**Exhibit 10.4**

 

**LEASE AGREEMENT**

 

**by and between**

 

**DaPuzzo InvestmentGroup, LLC,as Landlord**

 

**and**

 

**Encision, Inc.as Tenant**

 

**6797 WinchesterCircleBoulder, Colorado**

 

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**TABLE OF CONTENTS**

 
| 1.  | BASIC LEASE DEFINITIONS, EXHIBITS AND  ADDITIONAL DEFINITIONS |   |
|-----|---------------------------------------------------------------|--------|
| 2.  | GRANT  OF LEASE                                               |   |
| 3.  | RENT                                                          |   |
| 4.  | REIMBURSEMENT OF CERTAIN EXPENSES BY  LANDLORD                |   |
| 5.  | RENEWAL  OPTION                                               |   |
| 6.  | RIGHT OF FIRST OPTION                                         |   |
| 7.  | PERMITTED USE AND OCCUPANCY                                   |   |
| 8.  | COMMON  AREAS                                                 |   |
| 9.  | UTILITIES,  HVAC AND SECURITY                                 |   |
| 10. | REPAIRS                                                       |   |
| 11. | ALTERATION AND IMPROVEMENTS                                   |   |
| 12. | LIENS                                                         |   |
| 13. | INSURANCE                                                     |   |
| 14. | DAMAGE OR DESTRUCTION                                         |   |
| 15. | WAIVERS AND INDEMNITIES                                       |   |
| 16. | CONDEMNATION                                                  |   |
| 17. | ASSIGNMENT AND SUBLETTING                                     |   |
| 18. | PERSONAL PROPERTY                                             |   |
| 19. | END  OF TERM                                                  |   |
| 20. | ESTOPPEL CERTIFICATES                                         |   |
| 21. | TRANSFERS OF LANDLORD’S INTEREST                         |   |
| 22. | RULES AND REGULATIONS                                         |   |
| 23. | TENANT’S DEFAULT AND LANDLORD’S REMEDIES            |   |
| 24. | LANDLORD’S DEFAULT AND TENANT’S REMEDIES            |   |
| 25. | SECURITY  DEPOSIT                                             |   |
| 26. | BROKERS                                                       |   |
| 27. | LIMITATIONS ON LANDLORD’S LIABILITY                      |   |
| 28. | NOTICES                                                       |   |
| 29. | FORCE  MAJEURE                                                |   |

 

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| 30. | MISCELLANEOUS |   |
|-----|---------------|--------|

 

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**LEASE AGREEMENT**

 

THIS LEASEAGREEMENT (this “Lease”) is entered into as of the Date by and between theLandlord and Tenant, identified in Section 1.1 below.

 

**1.**                                      **BASIC LEASEDEFINITIO****NS, EXHIBITS ANDADDITIONAL DEFINITIONS**.

 

**1.1****                               BasicLease Definitions.**  In this Lease,the following defined terms have the meanings indicated:

 

(a)                                  “Date”means June 3, 2004.

 

(b)                                 “Landlord”means DaPuzzo Investment Group, LLC, a Colorado limited liability company.

 

(c)                                  “Tenant”means Encision, Inc., a Colorado corporation.

 

(d)                                 “Property”means Lot 8, Replat of Gunbarrel Technical Center, County of Boulder, State ofColorado, located at 6797 Winchester Circle, Boulder, Colorado.

 

(e)                                  “Premises”means the space in the Building known as Suites A and D and identified on ExhibitA to this Lease.  The Rentable Areaof the Premises will be approximately 19,846 square feet and will be finallydetermined by Landlord’s architect upon completion of Landlord’s work per theWork Letter attached as Exhibit D.

 

(f)                                    “Building”means the building and other related improvements located on the Property.  Upon completion of Landlord’s work pursuantto the Work Letter attached as Exhibit D, the Building will containapproximately 35,870 square feet of Rentable Area and will be finallydetermined by Landlord’s architect upon completion of Landlord’s work.

 

(g)                                 “PermittedUse” means primarily research, development, and manufacturing of medicaldevices, general office uses and for no other use or purpose.

 

(h)                                 “RentableArea” means the rentable area, measured in square feet, of any described spacewithin the Building, as determined pursuant to the Standard Method forMeasuring Floor Area in Office Buildings, ANSI/BOMA Z65.1-1996.

 

(i)                                     “CommencementDate,” is defined in the Work Letter attached to this Lease as Exhibit D.

 

(j)                                     “Term”means the duration of this Lease, which will be approximately 60 months,beginning on the Commencement Date and ending on the Expiration Date, unlessterminated earlier as provided in this Lease. If Tenant exercises Tenant’s renewal option pursuant to Article 4,the Renewal Term shall be deemed part of the Term.

 

(k)                                  “ExpirationDate” means (1) if the Commencement Date is the first day of a month, the fiveyear anniversary of the day immediately before the Commencement Date; or (2) ifthe Commencement Date is not the first day of a month, the last day of the 60thmonth following the month in which the Commencement Date occurs.

 

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(l)                                     “BaseRent” means the Rent payable in each Lease Year according to Section 3.1,as follows:

 

 

| **Lease  Year** | ** ** | **Base Rent  Per Month**                               |
|-----------------|------------|--------------------------------------------------------|
|            |       |                                                   |
|            |       | 1/12 of the following:                                 |
| 1               |       | $0.00  multiplied by the Rentable Area of the Premises |
| 2               |       | $7.00  multiplied by the Rentable Area of the Premises |
| 3               |       | $8.23  multiplied by the Rentable Area of the Premises |
| 4               |       | $8.52  multiplied by the Rentable Area of the Premises |
| 5               |       | $8.81  multiplied by the Rentable Area of the Premises |

 

(m)                               “Tenant’sShare” means that percentage obtained by dividing the Rentable Area of thePremises by the Rentable Area of the Building. Initially, Tenant’s Share is 55.328%. Tenant’s Share shall be adjusted from time to time as made necessary bychanges in the Rentable Area of the Premises or the Building pursuant toSection 1.1(e), 1.1(f), 8.1, 16.2.

 

(n)                                 “SecurityDeposit” means an amount equal to one and one-half month’s Base Rent for thesecond Lease Year, which Tenant shall pay to Landlord upon execution of thisLease.  The Security Deposit will becredited towards Tenant’s Base Rent due for the entire first month and part ofthe second month of the third Lease Year.

 

(o)                                 “Landlord’sAddress” means:

 

DaPuzzoInvestment Group

8467 FirethornCourt

Longmont,Colorado 80503

 

(p)                                 “Tenant’sAddress” means:

 

before theCommencement Date:

 

Encision, Inc.

4828 SterlingDrive

Boulder,Colorado 80301

 

after theCommencement Date:

 

Encision, Inc.

6797Winchester Circle

Boulder,Colorado 80301

 

(q)                                 “Broker”means The Colorado Group, Inc., acting as a transaction broker representingboth Landlord and Tenant.  Landlord willpay Broker a commission in accordance with a separate listing agreement withBroker.

 

(r)                                    “Exhibits”means those exhibits listed in Section 30.16 below.

 

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**1.2****                               AdditionalDefinitions**.  In addition to thoseterms defined in Section 1.1 and other sections of this Lease, the followingdefined terms when used in this Lease have the meanings indicated:

 

(a)                                  “ADA”means the American with Disabilities Act of 1990, as amended from time to time.

 

(b)                                 “AdditionalRent” means all amounts required to be paid by Tenant pursuant to Section 3.2of this Lease in addition to Base Rent.

 

(c)                                  “Affiliates”means, with respect to any party, any persons or entities that own or control,are owned or controlled by, or are under common ownership or control with, suchparty and such party’s and each of such other person’s or entity’s respectiveofficers, directors, shareholders, partners, venturers, members, managers,agents and employees.  For purposes ofthis definition, a party is “owned” by anyone that owns more than 50% of theequity interests in such party and a party is “controlled” by anyone that ownssufficient voting interests to control the management decisions of such party.

 

(d)                                 “CommonAreas” means****all areas andfacilities on the Property and within the Building that are provided and designatedfrom time to time by Landlord for the general, nonexclusive use and convenienceof Tenant and other tenants of the Building and their respective employees,invitees, licensees and other visitors, including, without limitation, certainlobbies, hallways, entry ways, loading areas, toilet facilities, elevatorfacilities, shafts, basements, driveways, parking areas, mechanical andelectrical rooms, janitors’ and storage closets, stairways, lightingfacilities, trash facilities, utility lines, sidewalks, covered walkways,terraces, loading areas, underground walkways, plazas, courts, retaining walls,access roads, truck serviceways and landscaped areas.

 

(e)                                  “Encumbrance”means any ground lease, first mortgage, or first deed of trust now or laterencumbering the Building and all their renewals, modifications, supplements,consolidations, and replacements.

 

(f)                                    “EnvironmentalLaws” means the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901,et seq.; the Comprehensive Environmental Response, Compensation and LiabilityAct, 42 U.S.C. §§ 9601, et seq. (including the so-called “Superfund”amendments thereto); the Clean Water Act, 33 U.S.C. §§ 1251, et seq.; theHazardous Materials Transportation Authorization Act of 1994, 49 U.S.C. §§ 1501,et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601, et seq.; theFederal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136, etseq.; the Atomic Energy Act of 1954, 42 U.S.C. §§ 2014, et seq.; and anyother applicable Laws governing or pertaining to any hazardous substances,hazardous wastes, chemicals or other materials, including, without limitation,asbestos, polychlorinated biphenyls, radon, petroleum products and anyderivative.

 

(g)                                 “HazardousSubstance” means any substance, chemical or material declared to be, orregulated as, hazardous or toxic under any Environmental Law or the presence ofwhich may give rise to liability under any Environmental Law.

 

(h)                                 “Laws”means any and all present or future federal, state or local laws, statutes,ordinances, rules, regulations or orders of any and all governmental orquasi-governmental authorities having jurisdiction over the Premises,including, without limitation, the ADA and Environmental Laws.

 

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(i)                                     “LeaseYear” means the one-year period (unless the Commencement Date is not the firstday of a month, in which event the final “Lease Year” shall be a thirteen-monthperiod) commencing on each anniversary of the first day of the month in whichthe Commencement Date occurred.

 

(j)                                     “LeaseholdImprovements” is defined in the Work Letter attached to this Lease as ExhibitD.

 

(k)                                  “Lender”means the ground lessor of any ground lease, the mortgagee of any mortgage orthe beneficiary of any deed of trust, that constitutes an Encumbrance.

 

(l)                                     “OperatingExpenses” means, with respect to any given calendar year during the Term, allreasonable costs and expenses (expressed as a total amount and in dollars persquare foot of the Rentable Area of the Building) of management, operation andmaintenance of the Property and the Building, including the Common Areas,incurred by Landlord, including, without limitation, costs of cleaning, windowwashing, maintaining window coverings, landscaping, lighting, heating, airconditioning, and repaving parking areas; painting, repairing and replacing theBuilding or any portion of it to the extent that such painting, repairs, orreplacements are considered non-capital expenses under generally acceptedaccounting principals (except to the extent proceeds of insurance orcondemnation awards are actually received); removing snow and ice; trashremoval; reasonable management fees (comparable to fees charged for similarbuildings in the same general geographic area as the Building), providingseasonal holiday decorations; providing insurance as set forth inSection 13.1; wages, salaries and compensation of employees who are notabove the level of building manager; consulting, accounting, legal (limited tolegal costs associated with controlling Operating Expenses), janitorial,maintenance, guard, fire protection, fire hydrant and other services; power,water, waste disposal and other utilities; licenses and permit fees; the totalamounts paid by Landlord in satisfaction of any assessments made by any owners’association for the purpose of providing any services or benefits to theProperty, the Premises or the Building generally; depreciation on personalproperty and equipment used in the operation or maintenance of the Buildingover the useful life of such personal property and equipment in accordance withthe applicable depreciation schedules prescribed under the Internal RevenueCode and rent paid for leasing such equipment; real and personal property taxesand assessments (and any tax levied in whole or in part in lieu of or inaddition to such property taxes) on the Building, the Property or Landlord’spersonal property used in the operation or maintenance of the Building and theProperty; and any other costs, charges and expenses which are regarded as anormal maintenance and operating expense of Landlord for the Building and theProperty under generally accepted accounting principles; plus all reasonablecosts (amortized over the useful life of the item) of any capital improvementswhich are made by Landlord to any portion of the Building and the Propertyrelated to the office space contained therein (A) for the purpose of reducingthe costs described in this paragraph, to the extent of such reduction, or (B)after the date of this Lease and which are required under any governmental lawor regulation that was not applicable to the Property or the Building or thesubject portion of it at the time such capital improvements were constructedand which are not a result of the nature of Tenant’s use of the Premises(whether or not such law or regulation is applicable to the Building as aresult of Landlord’s status under such law or regulation or

 

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Landlord’suse, occupancy or alteration of any portion of the Building).  Notwithstanding the foregoing, OperatingExpenses will not include the costs of capital improvements which are requiredto be made to the Premises by Landlord pursuant to Section 2.1 or to anyother premises in the Building by the Landlord or the tenant thereof pursuantto the provisions of such tenant’s lease. In addition, Operating Expenses will not include:  (1) depreciation on the Building or anyportion of it; (2) costs of improvements made for tenants of the Building,including, without limitation, painting, redecorating and other similar work;(3) finder’s fees and real estate brokers’ commissions, including leaseconcessions and lease take-over obligations; (4) mortgage principal orinterest; (5) capital items other than those referred to in clause (A) or (B)above; (6) costs arising out of Landlord’s provision of services and utilitiesto Tenant or other tenants of the Building outside regular business hours or inamounts exceeding those required for general office purposes for which Landlordreceives direct reimbursement from Tenant or such other tenants; (7) repairs orother work (including rebuilding) occasioned by fire, windstorm or othercasualty or by condemnation; (8) any costs that are separately charged to andpayable by tenants or any other third parties or for which Landlord iscompensated by insurance proceeds or warranties or otherwise reimbursed; (9)interest and penalties for late payment of taxes; (10) costs and expenses ofenforcing leases against other tenants in the Building, including legal fees;(11) expenses resulting from any violation by Landlord of the terms of anylease of space in the Building or of any ground or underlying lease or anymortgage; (12) advertising and promotional expenses; and (13) repair andreplacement resulting from inferior or deficient workmanship, material, orequipment in the initial construction of the Building; (14) federal, state orlocal income taxes and franchise taxes imposed on or measured by the income ofLandlord from the operation of the Building; (15) costs incurred to repair orreplace mechanical equipment or systems used in the Building to the extent suchcosts are reimbursed by any warranty on such equipment or systems; (16)Hazardous Substance remediation costs (provided such exclusion shall not affectTenant’s obligations and liability under Section 7.1(b)); and (17)interest, principal, points and fees on debts or amortization on anyEncumbrance. Those portions of the Operating Expenses that vary with occupancyof the Building will be adjusted to equal the amount of such Operating Expensesthat Landlord reasonably believes would have been incurred if 100% of theRentable Area of the Building were occupied; provided that such projectionsshall be consistently applied.

