed of trust affecting the Premises (provided that the name and address of

such holder(s) has been previously provided to Tenant by Landlord in writing),

provided that if such failure cannot reasonably by cured within such thirty

(30) day period, Landlord shall not be in default hereunder as long as Landlord

or such holder(s) commences the remedying of such failure within such

thirty-day period and diligently prosecutes the same to completion, during

which time Landlord and such holder(s), or either of them, their agents or

employees, shall be entitled to enter upon the Premises at reasonable times and

do whatever may be necessary to remedy such failure.  In no event shall Landlord be liable to Tenant for consequential,

special or punitive damages by reason of a failure to perform (or a default) by

Landlord under this Lease.

 

17)  MISCELLANEOUS

 

a)     Holding

Over.  Should Tenant continue

to occupy the Premises after the expiration of the Lease Term without the prior

written consent of Landlord (which such consent shall not be unreasonably

withheld, conditioned or delayed), such occupancy shall be a tenancy-at-will

under all of the terms, covenants and conditions of this Lease, but Tenant

shall pay Landlord a daily Base Rental equal to the sum found by dividing one

hundred and fifty percent (150%) of the Base Rental for the final month of the

Lease Term by number of days in the applicable holdover month, plus a daily

prorated amount of Tenant’s Share of Basic Operating Costs.  Tenant shall also pay any and all reasonable

damages sustained by Landlord as a result of such holdover.  If Tenant consists of more than one person

or entity, and if any of the persons or entities comprising Tenant continue to

occupy the Premises after the expiration of the Lease Term, all other persons

or entities comprising Tenant shall be deemed to have consented to such

occupancy and shall continue to be jointly and severally liable for all of the

terms, covenants and conditions contained in this Lease during the holdover

term.

 

b)    Change of

Building Name.  Landlord

reserves the right at any time to change the name of the Building upon thirty

(30) days advance written notice to Tenant. 

Notwithstanding the foregoing, in no

 

21

event shall Landlord be entitled to change the name of the Building to

reflect the name of any tenant or occupant of the Building other than that of

Tenant.

 

c)  Modification of Common Areas.  Subject to the provisions set forth in this

Subsection, Landlord shall have the right to repair, change, redecorate, alter,

improve, or renovate any part of the Common Areas (including, but not limited

to, those located on any full floor leased by Tenant), without being held

guilty of an actual or constructive eviction of Tenant or breach of any express

or implied warranty and without an abatement of Rent.  In exercising such right, Landlord will use all reasonable

efforts to minimize any interruption to the conduct of Tenant’s business.  Notwithstanding the foregoing, in no event

shall Landlord have the right to change, alter or otherwise modify the Common

Areas of the Complex if such change, alteration or modification would (i)

reduce the number of reserved and unreserved parking spaces allocated for

Tenant’s use; (ii) materially interfere with Tenant’s business operations

within the Building and/or the Premises; or (iii) materially interfere with

access to and from the Building and Highway 290 and any other major

thoroughfare located adjacent to the Complex.

 

d)  Estoppel Agreement.  Tenant agrees that it will from time to time

within ten (10) business days after written request by Landlord, execute and

deliver to such persons as Landlord shall reasonably request an estoppel

agreement in recordable form certifying that this Lease is unmodified and in

full force and effect (or if there have been modifications, that the same is in

full force and effect as so modified), stating the dates to which Rent and

other charges payable under this Lease have been paid, stating the Landlord is

not in default hereunder (or if Tenant alleges a default stating the nature of

such alleged default) and further stating such other matters as Landlord shall

reasonably require.

 

e)  Attorney’s Fees.  Tenant must pay to Landlord, on demand, all

attorney’s fees, costs and expenses reasonably incurred by Landlord in recovery

of any Rent or enforcement of Landlord’s rights under this Lease.  Further, if Landlord or Tenant employs an

attorney to assert or defend any action arising out of the breach of any term,

covenant or provision of this Lease, or to bring legal action for the unlawful

detainer of the Premises, the prevailing party shall be entitled to recover

from the non-prevailing party reasonable attorney’s fees and costs of suit

incurred in connection therewith.  For

purposes of this Subsection, a party shall be considered to be the “prevailing

party” to the extent that (1) such party initiated the litigation and

substantially obtained the relief which it sought (whether by judgment,

voluntary agreement or action of the other party, trail, or alternative dispute

resolution process), (2) such party did not initiate the litigation and did not

receive judgment in its favor, but the party receiving the judgment did not

substantially obtain the relief which it sought, (3) such party did not

initiate the litigation but did receive judgment in its favor; or (4) the other

party to the litigation withdrew its claim or action without having

substantially received the relief which it was seeking.

 

f)  No Implied Waiver.  The failure of either party to insist at any

time upon the strict performance of any covenant or agreement  in this Lease or to exercise any right,

power or remedy contained in this Lease shall not be construed as a waiver or a

relinquishment thereof for the future. 

The acceptance by Landlord of late payments shall not be construed as a

waiver by Landlord of the requirement for timely payment nor create a course of

dealing.  No payment by Tenant or

receipt by Landlord of a lesser amount than the monthly installment of Rent due

under this Lease shall be deemed to be other than on account of the earliest

Rent due hereunder, 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.

 

g)  Independent Obligations.  Except as otherwise indicated in this Lease,

the obligation of Tenant to pay Rent hereunder and the obligation of Tenant to

perform Tenant’s other covenants and duties hereunder constitute independent

unconditional obligations to be performed at all times provided for

hereunder.  Except as expressly provided

in this Lease, Tenant waives and relinquishes all rights which Tenant might

have to claim any nature of lien against or withhold, abate or deduct from, or

offset against Rent.

 

h)  Severability.  If any term or provision of this Lease, or

the application thereof to any person or circumstance shall, to any extent, be

invalid or unenforceable, the remainder of this Lease, or the application of

such term or provision to persons or circumstances other than those as to which

it is held invalid or unenforceable, shall not be affected thereby, and each

term and provision of this Lease shall be valid and enforced to the fullest

extent permitted by law.

 

22

 

i)  Governing Law.  This Lease and the rights and obligations of

the parties hereto shall be interpreted, construed, and enforced in accordance

with the laws of the State of Texas. 

This Lease is performable in, and the exclusive venue for any action

brought with respect hereto, shall be in Austin, Travis County, Texas.

 

j)  Force Majeure.  Whenever a period of time is herein

prescribed for the taking of any action by Landlord or Tenant, the party

responsible for taking such action shall not be liable or responsible for, and

there shall be excluded from the computation of such period of time, any delays

due to strikes, riots, acts of God, shortages of labor or materials, war,

governmental laws, regulations or restrictions, or any other cause whatsoever

beyond the control of the party responsible for taking such action; provided,

however, the provisions of this Subsection shall never be construed as allowing

an extension of time with respect to Tenant’s obligation to pay Rent when and

as due under this Lease.

 

k)  Time of Performance.  Except as otherwise expressly provided

herein, time is of the essence under this Lease, including all Exhibits.

 

l)  Transfers by Landlord.  From and after the Commencement Date,

Landlord shall have the right to transfer and assign, in whole or in part, all

its rights and obligations hereunder and in the Complex, and in such event and

upon the assumption by the transferee of the obligations of Landlord hereunder,

Landlord shall be released from any further obligations accruing after the date

of transfer, and Tenant agrees to look solely to such successor in interest of

Landlord for the performance of such obligations.

