Document:

ex10-1.htm

Exhibit 10.1

 

LEASE

 

FOR PREMISES LOCATED AT

 

1751 SOUTH FORDHAM STREET, SUITE F,

 

LONGMONT, COLORADO

 

BETWEEN

 

CHROMADEX ANALYTICS, INC.

 

AS TENANT

 

AND

 

LONGMONT DIAGONAL INVESTMENTS LLC

 

AS LANDLORD

 

  

  

  

 

TABLE OF CONTENTS

LEASE

	
1.

	
PRINCIPAL TERMS.

 

	
2.

	
PREMISES LEASED; DESCRIPTION

 

	
3.

	
PRESENT CONDITION OF PROPERTY

 

	
4.

	
TERM

 

	
5.

	
RENT

 

	
6.

	
TAXES - REAL PROPERTY - PAID BY TENANT - PROTEST

 

	
7.

	
TAXES - TENANT'S PERSONAL PROPERTY - PAID BY TENANT

 

	
8.

	
UTILITIES AND SECURITY SERVICES

 

	
9.

	
HOLDING OVER

 

	
10.

	
ALTERATION - CHANGES AND ADDITIONS

 

	
11.

	
MECHANIC'S LIENS

 

	
12.

	
SIGNAGE

 

	
13.

	
MAINTENANCE AND REPAIRS

 

	
14.

	
CONDITION UPON SURRENDER - RETURN OF KEYS

 

	
15.

	
USE OF THE PREMISES; COMPLIANCE WITH LAWS; RULES AND REGULATIONS

 

	
16.

	
INSURANCE

 

	
17.

	
FIRE REGULATIONS - TENANT RESPONSIBILITY

 

	
18.

	
REPLACEMENT OF BUILDING - CASUALTY DAMAGE

 

	
19.

	
ENVIRONMENTAL MATTERS

 

	
20.

	
ENTRY BY LANDLORD

 

	
21.

	
DEFAULT - REMEDIES BY LANDLORD

 

	
22.

	
LEGAL PROCEEDINGS AGAINST TENANT BY THIRD PARTIES; TENANT TO PAY LANDLORD'S FEES

 

	
23.

	
INDEMNIFICATION BY TENANT AND BY LANDLORD

 

	
24.

	
ASSIGNMENT OR SUBLETTING

 

	
25.

	
LANDLORD'S WARRANTY OF TITLE; QUIET ENJOYMENT

 

	
26.

	
ADDITIONAL DEVELOPMENT OF PROPERTY - RIGHTS OF LANDLORD

 

	
27.

	
GOVERNMENTAL ACQUISITION OF THE PREMISES

 

	
28.

	
SUBORDINATION OF THE LEASEHOLD TO MORTGAGES

 

	
29.

	
MEMORANDUM OF LEASE - CONFIDENTIALITY

 

	
30.

	
NO WAIVER OF BREACH; ACCEPTANCE OF PARTIAL PAYMENTS OF RENT

 

	
31.

	
CONTROLLING LAW; PARTIAL INVALIDITY; MODIFICATIONS OR EXTENSIONS.

 

	
32.

	
INUREMENTS

 

	
33.

	
TIME

 

	
34.

	
ADDRESSES; EMPLOYER IDENTIFICATION NUMBERS; METHOD OF GIVING NOTICE

 

	
35.

	
DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS

 

	
36.

	
ADDITIONAL PROVISIONS

  

-1-

  

LEASE

 

THIS LEASE (the "Lease") is made and entered into this 14th day of April, 2016, by and between LONGMONT DIAGONAL INVESTMENTS LLC, a Delaware limited liability company, hereinafter referred to as "Landlord," and CHROMADEX ANALYTICS, INC., a Nevada corporation, hereinafter referred to as "Tenant."

 

W I T N E S S E T H:

 

In consideration of the covenants, terms, conditions, agreements, and payments as hereinafter set forth, the parties hereto covenant and agree as follows:

 

1.           PRINCIPAL TERMS.  Capitalized terms, first appearing in quotations in this Section, elsewhere in this Lease or any Exhibits, are definitions of such terms as used in this Lease and Exhibits and shall have the defined meaning whenever used. Any Addenda and/or Exhibits referred to herein and attached hereto are incorporated herein by reference.

 

	
  

	
1.1

	
"Building":

	
The building having an address of 1751 South Fordham Street, in the City of Longmont, County of Boulder, State of Colorado, consisting of approximately 61,600 rentable square feet of space, as generally described on Exhibit A-1 attached hereto

 

	
  

	
1.2

	
"Premises":

	
Approximately 10,052 rentable square feet located in Suite #F, as generally depicted on Exhibit A-2 attached hereto.

 

	
  

	
1.3

 

 

 

 

 

 

 

1.4

	
"Initial Term":

 

 

 

 

 

 

 

"Base Rent":

	
87 whole calendar months following the Commencement Date plus any partial month in which the Commencement Date occurs

 

"Commencement Date": Upon the Delivery Date (as hereafter defined), estimated to be on or before July 1, 2016

 

"Expiration Date": the last day of the 87th whole calendar month following the Commencement Date

 

 

	
Period

	 	
Annually/RSF

	 	 	
Monthly

	 
	
Months 1-12*

	 	$	10.25	 	 	$	8,586.08	*
	Months 13-24	 	$	10.75	 	 	$	9,004.92	 
	Months 25-36	 	$	11.25	 	 	$	9,423.75	 
	Months 37-48	 	$	11.75	 	 	$	9,842.58	 
	Months 49-60	 	$	12.25	 	 	$	10,261.42	 
	Months 61-72	 	$	12.75	 	 	$	10,680.25	 
	
Months 73-84

	 	$	13.25 	 	 	$	11,099.08	 
	
Months 85-87

	 	$	13.75	 	 	$	11,517.92	 

	
  

	
*Subject to abatement as provided in Section 5.1 below

 

	
  

	
Tenant shall pay Landlord Base Rent for the first whole calendar month for which Tenant is obligated to pay Base Rent concurrent with Tenant's execution of this Lease

 

	
  

	
1.5

 

1.6

 

	
Tenant Improvements:

 

Operating Expenses:

 

	
In accordance with the Work Letter attached as Exhibit B

 

Initial Estimate of Operating Expenses: $4.43 per square foot of the Building

Initial Estimated Payment: $3,710.86 per month

Tenant's Share: 16.3182%

 

	
  

	
1.7

	
"Deposit":

	
$175,000.00, subject to reduction as provided below

Tenant shall pay Landlord the Deposit concurrent with Tenant's execution of this Lease

 

	
  

	
1.8

	
"Permitted Use":

	
Research and development laboratory consistent with a PUD-I zoning classification, and related general office uses

 

  

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1.9

	
"Guarantor":

	
None

	
  

	
1.10

	
Landlord's Notice Address:

	
Longmont Diagonal Investments LLC 

c/o Goff Capital Partners, L.P.

6465 South Greenwood Plaza Blvd, Suite 1075

Centennial, Colorado 80111

Attn: Conrad Suszynski

 

with a copy to

 

Goff Capital Partners, L.P.

500 Commerce St., Suite 700

Fort Worth, Texas 76102

Attn: Mark Collier

 

	
  

	 	

Landlord's Fax Number:

	

(720) 250-9631

 

	
  

	
1.11

	
Rent Payment Address:

	
by U.S. Mail:

 

Longmont Diagonal Investments LLC

P.O. Box 731747

Dallas, TX 75373-1747

 

by overnight mail:

 

JPMorgan Chase (TX1-0029)

 

Attn: Longmont Diagonal Investments LLC 731747

14800 Frey Road, 2nd Floor

Ft. Worth, TX 76155

	
  

	
1.12

 

1.13

 

 

	
Landlord's Tax I.D.:

 

Tenant's Notice Address:

 

Precommencement Address:

 

 

 

Post Commencement Address: 

  

 

Tenant's Fax Number:

	
45-4210159

 

 

 

10005 Muirlands Blvd

Suite G

Irvine, CA 92618

 

At the Premises

 

(949) 419-0294

 

	
  

	
1.14

	
Tenant's Tax I.D.:

	
90-0070340

 

	
  

	
1.15

	
Landlord's Broker:

	
Dean Callan & Company and Newmark Grubb Knight Frank

 

	
  

	

1.16

 

1.17

	

Cooperating Broker:

 

Parking:

	

Rare Space Inc.

 

35 unreserved parking spaces

 

  

-3-

  

 

	
  

	
1.18

	
Attachments:

	
[check if applicable]

	
  

	 	
X

	
Addendum

	
  

	
X

	
Exhibit A-1:  Legal Description of Building

	
  

	
X

	
Exhibit A-2:  Premises

	
  

	
X

	
Exhibit B:  Work Letter for Tenant Improvements

	
  

	
X

	
Exhibit C:  Form of Commencement Agreement

	
  

	
X

	
Exhibit D:  Form of Tenant's Estoppel Certificate

	
  

	
X

	
Exhibit E:  Form of Subordination Agreement, Acknowledgement of Lease Assignment, Estoppel, Attornment and Non-Disturbance Agreement

	
  

	
X

	
Exhibit F:  Tenant-Owned Alterations

2.           PREMISES LEASED; DESCRIPTION.   Landlord hereby leases unto Tenant the Premises which is a part of the Building on the land ("Land"), a more detailed description of which is described on Exhibit A-1. A floorplan showing the location of the Premises within the Building is attached as Exhibit A-2.  The leasing of the Premises is made according to the terms of this Lease, including the non-exclusive right to use, subject to the provisions of this Lease, to use all appurtenances thereto and all fixtures attached thereto, roadways, sidewalks, and other common areas serving the Building, as Landlord may from time to time designate for use by tenants of the Building.  Tenant shall have access to the Premises and the parking areas at the Building 24 hours per day, 7 days per week, and 365 days per year subject to the provisions of this Lease.

 

3.           PRESENT CONDITION OF PROPERTY.  Tenant has examined and accepts the Building, improvements, and any fixtures on the Premises, in present condition, subject to the construction of Tenant Improvements as detailed in the Work Letter ("Work Letter") attached hereto as Exhibit B and made a part hereof by this reference.  No representation, statement, or warranty, express or implied, has been made by or on behalf of Landlord as to the condition of the Premises, or as to the use that may be made of same.  In no event shall Landlord be liable for any defect in the Premises or for any limitation on the use of the Premises.

 

4.           TERM.

 

4.1           Initial Term.  The Initial Term of this Lease commences at 12:01 a.m. on the Commencement Date and terminates at 12:00 midnight on the Expiration Date (the Initial Term, together with any extensions thereof, plus any partial month prior to the Initial Term is herein referred to as the "Term"). The Commencement Date of the Initial Term as set forth in  Section 1 shall be subject to those adjustments of the Commencement Date, if any, set forth in Section 4.2 which relate to the performance of construction on the Premises.

 

4.2           Tenant Improvement Construction.  The Commencement Date of this Lease shall be delayed until Landlord delivers possession of the Premises with the Tenant Improvements, described in the Work Letter, Ready for Occupancy (as defined in the Work Letter) (the "Delivery Date").  If for any reason Landlord is delayed and the Delivery Date does not occur on or prior to the anticipated Commencement Date, such failure will not affect the validity of this Lease, but in such case the Commencement Date shall be postponed, and Tenant shall not be obligated to pay Rent, until the Premises are Ready for Occupancy (unless such delay is due to a delay caused by Tenant, in which case Tenant's Rent obligations and the Commencement Date shall occur on the date the Premises would have been Ready for Occupancy had there been no delay by Tenant). If the Delivery Date is other than the first day of the month, then the Commencement Date will be further delayed to the first day of the month following the Delivery Date but all provisions hereof, including Tenant's obligation to pay Rent (prorated for a partial month), will be in effect as of the Delivery Date.  If the Commencement Date is delayed, the Expiration Date shall be extended so that the Initial Term will continue for its full period and end on the last day of a calendar month.  The postponement of Tenant's obligation to pay Rent is in full settlement of all claims which Tenant may otherwise have by reason of Landlord's delay of delivery of the Premises. Promptly following the Commencement Date, Landlord and Tenant agree to execute a commencement agreement in the form attached as Exhibit C setting forth the Commencement Date, the Expiration Date and such other matters described therein or requested by Landlord.

 

4.3           Delivery of Possession. Taking possession of the Premises by Tenant on the Delivery Date is conclusive evidence that the Premises are in the condition agreed upon between Landlord and Tenant and acknowledgment by Tenant of satisfactory completion of any work which Landlord has agreed to perform, including the Tenant Improvements (subject to any punchlist items identified pursuant to the Work Letter).  Tenant may, upon written consent by Landlord in its sole discretion, have access to the Premises during Tenant Improvement construction for the purpose of moving in Tenant-owned furniture, fixtures, cabling, equipment and inventory.  This access and the items so moved in shall not in any way prevent or materially interrupt construction of the Tenant Improvements, nor shall Landlord, its agent, employees, subcontractors, or any other person on the Premises whether invited or not invited, be liable for the protection, care or security of Tenant-owned items.  This Section shall not be construed so as to permit Tenant to occupy the Premises prior to the satisfaction of all requirements for Tenant's insurance set forth below or to operate its business from the Premises.  If Tenant commences its usual business therein, all terms and provisions of this Lease shall apply as of the date Tenant commences its business, including the obligation for the payment of all Rent and other amounts owing hereunder, however, such early occupancy shall not advance the Expiration Date of this Lease.

 

  

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                5.           RENT.  All amounts, including Base Rent or any additional Rent, to be paid by Tenant pursuant to this Lease as the context requires, are sometimes referred to collectively as "Rent".  Tenant shall pay Rent to Landlord as follows:

 

5.1           Base Rent.   Subject to the provisions below, commencing on the Delivery Date and on the first day of each month thereafter, Tenant shall pay minimum Base Rent in the amount stated in Section 1.4, in advance without notice.  Rent shall be paid without set off, abatement, or diminution (except as expressly provided in Section 21.10), at the address set forth in Section 1.11, or at such other place as Landlord from time to time designates in writing. Notwithstanding anything to the contrary, and so long as there has been no event of default (as hereinafter defined) Tenant may occupy the Premises and abate payment of Base Rent (but not Operating Expenses, utilities or any other charges required to be paid by Tenant hereunder) for the 90 day period following the Commencement Date (the "Abated Rent Period"). Base Rent payable hereunder is allocable to, and will be accrued by the parties during, their fiscal periods in which the same is actually paid.  No portion of Base Rent paid by Tenant during periods outside of the Abated Rent Period will be allocated to such Abated Rent Period, nor is such Base Rent intended to be allocable to the Abated Rent Period. If at any time during the Term, an event of default occurs, Tenant shall owe Landlord, in addition to all other amounts, the Base Rent abated hereunder. Tenant has no obligation to pay the Base Rent abated hereunder if no event of default occurs prior to the Termination Date.

 

5.2           Operating Expenses.  In addition to Base Rent, Tenant shall pay to Landlord as additional Rent during the Term hereof, Tenant's Share, as hereinafter defined, of the Operating Expenses, as hereinafter defined, for each year of the Term.  Tenant's Share of Operating Expenses shall be payable in accordance with the following provisions:

 

5.2.1           "Tenant's Share" is defined, for purposes of this Lease, to be the percentage as set forth in Section 1.6 hereof, which percentage is determined by dividing the approximate rentable square footage of the Premises by the total approximate rentable square footage of space contained in the entire Building, as such square footages are set forth in Section 1 hereof.   It is understood and agreed that Tenant's Share is subject to revision in the event the actual size of the Building is increased or decreased by Landlord, as provided for herein.

 

5.2.2           "Operating Expenses" is defined, for purposes of this Lease, to include all reasonable costs incurred by Landlord for or in connection with the ownership, management, operation, maintenance and repair of the Building as is necessary to keep the Building in a safe and good order and condition including as is required by all applicable laws, codes, rules and regulations ("Applicable Laws").  Operating Expenses may include but are not limited to, the following:

 

(1)           The maintenance and repair of common areas, if any;

 

(2)           The maintenance and repair, including striping and sealing where applicable, of parking areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways, stairways, parkways and driveways;

 

(3)           Snow removal (Landlord is responsible for snow removal of more than 2");

 

(4)           The preventative maintenance and repair of all heating, air conditioning, plumbing, electrical systems, life safety equipment (including fire detection and suppression systems), locks and security systems, telecommunication and other equipment used in common by, or for the benefit of Tenant, tenants or occupants of the Building;

 

(5)           The maintenance, repair and replacement of all landscaped areas, including irrigation systems and fences;

 

(6)           Window washing and the maintenance and repair of parking lot lighting;

 

(7)           The preventative maintenance and repair of Building exteriors (including roofs) and any other publicly mandated services to the Building;

 

(8)           The cost of all utilities including water, sewer, gas, and electricity, except for those utilities separately metered and paid for by Tenant or tenants;

 

(9)           All costs incurred in the maintenance and/or cleaning of the Building or Premises, except for janitorial costs specific to the Premises which shall be contracted for and paid directly by Tenant;

 

(10)         All real property taxes and assessments levied against the Building or land by any governmental or quasi-governmental authority or under any covenants, declarations, easements or restrictions (collectively referred to herein as "Taxes"). Taxes are computed on an accrual basis based on the year in which they are levied;

 

  

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(11)           Insurance premiums for the Building, including property damage coverage, together with loss of rent endorsement; the part of any claim paid under the deductible portion of any insurance policy carried by Landlord; public liability insurance; and any other insurance carried by Landlord on any component parts of the Building;

 

(12)           All labor costs, including wages, costs of worker's compensation insurance, payroll taxes, fringe benefits, including pension, profit-sharing and health for employees of Landlord, or Landlord's management company, at or below the level of Building Manager, who are providing services to the Building or the business park of which the Building is a part;

 

(13)           Professional building management fees equal to 4% of gross rents for the Building;

 

(14)           Reasonable legal, accounting, inspection, and other consulting fees (including fees for consultants for services that actually result in a reduction in Operating Expenses due to improvement in the operation, maintenance or state of repair of the project of which the Premises are a part).

 

Operating Expenses shall specifically not include:

 

(a)           The costs of replacements of equipment or improvements that are considered capital items under Generally Accepted Accounting Principles ("GAAP"), except for (i) costs of capital improvements and structural repairs and replacements to the Building to conform to new Applicable Laws or changes in any Applicable Laws subsequent to the date of this Lease ("Required Capital Improvements") and necessitated due to Tenant's Permitted Use, and (ii) the costs of any capital improvements and structural repairs and replacements designed primarily to reduce Operating Expenses ("Cost Savings Improvements").  Expenditures for Required Capital Improvements and Cost Savings Improvements will be amortized at a market rate of interest over the useful life of such capital improvement (as reasonably determined by Landlord's accountants); however, the amortized amount of any Cost Savings Improvement in any year will be equal to the estimated resulting reduction in Operating Expenses;

 

(b)           The costs of alterations of tenant spaces or other capital expenditures except for such costs, as reasonably amortized by Landlord, where one of the purposes of such capital expenditure was to improve Building operating efficiency resulting in cost savings to Tenant;

 

(c)           Principal and interest payments, points, fees and any other mortgage related charges or expenses;

 

(d)           Leasing commissions or other related leasing expenses;

 

(e)           Any expenses paid by any tenant directly to third parties, or as to which Landlord is otherwise reimbursed by any third party, other tenant or tenants, or by insurance proceeds;

 

(f)           Depreciation of the Building; and

 

(g)           Cost for, or contributions to, reserves of any kind.

 

The Operating Expenses for the first and last years of the Term shall be prorated according to that portion of such year as to which Tenant is responsible for a share of such expenses.  Certain items of maintenance (such as landscape maintenance and snow removal) are performed by Landlord on numerous areas owned and/or maintained by Landlord, in addition to the Premises, and the cost thereof cannot be precisely ascribed to the Premises.  As to such services which are performed on areas in addition to the Premises, the cost for all areas so serviced shall be allocated to the Premises in proportion to the square feet of building floor space in the Premises compared to the square feet of building floor space in the entire area to which such services are provided.  Landlord shall keep reasonable records of such cost.

 

  

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                                                5.2.3           Operating Expenses for the calendar year in which the Term commenced have been estimated (the "Initial Estimate") and such Initial Estimate is set forth in Section 1.6 of this Lease.  Until notice is given by Landlord of a change in such estimate, Tenant shall make estimated monthly payments in the amount last advised by Landlord; the amount of such estimate that Tenant is obligated to pay as of the commencement of Tenant's obligations under this Lease as Tenant's Share of Operating Expenses is set forth as the Initial Estimated Payment in Section 1.6 of this Lease.  Landlord shall deliver to Tenant within 90 days after the expiration of each calendar year a reasonably detailed statement showing Tenant's Share of the actual Operating Expenses incurred during such year.  If Tenant's payments under this Section during said subject year exceed Tenant's Share of actual Operating Expenses as indicated on said statement, Tenant shall be entitled to credit the amount of such overpayment against Tenant's Share of Operating Expenses next falling due.  If Tenant's payments under this Section during the subject calendar year were less than Tenant's Share of actual Operating Expenses as indicated on said statement, Tenant shall pay to Landlord the amount of the deficiency within 30 days after delivery by Landlord to Tenant of said statement. During any periods of adjustments and prior to receipt of Landlord's statement, Tenant shall continue to pay Landlord the amount of the estimated payment for the prior calendar year and a retroactive adjustment, if applicable, shall be made after Tenant's receipt of the statement which sets forth the new estimated payment. Landlord and Tenant shall forthwith adjust between them any balance determined to exist with respect to that portion of the last year for which Tenant is responsible as to Operating Expenses, notwithstanding that the Term may have terminated before the end of such year and such obligation shall survive the expiration or earlier termination of this Lease.  If Tenant disputes an adjustment submitted by Landlord or a proposed increase or decrease in the estimated payment, Tenant shall give Landlord notice of such dispute within 30 days after Tenant's receipt of the adjustment.  If Tenant does not give Landlord timely notice, Tenant waives its right to dispute the particular adjustment.  If Tenant timely objects, Tenant may engage its own certified public accountants ("Tenant's Accountants") to verify the accuracy of the statement complained of or the reasonableness of the estimated increase or decrease.  Tenant's Accountants shall enter into a confidentiality agreement satisfactory to Landlord.  If Tenant's Accountants determine that an error has been made, Landlord's accountants and Tenant's Accountants shall endeavor to agree upon the matter, failing which such matter shall be submitted to an independent certified public accountant selected by Landlord, with Tenant's reasonable approval, for a determination which will be conclusive and binding upon Landlord and Tenant.  Tenant shall pay for all costs incurred by Tenant for Tenant's Accountants; provided, however, if it is ultimately determined that an error has been made in Landlord's determination of Tenant's Share of Operating Expenses, and such error exceeds seven percent (7%), Landlord shall be responsible for the cost of the audit by the Landlord's accountants,  Tenant's Accounts, and the third accountant (if any), which costs must be determined on an hourly or flat fee basis, and not on a percentage or contingent fee.  Notwithstanding the pendency of any dispute, Tenant shall continue to pay Landlord the amount of the estimated payment or adjustment determined by Landlord's accountants until the adjustment has been determined to be incorrect.  If it is determined that any portion of the Operating Expenses were not properly chargeable to Tenant, then Landlord shall promptly credit or refund the appropriate sum to Tenant.