 

(m)                               “PrimeRate” means the rate of interest announced from time to time by The ChaseManhattan Bank, or any successor to it, as its prime rate.  If The Chase Manhattan Bank, or any successorto it, ceases to announce a prime rate, Landlord will designate a reasonablycomparable financial institution for purposes of determining the Prime Rate.

 

(n)                                 “Rent”means the Base Rent, Additional Rent, and all other amounts required to be paidby Tenant under this Lease.

 

**2.**                                      **GRANT OF LEASE**.

 

**2.1****                               Demise.**  Subject to the terms, covenants, conditionsand provisions of this Lease, Landlord leases to Tenant and Tenant leases fromLandlord the Premises for the Term to be used for the Permitted Use.  Landlord will tender the Premises to Tenantin accordance with the Work Letter attached hereto as Exhibit D.

 

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**2.2****                               QuietEnjoyment.**  Landlord covenants thatduring the Term Tenant will have quiet and peaceable possession of thePremises, subject to the terms, covenants, conditions and provisions of thisLease, and Landlord will not disturb such possession except as expresslyprovided in this Lease.

 

**3.**                                      **RENT****.**

 

**3.1****                               BaseRent.**  Commencing on the CommencementDate and continuing throughout the Term, Tenant will pay Landlord Base Rent accordingto the following provisions.  Base Rentduring each Lease Year (or portion of a Lease Year) will be payable in monthlyinstallments in the amount specified for such Lease Year (or portion thereof)in Section 1.1(l), in advance, on or before the first day of each andevery month during the Term.  If the Termcommences on other than the first day of a month or ends on other than the lastday of a month, Base Rent for such month will be appropriately prorated basedon the number of days in such month. Tenant covenants to pay all Rent when due to Landlord’s Address, or tosuch other place of which Landlord notifies Tenant in writing from time totime, and to observe and perform all of the terms, covenants and conditionsapplicable to Tenant in this Lease. Tenant further agrees that the covenant to pay Rent is an independentcovenant, not subject to abatement, offset, or deduction, except as may beprovided in this Lease.

 

**3.2****                               AdditionalRent.**  Commencing on the CommencementDate and continuing for the duration of the Term, Tenant agrees to payLandlord, as Additional Rent, in the manner provided below, Tenant’s Share ofOperating Expenses.

 

(a)                                  EstimatedPayments.  Prior to or within 60 daysafter the beginning of each calendar year, Landlord will notify Tenant ofLandlord’s estimate of Operating Expenses for such calendar year.  On or before the first day of each monthduring the Term, Tenant will pay to Landlord, in advance, 1/12 of Tenant’sShare of such estimated Operating Expenses; provided that until such notice isgiven with respect to the ensuing calendar year, Tenant will continue to pay onthe basis of the prior calendar year’s estimate until the month after the monthin which such notice is given.  Withinthirty (30) days after Tenant’s receipt of Landlord’s new estimate, Tenant willpay to Landlord 1/12 of the difference between the new estimate and the prioryear’s estimate for each month which has elapsed since the beginning of thecurrent calendar year.  If at any time ortimes it appears to Landlord that Operating Expenses for the then-currentcalendar year will vary from Landlord’s estimate by more than 5%, Landlord may,by notice to Tenant, revise its estimate for such year, and subsequent paymentsby Tenant for such year will be based upon the revised estimate.  If Tenant’s share of Operating Expenses forany year are expected to be more than 105% of Tenant’s Share of OperatingExpenses for the preceding year, Tenant may require Landlord (at no cost toTenant) to obtain bids for all Operating Expenses which constitute 5% or moreof the aggregate Operating Expenses (other than insurance) for which Landlordmay reasonably be expected to be able to obtain bids.  Such bids will be from reputable providers ofsuch services.  Landlord shall then reasonablyselect the providers of such services included within Operating Expenses basedon the bid amount and the quality and experience of such provider, subject toTenant’s right to review the bids with Landlord.

 

(b)                                 AnnualSettlement.  As soon as practicableafter the close of each calendar year, but in no event more than 90 days afterthe close of each calendar year, Landlord will deliver to Tenant its statementof actual Operating Expenses incurred for such

 

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calendaryear.  If, on the basis of suchstatement, Tenant owes an amount that is less than the estimated paymentspreviously made by Tenant for such calendar year, Landlord will either refundsuch excess amount to Tenant or credit such excess amount against the nextAdditional Rent payment(s), if any, due from Tenant to Landlord.  If, on the basis of such statement, Tenantowes an amount that is more than the estimated payments previously made byTenant for such calendar year, Tenant will pay the deficiency to Landlordwithin 30 days after the delivery of such statement.  If this Lease commences on a day other thanthe first day of a calendar year or terminates on a day other than the last dayof a calendar year, Operating Expenses applicable to the calendar year in whichsuch commencement or termination occurs will be prorated on the basis of thenumber of days within such calendar year that are within the Term.

 

(c)                                  FinalPayment.  Tenant’s obligation to payTenant’s Share of Operating Expenses that accrue but are not paid for periodsprior to the expiration or early termination of the Term will survive suchexpiration or early termination.  As soonas practicable after the expiration or early termination of the Term, Landlordmay submit an invoice to Tenant stating the amount, if any, by which actualOperating Expenses through the date of such expiration or early terminationexceeded Tenant’s estimated payments for the calendar year in which suchexpiration or termination has occurred. Tenant will pay Tenant’s Share of the amount of any such excess toLandlord within 30 days after the date of Landlord’s invoices.

 

(d)                                 Audit.  Tenant shall have the right at its ownexpense and at a reasonable time (after written notice to Landlord) within 60days of the date of the statement received by Tenant pursuant tosubsection (b) or (c), above (the “Statement”), to audit Landlord’s booksrelevant to Additional Rent due under this Section 3.2.  If Tenant does not audit Landlord’s books anddeliver the results thereof to Landlord within said 60-day period, the termsand amounts set forth in the Statement shall be deemed conclusive and final andTenant shall have no further right to adjustment.  If Tenant’s examination reveals that an errorhas been made in Landlord’s determination of Tenant’s Share of OperatingExpenses, and Landlord agrees with such determination, then the amount of suchadjustment shall be payable by Landlord or Tenant, to the other party as thecase may be.  If Tenant’s examinationreveals an error has been made in Landlord’s determination of Tenant’s Share ofOperating Expenses, and Landlord disagrees with the results thereof, Landlordshall have 60 days to obtain an audit from an accountant of its choice todetermine Tenant’s Share of Operating Expenses. If Landlord’s accountant and Tenant’s accountant are unable to reconciletheir audits, both accountants shall mutually agree upon a third accountant,whose determination of Tenant’s Share of Operating Expenses shall beconclusive.  If the amount of error isdetermined to be an overcharge of 10% or more, then the reasonable costs of allof the audits made pursuant to this subsection shall be paid by Landlord.

 

**3.3****                               Tenant’sTaxes.**  As Additional Rent, Tenantwill reimburse Landlord upon demand for any and all taxes charged to andpayable by Landlord, due to (a) the costs or value of Tenant’s equipment,furniture, fixtures and other personal property located in the Premises; (b)upon or measured by Rent under this Lease; (c) upon or with respect to thepossession, leasing, operation, management, maintenance, alteration, repair,use or occupancy by Tenant of the Premises; and (d) upon this transaction orany document to which Tenant is a party creating or

 

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transferringan interest or an estate in the Premises. If it is not lawful for Tenant to reimburse Landlord, the Base Rentpayable to Landlord under this Lease will be revised to yield to Landlord thesame net rental after the imposition of any such tax upon Landlord as wouldhave been payable to Landlord prior to the imposition of any such tax.

 

**3.4****                               LatePayments.**  To compensate Landlord forits additional cost of processing late payments for any payment of Rent whichis not received within five days after it is due, Tenant will pay a late chargeof 1% of the late payment, but not less than $100 or more than $1,000.  In addition, all amounts payable under thisLease by Tenant to Landlord, if not paid when due, will bear interest from thedue date until paid at the lesser of the highest interest rate permitted by lawor 5% in excess of the then current Prime Rate.

 

**3.5****                               Rightto Accept Payments.**  No receipt byLandlord of an amount less than Tenant’s full amount due will be deemed to beother than payment “on account,” nor will any endorsement or statement on anycheck or any accompanying letter effect or evidence an accord andsatisfaction.  Landlord may accept suchcheck or payment without prejudice to Landlord’s right to recover the balanceor pursue any right of Landlord.  Nopayments by Tenant to Landlord after the expiration or other termination of theTerm, or after the giving of any notice (other than a demand for payment ofmoney) by Landlord to Tenant, will reinstate, continue or extend the Term ormake ineffective any notice given to Tenant prior to such payment.  After notice or commencement of a suit, orafter final judgment granting Landlord possession of the Premises, Landlord mayreceive and collect any sums of Rent due under this Lease, and such receiptwill not void any notice or in any manner affect any pending suit or anyjudgment obtained.

 

**4.**                                      **REIMBURSEMENTOF CERTAIN EXPENSES BY LANDLORD**

 

**4.1****                               MovingExpenses.**  Landlord will reimburseTenant upon demand for all reasonable out-of-pocket expenses, up to $40,000,incurred by Tenant for (a) the packing, loading, transporting, unloading, andunpacking (including packing materials) Tenant’s personal property; and (b) thecalibration of equipment, sterilization dose audits (including parts andmaterials), FDA/UL/ISO Audits required due to the move, facility registrationchanges and fees, marketing literature, Instruction for Use and Manual changesrelated to the move (does not include printing expenses) and other expensesrelated to the relocation of Tenant’s fixtures, furniture and equipment ascommercially required per Tenant’s Permitted Use, but not including regularmaintenance or upkeep that Tenant would have undertaken in any event.

 

**4.2****                               Reimbursementof Rent Under Previous Lease.**  Landlordacknowledges that Tenant is obligated to pay monthly base rent payments in theamount of $9,564.93 plus operating expenses pursuant to that certain Leasebetween Tenant and Sterling Partnership dated as of September 7, 2001 (the“Existing Lease”) and that such obligation will continue until October 31,2004.  Landlord agrees to reimburseTenant on a monthly basis in the amount of each such monthly rent payment madeby Tenant under the Existing Lease for the period beginning on the CommencementDate and continuing until October 31, 2004.  Operating expense charges will be paid on acumulative basis for the period beginning on the Commencement Date andcontinuing until October 31, 2004. The operating expense charges will be calculated and billed to Landlordno later than January 31, 2005 and shall be paid to Tenant within thirty(30) days of such billing. Tenant acknowledges that Landlord may attempt tomitigate his reimbursement expenditure pursuant to this Section 4.2 bysecuring a tenant to occupy the space previously occupied by Tenant under itsExisting Lease.  Tenant agrees tocooperate fully with, and use commercially

 

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reasonablyefforts to facilitate, Landlord’s efforts to sublet the space previouslyoccupied by Tenant.  Tenant furtheracknowledges that any proceeds from the subletting of such space previouslyoccupied by Tenant will be credited against the reimbursement amount Landlordis required to pay Tenant pursuant to this Section 4.2.

