Garden Ridge, L.P. v. Clear Lake Center, L.P.

Opinion

ACCEPTED 14-15-00695-cv FOURTEENTH COURT OF APPEALS HOUSTON, TEXAS 12/17/2015 5:50:10 PM CHRISTOPHER PRINE CLERK

NO. 14–15–00695–CV

FILED IN 14th COURT OF APPEALS IN THE FOURTEENTH COURT OF APPEALSHOUSTON, TEXAS HOUSTON, TEXAS 12/17/2015 5:50:10 PM CHRISTOPHER A. PRINE Clerk Garden Ridge, L.P., Appellant

V.

Clear Lake Center, L.P., Appellee

From the 215th District Court, Harris County, Texas Cause No. 2009–58038, consolidated with Cause No. 2012–46099

Clear Lake Center, L.P.’s Combined Cross–Appellant’s Brief and Appellee’s Brief

HIRSCH & WESTHEIMER, P.C. Eric Lipper State Bar No. 12399000 elipper@hirschwest.com Michael D. Conner State Bar No. 04688650 mconner@hirschwest.com 1415 Louisiana, 36th Floor Houston, Texas 77002 Telephone: 713–223–5181 Facsimile: 713–223–9319

Attorneys for Appellee/Cross Appellant Clear Lake Center, L.P.

ORAL ARGUMENT REQUESTED

20020862.20090455/2250814.1 Identity of Parties and Counsel

Appellant: Appellee/Cross–Appellant: Garden Ridge, L.P. Clear Lake Center, L.P.

Attorneys for Appellant: Attorneys for Appellee/Cross– Elizabeth G. Bloch Appellant: State Bar No. 02495500 Michael D. Conner Heidi.bloch@huschblackwell.com State Bar No. 04688650 Stephen W. Lemmon mconner@hirschwest.com State Bar No. 12194500 Eric Lipper Stephen.Lemmon@huschblackwell.com State Bar No. 12399000 Bradley W. Cole elipper@hirschwest.com State Bar No. 04535980 HIRSCH & WESTHEIMER, P.C. brad@bwc–law.net 1415 Louisiana, 36th Floor HUSCH BLACKWELL LLP Houston, Texas 77002 111 Congress A venue, Suite 1400 Telephone: (713) 223–5181 Austin, Texas 78701 Facsimile: (713) 223–9319 Telephone: (512) 472–5456 Facsimile (512) 479–1101

i 20020862.20090455/2250814.1 Table of Contents

Identity of Parties and Counsel .................................................................................. i

Table of Authorities ...................................................................................................v

Statement of the Case.................................................................................................1

Clear Lake Center, L.P.’s Cross–Appellant’s Brief ..................................................1

Clear Lake’s Cross Issues ..........................................................................................2

Issue 1: Clear Lake conclusively established Garden Ridge’s claims are precluded based on affirmative defenses of waiver, ratification, novation, accord and satisfaction, and/or estoppel; Clear Lake is entitled to complete judgment in its favor. ....................................................................... 2

Issue 2: The trial court erred by excluding evidence offered to support Clear Lake’s affirmative defenses; error was harmful and, at minimum, Clear Lake is entitled to a new trial. ................................................ 2

Issue 3: Because the trial court erred by excluding admissible, critical evidence, the findings of liability and damages are unsustainable. .......................................... 2

Issue 4: Without sustainable findings of liability and damages, attorneys’ fees are not recoverable. ................................. 2

Issue 5: All claims for amounts paid before September 10, 2005, are barred by limitations; it was error for the trial court to include in the judgment any damage amount for periods before September 10, 2005. ...........................................................................................2

ii 20020862.20090455/2250814.1 Issue 6: Based on Clear Lake’s counterclaim for breach of contract, its recovery of “offset” damages, its unrebutted evidence proving attorneys’ fees, Clear Lake is entitled to judgment in its favor or, alternatively, a new trial. ..................................................................................................2

Statement of Facts ......................................................................................................3

Introduction ................................................................................................................6

Summary of the Argument.......................................................................................11

Standard of Review ..................................................................................................12

Argument and Authority ..........................................................................................14

Issue 1: Clear Lake’s affirmative defenses preclude Garden Ridge’s suit as a matter of law. .........................................14

Issue 2: The trial court erroneously applied the parol evidence rule. .................................................................................18

Issue 3: Based on the erroneous exclusion of evidence, findings of liability and damages must fail. ...................................28

Issue 4: Garden Ridge is not entitled to recover attorneys’ fees as found by the jury. ..............................................28

Issue 5: Limitations bars recovery of any damages incurred prior to September 10, 2005. ...........................................29

Issue 6: Clear Lake is entitled to judgment in its favor, including its attorneys’ fees. ..........................................................31

Conclusion ...............................................................................................................32

iii 20020862.20090455/2250814.1 Clear Lake’s Appellee’s Brief .................................................................................33

[Clear Lake incorporates the Statement of the Case and Statement of Facts in it Cross Appellant’s Brief] .....................................................................33

Standard of Review ..................................................................................................33

Argument and Authorities........................................................................................34

The Lease does not include an agreement for interest on the disputed refunds claimed. ........................................................................34

No pre–judgment interest is warranted..........................................................37

Conclusion ...............................................................................................................39

Certificate of Compliance ........................................................................................41

Certificate of Service ...............................................................................................41

Appendix ..................................................................................................................42

iv 20020862.20090455/2250814.1 Table of Authorities

Cases

Alford. Meroney & Co. v. Rowe, 619 S.W.2d 210 (Tex. 1981) ...............................................................................22

Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154 (Tex. 2003) ................................................................................35

Anchor Casualty Co. v. Bowers, 393 S.W.2d 168 (Tex. 1965) ................................................................................32

Avila v. U. S. Fid. & Guar. Co., 551 S.W.2d 453 (Tex. Civ. App.–San Antonio 1977, writ ref’d n.r.e.) ...............26

Bartosh v. Gulf Health Care Ctr.–Galveston, 178 S.W.3d 434 (Tex. App.–Houston [14th Dist.] 2005, no pet.) .......................25

Bayer Corp. v. DX Terminals, Ltd., 214 S.W.3d 586 (Tex. App.–Houston [14th Dist.] 2006, pet. denied) ............... 13

Behzadpour v. Bonton, 14–09–01014–CV, 2011 WL 304079 (Tex. App.–Houston [14th Dist.] Jan. 27, 2011, no pet.) .......13

Bueckner v. Hamel, 886 S.W.2d 368 (Tex. App.–Houston [1st Dist.] 1994, writ denied) ..................22

Champlin Oil & Ref. Co. v. Chastain, 403 S.W.2d 376 (Tex. 1965) ......................................................................... 15, 16

City of Brownsville v. Alvarado, 897 S.W.2d 750 (Tex. 1995) ................................................................................13

Clear Lake Ctr., L.P. v. Garden Ridge, L.P., 416 S.W.3d 527 (Tex. App.–Houston [14th Dist.] 2013, no pet.) ............... passim

Clear Lake Water Auth. v. Friendswood Dev. Co. Ltd., 344 S.W.3d 514 (Tex. App.–Houston [14th Dist.] 2011, pet. denied) ............... 37

v 20020862.20090455/2250814.1 Cochran v. Wool Growers Central Storage Co., 140 Tex. 184, 166 S.W.2d 904 (1942) ........................................................... 31-32

Columbia Gas Trans. Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587 (Tex. 1996)....................................................................................34

ConocoPhillips Co. v. Noble Energy, Inc., 462 S.W.3d 255 (Tex. App.–Houston [14th Dist.] 2015, pet. filed) ....................33

Corcoran v. Atascocita Cmty. Imp. Ass’n, Inc., 14-12-00982-CV, 2013 WL 5888127 (Tex. App.–Houston [14th Dist.] Oct. 31, 2013, pet. denied) ..............................22

Creel v. Houston Indus., Inc., 124 S.W.3d 742 (Tex. App.–Houston [1st Dist.] 2003, no pet.)..........................25

Eckland Consultants, Inc. v. Ryder, Stilwell Inc., 176 S.W.3d 80, 87 (Tex. App.–Houston [1st Dist.] 2004, no pet.) .....................17

Falcon Enterprises, Inc. v. Sugar Creek Section 25, 14–97–00817–CV, 1999 WL 966645 (Tex. App.–Houston [14th Dist.] Oct. 21, 1999, pet. denied) ..............................17

Fillion v. Osborne, 585 S.W.2d 842 (Tex. Civ. App.—Houston [1st Dist.] 1979, no writ) ....... 19, 26

Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132 (Tex. 1994) ................................................................................34

Fox v. State, 115 S.W.3d 550 (Tex. App.–Houston [14th Dist.] 2002, pet. ref’d) ...............................................7

Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777 (Tex. App.–Houston [14th Dist.] 2004, no pet.) .......................29

Freezia v. IS Storage Venture, LLC, 14–14–00174–CV, 2015 WL 4983705 (Tex. App.–Houston [14th Dist.] Aug. 20, 2015, no pet.) ................ 17, 18, 21, 23

vi 20020862.20090455/2250814.1 Gulf Paving Co. v. Lofstedt, 144 Tex. 17, 188 S.W.2d 155 (Tex. 1945) ...........................................................31

Hand & Wrist Ctr. of Houston, P.A. v. Republic Services, Inc., 401 S.W.3d 712 (Tex. App.–Houston [14th Dist.] 2013, no pet.) .......................33

Helmerich & Payne Intern. Drilling Co. v. Swift Energy Co., 180 S.W.3d 635 (Tex. App.–Houston [14th Dist.] 2005, no pet.) ..... 34-35, 36, 37

Henry v. Masson, 453 S.W.3d 43 (Tex. App.–Houston [1st Dist.] 2014, no pet.)..................... 38, 39

Hexter v. Pratt, 10 S.W.2d 692 (Tex. Comm’n App. 1928, judgm’t adopted) .............................15

Hooper v. Chittaluru, 222 S.W.3d 103 (Tex. App.–Houston [14th Dist.] 2006, pet. denied) ..................7

Houston Exploration Co. v. Wellington Underwriting Agencies, Ltd., 352 S.W.3d 462 (Tex. 2011) ......................................................................... 20, 24

Iliff v. Iliff, 339 S.W.3d 74 (Tex. 2011) ..................................................................................33

In re N.R.C., 94 S.W.3d 799 (Tex. App.–Houston [14th Dist.] 2002, pet. denied) ..................25

Jernigan v. Langley, 111 S.W.3d 153 (Tex. 2003) ................................................................................22

Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507 (Tex. 1998) ................................................................................17

Kamat v. Prakash, 420 S.W.3d 890 (Tex. App.–Houston [14th Dist.] 2014, no pet.) .......................17

Kelley–Coppage, Inc. v. Highlands Ins. Co., 980 S.W.2d 462 (Tex. 1998) ................................................................................34

vii 20020862.20090455/2250814.1 Little v. Smith, 943 S.W.2d 414 (Tex. 1997) ................................................................................15

Love v. Barber, 17 Tex. 312 (1856) ...............................................................................................16

Lyons v. Montgomery, 701 S.W.2d 641 (Tex. 1985) ................................................................................34

Marsh v. Marsh, 949 S.W.2d 734 (Tex. App.–Houston [14th Dist.] 1997, no writ)................ 33, 38

McCraw v. Maris, 828 S.W.2d 756 (Tex. 1992) ................................................................................13

McGilliard v. Kuhlmann, 722 S.W.2d 694 (Tex. 1986) ................................................................................32

Meridien Hotels, Inc. v. LHO Financing Partnership I, L.P., 255 S.W.3d 807 (Tex. App.–Dallas 2008, no pet.) ..............................................37

Moreno v. Sterling Drug, Inc., 787 S.W.2d 348 (Tex. 1990) ................................................................................30

Meroney & Co. v. Rowe, 619 S.W.2d 210 (Tex. 1981) ................................................................................22

Motor Vehicle Bd. v. El Paso Indep. Auto Dealers Assn., Inc., 1 S.W.3d 108 (Tex. 1999) ....................................................................................22

Pickens v. Alsup, 568 S.W.2d 742 (Tex. Civ. App.–Austin 1978, writ ref’d n.r.e.) ........................38

Prestige Ford Co. Ltd. P’ship v. Gilmore, 56 S.W.3d 73 (Tex. App.–Houston [14th Dist.] 2001, pet. denied) ....................13

Ragsdale v. Progressive Voters League, 801 S.W.2d 880 (Tex. 1990) ................................................................................31

viii 20020862.20090455/2250814.1 Reliance Steel & Aluminum Co. v. Sevcik, 267 S.W.3d 867 (Tex. 2008) ............................................................. 13, 24, 26, 27

Saba Zi Expl., L.P. v. Vaughn, 448 S.W.3d 123 (Tex. App.–Houston [14th Dist.] 2014, no pet.) .......................20

Steubner Realty 19, Ltd. v. Cravens Rd. 88, Ltd., 817 S.W.2d 160 (Tex. App.–Houston [14th Dist.] 1991, no writ) ............... 17, 23

Sun Oil Co. (Delaware) v. Madeley, 626 S.W.2d 726 (Tex. 1981) ................................................................................25

Sun Operating Ltd. P’ship v. Holt, 984 S.W.2d 277 (Tex. App.–Amarillo 1998, pet. denied) ...................................34

Tanner Dev. Co. v. Ferguson, 561 S.W.2d 777 (Tex.1977) .................................................................................24

Tarleton State University v. K.A. Sparks Contractor, Inc., 695 S.W.2d 362 (Tex. App.–Waco 1985, writ ref'd n.r.e.) ..................................31

Tawes v. Barnes, 340 S.W.3d 419 (Tex. 2011) ................................................................................33

Tenneco, Inc. v. Enterprise Prod. Co., 925 S.W.2d 640 (Tex. 1996) ................................................................................22

TH Healthcare Ltd. v. Patino, No. 13–06–602–CV, 2007 WL 2128909 (Tex. App.–Corpus Christi July 26, 2007, pet. denied) ................................. 14-15

Triton Oil & Gas Corp. v. Marine Contractors & Supply, Inc., 644 S.W.2d 443 (Tex. 1982) ................................................................................12

Via Net v. TIG Ins. Co., 211 S.W.3d 310 (Tex. 2006) ................................................................................15

Vickery v. Vickery, 999 S.W.2d 342 (Tex. 1999) ................................................................................22

ix 20020862.20090455/2250814.1 Walker v. Rangel, 14–08–00643–CV, 2009 WL 4342505 (Tex. App.–Houston [14th Dist.] Dec. 3, 2009, no pet.) ......................................13

Wagner v. Morris, 658 S.W.2d 230 (Tex. App.–Houston [1st Dist.] 1983, no writ) .........................19

Washington Square Fin., LLC v. RSL Funding, LLC, 418 S.W.3d 761 (Tex. App.–Houston [14th Dist.] 2013, pet. denied) ................33

White v. Harrison, 390 S.W.3d 666 (Tex. App.–Dallas 2012, no pet.) .............................................22

Williams Distrib. Co. v. Franklin, 898 S.W.2d 816 (Tex. 1995) .................................................................................26

Other Authority

Pickard v. Sears, Eng. C.L. vol. 33, p. 117, (112 Eng.Rep. 179) ..........................................................16

Statutes

Tex. Fin. Code § 304.002.........................................................................................34

Tex. Fin. Code § 304.003.................................................................................. 34, 37

Tex. Civ. Prac. & Rem. Code § 16.004 ...................................................................30

Tex. Civ. Prac. & Rem. Code § 16.051 ...................................................................30

Tex. Civ. Prac. & Rem. Code § 38.001 ............................................................ 28, 31

x 20020862.20090455/2250814.1 Rules

Tex. R. App. P. 9.4...................................................................................................41

Tex. R. App. P. 44.1(a)(1) .......................................................................................13

Tex. R. Evid. 403 .....................................................................................................25

xi 20020862.20090455/2250814.1 Clear Lake Center, L.P.’s Cross–Appellant’s Brief

Statement of the Case

Nature of Case Tenant Garden Ridge sued landlord Clear Lake to recover alleged overpayments of management fees under a commercial real property lease.

Trial Court 215th District Court, Harris County, Texas, Hon. Elaine Palmer presiding.

Course of Proceedings This is the second appeal. The first appeal was from cross motions for summary judgment. This Court reversed the summary judgment in favor of Garden Ridge, affirmed, in part, the summary judgment in favor of Clear Lake, and remanded for trial on the narrowed issues. See Clear Lake Ctr., L.P. v. Garden Ridge, L.P., 416 S.W.3d 527 (Tex. App.–Houston [14th Dist.] 2013, no pet.).

Trial Court’s On remand, a jury answered favorably to Garden Ridge. Disposition CR262–80. Judgment was entered awarding Garden Ridge damages of $594,700 and $350,000 in attorneys’ fees; 5% post–judgment interest; and, conditional appellate fees. CR359–61.

1 20020862.20090455/2250814.1 Clear Lake’s Cross Issues

Issue 1: Clear Lake conclusively established Garden Ridge’s claims are precluded based on affirmative defenses of waiver, ratification, novation, accord and satisfaction, and/or estoppel; Clear Lake is entitled to complete judgment in its favor.

Issue 2: The trial court erred by excluding evidence offered to support Clear Lake’s affirmative defenses; error was harmful and, at minimum, Clear Lake is entitled to a new trial. Issue 3: Because the trial court erred by excluding admissible, critical evidence, the findings of liability and damages are unsustainable.

Issue 4: Without sustainable findings of liability and damages, attorneys’ fees are not recoverable.

Issue 5: All claims for amounts paid before September 10, 2005, are barred by limitations; it was error for the trial court to include in the judgment any damage amount for periods before September 10, 2005.

Issue 6: Based on Clear Lake’s counterclaim for breach of contract, its recovery of “offset” damages, its unrebutted evidence proving attorneys’ fees, Clear Lake is entitled to judgment in its favor or, alternatively, a new trial.

2 20020862.20090455/2250814.1 Statement of Facts

Clear Lake1 is owner and landlord and Garden Ridge is the tenant under a

Shopping Center Lease (the “Lease”) executed in 1995. 8RRPX1. The Lease was

amended in 1996 and in 2005. 2 8RRPX2; 8RRPX3. Among other things, the Lease

requires Clear Lake to “operate, manage and maintain” the Common Area.

8RRPX1, § 6.3. The Lease requires Garden Ridge to pay “Tenant’s Share of

Common Area Costs” described as “all sums expended” by Clear Lake:

in operating, managing, policing, equipping, lighting, repairing, replacing and maintaining the Common Areas, and an allowance to Landlord for Landlord’s supervision of the Common Areas in an amount equal to seven and one–half percent (7–1/2%) of the total of all Common Area Costs.

8RRPX1, § 6.4.

Clear Lake billed and collected a management fee as a component of Common

Area Maintenance Charge, see 8RRPX1, § 1.1 (i) (“CAM”), a part of Garden

Ridge’s rent. See 8RRPX1. With the exception that “the manner of operation,

management and maintenance and the expenditures therefor” are to be “in the sole

discretion of Landlord,” the Lease does not specify a formula for calculating the

management fee. See 8RRPX1, article VI.

1 Clear Lake bought the shopping center from the original owner/landlord in 2003. 2 The terms of first amendment do not materially affect the Lease for purposes of this suit. See 8RRPX2.

3 20020862.20090455/2250814.1 Garden Ridge paid the management fee for the years beginning in 2003 until

shortly before it sued in September 2009. It paid later fees “under protest.” See, e.g.,

8RRPX57, PX58.

In February 2004, Garden Ridge filed for chapter 11 bankruptcy protection.

See 6RR131; 8cRRDX13. As part of its reorganization plan, Garden Ridge elected

to keep the store at Clear Lake Center. See, e.g., 6RR128–29. Garden Ridge and

Clear Lake spent about six months negotiating terms under which Garden Ridge

would remain a tenant, subject to bankruptcy court approval. See 6RR138–39.

In these negotiations, Garden Ridge employed a team that included: (a) one

“principal of the owner of Garden Ridge”; (b) two of its “day–to–day operations

guy[s]”; (c) Garden Ridge’s bankruptcy counsel; (d) its “leasing counsel”; and (e) a

commercial leasing consultant. 6RR127–31. Based on negotiations between the

Garden Ridge team and Clear Lake’s representatives, the parties agreed to and

signed the Second Amendment to Lease (the “Amendment”) in February 2005. See

8RRPX3.

In the Amendment, Clear Lake agreed to reduce Garden Ridge’s Base Rental

payments. 8RRPX3, ¶ 3. It agreed to extend the Lease term through January 2024.

Id., ¶ 2. The Amendment also included Garden Ridge’s agreement to pay (over 24

months and without interest) an “Agreed Cure Amount” of $326,132.98, inclusive

of the 2003 CAM charge of $82,573.33. Id., ¶ 4; 8cRRDX13 (proof of claim). Per

4 20020862.20090455/2250814.1 the 2003 reconciliation statement, 3 which Garden Ridge had, the CAM includes a

management fee of $58,259.14. 8RRPX11. Thus, Garden Ridge expressly agreed

that the proper amount of CAM charges, including the management fee, was

$82,573.33. 8RRPX3; 8RRPX11. With the right to do so, 8RRPX1, § 6.5, Garden

Ridge did not ask to audit Clear Lake’s books before signing the Amendment.

The Amendment also includes the parties’ ratification, confirmation and

approval of all terms of the Lease except those specifically modified by the

Amendment. 8RRPX3, ¶ 14(b). Both Garden Ridge and Clear Lake “waived” all

existing “defaults . . . offsets and defenses . . . under the Lease.” Id. Both Garden

Ridge and Clear Lake “release[d] each other from all liabilities, claims,

controversies, causes of action and other matters of every nature which, through

[February 4, 2005], have or might have arisen out of or in any way in connection

with the Lease and/or the Demised Premises demised thereunder.” Id.

In addition to the waiver and release, Garden Ridge also “represent[ed]” to

Clear Lake that, except for the “amounts that compromise [sic] the Agreed Cure

Amount, there exists no breach, default, event or condition which with the giving of

notice or passage of time, or both, would constitute a breach or default under the

3 CAM charges were paid monthly, in advance, based on estimated annual costs, subject to year-end adjustment based on actual costs for which Clear Lake provided annual reconciliation statements. 8RRPX1, §§ 6.4, 6.5; see also, e.g., 8RRPX11. Garden Ridge had the right to inspect and audit Clear Lake’s records. 8RRPX1, § 6.5.

5 20020862.20090455/2250814.1 Lease either by Lessee or Lessor, and (iii) except as provided otherwise in this

Agreement, Lessee has no existing claims, defenses or offsets against rental due or

to become due under the Lease.” 8RRPX3, ¶ 14(h).

After the Bankruptcy court approved Garden Ridge’s assumption of the Lease

as amended, the parties continued to perform as they had since Clear Lake’s

purchase of the shopping center in 2003. Clear Lake billed estimated CAM charges

monthly, provided reconciliation statements annually–each containing the same

detailed, line item disclosures as the one for 2003, and Garden Ridge paid the CAM

charges, including management fees. In 2009, Garden Ridge exercised its audit right,

see 8RRPX1, § 6.5, and engaged an outside firm to conduct an “audit of annual

operating costs” for the store. See 8RRPX52.

Introduction

Beginning with voir dire and his analogy to a cell–phone “charge showing up

that you really did not order that you found out about later,” see 3RR40–46, counsel

for Garden Ridge repeatedly infused into the proceedings that Garden Ridge “did

not know” what the management fee was for. In opening statement, Garden Ridge’s

lawyer told the jury, “we found out for the very first time” in 2009. 3RR121–22. In

closing argument, he told the jury, “In 2009, they say, ‘Gee, this seems like a big

number.’” 7RR69. Yet, but for the exclusion of evidence, the jury would have known

that four years earlier when the insolvent Garden Ridge was trying to keep the store

6 20020862.20090455/2250814.1 open, before the parties agreed to reduce Garden Ridge’s rent, extend the Lease term,

permit Garden Ridge to pay out an agreed cure amount over time without interest,

and to give Garden Ridge a $150,000.00 credit for a new air conditioner, Garden

Ridge’s negotiating team said practically the same thing: “the estimate for 2005

[CAM] is around $15,000 per month which seems excessive” … “Let’s discuss so

there is no misunderstanding going forward.” 8dRRDX16–F; see also 7RR4 (Clear

Lake’s proffer of Mr. Freedman’s testimony about the conversation he had with Mr.

Spargo, the author of the excluded email). 4

Contrary to Garden Ridge’s recurring theme that it “did not know,” the

excluded evidence would have shown the jury that five years before Mr. Boystun

was hired to do an audit, during the months leading up to the February 2005

Amendment, Garden Ridge, its counsel, its in–house leasing staff, and its outside

leasing consultants were fully apprised of all components of the CAM charges,

including the management fee. See 8dRR16A–F; see also 8RRPX11. Garden Ridge

did know; all material facts were available to Garden Ridge’s negotiating team in

2004.

4 See Hooper v. Chittaluru, 222 S.W.3d 103, 108 (Tex. App.–Houston [14th Dist.] 2006, pet. denied) (‘The ‘nature of the disputed evidence was apparent to all,’ and thus the offer was sufficiently specific.” (quoting Fox v. State, 115 S.W.3d 550, 559 (Tex. App.–Houston [14th Dist.] 2002, pet. ref’d))).

7 20020862.20090455/2250814.1 The excluded evidence would have illuminated further that the Amendment

did not appear out of a vacuum; it was negotiated for months. See, e.g., 8dRRDX14.

But for the exclusion of evidence, the jury would have seen the mid–November

2004, email asking for “more information to support” the $82,573.33 2003 CAM

charge. 8dRRDX16–C. But for the exclusion of evidence, the jury would have seen

that two weeks later, Garden Ridge’s negotiating team was still “checking on” the

cure amounts. 8dRRDX16–E. But for the exclusion of evidence, the jury would have

known that less than a week before signing the Amendment that extended the Lease

through January 31, 2024, Garden Ridge’s negotiating team member, Mr. Spargo,

wrote that the estimate for future CAM “seems excessive” and asked for (and got,

see 7RR4) “discuss[ion] so there is no misunderstanding going forward.”

8dRRDX16–F. An objective observer could only conclude that all possible

misunderstandings about CAM charges “going forward” were resolved because

Garden Ridge would not have signed the Amendment otherwise.

There is no dispute that the management fee component of CAM was

determined the same way for 2003 as it was for the years after 2003. It is Garden

Ridge’s pro rata share of the 5% fee paid by Clear Lake to its property manager.

8 20020862.20090455/2250814.1 So, when Garden Ridge knew (or is legally charged with knowledge) how the

management fee was determined is important. Garden Ridge’s attorney thought so;

he did his best to convince the jury that Garden Ridge was in the dark until 2009.

But, as the Court wrote in the first appeal addressing limitations:

Garden Ridge paid the 2004 CAM charge without question and without requesting an audit, for which it had a contractual right under Section 6.5 of the lease. Garden Ridge could have inquired about the management fee as soon as Clear Lake sent the reconciliation, but Garden Ridge did not do so. Instead, Garden Ridge waited four years to request an audit, and there is no evidence Clear Lake provided false information during the course of the audit–indeed, the management agreement that Clear Lake provided during the audit is precisely how Garden Ridge learned of the breach. ***

We hold as a matter of law that a tenant acting with due diligence could have discovered this type of injury by asking Clear Lake for information needed to verify contractual performance.

Clear Lake Ctr., L.P. v. Garden Ridge, L.P., 416 S.W.3d 527, 544 (Tex. App.–

Houston [14th Dist.] 2013, no pet.).

The same analysis applies to Clear Lake’s affirmative defenses, particularly,

estoppel. See Champlin Oil & Ref. Co. v. Chastain, 403 S.W.2d 376, 388 (Tex. 1965)

(“imputed actual notice carries with it the same legal consequences as conscious

knowledge.”). The Court should hold, consistently with the first appeal, that Garden

Ridge, acting with due diligence, could have discovered the injury complained of in

this case by asking Clear Lake before signing the Amendment for any information

it needed before representing that:

9 20020862.20090455/2250814.1 there exists no breach, default, event or condition which with the giving of notice or passage of time, or both, would constitute a breach or default under the Lease either by Lessee or Lessor, and (iii) except as provided otherwise in this Agreement, Lessee has no existing claims, defenses or offsets against rental due or to become due under the Lease.

8RRPX3, ¶ 14(h).

But for the exclusion of Clear Lake’s evidence, the jury would have known

that when Garden Ridge represented in the Amendment that “there exists no breach,

default, event or condition which … would constitute a breach or default under the

Lease,” 8RRPX3, ¶ 14(h), Garden Ridge either knew how the management fee was

determined or, if not, it was either willfully or negligently ignorant of the available

facts. The jury should have been permitted to see and hear all the evidence—

including precluded cross examination on excluded facts and documents—of what

Garden Ridge knew, see, e.g., 7RR4, when it made the representation relied on by

Clear Lake. The jury should have seen and heard the excluded evidence before it

was asked to decide if Garden Ridge was precluded from complaining in 2009 about

the same method of determining the management fee that it represented in the 2005

Amendment was not a breach of the Lease. The trial court erred by excluding critical

evidence offered by Clear Lake in support of its affirmative defenses.

10 20020862.20090455/2250814.1 Summary of the Argument

Clear Lake’s non–compliance, if there was any, was excused.

Garden Ridge is legally precluded to have sued in 2009 for refund of CAM

charges determined the same way after the Amendment as they were determined

before it. Garden Ridge is charged with knowledge of its claimed injury–what the

management fee was for–before February 2005. With that knowledge, Garden Ridge

affirmatively represented in writing, in exchange for substantial value, that there was

no breach, default, event or condition which would constitute a breach or default

under the Lease and that it had no existing claims, defenses or offsets against rental

due or to become due under the Lease. Having enjoyed the benefits of the Lease as

amended for years, Garden Ridge is estopped, or otherwise legally precluded, to

deny its prior, contractual representations or their effect.

Clear Lake was not allowed to use certain evidence in support of its

affirmative defenses. Garden Ridge’s objection was that admission of the evidence

in issue would offend the parol evidence rule. Following Garden Ridge’s lead, the

trial court erred, misconstruing and misapplying the parol evidence rule. Exclusion

of the evidence was error and the erroneous rulings resulted in an incorrect judgment.

11 20020862.20090455/2250814.1 Because Clear Lake is entitled, at minimum, to a new trial based on exclusion

of its evidence, the jury’s findings of liability and damages cannot stand. Without

sustainable findings of liability and damages, Garden Ridge may not recover

attorneys’ fees.

The Court concluded in the first appeal in this case that all claims which

accrued before September 10, 2005 are barred by limitations. It is undisputed that

Clear Lake charged and Garden Ridge paid management fees each month, including

January through September, 2005. It is undisputed that Garden Ridge had the right

to audit at any time but did not invoke it until 2009. Thus, each monthly payment of

supposedly overstated fees marked accrual of any cause of action for the claimed

overpayment. Garden Ridge is not entitled to damages for all of 2005 as found by

the jury and as incorporated into the Judgment.

Additionally, Clear Lake counterclaimed for breach of contract and for

declaratory relief. Clear Lake prevailed on a claim for offset. Plus, Clear Lake

adduced unrebutted evidence of its attorneys’ fees. Clear Lake is entitled to

judgment in its favor, including its proven attorneys’ fees.

Standard of Review

An issue is conclusively established when the evidence is such that ordinary

minds cannot differ as to the conclusion to be drawn from it. Triton Oil & Gas Corp.

v. Marine Contractors & Supply, Inc., 644 S.W.2d 443, 446 (Tex. 1982);

12 20020862.20090455/2250814.1 Behzadpour v. Bonton, 14–09–01014–CV, 2011 WL 304079, at *3 (Tex. App.–

Houston [14th Dist.] Jan. 27, 2011, no pet.).

The exclusion of evidence generally is within the discretion of the trial court.

See Bayer Corp. v. DX Terminals, Ltd., 214 S.W.3d 586, 609 (Tex. App.–Houston

[14th Dist.] 2006, pet. denied) (citing City of Brownsville v. Alvarado, 897 S.W.2d

750, 753 (Tex. 1995)). When error is shown and that error probably resulted in an

improper judgment, the Court should reverse. See City of Brownsville v. Alvarado,

897 S.W.2d at 753–54; see also Prestige Ford Co. Ltd. P’ship v. Gilmore, 56 S.W.3d

73, 78 (Tex. App.–Houston [14th Dist.] 2001, pet. denied); Walker v. Rangel, 14–

08–00643–CV, 2009 WL 4342505, at *6 (Tex. App.–Houston [14th Dist.] Dec. 3,

2009, no pet.); Tex. R. App. P. 44.1(a)(1). The Texas Supreme Court has further

explained that, “if erroneously admitted or excluded evidence was crucial to a key

issue, the error was likely harmful.” Reliance Steel & Aluminum Co. v. Sevcik, 267

S.W.3d 867, 873 (Tex. 2008). This is not a “but for” test; the complaining party is

only required to show that the exclusion of evidence probably resulted in the

rendition of an improper judgment. Id. (citing McCraw v. Maris, 828 S.W.2d 756,

758 (Tex. 1992)). In determining whether harm resulted, the Court “must evaluate

the whole case from voir dire to closing argument.” Reliance Steel & Aluminum Co.

v. Sevcik, 267 S.W.3d at 871.