 

5.3           Late Charges.  Tenant will pay a late charge equal to 5% of any monthly Rent payment or other payment not paid when due, which payment shall be in addition to any interest elsewhere provided for.  Notwithstanding the foregoing, in the first instance of late payment during any 12-month period, such late charge will not be assessed until the 5th day after Landlord has given written notice to Tenant notifying Tenant that the payment is late.

 

5.4           Security Deposit.   Tenant has deposited and will keep on deposit at all times during the Term with Landlord the Deposit as security for the payment and performance of Tenant's obligations under this Lease, including but not limited to payment of all Rent due under the terms hereof.  Landlord shall not owe Tenant any interest on the Deposit.  At Landlord's election, deductions may be made by Landlord from the amount so retained for the reasonable cost of repairs to the Premises which should have been performed by Tenant, for any Base Rent, additional Rent payment or any other sum delinquent under the terms hereof, and for any sum used by Landlord in any manner to cure any default in the performance of Tenant under the terms of this Lease.  In the event deductions are so made during the Term, upon notice by Landlord, Tenant shall redeposit such amounts so expended so as to maintain the Deposit in the amount as herein provided for, within 10 days after receipt of such written demand from Landlord.  Nothing herein contained shall limit the liability of Tenant as to any repairs or maintenance of the Premises; and nothing herein shall limit the obligation of Tenant promptly to pay all sums otherwise due under this Lease and to comply with all the terms and conditions hereof.  If the entire Deposit has not been utilized, the remaining amount will be refunded to Tenant or to whoever is then the holder of Tenant's interest in this Lease, without interest, within 60 days after full performance of this Lease by Tenant.  Notwithstanding the foregoing, on the first day of the 13th month of the Term following the Commencement Date, if an event of default by Tenant has not occurred (or an event of default by Tenant has occurred but has been cured within the applicable cure period to the extent permitted under the Lease) as of the date of decrease, the Deposit shall be decreased by $25,000.00 (resulting in the Deposit in the amount of $150,000.00); thereafter, on the first day of the 25th month of the Term following the Commencement Date, if an event of  default by Tenant has not occurred (or an event of default by Tenant has occurred but has been cured within the applicable cure period to the extent permitted under the Lease) as of the date of decrease, the amount of the Deposit shall be decreased by $25,000.00 (resulting in the Deposit in the amount of $125,000.00); thereafter, on the first day of the 37th month of the Term following the Commencement Date, if an event of default by Tenant has not occurred (or an event of default by Tenant has occurred but has been cured within the applicable cure period to the extent permitted under the Lease) as of the date of decrease, the Deposit shall be decreased by $75,000.00 (resulting in the Deposit in the amount of $50,000.00); and thereafter, on the first day of the 49th month of the Term following the Commencement Date, if an event of default by Tenant has not occurred (or an event of default by Tenant has occurred but has been cured within the applicable cure period to the extent permitted under the Lease) as of the date of the decrease, the Deposit shall be decreased by $25,000.00 (resulting in the Deposit in the amount of $25,000.00).  Landlord shall hold the Deposit as same may be decreased hereunder for the remainder of the Term pursuant to the Lease.

 

5.5           Proration of Rent for Partial Months.  If the Term begins on other than the first day of a month, Base Rent and additional Rent from such date until the first day of the next succeeding calendar month shall be prorated on the basis of the actual number of days in such calendar month and shall be payable in advance.  If the Term terminates on other than the last day of the calendar month, Rent from the first day of such calendar month until such termination date shall be prorated on the basis of the actual number of days in such month, and shall be payable in advance.

 

  

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6.           TAXES - REAL PROPERTY - PAID BY TENANT - PROTEST.  Tenant shall pay as Operating Expenses, Tenant's Share of all real estate taxes and assessments (excluding federal or state income taxes and franchise or estate taxes), as shall, from and after the date hereof, be assessed upon the Premises and any appurtenances or improvements thereto in accordance with Section 5.  The real estate taxes and assessments for the year in which the Term shall begin, as well as for the year in which this Lease shall end, shall be apportioned so that Tenant shall pay only the portions that correspond with the portions of such years as are within the Term.  In the event that the Premises are assessed for tax purposes as a part of a larger parcel, the tax on the entire parcel shall be prorated in proportion to the number of square feet of Building floor space on each portion of the entire parcel.

 

Upon written request from Tenant, Landlord shall protest the tax assessment on the Premises, to the extent that Landlord, in good faith, believes that such protest is justifiable and likely to be successful.  In the event of any such protest Tenant shall nevertheless pay to Landlord the taxes as assessed and Tenant shall be entitled to the appropriate share of any refund.  Tenant shall not protest any real property tax assessment on the Premises.

 

7.           TAXES - TENANT'S PERSONAL PROPERTY - PAID BY TENANT.  Tenant shall be responsible for and timely pay any and all personal property taxes assessed against any furniture, fixtures, equipment and items of a similar nature installed and/or located in or about the Premises by Tenant.

 

8.           UTILITIES AND SECURITY SERVICES

 

8.1           Utilities.  Tenant shall obtain and contract directly with the respective utility provider and pay all charges for any utilities separately metered to the Premises. Tenant agrees that Landlord shall not be liable for directly contracted utility services not being supplied to the Premises. Tenant irrevocably appoints Landlord as Tenant's attorney-in-fact solely for the purpose of terminating Tenant's account with any provider of such utilities if Tenant abandons the Premises or if this Lease expires or is otherwise terminated.

 

Tenant shall pay as Operating Expenses, Tenant's Share of all utilities servicing the Premises on common meters with other tenants, including but not limited to water, sewer, hot water, heat, gas, electricity, light, telephone, cable TV.  Except as set forth herein, Landlord shall not be required to furnish to Tenant any utility services of any kind, such as, but not limited to, water, sewer, heat, gas, electricity, voice or data services, or other utilities used, rendered, or supplied upon or in connection with the Premises.  Tenant agrees that Landlord shall not be liable for failure to supply any utility service during any period Landlord is unable to furnish such services and Landlord uses reasonable diligence to supply such services, it being understood that Landlord reserves the right to discontinue temporarily such services, or any of them, at such times as may be necessary by reason of accident, unavailability of employees, repairs, alterations or improvements, or whenever by reason of strikes, lockouts, riots, acts of God or any other happening beyond control of Landlord.  Landlord's obligations to furnish services shall be conditioned upon the availability of adequate sources.  Landlord shall have the right to enter upon the Premises at all reasonable times upon prior written or telephonic notice as may be reasonable under the circumstances in order to make such repairs, alterations and adjustments as shall be necessary in order to comply with the provisions of any mandatory or voluntary fuel or energy saving or similar statute, regulation or program. No prior notice shall be required in the event of an emergency.

 

8.2           Private Security Service.  Landlord may, in its sole discretion, engage a private security service, as an independent contractor, to patrol the Building or the business park in which the Building is located, but Landlord shall have no obligation to engage a private security service and shall not be liable for any damages or loss which might have been averted had a private security service been engaged.  If Landlord does so employ a private security service, the cost thereof shall be considered an Operating Expense, and Tenant agrees that neither Landlord nor the Building management company, nor their respective members, officers, employees or agents shall have liability for damages, liability or any claims (collectively, "Damages"), on account of any injury to or death of any employee, agent, representatives or invitee of Tenant arising out of the use or acts of the private security service.  Nothing herein shall limit any action by Tenant against any person or entity providing private security service, provided that neither Landlord nor the Building management company, or their respective members, officers, employees or agents (other than such security service) shall be party to, or liable for, any judgment entered in such an action as a defendant, cross-defendant, third- party defendant, or otherwise.  If Tenant desires a higher level of security services than Landlord provides, or wishes to obtain an agreement that there will be liability for actions, inactions, non-performance or quality of performance by a security service, Tenant may engage such additional security service for the Premises as Tenant chooses, at Tenant's sole expense.

 

9.           HOLDING OVER.  If, after expiration of the Term, Tenant shall remain in possession of the Premises and continue to pay Rent without a written agreement as to such possession, then Tenant shall be deemed a month-to-month Tenant and the Base Rent rate during such holdover tenancy shall be equivalent to 150% of the monthly Base Rent paid for the last month of tenancy under this Lease, plus payment of 100% of all additional Rent under this Lease.  Such month-to-month tenancy may be terminated by Landlord effective as of midnight on any day which is more than 29 days after date of delivery of Landlord's written notice of termination to Tenant. No holding over by Tenant shall operate to renew or extend this Lease without the written consent of Landlord.

 

 

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10.           ALTERATION - CHANGES AND ADDITIONS.  Tenant shall not make any improvements, additions or alterations to the Premises (collectively "Alterations") during the Term without in each instance first obtaining the written consent of Landlord. Landlord will not unreasonably withhold consent to Tenants erecting inside partitions, adding to existing electric power service, adding telephone outlets or other communication services, adding light fixtures, installing additional heating and/or air conditioning, or making such other Alterations as Tenant may desire.  Landlord, in its sole discretion, may withhold its consent to Alterations which require new openings in the roof or placement of additional equipment on the roof of the Building.

 

Prior to commencement of any Alterations, Tenant shall submit to Landlord a set of fully detailed working drawings and specifications for the proposed Alteration, prepared by a licensed architect or engineer; provided, however, if Tenant so requests, Landlord will have the working drawings and specifications prepared for Tenant, at Tenant's expense.  Tenant will pay Landlord's customary hourly charges for review and approval of any working drawings and specifications provided by Tenant, as additional Rent, to be paid within 30 days after delivery of invoice.  In particular, but not as a limitation, the working drawings must fully detail changes to mechanical, wiring and electrical, lighting, plumbing and HVAC systems of the Premises, and the Building as applicable, to Landlord's satisfaction.  Landlord may refuse to consent to Alterations because of the inadequacy of the working drawings and specifications.  All Alterations, along with any repair and maintenance work performed by Tenant, shall be done at Tenant's expense with Landlord's prior consent and subject to any conditions imposed by Landlord; however, if such work is not performed by or on behalf of Landlord, Tenant shall pay Landlord its supervisory fee within 30 days of receipt of an invoice from Landlord. Tenant may not commence the Alterations until Landlord's written consent has been given.  Any Alterations requested by Tenant of the telecommunication or data transmission equipment, facilities, lines or outlets on the Premises shall be performed only with Landlord's approval, and only by Landlord's approved contractor.  Notwithstanding anything to the contrary set forth herein, Tenant shall have the right to make non-structural Alterations costing less than $25,000.00 (at any one time) without the consent of Landlord, so long as such Alterations do not affect the Building's mechanical, electrical, telecommunications, or life safety systems, do not increase the load on the Building systems or structure, and are completed in accordance with Applicable Laws and in accordance with the working drawings and specifications approved by a licensed architect or engineer (copies of which shall be provided to Landlord promptly following completion of such Alterations).

 

If within 30 days after such working drawings are submitted by Tenant to Landlord for such approval, Landlord shall have not given Tenant notice of disapproval, stating the reason for such disapproval, such working drawings shall be considered denied by Landlord.  As a condition of approval for such Alterations, Landlord shall have the right to require Tenant to furnish adequate bonds or other security acceptable to Landlord for performance of and payment for the work to be performed.

 

Upon the expiration or earlier termination of this Lease, all Alterations (except trade fixtures, laboratory equipment and those items identified on Exhibit F installed by or at the request of Tenant (the "Tenant-Owned Alterations")) shall be and remain the property of Landlord, provided, however, Landlord shall have the option to require Tenant to remove any or all such Alterations, including any fixtures, equipment, and/or additions.  If Tenant expressly requests Landlord's determination when requesting Landlord's consent to Alterations, Landlord shall make its determination as to whether or not Tenant shall be required to remove such Alterations and restore the Premises at the expiration or earlier termination of this Lease.  If Tenant removes any Alteration at Landlord's request or any Tenant-Owned Alterations, Tenant shall repair and restore the Premises to the condition existing immediately prior to such installation or Alteration or Tenant-Owned Alteration, normal wear and tear excepted, all at Tenant's cost and expense.  All work done by or on behalf of Tenant shall conform to Applicable Laws, including appropriate city, county and state building codes and health standards and OSHA standards and Tenant shall be responsible for obtaining and paying for building permits in connection therewith.

 

Neither Landlord's right of entry, nor any actual inspection by Landlord, nor Landlord's actual knowledge of any Alteration accomplished or in progress shall constitute a waiver of Landlord's rights concerning Alterations by Tenant.  Landlord's consent or approval of the working drawings and specifications for any Alterations shall not constitute a warranty or representation by Landlord (and shall not impose any liability on Landlord) as to their completeness, design sufficiency, or compliance with Applicable Laws.  If any Alterations, or removal of Alterations or fixtures and equipment, cause damage to the structural portion, exterior finish, roof or other portions of the Building, then the costs to repair such damage, and further maintenance and repairs during the Term, shall thereafter be the sole responsibility of Tenant.

 

11.           MECHANIC'S LIENS.  Tenant shall pay all costs for construction done by it or caused to be done by it on the Premises as permitted by this Lease.  Tenant shall keep the Building, other improvements and land of which the Premises are a part free and clear of all mechanic's liens resulting from construction by or for Tenant.  Tenant shall have the right to contest the correctness or validity of any such lien if, by the earlier of the date an action is commenced to foreclose such lien, or 15 days following demand by Landlord, Tenant deposits with Landlord and/or any appropriate court or title insurance company a bond or sum of money sufficient to allow issuance of title insurance against the lien and/or to comply with the statutory requirements for discharge of the lien found in Sections 38-22-130 and 38-22-131 of the Colorado Revised Statutes, or any successor statutory provision.  Landlord shall have the right to require Tenant's contractor(s), subcontractors and materialmen to furnish to both Tenant and Landlord adequate lien waivers on work or materials paid for, in connection with all periodic or final payments. Tenant's failure to act in accordance with the foregoing shall be an event of default and Landlord may, in addition to other remedies, pay such amounts, which together with reasonable attorneys' fees incurred and interest, shall be immediately due Landlord upon notice.  Landlord reserves the right to post notices on the Premises that Landlord is not responsible for payment of work performed and that Landlord's interest is not subject to any lien.

 

 

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12.           SIGNAGE.  Tenant shall place no signs on the Premises or the Building (except inside the Premises and that are not visible from outside the Premises) without prior written consent of Landlord. If Landlord approves signage, Tenant shall be responsible for removing such signage and restoring the area of the Building on which the signage was mounted on or before the Expiration Date or earlier termination of this Lease.  Tenant may not put any signs on the Premises indicating that the same are for rent, or available for assignment or sub-lease, and may not put any signs of real estate brokers on the Premises.  Notwithstanding the foregoing, Tenant shall have the right, subject to Landlord's then applicable signage criteria and the regulations, codes and covenants of the City of Longmont and the business park in which the Building is located, to place identification signage at the entry to the Premises, at Tenant's cost and expense.

 

13.           MAINTENANCE AND REPAIRS.

 

13.1  The Building.  Landlord shall be responsible for maintenance and repairs of the roof, exterior finish and structural portions of the Building, along with the common areas (including landscaped areas, parking areas, loading and unloading areas, roadways, sidewalks, walkways, stairways, parkways and driveways) of the Building (however, all expenditures by Landlord in this regard shall be included in Operating Expenses except where specifically excluded).  If any such maintenance or repairs are necessitated by damage caused by Tenant or its employees, agents, contractors, sub-contractors, licensees, invitees or guests, Tenant shall reimburse Landlord (subject to the waivers set forth in Sections 13.3 and 16.5 below) for the reasonable and documented cost of same, as additional Rent, to be paid within 10 days after delivery of invoice.

 

13.2  The Premises.  All maintenance, repairs and replacements of or within the Premises shall be performed by Tenant, at its own expense, including all necessary maintenance, repairs and replacements to pipes, plumbing and electrical systems which exclusively serve the Premises, windows or other glass, doors, fixtures, interior decorations, and all other appliances and appurtenances.  Such repairs and replacements to the Premises, ordinary as well as extraordinary, shall be made promptly, as and when necessary, so that the Premises are maintained in good condition, consistent with the condition of the Premises on the Commencement Date, normal wear and tear excepted.  All such maintenance, repairs and replacements shall be in quality and class at least equal to the original work.  If Tenant fails to timely make such maintenance, repairs or replacements, Landlord may, but shall not be required to, make such repairs and replacements on Tenant's behalf, and the cost and expense thereof shall constitute and be collectable as additional Rent, together with interest thereon as hereinafter provided.

 

13.3  Tenant's Property.  Notwithstanding Landlord's obligations elsewhere set forth in this Lease, Tenant agrees that Landlord is not liable for any damage to the personal property of Tenant or consequential damages to Tenant.  Except to the extent arising out of Landlord's gross negligence or willful misconduct, Tenant shall indemnify and save harmless Landlord of and from liability for damages, liability or any claims against Landlord, including costs, attorney's fees and expenses of Landlord in defending against the same, on account of any injury to (or death of) any employee, agent, representative or invitee of Tenant.

 

14.           CONDITION UPON SURRENDER - RETURN OF KEYS.  Subject to the requirements of Tenant pursuant to Section 10, Tenant shall vacate the Premises in the same condition as when received, ordinary wear and tear and damage by casualty or condemnation, excepted, cleaned to the same standard as when received, and shall remove all of Tenant's property, so that Landlord can repossess the Premises not later than midnight on the day upon which this Lease or any extension hereof expires or is otherwise terminated.  Landlord shall have the same rights to enforce this covenant by ejectment and for damages or otherwise as for the breach of any other conditions or covenant of this Lease.  Upon expiration or termination of this Lease, Tenant shall deliver to Landlord keys which operate all locks on the exterior and interior of the Premises, including keys to locks on cupboards and closets.  Tenant shall retrieve all keys to the Premises which Tenant has delivered to employees or others, and include same with the keys delivered to Landlord.

 

15.           USE OF THE PREMISES; COMPLIANCE WITH LAWS; RULES AND REGULATIONS.  Tenant shall use the Premises for the Permitted Use and for no other purpose.  Tenant's use of the Premises shall comply with all present and future Applicable Laws of any governmental authority having jurisdiction over the Premises with respect to Tenant's use or operation in the Building.  No outside storage at the Building by or on behalf of Tenant shall be allowed unless first approved by Landlord in writing and then only in such areas as are designated as storage areas by Landlord. Tenant shall not commit or suffer any waste on the Premises.  Tenant shall not permit any nuisance to be maintained on the Premises nor permit any disorderly conduct, noise, vibrations, or odors or other activity that may be dangerous or offensive to other occupants of any other part of the property of which the Premises are a part and/or of any adjoining property.  Tenant shall be liable for the cost of any damage to the Premises or Building or the common areas, sidewalks, and pavements adjoining the same which results from the movement of heavy articles or heavy vehicles or utility cuts made by or on behalf of Tenant.  Tenant shall not overload the floors or any other part of the Premises.

 

As part of a common scheme for orderly development, use and protection, of its various properties and those properties adjacent to the Premises, Landlord may impose upon Tenant reasonable rules and regulations concerning parking and vehicle traffic; locations at which deliveries are to be made and access thereto; trash disposal; use of common areas such as recreation areas, corridors, and sidewalks; signs and directories; use of communication wires or cables which are used in common but which may be inadequate fully to serve all the demands placed upon them; provided that such rules and regulations shall be uniform in their application and shall not violate the express terms of this Lease elsewhere set forth.

 

 

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16.           INSURANCE.

 

16.1           Landlord's Insurance.  Landlord shall keep the Building and the Building improvements (excluding, however, Tenant's leasehold improvements, alterations, additions, trade fixtures, merchandise and personal property) insured throughout the Term against losses covered by ISO Causes of Loss – Special Form Coverage, as defined in the insurance industry, which shall also cover loss of rents.  Landlord shall pay any premium on such policy and such costs shall be included in Operating Expenses. Landlord may purchase a single policy covering buildings and grounds in addition to the Building and the Premises.  In that event, the premium shall be allocated among the various covered buildings and the Premises in proportion to the number of square feet of building floor space in each area for the Liability Insurance and the total insured value of the building for the Property Insurance.

 

16.2           General Liability Insurance.  Tenant agrees to carry comprehensive general liability insurance in the minimum total amount of $2,000,000 for each occurrence of bodily injury and $2,000,000 for each occurrence of property damage or $2,000,000 Combined Single Limits (CSL) bodily injury and property damage; at least $1,000,000 of such insurance coverage shall be primary coverage and the remaining $1,000,000 of such coverage may be pursuant to an umbrella or excess liability policy.  Tenant also agrees to carry Comprehensive Automobile Liability insurance, including Owned, Employers Non-Owned, and Hire Auto Coverage, with a combined single limit of not less than $2,000,000 per occurrence for bodily injury and property damage; at least $1,000,000 of such insurance coverage shall be primary coverage and the remaining $1,000,000 of such coverage may be pursuant to an umbrella or excess liability policy.  Tenant shall supply to Landlord certificates of insurance as provided in Section 16.6.  In the event Tenant fails to secure such insurance or to give evidence to Landlord of such insurance by depositing with Landlord certificates as provided below, Landlord may purchase such insurance in Tenant's name and charge Tenant the premiums therefor.  Bills for the premiums therefor shall be deemed and paid as additional Rent due within 10 days after delivery of invoice.  Landlord, Goff Capital Partners, L.P., the Building manager, Flatiron Property Management LLC, and such other parties that Landlord shall reasonably require from time to time shall be named as additional insured's (using endorsement form CG 20 10 07 04 or such other form Landlord may require from time to time) in all of the foregoing insurance policies with a statement to that effect set forth in the certificates of insurance furnished to Landlord.  Flatiron Property Management LLC, having an address of 2101 Ken Pratt Boulevard, Suite 101, Longmont, Colorado 80501, or such other party that Landlord shall require from time to time, shall be named "Certificate Holder" on all certificates of insurance required hereunder.  In the event Tenant has multiple locations all insured under one policy, then Tenant shall provide to Landlord an aggregate limit endorsement specific to the Premises.

 

16.3           Tenant Improvements.  Tenant agrees to carry insurance covering all of Tenant's leasehold improvements, alterations, additions, trade fixtures, merchandise and personal property from time to time in, on or upon the Premises, at least as broad as ISO Causes of Loss – Special Form Coverage and Equipment Breakdown Protection Coverage, including Flood and Earthquake, against risks of direct physical loss or damage (commonly known as "all risk" and "boiler and machinery") for the full replacement cost of Tenant's property located at the Premises, with a deductible amount not to exceed $10,000.00.  Any policy proceeds shall be used for the repair or replacement of the property damaged or destroyed unless this Lease shall cease and terminate due to destruction of the Premises as provided below. Leasehold improvements shall include all improvements above the concrete floor and below the concrete or steel roof deck and roof structure whether completed specifically for Tenant or existing prior to the Commencement Date and those tenant improvements made by Tenant or on Tenant's behalf by Landlord.