 

**5.**                                      **RENEWAL OPTION****.**

 

**5.1****                               Exerciseand Base Rent.**  Subject to the termsand provisions of this Section 5.1, Tenant, at its option, may extend theinitial Term of this Lease for one additional 5-year period (the “RenewalTerm”), which Renewal Term will commence as of the end of the initial Term ofthis Lease.  To exercise its option as tosuch Renewal Term, Tenant must deliver written notice of its intent to exercisesuch option (the “Renewal Notice”) to Landlord no sooner than 12 months and nolater than six months prior to the expiration of the initial Term of thisLease.  If Landlord timely receives aRenewal Notice from Tenant, then Tenant and Landlord shall be irrevocablycommitted to the Renewal Term, with the Base Rent for the Renewal Term beingdetermined as follows below.  Within tendays after Landlord receives Tenant’s Renewal Notice, Landlord will deliver toTenant in writing a statement as to the Base Rent for the Renewal Term (a“Renewal Rent Statement”) as determined by Landlord based on the “Market RentalRate” defined in Section 5.2 below. Tenant will have a period of 10-business days following its receipt of aRenewal Rent Statement to notify Landlord in writing whether Tenant agrees tothe Base Rent stated in such Renewal Rent Statement.  If Tenant does not respond to Landlord’sRenewal Rent Statement within such 10-business day period or Tenant notifiesLandlord in writing within such 10-business day period that Tenant does notagree with the Base Rent stated in such Renewal Rent Statement, Tenant andLandlord will have 20 days from the earlier of the expiration of the10-business day period or Landlord’s receipt of Tenant’s notice of disagreementto negotiate and agree upon the Base Rent for the Renewal Term based on theMarket Rental Rate for the Premises.  Ifno agreement can be reached as to the Base Rent for the Renewal Term withinsuch 20-day period, then such Base Rent shall be determined pursuant toSection 5.2 below.

 

**5.2****                               BaseRent Determination.**  Within 10 daysafter the expiration of the 20-day negotiation period described inSection 5.1, Landlord and Tenant shall mutually appoint a commercial realestate broker (on an agreed fee basis) having at least 10 years of experiencein office leasing in the Boulder area (the “Appointed Broker”).  If within such 10-day period, Landlord andTenant have been unable to agree upon a mutually acceptable Appointed Broker,they will each appoint a commercial real estate broker having at least 10 yearsof experience in office leasing in the Boulder area and will instruct suchbrokers to jointly select the Appointed Broker. Within five days after appointment of the Appointed Broker, Landlord andTenant each shall deliver to the Appointed Broker their respective determinationsof the Base Rent for the Renewal Term based on the Market Rental Rate(respectively, “Landlord’s Rent Determination” and “Tenant’s RentDetermination”).  Within 10 days afterreceiving Landlord’s Rent Determination and Tenant’s Rent Determination, theAppointed Broker shall prepare an estimate of the Base Rent for the RenewalTerm based on the Market Rental Rate and immediately notify Landlord and Tenantof such estimate (the “Independent Appraisal”). The Base Rent determined by the Appointed Broker shall be added towhichever of Landlord’s Rent Determination or Tenant’s Rent Determination isclosest in amount to the Independent Appraisal, the sum of such amount shall bedivided by two and the resulting quotient shall be the Base Rent applicable forthe Renewal Term.  In the event that thedifference between the Independent Appraisal and

 

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Landlord’sRent Determination is equal to the difference between the Independent Appraisaland Tenant’s Rent Determination, then the Independent Appraisal shall be theBase Rent for the Renewal Term.  Landlordand Tenant shall share equally the fee of the Appointed Broker.  The term “Market Rental Rate” means theprevailing rental rate (taking into account tenant improvement allowances andrent concessions) that a landlord and a tenant at arms’ length would determineas the rental rate, per square foot of Rentable Area, based on the rental ratesfor comparable premises and comparable term lengths in other comparablebuildings in Boulder County recently entered into at the time the Market RentalRate is being determined.

 

**5.3****                               Applicabilityof Lease Terms.**  During the RenewalTerm, all of the terms and provisions of this Lease will apply, except that:(a) Base Rent will be the amount determined pursuant to Section 5.1 above;(b) the Work Letter attached as Exhibit D will be of no further force oreffect except to the extent that it defines the Commencement Date; and (c) uponthe expiration or earlier termination of the Renewal Term, Tenant will have nofurther rights to renew or extend the Term of this Lease.

 

**5.4****                               Limitations.**  Notwithstanding anything above to thecontrary, Tenant will have no right to extend the Term of this Lease and theRenewal Notice will be ineffective if a Default exists at the time the RenewalNotice is given or at the commencement of the Renewal Term beyond anyapplicable notice and cure period.  Anytermination of this Lease prior to the Expiration Date will serve toimmediately and automatically terminate all of Tenant’s rights under thisSection 5.  Any assignment by Tenantof the Lease or subletting of the entire Premises will automatically terminatethe option to extend the Term set forth in this Section 5, unless Landlordconsents to the contrary in writing at the time of such subletting orassignment or such subletting or assignment is made pursuant toSection 17.6 or Section 17.7 below.

 

**6.**                                      **RIGHT OF FIRSTOPTION.**

 

During theTerm of this Lease, Tenant will have the right to be offered by Landlord theopportunity to add to the Premises any “RFO Space” (as defined below) thatbecomes available for lease during the Term. The “RFO Space” means any vacant space in the Building that iscontiguous to Premises.  Any space in theBuilding shall not be deemed available for lease (and therefore will not beconsidered RFO Space) to the extent that it is subject to, or becomes subjectto, any expansion or renewal option in favor of another tenant.  If at any time during the Term any of the RFOSpace becomes available or is becoming available for lease, before offeringsuch space to any other party, Landlord shall notify Tenant in writing thatsuch RFO Space is available for lease or is becoming available during the Termand such notice will provide the terms at which Landlord is proposing in goodfaith to offer the space, including the base rent, additional rent, anyapplicable tenant improvement allowance and any other terms relevant to theleasing of the RFO Space (the “RFO Offer Notice”).  The RFO Offer Notice shall notify Tenant ofthe day on which the RFO Space will become available for delivery toTenant.  Tenant shall have 25 days afterreceipt of the RFO Offer Notice (the “Consideration Period”) to either acceptLandlord’s offer for the leasing of the RFO Space or negotiate with Landlord toreach agreement on terms that are acceptable to Landlord and Tenant.  If Tenant elects to negotiate with Landlordduring the Consideration Period, then Landlord and Tenant shall negotiate ingood faith to reach agreement on the terms for Tenant’s leasing of the RFOSpace.  If Tenant timely acceptsLandlord’s RFO Space offer or Tenant and Landlord otherwise reach agreement onthe terms of Tenant’s leasing of the RFO Space during the Consideration Period,the parties shall enter into a lease for such space substantially in the formof this Lease, but containing the terms and

 

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provisionswith respect to the rent payable for such space, the tenant improvement work,if any, free rent periods, if any, tenant improvement allowances, if any, andsuch other terms and conditions as are unique to the RFO Space, as agreed on byLandlord and Tenant.  If Tenant fails toaccept Landlord’s RFO Space offer or Landlord and Tenant, after negotiating ingood faith, do not reach agreement on terms for Tenant’s leasing of the RFOSpace within the Consideration Period, Tenant shall be deemed to have rejectedan RFO Offer Notice.  If Tenant rejectsor is deemed to have rejected an RFO Offer Notice, Landlord shall thereafter befree to lease any or all of the RFO Space that is the subject of the RFO OfferNotice to any prospective tenant upon such terms to which Landlord and suchtenant agree, and Tenant will not have any right to lease the applicable RFOSpace until after it has been rented by Landlord and again becomes availablefor lease.  Tenant will not have theright to accept any RFO Offer Notice if a Default (beyond any applicable cureperiod) exists at the time of Tenant’s attempted acceptance.  In addition, Tenant’s rights under thisSection 6 will automatically terminate upon any early termination of thisLease.  Tenant’s right of first offerpursuant to this Section 6 may only be assigned by Tenant to an assigneepermitted pursuant to Article 17.

 

**7.**                                      **PERMITTEDUSE AND OCCUPANCY**.

 

**7.1****                               PermittedUse.**  Tenant agrees to use and occupythe Premises only for the Permitted Use and for no other purpose without theprior written consent of Landlord, not to be unreasonably withheld, conditionor delayed.

 

(a)                                  Use.  Tenant agrees to use the Premises in a safe,careful and proper manner, and to comply, at Tenant’s expense, with all Lawsapplicable to Tenant’s use, occupancy or alteration of the Premises and withany Laws that require any alterations to the Premises due to Tenant’s statusunder such Laws, including, without limitation, the ADA; provided, however,that Landlord shall, at Landlord’s cost and expense, make any changes oralterations required by Laws, including the ADA, as a result of conditionsexisting prior to the Commencement Date in the Premises, and not resulting fromTenant’s particular use of the Premises. If, due to the nature or manner of any use or occupancy of the Premisesby Tenant, any improvements or alterations to the Building or the Premises aredetermined to be required to comply with any Laws, then Tenant will pay allcosts of the required improvements, alterations or changes in services.  Tenant will not keep anything on the Premisesfor any purpose which increases the insurance premium cost or invalidates anyinsurance policy carried on the Premises by Landlord. Tenant will pay, as Rentand upon demand of Landlord, any such increased premium cost due to Tenant’suse or occupation of the Premises. Tenant will not cause, maintain or permitany nuisance or waste in or about the Building or the Premises.  In addition, except as expressly providedotherwise in the Lease, Tenant will keep the Premises free of debris, andanything of a dangerous, noxious or toxic nature, which could create a firehazard or undue vibration, heat, noise, fumes, vapors or odors.  If any item of equipment, building materialor other property brought into the Building or the Premises by Tenant or onTenant’s request causes a dangerous, noxious or toxic effect (including anenvironmental effect) and in Landlord’s reasonable opinion such effect will notbe permanent but will only be temporary and is able to be eliminated, thenTenant will not be required to remove such item, provided that Tenant promptlyand diligently causes such effect to be eliminated, pays for all costs ofelimination and indemnifies Landlord against all liabilities arising from sucheffect.

 

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(b)                                 HazardousMaterials.  To Landlord’s knowledgewithout investigation, the Premises and the Building are concurrently incompliance with all applicable Environmental Laws, and no Hazardous Materials(other than cleaning agents used in the course of regular janitorial services)exist on, about, or under, the Premises or the Building.  Landlord and Tenant agree that, during theTerm, each will comply with all Laws, including, without limitation, allEnvironmental Laws, governing, and all procedures established by Landlord forthe use, abatement, removal, storage, disposal or transport of any HazardousSubstances and any required or permitted alteration, repair, maintenance,restoration, removal or other work in or about the Building or the Premisesthat involves or affects any Hazardous Substances.  Except for the lawful use of cleaning agentsused in the course of regular janitorial service and laser printer tonercartridges that are disposed of in compliance with applicable EnvironmentalLaws, and such materials of the type and quality consistent with Tenant’sPermitted Use, no Hazardous Substances will be stored, used, released,produced, processed or disposed of in, on or about, or transported to or from,the Building or the Premises by Tenant or any of Tenant’s agents, employees orcontractors, without first obtaining Landlord’s express written consent (anyHazardous Substances which are stored, used, released, produced, processed ordisposed in, on or about, or transported to or from, the Building or thePremises by any of such persons or entities upon such express written consentare called “Tenant’s Hazardous Substances”). Any such use, storage, disposal or production of the HazardousSubstances permitted by this Section 7.1(b) shall be done in compliancewith all Environmental Laws and so as not to result in the Premises being inviolation of any Environmental Laws. Upon the Expiration Date or earlier termination of this Lease Tenant, atits expense, will take all action necessary to restore the Building and thePremises to the condition existing prior to the introduction of Tenant’sHazardous Substances, whether such action is required by any governmentalauthority in order to comply with applicable Laws or reasonably required byLandlord in order for Landlord to make the same economic use of the Buildingand the Premises as Landlord could have made prior to the introduction ofTenant’s Hazardous Substances.  Suchaction may include, without limitation, the investigation of the environmentalcondition of the Building or the Premises, the preparation of remediation plansor feasibility studies and the performance of cleanup, remedial, removal orrestoration work.  Tenant will obtainLandlord’s written approval before undertaking any action required by thisSection 7.1(b), which approval will not be unreasonably withheld so longas the proposed actions will not have an avoidable material and adverse effecton the Building or the Premises.  Eachparty will indemnify and hold the other and the other’s Affiliates harmlessfrom and against any and all claims, costs and liabilities (includingreasonable attorneys’ fees) arising out of or in connection with any breach bysuch party of its covenants under this Section 7.1(b).  The parties’ obligations under thisSection 7.1(b) will survive the expiration or early termination of theTerm.

 

**7.2****                               Signsand Displays.**  Tenant shall beentitled to use 50% of the Building’s monument sign, subject to Landlord’sprior approval of such display or sign, which approval shall not beunreasonably withheld, conditioned or delayed. Landlord shall install such display or sign on the Building’s monumentsign at Tenant’s expense.  Tenant willnot place, cause or permit to be placed and maintained on the exterior of thePremises any other sign, awning,

 

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lettering orother advertising matter, unless previously approved by Landlord in Landlord’sreasonable discretion.