 

m)  Commissions, Daniel

L. Roth of Southwest Strategies Group (“Landlord’s

Broker”) has represented Landlord in this transaction, and Richard

Skinner has represented Tenant in this transaction (“Tenant’s Broker”). 

Landlord shall be solely responsible for compensating Landlord’s Broker,

and has agreed to pay a brokerage commission to Landlord’s Broker in an amount

equal to 2% of the total Base Rental payable over the term of this Lease.  Such commission will be payable 1⁄2 upon the

execution of this Lease and 1⁄2 upon the Commencement Date.  Tenant shall be solely responsible for compensating

Tenant’s Broker pursuant to a separate commission agreement between Tenant and

Tenant’s Broker.  Tenant and Landlord

acknowledge and agree that Landlord’s Broker and Tenant’s Broker are the only

brokers involved in the procurement, negotiation, or execution of this

Lease.  Landlord and Tenant hereby agree

to defend, indemnify and hold each other harmless against any loss, claim,

expense or liability with respect to any commissions or brokerage fees claimed

on account of the execution and/or renewal of this Lease or the expansion of

the Premises due to any action of the indemnifying party.

 

n)  Effect of Delivery of This

Lease.  Landlord has

delivered a copy of this Lease to Tenant for Tenant’s review only, and the

delivery hereof does not constitute an offer to Tenant or an option.  This Lease shall not be effective until a

copy of this Lease executed by both Landlord and Tenant is delivered by

Landlord to Tenant.

 

o)  No Warranties.  TENANT ACKNOWLEDGES AND AGREES THAT, EXCEPT

AS OTHERWISE EXPRESSLY PROVIDED IN THIS LEASE (INCLUDING THE TENANT

IMPROVEMENTS AGREEMENT), NEITHER LANDLORD NOR ANY LANDLORD RELATED PARTY HAS

MADE ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE

HABITABILITY, MERCHANTABILITY, SUITABILITY, QUALITY, CONDITION OR FITNESS FOR

ANY PARTICULAR PURPOSE WITH REGARD TO THE PREMISES OR THE COMPLEX AND THAT THIS

LEASE (AND ALL EXHIBITS HERETO) CONSTITUTE THE FULL AND FINAL AGREEMENT OF

LANDLORD AND TENANT WITH RESPECT TO THE LEASE OF SPACE IN THE BUILDING BY

TENANT.  EXCEPT FOR ANY WARRANTIES SET

FORTH IN THE TENANT IMPROVEMENTS AGREEMENT OR ELSEWHERE IN THIS LEASE, LANDLORD

HEREBY DISCLAIMS TO THE EXTENT PERMITTED BY LAW, ANY WARRANTIES, EITHER EXPRESS

OR IMPLIED, AS TO HABITABILITY, MERCHANTABILITY, SUITABILITY, QUALITY,

CONDITION OR FITNESS FOR ANY PARTICULAR PURPOSE WITH REGARD TO THE PREMISES OR

THE COMPLEX.  TENANTS TAKING POSSESSION

OF THE PREMISES SHALL BE PRESUMPTIVE EVIDENCE THAT(a) TENANT HAS INSPECTED (OR

HAS CAUSED TO BE INSPECTED) THE PREMISES AND THE COMPLEX, (b) TENANT ACCEPTS

THE PREMISES AND THE COMPLEX AS BEING IN GOOD AND SATISFACTORY CONDITION AND

SUITABLE FOR TENANT’S PURPOSES, AND (c) THE PREMISES AND THE COMPLEX FULLY

COMPLY WITH LANDLORD’S COVENANTS AND OBLIGATIONS HEREUNDER.  NOTWITHSTANDING THE FOREGOING,

 

23

 

TENANT DOES NOT WAIVE THE RIGHT

TO CAUSE LANDLORD TO (1) CORRECT ANY DEFECTIVE WORK PERFORMED BY LANDLORD (OR

ON LANDLORD’S BEHALF) IN ACCORDANCE WITH THE TERMS OF THE TENANT IMPROVEMENTS AGREEMENT,

(2) COMPLETE ANY PUNCHLIST ITEMS IN ACCORDANCE WITH THE TERMS OF THE TENANT

IMPROVEMENTS AGREEMENT OR (3) CORRECT ANY “LATENT DEFECTS” IN OR AFFECTING THE

PREMISES (I.E., DEFECTS NOT REASONABLY DISCOVERABLE PURSUANT TO A REASONABLE

INVESTIGATION OF THE PREMISES).  TENANT

SHALL HAVE THE RIGHT FOR SIX (6) MONTHS FOLLOWING THE COMMENCEMENT DATE TO

PROVIDE LANDLORD WITH WRITTEN NOTICE OF ALLEGED DEFECTS IN THE PERFORMANCE OF

THE WORK OR OF DEFECTS IN OR AFFECTING THE PREMISES.  FAILURE OF TENANT TO DELIVER WRITTEN NOTICE OF DEFECTIVE WORK OR

LATENT DEFECTS WITHIN SUCH SIX (6) MONTH PERIOD SHALL CONSTITUTE A WAIVER OF

ANY FURTHER CLAIMS OF TENANT RELATING TO THE TENANT IMPROVEMENTS AND THE

CONDITION OF THE PREMISES OR THE COMPLEX AS OF THE COMMENCEMENT DATE, SAVE AND

EXCEPT FOR LATENT DEFECTS. 

NOTWITHSTANDING THE FOREGOING, NOTHING CONTAINED IN THIS SUBSECTION

SHALL LIMIT THE RIGHT OF TENANT TO ENFORCE THE REPAIR AND MAINTENANCE

OBLIGATIONS OF LANDLORD UNDER THIS LEASE OR THE OBLIGATIONS OF LANDLORD UPON

CASUALTY OR CONDEMNATION OF THE PREMISES, THE BUILDING AND/OR THE COMPLEX.

 

p)  Merger of Estates.  Except in the event of a default or other

breach committed by Landlord, the voluntary or other surrender of this Lease by

Tenant or a mutual cancellation thereof, shall not constitute a merger; and

upon such surrender or cancellation of this Lease, Landlord shall have the

option, in Landlord’s sole discretion, to (a) either terminate all or any

existing subleases or subtenancies, or (b) assume Tenant’s interest in any or

all subleases or subtenancies.

 

q)  Survival of Indemnities and

Covenants.  Any and all

indemnities of Tenant and Landlord and any and all covenants of Tenant and

Landlord not fully performed on the date of the expiration or termination of this

Lease shall survive such expiration or termination.

 

r)  Headings.  Descriptive headings are for convenience

only and shall not control or affect the meaning or construction of any

provision of this Lease.

 

s)  Entire Agreement; Amendments.  This Lease, including the exhibits and

addenda, if any, listed below, embodies the entire agreement between the

parties hereto with relation to the transaction contemplated hereby, and there

have been and are no covenants, agreements, representations, warranties or restrictions

between the parties hereto other than those specifically set forth herein.  Any amendment or modification of this Lease

must be in writing and signed by Landlord and Tenant.

 

t)  Exhibits.  The following exhibits are attached hereto

and incorporated herein and made a part of this Lease for all purposes;

 

Exhibit “A” - Property

Description

 

Exhibit “B” - Floor Plans

 

Exhibit “C” - Rules and

Regulations

 

Exhibit “D” - Tenant

Improvements Agreement

 

Exhibit “E” - Parking

 

Exhibit “F” - Commencement

Notice

 

Exhibit “G” - Renewal Options

 

u)  Joint and Several Liability.  If Tenant consists of more than one person

or entity, the obligations of such parties under this Lease shall be joint and

several.  Notwithstanding the foregoing,

in no event shall the foregoing sentence be deemed to create any personal

liability hereunder for any member, officer, shareholder, director or employee

of Tenant.