 

16.4           Other Insurance.  Tenant shall purchase and maintain workers' compensation and employer's liability insurance as follows: Worker's Compensation Coverage A – Statutory Coverage in an amount required by the State of Colorado; Worker's Compensation Coverage B – Employers Liability Coverage in the amounts of $1,000,000 Each Accident, $1,000,000 Disease, Policy Limit, and $1,000,000 Disease, Each Employee.

Tenant agrees to carry other insurance against such other hazards and in such amounts as the holder of any mortgage or deed of trust to which this Lease is subordinate may require from time to time.

 

16.5           Mutual Waiver and Waiver of Subrogation.  Landlord and Tenant waive all rights of recovery against the other and its respective officers, partners, members, agents, representatives, and employees for loss or damage to its real and personal property kept in the Building which is capable of being insured against under ISO Causes of Loss - Special Form Coverage and Equipment Breakdown Protection Coverage and to the extent of damages and coverage under worker's compensation and employers liability insurance required under this Lease, or for loss of business revenue or extra expense arising out of or related to the use and occupancy of the Premises.  Tenant also waives all such rights of recovery against Landlord's Building manager and/or property manager.  Each party shall, upon obtaining the property damage insurance required by this Lease, notify the insurance carrier that the foregoing waiver is contained in this Lease and obtain an appropriate waiver of subrogation provision in the policies.

 

 

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                                16.6           Other Provisions Regarding Tenant's Insurance.  All insurance required of Tenant in this Lease shall be effected under enforceable policies issued by insurers licensed to do business in the State of Colorado with a Best's Financial Strength Rating of no less than A-X.  Tenant shall use reasonable efforts to deliver to Landlord a certificate evidencing a new or renewal policy prior to the expiration date of any such policy, and shall in any event deliver such certificate to Landlord no later than two (2) business days after such new or renewal policy is issued.  Within 10 days after Landlord's request, Landlord shall be furnished with satisfactory evidence of the payment of the premium on any policy required to be maintained by Tenant hereunder.  To the extent obtainable, all policies shall contain an agreement that, notwithstanding any act or negligence of Tenant which might otherwise result in forfeiture of such insurance, such policies shall not be canceled except upon 30 days prior written notice to Landlord, and that the coverage afforded thereby shall not be affected by the performance of any work in or about the Premises.  All policies of insurance required to be carried by Tenant hereunder shall be primary and non-contributory to any insurance maintained by Landlord, Landlord's Building manager and their employees, affiliates, advisors and designees.  If Tenant provides any insurance required of Tenant by this Lease in the form of a blanket policy, Tenant shall furnish satisfactory proof that such blanket policy complies in all respects with the provisions of this Lease, and that the coverage thereunder is at least equal to the coverage which would be provided under a separate policy covering only the Premises.

 

16.7           Changes in Standard Policies.  If the definition of insurance industry policy language relating to "all-risk" insurance or other term changes, the insurance requirements hereunder shall be modified to conform to the existing insurance industry language; however, the dollar amount of the coverage's required under this Lease shall not be less than those existing at the time of the date of this Lease.

 

16.8           No Use of Premises in Violation of Insurance Policies.  Tenant shall make no use of the Premises which would void or make voidable any insurance upon the Premises or Building or which would increase any insurance premiums for insurance on the Premises or the Building.

 

17.           FIRE REGULATIONS - TENANT RESPONSIBILITY.  It shall be Tenant's sole and exclusive responsibility to meet all fire regulations of any governmental unit having jurisdiction over the Premises or with respect to the Premises or required as a result of Tenant's Alterations to the extent such regulations affect Tenant's operations, at Tenant's sole expense.

 

18.           REPLACEMENT OF BUILDING - CASUALTY DAMAGE.  If the Premises are damaged or destroyed by fire or other cause at any time after the Commencement Date of this Lease, Landlord shall proceed with due diligence to repair or restore the same to the same condition as existed before such damage or destruction, and as soon as possible thereafter will give possession to Tenant of the Premises without diminution or change of location.  Provided, however, that in case of total destruction of the Premises by fire or other casualty, or in case the Building is so badly damaged that, in the reasonable opinion of Landlord, it is not feasible to repair or rebuild the same, or such damage cannot in Landlord's reasonable determination be repaired within 180 days following the occurrence of such damage, then, Landlord shall give notice to Tenant of such determination and Landlord or Tenant shall have the right to terminate this Lease by notice to the other party not later than 30 days after the date on which Landlord provides written notice of such determination.  In the event the Premises are rendered temporarily untenantable because of fire or other casualty, and this Lease is not terminated by either Landlord or Tenant as provided above, then monthly Base Rent shall abate on the untenantable area until the Premises are restored to their former condition, abatement to be based on the square feet of Building floor space in the untenantable area compared to the total rentable square feet of Building floor space in the Premises.  Provided, however, that to the extent the damage or destruction results from the negligence or other action of Tenant or its employees, agents, contractors, subcontractors, invitees, guests or licensees, Tenant shall pay for the restoration or repair, to the extent the cost of same is not covered by Landlord's insurance.

 

19.           ENVIRONMENTAL MATTERS.

 

19.1           Definitions.

 

19.1.1           Hazardous Material.  Hazardous Material means any substance:

 

(a)           the presence of which requires investigation, notice or remediation under any applicable federal, state or local statute, regulation, ordinance, order, action, policy or common law; or

 

(b)           which is or becomes defined as a "hazardous material," "hazardous waste," "hazardous substance," "regulated substance," "pollutant" or "contaminant" under any federal, state or local statute, regulation, rule or ordinance or amendments thereto including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. §9601 et seq.), Toxic Substances Control Act (15 U.S.C. §2601 et seq.), the Colorado Underground Storage Tank Act (Colo. Rev. Stat. §25-18-101 et seq.), and/or the Resource Conservation and Recovery Act (42 U.S.C. §6901 et seq.); or

 

(c)           which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous and is or becomes regulated by any governmental authority, agency, department, commission, board, agency or instrumentality of the United States, the State of Colorado or any political subdivision thereof; or

 

(d)           the presence of which on the Premises causes or threatens to cause a nuisance upon the Premises or to adjacent properties or poses or threatens to pose a hazard to the health or safety of persons on or about the Premises; or

 

 

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(e)           which contains gasoline, diesel fuel or other petroleum hydrocarbons; or

 

(f)           which contains polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde foam insulation; or

 

(g)           radon gas.

 

19.1.2           Environmental Requirements.  Environmental Requirements means all applicable present and future statutes, regulations, rules, ordinances, codes, licenses, permits, orders, approvals, plans, authorizations, concessions, franchises, and similar items, of all governmental agencies, departments, commissions, boards, bureaus, or instrumentalities of the United States, states and political subdivisions thereof and all applicable judicial, administrative, and regulatory decrees, judgments, and orders relating to the protection of human health or the environment, including:

 

(a)           All requirements, including but not limited to those pertaining to reporting, licensing, permitting, investigation, and remediation of emissions, discharges, releases, or threatened releases of Hazardous Materials, chemical substances, pollutants, contaminants, or hazardous or toxic substances, materials or wastes whether solid, liquid, or gaseous in nature, into the air, surface water, groundwater, or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of chemical substances, pollutants, contaminants, or hazardous or toxic substances, materials, or wastes, whether solid, liquid, or gaseous in nature; and

 

(b)           All requirements pertaining to the protection of the health and safety of employees or the public.

 

19.1.3           Environmental Damages.  Environmental Damages means all claims, judgments, damages, losses, penalties, fines, liabilities (including strict liability), encumbrances, liens, costs, and expenses of investigation and defense of any claim, whether or not such claim is ultimately defeated, and of any good faith settlement or judgment, of whatever kind or nature, contingent or otherwise, matured or unmatured, foreseeable or unforeseeable, including reasonable attorneys' fees and disbursements and consultants' and witnesses' fees, any of which are incurred at any time as a result of the existence of Hazardous Material upon, about, beneath the Premises or migrating or threatening to migrate to or from the Premises, or the existence of a violation of Environmental Requirements pertaining to the Premises, including:

 

(a)           Damages for personal injury, or injury to property or natural resources occurring upon or off of the Premises, foreseeable or unforeseeable, including lost profits, consequential damages, the cost of demolition and rebuilding of any improvements on real property, interest and penalties including but not limited to claims brought by or on behalf of employees of Tenant;

 

(b)           Fees incurred for the services of attorneys, consultants, contractors, experts, laboratories and all other costs incurred in connection with the investigation or remediation of such Hazardous Materials or violation of Environmental Requirements including, but not limited to, the preparation of any feasibility studies or reports or the performance of any cleanup, remediation, removal, response, abatement, containment, closure, restoration or monitoring work required by any federal, state or local governmental agency or political subdivision or court, or reasonably necessary to make full economic use of the Premises and any other property in a manner consistent with its current use or otherwise expended in connection with such conditions, and including any reasonable attorneys' fees, costs and expenses incurred in enforcing this Lease or collecting any sums due hereunder;

 

(c)           Liability to any third person or governmental agency to indemnify such person or agency for costs expended in connection with the items referenced herein; and

 

(d)           Diminution in the value of the Premises and adjoining property, and damages for the loss of business and restriction on the use of or adverse impact on the marketing of rentable or usable space or of any amenity of the Premises and adjoining property.

 

19.1.4           Landlord Indemnified Parties.  "Landlord Indemnified Parties" means Landlord, any other person who acquires an interest in the Premises in any manner, including by purchase at a foreclosure sale or otherwise, and the directors, officers, shareholders, employees, partners, agents, contractors, subcontractors, experts, licensees, affiliates, lessees, mortgagees, trustees, heirs, devisees, successors, assigns, guests and invitees of such persons.

 

 

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19.2           Indemnification Obligation.  Tenant, its successors in interest by merger, acquisition, consolidation or otherwise, assigns and guarantors, agree to indemnify, defend, reimburse and hold harmless Landlord Indemnified Parties from and against any and all Environmental Damages arising from activities of Tenant or its employees, agents, contractors, subcontractors, or guests, licensees, or invitees which (1) result in the presence of Hazardous Materials upon, about or beneath the Premises or migrating to or from the Premises, or (2) result in the violation of any Environmental Requirements pertaining to the Premises and the activities thereon.  Tenant shall have no obligation to the Landlord Indemnified Parties for any claims, losses, damages, cost or other liabilities of any kind or nature which do not arise from the acts or omissions of Tenant or its employees, agents, contractors, subcontractors, guests, licensees or invitees, including claims, losses, damages, costs or other liabilities which are the result of any conditions on the Property existing on the date Tenant takes occupancy of any portion of the Premises or any Hazardous Materials introduced on the Premises, Building or property on which the Building is located by Landlord, any party under Landlord's control, or any parties other than Tenant or its employees, agents, contractors, subcontractors, guests, licensees or invitees.  Tenant's obligation shall include the burden and expense of the Landlord Indemnified Parties in defending all claims, suits and administrative proceedings, including reasonable attorneys' fees and expert witness and consulting fees, even if such claims, suits or proceedings are groundless, false or fraudulent, and conducting all negotiations of any description, and paying and discharging, when and as the same become due, any and all judgments, penalties or other sums due against Landlord Indemnified Parties, and all such expenses incurred in enforcing the obligation to indemnify.  Tenant, at its sole expense, may employ additional counsel of its choice to associate with counsel representing the Landlord Indemnified Parties.

 

19.3           Tenant's Obligation to Remediate.  Notwithstanding the obligation of Tenant to indemnify Landlord pursuant to this Lease, Tenant shall, upon demand of Landlord, and at its sole cost and expense, promptly take all actions to remediate the Premises which are reasonably necessary to mitigate Environmental Damages or to allow full economic use of the Premises, or are required by Environmental Requirements, which remediation is necessitated by the 1) introduction of a Hazardous Material upon, about or beneath the Premises or 2) a violation of Environmental Requirements, either of which is caused by the actions of Tenant, its employees, agents, contractors, subcontractors, guests, invitees or licensees.  Such actions shall include, but not be limited to, the investigation of the environmental condition of the Premises, the preparation of any feasibility studies, reports or remedial plans, and the performance of any cleanup, remediation, containment, operation, maintenance, monitoring or restoration work, whether on or off of the Premises.  Tenant shall take all actions necessary to restore the Premises to the condition existing prior to the introduction of Hazardous Material upon, about or beneath the Premises, notwithstanding any lesser standard of remediation allowable under applicable law or governmental policies.  All such work shall be performed by one or more contractors, selected by Tenant and approved in advance and in writing by Landlord.  Tenant shall proceed continuously and diligently with such investigatory and remedial actions, provided that in all cases such actions shall be in accordance with all applicable requirements of governmental entities.  Any such actions shall be performed in a good, safe and workmanlike manner and shall minimize any impact on the business conducted at the Premises.  Tenant shall pay all costs in connection with such investigatory and remedial activities, including but not limited to all power and utility costs, and any and all taxes or fees that may be applicable to such activities.  Tenant shall promptly provide to Landlord copies of testing results and reports that are generated in connection with the above activities, and copies of any correspondence with any governmental entity related to such activities.  Promptly upon completion of such investigation and remediation, Tenant shall permanently seal or cap all monitoring wells and test holes to industrial standards in compliance with applicable federal, state and local laws and regulations, remove all associated equipment, and restore the Premises to the maximum extent possible, which shall include, without limitation, the repair of any surface damage, including paving, caused by such investigation or remediation hereunder.  Provided, however, that Tenant shall not be obligated to remediate environmental damages which result from seepage of Hazardous Materials onto the Premises from adjacent property unless the presence on the adjacent property was caused by Tenant or its employees, agents, contractors, subcontractors, guests, invitees or licensees.

 

19.4           Notification.  If Tenant shall become aware of or receive notice or other communication concerning any actual, alleged, suspected or threatened violation of Environmental Requirements, or liability of Tenant for Environmental Damages in connection with the Premises or past or present activities of any person thereon, or that any representation set forth in this Lease is not or is no longer accurate, including but not limited to notice or other communication concerning any actual or threatened investigation, inquiry, lawsuit, claim, citation, directive, summons, proceeding, complaint, notice, order, writ, or injunction, relating to same, then Tenant shall deliver to Landlord, within ten days of the receipt of such notice or communication by Tenant, a written description of said violation, liability, correcting information, or actual or threatened event or condition, together with copies of any such notice or communication.  Receipt of such notice shall not be deemed to create any obligation on the part of Landlord to defend or otherwise respond to any such notification or communication.

 

19.5           Negative Covenants.

 

19.5.1           No Hazardous Material on Premises.   Except in strict compliance with all Environmental Requirements, Tenant shall not cause, permit or suffer any Hazardous Material to be brought upon, treated, kept, stored, disposed of, discharged, released, produced, manufactured, generated, refined or used upon, about or beneath the Premises by Tenant, its agents, employees, contractors, subcontractors, guests, licensees or invitees, or any other person.  Tenant shall deliver to Landlord copies of all documents which Tenant provides to any governmental body in connection with compliance with Environmental Requirements with respect to the Premises, such delivery to be contemporaneous with provision of the documents to the governmental agency.

 

 

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19.5.2           No Violations of Environmental Requirements.  Tenant shall not cause, permit or suffer the existence or the commission by Tenant, its agents, employees, contractors, subcontractors or guests, licensees or invitees, or by any other person of a violation of any Environmental Requirements upon, about or beneath the Premises or any portion thereof.

 

19.5.3           No Environmental or Other Liens.  Tenant shall not create or suffer or permit to exist with respect to the Premises, any lien, security interest or other charge or encumbrance of any kind, including without limitation, any lien imposed pursuant to section 107(f) of the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. section 9607(1)) or any similar state statute to the extent that such lien arises out of the actions of Tenant, its agents, employees, contractors, subcontractors or guests, licensees or invitees.

 

19.6           Landlord's Right to Inspect and to Audit Tenant's Records.  Landlord shall have the right in its sole and absolute discretion, but not the duty, to enter and conduct an inspection of the Premises to inspect and audit Tenant's records concerning Hazardous Materials at any reasonable time upon reasonable prior notice to determine whether Tenant is complying with the terms of this Lease, including but not limited to the compliance of the Premises and the activities thereon with Environmental Requirements and the existence of Environmental Damages as a result of the condition of the Premises or surrounding properties and activities thereon.  If Landlord has reasonable cause to believe Tenant is in default with respect to any of the provisions of this Lease related to Hazardous Materials, Environmental Requirements or Environmental Damages, then Landlord shall have the right, but not the duty, to retain at the sole expense of Tenant an independent professional consultant to enter the Premises to conduct such an inspection and to inspect and audit any records or reports prepared by or for Tenant concerning such compliance; provided, however, if such inspection and audit shall disclose that Tenant is not in default with respect to any of the provisions of this Lease related to Hazardous Materials, Environmental Requirements or Environmental Damages, then Tenant shall not be required to pay for the cost of such inspection and audit.  Tenant hereby grants to Landlord the right to enter the Premises upon reasonable prior notice and to perform such tests on the Premises as are reasonably necessary in the opinion of Landlord to assist in such audits and investigations.  Landlord shall use reasonable efforts to minimize interference with the business of Tenant by such tests inspections and audits, but Landlord shall not be liable for any interference caused thereby.

 

19.7           Landlord's Right to Remediate.  Should Tenant fail to perform or observe any of its obligations or agreements pertaining to Hazardous Materials or Environmental Requirements, then Landlord shall have the right, but not the duty, without limitation upon any of the rights of Landlord pursuant to this Lease, to enter the Premises personally or through its agents, consultants or contractors and perform the same.  Tenant agrees to indemnify Landlord for the costs thereof and liabilities therefrom as set forth in Section 19.2.

 

19.8           Survival of Environmental Obligations.  The obligations of Tenant as set forth in Section 19 and all of its subsections shall survive termination of this Lease.

 

20.           ENTRY BY LANDLORD.  Landlord, or its authorized representative, and/or any lender or prospective lender, shall have the right to enter the Premises during the Term at all reasonable times during usual business hours for purposes of inspection, and/or the performance of any maintenance, repairs or replacement therein.  Landlord shall give Tenant such advance notice of entry as is reasonable in light of the purpose for the entry, except in the event of an emergency or regularly scheduled maintenance when no notice is required.  Landlord shall have the right, upon reasonable notice and during normal business hours, to enter the Premises and show the same to a prospective tenant during the last 270 days of this Lease or any extended term, unless the Term shall have been extended by mutual written agreement or delivery of notice of exercise of any option to extend.

 

21.           DEFAULT - REMEDIES OF LANDLORD.

 

21.1           Default Defined.  Any one or more of the following events (each of which is herein sometimes called "event of default") shall constitute a default:

 

21.1.1           Tenant defaults in the due and punctual payment of any Rent, taxes, tax deposits, insurance premiums, maintenance fees or other sums required to be paid by Tenant under this Lease when and as the same shall become due and payable; provided, however, that Tenant shall have a right to cure such event of default: (a) for the first occurrence in a calendar year, not later than 5 days after receipt of written notice of such non-payment by Landlord, and (b) for the second occurrence within a calendar year, within five (5) days after such payment is due, without a notice requirement. For a third and subsequent occurrence within such calendar year, it shall be an event of default if Tenant defaults in the due and punctual payment of any Rent, taxes, tax deposits, insurance premiums, maintenance fees or other sums required to be paid by Tenant under this Lease when and as the same shall become due and payable.

 

21.1.2           Tenant abandons the Premises;

 

21.1.3           Tenant defaults in the performance of or compliance with any of the covenants, agreements, terms and conditions contained in this Lease other than those referred to in the foregoing Section 21.1.1, and such default shall continue for a period of 10 business days after written notice thereof from Landlord to Tenant, and shall not be cured as permitted by Section 21.9;

 

 

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21.1.4           Tenant files a voluntary petition in bankruptcy or is adjudicated a bankrupt or insolvent, or takes the benefit of any relevant legislation that may be in force for bankrupt or insolvent debtors or files any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for itself under any present or future federal, state or other statute, law or regulation, or proceedings are taken by Tenant under any relevant Bankruptcy Act in force in any jurisdiction available to Tenant, or Tenant seeks or consents to or acquiesces in the appointment of any trustee, receiver or liquidator of Tenant or of all or any substantial part of its properties or of the Premises, or makes any general assignment for the benefit of creditors;

 

21.1.5           A petition is filed against Tenant seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future federal, state or other statute, law or regulation, and shall remain undismissed for an aggregate of 120 days, or if any trustee, receiver or liquidator of Tenant or of all or any substantial part of its properties or of the Premises is appointed without the consent or acquiescence of Tenant and such appointment remains unvacated for an aggregate of 20 days.

 

21.2           Landlord's Remedies in the Event of Default.  In the event of any event of default, Landlord shall have the option, without further notice to Tenant or further demand for performance, to exercise any one or more of the following remedies (and any other remedy available at law or in equity):

 

21.2.1           If Tenant has been late in payment of Rent or other sums due on four or more occasions during any period of one year, Landlord, without terminating this Lease, may 1) require that all future payments be made by bank cashier's check, and/or 2) require an additional security deposit in the amount of the then-current Base Rent for two months, and/or 3) require that Rent for each month be paid on or before the 15th day of the preceding month.  Such requirement shall be imposed by Landlord's written notice delivered to Tenant.  The additional security deposit shall be paid within 10 days after delivery of the notice.  Landlord may or may not exercise the remedies provided in this Section 21.2.1, in its sole discretion.  The exercise of the remedies provided in this Section 21.2.1 shall not be required prior to the exercise of any other available remedy.

 

21.2.2           Without obligation to seek a new tenant, to institute suit against Tenant to collect each installment of Rent or other sum as it becomes due or to enforce any other obligation under this Lease even though the Premises be left vacant.

 

21.2.3           As a matter of right, to procure the appointment of a receiver for the Premises by any court of competent jurisdiction upon ex parte application and without notice, notice being hereby expressly waived.  All rents, issues and profits, income and revenue from the Premises shall be applied by such receiver to the payment of the rent, together with any other obligations of Tenant under this Lease.

 

21.2.4           To re-enter and take possession of the Premises and all personal property therein and to remove Tenant and Tenant's agents and employees therefrom, and either:

 

a)  terminate this Lease and sue Tenant for damages for breach of the obligations of Tenant to Landlord under this Lease; or

 

b)  without terminating this Lease, relet, assign or sublet the Premises and personal property, as the agent and for the account of Tenant in the name of Landlord or otherwise, upon the terms and conditions Landlord deems fit with the new tenant for such period (which may be greater or less than the period which would otherwise have constituted the balance of the Term) as Landlord may deem best, and collect any Rent due upon any such reletting.  In this event, the rents received on any such reletting shall be applied first to the expenses of reletting and collecting, including, without limitation, all repossession costs, reasonable attorneys' fees, and real estate brokers' commissions, alteration costs and expenses of preparing said Premises for reletting, and thereafter toward payment of the Base Rent and of any other amounts payable by Tenant to Landlord.  If the sum realized shall not be sufficient to pay the Rent and other charges due from Tenant, then within five days after demand, Tenant will pay to Landlord any deficiency as it accrues.  Landlord may sue therefor as each deficiency shall arise if Tenant shall fail to pay such deficiency within the time limit.