 

**8.**                                      **COMMON AREAS**.

 

**8.1****                               Rightof Use.**  Landlord grants Tenant, itsemployees, invitees, customers, licensees and other visitors a nonexclusiveand, during the Term, irrevocable license for the Term to use the Common Areas,subject to the terms and conditions of this Lease.  Provided that there is no unreasonablematerial adverse effect on Tenant’s use or occupancy of the Premises, withoutadvance notice to Tenant (except with respect to matters covered bysubsection (a) below) and without any liability to Tenant in any respect,Landlord will have the right to:

 

(a)                                  establishand enforce reasonable non-discriminatory rules and regulations, in addition tothose on Exhibit C, concerning the maintenance, management, use andoperation of the Common Areas;

 

(b)                                 closeoff any of the Common Areas to whatever extent required in the reasonableopinion of Landlord and its counsel to prevent a dedication of any of theCommon Areas or the accrual of any rights by any person or the public to theCommon Areas, provided such closure does not deprive Tenant of the substantialbenefit and enjoyment of or access to the Premises;

 

(c)                                  temporarilyclose any of the Common Areas for maintenance, alteration or improvementpurposes, provided such closure does not deprive Tenant of the substantialbenefit and enjoyment of or access to the Premises;

 

(d)                                 changethe size, use, shape or nature of any such Common Areas, or change the arrangementand/or location of or regulate or eliminate the use of any concourse, or anyelevators, stairs, toilets or other public conveniences in the Common Areas,provided such changes do not materially adversely affect Tenant’s beneficialuse of or access to the Premises; and

 

(e)                                  expandthe Building or convert any portion of the Building (excluding the Premises) toCommon Areas.  In the event of any suchchanges in the Building, Landlord may make an appropriate adjustment inTenant’s Share; provided, however, that Landlord shall not increase Tenant’sShare as a result of any changes in the size of the Building, except as setforth in Section 16.2(d).

 

**8.2****                               Landlord’sCompliance with Laws.**  Landlord willmaintain the Common Areas in compliance with all applicable Laws.

 

**9.**                                      **UTILITI****ES, HVAC AND SECURITY.**

 

**9.1****                               Operationof Building and Premises.**

 

(a)                                  Duringthe Term, Landlord shall operate and maintain the Building in accordance withall applicable laws and regulations and shall provide the services set out insubsections (b) and (c) of this Section 9.1.

 

(b)                                 Landlordshall provide or cause to be provided in the Premises:

 

(1)                                  heat,ventilation and cooling as required for the comfortable use and occupancy ofthe Premises during business hours;

 

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(2)                                  electricpower, gas service and domestic running water service as supplied by the localutility companies for normal lighting and office usage; and

 

(3)                                  maintenance,repair and replacement as set out in Section 10.1.

 

(c)                                  Landlordshall provide or cause to be provided in the Common Areas:

 

(1)                                  domesticrunning water and necessary supplies in washrooms sufficient for the normal usethereof by occupants in the Building;

 

(2)                                  janitorialservices in the Common Areas (but not the Premises), including exterior windowwashing;

 

(3)                                  accessto and egress from the Premises;

 

(4)                                  heat,ventilation, cooling, lighting, electric power and domestic running water inthe Common Area during normal business hours; and

 

(5)                                  maintenance,repair and replacement as set forth in Section 10.1.

 

(d)                                 Iffrom time to time requested in writing by Tenant, and to the extent that it isreasonably able to do so, Landlord shall provide in the Premises services inaddition to those set out in subsection (b), above, such as, by way ofexample but not in limitation, heat, ventilation and cooling systems duringtimes other than normal business hours, provided that Tenant shall within 10days of receipt of an invoice for any such additional service pay Landlordtherefor at rates as Landlord may from time to time reasonably establish.

 

**9.2****                               Utilities.**  Subject to Tenant’s waiver of claims underSection 15.2, unless caused by the negligence or intentional misconduct ofLandlord, its agents, contractors or employees, neither Landlord nor its agentsor employees will be liable to Tenant or any of Tenant’s employees, agents oranyone claiming through or under Tenant, for any damages, injuries, losses,expenses, claims, or causes of action, because of any interruption, curtailmentor discontinuance of any utility service nor shall any such interruption,curtailment or discontinuance be deemed an eviction or disturbance of Tenant’suse or possession of the Premises or any part thereof, nor relieve Tenant fromfull performance of Tenant’s obligations under this Lease; provided, however,that if any utility service to the Premises shall become unavailable for aperiod in excess of seventy-two (72) consecutive hours and such unavailabilityis directly and proximately caused by the negligence or intentional misconductof Landlord, its agents, contractors or employees, all Base Rent shall abateuntil utility service to the Premises is restored.

 

**9.3****                               Security.**  The Building is equipped with a Building-widesecurity system installed by a previous tenant. Tenant shall have the right to use such system, at its expense, for thePremises if Tenant undertakes all programming and installations necessary toretrofit such system for use in the Premises. In undertaking such work, Tenant shall not change the system in a mannerthat would prevent it from also being used for any adjoining premises in theBuilding, provided that the work necessary to allow the system actually to beused in an adjoining premises is performed at no expense to Tenant.  In no event will Landlord be liable toTenant, and Tenant hereby waives any claim against Landlord and Landlord’sAffiliates, for (a) any entry of third parties onto the Premises or into theBuilding; (b) any damage or injury to persons or property; or (c) any loss ofproperty in or about the Premises or the Building, occurring as a result of anyunauthorized or criminal acts of third parties, regardless of any action,inaction, failure,

 

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breakdown,malfunction or insufficiency of any security services provided by Landlord,unless such damage to the Premises was the result of Landlord’s negligence orintentional misconduct. Tenant shall be responsible for the administration ofthe security system described in this Section 9.3 for so long as Tenant isthe sole tenant in the Building.  When aparty in addition to Tenant occupies space in the Building, the security systemdescribed in this Section 9.3 shall be administered by a third-partyretained by Landlord, and such administration costs shall become part ofOperating Expenses of which Tenant shall pay its share pursuant to this Lease.

 

**10.****                               REPAIRS.**

 

**10.1****                        LandlordMaintenance and Repairs.**  Landlordwill keep the exterior supporting walls, foundations, roof and down spouting onthe Building, and the Common Areas within the Building in reasonable conditionand in good repair, provided that the costs of such maintenance and repairswill be included as Operating Expenses as provided in this Lease.

 

**10.2****                        Tenant’sMaintenance and Repairs.**  Subject tothe terms of Articles 7, 14, and 16, and Section 9.1, Tenant will, atTenant’s own expense and at all times during the Term, maintain the Premises,and Tenant’s furnishings, equipment, personal property, and trade fixtures inthe Premises, in good working order, clean condition, and repair and in acondition that complies with all applicable Laws, at Tenant’s expense.  Tenant will also be responsible, at Tenant’sexpense, for all janitorial services in the Premises. All work done by Tenantor its contractors (which contractors will be subject to Landlord’s reasonableprior written approval) is subject to Landlord’s approval and must be done in afirst-class workmanlike manner using only grades of materials at least equal inquality to the materials being replaced and will comply with all insurancerequirements and all applicable Laws. Tenant will not overload the electrical wiring and ventilation orutilities serving the Building and will install at Tenant’s sole expense, afterfirst obtaining Landlord’s written approval, any additional electrical wiringthat may be required in connection with Tenant’s apparatus, equipment orfixtures.  In the event that anywarranties exist from time to time during the Term that cover and/or apply toany of the items required to be maintained and/or repaired by Tenant hereunder,Landlord shall, upon the prior written notice from Tenant, use reasonableefforts to assist Tenant in pursing warranty claims for such items; provided, however,that Landlord shall not be obligated to expend any cost or expense in pursingsuch warranty claims.

 

**10.3****                        Failure toMaintain Premises.**  If Tenant failsto perform any of its obligations under Section 10.2, then Landlord mayperform such obligations and Tenant will pay as Rent to Landlord the cost ofsuch performance, including an amount sufficient to reimburse Landlord foroverhead and supervision, within 10 days after the date of Landlord’s invoicetherefor.  For purposes of performingsuch obligations, or to inspect the Premises, Landlord may enter the Premisesupon not less than 12 hours’ prior notice to Tenant (except in cases of actualor suspected emergency, in which case no prior notice will be required) withoutliability to Tenant for any loss or damage incurred as a result of such entryunless due to the negligence or intentional misconduct of Landlord (but subjectto Tenant’s waiver of claims pursuant to Section 15.2); provided thatLandlord will take reasonable steps in connection with such entry to minimizeany disruption to Tenant’s business or Tenant’s use of the Premises.

 

**10.4****                        Notice ofDamage.**  Tenant will notify Landlordpromptly after Tenant learns of (a) any fire or other casualty on the Premises;(b) any damage to or defect in the Premises, including any fixtures orequipment in or serving the same, which was caused by Tenant or its agents,employees, contractors or invitees, or for the repair of which Landlord mightbe

 

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responsible;and (c) any damage to or defect in any parts or appurtenances of the equipmentlocated in the Premises.

 

**11.****                               ALTERATION AND IMPROVEMENTS.**  Tenant may, from time to time, at its ownexpense make non-structural changes, additions, and improvements to thePremises to better adapt the same to its business, provided that any suchchange, addition, or improvement exceeding $10,000.00 in total value shall besubject to the prior reasonable approval of Landlord. All changes, additionsand improvements to the Premises (but excluding Tenant’s trade fixtures),whether temporary or permanent in character, made or paid for by Landlord orTenant will, without compensation to Tenant, become Landlord’s property uponinstallation.  If at the time Landlordconsents to their installation, Landlord requests or approves the removal byTenant of any such changes, additions or improvements upon termination of thisLease, Tenant will remove the same upon termination of this Lease as providedin Section 19.1.  All other changes,additions and improvements will remain Landlord’s property upon termination ofthis Lease and will be relinquished to Landlord in good condition, ordinarywear and tear excepted.

 

**12.****                               LIENS.**  Tenant agreesto pay before delinquency all costs for work, services or materials furnishedto Tenant for the Premises, the nonpayment of which could result in any lienagainst the Building (including the Premises). Tenant will keep title to the Building (including the Premises) free andclear of any such lien.  Tenant willimmediately notify Landlord of the filing of any such lien or any pendingclaims or proceedings relating to any such lien and will indemnify and holdLandlord harmless from and against all loss, damages and expenses (includingreasonable attorneys’ fees) suffered or incurred by Landlord as a result ofsuch lien, claims and proceedings.  Incase any such lien attaches, Tenant agrees to cause it to be released andremoved of record within 30 days thereafter (failing which Landlord may do soat Tenant’s sole expense), unless Tenant has a good faith dispute as to suchlien in which case Tenant may contest such lien by appropriate proceedings solong as Tenant deposits with the court or Landlord, which ever is required byapplicable Laws, a bond or other security in an amount reasonably acceptable toLandlord and any Lender which may be used by Landlord to release such lien ifTenant’s contest is abandoned or is unsuccessful.  If Landlord incurs any legal costs in causingthe removal of such lien, Tenant will pay all legal costs incurred by Landlord,including, without limitation, Landlord’s reasonable attorneys’ fees.  Upon final determination of any permittedcontest, Tenant will immediately pay any judgment rendered in favor of the lienclaimant and cause the lien to be released.

 

**13.****                               INSURANCE.**

 

**13.1****                        Landlord’sInsurance**.

 

(a)                                  Duringthe Term as part of Operating Expenses, Landlord will provide and keep in forcethe following insurance for its benefit and the benefit of any Lender:

 

(1)                                  all-riskor fire insurance (including standard extended coverage endorsement perils,leakage from fire protective devices and other water damage) for the Buildingand the Leasehold Improvements for the full replacement value thereof(excluding depreciation of the Building and Tenant’s furniture, trade fixtures,equipment, documents, files, work products and other personal property);

 

(2)                                  lossof rental income insurance or loss of insurable gross profits; and

 

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(3)                                  suchother insurance (including boiler, machinery, earthquake, and flood insurance)as Landlord reasonably elects to obtain or any Lender requires.

 

(b)                                 Exceptas otherwise specifically provided in this Lease, insurance maintained byLandlord under this Section 13.1 will be in amounts that Landlord fromtime to time reasonably determines sufficient or any Lender requires; will besubject to such deductibles and exclusions as Landlord reasonably determines;will, in the case of insurance under Section 13.1(a)(1), permit therelease of Tenant from certain liability under Section 15.1; and willotherwise be on such terms and conditions as Landlord from time to timereasonably determines sufficient.

 

**13.2****                        Tenant’sInsurance.**  During the Term, Tenantwill provide and keep in force the following insurance:

 

(a)                                  commercialgeneral liability insurance relating to Tenant’s business (carried on, in orfrom the Premises and including Tenant’s use of any Hazardous Materials) andTenant’s use and occupancy of the Premises, for personal and bodily injury anddeath, and damage to others’ property, with limits of not less than $2,000,000for any one accident or occurrence;

 

(b)                                 all-riskor fire insurance (including standard extended coverage endorsement perils,leakage from fire protective devices and other water damage) relating toTenant’s furniture, equipment, inventory, trade fixtures, documents, files,work product and other personal property on a full replacement cost basis inamounts sufficient to prevent Tenant from becoming a coinsurer and subject onlyto such deductibles and exclusions as Landlord may reasonably approve;

 

(c)                                  Ifany boiler or machinery is operated in the Premises by Tenant, boiler andmachinery insurance;

 

(d)                                 IfTenant operates owned, hired or non-owned vehicles, automobile liabilityinsurance with limits of not less than $1,000,000 combined bodily injury andproperty damage; and

 

(e)                                  workers’compensation and employer’s liability insurance in any amounts required tocomply with applicable Laws.