13 20020862.20090455/2250814.1 Argument and Authority

Garden Ridge claimed that the way Clear Lake determined the annual

management fee amount was a breach of the Lease. Clear Lake pleaded affirmative

defenses including waiver, estoppel, ratification, novation, accord and satisfaction,

judicial estoppel, and release. CR194–98. Because Garden Ridge knew or should

have known how the fee was calculated before February 4, 2005, it is charged with

knowledge and was estopped, or otherwise precluded, from bringing suit for the

supposed breach.

Issue 1: Clear Lake’s affirmative defenses preclude Garden Ridge’s suit as a matter of law.

Garden Ridge could have inquired about the management fee as soon as Clear

Lake sent the 2003 reconciliation; it did not. With compelling incentive to

successfully reorganize, Garden Ridge did not use its contractual right to audit

during the 2004 or 2005 negotiations leading to the Amendment. 5 By analogy to this

Court’s accrual analysis in the first appeal, with the 2003 reconciliation in hand, the

contractual right to audit, and motivated by the desire to keep its store, Garden Ridge

could have and should have discovered in 2004 how Clear Lake determined the

management fee. See Clear Lake Ctr., L.P. v. Garden Ridge, L.P., 416 S.W.3d 527,

544 (Tex. App.–Houston [14th Dist.] 2013, no pet.) (citing TH Healthcare Ltd. v.

5 Garden Ridge waited until 2009 to first request an audit. See Clear Lake Ctr., L.P. v. Garden Ridge, L.P., 416 S.W.3d 527, 544 (Tex. App.–Houston [14th Dist.] 2013, no pet.).

14 20020862.20090455/2250814.1 Patino, No. 13–06–602–CV, 2007 WL 2128909, at *5 (Tex. App.–Corpus Christi

July 26, 2007, pet. denied) (mem. op.) (where contract allowed for reconciliation of

overpayments to be conducted, if the plaintiff had conducted its reconciliation and

audit, it would or should have known of the injury at that time). Had Garden Ridge

exercised diligence as it negotiated the Amendment, see Clear Lake Ctr., L.P., 416

S.W.3d at 543 (citing Via Net v. TIG Ins. Co., 211 S.W.3d 310, 314 (Tex. 2006)),

including invoking its right to audit, it would have known how the management fee

was determined, the essence of the breach it claims.

On the record of this case,6 especially as illuminated by the excluded evidence

of negotiations, see, e.g, 8dRRDX16–C, DX16–F, 7RR4, Garden Ridge, as a matter

of law, is charged with knowledge on February 4, 2005, of the “prior CAMS,”

including the management fee. See Champlin Oil & Ref. Co. v. Chastain, 403

S.W.2d 376, 388–89 (Tex. 1965) (“Means of knowledge with the duty of using them

are in equity equivalent to knowledge itself.”) (quoting Hexter v. Pratt, 10 S.W.2d

692, 693 (Tex. Comm’n App. 1928, judgm’t adopted) (emphasis added)); see also

Little v. Smith, 943 S.W.2d 414, 421 (Tex. 1997). Because Garden Ridge had

“knowledge or information of facts sufficient to put [it] upon inquiry which if

reasonably pursued would lead to the discovery of the controlling fact” (the use of

6 As this Court observed in the first appeal, “Garden Ridge’s … injury could have been discovered with the exercise of due diligence.” Clear Lake Ctr., L.P. v. Garden Ridge, L.P., 416 S.W.3d 527, 544 (Tex. App.–Houston [14th Dist.] 2013, no pet.).

15 20020862.20090455/2250814.1 the plant allocation formula in Champlin; the management fee calculation here),

Garden Ridge is “charged with actual knowledge of such controlling fact.”

Champlin Oil & Ref. Co. v. Chastain, 403 S.W.2d at 403–04 [emphasis added].

Charged with such knowledge, Garden Ridge represented in the Amendment that

“there exists no breach, default, event or condition which … would constitute a

breach or default under the Lease” and that it had no “existing claims, defenses or

offsets against rental due or to become due[ 7] under the Lease.” 8RRPX3, ¶ 14(h)

[emphasis added]. Having made the representations, Garden Ridge is bound by them

and estopped to sue for an alleged breach based on post–Amendment management

fees determined using the same method used before Garden Ridge signed the

Amendment. See Champlin Oil & Ref. Co. v. Chastain, 403 S.W.2d at 388. 8

The elements of estoppel are: (1) a false representation or concealment of

material facts; (2) made with knowledge, actual or constructive, of those facts; (3)

with the intention that it should be acted on; (4) to a party without knowledge or

7 See 8dRRDX16-F (“[I]t looks like the estimate for 2005 is around $15,000 per month which seems excessive. Some reasonable increase over the $8,500 amount would seem to be more realistic. Let’s discuss so there is no misunderstanding going forward.”). 8 The Champlin Oil case quotes from Love v. Barber, 17 Tex. 312 (1856): “[In Pickard v. Sears, Eng. C.L. vol. 33, p. 117, (112 Eng.Rep. 179), Lord Denman] says ‘that the rule of law is clear, that when one, by his words or conduct, willfully causes another to believe the existence of a certain state of things, and induces him to act on that belief, so as to alter his own previous position, the former is concluded from averring, against the latter, a different state of things, as existing at the same time …’”; and from a later Lord Denman opinion: “‘A party, who negligently or culpably stands by and allows another to contract on the faith and understanding of a fact which he can contradict, cannot afterwards dispute that fact in an action against the person whom he has himself assisted in deceiving.’”

16 20020862.20090455/2250814.1 means of obtaining knowledge of the facts; and (5) who detrimentally relies on the

representations. See Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962

S.W.2d 507, 515–16 (Tex. 1998); see also Kamat v. Prakash, 420 S.W.3d 890, 900

(Tex. App.–Houston [14th Dist.] 2014, no pet.); CR267, 268 (Questions 2 and 3).

Relying on the truth of Garden Ridge’s representation that nothing Clear Lake

had done or omitted to do in connection with the Lease through 2004 constituted a

breach or a default and its representation that Garden Ridge had “no defenses or

offsets against rental due or to become due,” 8RRPX3, Clear Lake agreed to and

did change its position to its detriment. CR268 (Question 3); see Falcon Enterprises,

Inc. v. Sugar Creek Section 25, 14–97–00817–CV, 1999 WL 966645, at *12 (Tex.

App.–Houston [14th Dist.] Oct. 21, 1999, pet. denied) (not designated for

publication); see also Freezia v. IS Storage Venture, LLC, 14–14–00174–CV, 2015

WL 4983705, at *6 (Tex. App.–Houston [14th Dist.] Aug. 20, 2015, no pet.)

(Doctrine of quasi–estoppel forbids a party from accepting the benefits of a

transaction and then subsequently taking an inconsistent position to avoid

corresponding obligations or effects); Steubner Realty 19, Ltd. v. Cravens Rd. 88,

Ltd., 817 S.W.2d 160, 164 (Tex. App.–Houston [14th Dist.] 1991, no writ); Eckland

Consultants, Inc. v. Ryder, Stilwell Inc., 176 S.W.3d 80, 87 (Tex. App.–Houston [1st

Dist.] 2004, no pet.). The Lease term was extended to 2024, Garden Ridge’s rent

was reduced. 8RRPX3. Garden Ridge was permitted to pay out the agreed cure

17 20020862.20090455/2250814.1 amount in default over time, without interest, and was given a $150,000 credit for

new air conditioning. Id. On these conclusively established facts and the applicable

law, Garden Ridge was estopped to challenge how Clear Lake determined the

management fees.

There is no dispute that the fees were determined the same way after the

Amendment as they were before it. Thus, Garden Ridge is precluded by law from

accepting the benefits of the Amendment for years, then taking an inconsistent

position to avoid obligations or effects of the clear language of its representations in

the Amendment. Freezia v. IS Storage Venture, LLC, supra. The law is clear and

reasonable minds cannot differ as to the facts. Clear Lake is entitled to reversal and

rendition of judgment in its favor.

Issue 2: The trial court erroneously applied the parol evidence rule.

In the alternative, the trial court’s exclusion of evidence based on the parol

evidence rule was reversible error.

With pleadings and evidence to submit jury questions, the trial court,

nevertheless, erroneously excluded much of Clear Lake’s evidence offered to prove

its affirmative defenses. See CR267–68 (Jury Questions 2 (excuse) and 3 (estoppel)).

The evidence excluded concerns several months of negotiation immediately before

the parties executed the February 4, 2005 [second] Amendment to the Lease. The

18 20020862.20090455/2250814.1 trial court’s rulings were predicated on Garden Ridge’s ill–founded objection, its

often repeated refrain: “parol evidence rule.” 9

The parol evidence rule generally excludes extrinsic evidence of a prior or

contemporaneous agreement between the parties to a written contract, if such

evidence changes or contradicts the terms of the written contract. See Wagner v.

Morris, 658 S.W.2d 230, 231 (Tex. App.–Houston [1st Dist.] 1983, no writ). Clear

Lake made no effort to vary the any term of the original Lease or the Lease as

amended. The parol evidence rule is neither applicable to nor a proper basis for

excluding the proffered evidence. On the other hand, the failure of the trial court to

afford the Clear Lake the opportunity to present pertinent evidence and to cross-

examine witnesses about that evidence was error rendering the trial materially unfair.

See Fillion v. Osborne, 585 S.W.2d 842, 845 (Tex. Civ. App.—Houston [1st Dist.]

1979, no writ); Avila v. U. S. Fid. & Guar. Co., 551 S.W.2d 453, 457 (Tex. Civ.

App.–San Antonio 1977, writ ref’d n.r.e.).

The validity and scope of the management fee is part of the original Lease

executed in 1995. See 8RRPX1, §§ 6.1 (“Common Area”), 6.3 (“Operation of

Common Area”), 6.4 (“Common Area Costs”). There is no formula or calculation

for determining the management fee contained in the Lease. See id. The excluded

9 See, e.g., 2RR5, 11, 17, 19, 21, 22, 33, 38, 55; 3RR16, 89-91, 98, 100, 102, 103; 4RR161- 62, 168, 170, 173-73, 174, 176, 178; 6RR18, 22.

19 20020862.20090455/2250814.1 evidence has nothing to do with any such formula or calculation. Rather, the

evidence relates to actions and communications occurring in 2004 or 2005, before

execution of the Amendment. Obviously, it is not evidence of anything (agreement

or otherwise) occurring prior to or contemporaneous with signing the 1995 Lease.

Lease terms establishing the validity and scope of the management fee, moreover,

are not changed by the Amendment. See 8RRPX3. The evidence of communications

during the 2004 and 2005 negotiations does not constitute and was not offered as

evidence of an “agreement” at all. It is evidence of what Garden Ridge said and did

and what it knew and, implicitly, should have known when it signed the Amendment.

Simply, Clear Lake did not offer the excluded evidence to change any provision of

the original Lease.

If it is the Amendment that concerned the trial court, still, the parol evidence

rule “does not prohibit consideration of surrounding circumstances that inform,

rather than vary from or contradict, the contract text.” Houston Exploration Co. v.

Wellington Underwriting Agencies, Ltd., 352 S.W.3d 462, 469 (Tex. 2011); Saba Zi

Expl., L.P. v. Vaughn, 448 S.W.3d 123, 131 (Tex. App.–Houston [14th Dist.] 2014,

no pet.). Clear Lake did not advocate changing any provision of the Amendment. To

the contrary, it argued that the unambiguous representations that “there exists no

breach, default, event or condition which … would constitute a breach or default

under the Lease” and that there are “no defenses or offsets against rental due or to

20 20020862.20090455/2250814.1 become due,” 8RRPX3, should be enforced as written. It remains Clear Lake’s

position that Garden Ridge cannot avoid its corresponding obligations or the effect

of its words by taking the inconsistent position that is the heart of its case. See, e.g.,

Freezia v. IS Storage Venture, LLC, supra. Because the management fee was

determined in exactly the same way in 2003 as it was through 2014, Clear Lake was

entitled to put on evidence of what Garden Ridge’s negotiating team knew as it

negotiated the Amendment. This is not parol evidence.

But for the trial court’s erroneous application of the parol evidence rule, the

jury would have seen that Garden Ridge specifically asked for “more information to

support” the $82,573.33 2003 CAM charge. 8dRRDX16–C. The jury would have

seen the email where Garden Ridge wrote that it was “checking on” the cure

amounts. 8dRRDX16–E. Clear Lake was prevented from asking any Garden Ridge

witness what it did to check on the cure amounts. But for the trial court’s erroneous

application of the parol evidence rule, the jury would have known that Garden

Ridge’s Mr. Spargo wrote in January 2005, before execution of the Amendment: the

estimate of $15,000 per month for CAM charges going forward “seems excessive.”

8dRRDX16–F. Mr. Spargo wrote, “Let’s discuss so there is no misunderstanding

going forward.” Id. This is not parol evidence. With no evidence or suggestion that

21 20020862.20090455/2250814.1 Clear Lake withheld anything Garden Ridge’s negotiating team asked for,10 and, had

it heard Mr. Freedman’s excluded testimony “about the conversation that he had

with Dave Spargo related to the negotiations of the second amendment to the lease,”

7RR4, the jury could (and should) reasonably have believed that Clear Lake’s failure

to comply, if any, was excused, 11 CR267 (Question 2), and/or that Garden Ridge

was estopped to pursue this case. See CR268 (Question 3).

10 See Clear Lake Ctr., L.P. v. Garden Ridge, L.P., 416 S.W.3d 527, 544 (Tex. App.–Houston [14th Dist.] 2013, no pet.) Discussing the 2004 reconciliation in its limitations analysis, the Court noted that Garden Ridge could have inquired about the management fee as soon as Clear Lake sent the reconciliation, but did not do so; “Garden Ridge waited four years to request an audit.” Id. It noted the absence of evidence that Clear Lake withheld any information. Id. 11 Question 2 includes, e.g., waiver, novation, ratification, and accord and satisfaction. CR267; see also CR194-98. Waiver is the intentional relinquishment of a known right, or conduct which is inconsistent with claiming the right. Jernigan v. Langley, 111 S.W.3d 153, 156 (Tex. 2003). While ordinarily a question of fact, when the surrounding facts and circumstances are undisputed, the question becomes one of law. Id.; Motor Vehicle Bd. v. El Paso Indep. Auto Dealers Assn., Inc., 1 S.W.3d 108, 111 (Tex. 1999). Silence or inaction for so long a period as to show an intention to yield the known right is enough to prove waiver. Tenneco, Inc. v. Enterprise Prod. Co., 925 S.W.2d 640, 643 (Tex. 1996); Alford. Meroney & Co. v. Rowe, 619 S.W.2d 210, 213 (Tex. 1981). The elements of a novation are: (1) a previous, valid obligation; (2) a mutual agreement of the parties to the acceptance of a new contract; (3) the extinguishment of the old contract; and (4) the validity of the new contract. Vickery v. Vickery, 999 S.W.2d 342, 356 (Tex. 1999). The elements of ratification are (1) approval by act, word, or conduct, (2) with full knowledge of the facts of the earlier act, and (3) with the intention of giving validity to the earlier act. See, e.g., Corcoran v. Atascocita Cmty. Imp. Ass’n, Inc., 14-12-00982-CV, 2013 WL 5888127, at *6 (Tex. App.–Houston [14th Dist.] Oct. 31, 2013, pet. denied) (citing White v. Harrison, 390 S.W.3d 666, 672 (Tex. App.–Dallas 2012, no pet.). A party ratifies an agreement when—after learning all of the material facts—he confirms or adopts an earlier act that did not then legally bind him and that he could have repudiated. Id. An accord requires a bargaining evidenced in a new contract, either express or implied, that replaces an old agreement. Vickery v. Vickery, 999 S.W.2d 342, 355 (Tex. 1999) (citing Bueckner v. Hamel, 886 S.W.2d 368, 372 (Tex. App.–Houston [1st Dist.] 1994, writ denied). In the new contract, the parties agree that one may give or perform, and the other will accept, something different from what each was expecting from the old contract. Id. The satisfaction is the actual performance of the new agreement. Id. The Amendment is the accord; performance from 2005 through at least the middle of 2009 is the satisfaction.

22 20020862.20090455/2250814.1 The jury could (and should) reasonably have found that Garden Ridge was

estopped to complain about any alleged non–compliance. CR268 (Question 3). It

was conclusively established that Garden Ridge, in fact, took voluntary action

concerning the Lease. See id. Garden Ridge decided it was in the company’s best

interest to keep the store at Clear Lake Center. It negotiated the Amendment for

which Clear Lake gave substantial value. In exchange for that value, Garden Ridge

represented in the Amendment that the amount of the CAM, inclusive of the

management fee, charged for 2003 (and the estimated CAM going forward) was not

a “breach, default, event or condition which … would constitute a breach or default

under the Lease” and that there were “no defenses or offsets against rental due or to

become due.” 8RRPX3.

But for the erroneous exclusion of, for example, Clear Lake’s exhibit 16, the

consequent inability to cross examine on those documents, and Mr. Freedman’s

excluded testimony about discussions he had with Mr. Spargo, the jury would have

known that with incentive–even a duty–to negotiate the best deal obtainable, Garden

Ridge was specifically focused on the 2003 CAM charges for over two months.

8dRRDX14, DX16; 7RR4. See Freezia v. IS Storage Venture, LLC, supra; Steubner

Realty 19, Ltd. v. Cravens Rd. 88, Ltd., supra. Based on Garden Ridge’s

representations, Clear Lake agreed to extend the Lease term, reduce Garden Ridge’s

rent, let Garden Ridge pay out amounts in default over time, without interest, and,

23 20020862.20090455/2250814.1 give Garden Ridge a $150,000 credit for air conditioning. 8RRPX3. With

information the trial court erroneously excluded, the jury could (and should)

reasonably have found that to allow Garden Ridge to challenge the management fee

determined exactly the same way it had been since 2003 would be contrary to Garden

Ridge’s “initial action” in procuring the Amendment and would result in harm to

Clear Lake. CR268 (Question 3). The trial court’s erroneous rulings based on

misconception and misapplication of the parol evidence rule deprived the jury of

relevant, critical information. See Reliance Steel & Aluminum Co. v. Sevcik, 267

S.W.3d 867, 873 (Tex. 2008). It deprived Clear Lake of the opportunity to examine

and cross-examine witness about the excluded documents. The error deprived Clear

Lake of a fair trial, resulted in an incorrect judgment, and should be reversed.

Evidence of what questions Garden Ridge’s negotiating team asked, what

information Clear Lake provided, and what Garden Ridge did or did not do with

information before signing the Amendment simply does not offend the parol

evidence rule. It is admissible evidence and can be used to inform the contractual

text without altering the objective intent embodied in the agreement. Evidence of the

parties’ negotiations is relevant to “ascertaining the dominant purpose and intent of

the parties embodied in the contract interpreted as a whole.” Houston Expl. Co. v.

Wellington Underwriting Agencies, Ltd., 352 S.W.3d 462, 469–70 (Tex. 2011)

(quoting Tanner Dev. Co. v. Ferguson, 561 S.W.2d 777, 781 (Tex. 1977); see also

24 20020862.20090455/2250814.1 Creel v. Houston Indus., Inc., 124 S.W.3d 742, 750 n.8 (Tex. App.–Houston [1st

Dist.] 2003, no pet.) (citing, inter alia, Sun Oil Co. (Delaware) v. Madeley, 626

S.W.2d 726, 731 (Tex. 1981)). Emails evidencing Garden Ridge’s specific focus on

the CAM charges in negotiating the Amendment, see, e.g., 8dRRDX16–F, and Clear

Lake’s (Mr. Freedman’s) proffered testimony about discussions that followed, see

7RR4, clearly are relevant, to jury Questions 2 and 3. CR267, 268. It was error for

the trial court to exclude the evidence and additional evidence the ability to examine

and cross-examine would certainly have produced, particularly where the only

objection was the parol evidence rule.

The excluded evidence provides details to the parties’ months–long

negotiation before signing the Amendment. See, e.g., 8dRRDX14, DX15, DX16.

The excluded evidence would have informed the jury about the time the parties

devoted, their focus on various aspects of the proposed amendment, particularly,

Garden Ridge’s focus on the CAM charges, and information available to Garden

Ridge–that which it asked for and that which it did not–during the negotiations.12

12 Clear Lake was permitted to present deposition testimony of one of Garden Ridge’s attorneys, Ms. Kimichik. See 6RR124, et seq. However, documents about which she testified were excluded. Any suggestion that specific information in excluded emails is cumulative is unfounded, specifically, see, 8dRRDX16-F. Mr. Freedman’s proffered but excluded testimony about his discussions with Mr. Spargo is, likewise, not cumulative of anything Ms. Kimichik said. In any event, Garden Ridge did not invoke and the trial court did not mention evidence rule 403. Tex. R. Evid. 403; see also In re N.R.C., 94 S.W.3d 799, 807 (Tex. App.–Houston [14th Dist.] 2002, pet. denied) (“The mere fact that another witness may have given the same or substantially the same Footnote continued on next page.

25 20020862.20090455/2250814.1 See 8dRRDX14, DX15, DX16; 7RR4. The evidence would have shown the jury

Garden Ridge’s focus on the CAM charges and how they were determined both for

2003 and going forward, the controlling issue in this case. See Reliance Steel &

Aluminum Co. v. Sevcik, supra; CR266 (Question 1). Evidence supporting Clear

Lake’s corresponding affirmative defenses is no less critical. See CR267, 268; see

also Bartosh v. Gulf Health Care Ctr.–Galveston, 178 S.W.3d 434, 439 (Tex. App.–

Houston [14th Dist.] 2005, no pet.) (citing Williams Distrib. Co. v. Franklin, 898

S.W.2d 816, 817 (Tex. 1995).

During the course of negotiating, in addition to the “cure amounts,” including

CAM charges, remaining “bracketed,” 8dRRDX14, DX15, DX16–E (November 29

and December 20 emails), Garden Ridge wrote specifically about the CAM amount

at least twice. On November 15, Garden Ridge’s accounting department wanted

“more information” about “prior” CAMs. 8dRRDX16–C. On January 27, Mr.

Spargo asked to discuss CAM estimates for 2005 “so there is no misunderstanding

going forward.” 8dRRDX16–F. Had the jury been permitted to see this evidence in

context with the undisputed fact that the Amendment was signed on February 4, its

Footnote continued from previous page. testimony is not the decisive factor. Rather, we consider whether the excluded testimony would have added substantial weight to the complainant’s case.”) [internal citations omitted]. Without the evidence and with no opportunity to examine witnesses using it, the trial was materially unfair to Clear Lake. See Fillion v. Osborne, 585 S.W.2d at 845; Avila v. U. S. Fid. & Guar. Co., 551 S.W.2d at 457.

26 20020862.20090455/2250814.1 only reasonably conclusion would be that these specific concerns expressly raised

in the negotiating process all had been addressed to Garden Ridge’s satisfaction.

Why else would it sign the Amendment? Why else would Garden Ridge

affirmatively represent in writing that, on February 4, 2005, “there exist[ed] no

breach, default, event or condition which … would constitute a breach or default

under the Lease[?]” 8RRPX3. Clear Lake was entitled to present evidence on the

critical issues, its affirmative defenses to Garden Ridge’s claim. The trail court’s

exclusion of the evidence, as parol evidence or otherwise, was harmful error. See

Reliance Steel & Aluminum Co. v. Sevcik, 267 S.W.3d at 873.

The excluded evidence clearly shows Garden Ridge’s focus on the CAM

charges, both past and future, before signing the Amendment. Assuming Garden

Ridge’s suit was not precluded as a matter of law, without Mr. Spargo’s January 27

email without Mr. Freedman’s testimony about his conversations with Mr. Spargo,

the jury could not fairly answer Questions 2 and 3. The jury was prevented from

fully and fairly assessing what Garden Ridge knew and what it considered important

to find out before contractually waiving and releasing past breaches (if any), and

before affirmatively representing that, except for its own defaults comprising the

Agreed Cure Amount, “there exists no breach, default, event or condition which …

would constitute a breach or default under the Lease either by Lessee or Lessor” and

it had “no defenses or offsets against rental due or to become due.” 8RRPX3, ¶14(h).

27 20020862.20090455/2250814.1 Assuming Garden Ridge’s suit was not precluded, without testimony erroneous

excluded as “parol evidence,” the jury could not fairly and impartially answer

whether Garden Ridge is estopped from complaining in 2009 about the method of

determining the management fee that was the same method used in 2003. The

exclusion of evidence was error and the error was harmful. At a minimum, the

judgment should be reversed and the case remanded for a new trial.

Issue 3: Based on the erroneous exclusion of evidence, findings of liability and damages must fail.

Because, as set forth above, the trial court erred by excluding admissible,

critical evidence, the findings of liability and damages in favor of Garden Ridge are

unsustainable and the Judgment must be reversed.

Issue 4: Garden Ridge is not entitled to recover attorneys’ fees as found by the jury.

Likewise, without sustainable findings of liability and damages, Garden Ridge

is not entitled to recover attorneys’ fees. See Tex. Civ. Prac. & Rem. Code § 38.001;

8RRPX1, § 19.4.

Additionally, the evidence shows that some of the fees claimed by Garden

Ridge were not incurred by Garden Ridge; rather, the evidence clearly shows a

portion of the claimed fees were incurred by a non–party venture capital firm called

Three Cities Venture. See, e.g., 8bRRPX90; 5RR74, 79, 132, 152 (Clear Lake’s

objection, overruled at 5RR81). Garden Ridge did not present evidence that fees

28 20020862.20090455/2250814.1 billed to Three Cities Venture were paid by Garden Ridge. Assuming the non–party

incurred fees in order to monitor or even assist in Garden Ridge’s prosecution of its

claims, the Lease provides for recovery of fees “incurred by Tenant,” not an affiliate,

investor, or stranger. 8RRPX1, § 19.4. With no evidence that it paid or agreed to pay

fees incurred by the non–party, Garden Ridge is not entitled to recover fees

evidenced by plaintiff’s exhibit 90. The exhibit should not have been admitted over

Clear Lake’s objection and, therefore, evidence to support the jury’s response to

Question 5 is insufficient.

Issue 5: Limitations bars recovery of any damages incurred prior to September 10, 2005.

The statute of limitations for breach of contract claims bars all claims that

accrued more than four years from the date that suit was filed. See Tex. Civ. Prac.

& Rem. Code §§16.004, 16.051. The Court held in the first appeal that all claims

accrued before September 10, 2005, are barred. Clear Lake Ctr., L.P. v. Garden

Ridge, L.P., 416 S.W.3d 527, 546 (Tex. App.–Houston [14th Dist.] 2013, no pet.).

The Court did not reach Clear Lake’s argument that claims for estimated CAM

charges paid prior to September 10, 2005, but subject to later reconciliation, had

accrued and, therefore, were barred. Id. at 544–45.

Garden Ridge’s claims accrued “when a wrongful act cause[d] an injury,

regardless of when the plaintiff learn[ed] of the injury.” Franco v. Slavonic Mut.

Fire Ins. Ass’n, 154 S.W.3d 777, 789 (Tex. App.–Houston [14th Dist.] 2004, no pet.)

29 20020862.20090455/2250814.1 (citing Moreno v. Sterling Drug, Inc., 787 S.W.2d 348, 351 (Tex. 1990)). Suit was

filed September 10, 2009. Therefore, the statute of limitations bars the recovery of

any management fee paid before September 10, 2005. See Tex. Civ. Prac. & Rem.

Code §§16.004, 16.051. The bar includes claims for the monthly management fee (a

component of estimated CAM) paid at any time before September 10, 2005.

The estimated CAM charges for 2005 were $15,577.61 per month, inclusive

of the management fee. 3CR 1173. The management fee for all of 2005 was

$75,561.47, or $6,296.79 per month. See 8RRPX13. Even if Garden Ridge was

entitled to sue for and recover any of the management fees at issue, it was barred

from recovering any of the $56,671.10 2005 fees paid before September 10, 2005.

Accordingly, the jury’s response to question 4, $80,000, is necessarily overstated.

Garden Ridge paid the estimated CAM charge every month without question and

without requesting an audit. “Garden Ridge could have inquired about the

management fee as soon as Clear Lake sent the [2003 or 2004] reconciliation, but

Garden Ridge did not do so.” See Clear Lake Ctr., L.P. v. Garden Ridge, L.P., 416

S.W.3d 527, 544 (Tex. App.–Houston [14th Dist.] 2013, no pet.). In fact, the

contractual right to audit is not tied to the reconciliation at all. 8RRPX1, §§ 6.4, 6.5.

Garden Ridge could have inquired at any time about the monthly estimated CAM

amounts. Thus, at a minimum, all amounts adjudged as damages but incurred before

September 10, 2005, must be excluded from the Judgment.

30 20020862.20090455/2250814.1 Issue 6: Clear Lake is entitled to judgment in its favor, including its attorneys’ fees.

Clear Lake counterclaimed for breach of contract. CR198–200. Per the

Judgment, it established the right of “offset” in the amount $5,300.00. CR359; see

also CR279 (Question 13); Tex. Civ. Prac. & Rem. Code §38.001. Nevertheless and

irreconcilably, the jury found $0 to be Clear Lake’s reasonable and necessary

attorneys’ fees. CR275 (Question 9). The response to question 9 is not sustainable.

Generally, it is the province of the jury to determine the reasonable value of

an attorney's services. Tarleton State University v. K.A. Sparks Contractor, Inc., 695

S.W.2d 362, 367 (Tex. App.–Waco 1985, writ ref'd n.r.e.) (citing Gulf Paving Co.

v. Lofstedt, 144 Tex. 17, 188 S.W.2d 155, 160 (Tex. 1945)). However, if the

evidence is not contradicted by any other witness, or attendant circumstances, and

the same is clear, direct and positive, and free from contradiction, inaccuracies, and

circumstances tending to cast suspicion thereon, it is taken as true, as a matter of

law. Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 882 (Tex. 1990).

Clear Lake offered unrebutted evidence of its attorney’s fees; Mr. O’Connell

opined that $350,000 to $400,000.00 would be reasonable fees for Clear Lake in the

case. 6RR41; see also 8cRRDX20 (fee bills). Although the witness was cross

examined, his testimony was not rebutted and no charge reflected on the attorneys’

invoices, 8cRRDX20, was challenged. Clear Lake’s fees can be and should have

been determined as a matter of law. Cochran v. Wool Growers Central Storage Co.,

31 20020862.20090455/2250814.1 140 Tex. 184, 166 S.W.2d 904, 908 (1942); see also McGilliard v. Kuhlmann, 722

S.W.2d 694 (Tex. 1986); Anchor Casualty Co. v. Bowers, 393 S.W.2d 168, 169–170

(Tex. 1965). In any event, the jury’s $0 response to question 9 is unsustainable.

Conclusion

Because Garden Ridge is estopped or otherwise legally precluded from

pursuing its claims in this case; because Clear Lake proved counterclaim damages

of at least $5,300; and, because Clear Lake established its attorneys’ fees as a matter

of law, the judgment should be reversed and judgment rendered in favor of Clear

Lake for damages of at least $5,300 plus attorneys’ fees of at least $350,000. In the

alternative, the judgment should be reversed and the case remanded for a new trial

on Clear Lake’s attorneys’ fees. In the further alternative, the Judgment should be

reversed and remanded for a new trial to permit Clear Lake to present erroneously

excluded evidence in support of its affirmative defenses. In the further alternative,

the Judgment should be reversed, or at minimum modified, to eliminate all damages

and related attorneys’ fees for claims accrued before September 10, 2005.

32 20020862.20090455/2250814.1 Clear Lake’s Appellee’s Brief

[Clear Lake incorporates the Statement of the Case and Statement of Facts in it Cross Appellant’s Brief]

Standard of Review

Assuming the Judgment could survive this appeal, at what rate Garden Ridge

might recover judgment interest depends on the Lease language, a question of

contract construction reviewed de novo. See ConocoPhillips Co. v. Noble Energy,

Inc., 462 S.W.3d 255, 265 (Tex. App.–Houston [14th Dist.] 2015, pet. filed) (citing

Tawes v. Barnes, 340 S.W.3d 419, 425 (Tex. 2011)); Washington Square Fin., LLC

v. RSL Funding, LLC, 418 S.W.3d 761, 767 (Tex. App.–Houston [14th Dist.] 2013,

pet. denied).

Assuming the judgment could survive and no statute controls, the decision to

award prejudgment interest is within the trial court’s discretion. Hand & Wrist Ctr.

of Houston, P.A. v. Republic Services, Inc., 401 S.W.3d 712, 717 (Tex. App.–

Houston [14th Dist.] 2013, no pet.). As such, the Court reviews for abuse of that

discretion. Id. (citing Marsh v. Marsh, 949 S.W.2d 734, 744 (Tex. App.–Houston

[14th Dist.] 1997, no writ)). A trial court abuses its discretion when it fails to analyze

or apply the law correctly. Iliff v. Iliff, 339 S.W.3d 74, 78 (Tex. 2011).

