Exhibit 10.27


 


LEASE
AGREEMENT


(MULTI-TENANT
FACILITY)


 


Article One          BASIC
TERMS.


 


This Article One
contains the Basic Terms of this Lease between the Landlord and Tenant named
below. Other Articles, Sections and Paragraphs of the Lease referred to in this
Article One explain and define the Basic Terms and are to be read in
conjunction with the Basic Terms.


 


Section 1.01.          Date of Lease. February 8, 2006


 


Section 1.02.          Landlord. York County, LLC, a California limited liability
company


 


	
   Address of Landlord:

  	
   

  	
  4601
  DTC Boulevard, Suite 650

  
	
   

  	
   

  	
  Denver, CO 80237

  
	
   

  	
   

  	
  Attn: Bill Bullen

  
	
   

  	
   

  	
  Telephone:

  	
  (303)

  	
  790-4737

  
	
   

  	
   

  	
  Facsimile:

  	
  (303)

  	
  790-4723

  



 


Section 1.03.          Tenant. Corgenix Medical Corporation, a Nevada corporation


 


	
   Address of Tenant:

  
	
   

  
	
   

  	
  Prior
  to the

  
	
   

  	
  Commencement
  Date:

  
	
   

  	
  12061
  Tejon St.

  
	
   

  	
  Westminster, CO 80234

  
	
   

  	
  Attn: Taryn Reynolds

  
	
   

  	
  Telephone: 

  	
  (303) 457-4345

  
	
   

  	
  Facsimile:
  

  	
  (303)
  252-9212

  
	
   

  
	
   

  	
  After
  the

  
	
   

  	
  Commencement
  Date:

  
	
   

  
	
   

  	
  11575 Main
  Street

  
	
   

  	
  Broomfield
  One

  
	
   

  	
  Broomfield, CO 80020

  
	
   

  	
  Attn: Taryn Reynolds

  
	
   

  	
  Telephone: 

  	
  (303) 457-4345

  
	
   

  	
  Facsimile:
  

  	
  (303)
  252-9212

  
				



 


Section 1.04.          Property. The Property is part of Landlord’s
multi-tenant real property development known as Broomfield Corporate Center and
described or depicted in Exhibit ”A” (the “Project”). The Project includes
the land, the buildings and all other improvements located on the land, and the
common areas described in Section 4.05(a). The Property is approximately


 

















 


thirty
two thousand (32,000) rentable square feet (“Property”) of Landlord’s
approximately 102,400 square foot building, commonly known as
Broomfield 1, located at 11575 Main Street, City and County of
Broomfield, Colorado. The exact rentable square footage of the Property will be
determined by Landlord’s certified architect and any resulting recalculation to
the rent and Tenant’s Pro-Rata Share (as determined in accordance with Section 4.05(e))
will be made prior to the Commencement Date of the Lease. The Property includes
Tenant’s pro rata share of the Project electrical room and fire sprinkler
room.


 


Section 1.05.          Lease Term. Seven (7) years and five (5) months
beginning on the first day following the substantial completion by Landlord of
all Tenant Improvements as set forth in this Lease and in the Work Letter
attached hereto as Exhibit A to Addendum (“Commencement Date”), and ending
on the date that is the last day of the month which is seven (7) years and
five (5) months from the Commencement Date. The Commencement Date is
anticipated to be April 1, 2006 subject to Substantial Completion (as
defined in the Work Letter) Force Majeure (as defined in the Addendum) and
Tenant Delay (as defined in the Work Letter).


 


Section 1.06.          Permitted Uses. Tenant shall use the Property for its
headquarters, laboratory research and development facilities, and production
facilities for the manufacture, packaging, warehousing and distribution of
Tenant’s human disease diagnostic products including sales, marketing and
shipping of related products, and shall not use or permit the Property to be
used for any other purpose without the prior written consent of Landlord.


 


Section 1.07.          Tenant’s Guarantor. None


 


Section 1.08.          Brokers. (See Article Fourteen)


 


 Landlord’s
Broker:  Fuller and Company


 


 Tenant’s
Broker:  None


 


Section 1.09.          Commission Payable to Landlord’s Broker. (See Article Fourteen)  Broker Commission will be paid pursuant to
separate agreement between Landlord and Fuller and Company.


 


Section 1.10.          Initial Security Deposit. (See Section 3.03) Tenant
shall pay to Landlord an initial security deposit in the amount of Two Hundred
Thousand and No/100 Dollars ($200,000.00) (“Initial Security Deposit”). The
Initial Security Deposit and any additional security deposits shall be held by
Landlord in a separate account and bearing interest on behalf of Tenant and
will be applied and disbursed strictly in accordance with this Section 1.10.
Provided Tenant has not been in material default of this Lease beyond
applicable cure periods at any time during the initial Lease Term, Landlord
shall credit Tenant the amount of Eighteen Thousand Seven Hundred Fifty and
No/100 Dollars ($18,750.00) for Base Rent due and payable by Tenant to be
applied against the Initial Security Deposit quarterly during the Lease Term
commencing September 1, 2007 until such time as the balance of the Initial
Security Deposit is Fifty Thousand and No/100 Dollars ($50,000.00). At such
time as the Initial Security Deposit equals Fifty Thousand and No/100 Dollars
($50,000.00) such amount shall represent the Initial Security Deposit for the
balance of the Lease Term. Tenant agrees to maintain liquid assets in cash or
near cash items (as shown on Tenant’s most recent quarterly report prepared
pursuant to


 


2

















 


customary
accounting standards in accordance with Generally Accepted Accounting
Principles, “GAAP”) (collectively, “Liquid Assets”) during the initial Lease
Term in excess of Six Hundred Thousand and No/100 Dollars ($600,000.00) (the “Liquidity
Covenant”). The amount of the Initial Security Deposit may be applied by
Tenant to meet the Liquidity Covenant. In the event Tenant shall violate the
Liquidity Covenant at any time during the initial Lease Term, then, after
notice from Landlord and opportunity for Tenant to cure such violation within
ten (10) days after receipt of Landlord’s notice, and in the event
Tenant does not cure such violation, Tenant shall forthwith deposit with
Landlord an additional security deposit in the amount of One Hundred Thousand
and No/100 Dollars ($100,000.00). If Tenant fails to maintain Liquid Assets in
excess of Six Hundred Thousand and No/100 Dollars ($600,000.00) within six (6) months
of Tenant’s violation of the Liquidity Covenant then Tenant shall immediately
deposit with Landlord additional security deposits in the amount of Twenty Five
Thousand and No/100 Dollars ($25,000.00) quarterly for the balance of the Lease
Term until either (i) Tenant’s Liquid Assets exceed Six Hundred Thousand
and No/100 Dollars ($600,000.00) or (ii) all monies deposited by Tenant as
security deposits, including the Initial Security Deposit, equals the then
unamortized portion of the Tenant Improvement Allowance (as defined in the Work
Letter). In the event that such additional security deposits equal the then
unamortized portion of the Tenant Improvement Allowance such additional
security deposits shall be refunded to Tenant by Landlord pro rata based on the
amortization schedule of the Tenant Improvement Allowance as set forth in Section 1.12.


 


Section 1.11.          Vehicle Parking Spaces Allocated to Tenant. Tenant shall be
entitled to non-reserved surface parking as provided for in this Section 1.11
and Section 4.05(c) of this Lease. Tenant shall be entitled to two
and one-half (2.5) parking spaces for each one thousand (1,000) square
feet of rental space in the Building, being approximately
eighty (80) such parking spaces.


 


Section 1.12.          Rent and Other Charges Payable by Tenant.


 


(a)           BASE RENT. Base Rent shall be as set forth below.


 


	
   

  	
   

  	
  Square Feet

  	
   

  	
  Base Lease Rate

  	
   

  	
  Amortized Tenant Improvements

  	
   

  	
  Estimated Operating Expenses

  	
   

  	
  Subtotal per SF

  	
   

  	
  Square Feet

  	
   

  	
  Base Lease Rate

  	
   

  	
  Estimated Operating Expenses

  	
   

  	
  Subtotal per SF

  	
   

  	
  Combined Square

  Feet

  	
   

  	
  Combined Total Rent per SF

  	
   

  
	
  4/1/06-8/31/06

  	
   

  	
  25.600

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   1.61

  	
   

  	
  $

  	
   1.61

  	
   

  	
  6400

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   1.61

  	
   

  	
  $

  	
   1.61

  	
   

  	
  32,000

  	
   

  	
  $

  	
   1.61

  	
   

  
	
  9/1/06-3/31/07

  	
   

  	
  25,600

  	
   

  	
  $

  	
  4.00

  	
   

  	
  $

  	
  5.24

  	
   

  	
  $

  	
  1.61

  	
   

  	
  $

  	
  10.85

  	
   

  	
  6400

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
  1.61

  	
   

  	
  $

  	
  1.61

  	
   

  	
  32,000

  	
   

  	
  $

  	
  9.00

  	
   

  
	
  4/1/07-8/31/07

  	
   

  	
  25,600

  	
   

  	
  $

  	
  4.00

  	
   

  	
  $

  	
  5.24

  	
   

  	
  $

  	
  1.61

  	
   

  	
  $

  	
  10.85

  	
   

  	
  6400

  	
   

  	
  $

  	
  3.00

  	
   

  	
  $

  	
  1.61

  	
   

  	
  $

  	
  4.61

  	
   

  	
  32,000

  	
   

  	
  $

  	
  9.60

  	
   

  
	
  9/1/07-8/31/08

  	
   

  	
  25,600

  	
   

  	
  $

  	
  5.64

  	
   

  	
  $

  	
  5.24

  	
   

  	
  $

  	
  1.61

  	
   

  	
  $

  	
  12.49

  	
   

  	
  6400

  	
   

  	
  $

  	
  3.09

  	
   

  	
  $

  	
  1.61

  	
   

  	
  $

  	
  4.70

  	
   

  	
  32,000

  	
   

  	
  $

  	
  10.93

  	
   

  
	
  9/1/08-8/31/09

  	
   

  	
  25,600

  	
   

  	
  $

  	
  6.85

  	
   

  	
  $

  	
  5.24

  	
   

  	
  $

  	
  1.61

  	
   

  	
  $

  	
  13.70

  	
   

  	
  6400

  	
   

  	
  $

  	
  3.18

  	
   

  	
  $

  	
  1.61

  	
   

  	
  $

  	
  4.79

  	
   

  	
  32,000

  	
   

  	
  $

  	
  11.92

  	
   

  
	
  9/1/09-8/31/10

  	
   

  	
  25,600

  	
   

  	
  $

  	
  7.19

  	
   

  	
  $

  	
  5.24

  	
   

  	
  $

  	
  1.61

  	
   

  	
  $

  	
  14.04

  	
   

  	
  6400

  	
   

  	
  $

  	
  3.28

  	
   

  	
  $

  	
  1.61

  	
   

  	
  $

  	
  4.89

  	
   

  	
  32,000

  	
   

  	
  $

  	
  12.21

  	
   

  
	
  9/1/10-8/31/11

  	
   

  	
  25,600

  	
   

  	
  $

  	
  7.55

  	
   

  	
  $

  	
  5.24

  	
   

  	
  $

  	
  1.61

  	
   

  	
  $

  	
  14.40

  	
   

  	
  6400

  	
   

  	
  $

  	
  3.38

  	
   

  	
  $

  	
  1.61

  	
   

  	
  $

  	
  4.99

  	
   

  	
  32,000

  	
   

  	
  $

  	
  12.52

  	
   

  
	
  9/1/11-8/31/12

  	
   

  	
  25,600

  	
   

  	
  $

  	
  7.93

  	
   

  	
  $

  	
  5.24

  	
   

  	
  $

  	
  1.61

  	
   

  	
  $

  	
  14.78

  	
   

  	
  6400

  	
   

  	
  $

  	
  3.48

  	
   

  	
  $

  	
  1.61

  	
   

  	
  $

  	
  5.09

  	
   

  	
  32,000

  	
   

  	
  $

  	
  12.84

  	
   

  



 


Base Rent and other charges payable by Tenant shall be pro rated for
any fractional month.


 


(b)           OTHER PERIODIC PAYMENTS. (i) Real Property Taxes (See Section 4.02);
(ii) Utilities (See Section 4.03); (iii) Insurance Premiums (See
Section 4.04); (iv) Tenant’s Initial


 


3

















 


Pro-Rata
Share of Common Area Expenses thirty one and 25/100 percent (31.25%); (See Section 4.05);
(v) Impounds for Insurance Premiums and Property Taxes (Section 4.08);
(vi) Maintenance, Repairs and Alterations (See Article Six).


 


Section 1.13.          Landlord’s Share of Profit on Assignment or Sublease. (See Section 9.05)  Fifty and No/100 percent (50.00%) of the
profit (the “Landlord’s Share”).


 


Section 1.14.          Riders. The following Riders are attached to and made a part of
this Lease:


 


 Exhibit ”A” “Property Description”


 Addendum to Lease


 Exhibit ”A” to Addendum, “Work Letter”


 


Article Two           LEASE
TERM.


 


Section 2.01.          Lease of Property for Lease Term. Landlord leases the
Property to Tenant and Tenant leases the Property from Landlord for the Lease
Term. The Lease Term is for the period stated in Section 1.05 above and
shall begin and end on the dates specified in Section 1.05 above, unless
the beginning or end of the Lease Term is changed under any provision of this
Lease. The “Commencement Date” shall be the date specified in Section 1.05
above for the beginning of the Lease Term, unless advanced or delayed under any
provision of this Lease.


 


Section 2.02.          Delay in Commencement. Landlord shall not be liable to
Tenant if Landlord does not deliver possession of the Property to Tenant on the
Commencement Date. Landlord’s non-delivery of the Property to Tenant on that
date shall not affect this Lease or the obligations of Tenant under this Lease
except that the Commencement Date shall be delayed until Landlord delivers
possession of the Property to Tenant and the Lease Term shall be extended for a
period equal to the delay in delivery of possession of the Property to Tenant,
plus the number of days necessary to end the Lease Term on the last day of a
month, and the dates set out in Section 1.12 shall be adjusted accordingly.
If delivery of possession of the Property to Tenant is delayed Landlord and
Tenant shall, upon such delivery, execute an amendment to this Lease setting
forth the actual Commencement Date and expiration date of the Lease. In the
event that the Commencement Date has not occurred on or before May 15,
2006, subject to Force Majeure and Tenant Delay, Tenant shall receive a credit
against Base Rent equal to one (1) day of Base Rent for every one (1) day
that the Commencement Date is delayed beyond May 15, 2006 (as such date is
extended by Force Majeure or Tenant Delay), the foregoing being Tenant’s sole
remedy against Landlord for a delay in the Commencement Date.