 

Landlord, Landlord’sproperty manager (if any), and any Lender will be named as additional insuredsin the policy described in Section 13.2(a), as their interests appear,which will include cross liability and severability of interests clauses andwill be on an “occurrence” (and not a “claims made”) form.  The policies described inSection 13.2(b) will permit the release of Landlord from certain liabilityunder Section 15.2.  Tenant’sinsurance policies will be written by insurers that are rated A-VII or betterby Best’s Rating Guide and licensed in the State of Colorado, will be writtenas primary policies, not contributing with and not supplemental to the coveragethat Landlord may carry, and will otherwise be upon such terms and conditionsas Landlord from time to time reasonably requires, including reasonable limitson Tenant’s deductibles.  Tenant willfile with Landlord, on or before the Commencement Date and at least 10 daysbefore the expiration date of expiring policies, such copies of either currentpolicies or certificates, or other proofs, as may be reasonably required toestablish Tenant’s insurance coverage in effect from time to time and paymentof premiums.  Tenant’s insurers willagree to give Landlord and all other additional insureds at least 30 days’ priornotice of any non-renewal, and at least 10 days’ prior notice of anycancellation, of any insurance coverage required by this

 

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Section 13.2.  If Tenant fails to insure or pay premiums, orto file satisfactory proof as required, Landlord may, upon a minimum of tenbusiness days’ notice, effect such insurance and Tenant will pay to Landlord,on demand, the cost of any premiums paid by Landlord.  Tenant shall be entitled to maintain anumbrella policy covering all of Tenant’s assets.

 

**14.****                               DAMAGE OR DESTRUCTION.**

 

**14.1****                        TerminationOptions.**  If the Building is damagedby fire or other casualty Landlord will, promptly after learning of suchdamage, notify Tenant in writing of the time necessary to repair or restoresuch damage, as estimated by Landlord’s architect, engineer or contractor (the“Repair Notice”).  If the damage rendersthe Premises or a material part of the Building untenantable and such RepairNotice states that repair or restoration of all of such damage that was causedto the Building or the Premises cannot be completed within 180 days from thedate of such damage (or within 90 days from the date of such damage if suchdamage occurs within the last 12 months of the Term), then Tenant will have theoption to terminate this Lease; provided, however, that if such damage is theresult of Tenant’s or its subtenant’s, licensee’s, or any of their agent’s,employee’s or invitee’s negligent acts or omissions or willful misconduct, thenTenant shall not have the right to terminate the Lease pursuant to thisSection 14.1 or Section 14.2. If such Repair Notice states that repair or restoration of all of suchdamage that was caused to the Building or the Premises cannot be completedwithin 180 days from the date of such damage, or if such damage occurred withinthe last 12 months of the Term and such Repair Notice states that repair orrestoration of all such damage that was caused to the Building or the Premisescannot be completed within 90 days from the date of such damage, or if suchdamage renders more than 50% of the Rentable Area of the Building or thePremises untenantable, or if such damage is not insured against by theinsurance policies required to be maintained by Landlord according to Section 13.1,then Landlord will have the option to terminate this Lease.  Any option to terminate granted above must beexercised by written notice to the other party given within 10 days afterLandlord delivers to Tenant the Repair Notice. If either party exercises its option to terminate this Lease, the Termwill expire and this Lease will terminate 10 days after notice of terminationis delivered; provided, however, that Rent for the period commencing on thedate of such damage until the date this Lease terminates will be reduced to thereasonable value of any use or occupation of the Building by Tenant during suchperiod.

 

**14.2****                        RepairObligations.**  If the Building or thePremises are damaged by fire or other casualty and neither party terminatesthis Lease according to Section 14.1, then Landlord will repair andrestore such damage with reasonable promptness to the condition existing priorto the damage or better, subject to delays for insurance adjustments and delayscaused by force majeure (as described in Section 29 below).  However, Landlord will not be required tospend more for such repair and restoration than the insurance proceedsavailable to Landlord as a result of the fire or other casualty.  To the extent Tenant is responsible forinsuring Tenant’s furniture and equipment, Tenant agrees, promptly upon noticefrom Landlord that Landlord is repairing the Premises, to file such claimsnecessary to reopen Tenant’s business within 20 days after the completion ofLandlord’s repairs.  Landlord will haveno liability to Tenant and Tenant will not be entitled to terminate this Leaseif Landlord’s repairs and restoration are not in fact completed within theestimated time period, provided that Landlord promptly commences and diligentlypursues such repairs and restoration to completion.  In no event will Landlord be obligated torepair, restore or replace any of the property required to be insured by Tenantaccording to

 

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Section 13.2.  If Landlord fails to complete repairs to thePremises within 180 days of the date of the damage (or within 90 days from thedate of such damage if such damage occurs within the last 12 months of theTerm), subject to force majeure delays, then Tenant shall have the right toterminate this Lease upon written notice delivered to Landlord at any timeafter such 180-day or 90-day (as applicable) period and prior to Landlord’ssubstantial completion of such repairs.

 

**14.3****                        RentAbatement.**  If any fire or casualtydamage renders the Premises untenantable and if this Lease is not terminatedaccording to Section 14.1, then Rent will abate beginning on the date ofsuch damage on a per diem basis.  Suchabatement will end on the earlier of 30 days after the date Landlord hassubstantially completed the repairs and restoration Landlord is required toperform according to Section 14.2 or the date Tenant accepts the Premisesfor occupancy.  Except as provided inSection 15.3, in no event will Landlord be liable for any inconvenience orannoyance to Tenant or injury to the business of Tenant resulting in any wayfrom damage caused by fire or other casualty or the repair of such damage,provided however that, to the extent Tenant remains in possession of a portionof the Premises, Landlord will take all reasonable steps to minimize thedisruption to Tenant’s business and use of such portion of the Premises duringthe period of repair.

 

**15.****                               WAIVERS AND INDEMNITIES.**

 

**15.1****                        Landlord’sWaivers.**  Tenant and its Affiliateswill not be liable or in any way responsible to Landlord for, and Landlordwaives all claims against Tenant and its Affiliates for, any loss, injury ordamage that is insured or required to be insured by Landlord underSection 13.1(a)(1), or arises from any deductible, or losses under worker’scompensation laws, so long as such loss, injury or damage results from or inconnection with this Lease or Tenant’s use and occupancy of the Premises.  Landlord shall use reasonable efforts tocause its insurance carrier to endorse all applicable policies waiving thecarrier’s rights of recovery under subrogation or otherwise against Tenant.

 

**15.2****                        Tenant’sWaivers.**  Except to the extent causedby the willful or negligent act or omission or breach of this Lease by Landlordor its agents or employees, Landlord and its Affiliates will not be liable orin any way responsible for, and Tenant waives all claims against Landlord andits Affiliates for, any loss, injury or damage suffered by Tenant or othersrelating to (a) loss or theft of, or damage to, property of Tenant or others;(b) injury or damage to persons or property resulting from fire, explosion,falling plaster, escaping steam or gas, electricity, water, rain or snow, orleaks from any part of the Building or from any pipes, appliances or plumbing,or from dampness; or (c) damage caused by the public or by construction of anyprivate or public work.  In addition,Landlord and its Affiliates will not be liable or in any way responsible toTenant for, and Tenant waives all claims against Landlord and its Affiliatesfor, any loss, injury or damage that is insured or required to be insured byTenant under Sections 13.2(b), or arises from any deductible, or losses underworker’s compensation laws, so long as such loss, injury or damage results fromor in connection with this Lease.  Tenantshall use reasonable efforts to cause its insurance carrier to endorse allapplicable policies waiving the carrier’s rights of recovery under subrogationor otherwise against Landlord.

 

**15.3****                        Landlord’sIndemnity.**  Subject toSection 15.2 and except to the extent caused by the willful or negligentact or omission or breach of this Lease by Tenant, its subtenants or licensees,or any of their respective agents, employees or invitees, Landlord willindemnify and hold Tenant harmless from and against any and all liability,loss, claims, demands, damages or expenses (including reasonable attorneys’fees) due to or arising out of any willful or negligent

 

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act oromission or breach of this Lease by Landlord or its agents or employees.  Landlord’s obligations under thisSection 15.3 will survive the expiration or early termination of the Term.

 

**15.4****                        Tenant’sIndemnity.**  Subject toSection 15.1 and except to the extent caused by the willful or negligentact or omission or breach of this Lease by Landlord or its agents or employees,Tenant will indemnify and hold Landlord harmless from and against any and allliability, loss, claims, demands, damages or expenses (including reasonable attorneys’fees) due to or arising out of any willful or negligent act or omission of orbreach of this Lease by Tenant, its subtenants or licensees, or any of theirrespective agents, employees or invitees. Tenant’s obligations under this Section 15.4 will survive theexpiration or early termination of the Term.

 

**16.****                               CONDEMNATION.**

 

**16.1****                        FullTaking.**  If all or substantially allof the Building or the Premises are taken for any public or quasi-public useunder any applicable Laws or by right of eminent domain, or are sold to thecondemning authority in lieu of condemnation, then this Lease will terminate asof the date when the condemning authority takes physical possession of theBuilding or the Premises.

 

**16.2****                        PartialTaking.**

 

(a)                                  Landlord’sTermination of Lease.  If only partof the Building or the Premises is thus taken or sold, and if after suchpartial taking, in Landlord’s reasonable judgment, alteration or reconstructionof any affected improvements necessary for Tenant’s use and enjoyment of thePremises is not economically justified, then Landlord (whether or not thePremises are affected) may terminate this Lease by giving written notice toTenant within 45 days after the taking.

 

(b)                                 Tenant’sTermination of Lease.  If any part ofthe Premises or if over 20% of the Building is thus taken or sold, Tenant mayterminate this Lease if in Tenant’s reasonable judgment the Premises cannot beoperated by Tenant in an economically viable fashion because of such partialtaking.  Such termination by Tenant must beexercised by written notice to Landlord given not later than 45 days afterTenant is notified of the taking of the Building.

 

(c)                                  EffectiveDate of Termination.  Termination byLandlord or Tenant will be effective as of the date when physical possession ofthe applicable portion of the Building or the Premises are taken by thecondemning authority.

 

(d)                                 Electionto Continue Lease.  If neitherLandlord nor Tenant elects to terminate this Lease upon a partial taking of aportion of the Building or the Premises, the Rent payable under this Lease willbe diminished by an amount allocable to the portion of the Building or Premiseswhich was so taken or sold.  If thisLease is not terminated upon a partial taking of the Building or the Premises,Landlord will, at Landlord’s sole expense, promptly restore and reconstruct theBuilding and the Premises to substantially their former condition to the extentthe same is feasible.  However, Landlordwill not be required to spend for such restoration or reconstruction an amountin excess of the net amount received by Landlord as compensation or damages forthe part of the Building or the Premises so taken.

 

**16.3****                        Awards.**  As between the parties to this Lease,Landlord will be entitled to receive, and Tenant assigns to Landlord, all ofthe compensation awarded upon taking of any

 

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part or all ofthe Building or the Premises, including any award for the value of theunexpired Term.  However, Tenant mayassert a claim in a separate proceeding against the condemning authority forany damages resulting from the taking of Tenant’s trade fixtures or personalproperty, or for moving expenses, business relocation expenses or damages toTenant’s business incurred as a result of such condemnation.

 

**17.****                               ASSIGNMENT AND SUBLETTING.**

 

**17.1****                        Limitation.**  Except as permitted in Sections 17.6 and17.7, without Landlord’s prior written consent (which consent will not beunreasonably withheld or delayed), Tenant will not assign all or any of itsinterest under this Lease, sublet all or any part of the Premises or permit thePremises to be used by any parties other than Tenant and its agents,contractors, invitees, or employees.

 

**17.2****                        Notice ofProposed Transfer; Landlord’s Options.** If Tenant desires to enter into any assignment of this Lease or asublease of all or any part of the Premises, Tenant will first give Landlordwritten notice, at least 30 days prior to the effective date of the proposedassignment or sublease, of the proposed assignment or sublease, which noticewill contain (a) the name and address of the proposed transferee, (b) theproposed use of the Premises if other than the Permitted Use, (c) statementsreflecting the proposed transferee’s current financial condition and income andexpenses for the past two years, and (d) the principal terms of the proposedassignment or sublease.  Tenant shall notpermit the proposed transferee to occupy the Premises, or a portion thereof,without Landlord’s written consent (which consent will not be unreasonablywithheld or delayed).  Except in the caseof any transfer permitted under Sections 17.6 and 17.7, Landlord will have theoption, which must be exercised, if at all, by notice given to Tenant within 15days after Landlord’s receipt of Tenant’s notice of the proposed transfer,either (a) if Tenant’s notice relates to a subletting, to sublet from Tenantsuch space as is described in the notice for such portion of the Term as isdescribed in the notice, upon the same terms and conditions and for the sameRent (apportioned, as appropriate, to the amount of such space) as provided inthis Lease; or (b) if such notice relates to an assignment, to become Tenant’sassignee.