33 20020862.20090455/2250814.1 Argument and Authorities

The Lease does not include an agreement for interest on the disputed refunds claimed.

Garden Ridge is not entitled to 18% interest either pre– or post–judgment

based on any language found in the Lease. If any judgment in favor of Garden Ridge

survives, applicable interest must conform to section 304.003 of the Texas Finance

Code. See Tex. Fin. Code § 304.003. Section 304.002 of the Finance Code does not

apply. See Tex. Fin. Code § 304.002. The Lease cannot be reasonably read to include

an agreement providing 18% interest on disputed reimbursement amounts.

As with any contract, proper construction the Lease requires: (1) reviewing

the Lease as a whole, not picking and choosing among isolated provisions, Columbia

Gas Trans. Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996); (2) giving

effect to all of the terms, so that none is rendered meaningless, Kelley–Coppage, Inc.

v. Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex. 1998); and (3) construing each

provision to give it the intended effect. Forbau v. Aetna Life Ins. Co., 876 S.W.2d

132, 133 (Tex. 1994). Words used in an unambiguous contract are to be given their

plain meanings. See Lyons v. Montgomery, 701 S.W.2d 641, 643 (Tex. 1985). Courts

are “not at liberty to rewrite the contract or interpret it in a manner which the parties

never intended.” Sun Operating Ltd. P’ship v. Holt, 984 S.W.2d 277, 283 (Tex.

App.–Amarillo 1998, pet. denied); see also Helmerich & Payne Intern. Drilling Co.

34 20020862.20090455/2250814.1 v. Swift Energy Co., 180 S.W.3d 635, 641 (Tex. App.–Houston [14th Dist.] 2005, no

pet.) (citing Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 162 (Tex. 2003).

Garden Ridge first relies on section 4.3. See Brief, p. 8, et seq. The section,

captioned “Failure to Pay Rental on Time,” is part of Article IV, all of which relates

to Garden Ridge’s obligation to pay rent. See 8RRPX1, art. IV. 13 Garden Ridge

argues that the phrase, “Past due Base Rental and other past due payments shall bear

interest from maturity at the rate of eighteen percent (18%) per annum …” should

be read to apply to reconciliation reimbursements 14 that Garden Ridge did not seek

until 2009, that Clear Lake vigorously contested, and that were not adjudicated as

“due” for another 6 years. See CR359–61.

Notwithstanding the strained reading Garden Ridge suggests, the other

sentence in section 4.3 places the “past due payments” language in its proper context:

“All other sums and charges of whatsoever nature required to be paid by Tenant to

Landlord pursuant to the terms of this Lease constitute additional rent (whether or

not the same be designated “additional rent”), and failure by Tenant to timely pay

such other sums or charges may be treated by Landlord as a failure by Tenant to pay

Base Rent.” 8RRPX1, § 4.3. Implicitly, all of section 4.3 deals with payments “by

13 See also 8RRPX1, § 27.9 (“The captions used herein are for convenience only and do not limit or amplify the provisions hereof.”). 14 The parties could have, but did not, make reference to sections 6.4 and 6.5 (“Common Area Costs”) in section 4.3. 8RRPX1.

35 20020862.20090455/2250814.1 Tenant to Landlord” and the only reasonable reading of the section 4.3 cannot

support Garden Ridge’s argument.

Garden Ridge tries to bolster the argument by reference to sections 6.4 and

8.1. See Brief, p. 10, n. 20. First, section 8.1 of the Lease deals with “Landlord’s

Repairs” and expressly refers to the 18% interest cap “specified in Section 27.13.”

8RRPX1, § 8.1. The case, of course, has nothing to do with any claim that Clear

Lake failed to make some repair. Sections 6.4 (Garden Ridge’s other referenced

section) and 6.5 do not expressly provide for interest on reimbursements and, unlike

section 8.1, neither refers to another section of the Lease with an interest provision.

See 8RRPX1, §§ 6.4, 6.5.

As the Court wrote in Helmerich & Payne, “We cannot rewrite the [] Contract

or add to its language under the guise of interpretation.” Helmerich & Payne Intern.

Drilling Co. v. Swift Energy Co., supra. As section 8.1 15 shows, the parties to the

Lease clearly knew how to provide for contractual interest when that was the intent.

By choosing not to include any such language in section 6.4 (or 6.5), there is no

contractual basis for 18% interest on the Judgment. This Court is not permitted add

15 See also §§ 8.2, 13.2, 13.3, 19.3, and 27.13. Unlike section 19.3, “Landlord’s Remedies,” which references interest at the rate and in the manner specified section 27.13, section 19.4, “Tenant’s Remedies,” makes no such reference. 8RRPX1, article 19. Rather, the “Tenant’s Remedies” provision says, if there is a final, non-appealable judgment against Landlord, Tenant may recover “interest thereon as provided in said judgment.” Id., § 19.4. If the parties intended a judgment for damages to accrue interest at 18%, they would have included that as one of “Tenant’s Remedies.” They did not; the Court may not do it for them.

36 20020862.20090455/2250814.1 to the language to support Garden Ridge’s strained interpretation. Helmerich &

Payne, supra.

No reasonable reading of the Lease supports Garden Ridge’s argument for

18% interest. Because there is no rate specified in the contract, interest, including

pre–judgment interest, if any, can only be determined by section 304.003. Tex. Fin.

Code §304.003; see Clear Lake Water Auth. v. Friendswood Dev. Co. Ltd., 344

S.W.3d 514, 525 (Tex. App.–Houston [14th Dist.] 2011, pet. denied); Meridien

Hotels, Inc. v. LHO Financing Partnership I, L.P., 255 S.W.3d 807, 824–25 (Tex.

App.–Dallas 2008, no pet.). That rate is currently 5%. Garden Ridge shows no basis

for changing the trial court’s judgment.

No pre–judgment interest is warranted.

Garden Ridge’s “211th Day” formula is convenient but ignores the Lease

language. The reimbursement amounts did not become “past due” as argued. Garden

Ridge recites from section 6.4 that when the annual reconciliation statements are

provided, “Tenant shall pay to Landlord the amount of any deficiency, or Landlord

shall refund to Tenant the amount of any excess, as the case may be, such

reimbursement or payment to be made within thirty days following the Tenant’s

receipt of such statement.” 8RRPX1, section 6.4. The triggering event contemplated

in the Lease never occurred. See id. Garden Ridge does not cite the Court to evidence

that any “such statement” received by Garden Ridge required a refund. Id. To the

37 20020862.20090455/2250814.1 contrary, Garden Ridge’s entire case is based on the claimed over charges reflected

on serial reconciliation statements. Further, the damages award was not determined

until 2015, six years after suit was filed, eleven years after the first, supposedly

offending reconciliation statement was provided. For that entire period–and still–

“there remained a serious and genuine dispute regarding ultimate liability, which

was contested in good faith by the parties, and the amount of damages could not be

ascertained until final judgment.” Henry v. Masson, 453 S.W.3d 43, 50 (Tex. App.–

Houston [1st Dist.] 2014, no pet.) (citing Pickens v. Alsup, 568 S.W.2d 742, 744

(Tex. Civ. App.–Austin 1978, writ ref’d n.r.e.)). The court in Henry concluded that

the trial court’s decision not to award pre–judgment interest was not an abuse of

discretion. Id.; see also Marsh v. Marsh, 949 S.W.2d 734, 744 (Tex. App.–Houston

[14th Dist.] 1997, no writ). Garden Ridge has shown no abuse here.

Until shortly before litigation began, Garden Ridge did not invoke its right to

audit. The one “audit report” alleged is dated June 29, 2009, and was purportedly

provided to Clear Lake on July 6, 2009, followed by “a formal notice of default” on

August 11, 2009. See CR132 (Amended Petition, ¶¶ 53, 54); 8RRPX60 (“demand”

letter). Clear Lake responded on August 28, noting its disagreement with Garden

Ridge’s assertions but, nevertheless, tendering over $50,000.00 8cRRDX17–P. Two

weeks later, on September 10, 2009, Garden Ridge filed suit. CR2. Although some

form of audit was done, apparently covering at least 8 years, see, e.g., 3RR137, and

38 20020862.20090455/2250814.1 apparently identifying far more than a portion of the management fee as

reimbursable, see 8RRPX60, no “audit report” was admitted in evidence. See 2RR3–

6; see also 8RR; 8bRR. Garden Ridge should not be permitted to rely on an audit

that presumably sought much more than the damages in the Judgment and is not in

evidence to serve as the supposed triggering event upon which it would bootstrap

pre–judgment interest. See Henry v. Masson, 453 S.W.3d at 50. The trial court did

not abuse its discretion by declining to award pre–judgment interest. The Judgment

should not be changed on that basis.

Conclusion

Garden Ridge has shown no basis to alter the Judgment. Because Garden

Ridge is estopped or otherwise legally precluded from pursuing its claims in this

case; because Clear Lake proved counterclaim damages of at least $5,300; and,

because Clear Lake established its attorneys’ fees as a matter of law, the judgment

should be reversed and judgment rendered in favor of Clear Lake for damages of at

least $5,300 plus attorneys’ fees of at least $350,000. In the alternative, the judgment

should be reversed and the case remanded for a new trial on Clear Lake’s attorneys’

fees. In the further alternative, the Judgment should be reversed and remanded for a

new trial to permit Clear Lake to present erroneously excluded evidence in support

of its affirmative defenses. In the further alternative, the Judgment should be

39 20020862.20090455/2250814.1 reversed, or at minimum modified, to eliminate all damages and related attorneys’

fees for claims accrued before September 10, 2005.

Respectfully submitted,

HIRSCH & WESTHEIMER, P.C.

By:/s/ Michael D. Conner Eric Lipper State Bar No. 12399000 elipper@hirschwest.com Michael D. Conner State Bar No. 04688650 mconner@hirschwest.com 1415 Louisiana, 36th Floor Houston, Texas 77002 Telephone: 713–223–5181 Facsimile: 713–223–9319

ATTORNEYS FOR APPELLEE/CROSS–APPELLANT CLEAR LAKE CENTER, L.P.

40 20020862.20090455/2250814.1 Certificate of Compliance

Pursuant to TEX. R. APP. P. 9.4, I hereby certify that this Clear Lake’s Combined Cross–Appellant’s Brief and Appellee’s Brief contains 9,578 words. This is a computer–generated document created in Microsoft Word, using 14–point typeface for all text, except for footnotes which are in 12–point typeface. In making this certificate of compliance, I am relying on the word count provided by the software used to prepare the document.

/s/ Michael D. Conner Michael D. Conner

Certificate of Service

I hereby certify that on this 17th of December, 2015, a true and correct copy of the foregoing document was sent to the following counsel of record:

Elizabeth G. Bloch Heidi.bloch@huschblackwell.com Stephen W. Lemmon Stephen.Lemmon@huschblackwell.com Bradley W. Cole brad@bwc–law.net HUSCH BLACKWELL LLP 111 Congress Avenue, Suite 1400 Austin, Texas 78701 Phone: 512.472.5456 Fax: 512.479.1101 Via E–Service

/s/ Michael D. Conner Michael D. Conner

41 20020862.20090455/2250814.1 NO. 14–15–00695–CV

IN THE FOURTEENTH COURT OF APPEALS HOUSTON, TEXAS

Garden Ridge, L.P., Appellant

V.

Clear Lake Center, L.P., Appellee

From the 215th District Court, Harris County, Texas Cause No. 2009–58038, consolidated with Cause No. 2012–46099

Final Judgment signed May 19, 2015 (CR 359-61) Tab 1

Charge of the Court (CR262-80) Tab 2

Shopping Center Lease (8RRPX1) Tab 3

First Amendment to Shopping Center Lease (8RRPX2) Tab 4

Second Amendment to Lease (8RRPX3) Tab 5

42 20020862.20090455/2250814.1 Tab 1 4

&l rglt CA{J8E NO. t{r09 5fi138 c.*nirnF{ RrDcE, L.p., fi IN THE DISTRICT COIJRT Plnlntiif, $ $ v, ü IIA,RRIS COÜIITY, TffiÅg $ CLEAR LAKE CE¡ITEA{ L.P", H lnd DOES l-10, $ Ê_. I{ Ilefendrnt¡, $ 2l sú il¡nrcmt rlr[¡Tarcr Ffl I

Ëg Ér \I - Cl+r cAUSt FrO. r{t1t-{6t¡t9 ed.EË GARITEN RrDcF4 L.P", IH TIIE I}IËTRIST COURT t-t tå > Plnlntlff, tst = v. H.A.nAIS COUHTy, TEXAS I J cLEÂ,n LAKE CENTER, L.P", DefendanL rrsffi JUIXCH,L Drsrnrcr FINAL JUDGMENT

Or¡ IvIuEh 9, 2015, çsmË on to bc conride.rad the frial of this cau,ËË. All parties appearud

þ and thruugh counsel of record and announced ready fnr bial" After n juqy wm impunoled and

Ëw$rn! it hËetd the evidence and arguuents of cou¿scl [n rc*ponnn to thc jury chorge" lhe jury

mads fintlingr thåt the Csurt mceived" ñled, and entercd of r¡so¡d, The Court dsc sonsidÊrÊd the

pnrtiern rqqæt for declnratory relicf Having reviewÊd the verdicÇ the CÕurt concludeg that

judgmant should be r¡ndered in favor of tha Plaintiff, Garden Ridgs, L.P., at set forth belcw"

IT IS TIIEREFORE, ORDERED, ADTUDGED .{ND FECR.EED, that Garden Ridge,

L.P" recover ftom CIeflr l"aka Centcr, LP. the srrtl of $594,700 (damages of $600,0CI0 minw nn

offset of S5Jû0). I

$4P8#Jir44 fcratad damagee nw

Åus"6û9fló69-3

RE€mDgnErBlüß$lllfi lì¡ã ins|lmeil b olPoø ryaþ sl ttE tlmå 0t rn¡ging 359 '+

I

IT lS FURTHER ÕADERËD th*r üarden Ridge, L.P. ræaver frnm ClËnr Läke Ccntrr,

L.F. i[s reasonablE and tresessary attomeys' feçs in t]¡e arnount of $350$00, logethrr with a

conditional swflrd in th6 svcnttrf an ap¡leol in &s follüwing amountr;

$?5,0Üü ifan appenl is taken ta thc ur:urt ofngpeal*;

$25,0Uü for tîling or reaponding to o petition for rcview tn the Texns Suprana Court;

$25,00û fnr filing or rerponding 1o a brief on the nrerits to the Texas SuprõmÉ Court;

$1û,û00 fororal argummt in the Texns Suprume Courl

IT IS FURTHE& OïÞERED tl¡at sll costc of qÕurt ar€ adjudged agninat Clear Lakc

Center, L.F., fCIr atl çf whl:ch stesution rhell lssus.

IT IS TURTHER ÛRI}ERED, ADJUDGED AHF NECNEED ÛrAt aII Imou¡rtg nwarded

in this Judgment shnll beûr post-judgm€nt interest at tho rate cfSåLåB* perrent (fr oo'¿l po

annrm from tlre date folluwing thir judgmenç until this judgment is paid in full, fnr all sf which

sxecutian shall issue.

ff IS FIIRTHER OR.ÐËRED" ADruDÕED.4ND Dã'CREED, ns dectaral,ory relie.{ that

rvhile the Lsese beh¡¡cerr thr parties allows Clenr Lake Cenler, Lf. tn charge * managcmtnt fee,

that feE is limitÞd tu nums expended for tho mÊnðg€ßrõnt md mnintËnsncë af thr oommûn årËa

snd not the pmpcrty as n whole. ln addition, the Court declares thst $ardsn Rid.Bc, L.F. i¡ not

cbligated undsr the Leüsc tE Fey for mnnagtmrnt fsee thst art nat rslated trl the msnagçn¿nt or

msiilfenûffe af tfte rû¡nffüÍ¡ affi af Clrs¡ Lake Crnfe,r, cs lhåt lsrm is dsfrnnd in the Lease" and

tbat the ilrnnrgÈmcnt fees must bÊ *o*pur"ùl. to xirnilur *hopping ecntieß in H¡rris County,

Texac" "fhs Csurt å¡¡thsr deolares that a eanrpsrable fee, ðË dEtcrntinod by the jury, in 3% of the

ctfitmon arcË fftpEnEËt.

All relief requestod in this cuse which hüs nnthçen expreuþ grantrd harsin is dcnied-

2An 7

This jndgment i¡ finsl and disposes af ¿ll p¿rties and clairne and is appealable.

sIûNED * ttr l'fl¿uy of M.** , ?015. J

EL.{IHE PALMEE, DISTRJTT JUDT}E PRE8IDINO

AFPROVED AS TO FTRM:

Stephan W. tammon $tateBarNo, 12194500 BmdleY rtr. Colc Statc BarNo. û4535980 Husoh Blackwell LLP I I I Congress *dvenue, Suite 140CI Austin Texse 78701 Phono; 512.472:5456 Fax: 513.479,1Iût Stephen.Lammou@huschblachre ll.com brad@bwr-law.nct

AlTORNtrB FORFLAINTIFF çARI}EN RIÐCE, L"P

Eric Lipper srate BarNo" 123990Û0 ïfhitrey Rawlinson St¿tn Eaf, No, 2406*655 Hirsch and trVæfteimer F.C. l4l5 louida¡a, 3Ëth Floor Houstor¡o Te*âÉ 77CIü2 Tclephon* 7 13.22t "9 I 62 Facrimile: 7 13 "3-23 .91 l9 elipper@himchwcst.cÕm wrawlinmn@hiræhwest.s$m

.åTTORI{EYS FOR ÞEFENDAT\TT CLEAR L^ûI{E CENTER, L.P.

361 Tab 2 .¡ s' Tfutr;å} f -[I DEnrcl Chns Þlrtrlct Clark

cAusE No 2CIü9-5&û38 Tfmt

GARNEN RINGE, L P $ TN $

$ VS $ HARRISÇOLINTY,TEXÂ.S $ CLËÀR L,'\KH CENT'ËR- L F $ And DüHS l-lü, $ ?Isth JI.jDICtrAL I]ISTRICT

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Charge of thc Court

L,ADIES AHD üENTT,Fh4E}.¡T ü¡T'l'¡{E JURY

¡tftsr the closrng argumÈnts, you wll go tn the Jury rûom to decrde the ease, ânswer ülç queshons ftal are allachsd, and reach a verdrct Yau may drscuss ¡lre cace rvlth other ¡urors only when you ärB all together rn the;rrry room

Rernernber my prËvtrlts mstntchons Do not dwcuss thç sasc wrth anyonÊ ÊlsË, crthcr rn person or by any olher rncaru IJo not do any mdependent rnvesttgalroil nbout thc case tr eonduct any rcsearch Fo nol lock up any wards m drstronenes or on the Intgrnet Do not post lnformatron about the. casË on the Intemel Do no1 shnre any spccral kr:owledge or expenences wrth the pther JurCIrs fla not usq your phone or âny other elÊËkomË dçvrce dunng your dehberahûhs I'or any rs65tn I mll grve yüu a nu¡nber where olhem rnay conlect you tn case of an cürËrgÕnc.y ,

Any note$ you hnve taken are for your own personal use You rnay lake your nctcs bsck mto The Sury roçrn and consult lhern dunng dchberatloffi, but dn not shcw or rcad yÕur notËË to yor.u fcllow lururx dunng ynur dehberill¡cmt You¡ notcs ärÊ Rnt evrdeno€ Esch of you shcuhl rely on your rndependent rcccllest¡on sf the evldencc and nnt be mlh¡eneed by the fact that another Jrutr has or has not tgken nntes

You must leave your notes $¡rth the bml¡ff when you arc not dehberatrng The badrffwrll grve yüur notes tu me prompfly pller collestrng them frorn yau I wll make rrne. yüur notes ara kept rn a safe, åËeure locstlon and not cl$slcsed to anyone *tlter you complete your delrtrer¿hcr¡-t, the ba¡llff wrll calleet your notes ï/hcn you âre released åo* Ju"y duly, flre bill¡ff wrll promptly dcstroy your notes m that nobady can read what you wrcÎe

fiËCOftOER 8 ilETORAJ{DUü rlìE lËilrunËfi Eôlf Lurt¡¡ nr¡at,h, at the rune c{ rrrr¿{q ;'* " 262 lle.re sre ün rnstructlan¡ f,'cr snsçÊnng the questrnns

I DÕ not let bras, prelud:sc, or sympøthy play any part rn your decrsran

2 Base your änswcrs cnly on the evtdenee adrntlted rn court $nd on thc law that rs m thesc msln¡ûtlans and questrcns Do not cunsrder or drse.uss nny evrdence tbat wss not adruttõd m the cnurtrçsm

3 Yau are lo måke up your {:wl mutls nbout the fscts You are the sole.¡udges of the credrbilrty of t}re r¡ntnesses and the werght tr $ve thcr lestrmany But on m¡rtfsrs of law, you rrust followall of nay nslructrpns

4 If nry mstruchons use a word ln fl wsy that ¡s dlfferent frorn lts ordrnary mfran¡ng! usr the rnesrung I grve ytu, r,rrhtch u'll! bn ü prÐpËr legal defirutron

5 4,1 the ques$on$ aüd answsr$ are rfliprlrtÊnt Nr rne $hruld $åy thal any qu€shCIn ûr ãnswsr rs not rmpartant

6 .4,¡swer*yes" of "¡1t" tc ø11qucsttuns uilcss you årc told othcrwrse  *'yesn'rìnslver nrust bs based sn fl FrÊFûnde¡anr:e of the evdenÊe unle$s yur rrÊ told otherwse Whensycr n ques[ron r€quucs an ansrv€r olher than ']Ës" or "non" your ansrrter mu$ bË based nn a preponde.rnnæ of the evrdence unlesx you flrE told othen¡vrse

'lhc tsm o'prcponderançe of The evldencc" m$ãns the gruater welght. of crsdrtrle erndence presented rn thrs cåse ll'you do not find that a preponderance of the eyldsnc.c supports il ')es" enswer, then answer *ho " A prcpondËmnce of thç cvrdeircs rc not measuflDd by thc number of wrtnesses or by the number of dosurnents adrnrfled m evlden{:s For a fact to be proved by a prepandemnce ofthe evrdence, yoi¡ mu$t ñnd flut the fncr ß nrCIrÈ hkely true lhan nCIt true

7 Do not dcclde who you tbrnk shor¡ld çrn before yru ilffiwer the quesnCIns snd then ;ust answer lhe questronÊ tü m¡tch your dc"crsron .Answer ench questron eareñ¡lly wrnhout eonsrdenng who wll wrn IJo nol drscuss nr cons¡der the effect yüur ens\ryËrs vrrll har'Ë

I Do not answer queshons by druwrng strålus or by any method of chance

I Some qtrçs!ûns rnrght a"sk you for a dollff ¿mouRt Í]o not ãgrïc ill advanee to deçrdc ou a dollar amo¡mt by nddrng up earh¡uror's srnount snd then figunng the average

[ü ool Do not hnde yfiur'&n.qwers For *xarnple" do nnt såS, w¡ll an$trer t]us questrnn yru¡ wsy rfyou anslrygr anofhcr questron my way "

l l Unle¡s $therwse mstructed, thg answers to the questrons musl be hilEsri on fhe decrsron of nt least lü of the 1l ¡urors The snmr 10.¡untrs must agree.on cvËry ânswÊr Dn nnt agree to be bound by a vole af anl*lung less than 10.¡urors, even rf ¡t would be a mq¡onty

Z

263 As I have sald befb¡e, rl'yuu do not follow thme rustruchons, you wrll be gudty cf .¡uror mlseonduct, and I mrght have ta srder a new lrral s¡rd start thu process ovËr agâln Thrs would wÊEt€ your lrnre and thg pafires' mÕneJ¡, and would ruqu¡re the tatpayers sf tlus county 1o pay frnr a¡rothEr tnal If n Sumr breaks any of thcec ruleq tell thst prrson to slnp and report tt to me tmmedrately

Prendrng Juror

1 Wben you go rntn the 1r-u7 roorn to nnslryer lhe quesfions, thç first tlung yau wrll nred tCI do ß choosc a presrdrng.¡uror

2 The presrdrngJuflìr has these dutres

íl lrave the complete charge rcad aloud rf rt wll be helpful tû your dehtrerat¡üns, b presrde rvËr ytur dchbtrat¡gns, meilung manûge the dtscu*stnns, and see that you follarv fhese rnslruüUün$, t grve lvntten queshons or uommenln to ths barhff r,r'hn wrll grve them t$ the ¡udge, d wnte down the answers you ffgrçE $n, Ë gei The slgnalurÉ$ fir the vsrdrct eerhfifåte, and f nrnry úe barldf thtt ytu h¡rvç rÊaehed a verdlct

Do yau ur¡derstnnd th¡ duhes of the presrdrng¡uror? If yc¡u ds nol, please tell mc nolr

lnstructtuns for Srgtrng the Yrrdre I Crrhficnùe

1 Unless otherwt$e mstructed, you måy answrr the questrons on a vote af lü;urors Tlie sqmc 1ü lurnrs must ügrËe on svsry answsr ln the cha¡ge Thls means you måy not hsve one group af lO¡urnrs ûgree on ûne &nswer and a dllhrçnt grnup of l0¡urors ûgrue on nnotlter íinsrvsr

? lf 10 .¡urors âgrss rn wery ans1vËr, ttrose l0 Juror$ ergn the verdtel If I I ¡won sgree on evet1 &nswerf those 11 lurrrs srgn the verdlct If all 1? uf you flgtue rln Bvcry ¡utswerr you sre unsn:fitous and only the presrdrng¡uror Ëtgit$ lhç verdlct

3 All;urors should dehberatc oü every queslron You may end up wrtlr ull 1? of you flgrcËrng on s{!ne ånsrry&rs: whlle anly 10 or I i of you sgree on other an$wÊffi Ëlul wlien yCIu $tgll the verdrct" only those 1ü rryho ågrËc ün svsty rinliwer wrll srgn the verdlct

Dn you rmderstand tlresf urstructtons? llyou do not, plcese tcll me rrsrv

FRESIDîHT

J

264 DE FITìIITIONS A}ID INSTftUCTIONS

In.qtru*t¡nns

In nnswenng queetronn abûut damages, answer each questron separately Do not rnerËnse or redncc thg amount rn nne ãnslyer beeause of the rnstmctrong ln or your ilnswsr; to any other quËstrons about damages lJo not speculate about rvhat any perty's ultrmate reffrvery rnäy or may nct be Åny recovery wrll be determlned by lhc court lvhen rt apphes the law to your ånswcrs at the trme afSudgment r

Bur*len of proof rs thr Plnrntlfi{s}'s responsrbrlrty to prrc the truth of thelr elarm{s} agrunst the Dcfendant by a Preponderance ofthe evrdençø

Defin¡tlonr

Caprtalncd tsrms rneludcel rn queshons have the same rnsflnmg as m the lease

You are rnstructer{ that the "Le&g€" mÊån$ the "Shopplng Center LËãseoo' the "Flr$t Amcntlmenl tü [,Êirse," and the "Seçond AmendrnEnt to Lease n'

1tr/alver rs an rntent¡onal su¡render of n knowl rrght or ¡ntentronal condu¡:t rncûrrs*tent wrth clarmrng the rrght

The followtng f,aclerrs may be consldered rn determmrng the reasonsbleness of an attnniey's fee award

a the tune and labor lnvolved, the novelty and drffreulty of lhe questrons rnvolved, and the skrll requred to perform the legal servlces properly, b the Nrkehhood that the acceptance of the partrcular empl"oyment wlll preclude other employment by the lnwysr, c the fee custsmanly chargcd rn the localrty for srmrlar legal servlces, d the nmnunt mvolved and the results obtruned, s the trme lrrnltåbons rmposôd by the cl¡ent or thc clrcuntstaRces, f the nature and length af the prolbssronal relatronshrp rr¡th the chent E the expenence, rcputåtron, and *bllrty of the lewyer or lauryers performrng the servrces, and h rvhether the fee ls fìxed or eontrngent on results obtarnecl or uneertunly of colles,üon before the legal servress have been rendered

265 OTIE*TION FTO I Ðrd Clear Lake Ccntar f¡¡l to comply ï/rth thÊ Lesss by dorng any of tlre fullowrng?

Chnrgmg tardeir fudge Common A¡en Costs for the costs fCIr anythrng othcr than Comrnon as defined rn the Lease '{rsa AgE$¡Br "Yegto or "NÐ"

AnswEr útç t-

266 If your answer to þsstron No I ¡s "Yes," thçn answer thg followlng quesüon Othcnvrsc, do not answer the fsllswrng quÊ$tmn TUESTION NO 2

Was Clear Lakç Çenter's *brlrue to conrply e*eused?

Fzulu¡e to comply by Çlear I,ake Ccutcr ¡r sxcu*ed rf comphance rs warved try Garelen Rrdge lffarver rs an rntentronal surrender of a hnown nght or rntenhonal ccnduct rnçono¡stÆnt w¡th clarmlng the rrght

Farlure to cornply by tlear Lake tenter rs exc¡r*ed rf the partre* agreed that a nerv âgreement wculd talte rts placer [n decrdrng whether the ¡rarhes reachetl an agreement, yoü $rs¡¡ consrder what they sard and drd m hght of the surroundmg errçum¡tanees, rncludrng ã,ny e¿rher cûurrË of deahng You may not consrder the parhes' unexpreesed thoughte or rntentrtng

F¿rlure to cornply by Clear Lake Center rs exrusÊd rf a drflerent perlor mance was aceepted a* full sabsfactlon of pelformance af the orrgrnal obhgatrons of the ågr€ement I

Failure to comply by tlear Lake Center re exeused rf the followrng crcuffÁtanees occurred

t Garden Frdge a By words or conduct made a f'alse nepre*entailon sr concealed sraterlal facts, and b Vfrth knawledgt of the facts or wlth knowledge or tnfbrmat¡on that wnuld lend o reaaonsble per$on ts dlsctver the faets, mrd c \Mrth the ¡¡tent¡on tltat Clear Lake Center wauld rely on the lalse repreÉentåt¡on or concealment u actrng or decrdtng not to act and g Clear l¿ke Center å Drd not know and hnd nt ürËan$ of knormng the real facts and b fi.ehed to rt.s detrrment ün tJre falce representabon sr ¿r:neealment sf msterral f;¡cts

A¡gwer *YÊs" or *No"

Ànstver frJP

267 If your arswer to Queshon No 1 rs o'Yesn" *1Ën mswer the followrng quesüon ütherwrse, do not an$wer the followurg questron

o{IE$TrqN Nq 3

Is Guden Rrdge estopped from cornplarnrng of Clear Lake Center's fallure to complf To find estoppel, you must find that Garden Rrdge took sorne voluntary actlon cûnrÉrlung the management fae on whrch Clear Lake Ccriter rehed m güod fnrth, whrch led Clear Lake tenter to change the posrtron * held pnor to such aclron, to Its dstnmcnt end thåt to now allow Garden Rrdge to ehnllengs 1þs msnagement fee would be connary to üs rruhfll actron, and would result m harm to Ëlear Lake Centçr

Angwer r¡Ye$r' (lr ttHot'

Answer ¡,) p

268 If yaur ånswer to Questron No I ls o'Ye$," and your ånsì¡rÊr ûo both Questron Nos 2 a¡rd 3 ls'tilon" thsn answer the followrng questron ttherwrne, dCI not. an$wsr the followrng questron

OI]ESTI NO4 of money, tf any, rf pard nolv m cash, would fatrly and reasonnbly cornpenseæ trVhat sum üarden Rrdge for rts darnageso rf any, that resulted flum su{:h fallure to ccmply?

Consrder thr followrng slement of damages, rf any, and none other

The amount pard by üardcn fudge" rf any. for sums expended by Clear Lakç Ëçnter rn manågtng somethrng other than the Comrnon A¡ea" or amount pard by tarden lüdge for sums expended by Clear Lake Ccnter m manågng the Commun A¡e*r that are not comparablc ts sr¡rns ËxpÊnded m rnürlsgrng Cnmrnon Afleås af srmllar shopprng csnlers rn Hams County, Texas

Do not add any amqutÎ for lnterest on damages, rf *ny

Answer separately rn dçllars and cents, rf any

For calendar year 2üû5

Answer $ 7&n noo For c.alendar ycar 2üt6

"¡trnswcr $ ap Fcr c¿lendar yeer ?tlt7

An$trçr $ {o4, BP ø For calendnr ycar 2{}tS

..{,nswer fijâ*ßæ* For calendar yeer 2t09

Answçr $ fi t&ç T¡or cslendar yeer 3tlû Answer $ þëp For ealendar year 2ü13

Answer $ 0Ft I 269 For calendnr year 2ü14

Answer $ 8L,nnþ I

I 270 ouEsrIOFI N0 T

Tfhât rs fl reasonable fee far the nÊÊËssåry scrvlres rncuned by Õarden Rrdge, rf anyo for rts atlorneys rn th$ casel

^Answer separately n dollars mrd cents, rf any F*r prrpar*tron sÃrd tnal

.Ans\¡$er $ ,ÛÕ If an appeal rs hke,n tCI ths Court of Appeals

Answer $

For fikng or respandrng lo a peätron for rsvrerv tp the Texas Suprerne Court

Answcr $ â.5" û7P I For filrng or respondmg tCI a bnef on the menfs to thË Texas Supreme CCIurt

Answer $

For appeanng to make oral argument$ åt the Texas Suprcme Court

Answer $ lþ, þtTt I

271 OUESTION NO 6

Dld (iard*n Rrdgc farl to comply wrth the tease? onYes" Answg¡ 0f "No"

.4nswer ¡.fp

ll 272 If you answrred o'YÊs" to Questron No 6 then answer the followtng questron Othe.rwme, dq not an*u¡Er the followrng questron

çTIESTTOF{ Nü _?

