Lease Agreement

LEASE AGREEMENT


THIS Lease Agreement ("Lease") is made this 12th day of July, 1999 between HARVARD PROPERTY (333 SAM HOUSTON) L.P. called "Landlord", and Air Nexus, Inc. hereinafter called "Tenant".


LEASE OF PREMISES


In consideration of the mutual covenants herein, Landlord hereby leases to Tenant and Tenant hereby hires from Landlord, subject to all of the terms and conditions hereinafter set forth, those certain premises (hereinafter called the "Premises") set forth in Items 1 and 2 of the Basic Lease Provisions and shown on the drawings attached hereto and made a part hereof as "Exhibit A-1". The office building in which the Premises are located, the land on which the office building is situated (described in the attached "Exhibit A-2"), and all improvements and appurtenances to the building and the land, are referred to collectively herein as the "Building".


BASIC LEASE PROVISIONS


The following provisions set forth various basic terms of this Lease and are sometimes referred to as the "Basic Lease Provisions".


1. Building: 333 North Belt
Address: 333 N. Sam Houston Parkway E., Houston, Texas


2. Floor(s): 8th


Suite(s): 870


Net Rentable Area: 4,199 RSF


3. a. Total Net Rentable Area of Building: 205,645


b. Tenant's Building Expense Percentage 0.0200296


c. Base Year: 1999


4. a. Basic Rent Square Foot


1st Year $16.00


2nd Year $16.50


3rd Year $17.00


4th Year $17.50


5th Year $18.00


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b. Basic Monthly Rent:


1st Year $5,492.00


2nd Year $5,663.63


3rd Year $5,835.25


4th Year $6,006.88


5th Year $6,178.50


c. Basic Yearly Rent Rent:


1st Year $65,904.00


2nd Year $67,963.50


3rd Year $70,023.00


4th Year $72,082.50


5th Year $74,142.00


5. Term: 5 Years


6. Target Commencement Date: October 1, 1999


7. Security Deposit: $5,492


8. Brokers: S.E. Covington & Company, Inc.


Address: 5120 Woodway, Suite 10007
Houston, Texas 77056


9. Addresses for notices due under this Lease:


Tenant:
Air Nexus, Inc.
333 N. Sam Houston Parkway E.
Suite 820
Houston, Texas 77060


Landlord:
Harvard Property (333 Sam Houston) L.P.
333 N. Sam Houston Parkway, Suite 333
Houston, Texas 77060


Special Provisions:


10. Tenant, at Tenant's sole expense has the right to install a small
satellite dish on the building roof provided that no additional electricity
is needed. In the event additional electricity is needed, Tenant, at
Tenant's sole cost and expense will install a sub-meter that will be read
by the building engineers on a monthly basis. The additional cost of
electricity will be billed back to the Tenant.


11. Landlord has received written notice from the Tenant that S.E.
Covington & Company is to represent Air Nexus, Inc. in this transaction.
Landlord agrees to pay a four (4%) commission divided into two equal
payments. The first payment will be considered earned and due within ten
(10) days after the execution of the lease or other agreement including
extension of lease, renewal, or expansion of the Premises. The second
payment will be earned and due ten (10) days after Tenant occupies the
Premises.


12. Lessee shall have the option to renew the lease for one additional five
(5) year period provided that Tenant provide Landlord with a one hundred
and eighty (180) day written notice of the Tenant's intent to renew. If
the Option to Renew is exercised, the Base Rent during the Option Term
shall be ninety-five percent rate (95%) of the then prevailing market
rental.


13. Effective October 1, 1999, provided that Tenant is not in default of the
Lease, remains financially responsible, and subject to all the terms and
conditions provided by the Lease, all Amendments or Modifications made
to the Lease; Tenant shall have a one time First Right of Refusal on any
space as it becomes available on the eighth (8th) floor subject to any
existing options or First Right of Refusals. If any such space has an
offer made by a Prospective Tenant that is included in the First Right
of Refusal on the eighth, Landlord shall propose that same offer to
Tenant and Tenant shall be given a one time First Right of Refusal.
Landlord shall notify Tenant in writing either by a hand delivered copy
that is signed with a receipt date or by certified, return receipt
requested mail. Tenant shall have the responsibility to respond in
writing to Landlord within five (5) business days thereafter. If Tenant
fails to respond or responds that it does not wish to exercise its Right
of First Refusal, the Landlord shall have the right to lease the space
stated in Tenant's notice to said third party.