 


Section 2.03.          Early Occupancy. If Tenant occupies the Property prior to
the Commencement Date, Tenant’s occupancy of the Property shall be subject to
all of the provisions of this Lease. Early Occupancy of the Property shall not
advance the expiration date of this Lease. Tenant shall pay Base Rent and all
other charges specified in this Lease for the Early Occupancy period.


 


Section 2.04.          Holding Over. Tenant shall vacate the Property upon the
expiration or earlier termination of this Lease. If Tenant does not vacate the
Property upon the expiration or earlier termination of the Lease and Landlord
thereafter accepts rent from Tenant, Tenant’s occupancy of the Property shall be
a “month to month” tenancy, subject to all of the terms of this Lease


 


4

















 


applicable
to a month-to-month tenancy, except that the Base Rent shall equal One Hundred
and Fifty percent (150%) of the of the Base Rent then in effect.


 


Article Three       BASE
RENT.


 


Section 3.01.          Time and Manner of Payment. Upon execution of this Lease,
Tenant shall pay Landlord the Base Rent in the amount stated in Section 1.12(a) above
for the first month of the Lease Term. On the first day of the second month of
the Lease Term and each month thereafter, Tenant shall pay Landlord the Base
Rent, in advance, without offset, deduction or prior demand. The Base Rent
shall be payable at Landlord’s address or at such other place as Landlord may designate
in writing.


 


Section 3.02.          Cost of Living Increases. Intentionally Deleted.


 


Section 3.03.          Security Deposit; Increases. Upon the execution of this
Lease, Tenant shall deposit with Landlord a cash Initial Security Deposit in
the amount set forth in Section 1.10 above. Landlord may apply all or
part of the Initial Security Deposit and such additional monies deposited
by Tenant as an additional security deposit to any unpaid rent or other charges
due from Tenant or to cure any other defaults of Tenant. If Landlord uses any part of
the security deposits, Tenant shall restore the security deposits to the then
applicable amount within ten (10) days after Landlord’s written request. Tenant’s
failure to do so shall be a material default under this Lease. No interest
shall be paid on the security deposits. Landlord shall not be required to keep
the security deposits separate from its other accounts and no trust
relationship is created with respect to the security deposits.


 


Section 3.04.          Termination; Advance Payments. Upon termination of this
Lease under Article Seven (Damage or Destruction), Article Eight
(Condemnation) or any other termination not resulting from Tenant’s default,
and after Tenant has vacated the Property in the manner required by this Lease,
Landlord shall refund or credit to Tenant (or Tenant’s successor) the unused
portion of the Security Deposit, any advance rent or other advance payments
made by Tenant to Landlord, and any amounts paid for real property taxes and
other reserves which apply to any time periods after termination of the Lease.


 


Article Four         OTHER
CHARGES PAYABLE BY TENANT.


 


Section 4.01.          Additional Rent. All charges payable by Tenant other than
Base Rent are called “Additional Rent.” 
Unless this Lease provides otherwise, Tenant shall pay all Additional
Rent then due with the next monthly installment of Base Rent. The term “rent”
shall mean Base Rent and Additional Rent.


 


Section 4.02.          Property Taxes.


 


(a)           Real Property Taxes. Tenant shall pay its pro-rata share of
the real property taxes on the Property (including any fees, taxes or
assessments against, or as a result of, any tenant improvements installed on
the Property by or for the benefit of Tenant) during the Lease Term. Subject to
Section 4.02(c) and Section 4.08 below, such payment shall be
made to Landlord at least ten (10) days prior to the delinquency date of
the taxes.


 


5

















 


(b)           Definition of “Real Property Tax.”  “Real Property Tax” means: (i) any fee,
license fee, license tax, business license fee, commercial rental tax, levy
charge, assessment, penalty or tax imposed by any taxing authority against the
Property; (ii) any tax on the Landlord’s right to receive, or the receipt
of, rent or income from the Property or against Landlord’s business of leasing
the Property; (iii) any tax or charge for fire protection, streets,
sidewalks, road maintenance, refuse or other services provided to the Property
by any governmental agency; (iv) any tax imposed upon this transaction or
based upon a re-assessment of the Property due to a change of ownership, as
defined by applicable law, or other transfer of all or part of Landlord’s
interest in the Property; and (v) any charge or fee replacing any tax
previously included within the definition of real property tax. “Real property
tax” does not, however, include Landlord’s federal or state income, franchise,
inheritance or estate taxes.


 


(c)           Joint Assessment. If the Property is not separately
assessed, Landlord shall reasonably determine Tenant’s share of the real
property tax payable by Tenant under Section 4.02(a) from the
assessor’s worksheets or other reasonably available information. Tenant shall
pay such share to Landlord within twenty (20) days after receipt of Landlord’s
written statement.


 


(d)           Personal Property Taxes.


 


(i)            Tenant
shall pay all taxes charged against trade fixtures, furnishings, equipment or
any other personal property belonging to Tenant. Tenant shall try to have
personal property taxed separately from the Property.


 


(ii)           If
any of Tenant’s personal property is taxed with the Property, Tenant shall pay
Landlord the taxes for the personal property within twenty (20) days after
Tenant receives a written statement from Landlord for such personal property
taxes.


 


Section 4.03.          Utilities. Tenant shall pay, directly to the appropriate
supplier, the cost of all natural gas, heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the Property. However, if any services or utilities are jointly metered with
other property, Landlord shall make a reasonable determination of Tenant’s
proportionate share of the cost of such utilities and services and Tenant shall
pay such share to Landlord within twenty (20) days after receipt of Landlord’s
written statement.


 


Section 4.04.          Insurance Policies.


 


(a)           Liability Insurance. During the Lease Term, Tenant shall
maintain a policy of commercial general liability insurance (sometimes known as
broad form comprehensive general liability insurance) insuring Tenant
against liability for bodily injury, property damage (including loss of use of
property) and personal injury arising out of the operation, use or occupancy of
the Property. Tenant shall name Landlord as an additional insured under such
policy. The initial amount of such insurance shall be TWO MILLION DOLLARS
($2,000,000.00) per occurrence. The liability insurance obtained by Tenant
under this Section 4.04(a) shall (i) be primary and
non-contributing; (ii) contain cross-liability endorsements; and (iii) insure
Landlord against Tenant’s performance under Section 5.05, if the matters
giving rise to the indemnity under Section 5.05 result from the negligence
of Tenant. The amount and coverage of such insurance shall not limit Tenant’s
liability nor relieve Tenant of any other obligations under this Lease.


 


6

















 


Landlord
may also obtain comprehensive public liability insurance in an amount and
with coverage determined by Landlord insuring Landlord against liability
arising out of ownership, operation, use or occupancy of the Property. The
policy obtained by Landlord shall not be contributory and shall not provide
primary insurance.


 


(b)           Property and Rental Income Insurance. During the Lease Term,
Landlord shall maintain policies of insurance covering loss of or damage to the
Property in the full amount of its replacement value. Such policy shall contain
an inflation Guard Endorsement and shall provide protection against all perils
included within the classification of fire, extended coverage, vandalism,
malicious mischief, special extended perils (all risk), sprinkler leakage and
any other perils which Landlord deems reasonably necessary. Landlord shall have
the right to obtain flood and earthquake insurance if required by any lender
holding a security interest in the Property. Landlord shall not obtain
insurance for Tenant’s fixtures or equipment or building improvements installed
by Tenant on the Property. During the Lease Term, Landlord shall also maintain
a rental income insurance policy, with loss payable to Landlord, in an amount
equal to one (1) year’s Base Rent, plus estimated real property taxes and
insurance premiums. Tenant shall be liable for the payment of any deductible
amount under Landlord’s or Tenant’s insurance policies maintained pursuant to
this Section 4.04, in an amount not to exceed TWENTY THOUSAND DOLLARS
($20,000.00). Tenant shall not do or permit anything to be done which
invalidates any such insurance policies.


 


(c)           Payment of Premiums. Subject to Section 4.08, Tenant
shall pay all premiums for the insurance policies described in Section 4.04(a) and
(b) (whether obtained by Landlord or Tenant) within twenty (20) days after
Tenant’s receipt of a copy of the premium statement or other evidence of the
amount due, except Landlord shall pay all premiums for non-primary
comprehensive public liability insurance which Landlord elects to obtain as
provided in Section 4.04(a). If insurance policies maintained by Landlord
cover improvements on real property other than the Property, Landlord shall
deliver to Tenant a statement of the premium applicable to the Property showing
in reasonable detail how Tenant’s share of the premium was computed. If the
Lease Term expires before the expiration of an insurance policy maintained by
Landlord, Tenant shall be liable for Tenant’s prorated share of the insurance
premiums. Before the Commencement Date, Tenant shall deliver to Landlord a copy
of any policy of insurance which Tenant is required to maintain under this Section 4.04.
At least thirty (30) days prior to the expiration of any such policy, Tenant
shall deliver to Landlord a renewal of such policy. As an alternative to
providing a policy of insurance, Tenant shall have the right to provide
Landlord a certificate of insurance, executed by an authorized officer of the
insurance company, showing that the insurance which Tenant is required to
maintain under this Section 4.04 is in full force and effect and
containing such other information which Landlord reasonably requires.


 


(d)           General Insurance Provisions.


 


(i)            Any
insurance which Tenant is required to maintain under this Lease shall include a
provision which requires the insurance carrier to give Landlord not less than
thirty (30) days’ written notice prior to any cancellation or modification of
such coverage.


 


(ii)           If
Tenant fails to deliver a policy, certificate or renewal to Landlord required
under this Lease within the prescribed time period or if any such policy is
cancelled or modified during the


 


7

















 


Lease
Term without Landlord’s consent, Landlord may obtain such insurance, in
which case Tenant shall reimburse Landlord for the cost of such insurance
within twenty (20) days after receipt of a statement that indicates the cost of
such insurance.


 


(iii)          Tenant
shall maintain all insurance required under this Lease with companies holding a
“General Policy Rating” of A-12 or better, as set forth in the most current
issue of “Best Key Rating Guide.” 
Landlord and Tenant acknowledge the insurance markets are rapidly
changing and that insurance in the form and amounts described in this Section 4.04
may not be available in the future. Tenant acknowledges that the insurance
described in this Section 4.04 is for the primary benefit of Landlord. If
at any time during the Lease Term, Tenant is unable to maintain the insurance
required under the Lease, Tenant shall nevertheless maintain insurance coverage
which is customary and commercially reasonable in the insurance industry for
Tenant’s type of business, as that coverage may change from time to time. Landlord
makes no representation as to the adequacy of such insurance to protect
Landlord’s or Tenant’s interests. Therefore, Tenant shall obtain any such additional
property or liability insurance which Tenant deems necessary to protect
Landlord and Tenant.


 


(iv)          Unless
prohibited under any applicable insurance policies maintained, Landlord and
Tenant each hereby waive any and all rights of recovery against the other, or
against the officers, employees, agents or representatives of the other, for
loss of or damage to its property or the property of others under its control,
if such loss or damage is covered by any insurance policy in force (whether or
not described in this Lease) at the time of such loss or damage. Upon obtaining
the required policies of insurance, Landlord and Tenant shall give notice to
the insurance carriers of this mutual waiver of subrogation.


 


Section 4.05.          Common Areas: Use, Maintenance and Costs.


 


(a)           Common Areas. As used in this Lease, “Common Areas” shall
mean all areas within the Project which are available for the common use of
tenants of the Project and which are not leased or held for the exclusive use
of Tenant or other tenants, including, but not limited to, parking areas,
driveways, sidewalks, loading areas, access roads, corridors, landscaping and
planted areas. Landlord, from time to time, may change the size, location,
nature and use of any of the Common Areas, convert Common Areas into leasable
areas, construct additional parking facilities (including parking structures)
in the Common Areas, and increase or decrease of Common Area land and/or
facilities. Tenant acknowledges that such activities may result in
inconvenience to Tenant. Such activities are permitted if they do not
materially affect Tenant’s use of the Property.


 


(b)           Use of Common Areas. Tenant shall have the nonexclusive
right (in common with other tenants and all others to whom Landlord has granted
or may grant such rights) to use the Common Areas for the purposes
intended, subject to such reasonable rules and regulations as Landlord may establish
from time to time. Tenant shall abide by such rules and regulations and
shall use its best effort to cause others who use the Common Areas with Tenant’s
express or implied permission to abide by Landlord’s rules and regulations.
At any time, Landlord may close any Common Areas to perform any acts
in the Common Areas as, in the Landlord’s judgment, are desirable to improve
the Project, provided that such closures do not materially


 


8

















 


affect
Tenant’s usability or access to the Property. Tenant shall not interfere with
the rights of Landlord, other tenants or any other person entitled to use the
Common Areas.


 


(c)           Specific Provision re: Vehicle Parking. Tenant shall be
entitled to use the number of vehicle parking spaces in the Project allocated
to Tenant in Section 1.11 of the Lease without paying any additional rent.
Tenant’s parking shall not be reserved and shall be limited to vehicles no
larger than standard size automobiles or pickup utility vehicles. Tenant shall
not cause large trucks or other large vehicles to be parked within the Project
or on the adjacent public streets. Temporary parking of large delivery vehicles
in the Project will be permitted by the rules and regulations established
by Landlord. Vehicles shall be parked only in striped parking spaces and not in
driveways, loading areas or other locations not specifically designated for
parking. Handicapped spaces shall only be used by those legally permitted to
use them. If Tenant parks more vehicles in the parking area than the number set
forth in Section 1.11 of this Lease, such conduct shall be a material
breach of this Lease, subject to the applicable grace period in Section 10.02(c).
In addition to Landlord’s other remedies under the Lease, Tenant shall pay a
daily charge reasonably determined by Landlord for each such additional
vehicle.


