Document:

Exhibit
10.1

 

	
  For Bank
  Use Only

  	
  Reviewed by

  	
   

  
	
   

  	
   

  	
   

  
	
  Due

  	
  MARCH 30, 2009

  
	
   

  	
   

  
	
  Customer
  #

  	
  0013592421

  	
  Loan
  #

  	
  34

  
							

 

AMENDMENT TO NOTE

 

This amendment (the “Amendment”),
dated as of the date specified below, is by and between the borrower (the “Borrower”) and the bank (the “Bank”)
identified below.

 

RECITALS

 

A.  The Borrower has executed a Note (the “Note”), payable to the Bank dated NOVEMBER 25, 2003 and as
amended and replaced from time to time, and the Borrower (and if applicable,
certain third parties) have executed the collateral documents which may or may
not be identified in the Note and certain other related documents (collectively
the “Loan Documents”), setting
forth the terms and conditions upon which the Borrower may obtain loans from
the Bank from time to time in the original amount of $1,500,000.00, as may be
amended from time to time.

 

B.  The
Borrower has requested that the Bank permit certain modifications to the Note
as described below.

 

C.  The Bank has
agreed to such modifications, but only upon the terms and conditions outlined
in this Amendment.

 

AGREEMENT

 

In consideration of the mutual covenants contained herein, and
for other good and valuable consideration, the Borrower and the Bank agree as
follows:

 

ý  Change in
Payment Schedule. If checked
here, effective upon the date of this Amendment, any payment terms are amended
as follows:

 

Principal and interest are payable in
installments of $28,172.81 each, beginning APRIL 30, 2004, and on the same date
of each CONSECUTIVE month thereafter (except that if a given month does not
have such a date, the last day of such month), plus a final payment equal to
all unpaid principal and accrued interest on MARCH 30, 2009, the maturity date.

 

ý  Change in
Interest Rate.  If checked
here, effective upon the date of this Amendment, interest payable under the
Note is amended as follows:

The unpaid principal balance will bear
interest at an annual rate of 4.730%.

 

ý  Change in
Prepayment Terms.  If checked
here, refer to attached Prepayment Addendum.

 

o  Change in Late Payment Fee. If checked here, subject to applicable law, if any payment is not made
on or before its due date, the Bank may collect a delinquency charge of
             % of
the unpaid amount. Collection of the late payment fee shall not be deemed to be
a waiver of the Bank’s right to declare a default hereunder.

 

o  Change in Closing Fee. If checked here and subject to applicable law, the Borrower will pay the
Bank a closing fee of
$                              
(apart from any prior closing fee) contemporaneously with the execution of this
Amendment. This fee is in addition to all other fees, expenses and other
amounts due hereunder.

 

ý  Change in Maturity Date. If checked here, any references in the Note to the maturity date or date
of final payment are hereby deleted and replaced with “MARCH 30, 2009”.

 

o  Change in Maximum Loan Amount. If checked here, all references in the Note (whether or not numerically)
to the maximum loan amount are hereby deleted and replaced with
“$                      ”,
which evidences an additional
$                     
available to be advanced subject to the terms and conditions of the Note.

 

1

 

o  Temporary Increase in Loan Amount. If checked here, notwithstanding the principal
amount of the Note, the principal amount that may be borrowed thereunder shall
increase from
$                          
to
$                               
effective                     
through
                     
annually. On              
through            
annually, the principal amount that may be borrowed thereunder shall revert to
$                                    
and any loans outstanding in excess of that amount will be immediately due and
payable without further demand by the Bank.

 

o  Change in Multiple Advance Termination Date. If checked here, all references in the Note to
the termination date for multiple advances are hereby deleted and replaced with
“                                 ”.

 

o  Change in Paid-in-Full Period. If checked here, all revolving loans under the Note must be paid in full
for a period of at least
                  
consecutive days during each fiscal year. Any previous Paid-in-Full provision
is hereby replaced with this provision.

 

Default Interest Rate. Notwithstanding any
provision of this Note to the contrary, upon any default or at any time during
the continuation thereof (including failure to pay upon maturity), the Bank
may, at its option and subject to applicable law, increase the interest rate on
this Note to a rate of 5% per annum plus the interest rate otherwise payable
hereunder. Notwithstanding the foregoing and subject to applicable law, upon
the occurrence of a default by the Borrower or any guarantor involving
bankruptcy, insolvency, receivership proceedings or an assignment for the
benefit of creditors, the interest rate on this Note shall automatically
increase to a rate of 5% per annum plus the rate otherwise payable hereunder.

 

Effectiveness of Prior Documents. Except as specifically amended hereby, the
Note and the other Loan Documents shall remain in full force and effect in
accordance with their respective terms. All warranties and representations
contained in the Note and the other Loan Documents are hereby reconfirmed as of
the date hereof. All collateral previously provided to secure the Note
continues as security, and all guaranties guaranteeing the Note remain in full
force and effect. This is an amendment, not a novation.

 

Preconditions to Effectiveness. This Amendment shall only become effective
upon execution by the Borrower and the Bank, and approval by any other third
party required by the Bank.

 

No Waiver of Defaults; Warranties. This Amendment shall not be construed as or be
deemed to be a waiver by the Bank of existing defaults by the Borrower, whether
known or undiscovered. All agreements, representations and warranties made
herein shall survive the execution of this Amendment.

 

Counterparts. This Amendment may be signed in any number of counterparts, each of
which shall be considered an original, but when taken together shall constitute
one document.

 

Authorization. The Borrower represents and warrants that the execution, delivery and
performance of this Amendment and the documents referenced herein are within
the authority of the Borrower and have been duly authorized by all necessary
action.

 

Transferable Record. The note, as amended, is a “transferable
record” as defined in applicable law relating to electronic transactions.
Therefore, the holder of the note, as amended, may, on behalf of Borrower,
create a microfilm or optical disk or other electronic image of the note, as
amended, that is an authoritative copy as defined in such law. The holder of
the note, as amended, may store the authoritative copy of such note, as amended,
in its electronic form and then destroy the paper original as part of the
holder’s normal business practices. The holder, on its own behalf, may control
and transfer such authoritative copy as permitted by such law.

 

Attachments. All documents attached hereto, including any
appendices, schedules, riders, and exhibits to this Amendment, are hereby
expressly incorporated herein by reference.

 

	
  Dated as of: 

  	
  MARCH 30, 2004

  	
   

  

 

 

	
   

  	
   

  	
  BIOJECT
  MEDICAL TECHNOLOGIES INC.

  
	
  (Individual Borrower)

  	
   

  	
  Borrower Name (Organization)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a

  	
  OREGON Corporation

  
	
   

  	
   

  	
   

  
	
  Borrower Name

  	
  N/A

  	
   

  	
  By:

  	
  /s/ Michael A. Temple

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name and Title:

  	
  MICHAEL A. TEMPLE

  EXECUTIVE VICE PRESIDENT

  
	
   

  	
   

  	
   

  	
   

  
	
  Borrower Name

  	
  N/A

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name and Title:

  	
   

  
								

 

	
  Agreed to:

  	
   

  	
   

  
	
   

  
	
  U.S. BANK N.A.

  	
    (Bank)

  	
   

  
	
   

  
	
  By:

  	
  /s/ Elizabeth Jones

  	
   

  	
   

  
	
  Name and Title:

  	
  ELIZABETH JONES 

  ASSISTANT VICE PRESIDENT

  	
   

  	
   

  
							

 

2

 

BREAKFUNDING PREPAYMENT FEE ADDENDUM

 

To Amendment to Note dated MARCH 30,
2004 Prepayment. There
shall be no prepayments of this Note, provided that the Bank may consider
requests for its consent with respect to prepayment of this Note, without
incurring an obligation to do so, and the Borrower acknowledges that in the
event that such consent is granted, the Borrower shall be required to pay the
Bank, upon prepayment of all or part of the principal amount before final
maturity, a prepayment indemnity (“Prepayment Fee”) equal to the greater of
zero, or that amount, calculated on any date of prepayment (“Prepayment Date”),
which is derived by subtracting: (a) the principal amount of the Note or
portion of the Note to be prepaid from (b) the Net Present Value of the Note or
portion of the Note to be prepaid on such Prepayment Date; provided, however,
that the Prepayment Fee shall not in any event exceed the maximum prepayment
fee permitted by applicable law.

 

“Net Present Value” shall mean the amount which is derived by summing the present values of
each prospective payment of principal and interest which, without such full or
partial prepayment, could otherwise have been received by the Bank over the
shorter of the remaining contractual life of the Note or next repricing date if
the Bank had instead initially invested the Note proceeds at the Initial Money
Market Rate. The individual discount rate used to present value each
prospective payment of interest and/or principal shall be the Money Market Rate
at Prepayment for the maturity matching that of each specific payment of
principal and/or interest.

 

“Initial Money Market Rate” shall mean the rate per annum, determined
solely by the Bank, on the first day of the term of this Note or the most
recent repricing date or as mutually agreed upon by the Borrower and the Bank,
as the rate at which the Bank would be able to borrow funds in Money Markets
for the amount of this Note and with an interest payment frequency and
principal repayment schedule equal to this Note and for a term as may be
arranged and agreed upon by the Borrower and the Bank, adjusted for any reserve
requirement and any subsequent costs arising from a change in government
regulation. Borrower acknowledges that the Bank is under no obligation to
actually purchase and/or match funds for the Initial Money Market Rate of this
Note.

 

“Money Market Rate At Prepayment” shall mean that zero-coupon rate, calculated
on the Prepayment Date, and determined solely by the Bank, as the rate at which
the Bank would be able to borrow funds in Money Markets for the prepayment
amount matching the maturity of a specific prospective Note payment or
repricing date, adjusted for any reserve requirement and any subsequent costs
arising from a change in government regulation. A separate Money Market Rate at
Prepayment will be calculated for each prospective interest and/or principal
payment date.

 

“Money Markets” shall mean one or more wholesale funding markets available to the Bank,
including negotiable certificatesof deposit, commercial paper, eurodollar
deposits, bank notes, federal funds, interest rate swaps or others.