Was tarden Rrdge's fadure to comply ertcused?

F*rlure to comply by tarden Rrdge rs excussd by Clear Lake's prËvlûus fmltlre [o courply wrtb a matenal obhgahon of,the same agreernent

Fallmr to cornply by Garden Rrdge rs excus€d rf comphance ls'*verved by Clear Lakc

\túarver rs ân mtentronnl rehnqulshmÊnt of a known nght or rnteirhonal conduct ulcCIRsl$tent wlth clalmrng the nght

Fmlure to comply wrth onc agleernent rs excusðd rf the parttes agreed that a new agrnement would take rts place

Fadure to comply wth an agreement rs excussd lf a d¡fferent perfonnüRtç 1ilå"5 acccpted as full saüsfaetron of performance of the onglnal obhgatrons of the agrtement

.Ànrwer *{YÊs" or'rF{o tt

,4.n¡wer

273 Ifyour änstvÈr to Questlon Ì'-Io 6 rs 'oYÊs," ffid your answÊ¡ to Questron ?tlo 7 ts "No,'n lhcn answer tirc fcllcwrng quesbon Otherwrsc, ds not åru¡$rÊr the followrng quÊsûûn

0Ir_Et:rIqF Nç 8-,

1[/hat sum of msneyn rf any, rf pard now m eash, would falrly and rea$onably eompensate Clesr Lakc Centcr fcr rls damages, rf any, that rezulted from such farlure to comply?

Constder the follnwlng elemcnt of damages, rf any, and none other

The ¿mount not pard by Garden lfudge, rf any, for sums expendcd by Cle*r Leke CenùÊr ln managmg the Cornrnon.A.rca

Ils not add any arnount for mterest on damages, rf any

Ansrvel separately m dolla$ and csflts, rf any

For calendar year ?01 1

Answer $

For calcndar year 2û1?

Answe¡ $

274 orsEË:nqgllg e

lVhst $ a rreåsonahle fee for the Træessary serwc.€E of Clear Lake Center's attorneys rn thrs cese?

Answer sË.perstËly tn dnllars and centso rf any

For preparaflpn and trral

Answer ü t If an appeal ts tsken to the Court of Appeals

Answer $ o For fihng or respondrng to a petrüon for ret:ew tCI the Texas Supreme Court

Answer $ t For fillng or respondrng to a bnef on the ments to the Tcxas Supreme Court

Ansurer $ t For appeanng to make oral atguments at the Texa$ $upreme Court

A¡swer $ t

t4

275 OUESTIONNO 10

Þrd Clear Lake Centcr obtmn or ret*n monÊy from Garden Rrdge that rn squty a¡d good com¡c¿ËnÊË belongs to *CIrdEn Rrdge?

AnswÉr "Ygso or "Noo'

Ansqør

l5

276 If your answ€r fo Questron No l0 ts **Yes," then ån$wçr fhe followlng questlon Otherwrse, do not åns$,er the followlng quÊsflon

OTIESTIO Fto 11

trVhat cum of monÊ'$, tf any, rf pard nrlw rn cash, would farly and res$onåbly compensate üarden Rrdge fsr lts damages, rf any, that reaulted lþom such actron?

Csn$dÊr the followrng element of dnrnages, rf any, and none sther

The amounl of money, rf any, that Clca¡ Lake Center obtarned or retamed from tarden fudge that rn equrty end good ronsüenoË belonga to Garden Rrdge

Do not add any amount for mterest on damages, rf nny

Answer separately rn dollers arrd cents, rf any

For calcndar year 20ü5

Answer $ ü For calendar year ?006

Answcr $ 0 For calcr¡dar year 2ü07

Ancwer $ ü For calendar year 20CI8

Answer $ fr For c¿lendar year ?û09

Answer $ Ð

t For cslendar year 2010

A¡swer S

For calendar ye*r 2013

Answer S ü

For cfllendär year 2014

Anst¡fer t fr 16

277 ÛIJEüTIOI,{ Ë0 rz

D¡d tardcn &rdge obtarn or rçtarn mûney from Clear Lakc Ccnter that rn Ëqilty and good consmËncç belongs to Cles¡ Lake Centsr'¡

Answgr'oYgs* ûf 'rNt?r

Answer

t?

278 ¡

If yurr ¡mswcr No *Tss," flld your ãnsi{rçr to lt 1o Queshon rs Questrorr No 12 $ "No,* then ansu¡er the followrng qu€stlon Õthenmsç, do not ånswçr the fblloçrng questron

OUE$TION NO 13

Vfhat sum of money, rf flny, rf pard nû\ry m cash, would farly and res$onably compeirsate Clear Lake Center for ltg damages, rf any, that resulted from suçh ffihon?

Consrdcr the fCIllowftg €l€ment of damages, rf ffty, and nons other

Thç amount of money, lf nny, thqt Gacdcn fudge obtsrnÊd ar re,tarnod ftom Cleff l¿kç Ccnter thût rR e$nty ãnd goed c,cnscrËnÊË belongs tp Clsâf Lake Center

Da not add any åmoilnt fsr tntuçst ûn dnrnågÊs, lf nny

For calcndår year ?ü11

Answsr S*-â{p*Ð- For calcndar year 2012

.Ans\iler $ Årt

1t

279 Verdtct Cerhlicate

"o-y" tur rs unânlmous Alt I2 of us hsvc agreed to each nrid *very fft$wÊr The J has the for all l! of us

l sf PÍEsrdmg Juror Pnnted Name of Fresrdmg Juror

Our verdl*t ß not Ênflnuru)us Eleven of us havo agreed to each nnd every ans!¡rËr and hsve srgned thc cerhficate below

Õu¡ yer*ct ts not untmrnüus Ten of us have agreed to each and eveiy answÊr rurd have srgned the certrficate below

SIGNATURE T{AME PRI}TTED

T

s

I l0

l1

280 Tab 3 li'l:!¿

gãoPPI¡lo CENIER IJBAaE

This Lease ls entered into as of the 29th day of December , 1-995, by and betr¡een the Landlord and the Tenant hereinafter named.

ÀRTTCLE I. Seçtion 1.1. Fundamentq] Lease provisions. (a) ILÀ,NDLORDI: FiesÈa Uart, Inc., a Texas corporation

(b) LANDLORD,S ADÐRESS: b235 Katy Frêeway Houston, texas 77Oo7

(c) rTENA¡¡Til: Garden nidge, L.p, , a Texas lirnit.ed partnership

(d) TANANTTS å,DDRESS: 19411 Àtrlum placê, Suite j.?0 Houston, ?êxas 77O94 (e) IENANT,S TRÀDENÀüE! Gãrden Ridge (f) ilDEMISED pREtfIgESr: Approxinately l5Ot757 ôguare feet in area belng a portion of the shopping center coromonly linolrn aË Nasa value center constructed on the real property described in Exhibit rÃ.[ attached hereto, the Denised prenisås so s called) being situated subståntial1y in Èhe i.ocatlon1ñereín which is shonn outlined in red on the plat att,ached hereto as Exhibit ilBil, The tarm rrshÐpping Centerrr, as used herein, shalL refer to the real property described in Exhibit ÍÀr and any existing and future buj-ldings, parking areas, sidewalks, service areal and other inprovernents thereon. (S) LEÀSE TER!î: Commencing on the IC1osing Datêr as such term is defined and deter¡rined under the term6 of that, certäih Àsset Purchase Agreênent dated as of Decenber az, 1.995 bet\¡¡een Tenant, as Purchaser, and Pot,t,êry Mart, Inc., as Seller, but in no evenù lâter than April L, 1996 (the rcommensenent Dateil), and contínuing for twenty (20) years thereafter. (h) BÀS8 RENÏÀL: $975,00O.00 for the first ten yeârs of the Lêase Term, payabre in nonthly inst,allments of 9s1,2so.00 each. After the first ten years of the Lease Term, Basê Rental shal"I be adjusted on each five year anni"versary of the commêncenênt Ðate (the ttÀdJustnent D_at.ett) .throughout the Lêase Tern (including any Ext.ension Periods for rvhich the ExtenEion option is exercised unaei Àrt.icle XXIII hereof). !'or the five year period commencing upön each Àdjustrnent Date, Base Rêntal shall be equal to the piodüct obtained by nultiplying (x) the Base Rental in effect during the preceding calendar ¡nonth (therrDetêrninâtion trtonthr) by (y) a fraction, the nu¡nêrator of r¡hich shall be the ¡nost current-Refised cohsuner Price rndex (all cities - urban wåge Earnérs and clerícal workers, U.S. city Average, A.1"1 ftêns) of the Burear¡ of Labor statistics of the unlted staÈes Department of Labor (19g2 to L9g4 * 100) the (rtcPrt') for the Deter¡ninat,i-on Month ànd the denorninator of which shalr be the cPr for the first caLendar ¡nonth of the Leäse lerm in the case of the first adjustnent of Base Rênta1 and for the calendar nônth sixty nonths prior to the Deternination Month i-n the case of each subsequent adjustment,. Base RentaL shall never decrease and i-ncreases in Base Rentar based upon increases in the cPr shalt be cumulative; provided, however, thät the first increase in Base Rental following .the first ten years of the Lease Tern shall not exceed t!¡enty percen! (a0*), and. no single increase

F:1l9ts/ ¡ôt4.,^sÉ: PLAINTIFF EXHIBIT 1 Glear Lake (2) oo0904 :ilü"

thereafter for any five year period shalI exceed ten percent. (10t), (i) colfMoN ÀREÀ MÀINTENANCE CHÀRGE: Tenantfs share {herelnafter defined), esti¡nated to be g9o,o00.oo for t,he first year of the Lease Term, payable in egual nonthly install¡nants of $7,500.Oo each, subJect to adjustment as provided in Section 6.4 (j) TÀxgs: Tênant,rs Share, estinated to be g12g,ooo.0o for the firsÈ year of the Lease Term, payable in the manner provided in Sect.ion 18.2. (k) INSURANCE: Tênant,s Shåre, estimated to be $13,500.oo for the first yeâr of the Lease Tern, payable in equal nenthl-y installnents of 51,125.00 eäch, subject to adjusturenC as provided in sêct.ion 18.4. {1i TENÃNT.S SI{ÀRE: Àç used in this Leasê Agrêênent, Tenant's shðre of common Area Maintenancê charges, TaxeÉr, insurance and any other amounts payable under the terms hereof shall mean 37.24\ of the tot.al amount óf all such charges and amounts. In the event any additional buildings, or additions to existing buíldings in the Shopping Center/ are added to the Shopping centei, Tenantis share of Common Àrea Maintenãnce Charges, Taxes, Insurance ¡rnd åny other alïounts payâble under the ter¡ns hereof shalL be equitably adjusted. (¡n) PREPÀTD RENTAL: gg9r975,O0, inelusive of (i) aase Renta1 for the first ¡nonth of the Lêasê ferrn, pl-us (ii) fenant t s Share of conmon Àrea Maintenancê Chargês and Insurance for the first dronth of the Leasê Tern. (n) PERilITTAD USE: The Dgnised preÍ¡isea shaÌl þe used f,or the pTlpose of operating therein a retail store selling silk and dried flowersr. non-electric housewares, sêasonal goods (hóliday decorat,ion and trim), party supplies, ho¡ne decor and accessoriesl baskets, cänd1es, pot,tery, (decoraÈive and funetional) cråfts and pictures and picture frames (the I'Prirnary Pernitled Merchandiser). In addition, Tenant nay se11 such other nershandise rvhich is offerêd for sale in a najorÍty of renant¿s other sÈores provlded the sale of such merchandi.se does not, confliet vi.th or violate any !g?l prof¡iþit.ion or restrictlon described in clauses (i) througñ (iii) in¡nediately berov in effect at the tine such ¡nerchandise is offered for sale in thê Dênisêd prenises. After the flrst five years of fhê Lêa6e Ter¡n, except as otherwise provided in this L€aÊe, the Demised Prernises nay also þe used for any other 1awful retail purpose which is not ín conftict rvíÈh (i) the prinrary use of any other tenantrs leased prenises in Èhe Shopping Center at the time of a proposed change in Tenantrs use of the Dêtnised premises and (Íi) any exclusíve use provision contalned in any leaee covering other space in the Shopplng eenter in effect aJ of the date of a proposed clrange in Tenant's use of the Dernised prenises and (iii) any prohibition or restriction contained in that cert,ain Cónstruction and Reciprocal Easêment, Agreenent (Èhe rRFtA'r) dated Ðêcember 2, L986, bêtwèen Landlord and Wal-l¡tart properties, Inc., recordêd under Harris County clerkts File No. Kg6zogT (without amendmenù unless approved by Tenant) or any other restriction of record against Èhe Denised prenises or the Shopping center a6 of the daÈe of this Lease. rn addition, the Ðe¡nièed Þre¡nises shalt not be used for åny purpose which ls i.nconsist,ent with the operatÍon of a first cl"ass retail shopping center or for any of the following pr¡rposês eollectively, the rtprohibited Uses'r), til ä second-hand or sample store, (ii) a surplus store, (iii) a bar, pub, nightclub, music hâI1 or disco, (iv) a bowling alley, tbeater, billiärd or bì.ngo parJor or other si¡¡ilar entertainnent purpose, (v) . a flea Ìnarket, (vi) a massage parlor, {vii) a funerãl home, (viii) the såle of paraphernalia for use with i1legal drugs, (ixj t,hc i1legal display of pornographic ¡¡aterial, (xi an off-tract bêtting parlor, (xi) any use which is illegal, (xii) a banquet hal1, auditorium or other place of public or private assern5ly, (xiii) a training or educational facility lincluding, r,rithout

Pìit.99Ìl 6,14.1.Str 2 PLAINTIFF EXHIBIT 1 Glear Lake (2) oo0905 i:'. t.r.,i

limi.tation, a beauty school, barber college, reading roon, school or other facility catering prinarily to students or t,laineee rather than customers) or (xiv) a glnmnasiun..sport or health club or spa. In addition, êxcept as expreësly pernitted above, Tenant shaLl not sell or offer for sale in the De¡nised premises groceries, neats, produce, _ drugs, sundries and other foods or food productå customarj"ly sold from ti¡ne to tine in a grocery store or supennarket. LandLord recognizes that renântrs customãry bueinees includes the operation of a prepared food service facility, and Landlord hereby approves the same. Landlord hereby agrees Èhat. it shalL not lêase any portion of the shoppÍng center for the purpose of conducting any Þrohibited Use nor shall it permít the use of . any portion of the Shopping Center for any Prohibited Use. Seetion 1. Z. Ef fe-.c-_ç of Reference to Fundanental lJease provisions. Each of the foregoing definitions aña- ruñaãñãilãr lçase provisions sha1l bê construed in conjunction with and li¡nited by the references thereto in the other provisions of this Lêase. ARTTCLE IT.

Sect,ion 2.1. Demised preJmises and Term. In consider- at.ion of the obligation of renånt to päy rent Àt hereln provided and in consideration of the ot,her terms, covenants and conditions hereof, Landlord hereby demises and reases to Tenant, and renant hereby takeõ from Landrord, the Dernised premises as described in section 1'1(f). To HÀvE ÀND To HOLD the Denrised premÍsas for the Leåse Term specified in section 1.1(s), arl upon the terns and cÕnditions sêt forth in this Lease. Landrord fùrther agrees that. if Tenanl shalt perforro all of the covenants and agreeneñts herein required to be performed by Tenant, Tenant shall, subject to the terms of this Lêase, at all tl¡res during the continuance of this Lease have peaceful and quiet. possesslorr of the Denised premi.ses. There is specifically excluded frou the De¡nised premises and reserved unto Landlord, holrever, the air space over and above and the subsurface below the Þe¡nieed prenises and. tbe shopping center. Landlord further rêserves the use of the exterior walii anã roof of the De¡nised Pre¡rise.s and t,he right to insta1l, naintain, use, repair and replace pipes, ducts, conduits and wires 3-eading tnrougå the Dêmlsed Prenises.and servlng other parts of the shopping centãr in locations which will not mat,erially interfere with renantrs use thereof ARTTCLE 1II. . qsrction occupying Acçeptanqp_ of Denised pre¡qiFelå. By ¡.r. Prenises, the Demised Tenant shall be ãeened to havä accepted the same in its existing condition. îenanÈ rrarrants to Landlord that it. has, prior to the execution hereof, futly inspected the Demi"sed Premises and that it has nade, perfornedl obtained and received aII.studies, inspectiong, reporÈs,-diagnoseå ând tests that Tenant desires relative to the Demised prenisãs and Tenant's proposed business use of the Þernised premises. tenant underst.ands and agrees that it is accepting the De¡nised premises in its present rrAS-ISil, TTWHERE-ISI conditlbn, ilWITH ALL FÀULTSr. lenanl acknowledges that Landlord has not ¡nade and does not rnake, and Landlord hereby disclairns, any and all warrantles, exprêss or implied, which in any way relate to the Denised prernises or the condition thereof, including, without, tinitat,ion, êily irnplied warranty of suÍtabili.ty or habitabili.ty. Tenan{ further understands that Landlord has reried upon Tenant's having ¡rade a1l_ inspections Tenant desires prior to lèasing the DemÍeed prenises from Landlord, and that, but for such inspect,ions by Tenant, Landlord wor¡]d not have leased the Þe¡¡ised pre¡riçes to Tenant. Tenânt waives and relinquishes any right Èo assert, either as a clain or as a defense, that Landloid is- bound t.o periorm or tiable for thê non-perfor$ancê of any irnplied covenant oi irnpliea duty of Landl"ord not expressly set forth herein. Nothing in this seciion

¡'j"l.Ð?Iôtl.t-sË 3 PLAINTIFF EXHIBIT 1 Glear Lake (2) o00906 ..fììi:r. i:.¡ür¡ -r:.x:

shall opêrate and relieve Landlord fron it,s obllgations undêr this Lease for repair and ¡rai.ntenance to the extent provided for in Article VIII below. Section 3.2. Tênånþ_'_ç Work. Tenant, at its sole cost, , and expense, risk shall perform alI qrork (rtTenant's Workrr) requireå to prac€ thè Denised Fremises in the condition neeessary fór the conduct of renant,'s business, substantialty in accordãnce with plans and specificatione (rrtenant's plansr) subnitted tó and approved by Lândlord, which approval shalt not be unreasonably withheld or delayed. Landlord hereby approves, without thä neeessity of recei.ving plans theref or,- Tenant, s i.nit,ial installation of fixtures and non*struct,urâl demisinq walls (for office purposes) and repainting of the interior of the Ðer¡ised premises so long as the same åre substantÌa11y equivalent to Tanånt's store located at ?he Meadows in southern Harri.s countyr Têxas. with regard to any other inprovementef Tenant sha1l sub¡niå Tenå¡1t's PLans to Landlord for approval and Landrord shalL approve or disapprove Tenant's plâns within five (5) þusiness- days following Èheir subnrission to LandLord. rf Landlord faiLs io fpprove or disapprove Tenant's plans wÍthin such five (5) business day perlod, Landlord shall be deemed to have approved Tenant,rs Flans. Tenant shall also provide and instarl al1 other interi.or work, trade fixtures, furniture, furnishings and equipment of every deecriptlon neceÊsary or appropriate for the operatiðn of renant,'å businese in the Demised Premises. upon approval of rênant's plans, no changes sha11 be made therein without l¡andlordrs prror vritten åpprova1. ?ênant shal1 and does hereby indennify and hold Landlord, its agents and enployees, hatrmless fron and against any and all clains-, denands, suite and causes of action for-injury tå person or death and for_damage to property, including propert| of r,andlord, arising out of or in any way connected witñ Lr¡e^perlor- mancê of Tenantrs t^¡ork and the act,ivities of Tênant {nd its cont,ractors in the Denised pre¡nises. Àt all times whíIe is perforning Tenant's work and inst,alling its traãe Tênänt fÍxtures, equipment, furniture and furnishings, Tenant shât1 not unreasönaþly interfere with the conduet of business in the shopping centerl Tênant shall conply wlth such reguegts of r,andlorå-as Landl"ord might make for the purpose of avoiding such int,erference. Tenant shalr maintain the De¡nised prenises in a clean and orderly condition during the perfornance of Tenant,s l{ork and shalr pronptly rernove all unused conetruction maÈerials, equipnrent, shipping eontainers, packaging, debris and flanmable waste-frôn the Demised Pre¡nises and shall not allolr any such rvaste and debris to be placed upon or accuraulate in the coìnnon Àrêas. common Areãs shal1 not be used by Tenant for thè storage of equipment, Ínventory, fixtures, fefuse or debris. Tenanúrs work shall be subject, at all tirnes, to the general inspection and approval. of Landlord or LandLord's architect. I{iÈh respect to any conÈract for thè furnishing of labor or naterÍals for the pérformance of Tenant,'s llork, Tenant acts as a principal and not, ãs the agent of Lairdlord. Tenànt sha1l hâve no authority to place any llèn upon the Denised Prenises or any interest therein nol in any wêy to bind Landlord, and any attempt 1o do so shatl be void and ár nó effect. If, because of any-actual or alleged act or o¡rission of Tenant, any lien, affidavit, chargê or order for the paynent of money shall bä filed against Landlord, the De¡nised prenises or äny portiän thereof or interest therein, Í/hether or not sueh lien, affidãvit, charge or order is valid or enforceable, Tenant shall, at its soLe cost and expense, cause the same to be discharged of record by payment, bondinq or otherwise no later than fifteen (1s) aays after notice to Tenant of the filing thereof, but in all" evenCs prior to thê foreclosure thereof. : ÀRTICLE IV. paynent .qf Rental. À11 Base Rental and Se.çþion 4.1. aI1 other amounts payable by Tenant shall accrue hereunder fron tbe commencement Ðate, .and shal1 be payable to Landlord without, excêpt as expressly pernitted by the ter¡ns of this Lease, deductloñ,

l'r',L{,r.)?tiÍ4.f .Stj- PLAINTIFF EXHIBIT I Glear Lake (2) oo0907 ..'::'' ::::.:;l;ì íli¡:lì; \ji;f 'i{i*;i

set'off, prior noticê or derûand at the address to which noticês to Landlord are required to be given under thè ternË of Èhis Leasê. Seqt,ion 4.2. Bas_Ê Rent,al. Tenant shall pay Èo Landlord. BaÊe Rentðl in monthly installments, in advance, in- the amounts Ëpeeified in section 1. i. (h) above. The first sustr uronthly installment sharl be due and payâble on or before the exêcut,ion oi this Lease and subsequent. instarlnents shalr be due and payable on or before the first day of each calendar month during the-tern¡ of this Lease conmencing wiÈh the calendar nonth following thirty (30) days after the com¡nencement Date, çec,þlon 4.3. Failure to pav Rentai on Tinç. paÈt due Base Rental and other pâst dr¡e palments shall bear interest fron rnaturity ât the rate of eighteen percent (lst) per annum, provided, hovever, in no event shalr any such su¡rs bear ínterest ãt a rat,e greaÈer than the highest non-usuri.ous rat,e permitted by appricable 1aw. All other suns and charges of whatsoever nature-reqüirea to be paid by Tenant. to Landlord pursuant to the terms or thig Lease conetitut,e rradditionaladditíonal rent (whether or not the sane be desi"gnated renttr), and failure by Tenant to Èirnely pay such other sums or charges ¡nay be treât.ed by Lândlord ag a fáiluie by Tenant to pay Bâse Rent. ARTICLE V. TNTENTTONALLV DALETED

ARïICLE VI .

Section 6.1. Conn-qn Àrêa. ?lre ter¡n rtConmon Arear is defined for all purpos€s of this Lease as that part of the shoppinq center intended for the co¡n¡non use of all tenañts, inctudirg å;ro"{ otl¡er faciliti.es (ès such may be applicable to the srropping õenG;i parking ôrea, private streets and alleys, Iandscaþngl curbs, Ioading area, sidevalks, drainage facilitíèo, lightini fa?tfittes, drinking fountai-ns, pubtic toi.lets, and the tixe ¡ut excruding lFaee ln buildings (nolr or hereafter existing) designed for rentai for comnrercÍal purposes, as the sane nay exist fro¡n t,i¡ne to time, ånd further excruding streets and alleys ¡naintained by a pubtiå aut,hority. Landlord reserves the riEht to change from Èi¡ne tä time the dimensionE and location of the coromon Arãa, aa !¡ell as the di¡rensions, identity and type of any buildings in the Shópping cênter, and to construct additional buirdings or additionat stõrieà on exiEt'ing buildlngs. (excludingr, however, tbe Dernlsed prenises) or glhgr irnprovements in the Shopping Center, including, but not linited to free-standing buíldings oi kiosks; provlded, irowever, in no event shall (i) âny buitdings or other improvements bè constructed within that part of the cornmon ¡rea outlined in green (Èhe rrRestricted comnon Area") on the prat attached hereto as Exhibit rrB' and (ii) no changes shalL be ¡nade in the Restri.cted connon Area which reduce or change the number or eonfigrrrat.lon of parking spaces or driveways or aèeess areas within the Restricted conmon Area other than minor changes r¡hich singularry or in the agçregate with all other minor changes do not adversety affect thÊ operation .of Tenants, business in tne Þemised premises. Tenant, and its emþloyees and customers, and when duly authorized pursu^.ti to the provisions of this Lease, its subtenants, licenèees and concessionaires, sha11 have the non-exclusive right to use the Coamon Â,rea as consÈituted fron tine to time, such use to be in öÕ¡nnon with Landlord, other tenänts to the Snoppinq cent,êr and other persons pernitted by Landlord to use the same, and subject to such reasonable rules and regulations governing use åã Landlord nay fro¡n tirne to ti¡ne prescrlbe,- including- tbe designation of specifiå arêas wÍthin the shopping center or in-reasonablé proxinity thereto in which auÈo¡nobi.les owned by Tenant, its ernployees, suËtenants, Liçensees and concessionaires shall be parkeä. In this regard, Tenant shal1 furnish to Landlord upon request a complete 1iét of license nurnbers of all automobiles operated by fenanÈ, its

P:\1.9Ylld14.liti 5 PLAINTIT ' EXHIBIT 1 Glear Lake (2) ooo908 -;ii'jc'' ;; ir" 'l r.rlr¿

ênployees' subtenants, licensees or conceËsionaires. Tenant sbalL not solicit business or display nerchandisô or offer any merchåndise for sale within the Conmón Area or at âny other poini outside tbe Denised Prenises, or distribute handbills therein, or take any action vhich r¡ould intêrferê r*ith the rights of other persons to use the Cornmon Area. Landlord may tenporarily close any part of, the Corûmón Area for sueh periods of ti¡re as nðy bä reasonably necessäry to prevent . the public fron obtaining p¡escriptive right,s ôr to rnakê repairs or aLterations. LandLorã reserves the right to grant to third persons the non-excrusi.ve right. to erossover and use in cômnon with Landlord and all tenants of the shopping cenÈer the common Àrea as designat.ed fron tine to tine by Landlord, specifically, Tenant acknowrêdges the existence of, ald.agrees to the têrms and provisions of, t.hê REÀ. Subject Èo the li¡nitations on changes in tbe Restrict,ed connon Area se! forth ìn Section 6.1 hereof, Landlord shall_ have the right to makê chânges to thê co¡nmon Area, including, without linitation, changes in the location or configuration of driveways, entranceá, exiËs, vehicular parking spaces, parking area or the direct,ion of the flow of traffic. Sect,ion 6.2. parkincr Areå. Subject to the limitations on change6 in the Restricted conmon Àrêâ set forth in sect,ion 6.L hereof,.Landlord nay from tiure to tiroe substitute for any parking âr:eâ other âreas reasonably accessible to the tenanti of thé Shopping Center, which aieas nay be elevated, surface or underground. Tenant will not load or unload any trucks or permit any trucks serving the Demised premises, whether owned by feriant or not, to be loaded or unloaded in the Shopping Center, exðept in the âreas specifically designated for sush use by Landlord. LandlÕrd hereby deeignates the areas so indicated on -Exhibit oBil for such purposes in respect, t,o the Demised premises. Section 6.3. oÞeration of Conmon Area. Landlord shall operate, manage and ¡naintain the conmon Area, the rnanner of opêrationf management and naintenance and the expenditures therefor to be in the sole discreti-on of Landlord, proviãed such operation, Inånagement and ¡naintenance shâll be conparable to sinilaf shoppini centers in Harris count,y, .Texâs. Landrord shall have the riglï tá select a perãon t,o maintain and operate any of the connon Àiea if at any t.ine Landlord deterÍìines that tlre best interests of thè shopping center will be served by having any of the connon Àrea naintained and operated by thåt person. - Landrord sharl have lhe rÍght to negotiate and enter lnto a contract with that pêrson on such terms and conditions and for suÇh period of tine as Landrord deens reasonabre and proper, both as to services and as to cost. Section 6.4. Co¡ri¡ûan Àrea Co*qt,ã. In addit,ion to rentals and other charges prescrlbed in this Leåse, Tenant sha1l pay to Landlord Tenant's share of conrnon Àrea costs (as hereinatter definêd). rrConmon Àrea Costsrr, as used herein, means al1 suns expended by Landlord during the Lease Tern in operating, nanaqing, pollcing, eguippÍng, lighting, repairing, replaeing and-rnaintaininá the Common Àreas, and an allowançe to Landlord for Landlordrs supervision of the Common Areâs in an anount equal to seven and one-half percent (7-1/22) of the total of all Common Àrea Costs. comrnon Àrea Costs shall i.nclude, without linitat,ion, costs of reÈurfacing and.restriping the parking and driveway årêas; repainting, cleaning. sveeping, and other janltorlal ãervices; policing; purchase, construction, and mafnt,enance of refuse re€eptacles, planting and relandscaping; directional signs and other markersi car sto¡s.; lighting and oÈher utilities; installing, operating and maintaining .shopping cènter identification signá! prernlun¡ on. public 1 liabÍlity an¿ property danage ínsurãnce (excluding increaEes therein due to vãcancy in ttre Shopping centeri,' maint.enance, repair and replacerûent òt utirity syslãnsi including water, sanitary and storrn sewer Linee and othär irt:.rrtv lines, pipes. and conduits serving the Shopping Centeri Arainãqå systerns.serving the shopping center; rental chargeg for nachineiy and eguipment used in the operation, ¡nainte¡ance ãnd repair of thã

PrU,!9'l6il4. l,\E 6 PLAINTIFF EXHIBIT I Glear Lake (2) ooo909 i;iÌ,hiil r:, ü:i '-l*i.n'. '+i/"

cg¡nmon Area6r' costs of pêrsonnel to inplenent all of the foregoÍng, including wageÊ, unemployment taxe. and sociat securiiy -¿iläÃ; personal property taxes; fees for reguired lícenses and -parnits! sup¡Iies; and other costs necessary in Landlordrs judguenf ror tnå naintenance, operaÈion and nanagenent of the coi¡non åreas, but exc).uding depreciati.gl of tle origlna] coet of constructini itre comnon Àreas. Noj:withstanding the foregoíng, conmon Area bost,s sharr n-ot include,/(i) capital expenditures by Landtord unress the cost of auch items are a¡uortized over their useful rives (as deternined in accordance wi.th generally accept¿d accounting principles) .ín accordänce with leneral$ aecountin{ princi-ples, in which event there nay be i.nclude¿ ""c"iieã in conr¡ron Äreã costs for any year thê anortized portion of the cost of such ltens fôr such year as reflected in Landlord/s books and records. (ii) tlie cost of any r?þ9r or r¡aterials purchased by Landlord. trorn'any subsidiary or affiliate of Landlord unress the cost of such l.aboi or materi-als is cornpetitive with the cost of sinilar låbÒr and rnáteri.als avairable frorn unrelated vendors änd (iii) all costs and êxpenses {incruding penalties and fines) asàociãtea with the renoval and clean up of hâzardous r¿agtes or toxic subetances, (i;t work occasioned by casualty covêred by insurance require¿'to-uå ¡nai.nt"ained by Landlord ¡rursuant to this r,ease, oi wrrtcú is actuariy cqvered by insurance..maintained by Landlord, (v) work resultini from condennati.on to the extent the costs thereoi are not in excesã of the ar¡ard recelved by Landlord, (vi) depreciatlon and other cash charges, ivli) amortiaation of debt, interest on debt,non- or ground rent, and (viii) any cost,s separatery chargeable to or for which Landlord is entitled-to reinbureement from other t,enants in the. shopping cêntèr. Tenant sharr ¡nake such payneni" to Landlord at intervals not rnore frequent than raonthly v¡ttrr trre riiÃt-*ô"irrry instaLl¡aent due and payable upon the execudion of thls rreaÊe. nonthly or other periodic chargeE shalt be based uponsuch the Landlord/s est,i¡nated annuar cornmon Àrea costs, payable in advance but. subject t,o adjustment after the end ot eäcir calendar yeai during the tern of this Lease on the basis of the actuår common Area costs for such year. upon the computation of such adjustment (wlrich shall be completed within 1Bo days following the end of the calendar year to which such adjustrneñt relat,es) and notíce to Tenant, Tenant shall pay to Landl"Õrd the amouht of any deficiency, or Landlord shall- refund to Tenant tbe amount of aÞy e-xcess, as tËér case mây be, such re_inbursernent or pa)¡nênt to be naãe withiá thirty days followlng the Tenantrs receipt õf such statement. Section 6.,5. :gotB¡ûen=Àrea Co6t€. Landlord shall keep contpretê book6 and records for all cornmon Area costs, and renantì at its expenÊe, sha1l have the right to inspect,, a,rait ;;pi such books and records upon reasonãble noticé ouring the "'d busineåå hours of Landlord or Landlord,s property managêr. iandlord shall pronptry refund t,o ?enant any overpaynent and Tenant shall pronptly -(in each q"T_ to. Landlord any dericiency casê, within 30 ãaVå foLlowing completion of the audit¡', as the case ¡nay be, vhich is established by any such auditi provided, that, it such reflects that Landlord has overstäÈed corn¡non Àråa costs byaudit. than five pereent (5t), Landlord shall arso reLmburse TenantÍrÕre for thê reasonâble côsts and expenses incurred by Tenant in perforrning sueh audiÈ, not to exceed, hot¡ever, $:,OOO.ô0. ARTICLS VTT.

