Document:

EXHIBIT
      10.27

    

    

    

    Lease
      Agreement with Pawnee Properties, LLC.

     

     

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    LEASE

    

    

    PAWNEE
      PROPERTIES, LLC

    

    

    (as
      Landlord)

    

    

    and

    

    

    AEROGROW
      INTERNATIONAL, INC.

    

    

    (as
      Tenant)

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    LEASE

    

    THIS
      LEASE is made this 27th day of July, 2006, by and between PAWNEE PROPERTIES,
      LLC, a Colorado limited liability company ("Landlord") and AEROGROW
      INTERNATIONAL, INC. a Nevada corporation (“Tenant”).

    

    

    WITNESSETH:

    

    1.
      DEFINITIONS

    

    In
      addition to other terms, which are defined elsewhere in this Lease, the terms
      defined in the following subparagraphs of this Paragraph 1 shall have the
      meanings set forth in such subparagraph whenever used in this Lease with the
      first letter of each word capitalized.

    

    a. “Additional
      Rent” shall mean Tenant’s Pro Rata Share of Operating Expenses and such other
      charges as are required to be paid by Tenant to Landlord.

    

    b.
       "Base
      Rent" or “Basic Rental” shall mean annual rental for the first year of the
      Primary Lease Term of ONE HUNDRED EIGHTY-NINE THOUSAND ONE HUNDRED EIGHT AND
      NO/100’s Dollars ($189,108.00) payable in equal monthly installments of FIFTEEN
      THOUSAND SEVEN HUNDRED FIFTY-NINE AND NO/100’s Dollars
      ($15,759.00).

    

    c. “Brokers”
      shall mean The Colorado Group, Inc. and Chrisman Commercial, LLC for Landlord
      and Irwin & Hendrick, Ltd. for Tenant.

    

    d. "Building"
      shall mean that certain building and other improvements located at 6075 Longbow
      Drive, Boulder, Colorado 80301, and the real property upon which such building
      and improvements is located.

    

    e. “Commencement
      Date” shall mean the date the Lease commences pursuant to paragraphs 3(b) or
      3(l).

    

    f. "Common
      Areas" shall mean those portions of the Building, which are made available
      on a
      non-exclusive basis for general use in common, including landscaping and lawn
      sprinkler systems, of tenants, their employees, agents and invitees. Landlord
      shall have the right from time-to-time to change the location or character
      of
      and to make alterations of or additions to the Common Areas, and to repair
      and
      reconstruct the Common Areas.

    

    g. Intentionally
      Deleted.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    h. The
      following exhibits, riders and/or addenda are attached to this Lease and
      expressly incorporated herein by this reference:

     

    Exhibit
      A Depiction
      of the Premises

    Exhibit
      B Rules
      and
      Regulations

    Exhibit
      C Form
      Tenant Estoppel Certificate

    Exhibit
      D Form
      Subordination, Non-disturbance and Attornment Agreement

    Exhibit
      E Work
      Letter

    Exhibit
      F 2006
      Estimated Operating Expenses

    

    i. "Landlord's
      Notice Address" shall mean c/o Chrisman Commercial 5777 Central Avenue, Suite
      110, Boulder CO 80301, Attn: Steven Chrisman, or such other address as Landlord
      may from time-to-time designate.

    

    j. “Lease
      Year” shall mean each twelve month period during the Primary Lease Term or
      extension thereof.

    

    k. “Operating
      Expenses” shall mean all costs and expenses of every kind and nature paid or
      incurred by Landlord in the operation, management, repair, maintenance and
      administration of the Building as set forth in Paragraph 6 below.

    

    l. “Parking
      Spaces” shall mean eighty-six (86) unassigned and uncovered parking spaces in
      areas on the Property, which Landlord designates from time-to-time for parking
      by tenants in the Building.

    

    m. "Premises"
      shall mean those certain premises located on the first and second floor of
      the
      Building known as Suite 200, which the parties agree is comprised of
      approximately 21,012 rentable square feet as depicted on Exhibit A attached
      hereto. 

    

    n. "Primary
      Lease Term." Subject to adjustment as set forth in Paragraph 3b below, the
      term
      of the Lease shall commence at 12:01 a.m. on the 1st day of December, 2006
      and
      shall terminate at 12:00 midnight on the 31st day of January, 2012, unless
      modified pursuant to paragraph 3(b), a term of five (5) years and two (2)
      months.

    

    o. "Prime
      Rate" shall mean the rate quoted from time-to-time in the Money Rates section
      of
      The Wall Street Journal that leading banks are charging to their most
      credit-worthy customers.

    

    p. "Property"
      shall mean that certain real property on which the Building is situated, located
      in Boulder, Colorado more particularly described as Lot 3, Longbow Park, County
      of Boulder, State of Colorado. 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    q. "Rent"
      shall mean Basic Rent together with all other monetary obligations (or other
      obligations which are capable of being reduced to a monetary sum) under this
      Lease.

    

    r. "Rentable
      Area" shall mean 39,626 square feet which is all rentable space available for
      lease in the Building. If there is a significant change in the aggregate
      Rentable Area as a result of an addition to the Building, partial destruction
      thereof, modification to the design of the Building, or similar cause which
      causes a reduction or increase thereto on a permanent basis, Landlord shall
      make
      such adjustment in the computations as shall be necessary to provide for any
      such change. Tenant agrees that the Rentable Area may be recalculated in the
      event that the Building and/or the Premises is re-measured. Notwithstanding
      such
      re-measurement, Tenant's Pro Rata Share and Base Rent shall not be increased
      or
      decreased during the Primary Lease Term.

    

    s.
       “Reserve
      Amount” shall mean a reserve for replacement of heating, ventilating and
      air-conditioning unit, replacement of the roof, and parking lot in the amount
      of
      NINETEEN THOUSAND EIGHT HUNDRED THIRTEEN AND NO/100’s Dollars
      ($19,813.00)).

    

    t. “Security
      Deposit" shall mean the sum of TWENTY-FOUR THOUSAND FOUR HUNDRED TWENTY-SIX
      AND
      45/100’s Dollars ($24,426.45).

    

    u. "Tenant's
      Notice Address" shall mean 6075 Longbow Drive, Suite 200, Boulder, Colorado
      80301.

    

    v. "Tenant's
      Permitted Use" shall mean administrative offices and assembly, machine shop,
      and
      grow labs for Tenant’s in-home garden unit. 

    

    w. "Tenant's
      Pro Rata Share" shall mean 55.8166%. This percentage is calculated by dividing
      the Premises square footage by 95% of the Rentable Area. In the event Tenant
      at
      any time during the Primary Lease Term, or any extensions thereof, leases
      additional space in the Building, Tenant's Pro Rata Share shall be recomputed
      by
      dividing the total rentable square footage of the Premises then being leased
      by
      Tenant (including any additional space) by 95% of the Rentable Area and the
      resulting percentage shall become Tenant's Pro Rata Share.

    

    2. PREMISES. In
      consideration of the payment of Rent and the keeping and performance of the
      covenants and agreements by Tenant, as hereinafter set forth, Landlord hereby
      leases and demises unto Tenant the Premises, together with a non-exclusive
      right, subject to the provisions hereof, to use all appurtenances thereto,
      including the Common Areas.

    

    3. COMPLETION
      OF THE PREMISES AND POSSESSION.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    a. If
      the
      Premises have never been occupied and are not completed as of the date this
      Lease is entered into and Landlord has agreed to complete the same to any extent
      or the Premises have previously been occupied, but Landlord has agreed to
      perform remodeling work thereon, provisions with respect to such completion
      or
      remodeling will be set forth in a work letter to be executed between Landlord
      and Tenant concurrently herewith (the "Work Letter"), the form of which is
      attached hereto as Exhibit E. Other than as set forth in the Work Letter,
      Landlord shall have no obligation for the completion or remodeling of the
      Premises, and Tenant shall accept the Premises in their "as is" condition on
      the
      date the Primary Lease Term commences. If Landlord is to complete or remodel
      the
      Premises and if the Premises are not "Ready for Occupancy," as hereafter
      defined, on the date the Primary Lease Term is to begin, Tenant's obligation
      to
      pay the Base Rent, its Pro Rata Share of increases in Operating Expenses, and
      other sums owing hereunder shall not commence until the Premises are Ready
      for
      Occupancy, provided, however, from the effective date hereof, other than the
      payment of Rent, this Lease, and all of the covenants, conditions, and
      agreements herein contained shall be in full force and effect. The postponement
      of Tenant's obligation to pay Rent and other sums herein provided to be paid
      by
      Tenant for such period prior to the delivery of the Premises to Tenant, Ready
      for Occupancy, as hereinafter defined, shall be in full settlement of all claims
      which Tenant might otherwise have by reason of the Premises not being Ready
      for
      Occupancy on the date the Primary Lease Term is scheduled to begin. However,
      if
      Tenant takes possession of all or any part of the Premises prior to the date
      the
      Premises are Ready for Occupancy for the purpose of conducting its usual
      business therein, all terms and provisions of this Lease shall apply, including
      the obligations for the payment of all Rent, and other amounts owing hereunder.
      "Ready for Occupancy" as used herein shall mean the date that Landlord shall
      have substantially completed the Premises or any remodeling work to be performed
      by Landlord, to the extent agreed to in the Work Letter. The issuance of all
      required certificate(s) of occupancy (temporary or permanent), final inspection
      or other approval from the governmental authority having jurisdiction over
      the
      Building allowing the Tenant to occupy the Premises shall control conclusively
      the date upon which the Premises are Ready for Occupancy, and the obligation
      to
      pay Rent begins as aforesaid. In addition to the above, if Landlord is delayed
      in delivering the Premises to Tenant due to the failure of a prior occupant
      to
      vacate the same, then the obligation for the payment of Rent and the
      commencement of the term hereof shall also be postponed, as hereinabove set
      forth, and such postponement shall be in full settlement of all claims which
      Tenant may otherwise have by reason of such delay of delivery.

    

    b. If
      the
      commencement of the Primary Lease Term is delayed pursuant to Paragraph 3a
      above, and such commencement occurs on a day other than the first day of the
      month, the Commencement Date of the Primary Lease Term shall be further delayed
      until the first day of the following month and Tenant shall pay proportionate
      Rent at the same monthly rate set forth herein (also in advance) for such
      partial month. In the event said Commencement Date is so delayed, the expiration
      of the term hereof shall be extended so that the Primary Lease Term will
      continue for the full period set forth in Paragraph 1 hereof. As soon as the
      Primary Lease Term commences, Landlord and Tenant shall execute an addendum
      to
      this Lease, if requested by either party, setting forth the exact date on which
      the Primary Lease Term commenced and the expiration date of the Primary Lease
      Term.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    c.
       Tenant
      may take possession of part of the Premises that are the subject of a separate
      certificate of occupancy prior to the date the entire Premises are Ready for
      Occupancy (“Partial Occupancy”). If a portion of the Premises of at least one of
      the two floors to be occupied is approved for occupancy, all terms and
      provisions of this Lease shall apply, however Tenant shall only be responsible
      for a pro rata portion of the Rent and Additional Rent during the period
      commencing with the date the Tenant occupies the partially completed portion
      of
      the Premises and the date the entire Premises is Ready for Occupancy. A Partial
      Occupancy shall not be deemed as the commencement of the Primary Lease
      Term.

    

    d. Landlord
      represents and warrants that, to the best of Landlord’s knowledge, as of the
      commencement of the Primary Lease Term all Building systems are in good working
      order and condition, including base Building HVAC, electrical, fire and life
      safety systems, plumbing and other mechanical systems, and all other elements
      constituting the base Building shell and if not Landlord will be responsible
      for
      making and paying for the necessary repairs. 