 

**17.3****                        ConsentNot to be Unreasonably Withheld.**  IfLandlord does not exercise its applicable option under Section 17.2, thenLandlord will not unreasonably withhold or delay its consent to the proposedassignment or subletting if each of the following conditions is satisfied:

 

(a)                                  theproposed transferee, in Landlord’s reasonable opinion, has sufficient financialcapacity and business experience to perform Tenant’s obligations under thisLease;

 

(b)                                 theproposed transferee will make use of the Premises which in Landlord’sreasonable opinion (1) is lawful; (2) is consistent with the Permitted Use ofthe Premises under this Lease; (3) is consistent with the general character ofuses conducted by the other occupants of the Gunbarrel Technical Center; (4)will not increase the likelihood of damage or destruction to the Building orthe Premises; and (5) will not cause an increase in insurance premiums forinsurance policies applicable to the Building;

 

(c)                                  ifthe proposed transfer is a sublease, the rent which the proposed transfereewill be required to pay will be equal to at least 90% of the then-currentmarket rent for the portion of the Premises being sublet; provided that thisSection 17.3(c) shall only apply if Landlord is currently offering spaceon Winchester Circle in Boulder,

 

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Coloradocomparable in size and available rental term to the portion of the Premisesbeing offered for sublease by Tenant;

 

(d)                                 theproposed transferee, at the time of the proposed transfer, is neither a tenantin any building owned or managed by Landlord or any Affiliate of Landlord inthe same county in which the Building is located, nor a party with whomLandlord is then negotiating for the lease of space in the Gunbarrel TechnicalCenter;

 

(e)                                  atthe time of the proposed transfer no “Default” (as defined inSection 23.1) exists under this Lease beyond any applicable notice andcure period; and

 

(f)                                    theproposed transferee or Tenant will pay Landlord’s reasonable costs associatedwith Landlord’s review and approval of the proposed transfer, including, withoutlimitation, attorneys’ fees and costs.

 

**17.4****                        Form ofTransfer.**  If Landlord consents to aproposed assignment or sublease, Landlord’s consent will not be effectiveunless and until Tenant delivers to Landlord an original duly executedassignment or sublease, as the case may be, that provides, in the case of asublease, that the subtenant will comply with all applicable terms andconditions of this Lease and, in the case of an assignment, an assumption bythe assignee of all of the terms, covenants and conditions which this Leaserequires Tenant to perform.

 

**17.5****                        Paymentsto Landlord.**  If Landlord does notexercise its applicable option under Section 17.2 and Tenant effects anassignment or sublease, then Landlord will be entitled to receive and collect,either from Tenant or directly from the transferee, 50% of the amount by whichthe consideration required to be paid by the transferee for the use andenjoyment of Tenant’s rights under this Lease (after deducting from suchconsideration Tenant’s reasonable costs incurred in effecting the assignment orsublease, including, but not limited to, attorney fees, brokerage commissions,tenant improvements and free rent) exceeds the Rent payable by Tenant toLandlord allocable to the transferred space. Such percentage of such amount will be payable to Landlord at thetime(s) Tenant receives the same from its transferee (whether in monthlyinstallments, a lump sum, or otherwise). Landlord hereby agrees that Tenant shall be entitled to retain theremaining 50% of the amount by which the consideration required to be paid bythe transferee for the use and enjoyment of Tenant’s rights under this Leaseexceeds the Rent payable by Tenant to Landlord allocable to the transferredspace.

 

**17.6****                        Change ofOwnership.**  Tenant may assign thisLease without the prior consent of Landlord to (i) any entity which assumes theobligations of Tenant under this Lease and has acquired all or substantiallyall of Tenant’s assets or (ii) any entity which is a successor of Tenant byoperation of law or merger or consolidation of or with Tenant.

 

**17.7****                        PermittedTransfers.**  Tenant may, upon noticeto Landlord but without obtaining Landlord’s consent, assign this Lease orsublease all or any part of the Premises to an Affiliate of Tenant.

 

**17.8****                        Effect ofTransfers.**  Other than an assignmentpermitted under Section 17.6, no subletting or assignment will releaseTenant from any of its obligations under this Lease unless Landlord agrees tothe contrary in writing.  Acceptance ofRent by Landlord from any person other than Tenant will not be deemed a waiverby Landlord of any provision of this Section 17.8. Consent to oneassignment or subletting will not be deemed a consent to any subsequentassignment or subletting.  In the eventof any default by any assignee or subtenant or any successor of Tenant in theperformance of any Lease obligation, Landlord may proceed directly

 

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against Tenantwithout exhausting remedies against such assignee, subtenant or successor.  The voluntary or other surrender of thisLease by Tenant or the cancellation of this Lease by mutual agreement of Tenantand Landlord will not work a merger and will, at Landlord’s option, terminate allor any subleases or operate as an assignment to Landlord of all or anysubleases; such option will be exercised by notice to Tenant and all knownsubtenants in the Premises.

 

**18.****                               PERSONAL PROPERTY.**  Tenant may install in the Premises itspersonal property (including Tenant’s usual trade fixtures) in a proper manner,provided that no such installation will interfere with or damage themechanical, plumbing or electrical systems or the structure of Building, andprovided further that if such installation would require any change, additionor improvement to the Building, such installation will be subject toArticle 8.  If no Default thenexists, any such personal property installed in the Premises by Tenant (a) maybe removed from the Premises from time to time in the ordinary course ofTenant’s business or in the course of making any changes, additions orimprovements to the Premises permitted under Article 11, and (b) will beremoved by Tenant at the end of the Term according to Section 19.1.  Tenant will promptly repair at its expenseany damage to the Building and the Premises resulting from such installation orremoval.  Tenant will be solelyresponsible for any and all taxes relating to its personal property on thePremises, and shall reimburse Landlord pursuant to Section 3.2(d) ifLandlord is charged for any such taxes.

 

**19.****                               END OF TERM.**

 

**19.1****                        Surrender.**  Upon the expiration or other termination ofthe Term, Tenant will immediately vacate and surrender possession of thePremises to Landlord in good order, repair and condition, except for ordinarywear and tear.  Upon the expiration orother termination of the Term, Tenant agrees to remove (a) all changes,additions and improvements to the Premises the removal of which Landlordrequested or approved according to Article 8 at the time Landlord consentedto their installation, and (b) all of Tenant’s trade fixtures, furnishings,equipment and other personal property. Tenant will pay Landlord on demand the reasonable cost of repairing anydamage to the Building or Premises caused by the installation or removal of anysuch items. Any of Tenant’s property remaining on the Premises after theexpiration or other termination of the Term will be conclusively deemed to havebeen abandoned by Tenant and may be appropriated, stored, sold, destroyed orotherwise disposed of by Landlord without notice or obligation to account to orcompensate Tenant, and Tenant will pay Landlord on demand all costs incurred byLandlord relating to such abandoned property.

 

**19.2****                        HoldingOver.**  Tenant understands that itdoes not have the right to hold over at any time and Landlord may exercise anyand all remedies at law or in equity to recover possession of the Premises, aswell as any damages incurred by Landlord, due to Tenant’s failure to vacate thePremises and deliver possession to Landlord as required by this Lease.  If Tenant holds over after the ExpirationDate, Tenant will be deemed a tenant from month to month, at a monthly BaseRent, payable in advance, equal to 150% of the monthly Base Rent payable duringthe last year of the Term, and Tenant will be bound by all of the other terms,covenants and agreements of this Lease as the same may apply to a tenancy atsufferance.

 

**20.****                               ESTOPPEL CERTIFICATES.**  Promptly upon Landlord’s request after Tenanthas occupied the Premises, Tenant will execute and deliver to Landlord anOccupancy Estoppel Certificate in the form of Exhibit B.  In addition, Tenant agrees that at any timeand from time to time during the Term (but on not less than 15 business days’prior request by Landlord), Tenant will execute, acknowledge and deliver toLandlord a certificate indicating any or all of the

 

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following:  (a) the Commencement Date and ExpirationDate; (b) that this Lease is unmodified and in full force and effect (or, ifthere have been modifications, that this Lease is in full force and effect, asmodified, and stating the date and nature of each modification); (c) the date,if any, through which Base Rent, Additional Rent and any other Rent payablehave been paid; (d) that Tenant is not aware of any default by Landlord orTenant which has not been cured, except for defaults stated in suchcertificate; (e) that Tenant is not aware of any existing defenses or setoffsto enforcement of this Lease, except as specifically stated in suchcertificate; (f) provided such events have occurred, that Tenant has acceptedthe Premises and that all improvements required to be made to the Premises byLandlord have been completed according to this Lease; (g) that, except asspecifically stated in such certificate, Tenant, and only Tenant, currentlyoccupies the Premises; and (h) such other matters as may be reasonablyrequested by Landlord.  Any suchcertificate may be relied upon by Landlord and any prospective purchaser orpresent or prospective mortgagee, deed of trust beneficiary or ground lessor ofall or a portion of the Premises.

 

**21.****                               TRANSFERS OF LANDLORD’S INTEREST.**

 

**21.1****                        Sale,Conveyance and Assignment.**  Subjectonly to Tenant’s rights under this Lease, nothing in this Lease will restrictLandlord’s right to sell, convey, assign or otherwise deal with the Building(including the Premises) or Landlord’s interest under this Lease.

 

**21.2****                        Effect ofSale, Conveyance or Assignment.** Provided that Landlord’s transferee assumes Landlord’s obligations underthis Lease, a sale, conveyance or assignment of the Building will automaticallyrelease Landlord from liability under this Lease from and after the effectivedate of the transfer, except for any liability relating to the period prior tosuch effective date; and Tenant will look solely to Landlord’s transferee forperformance of Landlord’s obligations relating to the period after sucheffective date.  This Lease will not beaffected by any such sale, conveyance or assignment and Tenant will attorn toLandlord’s transferee.

 

**21.3****                        Subordinationand Nondisturbance.**  This Lease isand will be subject and subordinate in all respects to any Encumbrance.  With respect to any Encumbrance encumberingthe Premises as of and subsequent to the Date of this Lease, Landlord will useits best efforts to cause the Lender to agree (either in the Encumbrance or ina separate agreement with Tenant) that so long as Tenant is not in default ofits obligations under this Lease, this Lease will not be terminated andTenant’s possession of the Premises will not be disturbed by the termination orforeclosure, or proceedings for enforcement, of such Encumbrance.  While such subordination will occur automatically,Tenant agrees, upon request by and without cost to Landlord or any successor ininterest, to promptly execute and deliver to Landlord or any Lender suchinstrument(s) as may be reasonably required to evidence such subordination,provided such subordination instrument provides that so long as Tenant is notin default of its obligations under this Lease, this Lease will not beterminated and Tenant’s possession of the Premises will not be disturbed byLender.  In the alternative, however, anyLender may unilaterally elect to subordinate its Encumbrance to this Lease.

 

**21.4****                        Attornment.**  If the interest of Landlord is transferred toany person (a “Transferee”) by reason of the termination or foreclosure, orproceedings for enforcement, of an Encumbrance, or by delivery of a deed inlieu of such foreclosure or proceedings, Tenant will immediately andautomatically attorn to the Transferee. Upon attornment this Lease will continue in full force and effect as adirect lease between the Transferee and Tenant, upon all of the same terms,conditions and covenants as stated in this Lease, except that the Transfereewill

 

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not be: (a)liable for any act or omission of any prior landlord, including Landlord (butsuch exemption will not excuse the Transferee from the performance of anyobligations of the landlord under this Lease required to be performedsubsequent to the transfer to the Transferee); (b) subject to any offsets ordefenses which Tenant might have against any prior landlord, including Landlord(excluding any express right of abatement granted under this Lease, providedthat the Lender who held the Encumbrance the enforcement of which resulted inthe transfer to the Transferee (the “Foreclosing Lender”) was afforded anynotice and cure rights to which it was entitled under Section 24.1 withrespect to the matter that gave rise to such express right of abatement); (c)bound by any Rent or advance Rent not actually received by the Transferee whichTenant might have paid for more than the current month or the next succeedingmonth to any prior landlord, including Landlord, and all such Rent will remaindue and owing, regardless of such advance payment; (d) obligated for repaymentto Tenant of the Security Deposit or any other security or advance rentaldeposit made by Tenant, except to the extent the same is paid over to theTransferee; or (e) bound by any termination, amendment or modification of thisLease (other than one expressly contemplated by the terms of this Lease andeffected according to such express terms, such as termination by Landlord dueto a Default by Tenant) made while any action or proceedings for thetermination, foreclosure, or enforcement of an Encumbrance of which Tenant hadnotice was pending without the written consent of the Foreclosing Lender.Tenant agrees, upon request by and without cost to the Transferee, to promptlyexecute and deliver to the Transferee such instrument(s) as may be reasonablyrequired to evidence such attornment.

 

**22.****                               RULES AND REGULATIONS.**  Tenant agrees to faithfully observe and complywith the Rules and Regulations set forth on Exhibit C and with allreasonable modifications and additions to such Rules and Regulations (whichwill be applicable to all Building tenants) from time to time adopted byLandlord and of which Tenant is notified in writing.  No such modification or addition willcontradict or abrogate any right expressly granted to Tenant under this Lease.

 

**23.****                               TENANT’S DEFAULT AND LANDLORD’SREMEDIES.**

 

**23.1****                        Default.**  Each of the following events will constitutea material breach by Tenant and a “Default” under this Lease:

 

(a)                                  Failureto Pay Rent.  Tenant fails to payBase Rent, Additional Rent or any other Rent payable by Tenant under the termsof this Lease when due, and such failure continues for five days after writtennotice from Landlord to Tenant of such failure; provided that with respect toBase Rent and Operating Expenses, Tenant will be entitled to only two noticesof such failure during any Lease Year and if, after two such notices are givenin any Lease Year, Tenant fails, during such Lease Year, to pay any suchamounts when due, such failure will constitute a Default without further noticeby Landlord or additional cure period.