: ç.egtion 7.1. Use of Ðenised preniqes, The Denised Prenises shall be used only for the purpose or purposes in,section 1-:-(n) above, and for no otnei purpose wiihout specified the prior written consent of LandlÕrd. so long as tenant i.s conductini iis business in the De4ised prernises, lenant shaLl use in- the transaction of businèss in the De¡rised prernÍses ihe trade na¡ne specified in section 1".1(e) above and no other trade name without the prlor written consent of Landl"ord. At arr timec when Tenant is operating its business, Tenant slraLl operate tts buslness diligence, in accordance with the ståndards utilized in with the majority of Tenant's st.ores. Nothing contained herein shall

Pr!L9Ð1ó{4.l"stt 7 PLAINTIFF EXHIBIT 1 Glear Lake (2) 000910 it::;a:r'li

rêguire TenanÈ to operate its business in the Demj.sed prenises. ft, aft,er opening, Tenant ceases to do busi.ness in the DemiÊed Prenises on a regurar basis for a continuous period in exeess of sixty days, Landlord shall thereafter at such tine as lt shall elect, until such ti¡ne âs Tenant reopens for business, håve thê right to terminate this Lease by giving written noticê of termination t.o Tenant which sha1l becone effeètive on Èhê tenth day followlng recei-pt of such notice by T€nånt. rn thê event of a terninat.ion hereunder, the parÈies hereto shall be rereased fron any and all liabili.ty under this Lease for the ternÍnated portion of the unexpired term. Nothing herain shatl be dee¡ned to affect or release Tenant's obtigation to pay Base Rêntâl and additlonal charges and to perform Tenant,s othèr obllgations hereunder until the effective date cf said terminat,ion by Landlord. periods of closing. of, the De¡nised premises reasonably necessitat,ed by (i) renodeling and/or repair or interruption due to loss of utlrit.i service, {ii.} casualty, (iii) condemnation and (iv) periods oi closing consented to by Landlord shall be exernpt fro¡¡l the provisi.ons of this section 7.1 anal shall not give Landlord the right to terminate as set forth herein. TenanÉ shall reimburse Landlord for any increase in the coet of insurance on the shopping center resulting froro an election by Tenånt t,o cease doing nusiiresé in the Dernised Prenises. . Section 7.2.. I,ilitations on Usq. Tenant shall not, without Landlord's prior written consent, keep anythlng within thå Dsmised Prernises or use the Denised prerníses iot åny purpose whieh increases the insurance prernium cost or invalidat"å åtty'insurance policy carried on thê De¡nised premises or other part,s of the Shopping center unless Tenant.pays thê cost Èhereof. A1r property kept' slored or maintained within the De¡nised premises ly rãnanÈ shall be at Tenant,s sole risk. Tenant shall not, permit any object,ionable or unpleasant odors t,o emanâte fron the Dernised rrenieee; nor place p..*ii À"y radio, television, loudepeaker or anplifier on the roof "r ór outsidà the Þenised Preni-Ees or rvhere the sa¡ne can be seen or heard from outside the building; lor place any antenna, ar,rning or other pr:ojection on the exlerior ot tne oeñised prÀnisãr; -når take any other actlon which would constiÈute a nuisance or would disturb oi endanger other tenants of the shopping center or unreasonabry interfere with their use of their rdjpeclive premises. Tenant sha1l take good care of the Þe¡nised pre¡nises and keep the sa¡ne. free fronr r.¡aste at all ti¡nes. lenant shall keep the Demised Premises and sidewalks, service-ways and loading å.."= adjacent to Ëhe Denised prenrises neat,, clean and free fro¡n ãirt or rubbish at alr times, and shall store al1 trash and garbage within the De¡nised Pre¡nises or in such area outsi.de the oeñised pre¡nises ås may be designated for such purpose by Landlord, and ?enant shall äËange, far t,he regul.ar pick-up of such trash ånd garbåge at ?enant's expense. Receiving and del.ivery óf goods and merchandise and renoval- of garbage and trash shall Le naãe onry in thê âreas prescribed by Landlord. Tenant shall not operate an"incinerator or burn trash or garbage within the shopping Center, No public. or private auction or any f ire, tilost-our-Iêaserr, ilgoing out of buginessil, bankruptcy or s i¡ni 1ar sales ot auctions sha1l be conducted in or frãm -the Demised Premises. Sectign 7.3. Då"Splavs and AdveqtisenqntË. Tenant shall maint,ain all display windows in a neát, -àttractive condition. Tenant sha11 includei the address and identity of its business activities in the Ðenised premises in all advertise¡nents made by Tenant in which the address and identlt,y of any sinilar rocai bu6j-ness activity of Tenant is rnentioned. Sectj.on 7.4. ConpLiance with Laws. Tenant, shall prôcure at its sore expensê any pernits and licenses required for

¡':1"9!?lô4.1.t."Sfì PLAINTIFF EXHIBIT I Glear Lake (2) 0009rr ;ii,; ,, lr ,.

Ç, t:/

the transaction of business in the Denised preruises and shall conply with alJ- laws, ordinances, regulations and orders now in effect or hereafter enacted or passed during Èhe tern of this r,eåse insofar ès thé conduct of lenant.rs business in the Denised prenises ã.nd any signs of Tênânt are concerned, and shalL make at renantrs Õr/n cost and expense alÌ repairs, additions and alterations to the Demised PremiEes ordered or required by any governnental authority as a result of Tenant,s failure to nðke repairs or perforn maj-ntenance reguired of iÈ under this Lease or because of particular use of the Demised pre¡nises. LandLord shåI1Tènantrsrnake at Landlord's expense any and all repairs, additions and alterations required as a result of faiture to comply vith any building code or other govêrnmental requirements in conneetion wittr the triginal construction of the Ðernised prenises, beeause of Landlordrs faiLure to ¡nake repairs required of Landlord under this Leâse or because of the nature of the structure of the Denised premises and not because of Tenantrs particular use of the Demised premises. ARTICTJE VITI.

Section 8.1. Landlordrs ReoairF, Upon the condition pnecedent that Tenant shall have Eivên Landlord prior wriÈten notice of the da¡ûâq,e requiring repair, Landlord will-repair danage to lhg r.oof (exclusive of flashing around any robftop ali- condit,ioning units êxcept for the period of the ¡nanufacúurerrs \rarranty covering such units during r.¡hich period Landlord shall maintain such ilashing) and stfucÈural portions lincluaing structural, i.nterior wal1s, exterior walls, and foundatiòn) of thå Þemised Pre¡ni.ses and the bullding in whi,ch thè såme are sítuated, unress the required repairs are "caused by the act or o¡nission oå Tenant or Tenant,s enployees or contractors; provided, however, in the event any such darnage is caused by one or more acts or omi-ssi"ons of lenant,, its agents, ernpì-oyees, custoners or invi.tees, or any burglar or unauthorized entrant, or any other person (with the exception of Landlord i.tself), Tenânt sha1l bear lhe cost of such repaírs unle€s the sarnê is covered by the insurance maintained by Landlord hereunder in which case Landlord shall nonalheless be responsible fo¡ such repairs to the extenÈ of the a¡nount actuatly received from the insurer, rf the Demised premises or the buirdini in which thê same are situated should becone in need or repairå reguired to be nade by Landlord hereunder, Tênant shall give nåtieå thereof to Landlord as soon as practicabre after Tenant becomes aware of the need for such repairs, and if Ländrord should fail or neglect to comnence to make -any éuch repairs within thirty daye {or, in the case of ân èmergency, vri.thirr, two days) followi-ng tire date of such notiçe from Tenant ór should thèreafter faii or neglect to prosecute the compleÈion of such repairs with reasonabl.e diligence, Tenant may nake such repalrs as ¡nay be necessary in which event Landlorct sha11 reimburse Tenant for Che reasonable lost of such repairs within twenty days following delivery to Landrord of:paid invoices or other satisfactory evidence of the cost of such repairs, together with interest thereon at the rate specÌfied in sêctÍon 27.13î provided, however, in the event tandlord notifies ?enant in writing within ten days fol.lowing the date on which Tenånt notifies Landlord of the need for such repairs that Landlord beilleves such repairs tÕ be unnecessary, then Tenant. shall not, exercise its right to make such repairs pursuant to this section 8.2 unless a majority of an infor¡üal arbitration comnlÈt,ee selected in the nanner described below has deter¡nined that such repairs åre reåsorlably necessary or appropriate, such arbit.ration õo¡tr¡rittee shall be forned by. Landlord and renant each selecting an individuar ând those two individuars in turn serecting a third individual.

. Section 8.2i Tenant's Repairs. Al1 damàge, other than that which Landlord undertakes to repáir in section alt'1incl_uding, without linitation, aI1 repairs, additions and alteratioàs requiråå as a result of failurê to cornply with any building code or other governmental requirements in - connectiãn wi.th the original construction of the Dernised prenises) or Articles xv and xvr witt be repaired and a1r maintenance will be perforrned and replacements

¡':\¡.r9ì 1 ó14. I ^st; 9 PLAINTIF'F EXHIBIT 1

Glear Lake (2) ooo9r2 J,,".'. r:::'.f 1*-¡'

and renehrals will be ¡rade by Tenant, at Tenântrs solè cost and êXpense; and Tenant shall keep the Denised premiges in good, cleån and habitâble condition and shaLl, at ite sole cost ånd êxpense, keep the Demised Pre¡nises free of infestation of insect,s, roãents, vernin and other pesls and in all caËes make all needêd repaJ_rs and replacements, .including replacenent of cracked or broken glass. without lirniting any other provisions herein contalned, it is understood that Tenant's responsibiLit,ies hereunder include the rêpair and replace¡nent of all lighting, heatlng, air conditioning, plunblng and other electrieal, rnechanical and electromotive installations, equÍpment and fixtures and all utilit.y repairs in ducts, conduits, pipes and wiring, and åny selrer stoppage ]ocaled in, under and above the Demised Premises. Tenant shall not nake, or perrnit Èo be made¡ any penetration in the roof of the hullding of r¡hich lhe Denised Prenises are a part, but shall be responsíblå f<¡r all rooftop flashing around all rooftop âir-conditioning unit,s. ln the event that any sueh roof penet.ration is required in connection with any repairs, maintenance, rene!¡a1s or replacements required to be nade by Tenånt undêr, Landlord shall peiform such roof peneÈration at TenanÈrs cost r.¡ithin a reaÉonâbtá ti¡ne after notice from Tenant. If any repairs required to be r,nade by Tenant hereunder are not nade rrithin ten (r0) days after written notice dellvered to Tenant by Lêndtord, (or if thá sane cannot reasonably be expected to be rspaired witlrin said 10 day period then sucñ longer period of t,ine as is reasonably necessary so long as Tenant, cotn¡nêncꀡ such repairE t¡lthin said 10 day period and prosecutes thê sane to corrpletì-on with reasonable dlligence) Landlord nay at its option make such repairs without liability to Tenant for ány toss or damage whieh ¡nay result to its stock or buslness by reaéon of such repairs; and Tenant shall pay to Landlord upon dernand, as additional rent hereunder, the cost of such repairs plus interest at the rate and in the nanner hereinafter specified in Section 27.13. . sçct,ion. B . 3 . Sqrrender of De¡¡j.sed pre¡nises. Upon termination of this Lease, lenant wilL sumender and deliver up thê Þemised Premises lo Landlord broon-clean and in the sane condition in which they existed at the commencenent of thie Leåse, excepting only ordinary wear and Èear, damage arj.sing frorn acts of - God, danage required hereunder to bê repaired by Landlord, danage from condêmnation or casualty and alterations and additions peirnitted hereunder or approved by Landlord.

ARTICLE TX

sectíon ?.L. Àlteratiqns. Tenant shall not nake any alteratlons, additions or inprovenents to the Ðenised preniseå without the prÍor l¡rit,ten consênt of Landlord, except for Ínt.erior, nön-structural alteratíons ånd the installation of unattached, novable trêde fixtures which nây be installed !Ìithout drilling, cutting or otherwise defacing the premises. At1 alterations, additions, improvenrents and fixtures (other than Tenant, s unattaehed, readlly movable furniture and office equiprnent) which nay be made or installed by either party upon the Denised premises shall i¡n¡nediately become .and remaj-n the property of Landlord and shall rernain upon and be surrendered lrith the Dêrnised premises at the t€rnination of this Lease. gection 9.2. llecbanic's Liens. I{ith respect, to any contract for construction done by Tenant or çaused to be done by it on the Þe¡¡ised Pre¡nises ae permitted by lhis Lease, Tenant acts as ð principat and not as the agent of Landlord, ând Landlord expressly disclains LiabÍlity for thê cost of labor Írerformed or maËeriåIÊ furnished by Aenânt. Tenant shall pay pronptly when due the entire cost of any work affecting the Demi.sed premisès done by or for the account of ?enant so that the Dernised prenises shall at âLl times be free of li-ens for labor and rnaterials. In no event shall Landlord Õr any of Landlord's property be liable for or chargeable with any expense or lien for work, labor or ¡naterials

P:\1.99?l&r.1 l-sÞl 10 PLAINTIFF EXHIBIT 1 Glear Lake (2) 0o0e13 .;::{ ,1. rì::j !..r' +.,;{

used Ín the Denised Premises or any improvements or change thereof nade at the requeÊt of, or upon the order ôf, or to dischargre the obligation of Tenant. Sêction 9-3 Trade Fixtures. ÀI1 Èrade fixtures and equipment instaLled by Tenant in the Denised Pre¡niees shall remain the property . of Tenant except if and t,o the extent leased by Tenant. Provided Tenant is not in default hereunder, Tenant shall havê the right, at thê t,ermination of thi.s Leasê, to renove any and all tradê fixtures, eguipment ånd other itens of personat property not constituting a part, oe tne freehold which iÈ ¡iay have stored or instaLled ln the De¡nised Premises, including but not, liruÍted to, counters, shelving, shoÌ^r casês, chairs and rûovable rnachinery purchased or provi.ded by tenðnt provided this right is exerciseã before the Lease is terminated and prÕvidêd that lenânt, shall repair any damage to the Dernised premises caused t,hereby. Tenant shall not have the right to remove any plunbing or ãlectrical fixtures or equipnent, heating or air-conAifloning ãquipnent, ftoor coverinqs (including wall-to-wa11 carpeting) glued or fastened to the floors or any paneling, tile or other mat.erials fastened or attached to Èhe waLls or ceilings, all of whieh shall be dee¡ned to constitute a part, of the freehold, and, as a maÈter of course, shatl" not includê the right to renove any fixtures or nachì.nery that werê furnished or pald for by the Lanillord. If Tenant sha11 fa:j-] to remove its trade fixturês or other property at the termination of this Leåse, such fixtures and otier'proþerty not removed by Tenant sha1l be deemed abandoned by Tenant and, at the opt.ion of Landlord, shäl1 become the property of tandlord. ARÎïCÌJE X. çection 10.1, Lanqåord,q, Right of gntry. Landlord shall have the right to enter upon the tenieed prenises at any ti¡ne for thê purpose of inspecting the same, or rnaking repaiis to the Ðernised Premises, or of naking repairs, alterations or additions to adjacent prenises, or of showing the Denised premises to prospecti.ve purchasers, lessees or lenders. Tenant will pernit Landlord to place and naintain rrFor Rentrr or ttFor LeaËe[ sÍgns on the Þemj.sed Premises during the last ninety days of the térn of this Lease. ARTICLE XI. Seçt,io4..1L, 1, SiqnÉ. Àvnlngs and Canol)ies. Landlord uray êrect and nåintain such suitable signs on and about t,he Shopping Center as Landlord, in its sole discretion, may deem appropriate to advertÌse the Shopping Center. Tenant rnay erect and r,raintain a flàt wall sign which shall be of such si.ze and type and in such location ås LandlÕrd rnay approve. Tenant shall sub¡nit t,o Landlord detaíled drawings and specifications for such sign, which drawings and specifications shall be subject to the r¡ritten approval of Låndlord prior to the installati"on of sueh sign. Tenanï sha11 be entitled to install its sÍgn (subject to Landlord,s prior approval thereof) in the existing pylon sign can containing pott,ery lfart/s existing sign. Except as herein otherr¡ise expreesly piovided, Tenant shall not, lrithout Landlordrs prior r.¡ritt.en consenf (a) rnake åni changes to the st,ore front or (b) instal.I or place on or about' the exterior of the De¡nised Pre¡nises any lighting, slgns (including but not, 1i¡nited to, portable signs¡ decorá{ionã, ¡ìaintinqs, awnings, canopies or the like or (c) erect or install any êxterior or interior signs, windor+ or door lettering, placards, dècorations or advertising nedia of any type which can be viewed fro¡n tbe exterlor of the Denised Pre¡nises, excepting only dignified displays of cust,omary type for its display windows. afi siins ryhich fãnairt is,pernitted to ¡naintaj"n hereunder shall. be kept inlured by Tenant, ånd Tenant. shall maintain the samê in good condition, repair and operating order at all tines, tenant shall keep all su¿h signs lighted during the hours from sundov¡n to 1Lt0O p.m. irrespective of whether or nôt the prernises ís opên for busiiess, unlésç Tenant shall be prevented from doing so by events beyond thê control of

I':\¡.ç$/lól4.l.sB 11 PLAINTIFF EXHIBIT 1 Glear Lake (2) oo09l4 j::,¡ñ' ,:,:,ui. ...,:j

fçnant. Àny sign which lenant, is permitted to naintain hereunder shalr cornply with all laws, rules and ordinancee and renant shall obtain any required governrnental apprgval. Landlord nâkes no representation with respect to Tenantrs abitity to obtain such approval. ARÎICLE XT:. Section 12.1. UtiliÈies. Tenant sha1l pronptty påy dírectly to the supplier all charges for electricity,- waierj gäsl têlephone service, sanitary, se!¡¡er service and other utilitles furníshed to the Ðe¡nised Premises, and wilt save and hol-d Landlord har¡nleEs frorn any charge or liabi.lity for same. Section 12.2. InterrupÈi"e*F-. Landlord shalt not be llable for åny interruption or ¡nalfunction whatsoever of ut.illty services and no such interruption shatl constitute an evictlon ol disturbanee of renant's use and possession of the De¡¡ised premises or grant Tênant any right of set-off or recoupnent. In the event of äny such interruption of utility services, Låndlord shall use ¡easonable dlligence to restore such service in any circunrståncè6 in which such interrupt,ion is caused by Landlord/s fault. In the event electrical service to the Dêmised pre¡ni.see is i"nterrupted, through no fault or act of Tênant, for a continuous period of slx nanthg, TenanÈ åt any tine thereafter prior to the restorat,ion of such servlce, shall have the right to t,errninat.e this Leåsê by giving thirty days r¡ritten noÈice of termination to Landlorå unLess, vithin such thirty day period, Landlord is successfut jn rêstorlng_êlectrical services to the Denised Frenises, it being understood and agreed that Landlord shaLl havê no obligation in this regard unlees Êuch interruption in servíce r*as caused by Irandlord's f ault.

ARTICLE XTIT. Sect.ion t-3.1. Indemnity. Lândlord shall not be 1iable to. Tenðnt or to lenantrs empì.oyees, agenÈs, licansees, inviteee, customers or visitors.- or to any other person whomsoever, for any inJury to person or damage to properti on or about the Demi.sêd Premises or thê coa¡non Area caused by the negligence or miEconduct of Tenant, its ernployees, subtenants, licanseäs ór concessionaires, ?r 9f any other invitation person entering the shopping Center under express of Tenänt, or arising out of t[e use of the Deirised Prenises by ?enant. and the conduct of its business therein, or arising out of. any breach or default by Tênant in t,he perfornance ðf its obligations hereunder; and Tenant hereby açtrees to inaemnify Landlord and hold Landlord harmless fron any 1oes, expense or claims arising.out of such danage or injury. The furnishiñg of any insurance herein required to be furnished by Tenant shalt not bå deemed to linit, Tenant's obrigations under tie provisions of this Sêction 13.1. Landlord hereby agrees to indernnify Tenant and hol"d Tenant har¡nless from any loss, expense or clains arÍsing out of the negligence or nisconduct of Landlord, its ernployaes, subtenants, licensees or concessionaíres or of any other person entering the Shopping Center under the express invitation of Landlord. Sect,ion 13.2. Liabill¿v Insurance. Tenånt shall procure and naintain throughout the term of this Lease a policy or polj.cies of conprehensive general liabiLity insurance, at its ãote èost, and êxpense, insuring boLh Landlord and Tênant against all claims, demands or actiöns arising out of or in connection rrrith Tenant,s uÉÊ or occupancy of the Demised Prernises, or by the condition of thè De¡aised Premises. ?he limits of such policy or pollcies shall be not less than $2,00o,000.00 co¡rbined single limit, which policy or policies shalL incLude coverage for Uoaity injury and äeathl property daraage and products liability coverage. suèh policy or policies sha11 be issued by a cornpany licensed to conduct business in the state of Texas. Tenant shall obtain a written obligation on the part of each j.nsurance company to notify Landlord at least ten

PiU-gl?164{.LsE 12 PLAINTIFF EXHIBIT 1 Clear Lake (2) ooo9r5 i" '",i1'', )::l !i li:: ,,Æ \i;ir:l

(10) days prior t,o cancellation of such ingurance. such poì.icies of duly exeçuted certj.f j.cat,es of insurance shall be pro¡npt.ly delivered to Landlord and rênewâls thereof as requirea ånafi ¡ã delivered to Landlord at least thi.rty (3o) days prior to the expiration of the respective policy terns. If Tenant should fail to conply r¡ith the foregoing requirenents relating to insurance, Låndlord may (but, shall not be obrigat,ed to) obtain such insurance for Tenant, and ?enant shall pay to Landlord on de¡nand ås additional rêñt hêreunder the premiun cost ther€of, plus interest åt the rat€ and in the nanner hereinafter specified j-n Seet,ion 27 .]-3. Section 13.3. ?enanç,:F Flre Insurance. fenant agrees to okrtaln and ¡naintain at all ti¡res during the ter¡n of this Lease a policy of fire and êxtended coverage insurance on its fixtures, equiprnent, rnêrchandÍse and other pfoperty placed in or upon the Demised Premises, insuring all such þróperty for lti ful1 replacênent value. SaÍd polì.cy shall be èndòrseã to provlde that it, may not be cancelLed except upon ten (to) days piior wrilten notÍce to Landlord. À duplicate originaì or certificâte of such policy will be deposited with Landlord by tenant upon Tenant,s taking possession of the Dernised Premises, and a dupliCate original or certificate of each subsequent policy ¡¡i11 be deposited -with Landlord prior to the expiration of the preceding such policy. If Tenant should fail to obtain such ineurance, f,andtord naf (but shall not be obtigated to) obtain such insuránce for Tenant, and fenant sha1l påy to LandLord on denand as additíonal rent hereunder the prernium cost t,hereof, plus interest, at the rate and in the manner hereinafter specified in Section 27.13.

. SecÈion 13..4 Landlordrç Insurance. Subject to Tenantrs oÞli.gat,ion to reimburse lJandl.ord for Tenant's Sharã of Èhe Coet of fnsurance, as herein provided, Landlord shalt keep the De¡nised Pre¡ri.ses and the shopping center insured against losË or danrage by fire and other ha¿arãs covered by ext.ênded coverage insurance frorn an insurance conpany or cornpanies authorized to dó business in the stêtê of Texas, such coverage t,o be in ân anount not, Iess than eighty percenÈ (8O*) of the full replacehent, cost thereof. In addltion, Landlord sha11 naintain in force public tiability insurance with respect to the common Àreas of thã shopping center in such anÞunt as is custo¡nary for shopping canters of êi¡nilar size and quatit,y in Harris county, Texås. ÀÈ tenant's request,, Landlord chal1 deliver to Tenant evidence of such insurãnce coverage. Landlord shall have the right to carry .äny of its insurañce required to be ¡naintaj-ned under this Lease undèr ttblanket policiesit covering Èhe shopping cênter and other loeat,ions vhich il owns or Ieãses provided, that, if Landlord elects to do so, such {blanket coveragerr shaÌl provide that the coverage with respecL to the shopping centêr shall not. be dirninished or reduced due to clai¡ns associated r¡ith other properties covered thereby and in no €vent shal1 the anounts payable by Tenant as Tenânt's Share of InÊurance be greater than what they $/ould olherwise be if the insurance fÕr the Shopping Center were not being provided under a 'tblðnketr¡ po).icy, not¡¡ithstandinq the provisiónJ of Article XVIII below. Section 13.5. Waiver,,ef Subroqation. To tlre extent that the parties nay ]ëgally so agree, neither Landlord nor Tenant shalL be liable (by way of subrogation or otherwise) to the other party {or to any insurance cô¡npany insuring the other party) for any loss or, danage to any of the property of the Landlord or the Tenant, as the_case may be, q¡hich loss or danage is covered by any insurance pol.icies carried by the parties and in force at the úirne of any such damage or required t.o be carried by the parÈies, even thougir suçh loss or darnage night have been occasioned by the negligence óf LandLord or Tenant, and the party hereto sustainíng such loss or datnage so protected by insurance waives its ri_ghls, if any, of recovêry against the other party hereto to the extent and amounl that such loss is covered by such insurance. Each party shål1 use its best efforts (including payment of any additioñal prenium) to have its insurance policies contain Cire standard - r¡aiver' of

l':\1,9971614. lJtì 1a PLAINTIFF EXHIBIT I Clear Lake (2) ooo9l6 subrogation clåuse. In the event Låndlord,s or Tenant¡s insurance carrier declines to include in such carrÍer,s policy the standard \,raiver of subrogation clause, LandLord or Tenant, as the case may be, shâll promptly notify the other party, but in no event shali such refusal abrogate, dininish, or nodify the waiver set forth in this $ection 13.5. ARÎICLE XIV. Sêction 14.1. Loss or,Damage to Tenant,'s preÞgrty. Landlord and Landlord,s agents and enployees sha1J. not be 1iabl.e to Tenant for any injury t,o person or danage to property caused by the Demised Premises or other portj.ons of the Shopping Center becãming ôut of repair or by defect or failure of any structural elenent oã the Demised Premises or of any egulpmeht,, pipes or viring, or broken glass, or by the backing up of drains, or by gas, water, stêan, electricity or oi1 leaking, escaping or floìrring into the Dernised Premlses (except where duê to Landlordrs wil"lful'failure to make any repairs or perform any $âint.enance obligations required under the terns of this Lease), nor shal1 Landlord be 1iab1e to Tênant for any. lcss or darnage Lhat ¡nay be occasioned by or Èhrough the acts or ornissíons of other tenants of the Shopping center or of any other persons $,¡homsoever, excepting only duly authorized employees and agents of Landlord. ARTTCLE XV,

Section 15.L. Þarnage or DestructÍon bv Fire or,Otþer Cqsual.tv. Tenant shatl give inmediate writ,t,en notice to Landlord of any damage caused to the Denised prenises by fire or other casualty. In the event that the Demised premises shall, be darnaged or destroyed by fire or other casualty lnsurable under standård fire and extended coverage j,nsurance and Landlord does not elect to terminate this lrease as hereinafter provided, Landlord shalt proceed.with reaEonable diligence and at íts sole cost and expênãê to rebuild and repair the Demised prenises. In the êvent 1a) tfre building in which the Demised Premises afê located shaIl, be dêËtroyed or substantially danaged by a casualty not covèred by Landlord's insurance, or (b) such building shall be destroyed or rendered untenantable to an extent in exeess of t$rênt,y-five percent (251) of the first floor area by a casualty covered by Landlord,s insurance, or (c) the holder of a mortgage, deed of trust or other Iiþn on the De¡nised Premises at the time of the casualty elects, pursuant to such mortg'aqe, deed of trust or other lien, to require the use of aI] or part of Landlord.s insurance proceeds Ín satisfaction of âlL or part of the indebtedness secured by the mortgaqe/ deed of trust or other lien, tben in any such eventuality Landlord nay elêct either to terninat.e this Lease or to proceed to rebuila and repair the De¡¡ised Prenisee. Landlord Jhall give written notice to Tenant of such election within sixty (60) åays after the occurrence of such casuatty and if it elects to rebuild and repair shall proceed to do so with reasonable diligence and at its sole cost ând expense. ff Landlord elects to rebui.ld, such notice shall state the esti¡nated tine to cornplete such rebuitding and, in the event the estinated tine to rebuild is greater than six (6) months, ?enant shall have the rigtrt to terrninate this Lease by giving i,rritten notice of ternination to Landlord r¡ithin ten (1Oj days fo1lot^ting receipt of such u¡ritten notice fron Land1ord. Notwithstanding the foregoi.ng, if any such casualty and tþê resulting da¡nage affècts only the Denised prernises and no other part of the Shopping Center and Landlord elects, pursuant to the foregoing, to terninate t,hís Leâse, Tenant may override such terrnj.nation if it desires to rebuild the De¡nj.sed premisesf at its sole cost, by giving rn¡ritten notice to Landlord wi.thin ten (10) days f ollowing receipt of such r"¡r j,tten notice f ron Landlord, stâting Tenant's desire and agreement to so rebuild i,¡ithÍn six months after such notice.

P: ! L991 16.14. LS tl PLAINTIFF EXHIBIT 1 Clear Lake (2) ooo9l7 ,f i,:1. irìiû.å

Landlôrd's obligation to rebuild and repair under this Àrticle XV ehall in any event be lirnited t,o reetoring the Denised Premiaes, exclusive of any alterations, additions, inrprovernente, fixtures _9nÇ eqriiprnent inetalled by Tenant, to suùstantiafly tbå sane condition ln which the same existed prior to the casuãlty. Tenant agrees that. pronptly after conpletion of such r¡ork Uy Landlord, lenant will proceed with reasonable ditigence and aL Tenânt's sole cost. and expense to rèstore, repalr and raplace all alterations, additions, improvenents, fixturesl signs ana ãquipneni instaLled by Tenant and proraptly reopen for busínets in the"Ðei¡isea Premises, ?enânt Ërgrêês that during any period of reconstruction Õr ¡epair of the De¡¡lsed Prenises it uilt continue the op€rât.ion of its business withln the Demised prernises to the extent practicable. During the period from the occurrence of the casualty until Landlord/s repairs are conpleted, the Base Rent shall abate proportionately during the period and to the extent that the Demised Prernises are unfit for use by Tenant and not actually used by ?enant in the ordinary conduct o¡- its business. No darnage or destruction to the Demlsêd premises shall alrow lenant lo surrender possessi.on of the Deroised premises or affect Tenant's liabi.lity for the palrnent of rent or any other covenant herein contained, except as nay be specifically p=roviaea in Èhis Leasê. Landlord shall not be obligaÈed to commênce any repair, restoration or rebuilding until insurance proceeds arè received by Landlord, and Landlord's obligations hereuáder Ëhal1 be li.nited to the proceeds received by Landlord under its insurance poJ"icy. .In the event the Þenlsed prernises shall be darnaged, in whsle or in substant.ial part, v¡ithi.n the last 24 rnonths or the tern of thi's Lease' or any ext.ension or rener¡al thereof, Landlord and ?ênant shall each have the option, exercisabte within thirty (30) days foltowing sueh damage, of terr¡inating this Lease, effective as of the dat,e of nailing notice thereof. .ARTTCLE XV].

