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FIRST AMENDMENT TO OFFICE LEASE

Office Lease Agreement

FIRST AMENDMENT TO OFFICE LEASE | Document Parties: Bluestem Pipeline, LLC | CULLEN ALLEN HOLDINGS LP | QUEST MIDSTREAM PARTNERS, LP You are currently viewing:
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Bluestem Pipeline, LLC | CULLEN ALLEN HOLDINGS LP | QUEST MIDSTREAM PARTNERS, LP

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Title: FIRST AMENDMENT TO OFFICE LEASE
Governing Law: Texas     Date: 5/12/2008
Industry: Oil and Gas Operations     Sector: Energy

FIRST AMENDMENT TO OFFICE LEASE, Parties: bluestem pipeline  llc , cullen allen holdings lp , quest midstream partners  lp
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Exhibit 10.6
FIRST AMENDMENT TO OFFICE LEASE
     THIS FIRST AMENDMENT TO OFFICE LEASE ( First Amendment ) is made and entered into this 7th day of February, 2008, by and between Cullen Allen Holdings L.P., a Delaware limited partnership ( “Landlord” ) and Quest Midstream Partners, L.P., a Delaware limited partnership ( “Tenant” ), the successor in interest of Bluestem Pipeline, LLC.
WITNESSETH:
     WHEREAS, Landlord and Bluestem Pipeline, LLC entered into that certain Office Lease dated March 14, 2007 (the “Lease” ) for approximately 3,433 RSF in Suite 3650 (the “Existing Premises” ) on the 36 th Floor of the office building commonly known as Three Allen Center, which is located at 333 Clay Street, Houston, Texas (the “Building” );
     WHEREAS, Tenant succeeded to the interest of Bluestem Pipeline, LLC, as tenant under the Lease;
     WHEREAS, Landlord and Tenant desire to amend and modify the Lease to relocate the Premises to approximately 9,801 RSF on the 40 th Floor of the Building and extend the Term of the Lease, among other things provided for herein.
     NOW, THEREFORE, in and for the premises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree to amend the Lease as follows:
      1.  Defined Terms . Capitalized terms not defined herein shall have the same meanings attributed to such terms under the Lease.
      2.  Relocation of the Premises . Effective on the Relocation Date, defined in Section 5 below, the Premises, as such term is used in the Lease, shall be relocated to approximately 9,801 RSF in Suite 4060 on the 40 th Floor of the Building as shown on Exhibit “A” attached hereto (the “New Premises” ). From and after the Relocation Date, defined below, Landlord and Tenant stipulate and agree that (i) the Premises, as such term is used in the Lease, contains 9,801 RSF (utilizing an add-on factor of 22.5% for this multi-tenant floor), (ii) the Building contains approximately 1,194,719 RSF; and (iii) all references in the Lease referring to the Premises shall mean the New Premises described in this First Amendment. Except as provided in this First Amendment, as of the Relocation Date, all references in the Lease pertaining to the duties and obligations of Tenant which are dependant upon the size of the Premises which are not specifically adjusted by this First Amendment, shall be automatically adjusted to reflect that the Premises, as such term is used in the Lease, contains 9,801 RSF.
      3.  Surrender of the Existing Premises . On or before that date upon the earlier of (i) the date upon which Tenant occupies the New Premises for the purpose of conducting Tenant’s business, (ii) the date which is ten (10) days after the date on which Tenant’s initial
Three Allen Center – Quest Midstream Partners, L.P.
First Amendment