Landlord agrees to use commercially reasonable efforts in order to mitigate its damages following any event of default by Tenant under this Lease beyond any applicable period of notice and cure; provided, however, nothing shall require Landlord to (i) attempt to re-lease the Premises unless and until Landlord obtains possession of the Premises, or (ii) lease the Premises in smaller increments than a full floor (except with respect to portions of the Premises located on multi-tenant floors, if any, in which event there shall be no minimum increment for such portions).

 

21.3           Tenant to Surrender Peaceably.  In the event Landlord elects to re-enter or take possession of the Premises, Tenant shall quit and peaceably surrender the Premises to Landlord, and Landlord may enter upon and re-enter the Premises and possess and repossess itself thereof, by force, summary proceedings, ejectment or otherwise, and may dispossess and remove Tenant and may have, hold and enjoy the Premises and the right to receive all rental income of and from the same.

 

21.4           No Termination by Re-Entry.  No re-entry or taking of possession by Landlord shall be construed as an election on Landlord's part to terminate or accept surrender of this Lease unless Landlord's written notice of such intention is delivered to Tenant.

 

 

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                                21.5           Injunction.  In the event of any breach by Tenant of any of the agreements, terms, conditions or covenants contained in this Lease, Landlord, in addition to any and all other rights, shall be entitled to enjoin such breach and shall have the right to invoke any right and remedy allowed at law or in equity or by statute or otherwise for such breach as though re-entry, summary proceedings, and other remedies were not provided for in this Lease.

 

21.6           Remedies Listed are Cumulative and Non-Exclusive.  The enumeration of the foregoing remedies does not exclude any other remedy, but all remedies are cumulative and shall be in addition to every other remedy now or hereafter existing at law or in equity.

 

21.7           Interest on Sums Past Due.  In addition to the late charge which is elsewhere established, all Rent and all other amounts due from Tenant hereunder shall bear interest at the rate of 18% percent per annum compounded annually from their respective due dates until paid, provided that this shall in no way limit, lessen or affect any claim for damages by Landlord for any breach or default by Tenant.

 

21.8           Attorneys' Fees.  Reasonable attorneys' fees, expert witness fees, consulting fees and other expenses incurred by either party by reason of the breach by either party in complying with any of the agreements, terms, conditions or covenants of this Lease shall constitute additional sums to be paid  to the prevailing party on demand.

 

21.9           Time to Cure Certain Non-Monetary Defaults.  In the event of any default other than failure to pay a sum of money, for which notice has been given as provided herein, which because of its nature can be cured but not within the period of grace heretofore allowed, then such default shall be deemed remedied, if the correction thereof shall have been commenced within said grace period or periods and shall, when commenced, be diligently prosecuted to completion.

 

21.10           Landlord Default.  If Landlord is in default under any of its obligations and the default continues for 30 days after written notice from Tenant (subject to extension pursuant to Section 22.9), Tenant may pursue all remedies at law or in equity.  Except as expressly provided hereinbelow, Tenant may not offset any sum due or assertedly due from Landlord to Tenant against any sum due from Tenant to Landlord.

 

Notwithstanding anything in this Section 21.10 to the contrary, if such Landlord default is a result of Landlord’s failure to make repairs or provide essential services and Landlord has not begun within 30 days after the receipt by Landlord of written notice from Tenant of the alleged failure to perform and pursue a cure with reasonable diligence, then Tenant may, at its option, and after providing Landlord with five (5) days' prior written notice of its intent to do so, effect such cure and shall furnish Landlord with a statement of the cost of such cure upon substantial completion thereof; provided, however, that Tenant shall not effectuate any cure which will affect any structural component of the Building or effectuate a cure in such manner as to void applicable warranties or materially and adversely interfere with other tenants' use, utilities or quiet enjoyment of their premises in the Building.  With respect to Tenant’s cure relating to any mechanical component of the Building, Tenant’s notice to Landlord of its election to cure shall include the name of Tenant’s proposed contractor for such cure for Landlord’s reasonable approval, which approval shall not be unreasonably withheld, conditioned or delayed.

 

Landlord shall reimburse Tenant for the actual, reasonable costs of any repair or other cure performed by Tenant in accordance with this Section 21.10 (as documented by invoices) within 30 days of receipt of Tenant’s written demand.  If Landlord fails to pay Tenant within such 30-day period, Tenant shall be permitted to offset the amount due against its next payment(s) of Base Rent coming due; provided, however, that if Landlord disputes that such default exists or disputes the reasonableness of the amount to be paid, by written notice to Tenant prior to the expiration of the 30-day period, then Landlord shall have no obligation to pay such amount until Tenant has obtained a final non-appealable court judgment that such sum was due and payable to Tenant under the terms of this Section 21.10 and wrongfully withheld by Landlord. To the extent any portion thus reimbursed to Tenant by Landlord represents an amount that would have been included in the Operating Expenses of the Building if paid by Landlord to perform the obligation in question, Landlord shall be entitled to include in Operating Expenses such amount.

Tenant agrees that if Tenant obtains a judgment against Landlord arising out of Landlord's obligations under this Lease, such judgment may be satisfied only by execution and sale of Landlord's interest in the Premises leased hereby.  Tenant may not seek execution against other property of Landlord, nor pursue any judgment, execution or other remedy against the partners or other owners of Landlord or any of their property.  Immediately upon receipt of Landlord's written request, Tenant will release any property (other than the Premises leased hereby) from the lien of any judgment obtained by Tenant against Landlord arising out of Landlord's obligations under this Lease.

 

 

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                22.           LEGAL PROCEEDINGS AGAINST TENANT BY THIRD PARTIES; TENANT TO PAY LANDLORD'S FEES.  In the event of any proceeding at law or in equity wherein Landlord, without being in default as to its covenants under the terms hereof, shall be made a party to any litigation by reason of Tenant's interest in the Premises, Tenant shall be liable for and shall pay all costs and expenses incurred by Landlord, including reasonable attorneys' fees, expert witness fees and consultant's fees.

 

23.           INDEMNIFICATION BY TENANT AND BY LANDLORD.  Tenant shall indemnify and save harmless Landlord of and from liability for damages or claims against Landlord, including costs, attorneys' fees and expenses of Landlord in defending against the same, on account of injuries to (or death of) any person or property, if the injuries (or death)  are caused by Tenant, its agents, subcontractors, servants or employees, or if such injuries (or death) are the result of the violation by Tenant, its agents, subcontractors, servants, or employees, of laws, ordinances, other governmental regulations, or of the terms of this Lease.

 

Landlord shall indemnify and save harmless Tenant of and from liability for damages or claims against Tenant, including costs, attorneys' fees and expenses of Tenant in defending against the same, on account of injuries to (or death of) any person or property, if the injuries (or death) are caused by Landlord, its agents, or employees, or where such injuries (or death) are the result of the violation by Landlord, its agents, or employees, of laws, ordinances, other governmental regulations, or of the terms of this Lease.

 

Tenant acknowledges that Landlord provides recreation facilities for the use of employees of Tenant and other occupants within the property developed by Landlord, which property presently includes Long's Peak Industrial Park, First, Second and Third Filings, and portions of St. Vrain Centre, both in the City of Longmont and County of Boulder, Colorado, and will include such additional property in the immediate vicinity thereof as may be developed by Landlord.  The term "recreation facilities" includes, at present, a fitness trail with 34 exercise stations, volleyball courts, basketball courts, and a park, and will include such additional facilities as Landlord may provide.  Tenant releases Landlord from liability for damages or claims against Landlord on account of any injury to (or death of) an employee, agent or invitee of Tenant arising out of the use of the recreation facilities.  Tenant acknowledges that Landlord may cease to operate the recreation facility at any time for any reason without cause.

 

24.           ASSIGNMENT OR SUBLETTING.

 

24.1           Tenant shall not sublet any part of the Premises nor assign or otherwise transfer this Lease or any interest herein (sometimes referred to as "Transfer," and the subtenant or assignee may be referred to as "Transferee") without the prior written consent of Landlord in each instance first being obtained, which consent will not be unreasonably withheld or delayed provided that:  (1) Tenant complies with the provisions of Section 24.3; (2) Landlord declines to exercise its rights under Section 24.3; (3) the Transferee is engaged in a business and the portion of the Premises will be used for the Permitted Use in a manner which is in keeping with the then standards of the Building and does not conflict with any exclusive use rights granted to any other tenant of the Building; (4) the Transferee has reasonable financial worth in light of the responsibilities involved; (5) there is no event of default by Tenant at the time it makes its request; (6) the Transferee is not a governmental or quasi-governmental agency; and (7) the Transferee is not a tenant or currently negotiating a lease with Landlord in any building owned by Landlord in the metropolitan area of the Building.

 

24.2           A Transfer shall include a sale by Tenant of substantially all of its assets or stock if Tenant is a publicly traded corporation, a merger of Tenant with another corporation, the transfer of 49% or more of the stock in a corporate tenant whose stock is not publicly traded, or transfer of 49% or more of the beneficial ownership interests in a partnership or limited liability company tenant.  Notwithstanding anything to the contrary in this Section 24, Tenant may, without obtaining Landlord's consent, complete a Transfer to a Permitted Transferee subject to the following conditions: (i) the proposed use of the Premises shall be the same as Tenant's use and Landlord shall not be required, as a result of Applicable Laws, to make any Alterations or renovations to the Building or common areas or provide special services as a result of such Transfer; and (ii) not less than 30 days following the effective date of the Transfer, Tenant provides Landlord with documentation evidencing such transaction and such other evidence as Landlord may reasonably require to establish that such transaction complies with the provisions of this Section.  "Permitted Transferee" means: (i) any subsidiary or affiliate in which Tenant owns a substantial interest; (ii) any parent of Tenant; (iii) any subsidiary or affiliate in which Tenant's parent owns a substantial interest; or (iv) any successor entity into which Tenant may be merged or consolidated or any entity which purchases all or substantially all of the assets or stock of Tenant provided that the resulting corporation has a net worth at least equal to Tenant's net worth as of the date of this Lease.

 

24.3           Except for a Transfer to a Permitted Transferee, Tenant must notify Landlord at least 60 days prior to the desired date of a proposed Transfer ("Transfer Request").  The Transfer Request shall describe the terms and conditions of the proposed Transfer.  Within 30 days following receipt of a Transfer Request, Landlord shall notify Tenant ("Landlord's Notice") of its election of the following as applicable:

 

(1)           If a Transfer Request involves 25% or more of the Premises, Landlord may recapture such space by terminating Tenant's Lease obligations as to the applicable portion of the Premises; provided, however, if Landlord makes such election, Tenant may, within 15 days after Landlord's Notice, withdraw a Transfer Request.  If such termination occurs, it shall be effective on the date designated in Landlord's Notice, which date shall not be more than 30 days following such notice; or

 

 

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(2)           Landlord may waive Landlord's rights under item (1) above, in which case Tenant shall be free to make a Transfer substantially identical to that described in the Transfer Request to any third party, subject to Landlord's consent as provided in Section 24.1.  If Tenant does not complete the Transfer within 60 days following Landlord's Notice or materially modifies terms from those in the Transfer Request, then, prior to a Transfer to a third party, Tenant must resubmit a modified Transfer Request to Landlord and repeat the process in accordance with the provisions hereof.

 

24.4           All documents utilized by Tenant to evidence a Transfer are subject to approval by Landlord.  Tenant shall pay Landlord's expenses, including reasonable attorneys' fees, of determining whether to consent and in reviewing and approving the documents.  Tenant shall provide Landlord with such information as Landlord reasonably requests regarding a proposed Transferee, including financial information.

 

24.5           Following any Transfer in accordance with this Section 24, Landlord may, after any default by Tenant, collect rent from the Transferee or occupant and apply the net amount collected to the Rent, but no such collection will be deemed an acceptance of the Transferee or occupant as Tenant or release Tenant from its obligations.   Consent to a Transfer shall not relieve Tenant from obtaining Landlord's consent to any other Transfer.  Notwithstanding a Transfer, even if consented to by Landlord, Tenant will not be released and continues to be primarily liable for its obligations.  If Tenant collects any rent or other amounts from a Transferee in excess of the Rent for any monthly period, Tenant shall pay Landlord 50% of such monthly excess, as and when received, after deduction of Tenant's reasonable transaction costs incurred for such Transfer.

 

24.6           If a trustee or debtor in possession in bankruptcy is entitled to assume control over Tenant's rights under this Lease and assigns such rights to any third party notwithstanding the provisions hereof, the rent to be paid by such party shall be increased to the current Base Rent (if greater than that being paid for the Premises) which Landlord charges for comparable space in the Building as of the date of such third party's occupancy.  If Landlord is entitled under the Bankruptcy Code to "Adequate Assurance" of future performance of this Lease, the parties agree that such term includes the following:

 

(1)           Any assignee must demonstrate to Landlord's reasonable satisfaction a net worth (as defined in accordance with GAAP consistently applied) at least as large as the net worth of Tenant on the Commencement Date increased by 7%, compounded annually, for each year thereafter through the date of the proposed assignment.  Tenant's financial condition was a material inducement to Landlord in executing this Lease.

 

(2)           The assignee must assume and agree to be bound by the provisions of this Lease.

 

25.           LANDLORD'S WARRANTY OF TITLE; QUIET ENJOYMENT.  Subject to the exercise of Landlord's remedies following the occurrence of an event of default, Landlord covenants it has good right to lease the Premises in the manner described herein and that Tenant shall peaceably and quietly have, hold, occupy, and enjoy the Premises during the Term, except as provided in Section 28 concerning subordination to mortgage lenders.

 

26.           ADDITIONAL DEVELOPMENT OF PROPERTY - RIGHTS OF LANDLORD.  Landlord reserves, during the Term upon reasonable prior notice to Tenant, the right to go upon and deal with the Premises or part thereof for the purpose of implementing a common development plan for the project of which the Premises are a part, and to install non-exclusive sidewalks, paths, roadways and other street improvements for use by vehicles, pedestrians, and for parking; to undertake such drainage programs to handle underground and surface drainage water and to make any other changes and/or improvements as Landlord shall deem advisable in the exercise of its sole discretion; provided, however, any such action by Landlord shall not unreasonably interfere with the rights of Tenant hereunder.

 

27.           GOVERNMENTAL ACQUISITION OF THE PREMISES.  The parties agree that Landlord shall have sole and exclusive authority to negotiate and settle all matters pertaining to the acquisition of all or part of the Premises by a governmental agency by eminent domain or threat thereof (condemnation), and to convey all or any part of the Premises under threat of condemnation, and this Lease shall terminate as to any area so conveyed.  It is agreed that any compensation for land and/or buildings to be taken whether resulting from negotiation and agreement or condemnation proceedings, shall be the exclusive property of Landlord, and that there shall be no sharing whatsoever between Landlord and Tenant of any such sum. Such taking of property shall not be considered as a breach of this Lease by Landlord, nor give rise to any claims in Tenant for damages or compensation from Landlord.  Tenant may separately claim and recover from the condemning authority the value of any personal property owned by Tenant which is taken, and any relocation expenses owed to Tenant by the condemning authority, provided that any such recovery shall not reduce Landlord's recovery.  If any portion of the Premises is so taken, then Landlord, at its election, may replace the square footage taken with space in the Building, or may provide building area essentially the same as the Premises in a reasonably adjacent location, within 10 days after the conveyance or taking, under the same terms and conditions as contained in this Lease, and this Lease shall be in full force and effect as to the new Premises.  If Landlord does not so provide reasonable space, then Tenant shall have two options.  First, Tenant may terminate this Lease by written notice delivered to Landlord within 60 days after the conveyance or taking.  Second, Tenant may retain the remaining portion of the Premises, under all the terms and conditions hereof, but the  Base Rent shall be reduced in proportion to the number of square feet of building floor space taken compared to the number of square feet of building floor space in the Premises prior to the taking.

 

 

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28.           SUBORDINATION OF THE LEASEHOLD TO MORTGAGES.  This Lease shall be subject and subordinate in priority at all times to the lien of any existing and/or hereafter executed mortgages and trust deeds encumbering the Premises.  Although no instrument or act on the part of Tenant shall be necessary to effectuate such subordination, Tenant will execute and deliver such further reasonable instruments subordinating this Lease to the lien of any such mortgages or trust deeds as may be desired by the mortgagee or holder of such trust deeds.  Tenant hereby appoints Landlord as his attorney in fact, irrevocably, to execute and deliver any such instrument for Tenant. Tenant further agrees that promptly following the Commencement Date and Landlord's request for the same, Landlord and Tenant will execute an estoppel certificate in the form attached as Exhibit D setting forth the Commencement Date, the Expiration Date and such other matters described therein or requested by Landlord, and thereafter, at any time and from time to time upon not less than 10 days prior written request by Landlord, to execute, acknowledge, and deliver to Landlord an estoppel affidavit in form acceptable to Landlord and the holder of any existing or contemplated mortgage or deed of trust encumbering the Premises.  Tenant's failure to deliver such statement within such time shall be an event of default by Tenant and shall be conclusive upon Tenant (1) that this Lease is in full force and effect, without modification except as may be represented by Landlord, (2) that there are no uncured defaults in Landlord's performance, and (3) that not more than one month's Rent has been paid in advance.  Tenant further agrees, promptly following the date on which this Lease is fully executed and delivered and Landlord's request for the same, to execute a subordination, attornment and non-disturbance agreement from the present mortgagee of the Building substantially in the form attached as Exhibit E, but subject to the reasonable modifications required by such mortgagee.  Further, upon request, Tenant shall supply to Landlord a resolution certifying that the party signing this statement on behalf of Tenant is properly authorized to do so.  Tenant agrees to provide Landlord within 10 business days of Landlord's request, Tenant's most recently completed financial statements and such other financial information as reasonably requested by Landlord in order to verify Tenant's financial condition to satisfy requirements of Landlord's existing or contemplated lender or mortgagee.

 

Tenant agrees that if there is a foreclosure of any mortgage or deed of trust encumbering the Premises and pursuant to such foreclosure, the Public Trustee or other appropriate officer executes and delivers a deed conveying the Premises to the mortgagee or its designee, or in the event Landlord conveys the Premises to the mortgagee or its designee in lieu of foreclosure, Tenant will attorn to such grantee of the Premises (the "Purchaser"), rather than to Landlord, to perform all of Tenant's obligations under this Lease, and Tenant shall have no right to terminate this Lease by reason of the foreclosure or deed given in lieu thereof. Upon any Purchaser succeeding to the interest of Landlord under this Lease, such Purchaser shall have the same remedies, by entry, action or otherwise for the non-performance of any agreement contained in the Lease, for the recovery of Rent or for any other default or event of default hereunder that Landlord had or would have had if any such Purchaser had not succeeded to the interest of Landlord. Any such Purchaser shall not be (a) liable for any act or omission of any prior Landlord (including the undersigned Landlord) unless and only to the extent such act or omission continues from and after the date such Purchaser acquires title to and possession of the Property; or (b) subject to any offsets or defenses which Tenant might have against any prior Landlord (including the undersigned Landlord); or (c) bound by any Rent which Tenant might have paid for more than the current month to any prior Landlord (including the undersigned Landlord); or (d) bound by any amendment, modification or termination of this Lease made without the written consent of Purchaser; or (e) liable for any security deposit not actually received by the applicable such Purchaser.  Notwithstanding anything to the contrary contained in this Lease, each such Purchaser is an intended third party beneficiary of this Section with the right to enforce same.

 

29.           RECORDING - CONFIDENTIALITY.  This Lease shall not be recorded; provided, however, Landlord acknowledges Tenant may be required to file this Lease or information pertaining to this Lease with a governmental regulatory body such as the Securities and Exchange Committee. All communications and information obtained by either party during the negotiations of this Lease, the actual terms and conditions of this Lease, including without limitation all information obtained by Landlord while in the Premises (but specifically excluding information relating to the physical premises owned by Landlord which relates to the operation of the Building and the normal performance of Landlord and Landlord's agents of the management, maintenance, repair and renovation duties with respect to the Building) shall be deemed confidential and proprietary (collectively the "Protected Information").  Without the prior written consent of an authorized representative of either party, Landlord and Tenant or its agents, shall not divulge to any third party any Protected Information, except as required by law or valid order of a court or tribunal or by a governmental regulatory body such as the Securities and Exchange Commission.  Prior to disclosure of any Protected Information, whether as required by law or court order or otherwise, either party shall inform the other party, in writing, of the nature and reasons for such disclosure.

 

30.           NO WAIVER OF BREACH; ACCEPTANCE OF PARTIAL PAYMENTS OF RENT.  No assent, or waiver expressed or implied, or failure to enforce, as to any breach of any one or more of the covenants or agreements herein shall be deemed or taken to be a waiver of any succeeding or additional breach.

 

Payment by Tenant or receipt by Landlord of an amount less than the Rent or other payment provided for herein shall not be deemed to be other than a payment on account of the earliest Rent then due, nor shall any endorsement or statement on any check or any letter accompanying any check or payment of Rent be deemed an accord and satisfaction, and Landlord may accept such check or other payment without prejudice to Landlord's right to recover the balance of all Rent then due, and/or to pursue any or all other remedies provided for in this Lease, in law, and/or in equity including, but not limited to, eviction of Tenant.  Specifically, but not as a limitation, acceptance of a partial payment of Rent shall not be a waiver of any default by Tenant.

 

31.           CONTROLLING LAW; AND PARTIAL INVALIDITY; MODIFICATIONS OR EXTENSIONS.  No modification of this Lease shall be binding unless endorsed hereon or otherwise written and signed by the respective parties.  The Lease, and all terms hereunder shall be governed by the laws of the State of Colorado, exclusive of its conflicts of laws rules.  Should any term or provision of this Lease be invalid or unenforceable, the remainder of this Lease shall not be affected thereby each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law. No modification of this Lease shall be binding unless endorsed hereon or otherwise written and signed by the respective parties.

 

32.           INUREMENTS.  The covenants and agreements herein contained shall bind and inure to the benefit of Landlord and Tenant and their respective successors.

 

 

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33.           TIME.  Time is of the essence in this Lease in each and all of its provisions in which performance is a factor.