 


(d)           Maintenance of Common Areas. Landlord shall maintain the
Common Areas in good order, condition and repair and shall operate the Project,
in Landlord’s sole discretion, as a first-class industrial/commercial real
property development. Tenant shall pay Tenant’s Pro-Rata Share (as determined
below) of all costs incurred by Landlord for the operation and maintenance of
the Common Areas. Common Area costs include, but are not limited to, costs and
expenses for the following: gardening and landscaping; utilities, water and
sewage charges; maintenance of signs (other than tenants’ signs); premiums for
liability, property damage, fire and other types of casualty insurance on the
Common Areas and all Common Area improvements; all property taxes and
assessments levied on or attributable to the Common Areas and all Common Area
improvements; all personal property taxes levied on or attributable to personal
property used in connection with the Common Areas; straight-line depreciation
on personal property owned by Landlord which is consumed in the operation or
maintenance of the Common Areas; rental or lease payments paid by Landlord for
rented or leased personal property used in the operation or maintenance of the
Common Areas; fees for required licenses and permits; repairing, resurfacing,
repaving, maintaining, painting, lighting, cleaning, refuse removal, snow and
ice removal, security and similar items; reserves for roof replacement and
exterior painting and other appropriate reserves; and a reasonable allowance to
Landlord for Landlord’s supervision of the Common Areas (not to exceed five
percent five (5%) of the gross rents of the Project for the calendar year). Landlord
may cause any or all of such services to be provided by third parties and
the cost of such services shall be included in Common Area Costs. Common Area
costs shall not include depreciation of real property which forms part of
the Common Areas.


 


(e)           Tenant’s Share and Payment. Tenant shall pay Tenant’s annual
Pro-Rata Share of all Common Area costs (prorated for any fractional month)
monthly as provided in Section 4.01 above. Tenant’s Pro-Rata Share shall
be calculated by dividing the rentable square foot area of the Property, as set
forth in Section 1.04 of the Lease, by the aggregate rentable square foot
area of the Project. Tenant’s initial Pro-Rata Share is set out in Section 1.12(b).
Any changes in the Common Area costs and/or the aggregate area of the Project
leased or held for lease during the Lease Term shall be effective on the first
day of the month after such change occurs. Landlord may, at Landlord’s
election, estimate in advance and charge to Tenant as Common Area costs,


 


9

















 


all
real property taxes for which Tenant is liable under Section 4.02 of the
Lease, all insurance premiums for which Tenant is liable under Section 4.04
of the Lease, all maintenance and repair costs for which Tenant is liable under
Section 6.04 of the Lease, and all other Common Area costs payable by
Tenant hereunder. At Landlord’s election, such statements of estimated Common
Area costs shall be delivered monthly, quarterly or at any other periodic
intervals to be designated by Landlord. Landlord may adjust such estimates
not more than once each twelve (12) month period based upon Landlord’s experience
and reasonable anticipation of costs. Such adjustments shall be effective as of
the next rent payment date after notice to Tenant. Within sixty (60) days after
the end of each calendar year of the Lease Term, Landlord shall deliver to
Tenant a statement prepared in accordance with generally accepted accounting
principles setting forth, in reasonable detail, the Common Area costs paid or
incurred by Landlord during the preceding calendar year and Tenant’s Pro-Rata
Share. Upon receipt of such statement, there shall be an adjustment between
Landlord and Tenant, with payment to or credit given by Landlord (as the case may be)
so that Landlord shall receive the entire amount of Tenant’s share of such
costs and expenses for such period.


 


Section 4.06.          Late Charges. Tenant’s failure to pay rent promptly may cause
Landlord to incur unanticipated costs. The exact amount of such costs are
impractical or extremely difficult to ascertain. Such costs may include,
but are not limited to, processing and accounting charges and late charges
which may be imposed on Landlord by any ground lease, mortgage or trust
deed encumbering the Property. Therefore, if Landlord does not receive any rent
payment within ten (10) days after it becomes due, Tenant shall pay to
Landlord a late charge equal to ten percent (10%) of the overdue amount. The
parties agree that such late charge represents a fair and reasonable estimate
of the costs Landlord will incur by reason of such late payment.


 


Section 4.07.          Interest on Past Due Obligations. Any amount owed by Tenant
to Landlord which is not paid when due shall bear interest at the rate of
fifteen percent (15%) per annum from the due date of such amount. However,
interest shall not be payable on late charges to be paid by Tenant under this
Lease. The payment of interest on such amounts shall not excuse or cure any
default by Tenant under this Lease. If the interest rate specified in this
Lease is higher than the rate permitted by law, the interest rate is hereby
decreased to the maximum legal interest rate permitted by law.


 


Section 4.08.          Impounds for Insurance Premiums and Real Property Taxes. If
required by a ground lessor or lender to whom Landlord has granted a security
interest in the Property, or if Tenant is more than ten (10) days late in
the payment of rent more than three (3) times during a consecutive twelve
(12) month period, Tenant shall pay Landlord a sum equal to one twelfth
(1/12) of the annual real property taxes and insurance premiums payable by
Tenant under this Lease, together with each payment of Base Rent. Landlord
shall hold such payments in a non-interest bearing impound account. If unknown,
Landlord shall reasonably estimate the amount of real property taxes and
insurance premiums when due. Tenant shall pay any deficiency of funds in the
impound account to any obligation then due under this Lease.


 


Section 4.09.          Management Fees. Tenant shall reimburse Landlord monthly for
Tenant’s Pro-Rata Share of the management fees and expenses (not to exceed five
percent (5%) of the gross rents of the Project for the calendar year) incurred
by Landlord in connection with the Property.


 


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Article Five           USE
OF PROPERTY.


 


Section 5.01.          Permitted Uses. Tenant may use the Property only for
the Permitted Uses set forth in Section 1.06 above.


 


Section 5.02.          Manner of Use. Tenant shall not cause or permit the Property
to be used in any way which constitutes a violation of any law, ordinance, or
governmental regulation or order, which annoys or interferes with the rights of
other tenants of Landlord, or which constitutes a nuisance or waste. Tenant
shall obtain and pay for all permits, including a Certificate of Occupancy,
required for Tenant’s occupancy of the Property and shall promptly take all
actions necessary to comply with all applicable statutes, ordinances, rules,
regulations, orders and requirements regulating the use by Tenant of the
Property, including the Occupational Safety and Health Act.


 


Section 5.03.          Hazardous Materials. As used in this Lease, the term “Hazardous
Material” means any flammable items, explosives, radioactive materials,
hazardous or toxic substances, material or waste or related materials,
including any substances defined as or included in the definition of “hazardous
substances,” “hazardous wastes,” “hazardous materials” or “toxic substances”
now or subsequently regulated under any applicable federal, state or local laws
or regulations, including, without limitation petroleum-based products, paints,
solvents, lead, cyanide, DDT, printing inks, acids, pesticides, ammonia
compounds and other chemical products, asbestos, PCBs and similar compounds,
and including any different products and materials which are subsequently found
to have adverse effects on the environment or the health and safety of persons.
Tenant shall not cause or permit any Hazardous Material to be generated,
produced, brought upon, used, stored, treated or disposed of in or about the
Property by Tenant, its agents, employees, contractors, sublessees without the
prior written consent of Landlord. Landlord shall be entitled to take into
account such other factors or facts as Landlord may reasonably determine
to be relevant in determining whether to grant or withhold consent to Tenant’s
proposed activity with respect to Hazardous Material. In no event, however,
shall Landlord be required to consent to the installation or use of any storage
tanks on the Property. Landlord hereby consents to the Hazardous Materials set
forth on Exhibit B to this Lease notwithstanding the foregoing.
Notwithstanding anything contained herein to the contrary, any storage,
handling, manufacture, use or existence of Hazardous Materials on the Property,
including those set forth on Exhibit B, shall be in conformity with
all applicable laws. Landlord represents and warrants to Tenant that, to the
actual knowledge of Landlord, there are no Hazardous Materials currently
affecting the Property or Project.


 


Section 5.04.          Signs and Auctions. Tenant shall not place any signs on the
Property without Landlord’s prior written consent and which shall be in
conformity with all applicable laws. Tenant shall not conduct or permit any
auctions or sheriff’s sales at the Property. Notwithstanding the above, Tenant
shall have the right to the signage as set forth in the Addendum.


 


Section 5.05.          Indemnity. Tenant shall indemnify Landlord against and hold
Landlord harmless from any and all costs, claims or liability arising from: (a) Tenant’s
use of the Property; (b) the conduct of Tenant’s business or anything else
done or permitted by Tenant to be done in or about the Property, including any
contamination of the Property or any other property resulting from


 


11

















 


the
presence or use of Hazardous Material caused or permitted by Tenant; (c) any
breach or default in the performance of Tenant’s obligations under this Lease; (d) any
misrepresentation or breach of warranty by Tenant under this Lease; or (e) other
acts or omissions of Tenant. Tenant shall defend Landlord against any such
cost, claim or liability at Tenant’s expense with counsel reasonably acceptable
to Landlord or, at Landlord’s election, Tenant shall reimburse Landlord for any
legal fees or costs incurred by Landlord in connection with any such claim. As
a material part of the consideration to Landlord, Tenant assumes all risk
of damage to property or injury to persons in or about the Property arising
from any cause, and Tenant hereby waives all claims in respect thereof against
Landlord, except for any claim arising out of Landlord’s gross negligence or
willful misconduct. As used in this Section, the term “Tenant” shall include
Tenant’s employees, agents, contractors and invitees, if applicable.


 


Section 5.06.          Landlord’s Access. Landlord or its agents may enter the
Property at all reasonable times to show the Property to potential buyers,
investors or tenants or other parties; to do any other act or to inspect and
conduct tests in order to monitor Tenant’s compliance with all applicable
environmental laws and all laws governing the presence and use of Hazardous
Material; or for any other purpose Landlord deems necessary. Landlord shall
give Tenant prior notice of such entry, except in the case of an emergency. Landlord
may place customary “For Sale” or “For Lease” signs on the Project (but
not on the Property other than during the last twelve (12) months of
the Lease Term).


 


Section 5.07.          Quiet Possession. If Tenant pays the rent and complies with
all other terms of this Lease, Tenant may occupy and enjoy the Property
for the full Lease Term, subject to the provisions of this Lease.


 


Article Six            CONDITION
OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS


 


Section 6.01.          Existing Conditions. Tenant accepts the Property in its
condition as of the execution of the Lease, subject to all recorded matters,
laws, ordinances, and governmental regulations and orders. Except as provided
herein, Tenant acknowledges that neither Landlord nor any agent of Landlord has
made any representation as to the condition of the Property or the suitability
of the Property for Tenant’s intended use. Tenant represents and warrants that
Tenant has made its own inspection of and inquiry regarding the condition of
the Property and is not relying on any representations of Landlord or any
Broker with respect thereto. If Landlord or Landlord’s Broker has provided a
Property Information Sheet or other Disclosure Statement regarding the
Property, a copy is attached as an exhibit to the Lease.


 


Section 6.02.          Exemption of Landlord from Liability. Landlord shall not be
liable for any damage or injury to the person, business (or any loss of income
therefrom), goods, wares, merchandise or other property of Tenant, Tenant’s
employees, invitees, customers or any other person in or about the Property,
whether such damage or injury is caused by or results from: (a) fire,
steam, electricity, water, gas or rain; (b) the breakage, leakage,
obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing,
air conditioning or lighting fixtures or any other cause; (c) conditions
arising in or about the Property or upon other portions of the Project, or from
other sources or places; or (d) any act or omission of any other tenant of
the Project. Landlord shall not be liable for any such damage or injury even
though the cause of or


 


12

















 


the
means of repairing such damage or injury are not accessible to Tenant. The
provisions of this Section 6.02 shall not, however, exempt Landlord from
liability for Landlord’s gross negligence or willful misconduct.


 


Section 6.03.          Landlord’s Obligations.


 


(a)           Except
as provided in Article Seven (Damage or Destruction) and Article Eight
(Condemnation), Landlord shall keep the following in good order, condition and
repair:  all structural components, the
foundations, exterior walls (including exterior windows and door frames, unless
any such damage is caused by Tenant) and roof of the Property (including
painting the exterior surface of the exterior walls of the Property not more
than once every five (5) years, if necessary), and all components of
electrical, mechanical, plumbing, heating and air conditioning systems and
facilities located in the Property which are concealed or used in common by
tenants of the Project, and the parking surfaces (including snow and ice
removal) of the Project. However, Landlord shall not be obligated to maintain
or repair windows, doors, plate glass or the interior surfaces of exterior
walls. Landlord shall make repairs under this Section 6.03 as necessary to
maintain an attractive, first-class multi-tenant facility for the Property
and Project equal to or superior to those of similar first-class multi-tenant
facilities in the Broomfield, Colorado area, and within a reasonable time after
receipt of written notice from Tenant of the need for such repairs.


 


(b)           Tenant
shall pay or reimburse Landlord for all costs Landlord incurs under Section 6.03(a) above
as Common Area costs as provided for in Section 4.05 of the Lease. Landlord
shall make any such repairs or corrections within thirty (30) days of receipt
of notice of the need for such by Landlord, or within such other reasonable
time as may be necessary, so long as Landlord has commenced such repairs
or corrections within said 30-day period and diligently pursues the repairs or
corrections to completion. In the event that Landlord does not make such
repairs or corrections within the time period set forth in this Section (b),
Base Rent shall be reasonably and equitably abated for such portion of the
Property that Tenant is unable to utilize for its business due to the failure
of Landlord to make such repairs or corrections. Tenant waives the benefit of
any statute in effect now or in the future which might give Tenant the right to
make repairs at Landlord’s expense or to terminate this Lease due to Landlord’s
failure to keep the Property in good order, condition and repair.


 


Section 6.04.          Tenant’s Obligations.