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leasehold improvements are substantially complete within the New Premises or (iii) forty five (45) days after the Relocation Date, as defined in Section 5 below, Tenant shall (a) peaceably vacate and surrender the Existing Premises on the 36 th Floor of the Building to Landlord broom-clean and in the condition required by Section 3.3(a) of the Lease and otherwise in accordance with the applicable provisions of the Lease; (b) remove from the Existing Premises all persons occupying and using same, return to Landlord all suite keys issued to Tenant in connection with its use of the Existing Premises (to the extent such pertain solely to the Existing Premises); and (c) remove from the Existing Premises all personal property owned by Tenant.
      4.  Term . Landlord and Tenant hereby agree that the Term of the Lease is hereby extended for a period of thirty-six (36) months such that the “Expiration Date” shall mean May 6, 2015.
      5.  Relocation Date . Landlord and Tenant hereby agree that another tenant of the Building, Tristone Capital Co. (“Tristone”), is currently leasing the New Premises. Tristone is not currently occupying the New Premises and has expressed its desire to return possession of the New Premises to Landlord. Tristone and Landlord are currently negotiating for a mutually acceptable agreement to return the New Premises to Landlord, so that Landlord may lease the New Premises to Tenant. Landlord shall deliver the New Premises to Tenant (the “Delivery Date” ) for the purpose of constructing Tenant’s Improvements within the New Premises upon the date which Landlord regains possession of the New Premises, but in no event prior to the effective date of Landlord regaining control pursuant to such mutually acceptable agreement between Tristone and Landlord. The “Relocation Date” shall mean the earlier to occur of (i) the date upon which Tenant occupies the New Premises for the purpose of conducting Tenant’s business, or (ii) forty-five (45) days after the Delivery Date.
      6.  Rent .
      A. Existing Premises . Except as expressly provided herein, Tenant’s obligation to pay Base Rent, Additional Rent and other items payable by Tenant pursuant to the terms of the Lease concerning the Existing Premises shall remain unchanged by this First Amendment and Tenant shall continue to pay all such amounts payable under the Lease with respect to the Existing Premises from the Commencement Date to the day immediately prior to the Relocation Date. The parties hereby acknowledge that the Relocation Date may be up to forty-five (45) days prior to the date Tenant actually ceases using the Existing Premises to accommodate the construction of Tenant’s leasehold improvements in the New Premises, provided, however, Tenant shall not be obligated to pay Base Rent and Additional Rent for the Existing Premises (but Tenant shall pay Base Rent and Additional Rent for the New Premises as provided in Section 6B below) for the period of up to forty-five (45) days following the Relocation Date as contemplated herein.
      B.  New Premises :
          (i) Commencing on the Relocation Date, and continuing through the Expiration Date, Tenant shall pay Base Rent for the New Premises in the manner provided in the Lease, in the amounts as follows:
Three Allen Center – Quest Midstream Partners, L.P.
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    Base Rent        
    Per Square Foot   Annual   Monthly
                  Time Period   Of RSF   Base Rent   Base Rent
Relocation Date – 05/06/12
  $ 23.37     $ 229,049.37     $ 19,087.45  
05/07/12 – 05/06/15
  $ 29.25     $ 286,679.25     $ 23,889.94  
          (ii) In addition to Base Rent for the New Premises, Tenant shall pay Additional Rent and all other sums provided in the Lease with respect to the New Premises from the Relocation Date to the Expiration Date, in the manner provided in the Lease. TENANT’S SHARE OF ADDITIONAL RENT IS PROJECTED TO BE $12.16 PER SQUARE FOOT OF RENTABLE AREA PER YEAR FOR CALENDAR YEAR 2008 OR AN ESTIMATED AMOUNT OF $9,931.68 PER MONTH FOR THE NEW PREMISES TO BE PAID IN ADDITION TO BASE RENT. Expenses that vary with occupancy shall be grossed-up to reflect that the Building is 100% occupied and operating and all such services are provided to all tenants.
      C. Tenant’s Share . Tenant’s Share shall remain 0.28735% through the day immediately preceding the Relocation Date. Commencing upon the Relocation Date, Landlord and Tenant agree that “Tenant’s Share”, as such term is used in the Lease, shall be 0.8204%.
      D. Texas Tax Code . The parties acknowledge that the 2006 session of the Texas Legislature revamped the Property Tax Code and the terms and conditions of this Lease shall be liberally construed in order to allow any taxes which previously and historically were charged on an ad valorem basis but converted to another system of taxation (even if it is a system of taxation otherwise excluded under Section 4.2 of the Lease) to be charged as Taxes under the Lease.
      7.  Condition of the New Premises . Landlord and Tenant confirm and agree that Tenant has accepted the New Premises in its current “AS IS” condition and “WITH ALL FAULTS,” except (a) for reasonable “punch list” items identified in writing by Tenant within ten (10) days after the Delivery Date; (b) latent defects discovered and identified by written notice to Landlord within one hundred eighty (180) days after the Delivery Date; and (c) that Landlord agrees to provide to Tenant an allowance of up to $210,695.00 ($15.00 per RSF of 3,433 RSF of the New Premises plus $25.00 per RSF on 6,368 RSF of the New Premises) (the “Allowance” ). The parties hereby agree that the Allowance is to be used solely for the construction of the initial leasehold improvements in the New Premises (above and below ceiling), construction documents as well as architectural, structural, mechanical, electrical, voice/data cabling, plumbing design, accessibility plan review and inspection (Per Texas Architectural Barriers Act), asbestos survey (Per SB-509), graphics and security and otherwise in accordance with the Work Letter attached to the Lease as Exhibit “F”, except that Section 1 (a) of Exhibit “F” is hereby deleted and replaced by the Allowance provided in this First Amendment. Landlord shall only charge a three percent (3%) construction management fee for all work done in the New Premises. Notwithstanding anything to the contrary, Tenant may elect, by giving Landlord prior written notice of Tenant’s election, to apply up to $3.00 per RSF of the New Premises (up to a maximum of $29,403.00) of the unused Allowance granted pursuant to
Three Allen Center – Quest Midstream Partners, L.P.
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this First Amendment, if any, towards subsequent installment(s) of Base Rent next due. EXCEPT AS SPECIFICALLY SET FORTH HEREIN, TENANT FURTHER ACKNOWLEDGES AND AGREES THAT LANDLORD DOES HEREBY DISCLAIM ANY AND ALL WARRANTIES, EXPRESS AND IMPLIED, INCLUDING BUT NOT LIMITED TO THOSE OF FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE EXISTING PREMISES, THE NEW PREMISES AND/OR THE IMPROVEMENTS LOCATED THEREIN.
      8.  Parking . Tenant shall continue to have the parking rights provided pursuant to Exhibit D to the Lease; provided, however, commencing on the Relocation Date and continuing through the Expiration Date, Landlord shall provide to Tenant and Tenant shall contract on a “must-take” basis for a total of ten (10) unreserved parking Permits in the Allen Center Garage and/or the Metropolitan Parking Garage, as designated by Landlord, Tenant shall have no other right to any parking Permits, except as referred to in this First Amendment, although Tenant may lease additional parking spaces at the then current rate on a month-to-month basis, subject to availability. Tenant shall pay the applicable monthly parking rate(s) charged by Landlord from time to time for all parking Permits leased, which are currently $185.00 and $165.00 (including sales tax) for unreserved parking Permits in the Allen Center Garage and the Metropolitan Parking Garage, respectively, and $205.00 to $260.00 (including sales tax) for reserved parking Permits, depending on location. Ten percent (10%) of Tenant’s parking Permit allotment may be taken as reserved parking Permits at a location determined by Landlord within either the Allen Center Garage and/or the Metropolitan Parking Garage. From and after the Relocation Date, no discount shall apply to the monthly parking rates. Parking rates are subject to change.
      9.  Right of First Refusal . Landlord and Tenant hereby agree that Tenant shall continue to have the Right of First Refusal set forth in Exhibit G to the Lease, except that effective upon satisfaction of the contingency set forth in Section 15 hereof, (i) the ROFR Premises, as such term is used in Exhibit G to the Lease, shall mean approximately 10,613 RSF on Floor 40 of the Building (Suites 4050, 4040 and 4010), as shown on Exhibit B attached hereto and Tenant shall no longer have any rights to additional space on Floor 36 of the Building and (ii) Tenant’s obligation to pay Rent for the ROFR Premises shall commence upon the earlier of the substantial completion of Tenant’s leasehold improvements within the ROFR Premises or 90 days following Landlord’s delivery of the ROFR Premises. For purposes of determining Tenant’s priority to the ROFR Premises in relation the rights of other tenants of the Building, Tenant’s right to the ROFR Premises described in this First Amendment shall be the date of the full execution of this First Amendment and the Right of First Refusal is subject and subordinate to (a) the pre-existing expansion option of Devon Energy Production Company, L.P. (who has the right to expand by one (1) full floor in the Building or in Devon Energy Tower at Two Allen Center, as determined by Landlord) and the pre-existing right of first refusal of Tristone Capital, LP (who has a right of first refusal on the entire 40 th Floor of the Building), and the successors and assigns of the foregoing, (b) any and all preferential rights, expansion options, refusal rights pertaining to the ROFR Premises which are granted to a third party tenant whose initial premises was offered to Tenant and which Tenant declined, and (c) the right to renew the lease of any existing tenant of the ROFR Premises (and their successors and assigns), whether by formal renewal option or otherwise. The existing tenants occupying portions of the ROFR Premises are as follows: (1) DnB Nor Bank ASA who occupies approximately 3,050 RSF in Suite 4010 and whose lease currently expires on march 31, 2009, (2) Savoy Capital, Inc. who occupies approximately 3,646 RSF in Suite 4040 and whose lease currently expires on March 31, 2009,
Three Allen Center – Quest Midstream Partners, L.P.
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and (3) Fannie Mae who occupies approximately 3,969 RSF in Suite 4050 and whose lease currently expires on June 30, 2010.
      10.  Early Termination Right . In the event that Tenant (i) desires to further expand the Premises in the future and Landlord, or an affiliate of Landlord, can not or will not accommodate Tenant’s desired expansion within the Building or the office buildings commonly known as One Allen Center, Two Allen Center or any expansions or additional buildings added to the Allen Center complex in the future and (ii) immediately following the Termination Date, as defined in Exhibit “C” attached hereto, Tenant significantly expands Tenant’s operations in the metropolitan area of the City of Houston (i.e, including without limitation the cities reasonably adjacent to the City of Houston, such as the cities of Katy, Sugar Land, Baytown, Pearland, The Woodlands, League City, etc.), in a single office building such that Tenant occupies at least 90% of the total amount of space Tenant then currently leases pursuant to the Lease plus the amount of space Tenant informed Landlord that it desired to expand into within the Allen Center complex, then Tenant shall have an option to terminate the Lease for the entire Premises effective on the last day of the 42 nd full month following the Relocation Date in accordance with the terms and conditions of the Termination Option set forth in Exhibit “C” attached hereto. Tenant’s failure to expand following the Termination Date shall be deemed a material breach of the Lease and in such case, Landlord may retroactively elect to void Tenant’s exercise of the Termination Option, in which case, the Lease shall continue in full force and effect as if the Termination Option was never a part of the Lease and Tenant shall be obligated to pay all amounts due pursuant to the Lease from the Commencement Date through the Expiration Date.
      11.  Expansion Option . Landlord and Tenant hereby acknowledge that the Expansion Option set forth in Exhibit I to the Lease was intended to provide Tenant with the one-time ability to expand the size of the Premises to accommodate Tenant’s growth. Furthermore, the parties acknowledge that the expansion contained in this First Amendment fulfills the parties original intent concerning such Expansion Option. Therefore, Landlord and Tenant hereby agree that effective upon the satisfaction of the contingency set forth in Section 15 of this First Amendment, the Expansion Option set forth in Exhibit I to the Lease is hereby deleted from the Lease in its entirety and shall be of no further force or effect.
      12.  Notices . Article 1 (n) of the Lease is hereby amended to provide a new notice address for Tenant as follows:
         
 
  Tenant:   Quest Midstream Partners, L.P.
 