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14. Landlord agrees to allow Tenant a one-time Cancellation Option at the
end of thirty-six (36) months in the event Landlord is unable to provide
expansion space with the following provisions:


a. Tenant is willing to execute a binding agreement,
b. Tenant will expand the Premises then under lease by more than
twenty-five percent (25%), at the then market rate, within ninety
days of written notice.
c. In the event Tenant elects to cancel the Lease, Tenant will be
required to reimburse Landlord for all unamortized costs Landlord
funded for leasehold improvements costs, leasing commissions and
architectural fees.


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15. TABLE OF CONTENTS


Description


Article 1 - Term and Possession Article 2 - Rent Article 3 - Security Deposit Article 4 - Occupancy and Use Article 5 - Utilities and Service Article 6 - Repairs, Maintenance, Alterations and Improvements Article 7 - Insurance, Fire and Casualty Article 8 - Condemnation Article 9 - Liens Article 10 - Taxes on Tenant's Property Article 11 - Subletting and Assigning Article 12 - Transfers by Landlord Article 13 - Default Article 14 - Notices Article 15 - Miscellaneous Provisions


Guaranty


Exhibit A-1 - Floor Plan Exhibit A-2 - Description of Land Exhibit B - Area Definitions Exhibit C - Acceptance of Premises Memorandum Exhibit D - Agreement for Construction Exhibit E - Rules and Regulations


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ARTICLE 1


TERM AND POSSESSION


Section 1.01. Commencement and Expiration. The Term of this Lease shall be the period of time specified in Item 5 of the Basic Lease Provisions, adjusted as provided below. Subject to and upon the terms and conditions set forth herein or in any Exhibit or Addendum hereto, the Term shall commence on the Target Commencement Date shown in Item 6 of the Basic Lease Provisions, or such earlier date as Tenant takes possession or commences use of the Premises for any purpose. The Term of this Lease shall expire, without notice to Tenant, on the Expiration Date. If the Lease commences on any day other than the first day of a calendar month, the term of the Lease shall be extended by that part of one month necessary to cause the expiration of the term to be on the last day of a calendar month. The dates of commencement ("Commencement Date") and expiration ("Expiration Date"), shall be confirmed by Landlord and Tenant by execution of an "Acceptance of Premises Memorandum" in the form attached hereto as "Exhibit C" and made a part hereof.


Section 1.02. Acceptance of Premises. The taking of possession of the Premises by Tenant shall be conclusive evidence against Tenant that, except for the completion of the remaining items of Landlord's work, if any, which are to be done pursuant to Exhibit D, and for minor "punch list" items agreed to in writing by Landlord and Tenant, which Landlord will promptly remedy, (i) the Premises are suitable for the purpose for which the same are leased, (ii) the Building and each and every part and appurtenance thereof are in good and satisfactory condition, and (iii) Tenant waives any defects in the Premises and its appurtenances and in all other parts of the Building and the appurtenances thereto. Upon delivery of possession of the Premises to Tenant, Landlord and Tenant shall execute the above-mentioned Acceptance of Premises Memorandum, although Tenant shall be deemed to have accepted the Premises even though the Acceptance of Premises Memorandum may not have been executed.


Section 1.03. Surrender of the Premises. Upon the expiration or earlier termination of this Lease, or upon the exercise by Landlord of its right to re-enter the Premises without terminating this Lease, Tenant shall immediately surrender to Landlord the Premises and all keys to the Premises and all parking and Building access cards, together with all alterations, improvements and other property as provided elsewhere herein, in good order, condition and repair, except for ordinary wear and tear; provided that at Landlord's written request Tenant shall remove at its expense improvements to the Premises such as special wall coverings and flooring which have become a part of and otherwise would have remained with the Premises. Tenant shall, at its expense, promptly repair any damage caused by removal of any improvements requested by Landlord as aforesaid, and shall restore the Premises to the condition existing prior to the installation of the items removed. If Tenant fails to surrender the Premises in the condition aforesaid, then Landlord may restore the Premises to such a condition at Tenant's expense. Upon the expiration or earlier termination of the Lease, Tenant will, at the option of Landlord, execute a Release of Lease and Waiver of Claim, in recordable form, containing Tenant's release of all of its interest in the Premises, which Release of Lease shall not be necessary to effectuate such release.