 


(a)           Except
as specified to be Landlord’s obligation in Section 6.03(a) and as
provided in Article Seven (Damage Destruction) and Article Eight
(Condemnation), Tenant shall keep all portions of the Property (including,
nonstructural, interior, exterior, and landscaped areas, portions, systems and
equipment) in good order, condition and repair (including interior repainting
and refinishing, as needed). If any portion of the Property or any system or
equipment in the Property which Tenant is obligated to repair cannot be fully
repaired or restored, Tenant shall promptly replace such portion of the
Property or system or equipment in the Property, regardless of whether the
benefit of such replacement extends beyond the Lease Term; but if the benefit
or useful life of such replacement extends beyond the Lease Term (as such term may be
extended by exercise of any options), the useful life of such replacement shall
be prorated over the remaining portion of the Lease Term (as extended), and
Tenant shall be liable only for that


 


13

















 


portion
of the cost which is applicable to the Lease Term (as extended). Tenant shall
maintain a preventive maintenance contract providing for the regular inspection
and maintenance of the heating and air conditioning system by a licensed
heating and air conditioning contractor. If any part of the Property is
damaged by any act or omission of Tenant, Tenant shall pay Landlord the cost of
repairing or replacing such damaged property, whether or not Landlord would
otherwise be obligated to pay the cost of maintaining or repairing such
property. It is the intention of Landlord and Tenant that at all times Tenant
shall maintain the portions of the Property which Tenant is obligated to
maintain in an attractive, first-class and fully operative condition.


 


(b)           Tenant
shall fulfill all of Tenant’s obligations under this Section 6.04, at
Tenant’s sole expense. If Tenant fails to maintain, repair or replace the
Property as required by this Section 6.04, Landlord may, upon ten (10) days’
prior notice to Tenant (except that no notice shall be required in the case of
an emergency), enter the Property and perform such maintenance or repair
(including replacement, as needed) on behalf of Tenant. In such case, Tenant
shall reimburse Landlord for all costs incurred in performing such maintenance
or repair immediately upon demand.


 


Section 6.05.          Alterations, Additions, and Improvements.


 


(a)           Tenant
shall not make any alterations, additions, or improvements to the Property
without Landlord’s prior written consent, except for non-structural alterations
which do not exceed Twenty Thousand Dollars ($20,000.00) in cost annually and
which are not visible from the outside of any building of which the Property is
part. Landlord may require Tenant to provide demolition and/or lien and
completion bonds in form and amount satisfactory to Landlord. Tenant shall
promptly remove any alterations, additions, or improvements constructed in
violation of this Section 6.05(a) upon Landlord’s written request. All
alterations, additions, and improvements shall be done in a good and
workmanlike manner, in conformity with all applicable laws and regulations, and
by a contractor approved by Landlord. Upon completion of any such work, Tenant
shall provide Landlord with “as built” plans, copies of all construction
contracts, and proof of payment for all labor and materials.


 


(b)           Tenant
shall pay, when due, all claims for labor and material furnished to the
Property. Tenant shall give Landlord at least twenty (20) days’ prior written
notice of the commencement of any work on the Property (other than in
connection with maintenance and minor repairs), regardless of whether Landlord’s
consent to such work is required. Landlord may elect to record and post
notices of non-responsibility on the Property.


 


(c)           Tenant
may, without Landlord’s further consent, install at Tenant’s cost any
reasonable security system for the Property as Tenant reasonably determines.
However, Tenant shall provide Landlord with prior written notice of the
installation of any such security system, which notice shall include a
description of Tenant’s security plans. In no event shall the provisions of
this Section 6.05(c) invalidate or otherwise render ineffective all
or any portion of any other provision of this Lease.


 


Section 6.06.          Condition upon Termination. Upon the termination of the
Lease, Tenant shall surrender the Property to Landlord, broom clean and in
the same condition as received except for ordinary wear and tear which Tenant
was not otherwise obligated to remedy under any provision


 


14

















 


of
this Lease. However, Tenant shall not be obligated to repair any damage which
Landlord is required to repair under Article Seven (Damage or Destruction).
In addition, Landlord may require Tenant to remove any alterations, additions
or improvements (whether or not made with Landlord’s consent) prior to the
expiration of the Lease and to restore the Property to its prior condition, all
at Tenant’s expense. Landlord and Tenant agree that Tenant shall remove its
sand from the Property at the termination of the Lease. All alterations,
additions and improvements which Landlord has not required Tenant to remove
shall become Landlord’s property and shall be surrendered to Landlord upon the
expiration or earlier termination of the Lease, except that Tenant may remove
any of Tenant’s machinery or equipment which can be removed without material
damage to the Property. Tenant shall repair, at Tenant’s expense, any damage to
the Property caused by the removal of any such machinery or equipment. In no
event, however, shall Tenant remove any of the following materials or equipment
(which shall be deemed Landlord’s property) without Landlord’s prior written
consent; any power wiring or power panels; lighting or lighting fixtures; wall
coverings; drapes, blinds or other window coverings; carpets or other floor
coverings; heaters, air conditioners or any other heating or air conditioning
equipment; fencing or security gates; or other similar building operating
equipment and decorations. Subject to the terms or removal herein, Landlord
hereby consents to Tenant’s removal of food and beverage equipment and hard
court flooring material at the termination of the Lease.


 


Article Seven       DAMAGE
OR DESTRUCTION


 


Section 7.01.          Partial Damage to Property.


 


(a)           Tenant
shall notify Landlord in writing immediately upon the occurrence of any damage
to the Property. If the Property is only partially damaged (i.e., less than
twenty-five percent (25%) of the Property is untenantable as a result of such
damage or less than twenty-five percent (25%) of Tenant’s operations are
materially impaired) and if the proceeds received by Landlord from the
insurance policies described in Section 4.04(b) are sufficient to pay
for the necessary repairs, this Lease shall remain in effect and Landlord shall
repair the damage as soon as reasonably possible. Landlord may elect (but
is not required) to repair any damage to Tenant’s fixtures, equipment, or
improvements.


 


(b)           If
the insurance proceeds received by Landlord are not sufficient to pay the
entire cost of repair, or if the cause of the damage is not covered by the
insurance policies which Landlord maintains under Section 4.04(b),
Landlord may elect either to (i) repair the damage as soon as
reasonably possible, in which case this Lease shall remain in full force and
effect, or (ii) terminate this Lease as of the date the damage occurred. Landlord
shall notify Tenant within thirty (30) days after receipt of notice of the
occurrence of the damage whether Landlord elects to repair the damage or
terminate the Lease. If Landlord elects to repair the damage, Tenant shall pay
Landlord the “deductible amount” (if any) under Landlord’s insurance policies
and, if the damage was due to an act or omission of Tenant, or Tenant’s
employees, agents, contractors or invitees, the difference between the actual
cost of repair and any insurance proceeds received by Landlord. If Landlord
elects to terminate the Lease, Tenant may elect to continue this Lease in
full force and effect, in which case Tenant shall repair any damage to the
Property and any building in which the Property is located, by paying any
repair amounts in excess of proceeds of insurance received by Landlord. Tenant
shall pay the cost of such repairs, except that upon


 


15

















 


satisfactory
completion of such repairs, Landlord shall deliver to Tenant any insurance
proceeds received by Landlord for the damage repaired by Tenant. Tenant shall
give Landlord written notice of such election within ten (10) days after
receiving Landlord’s termination notice.


 


(c)           If
the damage to the Property occurs during the last six (6) months of the
Lease Term and such damage will require more than thirty (30) days to repair,
either Landlord or Tenant may elect to terminate this Lease as of the date
the damage occurred, regardless of the sufficiency of any insurance proceeds. The
party electing to terminate this Lease shall give written notification to the
other party of such election within thirty (30) days after Tenant’s notice to
Landlord of the occurrence of the damage.


 


Section 7.02.          Substantial or Total Destruction. If the Property is
substantially or totally destroyed by any cause whatsoever (i.e., the damage to
the Property is greater than partial damage as described in Section 7.01),
and regardless of whether Landlord receives any insurance proceeds, this Lease
shall terminate as of the date the destruction occurred. Notwithstanding the
preceding sentence, if the Property can be rebuilt within six (6) months after
the date of destruction, Landlord may elect to rebuild the Property at
Landlord’s own expense, in which case this Lease shall remain in full force and
effect. Landlord shall notify Tenant of such election within thirty (30) days
after Tenant’s notice of the occurrence of total or substantial destruction. If
Landlord so elects, Landlord shall rebuild the Property at Landlord’s sole
expense, except that if the destruction was caused by an act or omission of
Tenant, Tenant shall pay Landlord the difference between the actual cost of
rebuilding and any insurance proceeds received by Landlord.


 


Section 7.03.          Temporary Reduction of Rent. If the Property is destroyed or
damaged and Landlord or Tenant repairs or restores the Property pursuant to the
provisions of this Article Seven, any rent payable during the period of
such damage, repair and/or restoration shall be reduced according to the
degree, if any, to which Tenant’s use of the Property is impaired. However, the
reduction shall not exceed the sum of one year’s payment of Base Rent,
insurance premiums, real property taxes and other rent. Except for such
possible reduction in Base Rent, insurance premiums and real property taxes,
Tenant shall not be entitled to any compensation, reduction, or reimbursement
from Landlord as a result of any damage, destruction, repair, or restoration of
or to the Property.


 


Section 7.04.          Waiver. Intentionally deleted


 


Article Eight        CONDEMNATION


 


If all or any portion of
the Property is taken under the power of eminent domain or sold under the
threat of that power (all of which are called “Condemnation”), this Lease shall
terminate as to the part taken or sold on the date the condemning
authority takes title or possession, whichever occurs first. If more than
twenty percent (20%) of the floor area of the building in which the Property is
located, or which is located on the Property, is taken, either Landlord or
Tenant may terminate this Lease as of the date the condemning authority
takes title or possession, by delivering written notice to the other within ten
(10) days after receipt of written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning
authority takes title or possession). If neither Landlord nor Tenant terminates
this


 


16

















 


Lease, this Lease shall remain in effect as to the portion of the
Property not taken, except that the Base Rent and Additional Rent shall be
reduced in proportion to the reduction in the floor area of the Property. Any
Condemnation award or payment shall be distributed in the following order:  (a) first, to any ground lessor,
mortgagee or beneficiary under a deed of trust encumbering the Property, the
amount of its interest in the Property; (b) second, to Tenant, only the
amount of any award specifically designated for loss of or damage to Tenant’s
trade fixtures or removable personal property; and (c) third, to Landlord,
the remainder of such award, whether as compensation for reduction in the value
of the leasehold, the taking of the fee, or otherwise. If this Lease is not
terminated, Landlord shall repair any damage to the Property caused by the
Condemnation, except that Landlord shall not be obligated to repair any damage
for which Tenant has been reimbursed by the condemning authority. If the
severance damages received by Landlord are not sufficient to pay for such
repair, Landlord shall have the right to either terminate this Lease or make
such repair at Landlord’s expense.


 


Article Nine          ASSIGNMENT
AND SUBLETTING


 


Section 9.01.          Landlord’s Consent Required. No portion of the Property or
of Tenant’s interest in this Lease may be acquired by any other person or
entity, whether by sale, assignment, mortgage, sublease, transfer, operation of
law, or act of Tenant, without Landlord’s prior written consent, except as
provided in Section 9.02 below. Landlord has the right to grant or
withhold its consent as provided in Section 9.05 below. Any attempted
transfer without consent shall be void and shall constitute breach of this
Lease. If Tenant is a corporation, any change in the ownership of a controlling
interest of the voting stock of the corporation shall require Landlord’s
consent.


 


Section 9.02.          Tenant Affiliate. Tenant may assign this Lease or
sublease the Property, without Landlord’s consent, to any corporation which
controls, is controlled by or is under common control with Tenant, or to any
corporation resulting from the merger of or consolidation with Tenant (“Tenant’s
Affiliate”). In such case, any Tenant’s Affiliate shall assume writing all of
Tenant’s obligations under this Lease.


 


Section 9.03.          No Release of Tenant. No transfer permitted by this Article Nine,
whether with or without Landlord’s consent, shall release Tenant or change
Tenant’s primary liability to pay the rent and to perform all other
obligations of Tenant under this Lease. Landlord’s acceptance of rent from any
other person is not a waiver of any provision of this Article Nine. Consent
to one transfer is not a consent to any subsequent transfer. If Tenant’s
transferee defaults under this Lease, Landlord may proceed directly
against Tenant without pursuing remedies against the transferee. Landlord may consent
to subsequent assignments or modifications of this Lease by Tenant’s
transferee, without notifying Tenant or obtaining its consent. Such action
shall not relieve Tenant’s liability under this Lease.


 


Section 9.04.          Offer to Terminate. If Tenant desires to assign the Lease or
sublease the Property, Tenant shall have the right to offer, in writing, to
terminate the Lease as of a date specified in the offer. If Landlord elects in
writing to accept the offer to terminate within twenty (20) days after notice
of the offer, the Lease shall terminate as of the date specified and all the
terms and provisions of the Lease governing termination shall apply. If
Landlord does not so


 


17

















 


elect,
the Lease shall continue in effect until otherwise terminated and the
provisions of Section 9.05 with respect to any proposed transfer shall
continue to apply.


 


Section 9.05.          Landlord’s Consent.


 


(a)           Tenant’s
request for consent to any transfer described in Section 9.01 shall set
forth in writing the details of the proposed transfer, including the name,
business and financial condition of the prospective transferee, financial
details of the proposed transfer (e.g., the term of and the rent and security
deposit payable under any proposed assignment or sublease), and any other
information Landlord reasonably deems relevant. Landlord shall have the right
to withhold consent, if reasonable, or to grant consent, based on the following
factors:  (i) the business of the
proposed assignee or subtenant and the proposed use of the Property: (ii) the
net worth and financial reputation of the proposed assignee or subtenant: (iii) Tenant’s
compliance with all of its obligations under the Lease: and (iv) such
other factors as Landlord may reasonably deem relevant. If Landlord
objects to a proposed assignment solely because of the net worth and/or
financial reputation of the proposed assignee, Tenant may nonetheless
sublease (but not assign), all or a portion of the Property to the proposed
transferee, but only on the other terms of the proposed transfer.