      Three Allen Center
 
      333 Clay Street, Suite 3650
 
      Houston, Texas 77002
      13.  Brokers . Tenant warrants that it has had no dealings with any real estate broker or agent in connection with the negotiation of this First Amendment, except for Partners Commercial Realty, LP d/b/a NAI Houston ( “Tenant’s Broker” ), and that it knows of no other real estate brokers or agents who are or might be entitled to a commission in connection with this First Amendment. Tenant agrees to indemnify and hold harmless Landlord from and against, and to reimburse Landlord for and with respect to, any liability or claim, whether meritorious or
Three Allen Center – Quest Midstream Partners, L.P.
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not, arising in respect to brokers and/or agents not so named and claiming to represent Tenant. Landlord agrees to indemnify and hold harmless Tenant from and against, and to reimburse Tenant for and with respect to, any liability or claim, whether meritorious or not, arising in respect to brokers and/or agents not so named and claiming to represent Landlord. Landlord has agreed to pay the fees of Tenant’s Broker, but only to the extent that Landlord has agreed to do so pursuant to the separate written agreement with Tenant’s Broker.
      14.  Calculation of Charges . Without waiving any rights to enforce the terms of the Lease, Tenant (i) understands and accepts the methods of calculation for determining charges, amounts and additional rent payable by Tenant under the Lease, as heretofore calculated and as modified hereby and (ii) acknowledges (to the fullest extent permitted by applicable law) that the provisions of the Lease, as modified hereby, satisfy the requirements of Section 93.012 (Assessment of Charges) of the Texas Property Code.
      15.  Contingency . Landlord and Tenant hereby acknowledge that the New Premises are currently occupied by Tristone. Accordingly, Landlord and Tristone must enter into an agreement to return such space to Landlord prior to Landlord’s obligation to deliver the New Premises to Tenant hereunder. Therefore, Landlord and Tenant hereby agree that this First Amendment in its entirety is contingent upon Landlord entering into a definitive agreement with Tristone, who must agree to return such space to Landlord, among other things, as determined in Landlord’s and Tristone’s sole and absolute discretion, prior to the effectiveness of this First Amendment. If this contingency is not satisfied on or before February 29, 2008, then this First Amendment in its entirety shall be deemed null and void, with no further action required by Landlord, and the Lease, without regard to this First Amendment whatsoever, shall continue in full force and effect.
      16.  Miscellaneous .
           (a) Amendment to Lease . Tenant and Landlord acknowledge and agree that the Lease has not been amended or modified in any respect, other than by this First Amendment and there are no other agreements of any kind currently in force and effect between Landlord and Tenant with respect to the Premises or the Building. The term “Lease” shall hereafter mean the Lease as amended by this First Amendment, unless the context requires otherwise.
           (b) Counterparts . This First Amendment may be executed in multiple counterparts, and each counterpart when fully executed and delivered shall constitute an original instrument, and all such multiple counterparts shall constitute but one and the same instrument.
           (c) Entire Agreement . This First Amendment sets forth all covenants, agreements and understandings between Landlord and Tenant with respect to the subject matter hereof and there are no other covenants, conditions or understandings, either written or oral, between the parties hereto except as set forth in this First Amendment.
           (d) Full Force and Effect . Except as expressly amended hereby, all other items and provisions of the Lease, as amended, remain unchanged and continue to be in full force and effect.
Three Allen Center – Quest Midstream Partners, L.P.
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           (e) Conflicts . If any provision of this First Amendment conflict with any of those of the Lease, then the provisions of this First Amendment shall govern.
           (f) Authority of Tenant . Tenant represents and warrants to Landlord that (i) Tenant is duly organized and an existing legal entity, in good standing in the State of Texas, (ii) Tenant has full right and authority to execute, deliver and perform this First Amendment, (iii) the person executing this First Amendment was authorized to do so and (iv) upon request of Landlord, such person will deliver to Landlord satisfactory evidence of his or her authority to execute this First Amendment on behalf of Tenant.
           (g) Successors and Assigns . This First Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
           (h) Good Faith and Fair Dealing . Landlord and Tenant agree to exercise their rights and remedies, and perform their respective obligations hereunder reasonably and in good faith.
     This First Amendment is executed as of the date first written above.
                         
“LANDLORD”       “TENANT”    
 
                       
Cullen Allen Holdings, L.P.,
a Delaware limited partnership
      Quest Midstream Partners, L.P.,
a Delaware limited partnership
   
 
                       
By:   Texas RE GP, LLC,                
    a Delaware limited liability company       By:   /s/ Michael Forbau    
 
                       
 
              Name:   Michael Forbau    
 
                       
 
              Title:   Vice President    
 
                       
 
  By:   /s/ Paul H. Layne                
 
                       
 
      Paul H. Layne,                
 
      Executive Vice President,                
 
      Head of Houston Region                
 
                       
 
  By:   /s/ Steven M. Lukingbeal                
 
                       
 
      Steven M. Lukingbeal,                
 
      Vice President,                
 
      Regional Counsel                
Three Allen Center – Quest Midstream Partners, L.P.
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EXHIBIT A
FLOOR PLAN OF THE NEW PREMISES
[Floor Plan Diagram]
A-1

 


 
EXHIBIT B
FLOOR PLAN OF ROFR PREMISES
[Floor Plan Diagram]
B-1

 


 
EXHIBIT C
TERMINATION RIGHT
1. Subject to and upon the terms, provisions and conditions set forth in this Exhibit, Tenant, but not any assignee or subtenant thereof, shall have the one time right (the “Termination Right” ) to terminate the Lease as to the entire Premises, effective on the last day of the forty-second (42 nd ) full calendar month following the Relocation Date (the “Termination Date” ). In order to exercise the Termination Right, Tenant must give Landlord written notice of Tenant’s exercise of the Termination Right at least six (6) months prior to the Termination Date, and pay the Termination Fee, as hereinafter defined, within thirty (30) days of the date of such notice. If Tenant fails to give notice of exercise of the Termination Right prior to the required notice date, the Termination Right shall be deemed waived and of no further force and effect. If Tenant gives timely notice of exercise of the Termination Right but fails to timely pay the Termination Fee to Landlord when due, Landlord may at its option either (i) deem the Termination Right waived and of no further force and effect or (ii) enforce the termination of the Lease, effective as of the Termination Date, and Tenant’s obligation to pay the Termination Fee. The provisions of this paragraph shall survive the expiration or termination of this Lease.
2. Notwithstanding the foregoing, Landlord shall have the option to revoke and nullify any purported exercise of the Termination Right by Tenant if at the time of exercise or thereafter Tenant is in monetary default under the Lease.
3. The “Termination Fee” shall be an amount equal to the sum of the following:
  A.   the unamortized portion of the Lease Costs (as hereinafter defined) as of the Termination Date; and
 
  B.   one (1) monthly installment of Base Rent and Additional Rent.
      “Lease Costs” shall mean all unamortized actual construction costs, architectural and engineering fees, leasing commissions (both internal and external), cabling design and installation costs, Excused Rent and other costs, if any, incurred by Landlord in connection with Tenant’s lease of the Premises, specifically including, but not limited to, the Allowance granted to Tenant. For purposes of calculating Lease Costs, each component or item of Lease Costs will be deemed to be amortized in equal monthly installments over the remaining Lease term(s) applicable to the space(s) in question at the rate of ten percent (10%) per annum beginning on the date that such component or item of Lease Costs was actually paid by Landlord.
C-1

 


 
Cullen Allen Holdings, L.P.
(“Landlord”)
Bluestem Pipeline, LLC
(“Tenant”)
Suite #3650
Three Allen Center
Office Lease

 


 
Table of Contents
             
1.
  BASIC LEASE PROVISIONS     1  
2.
  DEFINITIONS     2  
3.
  TERM     3  
4.
  RENT     5  
5.
  USE & OCCUPANCY     8  
6.
  SERVICES & UTILITIES     8  
7.
  REPAIRS     11  
8.
  ALTERATIONS     11  
9.
  INSURANCE     12  
10.
  DAMAGE OR DESTRUCTION     14  
11.
  INDEMNITY     16  
12.
  CONDEMNATION     16  
13.
  TENANT TRANSFERS     16  
14.
  LANDLORD TRANSFERS     19  
15.
  DEFAULT AND REMEDIES     20  
16.
  SECURITY DEPOSIT     22  
17.
  MISCELLANEOUS     23  
 i 

 


 
List of Exhibits
         
EXHIBIT A - LOCATION OF PREMISES
    A-1  
EXHIBIT B - RULES & REGULATIONS
    B-1  
EXHIBIT C - LEGAL DESCRIPTION OF LAND
    C-1  
EXHIBIT D - PARKING
    D-1  
EXHIBIT E - NOTICE OF LEASE TERM
    E-1  
EXHIBIT F - WORK LETTER
    F-1  
EXHIBIT G - RIGHT OF FIRST REFUSAL
    G-1  
EXHIBIT H - RENEWAL OPTION
    H-1  
EXHIBIT I - EXPANSION OPTION
    I-1  

ii


 
Lease
     Landlord and Tenant enter into this Lease (“Lease”) as of the Execution Date on the following terms, covenants, conditions and provisions:
1.   BASIC LEASE PROVISIONS
1.1   Basic Lease Definitions. In this Lease, the following defined terms have the meanings indicated.
 
(a)   Execution Date: March 14, 2007.
 
(b)   Landlord: Cullen Allen Holdings, L.P., a Delaware limited partnership.
 
(c)   Tenant: Bluestem Pipeline, LLC, a Delaware limited liability company.
 
(d)   Building: Three Allen Center, 333 Clay Street, Houston, Texas 77002, deemed to contain: 1,194,719 RSF.
 
(e)   Premises: Suite #3650, located on the Thirty-Sixth (36 th ) floor of the Building (as identified on Exhibit “A” ) and deemed to contain: 3,433 RSF.
 
(f)   Use: General non-governmental administrative office use consistent with that of a first-class office building.
 
(g)   Scheduled Term: 60 Months.
 
(h)   Scheduled Commencement Date: April 1, 2007.
 