 

v)  Multiple Counterparts.  This Lease may be executed in multiple

counterparts, each of which shall constitute an original instrument, but all of

which shall constitute one and the same agreement.

 

24

 

w)  Right of First Opportunity.  Tenant shall have a right of first

opportunity with respect to those portions of the Building that have been

previously leased and occupied by other tenants and which are either contiguous

with space then being occupied by Tenant or are located on the second floor of

the Building (the “Opportunity Space”) which may be “available for rent” (as

hereinafter defined).  If, during the

portion of the Term commencing on the Commencement Date and ending on the date

which is thirty six (36) months prior to the expiration of the Lease Term

(which expiration date shall be extended once Tenant is irrevocably bound to

lease the Premises for a Renewal Term pursuant to Exhibit G to this Lease), any

portion of the Opportunity Space becomes “available for rent” and Tenant is not

otherwise in default of its obligations hereunder, Landlord shall notify Tenant

of the availability of such Opportunity Space pursuant to a written notice (the

“Opportunity Notice”), which Opportunity Notice shall specify the portion of

the Building that has become “available for rent,” and the Base Rent per square

foot of Net Rentable Area of the Opportunity Space in question which Landlord

has determined to be the Market Rental Rate (as defined in Exhibit G) for such

Opportunity Space as of the date of the applicable Opportunity Notice.  Tenant shall then have ten (10) days following

Tenant’s receipt of such Opportunity Notice to elect, in writing, to attempt to

lease any Opportunity Space, described in an Opportunity Notice, and if Tenant

fails to timely elect to attempt to lease any Opportunity Space, Tenant shall

have no further right with respect to such Opportunity Space pursuant to this

Section.  Notwithstanding the foregoing,

if Landlord leases Opportunity Space described in an Opportunity Notice for

which Tenant has elected not to exercise its right of first opportunity and

such Opportunity Space subsequently becomes “available for rent” during the

period described in the first sentence of this Section, Tenant shall again have

a right of first opportunity with respect to such Opportunity Space pursuant to

this Section.  If Tenant exercises its

right of first opportunity described in this Section with respect to any

Opportunity Space, Tenant and Landlord shall negotiate in good faith in an

effort to agree upon the Base Rental and other material terms on which Tenant

shall Lease such space.  In the event,

however, that Tenant and Landlord cannot agree upon the Base Rental and other

material terms on which Tenant shall Lease such space within ten (10) days

following Landlord’s receipt of Tenant’s notice of election to attempt to lease

the Opportunity Space, then Tenant’s option to acquire that Opportunity Space

shall expire and be of no further effect. 

For purposes of this Section, Opportunity Space shall be considered

“available for rent” if such space has previously been leased by Landlord, and

such space either (a) becomes vacant and/or such space is not subject to any

expansion option, right of first opportunity or right of first refusal granted

to any tenant which has leased space in the Building that was not previously leased

and occupied by any tenant, or (b) the tenant leasing such space or having any

expansion option, right of first opportunity, right of first refusal or

extension option with respect thereto elects not to exercise any such option.  Tenant agrees that Landlord may send an

Opportunity Notice to Tenant for Opportunity Space at least six (6) months

prior to the scheduled expiration of the term of a lease for such space if

either the tenant thereof notifies Landlord of its intent to vacate such space

or there are no remaining extensions options in such lease which may thereafter

be exercisable by the tenant thereof.

 

IN

WITNESS WHEREOF, Landlord and Tenant have executed

this Lease as of the date first above written.

 

	

  LANDLORD:

  
	

  ASC Management, Inc.

  
	

   

  
	

  By:

  	

  /s/ Peter Barlin

  	

   

  
	

   

  	

  PETER BARLIN (OWNER)

  
	

  Address:

  
	

  3724

  Jefferson, Suite 306

  Austin, Texas 78731

  
	

   

  
	

  TENANT:

  
	

  EpicEdge, Inc

  
	

   

  
	

  By:

  	

  /s/ Paul Ruiz

  	

   

  
	

   

  	

  Paul Ruiz, CFO

  
	

   

  	

   

  
	

  Address

  Prior to Commencement Date:

  
	

   

  	

   

  
	

  Austin,

  Texas

  	

   

  	

   

  
	

  Address

  Subsequent to Commencement Date:

  
	

  Premises

  
						

 

25

 

EXHIBIT “A”

 

PROPERTY DESCRIPTION

 

EXHIBIT “B”

 

FLOOR PLANS

 

[The Floor Plans Follow this Cover Page]

 

EXHIBIT “C”

 

RULES AND REGULATIONS

 

1.                    Sidewalks, doorways, vestibules,

halls, stairways, and similar areas within and surrounding the Building shall

not be obstructed nor shall refuse, furniture, boxes or other items be placed

therein by Tenant or its officers, agents, servants, and employees, or used for

any purpose other than ingress and egress to and from the Premises, or for

going from one part of the Building or Complex to another part of the Building

or Complex.  Tenant shall be

responsible, at its sole cost, for the removal of any large boxes or crates not

used in the ordinary course of business. 

Nothing shall be swept or thrown into the corridors, halls, elevator

shafts or stairways.  Canvassing,

soliciting, distributing handbills, advertising and peddling in the Building

and Complex are prohibited.

 

2.                    Plumbing fixtures and appliances

shall be used only for the purpose for which constructed, and no unsuitable

material shall be placed therein.  Any

stoppage or damage to any such fixtures or appliances from misuse on the part

of Tenant or Tenant’s officers, agents, contractors, employees, guests and

customers shall be paid by Tenant, and Landlord shall not in any case be

responsible thereof.

 

3.                    No signs, directories, posters,

advertisements, or notices visible to the public shall be painted or affixed on

or to any of the windows or doors, or in corridors or other parts of the

Building, except in such color, size, and style, and in such places, as shall

be first approved in writing by Landlord (which such approval shall not be

unreasonably withheld, conditioned or delayed.)  Landlord shall have the right to remove all unapproved signs,

directories, posters, advertisements or notices following reasonable prior

notice to Tenant at the expense of Tenant.

 

4.                    Tenant shall not do, or permit

anything to be done in or about the Building or Complex, or bring or keep

anything therein, that will in any way increase the rate of fire or other

insurance on the Building, or on property kept therein or otherwise increase

the possibility of fire or other casualty. 

No cooking, including grills or barbecues, shall be permitted within the

Premises or on any patio adjoining the Premises (other than cooking through the

use of a microwave oven).

 

5.                    Landlord shall have the power to

prescribe the weight and position of heavy equipment or objects which may

overstress any portion of the floor. 

All damage done to the Building by the improper placing of such heavy

items will be repaired at the sole expense of Tenant.  Tenant shall notify the Building manager when safes or other

heavy equipment are to be taken in or out of the Building and the moving shall

be done only after written permission is obtained from Landlord on such

conditions as Landlord shall reasonably require.

 

6.                    Corridor doors, when not in use,

shall be kept closed.