 


(b)           If
Tenant assigns or subleases, the following shall apply:


 


(i)            Tenant
shall pay to Landlord as Additional Rent under the Lease the Landlord’s Share
(stated in Section 1.13) of the Profit (defined below) on such transaction
as and when received by Tenant, unless Landlord gives written notice to Tenant
and the assignee or subtenant that Landlord’s Share shall be paid by the
assignee or subtenant to Landlord directly. The “Profit” means (A) all
amounts paid to Tenant for such assignment or sublease, including “key” money,
monthly rent in excess of the monthly rent payable under the Lease, and all
fees and other consideration paid for the assignment or sublease, including
fees under any collateral agreements, less (B) costs and expenses directly
incurred by Tenant in connection with the execution and performance of such
assignment or sublease for real estate broker’s commissions and costs of
renovation or construction of tenant improvements required under such
assignment of sublease. Tenant is entitled to recover such cost and expenses before
Tenant is obligated to pay the Landlord’s Share to Landlord. The Profit in the
case of a sublease of less than all the Property is the rent allocable to the
subleased space as a percentage on a square footage basis.


 


(ii)           Tenant
shall provide Landlord a written statement certifying all amounts to be paid
from any assignment or sublease of the Property within thirty (30) days after
the transaction documentation is signed, and Landlord may inspect Tenant’s
books and records to verify the accuracy of such statement. On written
request, Tenant shall promptly furnish to Landlord copies of all the
transaction documentation, all of which shall be certified by Tenant to be
complete, true and correct. Landlord’s receipt of Landlord’s Share shall not be
consent to any further assignment or subletting. The breach of Tenant’s
obligation under this Section 9.05(b) shall be a material default of
the Lease.


 


Section 9.06.          No Merger. No merger shall result from Tenant’s sublease of
the Property under this Article Nine, Tenant’s surrender of this Lease or
the termination of this Lease in any other


 


18

















 


manner.
In any such event, Landlord may terminate any or all subtenancies or
succeed to the interest of Tenant as sublandlord under any or all subtenancies.


 


Article Ten           DEFAULTS;
REMEDIES


 


Section 10.01.        Covenants and Conditions. Tenant’s performance of each of
Tenant’s obligations under this Lease is a condition as well as a covenant. Tenant’s
right to continue in possession of the Property is conditioned upon such
performance. Time is of the essence in the performance of all covenants and
conditions.


 


Section 10.02.        Defaults. Tenant shall be in material default under this
Lease:


 


(a)           If
Tenant abandons the Property or if Tenant’s vacation of the Property results in
the cancellation of any insurance described in Section 4.04;


 


(b)           If
Tenant fails to pay rent or any other charge when due (except that Tenant shall
be entitled to up to three (3) ten (10) day grace periods during the
Lease Term);


 


(c)           If
Tenant fails to perform any of Tenant’s non-monetary obligations under
this Lease for a period of thirty (30) days after written notice from Landlord;
provided that if more than thirty (30) days are required to complete such
performance, Tenant shall not be in default if Tenant commences such
performance within the thirty (30)-day period and thereafter diligently pursues
its completion. The notice required by this Paragraph is intended to satisfy
any and all notice requirements imposed by law on Landlord and is not in
addition to any such requirement.


 


(d)           (i) If
Tenant makes a general assignment or general arrangement for the benefit of
creditors; (ii) if a petition for adjudication of bankruptcy or for
reorganization or rearrangement is filed by or against Tenant and is not
dismissed within thirty (30) days; (iii) if a trustee or receiver is
appointed to take possession of substantially all of Tenant’s assets located at
the Property or of Tenant’s interest in this Lease and possession is not
restored to Tenant within thirty (30) days; or (iv) if substantially all
of Tenant’s assets located at the Property or of Tenant’s interest in this
Lease is subjected to attachment, execution or other judicial seizure which is
not discharged within thirty (30) days. If a court of competent jurisdiction
determines that any of the acts described in this subparagraph (d) is
not a default under this Lease, and a trustee is appointed to take possession
(or if Tenant remains a debtor in possession) and such trustee or Tenant
transfers Tenant’s interest hereunder, then Landlord shall receive, as
Additional Rent, the excess, if any, of the rent (or any other consideration)
paid in connection with such assignment or sublease over the rent payable by
Tenant under this Lease.


 


(e)           If
any guarantor of the Lease revokes or otherwise terminates, or purports to
revoke or otherwise terminate, any guaranty of all or any portion of Tenant’s
obligations under the Lease. Unless otherwise expressly provided, no guaranty of
the Lease is revocable.


 


Section 10.03.        Remedies. On the occurrence of any material default by
Tenant, Landlord may, at any time thereafter, with or without notice or demand
and without limiting Landlord in the exercise of any right or remedy which Landlord
may have:


 


19

















 


(a)           Terminate
Tenant’s right to possession of the Property by any lawful means, in which case
this Lease shall terminate and Tenant shall immediately surrender possession of
the Property to Landlord. In such event, Landlord shall be entitled to recover
from Tenant all damages incurred by Landlord by reason of Tenant’s default,
including (i) the worth, as defined in Section 10.03(a)(iii) below,
at the time of the award of the unpaid Base Rent, Additional Rent and other
charges which Landlord had earned at the time of the termination; (ii) the
worth at the time of the award of the amount by which the unpaid Base Rent,
Additional Rent and other charges which Landlord would have earned after termination
until the time of the award exceeds the amount of such rental loss that Tenant
proves Landlord could have reasonably avoided by mitigation; (iii) the
worth at the time of the award of the amount by which the unpaid Base Rent, and
other charges which Tenant would have paid for the balance of the Lease Term
after the time of award exceeds the amount of such rental loss that Tenant
proves Landlord could have reasonably avoided by mitigation; and (iv) any
other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform its obligations under the Lease or
which in the ordinary course of things would be likely to result therefrom,
including, but not limited to, any costs or expenses Landlord incurs in maintaining
or preserving the Property after such default, the cost of recovering
possession of the Property, expenses of reletting, including necessary
renovation or alteration of the Property, Landlord’s reasonable attorneys’ fees
incurred in connection therewith, and any real estate commission paid or
payable. As used in subparts (i) and (ii) above, the “worth at the
time of the award” is computed by allowing interest on unpaid amounts at the
rate of fifteen percent (15%) per annum, or such lesser amount as may then
be the maximum lawful rate. As used in subpart (iii) above, the “worth
at the time of the award” is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of the
award, plus one percent (1%). If Tenant has abandoned the Property, Landlord
shall have the option of (i) retaking possession of the Property and
recovering from Tenant the amount specified in this Section 10.03(a), or (ii) proceeding
under Section 10.03(b). As used in subparts (i) – (iii) above
and Section 10.05 below, “award” is the judgment which may be awarded
to Landlord by a court of competent jurisdiction;


 


(b)           Maintain
Tenant’s right to possession, in which case this Lease shall continue in effect
whether or not Tenant has abandoned the Property. In such event, Landlord shall
be entitled to enforce all of Landlord’s rights and remedies under this Lease,
including the right to recover the rent as it becomes due;


 


(c)           Pursue
any other remedy now or hereafter available to Landlord under the laws or
judicial decisions of the state in which the Property is located.


 


Section 10.04.        Intentionally
deleted


 


Section 10.05.        Automatic Termination. Notwithstanding any other term or
provision hereof to the contrary, the Lease shall terminate on the occurrence
of any act which affirms the Landlord’s intention to terminate the Lease as
provided in Section 10.03(a) hereof, including the filing of an
unlawful detainer action against Tenant. On such termination, Landlord’s
damages for default if awarded, shall include all costs and fees, including
reasonable attorneys’ fees that Landlord incurs in connection with the filing,
commencement, pursuing and/or defending of any action in any bankruptcy court
or other court with respect to the Lease; the obtaining of relief from any


 


20

















 


stay
in bankruptcy restraining any action to evict Tenant; or the pursuing of any
action with respect to Landlord’s right to possession of the Property. All such
damages suffered (apart from Base Rent and other rent payable hereunder)
shall constitute pecuniary damages which must be reimbursed to Landlord prior
to assumption of the Lease by Tenant or any successor to Tenant in any
bankruptcy or other proceeding.


 


Section 10.06.        Cumulative Remedies. Landlord’s exercise of any right or
remedy shall not prevent it from exercising any other right or remedy.


 


Article Eleven      PROTECTION
OF LENDERS.


 


Section 11.01.        Subordination. Landlord shall have the right to subordinate
this Lease to any ground lease, deed of trust or mortgage encumbering the
Property, any advances made on the security thereof and any renewals,
modifications, consolidations, replacements or extensions thereof, whenever
made or recorded. Tenant shall cooperate with Landlord and any lender which is
acquiring a security interest in the Property or the Lease. Tenant shall
execute such further documents and assurances as such lender may require,
provided that Tenant’s obligations under this Lease shall not be increased in
any material way (the performance of ministerial acts shall not be deemed
material), and Tenant shall not be deprived of its rights under this Lease. Tenant’s
right to quiet possession of the Property during the Lease Term shall not be
disturbed if Tenant pays the rent and performs all of Tenant’s obligations
under this Lease and is not otherwise in default. If any ground lessor,
beneficiary or mortgagee elects to have this Lease prior to the lien of its
ground lease, deed of trust or mortgage and gives written notice thereof to
Tenant, this Lease shall be deemed prior to such ground lease, deed of trust or
mortgage whether this Lease is dated prior or subsequent to the date of said
ground lease, deed of trust or mortgage or the date of recording thereof.


 


Section 11.02.        Attornment. If Landlord’s interest in the Property is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or
purchaser at a foreclosure sale, Tenant shall attorn to the transferee or
successor to Landlord’s interest in the Property and recognize such transferee
or successor as Landlord under this Lease. Tenant waives the protection of any
statute or rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Property upon the transfer
of Landlord’s interest.


 


Section 11.03.        Signing of Documents. Tenant shall sign and deliver any
instrument or documents necessary or appropriate to evidence any such
attornment or subordination or agreement to do so. Notwithstanding anything
contained herein to the contrary, if Tenant fails to sign and deliver such
instrument or documents within seven (10) days after receipt of written
request for such from Landlord, such failure shall constitute a material
default under this Lease, subject only to one (1) three (3) day cure
period after receipt of notice from Landlord.


 


Section 11.04.        Estoppel Certificates.


 


(a)           Upon
Landlord’s written request, Tenant shall execute, acknowledge and deliver to
Landlord a written statement certifying: 
(i) that none of the terms or provisions of this Lease have been
changed (or if they have been changed, stating how they have been changed); (ii) that
this Lease has not been cancelled or terminated; (iii) the last day of
payment of the Base Rent


 


21

















 


and
other charges and the time period covered by such payments; (iv) that
Landlord is not in default under this Lease (or, if Landlord is claimed to be
in default, stating why); and (v) such other representations or
information with respect to Tenant or the Lease as Landlord may reasonably
request or which any prospective purchaser or encumbrancer of the Property may require.
Tenant shall deliver such statement to Landlord within ten (10) days after
Landlord’s request. Landlord may give any such statement by Tenant to any
prospective purchaser or encumbrancer of the Property. Such purchaser or
encumbrancer may rely conclusively upon such statement as true and
correct.


 


(b)           If
Tenant does not deliver such statement to Landlord within such ten (10) day
period, Landlord, and any prospective purchaser or encumbrancer, may conclusively
presume and rely upon the following facts: 
(i) that the terms and provisions of this Lease have not been
changed except as otherwise represented by Landlord; (ii) that this Lease
has not been cancelled or terminated except as otherwise represented by
Landlord; (iii) that not more than one month’s Base Rent or other charges
have been paid in advance; and (iv) that Landlord is not in default under
the Lease. In such event, Tenant shall be estopped from denying the truth of
such facts.


 


Section 11.05.        Tenant’s Financial Condition. Within ten (10) days
after written request from Landlord, Tenant shall deliver to Landlord its most
recent quarterly report prepared in such financial statements as Landlord
reasonably requires to verify that Tenant is in compliance within the Liquidity
Covenant and to verify the net worth of Tenant, and such financial statements
as reasonably requested by Landlord to verify the net worth of any assignee,
subtenant, or guarantor of Tenant. In addition, Tenant shall deliver to any
lender designated by Landlord Tenant’s most recent quarterly report to
facilitate the financing or refinancing of the Property. Tenant represents and
warrants to Landlord that each such financial statement of Tenant provided to
Landlord or Landlord’s lender will be, to the best of Tenant’s actual
knowledge, a true and accurate statement as of the date of such statement and
prepared in accordance with GAAP. All financial statements shall be
confidential and shall be used only for the purposes set forth in this Lease.


 


Article Twelve      LEGAL
COSTS


 


Section 12.01.        Legal Proceedings. If Tenant or Landlord shall be in breach
or default under this Lease, such party (the “Defaulting Party”) shall
reimburse the other party (the “Nondefaulting Party”) upon demand for any costs
or expenses that the Nondefaulting Party incurs in connection with any breach
or default of the Defaulting Party under this Lease, if suit is commenced and
judgment enters against the Nondefaulting Party. Furthermore, if any action for
breach of or to enforce the provisions of this Lease is commenced, the court in
such action shall award to the party in whose favor a judgment is entered, a
reasonable sum as attorneys’ fees and costs. The losing party in such action
shall pay such attorneys’ fees and costs. Tenant shall also indemnify Landlord
against and hold Landlord harmless from all costs, expenses, demands and
liability Landlord may incur if Landlord becomes or is made a party to any
claim or action (a) instituted by Tenant against any third party, or by
any third party against Tenant, or by or against any person holding any
interest under or using the Property by license of or agreement with Tenant; (b) for
foreclosure of any lien for labor or material furnished to or for Tenant or
such other person; (c) otherwise arising out of or resulting from any act
or transaction of Tenant or such other person; or (d) necessary to protect
Landlord’s interest under this Lease in a bankruptcy


 


22

















 


proceeding,
or other proceeding under Title 11 of the United States Code, as amended. Tenant
shall defend Landlord against any such claim or action at Tenant’s expense with
counsel reasonably acceptable to Landlord or, at Landlord’s election, Tenant
shall reimburse landlord for any legal fees or costs Landlord incurs in any
such claim or action.


 


Section 12.02.        Landlord’s Consent. Tenant shall pay Landlord’s reasonable
attorneys’ fees incurred in connection with Tenant’s request for Landlord’s
consent under Article Nine (Assignment and Subletting), or in connection
with any other act which Tenant proposes to do and which requires Landlord’s
consent.


 


Article Thirteen  MISCELLANEOUS
PROVISIONS


 


Section 13.01.        Non-Discrimination. Tenant promises, and it is a condition
to the continuance of this Lease, that there will be no discrimination against,
or segregation of, any person or group of persons on the basis of race, color,
sex, creed, national origin or ancestry in the leasing, subleasing,
transferring, occupancy, tenure or use of the Property or any portion thereof.