    

    4. RENT.
      Tenant
      agrees to pay to Landlord as Base Rent, without prior notice or demand, the
      following amounts:

    

    Schedule
      of Base Rent

     

         

    
      
        	
                Month(s)

              	 	 	
                Monthly
                  Base
                  Rent

              	 	 	
                Annual
                  Base
                  Rent

              	 
	 	 	 	 	 	 	 	 
	
                Dec
                  2006-Jan 2007

              	 	
                $

              	
                0.00

              	 	 	 	 
	 	 	 	 	 	 	 	 
	
                Feb
                  2007-Jan 2008

              	 	
                $

              	
                15,759.00

              	 	
                $

              	
                189,108.00

              	 
	 	 	 	 	 	 	 	 
	
                Feb
                  2008-Jan 2009

              	 	
                $

              	
                17,510.00

              	 	
                $

              	
                210,120.00

              	 
	 	 	 	 	 	 	 	 
	
                Feb
                  2009-Jan 2010

              	 	
                $

              	
                18,385.50

              	 	
                $

              	
                220,626.00

              	 
	 	 	 	 	 	 	 	 
	
                Feb
                  2010-Jan 2011

              	 	
                $

              	
                18,385.50

              	 	
                $

              	
                220,626.00

              	 
	 	 	 	 	 	 	 	 
	
                Feb
                  2011-Jan 2012

              	 	
                $

              	
                19,261.00

              	 	
                $

              	
                231,132.00

              	 
	 	 	 	 	 	 	 	 
	
                Total
                  Base Rent:

              	 	 	 	 	
                $

              	
                1,071,612.00

              	 

      

    

     

    Tenant
      shall begin to pay the Base Rent on the date the Primary Lease Term commences
      and thereafter on the first day of each month during the term hereof. All Rents
      shall be paid in advance, without notice, set off, abatement, counterclaim,
      deduction or diminution, at the Colorado Group, 3434 47th
      Street,
      Suite 220, Boulder, Colorado 80301, Attn: Susan Chrisman, or at such place
      as
      Landlord from time-to-time designates in writing. Tenant shall pay its first
      installment of Basic Rent to Landlord simultaneously with its execution of
      this
      Lease. In addition, Tenant shall pay to Landlord Tenant's Pro Rata Share of
      Operating Expenses as provided herein and such other charges as are required
      by
      the terms of this Lease to be paid by Tenant which shall be referred to herein
      as "Additional Rent." Landlord shall have the same rights as to the Additional
      Rent as it has in the payment of Base Rent.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5. SECURITY
      DEPOSIT.
      Simultaneously with its execution of this Lease, Tenant shall deposit with
      Landlord the Security Deposit set forth in Paragraph 1t above, which shall
      be
      held by Landlord as security for the faithful performance by Tenant of all
      the
      terms, covenants, and conditions of this Lease to be kept and performed by
      Tenant during the term hereof. If Tenant defaults with respect to any provision
      of this Lease, including, but not limited to the provisions relating to the
      payment of Rent, Landlord may (but shall not be required to) use, apply or
      retain all or any part of the Security Deposit for the payment of any Rent
      or
      for the payment of any amount which Landlord may spend or become obligated
      to
      spend by reason of Tenant's default, or to compensate Landlord for any other
      loss or damage which Landlord may suffer by reason of Tenant's default. If
      any
      portion of said Security Deposit is so used or applied, Tenant shall within
      five
      (5) days after written demand therefor, deposit cash with Landlord in an amount
      sufficient to restore the Security Deposit to its original amount and Tenant's
      failure to do so shall be an Event of Default under this Lease. Landlord shall
      not be required to keep the Security Deposit separate from its general funds,
      and Tenant shall not be entitled to interest on the Security Deposit. If Tenant
      shall fully and faithfully perform every provision of this Lease to be performed
      by it, the Security Deposit or any balance thereof shall be returned to Tenant
      (or at Landlord's option, to the last assignee of Tenant's interest hereunder)
      within sixty (60) days after the expiration of the Primary Lease Term or any
      extension period thereof.

    

    6. OPERATING
      EXPENSES. 

    

    a. Operating
      Expenses means all reasonable and necessary costs and expenses of every kind
      and
      nature, other than those expressly excluded below, paid or incurred by Landlord
      in operating, managing, repairing, maintaining and administering the Building
      including, without limitation:

    

    (1) The
      cost
      of all insurance required to be kept by Landlord pursuant to this Lease or
      by
      any lender with respect to the Property, and any other insurance customarily
      procured for other commercial buildings in the same geographical area as the
      Building or which Landlord may reasonably elect to obtain with respect to the
      operation or ownership of the Property and the part of any claim required to
      be
      paid under the deductible portion of any insurance policies carried by Landlord
      in connection with the Property.

    

    (2) The
      cost
      of general repairs, maintenance and replacements, made from time-to-time by
      Landlord to the Property, including costs under mechanical or other maintenance
      contracts and repairs and replacements of equipment used in connection with
      such
      maintenance and repair work. The foregoing excludes capital expenditures as
      defined in Paragraph 6b(4) and costs for replacement of heating, ventilating
      and
      air-conditioning units, replacement of the roof, and parking lot which are
      provided for by the Reserve Amount ,

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (3) The
      cost
      of pest control, security services, window cleaning, janitorial and snow and
      ice
      removal services. 

    

    (4) The
      cost
      of maintaining and repairing common areas, maintaining and repairing
      landscaping, and of maintaining and operating fire detection, fire prevention,
      lighting and communications systems.

    

    (5) The
      cost
      of all utilities (including, without limitation, water, sewer, gas and
      electricity) used or consumed.

    

    (6) Remuneration
      (including wages, usual expense accounts and fringe benefits, costs to Landlord
      of workmen's compensation and disability insurance and payroll taxes) and fees
      of persons and companies to the extent directly engaged in operating, repairing,
      maintaining, or administering the Property. 

    

    (7) The
      cost
      of professional property management fees (not to exceed 6% of Basic Rental
      for
      the Property) and costs incurred by Landlord or its agents in engaging
      accountants or other consultants to assist in making the computations required
      hereunder. 

    

    (8) The
      cost
      of capital improvements and structural repairs and replacements made in, on
      or
      to the Property that are [a] made in order to conform to changes subsequent
      to
      the Commencement Date in any applicable laws, ordinances, rules, regulations
      or
      orders of any governmental or quasi-governmental authority having jurisdiction
      over the Property; [b] designed primarily or intended to reduce Operating
      Expenses or the rate of increase in Operating Expense; or [c] incurred for
      redecoration, renovation or replacement of floor coverings of Common Areas.
      Landlord and Tenant agree that redecoration should not be required for the
      Preliminary Lease Term. The items set forth above in [a] through [c] above
      shall
      hereafter be collectively referred to as the “Capital Improvements.” The cost of
      such Capital Improvements shall be charged by Landlord to Operating Expense
      in
      equal annual installments over the useful life of such Capital Improvement
      (as
      reasonably determined by Landlord) together with interest on the balance of
      the
      unreimbursed cost at 4% above the Prime Rate.

    

    (9) All
      real
      property taxes and assessments levied against the Building by any governmental
      or quasi-governmental authority. The foregoing shall include any taxes,
      assessments, surcharges, or service or other fees of a nature not presently
      in
      effect which shall hereafter be levied on the Building as a result of the use,
      ownership or operation of the Building or for any other reason, whether in
      lieu
      of or in addition to, any current real estate taxes and assessments; provided,
      however, any taxes which shall be levied on the rentals of the Building shall
      be
      determined as if the Building were Landlord's only property and, provided
      further, that in no event shall the term "taxes or assessments," as used herein,
      include any net federal or state income taxes levied or assessed on Landlord,
      unless such taxes are a specific substitute for real property taxes. Such term
      shall, however, include gross taxes on rentals. Expenses incurred by Landlord
      for tax consultants and in contesting the amount or validity of any such taxes
      or assessments shall be included in such computations. The term “assessment”
shall include so-called special assessments, license tax, business license
      fee,
      business license tax, commercial rental tax, levy, charge, penalty or tax,
      imposed by any authority having the direct power to tax, including any city,
      county, state or federal government, or any school, agricultural, lighting,
      water, drainage or other improvement or special district thereof, against the
      Premises, the Building, or the Property or any legal or equitable interest
      of
      Landlord therein. For the purposes of this Lease, any special assessments shall
      be deemed payable in such number of installments as is permitted by law, whether
      or not actually so paid. Tenant shall not be responsible to pay any fines,
      late
      charges or penalties assessed against Landlord as a result of Landlord's failure
      to timely pay such taxes and assessments.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (10) Other
      costs and expenses, including supplies, not otherwise expressly excluded
      hereunder attributable to the operation, management, repair, maintenance and
      administration of the Property.

    

    (11) The
      Reserve Amount.

     

    b. Operating
      Expenses shall not, however, include the following:

    

    (1) Any
      charge for depreciation of the Building and any principal, interest or other
      finance charge.

    

    (2) The
      cost
      of any work, including painting, decorating and work in the nature of tenant
      finish, which Landlord performs for any tenant in the Building. 

    

    (3) The
      cost
      of repairs, replacements or other work occasioned by insured casualty or defects
      in construction or equipment to the extent such cost is reimbursed to Landlord
      (or not charged to Landlord) by reason of collected insurance proceeds (using
      Landlord's good faith efforts to collect such proceeds) or any contractors',
      manufacturers' or suppliers' warranties.

    

    (4) Expenditures
      required to be capitalized for federal income tax purposes before any reductions
      for accelerated depreciation or other alternative expense method of such
      expenditures allowable under federal income tax regulations (except as expressly
      authorized in Paragraph 6a(8) herein).

     

    (5) Leasing
      commissions, advertising expenses and other costs incurred in leasing space
      in
      the Building except as otherwise expressly provided in this Lease.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (6) The
      cost
      of repairing or rebuilding necessitated by condemnation.

    

    (7) The
      cost
      of any damage to the Property or any settlement, payment or judgment incurred
      by
      Landlord, resulting from Landlord's tortious act, neglect or breach of this
      Lease that is not covered by insurance proceeds.

    

    (8) Costs
      (including, without limitation, attorneys fees) incurred by Landlord in
      attempting to collect Rent or evict tenants from the Building.

    

    (9) Costs,
      including, without limitation, any penalties, fines and legal expenses incurred
      by Landlord or any other tenant in the Building as a result of a violation
      of
      any federal, state or local law, code or regulation.

    

    c. Costs
      for
      maintenance of HVAC equipment for the Premises shall be charged to Tenant by
      Landlord as costs are incurred and shall be paid by Tenant concurrently with
      Tenant’s payment of Rent. Landlord shall use reasonable efforts to allocate such
      HVAC maintenance charges equitably among the tenants whose Premises are served
      by such equipment.

    

    d. On
      the
      date the Primary Lease Term commences and continuing each month thereafter
      during the Primary Lease Term (and any extension thereof) Tenant shall pay
      to
      Landlord, at the same time as the Base Rent is paid, an amount equal to
      one-twelfth (1/12) of Landlord's estimate of Tenant's Pro Rata Share of
      Operating Expenses for the particular calendar year, with a final adjustment
      to
      be made between the parties at a later date for said calendar year in accordance
      with the procedures set forth herein.

     

    (1) As
      soon
      as practicable following the end of each calendar year, but in no event later
      than one hundred and fifty (150) days after the end of the calendar year, during
      the Primary Lease Term, or any extension thereof, Landlord shall submit to
      Tenant a statement prepared by a representative of Landlord setting forth the
      exact amount of Tenant's Pro Rata Share of the Operating Expenses for the
      calendar year just completed. Beginning with each subsequent calendar year,
      it
      shall also set forth the estimated amount of Tenant's Pro Rata Share of
      Operating Expenses for the new calendar year. In no event will the Rent to
      be
      paid by Tenant hereunder ever be less than the Base Rent set forth in Paragraph
      1 above. 