 

In
calculating the amount of such Prepayment Fee, the Bank is hereby authorized by
the Borrower to make such assumptions regarding the source of funding,
redeployment of funds and other related matters, as the Bank may deem
appropriate. If the Borrower fails to pay any Prepayment Fee when due, the
amount of such Prepayment Fee shall thereafter bear interest until paid at the
default rate specified in this Note (computed on the basis of a 360-day year,
actual days elapsed). Any prepayment of principal shall be accompanied by a payment
of interest accrued to date thereon; and said prepayment shall be applied to
the principal installments in the inverse order of their maturities. All
prepayments shall be in an amount of at least $100,000 or, if less, the
remaining entire principal balance of the loan.

 

 

	
  Dated as of: 

  	
  MARCH 30, 2004

  	
   

  

 

	
   

  	
   

  	
  BIOJECT
  MEDICAL TECHNOLOGIES INC.

  
	
  (Individual Borrower)

  	
   

  	
  Borrower Name
  (Organization)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a

  	
  OREGON Corporation

  
	
   

  	
   

  	
   

  
	
  Borrower Name

  	
  N/A

  	
   

  	
  By

  	
    /s/ Michael A
  Temple

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name and Title

  	
  MICHAEL A. TEMPLE,
  EXECUTIVE VICE PRESIDENT

  
	
   

  	
   

  	
   

  	
   

  
	
  Borrower Name

  	
  N/A

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name and TitleExhibit 10.4

 

LEASE AGREEMENT

 

by and between

 

DaPuzzo Investment
Group, LLC,

as Landlord

 

and

 

Encision, Inc.

as Tenant

 

6797 Winchester
Circle

Boulder, Colorado

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  BASIC LEASE DEFINITIONS, EXHIBITS AND
  ADDITIONAL DEFINITIONS

  	
   

  
	
  2.

  	
  GRANT
  OF LEASE

  	
   

  
	
  3.

  	
  RENT

  	
   

  
	
  4.

  	
  REIMBURSEMENT OF CERTAIN EXPENSES BY
  LANDLORD

  	
   

  
	
  5.

  	
  RENEWAL
  OPTION

  	
   

  
	
  6.

  	
  RIGHT OF FIRST OPTION

  	
   

  
	
  7.

  	
  PERMITTED USE AND OCCUPANCY

  	
   

  
	
  8.

  	
  COMMON
  AREAS

  	
   

  
	
  9.

  	
  UTILITIES,
  HVAC AND SECURITY

  	
   

  
	
  10.

  	
  REPAIRS

  	
   

  
	
  11.

  	
  ALTERATION AND IMPROVEMENTS

  	
   

  
	
  12.

  	
  LIENS

  	
   

  
	
  13.

  	
  INSURANCE

  	
   

  
	
  14.

  	
  DAMAGE OR DESTRUCTION

  	
   

  
	
  15.

  	
  WAIVERS AND INDEMNITIES

  	
   

  
	
  16.

  	
  CONDEMNATION

  	
   

  
	
  17.

  	
  ASSIGNMENT AND SUBLETTING

  	
   

  
	
  18.

  	
  PERSONAL PROPERTY

  	
   

  
	
  19.

  	
  END
  OF TERM

  	
   

  
	
  20.

  	
  ESTOPPEL CERTIFICATES

  	
   

  
	
  21.

  	
  TRANSFERS OF LANDLORD’S INTEREST

  	
   

  
	
  22.

  	
  RULES AND REGULATIONS

  	
   

  
	
  23.

  	
  TENANT’S DEFAULT AND LANDLORD’S REMEDIES

  	
   

  
	
  24.

  	
  LANDLORD’S DEFAULT AND TENANT’S REMEDIES

  	
   

  
	
  25.

  	
  SECURITY
  DEPOSIT

  	
   

  
	
  26.

  	
  BROKERS

  	
   

  
	
  27.

  	
  LIMITATIONS ON LANDLORD’S LIABILITY

  	
   

  
	
  28.

  	
  NOTICES

  	
   

  
	
  29.

  	
  FORCE
  MAJEURE

  	
   

  

 

i

 

	
  30.

  	
  MISCELLANEOUS

  	
   

  

 

ii

 

LEASE AGREEMENT

 

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

 

1.                                      BASIC LEASE
DEFINITIONS, EXHIBITS AND
ADDITIONAL DEFINITIONS.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)                                 “Permitted
Use” means primarily research, development, and manufacturing of medical
devices, general office uses and for no other use or purpose.

 

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

 

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

 

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

 

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

 

1

 

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

 

 

	
  Lease
  Year

  	
   

  	
  Base Rent

  Per Month

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1/12 of the following:

  
	
  1

  	
   

  	
  $0.00
  multiplied by the Rentable Area of the Premises

  
	
  2

  	
   

  	
  $7.00
  multiplied by the Rentable Area of the Premises

  
	
  3

  	
   

  	
  $8.23
  multiplied by the Rentable Area of the Premises

  
	
  4

  	
   

  	
  $8.52
  multiplied by the Rentable Area of the Premises

  
	
  5

  	
   

  	
  $8.81
  multiplied by the Rentable Area of the Premises

  

 

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

 

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

 

(o)                                 “Landlord’s
Address” means:

 

DaPuzzo
Investment Group

8467 Firethorn
Court

Longmont,
Colorado 80503

 

(p)                                 “Tenant’s
Address” means:

 

before the
Commencement Date:

 

Encision, Inc.

4828 Sterling
Drive

Boulder,
Colorado 80301

 

after the
Commencement Date:

 

Encision, Inc.

6797
Winchester Circle

Boulder,
Colorado 80301

 

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

 

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

 

2

 

1.2                               Additional
Definitions.  In addition to those
terms defined in Section 1.1 and other sections of this Lease, the following
defined terms when used in this Lease have the meanings indicated:

 

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

 

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

 

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

 

(d)                                 “Common
Areas” means  all areas and
facilities on the Property and within the Building that are provided and designated
from time to time by Landlord for the general, nonexclusive use and convenience
of Tenant and other tenants of the Building and their respective employees,
invitees, licensees and other visitors, including, without limitation, certain
lobbies, hallways, entry ways, loading areas, toilet facilities, elevator
facilities, shafts, basements, driveways, parking areas, mechanical and
electrical rooms, janitors’ and storage closets, stairways, lighting
facilities, trash facilities, utility lines, sidewalks, covered walkways,
terraces, loading areas, underground walkways, plazas, courts, retaining walls,
access roads, truck serviceways and landscaped areas.

 

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

 

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

 

(g)                                 “Hazardous
Substance” means any substance, chemical or material declared to be, or
regulated as, hazardous or toxic under any Environmental Law or the presence of
which may give rise to liability under any Environmental Law.

 

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

 

3

 

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

 

(j)                                     “Leasehold
Improvements” is defined in the Work Letter attached to this Lease as Exhibit
D.

 

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

 

(l)                                     “Operating
Expenses” means, with respect to any given calendar year during the Term, all
reasonable costs and expenses (expressed as a total amount and in dollars per
square foot of the Rentable Area of the Building) of management, operation and
maintenance of the Property and the Building, including the Common Areas,
incurred by Landlord, including, without limitation, costs of cleaning, window
washing, maintaining window coverings, landscaping, lighting, heating, air
conditioning, and repaving parking areas; painting, repairing and replacing the
Building or any portion of it to the extent that such painting, repairs, or
replacements are considered non-capital expenses under generally accepted
accounting principals (except to the extent proceeds of insurance or
condemnation awards are actually received); removing snow and ice; trash
removal; reasonable management fees (comparable to fees charged for similar
buildings in the same general geographic area as the Building), providing
seasonal holiday decorations; providing insurance as set forth in
Section 13.1; wages, salaries and compensation of employees who are not
above the level of building manager; consulting, accounting, legal (limited to
legal costs associated with controlling Operating Expenses), janitorial,
maintenance, guard, fire protection, fire hydrant and other services; power,
water, waste disposal and other utilities; licenses and permit fees; the total
amounts paid by Landlord in satisfaction of any assessments made by any owners’
association for the purpose of providing any services or benefits to the
Property, the Premises or the Building generally; depreciation on personal
property and equipment used in the operation or maintenance of the Building
over the useful life of such personal property and equipment in accordance with
the applicable depreciation schedules prescribed under the Internal Revenue
Code and rent paid for leasing such equipment; real and personal property taxes
and assessments (and any tax levied in whole or in part in lieu of or in
addition to such property taxes) on the Building, the Property or Landlord’s
personal property used in the operation or maintenance of the Building and the
Property; and any other costs, charges and expenses which are regarded as a
normal maintenance and operating expense of Landlord for the Building and the
Property under generally accepted accounting principles; plus all reasonable
costs (amortized over the useful life of the item) of any capital improvements
which are made by Landlord to any portion of the Building and the Property
related to the office space contained therein (A) for the purpose of reducing
the costs described in this paragraph, to the extent of such reduction, or (B)
after the date of this Lease and which are required under any governmental law
or regulation that was not applicable to the Property or the Building or the
subject portion of it at the time such capital improvements were constructed
and which are not a result of the nature of Tenant’s use of the Premises
(whether or not such law or regulation is applicable to the Building as a
result of Landlord’s status under such law or regulation or

 

4

 

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

 

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

 

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

 

2.                                      GRANT OF LEASE.

 

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

 

5

 

2.2                               Quiet
Enjoyment.  Landlord covenants that
during the Term Tenant will have quiet and peaceable possession of the
Premises, subject to the terms, covenants, conditions and provisions of this
Lease, and Landlord will not disturb such possession except as expressly
provided in this Lease.

 

3.                                      RENT.

 

3.1                               Base
Rent.  Commencing on the Commencement
Date and continuing throughout the Term, Tenant will pay Landlord Base Rent according
to the following provisions.  Base Rent
during each Lease Year (or portion of a Lease Year) will be payable in monthly
installments in the amount specified for such Lease Year (or portion thereof)
in Section 1.1(l), in advance, on or before the first day of each and
every month during the Term.  If the Term
commences on other than the first day of a month or ends on other than the last
day of a month, Base Rent for such month will be appropriately prorated based
on the number of days in such month. 
Tenant covenants to pay all Rent when due to Landlord’s Address, or to
such other place of which Landlord notifies Tenant in writing from time to
time, and to observe and perform all of the terms, covenants and conditions
applicable to Tenant in this Lease. 
Tenant further agrees that the covenant to pay Rent is an independent
covenant, not subject to abatement, offset, or deduction, except as may be
provided in this Lease.