 

7.                    All movement of furniture and large

equipment into and out of the Building shall be scheduled through the Building

manager and conducted outside of Normal Business Hours.  All deliveries must be made via the service

entrance and service elevator, when provided, during Normal Business

Hours.  Any delivery after Normal

Business Hours must be coordinated with the Building manager; provided however,

that Building manager shall, in good faith, endeavor to coordinate such

deliveries in a reasonable manner to accommodate the schedules of Tenant and

such delivery parties.  When conditions

are such that Tenant must dispose of crates, boxes, and other refuse not

typically associated with standard office operation, it will be the

responsibility of Tenant to dispose of same prior to or after Normal Business

Hours.

 

8.                    Tenant and Landlord’s employees

shall cooperate in keeping the Premises, the Building and the Complex in a neat

and clean condition.

 

9.                    Tenant shall not cause or permit

any improper noises in the Building, or allow any unpleasant odors to emanate

from the Premises, or otherwise unreasonably interfere, injure or annoy in any

way other tenants, or persons having business with them.

 

10.              No animals or birds shall be brought into

or kept in or about the Building, except those assisting the disabled.

 

1

 

11.              No machinery of any kind, other than

ordinary office machines such as

copiers, fax machines, personal computers, servers and related mainframe

equipment, electric typewriters and word processing equipment, shall be

operated on the Premises without the prior written consent of Landlord, which

such consent shall not be unreasonably withheld, conditioned or delayed.

 

12.              Save and except for cleaning fluids and

similar materials in types and amounts commonly found in offices, Tenant shall

not use or keep in the Building any flammable or explosive

fluid or substance without the prior written approval of the Building manager,

which such approval shall not be unreasonably withheld, conditioned or delayed.

 

13.              No bicycles, motorcycles or similar vehicles

will be allowed in the Building; provided however, that Landlord, at Landlord’s

sole cost and expense, shall install secure

bicycle/motorcycle racks outside the Building for the storage of such bicycles and/or motorcycles, as required by applicable law, code, or ordinance.

 

14.              No nails, hooks, or screws (other than those

necessary for hanging artwork, diplomas, posterboards, etc. on interior walls)

shall be driven into or inserted in any part of the Building (including doors) except as approved by Landlord (which

such approval shall not be unreasonably withheld, conditioned or delayed.)

 

15.              Landlord has the right to evacuate the

Building in the event of an emergency or catastrophe.  Tenant shall cause its officers, partners and employees to

participate in any fire safety or emergency evacuation drills reasonably

scheduled by Landlord; provided that Landlord first provides Tenant

with reasonable prior written notice

of such drills.

 

16.              No food and/or beverages shall be prepared,

cooked or distributed from the Premises without the

prior written approval of Landlord (which such approval shall not

be unreasonably withheld conditioned or delayed), which approval shall not be

unreasonably withheld or delayed; however, Tenant shall be permitted to install

refrigerators, microwave ovens, coffee machines and vending machines for the

use of its own employees and guests.

 

17.              No additional or replacement locks shall be

placed upon any doors without the prior written approval of Landlord, which

approval shall not be unreasonably withheld, conditioned or delayed. All

necessary keys shall be furnished by Landlord, and the same shall be

surrendered upon termination of this Lease and Tenant shall

then give Landlord an explanation of the combination of all locks on doors or

remaining vaults. No duplicates of keys shall be made by Tenant.

 

18.              Tenant will not locate furnishings or

cabinets  adjacent

to mechanical or electrical access panels or over air conditioning outlets so

as to prevent operating personnel from servicing such units as routine or

emergency access may require.  The

reasonable cost of moving such furnishings for Landlord’s access will be at

Tenant’s expense.  The lighting and air

conditioning equipment of the Building (but not the Premises) will remain

the exclusive charge of personnel designated by Landlord.

 

19.              No portion of the Building shall be used for

the purpose of lodging rooms.

 

20.              Prior written approval, which approval shall not be unreasonably withheld,

conditioned or delayed, must be obtained for installation of window

shades, blinds, drapes or any other window treatment or object that may be

visible from the exterior of the Building or affect the heating and cooling of

the Building.

 

21.              No supplemental heating, air ventilation or air conditioning equipment, including space heaters and

fans, shall be installed or used by Tenant without the prior written consent of

Landlord, which such consent shall not be unreasonably withheld, conditioned

or delayed.

 

22.              No smoking shall be permitted within the

Premises or anywhere else within the Complex other than those smoking areas

reasonably designated by the Building manager.

 

23.              No unattended children shall be allowed

within the Complex.

 

2

 

24.              During other than Normal Business Hours,

Building Access will be limited and be by entry card or key entry together with

Landlord’s reasonable registration procedures. 

Notwithstanding the foregoing, the Building shall be available for

access 24 hours a day, 7 days a week.

 

25.              Landlord reserved the right to rescind any of

these rules and regulations and make such other and further rules and

regulations as in its reasonable judgment shall from time to time be necessary

or advisable for the operation of the Building or the Complex, providing that

such rules and regulations are in writing and uniformly enforced against all

other tenants of the Building.  Such

rules and regulations shall be binding upon Tenant upon delivery to Tenant of

notice thereof in writing.

 

26.              In the event of any inconsistency between

these rules and regulations and the terms of the Lease, the terms of the Lease

shall control.

 

3

 

EXHIBIT “D”

 

TENANT

IMPROVEMENTS AGREEMENT

 

This Tenant Improvements Agreement (the

“Tenant Improvements Agreement”) describes and specifies the rights and

obligations of Landlord and Tenant with respect to the design, construction and

payment for the completion of the Tenant Improvements within the Premises.

 

1)  DEFINITIONS

 

a)  Definitions.  Terms which are defined in the Lease shall have the same meaning

in this Tenant Improvements Agreement. 

Additionally, as used in this Tenant Improvements Agreement, the following

terms (when delineated with initial capital letters) shall have the respective

meaning indicated for each as follows:

 

i)              Base Building

Condition shall mean the condition of the Building, the Parking

Areas, and the exterior landscape that must be substantially completed by

Landlord on or before the Base Condition Deadline (defined below).  Landlord shall furnish Tenant with access to

or a copy of all plans, drawings and specifications concerning the Base Building

Condition (the “Base Building Condition

Plans”) within 10 days following the execution date of this Lease

 

ii)             Base Premises

Condition shall mean the condition of the Premises completed with

the following improvements, all of which improvements shall be completed in the

Premises by Landlord, at Landlord’s sole cost and expense, on or before the

Base Condition Deadline (defined below): (a) outside walls, core walls,

columns, and ground elevator lobby areas completed to Building Standard

condition for public areas; (b) broom clean, unfinished concrete floors

throughout the Premises; (c) Building Standard ceiling grid system and 2 foot

by 2 foot ceiling tile stacked on floor; (d) Building Standard 110 Volt 20 amp.

power supplied to the Building core, at panels in the electrical closet; (e)

men’s and ladies’ restroom facilities with Building Standard finishes located

on each floor on which the Premises are located completed in accordance with

applicable code; (f) exterior main heating, ventilating, and air-conditioning

ducts completed to the mixing boxes; (g) sprinkler risers and main loop on each

floor with sprinkler heads turned up at a ratio of 1 per 225 square feet; (h)

Building Standard smoke detectors in accordance with applicable building codes

and based on an open office floor plan; (i) Building Standard lights stacked on

the floor at a ratio of 1 per 100 usable square feet ; (j) exit lights and fire

alarms; (k) sound insulation at core; (l) full height doors butts and jambs on

all doors; (m) Building Standard stairwells between all floors completed; (n)

Building Standard metal elevator doors painted and elevator frames and jambs

installed and painted; (o) Building Standard passenger elevators sufficient to

provide passenger and freight service; (p) access at core to domestic cold

water, waste and vent systems; (q) two (2) Building Standard drinking fountains

per floor; (r) Building Standard telephone closets and telephone boards

installed one (1) per each floor and finished in sheetrock; and (s) all

interior walls taped and bedded;

 

iii)            Building Standard

means the quality and type of materials, finishes, and workmanship specified by

Landlord for the Building as shown in the Base Building Condition Plans

furnished to Tenant by Landlord within the 10 day period discussed above.