(i)   Base Rent: The following amounts payable in accordance with Article 4:
                             
Beginning   Ending   Annual Base Rent     Annual     Monthly  
month   Month   per RSF     Base Rent     Base Rent  
1
  60   $ 18.50     $ 63,510.50     $ 5,292.54  
      This is a “Net” Lease as opposed to a “Gross” Lease, which will require Tenant to pay an additional amount for Taxes and Expenses, PROJECTED TO BE $10.97 PER RSF PER YEAR FOR CALENDAR YEAR 2007 OR AN ESTIMATED AMOUNT OF $3,138.33 PER MONTH TO BE PAID IN ADDITION TO BASE RENT.
  (j)   [Intentionally Omitted].
 
  (k)   Tenant’s Share: 0.28735%.
 
  (l)   Tenant’s Trade Name: Quest Midstream.
 
  (m)   Security Deposit: Letter of Credit, initially in the amount of $124,607.03, subject to annual decreases pursuant to Article 16.
 
  (n)   Notice Addresses: For each party, the following address(es):
     
For Landlord:
  For Tenant:
 
   
Cullen Allen Holdings, L.P.
  Bluestem Pipeline, LLC
c/o BrookField Properties
  Three Allen Center
1200 Smith Street, Suite 1200
  333 Clay Street, Suite 3650
Houston, Texas 77002
  Houston, Texas 77002
Attention: Property Manager
   
Two Allen Center – Bluestem Pipeline, LLC
Lease

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For Landlord:
  For Tenant:
with a copy to:
  With a copy to:
 
Cullen Allen Holdings, L.P.
  The Staubach Company
c/o Brookfield Properties
  Riverway, Suite 2500
1200 Smith Street, Suite 1200
  Houston, Texas 77056
Houston, Texas 77002
Attn: Executive Vice President
  Attn: Lucian Bukowski
  (o)   Parking Permits: 3 “must-take” and up to 2 additional permits, pursuant to Exhibit “D”.
 
  (p)   Brokers: The Staubach Company. Landlord will pay Broker a commission, but only to the extent that Landlord has agreed to do so pursuant to a separate agreement between Landlord and Broker.
         
(q)
  Liability Limit:   $5,000,000 for any one accident or occurrence.
 
       
(r)
  Business Hours:   From 7:00 a.m. to 7:00 p.m. on Monday through Friday and from 7:00 a.m. to 1:00 p.m. on Saturday, excepting: New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day, and other legal holidays commonly observed in similar class office buildings in the locale of the Building (“Holidays”).
  (s)   Allowance: up to $25.00 per RSF of the Premises (up to a total of $85,825.00), pursuant to Exhibit “F”.
 
  (t)   Right of First Refusal in accordance with Exhibit “G”.
 
  (u)   Renewal Option in accordance with Exhibit “H”.
 
  (v)   Expansion Option in accordance with Exhibit “I”.
2. DEFINITIONS
      2.1 Project. The Land, Building, Common Areas and Premises (as defined in §1 and below) are collectively referred to as the “Project.”
      2.2 Land. “Land” means the real property on which the Building and Common Areas are located, including easements and other rights that benefit or encumber the real property. Landlord’s interest in the Land may be in fee or a leasehold. The Land may be expanded or reduced after the Execution Date. A legal description of the Land is attached hereto as Exhibit “C”.
      2.3 Base Building. “Base Building” means Building Structure and Mechanical Systems, collectively, defined as follows:
  (a)   Building Structure . “Building Structure” means the structural components in the Building, including foundations, floor and ceiling slabs, roofs, exterior walls, exterior glass and mullions, columns, beams, shafts and emergency stairwells. The Building Structure excludes the Leasehold Improvements (and similar improvements to other premises) and the Mechanical Systems.
 
  (b)   Mechanical Systems . “Mechanical Systems” means the mechanical, electronic, electric, physical or informational systems generally serving the Building or Common Areas, including the sprinkler, plumbing, heating, ventilating, air conditioning, lighting, communications, security, drainage, sewage, waste disposal, vertical transportation, fire/life safely systems.
      2.4 Common Areas. Tenant will have a non-exclusive right to use the Common Areas subject to the terms of this Lease. “Common Areas” means those interior and exterior common and public areas on the Land and in the Building (and appurtenant easements) designated by Landlord for the non-exclusive use by Tenant in common with Landlord, other tenants and occupants, and their employees, agents and invitees. The Common Areas includes parking facilities serving the Building that are owned or leased by Landlord.
      2.5 Premises. Landlord leases to Tenant the Premises subject to the terms of this Lease. Except as provided elsewhere in this Lease, by taking possession of the Premises Tenant accepts the Premises in its “as is”
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condition and with all faults, and the Premises is deemed in good order, condition, and repair except (a) for reasonable “punch list” items identified in writing by Tenant within ten (10) days after Landlord tenders possession of the Premises; (b) latent defects discovered and identified by written notice to Landlord within one hundred eighty (180) days after Landlord tenders possession of the Premises; and (c) that Landlord will construct the Leasehold Improvements to the Premises, if any, as described in the Work Letter, attached hereto as Exhibit “F”. The Premises includes the Leasehold Improvements and excludes certain areas, facilities and systems, as follows:
  (a)   Leasehold Improvements . “Leasehold Improvements” means all non-structural improvements in the Premises or exclusively serving the Premises, and any structural improvements to the Building made to accommodate Tenant’s particular use of the Premises. The Leasehold Improvements may exist in the Premises as of the Execution Date, or be installed by Landlord or Tenant under this Lease at the cost of either party. The Leasehold Improvements include: (1) interior walls and partitions (including those surrounding structural columns entirely or partly within the Premises); (2) the interior one-half of walls that separate the Premises from adjacent areas designated for leasing; (3) the interior drywall on exterior structural walls, and walls that separate the Premises from the Common Areas; (4) stairways and stairwells connecting parts of the Premises on different floors, except those required for emergency exiting;(5) the frames, casements, doors, windows and openings installed in or on the improvements described in (1-4), or that provide entry/exit to/from the Premises; (6) all hardware, fixtures, cabinetry, railings, paneling, woodwork and finishes in the Premises or that are installed in or on the improvements described in (1-5); (7) if any part of the Premises is on the ground floor, the ground floor exterior windows (including mullious, frames and glass); (8) integrated ceiling systems (including grid, panels and lighting); (9) carpeting and other floor finishes; (10) kitchen, rest room, lavatory or other similar facilities that exclusively serve the Premises (including plumbing fixtures, toilets, sinks and built-in appliances); and (11) the sprinkler, plumbing, heating, ventilating, air conditioning, lighting, communications, security, drainage, sewage, waste disposal, vertical transportation, fire/life safety, and other mechanical, electronic, physical or informational systems that exclusively serve the Premises, including the parts of each system that are connected to the Mechanical Systems from the common point of distribution for each system to and throughout the Premises.
 
  (b)   Exclusions from the Premises . The Premises does not include: (1) any areas above the finished ceiling or integrated ceiling systems, or below the finished floor coverings that are not part of the Leasehold Improvements, (2) janitor’s closets, (3) stairways and stairwells to be used for emergency exiting or as Common Areas, (4) rooms for Mechanical Systems or connection of telecommunications equipment, (5) vertical transportation shafts, (6) vertical or horizontal shafts, risers, chases, flues or ducts, and (7) any easements or rights to natural light, air or view. Notwithstanding the forgoing provisions, Tenant’s telecommunications and data cabling and related equipment in any area shall remain the Tenant’s personal property and Tenant, at Tenant’s sole cost and expense, shall remove such by the Expiration Date and repair all damage caused by such removal.
      2.6 Building Standard. “Building Standard” means the minimum or exclusive type, brand, quality or quantity of materials Landlord reasonably designates for use in the Building from time to time.
      2.7 Tenant’s Personal Property. “Tenant’s Personal Property” means those trade fixtures, furnishings, equipment, work product, inventory, stock-in-trade and other personal property of Tenant that are not permanently affixed to the Project in a way that they become a part of the Project and will not, if removed, impair the value of the Leasehold Improvements that Tenant is required to deliver to Landlord at the end of the Term under §3.3.
      2.8 Rentable Square Feet (“RSF”). The defined term“RSF” means Rentable Square Feet. RSF includes the actual number of usable square feet times a multiple to account for certain areas in the Building and the leased floors which benefit the Premises. The following add-on factor applies to the floor on which the Premises are located: 24.64%.
3. TERM
      3.1 Term. “Term” means the period that begins on the Commencement Date and ends on the Expiration Date, subject to renewal, extension or earlier termination as may be further provided in this Lease. “Month” means a full calendar month of the Term.
     (a)  Commencement Date . The “Commencement Date” means the date that is the earlier of:
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  (1)   The day that Tenant first conducts business in any part of the Premises; or
 
  (2)   The later of:
  (A)   The Scheduled Commencement Date, or
 
  (B)   The day that Landlord tenders the Premises to Tenant with Landlord’s Work substantially complete or that date that Landlord would have tendered possession of the Premises but for delay caused by Tenant.
  (b)   Expiration Date . “Expiration Date” means the date that is the last day of the Scheduled Term (plus that many additional days required for the Expiration Date to be the last day of a calendar month) after the Commencement Date.
 