 

3.2                               Additional
Rent.  Commencing on the Commencement
Date and continuing for the duration of the Term, Tenant agrees to pay
Landlord, as Additional Rent, in the manner provided below, Tenant’s Share of
Operating Expenses.

 

(a)                                  Estimated
Payments.  Prior to or within 60 days
after the beginning of each calendar year, Landlord will notify Tenant of
Landlord’s estimate of Operating Expenses for such calendar year.  On or before the first day of each month
during the Term, Tenant will pay to Landlord, in advance, 1/12 of Tenant’s
Share of such estimated Operating Expenses; provided that until such notice is
given with respect to the ensuing calendar year, Tenant will continue to pay on
the basis of the prior calendar year’s estimate until the month after the month
in which such notice is given.  Within
thirty (30) days after Tenant’s receipt of Landlord’s new estimate, Tenant will
pay to Landlord 1/12 of the difference between the new estimate and the prior
year’s estimate for each month which has elapsed since the beginning of the
current calendar year.  If at any time or
times it appears to Landlord that Operating Expenses for the then-current
calendar year will vary from Landlord’s estimate by more than 5%, Landlord may,
by notice to Tenant, revise its estimate for such year, and subsequent payments
by Tenant for such year will be based upon the revised estimate.  If Tenant’s share of Operating Expenses for
any year are expected to be more than 105% of Tenant’s Share of Operating
Expenses for the preceding year, Tenant may require Landlord (at no cost to
Tenant) to obtain bids for all Operating Expenses which constitute 5% or more
of the aggregate Operating Expenses (other than insurance) for which Landlord
may reasonably be expected to be able to obtain bids.  Such bids will be from reputable providers of
such services.  Landlord shall then reasonably
select the providers of such services included within Operating Expenses based
on the bid amount and the quality and experience of such provider, subject to
Tenant’s right to review the bids with Landlord.

 

(b)                                 Annual
Settlement.  As soon as practicable
after the close of each calendar year, but in no event more than 90 days after
the close of each calendar year, Landlord will deliver to Tenant its statement
of actual Operating Expenses incurred for such

 

6

 

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

 

(c)                                  Final
Payment.  Tenant’s obligation to pay
Tenant’s Share of Operating Expenses that accrue but are not paid for periods
prior to the expiration or early termination of the Term will survive such
expiration or early termination.  As soon
as practicable after the expiration or early termination of the Term, Landlord
may submit an invoice to Tenant stating the amount, if any, by which actual
Operating Expenses through the date of such expiration or early termination
exceeded Tenant’s estimated payments for the calendar year in which such
expiration or termination has occurred. 
Tenant will pay Tenant’s Share of the amount of any such excess to
Landlord within 30 days after the date of Landlord’s invoices.

 

(d)                                 Audit.  Tenant shall have the right at its own
expense and at a reasonable time (after written notice to Landlord) within 60
days of the date of the statement received by Tenant pursuant to
subsection (b) or (c), above (the “Statement”), to audit Landlord’s books
relevant to Additional Rent due under this Section 3.2.  If Tenant does not audit Landlord’s books and
deliver the results thereof to Landlord within said 60-day period, the terms
and amounts set forth in the Statement shall be deemed conclusive and final and
Tenant shall have no further right to adjustment.  If Tenant’s examination reveals that an error
has been made in Landlord’s determination of Tenant’s Share of Operating
Expenses, and Landlord agrees with such determination, then the amount of such
adjustment shall be payable by Landlord or Tenant, to the other party as the
case may be.  If Tenant’s examination
reveals an error has been made in Landlord’s determination of Tenant’s Share of
Operating Expenses, and Landlord disagrees with the results thereof, Landlord
shall have 60 days to obtain an audit from an accountant of its choice to
determine Tenant’s Share of Operating Expenses. 
If Landlord’s accountant and Tenant’s accountant are unable to reconcile
their audits, both accountants shall mutually agree upon a third accountant,
whose determination of Tenant’s Share of Operating Expenses shall be
conclusive.  If the amount of error is
determined to be an overcharge of 10% or more, then the reasonable costs of all
of the audits made pursuant to this subsection shall be paid by Landlord.

 

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

 

7

 

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

 

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

 

3.5                               Right
to Accept Payments.  No receipt by
Landlord of an amount less than Tenant’s full amount due will be deemed to be
other than payment “on account,” nor will any endorsement or statement on any
check or any accompanying letter effect or evidence an accord and
satisfaction.  Landlord may accept such
check or payment without prejudice to Landlord’s right to recover the balance
or pursue any right of Landlord.  No
payments by Tenant to Landlord after the expiration or other termination of the
Term, or after the giving of any notice (other than a demand for payment of
money) by Landlord to Tenant, will reinstate, continue or extend the Term or
make ineffective any notice given to Tenant prior to such payment.  After notice or commencement of a suit, or
after final judgment granting Landlord possession of the Premises, Landlord may
receive and collect any sums of Rent due under this Lease, and such receipt
will not void any notice or in any manner affect any pending suit or any
judgment obtained.

 

4.                                      REIMBURSEMENT
OF CERTAIN EXPENSES BY LANDLORD

 

4.1                               Moving
Expenses.  Landlord will reimburse
Tenant upon demand for all reasonable out-of-pocket expenses, up to $40,000,
incurred by Tenant for (a) the packing, loading, transporting, unloading, and
unpacking (including packing materials) Tenant’s personal property; and (b) the
calibration of equipment, sterilization dose audits (including parts and
materials), FDA/UL/ISO Audits required due to the move, facility registration
changes and fees, marketing literature, Instruction for Use and Manual changes
related to the move (does not include printing expenses) and other expenses
related to the relocation of Tenant’s fixtures, furniture and equipment as
commercially required per Tenant’s Permitted Use, but not including regular
maintenance or upkeep that Tenant would have undertaken in any event.

 

4.2                               Reimbursement
of Rent Under Previous Lease.  Landlord
acknowledges that Tenant is obligated to pay monthly base rent payments in the
amount of $9,564.93 plus operating expenses pursuant to that certain Lease
between Tenant and Sterling Partnership dated as of September 7, 2001 (the
“Existing Lease”) and that such obligation will continue until October 31,
2004.  Landlord agrees to reimburse
Tenant on a monthly basis in the amount of each such monthly rent payment made
by Tenant under the Existing Lease for the period beginning on the Commencement
Date and continuing until October 31, 2004.  Operating expense charges will be paid on a
cumulative basis for the period beginning on the Commencement Date and
continuing until October 31, 2004. 
The operating expense charges will be calculated and billed to Landlord
no later than January 31, 2005 and shall be paid to Tenant within thirty
(30) days of such billing. Tenant acknowledges that Landlord may attempt to
mitigate his reimbursement expenditure pursuant to this Section 4.2 by
securing a tenant to occupy the space previously occupied by Tenant under its
Existing Lease.  Tenant agrees to
cooperate fully with, and use commercially

 

8

 

reasonably
efforts to facilitate, Landlord’s efforts to sublet the space previously
occupied by Tenant.  Tenant further
acknowledges that any proceeds from the subletting of such space previously
occupied by Tenant will be credited against the reimbursement amount Landlord
is required to pay Tenant pursuant to this Section 4.2.

 

5.                                      RENEWAL OPTION.

 

5.1                               Exercise
and Base Rent.  Subject to the terms
and provisions of this Section 5.1, Tenant, at its option, may extend the
initial Term of this Lease for one additional 5-year period (the “Renewal
Term”), which Renewal Term will commence as of the end of the initial Term of
this Lease.  To exercise its option as to
such Renewal Term, Tenant must deliver written notice of its intent to exercise
such option (the “Renewal Notice”) to Landlord no sooner than 12 months and no
later than six months prior to the expiration of the initial Term of this
Lease.  If Landlord timely receives a
Renewal Notice from Tenant, then Tenant and Landlord shall be irrevocably
committed to the Renewal Term, with the Base Rent for the Renewal Term being
determined as follows below.  Within ten
days after Landlord receives Tenant’s Renewal Notice, Landlord will deliver to
Tenant in writing a statement as to the Base Rent for the Renewal Term (a
“Renewal Rent Statement”) as determined by Landlord based on the “Market Rental
Rate” defined in Section 5.2 below. 
Tenant will have a period of 10-business days following its receipt of a
Renewal Rent Statement to notify Landlord in writing whether Tenant agrees to
the Base Rent stated in such Renewal Rent Statement.  If Tenant does not respond to Landlord’s
Renewal Rent Statement within such 10-business day period or Tenant notifies
Landlord in writing within such 10-business day period that Tenant does not
agree with the Base Rent stated in such Renewal Rent Statement, Tenant and
Landlord will have 20 days from the earlier of the expiration of the
10-business day period or Landlord’s receipt of Tenant’s notice of disagreement
to negotiate and agree upon the Base Rent for the Renewal Term based on the
Market Rental Rate for the Premises.  If
no agreement can be reached as to the Base Rent for the Renewal Term within
such 20-day period, then such Base Rent shall be determined pursuant to
Section 5.2 below.