Section 16.t. Conde¡r.rnation. f f more than thirty (30t) percent of the f100r area of the Denised premises should bè taken for åny public or quasi-public use under äny governmental law, ordinanee.or reguration or by right of e¡ninent ão¡nain or by private purchase in rieu thereof, this Leåse shatl terminate and-tÍre rent shal1 be abated durÍng the unexpired portion of this Lêase, effective on the date physical possession is taken by thê condemning authority. If less than thi.rty (30*) percent of the floor area of thê Denised Pre¡nises should be Èaken as âforêgåid, this rJeåse shal,l not terminate; hovever, Èhe Base Rental payable hereunder during the unexpired portion of this Lease shall be reduced in proportioñ to the area taken, effective on thê date physical possession is taken by the condenning authority. Following such partial taking, Landlord sharl rnake all necessary repairs or âlterations to the renraini.ng prenises in order to ¡nake the re¡naini.ng portions of the Demised Premises an architectural who1e. whêthèr or not any portion of tÌ¡e Þenised premises should be taken as aforesaid, Landlord shaLl have the election to terminate this Lease or to continue this Lease in effect in the event that buildings containing twent,y-five percent (259) or more of the floor area of the Shopping Center should be taken as aforesaid. section 1e.à. Takinq of cpn¡non Area. rf any part of the Cômmon Area should be taken as aforesaid, this Lease sha1l not terrninate, nor shall the rent payable hereunder be redueed, except that elthar Landlord or tenant may lerninate this Leasê if the arèa of the Cornnon Area re¡oaining following such taking plus any addi- tional parking area provided by Landlord in reasonatie proxirnity to

P:\1..9$lú¡4.Ilili 15 PLAINTIFF EXHIBIT 1 Clear Lake (2) oo09r8 ..r il;' ùÌ

the shopping center vithin ninety (90) days after the date of any such takÍng shall be less than eighty (sOj percent of the area oi the cÕmmon Àrea immediately prior to the taking. Àny election to terminate this Lease in accordance with this providi.on shall be evidenced by written notice of terurination delivered to the othEr pôrty no soonêr than ni-nety (90) dðys nor later thân one hundred twenty (120) days after the date physical possession is taken by the condenning authority. Sgction L6,3. Conpensation. Àll corrrpensation awarded . a_ny taking (or. the proceeds of private sale in li"eu thereof) the Demísed Premises or Cornmon À_rea shaLl be the proparty of !9r of Landlord, and îenant hereby assigns its int,erest in any such iward to Landlord; provided, howaver, iandlord shal1 have no interest in âny award mâde to Tenant for Tenantrs moving and rel0cati,on expenses or for the loss of Tenant,s fixtures and other t,angible pêrsonal property íf a separate al¡ard for such ite¡ns is r¡ade to Tênânt. ARTICLE XVI:. Section J.7,,..J.. Àgeiqnnent And S$btet,ting. Except äs expressry pernitted under the terrns hereof, renàn{ shall not ássi.gn o¡: in âny nanner transfer this Lease or âny estat,e or intereåt therein, by operation of law or otherwise, or sublet the Ðenised Premises or any part thêreof, or grant any license, concession or other righÈ of occupancy of any portion tf the Demised premises wíthout the prior written consent of Landlord, which consent shall not be unreaeonably withheld or delayed. upon any violation of thís provision, this Lease shalL terminate, ãt r,andtordrs option. cönsent by Landlord to one or nore assignments or sublettinqi shall not operate as ê waiver of Landlord,s right.s as t,o any suËeequent, assignments and sublet,tings. Any permitted assignment, or subiease shåÌl be only for a purpose specified in sectÍon 1".1(n) hereof and f-or no oÈher.purpose. rn no event shall any assignment or sublease of the De¡nlsed prenises relieve or release Tenant. fron åny obrigations under thlg Lease. Landrord sbarl be pernitted tå enforce the provisions of this instrumênt agaìnst thé undersigned renant and/or any assignee without damand upori or proceeding in-any way agai.nst any other pêrson. rn detêrnini.ng wrrettrer to qfant itå consent to a proposed assignïient or sublease, Landlord shall take inÈo coneideraÈion, among other factors, {i} ÕbJective evidenee or lnformation concerning the flnansial conaitián of the proposed assignee or subtenant- (ii) the character and reputatÍon oi tne proposed assignee or subtenant, {iir) the business ex¡rerience of the proposed assignee or subtenant and (iv) the nature of the proposed use of the De¡nised premises ny ttre proposed assÍgnee or subtenant. Any requeÊt for Landlord,s consent to a pioposed aseiginnent or sublease shalr be accompanied by financial and operating infor¡nation with respect to the proposed assignee or suþtenant and such other infornation coneerning the proposed assignee or subtenant as Landlôrd may reåsonably rêguest. Tenant sha11 give Landrord written notice of renant's oLsirå to assi.gn or sublease (r'Noticê of Assignment"). Ländlord shall be deemed to have withheld its consent to such assignnent or sublease unless Landlord notifies Tenant, wiÈhi"n thirty days after Tenant,s Notice of Assignnent, of Landlordrs consent. Seçtíon L7,2.. Corporate or, partnershio Ovrnership. If at any tine during the prinary ter¡n of this Lease -o; any renerral or extengron thereofr-the person or persons h¡ho own a-rnajority of either the outstanding votíng eharès or partnership interests of Tenant at the time of the execution of t,his Lease ðease to own a rnajority of such sha.rês or interests (except as the result of transfèrs by devise or descent), the loss oi a majority of such shares or interests shal1 be dee¡ned an assignrnent of thiJ Lease by Tenant and therefore subject in all respects to the provísions oi Section lT.L above.

P ri-et?lé44.I-,sE 16 PLAINTIFF EXHIBIT 1 Glear Lake (2) 000919 i:]:: i '1., i ':.¡;'i

. Section 17 . . C?nti.nuinq obliqations. l,Iotwithstanding _3 åny assignment or subletting, Tenant shalL áÈ all ti¡nes re¡uaiñ fu1ly responsible and liable for the pa)¡nent of Èhe rent or other charges l¡ereln specified and for cornpliance with all of its other obligations under thie Lease {êvên if future assignnent,s and sublettings occur subseguent to an asslgnnent or subLetting by Tenant, and regardless of r¡hether or no! Landlord,s approval- haå been obtained for sueh future assignnents and subletÈings). Moreover, in the evênt, that the rent.al due and payable dy '. subressee (or a co¡nbÍnation of the rental payable under such sublease plus any bonus or other consideration therefor or incldent thereto) Less alL reasonabre costs and expenses (including, without ri¡nitatÍon, renovation costs and brokerage cornmissions) incurred by lenant in consu¡nmating suêh sublease or assigrunent) exceeds thä rental payable under this Lease, or if with respect. to a pernitted assignrnent, permitted ricense or öther transfer by Tenant þernittea by Landlord, the consideration payable to Tenant by the àssignee, li.censee or other transferee exceeds the rent.al payãlle under-this Lea6ë, then Tenant shall be bound and obligated to pay Landlord. one-half of all such excess rêntal and other excess c-onèideration within ten (L0) days following receipt tbereof by TenånÈ from such sublessee, assignee, Iieeneee or othér t,ransferee, as the caae may be: Finally, in the event of any assignnent or subletting, it i; understood and agreed that a1I rentalË paid to fenan{ by an assígnee or subleesee shall, to the extent the same are, in €urn, due to Landlord hereunder, be received by Tenant in trust for tandlord, to be forvarded imrnediately to Landlord r¡ithout offset or reduction of any kind; and upon election by Landlord such rentals shall be paid directly to Landlord as specified in sect.ion 4,1 of this Lease (to be applied as a credi-t and offset to renantrs rental obligations). Section 17,4. Encu¡abraf¡ce. Tenant shall not mortgage, pledge or otherwise encumber its inÈerest in this Lease or in i¡re Denised Premises. Çection 17.5. Landlord's Otr'tion to Terninate. In lieu of consenting to an assignnent or sublease, Landlord ¡ray, at its option, within thirty days after Tenant,s Not,ice of AsËigrunent, termlnate this Lease and release Tenant fron any an¿ ali obligations accruing under this Lêase frön and after thã effective date of such ternination. Landlord shall qive to Tenant r+rritten notice of f,andlord,s exercise of this option ('rNotice of TerninaÈion"), and this Lease shall terninatè thirty (30) dàys after the NÕtice of Ter¡ninatíon (thê r'Effective Date ðf Terninatlonrt), and Tenant shal] be futly and conplet,ely released of aL1 obligations accruing under this Lease fio¡o anã after the Sffective Date of rermination. Tf Land.rord makes such election, Landlord shall be free to accept any proposed asaignee or subLeesee as the new tenant, in which case Landlord shaLl be ent,ít,ted to retain a1l consideration paid by sueh assignee or sublessee. Notwithstanding anything to the cont,rary contained in this section L7.5 or Section 1"7.1 above, Landlord sha]l not have the option hereinabove grant.ed to terninate this Lease ln the event of a proposed sublease of less tban the entire Denised premises; provided, ho!¡ever, the decision by Landlord as to lrhêther or not to grånt its consent to such proposed sublease, as required under the terms of section 1"7.1, shalr be vithln Landlord/s sole and absoluÈe discretion. Section 17,6. Àssiqnnent or $ublease Without Landlord's Çplse¡t.. Notv¡it,hËtånding anything to the contrary cont,ained in this Article XVII, Tenant shall have the right, without Landlord's copsent,, to assign this Lease or sublease the De¡nised prenises, in either case subject to all of the terms and provisions hereot, to any corporation, partnership or other entity controlled by, under connon control with or controlling Tenant or to any corporatíon, partnership or other entity succeeding to subst,antitlly al1 of the åssets of Tenant as a result of a consolidation, nergier or sale, and folÌowing any such assignrnent or sublease, tenant shall

P:\l.tiEi I ôr{. l.Str. L'7 PLAINTIFF EXHIBIT 1 Clear Lake (2) ooo920 ,,,;ìii. ::;l:.,ri;

cónti.nue to re¡nain liable and obì.igated under all of the terms and provisions of lhis Lease. sectiôn L7,7. Àssiqnment by,.Landlord, In the event of the transfer and asslgnment by Låndlord of its int.erest in this Lease and in the building containing the Þemised premises to a person expressly assurning Landlord's obligations under thj_s Lease, Landlord shall thereby be released fron any further obtigat,ions hereunder, and Tenant agrees to look solely t,o such suceeðaor in interest of the Landlord for performance of such obligations. Àny security given by Tenant to seçure perforrnance of Tenant,,å obligations hereunder nay be assigned and transferred by Landlord to åuch successor in interest, and Landlord shatl thereby be discharged of any further obli-gation relating thereto. ÀRTTCLE XVTII. Sect.ion 18.1. Pêrsonal prÕþe..fþv tâxea. ?enant Ëha1l bê liable for and shaL] pay atl taxes, assessnents, charges, levies and other sums levied by any governraental authority or olher taxlng authority aEainst lenant,s leasehold interest ánd all personaí property and trade fj.xtures placèd by Tenant in the De¡oised Premises. 1f any such taxes åre levied against Landlord ôr Landlord,s property and if Landlord elects to pay the same or if the assessed value of Landlord's property is increased by incrusion of personal property and t.radê fixÈures placed by Tenant j_n the Demised Prernises and Landlord el.ects to päy the taxès baÊêd on such increase, Tênant shall pay to Landlord upon denand that part of s¡.¡ch taxes for q¡hich Íenant is primarity liable hereunder. t{ithin twenty (20) days after notice from l,andlord, Tenant, shall furnish to Ländlord a true copy of receipts evidencing the payment of such personal property taxes and assessments . Sect,ion L8.2. Rêal Estq!.e Taxes, Except as provided in Sections 18.1 and 18.3, IJandlord shall pay or cauãe to Ée paid all general. real estate taxes and governnental charges therãinafter collectivery referred to as the ,General Taxes*) revied against the Shopping Center for eaeh real estat,e tax year. If Landlord is required under the terms of any nortgage or deed of trust covaring the shopping center to deposit into an escror.r or other account on a monthly or other periodic basìs Èhe GeneraL Taxes assessed against, the Shopping Center, Tenant shall pay to Landlord in nonthly install¡nents, on the sam€ date6 as and in addlÈion to the BaËe Rentâl and other charges prescribed in this Lease, an amount equal to one-twelfth (1/12th) of Tênantrs share of the ceneral 'Iaxes, as estimated by Landlord in good faith fro¡n time to time. As: soon as practÍcable after the cloÊe of each calendar year during the Lease Terrn, Landlord shal1 furnish a statement in r¡ritj.ng tó lenant specifyi.ng the act,ual amount due by ?enant in respec€ of Tenant's ehare of the Generâl Taxes. In the event the total of thë rnonthly payments theretofore made by Tenant under this Section 1g.2 for such year, if any, exceeds the actual amount due, thên thê excess shalI bè applÍed pro rata as a credit on the nonthly installments thereafter cornj.ng due under this Section L8.2. In the evenÊ the total of the nonthly paynents theretofore ¡¡rade by Tenant under t,his Section 18.2 for such year, if any, is less thân the actual anount duê, or¡ if Tenant is not required under the terns of thi"s Section 18.2 Èo pay lenantrs Share of the General Taxes on a monthly basis, any suðh-deficiency or the full amount of Tenant,s Shâre of the ceneral laxes, as the case may be, shall be due and pàyäble by lenant to Landlord within ten lio¡ days after fenant's receipt of such statement. During âny year which shall be lees thðn ô fu1l tax year, ?enânt/s share of the cenerål Taxes shâll bê prÐrated on a daily ibasis between the parties to the end that Têhant sha11 only pay for taxes attrlbutable to the portlon of the tax year occurring within the Lease TerÌn. Section_19,3. Substitute and Additional Taxes, If at any time during the prirnary terrn of this Lease ôr any renewâl or extensiôn thereof a tax or excise on rents, or other tax hou/ever

P:il-99? 1 64J. tsg tB PLAINTIFF EXHIBIT I G¡ear Lake (2) o0092r ':.: / . :'::

described (except any franchise, estate, inheritance, capital stock, income or excèss proflt.s tax inposed upon l,andlorá¡ is Levied or aciÊessêd against.Landlord by any 1a!¡ful taxlng authority on âccount of Landlord's interêst in Èhis Lease or t,he rents ol other charges reserved hereunder, as a substitute in r{¡hole or in part for, or in addition to the General Taxes described in section 18.2 above, tenant agreês to pay to Landlord upon demand, and in addition to the rentals and other charges prescribed in this Leasê, the amount, of such tax or excise. In the evênt any such tax or excise is levled or assessed directly against renanC, then Tenant shäll be responsible for and shall pay the sarne at such tines and in such üanner as the taxing auttrority shal.l require. S,:ectloï 18.4. fnsurance. Tenant shall pay to Landlord, upon demand, and in addi.tion to the rentals and other chargeå prescribed in this Lease, Tenantrs Share of the premiuns for aIl fire and extended coverage insurance, boi.ler iisurance, public liability and property danage insurance, rent insurance and other insurance which, from tine to tirne, Landloril is required by any nortgagee, lender or insurancê conpany or underwriterto carry wltir respect to thê shopping center or r.¡hich is customarily carried by ol.rners of conparabre shoppíng centers from time to tir¡e in narriË Cciunty, ?exas (hereinafter collectlvel.y referred to asi the rr{nsurance Pre¡niumslt). rn no evênt shalL the fire and extended covêragie insurance maint.ained by Landlord on the shopping centêr bê less than eighty percent (90*) of the replacernen{-vaiue of the buildi-ngs comprísing the shopping center. For purposes hereof, premiums paid for insurance poli.cies havíng pori.cy years which då not coincide with carendar years sharl be þioratãd on a per diem basis for each calendar yeãr affected, and total"premiuns fôr policies issued for rnore than one year wiJ.l be prorãted equally over the nu¡nber of years for the tern of such policies, regardtesl ôf differences in prerniurn amounts actually paid during ôny particular year or years of such term. rãnairt shatl påV iå Landlord i-n monthly instarJ.ments, on the same dates as ãnã in addition to the Base Rental and other chargas prescribed in this Leâse, an amount equal to one-trÀrerfth (L/tath) of Tenantrs share of the lnsurance Premiums, as est,imated by Landlord in good faith fro¡n t¿r¡ne to ti¡ne. As soon as practlcable af ter the close of each calendar year during the term hereof, Landlord shall furnish a statsment, in writing to Tenant specifying the actual a¡nount due by Tenant in respect of renant's share of rnsurance Þreniu¡rs. rn the event the total of Èhe monthly paynnent,s theretofore made by Tenant ur¡der thls Section 18.4 for such year exceeds the actuai anount due, then the excess sharl be applied pro rata as a credit on t.he nonthly i"ngtallrnents thereafter coming ãue under this section 18.4, rn the event the tot.al <¡f the monthly payments theretofore made by Tenant under this seçtion l-8.4 for such year is less than thã actual anount due, any such deficiency shall be due and payable by Tenant to Landlord within ten (1o) days âfter Tenant,s ieãeipt of sugh sÈatement. DurÍng any part of the Leasê Tern which shail be leðs than a fuLl policy year, Tênant,s share of the Insurance Premiurne shal1 bê prorated on a daily basis betr'¡een the parties t.o Èhe end that renånt shall only pay for thê rnsurance premiums attributable to the portion of the policy year occurri"ng within the Leasê TerìÍ. ARTICLE XIX. Section"._lg. l. Bankruptcv. If Tenant shall become bankrupt or insolvent or unable to pay i.ts deþts as such become due, or file any debtor proceedings; or if Tenant shall file or have filed against it in any court pursuant to any statute either of the lJnited States :or of any sta{e a petition in bankruptcy or insolvency or for rêorganizaÈion or for the appointnent of a receiver or trustee of. all or a portion of Tenantri property, or if Tenant makes an assignment for the benefit of creditors, or petitions for or enters into an arrangement, then, this Lease shatl terminate and Landlord, in addition to any other rights or remedies it nay have, shall have the in¡nediate fignt of re-entry and rnay

P::,1.99?lú14-LSe 19 PLAINTIF'F'EXHIBIT I Glear Lake (2) 000922 ::r.,;: $ reÌìove all persons and property fron the Denised pre¡¡ises and such property rnay be removed and stored in a public warehouse or elsewhere at the cost of, and for the account of Tenant, all withouÈ service of notj.ce or resort to leqal process and wj-thouÈ belng dee¡oed guilty of trespass, or beconinq fiãnfe for any loss or díi¡ûage whleh nay be occasioned thêreþy. Seclion 19.2. Fvents...,ç.f Default. The ôccurrênce of any one or more of tbe follo¡ring events shalL constitute an ilEvent oi Defaultil by Tenånt: (1) Failure to pay when due any install¡nent of rent or any other obligation hereunder ínvolving the pa)¡ment of noney., if the failure continues for ten (10) days after written notice to Tenant of such failure, but in no event shall Landlord be obligated to give nore than two such notices j.n any tr.relve ¡nonth period. (2) Failure to perform or observe any terh, provision or covenânt of this Lease to be performed or observed by Tenant, other than as described in subsection (1) above, if such failure conèinues for thirty {30) days following written not,j-ce to fenant of such failure; or, if euch failure cannot be reasonably cured within said thirty day perlod, Tenant shall not have so¡nmenced to cure such failure u¡ithin said thirty day period and shall not therêafter (and i.n any event r¿ithin ninety days) continuouEly and dlligently in good faith proceed to cure such fai.lure. Seçtion 19.3. Ländlordls Remedi.e-g. IJpon the occurrence of äny one or more of lhe foregoing Events of Default, without further notice or de¡nand of any kind to TenanÈ or any other party, tandlord shall havê the opt,ion to pursue, in addition to and cuÍru1ätlve of aLI other legal or equiÈable renedies now or hereafter available, the follor{lng described remedies: (1) Landlord may elect t,o terninate this Lease and the têrn created hereby, in i¡hich event tandlord nay i¡unediately reposs€ss the Demised premises and Tenant shall pay at once to Landlord, as liquidat.ad datiläges (dlscounted as herei.nafter provided), the sum of ¡noñey equal to t,he rent provided in thís Lease Èo be paid by Tenant to Landlord for the balance of the stated ternr of this Lease, together with such expenses as Landlord rnay incur for legal expenses¡ brokerage fees and in puttÍng the Dernised Prer¡ises in good order and preparing the sane for reletting, Iess the fair rental value of the Denlsed Premises for the Éame period. Such liguidated damages sball be discounted to present value at the rate of six percent (6*) per annum. (2) Landlord nay elect to termínate Tenant,s right ôf possession of, thë Dèmised Prernises without ter¡nination of this Lease, in r¡hích event Tenant agrees to surrender possession and vacate the Denised premises imruediately and deliver possession thereof to Landlord, and Tênant hêreby granls to Landlord fu1l and free license to enter into and upon the De¡nised Prearises, or any part. therèof, and to expel or remove Tenant and äny other person, firm or corporatlon who nay be occupying or within the Demised Prernises or any part thereof, and remove any and all propert,y therefro¡n, using such force as ftay be necessary, vitþout terrninating this Lease or releaeing ?enant in ¡¡ho1e or in part from Tenantrs obligation to pay rent and perforn any of the covenants, conditions and agreements tc¡ be perforned by lenant, as provided in this Lease, r¿ithout. bel.ng deemed in any manner guilty of trespass, eviction or forcible entry or detainer, and without relinquishing Landlord's right to rentaL or any other

P:\Lqi?lú4.[^CÊ 20 PLAINTIFF EXHIBIT 1 Glear Lake (2) o00923 ,i:-l+, . iÎ':, -'.¡;:i' !i5f

right of Landlord under this Lease or by operation of 1aw.

(3) Landlord may alter locks and other security devises at the Denised Prernises. fn the event Landlôrd exercj-ses its rights to alter the locks at the De¡nised Premises, Landlord ehaIl onl-y be requi.red to provide lenant with a new key during Landlord's regular businese hours, provided that in no event shalt Landlord be required t.o provide Tenant a nev key until such tj-me as Landlord cures al.} default,s under the Lease and/ if requj.red by Landlord, Tenant pays to Landlord a seeurity deposit in the anount equal to trdo ti¡ues the Ëasê Rent then due hereunder. Tenant hereby waiv€s {to the extent legally permissible) åny and all notices otharwise required under common law or under chapÈers 24 or 92 of thê Texas Property Code, a$ samê presently exists or fûay be hereafter anendêd (or any subseguent sinilar statute relatíng to notice prior to instituting such action or proceeding). To the ext,ent of any inconsistency betv/een this Lease and the provi,sions of Section 92.008 of the 'Îexês Propêrty code (as it may be hereafter amended), it is the agreêmênt of the parties tbat the terrns and provlsfons of this L€ase shâll prevail. Upon and after entry into poesessj.on, with or i.rlthout terrni"nating this Lease, Landlord nay, but shall nôt be obligated to, relet all or any part of the Demised Pre¡nises for the account of Tenant for such rent and upon such termg and to such person, fir¡n or corporation and for such use or uses and such period or periods as Landlord, in Landlord's sole discretion, shall deÈer- nine, and Landlord shall not be required t,o accept any prospecti"ve lessee offered þy Tenant, or to observe any instruction givên by Tênant about such reletting, or t,o do any act, or exercise any care or diligence wiÈh respect to such reletting or to the nit.:gation of danages of Tenant. For the purpose of such reletting, landlord may decorate or make repairs, changes, alterations or additlons in or t<¡ the Demised Prenises to thê extent dee¡ned by Landlord desirable or necessary. If the eonsideration col.lected by Landlord upon any such reletting for Tenant/s acsount is not sufficiênt to påy, aÉ liguidated danages, the rental reservêd in t,his l,ease, plus the cost of repairs, alterations, addi.tions, redecorating and Landlord's other expensès, Tenant agirees to pay to Landlord the def iciency upon denand. The servÍce of any notieê, denand for possession, notice t,hat the tênancy hereby created will be ter¡ninated on thê date therein named, institution of any action for forci.ble detainer or the entering of a judgment for possession i.n such action, or any other act or act,s resulting in the ter¡nination of Tenânt's right to possession of the De¡nised Prenises, shal1 not relieve lenant fron Tenant's obligations to pay the rent hereunder durlng the balance of the terft or any extension thereof, except as therein expressly provided. Landlord may eollect and receive any rent due from Tenant, and the payment thereof shall not constitute a waiver of, or affect, any notice or denand given, suit insti.tuted or judgrnent obtained by Landlord, or be held t,o waive, affect, chånge, nodify or ålter the rights or remedies which Landlord has in equity or at Iaw by virtue of thls Lease. Thê äcceptance of liquidated damages by Landlord under any of the provisions of thiÊ Lease sha1l not preclude Landlord frbm the enforcenent of any of t.he covenants or agreements herein, nor shall any other act whích infers recognition of the Èenâncy operate as a waiver of Landlord's right to terminat,e this Lease, or any extension hereof/ior operâte as an extension of thís Lease. Landl"ord, at any tj-me after the occurrence of an Event of Default, without being under any obligation to do so and r,¡ithout thþreby waiving such default, may cure the default for the account of Tenant (and enter the De¡nised Premises for such purposê), and

F \t9v¡ltr{.tsË 2L PLAINTIFF EXHIBIT 1

Glear Lake (2) o00924 i,¡i:ri tiari:* ili¡i\r'j:.j -t;iF ':¿!r

thereupon Tenant shall be obligated and hereby agreeê to pay t,o Landlord, upon demand, all cost.s, expensês and dlsbureã¡trènts (including reasonabl.e attorneys' fees) incurred by Landlord in curlng such default, tögether t¡ith interest thêreon Jt the rate and in the manner hereinafter specified in Section 27,L3, For all purpoães of this Artíc1e XIX the rentaL agreed to be paid by thê lenant or the amount of rental payable by the Tenânt as liqu-l-dated danrages or otherwise, shall be deerìed to be thê Base Êênta1 (as specified ln Section 1.1(h) of thi.e Lease), all ite¡ns of additlonal rental (including, without Linitation, the charges for ¡nàintenance of the Comnon Area, as specified in Section 1.1(i) of thie Leaee), and all other suns required to be paid by ienanl pursuant to the Èerns of this Lease. All such sums shall bê computed on the basis of the averagê Ìrohthly anount thêreof accruing or ¡¡hich was payable during the irn¡nediately precedj"ng z4-month period, except that if it becomes necessary to cornpute such rental before such 24-nonth period has occurred, then the average monthly amount thereof accruing during such shor!èr period shall be the basis of such computation. In the event, Landlord shalL have taken possession of the De¡nised Prenises pursuant to the authority herein granted, then Landlord shall" håvè the ri.ght to keep in place and usê al,L of Ténant,'s fixtures, furniture, equipnentr inprovements, additions, alterations and other personal property at all times prior to any fereclosure thereon by Landlord or repossession thereof by any third party having a prior lien thereôn or cLaim thereto. Landlord may restrain or enjoin any b¡each or threatened breach of any eovenant, duty or obligat,ion of Tenant herein ôontðined wilhout the necessity of proving the inadequacy of any 1ega1 rerüedy or irreparable har¡1.- The renedles'òf l,andlora hereunder shall be deened eumu.Lative and not exclusive of each other. In the event that Landlord institutes any action or proceeding to enforce payment of a nonetary sum due hereunder or on account of any other breach or default by Tenant, in the performance of, its obligations hereunder and is the prevailing paity in such acti<¡n then, in such event, Tenant wl11 pây to Landlord alI reasonable costs incurred by Landlord in prosecuting such actiÕn, including reasonable attorneygt fee6. SecÈion 19.4. le,nan!'S Remedies. Except as provided elsertrhereherein, in the evenl of any default, by lJandlord, tenantrs exclusj.ve remedy sha1l be an action for darnages (fênånt hereby waiving the benefit of åny laws granting it a lien upon the property of Landlord and/or upon rent due Landlord), but, prior to any such action Tenant wíll give f,andlord gritten notice speeifying such default with particularity, and Landlord shall thereupon have twenty (20) days, in which to colmrence to cure any such defaulÈ. Uriless and until Landlord fails so to conmence to eure any defðult af,ter such notice or having so co¡uuenced thereafter taí1s to exercise reasonable diligence to conplête suöh cure, Tenant shall nût have any renedy or cause of action by reason thereof. Ä11 obligatíons of Landlord hereunder wíIl bê çonstrued as covênants, nÒ conditions,' and all such obligations will be binding upon Landlord only during the period of -its ownership of the Sfr-oppi.nq Center and not thereafter. In the event that Tenant institutes any action or proceeding on account of any breach or default bt Landlord in the performance of its obligations hereunder ând is thè prevailing party in such action then, in such event, Landlord will pay to Tenant all reasonable eosts incurred by Tenant in prosecuting such astion, including reasonable attorneys, fees. Notü/ithstanding the provisions of Seeti.on 22.3 belor,¡, in the event Tenant receives a fina1, non-appealable judgment against Landlord assessing danagês, r,¡hich Landlord fails or refuses to pay within thirty (30) days after receipt of demand fron Tenant, then Tènant shall have the right, to recover the sane, together with int,erest

t'r \t-997 ! é44 . L.SD 22 PLAINTIFF EXHIBIT 1 Glear Lake (2) 000925 ;.tl.tt,

'4r"J

lhereon as provided for in said judgrnent (collectively, the *Judgment Arnountrr), by offset against Èhe Base RêntaL theieafter becorning due (and which nay then be unpaid) hereunderr. provided, hô!¡êvêr, in no evenÈ shal1 the amount so offset in any month exceeá twenty-five percent (2S*) of the Baee Rental payãOte for such month, unless such li¡¡itation r¡ould render it iraposslble for Tenant to recover the ,Judgment Ànount on or before the explration of primary Lease ?er¡n in which event Tenant shall -be entitl"ed the Èo offset against Base RentaL each nonth the anount equar to lhe Judgenent Amount divided by the number of ¡uonths then re¡naÍning in the prirnary Lease Tern. ÀRTICLE XX. Section _?_0, 1,. So long as Tenant is not in default hereunder and is actually occupying and using the Denised premÍses for the sale of the primary per¡nitt,ed Itlerchandise, Landlord agrees that it shall not lease any portion of the Shopping Center or pernit the use of any portion of the shopping cenËèr for the sale of the Prirnary Permitted Merchandise,. provided, that thís restriction on leasing (and resulting exclusive in favor of renant) shalr not be deemed breached by Landlord to the extent {but nå further) ä tenant under any rêase of space in the shopping-center as of the date hereof has, as of the date hereof, th; right (whêther or not, sueh right is exerei.sed) under such lease to úse such tenant/s premises for the operation of a business setrlng all or a portion of the primary permitted Herchandise. Not¡¡ithsta;ding the foregolng, it sha1l not be a brêâöh or violation of the abovã described restríctlon lf any tenant noÌ{ or hereaft.er leasing space in thg Shopping Cent,er uses such tenant's prenises for the operation of a business selling ã11 or any port,ion of t,he prirnary Pernltted Merchandise in no more than the teÀser of (i) twenty-fivå përcènt {25t) of Euch Tenant,s premlses or {ii) 2,50ó squarè teet of such tenantrs prernises. In addition, for the purpose of the restricti-on (and resulting exctusive in favor of tenand) contained in this Artícte xx, Primary pernritt,ed llerchåndise shall not inctude 1j-nens, pillons; bathroom accessories, furniture, palnt,, hardrrvare, larnps and frêsh flowers. ?enant acknowledges that ror tire purposeå of the foregoing restriction and arl other provisions -of t.t¡is Leåse, Èhe term 'ishopping centert does not includê the tract of land located southeast and contiguous to the land described on Exhibit 'Àx attached hereto and the building l"ocated thereon currêntly occupied by wal-uårt,.

ARTICLE XXI.