  (c)   Early Occupancy . Tenant may not enter the Premises for any purpose until Landlord tenders possession of the Premises to Tenant. If Tenant conducts business in any part of the Premises before the Scheduled Commencement Date, Tenant will pay Base Rent for that period at the rate for the first Month that Base Rent is due, without discount or excuse.
 
  (d)   Late Occupancy . If Landlord fails to lender possession of the Premises to Tenant by the Scheduled Commencement Date due to delay caused by Tenant or Force Majeure, Landlord will not be in default of this Lease.
 
  (e)   Confirmation of Term . Landlord shall notify Tenant of the Commencement Date using a Notice of Lease Term (“NLT”) in the form attached to this lease as Exhibit “E”. If the information set forth in the NLT is correct, Tenant shall execute and deliver to Landlord the NLT within 10 business days after its receipt, but Tenant’s failure to do so will not reduce Tenant’s obligations or Landlord’s rights under this Lease.
      3.2 Holdover. If Tenant keeps possession of the Premises after the Expiration Date (or earlier termination of this Lease) without Landlord’s prior written consent (a “Holdover”), (which may be withheld in its sole discretion), then in addition to the remedies available elsewhere under this Lease or by law, Tenant will be a tenant-at-sufferance and must comply with all of Tenant’s obligations under this Lease, except that for each Month of Holdover Tenant will pay 150% of the monthly Base Rent payable at the end of the Term, without proration for any partial Month of Holdover. Tenant shall indemnify and defend Landlord from and against all claims and damages, both consequential and direct, that Landlord suffers due to Tenant’s failure to return possession of the Premises to Landlord at the end of the Term. Landlord’s deposit of Tenant’s Holdover payment will not constitute Landlord’s consent to a Holdover, or create or renew any tenancy.
      3.3 Condition on Expiration.
(a) Return of the Premises . At the end of the Term, Tenant will return possession of the Premises to Landlord vacant, free of Tenant’s Personal Property, in broom-clean condition, and with all Leasehold Improvements in good working order and repair (excepting ordinary wear and tear), except that Landlord may require Tenant, by notice of at least 30 days before the expiration of the Term, to remove any Tenant’s Wiring, or item of Leasehold Improvements or Alterations, and restore the Premises damaged by removal, if either:
  (1)   When Landlord approved the installation of the improvement, Landlord reserved in writing Landlord’s right to have Tenant remove the improvement at the end of the Term; or
 
  (2)   Tenant failed to obtain Landlord’s written consent under §8.1(a) for an item of Alterations to become part of the Premises.
(b) Correction by Landlord . If Tenant fails to return possession of the Premises to Landlord in the condition required under (a), then Tenant shall reimburse Landlord for the reasonable costs incurred by Landlord to put the Premises in the condition required under (a), plus Landlord’s standard administration fee.
(c) Abandoned Property . Tenant’s Personal Property left behind in the Premises after the end of the Term will be considered abandoned and Landlord may move, store, retain or dispose of these items at Tenant’s cost, including Landlord’s standard administration fee. As used in this Lease, “Landlord’s standard administration” fee is fifteen percent (15%).
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4. RENT
      4.1 Base Rent. Tenant shall prepay 1 month’s installment of Base Rent by the Execution Date, to be applied against Base Rent first due under this Lease. During the Term, Tenant shall pay all other Base Rent in advance, in monthly installments, by the 1 st of each calendar month. Base Rent for any partial month will be prorated.
      4.2 Additional Rent. Tenant’s obligation to pay Taxes and Expenses under this §4.2 is referred to in this Lease as “Additional Rent.”
  (a)   Taxes . For each full or partial calendar year during the Term, Tenant shall pay as in the manner described below the Tenant’s Share of the amount of the Taxes. “Taxes” means the total costs incurred by Landlord for: (1) real and personal properly taxes and assessments (including ad valorem and special assessments) levied on the Project and Landlord’s personal property used in connection with the Project; (2) taxes on rents or other income derived from the Building; (3) capital and place- of -business taxes; (4) taxes, assessments or fees in lieu of the taxes described in (1-3); and (5) the reasonable costs incurred to reduce the taxes described in (1-4). Taxes excludes net income taxes and taxes paid under §4.3. The parties acknowledge that the 2006 session of the Texas Legislature revamped the Property Tax Code and the terms and conditions of this Lease shall be liberally construed in order to allow any taxes which previously and historically were charged on an ad valorem basis but converted to another system of taxation (even if it is a system of taxation otherwise excluded under this Section 4.2) to be charged as a Taxes under the Lease.
 
  (b)   Expenses . For each full or partial calendar year during the Term, Tenant shall pay in the manner described below the Tenant’s Share of the Expenses. “Expenses” means the total costs incurred by Landlord to operate, manage, administer, equip, secure, protect, repair, replace, refurbish, clean, maintain, decorate and inspect the Project, including a market fee to manage the Project of no more than four percent (4%) of the gross revenue of the Project (Landlord currently charges three percent (3%). Expenses that vary with occupancy will be calculated as if the Building is 100% occupied and operating and all such services are provided to all tenants. The estimated Expenses and Taxes for calendar year 2007 are $10.97 per RSF which would mean that Tenant would pay a monthly amount of $3,138.33 as Tenant’s Share of Taxes and Expenses over and above in addition to the monthly Base Rent of $5,292.54 indicated above.
  (1)   Expenses include:
  (A)   Standard Services provided under §6,1 ;
 
  (B)   Repairs and maintenance performed under §7.2;
 
  (C)   The cost of casualty, liability, terrorism, fidelity, rent and all other insurance (including deductibles paid) for the Project;
 
  (D)   Wages, salaries and benefits of personnel to the extent they render services to the Project;
 
  (E)   Costs of operating the Project management office (including reasonable rent);
 
  (F)   The Project’s fair pro rata share of certain landscaping and related expenses to maintain Antioch Park and similarly situated adjoining green space;
 
  (G)   Amortization installments of costs required to be capitalized and incurred:
  (i)   To comply with insurance requirements or laws (“Mandated Expenses”);
 
  (ii)   That are reasonably calculated to reduce other Expenses or the rate of increase in other Expenses (“Cost-Saving Expenses”); or
 
  (iii)   That are reasonably calculated to improve or maintain the safety, health or access of Project occupants, and otherwise maintain the quality, appearance, or integrity of the Project (“Quality Expenses”).
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  (2)   Expenses exclude:
  (A)   Taxes;
 
  (B)   Mortgage payments (principal and interest), and ground lease rent;
 
  (C)   Commissions, advertising costs, attorney’s fees and costs of improvements in connection with leasing space in the Building;
 
  (D)   Costs reimbursed by insurance proceeds or tenants of the Building (other than as Additional Rent);
 
  (E)   Depreciation;
 
  (F)   Except for the costs identified in §4.2(b)(l)(G), any capitalized costs;
 
  (G)   Collection costs and legal fees paid in disputes with tenants;
 
  (H)   Costs to maintain and operate the entity that is Landlord (as opposed to operation and maintenance of the Project);
 
  (I)   Installments of costs amortized under subsection (c) of this §4.2;
 
  (J)   Costs related to monitoring, testing, removal, cleaning, abatement or containment of any significant quantities of hazardous materials from the Building;
 
  (K)   Costs to correct material defects in the construction of the Building, except to the extent such are provided in Section 4.2(b)(1)(B);
 
  (L)   Costs incurred to add or delete floors from the Common Areas;
 
  (M)   Any fines, penalties, late charges or liquidated damages and related interest imposed on Landlord to the extent such are not incurred due to the actions of Tenant, which shall be paid in full by Tenant;
 
  (N)   Cash charitable contributions in excess of $10,000 per year; and
 
  (T)   Reserves to the extent such do not pertain to regular and recurring costs.
  (c)   Amortization and Accounting Principles .
  (1)   Each item of Mandated Expenses and Quality Expenses will be fully amortized in equal annual installments, with interest on the principal balance at the Amortization Rate, over the number of years that Landlord reasonably projects the item of Expenses will be productive for its intended use, without replacement, but properly repaired and maintained.
 
  (2)   Each item of Cost-Saving Expenses will be fully amortized in equal annual installments, with interest on the principal balance at the Amortization Rate, over the number of years that Landlord reasonably estimates for the present value of the projected savings in Expenses (discounted at the Amortization Rate) to equal the cost.
 