Section 1.04. Holding Over. In the event Tenant, or any party claiming under Tenant, retains possession of the Premises after the expiration or earlier termination of this Lease, such possession shall be an unlawful detainment, and no tenancy or interest shall result from such possession; such parties shall be subject to immediate eviction and removal, and Tenant or any such party shall pay Landlord as rent for the period of such hold-over an amount equal to one and one half times the Basic Rent payable during the last Lease Year of the Term. Tenant shall also pay any and all damages sustained by Landlord as a result of such hold-over. Tenant will vacate the Premises and deliver same to Landlord immediately upon Tenant's receipt of notice from Landlord to so vacate. The rent during such hold-over period shall be payable to Landlord on demand. No holding over by Tenant, whether with or without consent of Landlord, shall operate to extend this Lease.


ARTICLE 2


RENT


Section 2.01. Basic Rent. Tenant agrees to pay as Basic Rent for the Premises for each Lease Year the sum shown in Item 4 of the Basic Lease Provisions as "Basic Yearly Rent." The Basic Rent shall be payable in equal monthly installments in the amount set forth in Item 4 of the Basic Lease Provisions as "Basic Monthly Rent" in advance, without demand, counterclaim, deduction, or set off, commencing on the Commencement Date (subject to the provisions of Section 2.02 D. hereof) and continuing on the first day of each calendar month thereafter. (For purposes hereof, the first "Lease Year" shall be the period beginning on the Commencement Date and ending on the last day of the calendar month in which the first anniversary of the Commencement Date occurs; each subsequent Lease Year shall be the 12 month period commencing on the last day of the immediately preceding Lease Year, except that the last Lease Year shall end on the last day of the Term). The Basic Rent shall be adjusted in the case of any Lease Year which has more than or less than 365 days. If the Term of this Lease commences on a day other than the first day of a calendar month, the rent for such partial month shall be prorated in the proportion that the number of days this Lease is in effect during such partial month bears to the number of days in that calendar month.


Section 2.02. Additional Rent.


A. Definitions. For purposes of this Section 2.02, the following
definitions shall apply:


1. "Additional Rent" shall mean the amount of Tenant's
Proportionate Share of Building Operating Expenses for a
particular calendar year, or portion thereof in excess of
Building Operating Expenses for the Base Year.


2. "Building Operating Expenses" shall mean all of Landlord's
direct costs and expenses paid or incurred in operating and
maintaining the Building for a particular calendar year or
portion thereof as determined by Landlord in accordance with
generally accepted accounting principles, including all
additional direct costs and expenses of operation and
maintenance of the Building which Landlord determines that it
would have paid or incurred during such year if the Building
had been ninety-five (95%) occupied. Building Operating
Expenses shall include by way of illustration but not
limitation: all general real estate taxes and all special
assessments; costs and expenses of contesting the validity or
amount of real estate taxes; insurance premiums; water,
sewer, electrical and other utility charges; service and
other charges incurred in the operation and maintenance of
the elevators and the heating, ventilation and air-conditioning
system; cleaning and other janitorial services; tools and
supplies; repair costs; landscape maintenance costs; security
services; license, permit and inspection fees; reasonable
management fees; wages and related benefits payable to
employees directly engaged in the maintenance and operation
of the Building, including taxes and insurance relating
thereto; accounting services; trash removal; garage
maintenance and operating costs; and, in general, all other
costs and expenses which would generally be regarded as
operating and maintenance costs and expenses, including those
which would normally be amortized over a period not to exceed
five (5) years. There shall also be included in Building
Operating Expenses the cost of any capital improvement made
to the Building by Landlord after the date of this Lease
which is required under any governmental law or regulation
that was not applicable to the Building at the time it was
constructed, amortized over such period as Landlord shall
reasonably determine, together with an amount equal to
interest at the rate of 12% per annum on the unamortized
balance.