. Section ?å*.1 . Surrender of De¡.¡r,iged preroises. At the expiration. or ternination of thie Lease, wnetne-Uy :_apse of time or otherlrise, Tenant sharl surrender the De¡oisãd p-re¡niseg to tandlord in the sane condition of thè Demised premlses on the date hereof (excepting reasonable r.¡ear and t,ear, losses reguired to be reEtored by Landlord pursuant to Section 8.1, RrtiõIe W, and Artíere xvr of this Lease. and damage fron condennatíon or casua).ty not required to be repai.red by Tenant under the terns of thii Lease) êxcept for al.terations whi.eh renant has the right or måy be required to rênove under t,he provisions of Section -g.t. Tenant also shall surrender all keys for the Ðernised premi.ses to Landlord at the expiraÈion of this Lease {but no such surrender shall be deened to be an acceptänce by Landlord of surrender of the Demised Premises)- and sharl inforrn Landlord of aÌ1 co¡nbinations on 1ocks, säfes and vaults, if any, in the Þemised premises. Landlord can eìect to retain or dispose of in any manner any alterations or othêr property that Tênant does no1 remove fron the Demised Premises on expiraLion or terrnination of the terur of this givlng at least ten (1o) days/ notic€ to Tenant. Title to LeaÊe by any sucir alterations or other property Èhat Landlord elects to retãin or dispose of on expiration of such ten-day period shall vest in Landlord. TenanÈ waives â1r claims against Landlord for any dåñagês resulting fro¡a Landlord/s retention or dispositi.on of any

P:\19971ó44 l-\Ë 23 PLAINTIFF EXHIBIT I Glear Lake (2) 000926 ::{11¡ r'llll:: îJåÌiI

such altêrations or other property. fenant, shal1 be liable to Landlord for Landlord,s cösts for storing, re¡noving and disposing of any such alterations or other pröperty, Seeti.on 21.2, Holdinq Over. In the event Tenant rehains in possession of the De¡nised Preníses after the expiration of t,his Lease and without the execution of a nevJ lease, it sha1l be deerned to be occupying said premises as a tônånt fron month to nonth at a rental equal to the rentâ1" herein provÍded plus fifty percent (S0*) of such amount and othèrwise subject to all the eonditions, provi- sions and obligat,ions of thj-s Lease insofar as the same are applícable to a ¡nonth to ¡nonth tenanÇy. Thê above described tenancy fron nonth-to-nonth may be t,er¡ninated by either party upon thirty (30) days q¡ritten notice to the other. ARTICLE XXTI. geët,lon 22.L. Suborqination. Subject t,o the condition precedent to subordination hereinafter sêt forth in thi.s Sect,ion 22.1, Tenant aceepts this Lease subJect ãnd subordinat,e to any mertgage, deed of trusL ôr other Lien presently existlng or hereafter placed upon the DemÍsed Premises or the Shopping Centêr äÉ a whole, and to any renel¡als and extenÊions thereof. fenant agrees thät any such mortgagee shall have t,he rlght at any tine to subordinate €¡uch ¡nortgagê, deed of trust, or other lten to this Lease; provided, however, notwithstanding tl¡at this Leasê ¡nay bê (ör made to be) superior to such rnortgage, daed of truat or other lien, the provisions of such ñortgage, deed of truat or other }ien relâtive to the rights of the nortgagee lrith respect to proceeds arising fron an eninent domain t,aking (including a voluntary cÕnveyancê by Lândlord) and/or arising fron insurance payable by rêason of danage to or destruction of the Denj.sed premises shall be prior and s\¡perior to any contrary provisl.ons contained in this instrument with respect to the payment or usage thêreôf. Ländlord is hereby irrevocably vested r¡rith ful] pover and authority to subordinate this Lease to any nortgage. deed of trust or other lien hêreâfter placed upon the Ðe¡nised Pie¡níses or the Shopping Center as a whole, and Tenänt âqrees upon denand to.execute such further instru¡nents subordinating this Lease as Landlord may requesti provided, hoüreverr as a condition precedent to the effectivenèss of any Ëuch subordination, the holder of any such rnortqage, deed of trust or other lien t,o which thi6 Lease is to Þe subordinated 6haLl agree pursuänt to a writEen agrêement delivered to ?enant that so long as lenanÈ is in cornpliance r*ith the provisS.ons of this Lease, Tenant.'s uÊ¡e and occupancy of the Demised Prenises and its rlghts under this LêaEe shall not be dÍsturbed or affected by -any fqreclosure or other aetion (or by the delivery or acceptancå of ã deed or other conveyance or tränsfer in lieu tñereof) wllctr nay be instituted or underÈaken i"n order to enforce any right or retnedy availåble to the holder of such instrument or any other docunent evidencing or given as security for the transaction secured thereby. Section 22.2. Noticê to Horþ..qêgee of Trandlord,s Def.Rqlt. At any tirne when the holder of an outstanding r*ortgage, deed of trust or other lien covering Landlordfs interest in the Demised Premises has given Tenant written not.íce of i.ts interest j.n this Lease, fenant may not exercise any rernedies for default by Landloral hereunder unless and untiL the holdêr of the indeþtedness secured by such mortgage, deed of trust or other lien shall have receivêd r¡rr:itten notic€ of such default and a reasonable time for curing such default shall tbereafter have elapsed, which shall not be less than thirty (3û) days- Section.?2.3. Rig.ht to EstpÞþel cer!,if,icatgs. Each party, r,rithin ten (10) days after notice fron the other party, shall execute and deliver to the other pårtyr in recordable forn, a certificaÈe stating that this Lease is unnodified and in ful.1 fotrce and effect¿ or in full force and effect as modified, and stati"ng the modifications. The cerÈificate also sha11 state the

l,ìì1.t971614. LSA ¿c PLAINTIFF EXHIBIT I Glear Lake (2) ooo927 í;.-iì:i ,ùi5j' .:.1\q

anount of Base Rêntal, the dates to which rent and other chargês have been paid in advance, if any,. ând the amount of any security deposit or prepaid rent. The cêrtificate also Êhâll staÈe r,rhethel or not, to the best knowledge of the signer of such certificate, the other party is in default in perfornance of any covenant, agreenent or condition contained in this Lease, and, if eet specifying each such default of which the signer nay have knowledge. Failure to dêIj.ver the cêrtificaÈe r*ithin thê tèn {10) days shal1 be conclusíve upon the party failing t,o deliver the certificate for the benefit, of the party reguêsting the certificate ånd âny succesÊor to the party requesting the certificate, that thie Lease is in fult force and effect and has not been rnodified., excepf_ as may be rêpresented by the party requesting the certificate. ARIICLE XX1IT. Section 23 . 1. oJtion tÕ Exf,end. Subject to t,he cônditions herein stated and provided that Tênant is not then in default in t,he payrnent of rental or any other amount or in the perforrnance of any other obligation of Tenant pâyable or perforrn- able under the ternÉ of this Lèa€¡e, Tenant shall have the right and option to extend the ter¡n of this Lease for for¡r (4) additional pe?iöds ôf five (5) years eôch (the trExtension periodsr). Tenântrs right to exercise Èhe option herein granÈed (the ilÞxt,ension Option") for. each Extension Period is subJect Èo and conÈingent upon the satisfaction of the following condit,ions: (1) Tenant shall not havg assigned this Lease or any interesl hereln or sublet all or any portfon of the Dernised Premises during the primary Èer¡¡ or any previous Extension Period except ås exprêssly perlnitted under the terrns hereof; and (2) Tenant sha1l have gÍven to Landlord written notice of Tenantrs election to exercise the first, or any subsequent. ExtensiÕn Option not later than nine (9) months prior t,o the explration of the original term of the Lease or the then current Extension Feriod, as the case nay be. Unless Tenant shall have given Landlord tinely noticê of j"ts el"ectíon to exercise the Extension Option as required above, it shall be deened that Tenant has noÈ exercíEed such option and the term of this Leasè sha1l ter¡¡inate ât the end of the original term or the then current Extension Period, as the case may be. In the event Tenant exerci-ses the Extension Option for any of the Extension Periods, alL of the terns and provisions of thie Lease which âre applicable for and during the original term shall apply during the Extension periods except that there shall be no furlirei opti.ons to extend the Lease Term at the expiration of, the fourth Ext,ension Period. Further, the Base Rental during thê first Extension Periods shaIl be deternined in accordanðe with the provisions of Section 1.1(h) hereof. All references in this Lease to ÍLeage Termrr shall refer to the oríginal term and the four Extension Periods, if lhe Extension Optlon is effectively exercised foi such Extension Periods or any of thêrn, in accordance i¡¡ith thê provisions hereof

ARTICLA XXIV. Section 24._1. Definitions. For purposes of this Artícle, the following terrns shall have the following meanings: (i) ttHazardous Materialsl shall nean any substance v¡hich novJ or hereafter is regulated by any covernmental Requirement (hereínafter defined) including, but, not .li¡nit,ed to {i) any rrhazardous !¡asteil as defined by the Resource Conservation and Recovery Act of 19'76, as

P:\L9971ú¡4.f ^CÊ 25 PLAINTIFF EXHIBIT I Glear Lake (2) ooo928 .',:r", l.,:i,$ '*;r; i¿il*

amended, ând any regulations pronulgat.êd Èhêreunder; (ii) any rrhãzardous substancefr as defined by the Conprehensive Environmental Response, Cornpensation and Liability Àct of 1980 (ttCEnCU\"¡, âs anended, and any regulat.ions pronulgated thereunder; (iii) asbestog ln any forn; (iv) polychlorinated blphenyls; and (v) âny petroleum Õr any petroleurn-based product. (ii) I'Governmental Requirenentsl shall mean alI laws, ordinances, sÈatutes, codes/ rulee, regul.ations, orders and decrees of the United States, the State of Têxas, Harris County, the CiÈy of Vùebster or any other political subdÍvision, âgency or inst,ru¡nentality exercising jurisdiction over the Þe¡nised premises or the Tenant. { lii) [Hazardous ¡{ateriå].s Contarni.nationrr shalÌ nean thê contanínation of the inprovenents, facilltÍes, soi"l, ground h¡âter, or air or other eLenent,s o¡1, over or under the Demised Premj.ses by Hazardous !,{aterials at any line eÍianating fron tlre Demised Pre¡uises. Section 24.2. Covênants, RsÞresentati"pns, and Wg-rre¿t|eS. Subject to the express rlghÈs granted t.o Tenant under the terms of this Lease, Tenant will notl (i) Do anything upon the Shopping center ttrat would violate any Covernmental Rêquirenent,si (Íi) Receivê, storê, dispose, generate, treat, use or place any Hauardous Materials on, from or in the De¡nised Preroises or the shÕpping Center in a manner ¡¡hich violates any Covernmental Requirernents; (iii)"ransport any Hauärdous I'{aterÍals to or from the Denised Prenises or the Shopping Center in a manner r,¡hich violates any covernmental Requirements; (iv) Cause the existence of any Hazardous MaÈerials Contåüinatlon in or on the Denised Prenises. DurÌ-ng the ter¡¡ of this Lease, Tenant will give written notice to Landlord pronptly upon îenant/s acquisition of kno!¡ledge of thè deposlt, release, placement, or presence of any HauârdÕus Materials to the extent the sâne constitut.es Hazardous uateri.al,6 Contanination ôñ, under or in the Demised Premises or ôf the transportation of any Hazardous Materials to or from the Demlsed Pre¡nises in violation of covernnental Requirenents. Tenant shåLl coÍrply at all tines with all Governmenlal Rêqulrements related to the Der¡ised Pre¡ni"ses with respeet to Hâuãrdous Uaterials introduced by Tenant into the Demised Premises. Tenant, sha1l innediately comply with any and aLl Governmental Requirements requiring thê removal, treatment or disposal of Hazardous Matêria1Ë or â. Hazardous Materíals Cont,amination on the Demised premises inlroduced by Èhe Tenant into the Demised Premises or the Shopping center, all at fenant,s sole cost and expense. Section 24.3. Access and, Çleanuo Rj.qhts. Landlord and its agents and contractors shall have the right at any reâsonablè tÍrne to entêr upon the Denised Prenises to inspect and/or test t,he sanê for conpliance with this Article XXIV or to correct, at Tenant,s expensè (should Tenant fail to do so following notieê), any violation of this Article XXIV, but Landlord shall be under no obligatlon to do so. Further, Tenant acknowledges and agrêes Èhåt the Landlord sha1l have ¡hê right (but not the obligation) to enter the Demised Premises or take other actions as it may dêem necessâry or:advisable to cl-ean up/ rêmove, dispose, resolvè or minimize the inpact of, çr otherr'risê deal with any Hazârdous Materials or Hazardous Mat,erials Contarninat,ion in, oîr below ôr âbove the Demised Prenises following receipt of any notice by any person or

F il.t9ftólJ.I_sti 26 PLAINTIFF EXHIBIT 1 Glear Lake (2) ooo929 i.;i.:ììii hij:i!

entity assêrting the existence of any Hazardous Materials or Hazardous t'laterials contamination which, if true, could result in an order, notice, suit or fi"ne agaìnst Landlord. Tènant shall indennify, defend and save harnless Landrord and Landlordrs owners, directors, officers, ernployees and eont,ractors (coltectively, thå 'il,andlord Partiestr) from and against any suits, actions, te!äf or adninistrative proceedings, denands, ctains, -liabiliÈíe*, -iã""1 fines, penalties, losses, injuries, darnages, expenses or'costs, incruding renediation expenses, intereãt and ðÈtorneys' and consurt,antgt fees (collectively, the rclåim6r) incurred or èuffered by the Landlord parties or €rny of them (i) that are lncurred or inrposed based upon any Governnental Raquirement and that arise out ôf any introduction by ?enant, its owners, dlrectors, offieers, enployees, agents, contrãctors, licensees, assignees or subleesees (co1lecÈi"ve1y, thê ttrenant parties*) of Hazardous llaterials int or upon the shopping center or (ii) that otherr¡ise arises from lhe breach by lenant or Tênant parties, or any of thern, of any represent,ation, warranty or covenant in this paragraph e. . Section 24.4 . Landlord, s .Indennitv. Landlord shall i-ndemnify, defend ãnd save harmLess the Teñant parties from and against a1l clains incurred or suffered by the.tenant parties or any of the¡n (i) that åre incurred or imposed based upon any Governrnent.ar Reglirement and that arise õut of âny názardouå Mâterials contanination in the shopping center as of ihe date of the Lease or (ii) that are incurred or inpoeed based upûn any cqvernmental Reguirenent and that, arise out of any introdudtion uy the Landlord Parties of Hazardous Materials iirto or upon thà s-hopping center during the term of the Lease. Landrorà sharl irnmediat.ely conply _with any and alL Govêrnnental Requirenrenis requiring the removal, treatnent or dÍsposal of Hazardous lqaterials or Hazardous lttâterials contanination on thg shopping center as of the date of the Lease or which is introduceã by the Landlord Parties into or upon thê shopping center during tie term of the Lêase,

ÀRTICLE XXV.

. Sect,ion 25.L. Notlceg. !{hêrever any notice is reguired or permittèd hereunder, such notice shall bè in writing.' o"V notice or document required or pernitted to be delivered hÀreundel shè11 be either delivered to the notice address of Landlord (addressed to the attention of the president) or renant set forth in section l.L hereof, by hand or sent by united statês registered or certified nail, qostage prepaid, return receipt requeÁted, to the same addresç' Either party's address nay be cnangea fron time to ti¡ne by sueh party by giving notice as prõvided heiein. A poËt, office receipt for registration of such notice or signed return receipt shalL be conclusive that such noticê r/as delivãred in due course of nail if nailed as provided above. For purpôses of the calculation of various time periods referred to -heiein, nåtirå delÍvered by hand sharl be deenred reeeived when delÍvered to the prace for gÍving notice to a party referred to above and notice nailed in the mânner provided above sharl be dêenìed compreted upon the earlier to occur of (i) actual receipt as indicated on the signed return receipt, or' iii¡ three {3) days after posting as herein - provided-. Any written notice addressed ai provided hereinabove and aetually recei.ved by thê addresseel shall sonstitute sufficient notice for al.L purposes of this Lease. ÀRTTCLE XXVT.

Section 26.1. Oovernnent,al Regulations. Landtord and Têaänt acknowledge that therê are j.n effect federal, staÈe, county and municipal laws, orders, ru1es, directives and r"gu:.ationi (collectively referred to hereinafter as the ,Regulatiãns,¡ and that addi.tionat Regul"ations may hereafter be enaited or go i.nto effecl, rerating to or affect.ing the Demised pre¡nises or the shopping center, ând cÕncerning t.he irnpact on the environnent of

l:\l"1r97lrí4. t.S¡ì 2"7 PLAINTIFF EXHIBIT 1 Glear Lake (2) oo0930 ,r1;.:,. ,: !!',:¡n.: t;;

construction, land use, ¡¡aj.ntenance and operation öf structurea, ånd conduct, of business. sì-lbject to the express rights grånted undêr the terxns of thie Lease, neither Landlord nor Tenant will cäuse, or pernit to bê eaused, any âct or practice, by negllgence, olrission, or otherwì.se, that would adversely affect the-envi.ron- ment, or do anythì-ng or pernit anything to be done that r¡ould violate any of said laws, regulatione, or guidelines. Morêover, Tenant shall have no claim against Landlord by reason of any ehanges Landlord nay make in the Shopping Center or the Denised Pre¡nises pursuant to sai.d Regulati.ons or any charges inposed upon customers or other invitees pursuånt to same, ARTICLE XXVIT. section ?7.1. Nêgat.íon of pafçnershiÞ. Nothing herein contained sha11 be dee¡red or construed by the parties heråto, nor by any third partyf as creatfng the retationship of principal and agent or. of partnership or of joint venture bêtween the þarties hereto, it being underËtood and agreed that neithèr the nelhod of conputatlon of rent, nor any other provision contained herein, nor ãny acts of the part.ies hereto, sball be deened to craåte any relationship betlreen the partíes heretô other than the relationshiþ of landlord and tenant, Section 27.2. IndeÞendent Covenant to pãy Ren*.3r¡d Other Chefg*ç. Tenant shall not for any reason withhold or reduce 'fenant,s required pay¡nèntÊ of rentals and other charges provided in this Lêase, it being agreed that Èhe obligations oi Landlord hereunder are independent of Tenantrs obligations, except as nay be otherwise expressly provided. Section 27.3. Li¡nitation of Landlo-fdls Liabilitv. Under no circumstances $¡hatsoever shaLl Landlord ever be liable héreunder for consequential or special damages; and alL 1iabi1it,y of Landlord (including any i.ndividual rnemþer Èhêreof) to Tenant foi any ilefâu1t by Landlord under the terms of this Lease shall be tinited to the proceeds of sale on execution of the ínterest of Landlord in the Shoppíng Center; it, being stipulated and agreed that Landlord shall not be personally liable for any deficiency. This clause shall not, be deemed to lir¡it or deny any renedies which Tenant rnay have ì.n the event of defauli by Landlord hereunder, whi.ch do not involve the personal liability of Landlord. Speciflcatly, Tenant shall have the ri.ght, t,o seel< injunctive or othêr eguitable relief in connection with thís Lease. Sectiqn 27.4. Cqn.çeu!_s and Per¡nissions. Except as nåy be otherwise herein provided, in all circumstånces under this Lease whère prior consent or pernission of one party (rrfirst, partyr'), wn-ether it be Landlord or Tenant, ís reguíred befora the olher party {ilsecond party'r) is authorized to take any particutar type of action, the matÈer of whether to grant 6uch consent or perrniÃsion shall be within the sole and exclugive judgment ðnd discretion of the firÊt party; and it shall not constitute any naturs of breach by the first. party hereunder or any defense to the pêrfornance of ðny covenanÈ, duty or obligation of the second party hereunder that thÊ first party delayed or with.l¡al-d.the qranting of such consent or perrnission, whether or not the delay or withhoLding of such consent or perrnission was, in the opinion of the second party, prudent or reåsonable or based on good cause. 9ection 27.5,, Non-lfaiver. One or nore waivers of any covenant, t€rm or condition of thls Lease by either party shall not be conctrued as a waiver of a subsequent breach of thè sa¡ne covenånt, tern or condition. Thê consent or approval by either party to or of any act by the other party requiring sueh consent or approval shall not bê deemed to r¡aive or render unneÇessary consênt to or approvaL of any subseguent sj.milar act,. Section 27.6. Force l{ajÊure. tThenever a period of ti¡ne ls herein prescribed for action to be taken by Landlord, Landlord

P: ì1.9971 û¡,1 . LSB 2A PLAINTIFF EXHIBIT I Glear Lake (2) 000931 u:,'

shaLl not be Ìi-able or responsible for, and Èhere shalr be excluded frorn the conrputat,ion of any such period of time, any delays due tô strikes, riots, acÈs of.cod, shortages of labor'or írateriåfr, *.i, governrnental larvs, regulations or restrictions or any other câuÊes of any klnd vrhåtsoever which are beyond the reasonaËre control of Landlord. Spction 27.r?- Short Form Lease. The parties agree noÈ to place this tease of record, but. each party shall, at the request of the _other, execuÈe and acknowledge, so that Èhe same rnay be recorded, a shorÈ forrn lease or mernorandum of rease, stating ïhat Tenånt, has accepted possession of the Denised premises, indiõating the lease term and any options to extend such tern, but onrittin{ rent ðnd other terms., and an agreement. specifying the date oi cÖnnèncement and ternination of the lease terrn; provlded., hot¡ever, that the failure to record said short forn lease, :nemorandu¡n rf lease or agreement sharl not affect or iurpair the validity and effectiveness of this Lease. Tenant shall -pay all coets, täxes, fees and other expenses in connection t¡i*r or prerequisíte tå recording. . Sêction A7.9. coverninq La!r; provi5ions severable, Thè laws of the stâte of Têxas sha11 qovè@tion, vaì-idity, perforrnance and enforcer*eni of this Lease. rf any provi.sion of Èhis LeåÉe should be herd to be invatid or ,rn".,i forceable, the validity ând enforceability of the remaining provisions of this Lêaaê sha}l not be affecteå thereby. venue for any action under thÍs Lease shatl be the county in ritricrr rentais are due pursuant, to Sectíon 4.1. ând SecÈj.on 1.1 of thj.s Lease. qection 27.9. Capçions. The captions used herein are fqr con venience only and do not li¡rit or ànplify the provisions hereof. Seqtion 27.10. Nunþç.r and Gender. Irlhenever herein the singular number is ueed, the same shall include the plural, and words of any gender shall include each other gender. Sec.tign 27.¡1.. Sucçessors. The t,erns, provisions and covenants sontained in this Lease shall apply to,- inure to the beneflt of and be bl.nding upon thê partfeJ hereto and their respective heirs, suceêssors in interestãnd legal rëpresentatives, excÊpt as otherrr¡ise herein expressly provided.- Sectiqn 27,12. Broker. Tn considerát,ion of the services rendered in connection with the negotiation of this Lease by united Equities Tncorporated ("Brokert), Landlord shall pay to Broker a leasing com¡nission in the anount equar t.o 3* of Èi¡ã Base Rental onl.y which is actually paid by Tenanl for the Demised prenises and any additionar space in the shopping center whích nay be added t,o anrl becomes a part of the Ðe¡nised prèmises, r,¡hich conirission shall be:payabJ"e nonthly if, as and when such Base Rental is received by Landlord, and not otherwise. rn additlon, in the event Tenant exercises the ExtenEion option for any of the Extension periods under the provisions of Àrticle XXTII hereof, Owner shatl pay to Broker a further co¡nmission in the amount equal to 1-1/2t ãr-tr¡e Base Rental only r.¡lgn i"s. actua_lly paid . to Landlord during any Extension Period, r¡hich additional co'nrnission shall also be palablä nonthly if, as and vrhen received by Landl0rd, and not otnerv¡ise. Landlord shall have the right and opÈion of aecelerating, at any time, t,he payment of all co¡n¡rissi.on instatl¡nents set forlir above. If Landlord se1ls its interest in the Shopping cent,er and in connection therewith assigns Land1ord's inteiesC in this Lease, Låndlord shar] ei.ther (if require the purchaser to assume the payrnent of all co¡n¡nisèion install¡nents acðruing after such sale in r¿hich event serrer shart- be released of alt fi¡rther lÍabirity iá Broker or (ii) seller shal1 remain liable to Broker for the payrnent of all co¡nmission instaltments accruing after such sa1e. r,ãnãtord and renant each hereby repres€nt and !''arrant to the <¡ther that Bröker is the only agent, broker, finder or other party with whom

l): ii..{¡9Ì l¡j,14 l,Sll 29 PLAINTIFF EXHIBIT I Glear Lake (2) oo0932 ::l:j', !;i;tr lliir t1; ",¡k4

they have dêâlt h¡ho is or mäy be entitled t,o any com¡nission or fee wilh respect to this Lease. Seet,ion 27.L3. Interest on,fJ*qg Pavments. In the event any install¡¡ent of Base Rental or any other sun payablê by Tenant to Landlord under the provisiong of this Lease is not receivêd within fivê (5) days after íts due date for any reåson what.soêver, it ís agreed that the ãmount thus due sha1l bear interest at the maximum contractual rate whích legally coutd be charged under the laws of the State of Texas in the êvent of a Loan of sueh rental or other sum to Tenant (but in no event t,o exceed 18* per annurn), such interest to accrue continuously on any unpaid balance due to Landlord by Tenant during the period commencing with the aforesaid due date and terminating wlth the date on which Tenant ¡nakes full payment of sueh a¡nounts to Landlord. Any such interest shall be pa!¡able as additiona] rent hereunder. Section 27.1,4. Entire*Agreement. This Lease contains t.he entire agreement between the parties, and no agreênêht shall be effective to change, rnodify or ter¡ninate this lJease in r¡hole or.in par:t unless such is in writing and duly signed by the party against whorn enforcement of such change, modification or ternination is sought, Landlord and Tênant hereby âcknov/1edge that they arê not relying on any representation or promise of the other, except as may be expressly set forth 1n this Lease, 6q.ction 27 . 15 . Te{ni.natign of Existlnq Lease. The obllgations of the parties hereto are exprèssly conditioned upon and subject to the terninatj,on by rnutual agreement, of the parties thereto of the existing Shopping center Lease dated Decembêr 3, 1989, betïreen Landlord and Pottery I'tart, Inc. (the ttExisting Leaserr). In the event the Existing Leasê is not t,erminated eff,ective as of the Commencement Date, either party hereto shall have the right to terrninate this Leâse by giving written notice of termínat,ion to the other party. Section 27.16. Exhibits. The exhibits attached to this Lease are incorporated herein and ¡nade a part hereof for all purposes. ÉXECUTED in nultiple counterparts, each of which shatl have the force ând effect of an original as of the date first above vrr:itten. I,ANDLORÐ

¡'IESTA

s, Presldent

TENANT:

GARDEN RIDGE, L.P. By: Garden Ridge Managernent, Inc., its sole partner Êy: Armand Shapiro, Chairman

BROKERI

UNITFÞ NQUÏTÏES INCORPORÀTED

By Edl'¡ Freednan, Pre6

l¡:U-9t'ì¡644.LsÉ 30 PLAINTIFF EXHIBIT 1 Glear Lake (2) 000933 i':v & ËK¡IIBIT ''A"

47.6664 aeres of land (2t076,348 square fee¡)r a tract of land belng parE of and out of LoÈs lr 2, 3r and 4' Block 9 of tlebster Outlot,s as recorded in Volune 67, Page 197 of the Harris County Deed Recordsr in the Robert. l,iilson Survey, Abstract No. 88, 1n the Clty of tJebster, Harrls County' Texas, and belng more fully descrlbed by DeÈês and bounds ae follows (nith be-arlngs -referenced to ¿he Soulheasterly rlght-of-way llne of F.ll. 528, also knonn as l{11son Avenue, cailed N 52'ú 13 t oo" E) : BSGINNINC at a point. oarking interseetion of the Southeaslerly right-of-nay line oË sald F.H. 528 wlÈh thê SouthwcgÈ llne of sald Lot 2 and belng the moet Northerly tlest corner of the herein descrlbed trac¡: THENCE, tl 52o 13' 00' E, along sald ri.ght-of-way 11ne of F.!,1. 528, a dlstance of 325.86 feeÈ to Èhe polnt of curvature oÉ a curve to the right; THENCE, NORTHEASTERLY, along a SoutheasÈ 1lne of a Texas Hlghway Ðepårtnent rlght-of-way easeûent (racorded ln Volume 2825, Þage- 495 of thè Harrts County Decd Reeordg) and the arc of sald curv€ to th. rlrht havlnr ¡ rsdl.us of 286.48 fcet, a central angle of 45à õ0'00", ã chord beartng N 74o 43f 00r'8, 2L9.26 feet, an arc length of 225.00 feeÈ to the polnt-of-tangeney of sald curve; THENCE, s 82c 47r 00il E, contlnulng along satd rlght-of-way eaoenênt, a dlstance of 186.05 feet to the polnt-of-curvålur€ of ¿ eurve to lhe left; ?HENCE, EASTERLY, eont,lnuing along saLd rlght-of-wåf eåseúent and thc arc, of sald curve Èo the lefÈ havlng a radlus of 286.48 feet, a cêntral anglc of 45c 00t 00r', a-chord bearlng t{ 74o 43t 0'0" E, 2L9.26 FeeÈ, an arc lcngth of 225.00 feeÏ to the polnt-of-tengêncy of sald curve¡ THENCE, N 52r 13' 00" E, contl.nulng along sald right-of-way easêo€ntr a dl.stancc of 175.80 f,eet to lhc polnt-of-curvature of a curve Èo the rlght; THENCE, EASTERLY, along thc arc of gqld curve to the rlght havlng a radlus of 137.00 -feet-, a central angle of 90o 001 00'r, ã chord beartng S 82o 47'- O0'r E, 193.7i feet, ån årc length of 215.20 fcct to a polnt 1¡ tha SouthwesÈ, rlght-of- way llne of Intergtate Hlghvay 45 (Gutf Freaway) narklng the polnt-of-Èang€ncy of sald curve; THENCE, S 37o 47t 00" E, along the Southwes t right-of -way llna of said Intêrrtat,ê Hlghray 45, a dls Èance of 680, 20 fêeÈ to Èhê polnt-of-curvåturÊ of a çurve to Èhe rlght ¡ THENCE, SOUTHEASTERLY, eontlnulng along s¡ld rlght-of-uay llne and the arc of said curva to the rlc,ht h¿vlng a radius of 5,585.58 feeÈ, a central angle of 08¡ 22t 26'r, a chord bearlng S 33o 35' 47" E,81.5.60 feet, an arc length of 816.33 feet to a polnt tn the Southeaat lln¿ of the aforemen'tloned Lot 4 of the llebster Outlots; THENCE, S 52o 13r 00" W, along thè Southeast llne oË satd Lot 4r {r dlstance of 1r117.91 feet to a polnt for the South sornêr of thls tr¿c,t¡ THENCE, N 37o 43t 16'r r ,, along the conmon Southnest line of såld Lots 4, 3 and ? o f t,he l.Je bster 0utlots, a dlstance of 1,930.00 feet to the POINT 0F BEçINNING and containlng t47,6664 aetres of land.

PLAINTIFF EXHIBIT I Glear Lake (2) oo0934 ilr'{: ./:i:;1; 1,.:,'.¡ t ì. .,.:¡

SAVE AND EXCEPT TITE FOLLO9ING:

A 10.2652 acre (44711s3 square foot) tract in the Robert ililson survey, Abstract ilo. gg, beini out ofof rand located Lot-4 of the tlebster outlots ¿s recordeä-in vo'rume ol, 0eed Reconds.,. ln ll.arris-county,.Texas anil iãge idi'oi-i¡ã'xlriij couniy beíng more pa.iiluiåriy descí.ibed bv metês ¡nd bounds as.foltoxi (q!rh bearing rãrereñcãã ü-tñã iãutñÃisteiiy Iig!!-qf:w¡y..llne of state F.r'r.'528, arso kñown as riison-nvâñuË, calred t{ 52f 13, 00' t) i C0!fi8ilC¡t{6 öt à l/Z-inch lron rod found ln the arc of a curve m¡rklng the lntersecilon of the Southeast llne oi said lot 4 rith.the.southwest right-of-way 'r'ine of Interståte Highway ilo. 45 (Gulf Freeray), bãsed on a-lOO_ioãt *1iii,i-

ïHEllCE,_ N0RIlll{ESTtRLy, along the Southnest riqht-of-way llne of srtd Interstaùe Higñway tto. 45 ¿nd thå iri oi-Ëai¿ curve to the left havrng a radrus of 5.59s,59 feet. a ðenirar angle of 0lo 42' 55o, a-chord bearlng il 3Oo 16'OZi l,¡,"iOi.ZO feet, an arc length of 16l.2l feet tõ a 5/g-lnch i"on'"õã- set for the mo¡t €asterly Southeast eorner and p0lttÏ 0f BEG¡l{tl¡t{G of the herein ðescribed tr¡ct¡

flilçE,"S-52o 15' 44o ï, a dlstarce of 581.50 feet to ¡ S/8-lnch lron rod set fór corner¡ ïllEtlCE, S 37o 43r 16r f, a distance of 66.37 feet to a 2-inch lron plpe :et for corner¡ lllEllcEr s 52' 13' 00" H' arong a ltne 100.00 feet ilorthwest ül lll panllel.to the Sourheãst ltne of iai¿ tõi i,'a"äìitun"e of 482'00 feet to a 2-inch rron prpe set for t¡e-soütñ ão"n", of thls tract; ïHEllCE, l{ 37c 13. 16r }1, rlong a llne 100.00 feet l{ontheast oI of Ï9 parrltel to the Souttrrãst fine of s¡i¿ toi a,'i"ãìãt"nc. 4¡14.89 feet to ¡ 2-inch tron pipe set for - -'- cõ"ñeri UçilqE..ll 52c 161 44r Er a dlstance of 4g2.00 feet to ¡ S/8-lnch lrqn rod set fór corner¡ THEllCt, N37. 43, 16r lt, a distaftce of 57.00 feet to a S/g-lnch lron rod set for corneri THËtlCE,ll 52. 161 44r Er ¡ dlstance of 310,00 feet to a polnt for corner¡ THEtlCg,.S 37.-¡û3¡ 16, E, a dlstance of 65.ü} feet to a S/8-inch lron rod set for corner; ïqilqE, il 52¡ 161 44" E, a dlstance of 211.97 feet to ¿ S/8-lnch lron rod set li the arc of a curve rn the iõuin*est right-of-ray llne of the ðforeilentioned Interstaiã Hi;il;; tlo. 45 for the most t{ortherly East corner of this tn¡Ët¡-'

i:i!1ili$.'ffi]'lb';å' havlng.¡. rôdfus til:.:::'"i' :::;T;it: ll'in!'"1 îlî'- a centr¡r angie õi-o¡¿'ig, a chord be¡rina 9f-irs9!,sg_feet, s ?.3. gll 45._E.'371:ãs rêet,.ãå-ari iãnoir, 3an or 3n.31 reer-to_tñe põrHi-or-åEeiñiiñe inã'.äntiiiiåõ"r' 10,265a açres of ltnd.