  (3)   Any item of Expenses of significant cost that is not required to be capitalized but is unexpected or does not typically recur may, in Landlord’s discretion, be amortized in equal annual installments, with interest on the principal balance at the Amortization Rate, over a number of years reasonably determined by Landlord in substantial accordance with GAAP.
 
  (4)   “Amortization Rate” means the prime rate of Citibank, N.A. (or a comparable financial institution selected by Landlord), plus 3%.
 
  (5)   Landlord will otherwise use sound real estate accounting and management principles, consistently applied, to determine Additional Rent. To the extent applicable, Landlord will use GAAP to the extent such is commonly applied.
  (d)   Estimates . Landlord will reasonably estimate Additional Rent each calendar year. Tenant will pay the estimated Additional Rent in advance, in monthly installments, by the first day of each month, until the estimate is revised by Landlord. Landlord may reasonably revise its estimate during a calendar
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      year and Tenant will pay the monthly installments after the revision based on the revised estimate. The aggregate estimates of Additional Rent paid by Tenant in a calendar year is the “Estimated Additional Rent.”
 
  (e)   Settlement . As soon as practical after the end of each calendar year that Additional Rent is payable, Landlord will give Tenant a statement of the actual Additional Rent for the calendar year. The statement of Additional Rent is conclusive, binds Tenant, and Tenant waives all rights to contest the statement, except for items of Additional Rent to which Tenant objects by notice to Landlord given within 90 days after receipt of Landlord’s statement; however, Tenant’s objection will not relieve Tenant from its obligation to pay Additional Rent pending resolution of any objection. If the Additional Rent exceeds the Estimated Additional Rent for the calendar year, then Tenant shall pay the underpayment to Landlord in a lump sum as Rent within 30 days after receipt of Landlord’s statement of Additional Rent. If the Estimated Additional Rent exceeds the Additional Rent for the calendar year, then Landlord shall credit the overpayment against Rent next due. If an overpayment of Additional Rent is outstanding upon the expiration or sooner termination of this Lease, Landlord shall refund such overpayment to Tenant within 30 days after the date that Landlord completes its statement of the actual Additional Rent for the applicable calendar year.
 
  (f)   Landlord shall maintain complete and accurate books and records detailing all Expenses and Taxes for the immediately preceding calendar year. Landlord may keep the books and records at the Building or at Landlord’s regional office. If Tenant objects to items in Landlord’s statement of actual Additional Rent for the calendar year, then Tenant and/or its representatives (which shall be members of one of the “Big Four” accounting firms and shall not be compensated on a contingency fee basis for this audit) shall have the right, at Tenant’s expense, to examine (but not to copy), and audit during normal business hours, Landlord’s books and records pertaining to the objected to items in the Expenses and Taxes for the preceding calendar year to enable Tenant to verify the accuracy thereof. The results of such audit shall be certified by a “Big Four” accounting firm, at Tenant’s expense. Landlord shall reasonably cooperate with Tenant in any such examination. Any overpayment by Tenant shall be credited to Tenant and any undercharge shall be paid by Tenant as soon as reasonably possible. Failure by Tenant to contest or dispute the allocation of Additional Rent within ninety (90) days after the date of the statement of the actual Additional Rent for the calendar year is submitted to Tenant (a) is deemed a waiver of the applicable audit or dispute right and any right to contest the Additional Rent charges (undercharges or overcharges) for the applicable Lease year; (b) is deemed acceptance of the Additional Rent charges as submitted to and reviewed by Tenant; and (c) CONSTITUTES FULL RELEASE OF LANDLORD BY TENANT FOR ANY OVERCHARGES of Additional Rent more than one year old. The foregoing provisions shall survive termination or expiration of the Lease. Tenant shall not be entitled to conduct such an audit if Tenant is otherwise in default under this Lease, beyond any applicable notice and cure provision.
      4.3 Other Taxes. Upon demand, Tenant will reimburse Landlord for taxes paid by Landlord on (a) Tenant’s Personal Property, (b) Rent, (c) Tenant’s occupancy of the Premises, or (d) this Lease. If Tenant cannot lawfully reimburse Landlord for these taxes, then the Base Rent will be increased to yield to Landlord the same amount after these taxes were imposed as Landlord would have received before these taxes were imposed.
      4.4 Terms of Payment. “Rent” means all amounts payable by Tenant under this Lease and the exhibits, including Base Rent and Additional Rent. If a time for payment of an item of Rent is not specified in this Lease, then Tenant will pay Rent within 30 days after receipt of Landlord’s statement or invoice. Unless otherwise provided in this Lease, Tenant shall pay Rent without notice, demand, deduction, abatement or setoff, except as otherwise specifically set forth herein, in lawful U.S. currency. Landlord will send invoices payable by Tenant to Tenant; however, neither Landlord’s failure to send an invoice nor Tenant’s failure to receive an invoice for Base Rent (and installments of Estimated Additional Rent) will relieve Tenant of its obligation to timely pay Base Rent (and installments of Estimated Additional Rent). Each partial payment by Tenant shall be deemed a payment on account. No endorsement or statement on any check or any accompanying letter shall constitute an accord and satisfaction, affect Landlord’s right to collect the full amount due, or require Landlord to apply any payment to other than Rent earliest due. No payment by Tenant to Landlord will be deemed to extend the Term or render any notice, pending suit or judgment ineffective. By notice to the other, each party may establish or change its billing address.
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      4.5 Late Payment. If Landlord does not receive all or part of any item of Rent when due, then Tenant shall pay Landlord a “Late Charge” of 5% of the overdue amount. Tenant agrees that the Late Charge is not a penalty, and will compensate Landlord for costs not contemplated under this Lease that are impracticable or extremely difficult to fix. Landlord’s acceptance of a Late Charge does not waive Tenant’s default.
      4.6 [Intentionally omitted].
      4.7 Waiver of Tenant Rights and Benefits Under Section 93.012, Texas Property Code. Landlord and Tenant are knowledgeable and experienced in commercial leasing transactions and agree that the provisions of this Lease for determining all charges, amounts, and Additional Rent payable by Tenant (including, without limitation, payments under this Section 4), are commercially reasonable and valid even though such methods may not state a precise mathematical formula for determining such charges. Accordingly, Tenant voluntarily and knowingly waives all rights and benefits of a tenant under Section 93.012, Texas Property Code, as such section now exists or as may be hereafter amended or succeeded. Nothing contained in this waiver however is intended to limit or impair Tenant’s audit rights granted hereunder, or except as otherwise expressly set forth in this Lease to the contrary, any other remedy available to Tenant under the Lease or law or in equity (other than Section 93.012, Texas Property Code). In addition, nothing in this §4.7 shall constitute a waiver of Tenant’s right to dispute and/or initiate a claim disputing Landlord’s methods of calculating or determining Expenses and/or Landlord’s calculation or determination of Additional Rent.
5. USE & OCCUPANCY
      5.1 Use. Tenant shall use and occupy the Premises only for the Use. Landlord does not represent or warrant that the Project is suitable for the conduct of Tenant’s particular business.
      5.2 Compliance with Laws and Directives.
  (a)   Tenant’s Compliance . Subject to the remaining terms of this Lease, Tenant shall comply at Tenant’s expense with all directives of Landlord’s insurers or laws concerning:
  (1)   The Leasehold Improvements and Alterations,
 
  (2)   Tenant’s use or occupancy of the Premises,
 
  (3)   Tenant’s employer/employee obligations,
 
  (4)   A condition created by Tenant,
 
  (5)   Tenant’s failure to comply with this Lease,
 
  (6)   The negligence of Tenant, the Tenant Parties, or Tenant’s Affiliates or contractors, or
 
  (7)   Any chemical wastes, contaminants, pollutants or substances that are hazardous, toxic, infectious, flammable or dangerous, or regulated by any local, state or federal statute, rule, regulation or ordinance for the protection of health or the environment (“Hazardous Materials”) that are introduced to the Project, handled or disposed by Tenant or its Affiliates, or any of their contractors.
  (b)   Landlord’s Compliance . The cost of Landlord’s compliance with directives or orders of Landlord’s insurers or governing authorities concerning the Project, other than those that are Tenant’s obligation under subsection (a), will be included in Expenses to the extent allowed under §4.2.
      5.3 Occupancy. Tenant shall not interfere with Building services or other tenants’ rights to quietly enjoy their respective premises or the Common Areas. Tenant shall not make or continue nuisance, including any objectionable odor, noise, fire hazard, vibration, or wireless or electromagnetic transmission, Tenant will not maintain any Leasehold Improvements or use the Premises in a way that increases the cost of insurance required under §9.2, or requires insurance in addition to the coverage required under §9.2.
6. SERVICES & UTILITIES
      6.1 Standard Services.
  (a)   Standard Services Defined . “Standard Services” means:
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  (1)   Healing, ventilation and air-conditioning (“HVAC”) during Business Hours as reasonably required to comfortably use (in a temperature range that is consistent for a first-class office building) and occupy the Premises and interior Common Areas;
 
  (2)   Tempered water from the public utility for use in Common Area restrooms;
 
  (3)   Janitorial services to the Premises and interior Common Areas 5 days a week, except Holidays, to the extent reasonably determined by Landlord in a manner consistent with standards for first class office buildings in the Houston Central Business District;
 
  (4)   Access to the Premises (by at least 1 passenger elevator if not on the ground floor);
 
  (5)   Labor and materials (to the extent such are Building Standard) to replace fluorescent tubes and ballasts in Building Standard light fixtures in the Premises; and
 
  (6)   Electricity from Landlord’s selected provider(s) for Common Areas lighting, Building Standard light fixtures in the Premises and to convenience outlets in the Premises for the operation of customary quantities and types of office equipment, however, the connected load will not exceed an average of 3.4 watts per rentable square foot of the Premises during Business Hours on an annual basis, subject to the following:
  (i)   The electrical facilities in the Building available for Tenant’s use are (i) 277/480 volts, 3 phase, for large equipment loads and fluorescent lighting; and (ii) 120/208 volts, 3 phase, for small equipment loads and incandescent lighting.
 