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In addition to inclusion of the cost of any capital
improvement required by any governmental law or regulation as
aforesaid, if Landlord shall install a labor-saving device or
other equipment which improves the operating efficiency of
any system within the Building, then Landlord may add to
Building Operating Expenses in each year during the useful
life of such installed device or equipment an amount equal to
the annual amortization allowance of the cost of such
installed device or equipment as determined in accordance
with applicable regulations of the Internal Revenue Service
or generally accepted accounting principles, together with an
amount equal to interest at the rate of 12% per annum on the
unamortized balance thereof.


For the purpose of this Article, payments made by tenants
of the Building, either to third parties or to Landlord,
under agreements for direct reimbursement for services (e.g.,
separately metered utilities, separately contracted
janitorial services, property taxes directly reimbursed to
Landlord, etc) shall not be included in "Building Operating
Expenses". However, for each category of expense for which
one or more tenants of the Building makes such payments,
Tenant's Building Expense Percentage shall be adjusted by
excluding from the denominator thereof the Net Rentable Area
of all tenants making such payments (for instance, if tenants
leasing a total of 10% of the Net Rentable Area of the Building
pay their own electricity bills under an arrangement for
separate metering, the Building Expense Percentage for each
tenant not making such payment will increase proportionately
with respect to that category of expense).


If Tenant makes any such payment, Building Operating
Expenses, for purposes of this Article, shall exclude the
category of expense for which such payment is made, but only
to the extent that the category of expense includes payments
made or charges incurred with respect to space actually
leased to other tenants (for example, if Tenant pays its own
electricity, Building Operating Expenses for purposes of
determining Tenant's Additional Rent shall include the
electricity expense associated with space not actually leased
to other tenants).


3. "Building Expense Percentage" shall mean the percentage
specified in Item 3 of the Basic Lease Provisions. This
percentage was determined by dividing Net Rentable Area in
the Premises, as specified in Item 2 of the Basic Lease
Provisions, by the total Net Rentable Area in the Building.


4. "Tenant's Proportionate Share of Building Operating Expenses"
shall be the dollar amount equal to the product of Tenant's
Building Expense Percentage times the Building Operating
Expenses.


5. "Base Year" shall mean the twelve (12) month period specified
in Item 3 of the Basis Lease Provisions.


B. Payment Obligation. In addition to the Basic Rent specified in this Lease, Tenant agrees to pay to Landlord as Additional Rent for the Premises, in each calendar year or partial calendar year during the Term of this Lease, an amount equal to Tenant's Proportionate Share of Building Operating Expenses for such calendar year in excess of Building Operating Expenses during the Base Year.


1. Payment of Tenant's Proportionate Share of Building Operating
Expenses. Tenant's Proportionate Share of Building Operating
Expenses in excess of Building Operating Expenses during the
Base Year for the remainder of the calendar year after the
Commencement Date and for each subsequent calendar year shall
be estimated by Landlord, and such estimate may be revised
from time to time, and written notice thereof shall be given
to Tenant. For the calendar year in which the Commencement
Date occurs, Tenant shall pay to Landlord each month, at the
same time the Basic Rent is due, an amount equal to the
amount of such estimated Additional Rent for the remainder of
such calendar year divided by the number of months remaining
in such year; and for each calendar year thereafter Tenant
shall pay to Landlord each month, at the same time the Basic
Rent is due, an amount equal to one-twelfth (1/12) of the
estimated annual Additional Rent due.


2. Revisions in Estimated Additional Rent. If Landlord revises
the estimated Additional Rent during any calendar year,
thereafter Tenant, following written notice to that effect,
shall pay to Landlord, in each of the remaining months of
such year, an additional amount equal to the amount of such
increase in the estimated Additional Rent divided by the
number of months remaining in such year.


3. Adjustments to Actual Additional Rent. After the end of each
calendar year, Landlord shall prepare and deliver to Tenant a
statement showing Tenant's actual Additional Rent. Within
thirty (30) days after receipt of the aforementioned
statement, Tenant shall pay to Landlord, or Landlord shall
credit against the next Additional Rent payment or payments
due from Tenant, as the case may be, the difference between
Tenant's actual Additional Rent for the preceding calendar
year and the estimated Additional Rent paid by Tenant during
such year.