E:I(uIB IT I'AI' -z- PLAINTIFF EXHIBIT I Glear Lake (2) o00935 ,,: '. EXHIBI? "B'' -.:* PLAT

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EXHIBIT Glear Lake (2) 1Iryi SA VALUE CENÎER SIÎE PLAN. Tab 4 ì ".,. -

riF.sT AME}{I)MENr,T_Ç-SHOppiNG CEI\-iTER, .rä*sE

This First Åmendment to Shopping Center læase {"First Amendment") is made and eritered ints effective as of the 8rh day of January 1996 by and between Fiesra Marr, Inc", â Texas corporation ("Landlord") and Gardea Ridge, L.P., a Texas limiæd partnership ("Tenant").

RËCTT-{LS

l¿ndlord and Tenånt have heretofore executed that ærtäin Shopping Center l-ease (the "Original l-ease") dåted Þecember 29 , 1995, the Original l,ease covering approximarely 150,?5? sgu¿ìre feet of area in a building comprising a ponion of the Shopping Center in Harris Counry, Texas knows as the "Nasa Value Center. " Reference is here made lo the Original l-ease for all purposes and words with initial capiøl lerters used but not defined herein shall have the respective meanings ascribed to rhem in the CIriginal [æase.

l¿ndlord and Tenant executed and conditionally delivered the Original læase pursuant to that certain letter agreement of even date with rhe CIriginal l-ease (the "Conditional Delivery Letter"), which Conditional Delivery l.etter set forth certain conditions to the effectiveness of the Original Lease and the guaranfy thereof by Garden Ridge Corporation ("Guarantor") evidenced by a Guaranry of l.ease ("Guaranty") of even date with the Original [*ase executed and delivered by Guarantor, pursuarrt to the Conditional Delivery Lætter, conÇurrent with the exeurtion and delivery of the Original Læase.

I¿ndlord, Tenant and Guarantor desire to confirm that the canditions to the effectiveness of the Original læase and the Guaranty set forth in the Conditional Delivery Lener have been satisfied and to make cert¿in changes to the Original Lease, as more particularly set forth hereinafter.

AfiR.NçMFNTS

Nû1V, THEREFORË, for and in consideration of the mutual crvenants contained in the Original læase and those set forth herein, L¿ndiord and Tenant hereby âgree as follows:

1. The Original [.ease, as hereby amended, is effective as of the date of this First Amendment, bofh l-andlord and Tenant hereby acknowledging that all of the condirions to the effectiveness thereof set fûrth in the Ccnditional Delivery l,etter have been satisfied. Guarantor joins in this First Arnendment for the purprse of acknowledging ttrat rhe condirions rû rhe effectiveness of the Guaranty of the Original Læase, as hereby amended, have been satisfied such that the Ûuaranty delivered pursuânt to the Conditional Ðeliv*ry Letter is and remains in fult force and effect, notwithst¿nding rhis First Amendmenr.

2. Section 1. tih) of the ûriginal Lease is hereby amended bv deieting the references therein to the dollar amçunts of "$9?5,ûüû" and "$81,?50.0û" and substituting rherefcr, respecrively, "$945,750" and "$78,812.5û'.

PLAINTIFF EXHIBIT 2 Glear Lake (2) ooo937 3. Section 1.1{m} cf the Original L¿ase is hereby amended by deleting the reference therein to the dollar ämüunt af "$89,875" and substinrting therefor the amount of "$8?,437.50'.

4. Section 27.12 of the Original læase is hereby amended by deleting the text thereof in its entirety and substi.ruting therefsr the foilowing:

"In csnsideralian of the services rendered in co*¡ection with the negotiation of this l-ease by United Ëquities Incorparated {"Broker"), Tenant shall pay tc Broker a leasing commission pürruant ro a sêpåråtÕ âg.rserä€nt bctwe.ea Teuant and Broker. Broker shall look exclusively to Tenant for payment of âny and all commissions in respect to ttris læase and hereby releases l¿ndlord therefrom. I"andlord and Tenant each hereby represent and warrant to the other that Broker is the only agent, broker, finder or other parry with whom they have dealt who is or may be entitled to ariy commission or fee with respect to this l-ea$e. "

S. Broker joins in this First Amendmeff to evidence its consent and agreement to the provisions of paragraph 4 immediately above.

6. Except as expressly arnended hereby, the Original L¿ase shall remain in full force and effect. The Original Lease as amended by this First Amendment is hereby ratified and confirmed. This First Amendment shall be governed by and construed in accordance with the laws of the State of Texas.

FIESTA MÂRT, INC

By: Louis President

GARDEN RIDGE, L.P.

By: Garden Ridge Management, Inc., General Partner

Ë,v

f¿rn¿" A<-Uu tLu-c5r ,LFo

PLAINTIFF EXHIBIT 2 ,, Glear Lake (2) ooo938 l'- I

CARDËN RIDGE CORPOR.{TION

By:

A,{ uf , cfii

UMTED EQUITIES TNCORPORATED

By Lt*" Edwin Freedman,' President ,ffru*,j*l

nffi2a

PLAINTIFF EXHIBIT 2 Glear Lake (2) 3 ooo939 Tab 5 94 H Ë l:[t H ::: iÌ Íi SECOND AIVTENDMENT TO LEASE iì TI{IS SECOND AIVfENDMENT TO LEASE (this "4men4pqggt') is made and. entered :Ë: into as of Febnrary t{ , 2005, by ald betìa,ee¡ CTEAR LAI(E CENIER" L.p., a Texas limited ii parbership ("LÊ!!g,!'), and G.IRDEN RIDGE, L.P., a Texas limited parbrership iÌi Ctgqggg'). i,:i RECITAI,S: ;iìl ¡r:

*iü *l IYHEREAS, Lessor (as assignee to Original Lessor) ærd Lessee, are parties to that i¡i cgrtain Shopping Center Lease dated DEcember 29, 1995 (the'!gglg"), oriþalþ executed by .-'.::

i:jj Fiesta Marf Inc., a Texas corporation ("9gjg!tr¡I teseor') and iesseq covering the Demiseã ä.1 iìi Premises (as defined in the Lease), such Demised Premises being more particularly d.eseribed in È the Lease; :irf lr: 'ì, WffiRDAS, said Lease was subsequentþ mended by First Amendnent to Shopping É it1 Celter Lease (the "Ebf-]lEggdmggf) dated lanuary 8, 1996, executed by and, be¡n'eeñ l,r

ii Original Lessor and Lessee. The Lease as ameuded by tbe First AmeNrdment is herein called, the ,2 "Lsgg'T ¡ì ,1, i:'ól II{HEREAS, sâid Lease was subsequently assigned by Orighal Lessor to Lessor by 1¡ i assignment on or aboutApril30, 2003¡ :tl

iÌ .:Ì t: rqHEREAs, ou Febnrary 2,2004 (tbo "!gtitigg_Þe!g') Lessee filed a petition (the I "EglBtpjgv Cnse') uniler chapter 1l of Title 11 of the United States Code (11 U.S.C. $$ t-Of- å 1330 et seq., the 'bkfuDlgÏ-Qgdg') in the United States Baulaupicy Court for tbe Distict of :l ÐElaware (the'Eqnkrgp!gy-ggg.E!); È

WffiREAS, Lessor and Iæssee desire to amend the Leaso to provide for, aoong oþer ,1 ii

ti thìngs, tbc reduction of the Base Rental (as such tsrm is defined h tbe Lease), puouaoito ü. i terms andprovisions set forth i¡¡ tbis Âmendment; i a'

a 1ryHERE.A,S, Lessor and Lessee intend that, excopt where expressly speciñed, the temrs : : of this.¡{,srendment shall be oonditioued on the Bankruptcy Court's estry oiâ¡ order as to wbich all applicable appeals periods have passed without an appeal or motiou for resonsideration i : having been file4 or_ltit! any such appeal or motion for reconsideration baving beea finally . resolved in favor of afñrming such order, authorizing Lessee's æsumption of the Ùgase pursuant ; to section 365 or 1123(b) of the Banlcuptcy Code (the "Final Assu{r,lntion 0 t: " and the date such order becomes the Final Assumption order, the t'Final Assgl,nption or i i ). :

: NO''w, TffiREFORE, for a¡rd in consideratíon of the premises and mufual agreements : contained herein and other good arid valuablE cousideration, the receipt and sufficie,lrry of which are hereþ acknowJedged, the parties hereto agree to amend the Lease as follows:

açBsptvrENr: 1. Qefîqgd Tg,rq.s.. All capitalized terrns not expressly deñned herein shall take tlre meaningp ascribed to them in the Lease, as amended by this A¡nendment.

Grrden Ridgc, LP. WEhstcr-No. 16 -Pogcl

ffiffiPY g DALr5274l8.B å t 2 Ë PLAINTIFF EXHIBIT Clear Lake 000037 \

2. Lease Ïerm. Section l.l(sì of the Lease is hereby deleted in its entirefy and is replaced with the foilowing: "The base term of the Lease shall co¡¡sence on fanuary 8, 1996 (the "@) and shatl ECpirB on January31,2V¿4."

3. BeTt Reductipn. The fi:st two sentences of Eçllgg.ålfh} of the Leæe are hereby deleted in tbeir entirety md are replaccd witb the following:

'Ìvfonthly EaseRsntal ("Eggg R'gggl') forthe LeaseTerm shall be as follorvs:

Beginning witb the ñret month after tbe Final Assnmptíon Order Þate to January 31, 2011 : $78,813.00;

Febnrary 1, 201 I to January 3 1, 2016 - $86,694¡ and

Febnary 1,2016 to January 31,2024 - S95'363.

During any 8:rtensiou Periods for whicb an Extensiou Option is exercÍsed under Article )OGtr hereof, the-Base Rental shall be adjusted upon the expiration of the base term of the Lease and on each ãve year anniversary of tbe commecrcement date af tho first Extension Period (lhe ..AC,ig!@!-DAþ')." For thu five yearperiod oommeucing upon each AiljushentÐato, Basc Retrtat shâtt be èquat to the product obtained by.multiplþg (x) the Base Re¡tål in effect &uine the proceding oalãudæ month (the '@) bV þ) a fractioq the ur¡m,erator of 'Vlage Eamers wnióU snaU be the most crment Revised Consuuer P{ce !Ae1(atl aities - Urban anð Clerícal Vforkers, U.S. City Average, All ltens) of the Br¡reau of Labor Statistios of the Unite¡1 States Deparhent of Labor (1982 to 1984 = 100) the (t'gn for tbe Determinatio¡ Montb and the dàominator of whicb shall be the CPI for the first calendar moutb of the Iæase Term in the case of the first adjustÉent of Base Rental and for the calendar month sixtymonths prior to the Determinatíon Month in the case of eacb subsequent adjusment Base Rectal shall äever decrease and inereasos iu Base Reutal based upon increases in the CPI sh¿ll be cumulative; províded, horrvevor, that the füst increase in Base Rental ou the first Adjustmcnt Date shall uot èxceed tweuty percent QÐW, and no single increase tlereafrer for any five year period shall exceed ten percent O07.).

4. .Aereed Cure Ämount nnd.Tir4ing of Pqyqcnt. Provided that (a) no Evmts of Default ('p"rt-¿rgp{![g"t D"f*lt{) under tbe Lease by Lessee a¡ise betwecn the date of this erngnd6eff and the finat esnrmption Order Ðate, or þ) Lessee cu¡es such Post-Anxendment Defaults or compÊ¡rsates Lessor for any ach¡al pecuniary loss ¡esulting ftom any Post- Amcndme,l¡t Defaults within fifteen (15) days of the Fiual Assumption Order Date, (x) Lessor agreestoaocept$326,132.98(the..@)inf1¡ltandfinalsatisfactionof Lêsee's obligitions under paragraphs (bXlXA) and (bXlXB) of section 365 of tbe Bankntptcy Code to cure all defaults or compensate Lessor for any actual pecuniary loss resulting Ëom any defaults under t[e Lease¡ whish defaults includc, without limitation, Lesseo's obligatioq under the Lease for 2003 real properly taxes ass€ssed against the Demised Premises in thc amount of $142,385.68 (the'?OQLTggg"), Base Reutal for the month ofFebruary, 2004 itr the amoì¡nt of $88,936.00 (tire "Eubrqgglßçnf),2003 cornmon areamaintenancs chæges of $82,573.33 (thq ,.Uqg3-çADi"), Z00j irú¡rânù of $11,992.29 and 2003 Pylon sign of $245.68 and (y) Lessor .gr""" that Lessee's paynent of the Agreed Cure Arnount as follows shall constitute adequate

Glrden Ridgc. LP. lilcbrterlNo 16 - P¡gc 2

DAL:52?{1E,8

PLAINTEFÆÆàçFIBTT 3 000038 assuauce of Lessee's prompt cure of defaults or palacent for actual pecuniary ioss resulting from defâults u¡der thc Lease as required by paragraphs (bXlXA) an¡l (bXl)@j of section 365 of the Êanlcruptcy Code: The Agreed Cr¡¡e Anouot shall be payable in twenty-four (24) equat mouthiy installments (without interest prior to the maturity or penalty) beginning witt¡ the first monthly installmeot of Base Rental payable affer the Fínat ^A,ssumption Orde¡ Date. Lossor alrees that if Lessee pays the 2003 Tores and/or the Febnrary Rent prior to the Final Assuurption Order Date, (a) the Agreed Curs A¡count shall be reduced by the emoutt of arry such paynent and (b) the a¡nortization of the Agreed Cure Amount shall be a{iusted in a ma¡ner to preserrre the fntent ofthe previous serltenca (8.g., ifthe 2003 Tæres are paid before tbe Final Assunption Order Date, the Agreed Cure Arûormt sball be reduced by the amount of such palæent an¿ str¿¡ be paid in twenty-four (24) equal monthly installments without interest or penalty beginning with Fq_fi*t monthly installnent of Base Rental payable after the Final Assumption Order Date.) Faift¡re to pay any installment of the Agreed Cure.A¡nou¡t sball constitute on Event of Defa¡¡lt r¡nder the Lease, md Lessor shall have tbe right to accelerate the mairuity ef ¡qnaini'¡g installments. Further, i:oterest on all past due iustallments of Agreed Cure Amoust shall acaruá at the rate provided in Sec.tiop 27.13 of the Lease and strall become part of the â,g¡eed Cure Amount.

Lessee fi¡rther acftoowledges that i¡ addition to the AgrBed C¡ue Amou¡tt, Lessee is oblÍgated to Lessor for 2004 TaxÈs, coÍrüßoÉ area ma¡ütenancÊ, insrance, aod pylon sign charges (coilectively, '?094Sbgr,Feq') and that all such 2004 Cbarges first accruing from and a$er the Petition Date co$titute adminishativo expenses of Lessee's Banlcnrptcy Case and (to the extsut not already paid) shalt be paid upon execution of this Amesdment.

5. Ee¡tine Vent¡tatiqLlnd Àir Cg[Citionine (EVÄCì. Notwithstandiqg anything coqtained io tbe Lease to the coutary, if Lessee is required to replace aoy IIVAC units located at thc Demised Premises, Lessor agress to permit Lessee a monthly rent credit agãinst Base Rental under the Lease of up to S7,500.00 'util sucb time as Lessee is fully reimbrused for Lessee's ach¡al and dírect costs incurred, in sonnection with its purchase o? such new ITVAC units f'm¡¿C tIn!!-AS!g'), provided Lessee delivers to Lessor w¡itten receipts for the IÍVAC Unit Costs inc¡¡¡red. . In no event shall the aggregate rent credit to Lessee hereu¡der exceed -:f $tS0,000.00. Any new IIVAC units replaced hereunder sball be of a guality equal to or bettsr than is standard for premises of this type. In tbe riveut that Lessee reptacis any IMC uaits prior to tbe date of the Final Assumption Order Date, Lessor agre€s to permit Lessee to conmesce the herein described rent credit against the f¡st Base Rental due rmder the Lease after the Final Assumption Order Ðate.

6. Tax Escrow.

(a) Beginning tbe earlier to occur of (a) the fust month after the Final Assumptioa OrderDate and (b) January 1. 2005, and contüruing througþ each subsequent month tbereafter duríng the balar¡ce of the term of the Lease aod any e¡

(b) Each paymsnt made by Lessee pursuent to this Secli-on 6 shall be called a .@.''Lessorsgrêestoaccepta¡dbo!deacbTaxEscrowDepositin

G¡rdcn Rídg!. LP. ìÀlcbstcr/llo. l6 - Plgc 3

DALf¿?4¡8.8

PLAINTIFF EXHIBIT.3 i Clear Lake â ^^^^ ^ I

c.îcro$r für use solely to pay the Toces levied or assessed against the Demi¡ed Premises in accordatrre witb the proriiions of SggËgg-IEå of the Lease. Tha Tax Esc¡ow Dcposit pa¡ment may bË commingled i¡íth Lessor's fr.lnds a¡rd sball be held by Lessor without the ofinterest.

7. Notice to.PortÍes. Pt¡rsualú to Secfigr.z5tl of the Leasc, Lessee and Lessor hereby Oesþate the folfowiag Edd¡esses for notices:

To.Les$çe;

GardenRidgË, L-P- 1.9411 Atrir¡nPlace IIouston, Texas 77084 å.ttention: Legal DeParhent

withacoPYto:

ÂndrewsKurthLLF 1717 Main Staet Suite 3?00 Dallas, Texas 752014605 Atteution B¡igitte Gawenda Kimichik' Esq'

To LesÞon

ClearLake Center, L.P. c/o CL GrouP,Inc- 6909 Ashcroft, Suite 200 [tror¡stqn, Texas 77081

ä with acopvto: J t ;: f;: :f Hinch & Wastheimer, P.C' I :l 25ù Floor, Bank of Ameríca CentEr ?¡ 700 Louisian^ ir'l Hottston, Toras ?,7002 i:, Attention: Ronald J. Sta¡k ii :i :¡: 1{ E. Ço$fp a+d Fxoenses. Each party will_ bear tbe costs and expenses of its :i:

respective ptoffichding touusel, in connect¡on with the negotiation, l:i In )! Joå*.nt^ti¡* and implementation of tbe ransastions contemplated by or rgfene{ to_herein 11 iì no event sball tessor seek reimbursement of any such fees or ËxPenses from fhe Chapter ,rt"tu of thu Lesses (and its affiliates) or'filo or support an application for reimbwsement by iji the -'{ì of *V professìoml, including counsel, acting or purporting to act on behalf of Lessor or i;i ii ii "*¡;" on behalf of the Unofñsial Committee of Landlords ,ii

:::

a:. :::

::¡ ::j. Grden Ridgc. LP. :i lvcbe¡rr/No. 16 - Prge4 ,j DAL527{¡8.8 :'..

PLAINTðEU;EIIËIIBIT 3 000040 '!:i it È ä !.1::

È :ir :$

riil

ii' it 9. Non-Assumntion of Le¡se¡ Amçndment ConditÍoned Upop Ass$mpËon of Lease. i::_: l:j :Í ä (a) Except as sÊt forth in Sectíon 9ß) of this .å,mendment, rhe tenns of this i-:l A¡nendrneut shall be ofno force or effect ¡¡rtil the Final .A,ssu¡option Order Dalc. ?i jj:j lìi :€ iÌì (b) Notwitbstanding aayl}ing to the contary in thiE Amendmenl the lj followirg obligations sball be binding and enforceable çon the parties' exesution of tbis tt tl: :¡r' .Amendmcnt: (i) Lessee"s obligations under Section ,91ü of this .Anendment, (ü) ìil Lessor's and Lesseels obligations under Sçgon rF. sf, this ä "A¡nendn¡ent¡ aad (üi) rhé iü qarties' agreement to amend the Lease as províded in this Amend¡nent upon enty of the Final Assumption Order. ìì! â: (c) fi¡e parties to this Amendment acknowledge and agr€€ that s,j! ì¡ notwithstanding anything contained in this Amendment to the contar¡r, execution by t '.f¿ Lessor and Lessee of this Amendment shall not co¡stitute or in any way be deemed ín i\l arry Inrütrer to be Lessee's (aad/or its affilÍates') assunption or sovation of the LeasÊ. ¡i !; (d) Lessee will make a good fhith effort to procure eutry of the FÍnal ít Assumption O¡der as part of and simultaneously with the confirmation of a pian of ti reorgaoization. i;

f 9i

a - 10. &Aense o¡a¡t¡trgst .Clalry Provided that l¡ssorre&ains Êom supporting auy ,: effort by the Informal Landlord Committee of Garden Ridgs (the "ILÇ') or itslãgd uuø.ir i" :: financial advÍsors to recover fees and/or BrpensÊs from Lesse¡ ptusuant to Ssctiou S03(b) of the J. Banlruptcy Code (11 U,S.Ç. $ 503(b)), Lessee releases, effeotìve as of the Final Assumption ìl |: Order, Lessor ûom all el¡ims and cau.qes of action based. o¡ the Sherman Act or any õthur i applicable antitn¡st law. Lessee and its affiliates expresslyresene, however, aü dgbts, renøiar, i i causes of action, and claims against all other partíes. :

i 11. Lj:ssee'$ L"snder-n'inpncingr ÇltÞ-oJdinatio4 o[, pgsouar proesrty lrie¡q. Lessor acknowledges tbat Lessee is pursuing fnancbg fro¡n a third party lender (whetb;i one;¡ a more and including specifioally Bank of America, N.4.. as admi¡ishatíve agent for a group of londing institutious pursuaut to sush agreements and documents as may be entered intõ a¡ong Lesse€, and such group of lendÍng institutions, collectively herein "lggggt') in the Bânlcrrytcy Case and that Lender will bs seeking a securit¡r interest iu all personal property (including, inventory, removable fixtures, furnishings, equipment, and other tangible personal prcp"rty) owned or leæed by Lessee at the Demised Premises (collectivel¡ the ..I,egCg¡-çg!!g!gg!). Accordinglg Lessor hereby agrees to subotdinate any rigbtr Lessor may have, if a¡ly, to maintain or enforce any landlord's lieq whether statutory, contactual, or otberwis€, or any other liens or claims which Lessor now has or may hereafter havg against the Lender Collateral druing the term of any loan from Lender. In addition, Lessor ftrther ãgrËes, upon (a) a termination by Lessor of tbe Lease, (b) the taking of possession of the Demised Premises by Lessor þursuant to a Lessor rernedy under the Lease or under applicable state law), or (c) notice to Lessor that Lender bas er(ercised any of its rigþts and remedìes rmder tbe loan documents ø

Gardcn Rídge, LP. \A¡cbsÈr/,\'o. 16 - Plgc 5

DAL:527418,8

PLAINTIFF EXHIBIT 3

Clear Lake nnnn¿'l \+ r

(the 'Ðlgpg¡lfigg_Bg¡lQ$') for the pì¡rpose of (x) inspecting the Lender Collateral, (y) talcing pos*essiou of or removing any of or alt of ths Lendsr Collateral from the Dennised Premises, or tz) exhibíting for sale and/or coudueting oüe or more sales (zucb sale(s) to be co¡ducted in courpliance øtU tte ternns of the Leasa) of such oollateral on the Demised Premises (and Lessor shali not in rny mrinner hinder, interfere with or prcvent any of the foregoing) provided that Lender (i) pays, when due, to Lcssor Base Reutal a¡d atl other amounts payable uder the terms of tbe Llaie and that ¡re attributabla to zuch period of possession, (ii) sh¿lt ind€mriify, defend, and hotd harmless Lessor agaiust any claim,Ioss, or dmage based oa damage to pmperty or 'any entry by Lender; or any other rnjr¡ry to persols resnrltÍng or claimed to bave æeulted from, rioõir" of Lender's dghts with respect to tho Lender Collateral and (üi) reimburses Lessor for a$y heat a¡d/or electiãity e:çense to the extent required by tbe Lease during such period of po-ssession- Lessor agrees that Lender shall h¿ve no obligæíon gr liability to oure auy defaults of Losr" under the Lease. Upon Lessor's receipt of'written notice of the Lender's contact information, Lessor agrecs to use its reasosable efforB to provide notice to l¡nder of LEssor's exercise of any remedies of Lessor uuder the Lcase, inclutting termiuation of the Lease or takiug possession ofibe ÐemisedPremises. Lessor acknowledges and agroes that thc provisions of tbÌs as a thinl party Ëectípp 1å ¿re intended for ths beuefit of tbe Lcnder, and l,ender may rely b@ ou this section rl. Notwitbstauding anything to the conEary contained bereín, if after the i:rpiratíon of Ae piqposítion Pe¡ioil the Leuds Collateral has not been rcmoved Êom tbe Demisei Premises, the Lender Collateral shsll be deemed abandoned by Lender and Lessor shall be entitlcd, but not obligatc{ to dispose of or sell the Leased Collate¡al in any m*nner it sees ût witb no co¡trpensation or liability whstsoever to the Lender. At the request of Lessee a¡rd at Lessee's expensq Leseor shall exccute ud deliver to any Lender and/or to Lessee other \¡rith documents tlrai Lender desns reasonably necessâry to effect tbc waiver of Lessor's rigbts reqpecr to any Lender Collatoral as provided ín this Ë.Ê9$gg.!!. Lessor acknowledges lhat the term .T.endei' in this $ectiou 11 shatl include aoy londcr tbat obtains a consensual secuity ìnterest in Lender Conæe'raf, whe&er in connection with confirmation of a plan ofreorganízation involving Lessse or subsequent thereto.

12, Lessgrrs Lgder Financlne¡ AEry,n,im.e,pt--goFditiong4: I{9o¡,Åonro},alt Lessee actoow an¿ Oe Shopping Center ofwhicb the Denised premises is a parf are enq¡¡ubered by a Deed of Tnrst, AssiEnment of Leases and Rents and Sectuity Agreiment md as Assignmeot of Leases a¡d Rents which sccurc a fi¡st mortgage loan ûom Jóhn ¡lancock Real EstEtE Finance, Inc. (l9ggg¡:Llenq,pr') and tbat such documents prohibit tUr modifcation of the Lease witbout the prior wrinen couseût of Lessor's LEndEr. Ttris ãmeud¡nent and the respectivo obligations of Lessor a¡rd Lesses are subject to, and conditioned upon, Lessor's s5¡¡íníng the prior written conseot of Lessor's Lender ls this As,endmont grior_to tUe Finat Assrunption Ot¿et bate. Lessor ag¡eÊs to request such consent promptly following tbe executio¿ of thiiAmeudmentbylessor and Lessee a¡rd to diligently and in good faith attempt to obrain such corsent no later Uan tnirty (30) days following the exesution of this Amendrrent by Lessor ¿nd Lessee.

13.Çonfidentitlity. Lessor and Lessee agree until the Finai Assumption Order to keep the terms of tbis e ent conñdential, to fhe extent perrrited by applicable law' incíudíng the bankruptcy laws governing Lessee's pending bankruptoy filíng, exce¡t that Lessee shafl belernitted to disclose the tcüns of this Àmendment to the Banknrptcy Court, and the crediiorri committee, and Lessee's creditors, potential lenders, potential investors, acenuniants,

Gorden Rídgc LP' lv€bst€r/Ntl. l6-Poge6

tALr5T14l8.B

PLATNTUFUÆàIFrBIr 3 000042 I

officers and directors, attorae¡æ and other partie$ Bs LÊssee deems trecessary in connectiou with its reorganization

14. Miscellq$eous.

(a) The parties hereûo covenant and agree to indemnify and hold each other harrnless Êom and against aily and all claims for commissions and oiher compensation nade by any agent or agents a¡¡d/or broker or brokers based on any dealing between either parfy hereto aad ury agent or agents and/or brokq or bmkers, togetber with all clsts and etcPenses incuned by either party hereto in resisting such claims (including, without limitation, attorney's fees).

(b) Except as modified by this A¡¡cndment and zubject to Sectio$ 9 of this Amendnenl tbe Lease and all the terms, covenants, conditionC anA agreements thereof ara hereby ratÍfied, confirmed and approved. Subject to Section 10 ofthis Amendmend any defaulls or any offsets and defonses by eitber Lessor or Lesseãunder tbe Le¡se and ocisting (or which may exist ¿fter the gving of notice or passage of time) on the date of this Amendmgt (9x.upt æ otherwise speciñoally addressed in this .,{,mendment) are hereby waived by Lessee aud Lessor, and Lessee snd Lessor hereby release each other from all liabilities, slaims, conFoversies, cs,uses cf action and other mattsrs of every nature which, tbrough the date bereo! have o¡ ldgbt have arisen out of or in any w"y iu con¡rection v/ith the Lease and/or the Demised Premises demised therermd,or.

(c) Ttris.Amendment contains the entire understanding between tbe parties with respect to tbe matters contained berein. No representations, warranties, .ov.oaots or agreements have beeu made soncerning or affectÍirg the subject matter of this agreement, except Írs are contained hercin and in the Lease.

(d) This A¡nendmont may notbe cbangod oratly, but orly by an agreemont in rwitin-g signed by tho party against whom enforcement of any waívor,-changË or modiEcation or discharge is sougbt.

G) Except as modified by this .,¿rmesdoetrt and subject to Seçfion g of this Anendmenf the Lease shall remain unchanged and shall continue in ñ¡li fñæ effect.

(Ð The parties hereto represent and wa¡rant to each other that this Amendment (aud each term and provision hereof) has been duly aud appropriately ¿¡rtborized by the parties hereto through proper written corporate or partnershij action and approval, as applieable, and, subject to Sect¡on 9 of thís Amenrl'¡ent, no additional co¡sent, agreement or approval is required with respect hereto.

(g) This Anendment may be executed in several counterparts and by each pa¡ry m a separate counterpart,iach of which, when executed ¿nd delivered by facsimile, shall bc an original, and all ofwhieh together shall constitute one document.

(h) Lessee represeuts tirat (i) except as described ín SgctÍoq Í of this Amcndment, neither the Demised Premises nor the building, in wtricU tlc sa¡ne ate situated are in need of repairs required to be made by Lessor under tl¡e terms of the Lease

6¡r{sn RídBe, LP, Websæ¡/No. 16 - Flgp 7

DAL:527418.8

PLAINTIFF EXHIBIT ? I

Clear Lake fìt1n^, t ! l

including, withour limitation, Sectlo¿-8,l.tbereof; (ü) except {thres¡ec! !o lbc amounts that corãlromíse the Agreed Cr¡re ¿nount, tbere oxists no breacl¡ def¿tdt' avent or con¿ition which utith the g"ing of uotice or the passags of time, or botb, would constiírte a breach or defnuf under thc Lease eitherr by Lessee or Lesso¡i and (üi) exæpt as provided otherwise is tbis A.greement, Lessee has no existing claims, defenses or offsets against rental due or to becone due under the Leasa

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ii i:' ti i:: |;: Cuden Ridge' LP. i::: WÉbÉtcdNo, l6-Pqg¡8 il DAL:527418.8 rìj

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4 PLATNTEFJSÆ¡[HrBIr 3 000044 ! :' t.

IN TVITNESS WHEREOF, Lossor and Lessee have executed and delivered this Artendment as of the date herein set forth above.

I,ESSOR:

CLEAR LAIG, CENTE& L.P., a Texas limited partnership

By: CLGroup,Ino. its geoeralparber

Name: EdwinFreen¡an Title: President

LESSEE:

GÅRDEN RJDGE, L.P., tímited parürenhip a Texas

B¡T GARDEN RIDGE ¡dANAGEMENT, INC., its general parÍrer

Title:

Ërrdcn Rídge, LP. Websrgf -No, l6 -Pegc9 DAhl2?.Sl8.8

PLAINTIFF EXIIIBIT 3 Clear Lake 000045