 

iv)           Non-Building Standard

means all materials, finishes, and workmanship used in connection with the

construction and installation of the Tenant Improvements which deviate from

Building Standard in terms of quality or kind.

 

v)            Tenant’s Work

means the work which is supplied, installed, and finished by Landlord’s

Contractor to construct and complete the tenant Improvements to the

Premises.  Tenant’s Work shall not

include the purchase and installation of any voice and data cabling, telephone

or other communications equipment unless specifically included in the Plans and

Specifications; provided, however, Landlord shall, as a part of Tenant’s Work,

shall install a TI and/or DSL data lines and a cable television line to the

external wall of the Premises.

 

vi)           Cost of Tenant’s Work

means the cost of performing Tenant’s Work shall include the cost of preparing

the Space Plan and the Plans and Specifications

 

1

 

and all permit fees;

including, without limitation, any fee payable to the Texas Department of

Licensing and Regulation (or any successor thereto).

 

vii)          Tenant Improvements

shall mean the leasehold improvements to be constructed and/or installed by

Landlord within the Premises in accordance with the provisions of this Tenant

Improvements Agreement, the Space Plans and the Plans and Specifications.

 

viii)         Landlord’s Contractor

means the person or firm from time to time selected by Landlord to construct

and install the Tenant Improvements in the Premises.  Landlord reserves the right to replace the initial Landlord’s

Contractor and/or to engage other contractors if the initial Landlord’s

Contractor fails or refuses to perform the Tenant’s Work.

 

ix)            Landlord’s Manager

shall be the manager of the Building, whose responsibilities include serving as

construction manager in connection with the construction of the Tenant

Improvements.

 

2)  COMPLETION OF BASE BUILDING AND BASE

PREMISES

 

Landlord shall, at Landlord’s sole cost and

expense, and with reasonable diligence, complete the Building to Base Building

Condition and the entire Premises to Base Premises Condition.  Landlord shall not materially deviate from

the Base Building Condition. Plans or the specifications set forth above for

the Base Premises condition without obtaining Tenant’s prior written consent,

which such consent shall not be unreasonably withheld, conditioned or delayed.

 

3)  CONSTRUCTION OF TENANT IMPROVEMENTS

 

a)  Space Plans and Plans and Specifications.  As soon as practicable after the execution

of this Lease, but in any event not more than N/A days from the date of

execution of this Lease, Tenant and Landlord shall agree upon (i) the general

configuration information for the Tenant Improvements to be constructed within

the Premises (such configuration information refereed to herein as the “Space Plans”); and (ii) the detailed

construction information for the Tenant Improvements to be constructed within

the Premises (such detailed construction information referred to herein as the “Plans and Specifications”).  The information to be approved by Landlord

and Tenant (and to be included as part of the Construction Documents, defined

below) shall include, without limitation, the color scheme for the Tenant

Improvements, the types of materials and finishes to be used for the Tenant

Improvements, and the estimated construction schedule for the contemplated

Tenant Improvements.  Following the

mutual approval by Landlord and Tenant of such configuration and construction

detail information, Landlord shall prepare and deliver to Tenant for approval,

written Space Plans, Plans and Specifications and other detailed construction

documents (such documents collectively referred to herein as the “Construction Documents”) which encompass

and memorialize the matters previously agreed to by Landlord and Tenant.  Acting in good faith, Tenant shall approve

or disapprove such Construction Documents within 5 business days after receipt

thereof.  The failure of Tenant to

disapprove such Construction Documents within such 5 day period shall constitute

approval by Tenant.  If Tenant, acting

in good faith, does not approve such Construction Document, Tenant shall

specifically identify its objections and Landlord shall revise such

Construction Documents to address Tenant’s objections and re-submit the same to

Tenant for approval within 5 business days thereafter.  The foregoing process shall be implemented

repeatedly (but Tenant covenants to use its good faith efforts to approve the

Construction Documents not later than the date set froth above in this

paragraph) until, acting in good faith, Tenant shall have approved, in writing,

Landlord’s Construction Documents.

 

b)  Landlord’s Contractor.  Unless otherwise agreed to in writing by

Landlord and Tenant, all Tenant’s Work involved in the construction and

installation of the Tenant Improvements shall be carried out by Landlord’s

Contractor under the sole direction of Landlord’s Manager, who shall serve as

construction manager on behalf of Landlord without cost to Tenant.  Tenant, at Tenant’s sole cost and expense,

shall have the option (but not the obligation) to appoint an architect or

similar professional of Tenant’s choosing to act on Tenant’s behalf (such

professional referred to herein as the “Tenant

Representative”).  Tenant and

Tenant’s designated representatives shall cooperate with Landlord and

Landlord’s Manager to promote the efficient and expeditious completion of each

such Tenant’s Work.

 

2

 

c)  Statement of Cost of Tenant’s Work.

 

i)              Landlord shall be responsible for the payment of all

costs (labor and materials) incurred by Landlord for the performance of all

Tenant’s Work; provided however, that Tenant shall be responsible for the

payment of all costs and expenses of Tenant’s Work attributable to deviations

made by Tenant from the Space Plan and the Plans and Specifications (the “Increased Costs”).

 

ii)             If there are Increased Costs, Landlord may, at its

option, require Tenant to deposit the reasonable estimate of such Increased

Costs with Landlord (each such deposit referred to herein as the “Excess Deposit”) prior to the commencement

of the Tenant’s Work on the Tenant Improvements.  The Excess Deposit shall be applied by Landlord against the costs

reasonably incurred by Landlord which exceed the Tenant Allowance.

 

iii)            Any remaining amounts of the Excess

Deposit held by Landlord shall be refunded to Tenant within thirty (30) days

following the Commencement Date.  If

there is a deficiency in the applicable Excess Deposit, such deficiency shall

be paid by Tenant within thirty (30) days following the Commencement Date.

 

iv)           If Landlord does not require any

Excess Deposit to be made, Landlord shall invoice Tenant for any Increased

Costs incurred by Landlord within sixty (60) days following the Commencement

Date.  Tenant shall pay such excess sums

to Landlord within thirty (30) days after it receives the invoice from

Landlord.

 

v)            Tenant agrees that in the event of

default of payment as required by the terms of this Tenant Improvements

Agreement, Landlord (in addition to all other remedies) shall have the same

rights as in the event of default of payment of Rent under this Lease.  Notwithstanding any provision set forth

herein or in the Lease to the contrary, Landlord shall furnish Tenant with copies

of any and all documentation reasonably requested by Tenant to substantiate any

excess costs incurred by Landlord in the performance of the Tenant’s Work.