 

34.           ADDRESSES; EMPLOYER IDENTIFICATION NUMBERS; METHOD OF GIVING NOTICE.  All Rent and other monetary obligations due under this Lease shall be mailed to the Rent Payment Address set forth in Section 1.11 of this Lease. All notices or other communications required or desired to be given to Landlord must be in writing and shall be deemed received when delivered personally to any officer, partner, or member of Landlord (depending upon the nature of Landlord), or when deposited in the United States mail, postage prepaid, certified or registered, return receipt requested, addressed to Landlord's Notice Address set forth in Section 1.10 of this Lease, or when deposited with a nationally-recognized overnight courier service with verification of delivery, addressed to Landlord's Notice Address set forth in Section 1 of this Lease.  All notices or communications required or desired to be given to Tenant shall be in writing and deemed duly served when delivered personally to any officer, employee, partner, or member of Tenant (depending upon the nature of Tenant), individually if a sole proprietorship, or manager of Tenant whose office is in the Building, or when deposited in the United States mail, postage prepaid, certified or registered, return receipt requested, addressed to Tenant's Notice Address set forth in Section 1.13, or when deposited with a nationally-recognized overnight courier service with verification of delivery, addressed to Tenant's Notice Address set forth in Section 1.13.

 

Signatures to this Lease transmitted by facsimile or email shall be binding as original signatures so long as the originally signed signature page is received by a nationally-recognized overnight courier service the next day.  The foregoing does not prohibit notice from being given as provided in the rules of civil procedure, as amended from time to time, for the state in which the Building is located.

 

Either party may change its notice address, street or mailing address, or fax number, for purposes hereof, by written notice delivered to the other.

 

35.           DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS. Tenant, by execution of this Lease and occupancy of the Premises, agrees to comply with the Master Declaration of Covenants, Conditions and Restrictions applicable to the Premises (the "Declarations").

 

36.           ADDITIONAL PROVISIONS.

 

36. 1           Brokers.  Tenant and Landlord each represents to the other that it has not employed any broker with respect to this Lease and has no knowledge of any broker's involvement in this transaction except those listed in Sections 1.15 and 1.16 (collectively, the "Brokers").  Tenant and Landlord each shall indemnify and hold the other harmless of and from any and all loss, costs, damages or expenses (including all reasonable attorneys' fees and disbursements) by reason of any claim of or liability to any broker or person claiming through Tenant or Landlord, as applicable, and arising out of or in connection with the negotiation, execution and delivery of this Lease, other than to the Brokers.  Additionally, Tenant and Landlord each acknowledge and agree that the other party shall have no obligation for payment of any brokerage fee or similar compensation to any person with whom Tenant or Landlord, as applicable, has dealt or may in the future deal with respect to leasing of any additional or expansion space in the Building or renewals or extensions of this Lease, other than to the Brokers.  If any claim shall be made against Tenant or Landlord by any broker, other than the Brokers, who shall claim to have negotiated this Lease on behalf of Tenant or Landlord or to have introduced Tenant to the Building or to Landlord, Tenant and Landlord, as applicable, shall be liable for payment of all attorneys' fees, costs and expenses incurred by Landlord in defending against the same.  Tenant acknowledges that Landlord is not liable for any representations by the Brokers regarding the Premises, Building, or this Lease.

 

36.2           Parking.  Landlord will make available for Tenant's use the number of parking spaces as set forth in Section 1.17.  All parking spaces shall be in and out, non-assigned parking spaces in the surface parking area designated by Landlord for use by tenants of the Building at no additional charge to Tenant.  Notwithstanding the above, the right granted to Tenant to use such parking spaces is non-exclusive and a license only and Landlord's inability to make such spaces available at any time for reasons beyond Landlord's reasonable control is not a material breach by Landlord of its obligations hereunder, provided, Landlord shall use commercially reasonable efforts to promptly provide Tenant with reasonably comparable substitute parking near the Building at no additional cost to Tenant.  Tenant has no rights to use any parking areas except as designated by Landlord for the Building.  All vehicles parked in the parking area and the personal property therein shall be at the sole risk of Tenant, Tenant's agents and the users of such spaces and Landlord shall have no liability for loss or damage thereto for whatever cause.

 

36.3.           Substitute Premises.  Intentionally omitted.

 

36.4           Transfer by Landlord.  The term "Landlord" insofar as obligations of Landlord are concerned, only the owner of the Building at the time in question and, if any transfer of the title occurs, Landlord herein named (and in the case of any subsequent transfers, the then grantor) is automatically released from and after the date of such transfer of all liability as respects performance of any obligations of Landlord thereafter to be performed.  Any funds in which Tenant has an interest and which are in Landlord's possession at the time of transfer will be turned over to the grantee and any amount then due Tenant under this Lease will be paid to Tenant.

 

36.5           No Merger.  The termination or mutual cancellation of this Lease will not work a merger, and such termination or cancellation will at the option of Landlord either terminate all subleases or operate as an automatic assignment to Landlord of such subleases.

 

 

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36.6           Common Area Use.  Landlord may use any of the common areas of the Building for the purposes of completing or making repairs or alterations to any portion of the Building or land on which the Building is located.

 

36.7           Construction.  The parties waive any rule of construction that ambiguities are to be resolved against the drafting party.  Any words following the words "include," "including," "such as," "for example," or similar words or phrases shall be illustrative only and are not intended to be exclusive, whether or not language of non-limitation is used.

 

36.8           Section And Paragraph Headings; Grammar.  All section or paragraph headings are made for the purposes of ease of location of terms and shall not affect or vary the terms hereof.  Throughout this Lease, wherever the words, "Landlord" or "Tenant" are used they shall include and imply to the singular, plural, persons both male and female, and all sorts of entities and in reading said Lease, the necessary grammatical changes required to make the provisions hereof mean and apply as aforesaid shall be made in the same manner as though originally included in said Lease.

 

36.9           Joint and Several.  If there is more than one party which is Tenant, the obligations imposed upon Tenant are joint and several.

 

36.10           Acceptance of Keys, Rent or Surrender.  No act of Landlord or its representatives during the Term, including any agreement to accept a surrender of the Premises or amend this Lease, is binding on Landlord unless such act is by a partner, member or officer of Landlord, as the case may be, or other party designated in writing by Landlord as authorized to act.  The delivery of keys to Landlord or its representatives will not operate as a termination of this Lease or a surrender of the Premises.

 

36.11           Name and Size.  Landlord may, as it relates to the Building and the surrounding project of which the Building is a part, change the name, increase the size by adding additional real property, construct other buildings or improvements, change the location and/or character, or make alterations or additions. If the size of the Building is increased, Landlord and Tenant shall execute an amendment which incorporates any necessary modifications to Tenant's Share.  Tenant may not use the name of the Building or the project of which the Building is a part for any purpose other than as part of its business address.

 

36.12           Diminution of View.  Tenant agrees that no diminution of light, air, or view from the Building entitles Tenant to any reduction of Rent under this Lease, results in any liability of Landlord, or in any way affects Tenant's obligations.

 

36.13           Lender's Requirements.  Tenant will make such reasonable modifications to this Lease as may hereafter be required to conform to any reasonable requirements of any holder of any existing mortgage or deed of trust encumbering the Premises, so long as such modifications do not unreasonably increase Tenant's obligations or materially alter its rights hereunder.

 

36.14           Effectiveness.  Submission of this instrument for examination or signature by Tenant does not constitute an option to lease and this Lease is not effective unless and until this Lease is executed and delivered by both Landlord and Tenant.

 

36.15           Survival.  This Lease, notwithstanding expiration or termination, continues in effect as to any provisions requiring observance or performance subsequent to termination or expiration.

 

36.16           Authority for Action. Unless otherwise provided, Landlord may act through Landlord's Building manager and/or property manager or other designated representatives from time to time.

 

36.17.           Counterparts.  This Lease may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Any one or more counterpart signature pages may be removed from one counterpart of this Lease and annexed to another counterpart of this Lease to form a completely executed original instrument without impairing the legal effect of the signature thereon.

 

36.18           Patriot Act Compliance.  Tenant represents and warrants that:

 

36.18.1                      No action, proceeding, investigation, charge, claim, report or notice (collectively, "Action") has been commenced, threatened or to its knowledge filed against Tenant (which, for purposes of this Section, includes its affiliates) alleging any violation of any laws relating to terrorism or money laundering, including Executive Order No. 13224 on Terrorist Financing (effective September 24, 2001) (the "Executive Order") and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) (the "Patriot Act").

 

36.18.2                      To Tenant's knowledge, Tenant has not taken or omitted to take any action which could reasonably be expected to result in any Action against Tenant alleging any violation of the Executive Order or the Patriot Act.

 

36.18.3                      Tenant is not a Prohibited Person.  For the purposes hereof, "Prohibited Person" shall mean: (i) a person (which for purposes of this Section includes any entity) that is listed in the Annex to, or is otherwise subject to the provisions of the Executive Order and relating to blocking property and prohibiting transactions with persons who commit, threaten to commit, or support terrorism; (ii) a person owned or controlled by, or acting for or on behalf of, any person that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a person with whom Landlord is prohibited from dealing or otherwise engaging in any transaction by any terrorism or money laundering law, including the Executive Order and the Patriot Act; (iv) a person who commits, threatens, or conspires to commit or supports "terrorism" as defined in the Executive Order; (v) a person that is named as a "specially designated national and blocked person" on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov/ofac/t11sdn.pdf, or at any replacement website or other replacement official publication of such list; and (vi) a person who is affiliated with a person listed above.

 

36.18.4                      Tenant is not violating and will not violate, any of the prohibitions set forth in any terrorism or money laundering law, including the Executive Order and Patriot Act.

[Remainder of Page Intentionally Left Blank – Signatures Follow]

 

  

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IN WITNESS WHEREOF, the Parties have executed this Lease as of the date first written above.

 

	
LANDLORD:

	
LONGMONT DIAGONAL INVESTMENTS LLC, a Delaware limited liability company

 

	
  

	
By      /s/ Conrad Suszynski

                      Authorized Signatory

 

 

TENANT:                                                                CHROMADEX ANALYTICS, INC., a Nevada corporation

                                                                                                            By      /s/ThomasVarvaro             

                                                                                                            Title  CFO

 

  

-23-

  

ADDENDUM

 

THIS ADDENDUM ("Addendum") is to that certain lease (the "Lease") by and between LONGMONT DIAGONAL INVESTMENTS LLC, a Delaware limited liability company ("Landlord"), and CHROMADEX ANALYTICS, INC., a Nevada corporation ("Tenant"), with respect to approximately 10,052 rentable square feet of space (the "Premises") in the Building.  Terms not otherwise defined in this Addendum shall have the meanings set forth in the Lease.  In the event of any conflict between the terms and provisions of the Lease and the terms and provisions of this Addendum, the terms and provisions of this Addendum shall control.

 

1.           OPTION TO EXTEND.  Landlord grants Tenant an option (the "Option") to extend the Term of the Lease for 1 additional term of 60 months ("Option Term").  The Option applies only to the Premises and is on the following conditions:

A.           Notice of Tenant's interest in exercising the Option must be given to Landlord no earlier than 12 months and no later than 9 months prior to the Expiration Date ("Tenant's Notice").  Not later than 30 days after receiving Tenant's Notice, Landlord will notify Tenant of the Base Rent applicable during the Option Term in accordance with subsection E below ("Landlord's Renewal Notice").

B.           Tenant shall have 15 days after receipt of Landlord's Renewal Notice to exercise the Option by delivering notice of exercise to Landlord.  If Tenant timely exercises the Option, the Term will be deemed extended on the terms of this Section and the parties will execute an amendment evidencing the extension.

C.           Unless Landlord is timely notified by Tenant in accordance with subsections A and B above, it will be conclusively deemed that Tenant has not exercised the Option and the Lease will expire in accordance with its terms on the Expiration Date.

D.           Tenant's rights pursuant to this Section are personal to Tenant and may not be assigned.  Tenant's right to exercise the Option is conditioned on: (i) no uncured event of default existing at the time of exercise or at the time of commencement of the Option Term; (ii) Tenant not having subleased or vacated any part of the Premises or assigned its interest under the Lease, as of the commencement of the Option Term; and (iii) Tenant having the financial ability to perform its obligations under the Option Term.

E.           The Option granted hereunder will be upon the terms of the Lease, except that the Base Rent during the Option Term will be the rate at which Landlord would lease space in the Building comparable to the Premises to third parties if such space were available for leasing for a lease term paralleling the Option Term.

F.           After exercise of the Option Term, or failure to exercise the Option for the Option Term, Tenant shall have no further rights to extend the Term.

2.           RIGHT OF FIRST REFUSAL.  Subject to the Prior Rights (as hereinafter defined) of other tenants in the Building or other buildings owned by Landlord, Tenant shall have an ongoing Right of First Refusal ("ROFR") to lease any vacant rentable space in the Building that is contiguous to the Premises (the "ROFR Space"), subject to and in accordance with the terms and conditions of this Addendum.

 

(A)           If Landlord desires to propose a bona fide third party offer to lease the ROFR Space or if Landlord receives a bona fide third party offer to lease any of the ROFR Space (or any portion thereof) that Landlord desires to accept or Landlord has received a bona fide third party offer and desires to make a counter-offer to such third party, before entering into a binding agreement with such third party, Landlord shall give notice to Tenant ("3rd Party Offer Notice") of the material terms of such offer or counter-offer (not including the identity of such third party) and the terms applicable to leasing such space to Tenant as determined in accordance with the following provisions. Tenant has 5 business days after receiving the 3rd Party Offer Notice within which to notify Landlord whether it elects to lease the ROFR Space, which election must be for all space included in the 3rd Party Offer Notice. Landlord's obligation to offer ROFR Space to Tenant is subordinate to all rights of extension, expansion, or first offer or refusal as to the ROFR Space in favor of other tenants in the Building or other buildings owned by Landlord in place as of the date of this Lease and is subordinate to the option of Landlord to extend the existing lease of any current tenant of any ROFR Space, whether or not such tenant's lease expressly provides for such extension option ("Prior Rights").

(B)           If Tenant does not timely notify Landlord, it will be conclusively presumed that Tenant has waived its ROFR as to the 3rd Party Offer Notice, Landlord shall be free to lease the ROFR Space to anyone whom it desires on the terms of the 3rd Party Offer Notice and Tenant and Tenant will have no further rights to the ROFR Space once leased unless and until such lease ends and such space again is subject to a 3rd Party Offer Notice.

 

(C)           The ROFR Space will be added to the Premises for a term that is equal to the greater of (i) the term included in the 3rd Party Offer (in which case the term of the ROFR Space shall not be coterminous with the Term of the Lease) or (ii) the then remaining Term of the Lease, and the financial terms for the ROFR Space shall be based upon the provisions and the rental rate of the 3rd Party Offer. Upon exercise of the ROFR, the ROFR Space will be deemed added to the Premises and Tenant will accept such space in its "as is" condition without any remodeling or fix-up work performed by Landlord, except as may be otherwise provided in Landlord's 3rd Party Offer Notice. All costs of preparing any ROFR Space for Tenant's occupancy, including costs of compliance with applicable laws will be paid by Tenant.  After exercise of the ROFR, the parties will execute an amendment to the Lease evidencing the addition of such space.

 

(D)           Tenant's right to exercise the ROFR is conditioned on: (i) no event of default by Tenant existing at the time it exercises the ROFR or on the date that Tenant's occupancy of the ROFR Space is scheduled to commence; (ii) there having been no more than one event of default by Tenant during the Initial Term or the Renewal Term thereof; and (iii) Tenant not having vacated or subleased any portion of the Premises or assigned its interest in the Lease (except to a Permitted Transferee). This ROFR is personal to Tenant and may not be assigned except to a Permitted Transferee. In the event of an assignment of the Lease (except to a Permitted Transferee) or a subletting or vacation of any portion of the Premises, or if there has been more than one event of default by Tenant during the Initial Term or the Renewal Term hereof, the ROFR shall be deemed null and void and of no further force or effect.

 

(E)           All notifications contemplated by this Paragraph, whether from Tenant to Landlord, or from Landlord to Tenant, must be in writing and given in the manner provided in this Lease.

 

3.           RESTORATION.  On or before expiration of the Lease or within 15 days after the earlier termination of the Lease, Tenant shall remove those alterations and improvements requested by Landlord to be removed and shall repair and restore the Premises to Landlord's satisfaction (the "Restoration Obligation").  Landlord shall provide Tenant with a description of the Restoration Obligation upon review and approval of the Construction Drawings (as defined in the Work Letter).  If Tenant fails to perform the Restoration Obligation as herein required, Landlord may perform the Restoration Obligation at Tenant's sole cost and expense and may apply the Deposit to the costs and expenses incurred by Landlord in performing the Restoration Obligation.  Tenant shall be responsible for any costs and expenses incurred by Landlord to perform the Restoration Obligation in excess of the Deposit plus an administrative fee of 20%.  Landlord shall have no obligation to return any portion of the Deposit to Tenant in the event Tenant has failed to perform the Restoration Obligation as herein required.

 

IN WITNESS WHEREOF, the parties hereto execute this Addendum.

 

	
LANDLORD:

	
LONGMONT DIAGONAL INVESTMENTS LLC, a Delaware limited liability company

 

 

	
  

	
By    /s/ Conrad Suszynski

                    Authorized Signatory

 

 

TENANT:                                                                CHROMADEX ANALYTICS, INC., a Nevada corporation

 

            By      /s/Thomas Varvaro

                                                                                                    Title   CFO

 

  

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EXHIBIT A-1

 

BUILDING

 

 

A portion of the northwest quarter of Section 17, Township 2 North, Range 69 West of the 6th P.M.,

City of Longmont,

Boulder County, Colorado

  

A-1

  

EXHIBIT A-2

 

PREMISES

 

  

  

  

A-2

  

EXHIBIT B

 

WORK LETTER FOR TENANT IMPROVEMENTS

 

CHROMADEX ANALYTICS, INC.

	
RE:

	
Lease (the "Lease") by and between LONGMONT DIAGONAL INVESTMENTS LLC, a Delaware limited liability company, as Landlord, and CHROMADEX ANALYTICS, INC., a Nevada corporation, as Tenant, pertaining to approximately 10,052 rentable square feet of space in Suite F (the "Premises") of the Building

Concurrently herewith, Tenant and Landlord have executed the referenced Lease, which provisions of said Lease are herein incorporated by reference as if fully set forth herein. Initially capitalized terms not otherwise defined have the same meaning as in the Lease. In consideration of the execution of the Lease, Landlord has agreed to complete certain improvements (the "Tenant Improvements") in the Premises and Tenant and Landlord agree as follows:

      1.       Landlord and Tenant have mutually approved the space plan dated January 22, 2016 ("Space Plan"), which was prepared by Don Hostetter ("Landlord's architect"), a copy of which is attached to and incorporated into this Work Letter as Schedule A.

2.      Landlord's Architect and engineers selected by Landlord will prepare draft architectural, mechanical and electrical construction drawings for the Premises to the extent necessary that are consistent with the Space Plan.  Landlord's Architect and the engineers shall use reasonable efforts to complete and deliver such draft construction drawings to Landlord and Tenant not later than 3 weeks following the date of the Lease.  Not later than 5:00 p.m., Mountain time, on the 5th business day following Tenant's receipt of the draft drawings, Tenant shall either (i) give notice that Tenant approves such drawings, or (ii) notify Landlord and Landlord's Architect of changes requested by Tenant.  If Tenant fails to notify Landlord of requested changes by such deadline, Tenant shall be deemed to have approved the drawings.  Tenant shall have the right to request changes in the drawings based on either (a) inconsistency between the Space Plan (an "Inconsistency"), or (b) changes requested by Tenant, in Tenant's discretion, subject to Landlord's approval, not to be unreasonably withheld, conditioned or delayed.  If changes are requested by Tenant in accordance with the foregoing or by Landlord, Landlord's Architect shall revise the draft drawings and deliver such revised drawings again for approval, under the foregoing provisions; delay caused by changes shall be subject to the provisions of Paragraph 8 below. Upon approval or deemed approval, the drawings shall be deemed the "Construction Drawings".

      3.      Neither Landlord's use or approval of any plans (including the Space Plan or any other preliminary space plans) submitted by Tenant for completion of the Tenant Improvements nor the fact that such plans have been prepared by architects or engineers on behalf of Landlord creates a responsibility or liability on the part of Landlord for their completeness, design sufficiency, or compliance with any laws, rules and regulations of governmental agencies or authorities having jurisdiction over the Premises now or hereafter in effect.

      4.      Landlord shall obtain bids from general contractors for the Tenant Improvements from at least three (3) different general contractors, including two (2) general contractors suggested by Tenant and approved by Landlord.  The general contract shall be awarded to one of the proposed general contractors based on competitive bid and mutual approval by Landlord and Tenant.  The general contractor selected shall be referred to herein as the "Approved Contractor" and shall act as Landlord's general contractor to construct the Tenant Improvements. Approved Contractor shall diligently perform all Tenant Improvements in the Premises substantially in accordance with the Construction Documents.  The Approved Contractor will be responsible for submitting the Construction Documents to the appropriate governmental authorities and obtaining the applicable building permits necessary to allow Approved Contractor to commence and fully complete the construction of the Tenant Improvements.  Any costs incurred by Approved Contractor with seeking and obtaining any such building permits or other occupancy certificates shall be deducted from the Finish Allowance described below.  Neither Tenant nor Tenant's construction representative shall be responsible for obtaining any such building permits or occupancy certificates for the Premises.  Landlord shall deliver the Premises to Tenant Ready for Occupancy.  "Ready for Occupancy" means either (a) Landlord has received a certificate of completion (or all approvals required for the issuance thereof) for the Premises from the applicable governmental authorities, or (b) if a certificate of completion is not required as a condition to Tenant's lawful occupancy of the Premises, the Tenant Improvements is substantially completed (subject to punch list items), as confirmed in writing by Approved Contractor; provided that if either (a) or (b) is delayed or prevented because of work Tenant is responsible for performing in the Premises ("Additional Tenant Work"), then "Ready for Occupancy" means the date that all of the Tenant Improvements which is necessary for either (a) or (b) to occur has been performed (subject to punch list items) and Landlord has made the Premises available to Tenant for the performance of any Additional Tenant Work.

      6.      Landlord shall notify Tenant when the Premises are Ready for Occupancy.  If Tenant takes possession of all or any part of the Premises prior to the Commencement Date or the date the Premises are Ready for Occupancy for the purpose of conducting its usual business therein, all terms and provisions of the Lease shall apply as of the date Tenant commences its business, including the obligation of payment of all Rent and other amounts owing hereunder. Following receipt of such notice, the representatives of Landlord and Tenant shall jointly inspect the Premises with Landlord's architect or contractor and develop a punchlist of items of the Tenant Improvements that have not been completed, distinguishing between those items which must be completed prior to the Premises being deemed Ready for Occupancy for Tenant to conduct its business and those items that can be completed by Approved Contractor after Tenant takes occupancy for the purpose of conducting its business; in the event of a dispute, Approved Contractor shall resolve such dispute.  No items that are incomplete due to Tenant Delay shall be included on the punchlist.  Taking possession of the Premises by Tenant shall be conclusive evidence as against Tenant that the Premises were in the condition agreed upon between Landlord and Tenant and acknowledgment of satisfactory completion of the Tenant Improvements.  except for the punchlist items and except for latent defects of which Tenant gives notice to Landlord within 11 months following the date the Premises are deemed Ready for Occupancy.  Landlord shall complete the punchlist items with reasonable diligence and shall remedy latent defects of which Tenant gives notice to Landlord in accordance with the foregoing provision.