  (ii)   Landlord will provide the capacity in the Building’s electrical riser to supply (i) two (2) watts per square foot of Usable Area at 277/480 volts and (ii) four (4) watts per square foot of Usable Area at 120/208 volts. Collectively, Tenant shall not have a connected electrical design load greater than an average of six (6) watts per square foot of Usable Area within the Premises (“Building Standard Capacity”).
 
  (iii)   The electrical cost component of Expenses is calculated on the basis of .34 kilowatt-hours per square foot of Usable Area in the Premises per month (“Building Standard Usage”). Tenant shall pay to Landlord, upon demand, the cost of the consumption of electricity in excess of the Building Standard Usage at rates determined by Landlord which shall be in accordance with any applicable laws, but not to exceed the cost of such consumption if Tenant were billed directly from the local utility provider. Landlord may, at its option, upon not less than thirty (30) days’ prior written notice to Tenant, discontinue the availability of any electrical service in excess of the Standard Building Capacity or Standard Building Usage. If Landlord gives any such notice, Tenant will contract directly with the applicable public utility for the supplying of such electrical service to the Premises.
 
  (iv)   All of Tenant’s electrical usage, with the exception of one (1) 277 volt, 2x4 Building Standard fluorescent light fixture per 80 square feet of Usable Area, shall be metered by a Building Standard consumption meter.
 
  (v)   Tenant shall pay for all costs of meters, submeters, wiring, risers, transformers, electrical panels, air conditioning and other items necessary to accommodate Tenant’s electrical design loads and capacities, which may be charged to the Allowance, if any. Notwithstanding the foregoing, Landlord may refuse to allow installation and withhold consent for Tenant’s installation of any meters, submeters, wiring, risers, transformers, electrical panels, or air conditioning and other items if, in Landlord’s sole judgment, the same are not reasonable or would cause damage or injury to the Building or the Premises or cause or create a dangerous or hazardous condition or entail excessive or unreasonable alterations or repairs to the Building or the Premises, or would interfere with or create or constitute a disturbance to other tenants or occupants of the Building.
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  (b)   Standard Services Provided . During the Term, Landlord shall provide the Standard Services to Tenant. The cost of the Standard Services is included in Expenses. Landlord is not responsible for any inability to provide Standard Services due to either: the concentration of personnel or equipment in the Premises; or Tenant’s use of equipment in the Premises that is not customary office equipment, has special cooling requirements, or generates excessive heat, as determined in Landlord’s reasonable discretion.
 
  (c)   Impermissible REIT Income . For so long as the entity specified in §1.1(b) (or an affiliate or REIT- qualified successor in interest of such entity) shall be the Landlord under this Lease, any services required to be provided to Tenant under this Lease that may result in the actual or constructive receipt by Landlord (or any member of Landlord) of impermissible tenant service income as described in Section 856(d)(7) of the Internal Revenue Code shall be performed by Brookfield Properties Tenant Services LLC, a Delaware limited liability company (or its designated successors or assigns).
      6.2 Additional Services. Unless Tenant obtains Landlord’s prior written consent, Tenant will not use utilities or services in excess of the Standard Services. If Landlord so consents, Landlord may provide utilities and services in excess of the Standard Services subject to the following:
  (a)   HVAC . If Tenant requests HVAC service to the Premises during non-Business Hours, Tenant will pay as Rent Landlord’s scheduled rate for this service, which are currently $35.00 per hour, per air handler.
 
  (b)   Lighting . Landlord will furnish both Building Standard and non-Building Standard lamps, bulbs, ballasts and starters that are part of the Leasehold Improvements. Landlord will install non-Building Standard items at Landlord’s scheduled rate for this service.
 
  (c)   Other Utilities and Services . Tenant will pay as Rent the cost of utilities or services (other than HVAC and lighting addressed in (a) and (b)) either used by Tenant or provided at Tenant’s request in excess of that provided as part of the Standard Services, plus Landlord’s standard administration fee. Tenant’s excess consumption may be reasonably estimated by Landlord unless either Landlord requires or Tenant elects to install Building Standard meters to measure Tenant’s consumption.
 
  (d)   Additional Systems and Metering . Landlord may require Tenant, at Tenant’s expense, to upgrade or modify existing Mechanical Systems serving the Premises or the Leasehold Improvements to the extent necessary to meet Tenant’s excess requirements (including installation of Building Standard meters to measure the same).
      6.3 Alternate Electrical Billing. Landlord may elect to separately meter Tenant’s total consumption of electricity in the Premises, including lighting and convenience outlets. If Landlord so elects, then Landlord shall notify Tenant of such election and in lieu of including consumption of electricity of tenanted premises in Expenses, Tenant shall pay to Landlord as Rent the cost of Tenant’s electricity consumption, plus (i) Landlord’s standard administration fee and (ii) electrical expenses allocable to Common Area and other non-leasable RSF in the Building (provided that to the extent such amount is included in Expenses, it shall not be separately billed).
      6.4 Telecommunication Services. Tenant will contract directly with third party providers and will be solely responsible for paying for all telephone, data transmission, video and other telecommunication services (“Telecommunications Services”) subject to the following:
  (a)   Providers . Each Telecommunication Services provider that does not already provide service to the Building shall be subject to Landlord’s approval, which Landlord may withhold in Landlord’s sole discretion. Without liability to Tenant, the license of any Telecommunication Services provider servicing the Building may be terminated under the terms of the license, or not renewed upon the expiration of the license.
 
  (b)   Tenant’s Wiring . Landlord may, in its sole discretion, designate the location of all wires, cables, fibers, equipment, and connections (“Tenant’s Wiring”) for Tenant’s Telecommunication Services, restrict and control access to telephone cabinets and rooms. Tenant may not use or access the Base Building, Common Areas or roof for Tenant’s Wiring without Landlord’s prior written consent, which Landlord may withhold in Landlord’s sole discretion, or for which Landlord may charge a fee determined by Landlord.
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  (c)   No Beneficiaries . This §6.4 is solely for Tenant’s benefit, and no one else shall be considered beneficiary of these provisions.
      6.5 Special Circumstances. Without breaching this Lease, Landlord may interrupt, limit or discontinue any utility or services Landlord provides under this Article 6 under any of the following circumstances: (a) in an emergency; (b) to comply with laws or to conform to voluntary government or industry guidelines; and (c) to repair or maintain the Project under §7.2; or (d) modify, renovate or improve the Project under §8.2, subject to the terms of Section 6.6 below. Landlord shall use its commercially reasonable efforts to minimize the impact of such interruption, limitation or discontinuance on Tenant, and shall restore such utility or service as soon as reasonably possible under the circumstances.
      6.6 Interruption of Services. Except for the circumstances set forth in Section 6.5(a), (b) and (c), if there is an interruption of the services described in 6.1 (a) (1), (2), (4) and/or (6) (the “Essential Services”) and such interruption is not the result of negligence or willful misconduct of Tenant, its agents or employees, and if such interruption continues for a period of five (5) consecutive business days or thirty (30) business days in any one (1) twelve month period after receipt by Landlord of written notice from Tenant, Tenant shall be entitled to an abatement of rent from the sixth (6 th ) consecutive day with respect to that portion of the Premises rendered unusable, and which Tenant does not actually use, by Tenant as a result of such interruption, until such time as such Essential Services are restored.
7. REPAIRS
      7.1 Tenant’s Repairs. Except as provided in Articles 10 and 12, during the Term Tenant shall, at Tenant’s cost, repair, maintain and replace, if necessary, the Leasehold Improvements and keep the Premises in good order, condition and repair. Tenant’s work under this §7.1 must be (a) approved by Landlord before commencement, (b) supervised by Landlord at Tenant’s cost, If Landlord so reasonably requires, and (c) performed in a first-class manner with materials of at least Building Standard.
      7.2 Landlord’s Repairs. Except as provided in Articles 10 and 12, during the Term Landlord shall repair, maintain and replace, if necessary, all parts of the Project that are not Tenant’s responsibility under §7.1 or any other tenant’s responsibility under their respective lease, and otherwise keep the Project in good order and condition according to the standards prevailing for comparable first-class office buildings in the area in which the Building is located. Except in an emergency, Landlord will use commercially reasonable efforts to avoid disrupting Tenant’s business in performing Landlord’s duties under this §7.2. Tenant may not repair or maintain the Project on Landlord’s behalf or offset any Rent for any repair or maintenance of the Project that is undertaken by Tenant.
8. ALTERATIONS
      8.1 Alterations by Tenant. “Alterations” means any modifications, additions or improvements to the Premises or Leasehold Improvements made by Tenant during the Term, including modifications to the Base Building or Common Areas required by law as a condition of performing the work. Alterations are made at Tenant’s sole cost and expense, subject to the following:
  (a)   Consent Required . All Alterations require Landlord’s prior written consent, except for cosmetic changes solely within the Premises, which do not affect the Base Building or Common Areas and which cost less than $5,000, in the aggregate over a six (6) month period. If a Design Problem exists, Landlord may withhold its consent in Landlord’s sole discretion; otherwise, Landlord will not unreasonably withhold, condition or delay its consent. Unless Tenant obtains Landlord’s prior written consent to the Alterations becoming part of the Premises to be tendered to Landlord on termination of the Lease, Landlord may require Tenant to remove Alterations and restore the Premises under §3.3 upon termination of this Lease.
 