 

5.2                               Base
Rent Determination.  Within 10 days
after the expiration of the 20-day negotiation period described in
Section 5.1, Landlord and Tenant shall mutually appoint a commercial real
estate broker (on an agreed fee basis) having at least 10 years of experience
in office leasing in the Boulder area (the “Appointed Broker”).  If within such 10-day period, Landlord and
Tenant have been unable to agree upon a mutually acceptable Appointed Broker,
they will each appoint a commercial real estate broker having at least 10 years
of experience in office leasing in the Boulder area and will instruct such
brokers to jointly select the Appointed Broker. 
Within five days after appointment of the Appointed Broker, Landlord and
Tenant each shall deliver to the Appointed Broker their respective determinations
of the Base Rent for the Renewal Term based on the Market Rental Rate
(respectively, “Landlord’s Rent Determination” and “Tenant’s Rent
Determination”).  Within 10 days after
receiving Landlord’s Rent Determination and Tenant’s Rent Determination, the
Appointed Broker shall prepare an estimate of the Base Rent for the Renewal
Term based on the Market Rental Rate and immediately notify Landlord and Tenant
of such estimate (the “Independent Appraisal”). 
The Base Rent determined by the Appointed Broker shall be added to
whichever of Landlord’s Rent Determination or Tenant’s Rent Determination is
closest in amount to the Independent Appraisal, the sum of such amount shall be
divided by two and the resulting quotient shall be the Base Rent applicable for
the Renewal Term.  In the event that the
difference between the Independent Appraisal and

 

9

 

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

 

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

 

5.4                               Limitations.  Notwithstanding anything above to the
contrary, Tenant will have no right to extend the Term of this Lease and the
Renewal Notice will be ineffective if a Default exists at the time the Renewal
Notice is given or at the commencement of the Renewal Term beyond any
applicable notice and cure period.  Any
termination of this Lease prior to the Expiration Date will serve to
immediately and automatically terminate all of Tenant’s rights under this
Section 5.  Any assignment by Tenant
of the Lease or subletting of the entire Premises will automatically terminate
the option to extend the Term set forth in this Section 5, unless Landlord
consents to the contrary in writing at the time of such subletting or
assignment or such subletting or assignment is made pursuant to
Section 17.6 or Section 17.7 below.

 

6.                                      RIGHT OF FIRST
OPTION.

 

During the
Term of this Lease, Tenant will have the right to be offered by Landlord the
opportunity to add to the Premises any “RFO Space” (as defined below) that
becomes available for lease during the Term. 
The “RFO Space” means any vacant space in the Building that is
contiguous to Premises.  Any space in the
Building shall not be deemed available for lease (and therefore will not be
considered RFO Space) to the extent that it is subject to, or becomes subject
to, any expansion or renewal option in favor of another tenant.  If at any time during the Term any of the RFO
Space becomes available or is becoming available for lease, before offering
such space to any other party, Landlord shall notify Tenant in writing that
such RFO Space is available for lease or is becoming available during the Term
and such notice will provide the terms at which Landlord is proposing in good
faith to offer the space, including the base rent, additional rent, any
applicable tenant improvement allowance and any other terms relevant to the
leasing of the RFO Space (the “RFO Offer Notice”).  The RFO Offer Notice shall notify Tenant of
the day on which the RFO Space will become available for delivery to
Tenant.  Tenant shall have 25 days after
receipt of the RFO Offer Notice (the “Consideration Period”) to either accept
Landlord’s offer for the leasing of the RFO Space or negotiate with Landlord to
reach agreement on terms that are acceptable to Landlord and Tenant.  If Tenant elects to negotiate with Landlord
during the Consideration Period, then Landlord and Tenant shall negotiate in
good faith to reach agreement on the terms for Tenant’s leasing of the RFO
Space.  If Tenant timely accepts
Landlord’s RFO Space offer or Tenant and Landlord otherwise reach agreement on
the terms of Tenant’s leasing of the RFO Space during the Consideration Period,
the parties shall enter into a lease for such space substantially in the form
of this Lease, but containing the terms and

 

10

 

provisions
with respect to the rent payable for such space, the tenant improvement work,
if any, free rent periods, if any, tenant improvement allowances, if any, and
such other terms and conditions as are unique to the RFO Space, as agreed on by
Landlord and Tenant.  If Tenant fails to
accept Landlord’s RFO Space offer or Landlord and Tenant, after negotiating in
good faith, do not reach agreement on terms for Tenant’s leasing of the RFO
Space within the Consideration Period, Tenant shall be deemed to have rejected
an RFO Offer Notice.  If Tenant rejects
or is deemed to have rejected an RFO Offer Notice, Landlord shall thereafter be
free to lease any or all of the RFO Space that is the subject of the RFO Offer
Notice to any prospective tenant upon such terms to which Landlord and such
tenant agree, and Tenant will not have any right to lease the applicable RFO
Space until after it has been rented by Landlord and again becomes available
for lease.  Tenant will not have the
right to accept any RFO Offer Notice if a Default (beyond any applicable cure
period) exists at the time of Tenant’s attempted acceptance.  In addition, Tenant’s rights under this
Section 6 will automatically terminate upon any early termination of this
Lease.  Tenant’s right of first offer
pursuant to this Section 6 may only be assigned by Tenant to an assignee
permitted pursuant to Article 17.

 

7.                                      PERMITTED
USE AND OCCUPANCY.

 

7.1                               Permitted
Use.  Tenant agrees to use and occupy
the Premises only for the Permitted Use and for no other purpose without the
prior written consent of Landlord, not to be unreasonably withheld, condition
or delayed.

 

(a)                                  Use.  Tenant agrees to use the Premises in a safe,
careful and proper manner, and to comply, at Tenant’s expense, with all Laws
applicable to Tenant’s use, occupancy or alteration of the Premises and with
any Laws that require any alterations to the Premises due to Tenant’s status
under such Laws, including, without limitation, the ADA; provided, however,
that Landlord shall, at Landlord’s cost and expense, make any changes or
alterations required by Laws, including the ADA, as a result of conditions
existing prior to the Commencement Date in the Premises, and not resulting from
Tenant’s particular use of the Premises. 
If, due to the nature or manner of any use or occupancy of the Premises
by Tenant, any improvements or alterations to the Building or the Premises are
determined to be required to comply with any Laws, then Tenant will pay all
costs of the required improvements, alterations or changes in services.  Tenant will not keep anything on the Premises
for any purpose which increases the insurance premium cost or invalidates any
insurance policy carried on the Premises by Landlord. Tenant will pay, as Rent
and upon demand of Landlord, any such increased premium cost due to Tenant’s
use or occupation of the Premises. Tenant will not cause, maintain or permit
any nuisance or waste in or about the Building or the Premises.  In addition, except as expressly provided
otherwise in the Lease, Tenant will keep the Premises free of debris, and
anything of a dangerous, noxious or toxic nature, which could create a fire
hazard or undue vibration, heat, noise, fumes, vapors or odors.  If any item of equipment, building material
or other property brought into the Building or the Premises by Tenant or on
Tenant’s request causes a dangerous, noxious or toxic effect (including an
environmental effect) and in Landlord’s reasonable opinion such effect will not
be permanent but will only be temporary and is able to be eliminated, then
Tenant will not be required to remove such item, provided that Tenant promptly
and diligently causes such effect to be eliminated, pays for all costs of
elimination and indemnifies Landlord against all liabilities arising from such
effect.

 

11

 

(b)                                 Hazardous
Materials.  To Landlord’s knowledge
without investigation, the Premises and the Building are concurrently in
compliance with all applicable Environmental Laws, and no Hazardous Materials
(other than cleaning agents used in the course of regular janitorial services)
exist on, about, or under, the Premises or the Building.  Landlord and Tenant agree that, during the
Term, each will comply with all Laws, including, without limitation, all
Environmental Laws, governing, and all procedures established by Landlord for
the use, abatement, removal, storage, disposal or transport of any Hazardous
Substances and any required or permitted alteration, repair, maintenance,
restoration, removal or other work in or about the Building or the Premises
that involves or affects any Hazardous Substances.  Except for the lawful use of cleaning agents
used in the course of regular janitorial service and laser printer toner
cartridges that are disposed of in compliance with applicable Environmental
Laws, and such materials of the type and quality consistent with Tenant’s
Permitted Use, no Hazardous Substances will be stored, used, released,
produced, processed or disposed of in, on or about, or transported to or from,
the Building or the Premises by Tenant or any of Tenant’s agents, employees or
contractors, without first obtaining Landlord’s express written consent (any
Hazardous Substances which are stored, used, released, produced, processed or
disposed in, on or about, or transported to or from, the Building or the
Premises by any of such persons or entities upon such express written consent
are called “Tenant’s Hazardous Substances”). 
Any such use, storage, disposal or production of the Hazardous
Substances permitted by this Section 7.1(b) shall be done in compliance
with all Environmental Laws and so as not to result in the Premises being in
violation of any Environmental Laws. 
Upon the Expiration Date or earlier termination of this Lease Tenant, at
its expense, will take all action necessary to restore the Building and the
Premises to the condition existing prior to the introduction of Tenant’s
Hazardous Substances, whether such action is required by any governmental
authority in order to comply with applicable Laws or reasonably required by
Landlord in order for Landlord to make the same economic use of the Building
and the Premises as Landlord could have made prior to the introduction of
Tenant’s Hazardous Substances.  Such
action may include, without limitation, the investigation of the environmental
condition of the Building or the Premises, the preparation of remediation plans
or feasibility studies and the performance of cleanup, remedial, removal or
restoration work.  Tenant will obtain
Landlord’s written approval before undertaking any action required by this
Section 7.1(b), which approval will not be unreasonably withheld so long
as the proposed actions will not have an avoidable material and adverse effect
on the Building or the Premises.  Each
party will indemnify and hold the other and the other’s Affiliates harmless
from and against any and all claims, costs and liabilities (including
reasonable attorneys’ fees) arising out of or in connection with any breach by
such party of its covenants under this Section 7.1(b).  The parties’ obligations under this
Section 7.1(b) will survive the expiration or early termination of the
Term.

 

7.2                               Signs
and Displays.  Tenant shall be
entitled to use 50% of the Building’s monument sign, subject to Landlord’s
prior approval of such display or sign, which approval shall not be
unreasonably withheld, conditioned or delayed. 
Landlord shall install such display or sign on the Building’s monument
sign at Tenant’s expense.  Tenant will
not place, cause or permit to be placed and maintained on the exterior of the
Premises any other sign, awning,

 

12

 

lettering or
other advertising matter, unless previously approved by Landlord in Landlord’s
reasonable discretion.