      7.      Landlord shall pay the cost of all Tenant Improvements (including the cost of review and preparation of any space plans or construction drawings), all labor, materials, permits, fees, and contractors and subcontractors' charges up to a total maximum of $301,560.00 (such amount, the "Finish Allowance").  To the extent required by Landlord's mortgagee or other beneficiary under a deed of trust securing the Property, Landlord shall cause Approved Contractor to provide payment and performance bonds for any or all Tenant Improvements, and such bonds to be provided at Tenant's cost and expense (but subject to reimbursement from the Finish Allowance) and such bonds will be requested and provided prior to commencement of Tenant Improvements. Except as otherwise provided below, the Finish Allowance is to be expended solely for the benefit of Landlord; that is, Finish Allowance will be expended only to pay for design, engineering, installation, and construction of the Tenant Improvements which under the Lease becomes the property of Landlord upon installation and not for movable furniture, equipment, cabling, and trade fixtures not physically attached to the Premises.  All costs of the Tenant Improvements in excess of the Finish Allowance shall be at Tenant's expense (collectively, "Tenant's Contribution"); provided, however, upon notice to Landlord given prior to the commencement of construction of the Tenant Improvements, Tenant shall have the right to increase the Finish Allowance for allowed expenses by a maximum additional sum of $50,260.00 (the "Additional Allowance").  The Additional Allowance shall be considered part of the Finish Allowance for all purposes of this Work Letter.  Tenant shall reimburse Landlord for the Additional Allowance as additional Base Rent amortized equally at 8% interest per annum (to accrue from the date the Finish Allowance is paid by Landlord) on a straight line basis over the Initial Term.  Costs arising from Tenant Delay may not be deducted from the Finish Allowance.  Tenant is responsible for and shall pay all costs and expenses payable under this Work Letter that are not allowable as expenditures from the Finish Allowance within 30 days following receipt of an invoice therefore detailing the bills and invoices covering labor and material actually incurred as part of the Tenant Improvements, as applicable.  Upon acceptance by the parties of the bid from the Approved Contractor, Tenant shall deposit with Landlord the amount which the parties agree is a reasonable estimate of the amount by which the cost of the Tenant Improvements is expected to exceed the Finish Allowance (the "Initial Contribution"). If the cost of the Tenant Improvements exceeds the Finish Allowance by more than the Initial Contribution, Tenant shall pay the remaining balance of Tenant's Contribution associated with the Tenant Improvements to Landlord within 30 days following the date on which the Premises are deemed Ready for Occupancy. The parties agree that Landlord (and Approved Contractor) shall have no obligation to commence construction of the Tenant Improvements until Landlord receives the Initial Contribution and any delay in delivering the Initial Contribution shall be deemed to be a Tenant Delay hereunder.

      8.      Notwithstanding the provisions of the Lease, the Commencement Date and Tenant's obligations to pay Rent will not be delayed or extended by Tenant Delay and the Term will commence on the date it would have commenced had there been no Tenant Delay.  "Tenant Delay" means delay (i) in the preparation, finalization or approval of any plans or construction drawings caused by Tenant or Tenant's agents; (ii) in the preparation, finalization or approval of the general contract with Approved Contractor as a result of value engineering or modifications in construction pricing caused by Tenant or Tenant's agents; (iii) caused by Tenant's material changes to any plans or construction drawings; (iv) in the delivery or installation of any special or non-standard building items specified by Tenant that would cause delay in completion beyond the date the Tenant Improvements would have been completed had it not been for such delay by Tenant; or (v) of any kind or nature in the completion of the Tenant Improvements caused by Tenant, Tenant's agents or representatives.

  

B-1

  

SCHEDULE A TO WORK LETTER

SPACE PLAN

See attached.

 

B-2

 

 

 

  

B-3

  

 

Exhibit C

FORM OF COMMENCEMENT AGREEMENT

Commencement Date Acknowledgment and Agreement

This Commencement Date Acknowledgment and Agreement ("Agreement") is an acknowledgment of the Commencement Date as defined in the Lease and intended to be a part of that certain Lease for premises located at _____________________________, Longmont, Colorado, which was executed on the ______ day of ________________, 201__, between LONGMONT DIAGONAL INVESTMENTS LLC, a Delaware limited liability company, as Landlord, and CHROMADEX ANALYTICS, INC., a Nevada corporation, as Tenant.

Landlord and Tenant hereby agree that:

1.           The Premises are tenantable, Landlord has no further obligation for construction, and Tenant acknowledges that both the Building and the Premises are satisfactory in all respects.

2.           Tenant took possession of the Premises on   , 201   . Tenant hereby agrees to pay partial month's Rent in the amount of $_________ (_____ days at $________ per diem).

3.           The Commencement Date of the Lease is hereby agreed to be the 1st day of the month of______________, 201___.

4.           The Expiration Date of the Lease is hereby agreed to be the last day of month of _______________, 201___.

All other terms and conditions of the Lease Agreement are hereby ratified and acknowledged to be unchanged.

Agreed and executed this ______ day of _______________, 201___.

 

LANDLORD:                                                                           LONGMONT DIAGONAL INVESTMENTS LLC

	
  

	
By

	 

                                                                                                             Authorized Signatory

 

 

	
TENANT:

	
CHROMADEX ANALYTICS, INC.,

	
  

	
a Nevada corporation

 

 

   By                                                      

   Title                                                      

 

  

C-1

  

EXHIBIT D

 

FORM OF TENANT'S ESTOPPEL CERTIFICATE

Tenant's Estoppel Certificate

 

	
PROJECT:

	
1751 South Fordham Street, Longmont, CO 80503 ("Project")

	
PREMISES:

	
Suite F (totaling 10,052 net rentable square feet) ("Premises")

	
LANDLORD:

	
LONGMONT DIAGONAL INVESTMENTS LLC, a Delaware limited liability company ("Landlord")

	
LEASE DATED:

	
_________________, 2016 ("Lease")

The undersigned tenant ("Tenant"), in recognition that Wells Fargo Bank, N.A. (together with its successors and assigns, the "Lender") has provided financing for the Project, hereby certifies to Landlord and Lender that:

 

1. Tenant has accepted possession of the Premises pursuant to the Lease.  The Lease term commenced on ___________, 201___.  The expiration date of the Lease term, excluding any unexercised renewals and extensions, is ______________.  Tenant has not assigned its rights under the Lease or sublet any portion of the leased premises.  The Lease has not been amended except as follows:  [List the dates of any amendments or modifications of the Lease]

 

2. Any improvements required by the terms of the Lease to be made by Landlord have been completed to the satisfaction of Tenant in all respects, and Landlord has fulfilled all of its duties under the Lease, including without limitation satisfaction of any tenant improvement allowance obligations thereunder.

 

3. Except as disclosed in Paragraph 1 above, the Lease has not been assigned, modified, supplemented or amended in any way.  The Lease constitutes the entire agreement between the parties and there are no other agreements or understandings between Landlord and Tenant concerning the Premises.  The undersigned does not have (a) any option or preferential right to (i) purchase all or any part of the Premises or the building of which the Premises are a part, (ii) cancel or terminate the Lease early, or (iii) surrender space back to Landlord, or (b) any right, title or interest with respect to the Premises or such building other than as Lessee under the Lease.

 

4. The Lease is valid and in full force and effect, and to the best of Tenant's knowledge, neither Landlord nor Tenant is in default thereunder.  Tenant has no defense, setoff or counterclaim against Landlord arising out of the Lease or against the payment of rent or other charges under the Lease or in any way relating thereto, or arising out of any other transaction between Tenant and Landlord, and no event has occurred and no condition exists, which with the giving of notice or the passage of time, or both, will constitute a default under the Lease.  Tenant is current in the payment of any taxes, utilities, common area maintenance or other charges to be paid by Tenant.

 

5. There are no actions, whether voluntary or involuntary, pending against Tenant under any insolvency, bankruptcy or other debtor relief laws of the United States of America or of any state or other political subdivision thereof.

 

6. The minimum monthly rent presently payable under the Lease is $___________.  Except for Tenant's security deposit (if any), Landlord holds no other funds for Tenant's account.  No rent or other sum payable under the Lease has been paid more than one month in advance.  Tenant is not entitled to any credit against any rent or other charges under the Lease, or any other rent concession under the Lease, including without limitation any such remaining credit (i.e., not previously applied against rent prior to the date hereof), whether arising from any unused tenant improvement allowance or otherwise, except as follows (if applicable, explain basis for credit and amount of remaining credit): ___________.

 

7. Tenant acknowledges that the Lease will be assigned to Lender in connection with Lender's financing of the Project, and Tenant has received no notice of a prior assignment, hypothecation or pledge of the Lease or the rents (other than in connection with previous financing of the Project); and that the interest of the Landlord in the Lease shall be assigned to Lender solely as security for the purposes specified in the assignment and Lender shall assume no duty, liability or obligations whatever under the Lease or any extension or renewal thereof.

 

8. Tenant shall give Lender prompt written notice of any default of Landlord under the Lease, if such default entitles Tenant, under law or otherwise, to terminate the Lease, reduce rent or credit or offset any amounts against future rents and shall give Lender reasonable time (but in no event less than 90 days after receipt of such notice) to cure or commence curing such default prior to exercising (and as a condition precedent to its right to exercise) any right Tenant may have to terminate the Lease, reduce rent or credit or offset any amounts against the rent.  Tenant shall give written notice to any successor in interest of Lender, any transferee who acquires the property by deed in lieu of foreclosure, or any successor or assign thereof (collectively, the "Mortgagee").

 

9. All notices and other communications from Tenant to Lender shall be in writing and shall be delivered or mailed by registered mail, postage paid, return receipt requested, addressed to:

 

Wells Fargo Bank, N.A.

 

333 Market Street, 3rd Floor

 

San Francisco, California 94105-2102

 

Attention:  Kathryn Z. Marker

 

Or at such other address as Lender or its successors, assigns or transferees shall furnish to Tenant in writing.

 

10. This Estoppel Certificate is being executed and delivered by Tenant to induce Lender to make a loan to Landlord, which loan is to be secured in part by an assignment to Lender of Landlord's interest in the Lease and with the intent and understanding that the above statements will be relied upon by Landlord and Lender.

 

TENANT:                                                                                               ________________________________________

 

 

By:                                                                

                Its:                                                                

                Date:           

  

D-1

  

EXHIBIT E

 

FORM OF SUBORDINATION AGREEMENT, ACKNOWLEDGEMENT OF LEASE ASSIGNMENT, ESTOPPEL, ATTORNMENT AND NON-DISTURBANCE AGREEMENT

SUBORDINATION AGREEMENT, ACKNOWLEDGMENT OF LEASE ASSIGNMENT, ESTOPPEL, ATTORNMENT AND NON-DISTURBANCE AGREEMENT

RECORDING REQUESTED BY

AND WHEN RECORDED MAIL TO:

Wells Fargo Bank, National Association

4643 South Ulster Street, Suite 1400

Denver, CO  80237

Attn:  Susan Rich

Loan No. 1013911

(Space Above For Recorder's Use)

 

  

E-1

  

SUBORDINATION AGREEMENT, ACKNOWLEDGMENT OF LEASE ASSIGNMENT, ESTOPPEL, ATTORNMENT AND NON-DISTURBANCE AGREEMENT

(Lease to Security Instrument)

THIS SUBORDINATION AGREEMENT, ACKNOWLEDGMENT OF LEASE ASSIGNMENT, ESTOPPEL, ATTORNMENT AND NON-DISTURBANCE AGREEMENT (this "Agreement") is made AS OF ______________, ____, by and between [_________________], A [_______________], OWNER(S) OF THE REAL PROPERTY HEREINAFTER DESCRIBED ("Mortgagor"), [______________], A [____________] ("Tenant") and WELLS FARGO BANK, NATIONAL ASSOCIATION (collectively with its successors or assigns, "Lender").

 

R E C I T A L S

	
A.  

	
Pursuant to the terms and provisions of a lease dated [_______________] ("Lease"), Mortgagor granted to Tenant a leasehold estate in and to a portion of the property described on Exhibit A attached hereto and incorporated herein by this reference (which property, together with all improvements now or hereafter located on the property, is defined as the "Property").

	
B.  

	
Mortgagor has executed, or proposes to execute, that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (as the same may be amended, restated, replaced or modified from time to time, the "Security Instrument") securing, among other things, that certain Amended, Restated and Consolidated Promissory Note (as the same may be amended, restated, replaced or modified from time to time, the "Note"), in the principal sum of ONE HUNDRED FIFTY FOUR MILLION ONE HUNDRED FIFTY THOUSAND AND NO/100THS DOLLARS ($154,150,000.00), in favor of Lender ("Loan").  The Security Instrument will be recorded in the real property records where the Property is located.

	
C.  

	
As a condition to Lender making the Loan secured by the Security Instrument, Lender requires that the Security Instrument be unconditionally and at all times remain a lien on the Property, prior and superior to all the rights of Tenant under the Lease and that the Tenant specifically and unconditionally subordinate the Lease to the lien of the Security Instrument.

	
D.  

	
Mortgagor and Tenant have agreed to the subordination, attornment and other agreements herein in favor of Lender.

NOW THEREFORE, for valuable consideration and to induce Lender to make the Loan, Mortgagor and Tenant hereby agree for the benefit of Lender as follows:

	
1.  

	
SUBORDINATION.  MORTGAGOR AND TENANT HEREBY AGREE THAT:

	
1.1  

	
Prior Lien.  The Security Instrument securing the Note in favor of Lender, and any modifications, renewals or extensions thereof (including, without limitation, any modifications, renewals or extensions with respect to any additional advances made subject to the Security Instrument), shall unconditionally be and at all times remain a lien on the Property prior and superior to the Lease;

	
1.2  

	
Subordination.  Lender would not make the Loan without this agreement to subordinate; and

	
1.3  

	
Whole Agreement.  This Agreement shall be the whole agreement and only agreement with regard to the subordination of the Lease to the lien of the Security Instrument and shall supersede and cancel, but only insofar as would affect the priority between the Security Instrument and the Lease, any prior agreements as to such subordination, including, without limitation, those provisions, if any, contained in the Lease which provide for the subordination of the Lease to a deed or deeds of trust or to a mortgage or mortgages.

AND FURTHER, Tenant individually declares, agrees and acknowledges for the benefit of Lender, that:

	
1.4  

	
Use of Proceeds.  Lender, in making disbursements pursuant to the Note, the Security Instrument or any loan agreements with respect to the Property, is under no obligation or duty to, nor has Lender represented that it will, see to the application of such proceeds by the person or persons to whom Lender disburses such proceeds, and any application or use of such proceeds for purposes other than those provided for in such agreement or agreements shall not defeat this agreement to subordinate in whole or in part; and

	
1.5  

	
Waiver, Relinquishment and Subordination.  Tenant intentionally and unconditionally waives, relinquishes and subordinates all of Tenant's right, title and interest in and to the Property to the lien of the Security Instrument and understands that in reliance upon, and in consideration of, this waiver, relinquishment and subordination, specific loans and advances are being and will be made by Lender and, as part and parcel thereof, specific monetary and other obligations are being and will be entered into which would not be made or entered into but for said reliance upon this waiver, relinquishment and subordination.

	
2.  

	
ASSIGNMENT.  TENANT ACKNOWLEDGES AND CONSENTS TO THE ASSIGNMENT OF THE LEASE BY MORTGAGOR IN FAVOR OF LENDER.

	
3.  

	
ESTOPPEL.  TENANT ACKNOWLEDGES AND REPRESENTS THAT:

	
3.1  

	
Entire Agreement.  The Lease constitutes the entire agreement between Mortgagor and Tenant with respect to the Property and Tenant claims no rights with respect to the Property other than as set forth in the Lease;

	
3.2  

	
No Prepaid Rent.  No deposits or prepayments of rent have been made in connection with the Lease, except as follows (if none, state "None"): ;

	
3.3  

	
No Default.  To the best of Tenant's knowledge, as of the date hereof:  (i) there exists no breach, default, or event or condition which, with the giving of notice or the passage of time or both, would constitute a breach or default under the Lease; and (ii) there are no existing claims, defenses or offsets against rental due or to become due under the Lease;

	
3.4  

	
Lease Effective.  The Lease has been duly executed and delivered by Tenant and, subject to the terms and conditions thereof, the Lease is in full force and effect, the obligations of Tenant thereunder are valid and binding and there have been no [[further]] amendments, modifications or additions to the Lease, written or oral; and

	
3.5  

	
No Broker Liens.  Neither Tenant nor Mortgagor has incurred any fee or commission with any real estate broker which would give rise to any lien right under state or local law, except as follows (if none, state "None"): .

	
4.  

	
ADDITIONAL AGREEMENTS.  TENANT COVENANTS AND AGREES THAT, DURING ALL SUCH TIMES AS LENDER IS THE BENEFICIARY UNDER THE SECURITY INSTRUMENT:

	
4.1  

	
Modification, Termination and Cancellation.  Tenant will not consent to any modification, amendment, termination or cancellation of the Lease (in whole or in part) without Lender's prior written consent and will not make any payment to Mortgagor  in consideration of any modification, termination or cancellation of the Lease (in whole or in part) without Lender's prior written consent;

	
4.2  

	
Notice of Default.  Tenant will notify Lender in writing concurrently with any notice given to Mortgagor of any default by Mortgagor  under the Lease, and Tenant agrees that Lender has the right (but not the obligation) to cure any breach or default specified in such notice within the time periods set forth below and Tenant will not declare a default of the Lease, as to Lender, if Lender cures such default within fifteen (15) days from and after the expiration of the time period provided in the Lease for the cure thereof by Mortgagor; provided, however, that if such default cannot with diligence be cured by Lender within such fifteen (15) day period, the commencement of action by Lender within such fifteen (15) day period to remedy the same shall be deemed sufficient so long as Lender pursues such cure with diligence;

	
4.3  

	
No Advance Rents.  Tenant will make no payments or prepayments of rent more than one (1) month in advance of the time when the same become due under the Lease; and

	
4.4  

	
Assignment of Rents. Upon receipt by Tenant of written notice from Lender that Lender has elected to terminate the license granted to Mortgagor to collect rents, as provided in the Security Instrument, and directing the payment of rents by Tenant to Lender, Tenant shall comply with such direction to pay and shall not be required to determine whether Mortgagor is in default under the Loan and/or the Security Instrument.

	
4.5  

	
Insurance and Condemnation Proceeds.  In the event there is any conflict between the terms in the Security Instrument and the Lease regarding the use of insurance proceeds or condemnation proceeds with respect to the Property, the provisions of the Security Instrument shall control.

	
5.  

	
ATTORNMENT.  IN THE EVENT OF A FORECLOSURE UNDER THE SECURITY INSTRUMENT, TENANT AGREES FOR THE BENEFIT OF LENDER (INCLUDING FOR THIS PURPOSE ANY TRANSFEREE OF LENDER OR ANY TRANSFEREE OF MORTGAGOR'S TITLE IN AND TO THE PROPERTY BY LENDER'S EXERCISE OF THE REMEDY OF SALE BY FORECLOSURE UNDER THE SECURITY INSTRUMENT) AS FOLLOWS:

	
5.1  

	
Payment of Rent.  Tenant shall pay to Lender all rental payments required to be made by Tenant pursuant to the terms of the Lease for the duration of the term of the Lease;

	
5.2  

	
Continuation of Performance.  Tenant shall be bound to Lender in accordance with all of the provisions of the Lease for the balance of the term thereof, and Tenant hereby attorns to Lender as its landlord, such attornment to be effective and self-operative without the execution of any further instrument immediately upon Lender succeeding to Mortgagor's interest in the Lease and giving written notice thereof to Tenant;

	
5.3  

	
No Offset.  Lender shall not be liable for, nor subject to, any offsets or defenses which Tenant may have by reason of any act or omission of Mortgagor under the Lease, nor for the return of any sums which Tenant may have paid to Mortgagor under the Lease as and for security deposits, advance rentals or otherwise, except to the extent that such sums are actually delivered by Mortgagor to Lender; and

	
5.4  

	
Subsequent Transfer.  If Lender, by succeeding to the interest of Mortgagor under the Lease, should become obligated to perform the covenants of Mortgagor thereunder, then, upon any further transfer of Mortgagor's interest by Lender, all of such obligations shall terminate as to Lender.

	
5.5  

	
Limitation on Lender's Liability.  Tenant agrees to look solely to Lender's interest in the Property and the rent, income or proceeds derived therefrom for the recovery of any judgment against Lender, and in no event shall Lender or any of its affiliates, officers, directors, shareholders, partners, agents, representatives or employees ever be personally liable for any such obligation, liability or judgment.

	
5.6  

	
No Representation, Warranties or Indemnities.  Lender shall not be liable with respect to any representations, warranties or indemnities from Mortgagor, whether pursuant to the Lease or otherwise, including, but not limited to, any representation, warranty or indemnity related to the use of the Property, compliance with zoning, landlord's title, landlord's authority, habitability or fitness for purposes or commercial suitability, or hazardous wastes, hazardous substances, toxic materials or similar phraseology relating to the environmental condition of the Property or any portion thereof.

	
6.  

	
NON-DISTURBANCE.  In the event of a foreclosure under the Security Instrument, so long as there shall then exist no breach, default, or event of default on the part of Tenant under the Lease, Lender agrees for itself and its successors and assigns that the leasehold interest of Tenant under the Lease shall not be extinguished or terminated by reason of such foreclosure, but rather the Lease shall continue in full force and effect and Lender shall recognize and accept Tenant as tenant under the Lease subject to the terms and provisions of the Lease except as modified by this Agreement; provided, however, that Tenant and Lender agree that the following provisions of the Lease (if any) shall not be binding on Lender:  any option to purchase with respect to the Property; any right of first refusal with respect to the Property; any provision regarding the use of insurance proceeds or condemnation proceeds with respect to the Property which is inconsistent with the terms of the Security Instrument; or any tenant improvement allowances or construction obligations.

	
7.  

	
MISCELLANEOUS.

	
  

	
7.1

	
Remedies Cumulative.  All rights of Lender herein to collect rents on behalf of Mortgagor under the Lease are cumulative and shall be in addition to any and all other rights and remedies provided by law and by other agreements between Lender and Mortgagor or others.