  (b)   Design Problem Defined . “Design Problem” means a condition that results, or will result, from work proposed, being performed or that has been completed that either:
  (1)   Does not comply with laws;
 
  (2)   Does not meet or exceed the Building Standard;
 
  (3)   Exceeds the capacity, adversely affects, is incompatible with, or impairs Landlord’s ability to maintain, operate, alter, modify or improve the Base Building;
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  (4)   Affects the exterior appearance of the Building or Common Areas;
 
  (5)   Violates any agreement affecting the Project;
 
  (6)   Violates any insurance regulations or standards for a fire-resistive office building; or
 
  (7)   Locates any equipment, Tenant’s Wiring or Tenant’s Personal Property on the roof of the Building, in Common Areas or in telecommunication or electrical closets.
  (c)   Performance of Alterations . Alterations shall be performed by Tenant in a good and workman-like manner according to plans and specifications approved by Landlord. All Alterations shall comply with law and insurance requirements. Landlord’s designated contractors must perform Alterations affecting the Base Building or Mechanical Systems; and, all other work will be performed by qualified contractors that meet Landlord’s insurance requirements and are otherwise reasonably approved by Landlord. Promptly after completing Alterations, Tenant will deliver to Landlord “as-built” CADD plans, proof of payment, a copy of the recorded notice of completion, and all unconditional lien releases.
 
  (d)   Bonding . If requested by Landlord, before commencing Alterations Tenant shall at Tenant’s cost obtain bonds, or deposit with Landlord other security reasonably acceptable to Landlord for the payment and completion of the Alterations. These bonds or other security shall be in form and amount acceptable to Landlord, not to exceed 125% of the cost of completion.
 
  (e)   Insurance . Throughout the performance of Alterations, Tenant shall carry worker’s compensation insurance in statutory limits, “all risk” Builders Risk coverage and general liability insurance, with completed operation endorsement, for any occurrence in or about the Project, under which Landlord and its agent and any Encumbrance holder whose name and address have been furnished to Tenant shall be named as parties insured, in such limits as Landlord may reasonably require, with insurers reasonably satisfactory to Landlord. Tenant shall furnish Landlord with evidence that such insurance is in effect at or before the commencement of Alterations and, on request, at reasonable intervals thereafter during the continuance of Alterations.
 
  (f)   Alterations Fee . Tenant shall pay Landlord as Rent 5% of the total construction costs of the Alterations to cover review of Tenant’s plans and construction coordination by its own employees. In addition, Tenant shall reimburse Landlord for the actual cost that Landlord reasonably incurs to have engineers, architects or other professional consultants review Tenant’s plans and work in progress, or inspect the completed Alterations.
      8.2 Alterations by Landlord. Landlord may modify, renovate or improve the Land, Building, and Common Areas (but not the Premises) as Landlord deems appropriate, provided Landlord uses commercially reasonable efforts to avoid disrupting Tenant’s business.
      8.3 Liens and Disputes. Tenant will keep title to the Land and Building free of any liens concerning the Leasehold Improvements, Alterations, or Tenant’s Personal Property, and will promptly take whatever action is required to have any of these liens released and removed of record (including, as necessary, posting a bond or other deposit). To the extent legally permitted, each contract and subcontract for Alterations will provide that no lien attaches to or may be claimed against the Project. Tenant will indemnify Landlord for costs that Landlord reasonably incurs because of Tenant’s violation of this §8.3.
9.   INSURANCE
      9.1 Tenant’s Insurance.
  (a)   Tenant’s Coverage . Before taking possession of the Premises for any purpose (including construction of Tenant Improvements, if any) and during the Term, Tenant will provide and keep in force the following coverage:
 
      (1) “all risk” property insurance (including coverage for terrorism), with a deductible reasonably acceptable to Landlord, covering all present and future Leasehold Improvements and Tenant’s Personal Property to a limit of not less than the full replacement cost thereof, and
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      (2) commercial general liability insurance, including a contractual liability endorsement, and personal injury liability coverage, in respect of the Premises and the conduct or operation of business therein, with Landlord and its managing agent, if any, and each Encumbrance holder, defined in Section 14.2, whose name and address shall have been furnished to Tenant, as additional insureds, with limits of not less than $5,000,000 combined single limit for bodily injury and property damage liability in any one occurrence, and
 
      (3) [Intentionally Omitted], and
 
      (4) when Alterations are in process, the insurance specified in Section 8.1 (c).
 
  (b)   Insurers and Terms . The limits of such insurance shall not limit the liability of Tenant. Tenant shall deliver to Landlord and any additional insureds, at least 10 days prior to the Commencement Date, such fully paid-for policies or certificates of insurance, in form reasonably satisfactory to Landlord issued by the insurance company or its authorized agent. Tenant shall procure and pay for renewals of such insurance from time to time before the expiration thereof, and Tenant shall deliver to Landlord and any additional insureds such renewal policy or a certificate thereof at least 30 days before the expiration of any existing policy. All such policies shall be issued by companies of recognized responsibility licensed to do business in Texas and rated by Best’s Insurance Reports or any successor publication of comparable standing as A/VIII or better or the then equivalent of such rating, and all such policies shall contain a provision whereby the same cannot be cancelled, allowed to lapse or modified unless Landlord and any additional insureds are given at least 30 days’ prior written notice of such cancellation, lapse or modification. The proceeds of policies providing “all risk” property insurance of Leasehold Improvements and Tenant’s Personal Property shall be payable to Landlord, Tenant and each Encumbrance holder, defined in Section 14.2, as their interests may appear. Tenant shall cooperate with Landlord in connection with the collection of any insurance monies that may be due in the event of loss and Tenant shall execute and deliver to Landlord such proofs of loss and other instruments which may be required to recover any such insurance monies. Landlord may from time to time require that the amount of the insurance to be maintained by Tenant under this Section 14.2 be increased by reasonable amounts under the circumstances, so that the amount thereof adequately protects Landlord’s interest.
 
  (c)   Proof of Insurance. Tenant shall provide Landlord with certificates of insurance or other reasonable proof that the coverage required under (a) is in effect. Tenant will provide reasonable proof at least 30 days before any policy expires that the expiring policy will be replaced.
 
  (d)   Compliance with Insurance Standards .
 
      (1) Tenant shall not violate, or permit the violation of, any condition imposed by any insurance policy then issued in respect of the Project. Tenant shall not do or permit anything to be done, or keep or permit anything to be kept, in the Premises which would subject Landlord or any Encumbrance holder, defined in Section 14.2, to any liability or responsibility for personal injury or death or property damage, or which would increase any insurance rate in respect of the Project over the rate which would otherwise then be in effect or which would result in insurance companies of good standing refusing to insure the Project in amounts reasonably satisfactory to Landlord, or which would result in the ca

 
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