 


Section 13.02.        Landlord’s Liability; Certain Duties.


 


(a)           As
used in this Lease, the term “Landlord” means only the current owner or owners
of the fee title to the Property or the leasehold estate under a ground lease
of the Property at the time in question. Each Landlord is obligated to perform the
obligations of Landlord under this Lease only during the time such Landlord
owns such interest or title. Any Landlord who transfers its title or interest
is relieved of all liability with respect to the obligations of Landlord under
this Lease to be performed on or after the date of transfer. However, each
Landlord shall deliver to its transferee all funds that Tenant previously paid
if such funds have not yet been applied under the terms of this Lease.


 


(b)           Tenant
shall give written notice of any failure by Landlord to perform any of its
obligations under this Lease to Landlord and to any ground lessor, mortgagee or
beneficiary under any deed of trust encumbering the Property whose name and
address have been furnished to Tenant in writing. Landlord shall not be in
default under this Lease unless Landlord (or such ground lessor, mortgagee or
beneficiary) fails to cure such non-performance within thirty (30) days after
receipt of Tenant’s notice. However, if such non-performance reasonably
requires more than thirty (30) days to cure, Landlord shall not be in default
if such cure is commenced within such thirty (30) day period and
thereafter diligently pursued to completion.


 


(c)           Notwithstanding
any term or provision herein to the contrary, the liability of Landlord for the
performance of its duties and obligations under this Lease is limited to
Landlord’s interest in the Property, and neither the Landlord nor its partners,
shareholders, officers or other principals shall have any personal liability
under this Lease.


 


Section 13.03.        Severability. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is
illegal or unenforceable shall not cancel or invalidate the remainder of such
provision or this Lease, which shall remain in full force and effect.


 


23

















 


Section 13.04.        Interpretation. The captions of the Articles or Sections of
this Lease are to assist the parties in reading this Lease and are not a part of
the terms or provisions of this Lease. Whenever required by the context of this
Lease, the singular shall include the plural and the plural shall include the
singular. The masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conduct, acts or omissions of Tenant,
the term “Tenant” shall include Tenant’s agents, employees, contractors,
invitees, successors or others using the Property with Tenant’s expressed or
implied permission.


 


Section 13.05.        Incorporation of Prior Agreements; Modifications. This Lease
is the only agreement between the parties pertaining to the lease of the
Property and no other agreements are effective. All amendments to this Lease
shall be in writing and signed by all parties. Any other attempted amendment
shall be void.


 


Section 13.06.        Notices. All notices required or permitted under this Lease
shall be in writing and shall be personally delivered or sent by certified
mail, return receipt requested, postage prepaid. Notices to Tenant shall be
delivered to the address specified in Section 1.03 above, except that upon
Tenant’s taking possession of the Property, the Property shall be Tenant’s
address for notice purposes. Notices to Landlord shall be delivered to the
address specified in Section 1.02 above. All notices shall be effective
upon delivery. Either party may change its notice address upon written
notice to the other party.


 


Section 13.07.        Waivers. All waivers must be in writing and signed by the
waiving party. Landlord’s failure to enforce any provision of this Lease or its
acceptance of rent shall not be a waiver and shall not prevent Landlord from
enforcing that provision or any other provision of this Lease in the future. No
statement on a payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without notice to
Tenant, negotiate such check without being bound to the conditions of such
statement.


 


Section 13.08.        No Recordation. Tenant shall not record this Lease without
prior written consent from Landlord. However, either Landlord or Tenant may require
that a “Short Form” memorandum of this Lease executed by both parties be
recorded. The party requiring such recording shall pay all transfer taxes and
recording fees.


 


Section 13.09.        Binding Effect; Choice of Law. This Lease binds any party
who legally acquires any rights or interest in this Lease from Landlord or
Tenant. However, Landlord shall have no obligation to Tenant’s successor unless
the rights or interests of Tenant’s successor are acquired in accordance with
the terms of this Lease. The laws of the state in which the Property is located
shall govern this Lease.


 


Section 13.10.        Corporate Authority; Partnership Authority.


 


(a)           If
Tenant is a corporation, each person signing this Lease on behalf of Tenant
represents and warrants that he has full authority to do so and that this Lease
binds the corporation. Within thirty (30) days after this Lease is signed,
Tenant shall deliver to Landlord a certified copy of a resolution of Tenant’s
Board of Directors authorizing the execution of this Lease or other evidence of
such authority reasonably acceptable to Landlord. If Tenant is a partnership,
each person or entity signing this Lease for Tenant represents and warrants
that he or it is a general


 


24

















 


partner
of the partnership, that he or it has full authority to sign for the
partnership and that this Lease binds the partnership and all general partners
of the partnership. Tenant shall give written notice to Landlord of any general
partner’s withdrawal or addition. Within thirty (30) days after this Lease is
signed, Tenant shall deliver to Landlord a copy of Tenant’s recorded statement
of partnership or certificate of limited partnership.


 


(b)           If
Landlord is a corporation, each person signing this Lease on behalf of Landlord
represents and warrants that he has full authority to do so and that this Lease
binds the corporation. Within thirty (30) days after this Lease is signed,
Landlord shall deliver to Tenant a certified copy of a resolution of Landlord’s
Board of Directors authorizing the execution of this Lease or other evidence of
such authority reasonably acceptable to Tenant. If Landlord is a partnership,
each person or entity signing this Lease for Landlord represents and warrants
that he or it is a general partner of the partnership, that he or it has full
authority to sign for the partnership and that this Lease binds the partnership
and all general partners of the partnership. Within thirty (30) days after this
Lease is signed, Landlord shall deliver to Tenant a copy of Landlord’s recorded
statement of partnership or certificate of limited partnership.


 


Section 13.11.        Joint and Several Liability. All parties signing this Lease
as Tenant shall be jointly and severally liable for all obligations of Tenant.


 


Section 13.12.        Force Majeure. See Addendum Section D.


 


Section 13.13.        Execution of Lease. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the
counterparts shall constitute a single binding instrument. Landlord’s delivery
of this Lease to Tenant shall not be deemed to be an offer to lease and shall
not be binding upon either party until executed and delivered by both parties.


 


Section 13.14.        Survival. All representations and warranties of Landlord and
Tenant shall survive the termination of this Lease.


 


Section 13.15.        Counterparts. This Lease may be executed in any number
of counterparts all of which taken together shall constitute one and the same
instrument.


 


Article Fourteen  BROKERS


 


Section 14.01.        Broker’s Fee. When this Lease is signed by and delivered to
both Landlord and Tenant, Landlord shall pay a real estate commission to
Landlord’s Broker named in Section 1.08 above, if any, as provided in the
written agreement between Landlord and Landlord’s Broker. If a Tenant’s Broker
is named in Section 1.08 above, Landlord’s Broker shall pay an appropriate
portion of its commission to Tenant’s Broker if so provided in any agreement
between Landlord’s Broker and Tenant’s Broker. Nothing contained in this Lease
shall impose any obligation on Landlord to pay a commission or fee to any party
other than Landlord’s Broker.


 


Section 14.02.        Agency Disclosure; No Other Brokers. Landlord and Tenant
each represent and warrant that they have dealt with no other real estate
broker(s) in connection with this transaction except: Fuller and Company, who
represents Landlord. Tenant agrees to indemnify and hold harmless Landlord from
any person claiming a brokerage commission from the representation of Tenant
with regard to this Lease.


 


25

















 


Article Fifteen     COMPLIANCE


 


The parties hereto agree
to comply with all applicable federal, state and local laws, regulations,
codes, ordinances and administrative orders having jurisdiction over the
parties, property or the subject matter of this Agreement, including, but not
limited to, the 1964 Civil Rights Act and all amendments thereto, the Foreign
Investment in Real Property Tax Act, the Comprehensive Environmental Response Compensation
and Liability Act, and The Americans With Disabilities Act.


 


ADDITIONAL PROVISIONS MAY BE
SET FORTH IN A RIDER OR RIDERS ATTACHED HERETO.


 


Landlord and Tenant have
signed this Lease at the place and on the dates specified adjacent to their
signatures below and have initialed all Riders which are attached to or
incorporated by reference in this Lease.


 


[Remainder
of Page Intentionally Left Blank]


 


 


[Signatures Appear On Next Page]


 


26

















 


SIGNATURE PAGE


 


	
   

  	
  “LANDLORD”

  
	
   

  	
   

  
	
  Signed on February 8, 2006

  	
  YORK COUNTY, LLC, a California
  limited

  
	
  at Sacramento, California

  	
  liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Panattoni Investments, LLC, a California

  
	
   

  	
   

  	
  limited liability company, Managing

  
	
   

  	
   

  	
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Carl D. Panattoni 

  	
   

  
	
   

  	
   

  	
  Carl D. Panattoni, Trustee of the

  
	
   

  	
   

  	
  Panattoni Living Trust, Dated

  
	
   

  	
   

  	
  April 8, 1998, Managing Member 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  “TENANT”

  
	
   

  	
   

  
	
  Signed on February 8, 2006

  	
  CORGENIX MEDICAL CORPORATION,

  
	
  at Westminster, Colorado

  	
  a Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Douglas T. Simpson

  	
   

  
	
   

  	
  Name: 

  	
  Douglas T. Simpson

  
	
   

  	
  President

  
	
   

  	
  Corgenix Medical Corporation

  
							



 


27

















 


Exhibit A


 


[Property
Description]


 


Situated in the
City and County of Broomfield, State of Colorado, more particularly described
as follows:


 


Lot           ,
Broomfield Corporate Center, City and County of Broomfield, State of Colorado.


 


28

















 


Exhibit B


 


[List of Permitted Hazardous Materials]


 


Regulated Substances Listed in CFR1910.1000 Table Z-A


 


	
  Chemical 

  Name

  	
   

  	
  Specific 

  Hazard

  	
   

  	
  Average Amt

  On-Site/Mo

  
	
  Acetic Acid

  	
   

  	
  Fumes

  	
   

  	
  600 mL

  
	
  Acetone

  	
   

  	
  Flammable

  	
   

  	
  1 L

  
	
  Boric Acid

  	
   

  	
  Dust

  	
   

  	
  1 Kg

  
	
  Cellulose

  	
   

  	
  Dust

  	
   

  	
  200 g

  
	
  Chloroform

  	
   

  	
  Flammable

  	
   

  	
  1 L

  
	
  Cupric Sulfate,
  Pentahydrate

  	
   

  	
  Environmental

  	
   

  	
  500 g

  
	
  Diethanolamine

  	
   

  	
  Flammable

  	
   

  	
  250 g

  
	
  Ethyl Alcohol

  	
   

  	
  Flammable

  	
   

  	
  14 L

  
	
  Glycerol

  	
   

  	
  Fumes

  	
   

  	
  12 L

  
	
  Guanidine HCI

  	
   

  	
  Neurotoxin

  	
   

  	
  4 Kg

  
	
  Hydrochloric Acid

  	
   

  	
  Flammable

  	
   

  	
  6 L

  
	
  Isopropyl Alcohol

  	
   

  	
  Flammable

  	
   

  	
  50 L

  
	
  Manganese CI,
  Tetrahydrate

  	
   

  	
  Dust

  	
   

  	
  500 g

  
	
  Methyl Alcohol

  	
   

  	
  Flammable

  	
   

  	
  8 L

  
	
  n,n-Dimethylformide

  	
   

  	
  Flammable

  	
   

  	
  500 mL

  
	
  Para-Methoxyphenol
  (pMP)

  	
   

  	
  Fumes

  	
   

  	
  100 g

  
	
  Perchloric Acid

  	
   

  	
  Explosive

  	
   

  	
  2 L

  
	
  Polyacrylamide

  	
   

  	
  Carcinogen

  	
   

  	
  5 g

  
	
  Sodium Azide

  	
   

  	
  Explosive

  	
   

  	
  3 Kg

  
	
  Sodium Hydroxide

  	
   

  	
  Corrosive

  	
   

  	
  1 Kg

  
	
  Sucrose

  	
   

  	
  Fumes

  	
   

  	
  20 Kg

  
	
  Sulfuric Acid

  	
   

  	
  Acid

  	
   

  	
  6 L

  
	
  Thimerosal (Mg
  Compound)

  	
   

  	
  Environmental

  	
   

  	
  200 g

  
	
  Zinc Sulfate

  	
   

  	
  Dust

  	
   

  	
  100 g

  



 


NOTE:


1)  Above quantities may be
increased due to future production needs.


2)  Various forms of human bodily
fluids are used in the production of this product and in the development of
future products. These products are classified as Biohazard Material.


 


29

















 


ADDENDUM TO LEASE


 


Dated February 8, 2006


 


By and Between


 


YORK COUNTY, LLC, a California limited liability company, “LANDLORD”

and

CORGENIX MEDICAL CORPORATION, a Nevada corporation, “TENANT”


 


1.             Except
as otherwise set forth herein, the terms and conditions of the Lease shall
remain in full force and effect.


 


2.             To
the extent of any inconsistencies or contradictions between the terms and
conditions of the Lease and this Addendum, the terms and conditions contained
herein shall supersede and take precedence over those contained in this Lease.


 


Section A. TENANT CREDIT. Tenant
represents and warrants to Landlord that Tenant is not represented by a broker
and Tenant does not owe any broker a commission with regard to this Lease. In
reliance of this representation and warranty of Tenant, Landlord agrees to pay
to Tenant as an additional Tenant Improvement Allowance (as defined in the Work
Letter set forth in Exhibit A to this Addendum) the amount of four percent
(4%) of the total Base Rent for the Lease Term to be used by Tenant as an
additional Tenant Improvement Allowance subject to the terms and amortization
of the Tenant Improvement Allowance as set forth in Section 2 of the Work
Letter.


 


Section B. RIGHT OF FIRST REFUSAL TO EXPAND.


 


(a)           Tenant
shall have a one time right of first refusal to lease premises being available
for lease contiguous to the Property in the Building (“RFR Property”).