 

	
  

	
7.2

	
NOTICES.  All notices, demands, or other communications under this Agreement and the other Loan Documents shall be in writing and shall be delivered to the appropriate party at the address set forth below (subject to change from time to time by written notice to all other parties to this Agreement). All notices, demands or other communications shall be considered as properly given if delivered personally or sent by first class United States Postal Service mail, postage prepaid, or by Overnight Express Mail or by overnight commercial courier service, charges prepaid, except that notice of Default may be sent by certified mail, return receipt requested, charges prepaid.  Notices so sent shall be effective three (3) Business Days after mailing, if mailed by first class mail, and otherwise upon delivery or refusal; provided, however, that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication.  For purposes of notice, the address of the parties shall be:

 

  

E-2

  

	
Mortgagor:

	
[____________________]

c/o Flatiron Property Management LLC

5500 Flatiron Parkway, Suite 120

Boulder, CO 80301

	
 

With a copy to:

	
 

Goff Capital Partners

6465 South Greenwood Plaza Boulevard, Suite 1075

Centennial, CO 80111

Attention:  Conrad Suszynski

	
 

And to:

	
 

Goff Capital Partners

500 Commerce Street, Suite 700

Fort Worth, TX 76102

Attention:  Mark Collier

	
 

Tenant:

	
 

[________________]

[________________]

[________________]

Attention:  [_________]

	
 

Lender:

	
 

Wells Fargo Bank, National Association

Wells Fargo Bank, National Association

4643 South Ulster Street, Suite 1400

Denver, CO  80237

Attn:  Susan Rich

Loan No. 1013911

	
 

With a copy to:

	
 

Wells Fargo Bank, National Association

608 2nd Ave S, Floor 11

Minneapolis, MN 55402

Attention:  Bao Thao

Loan No.: 1013911

	
  

	
Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days' notice to the other party in the manner set forth hereinabove.

 

	
  

	
7.3

	
Heirs, Successors and Assigns.  Except as otherwise expressly provided under the terms and conditions herein, the terms of this Agreement shall bind and inure to the benefit of the heirs, executors, administrators, nominees, successors and assigns of the parties hereto.

 

	
1.4  

	
Headings.  All article, section or other headings appearing in this Agreement are for convenience of reference only and shall be disregarded in construing this Agreement.

	
1.5  

	
Counterparts.  To facilitate execution, this document may be executed in as many counterparts as may be convenient or required.  It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart.  All counterparts shall collectively constitute a single document.  It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto.  Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.

	
1.6  

	
Exhibits, Schedules and Riders.  All exhibits, schedules, riders and other items attached hereto are incorporated into this Agreement by such attachment for all purposes.

[Remainder of Page Intentionally Left Blank.]

  

E-3

  

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day and year first above written.

NOTICE:  THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO OBTAIN A LOAN A PORTION OF WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN IMPROVEMENT OF THE LAND.

IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS AGREEMENT, THE PARTIES CONSULT WITH THEIR ATTORNEYS WITH RESPECT HERETO.

"MORTGAGOR"

[___________________],

a [_________________]

By:           ______________________________

Name:      ______________________________

Its:           ______________________________

STATE OF ______________________________     )

) ss.

COUNTY OF ______________________________  )

The foregoing instrument was acknowledged before me this ______ day of __________, 201__, by _________________________, as _________________________ of _________________________, a _________________________.

 

 

Witness my hand and official seal.

My Commission expires:

                                                                                                                                _______________________________________

Notary Public

"TENANT"

[___________________________],

a [_________________________]

By:  ______________________________

Name:  ____________________________

Its: _______________________________

STATE OF ______________________________        )

  ) ss.

COUNTY OF ______________________________    )

The foregoing instrument was acknowledged before me this ______ day of __________, 201__, by _________________________, as _________________________ of _________________________, a _________________________.

 

 

Witness my hand and official seal.

My Commission expires:

_______________________________________

Notary Public

"LENDER"

WELLS FARGO BANK, NATIONAL ASSOCIATION

By:  ______________________________

Name:  ____________________________

Its: _______________________________

STATE OF ______________________________         )

    ) ss.

COUNTY OF ______________________________     )

The foregoing instrument was acknowledged before me this ______ day of __________, 201__, by _________________________, as _________________________ of _________________________, a _________________________.

 

 

Witness my hand and official seal.

My Commission expires:

_______________________________________

Notary Public

 

  

E-4

  

EXHIBIT A

[To be attached]

  

A-1

  

Exhibit F

TENANT-OWNED ALTERATIONS

 

	
Equipment Number/Label

	
Equipment Name

	
Equipment Type

	
Location

	
Comments

	
AWLAB-CENT-001

	
RA20 Centrifuge

	
Centrifuge

	
Wet Lab

	
Centrifuge needed for chemical separation operations and will need to be properly fastened to the floor to properly maintain equipment

	
AWLAB-DW-001

	
Dishwasher

	
Dishwasher

	
AW/Lab

	
Will be embedded into lab table and connected to building water and sewer infrastructure

	
AWLAB-FH-001

	
8'-12' Labconco Fume Hood

	
Chemical Hood

	
AW/Lab

	
Will be fastened to the floor and will be fastened to building wall and floor.  Will be connected to building utilities including makeup air and ducting for proper operations.

	
AWLAB-FH-002

	
8'-12' Labconco Fume Hood

	
Chemical Hood

	
AW/Lab

	
Will be fastened to the floor and will be fastened to building wall and floor.  Will be connected to building utilities including makeup air and ducting for proper operations.

	
AWLAB-LB-001

	
Lab Bench/Shelf

	
Bench

	
AW/Lab

	
Will be fastened to wall and floor.  Lab benches have chemical resistant top for durability with chemicals.

	
AWLAB-LB-002

	
Lab Bench/Shelf

	
Bench

	
AW/Lab

	
Will be fastened to wall and floor.  Lab benches have chemical resistant top for durability with chemicals.

	
AWLAB-LB-003

	
Lab Bench/Shelf w/sink

	
Bench

	
AW/Lab

	
Same as above but will have water and sewer hard piped

	
AWLAB-LB-004

	
Lab Bench/Shelf w/sink

	
Bench

	
AW/Lab

	
Same as above but will have water and sewer hard piped

	
AWLAB-LB-005

	
Lab Bench

	
Bench

	
AW/Lab

	
Will be fastened to wall and floor.  Lab benches have chemical resistant top for durability with chemicals.

	
AWLAB-TBL-006

	
Marble Balance Table

	
Table

	
AW/Lab

	
Will need to be properly fastened to the floor to enable high precision analytical equipment to function properly

	
MECH-DIW-004

	
DI Water Purification System

	
Utility

	
Mech Room

	
Utility that will be fastened to the floor in order to operate properly

	
MECH-HWT-006

	
Hot Water Tank

	
Utility

	
Mech Room

	
Utility that will be fastened to the floor and/or wall of the building in order to operate properly

	
PILOT-CENT-002

	
RC30 Centrifuge

	
Centrifuge

	
Pilot Lab

	
Centrifuge needed for chemical separation operations and will need to be properly fastened to the floor to properly maintain equipment

	
PILOT-DW-001

	
Dishwasher

	
Dishwasher

	
Pilot Lab

	
Will be embedded into lab table and connected to building water and sewer infrastructure

	
PILOT-MIL-001

	
Mill - Ultra Centrifugal Mill

	
Mill/Grinder

	
Pilot Lab

	
Will need to be properly fastened to the floor to properly operate equipment

	
PILOT-WIH-001

	
12' Labconco Walk-In Hood

	
Chemical Hood

	
Pilot Lab

	
Will be fastened to the floor and will be fastened to building wall and floor.  Will be connected to building utilities including makeup air and ducting for proper operations.

	
 

	  	  	  	  

*Such other equipment and fixtures as Tenant may install from time to time specific to its type of business.

F-1Exhibit 10.1

 

INVESTMENT AGREEMENT

This INVESTMENT AGREEMENT (the "Agreement"), dated as of April 4, 2016 (the "Execution Date"), is entered into by and between GROW CONDOS, INC. (the "Company"), a NEVADA corporation, with its principal executive offices at 722 W. Dutton Road, Eagle Point, OR 97524, and Tangiers Global,  LLC (the "Investor"), a Wyoming limited liability company, with its principal executive offices at 168 Dorado Beach East, Dorado, PR 00646.

RECITALS:

WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Investor shall invest up to Five Million Dollars ($5,000,000) (the "Commitment Amount") to purchase the Company's common stock, par value of $.001 per share (the "Common Stock");

WHEREAS, such investments will be made in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the "1933 Act"), Rule 506 of Regulation D promulgated by the SEC under the 1933 Act, and/or upon such other exemption from the registration requirements of the 1933 Act as may be available with respect to any or all of the investments in Common Stock to be made hereunder; and

WHEREAS, contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement substantially in the form attached hereto as· Exhibit A (the "Registration Rights Agreement") pursuant to which the Company has agreed to provide certain registration rights under the 1933 Act, and the rules and regulations promulgated thereunder, and applicable state securities laws.

NOW THEREFORE, in consideration of the foregoing recitals, which shall be considered an integral part of this Agreement, the covenants and agreements set forth hereafter, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Investor hereby agree as follows:

 

SECTION I. 

DEFINITIONS

For all purposes of and under this Agreement, the following terms shall have the respective meanings below, and such meanings shall be equally applicable to the singular and plural fonns of such defined terms.

"1933 Act" shall have the meaning set forth in the recitals.

"1934 Act" shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same will then be in effect.

"Affiliate" shall have the meaning set forth in Section 5.7.

"Agreement" shall have the meaning set forth in the preamble.

"Articles of Incorporation" shall have the meaning set forth in Section 4.3.

"By-laws" shall have the meaning set forth in Section 4.3. 

 

"Certificate" shall have the meaning set forth in Section 2.5. 

 

"Closing" shall have the meaning set forth in Section 2.5. 

 

"Closing Date" shall have the meaning set forth in Section 2.5.

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"Commitment Fee Note" shall have the meaning set forth in Section 11.17 

 

"Commitment Amount" shall have the meaning set forth in the recitals. 

 

"Common Stock" shall have the meaning set forth in the recitals. 

 

"Company" shall have the meaning set forth in the preamble.

 

"Control' or "Controls" shall have the meaning set forth in Section 5.7.

"DTC" shall have the meaning set forth in Section 2.5.

"DWAC" shall mean Deposit and Withdrawal at Custodian service provided by the Depository Trust Company.

"Effective Date" shall mean the date the SEC declares effective under the 1933 Act the Registration Statement covering the Securities.

"Environmental Laws" shall have the meaning set forth in Section 4.13. 

 

"Execution Date" shall have the meaning set forth in the preamble. 

 

"FAST" shall have the meaning set forth in Section 2.5.

 

"Indemnified Liabilities" shall have the meaning set forth in Section 10. 

 

"lndemnitees" shall have the meaning set forth in Section 10. 

 

"Indemnitor" shall have the meaning set forth in Section 10.

 

"Investor" shall have the meaning set forth in the preamble.

"Material Adverse Effect" shall have the meaning set forth in Section 4.1.

"Maximum Common Stock Issuance" shall have the meaning set forth in Section 2.6.

''Open Period" shall mean the period beginning on and including the Trading Day immediately following the Effective Date and ending on the earlier to occur of (i) the date which is thirty-six (36) months from the Effective Date; or (ii) termination of the Agreement in accordance with Section 8.

"PCAOB" shall have the meaning set forth in Section 4.6.

"Pricing Period" shall mean, with respect to a particular Put Notice, the five (5) consecutive Trading Days immediately succeeding the applicable Put Notice Date.

"Principal Market" shall mean the New York Stock Exchange, the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the OTC Bulletin Board or the OTC Markets Group, whichever is the principal market on which the Common Stock is traded.

"Purchase Amount" shall mean the total amount being paid by the Investor on a particular Closing Date to purchase the Securities.

2

 

"Purchase Price" shall mean a 17.5% discount from   the lowest trading price of the Common Stock during the Pricing Period applicable to the Put Notice, provided, however, an additional 10% will be added to the discount of each Put if (i) the Company is not DWAC eligible and (ii) an additional 15% will be added to the discount of each Put if the Company is under DTC "chill" status on the applicable Put Notice Date.

"Put" shall have the meaning set forth in Section 2.2.

"Put Amount" shall have the meaning set forth in Section 2.3.

"Put Notice" shall mean a written notice sent to the Investor by the Company stating the Put Amount in U.S. dollars that the Company intends to sell to the Investor pursuant to the terms of the Agreement and stating the current number of Shares issued and outstanding on such date.

"Put Notice Date" shall mean the Trading Day on which the Investor receives a Put Notice, determined as follows:  a Put Notice shall be deemed delivered on (a) the Trading Day it is received by electronic mail or otherwise by the Investor if such notice is received prior to 9:30 a.m. (Pacific time), or (b) the inllllediately succeeding Trading Day if it is received by electronic mail or otherwise after 9:30a.m. (Pacific time) on a Trading Day. No Put Notice may be deemed delivered on a day that is not a Trading Day.

"Put Settlement Sheet" shall mean a written letter to the Company by the Investor, evidencing acceptance of the Put and providing instructions for delivery of the Securities to the Investor.

"Put Shares Due" shall mean the Shares to be sold to the Investor pursuant to the Put.

"Registered Offering Transaction Documents" shall mean this Agreement and the Registration Rights Agreement between the Company and the Investor as of the date herewith.

"Registration Rights Agreement" shall have the meaning set forth in the recitals.

"Registration Statement" means the registration statement of the Company filed under the 1933 Act covering the resale of the Securities issuable hereunder by the Investor, in the manner described in such Registration Statement.

"Related Party" shall have the meaning set forth in Section 5.7. 

 

"Resolutions" shall have the meaning set forth in Section 7.5. 

 

"SEC" shall mean the U.S. Securities and Exchange Commission. 

 

"SEC Documents" shall have the meaning set forth in Section 4.6.

 

"Securities" shall mean the shares of Common Stock issued pursuant to the tenns of the Agreement.

"Shares" shall mean the shares of the Company's Common Stock.

"Subsidiaries" shall have the meaning set forth in Section 4.1.

"Trading Day" shall mean any day on which the Principal Market for the Common Stock is open for trading, from the hours of 9:30 am until 4:00 pm.

3

 

"VWAP" means, for any date, the price detennined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by (i) Bloomberg Financial L.P. or (ii) Stock Charts/Quote Media if the Investor does not promptly provide the Company the Bloomberg quote/pricing charts for the days involved upon the Company's request (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02p.m. (New York City time)) and (b) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Investor and reasonably acceptable to the Company.

"Waiting Period" shall have the meaning set forth in Section 2.3.

SECTION  II

PURCHASE AND SALE OF COMMON STOCK

1.        PURCHASE AND SALE OF COMMON STOCK. Subject to the terms and conditions set forth herein, the Company shall issue and sell to the Investor, and the Investor shall purchase from the Company, up to that number of Shares having an aggregate Purchase Price of Five Million Dollars ($5,000,000).

2.         DELIVERY OF PUT NOTICES. Subject to the tenns and conditions of the Registered Offering Transaction Documents, and from time to time during the Open Period, the Company may, in its sole discretion, deliver a Put Notice to the Investor which states the dollar amount (designated in U.S. Dollars), which the Company intends to sell to the Investor on a Closing Date (the "Put"). The Put Notice shall be in the form attached hereto as Exhibit B and incorporated herein by reference. Upon receipt of the Put Notice, the Investor shall deliver to the Company a Put Settlement Sheet on the Put Notice Date. The Put Settlement Sheet shall be in the fonn attached hereto as Exhibit C and incorporated herein by reference.

 

3.        PUT RESTRICTION. The maximum amount that the Company shall be entitled to Put to the Investor per any applicable Put Notice (the "Put Amount") shall be equal to one hundred percent (100%) of the average of the daily trading dollar volume (U.S. market only) of the Common Stock for the ten (10) consecutive Trading Days immediately prior to the applicable Put Notice Date so long as such amount does not exceed $100,000 unless a prior approval of the Investor is obtained by the Company from the Investor. The minimum Put Amount shall be equal to $5,000. During the Open Period, the Company shall not be entitled to submit a Put Notice until after the previous Closing has been completed. Notwithstanding the foregoing, the Company may not deliver a Put Notice on or earlier of the tenth (lOth) Trading Day immediately following the preceding Put Notice Date (the "Waiting Period") unless a written waiver to deliver Put Notice during the Waiting Period is obtained by the Company from the Investor in advance.

4.       CONDITIONS TO INVESTOR'S OBLIGATION TO PURCHASE SHARES. Notwithstanding anything to the contrary in this Agreement, the Company shall not be entitled to deliver a Put Notice and the Investor shall not be obligated to purchase any Shares at a Closing unless each of the following conditions are satisfied:

		i.	a Registration Statement shall have been declared effective and shall remain effective and available for the resale of all the Put Shares Due at all times until the Closing with respect to the applicable Put Notice;

		ii.	at all times during the period beginning on the related Put Notice Date and ending on and including the related Closing Date, the Common Stock shall have been listed or quoted

4

for trading on the Principal Market and shall not have been suspended from trading thereon during the Pricing Period and the Company shall not have been notified of any pending or threatened proceeding or other action to suspend the trading of the Common Stock;

iii.  the Company has complied with its obligations and is otherwise not in material breach of or in material default under, this Agreement, the Registration Rights Agreement or any other agreement executed in connection herewith which has not been cured prior to delivery to the Investor of the applicable Put Notice;

		iv.	no injunction shall have been issued and remain in force, or action commenced by a governmental authority which has not been stayed or abandoned, prohibiting the purchase or the issuance of the Securities; and

		v.	the issuance of the Secu:r;ities will not violate any shareholder approval requirements of the Principal Market.

If any of the events described in clauses (i) through (v) above occurs during a Pricing Period, then the Investor shall have no obligation to purchase the Put Amount of Common Stock set forth in the applicable Put Notice.

 

5.         MECHANICS  OF   PURCHASE  OF  SHARES BY INVESTOR.  Subject to  the satisfaction of the conditions set forth in Sections 2.6, 7 and 8 of this Agreement, the closing of the purchase by the Investor of Securities (a "Closing") shall occur on the date which is no earlier than five (5) Trading Days prior to and no later than seven (7) Trading Days following the applicable Put Notice Date (each a "Closing  Date"). On each such Closing Date, if the Company's transfer agent is participating in The Depository Trust Company ("DTC") Fast Automated Securities Transfer ("FAST") program and that the Securities are eligible for inclusion in the FAST program, the Company shall use all commercially reasonable efforts to cause its transfer agent to electronically transmit the Securities to be issued to the Investor on such date by crediting the account of the Investor's prime broker (as specified by the Investor in a Put Settlement Sheet) with DTC through its DWAC service. If the Company is not DWAC eligible or the Company is under DTC "chill" on such Closing Date, the Company shall deliver to the Investor pursuant to this Agreement, certificates representing the Securities to be issued to the Investor on such date and registered in the name of the Investor (the "Certificate"). On such Closing Date, after receipt of confirmation of delivery of such Securities to the Investor, the Investor shall disburse the funds constituting the Purchase Amount to the Company's designated account by wire transfer of (i) immediately available funds if the Investor receives the Securities by 9:30 a.m. (Pacific time) or (ii) next day available funds if the Investor receives the Securities thereafter.

 

6.         OVERALL LIMIT ON COMMON STOCK ISSUABLE.  Notwithstanding anything contained herein to the contrary, if during the Open Period the Company becomes listed on an exchange that limits the number of shares of Common Stock that may be issued without shareholder approval, then the number of Shares issuable by the Company and purchasable by the Investor, shall not exceed that number of the shares of Common Stock that may be issuable without shareholder approval (the "Maximum Common Stock Issuance"). If such issuance of shares of Common Stock could cause a delisting on the Principal Market, then the Maximum Common Stock Issuance shall first be approved by the Company's shareholders in accordance with applicable law and the By-laws and the Articles of Incorporation of the Company, if such issuance of shares of Common Stock could cause a delisting on the Principal Market. The parties understand and agree that the Company's failure to seek or obtain such shareholder approval shall in no way adversely affect the validity and due authorization of the issuance and sale of Securities or the Investor's obligation in accordance with the terms and conditions hereof to purchase a number of Shares in the aggregate up to the Maximum Common Stock Issuance limitation, and that such approval pertains only to the applicability of the Maximum Common Stock Issuance limitation provided in this Section 2.6.

5

 

7.        LIMITATION ON AMOUNT OF OWNERSHIP. Notwithstanding anything to the contrary in this Agreement, in no event shall the Investor be entitled to purchase that number of Shares, which when added to the sum of the number of shares of Common Stock beneficially owned (as such term is defined under Section 13(d) and Rule 13d-3 of the 1934 Act), by the Investor, would exceed 9.99% of the number of shares of Common Stock outstanding on the Closing Date, as determined in accordance with Rule 13d-1 G) of the 1934 Act.

 

SECTION III

 

INVESTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS

 

The Investor represents and warrants to the Company, and covenants, that:

1.        SOPHISTICATED INVESTOR. The Investor has, by reason of its business and financial experience, such knowledge, sophistication and experience in financial and business matters and in making investment decisions of this type that it is capable of (i) evaluating the merits and risks of an investment in the Securities and making an informed investment decision; (ii) protecting its own interest; and (iii) bearing the economic risk of such investment for an indefinite period of time.

2.        AUTHORIZATION: ENFORCEMENT. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Investor and is a valid and binding agreement of the Investor enforceable against the Investor in accordance with its terms, subject as to enforceability to general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

3.         SECTION 9 OF THE 1934 ACT. During the term of this Agreement, the Investor will comply with the provisions of Section 9 of the 1934 Act, and the rules promulgated thereunder, with respect to transactions involving the Common Stock. The Investor agrees not to short sell the Company's stock either directly or indirectly through its affiliates, principals or advisors, the Common Stock during the term of this Agreement. The Investor will only sell Company stock that it has in its possession.

4.        ACCREDITED INVESTOR. The Investor is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D of the 1933 Act.

5.        NO CONFLICTS. The execution, delivery and performance of the Registered Offering Transaction Documents by the Investor and the consummation by the Investor of the transactions contemplated hereby and thereby will not result in a violation of  limited liability company agreement or other organizational documents of the Investor.

6.        OPPORTUNITY TO DISCUSS. The Investor has received all materials relating to the Company's business, finance and operations which it has requested. The Investor has had an opportunity to discuss the business, management and financial affairs of the Company with the Company's management.

6

 

7.        INVESTM    ENT PURPOSES. The Investor is purchasing the Securities for its own account for investment purposes and not with a view towards distribution and agrees to resell or otherwise dispose of the Securities solely in accordance with the registration provisions of the 1933 Act (or pursuant to an exemption from such registration provisions).

 

8.        NO REGISTRATION AS A DEALER. The Investor is not and will not be required to be registered as a "dealer" under the 1934 Act, either as a result of its execution and performance of its obligations under this Agreement or otherwise.

		9.	GOOD STANDING. The Investor is a limited liability company, duly organized, validly existing and in good standing in the State of Wyoming.