    

    (2) To
      the
      extent that Tenant's Pro Rata Share of Operating Expenses for the period covered
      by such statement is different from the estimated amount upon which Tenant
      paid
      during the calendar year just completed, Tenant shall pay to Landlord the
      difference within twenty (20) days following receipt by Tenant of such statement
      from Landlord or receive a credit on the next months' rental owing hereunder,
      as
      the case may be. Upon request, Landlord shall make available to Tenant for
      its
      review or audit, Landlord’s records of estimated or actual Operating Expenses.
      Until Tenant receives such statement, Tenant's monthly Rent for the new calendar
      year shall continue to be paid at the rate paid for the calendar year just
      completed, but Tenant shall commence payment to Landlord of the monthly
      installments of Rent on the basis of said statement beginning on the first
      day
      of the month following the month in which Tenant receives such statement.
      Moreover, Tenant shall pay to Landlord or deduct from the Rent, as the case
      may
      be, on the date required for the first payment of Rent, as adjusted, the
      difference, if any, between the monthly installments of Rent so adjusted for
      the
      new calendar year and the monthly installments of Rent actually paid during
      the
      new calendar year.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (3)
       If,
      during any particular calendar year, there is a change in the information on
      which Landlord based the estimate upon which Tenant is then making its estimated
      rental payments so that such estimate furnished to Tenant is no longer accurate,
      Landlord shall be permitted to revise such estimate by notifying Tenant and
      there shall be such adjustments made in the monthly rental on the first day
      of
      the month following the serving of such statement on Tenant as shall be
      necessary by either increasing or decreasing, as the case may be, the amount
      of
      monthly Rent then being paid by Tenant for the balance of the calendar year
      as
      well as an appropriate adjustment in cash based upon the amount theretofore
      paid
      by Tenant during such particular calendar year pursuant to the prior estimate
      (but in no event shall any such decrease result in a reduction of the Base
      Rent).

    

    e. Landlord's
      and Tenant's responsibilities with respect to the Operating Expense adjustment
      described herein shall survive the expiration or early termination of this
      Lease, and Landlord shall have the right to retain the Security Deposit, or
      so
      much thereof as it deems necessary, to secure such payment attributable to
      the
      year in which this Lease terminates. 

    

    f. If
      Tenant
      shall dispute the amount of an adjustment submitted by Landlord or the proposed
      estimated increase or decrease on the basis of which Tenant's Rent is to be
      adjusted as provided in Paragraphs 6d(2) or 6d(3) above, Tenant shall give
      Landlord written notice of such dispute within thirty (30) days after Landlord
      advises Tenant of such adjustment or proposed increase or decrease. If Tenant
      does not give Landlord such notice within such time, then Tenant shall be deemed
      to have waived its right to dispute the amounts so determined. If Tenant timely
      objects, Tenant shall have the right to engage its own certified public
      accountants ("Tenant's Accountants") for the purpose of verifying the accuracy
      of the statement complained of or the reasonableness of the estimated increase
      or decrease. If Tenant's Accountants determine that an error has been made,
      Landlord and Tenant's Accountants shall use reasonable efforts to agree upon
      the
      matter, failing which the parties shall settle the dispute by arbitration or
      in
      such other manner as they agree. Notwithstanding the pendency of any dispute
      over any particular statement, Tenant shall continue to pay Landlord the amount
      of the adjusted monthly installments of Rent determined by Landlord until the
      adjustment has been determined to be incorrect as aforesaid. A delay by Landlord
      in submitting any statement contemplated herein for any calendar year shall
      not
      affect the provisions of this Paragraph 6 or constitute a waiver of Landlord's
      rights as set forth herein for said calendar year or any subsequent calendar
      years during the Primary Lease Term and any extensions thereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    g. Notwithstanding
      anything contained herein to the contrary, if any lease entered into
      by
      Landlord with any tenant in the Building provides for a separate basis of
      computation for any Operating Expenses with respect to its premises, then,
      to
      the extent that Landlord determines that an adjustment should be made in making
      the computations herein provided for, Landlord shall be permitted to modify
      the
      computation of Operating Expenses and Rentable Area for a particular calendar
      year, in order to eliminate or otherwise modify any such expenses which are
      paid
      for in whole or in part by such tenant. Furthermore, in making any computations
      contemplated hereby, Landlord shall also be permitted to make such adjustments
      and modifications to the provisions of this Paragraph 6 as shall be reasonably
      necessary to achieve a fair and equitable allocation of the costs to the Tenant
      based upon Tenant’s usage of such services and the intention of the parties
      within this Paragraph 6.

    

    h. The
      list
      of estimated operating expenses for the calendar year 2006 is attached hereto
      as
      Exhibit F. The Operating Expenses for the calendar year 2006 are estimated
      to be
      $186,588.00 per year or $4.96 per rentable square foot per year. Landlord makes
      no representations that the Operating Expenses will be any more or less than
      the
      attached estimate. The pro rata portion of the $4.96 per rentable square foot
      per year rate shall be paid by Tenant monthly with the Basic Rent through the
      end of the first full calendar year of the Primary Lease Term.

    

    7. USE.
      Tenant
      shall use the Premises for Tenant’s Permitted Use and shall not use or permit
      the Premises to be used for any other purpose without the prior written consent
      of Landlord. Tenant shall not do or permit anything to be done in or about
      the
      Premises nor bring or keep anything therein which will in any way increase
      the
      existing rate or affect any fire or other insurance upon the Building or any
      of
      its contents, or cause cancellation of any insurance policy covering said
      Building or any part thereof or any of its contents. Tenant shall not do or
      permit anything to be done in or about the Premises which will, in any way,
      obstruct or interfere with the rights of other tenants or occupants of the
      Building or injure or annoy them or use or allow the Premises to be used for
      any
      improper, immoral, unlawful or objectionable purpose, nor shall Tenant cause,
      maintain or permit any nuisance in, on or about the Premises. Tenant shall
      not
      commit or suffer to be committed any waste in or upon the Premises. Tenant
      shall
      comply with the Rules and Regulations for the Premises, as further described
      in
      Paragraph 18. 

    

    8. COMPLIANCE
      WITH LAW.
      Tenant
      shall not use the Premises or permit anything to be done in or about the
      Premises which will, in any way, conflict with any law, statute, ordinance
      or
      governmental rule or regulation now in force or which may hereafter be enacted
      or promulgated. Tenant shall, at its sole cost and expense, promptly comply
      with
      all laws, statutes, ordinances and governmental rules, regulations or
      requirements now in force or which may hereafter be in force, and with the
      requirements of any board of fire insurance underwriters or other similar bodies
      now or hereafter constituted, relating to, or affecting the condition, use
      or
      occupancy of the Premises. The judgment against Tenant, whether Landlord be
      a
      party thereto or not, that Tenant has violated any law, statute, ordinance
      or
      governmental rule, regulation or requirement, shall be conclusive of that fact
      as between Landlord and Tenant.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    9. ALTERATIONS
      AND ADDITIONS.
      Tenant
      shall not make or suffer to be made any alterations, additions or improvements
      (collectively, “Alterations”) to or of the Premises or any part thereof without
      the prior written consent of Landlord, which shall not be unreasonably withheld.
      Any Alterations to or of said Premises, including, but not limited to, wall
      covering, paneling and built-in cabinet work, but excepting movable furniture
      and trade fixtures, shall, on the expiration of the term, become a part of
      the
      realty and belong to Landlord and shall be surrendered with the Premises. In
      the
      event Landlord consents to the making of any Alterations to the Premises by
      Tenant, the same shall be made by Tenant at its sole cost and expense, and
      any
      contractor or person selected by Tenant to make the same, must first be
      reasonably approved of in writing by Landlord. Upon the expiration or earlier
      termination of the term hereof, Tenant shall, upon the written demand by
      Landlord, at Tenant's sole cost and expense, forthwith and with all due
      diligence, remove any Alterations which have been designated by Landlord to
      be
      removed, and repair any damage to the Premises caused by such removal. Tenant
      may, at Tenant’s option, request that Landlord make a determination as to
      whether Landlord will waive the preceding sentence at the time Tenant obtains
      approval from Landlord for such Alterations.

    

    10. REPAIRS. 

    

    a. Tenant
      shall, at its sole cost and expense, keep the Premises and every part thereof
      in
      good condition and repair, damage thereto from causes beyond the reasonable
      control of Tenant and ordinary wear and tear excepted. Tenant shall, upon the
      expiration or sooner termination of this Lease hereof, surrender the Premises
      to
      Landlord in good condition, ordinary wear and tear and damage from causes beyond
      the reasonable control of Tenant excepted. Except as specifically provided
      in an
      addendum, if any, to this Lease, Landlord shall have no obligation whatsoever
      to
      alter, remodel, improve, repair, decorate or paint the Premises or any part
      thereof, and the parties hereto affirm that Landlord has made no representations
      to Tenant respecting the condition of the Premises or the Building except as
      specifically herein set forth.

    

    b. Landlord
      shall repair and maintain the structural portions of the Building, including
      the
      roof, basic plumbing, air conditioning, heating, and electrical and sprinkler
      systems installed or furnished by Landlord, unless such maintenance and repairs
      are caused in part or in whole by the act, neglect, fault or omission of any
      duty by Tenant, its agents, servants, employees or invitees, in which case
      Tenant shall pay to Landlord the reasonable cost of such maintenance and
      repairs. The cost of all such repairs (except repairs of structural defects)
      shall be included in Operating Expenses. Landlord shall not be liable for any
      failure to make any such repairs or to perform any maintenance unless such
      failure shall persist for an unreasonable time after written notice of the
      need
      of such repairs or maintenance is given to Landlord by Tenant. Except as
      specifically provided in Paragraph 21 below regarding reconstruction after
      a
      casualty, there shall be no abatement of Rent and no liability of Landlord
      by
      reason of any injury to or interference with Tenant's business arising from
      the
      making of any repairs, alterations or improvements in or to any portion of
      the
      Building or the Premises or in or to fixtures, appurtenances and equipment
      therein. Except as provided in Paragraph 10 c and Paragraph 10 d below, Tenant
      waives the right to make repairs at Landlord's expense under any law, statute
      or
      ordinance now or hereafter in effect.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    c. Notwithstanding
      the foregoing, if Landlord fails to make any repairs or to perform any
      maintenance required of Landlord hereunder and within Landlord’s reasonable
      control, and such failure shall persist for an unreasonable time (not less
      than
      fifteen (15) days) after written notice of the need for such repairs or
      maintenance is given to Landlord and unless Landlord has commenced such repairs
      or maintenance during such period and is diligently pursuing the same, Tenant
      may (but shall not be required to) following a second notice (which notice
      shall
      have a heading in at least 12-point type, bold and all caps “FAILURE TO RESPOND
      SHALL RESULT IN TENANT EXERCISING SELF-HELP RIGHTS”) and Landlord’s failure to
      commence repairs within five (5) days after receipt of such second notice,
      perform such repairs or maintenance in accordance with the provisions of this
      Lease governing Tenant’s repairs and Alterations and Tenant shall be entitled to
      offset all third party costs and expenses incurred by Tenant therefor against
      the next monthly installment of Rent, provided Tenant delivers to Landlord
      appropriate invoices and back-up documentation regarding such costs and
      expenses.

    

    d.
      Notwithstanding any of the foregoing, in the event of an emergency involving
      imminent threat to life or substantial property damage, which shall include
      potential damage to Tenant’s growing laboratories for plants and Tenant’s
      computer systems, Tenant shall be permitted to proceed, at Tenant’s option, to
      repair or otherwise rectify such imminent threat and Tenant shall be entitled
      to
      offset all third party costs and expenses incurred by Tenant therefor against
      the next monthly installment of Rent.