 

(b)                                 Failureto Perform Other Obligations.  Exceptas otherwise specifically provided in this Lease, Tenant breaches or fails tocomply with any other provision of this Lease applicable to Tenant, and suchbreach or noncompliance continues for a period of 30 days after notice byLandlord to Tenant; or, if such breach or noncompliance cannot be reasonablycured within such 30-day period, Tenant does not in good faith commence to curesuch breach or noncompliance within such 30-day period or does not diligentlycomplete such cure within 90 days after such notice from Landlord.  However, if such

 

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breach ornoncompliance causes or results in (1) a dangerous condition on the Building orPremises, or (2) any insurance coverage carried by Landlord or Tenant withrespect to the Building or Premises being jeopardized, then a Default willexist if such breach or noncompliance is not cured as soon as reasonablypossible after notice by Landlord to Tenant, and in any event is not curedwithin 30 days after such notice.  Forpurposes of this Section 23.1(b), financial inability will not be deemed areasonable ground for failure to cure any breach of this Lease within theapplicable cure period, or failure to comply with the provisions of this Lease.

 

(c)                                  Transferof Interest Without Consent. Tenant’s interest under this Lease or in the Premises is transferred orpasses to, or devolves upon, any other party in violation of Section 17.

 

(d)                                 Executionand Attachment Against Tenant. Tenant’s interest under this Lease or in the Premises is taken uponexecution or by other process of law directed against Tenant, or is subject toany attachment by any creditor or claimant against Tenant and such attachmentis not discharged or disposed of within 60 days after levy.

 

(e)                                  Bankruptcyor Related Proceedings.  Tenant filesa petition in bankruptcy or insolvency, or for reorganization or arrangementunder any bankruptcy or insolvency Laws, or voluntarily takes advantage of anysuch Laws by answer or otherwise, or dissolves or makes an assignment for thebenefit of creditors, or involuntary proceedings under any such Laws or for thedissolution of Tenant are instituted against Tenant, or a receiver or trusteeis appointed for the Premises or for all or substantially all of Tenant’s property,and such proceedings are not dismissed or such receivership or trusteeshipvacated within 45 days after such institution or appointment.

 

**23.2****                        Remedies.**  Time is of the essence in the performance ofthis Lease.  If any Default occurs,Landlord will have the right, at Landlord’s election, then or at any later timeprior to the cure of such Default, to exercise any one or more of the remediesdescribed below, such remedies to be exercised in accordance with applicableLaws.  Exercise of any of such remedieswill not prevent the concurrent or subsequent exercise of any other remedyprovided for in this Lease or otherwise available to Landlord at law or inequity.

 

(a)                                  Cureby Landlord.  Landlord may, atLandlord’s option but without obligation to do so, and without releasing Tenantfrom any obligations under this Lease, make any payment or take any action asLandlord deems necessary or desirable to cure any Default in such manner and tosuch extent as Landlord deems necessary or desirable. Landlord may do sowithout additional demand on, or additional written notice to, Tenant andwithout giving Tenant an additional opportunity to cure such Default.  Tenant covenants and agrees to pay Landlord,upon demand, all advances, costs and expenses of Landlord in connection withmaking any such payment or taking any such action, including reasonableattorney’s fees, together with interest at the rate described inSection 3.4, from the date of payment of any such advances, costs andexpenses by Landlord.

 

(b)                                 Terminationof Lease and Damages.  Landlord mayterminate this Lease, effective at such time as may be specified by writtennotice to Tenant, and demand (and, if such demand is refused, recover)possession of the Premises from Tenant. Tenant will remain liable to Landlord for damages in an amount equal tothe Base Rent, Operating

 

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Expenses andother Rent which would have been owing by Tenant for the balance of the Termhad this Lease not been terminated, less the net proceeds, if any, of anyreletting of the Premises by Landlord subsequent to such termination, afterdeducting all Landlord’s expenses in connection with such recovery ofpossession or reletting.  Landlord willbe entitled to collect and receive such damages from Tenant on the days onwhich such Rent would have been payable if this Lease had not beenterminated.  Alternatively, at Landlord’soption, Landlord will be entitled to recover from Tenant, as damages for lossof the bargain and not as a penalty, an aggregate sum equal to (1) all unpaidBase Rent, Operating Expenses and other Rent for any period prior to thetermination date of this Lease (including interest from the due date to thedate of the award at the rate described in Section 3.4), plus any othersum of money and damages owed by Tenant to Landlord for events or actionsoccurring prior to the termination date; plus (2) the present value at the timeof termination (calculated at the rate commonly called the discount rate ineffect at the Federal Reserve Bank of New York on the termination date) of theamount, if any, by which (A) the aggregate of such Rent payable by Tenant underthis Lease that would have accrued for the balance of the Term aftertermination (with respect to Operating Expenses, such aggregate will becalculated by assuming that Operating Expenses for the calendar year in whichtermination occurs and for each subsequent calendar year remaining in the Termif this Lease had not been terminated will increase by 3% per year over theamount of Operating Expenses for the prior calendar year), exceeds (B) theamount of such Rent which Landlord will receive for the remainder of the Termfrom any reletting of the Premises occurring prior to the date of the award, orif the Premises have not been relet prior to the date of the award, the amount,if any, of such Rent which could reasonably be recovered by reletting thePremises for the remainder of the Term at the then-current fair rental value,in either case taking into consideration loss of rent while finding a newtenant, tenant improvements and rent abatements necessary to secure a newtenant, leasing brokers’ commissions and other costs which Landlord hasincurred or might incur in leasing the Premises to a new tenant; plus (3) intereston the amount described in (2) above from the termination date to the date ofthe award at the rate described in Section 3.4.  Landlord hereby acknowledges, however, thatLandlord shall attempt to mitigate its damages to the extent required by applicableLaws.

 

(c)                                  Repossessionand Reletting.  Landlord may reenterand take possession of all or any part of the Premises, without additionaldemand or notice, and repossess the same and expel Tenant and any partyclaiming by, through or under Tenant, and remove the effects of both using suchforce for such purposes as may be necessary, without being liable forprosecution for such action or being deemed guilty of any manner of trespass,and without prejudice to any remedies for arrears of Rent or right to bring anyproceeding for breach of covenants or conditions.  No such reentry or taking possession of thePremises by Landlord will be construed as an election by Landlord to terminatethis Lease unless a written notice of such intention is given to Tenant.  No notice from Landlord or notice given undera forcible entry and detainer statute or similar Laws will constitute anelection by Landlord to terminate this Lease unless such notice specifically sostates.  Landlord reserves the right,following any reentry or reletting, to exercise its right to terminate thisLease by giving Tenant such written notice, in which event the Lease willterminate as specified in such notice. After recovering possession of the Premises, Landlord may, from time totime, but will not be obligated to, relet all or any

 

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part of thePremises for Tenant’s account, for such term or terms and on such conditionsand other terms as Landlord, in its discretion, determines.  Landlord hereby acknowledges, however, thatLandlord shall mitigate its damages to the extent required by applicable Laws.Landlord may make such repairs, alterations or improvements as Landlordconsiders appropriate to accomplish such reletting, and Tenant will reimburseLandlord upon demand for all costs and expenses, including attorneys’ fees,which Landlord may incur in connection with such reletting.  Landlord may collect and receive the rentsfor such reletting but Landlord will in no way be responsible or liable for anyfailure to relet the Premises or for any inability to collect any rent due uponsuch reletting.  Regardless of Landlord’srecovery of possession of the Premises, Tenant will continue to pay on thedates specified in this Lease, the Rent which would be payable if suchrepossession had not occurred, less a credit for the net amounts, if any,actually received by Landlord through any reletting of the Premises.  Alternatively, at Landlord’s option, Landlordwill be entitled to recover from Tenant, as damages for loss of the bargain andnot as a penalty, an aggregate sum equal to (1) all unpaid Base Rent andOperating Expenses and other Rent for any period prior to the repossession date(including interest from the due date to the date of the award at the ratedescribed in Section 3.4), plus any other sum of money and damages owed byTenant to Landlord for events or actions occurring prior to the repossessiondate; plus (2) the present value at the time of repossession (calculated at therate commonly called the discount rate in effect at the Federal Reserve Bank ofNew York on the repossession date) of the amount, if any, by which (A) theaggregate of such Rent payable by Tenant under this Lease that would haveaccrued for the balance of the Term after repossession (with respect toOperating Expenses, such aggregate will be calculated by assuming thatOperating Expenses for the calendar year in which repossession occurs and foreach subsequent calendar year remaining in the Term if Landlord had not repossessedthe Premises will increase by 3% per year over the amount of Operating Expensesfor the prior calendar year), exceeds (B) the amount of such Rent whichLandlord will receive for the remainder of the Term from any reletting of thePremises occurring prior to the date of the award, or if the Premises have notbeen relet prior to the date of the award, the amount, if any, of such Rentwhich could reasonably be recovered by reletting the Premises for the remainderof the Term at the then-current fair rental value, in either case taking intoconsideration loss of rent while finding a new tenant, tenant improvements andrent abatements necessary to secure a new tenant, leasing brokers’ commissionsand other costs which Landlord has incurred or might incur in leasing thePremises to a new tenant; plus (3) interest on the amount described in (2)above from the repossession date to the date of the award at the rate describedin Section 3.4.  In no event willLandlord be required to pay Tenant any excess amounts if Landlord successfullyrelets the Premises.

 

(d)                                 BankruptcyRelief.  Nothing contained in thisLease will limit or prejudice Landlord’s right to prove and obtain asliquidated damages in any bankruptcy, insolvency, receivership, reorganizationor dissolution proceeding, an amount equal to the maximum allowable by any Lawsgoverning such proceeding in effect at the time when such damages are to beproved, whether or not such amount be greater, equal or less than the amountsrecoverable, either as damages or Rent, under this Lease.

 

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**24.****                               LANDLORD’S DEFAULT AND TENANT’SREMEDIES.**

 

**24.1****                        Default.**  If Tenant believes that Landlord has breachedor failed to comply with any provision of this Lease applicable to Landlord,Tenant will give written notice to Landlord describing the alleged breach ornoncompliance.  Landlord will not bedeemed in default under this Lease if Landlord cures the breach ornoncompliance within 20 days after receipt of Tenant’s notice or, if the samecannot reasonably be cured within such 20-day period, if Landlord in good faithcommences to cure such breach or noncompliance within such period and thendiligently and continuously pursues the cure to completion.  Tenant will also send a copy of such noticeto any Lender of whom Tenant has been notified in writing, and such Lender willalso have the concurrent right to cure the breach or noncompliance within theperiod of time described above.

 

**24.2****                        Remedies.**  If Landlord breaches or fails to comply withany provision of this Lease applicable to Landlord, and such breach ornoncompliance is not cured within the period of time described inSection 24.1, then Tenant may exercise any right or remedy available toTenant at law or in equity, except to the extent expressly waived or limited bythe terms of this Lease.

 

**25.****                               SECURITY DEPOSIT.**

 

**25.1****                        Deposit.**  Upon execution of this Lease, Tenant willdeposit the Security Deposit with Landlord. The Security Deposit will be used solely as security for Tenant’sfaithful and diligent performance of all of Tenant’s obligations under thisLease, including payment of Rent. The Security Deposit will remain inLandlord’s possession until credited against Tenant’s Base Rent obligationpursuant to Section 25.4, and Landlord will not be required to segregateit from Landlord’s general funds, unless required by Law.  Tenant will not be entitled to any intereston the Security Deposit, unless required by Law.

 

**25.2****                        Use andRestoration.**  If Tenant fails toperform any of its obligations under this Lease, Landlord may, at its option,use, apply or retain all or any part of the Security Deposit for the payment of(a) any Rent in arrears; (b) any expenses Landlord may incur as a direct orindirect result of Tenant’s failure to perform; and (c) any other losses ordamages Landlord may suffer as a direct or indirect result of Tenant’s failureto perform.  If Landlord so uses orapplies all or any portion of the Security Deposit, Landlord will notify Tenantof such use or application and Tenant will, within 10 days after the date ofLandlord’s notice, deposit with Landlord a sum sufficient to restore theSecurity Deposit to the amount held by Landlord immediately prior to such useor application.  Tenant’s failure to sorestore the Security Deposit will constitute a Default.

 

**25.3****                        Transfers.**  Tenant will not assign or encumber theSecurity Deposit without Landlord’s express written consent.  Neither Landlord nor its successors orassigns will be bound by any assignment or encumbrance of the Security Depositunless Landlord has given its consent. Landlord will have the right, at any time and from time to time, totransfer the Security Deposit to any purchaser or lessee of the Building.  Upon any such transfer, Tenant agrees to looksolely to the new owner or lessee for the return of the Security Deposit.

 

**25.4****                        SecurityDeposit as Base Rent Payment.** Landlord and Tenant agree that the Security Deposit will be creditedagainst Tenant’s Base Rent obligation for the entire first month and part ofthe second month of the third Lease Year. Pursuant to this Section 25.4, after the

 

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second monthof the third Lease Year, no Security Deposit shall exist, and Tenant shall haveno claim or interest in such funds.

