                                                                                              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



                                         Appendix


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
Appendix
 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-



                                                                    2




                                                                                                                      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.



                                                      3




                                                                                                 361
Appendix
 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

                                          CAUSEN0 2ü12-46t99

     ü"'q.}LÐEN RTDGE, L P                             $           rN   ïHE ÞIË]IRICT           CüLTRT TF
                                                       $
                                                       $
     v$                                                $             HARRIS COLIHTI.'TEXA                            S
                                                       $
                                                       $
     CLËÁ]T LI\.KE CIINTER" L P                        $           ?Islh       JUDICIAL I]I$TITICT


                                            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 Â *'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




                                                                                                        4

                                                                                                    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-




                                                                                              5

                                                                                            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




                                                                                                     6


                                                                                               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




                                                                                               7


                                                                                            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




                                                                                                 10


                                                                                              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




                                                                                             12


                                                                                          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¡          $




                                                                                                13


                                                                                             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




2


1


4


5



6


7


s


I
l0

l1

                                                                                       19

                                                                                      280
Appendix
 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 stõrieÃ
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¡nêncê€¡ 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''
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                                                                                                                    EXHIBIT
                                                                                                       Glear Lake (2)
                1Iryi           SA              VALUE            CENÎER SIÎE               PLAN.
Appendix
 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
Appendix
 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
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                                                                                                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¡<tensione thereof,
                  Lessee shall malce equal monthly deposits with Lessor ín tbe an¡ount determined unds
                  the provisions of SeqËot 18.2 of the Lease.

                              (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

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                                      with acopvto:
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                                      Hinch & Wastheimer, P.C'
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                                      25ù Floor, Bank of Ameríca CentEr
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                                      700 Louisian^
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                                      Hottston, Toras ?,7002
i:,                                   Attention: Ronald J. Sta¡k
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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,
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                                                                                                                 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
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              on behalf of the Unofñsial Committee of Landlords
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              Grden Ridgc. LP.
  :i          lvcbe¡rr/No.   16   - Prge4
    ,j        DAL527{¡8.8
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                                                                                                      PLAINTðEU;EIIËIIBIT      3
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             9.          Non-Assumntion of Le¡se¡ Amçndment ConditÍoned Upop Ass$mpËon of Lease.
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                                        (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.
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                                 (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
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:¡r'                     .Amendmcnt: (i) Lessee"s obligations under Section ,91ü of this .Anendment, (ü)
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                         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.
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â:                                  (c) fi¡e   parties  to this Amendment acknowledge and agr€€ that
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                        notwithstanding anything contained in this Amendment to the contar¡r, execution by
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'.f¿                    Lessor and Lessee of this Amendment shall not co¡stitute or in any way be deemed ín
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                        arry Inrütrer to be Lessee's (aad/or its affilÍates') assunption or sovation of the LeasÊ.
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                             (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.
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                     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.
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                        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<ecuted þ
           Lessee, to permit Lender or its agents to etrter upon ærd take possassiou of the Ðemised Premises
           for a reasonable period of time (aot to exceed 60 days) following receipt of notice from Læsor
           tl¡at the Lease bas been terminated or that Lessor has taken possession of the Demised Premises


           Gardcn Rídge, LP.
           \A¡cbsÈr/,\'o. 16 - Plgc 5

           DAL:527418,8


                                                                                                      PLAINTIFF EXHIBIT    3

                                                                                                              Clear Lake
                                                                                                                 nnnn¿'l
                                                                                                                 \+
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(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
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  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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                                                                                               PLATNTEFJSÆ¡[HrBIr 3
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            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