    

    11. LIENS.
      Tenant
      shall keep the Premises and the Property free from any liens arising out of
      any
      work performed, materials furnished or obligations incurred by Tenant. Landlord
      may require, at Landlord's sole option, that Tenant shall provide to Landlord,
      at Tenant's sole cost and expense, a lien and completion bond or other security
      reasonably acceptable to Landlord in an amount equal to one and one-half (1-1/2)
      times any and all estimated cost of improvements, additions, or alterations
      in
      the Premises, to insure Landlord against any liability for mechanics' and
      materialmen's liens and to insure completion of the work.

    

    12. ASSIGNMENT
      AND SUBLETTING.
      Except
      as expressly provided below, Tenant shall not either voluntarily or by operation
      of law, assign or transfer this Lease or any portion or interest therein, and
      shall not sublet the said Premises or any part thereof, or any right or
      privilege appurtenant thereto, or suffer any other person (the employees,
      agents, servants and invitees of Tenant excepted) to occupy or use the said
      Premises, or any portion thereof, without the prior written consent of Landlord,
      which will not be unreasonably withheld. Tenant may not mortgage, pledge or
      encumber this Lease without Landlord’s prior written consent which may be
      withheld in Landlord’s sole and absolute discretion. The consent to one
      assignment, subletting, occupation or use by any other person shall not be
      deemed to be a consent to any subsequent assignment, subletting, occupation
      or
      use by another person. Any such assignment or subletting without such consent
      shall be void, and shall, at the option of Landlord, constitute an Event of
      Default under this Lease. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Any
      Rent
      or other consideration realized by Tenant under any such assignment, subletting
      or occupancy in excess of the Basic Rental and other sums payable hereunder,
      after amortization of the reasonable and documented costs incurred by Tenant
      for
      leasing commissions and leasehold improvements in connection with such
      assignment, subletting or occupancy over the term of such assignment, subletting
      or occupancy, shall be paid to Landlord by Tenant. Landlord may charge a
      reasonable fee not to exceed $1,000 to pay for its expenses to review any
      proposed assignment, sublease, or encumbrance.

    

    13. HOLD
      HARMLESS.
      

    

    a. Tenant
      shall indemnify and hold harmless Landlord against and from any and all claims
      arising from Tenant's use of the Premises for the conduct of its business or
      from any activity, work, or other thing done, permitted or suffered by Tenant
      in
      or about the Property, and shall further indemnify and hold harmless Landlord
      against and from any and all claims arising from any breach or default in the
      performance of any obligation on Tenant's part to be performed under the terms
      of this Lease, or arising from any act or negligence of Tenant, or any officer,
      agent, employee, guest, or invitee of Tenant, and from all and against all
      costs, reasonable attorneys' fees, expenses and liabilities incurred in or
      about
      any such claim or any action or proceeding brought thereon, and, in any case,
      action or proceeding be brought against Landlord by reason of any such claim,
      Tenant, upon notice from Landlord shall defend the same at Tenant's expense.
      Tenant, as a material part of the consideration to Landlord, hereby assumes
      all
      risk of damage to property or injury to persons, in, upon or about the Premises,
      from any cause other than Landlord's gross negligence or willful and wanton
      acts. Landlord or its agents shall not be liable for any damage to property
      entrusted to employees of the Building, nor for loss or damage to any property
      by theft or otherwise, nor for any injury to or damage to persons or property
      resulting from fire, explosion, falling plaster, steam, gas, electricity, water
      or rain which may leak from any part of the Building or from the pipes,
      appliances or plumbing works therein or from the roof, street or subsurface
      or
      from any other place resulting from dampness or any other cause whatsoever,
      unless caused by or due to the gross negligence or willful and wanton acts
      of
      Landlord, its agents, servants or employees. Landlord or its agents shall not
      be
      liable for interference with the light or other incorporeal hereditament, loss
      of business by Tenant, nor shall Landlord be liable for any latent defects
      in
      the Premises or in the Building. Tenant shall give prompt notice to Landlord
      in
      case of fire or accidents in the Premises or in the Building or of defects
      therein.

    

    b.
      Landlord shall indemnify and hold harmless Tenant against and from any and
      all
      claims arising from Landlord's activity, work, or other thing done, permitted
      or
      suffered by Landlord in or about the Property, and shall further indemnify
      and
      hold harmless Tenant against and from any and all claims arising from any breach
      or default in the performance of any obligation on Landlord's part to be
      performed under the terms of this Lease, or arising from any act or negligence
      of Landlord, or any officer, agent, or employee of Landlord, and from all and
      against all costs, reasonable attorneys' fees, expenses and liabilities incurred
      in or about any such claim or any action or proceeding brought thereon, and,
      in
      any case, action or proceeding be brought against Tenant by reason of any such
      claim, Landlord, upon notice from Tenant shall defend the same at Landlord's
      expense. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    14. SUBROGATION.
      Landlord and Tenant hereby mutually waive their respective rights of recovery
      against each other for any loss, damage or claim under any fire, extended
      coverage and other property insurance policies actually maintained by such
      party
      or required to be maintained by such party under the terms of this Lease. Each
      party shall obtain any special endorsements, if required by their insurer to
      evidence compliance with the aforementioned waiver.

    

    15. LIABILITY
      INSURANCE.
      Tenant
      shall, at Tenant's expense, obtain and keep in force during the term of this
      Lease a policy of comprehensive public liability insurance with limits not
      less
      than $2,000,000, combined single limit, insuring Landlord and Tenant against
      any
      liability arising out of the ownership, use, occupancy or maintenance of the
      Premises and all areas appurtenant thereto, as their interests may appear.
      The
      limit of said insurance shall not, however, limit the liability of Tenant
      hereunder. Tenant may carry said insurance under a blanket policy, providing,
      however, said insurance by Tenant shall have a Landlord's protective liability
      endorsement attached thereto. If Tenant shall fail to procure and maintain
      said
      insurance, Landlord may, but shall not be required to, procure and maintain
      same, but at the expense of Tenant. Tenant shall deliver to Landlord prior
      to
      occupancy of the Premises certificates evidencing the existence and amounts
      of
      such insurance. No policy shall be cancelable or subject to reduction of
      coverage except after thirty (30) days' prior written notice to
      Landlord.

    

    16. SERVICES
      AND UTILITIES.
      Landlord agrees to furnish to the Premises during reasonable hours of generally
      recognized business days, electricity for normal lighting and fractional
      horsepower office machines and heat and air conditioning to keep the Premises
      in
      a condition consistent with other similar buildings in the Boulder area. If
      Tenant wishes to have air conditioning and heat to the Premises between the
      hours of 6pm and 6:30am Monday through Friday and the 48 hours of Saturday
      and
      Sunday, Tenant agrees to pay for the cost of the system as estimated by an
      independent HVAC maintenance company. Landlord shall also maintain and keep
      lighted the common stairs, common entries and toilet rooms in the Building
      of
      which the Premises are a part. Landlord shall not be liable for, and Tenant
      shall not be entitled to, any reduction of rental by reason of Landlord's
      failure to furnish any of the foregoing when such failure is caused by accident,
      breakage, repairs, strikes, lockouts or other labor disturbances or labor
      disputes of any character, or by any other cause, similar or dissimilar, beyond
      the reasonable control of Landlord. Landlord shall not be liable under any
      circumstances for a loss or injury to property, however occurring, through
      or in
      connection with or incidental to failure to furnish any of the foregoing, except
      as to Landlord's gross negligence or willful and wanton acts. Wherever heat
      generating machines or equipment are used in the Premises which affect the
      temperature otherwise maintained by the air conditioning system, Landlord
      reserves the right to install supplementary air conditioning equipment in the
      Premises and the cost thereof, including the cost of installation, and the
      cost
      of operation and maintenance thereof shall be paid by Tenant to Landlord within
      ten (10) days after demand by Landlord.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Tenant
      will not, without written consent of Landlord, use any apparatus or device
      in
      the Premises, including, but without limitation thereto, electronic data
      processing machines, punch card machines, and machines using in excess of 120
      volts, which will in any way increase the amount of electricity usually
      furnished or supplied for the use of the Premises as general office space;
      nor
      connect with electric current except through existing electrical outlets in
      the
      Premises, any apparatus or device, for the purpose of using electric current.
      If
      Tenant shall require water or electric current in excess of that usually
      furnished or supplied for the use of the Premises as general office space,
      Tenant shall first procure the reasonable prior written consent of Landlord.
      Landlord may cause a water meter or electrical current meter to be installed
      in
      the Premises, so as to measure the amount of water and electric current consumed
      for any such use. The cost of any such meters and of installation, maintenance
      and repair thereof shall be paid for by Tenant and Tenant agrees to pay to
      Landlord promptly upon demand therefor by Landlord for all such water and
      electric current consumed as shown by said meters at the rates charged for
      such
      services by the local public utility furnishing the same, plus an additional
      expense as reasonably determined by Landlord incurred in keeping account of
      the
      water and electric current so consumed. If a separate meter is not installed,
      such excess cost for such water and electric current will be established by
      an
      estimate made by a utility company or electrical engineer.

    

    Landlord
      acknowledges that Tenant will require electricity and air conditioning for
      Tenant’s grow lab facilities twenty four hours per day, three hundred and sixty
      five days per year and Landlord and Tenant agree that a check meter shall be
      installed as part of the Tenant Improvements to measure Tenant‘s additional
      electrical usage related to such requirement associated with Tenants grow lab
      facilities.

    

    17. PERSONAL
      PROPERTY TAXES.
      Tenant
      shall pay, or cause to be paid, before delinquency, any and all taxes levied
      or
      assessed and which become payable during the term hereof upon all Tenant's
      leasehold improvements, equipment, furniture, fixtures and personal property
      located in the Premises; except that which has been paid for by Landlord, and
      is
      the standard of the Building. In the event any or all of Tenant's leasehold
      improvements, Alterations, equipment, furniture, fixtures and personal property
      shall be assessed and taxed with the Building, Tenant shall pay to Landlord
      its
      share of such taxes within thirty (30) days after receipt by Tenant from
      Landlord of a statement in writing setting forth the amount of such taxes
      applicable to Tenant's property which statement shall include a copy of the
      tax
      bill.

    

    18. RULES
      AND REGULATIONS.
      The
      current Rules and Regulations for the Premises are attached hereto as Exhibit
      B
      and are incorporated herein by this reference. Tenant shall faithfully observe
      and comply with the Rules and Regulations that Landlord shall, from
      time-to-time, promulgate. Landlord reserves the right, from time-to-time, to
      make all reasonable additions and modifications to said Rules and Regulations,
      which shall be binding upon Tenant upon delivery of a copy of them to Tenant.
      Landlord shall not be responsible to Tenant for the nonperformance of any said
      Rules and Regulations by any other tenants or occupants. Landlord will use
      commercially reasonable efforts to apply and enforce the Rules and Regulations
      in a non-discriminatory manner. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    19. HOLDING
      OVER.
      Tenant
      shall have no right to hold over after the term without the express prior
      written consent of Landlord which may be withheld in Landlord’s sole and
      absolute discretion. If Tenant remains in possession of the Premises or any
      part
      after the expiration of the term hereof, without the express written consent
      of
      Landlord, such occupancy shall be on all terms of this Lease except on a
      month-to-month basis and at a rental in the amount of one and one-half times
      the
      last monthly Rent.