 

4)  CHANGE ORDERS

 

a)  Tenant’s Request for

Modification.  At any time

prior to or during the construction of the Tenant Improvements, Tenant shall

have the right to request that changes be made to the Construction Documents by

providing Landlord with a written change order request which details the nature

of the change or changes; provided however, that each such change must receive

the prior written approval of Landlord (which such approval shall not be

unreasonably withheld, conditioned or delayed).  Any proposed changes shall be made as follows;

 

i)              Within two (2) days after Landlord

receives a written change order request from Tenant, Landlord shall either

approve or disapprove of the requested change. 

If Landlord approves the change, Landlord shall, within four (4) days

after receiving Tenant’s request, furnish to Tenant a written estimate of any

increase or decrease in the Cost of Tenant’s Work attributable to the changes

specified in Tenant’s change order request. 

The written estimate must also include any extensions of the Completion

Date which may be necessitated by the changes specified in Tenant’s change

order request.

 

ii)             Within three (3) days after Tenant

receives Landlord’s written estimate, Tenant shall approve or disapprove of the

written estimate.  If Tenant approves

the estimate, Tenant shall sign the estimate and return a copy to Landlord.  Once Tenant executes and delivers a copy of

the estimate to Landlord (i) the estimate shall constitute a change to the

Construction Documents; (ii) the Completion Date will be extended as indicated

on the estimate/change order request; and (iii) the Cost of Tenant’s Work for

the Tenant Improvements will be adjusted in accordance with the increase or

decrease specified on the estimate/change order request.

 

iii)            If Landlord disapproves of a change

request submitted by Tenant, Landlord shall, within four (4) days after

receiving such request, furnish Tenant with a written statement which specifies

the reason(s) for such disapproval.

 

b)  Effectiveness of Change Order.  Unless and until Landlord and Tenant satisfy

the foregoing requirements with respects to changes in the Construction

Documents, Landlord shall not deviate in any manner whatsoever from the

specifications and requirements set for the in such Construction

Documents.  NO CHANGES TO THE

CONSTRUCTION DOCUMENTS MAY BE MADE VERBALLY BY EITHER

 

3

 

PARTY AND NO INCREASE IN THE

COST OF TENANT’S WORK SHALL OCCUR UNDER ANY CIRCUMSTANCES UNLESS AND UNTIL A

CHANGE ORDER HAS BEEN PROPERLY AUTHORIZED AND EXECUTED BY LANDLORD AND TENANT.

 

c)  As Built Plans.  In the event of any approved change in the

Construction Documents, Tenant shall, upon completion of the Tenant’s Work,

furnish Landlord with an accurate “as-built” plan of the Tenant’s Work as

constructed, which plans shall be incorporated in to this Tenant’s Improvement

Agreement by this reference for all intents and purposes when said plans are

fully completed.

 

5)  MISCELLANEOUS

 

a)  Compliance with Laws.  All design, construction and installation

activities conducted or performed by Landlord on behalf of Landlord or on

behalf of Tenant shall conform to the requirements of applicable building,

plumbing and electrical codes, requirements of governmental laws, including the

Americans with Disabilities Act, and the requirements of any authority having jurisdiction

over, or with respect to, such work.

 

b)  Failure to Pay.  The amounts payable by Tenant to Landlord

hereunder shall constitute Rent, and Tenant’s failure to make any such payment

when due shall constitute a default under the Lease, entitling Landlord,

subject to any applicable notice and/or grace periods provided in the Lease, to

exercise any or all of its remedies under the Lease or this Tenant Improvements

Agreement.

 

c)  Performance of Work and Delays.  Following final approval of the Construction

Documents, Landlord shall instruct Landlord’s Contractor to proceed with the

Tenant’s Work.  If a delay shall occur

in the completion of the Tenant’s Work as the result of (a) the fact that any

Tenant’s Work which is non-Building Standard requires a lead time (not due to

Landlord default or error) to obtain or construction time to perform, in excess

of that required for Tenant’s Work which is Building Standard, as reasonably

determined by Landlord and Tenant’s Representative, or (b) any act or omission

of Tenant, its agents or employees or Tenant’s Representative, including any

violation of the provisions of the Lease or any delay in giving authorizations

or approvals pursuant to this Tenant Improvements Agreement, then any such

delay shall be considered a Tenant Delay and will be subject to the terms of

the Lease.

 

d)  Punchlist Items.  Prior to the Commencement Date, Landlord and

Tenant shall conduct a walk-through of the Premises and shall specify in

writing the Punchlist Items which remain to be performed by Landlord.  All Punchlist Items shall be completed by

Landlord on or before the expiration of thirty (30) days following the date on

which Landlord and Tenant conduct each walk-through of the Premises.  Landlord shall have the right to enter the

Premises at reasonable times to complete the Punchlist Items, and entry by

Landlord, its agents, servants, employees or contractors for such purpose shall

not relieve Tenant of any of its obligations under the Lease or impose any

liability on Landlord or its agents, servants, employees or contractors.  Notwithstanding the foregoing, Landlord and

its agents, servants, employees or contractors shall use all reasonable efforts

to minimize disruption or interruption of Tenant’s operations within the

Premises.

 

e)  Notices.  All notices required or contemplated

hereunder shall be given to the parties in the manner specified for giving

notices under the Lease.

 

f)  Non-Compliance of Tenant

Improvements.  If, within

ninety (90) days after the walk-through inspection(s) referenced above under

the Subsection entitled “Punchlist Items”,: Tenant provides Landlord with

written notice that any of the Tenant Improvements do not comply with the

Construction Documents in all material respects (Tenant agreeing, however, to

promptly provide such written notice upon discovery of non-compliance),

Landlord will correct such non-compliance at its own expense.  Any patent non-compliance of which Tenant

has not given Landlord within such ninety (90) day period shall be deemed

waived.

 

4

 

EXHIBIT “E”

 

PARKING

 

Definitions.  The terms which are defined in the Lease

shall have the same meaning in this Parking Exhibit.

 

1)  Unavailability of Spaces. 

If all or a portion of Tenant’s reserved or unreserved parking spaces

(collectively referred to herein as the “Spaces”) become unavailable to Tenant

due to casualty damage, flooding, condemnation or conditions beyond Landlord’s

control, Landlord shall use all reasonable efforts to provide Tenant with

reasonably satisfactory alternative parking arrangements until the use of such

Spaces is restored.  Notwithstanding

anything contained herein to the contrary, Tenant shall have no right to

terminate this Lease by reason of such loss of available parking because of

such conditions.

 

2)  Risk.  All motor

vehicles (including all contents thereof) shall be parked in the Spaces at the

sole risk of Tenant, its employees, agents, invitees and licensees, it being

expressly agreed and understood that Landlord has no duty to insure any of such

motor vehicles (including the contents thereof), and that Landlord is not

responsible for the protection and security of such vehicles.  SAVE AND

EXCEPT FOR LOSSES, INJURY OR DEATH ATTRIBUTABLE IN WHOLE OR IN PART TO THE GROSS

NEGLIGENCE OR INTENTIONAL MISCONDUCT OF LANDLORD, LANDLORD SHALL HAVE NO

LIABILITY WHATSOEVER FOR ANY PROPERTY DAMAGE AND/OR PERSONAL INJURY WHICH MIGHT

OCCUR IN THE PARKING AREAS OR AS A RESULT OF OR IN CONNECTION WITH THE PARKING

OF MOTOR VEHICLES IN ANY OF THE SPACES. 