 


(b)           If
Landlord receives a bona fide written proposal (the “Lease Proposal”) from a
third party for the lease of RFR Property that Landlord is willing to accept,
then Landlord shall give written notice thereof to Tenant (“Landlord’s
Expansion Property Notice”). Landlord’s Expansion Property Notice shall contain
the material provisions of the Lease Proposal and identify the offering party. Tenant
shall within ten (10) business days after receipt from Landlord notify
Landlord in writing whether or not Tenant elects to lease the RFR Property on
the same terms and conditions as the Lease Proposal. If Tenant fails to so
notify the Landlord in writing or notifies Landlord in writing that Tenant
elects not to lease the RFR Property, the terms of this subsection (b) shall
be waived by Tenant and Landlord shall be free to lease the RFR Property to the
offering party on the same terms and conditions as the Lease Proposal. If
Tenant does not so elect to lease the RFR Property after receiving Landlord’s
Expansion Property Notice and the RFR Property becomes available for lease
again any time during the term of this Lease or any extension thereof, then
Tenant shall not have any further such first refusal rights to lease said premises.


 


1

















 


(c)           Tenant’s
rights in this Section B shall be in effect during the term of this Lease
or any extension thereof subject to Tenant not being in default of this Lease
at the time of Tenant’s exercise of its right of first refusal and no event has
occurred and is continuing which with the giving of notice or the passage of
time, or both, would constitute a default under this Lease.


 


Section C. TENANT’S RIGHT TO RENEW.


 


(a)           Extension
Periods. The original Lease Term may be extended, at the option of Tenant,
for two (2) periods of five (5) years each, potentially for a total
of ten (10) years, each such period herein sometimes referred to as the “Extension Period”, provided that (i), prior to expiration of
the original Lease Term, Tenant provides the Landlord with no less than nine (9) months
prior written notice for each said Extension Period, and (ii)  Tenant is
not in material default of the Lease, at the time Tenant submits notice to
extend the original Lease Term or at the commencement of the Extension Period,
beyond any applicable notice and grace periods. The Extension Period shall be
on the same terms, covenants and conditions of this Lease, except for the
payment of Base Rent which shall be as set forth in subsection (c) below.
Tenant shall not be permitted to extend this Lease beyond the second Extension
Period. If Tenant fails to exercise an extension, then the Lease shall expire
at the end of the then current term and Tenant shall have no further right to
extend the Lease Term.


 


(b)           In the
event Tenant exercises an extension option, then upon Landlord’s request,
Tenant shall execute and deliver to Landlord a Lease amendment within thirty
(30) days after Tenant’s receipt of such request setting forth the Base Rent
for the option period and the commencement and expiration of the upcoming
Extension Period.


 


(c)           The Rent
during the Extension Period shall be at one hundred percent (100%) of the then
prevailing market rental rate for the Property, but in no event less than the
Base Rent for the last month of the then current Lease Term, as may be
extended pursuant to this section. The Rent shall then increase annually by
three percent (3%) per year for the remainder of the applicable Extension
Period. The parties will attempt in good faith to arrive at the fair market
rental rate. In the event the parties cannot agree on the fair market rental
rate within thirty (30) days of Tenant’s exercise of the option to extend, the
parties shall each designate an MAI appraiser with a minimum of ten (10) years
experience in the Broomfield region of Colorado within ten (10) days of
the date the parties determine they cannot agree on a fair market rental rate. The
appraisers so selected shall mutually agree on a third MAI appraiser with the
above qualifications. That appraiser shall appraise the Property and determine
the fair market rent rate for the five-year (5-year) Extension Period taking
into consideration the value of the Property, the rental market in the Broomfield
region, rental for buildings of comparable quality and other relevant factors. If
the appraisers cannot agree on the third MAI appraiser, then upon application,
the Presiding Judge for the Superior Court for Broomfield County covering the
City of Broomfield, Colorado shall make such selection upon application of
either party.


 


2

















 


Section D. FORCE MAJEURE.


 


If Landlord or
Tenant is delayed in the completion of its obligations (“Force Majeure”) under
this Lease and Addendum by the act, neglect or default of the other party, or
by acts of God, including but not limited to flood, earthquake, tornado or the
like, wind or other adverse weather including rain delays, governmental
entities, lockouts, unavoidable casualties, war, acts of terrorism, civil
commotion, fire or other casualty, or any similar matters, both foreseeable and
unforeseeable, beyond such delayed party’s control, or by delay or refusal by
local governmental authorities in the issuance of any building or other
required permit or approval, then the time herein fixed for completion of such
obligations shall be extended by the number of days that such party has thus
been delayed. Landlord or Tenant, as the case may be, shall provide the
other party with written notice of any delay incurred covered by this Section D
within ten (10) days after commencement of such delay; provided, however,
that only one notice is necessary in the case of a continuing delay.


 


Section E. PERMITTED USES.


 


Tenant shall be responsible
at its sole cost and expense for obtaining all governmental approvals, permits,
entitlements, zoning and land use (collectively, the “Approvals”) for Tenant’s
Permitted Uses as set forth in Section 1.06 of the Lease. Landlord shall
reasonably cooperate with Tenant in order for Tenant to obtain such Approvals
from the local governmental authorities.


 


Section F. IMPROVEMENTS REQUIRED BY CODE OR
LAW.


 


In accordance with
the provisions of this Lease, in the event the City, County, responsible Fire
Department, or any other governmental agency or entity requires additional
improvements to the building due to Tenant’s proposed use of said building,
such improvements and any and all related costs shall be the sole cost and
expense of the Tenant. Landlord represents and warrants to Tenant that, as of
the date of execution of this Lease, the Property and Project are in compliance
and conformity with all applicable laws, including the American with
Disabilities Act.


 


Section G. SIGNS.


 


Tenant agrees to
adhere to the provisions of any sign program approved by or required by any
public entity or agency having control of such matters or as set forth in any
CC&R’s on the Property. Tenant shall be allocated space on the Property’s
directory signage and on the entrance to the Property. Any monument or building
signage shall be paid through the tenant improvement costs for the Property.


 


Section H. TENANT IMPROVEMENTS.


 


The construction
of the tenant improvements (“Tenant Improvements”) shall be accomplished, and
the cost of such construction will be paid in accordance, with a separate work
letter (“Work Letter”) between Landlord and Tenant attached hereto as Exhibit ”A”
to this Addendum. Except as expressly provided in the Lease, the Addendum, or
in the Work Letter, if any, Tenant acknowledges that Landlord has not
undertaken to perform any modification, alteration or improvement to the
Property.


 


3

















 


SIGNATURE
PAGE


 


Landlord and
Tenant have signed this Addendum to Lease on the dates specified adjacent to
their signatures.


 


	
   

  	
  “LANDLORD”

  
	
   

  	
   

  
	
  Signed on February 8, 2006

  	
  YORK COUNTY, LLC, a California
  limited

  
	
  at Sacramento, California

  	
  liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Panattoni Investments, LLC, a California

  
	
   

  	
   

  	
  limited liability company, Managing

  
	
   

  	
   

  	
  Member 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   /s/ Carl D. Panattoni

  	
   

  
	
   

  	
   

  	
  Carl D. Panattoni, Trustee of the

  
	
   

  	
   

  	
  Panattoni Living Trust, Dated

  
	
   

  	
   

  	
  April 8, 1998, Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “TENANT”

  
	
   

  	
   

  
	
  Signed on February 8, 2006

  	
  CORGENIX MEDICAL CORPORATION,

  
	
  at Westminster, Colorado

  	
  a Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   /s/ Douglas T. Simpson

  	
   

  
	
   

  	
  Name: Douglas T. Simpson

  
	
   

  	
  President

  
	
   

  	
  Corgenix Medical Corporation

  
						



 


4

















 


EXHIBIT ”A”


to
Addendum


 


 


WORK LETTER


 


1.             Tenant
Improvements. Prior to the Commencement Date, Landlord shall (or if
Landlord is not the contractor, then the chosen contractor, the “Contractor,”
shall) substantially complete or cause “Substantial Completion” (defined in
Paragraph 11 below) of the work (herein called the “Work”) necessary to
furnish and install within the Property in accordance with the “Final Tenant
Plans” (defined in Paragraph 6 below) the Tenant Improvements described in
Paragraph 1(A) as follows:


 


(A)          Tenant
Improvements and Allowances (herein sometimes referred to as “Building Standard”),
which shall be constructed or installed by Landlord at its sole cost and
expense based on the Tenant Improvement Allowance.


 


2.             Tenant
Improvement Allowance. Landlord agrees to provide Tenant with an
improvement allowance of Thirty Two and No/100 Dollars ($32.00) per square foot
or approximately Eight Hundred Nineteen Thousand Two Hundred and No/100 Dollars
($819,200.00), calculated based on 25,600 square feet portion of the Property (“Tenant
Improvement Allowance”), and Tenant may use this allowance to build-out
all or part of the Property and may expend all of the allowance, even
to the extent of exceeding Building Standard improvements. The Tenant
Improvement Allowance is to be used to construct the improvements as set forth
in the Final Tenant Plans and shall be reimbursed to Landlord amortized over
the Lease Term as part of monthly Base Rent per the schedule of Base
Rent set forth in Section 1.12 of the Lease.


 


Those
improvements described in the Final Tenant Plans in excess or in addition to
the Tenant Improvements, such additional improvements being herein called the (“Above
Standard Improvements”), are to be paid for by Tenant.


 


3.             Completion
of Improvements. Subject to the terms of the Lease and this Tenant Work
Letter and any “Tenant Delay” (as defined herein),
Landlord shall use commercially reasonable and diligent efforts to cause the “Contractor” (defined in Section 8 of this Tenant Work
Letter) to complete the construction and installation of the Tenant Improvements
on the Property in accordance with the terms of this Tenant Work Letter, in a
good and workman like manner using new materials, except where otherwise
provided in the final Tenant Plans.


 


4.             Appointment
of Construction Representatives.


 


(a)           By
Landlord. Landlord hereby appoints the following person as Landlord’s
representative (“Landlord’s
Representative”) to act for Landlord in all matters covered by this
Tenant Work Letter:  Bill Bullen
of Panattoni Development Company, LLC.


 


A-1

















 


(b)           By
Tenant. Tenant hereby appoints the following person as Tenant’s representative
(“Tenant’s
Representative”) to act for Tenant in all matters covered by this
Tenant Work Letter:  Taryn Reynolds.


 


(c)           Communications.
All communications with respect to the matters covered by this Tenant Work
Letter shall be made to Landlord’s Representative or Tenant’s Representative,
as the case may be. Either party may change its representative under
this Tenant Work Letter at any time by written notice to the other party.


 


5.             Architect.


 


(a)           An
architectural firm selected by Landlord and acceptable to Tenant (“Architect”), shall act as the architect with respect to the
design and construction of the Tenant Improvements. Landlord shall enter into a
contract with Architect for such services (the “Architect
Contract”). The parties acknowledge that                                                    is
an acceptable Architect.


 


6.             Improvement
Plans.


 


(a)           Landlord
and Tenant have each approved the preliminary outline specifications for the
Tenant Improvements (the “Preliminary Specifications”
as set forth in Exhibit ”A” attached hereto.


 


(b)           A
Space Plan based upon the Preliminary Specifications shall be prepared by
Landlord and shall include such other specifications of Tenant and sufficient
to convey the architectural design and layout of the Tenant Improvements for
the Property (the “Preliminary Tenant Plans”)
to include the location of walls and doors.


 


(c)           Final
Tenant Plans. Based on the Preliminary Tenant Plans approved by Landlord and
Tenant, Landlord shall cause the Architect, Engineer and/or other consultants
selected and retained by Landlord to prepare and deliver to Tenant final
architectural plans and drawings and complete engineering, mechanical,
fire/life safety, structural and electrical working drawings for all of the
Tenant Improvements (collectively, the “Tenant Working Drawings”).
Landlord shall cause the Tenant Working Drawings to incorporate such revisions
as may have been made by Tenant. The Tenant Working Drawings which shall
be approved by Landlord and Tenant are referred to herein as the “Final Tenant Plans.” 
The Preliminary Specifications, the Preliminary Plans, the Tenant
Working Drawings including warehouse layout, dock equipment locations,
warehouse electrical, office partition plan, office lighting plan, office
electrical plan, office mechanical plan, office finishes, office furniture
plans and the Final Tenant Plans are sometimes hereinafter referred to collectively
as the “Tenant Construction Drawings.”


 


(d)           Design
Problem; Tenant Changes. Tenant shall make no changes or modifications to the
Final Tenant Plans without the prior written consent of Landlord, which consent
may be withheld in Landlord’s sole discretion only if such change or
modification would result in any of the following (each a “Design
Problem”):  (i) directly
or indirectly delay “Substantial Completion,”
by more than five (5) days as that term is defined in Section 10
below, of the Tenant Improvements, unless Tenant agrees that any such delay
shall constitute a Tenant Delay (as defined below); (ii) increase the cost
of designing or constructing any of the Tenant Improvements above the cost of
the Tenant Improvements depicted in the Final Tenant Plans,


 


A-2

















 


unless
Tenant agrees to pay for such increased cost as if such increased cost were a
Change Order Cost (as defined below); (iii) be a quality lower than the
quality of the Tenant Improvements set forth in the Final or Preliminary Tenant
Plans; and/or (iv) violate any applicable laws, rules, regulations,
ordinances, directives, covenants, easements and restrictions of record, and
permits (collectively, “Applicable Law”).
Notwithstanding anything to the contrary set forth in this Tenant Work Letter,
in the event that Tenant shall request any changes or substitutions to the
Final Tenant Plans and such changes, differences and/or substitutions result in
increased costs of construction in excess of the costs of those Tenant
Improvements depicted on the Final Tenant Plans, then Tenant shall pay such
excess costs to Landlord.