    

    20. ENTRY
      BY LANDLORD.
      Landlord
      reserves, and shall during normal business hours upon reasonable notice to
      Tenant (which may be verbal to Tenant’s on-site manager) the right to enter the
      Premises, inspect the same, and to supply any service to be provided by Landlord
      to Tenant hereunder, to submit said Premises to prospective purchasers or during
      the last six months of the term to prospective tenants, to post notices of
      non-responsibility, and to alter, improve or repair the Premises and any portion
      of the Building of which the Premises are a part that Landlord may deem
      necessary or desirable, without abatement of Rent and may for that purpose
      in
      connection with any work to be performed by Landlord under this Lease. Landlord
      shall not be required to give any notice to Tenant in the event of any
      emergency, for recurring services (e.g., janitorial) or if Tenant has vacated
      the Premises. Landlord may erect scaffolding and other necessary structures
      where reasonably required by the character of the work to be performed, always
      providing that the business of Tenant shall not be interfered with unreasonably.
      Tenant hereby waives any claim for damages or for any injury or inconvenience
      to
      or interference with Tenant's business, any loss of occupancy or quiet enjoyment
      of the Premises, and any other loss occasioned thereby unless caused by gross
      negligence or willful and wanton acts of Landlord. For each of the aforesaid
      purposes, Landlord shall, at all times, have and retain a key with which to
      unlock all of the doors in, upon and about the Premises, and Landlord shall
      have
      the right to use any and all means which Landlord may deem proper to open said
      doors in an emergency, in order to obtain entry to the Premises without
      liability to Tenant except for the gross negligence or willful and wanton
      conduct of Landlord. Any entry to the Premises obtained by Landlord by any
      of
      said means, or otherwise shall not, under any circumstances, be construed or
      deemed to be a forcible or unlawful entry into, or a detainer of, the Premises,
      or an eviction of Tenant from the Premises or any portion thereof. Tenant shall
      not change the locks to the Premises without Landlord’s written
      consent.

    

    21. RECONSTRUCTION.
      In the
      event the Premises, or the Building of which the Premises are a part, are
      damaged by fire or other perils covered by extended coverage insurance, Landlord
      agrees to forthwith repair the same to substantially the same condition as
      existed immediately prior to such damage; and this Lease shall remain in full
      force and effect, except that Tenant shall be entitled to a proportionate
      reduction of the Rent while such repairs are being made, such proportionate
      reduction to be based upon the extent to which the damage and the making of
      such
      repairs shall materially and adversely interfere with the business carried
      on by
      Tenant in the Premises. If the damage is due to the fault or neglect of Tenant
      or its employees, there shall be no abatement of Rent. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    In
      the
      event the Premises or the Building of which the Premises are a part are damaged
      as a result of any cause other than the perils covered by fire and extended
      coverage insurance, then Landlord shall forthwith repair the same within one
      hundred and fifty (150) days of casualty, provided the extent of the destruction
      be less than twenty percent (20%) of the then full replacement cost of the
      Premises or the Building of which the Premises are a part. In the event the
      destruction of the Premises or the Building is to an extent greater than twenty
      percent (20%) of the full replacement cost, then Landlord shall have the option:
      (1) to repair or restore such damage, this Lease continuing in full force and
      effect, but the Rent to be proportionately reduced as hereinabove in this
      Paragraph provided; or (2) give notice to Tenant at any time within thirty
      (30)
      days after such damage terminating this Lease as of the date specified in such
      notice, which date shall be no less than thirty (30) and no more than sixty
      (60)
      days after the giving of such notice. In the event of giving such notice, this
      Lease shall expire and all interest of Tenant in the Premises shall terminate
      on
      the date so specified in such notice and the Rent, reduced by a proportionate
      amount, based upon the extent, if any, to which such damage materially
      interfered with the business carried on by Tenant in the Premises, shall be
      paid
      up to date of said such termination. Notwithstanding anything to the contrary
      contained in this paragraph, Landlord shall not have any obligation whatsoever
      to repair, reconstruct or restore the Premises when the damage resulting from
      any casualty covered under this paragraph occurs during the last twelve (12)
      months of the term of this Lease or any extension thereof and in the event
      of
      such casualty during the last twelve (12) months of the term of this Lease,
      and
      Landlord shall have the right to terminate this Lease by giving written notice
      to Tenant within thirty (30) days of such casualty.

    

    Landlord
      shall not be required to repair any injury or damage by fire or other cause,
      or
      to make any repairs or replacements of any panels, decoration, office fixtures,
      railings, floor coverings, partitions, or any other property installed in the
      Premises by Tenant unless covered by Landlord's insurance as part of the
      Building.

    

    Except
      as
      otherwise expressly authorized hereunder, Tenant shall not be entitled to any
      compensation or damages from Landlord for loss of the use of the whole or any
      part of the Premises or Tenant's personal property.

    

    22. DEFAULT.
      The
      occurrence of any one or more of the following events shall constitute an Event
      of Default:

    

    a. The
      vacating or abandonment of the Premises by Tenant, without payment of
      Rent.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    b. The
      failure by Tenant to make any payment of Rent or any other payment required
      to
      be made by Tenant hereunder, as and when due.

    

    c. The
      failure by Tenant to observe or perform any of the covenants, conditions or
      provisions of this Lease to be observed or performed by Tenant, other than
      described in Paragraph 22b above, where such failure shall continue for a period
      of thirty (30) days after written notice thereof by Landlord to Tenant;
      provided, however, that if the nature of Tenant's default is such that more
      than
      thirty (30) days are reasonably required for its cure, then Tenant shall not
      be
      deemed to be in default if Tenant commences such cure within said thirty (30)
      day period and thereafter diligently prosecutes such cure to
      completion.

    

    d. The
      making by Tenant of any general assignment or general arrangement for the
      benefit of creditors; or the filing by or against Tenant of a petition to have
      Tenant adjudged a bankrupt, or a petition of reorganization or arrangement
      under
      any law relating to bankruptcy (unless, in the case of a petition filed against
      Tenant, the same is dismissed within sixty [60] days); or the appointment of
      a
      trustee or a receiver to take possession of substantially all of Tenant's assets
      located at the Premises or of Tenant's interest in this Lease, where possession
      is not restored to Tenant within thirty (30) days; or the attachment, execution
      or other judicial seizure of substantially all of Tenant's assets located at
      the
      Premises or of Tenant's interest in this Lease, where such seizure is not
      discharged in thirty (30) days.

    

    If
      Landlord is in default in the performance of any obligation under this Lease
      on
      the part of Landlord to be performed and such default continues for a period
      of
      thirty (30) days after Tenant's written notice to Landlord specifying the nature
      of the default, then Tenant may exercise any right or remedy it may possess
      at
      law or equity, which is not otherwise waived in this Lease. If the default
      set
      forth in Tenant's notice cannot reasonably be cured within thirty (30) days,
      then Landlord shall not be deemed to be in default if (i) Landlord notifies
      Tenant in writing that it will cure the default, (ii) commences to cure the
      default within such thirty (30)-day period, and (iii) proceeds diligently and
      in
      good faith thereafter to cure such default and does cure such default within
      a
      reasonable time.

    

    23. REMEDIES
      IN DEFAULT.
      In the
      event of any Event of Default or other breach by Tenant, Landlord may at any
      time thereafter, with or without notice or demand, and without limiting Landlord
      in the exercise of a right or remedy which Landlord may have by reason of such
      Event of Default or breach:

    

    a. Reenter
      and take possession of the Premises or any part thereof and repossess the same
      as of Landlord's former estate and expel Tenant and those claiming through
      or
      under Tenant and remove the effects of both or either, without being deemed
      guilty of any manner of trespass and without prejudice to any remedies for
      arrears of Rent or preceding breach of covenants or conditions. Should Landlord
      elect to reenter, as provided in this paragraph, or should Landlord take
      possession pursuant to legal proceedings or pursuant to any notice provided
      for
      by law, Landlord may, from time-to-time, without terminating this Lease, relet
      the Premises or any part thereof, either alone or in conjunction with other
      portions of the Building of which the Premises are a part, in Landlord's or
      Tenant's name but for the account of Tenant, for such term or terms (which
      may
      be greater or less than the period which would otherwise have constituted the
      balance of the term of this Lease) and on such conditions and upon such other
      terms (which may include concessions of free Rent and alteration and repair
      of
      the Premises) as Landlord, in its absolute discretion, may determine and
      Landlord may collect and receive the Rents therefor. Landlord shall in no way
      be
      responsible or liable for any failure to relet the Premises, or any part
      thereof, or for any failure to collect any Rent due upon such reletting, but
      Landlord shall use commercially reasonable efforts to mitigate its damages.
      No
      such reentry or taking possession of the Premises by Landlord shall be construed
      as an election on Landlord's part to terminate this Lease unless a written
      notice of such intention be given to Tenant. No notice from Landlord hereunder
      or under a forcible entry and detainer statute or similar law shall constitute
      an election by Landlord to terminate this Lease unless such notice specifically
      so states. Landlord reserves the right following any such reentry and/or
      reletting to exercise its right to terminate this Lease by giving Tenant such
      written notice, in which event the Lease will terminate as specified in said
      notice.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

       b. If
      Landlord elects to take possession of the Premises as provided in Paragraph
      23a
      above without terminating the Lease, Tenant shall pay to Landlord (i) the Rent
      and other sums as herein provided, which would be payable hereunder if such
      repossession had not occurred, less (ii) the net proceeds, if any, of any
      reletting of the Premises after deducting all of Landlord's expenses incurred
      in
      connection with such reletting, including, but without limitation, all
      repossession costs, brokerage commissions, legal expenses, attorneys' fees,
      expenses of employees, alteration, remodeling, and repair costs and expenses
      of
      preparation for such reletting. Unpaid installments of rent or other sums shall
      bear interest from the date due at the rate of twenty percent (20%) per annum.
      If, in connection with any reletting, the new lease term extends beyond the
      existing term or the premises covered thereby include other premises not part
      of
      the Premises, a fair apportionment of the Rent received from such reletting
      and
      the expenses incurred in connection therewith, as provided aforesaid, will
      be
      made in determining the net proceeds received from such reletting. In addition,
      in determining the net proceeds from such reletting, any Rent concessions will
      be apportioned over the term of the new lease unless Tenant agrees otherwise.
      Tenant shall pay such amounts to Landlord monthly on the days on which the
      Rent
      and all other amounts owing hereunder would have been payable if possession
      had
      not been retaken and Landlord shall be entitled to receive the same from Tenant
      on each such day; 

    

    c. Give
      Tenant written notice of intention to terminate this Lease on the date of such
      given notice or on any later date specified therein and, on the date specified
      in such notice, Tenant's right to possession of the Premises shall cease and
      the
      Lease shall thereupon be terminated, except as to Tenant's liability hereunder
      as hereinafter provided, as if the expiration of the term fixed in such notice
      were the end of the term herein originally demised. In the event this Lease
      is
      terminated pursuant to the provisions of this Paragraph, Tenant shall remain
      liable to Landlord for damages in an amount equal to the Rent and other sums
      which would have been owing by Tenant hereunder for the balance of the term
      had
      this Lease not been terminated less the net proceeds, if any, of any reletting
      of the Premises by Landlord subsequent to such termination, after deducting
      all
      Landlord's expenses in connection with such reletting, including, but without
      limitation, the expenses enumerated above. Landlord shall be entitled to collect
      such damages from Tenant monthly on the days on which the Rent and other amounts
      would have been payable hereunder if this Lease had not been terminated and
      Landlord shall be entitled to receive the same from Tenant on each such day.
      Alternatively, at the option of Landlord, in the event this Lease is terminated,
      Landlord shall be entitled to recover forthwith against Tenant as damages for
      loss of the bargain and not as a penalty an amount equal to the worth at the
      time of termination of the excess, if any, of the amount of Rent reserved in
      this Lease for the balance of the term hereof over the then Reasonable Rental
      Value of the Premises for the same period plus all amounts incurred by Landlord
      in order to obtain possession of the Premises and relet the same, including
      attorneys' fees, reletting expenses, alterations and repair costs, brokerage
      commissions and all other like amounts. It is agreed that the "Reasonable Rental
      Value" shall be the amount of rental which Landlord can obtain as Rent for
      the
      remaining balance of the term. Landlord agrees to use commercially reasonable
      efforts to mitigate its damages; or

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    d. Pursue
      any other remedy now or hereafter available to Landlord under the laws or
      judicial decision of the State of Colorado.