 

8.                                      COMMON AREAS.

 

8.1                               Right
of Use.  Landlord grants Tenant, its
employees, invitees, customers, licensees and other visitors a nonexclusive
and, during the Term, irrevocable license for the Term to use the Common Areas,
subject to the terms and conditions of this Lease.  Provided that there is no unreasonable
material adverse effect on Tenant’s use or occupancy of the Premises, without
advance notice to Tenant (except with respect to matters covered by
subsection (a) below) and without any liability to Tenant in any respect,
Landlord will have the right to:

 

(a)                                  establish
and enforce reasonable non-discriminatory rules and regulations, in addition to
those on Exhibit C, concerning the maintenance, management, use and
operation of the Common Areas;

 

(b)                                 close
off any of the Common Areas to whatever extent required in the reasonable
opinion of Landlord and its counsel to prevent a dedication of any of the
Common Areas or the accrual of any rights by any person or the public to the
Common Areas, provided such closure does not deprive Tenant of the substantial
benefit and enjoyment of or access to the Premises;

 

(c)                                  temporarily
close any of the Common Areas for maintenance, alteration or improvement
purposes, provided such closure does not deprive Tenant of the substantial
benefit and enjoyment of or access to the Premises;

 

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

 

(e)                                  expand
the Building or convert any portion of the Building (excluding the Premises) to
Common Areas.  In the event of any such
changes in the Building, Landlord may make an appropriate adjustment in
Tenant’s Share; provided, however, that Landlord shall not increase Tenant’s
Share as a result of any changes in the size of the Building, except as set
forth in Section 16.2(d).

 

8.2                               Landlord’s
Compliance with Laws.  Landlord will
maintain the Common Areas in compliance with all applicable Laws.

 

9.                                      UTILITIES, HVAC AND SECURITY.

 

9.1                               Operation
of Building and Premises.

 

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

 

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

 

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

 

13

 

(2)                                  electric
power, gas service and domestic running water service as supplied by the local
utility companies for normal lighting and office usage; and

 

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

 

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

 

(1)                                  domestic
running water and necessary supplies in washrooms sufficient for the normal use
thereof by occupants in the Building;

 

(2)                                  janitorial
services in the Common Areas (but not the Premises), including exterior window
washing;

 

(3)                                  access
to and egress from the Premises;

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

10.                               REPAIRS.

 

10.1                        Landlord
Maintenance and Repairs.  Landlord
will keep the exterior supporting walls, foundations, roof and down spouting on
the Building, and the Common Areas within the Building in reasonable condition
and in good repair, provided that the costs of such maintenance and repairs
will be included as Operating Expenses as provided in this Lease.

 

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

 

10.3                        Failure to
Maintain Premises.  If Tenant fails
to perform any of its obligations under Section 10.2, then Landlord may
perform such obligations and Tenant will pay as Rent to Landlord the cost of
such performance, including an amount sufficient to reimburse Landlord for
overhead and supervision, within 10 days after the date of Landlord’s invoice
therefor.  For purposes of performing
such obligations, or to inspect the Premises, Landlord may enter the Premises
upon not less than 12 hours’ prior notice to Tenant (except in cases of actual
or suspected emergency, in which case no prior notice will be required) without
liability to Tenant for any loss or damage incurred as a result of such entry
unless due to the negligence or intentional misconduct of Landlord (but subject
to Tenant’s waiver of claims pursuant to Section 15.2); provided that
Landlord will take reasonable steps in connection with such entry to minimize
any disruption to Tenant’s business or Tenant’s use of the Premises.

 

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

 

15

 

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

 

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

 

12.                               LIENS.  Tenant agrees
to pay before delinquency all costs for work, services or materials furnished
to Tenant for the Premises, the nonpayment of which could result in any lien
against the Building (including the Premises). 
Tenant will keep title to the Building (including the Premises) free and
clear of any such lien.  Tenant will
immediately notify Landlord of the filing of any such lien or any pending
claims or proceedings relating to any such lien and will indemnify and hold
Landlord harmless from and against all loss, damages and expenses (including
reasonable attorneys’ fees) suffered or incurred by Landlord as a result of
such lien, claims and proceedings.  In
case any such lien attaches, Tenant agrees to cause it to be released and
removed of record within 30 days thereafter (failing which Landlord may do so
at Tenant’s sole expense), unless Tenant has a good faith dispute as to such
lien in which case Tenant may contest such lien by appropriate proceedings so
long as Tenant deposits with the court or Landlord, which ever is required by
applicable Laws, a bond or other security in an amount reasonably acceptable to
Landlord and any Lender which may be used by Landlord to release such lien if
Tenant’s contest is abandoned or is unsuccessful.  If Landlord incurs any legal costs in causing
the removal of such lien, Tenant will pay all legal costs incurred by Landlord,
including, without limitation, Landlord’s reasonable attorneys’ fees.  Upon final determination of any permitted
contest, Tenant will immediately pay any judgment rendered in favor of the lien
claimant and cause the lien to be released.

 

13.                               INSURANCE.

 

13.1                        Landlord’s
Insurance.

 

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

 

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

 

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

 

16

 

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

 

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

 

13.2                        Tenant’s
Insurance.  During the Term, Tenant
will provide and keep in force the following insurance:

 

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

 

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

 

(c)                                  If
any boiler or machinery is operated in the Premises by Tenant, boiler and
machinery insurance;

 

(d)                                 If
Tenant operates owned, hired or non-owned vehicles, automobile liability
insurance with limits of not less than $1,000,000 combined bodily injury and
property damage; and

 

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

 

Landlord, Landlord’s
property manager (if any), and any Lender will be named as additional insureds
in the policy described in Section 13.2(a), as their interests appear,
which will include cross liability and severability of interests clauses and
will be on an “occurrence” (and not a “claims made”) form.  The policies described in
Section 13.2(b) will permit the release of Landlord from certain liability
under Section 15.2.  Tenant’s
insurance policies will be written by insurers that are rated A-VII or better
by Best’s Rating Guide and licensed in the State of Colorado, will be written
as primary policies, not contributing with and not supplemental to the coverage
that Landlord may carry, and will otherwise be upon such terms and conditions
as Landlord from time to time reasonably requires, including reasonable limits
on Tenant’s deductibles.  Tenant will
file with Landlord, on or before the Commencement Date and at least 10 days
before the expiration date of expiring policies, such copies of either current
policies or certificates, or other proofs, as may be reasonably required to
establish Tenant’s insurance coverage in effect from time to time and payment
of premiums.  Tenant’s insurers will
agree to give Landlord and all other additional insureds at least 30 days’ prior
notice of any non-renewal, and at least 10 days’ prior notice of any
cancellation, of any insurance coverage required by this

 

17

 

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

 

14.                               DAMAGE OR DESTRUCTION.

 

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

 

14.2                        Repair
Obligations.  If the Building or the
Premises are damaged by fire or other casualty and neither party terminates
this Lease according to Section 14.1, then Landlord will repair and
restore such damage with reasonable promptness to the condition existing prior
to the damage or better, subject to delays for insurance adjustments and delays
caused by force majeure (as described in Section 29 below).  However, Landlord will not be required to
spend more for such repair and restoration than the insurance proceeds
available to Landlord as a result of the fire or other casualty.  To the extent Tenant is responsible for
insuring Tenant’s furniture and equipment, Tenant agrees, promptly upon notice
from Landlord that Landlord is repairing the Premises, to file such claims
necessary to reopen Tenant’s business within 20 days after the completion of
Landlord’s repairs.  Landlord will have
no liability to Tenant and Tenant will not be entitled to terminate this Lease
if Landlord’s repairs and restoration are not in fact completed within the
estimated time period, provided that Landlord promptly commences and diligently
pursues such repairs and restoration to completion.  In no event will Landlord be obligated to
repair, restore or replace any of the property required to be insured by Tenant
according to

 

18

 

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

 

14.3                        Rent
Abatement.  If any fire or casualty
damage renders the Premises untenantable and if this Lease is not terminated
according to Section 14.1, then Rent will abate beginning on the date of
such damage on a per diem basis.  Such
abatement will end on the earlier of 30 days after the date Landlord has
substantially completed the repairs and restoration Landlord is required to
perform according to Section 14.2 or the date Tenant accepts the Premises
for occupancy.  Except as provided in
Section 15.3, in no event will Landlord be liable for any inconvenience or
annoyance to Tenant or injury to the business of Tenant resulting in any way
from damage caused by fire or other casualty or the repair of such damage,
provided however that, to the extent Tenant remains in possession of a portion
of the Premises, Landlord will take all reasonable steps to minimize the
disruption to Tenant’s business and use of such portion of the Premises during
the period of repair.

 

15.                               WAIVERS AND INDEMNITIES.

 

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

 

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

 

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

 

19

 

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

 

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

 

16.                               CONDEMNATION.

 

16.1                        Full
Taking.  If all or substantially all
of the Building or the Premises are taken for any public or quasi-public use
under any applicable Laws or by right of eminent domain, or are sold to the
condemning authority in lieu of condemnation, then this Lease will terminate as
of the date when the condemning authority takes physical possession of the
Building or the Premises.

 

16.2                        Partial
Taking.

 

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

 

(b)                                 Tenant’s
Termination of Lease.  If any part of
the Premises or if over 20% of the Building is thus taken or sold, Tenant may
terminate this Lease if in Tenant’s reasonable judgment the Premises cannot be
operated by Tenant in an economically viable fashion because of such partial
taking.  Such termination by Tenant must be
exercised by written notice to Landlord given not later than 45 days after
Tenant is notified of the taking of the Building.

 

(c)                                  Effective
Date of Termination.  Termination by
Landlord or Tenant will be effective as of the date when physical possession of
the applicable portion of the Building or the Premises are taken by the
condemning authority.

 

(d)                                 Election
to Continue Lease.  If neither
Landlord nor Tenant elects to terminate this Lease upon a partial taking of a
portion of the Building or the Premises, the Rent payable under this Lease will
be diminished by an amount allocable to the portion of the Building or Premises
which was so taken or sold.  If this
Lease is not terminated upon a partial taking of the Building or the Premises,
Landlord will, at Landlord’s sole expense, promptly restore and reconstruct the
Building and the Premises to substantially their former condition to the extent
the same is feasible.  However, Landlord
will not be required to spend for such restoration or reconstruction an amount
in excess of the net amount received by Landlord as compensation or damages for
the part of the Building or the Premises so taken.