SAVE AND EXCEPT FOR COSTS, CLAIMS, EXPENSES AND/OR CAUSES OF ACTION

ATTRIBUTABLE IN WHOLE OR IN PART TO THE GROSS NEGLIGENCE OR INTENTIONAL

MISCONDUCT OF LANDLORD, TENANT HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD

LANDLORD HARMLESS FROM AND AGAINST ANY AND ALL COSTS, CLAIMS, EXPENSES, AND/OR

CAUSES OF ACTION WHICH LANDLORD MAY INCUR IN CONNECTION WITH OR ARISING OUT OF

THE USE OF THE SPACES BY TENANT OR ITS EMPLOYEES, AGENTS, SUBTENANTS, LICENSEES

AND VISITORS.

 

3)  Rules and Regulations. 

In its use of the Spaces, Tenant shall follow the following rules and

regulations applicable to the Parking Areas, as the same may be amended or

supplemented from time to time in accordance with the terms of Exhibit “C”.

 

a)  Cars must be parked entirely within the stall lines painted on

the floor;

 

b)  All directional signs and arrows must be observed;

 

c)  The speed limit shall be five (5) miles per hour;

 

d)  Parking is prohibited in areas not striped for parking, aisles,

areas where “no parking” signs are posted, in cross hatched areas and in such

other areas as may be designated by Landlord or Landlord’s agents(s) including,

but not limited to, areas designated as “Visitor Parking” or reserved spaces

not included as part of this Lease.

 

e)  Every user of the Parking Areas shall be responsible for parking

and locking his or her own car;

 

f)  Parking spaces which are designated for small, intermediate or

full-sized card shall be so used.  No

intermediate or full size cars shall be parked in parking spaces limited

compact cars; and

 

g)  No vehicle may be stored on the Parking Areas.  Any vehicle remaining on the Parking Areas

uninterruptedly for five (5) business days shall be deemed to have been stored

on the Parking Areas.

 

4)  Access.  Landlord

shall be entitled to utilize whatever access device Landlord deems necessary

(including but not limited to the issuance of parking stickers or access

cards), to assure that only authorized persons are using the Parking Areas.

 

5)  Parking.  Save and

except for those reserved Spaces assigned for the sole and exclusive use of

Tenant, the Parking Areas of the Complex are provided for the nonexclusive and

common user of Landlord, all tenants of the Building, and their respective

guests and invitees.  Tenant, its employees,

customers and invitees have no right to park in the parking areas designated

and marked for the exclusive use of other tenants.  If any person shall wrongfully park in any of the parking spaces

so designated and marked, Landlord shall be entitled and is hereby authorized

to place wheel lock or other device restricting mobility upon such vehicle or

have any such vehicle towed away, at the sole risk and expense of the vehicle

owner.

 

 

EXHIBIT F

 

FORM OF COMMENCEMENT NOTICE

 

This Commencement Notice is

executed this               day of                             , 200     , by and between ASC Management, Inc., a Texas corporation

(“Landlord”), and E-Comm Networks, LLC,

a Texas limited liability company (“Tenant”), pursuant to the provisions of

that certain Office Lease Agreement (the “Lease”) dated                             , 2000, between

Landlord and Tenant and covering space in the Building having an address of

5508 Highway 290 West, Austin, Texas 78745. 

All terms used herein with the initial letter capitalized shall have the

meaning assigned to such terms in the Lease.

 

W I T N E S S E T H:

 

1)  The Building, the Premises, the Parking Areas, and all other

improvements required to be constructed, finished-out and furnished by Landlord

in accordance with the terms of the Lease have been satisfactorily completed by

the Landlord and accepted by the Tenant except as follows (attach additional

sheet if necessary):.

 

2)  The Tenant Improvements have been delivered to, and accepted by,

the Tenant, subject to the completion of “punch list” items, except as follows

(attach additional sheet if necessary):.

 

3)  The Commencement Date of the Lease is the             day of                        , 200    

, and the Expiration Date is the              day of                         , 200     .

 

4)  The Premises consist of                           square feet of Rentable Area on the                floor of the Building.

 

5)  Payment of Rent shall be made on the fifth (5th)  day

of each month in accordance with the terms and conditions of the Lease at the

following address:

 

ASC Management, Inc.

 

3724 Jefferson, Suite 306

 

Austin, Texas 78731

 

IN WITNESS WHEREOF, this

instrument has been duly executed as of the date first written above.

 

	

  LANDLORD:

  
	

  ASC Management, Inc.

  
	

   

  
	

  By:

  	

   

  	

   

  
	

   

  	

  Manny Farahani, President

  
	

   

  
	

  Address:

  
	

  3724

  Jefferson, Suite 306

  
	

  Austin,

  Texas 78731

  
	

   

  
	

  TENANT:

  
	

  EpicEdge, Inc.

  
	

   

  
	

  By:

  	

   

  	

   

  
	

   

  	

  Jeff Sexton, President and COO

  
	

  Address

  Prior to Commencement Date:

  
	

   

  	

   

  
	

  Austin,

  Texas

  	

   

  	

   

  
	

  Address

  Subsequent to Commencement Date:

  
	

  Premises

  
						

 

1

 

EXHIBIT “G”

 

RENEWAL OPTION

 

1)  Provided that, at the time of Tenant’s exercise of a Renewal

Option (defined below) and upon the commencement of a Renewal Term (defined

below), this Lease is in full force and effect and there is no Event of Default

under this Lease, Tenant shall have the option (each a “Renewal Option”) to renew this Lease for

one (1) additional period of five (5) years (the “Renewal Term”) by notifying Landlord of its election in

writing not less than six (6) months prior to the end of the then current Lease

Term or Renewal Term, as applicable. 

Any such renewal shall include the Premises, as well as any other space

within the Building then being leased by Tenant as of the date of exercise of

such Renewal Option.

 

2)  Any renewal of this Lease will be upon the same terms, covenants,

and conditions applicable during the Lease Term, as provided in the Lease,

except that (a) the Base Rental payable during the Renewal Term shall be an

amount equal to the existing “Market Rental

Rate” (as defined below) as of the date on which such Renewal Term

commences, (b) the defined term “Lease Term” shall be deemed to include any

properly exercised “Renewal Term,” (c) no concessions applicable during the

initial Lease Term (such as construction allowances, moving allowances or free

rent) shall be applicable during a Renewal Term, and (d) Tenant shall possess

no further renewal options after the exercise of the second Renewal Option.  As used herein, the phrase “Market Rental Rate” shall mean the rate of

base rental being charged for similar transactions for comparable space

(including factors such as size, age, location and condition of the premises

and improvements in place therein) within buildings (including, but not limited

to Building) within the Market Area during the previous six (6) months with

tenants of a size and having a financial condition comparable to that of

Tenant, but in no event shall such rate be less than the Base Rental payable

under this Lease for the last year of the then current Lease Term.