 

**26.****                               BROKERS.**  Landlordand Tenant represent and warrant that no broker or agent negotiated or wasinstrumental in negotiating or consummating this Lease except the Brokers.Neither party knows of any other real estate broker or agent who is or might beentitled to a commission or compensation in connection with this Lease.  Landlord will pay all fees, commissions orother compensation payable to the Brokers pursuant to separate agreement. Tenantand Landlord will indemnify and hold each other harmless from all damages paidor incurred by the other resulting from any claims asserted against eitherparty by brokers or agents claiming through the other party other than theBrokers.

 

**27.****                               LIMITATIONS ON LANDLORD’S LIABILITY.**  Any liability for damages, breach, ornonperformance by Landlord or arising out of the subject matter of, or therelationship created by, this Lease will be collectible only out of Landlord’sinterest in the Building and the Property and no personal liability is assumedby, or will at any time be asserted against, Landlord, its Affiliates,shareholders, partners, managers, owners or members, Landlord’s propertymanager or asset manager, or any of its or their successors or assigns; allsuch liability, if any, being expressly waived and released by Tenant.

 

**28.****                               NOTICES.**  Allnotices required or permitted under this Lease must be in writing and will onlybe deemed properly given and received (a) when actually given and received, ifdelivered in person to a party who acknowledges receipt in writing; or (b) onebusiness day after deposit with a private courier or overnight delivery serviceor overnight delivery, if such courier or service obtains a writtenacknowledgment of receipt; or (c) two business days after deposit in the UnitedStates mails, certified mail with return receipt requested and postageprepaid.  All such notices must betransmitted by one of the methods described above to the party to receive thenotice at, in the case of notices to Landlord, Landlord’s Address, and in thecase of notices to Tenant, Tenant’s Address, or, in either case, at such otheraddress(es) as either party may notify the other of according to thisSection 28.

 

**29.****                               FORCE MAJEURE**.

 

**29.1****                       **Otherthan for Tenant’s obligations under this Lease that can be performed by thepayment of money (e.g., payment of Rent and maintenance of insurance), whenevera period of time is herein prescribed for action to be taken by either partyhereto, such party shall not be liable or responsible for, and there shall beexcluded from the computation of any such period of time, any delays due tostrikes, riots, acts of God, shortages of labor or materials, war, governmentallaws, regulations, or restrictions, or any other causes of any kind whatsoeverwhich are beyond the control of such party.

 

**30.****                               MISCELLANEOUS.**

 

**30.1****                        Parking.**  During the Term, Landlord shall makeavailable to Tenant, at no charge to Tenant during the entire Term, 64unreserved parking spaces in the parking lot for the Building.

 

**30.2****                        Binding Effect.**  Each of the provisions of this Lease willextend to bind or inure to the benefit of, as the case may be, Landlord andTenant, and their respective heirs, successors and assigns, provided thisclause will not permit any transfer by Tenant contrary to the provisions ofArticle 17.

 

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**30.3****                        CompleteAgreement; Modification.**  All of therepresentations and obligations of the parties are contained in this Lease andno modification, waiver or amendment of this Lease or of any of its conditionsor provisions will be binding upon a party unless in writing signed by suchparty.

 

**30.4****                        Deliveryfor Examination.**  Submission of theform of the Lease for examination will not bind Landlord in any manner, and noobligations will arise under this Lease until it is signed by both Landlord andTenant and delivery is made to each.

 

**30.5****                        No AirRights.**  This Lease does not grantany easements or rights for light, air, or view.  Any diminution or blockage of light, air, orview by any structure or condition now or later erected will not affect thisLease or impose any liability on Landlord.

 

**30.6****                        EnforcementExpenses.**  Each party agrees to pay,upon demand, all of the other party’s costs, charges and expenses, includingthe fees and out-of-pocket expenses of counsel, agents, and others retained,incurred in successfully enforcing the other party’s obligations under thisLease.

 

**30.7****                        No Waiver.**  No waiver of any provision of this Lease willbe implied by any failure of either party to enforce any remedy upon theviolation of such provision, even if such violation is continued or repeatedsubsequently.  No express waiver willaffect any provision other than the one specified in such waiver, and that onlyfor the time and in the manner specifically stated.

 

**30.8****                        Recording;Confidentiality.**  Tenant will notrecord this Lease, or a short form memorandum, without Landlord’s writtenconsent and any such recording without Landlord’s written consent will be aDefault.  Tenant agrees to keep the Leaseterms, provisions and conditions confidential and will not disclose them to anyother person without Landlord’s prior written consent.  However, Tenant may disclose Lease terms,provisions and conditions to Tenant’s brokers, accountants, attorneys, managingemployees and others in privity with Tenant, the Internal Revenue Service, oras required in Tenant’s SEC filings, as reasonably necessary for Tenant’sbusiness purposes or necessary in connection with the enforcement of its rightshereunder, without such prior consent.

 

**30.9****                        Captions.**  The captions of sections are for convenienceonly and will not be deemed to limit, construe, affect or alter the meaning ofsuch sections.

 

**30.10****                 Invoices.**  All bills or invoices to be given by Landlordto Tenant will be sent to Tenant’s Address. Tenant may change Tenant’s Address by notice to Landlord given accordingto Section 28.  If Tenant fails togive Landlord written notice of its objections within 90 days after receipt ofany bill or invoice from Landlord, such bill or invoice will be deemed true andcorrect and Tenant may not later question the validity of such bill or invoiceor the underlying information or computations used to determine the amountstated.

 

**30.11****                 Severability.**  If any provision of this Lease is declaredvoid or unenforceable by a final judicial or administrative order, this Leasewill continue in full force and effect, except that the void or unenforceableprovision will be deemed deleted and replaced with a provision as similar in termsto such void or unenforceable provision as may be possible and be valid andenforceable.

 

**30.12****                 Jury Trial.**  LANDLORD AND TENANT WAIVE TRIAL BY JURY INANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY LANDLORD OR TENANT

 

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AGAINST THEOTHER WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THISLEASE, TENANT’S USE AND OCCUPANCY OF THE PREMISES OR THE COMMON AREA, OR THERELATIONSHIP OF LANDLORD AND TENANT. HOWEVER, SUCH WAIVER OF JURY TRIAL WILL NOT APPLY TO ANY CLAIMS FORPERSONAL INJURY.

 

**30.13****                 Authority toBind.**  The individuals signing thisLease on behalf of Landlord and Tenant represent and warrant that they areempowered and duly authorized to bind Landlord or Tenant, as the case may be,to this Lease according to its terms.

 

**30.14****                 OnlyLandlord/Tenant Relationship.** Landlord and Tenant agree that neither any provision of this Lease norany act of the parties will be deemed to create any relationship betweenLandlord and Tenant other than the relationship of landlord and tenant.  Tenant has only a leasehold not subject tolevy and sale and not assignable by Tenant except as set forth in this Lease.

 

**30.15****                 Governing Law.**  This Lease will be governed by and construedaccording to the laws of the State of Colorado.

 

**30.16****                 Exhibits.**  The following exhibits are attached to andmade a part of this Lease by this reference:

 

Exhibit A -Depiction of Premises

Exhibit B -Occupancy Estoppel Certificate

Exhibit C -Rules and Regulations

Exhibit D -Work Letter

 

IN WITNESSWHEREOF, this Lease is executed as of the date set forth above.

 
| ** ** | **LANDLORD:**                                                        |
|------------|----------------------------------------------------------------------|
| ** ** | ** **                                                           |
|       | DaPuzzo  Investment Group LLC, a Colorado  limited liability company |
|       |                                                                 |
|       |                                                                 |
|       | By:                                                                  |   |   |
|       |                                                                 | Douglas C.  DaPuzzo |   |
|       |                                                                 | Manager |   |
|       |                                                                 |
|       |                                                                 |
| ** ** | **TENANT:**                                                          |
|       |                                                                 |
|       | Encision,  Inc., a Colorado corporation                              |
|       |                                                                 |
|       |                                                                 |
|       | By:                                                                  |   |   |
|       | Name: James  A. Bowman                                               |
|       | Title:  President and CEO                                            |

 

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| STATE OF  | )     |
|-----------|-------|
|      | ) ss: |
| COUNTY OF | )     |

 

The foregoinginstrument was acknowledged before me this                 dayof                               ,2004, by James A. Bowman, as President and CEO of Encision, Inc. a Coloradocorporation.

 

Witness myhand and official seal.

 

My commissionexpires:                                                                      .

 

 
|   |           |   |
|--------|----------------|--------|
|   | Notary  Public |

 

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| STATE OF  COLORADO | )     |
|--------------------|-------|
|               | ) ss: |
| COUNTY OF  BOULDER | )     |

 

The foregoinginstrument was acknowledged before me this        day of                           ,2004, by Douglas C. DaPuzzo, as Manager of DaPuzzo Investment Group, LLC, aColorado limited liability company.

 

Witness myhand and official seal.

 

My commissionexpires:                                                                      .

 

 
|   |           |   |
|--------|----------------|--------|
|   | Notary  Public |

 

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**Exhibit A**

**DEPICTION OF PREMISES**

 

A-1

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**Exhibit B**

**OCCUPANCY ESTOPPEL CERTIFICATE**

 

THIS OCCUPANCYESTOPPEL CERTIFICATE (this “Certificate”) is made upon this           day of                                           ,2004, by ENCISION, INC., a Colorado corporation (the “Tenant”), with respect toand forming a part of that certain Lease Agreement (the “Lease”) dated                                                   ,2004, between DaPuzzo Investment Group, LLC, a Colorado limited liabilitycompany (the “Landlord”) and Tenant for the space known as Suites A and B (the“Premises”) within the building located at 6797 Winchester Circle, Boulder,Colorado (the “Building”).

 

Inconsideration of the mutual covenants and agreements stated in the Lease, andintending that this Certificate may be relied upon by Landlord and anyprospective purchaser or present or prospective mortgagee, deed of trustbeneficiary, or ground lessor of all or a portion of the Building, Tenantcertifies as follows:

 

1.                                       Exceptfor those terms expressly defined in this Certificate, all initiallycapitalized terms will have the meanings stated for such terms in the Lease.

 

2.                                       TheCommencement Date occurred on                                                and the Expiration Date will occur on                                 .

 

3.                                       Tenant’sobligation to make monthly payments of Base Rent under the Lease began (or willbegin) on                                             and is paid current through the date of this Certificate.

 

4.                                       Tenant’sobligation to make monthly estimated payments of Additional Rent under theLease began (or will begin) on                                     and is paid current through the date of this Certificate.

 

5.                                       Tenanthas accepted the Premises, and all leasehold improvements and other workrequired to be performed by Landlord under the Lease (excluding latent defectsand punch list items) have been satisfactorily completed.

 

6.                                       Tenanthas no existing offset, credit, or defense to the payment of any Rent.

 

IN WITNESSWHEREOF, Tenant has executed this Certificate as of the day and year firstwritten above.

 

 
| ** ** | **TENANT:**                              |
|------------|------------------------------------------|
|       |                                     |
|       | ENCISION,  INC., a Colorado  corporation |
|       |                                     |
|       |                                     |
|       | By:                                      |   |
|       | Name:                                    |   |
|       | Title:                                   |   |
|            |                                          |  |  |  |

 

 

B-1

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**Exhibit C**

**RULES AND REGULATIONS**

 

Tenantcovenants and agrees to comply with the following rules and regulations as theymay be modified or amended during the Term. Landlord will not be responsible to Tenant for the nonperformance ofsuch rules and regulations by any other tenant or occupant of the Building.

 

1.                                       Noawning or other projections shall be attached to the outside walls of theBuilding without, in each instance, the prior written consent of Landlord,which consent shall not be unreasonably withheld.

 

2.                                       Noaerial, dish, antenna or telecommunications tower shall be erected by Tenant onthe roof or exterior walls of the Building, or on the grounds of the Buildingwithout, in each instance, the prior written consent of Landlord, which shallnot be unreasonably withheld.  Any suchitem so installed without such written consent shall be subject to removalwithout notice at any time.

 

3.                                       Noloud speakers, television sets, phonographs, radios, musical instruments orother devices shall be used by Tenant in a manner so as to be heard or seen offthe Building without the prior written consent of Landlord.

 

4.                                       Tenantshall not make or permit any noise, odor or gases which Landlord deemsobjectionable to emanate from the Premises. Tenant shall not suffer, allow, orpermit any vibration, light, or other effect to emanate from the Premises, orfrom any machine or other installation therein, or otherwise suffer, allow, orpermit the same to constitute a nuisance or otherwise interfere with thesafety, comfort, or convenience of Landlord or any of the other occupants ofthe Gunbarrel Technical Center.  Uponnotice by Landlord to Tenant that any of the aforesaid is occurring, Tenantagrees to forthwith remove or control the same.

 

5.                                       Duringthe last six months of this Lease, or any renewal or extension thereof, or atany time that Tenant may be in Default hereunder, Landlord shall have theright, upon reasonable advance notice, to enter the Premises at all reasonabletimes during usual business hours for the purpose of showing the same toprospective tenants.  Landlord may alsoplace signs on the exterior of the Building which are visible from the exterioroff the Building, for the purpose of advertising the availability of thePremises for lease.

 

6.                                       Tenantshall not permit its employees, licensees or invitees, to smoke any tobaccoproducts in the vicinity of any entrance to the Building.  Landlord may establish an outdoor smokingarea in the rear of the Building and Tenant shall take all actions necessary toensure that its employees, licensees and invitees limit smoking to suchdesignated area.

 

C-1

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