 

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

 

20

 

part or all of
the Building or the Premises, including any award for the value of the
unexpired Term.  However, Tenant may
assert a claim in a separate proceeding against the condemning authority for
any damages resulting from the taking of Tenant’s trade fixtures or personal
property, or for moving expenses, business relocation expenses or damages to
Tenant’s business incurred as a result of such condemnation.

 

17.                               ASSIGNMENT AND SUBLETTING.

 

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

 

17.2                        Notice of
Proposed Transfer; Landlord’s Options. 
If Tenant desires to enter into any assignment of this Lease or a
sublease of all or any part of the Premises, Tenant will first give Landlord
written notice, at least 30 days prior to the effective date of the proposed
assignment or sublease, of the proposed assignment or sublease, which notice
will contain (a) the name and address of the proposed transferee, (b) the
proposed use of the Premises if other than the Permitted Use, (c) statements
reflecting the proposed transferee’s current financial condition and income and
expenses for the past two years, and (d) the principal terms of the proposed
assignment or sublease.  Tenant shall not
permit the proposed transferee to occupy the Premises, or a portion thereof,
without Landlord’s written consent (which consent will not be unreasonably
withheld or delayed).  Except in the case
of any transfer permitted under Sections 17.6 and 17.7, Landlord will have the
option, which must be exercised, if at all, by notice given to Tenant within 15
days after Landlord’s receipt of Tenant’s notice of the proposed transfer,
either (a) if Tenant’s notice relates to a subletting, to sublet from Tenant
such space as is described in the notice for such portion of the Term as is
described in the notice, upon the same terms and conditions and for the same
Rent (apportioned, as appropriate, to the amount of such space) as provided in
this Lease; or (b) if such notice relates to an assignment, to become Tenant’s
assignee.

 

17.3                        Consent
Not to be Unreasonably Withheld.  If
Landlord does not exercise its applicable option under Section 17.2, then
Landlord will not unreasonably withhold or delay its consent to the proposed
assignment or subletting if each of the following conditions is satisfied:

 

(a)                                  the
proposed transferee, in Landlord’s reasonable opinion, has sufficient financial
capacity and business experience to perform Tenant’s obligations under this
Lease;

 

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

 

(c)                                  if
the proposed transfer is a sublease, the rent which the proposed transferee
will be required to pay will be equal to at least 90% of the then-current
market rent for the portion of the Premises being sublet; provided that this
Section 17.3(c) shall only apply if Landlord is currently offering space
on Winchester Circle in Boulder,

 

21

 

Colorado
comparable in size and available rental term to the portion of the Premises
being offered for sublease by Tenant;

 

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

 

(e)                                  at
the time of the proposed transfer no “Default” (as defined in
Section 23.1) exists under this Lease beyond any applicable notice and
cure period; and

 

(f)                                    the
proposed transferee or Tenant will pay Landlord’s reasonable costs associated
with Landlord’s review and approval of the proposed transfer, including, without
limitation, attorneys’ fees and costs.

 

17.4                        Form of
Transfer.  If Landlord consents to a
proposed assignment or sublease, Landlord’s consent will not be effective
unless and until Tenant delivers to Landlord an original duly executed
assignment or sublease, as the case may be, that provides, in the case of a
sublease, that the subtenant will comply with all applicable terms and
conditions of this Lease and, in the case of an assignment, an assumption by
the assignee of all of the terms, covenants and conditions which this Lease
requires Tenant to perform.

 

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

 

17.6                        Change of
Ownership.  Tenant may assign this
Lease without the prior consent of Landlord to (i) any entity which assumes the
obligations of Tenant under this Lease and has acquired all or substantially
all of Tenant’s assets or (ii) any entity which is a successor of Tenant by
operation of law or merger or consolidation of or with Tenant.

 

17.7                        Permitted
Transfers.  Tenant may, upon notice
to Landlord but without obtaining Landlord’s consent, assign this Lease or
sublease all or any part of the Premises to an Affiliate of Tenant.

 

17.8                        Effect of
Transfers.  Other than an assignment
permitted under Section 17.6, no subletting or assignment will release
Tenant from any of its obligations under this Lease unless Landlord agrees to
the contrary in writing.  Acceptance of
Rent by Landlord from any person other than Tenant will not be deemed a waiver
by Landlord of any provision of this Section 17.8. Consent to one
assignment or subletting will not be deemed a consent to any subsequent
assignment or subletting.  In the event
of any default by any assignee or subtenant or any successor of Tenant in the
performance of any Lease obligation, Landlord may proceed directly

 

22

 

against Tenant
without exhausting remedies against such assignee, subtenant or successor.  The voluntary or other surrender of this
Lease by Tenant or the cancellation of this Lease by mutual agreement of Tenant
and Landlord will not work a merger and will, at Landlord’s option, terminate all
or any subleases or operate as an assignment to Landlord of all or any
subleases; such option will be exercised by notice to Tenant and all known
subtenants in the Premises.

 

18.                               PERSONAL PROPERTY.  Tenant may install in the Premises its
personal property (including Tenant’s usual trade fixtures) in a proper manner,
provided that no such installation will interfere with or damage the
mechanical, plumbing or electrical systems or the structure of Building, and
provided further that if such installation would require any change, addition
or improvement to the Building, such installation will be subject to
Article 8.  If no Default then
exists, any such personal property installed in the Premises by Tenant (a) may
be removed from the Premises from time to time in the ordinary course of
Tenant’s business or in the course of making any changes, additions or
improvements to the Premises permitted under Article 11, and (b) will be
removed by Tenant at the end of the Term according to Section 19.1.  Tenant will promptly repair at its expense
any damage to the Building and the Premises resulting from such installation or
removal.  Tenant will be solely
responsible for any and all taxes relating to its personal property on the
Premises, and shall reimburse Landlord pursuant to Section 3.2(d) if
Landlord is charged for any such taxes.

 

19.                               END OF TERM.

 

19.1                        Surrender.  Upon the expiration or other termination of
the Term, Tenant will immediately vacate and surrender possession of the
Premises to Landlord in good order, repair and condition, except for ordinary
wear and tear.  Upon the expiration or
other termination of the Term, Tenant agrees to remove (a) all changes,
additions and improvements to the Premises the removal of which Landlord
requested or approved according to Article 8 at the time Landlord consented
to their installation, and (b) all of Tenant’s trade fixtures, furnishings,
equipment and other personal property. 
Tenant will pay Landlord on demand the reasonable cost of repairing any
damage to the Building or Premises caused by the installation or removal of any
such items. Any of Tenant’s property remaining on the Premises after the
expiration or other termination of the Term will be conclusively deemed to have
been abandoned by Tenant and may be appropriated, stored, sold, destroyed or
otherwise disposed of by Landlord without notice or obligation to account to or
compensate Tenant, and Tenant will pay Landlord on demand all costs incurred by
Landlord relating to such abandoned property.

 

19.2                        Holding
Over.  Tenant understands that it
does not have the right to hold over at any time and Landlord may exercise any
and all remedies at law or in equity to recover possession of the Premises, as
well as any damages incurred by Landlord, due to Tenant’s failure to vacate the
Premises and deliver possession to Landlord as required by this Lease.  If Tenant holds over after the Expiration
Date, Tenant will be deemed a tenant from month to month, at a monthly Base
Rent, payable in advance, equal to 150% of the monthly Base Rent payable during
the last year of the Term, and Tenant will be bound by all of the other terms,
covenants and agreements of this Lease as the same may apply to a tenancy at
sufferance.

 

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

 

23

 

following:  (a) the Commencement Date and Expiration
Date; (b) that this Lease is unmodified and in full force and effect (or, if
there have been modifications, that this Lease is in full force and effect, as
modified, and stating the date and nature of each modification); (c) the date,
if any, through which Base Rent, Additional Rent and any other Rent payable
have been paid; (d) that Tenant is not aware of any default by Landlord or
Tenant which has not been cured, except for defaults stated in such
certificate; (e) that Tenant is not aware of any existing defenses or setoffs
to enforcement of this Lease, except as specifically stated in such
certificate; (f) provided such events have occurred, that Tenant has accepted
the Premises and that all improvements required to be made to the Premises by
Landlord have been completed according to this Lease; (g) that, except as
specifically stated in such certificate, Tenant, and only Tenant, currently
occupies the Premises; and (h) such other matters as may be reasonably
requested by Landlord.  Any such
certificate may be relied upon by Landlord and any prospective purchaser or
present or prospective mortgagee, deed of trust beneficiary or ground lessor of
all or a portion of the Premises.

 

21.                               TRANSFERS OF LANDLORD’S INTEREST.

 

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

 

21.2                        Effect of
Sale, Conveyance or Assignment. 
Provided that Landlord’s transferee assumes Landlord’s obligations under
this Lease, a sale, conveyance or assignment of the Building will automatically
release Landlord from liability under this Lease from and after the effective
date of the transfer, except for any liability relating to the period prior to
such effective date; and Tenant will look solely to Landlord’s transferee for
performance of Landlord’s obligations relating to the period after such
effective date.  This Lease will not be
affected by any such sale, conveyance or assignment and Tenant will attorn to
Landlord’s transferee.

 

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

 

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

 

24

 

not be: (a)
liable for any act or omission of any prior landlord, including Landlord (but
such exemption will not excuse the Transferee from the performance of any
obligations of the landlord under this Lease required to be performed
subsequent to the transfer to the Transferee); (b) subject to any offsets or
defenses which Tenant might have against any prior landlord, including Landlord
(excluding any express right of abatement granted under this Lease, provided
that the Lender who held the Encumbrance the enforcement of which resulted in
the transfer to the Transferee (the “Foreclosing Lender”) was afforded any
notice and cure rights to which it was entitled under Section 24.1 with
respect to the matter that gave rise to such express right of abatement); (c)
bound by any Rent or advance Rent not actually received by the Transferee which
Tenant might have paid for more than the current month or the next succeeding
month to any prior landlord, including Landlord, and all such Rent will remain
due and owing, regardless of such advance payment; (d) obligated for repayment
to Tenant of the Security Deposit or any other security or advance rental
deposit made by Tenant, except to the extent the same is paid over to the
Transferee; or (e) bound by any termination, amendment or modification of this
Lease (other than one expressly contemplated by the terms of this Lease and
effected according to such express terms, such as termination by Landlord due
to a Default by Tenant) made while any action or proceedings for the
termination, foreclosure, or enforcement of an Encumbrance of which Tenant had
notice was pending without the written consent of the Foreclosing Lender.
Tenant agrees, upon request by and without cost to the Transferee, to promptly
execute and deliver to the Transferee such instrument(s) as may be reasonably
required to evidence such attornment.