    

    24. EMINENT
      DOMAIN.
      If more
      than twenty-five percent (25%) of the Premises shall be taken or appropriated
      by
      any public or quasi-public authority under the power of eminent domain, either
      party hereto shall have the right, at its option, to terminate this Lease by
      giving written notice to the other party, and Landlord shall be entitled to
      any
      and all income, Rent, award, or any interest therein whatsoever which may be
      paid or made in connection with such public or quasi-public use or purpose,
      and
      Tenant shall have no claim against Landlord or the condemning authority for
      the
      value of any unexpired term of this Lease. If either less than or more than
      twenty-five percent (25%) of the premises is taken, or neither party elects
      to
      terminate as herein provided, the rental thereafter to be paid shall be
      proportionately reduced. If more than ten percent (10%) of the Building other
      than the Premises may be so taken or appropriated, Landlord shall have the
      right
      at its option to terminate this Lease by giving thirty (30) days written notice
      to Tenant and shall be entitled to the entire award as above provided. Tenant
      shall, however, have the right to pursue a separate claim directly against
      the
      condemning authority for any damage suffered as a result of such taking.

    

    25. ESTOPPEL
      STATEMENT.
      Landlord and Tenant shall at any time and from time-to-time, upon not less
      than
      ten (10) business days' prior written notice from the other party, execute,
      acknowledge, and deliver to the other party a statement in writing, (a)
      certifying that this Lease is unmodified and in full force and effect (or,
      if
      modified, stating the nature of such modification and certifying that this
      Lease
      as so modified, is in full force and effect); (b) the date to which the rental
      and other charges are paid in advance, if any; (c) acknowledging that there
      are
      not, to Tenant's or Landlord's knowledge, as appropriate, any uncured defaults
      on the part of the other party hereunder, or specifying such defaults if any
      are
      claimed; and (d) such other items reasonably requested by the other party.
      Any
      such statement may be relied upon by any prospective purchaser or encumbrancer
      of all or any portion of the real property of which the Premises are a part.
      Unless as otherwise reasonably requested, Tenant Estoppel Statement shall be
      substantially in the form attached hereto as Exhibit C.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    26. PARKING.
      Tenant
      shall have the right to use in common with other tenants or occupants of the
      Building the parking facilities of the Building, subject to the Rules and
      Regulations. Landlord shall have no liability for any damage to property in
      or
      about the parking areas and Tenant hereby waives all claims arising in
      connection therewith, and agrees to indemnify Landlord for any claims arising
      out of or in connection with Tenant’s use of the Parking Spaces.

    

    27. AUTHORITY
      OF PARTIES.

    

    Each
      individual executing this Lease on behalf of Tenant represents and warrants
      that
      he is duly authorized to execute and deliver this Lease on behalf of Tenant,
      in
      accordance with a duly adopted resolution or in accordance with the operating
      agreement, partnership agreement or other governing entity documentation, and
      that this Lease is binding upon Tenant in accordance with its
      terms.

    

    28. GENERAL
      PROVISIONS.

    

    a. Waiver.
      The waiver by Landlord of any term, covenant, or condition herein contained
      shall not be deemed to be a waiver of such term, covenant or condition or any
      subsequent breach of the same or any other term, covenant or condition herein
      contained. The subsequent acceptance of Rent hereunder by Landlord shall not
      be
      deemed to be a waiver of any preceding breach by Tenant of any term, covenant
      or
      condition of this Lease, other than the failure of Tenant to pay the particular
      rental so accepted, regardless of Landlord's knowledge of such preceding breach
      at the time of the acceptance of such Rent.

    

    b. Notices.
      All notices and demands which may or are to be required or permitted to be
      given
      by either party to the other hereunder shall be in writing, except the verbal
      notice by Landlord to Tenant as stated in Paragraph 20. All notices and demands
      by Landlord to Tenant shall be sent by a) United States Mail, postage prepaid,
      or b) nationally recognized overnight bonded courier, addressed to Tenant at
      the
      address set forth in Paragraph 1u above, or to such other place as Tenant may,
      from time-to-time, designate in a notice to Landlord. All notices and demands
      by
      Tenant to Landlord shall be sent by a) United States Mail, postage prepaid,
      or
      b) nationally recognized overnight bonded courier, addressed to Landlord at
      the
      address set forth in Paragraph 1i above, or to such other person or place as
      Landlord may, from time-to-time, designate in a notice to Tenant.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    c. Joint
      Obligation. If there is more than one entity or individual which compromises
      Tenant under this Lease, then the obligations hereunder imposed upon Tenant
      shall be joint and several.

    

    d. Headings
      and Paragraph Titles. The headings and paragraph titles of this Lease are for
      reference purposes only and shall have no effect upon the construction or
      interpretation of any part hereof.

    

    e. Time.
      Time is of the essence of this Lease and each and all of its
      provisions.

    

    f. Successors
      and Assigns. The covenants and conditions herein contained, subject to the
      provisions as to assignment, apply to and bind the heirs, successors, executors,
      administrators and assigns of the parties hereto.

    

    g. Recordation.
      Tenant shall not record this Lease or a short form memorandum hereof or any
      other document which makes reference to this Lease without the prior written
      consent of Landlord which may be withheld in Landlord’s sole and absolute
      discretion. Any such recording without Landlord’s consent shall be considered an
      Event of Default. 

    

    h. Quiet
      Possession. Upon Tenant paying the Rent reserved hereunder and observing and
      performing all of the covenants, conditions and provisions on Tenant's part
      to
      be observed and performed hereunder, Tenant shall have quiet possession of
      the
      Premises for the entire term hereof against all parties claiming by, through
      or
      under Landlord, subject to all the provisions of this Lease.

    

    i. Late
      Charges. Tenant hereby acknowledges that late payment by Tenant to Landlord
      of
      Rent or other sums due hereunder will cause Landlord to incur costs not
      contemplated by this Lease, the exact amount of which will be extremely
      difficult to ascertain. Such costs include, but are not limited to, processing
      and accounting charges, and late charges which may be imposed upon Landlord
      by
      terms of any mortgage or trust deed covering the Premises. Accordingly, if
      any
      installment of Rent or of a sum due from Tenant shall not be received by
      Landlord or Landlord's designee within five (5) days after said amount is due,
      then Tenant shall pay to Landlord a one-time late charge equal to five percent
      (5%) of such overdue amount. The parties hereby agree that such late charges
      represent a fair and reasonable estimate of the cost that Landlord will incur
      by
      reason of the late payment by Tenant. Acceptance of such late charges by
      Landlord shall in no event constitute a waiver of Tenant's default with respect
      to such overdue amount, nor prevent Landlord from exercising any of the other
      rights and remedies granted hereunder.

    

    j. Prior
      Agreements. This Lease contains all of the agreements of the parties hereto
      with
      respect to any matter covered or mentioned in this Lease, and no prior
      agreements or understanding pertaining to any such matters shall be effective
      for any purpose. No provision of this Lease may be amended or added to except
      by
      an agreement in writing signed by the parties hereto or their respective
      successors in interest. This Lease shall not be effective or binding on any
      party until fully executed by both parties hereto.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    k. Attorneys'
      Fees. In the event of any action or proceeding brought by either party against
      the other under this Lease, the prevailing party shall be entitled to recover
      all costs and expenses, including the fees of its attorneys in such action
      or
      proceeding in such amount as the court may adjudge reasonable as attorneys'
      fees.

    

    l. Sale
      of
      Premises by Landlord. In the event of any sale of the Building, and assignment
      of Tenant's Security Deposit to a purchaser, Landlord shall be and is hereby
      entirely freed and relieved of all liability under any and all of its covenants
      and obligations contained in or derived from this Lease arising out of any
      act,
      occurrence or omission occurring after the consummation of such sale; and the
      purchaser, at such sale or any subsequent sale of the Premises, shall be deemed,
      without any further agreement between the parties or their successors in
      interest or between the parties and any such purchaser, to have assumed and
      agreed to carry out any and all of the covenants and obligations of Landlord
      under this Lease.

    

    m. Subordination,
      Non-Disturbance and Attornment. Within ten (10) days after request of Landlord,
      Tenant will, in writing, subordinate its rights hereunder to the lien of any
      first mortgage or first deed of trust to any bank, insurance company or other
      lending institution, now or hereafter in force against the land and Building
      of
      which the Premises are a part, and upon any buildings hereafter placed upon
      the
      land of which the Premises are a part, and to all advances made or hereafter
      to
      be made upon the security thereof.

    

    In
      the
      event any proceedings are brought for foreclosure, or in the event of the
      exercise of the power of sale under any mortgage or deed of trust made by
      Landlord covering the Premises, Tenant shall attorn to the purchaser upon any
      such foreclosure or sale and recognize such purchaser as Landlord under this
      Lease.

    

    Tenant
      will agree to confirm its subordination and attornment in the form attached
      hereto as Exhibit D or pursuant to another subordination, non-disturbance and
      attornment reasonably requested by Landlord’s lender.

    

    Notwithstanding
      anything to the contrary contained herein, Tenant shall only be obligated under
      this Paragraph 28m if such bank, insurance company or other lending institution
      or purchaser upon any such foreclosure or sale (a) recognizes Tenant's interest
      under this Lease, (b) agrees that, so long as Tenant is not in default under
      this Lease beyond any applicable cure periods, not to disturb Tenant's
      possession of the Premises, and (c) executes and delivers a subordination,
      non-disturbance and attornment agreement substantially in the form attached
      hereto as Exhibit D or pursuant to another subordination, non-disturbance and
      attornment reasonably requested by Landlord’s lender.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Within
      ten (10) days after request of Tenant, Landlord will, in writing, execute a
      landlord waiver of liens in favor of a secured lender of Tenant, such waiver
      to
      be in a form reasonably satisfactory to Landlord. 

    

    n. Name.
      Tenant shall not use the name of the Building or of the development in which
      the
      Building is situated for any purpose other than as an address of the business
      to
      be conducted by Tenant in the Premises.

    

    o. Separability.
      Any provision of this Lease which shall prove to be invalid, void or illegal
      shall in no way affect, impair or invalidate any other provision hereof and
      such
      other provision shall remain in full force and effect.

    

    p. Cumulative
      Remedies. No remedy or election hereunder shall be deemed exclusive but shall,
      wherever possible, be cumulative with all other remedies at law or in
      equity.

    

    q. Choice
      of
      Law. This Lease shall be governed by the laws of the State of
      Colorado.

    

    r. Signs
      and
      Auctions. Tenant shall not place any sign upon the Premises or Building or
      conduct any auction thereon without Landlord's prior written consent which
      shall
      not be unreasonably withheld, conditioned or delayed. Notwithstanding the
      foregoing, Landlord agrees to provide to Tenant, at Tenant’s sole cost and
      expense, Building standard signage on the monument sign for the Building and
      Building standard directory signage during the term of this Lease. In addition,
      Tenant shall have the right to secure signage on the exterior of the Building
      upon satisfaction of the following requirements: (i) Tenant leases a minimum
      of
      75% of the Building and maintains the 75% minimum; (ii) Tenant submits plans
      which detail the size, style and proposed location (on the Building) to Landlord
      for its review and approval, which approval may be given, withheld, or
      conditioned in its sole, absolute and subjective discretion; (iii) Tenant’s
      Building sign complies with all applicable laws, ordinances, rules, regulations
      or orders of any governmental or quasi-governmental authority having
      jurisdiction over the Property and all restrictive covenants applicable to
      the
      Property and Tenant provides Landlord evidence of same; and (iv) Tenant pays
      all
      costs, fees and expenses (including permit fees) to have its sign affixed to
      the
      Building. Upon the expiration, earlier termination of this Lease or Tenant
      leases less than 75% of the Building, Tenant shall, at its sole cost and
      expense, remove the Building signage and repair, paint, and/or replace any
      portion of the Building damaged or altered as a result of its Building signage
      (including, without limitation, any discoloration of the Building).