 


(e)           Governmental
Approvals. Once the final Tenant Plans have been approved by Tenant and
Landlord, Landlord shall submit the Final Tenant Plans to the appropriate
governmental agencies for plan checking and the issuance of a building permit
for the Tenant Improvements. The Architect shall make any and all changes to
the Final Tenant Plans required by any applicable governmental entity,
including, without limitation, any non-material changes required by the County
of Broomfield, to obtain a building permit for the Tenant Improvements;
provided, however, Tenant shall be notified of such changes and have the option
to select alternative means of modifying said Final Tenant Plans, if other
options are available. Landlord shall be responsible for obtaining approval of
the Final Tenant Plans by all governmental agencies having jurisdiction,
including all necessary permits and the temporary and permanent Certificate of
Occupancy (or other required, equivalent approval from the local governmental
authority permitting occupancy of the Property). Tenant and Landlord shall
cooperate with each other in obtaining such approvals. Notwithstanding the foregoing,
Tenant shall be responsible for obtaining, at Tenant’s sole cost and expense,
all approvals required in connection with Tenant’s proposed product mix,
particular use of the Property or commodity class in order that Tenant may conduct
its business in the Property in accordance with the terms of the Lease, and the
cost of any changes required to any of the Construction or the Tenant
Improvements as a result of such product mix, use, and/or commodity class shall
be paid for by Tenant.


 


(f)            No
Representations. Notwithstanding anything to the contrary contained in the
Lease or herein, but without limiting any representations or warranties in the
Lease, Landlord’s participation in the preparation of the Tenant Construction
Drawings, the selection of the Architect, Engineers, consultants and
Contractor, the cost estimates for the Tenant Improvements and the construction
thereof shall not constitute any representation or warranty, express or
implied, that the Tenant Improvements, if built in accordance with the Final
Tenant Plans, will be suitable for Tenant’s intended purpose, and Landlord
specifically disclaims any such effect. Tenant acknowledges and agrees that the
Tenant Improvements are intended for use by Tenant and the specifications and
design requirements for such Tenant Improvements are not within the special
knowledge or experience of Landlord. Landlord’s sole obligation shall be to
arrange the construction of the Tenant Improvements in accordance with the
requirements of the Final Tenant Plans; and any additional costs or expenses
required for the modification thereof to more adequately meet Tenant’s use,
whether during or after Landlord’s construction thereof, shall be borne
entirely by Tenant except as otherwise provided in this Tenant Work Letter. Notwithstanding
the foregoing, Landlord agrees to assign to Tenant, on a non-exclusive basis,
the benefit of all construction warranties pertaining to the Tenant
Improvements for the Original Term and as set forth in Schedule I attached
hereto.


 


A-3

















 


7.             Change
Orders. If Tenant desires any change in the Final Tenant Plans relative to
the Tenant Improvements which is reasonable and practical, such changes may only
be requested by the delivery to Landlord by Tenant of a proposed written “Change Order” specifically setting forth in detail the
requested change and the reasons for such requested change. Landlord shall have
five (5) Business Days from the receipt of the proposed Change Order to
provide the following items:  (a) a
reasonable summary of any estimated increase in the cost caused by such change
(“Change Order Cost”) and (b) a
statement of the estimated number of days of any delay caused by such proposed
change (the “Change Order Delay”). Tenant shall
then have five (5) Business Days to approve
the Change Order Cost and the Change Order Delay. If Tenant approves these
items, Tenant shall pay to Landlord the Change Order Cost, if any, within
forty-five (45) days after Landlord’s invoice therefor, which shall be
accompanied by evidence of Landlord’s payment of such Change Order Cost. Landlord
shall, promptly upon Tenant’s approval of the Change Order Cost and Change
Order Delay, execute the Change Order and cause the appropriate changes to the
Final Tenant Plans to be made. If Tenant fails to respond to Landlord within
said five (5) Business Day period, the Change Order Cost and the Change
Order Delay shall be deemed disapproved by Tenant and Landlord shall have no
further obligation to perform any work set forth in the proposed Change
Order. The Change Order Cost shall include all reasonable actual out-of-pocket
costs associated with the Change Order, including, without limitation,
architectural fees, engineering fees and construction costs, as reasonably determined
by the Architect and the Contractor, respectively. The Change Order Delay shall
include all actual unavoidable delays caused by the Change Order, including,
without limitation, all design and construction delays, as reasonably
determined by the Architect and the Contractor, respectively.


 


8.             Selection
of Contractor. A contractor, under the supervision of and selected by
Landlord, with Tenant’s consent shall construct the Tenant Improvements (the “Contractor”). Landlord shall also approve and select all
subcontractors performing such work. The Contractor shall be Panattoni Construction Inc., a California corporation (“Panattoni Construction”). Landlord acknowledges that Tenant may designate
subcontractors to be added to the bid list for any portion of the work.


 


9.             Construction
of the Tenant Improvements. Landlord shall enter into a construction
contract with the Contractor on a form reasonably acceptable to Landlord (“Construction Contract”) for the construction and
installation of the Tenant Improvements in a good and workmanlike manner and in
accordance with the Final Tenant Plans and in compliance with all applicable
laws, ordinances, and regulations. During the progress of construction of the
Tenant Improvements during normal construction business hours and upon
reasonable, but not more than twenty four (24) hours prior notice,
Landlord will permit, and cause Landlord’s Contractor to permit, Tenant access
to the Property for the purpose of observing the construction of the Tenant
Improvements. Tenant hereby approves Landlord’s selection of Panattoni
Construction, as Landlord’s Contractor, without any competitive bidding of
general contractors.


 


10.           Payment
for Cost of the Tenant Improvements. Landlord shall pay the cost of
designing and constructing the Tenant Improvements as provided in the Final
Tenant Plans up to the amount of the Tenant Allowance; provided, however, any
increase in the cost of the Tenant Improvements above the costs of the Tenant
Improvements set forth in the Final Tenant Plans resulting from any changes or
substitutions by Tenant to any portion of the Final Tenant Plans


 


A-4

















 


(as
provided in Section 6(d) above), as a result of any Change Orders,
any Change Order Cost and Change Order Delay Expenses, any changes to any
portion of the Tenant Construction Drawings resulting from modifications
proposed by Tenant which are not consistent with any of the Tenant Construction
Drawings as permitted in Section 6(c) above, any costs resulting from
any Tenant Delays, and/or obtaining any of the governmental approvals Tenant is
required to obtain pursuant to Section 6(e)) or which are expressly stated
in any of the Tenant Construction Drawings as being at Tenant’s cost, shall be
paid for by Tenant within thirty (30) days after Landlord’s written request therefor, which request for payment shall
not be made until Landlord has incurred such costs as evidenced by an invoice
or progress billing from the Contractor. Notwithstanding anything to the contrary
herein, any cost of the Tenant Improvements in excess of the Tenant Allowance
shall be paid by Tenant within thirty (30) days of Landlord’s submission to
Tenant of invoices evidencing such excess costs.


 


11.           Substantial
Completion; Target Completion Date. Except as provided in this Section 11,
the Commencement Date shall be as set forth in Section 2.01 of the Lease
and Paragraph 1 of the Addendum. For
purposes of the Lease, “Substantial Completion”
of the Property shall occur upon the completion of the Tenant Improvements in
accordance with the Final Tenant Plans (as the same may be modified
pursuant to Section 6(e), the completion
of the Landlord Work and the issuance by the City of Broomfield of a
certificate of completion, Certificate of Occupancy or temporary certificate of
occupancy (or its equivalent) for the Landlord Work and the Tenant Work and
permitting occupancy of the Property and commencement of business operations
therein by Tenant, with the exception of any Punch List Items (as defined in Section 13
below) which do not materially impair the usability of the Property by Tenant,
provided, however, if Landlord delivers a temporary Certificate of Occupancy or
its equivalent, Substantial Completion shall not have occurred if Tenant is not
reasonably satisfied that the permanent Certificate of Occupancy or its
equivalent will be issued in due course. Landlord shall attempt to provide
Tenant with a Certificate of Occupancy on the anticipated Commencement Date. Landlord
shall, at its sole cost and expense, be responsible for the following:


 


(1)           the
development and completion of all architectural, engineering, and related
documents and plans necessary for the construction of the improvements on the
Property;


 


(2)           the
acquisition of all permits related to the construction of the Property
excluding any costs associated with the installation of any Property signage;


 


(3)           preparation
of all environmental studies required by law and necessary to ensure the
Property is free from hazardous substances; and


 


(4)           the
construction and delivery of the Property using the Tenant’s Construction
Drawings, the Construction Contract, site plan, and final construction
documents all of which shall be approved in writing by Landlord and Tenant
within the agreed upon time period(s).


 


Substantial
Completion of the Property means that the Property has been completed pursuant
to the Tenant’s Construction Drawings, compliance with applicable laws and
subject to Punchlist Items.


 


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12.           Tenant
Delays. As used herein, “Tenant Delays”
means any delay in the design or construction of the Tenant Improvements
resulting from, other than if resulting from Force Majeure (as defined in Section D
of the Addendum to Lease), any or all of the following:  (a) Tenant’s material
failure to timely perform any of its obligations pursuant to this Tenant
Work Letter, including any failure to complete, on or before the due date
therefor, any action item which is Tenant’s responsibility pursuant to this
Tenant Work Letter, including Tenant’s failure to grant approvals, disapprovals
and/or make payments within the time frames described herein, such as Tenant’s
failure to approve the Preliminary Specifications and Preliminary Tenant Plans
on or before                                       
or the Working Drawings on or before                                       ;
(b) Tenant’s requested modifications to any of the Final Tenant Plans; (c) Tenant’s
request for materials, finishes, or installations which are not readily
available, (d) any delay in any way whatsoever arising from Tenant’s right
to conduct “Inspections” under Section 13 below, (e) Change Order
Delays, or (f) any other act or failure to act by Tenant, Tenant’s
Representative, Tenant’s employees, agents, independent contractors,
consultants and/or any other person performing or required to perform services
on behalf of Tenant, including material
interference with Landlord, or Contractor or subcontractors, during the Early
Occupancy Period under Section 2.03 of the Lease and Paragraph 1
of the Addendum, which causes a delay in Substantial Completion.


 


13.           Tenant’s
Inspection Rights. Landlord shall schedule and attend periodic
progress meetings, walk-throughs and any other meetings with the Contractor and
Tenant to discuss the progress of the construction of the Tenant Improvements (“Meetings”). Landlord shall give Tenant at least two (2) business
days prior notice (written or telephonic) of all such Meetings. Tenant shall
designate in writing the person or persons appointed by Tenant to attend the
Meetings and such designated party shall be entitled to be present at and to
participate in the discussions during all Meetings; but Landlord may conduct
the Meetings even if Tenant’s appointees are not present as long as the
required notice was given. In addition to the foregoing and to Tenant’s early
entry rights as provided in Section 2.03 of the Lease and Paragraph 1 of the Addendum, Tenant or its agents shall
have the right at any and all reasonable times to conduct inspections, tests,
surveys and reports of work in progress (“Inspections”)
for the purpose of reviewing whether the Tenant Improvements are being
constructed in accordance with the Final Tenant Plans, as amended by any
approved Change Orders or other agreed upon changes. Tenant agrees to protect,
hold harmless and indemnify Landlord from all claims, demands, costs and
liabilities (including reasonable attorneys’ fees) arising from Tenant’s or
Tenant’s agents entry onto the Land for the purpose of conducting Inspections,
except those claims, demands, costs and liabilities resulting from the
negligence or willful misconduct of Landlord or its Contractor, their
employees, agents, subcontractors and licensees. Landlord and Tenant shall hold
project meetings at least once a week to discuss the status of the Work.


 


14.           Walk-Through
and Punch List. Upon Substantial Completion of the Tenant Improvements,
Tenant, Landlord, the Tenant’s Representative and the Contractor shall jointly
conduct a walk-through of the Tenant Improvements and shall jointly prepare a
punch list (“Punch List”) of items needing
additional work (“Punch List Items”);
provided, however, the Punch List shall be limited to items which are required
by the Construction Contract, the Tenant Construction Drawings, as modified
under this Tenant Work Letter, Change Orders and any other changes agreed to by
the parties, and the Punch List Items must be completed within sixty (60) days
of Substantial Completion or Tenant shall have the right to complete the
Punchlist


 


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Items,
after providing ten (10) days written notice to Landlord, and Landlord
shall reimburse Tenant for Tenant’s costs within thirty (30) days of receipt of
an invoice therefore.


 


15.           Miscellaneous
Construction Covenants.


 


(a)           Coordination
with Lease. Nothing herein contained shall be construed as (i) constituting
Tenant as Landlord’s agent for any purpose whatsoever, or (ii) a waiver by
Landlord or Tenant of any of the terms or provisions of the Lease.


 


(b)           Cooperation.
Landlord and Tenant agree to cooperate with one another and to cause their
respective employees, agents and contractors to cooperate with one another to
coordinate any work being performed by Landlord and/or Tenant under this Tenant
Work Letter, and their respective employees, agents and contractors so as to
avoid unnecessary interference and delays with the completion of the Tenant
Work.


 


16.           Representations.
Except as set forth to the contrary in the Lease, Landlord does not warrant
that the Property or any component thereof will be free of latent defects or
that it will not require maintenance and/or repair within any particular period
of time, except as expressly provided herein. Tenant acknowledges and agrees
that it shall rely solely on the warranty or guaranty, if any, from Landlord’s
Contractor or other material and/or service providers relative to the proper
design and construction of the Tenant Improvements or any component thereof,
which warranties and guaranties Landlord shall obtain and which are described
in Section 5(f) of this Tenant Work Letter.


 


	
   

  	
  “LANDLORD”

  
	
   

  	
   

  
	
  Signed on February 8, 2006

  	
  YORK COUNTY, LLC, a California
  limited

  
	
  at Sacramento, California

  	
  liability company 

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Panattoni Investments, LLC, a

  
	
   

  	
   

  	
  California limited liability company,

  
	
   

  	
   

  	
  Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Carl D. Panattoni

  	
   

  
	
   

  	
   

  	
  Carl D. Panattoni, Trustee of the

  
	
   

  	
   

  	
  Panattoni Living Trust, Dated

  
	
   

  	
   

  	
  April 8, 1998, Managing Member

  



 


A-7

















 


	
   

  	
  “TENANT”

  
	
   

  	
   

  
	
  Signed on February 8, 2006

  	
  CORGENIX MEDICAL CORPORATION,

  
	
  at Westminster, Colorado

  	
  a Nevada corporation

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Douglas T. Simpson

  	
   

  
	
   

  	
  Name: Douglas T. Simpson

  
	
   

  	
  President

  
	
   

  	
  Corgenix Medical Corporation

  



 


A-8

















 


Exhibit ”A”
to Work Letter


Preliminary
Specifications


 


 


[To be attached]


 


A-9