 

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

 

23.                               TENANT’S DEFAULT AND LANDLORD’S
REMEDIES.

 

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

 

(a)                                  Failure
to Pay Rent.  Tenant fails to pay
Base Rent, Additional Rent or any other Rent payable by Tenant under the terms
of this Lease when due, and such failure continues for five days after written
notice from Landlord to Tenant of such failure; provided that with respect to
Base Rent and Operating Expenses, Tenant will be entitled to only two notices
of such failure during any Lease Year and if, after two such notices are given
in any Lease Year, Tenant fails, during such Lease Year, to pay any such
amounts when due, such failure will constitute a Default without further notice
by Landlord or additional cure period.

 

(b)                                 Failure
to Perform Other Obligations.  Except
as otherwise specifically provided in this Lease, Tenant breaches or fails to
comply with any other provision of this Lease applicable to Tenant, and such
breach or noncompliance continues for a period of 30 days after notice by
Landlord to Tenant; or, if such breach or noncompliance cannot be reasonably
cured within such 30-day period, Tenant does not in good faith commence to cure
such breach or noncompliance within such 30-day period or does not diligently
complete such cure within 90 days after such notice from Landlord.  However, if such

 

25

 

breach or
noncompliance causes or results in (1) a dangerous condition on the Building or
Premises, or (2) any insurance coverage carried by Landlord or Tenant with
respect to the Building or Premises being jeopardized, then a Default will
exist if such breach or noncompliance is not cured as soon as reasonably
possible after notice by Landlord to Tenant, and in any event is not cured
within 30 days after such notice.  For
purposes of this Section 23.1(b), financial inability will not be deemed a
reasonable ground for failure to cure any breach of this Lease within the
applicable cure period, or failure to comply with the provisions of this Lease.

 

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

 

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

 

(e)                                  Bankruptcy
or Related Proceedings.  Tenant files
a petition in bankruptcy or insolvency, or for reorganization or arrangement
under any bankruptcy or insolvency Laws, or voluntarily takes advantage of any
such Laws by answer or otherwise, or dissolves or makes an assignment for the
benefit of creditors, or involuntary proceedings under any such Laws or for the
dissolution of Tenant are instituted against Tenant, or a receiver or trustee
is appointed for the Premises or for all or substantially all of Tenant’s property,
and such proceedings are not dismissed or such receivership or trusteeship
vacated within 45 days after such institution or appointment.

 

23.2                        Remedies.  Time is of the essence in the performance of
this Lease.  If any Default occurs,
Landlord will have the right, at Landlord’s election, then or at any later time
prior to the cure of such Default, to exercise any one or more of the remedies
described below, such remedies to be exercised in accordance with applicable
Laws.  Exercise of any of such remedies
will not prevent the concurrent or subsequent exercise of any other remedy
provided for in this Lease or otherwise available to Landlord at law or in
equity.

 

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

 

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

 

26

 

Expenses and
other Rent which would have been owing by Tenant 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 recovery of
possession or reletting.  Landlord will
be entitled to collect and receive such damages from Tenant on the days on
which such Rent would have been payable if this Lease had not been
terminated.  Alternatively, at Landlord’s
option, Landlord will be entitled to recover from Tenant, as damages for loss
of the bargain and not as a penalty, an aggregate sum equal to (1) all unpaid
Base Rent, Operating Expenses and other Rent for any period prior to the
termination date of this Lease (including interest from the due date to the
date of the award at the rate described in Section 3.4), plus any other
sum of money and damages owed by Tenant to Landlord for events or actions
occurring prior to the termination date; plus (2) the present value at the time
of termination (calculated at the rate commonly called the discount rate in
effect at the Federal Reserve Bank of New York on the termination date) of the
amount, if any, by which (A) the aggregate of such Rent payable by Tenant under
this Lease that would have accrued for the balance of the Term after
termination (with respect to Operating Expenses, such aggregate will be
calculated by assuming that Operating Expenses for the calendar year in which
termination occurs and for each subsequent calendar year remaining in the Term
if this Lease had not been terminated will increase by 3% per year over the
amount of Operating Expenses for the prior calendar year), exceeds (B) the
amount of such Rent which Landlord will receive for the remainder of the Term
from any reletting of the Premises occurring prior to the date of the award, or
if the Premises have not been relet prior to the date of the award, the amount,
if any, of such Rent which could reasonably be recovered by reletting the
Premises for the remainder of the Term at the then-current fair rental value,
in either case taking into consideration loss of rent while finding a new
tenant, tenant improvements and rent abatements necessary to secure a new
tenant, leasing brokers’ commissions and other costs which Landlord has
incurred or might incur in leasing the Premises to a new tenant; plus (3) interest
on the amount described in (2) above from the termination date to the date of
the award at the rate described in Section 3.4.  Landlord hereby acknowledges, however, that
Landlord shall attempt to mitigate its damages to the extent required by applicable
Laws.

 

(c)                                  Repossession
and Reletting.  Landlord may reenter
and take possession of all or any part of the Premises, without additional
demand or notice, and repossess the same and expel Tenant and any party
claiming by, through or under Tenant, and remove the effects of both using such
force for such purposes as may be necessary, without being liable for
prosecution for such action or being deemed guilty of any manner of trespass,
and without prejudice to any remedies for arrears of Rent or right to bring any
proceeding for breach of covenants or conditions.  No such reentry or taking possession of the
Premises by Landlord will be construed as an election by Landlord to terminate
this Lease unless a written notice of such intention is given to Tenant.  No notice from Landlord or notice given under
a forcible entry and detainer statute or similar Laws will constitute an
election by Landlord to terminate this Lease unless such notice specifically so
states.  Landlord reserves the right,
following any reentry 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 such notice. 
After recovering possession of the Premises, Landlord may, from time to
time, but will not be obligated to, relet all or any

 

27

 

part of the
Premises for Tenant’s account, for such term or terms and on such conditions
and other terms as Landlord, in its discretion, determines.  Landlord hereby acknowledges, however, that
Landlord shall mitigate its damages to the extent required by applicable Laws.
Landlord may make such repairs, alterations or improvements as Landlord
considers appropriate to accomplish such reletting, and Tenant will reimburse
Landlord upon demand for all costs and expenses, including attorneys’ fees,
which Landlord may incur in connection with such reletting.  Landlord may collect and receive the rents
for such reletting but Landlord will in no way be responsible or liable for any
failure to relet the Premises or for any inability to collect any rent due upon
such reletting.  Regardless of Landlord’s
recovery of possession of the Premises, Tenant will continue to pay on the
dates specified in this Lease, the Rent which would be payable if such
repossession had not occurred, less a credit for the net amounts, if any,
actually received by Landlord through any reletting of the Premises.  Alternatively, at Landlord’s option, Landlord
will be entitled to recover from Tenant, as damages for loss of the bargain and
not as a penalty, an aggregate sum equal to (1) all unpaid Base Rent and
Operating Expenses and other Rent for any period prior to the repossession date
(including interest from the due date to the date of the award at the rate
described in Section 3.4), plus any other sum of money and damages owed by
Tenant to Landlord for events or actions occurring prior to the repossession
date; plus (2) the present value at the time of repossession (calculated at the
rate commonly called the discount rate in effect at the Federal Reserve Bank of
New York on the repossession date) of the amount, if any, by which (A) the
aggregate of such Rent payable by Tenant under this Lease that would have
accrued for the balance of the Term after repossession (with respect to
Operating Expenses, such aggregate will be calculated by assuming that
Operating Expenses for the calendar year in which repossession occurs and for
each subsequent calendar year remaining in the Term if Landlord had not repossessed
the Premises will increase by 3% per year over the amount of Operating Expenses
for the prior calendar year), exceeds (B) the amount of such Rent which
Landlord will receive for the remainder of the Term from any reletting of the
Premises occurring prior to the date of the award, or if the Premises have not
been relet prior to the date of the award, the amount, if any, of such Rent
which could reasonably be recovered by reletting the Premises for the remainder
of the Term at the then-current fair rental value, in either case taking into
consideration loss of rent while finding a new tenant, tenant improvements and
rent abatements necessary to secure a new tenant, leasing brokers’ commissions
and other costs which Landlord has incurred or might incur in leasing the
Premises to a new tenant; plus (3) interest on the amount described in (2)
above from the repossession date to the date of the award at the rate described
in Section 3.4.  In no event will
Landlord be required to pay Tenant any excess amounts if Landlord successfully
relets the Premises.

 

(d)                                 Bankruptcy
Relief.  Nothing contained in this
Lease will limit or prejudice Landlord’s right to prove and obtain as
liquidated damages in any bankruptcy, insolvency, receivership, reorganization
or dissolution proceeding, an amount equal to the maximum allowable by any Laws
governing such proceeding in effect at the time when such damages are to be
proved, whether or not such amount be greater, equal or less than the amounts
recoverable, either as damages or Rent, under this Lease.

 

28

 

24.                               LANDLORD’S DEFAULT AND TENANT’S
REMEDIES.

 

24.1                        Default.  If Tenant believes that Landlord has breached
or failed to comply with any provision of this Lease applicable to Landlord,
Tenant will give written notice to Landlord describing the alleged breach or
noncompliance.  Landlord will not be
deemed in default under this Lease if Landlord cures the breach or
noncompliance within 20 days after receipt of Tenant’s notice or, if the same
cannot reasonably be cured within such 20-day period, if Landlord in good faith
commences to cure such breach or noncompliance within such period and then
diligently and continuously pursues the cure to completion.  Tenant will also send a copy of such notice
to any Lender of whom Tenant has been notified in writing, and such Lender will
also have the concurrent right to cure the breach or noncompliance within the
period of time described above.