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    s. Landlord's
      Liability. The liabilities of the partners or members of Landlord pursuant
      to
      this Lease shall be limited to the assets of the partnership or limited
      liability company, and Tenant, its successors and assigns hereby waive all
      right
      to proceed against any of the partners, members, or the officers, shareholders,
      or directors of any corporate partner of Landlord. The term "Landlord," as
      used
      in this paragraph, shall mean only the owner or owners at the time in question
      of the fee title or an interest in a ground lease of the Property.
      Notwithstanding anything to the contrary contained herein, the extent of
      Landlord's liability under this Lease shall be limited to the Property, and
      Tenant shall not seek any personal liability against Landlord or any of
      Landlord's partners or members.

    

    t. Waiver
      of
      Jury Trial. Landlord and Tenant waive trial by jury in any action, proceeding
      or
      counterclaim brought by either of the parties to this Lease against the other
      on
      any matters whatsoever arising out of or in any way connected with this Lease,
      the relationship of Landlord and Tenant, Tenant's use of occupancy of the
      Premises, or any other claims (except claims for personal injury or property
      damage), and any emergency statutory or any other statutory remedy.

    

    u. Lender/Mortgagees.
      This Lease, at Landlord’s option, shall be subordinate to any mortgage or deed
      of trust (now or hereafter placed upon the land and the Building of which the
      Premises are a part, and upon any buildings hereafter placed upon the land
      of
      which the Premises are a part, and to all advances made or hereafter to be
      made
      upon the security hereof), including any amendment, modification or restatement
      of such documents. Tenant agrees that with respect to any of the foregoing
      documents, no documentation, other than this Lease, shall be required to
      evidence such subordination. Notice to Landlord of any such alleged default
      shall be inef-fective unless notice is simultaneously delivered to any holder
      of
      a mortgage and/or deed of trust affecting all or any portion of the land and
      the
      Building of which the Premises are a part ("Mortgagees"), as hereafter provided.
      Tenant agrees to give all Mortgagees, by certified mail, return receipt
      requested, a copy of any notice of default served upon Landlord, provided that
      prior to such notice Tenant has been notified, in writing (by way of notice
      of
      Assign-ment of Rents and Leases, or otherwise), of the address of such
      Mortgagees. Tenant further agrees that if Landlord shall have failed to cure
      such default within the time provided for in this Lease, then the Mort-gagees
      shall have an additional thirty (30) days within which to cure such default
      or,
      if such default cannot be cured within that time, then such additional time
      as
      may be necessary, if, within such thirty (30) days, any Mortgagee has commenced
      and is diligently pursuing the remedies necessary to cure such default
      (includ-ing, but not limited to, commencement of foreclosure proceedings, if
      necessary to effect such cure), in which event this Lease shall not be
      terminated while such remedies are being so diligently pursued. In no event
      will
      Landlord or any Mortgagee be responsible for any consequential damages incurred
      by Tenant as a result of any default, including, but not limited to, lost
      profits or interruption of business as a result of any alleged default by
      Landlord hereunder.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    v. Arbitration.
      Except for an action to gain possession of the Premises (and any corresponding
      claim for damages resulting from Tenant’s alleged unlawful detainer) and except
      as provided below, any and all disputes arising under or related to this Lease
      which cannot be resolved through negotiations between the parties shall be
      submitted to binding arbitration. If the parties fail to reach a settlement
      of
      their dispute within fifteen (15) days after the earliest date upon which one
      of
      the parties notified the other(s) of its desire to attempt to resolve the
      dispute, then the dispute shall promptly be submitted to arbitration by a single
      arbiter through the Judicial Arbiter Group ("JAG"), any successor of the
      Judicial Arbiter Group, or any similar arbitration provider who can provide
      a
      former judge to conduct such arbitration if JAG is no longer in existence,
      or an
      arbiter appointed by the court. The arbiter shall be selected by JAG or the
      court on the basis, if possible, of his or her expertise in the subject
      matter(s) of the dispute. The decision of the arbiter shall be final,
      nonappealable and binding upon the parties, and it may be entered in any court
      of competent jurisdiction. The arbitration shall take place in Boulder,
      Colorado. The arbitrator shall be bound by the laws of the State of Colorado
      applicable to the issues involved in the arbitration and all Colorado rules
      relating to the admissibility of evidence, including, without limitation, all
      relevant privileges and the attorney work product doctrine. All such discovery
      shall be completed in accordance with the time limitations prescribed in the
      Colorado Rules of Civil Procedure, unless otherwise agreed by the parties or
      ordered by the arbitrator on the basis of strict necessity adequately
      demonstrated by the party requesting an extension or reduction of time. The
      arbitrator shall have the power to grant equitable relief where applicable
      under
      Colorado law. The arbitrator shall issue a written opinion setting forth her
      or
      his decision and the reasons therefor within thirty (30) days after the
      arbitration proceeding is concluded. The obligation of the parties to submit
      any
      dispute arising under or related to this Agreement to arbitration as provided
      in
      this Paragraph shall survive the expiration or earlier termination of this
      Agreement. Notwithstanding the foregoing, either party may seek and obtain
      an
      injunction or other appropriate relief from a court to preserve or protect
      the
      status quo with respect to any matter pending conclusion of the arbitration
      proceeding, but no such application to a court shall in any way be permitted
      to
      stay or otherwise impede the progress of the arbitration
      proceeding.

    

    w. Financial
      Statements. Tenant shall provide their most recent annual financial statements,
      including statements of income and expense and statements of net worth
      ("financial statements") within (fifteen) 15 business days following the written
      request of Landlord. Landlord may request said annual financial statements
      no
      more than twice during any twelve (12) month period. Said financial statements
      shall be verified as being true and correct and Landlord agrees to keep said
      financial statements confidential, but may use said annual financial statements
      for purposes of obtaining financing upon or in connection with the sale of
      the
      Property. At the time Landlord requests financial statements from Tenant,
      Landlord shall advise Tenant if the financial statements will be given to a
      third party and to whom the financial statements will be submitted and Landlord
      shall, if requested to do so by Tenant, use commercially reasonable efforts
      to
      obtain from such individual or entity a written agreement which shall provide
      that said financial statements will be and shall remain confidential. If Tenant
      has not previously submitted the required financial statements to Landlord,
      within fifteen (15) days after the execution of this Lease, Tenant shall submit
      to Landlord its most recent financial statements.

    

    29. BROKERS.
      Tenant
      warrants that it has had no dealings with any real estate brokers or agents
      in
      connection with the negotiation of this Lease excepting only the Brokers listed
      in Paragraph 1c, and it knows of no other real estate broker or agent who is
      entitled to a commission in connection with this Lease. Tenant hereby agrees
      to
      indemnify Landlord for any loss or damage, including defense costs, arising
      out
      of claims from brokers or other finders other than the Brokers referenced
      above.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    30. HAZARDOUS
      MATERIALS AND ENVIRONMENTAL CONSIDERATIONS.

    

    a. Tenant
      covenants and agrees that Tenant and its agents, employees, contractors and
      invitees shall comply with all Hazardous Materials Laws (as hereinafter
      defined). Without limiting the foregoing, Tenant covenants and agrees that
      it
      will not use, generate, store or dispose of, nor permit the use, generation,
      storage or disposal of Hazardous Materials (as hereinafter defined) on, under
      or
      about the Premises, nor will it transport or permit the transportation of
      Hazardous Materials to or from the Premises, except in strict and full
      compliance with any applicable Hazardous Materials Laws. Any Hazardous Materials
      located on the Premises shall be handled in an appropriately controlled
      environment which shall include the use of such equipment (at Tenant's expense)
      as is necessary to meet or exceed standards imposed by any Hazardous Materials
      Laws and in such a way as not to interfere with any other tenant's use of its
      premises. Upon breach of any covenant contained herein, Tenant shall, at
      Tenant's sole expense, cure such breach by taking all action prescribed by
      any
      applicable Hazardous Materials Laws or by any governmental authority with
      jurisdiction over such matters.

    

    b. Tenant
      shall inform Landlord at any time of (i) any Hazardous Materials it intend
      to
      use, generate, handle, store or dispose of, on or about or transport from,
      the
      Premises and (ii) of Tenant's discovery of any event or condition which
      constitutes a violation of any applicable Hazardous Materials Laws. Tenant
      shall
      provide to Landlord copies of all communications to or from any governmental
      authority or any other party relating to Hazardous Materials affecting the
      Premises.

    

    c. Tenant
      shall indemnify and hold Landlord harmless from any and all claims, judgments,
      damages, penalties, fines, costs, liabilities, expenses or losses (including
      without limitation, diminution on value of the Premises, damages for loss or
      restriction on use of all or part of the Premises, sums paid in settlement
      of
      claims, investigation of site conditions, or any cleanup, removal or restoration
      work required by any federal, state or local governmental agency, attorney's
      fees, consultant fees and expert fees) which arise as a result of or in
      connection with any breach of the foregoing covenants or any other violation
      contained herein shall also accrue to the benefit of the employees, agents,
      officers, directors and/or partners of Landlord.

    

    d. Upon
      termination of the Lease and/or vacation of the Premises, Tenant shall properly
      remove all Hazardous Materials and, provided that Landlord reasonably believes
      that such a report is necessary, shall provide to Landlord an environmental
      audit report, prepared by a professional consultant satisfactory to Landlord
      and
      at Tenant's sole expense, certifying that the Premises have not been subjected
      to environmental harm caused by Tenant's use and occupancy of the Premises.
      Landlord shall grant to Tenant and its agents or contractors such access to
      the
      Premises as is necessary to accomplish such removal and prepare such
      report.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    e. "Hazardous
      Materials" shall mean (a) any chemical, material, substance or pollutant which
      poses a hazard to the Premises or to persons on or about the Premises or would
      cause a violation of or is regulated by any Hazardous Materials Laws, and (b)
      any chemical, material or substance defined as or included in the definitions
      of
      "hazardous substances", "hazardous wastes", "hazardous materials", "extremely
      hazardous waste", "restricted hazardous waste", "toxic substances", "regulated
      substances", or words of similar import under any applicable federal, state
      or
      local law or under the regulations adopted or publications promulgated pursuant
      thereto, including, but not limited to, the Comprehensive Environmental
      Response. Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sec.
      9601, et seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
      Sec. 1801, et seq.; the Resource Conservation and Recover Act, as amended,
      42
      U.S.C. Sec. 6901, et seq.; the Solid Waste Disposal Act, 42 U.S.C. Sec. 6991
      et
      seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Sec. 1251,
      et seq., of the Colorado Revised Statutes. "Hazardous Materials Laws" shall
      mean
      any federal, state or local laws, ordinances, rules, regulations, or policies
      (including, but not limited to, those laws specified above) relating to the
      environment, health and safety or the use, handling, transportation, production,
      disposal, discharge or storage of Hazardous Materials, or to industrial hygiene
      or the environmental conditions on, under or about the Premises. Said term
      shall
      be deemed to include all such laws as are now in effect or as hereafter amended
      and all other such laws as may hereafter be enacted or adopted during the term
      of this Lease.

    f. All
      obligations of Tenant hereunder shall survive and continue after the expiration
      of this Lease or its earlier termination for any reason.