 

3)  Within thirty (30) days after receipt of Tenant’s renewal notice

(and any required supporting information), Landlord shall notify Tenant in

writing of the Market Rental Rate and Tenant shall, within the next fifteen

(15) business days following receipt of Landlord’s determination of the Market

Rental Rate, notify Landlord in writing of Tenant’s acceptance or rejection of

Landlord’s determination of the Market Rental Rate.  If Tenant timely notifies Landlord of Tenant’s acceptance of

Landlord’s determination of the Market Rental Rate, this Lease shall be

extended as provided herein and Landlord and Tenant shall enter into an amendment

to this Lease to reflect the extension of the term and changes in Basic Rent in

accordance with this Section.  If (i)

Tenant timely notifies Landlord in writing of Tenant’s rejection of Landlord’s

determination of the Market Rental Rate and does to invoke its rights under

paragraph 4 below, or (ii) Tenant does not notify Landlord in writing of

Tenant’s acceptance or rejection of Landlord’s determination of the Market

Rental Rate within such fifteen (15) business day period, this Lease shall end

on the applicable expiration date.  If

Tenant timely notifies Landlord in writing of Tenant’s rejection of Landlord’s

determination of the Market Rental Rate and does invoke its rights under

paragraph 4 below (such notice, “Tenant’s

Notification”), upon approval by Tenant of the Market Rental Rate determined

in accordance with paragraph 4 below, this Lease shall be extended as provided

herein, and Landlord and Tenant shall enter into an amendment to this Lease to

reflect the extension of the term and changes in Basic Rent, with Market Rental

Rate determined in accordance with Paragraph 4 below.

 

4)  If Tenant timely invokes its rights under this paragraph, the

following shall apply:

 

a)  Landlord and Tenant shall each appoint a disinterested real

estate broker, with at least five (5) years experience, who is familiar with

rental values for properties in the vicinity of the Building.  Each party will make the appointment no

later than five (5) business days after receipt of Tenant’s Notification.  The agreement of the two brokers as to the

Market Rental Rate for the renewal term will be binding upon Landlord and

Tenant.  If the two (2) brokers cannot

agree upon the Market Rental Rate within ten (10) days following their

appointment, they shall, within five (5) days thereafter, agree upon a

disinterested third real estate broker (the “Independent

Broker”) with the qualifications set forth below.  Immediately thereafter, each of the brokers

will submit his best estimate of the Market Rental Rate for the Renewal Term

(together with a written report supporting such estimate) to the Independent

Broker and such broker will choose between the two estimates.  The estimate of Market Rental Rate chosen by

the Independent Broker as the closest to the Market Rental Rate will be binding

upon Landlord and Tenant.  Notification

in writing of this estimate shall be made to Landlord and Tenant within ten

(10) days following the selection of the Independent Broker.

 

1

 

b)  If either Tenant or Landlord fails to appoint a broker or fails

to notify the other party of such appointment within three (3) days after

receipt of notice that the prescribed time for appointing the brokers has

passed, then the other party’s broker will determine the Market Rental Rate for

the Renewal Term (which must be reasonable within the context of the market.)

 

c)  The Independent Broker must be a disinterested, reputable,

qualified real estate broker with at least ten (10) years experience in

commercial real estate leasing and who is familiar with rental values from

properties in the vicinity of the Building.

 

d)  If an Independent Broker must be chosen under the procedure set

out above, he must be chosen on the basis of objectivity and competence, not on

the basis of his relationship with the brokers or the parties to this Lease,

and the brokers shall be so advised. 

Although the brokers will be instructed to attempt in good faith to

agree upon an Independent Broker, if for any reason they cannot agree within the

prescribed time, either Landlord or Tenant may require each broker to

immediately submit his or her top choice for the Independent Broker to the then

highest ranking officer of the Travis County Bar Association who will agree to

help and who has no attorney/client or other significant relationship to either

Landlord or Tenant or the brokers.  Such

officer will have complete discretion to select the most objective and

competent Independent Broker from between the choice of each of the brokers,

and will do so within ten (10) business days after such choices are submitted

to him.

 

e)  Landlord and Tenant shall each bear the expense, if any, of the

broker appointed by it, and the expense of the Independent Broker and of any

office of the Travis County Bar Association who participates in the appraisal

process described above will be shared equally by Landlord and Tenant.

 

5)  If for any reason the Market Rental Rate has not been determined

prior to the commencement of the Renewal Term, then during such Renewal Term

until the Market Rental Rate is determined in accordance with the procedure

described above, Tenant shall pay Basic Monthly Rent at the rate that is 110%

of the rate of the monthly Base Rental which applied prior to such Renewal

Term.  Later, when the Market Rental

Rate for the Renewal Term is determined, an adjustment will be made between

Landlord and Tenant for any overpayment or underpayment of the Market Rental

Rate resulting from the operation of this subparagraph.  Any underpayment of the Market Rental Rate

for the period prior to such determination will be paid with the installment of

monthly Basic Rental next due after such determination, and any overpayment of

the Market Rental Rate shall be applied as on offset by Landlord against

Tenant’s next maturing installments of Basic Monthly Rent.

 

2

 

5508 Highway 290 West

Finish out Standards

 

Electrical:

1).  Main panel in Tenant’s space.

2).  Plugs and switches located according to

Tenant requirements.

3).  Isolated and dedicated circuits per

Tenant-Landlord agreement.

4).  Exit signs and emergency lights according to

code.

 

Lighting:

2’ X 4” lay in

fixtures installed one per 80’ sq.ft.

 

Mechanical:

Heated and

cooled air sufficient to maintain temperature during the summer at 74 to 76

degrees and at a minimum of 70 degrees in the winter.

 

Plumbing:

Common area

restrooms according to code.  One break

room kitchen sink located per Landlord’s plan.

 

Walls:

Metal stud

wall system with 5/8 inch sheetrock at 9’ foot height.

 

Ceilings:

Suspended 2’ X

4’ ceiling grid with standard acoustic tile.

 

Finishes:

Textured

gypsum wallboard with flat paint.

 

Flooring:

Tenant to

select from samples of carpet, tile, and vinyl provided by Landlord.

 

 

Landlord shall bill Tenant and

Tenant shall promptly pay excess utility costs for Leased Premises calculated

as follows:  excess electricity costs

equals 11⁄2 percent over the actual electricity costs allocated to the Leased

Premises in accordance with the old building allocation methodology for each

foot that the average ceiling height exceeds 9 feet.

 

The construction plans and the

building standards list as approved by both parties and attached to the Lease

shall constitute the Tenant finish-out and shall be provided by Landlord at

Landlord’s cost.  Any excess finish-out

or change orders shall be provided by Landlord at cost plus ten percent (10%)

and paid by Tenant.

 

NOTE:  The penalty dates are changed from November and December to

December and January.

 

 

EpicEdge

5508 Highway 290 West

Finish out Standards

 

Electrical:

1).  Main panel in Tenant’s space.

2).  Plugs and switches located according to

Tenant requirements.

3).  Isolated and dedicated circuits per

Tenant-Landlord agreement.

4).  Exit signs and emergency lights according to

code.

 

Lighting:

2’ X 4” lay in

fixtures installed one per 80’ sq.ft. 

(This specification shall serve as the base building standard for the

purpose of establishing allowances).

 

Mechanical:

Heated and

cooled air sufficient to maintain temperature during the summer at 74 to 76

degrees and at a minimum of 70 degrees in the winter.

 

Plumbing:

Common area

restrooms according to code.  One break

room kitchen sink located per Landlord’s plan.

 

Walls:

Metal stud

wall system with 5/8 inch sheetrock at 9’ foot height.

 

Ceilings:

Suspended 2’ X

4’ ceiling grid with standard acoustic tile.

 

Finishes:

Textured

gypsum wallboard with flat paint.

 

Flooring:

Tenant to

select from samples of carpet, tile, and vinyl provided by Landlord.

 

1).  Plans control.

2).  All finished wall, floor, ceiling treatment,

doors & fixtures shall be mutually agreed upon by the parties within 5

working days of the date of execution.

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