 

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

 

25.                               SECURITY DEPOSIT.

 

25.1                        Deposit.  Upon execution of this Lease, Tenant will
deposit the Security Deposit with Landlord. 
The Security Deposit will be used solely as security for Tenant’s
faithful and diligent performance of all of Tenant’s obligations under this
Lease, including payment of Rent. The Security Deposit will remain in
Landlord’s possession until credited against Tenant’s Base Rent obligation
pursuant to Section 25.4, and Landlord will not be required to segregate
it from Landlord’s general funds, unless required by Law.  Tenant will not be entitled to any interest
on the Security Deposit, unless required by Law.

 

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

 

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

 

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

 

29

 

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

 

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

 

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

 

28.                               NOTICES.  All
notices required or permitted under this Lease must be in writing and will only
be deemed properly given and received (a) when actually given and received, if
delivered in person to a party who acknowledges receipt in writing; or (b) one
business day after deposit with a private courier or overnight delivery service
or overnight delivery, if such courier or service obtains a written
acknowledgment of receipt; or (c) two business days after deposit in the United
States mails, certified mail with return receipt requested and postage
prepaid.  All such notices must be
transmitted by one of the methods described above to the party to receive the
notice at, in the case of notices to Landlord, Landlord’s Address, and in the
case of notices to Tenant, Tenant’s Address, or, in either case, at such other
address(es) as either party may notify the other of according to this
Section 28.

 

29.                               FORCE MAJEURE.

 

29.1                        Other
than for Tenant’s obligations under this Lease that can be performed by the
payment of money (e.g., payment of Rent and maintenance of insurance), whenever
a period of time is herein prescribed for action to be taken by either party
hereto, such party shall not be liable or responsible for, and there shall be
excluded from the computation of any such period of time, any delays due to
strikes, riots, acts of God, shortages of labor or materials, war, governmental
laws, regulations, or restrictions, or any other causes of any kind whatsoever
which are beyond the control of such party.

 

30.                               MISCELLANEOUS.

 

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

 

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

 

30

 

30.3                        Complete
Agreement; Modification.  All of the
representations and obligations of the parties are contained in this Lease and
no modification, waiver or amendment of this Lease or of any of its conditions
or provisions will be binding upon a party unless in writing signed by such
party.

 

30.4                        Delivery
for Examination.  Submission of the
form of the Lease for examination will not bind Landlord in any manner, and no
obligations will arise under this Lease until it is signed by both Landlord and
Tenant and delivery is made to each.

 

30.5                        No Air
Rights.  This Lease does not grant
any easements or rights for light, air, or view.  Any diminution or blockage of light, air, or
view by any structure or condition now or later erected will not affect this
Lease or impose any liability on Landlord.

 

30.6                        Enforcement
Expenses.  Each party agrees to pay,
upon demand, all of the other party’s costs, charges and expenses, including
the fees and out-of-pocket expenses of counsel, agents, and others retained,
incurred in successfully enforcing the other party’s obligations under this
Lease.

 

30.7                        No Waiver.  No waiver of any provision of this Lease will
be implied by any failure of either party to enforce any remedy upon the
violation of such provision, even if such violation is continued or repeated
subsequently.  No express waiver will
affect any provision other than the one specified in such waiver, and that only
for the time and in the manner specifically stated.

 

30.8                        Recording;
Confidentiality.  Tenant will not
record this Lease, or a short form memorandum, without Landlord’s written
consent and any such recording without Landlord’s written consent will be a
Default.  Tenant agrees to keep the Lease
terms, provisions and conditions confidential and will not disclose them to any
other person without Landlord’s prior written consent.  However, Tenant may disclose Lease terms,
provisions and conditions to Tenant’s brokers, accountants, attorneys, managing
employees and others in privity with Tenant, the Internal Revenue Service, or
as required in Tenant’s SEC filings, as reasonably necessary for Tenant’s
business purposes or necessary in connection with the enforcement of its rights
hereunder, without such prior consent.

 

30.9                        Captions.  The captions of sections are for convenience
only and will not be deemed to limit, construe, affect or alter the meaning of
such sections.

 

30.10                 Invoices.  All bills or invoices to be given by Landlord
to Tenant will be sent to Tenant’s Address. 
Tenant may change Tenant’s Address by notice to Landlord given according
to Section 28.  If Tenant fails to
give Landlord written notice of its objections within 90 days after receipt of
any bill or invoice from Landlord, such bill or invoice will be deemed true and
correct and Tenant may not later question the validity of such bill or invoice
or the underlying information or computations used to determine the amount
stated.

 

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

 

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

 

31

 

AGAINST THE
OTHER WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
LEASE, TENANT’S USE AND OCCUPANCY OF THE PREMISES OR THE COMMON AREA, OR THE
RELATIONSHIP OF LANDLORD AND TENANT. 
HOWEVER, SUCH WAIVER OF JURY TRIAL WILL NOT APPLY TO ANY CLAIMS FOR
PERSONAL INJURY.

 

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

 

30.14                 Only
Landlord/Tenant Relationship. 
Landlord and Tenant agree that neither any provision of this Lease nor
any act of the parties will be deemed to create any relationship between
Landlord and Tenant other than the relationship of landlord and tenant.  Tenant has only a leasehold not subject to
levy and sale and not assignable by Tenant except as set forth in this Lease.

 

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

 

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

 

Exhibit A -
Depiction of Premises

Exhibit B -
Occupancy Estoppel Certificate

Exhibit C -
Rules and Regulations

Exhibit D -
Work Letter

 

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

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  DaPuzzo
  Investment Group LLC, a Colorado

  limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Douglas C.
  DaPuzzo

  	
   

  
	
   

  	
   

  	
  Manager

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  Encision,
  Inc., a Colorado corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: James
  A. Bowman

  
	
   

  	
  Title:
  President and CEO

  

 

32

 

	
  STATE OF

  	
  )

  
	
   

  	
  ) ss:

  
	
  COUNTY OF

  	
  )

  

 

The foregoing
instrument was acknowledged before me this
                 day
of
                               ,
2004, by James A. Bowman, as President and CEO of Encision, Inc. a Colorado
corporation.

 

Witness my
hand and official seal.

 

My commission
expires:                                                                      .

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public

  

 

33

 

	
  STATE OF
  COLORADO

  	
  )

  
	
   

  	
  ) ss:

  
	
  COUNTY OF
  BOULDER

  	
  )

  

 

The foregoing
instrument was acknowledged before me this
        day of
                           ,
2004, by Douglas C. DaPuzzo, as Manager of DaPuzzo Investment Group, LLC, a
Colorado limited liability company.

 

Witness my
hand and official seal.

 

My commission
expires:                                                                      .

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public

  

 

34

 

Exhibit A

DEPICTION OF PREMISES

 

A-1

 

Exhibit B

OCCUPANCY ESTOPPEL CERTIFICATE

 

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

 

In
consideration of the mutual covenants and agreements stated in the Lease, and
intending that this Certificate may be relied upon by Landlord and any
prospective purchaser or present or prospective mortgagee, deed of trust
beneficiary, or ground lessor of all or a portion of the Building, Tenant
certifies as follows:

 

1.                                       Except
for those terms expressly defined in this Certificate, all initially
capitalized terms will have the meanings stated for such terms in the Lease.

 

2.                                       The
Commencement Date occurred on
                                                
and the Expiration Date will occur on
                                 .

 

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

 

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

 

5.                                       Tenant
has accepted the Premises, and all leasehold improvements and other work
required to be performed by Landlord under the Lease (excluding latent defects
and punch list items) have been satisfactorily completed.

 

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

 

IN WITNESS
WHEREOF, Tenant has executed this Certificate as of the day and year first
written above.

 

 

	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  ENCISION,
  INC., a Colorado

  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

B-1

 

Exhibit C

RULES AND REGULATIONS

 

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

 

1.                                       No
awning or other projections shall be attached to the outside walls of the
Building without, in each instance, the prior written consent of Landlord,
which consent shall not be unreasonably withheld.

 

2.                                       No
aerial, dish, antenna or telecommunications tower shall be erected by Tenant on
the roof or exterior walls of the Building, or on the grounds of the Building
without, in each instance, the prior written consent of Landlord, which shall
not be unreasonably withheld.  Any such
item so installed without such written consent shall be subject to removal
without notice at any time.

 

3.                                       No
loud speakers, television sets, phonographs, radios, musical instruments or
other devices shall be used by Tenant in a manner so as to be heard or seen off
the Building without the prior written consent of Landlord.

 

4.                                       Tenant
shall not make or permit any noise, odor or gases which Landlord deems
objectionable to emanate from the Premises. Tenant shall not suffer, allow, or
permit any vibration, light, or other effect to emanate from the Premises, or
from any machine or other installation therein, or otherwise suffer, allow, or
permit the same to constitute a nuisance or otherwise interfere with the
safety, comfort, or convenience of Landlord or any of the other occupants of
the Gunbarrel Technical Center.  Upon
notice by Landlord to Tenant that any of the aforesaid is occurring, Tenant
agrees to forthwith remove or control the same.

 

5.                                       During
the last six months of this Lease, or any renewal or extension thereof, or at
any time that Tenant may be in Default hereunder, Landlord shall have the
right, upon reasonable advance notice, to enter the Premises at all reasonable
times during usual business hours for the purpose of showing the same to
prospective tenants.  Landlord may also
place signs on the exterior of the Building which are visible from the exterior
off the Building, for the purpose of advertising the availability of the
Premises for lease.

 

6.                                       Tenant
shall not permit its employees, licensees or invitees, to smoke any tobacco
products in the vicinity of any entrance to the Building.  Landlord may establish an outdoor smoking
area in the rear of the Building and Tenant shall take all actions necessary to
ensure that its employees, licensees and invitees limit smoking to such
designated area.

 

C-1

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