    

    g. Tenant
      further covenants and agrees that it shall not install any storage tank (whether
      above or below the ground) on the Premises without obtaining the prior written
      consent of Landlord, which consent may be conditioned upon further requirements
      imposed by Landlord with respect to, among other things, compliance by Tenant
      with any applicable laws, rules, regulations or ordinances and safety measures
      or financial responsibility requirements.

    

    31. OPTION
      TO RENEW. If
      Tenant
      is not then in default of the terms, covenants and conditions herein contained,
      Tenant shall have the option to renew this Lease for one additional term of
      five
      (5) years. In the event Tenant desires to exercise said option, Tenant shall
      give written notice of such fact to Landlord not less than one hundred eighty
      (180) days prior to the expiration of the then current term of this Lease.
      In
      the event of such exercise, this Lease shall be deemed to be extended for the
      additional period on the same terms and conditions; provided however, Landlord
      shall have the option of increasing basic monthly rental to the then existing
      market rate for similar space in the Boulder vicinity. Basic monthly rental
      shall increase three and a half percent (3.5%) each year commencing the second
      year of the additional term. Landlord shall notify Tenant of its determination
      of market rent no less than one hundred twenty (180) days prior to commencement
      of the option term. In the event Tenant objects to Landlord’s determination,
      Tenant must notify Landlord in writing on or before the date that is sixty
      (150)
      days prior to the commencement of the option term. Within the next thirty (30)
      days Landlord and Tenant shall each select a Colorado qualified real estate
      appraiser with not fewer than five (5) years’ of experience appraising property
      similar to the Premises in Boulder County, Colorado, to determine the fair
      market rental value of the Premises. In order to be included in this value
      determination process, such appraisers’ determinations must be delivered in
      writing to both Landlord and Tenant within thirty (30) days after their
      appointment. If the valuations determined by such appraisers are within ten
      percent (10%) of one another, the fair market rental value of the Premises
      shall
      be the average of their figures. If the valuations determined by such appraisers
      are outside ten percent (10%) of one another, the two previously chosen
      appraisers shall jointly appoint a third appraiser with similar qualifications
      who shall independently determine the fair market rental value of the Premises
      within thirty (30) days after the appointment. The three fair market rental
      values shall be averaged and the resulting amount shall be the amount for that
      option term. The cost of all appraisals shall be paid equally by Landlord and
      Tenant.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    32. FIRST
      RIGHT OF REFUSAL.  Tenant
      shall have the right-of-first refusal to lease the remaining vacant space in
      the
      Building at such time as Landlord receives an offer from a third party to lease
      the space. Tenant shall have three (3) business days after receipt of written
      notice from Landlord of an offer to lease the space from a third party to enter
      into a modification of this Lease to include the additional space. 

     

    
      	 	
              LANDLORD: 

              PAWNEE PROPERTIES, LLC

            	 	 	 	
              TENANT:

              AEROGROW INTERNATIONAL, INC. 

            
	 	 	 	 	 	 
	By:	/s/ Steven
              P.
              Chrisman	 	 	By:	/s/ Mitchell
              B. Rubin
	 	
              
Steven
              P. Chrisman   	 	 	 	
              
Mitchell
              B. Rubin
	 	
              Manager

              5777
                Central Avenue, Suite 110

              Boulder, Colorado 80301

              Tax I.D. 84-1554609

            	 	 	 	
              Chief
                Financial Officer

              900
                28th
                Street, Suite 201

              Boulder, Colorado 80303

              Tax I.D. 46-051068Exhibit
      10.1

    

     

    CHARTER
      FOR THE AUDIT COMMITTEE

    OF
      THE BOARD OF DIRECTORS

    OF

    PATIENTS
      & PHYSICIANS, INC.

     

    Adopted
      July 31, 2006

    

    
      	
              I.

            	
              PURPOSE

            

    

    

    The
      primary function of the Audit Committee (the “Committee”) is to represent the
      Board of Directors (the “Board”) of Patients & Physicians, Inc. and its
      subsidiaries (the “Company”), in fulfilling its oversight responsibilities
      by:

    

    
      	 	
              1.

            	
              Reviewing
                the financial reports and other financial related information released
                by
                the Company to the public, or in certain circumstances, governmental
                bodies.

            

    

    

    
      	 	
              2.

            	
              Reviewing
                the Company's system of internal controls regarding finance, accounting,
                business conduct and ethics and legal compliance that management
                and the
                Board have established.

            

    

    

    
      	 	
              3.

            	
              Reviewing
                the Company's accounting and financial reporting
                processes.

            

    

    

    
      	 	
              4.

            	
              Reviewing
                and appraising with management the performance of the Company's
                independent auditors.

            

    

    

    
      	 	
              5.

            	
              Providing
                an open avenue of communication between the independent auditors
                and the
                Board.

            

    

    

    
      	
              II.

            	
              COMPOSITION

            

    

    

    The
      Committee shall be comprised of at least three members. Each Committee member
      shall be appointed by the majority of the Board, and unless otherwise
      agreed upon by a majority of the Board, be independent directors and free
      from any relationship that, in the opinion of the Board, would interfere with
      the exercise of his or her independent judgment as a member of the Committee.
      For purposes hereof, the term “independent” shall be based on the independence
      requirements of the Nasdaq Stock Market.

    

    All
      members of the Committee shall have a working familiarity with basic finance
      and
      accounting practices, and at least one member of the Committee shall have
      financial management expertise as determined by the Board. In addition, unless
      otherwise agreed upon by a majority of the Board, at least one member of
      the Committee shall be designated an “audit committee financial expert,” as
      determined by the Board in accordance with the applicable rules of the
      Securities and Exchange Commission. 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    The
      members of the Committee shall be elected or reappointed by the Board annually
      for a one year term. A Chairperson shall be appointed by the Board.

     

    
      	
              III.

            	
              MEETINGS

            

    

    

    The
      Committee will meet at least three times annually and be available to meet
      more
      frequently as circumstances dictate. Scheduled meetings of the Committee are
      (a)
      to review and approve the scope of the annual audit to be performed by the
      Company's independent auditors and (b) to review and discuss the results of
      the
      audit and the Company's 10-K report, prior to its filing. Incidental to any
      of
      these regularly scheduled meetings, the Committee should meet, if necessary,
      with management and the independent auditors in separate executive sessions
      to
      discuss any matters that the Committee and each of these groups believe should
      be discussed privately.

    

    
      	
              IV.

            	
              RESPONSIBILITIES
                AND DUTIES

            

    

    

    To
      fulfill its responsibilities and duties the Committee shall:

    

    Documents/Reports
      Review

    

    
      	 	
              1.

            	
              Review
                and reassess the adequacy of this Charter on an annual basis or as
                conditions dictate.

            

    

    

    
      	 	
              2.

            	
              Review
                and approve the Company's Business Conduct
                policies.

            

    

    

    
      	 	
              3.

            	
              Discuss
                with management and the independent auditors, the annual audited
                financial
                statements and other reports and financial and related information
                released to the public, or in certain circumstances governmental
                bodies,
                including any certification, report, opinion or review rendered by
                the
                independent auditors.

            

    

    

    
      	 	
              4.

            	
              Discuss
                with management and the independent auditors, as necessary, the quarterly
                financial information. The Chairperson of the Committee may represent
                the
                entire Committee for purposes of this
                review.

            

    

    

    
      	 	
              5.

            	
              Review
                with independent auditors the recommendations included in their management
                letter, if any, and their informal observations regarding the adequacy
                of
                overall financial and accounting procedures of the Company. On the
                basis
                of this review, make recommendations to senior management for any
                changes
                that seem appropriate.

            

    

    

    
      	 	
              6.

            	
              Prepare
                the minutes of each meeting, distribute the minutes to all members
                of the
                Committee and provide periodic summary reports to the Board. The
                permanent
                file of the minutes will be maintained by the Secretary of the
                Company.

            

    

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    Independent
      Auditors

    

    
      	 	
              1.

            	
              Select,
                evaluate, and if appropriate, terminate or replace the independent
                auditors. On an annual basis, the Committee will review and discuss
                with
                the auditors all significant relationships, including non-audit services
                proposed or performed, the auditors have with the Company to determine
                the
                auditors' independence. The independent auditors are accountable
                to the
                Committee and to the Board.

            

    

    

    
      	 	
              2.

            	
              The
                Committee shall approve the audit engagement and fees related thereto
                and
                pre-approve any other services and fees related thereto to be provided
                by
                the independent auditors.

            

    

    

    
      	 	
              3.

            	
              Annually
                consult with the independent auditors out of the presence of management
                about internal controls and the fullness and accuracy of the Company's
                financial statements.

            

    

    

    Financial
      Reporting Process

    

    
      	 	
              1.

            	
              In
                consultation with the independent auditors, review the integrity
                of the
                Company's financial reporting process, both internal and
                external.

            

    

    

    
      	 	
              2.

            	
              Review
                and consider the independent auditors' judgments about the appropriateness
                of the Company's accounting principles as applied in its financial
                reporting.

            

    

    

    
      	 	
              3.

            	
              Review
                and consider major changes to the Company's accounting principles
                and
                practices as proposed by management or the independent
                auditors.

            

    

    

    Process
      Improvement

    

    
      	 	
              1.

            	
              Establish
                regular reporting to the Committee by management and the independent
                auditors regarding any principal/critical risks, emerging or developing
                issues and significant judgments made or to be made in management's
                preparation of the financial
                statements.

            

    

    

    
      	 	
              2.

            	
              Following
                completion of the annual audit, review separately with management
                and the
                independent auditors any significant difficulties encountered during
                the
                course of the audit, including any restrictions on the scope of work
                or
                access to required information.

            

    

    

    
      	 	
              3.

            	
              Review
                any significant disagreement among management and the independent
                auditors
                in connection with the preparation of the financial
                statements.

            

    

    

    
      	 	
              4.

            	
              Review
                with the independent auditors and management the extent to which
                changes
                or improvements in financial or accounting practices, as approved
                by the
                Committee, have been implemented.

            

    

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    

    

    Ethical
      and Legal Compliance

    

    
      	 	
              1.

            	
              Establish
                procedures for reviewing and handling complaints or concerns received
                by
                the Company regarding accounting, internal accounting controls, or
                auditing matters, including enabling employees to submit concerns
                confidentially and anonymously, and review management’s disclosure of any
                frauds that involve management or other employees who have a significant
                role in internal control.

            

    

    

    
      	 	
              2.

            	
              Review
                the Company's operations and determine whether management has established
                and maintains effective programs and processes to ensure compliance
                with
                its Business Conduct policies.

            

    

    

    
      	 	
              3.

            	
              Review
                management's programs and processes for risk management and protection
                of
                the Company's assets and business.

            

    

    

    
      	 	
              4.

            	
              Review
                management's monitoring of the Company's compliance with the above
                programs to ensure that management has the proper review system in
                place
                to ensure that the Company's financial statements, reports and other
                financial information disseminated to governmental organizations
                and the
                public satisfy legal requirements.

            

    

    

    
      	 	
              5.

            	
              Review,
                with the Company's counsel, legal compliance matters, including corporate
                securities trading policies.

            

    

    

    
      	 	
              6.

            	
              Review,
                with the Company's counsel, any legal matter that could have a significant
                impact on the Company's financial
                statements.

            

    

    

    
      	 	
              7.

            	
              Perform
                any other activities consistent with this Charter, the Company's
                By-laws
                and government law, as the Committee or the Board deems necessary
                or
                appropriate.

            

    

    

    Outside
      Advisors

    

    The
      Committee shall have the authority to retain such outside counsel, accountants,
      experts and other advisors as it determines appropriate to assist it in the
      performance of its functions and shall receive appropriate funding, as
      determined by the Committee, from the Company for payment of compensation to
      any
      such outside counsel, accountants, experts or advisors.

    
      
         

      

      
        4

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