C. Rent. The Basic Rent, the Additional Rent, and all other sums required to be paid by Tenant hereunder, including any sums due under the Agreement for Construction, are sometimes collectively referred to as, and shall constitute, "Rent".


Tenant agrees to pay Rent when due, without prior demand therefor and without deduction or setoff unless otherwise specifically provided herein, at the office of the Building Manager or at such other place as Landlord may designate.


In the event any installment of Rent under this Lease shall not be paid by the fifth day of the calendar month, a "Late Charge" of five percent (5%) so overdue may be charged by Landlord as additional rent and also for the purpose of defraying Landlord's administrative expenses incident to the handling of such overdue payments; and Tenant agrees to pay such Late Charge to Landlord on demand therefor.


D. First Month's Rent. Tenant agrees to deposit with Landlord, upon execution of this Lease, a sum equal to one full month's installment of Basic Rent, which shall be credited to the first installment of Basic Rent due hereunder.


ARTICLE 3


SECURITY DEPOSIT


Tenant will pay Landlord simultaneously with its execution hereof the sum set forth in Item 7 of the Basic Lease Provisions as security for the performance of the terms hereof by Tenant. Tenant shall not be entitled to interest thereon. If Tenant defaults with respect to any provision of this Lease, Landlord may, but shall not be required to, use, apply or retain all or any part of this security deposit for the payment of any rent or any other sum in default, or for the payment of any other amount which Landlord may spend or become obligated to spend by reason of Tenant's default, or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant's default, including, without limitation, costs and attorney's fees incurred by Landlord to recover possession of the Premises. If any portion of said deposit is so used or applied, Tenant shall, upon demand therefor, deposit cash with Landlord in an amount sufficient to restore the security deposit to its original amount and Tenant's


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failure to do so shall constitute a default hereunder by Tenant. Tenant must provide Landlord written notice thirty (30) days prior to vacating the Premises. If Tenant defaults in providing Landlord with prior written notice, Tenant shall forfeit security deposit. If Tenant shall fully and faithfully perform every provision of this Lease to be performed by it, the security deposit shall be returned to Tenant within thirty (30) days after the Expiration Date.


ARTICLE 4


OCCUPANCY AND USE


Section 4.01. Use of Premises. The Premises shall be used solely for general office purposes and for no other use. Tenant will not use, occupy or permit the use or occupancy of the Premises for any purpose which is, directly or indirectly, forbidden by law, ordinance or governmental or municipal regulation or order, or which may be dangerous to life, limb or property; or permit the maintenance of any public or private nuisance; or do or permit any other thing which may disturb the quiet enjoyment of any other tenant of the Building; or keep any substance or carry on or permit any operation which might emit offensive odors or conditions into other portions of the Building; or use any apparatus which might make undue noise or set up vibrations in the Building; or permit anything to be done which would increase the fire and extended coverage insurance rate on the Building or contents, and if there is any increase in such rate by reason of acts of Tenant, then Tenant agrees to pay such increase promptly upon demand therefor by Landlord. Payment by Tenant of any such rate increase shall not be a waiver of Tenant's duty to comply herewith.


Section 4.02. Rules and Regulations. Landlord's reasonable rules and regulations applying to all tenants in the Building, shown on Exhibit E attached hereto, and all future reasonable rules and regulations as may be adopted by Landlord for the safety, care and cleanliness of, and preservation of good order in, the Premises and the Building, are hereby made a part hereof and Tenant agrees to comply with all such rules and regulations. Landlord shall have the right at all times to change such rules and regulations or to amend them in any reasonable manner. All changes and amendments will be sent by Landlord to Tenant in writing and shall be thereafter carried out and observed by Tenant.


Section 4.03. Signs. Tenant shall not inscribe, paint, affix or display any signs, advertisements or notices on or in the Building. Landlord shall furnish Tenant one (1) door plaque and one (1) company directory strip. All such letters and numerals shall be in building standard graphics and no others shall be used or permitted in the Premises.


Section 4.04. Access. Landlord or its authorized agents shall at any and all reasonable times have the right to enter the Premises to inspect the same, to supply janitorial service or any o ...