 

10.      TAX LIABILITIES. The Investor understands that it is liable for its own tax liabilities.

 

11.      REGULATION M. The Investor will comply with Regulation M under the 1934 Act, if applicable.

12.      GENERAL SOLICITATION. The Investor is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

13.      TRANSFER RESTRICTIONS. The Securities may only be disposed of in compliance with federal and state securities laws.  In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an affiliate of the Investor, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the 1933 Act; provided, however, that in connection with any transfer of Securities pursuant to Rule 144, the Company may require the transferor to provide a customary Rule 144 sellers representation letter. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of the Investor under this Agreement and the Registration Rights Agreement, as to issued Securities only.

SECTION IV

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the Schedules attached hereto, or as disclosed on the Company's SEC Documents, the Company represents and warrants to the Investor that:

7

1.        ORGANIZATION AND QUALIFICATION. The  Company is a corporation duly organized and validly existing in good standing under the laws of the State of NEVADA, and has the requisite corporate power and authorization to own its properties and to carry on its business as   now  being  conducted.  Both  the  Company  and  the  companies  it  owns  or  controls ("Subsidiaries") are duly qualified to do business and are in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement, "Material Adverse Effect" means a change, event, circumstance, effect or state of facts that has had or is reasonably likely to have, a material adverse effect on the business, properties, assets, operations, results of operations, financial condition or prospects of the Company and its Subsidiaries,  if any, taken as a whole, or on the transactions  contemplated  hereby or by the agreements  and instruments to be entered into in connection herewith, or on the authority or ability of the Company to perform its obligations under the Registered Offering Transaction Documents.

2.       AUTHORIZATION: ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.

		i.	The Company has the requisite corporate power and authority to enter into and perform the Registered Offering Transaction Documents, and to issue the Securities in accordance with the terms hereof and thereof.

 

		ii.	The execution and delivery of the Registered Offering Transaction Documents by the Company and the consummation  by it of the transactions  contemplated  hereby and thereby, including without limitation the issuance of the Securities  pursuant to this Agreement, have been duly and validly authorized by the Company's board of directors and no further consent or authorization is required by the Company, its board of directors, or its shareholders.

 

iii.   The Registered Offering Transaction Documents have been duly and validly executed and delivered by the Company.

 

		iv.	The Registered  Offering  Transaction  Documents  constitute  the  valid  and  binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable  bankruptcy, insolvency, reorganization,  moratorium,  liquidation  or similar laws relating to, or affecting generally, the enforcement of creditors' rights and remedies.

 

3.         CAPITALIZATION. As of the date hereof, the authorized capital stock of the Company consists of, 100 million authorized shares of the Common Stock, par value $.001 per share, of which 28 million were issued and outstanding as of April 1 . All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and non-assessable.

Except as disclosed in the Company's  publicly available filings with the SEC or as otherwise set forth on Schedule 4.3:

		i.	no shares of the Company's capital stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company;

 

ii. there are no outstanding debt securities;

8

 

iii.  there are no outstanding shares of capital stock, options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries;

		iv.	there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except the Registration Rights Agreement);

 

		v.	there are no outstanding securities of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries;

 

		vi.	there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities as described in this Agreement;

 

vii. the Company does not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement; and

 

viii. there is no dispute as to the classification of any shares of the Company's capital stock.

The Company has furnished to the Investor, or the Investor has had access through EDGAR to, true and correct copies of the Company's Articles of Incorporation, as in effect on the date hereof (the "Articles of Incorporation"), and the Company's By-laws, as in effect on the date hereof (the "By-laws"), and the tenns of all securities convertible into or exercisable for Common Stock and the material rights of the holders thereof in respect thereto.

4.        ISSUANCE OF SHARES. As of the Effective Date, the Company will have reserved the amount of Shares included in the Registration Statement for issuance pursuant to the Registered Offering Transaction Documents, which will have been duly authorized and reserved (subject to adjustment pursuant to the Company's covenant set forth in Section 5.5 below) pursuant to this Agreement. Upon issuance in accordance with this Agreement, the Securities will be validly issued, fully paid for and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof. In the event the Company cannot reserve a sufficient number of Shares for issuance pursuant to this Agreement, the Company will use its best efforts to authorize and reserve for issuance the number of Shares required for the Company to perform its obligations hereunder as soon as reasonably practicable.

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5.        NO CONFLICTS. The execution, delivery and performance of the Registered Offering Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Articles of Incorporation or the By-laws; or (ii) conflict with, or constitute a material default (or an event which with notice or lapse of time or both would become a material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, contract, indenture mortgage, indebtedness or instrument to which the Company or any of its Subsidiaries is a party, or to the Company's knowledge result in a violation of any law, rule, regulation, order, judgment or decree (including United States federal and state securities laws and regulations and the rules and regulations of the Principal Market or principal securities exchange or trading market on which the Common Stock is traded or listed) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected. Neither the Company nor its Subsidiaries is in violation of any term of, or in default under, the Articles of Incorporation or the By-laws or their organizational charter or by-laws, respectively, or any contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to  the  Company or its  Subsidiaries, except for  possible  conflicts, defaults, terminations, amendments, accelerations, cancellations and violations that would not individually or in the aggregate have or constitute a Material Adverse Effect. The business of the Company and its Subsidiaries is not being conducted, and shall not be conducted, in violation of any law, statute, ordinance, rule, order or regulation of any governmental authority or agency, regulatory or self-regulatory agency, or court, except for possible violations the sanctions for which either individually or in the aggregate would not have a Material Adverse Effect. Except as specifically contemplated by this Agreement and as required under the 1933 Act or any securities laws of any states, to the Company's knowledge, the Company is not required to obtain any consent, authorization, permit or order of, or make any filing or registration (except the filing of a registration statement as outlined in the Registration Rights Agreement between the parties) with, any court, governmental authority or agency, regulatory or self-regulatory agency or other third party in order for it to execute, deliver or perform any of its obligations under, or contemplated by, the Registered Offering Transaction Documents in accordance with the terms hereof or thereof. All consents, authorizations, permits, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof and are in full force and effect as of the date hereof. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. The Company is not, and will not be, in violation of the listing requirements of the Principal Market as in effect on the date hereof and on each of the Closing Dates and is not aware of any facts which would reasonably lead to delisting of the Common Stock by the Principal Market in the foreseeable future.

6.       SEC DOCUMENTS; FINANCIAL STATEMENTS. As of the date hereof, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein, and amendments thereto, being hereinafter referred to as the "SEC Documents"). The Company has delivered to the Investor or its representatives, or they have had access through EDGAR to, true and complete copies of the SEC Documents. As of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC or the time they were amended, if amended, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the fmancial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, by a firm that is a member of the Public Companies Accounting Oversight Board ("PCAOB") consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other written information provided by or on behalf of the Company to the Investor which is not included in the SEC Documents, including, without limitation, information referred to in Section 4.3 of this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstance under which they are or were made, not misleading. The Company's knowledge, neither the Company nor any of its Subsidiaries or any of their officers, directors, employees or agents have provided the Investor with any material, nonpublic information which was not publicly disclosed prior to the date hereof and any material, nonpublic information provided to the Investor by the Company or its Subsidiaries or any of their officers, directors, employees or agents prior to any Closing Date shall be publicly disclosed by the Company prior to such Closing Date.

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7.         ABSENCE OF CERTAIN CHANGES. Except as otherwise set forth in the SEC Documents, the Company does not intend to change the business operations of the Company in any material way. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy law nor does the Company or its Subsidiaries have any knowledge or reason  to believe that its creditors intend to initiate involuntary bankruptcy proceedings.

8.         ABSENCE OF LITIGATION AND/OR REGULATORY PROCEEDINGS. Except as set forth in the SEC Documents, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of Company or any of its Subsidiaries, threatened against or affecting the Company, the Common Stock or any of the Company's Subsidiaries or any of the Company's or the Company's Subsidiaries' officers or directors in their capacities as such, in which an adverse decision could have a Material Adverse Effect.

9.         ACKNOWLEDGMENT REGARDING INVESTOR'S PURCHASE OF SHARES. The Company acknowledges and agrees that the Investor is acting solely in the capacity of an arm's length purchaser with respect to the Registered Offering Transaction Documents and the transactions contemplated hereby and thereby. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Registered Offering Transaction Documents and the transactions contemplated hereby and thereby and any advice given by the Investor or any of its respective representatives or agents in connection with the Registered Offering Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Investor's purchase of the Securities, and is not being relied on by the Company. The Company further represents to the Investor that the Company's decision to enter into the Registered Offering Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.

10.    NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES. Except as set forth in the SEC Documents or required with respect to the Registered Offering Transaction Documents, as of the date hereof, no  event, liability, development or circumstance has occurred or exists, or to the Company's knowledge is contemplated to occur, with respect to the Company or its Subsidiaries or their respective business, properties, assets, prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws on a registration statement filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced.

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11.     EMPLOYEE RELATIONS. Neither the Company nor any of its Subsidiaries is involved in any union labor dispute nor, to the knowledge of the Company or any of its Subsidiaries, is any such dispute threatened. Neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that relations with their employees are good. No executive officer (as defined in Rule 50l(f) of the 1933 Act) has notified the Company that such officer intends to leave the Company's employ or otherwise terminate such officer's employment with the Company.

12.      INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted. Except as set forth in the SEC Documents, none of the Company's trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations, trade secrets or other intellectual property rights necessary to conduct its business as now or as proposed to be conducted have expired or -tem1inated, or are expected to expire or terminate within two (2) years from the date of this Agreement. The Company and its Subsidiaries do not have any knowledge of any infringement by the Company or its Subsidiaries of trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret or other similar rights of others, or of any such development of similar or identical trade secrets or technical information by others and, except as set forth in the SEC Documents, there is no claim, action or proceeding being made or brought against, or to the Company's knowledge, being threatened against, the Company or its Subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other infringement; and the Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and its Subsidiaries have taken commercially reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties.

 

13.      ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i) are, to the knowledge of the management and directors of the Company and its Subsidiaries, in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("Environmental Laws"); (ii) have, to the knowledge of the management and directors of the Company, received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses as currently conducted; and (iii) are in compliance, to the knowledge of the   management and directors of the Company, with all terms and conditions of any such permit, license or approval where, in each of the three (3) foregoing cases, the failure to so comply would have, individually or in the aggregate, a Material Adverse Effect.

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14.      TITLE. The Company and its Subsidiaries have good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as are described in the SEC Documents or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company or any of its Subsidiaries. Any real property and facilities held under lease by the Company or any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries.

15.      INSURANCE. Each ofthe Company's Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company reasonably believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any of its Subsidiaries has been refused any insurance coverage sought or applied for and neither the Company nor its Subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.

16.      REGULATORY PERMITS. The Company and its Subsidiaries have in full force and effect all certificates, approvals, authorizations and permits from the appropriate federal, state, local or foreign regulatory authorities and comparable foreign regulatory agencies, necessary to own, lease or operate their respective properties and assets and conduct their respective businesses in the manner currently being conducted, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, approval, authorization or permit, except for such certificates, approvals, authorizations or permits which if not obtained, or such revocations or modifications which, would not have a Material Adverse Effect.

 

17.      INTERNAL ACCOUNTING CONTROLS. Except as otherwise set forth in the SEC Documents, the Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles by a finn  with membership to the PCAOB and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  The Company's management has determined that the Company's internal accounting controls were not effective as of the date of this Agreement as further described in the SEC Documents.

18.      NO MATERIALLY ADVERSE CONTRACTS. ETC. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company's officers has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contract or agreement which in the judgment of the Company's officers has or is expected to have a Material Adverse Effect.

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19.      TAX STATUS. The Company and each of its Subsidiaries has made or filed all United States federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.

20.       CERTAIN TRANSACTIONS. Except as set forth in the SEC Documents and except for transactions pursuant to which the Company makes payments in the ordinary course of business upon tenus no less favorable than the Company could obtain from disinterested third parties and other than the grant of stock options disclosed in the SEC Documents, none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees, consultants,  officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or  personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, such that disclosure would be required in the SEC Documents..

21.       DILUTIVE EFFECT. The Company understands and acknowledges that the number of shares of Common Stock issuable upon purchases pursuant to this Agreement will increase in certain circumstances including, but not necessarily limited to, the circumstance wherein the trading price of the Common Stock declines during the period between the Effective Date and the end of the Open Period. The Company's executive officers and directors have studied and fully understand the nature of the transactions contemplated by this Agreement and recognize that they have a potential dilutive effect on the shareholders of the Company. The board of directors of the Company has concluded, in its good faith business judgment, and with full understanding of the implications, that such issuance is in the best interests of the Company. The Company specifically acknowledges that, subject to such limitations as are expressly set forth in the Registered Offering Transaction Documents, its obligation to issue shares of Common Stock upon purchases pursuant to this Agreement is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.

22.       LOCK-UP. The Company shall cause its officers, insiders, directors, and affiliates or other related parties under control of the Company, to refrain from selling Common Stock during each Pricing Period.

23.       NO GENERAL SOLICITATION. Neither the Company, nor any of its affiliates, nor any person acting on its behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Common Stock to be offered as set forth in this Agreement.

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24.       NO BROKERS.  FINDERS OR FINANCIAL ADVISORY FEES OR COMMISSIONS. No brokers, finders or financial advisory fees or commissions will be payable by the Company, its agents or Subsidiaries, with respect to the transactions contemplated by this Agreement.

 

SECTION V 

COVENANTS OF THE COMPANY

1.         BEST EFFORTS. The Company shall use all commercially reasonable efforts to timely satisfy each of the conditions set forth in Section 7 of this Agreement.

2.         REPORTING STATUS. Until one of the following occurs, the Company shall file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status, or take an action or fail to take any action, which would terminate its status as a reporting company under the 1934 Act: (i) this Agreement terminates pursuant to Section 8 and the Investor has the right to sell all of the Securities without volume restrictions pursuant to Rule 144 promulgated under the 1933 Act, or such other exemption, or (ii) the date on which the Investor has sold all the Securities and this Agreement has been terminated pursuant to Section 8.

3.         USE OF PROCEEDS. The Company will use the proceeds from the sale of the Securities (excluding amounts paid or to be paid by the Company for fees as set forth in the Registered Offering Transaction  Documents, if any) for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for other purposes that the board of directors of the Company, in its good faith deem to be in the best interest of the Company.

4.         FINANCIAL INFORMATION. During the Open Period,  the Company agrees to make available to the Investor via EDGAR or other electronic means the following documents and information on the forms set forth: (i) within five (5) Trading Days after the filing thereof  with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and any Registration Statements or amendments filed pursuant to the 1933 Act; (ii) copies of any notices and other information made available or given to the shareholders of the Company generally, contemporaneously with the making available or giving thereof to the shareholders; and (iii) within two (2) calendar days of filing  or delivery thereof, copies of all  documents filed with, and all correspondence sent to, the Principal Market, any securities exchange or market, or the Financial Industry Regulatory Association, unless such information is material nonpublic information.

5.         RESERVATION OF SHARES. The Company shall take all action necessary to at all times have authorized, and reserved the amount of Shares included in the Registration Statement for issuance pursuant to the Registered Offering Transaction Documents. In the event that the Company determines that it does not have a sufficient number of authorized shares of Common Stock to reserve and keep available for issuance as described in this Section 5.5, the Company shall use all commercially reasonable efforts to increase the number of authorized shares of Common Stock by seeking shareholder approval for the authorization of such additional shares.

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6.         LISTING. The Company shall use all commercially  reasonable efforts to promptly secure and maintain the listing of all of the Registrable Securities (as defined in the Registration Rights Agreement) on the Principal Market and each other national securities exchange and automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain, such listing of all Registrable Securities from time to time issuable under the terms of the Registered Offering Transaction Documents. Neither the Company nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market (excluding suspensions of not more than one (1) Trading Day resulting from business announcements by the Company). The Company shall promptly provide to the Investor copies of any notices it receives from the Principal Market regarding the continued eligibility of the Common Stock for listing on such automated quotation system or securities exchange. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 5.6.

 

7.         TRANSACTIONS WITH AFFILIA TES. The Company shall not, and shall cause each of its Subsidiaries not to, enter into, amend, modify or supplement, or permit any Subsidiary to enter into, amend, modify or supplement, any agreement, transaction, commitment or arrangement with any of its or any Subsidiary's officers, directors, persons who were officers or directors at any time during the previous two (2) years, shareholders who beneficially own 10% or more of the Common Stock, or Affiliates or with any individual related by blood, marriage or adoption to any such individual or with any entity in which any such entity or individual owns a 10% or more beneficial interest (each a "Related Party"), except for (i) customary employment arrangements and benefit programs on reasonable terms, (ii) any agreement, transaction, commitment or arrangement on an arms-length basis on terms no less favorable than terms which would have been obtainable from a disinterested third party other than such Related Party, or (iii) any agreement, transaction, commitment or arrangement which is approved by a majority of the disinterested directors of the Company. For purposes hereof, any director who is also an officer of the Company or any Subsidiary of the Company shall not be a disinterested director with respect to any such agreement, transaction, commitment or arrangement. "Affiliate" for purposes hereof means, with respect to any person or entity, another person or entity that, directly or indirectly, (i) has a 10% or more equity interest in that person or entity, (ii) has 10% or more common ownership with that person or entity, (iii) controls that person or entity, or (iv) is under common control with that person or entity. "Control" or "Controls" for purposes hereof means that a person or entity has the power, directly or indirectly, to conduct or govern the policies of another person or entity.

8.          FILING OF FORM 8-K. On or before the date which is four (4) Trading Days after the Execution Date, the Company shall file a Current Report on Form 8-K with the SEC describing the terms of the transaction contemplated by the Registered Offering Transaction Documents in the form required by the 1934 Act, if such filing is required.

9.         CORPORATE EXISTENCE. The Company shall use all commercially reasonable efforts to preserve and continue the corporate existence of the Company.

10.      NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION· SUSPENSION OF RlGHT TO MAKE A PUT. The Company shall promptly notify the Investor upon the occurrence of any of the following events in respect of a Registration Statement or related prospectus in respect of an offering of the Securities: (i) receipt of any request for additional information by the SEC or any other federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the Registration Statement or related prospectus; (ii) the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Securities for sale in any jurisdiction or the initiation or notice of any proceeding for such purpose; (iv) the happening of any event that makes any statement made in such Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, related prospectus or documents so that, in the case of a Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the related prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (v) the Company's reasonable determination that a post-effective amendment or supplement to the Registration Statement would be appropriate, and the Company shall promptly make available to Investor any such supplement or amendment to the related prospectus. The Company shall not deliver to Investor any Put Notice during the continuation of any of the foregoing events in this Section 5.10.

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11.      TRANSFER AGENT. Upon effectiveness of the Registration Statement, and for so long as the Registration Statement is effective, following delivery of a Put Notice, the Company shall deliver instructions to its transfer agent to issue Shares to the Investor that are covered for resale by the Registration Statement free of restrictive legends.

12.      ACKNOWLEDGEMENT OF TERMS. The Company hereby represents and warrants to the Investor that: (i) it is voluntarily entering into this Agreement of its own freewill, (ii) it is not entering this Agreement under economic duress, (iii) the terms of this Agreement are reasonable and fair to the Company, and (iv) the Company has had independent legal counsel of its own choosing review this Agreement, advise the Company with respect to this  Agreement, and represent the Company in connection with this Agreement.

 

SECTION VI

CONDITIONS OF THE COMPANY'S  ELECTION TO SELL

There is no obligation hereunder of the Company to issue and sell the Securities to the Investor. However, an election by the Company to issue and sell the Securities hereunder, from time to time as permitted hereunder, is further subject to the satisfaction, at or before each Closing Date, of each of the following conditions set forth below. These conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion.

1.        The Investor shall have executed this Agreement and the Registration Rights Agreement and delivered the same to the Company.

		2.	The Investor shall have delivered to the Company a Put Settlement Sheet in the form attached here to as Exhibit Con the Put Notice Date.

 

3.       No statute, rule, regulation, executive orderdecree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

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SECTION VII

FURTHER CONDITIONS OF THE INVESTOR'S OBLIGATION TO PURCHASE

The obligation of the Investor hereunder to purchase Securities is subject to the satisfaction, on or before each Closing Date, of each of the following conditions set forth below.

		1.	The Company shall have executed the Registered Offering Transaction Docilments and delivered the same to the Investor.

 

		2.	The Common Stock shall be authorized for quotation on the Principal Market and trading in the Common Stock shall not have been suspended by the Principal Market or the SEC, at any time beginning on the date hereof and through and including the respective Closing Date (excluding suspensions of not more than one (1) Trading Day resulting from business announcements by the Company, provided that such suspensions occur prior to the Company's delivery of the Put Notice related to such Closing).

 

		3.	The representations and warranties of the Company shall be tn1e and correct in aU material respects as of the date when made and as of the applicable Closing Date as though made at that time and the Company shall have materially performed, satisfied and complied with the covenants, agreements and conditions required by the Registered Offering Transaction Documents to be performed, satisfied or complied with by the Company on or before ·such Closing Date. The Investor may request an update as of such Closing Date regarding the representation contained in Section 4.3.

 

		4.	The Company shall have executed and delivered to the Investor the certificates representing, or have executed electronic book-entry transfer of, the Securities (in such denominations as the Investor shall request) being purchased by the Investor at such Closing.

 

		5.	The board of directors of the Company shall have adopted resolutions consistent with Section 4.2(ii) (the "Resolutions") and such Resolutions shall not have been materially amended or rescinded prior to such Closing Date.

 

		6.	No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

		7.	The Registration Statement shall be effective on each Closing Date and no stop order suspending the effectiveness of the Registration statement shall be in effect or to the Company's knowledge shall be pending or threatened. Furthermore, on each Closing Date (i) neither the Company nor the Investor shall have received notice that the SEC has issued or intends to issue a stop order with respect to such Registration Statement or that the SEC otherwise has suspended or withdrawn the  effectiveness of such  Registration Statement, either  temporarily or permanently, or intends or has threatened to do so (unless the SEC's concerns have been addressed), and (ii) no other suspension of the use or withdrawal of the effectiveness of such Registration Statement or related prospectus shall exist.

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		8.	At the time of each Closing, the Registration Statement (including information or documents incorporated by reference therein) and any amendments or supplements thereto shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading or which would require public disclosure or an update supplement to the prospectus.

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		9.	If applicable, the shareholders of the Company shall have approved the issuance of any Shares in excess of the Maximum Common Stock Issuance in accordance with Section 2.6 or the Company shall have obtained appropriate approval pursuant to the requirements of Nevada law and the Company's Articles of Incorporation and By-laws.

 

		10.	The conditions to such Closing set forth in Section 2.4 shall have been satisfied on or before such Closing Date.

 

		11.	The Company shall have certified to the Investor the number of Shares of Common Stock outstanding when a Put Notice is given to the Investor. The Company's delivery of a Put Notice to the Investor constitutes the Company's certification of the existence of the necessary number of shares of Common Stock reserved for issuance.

 

SECTION VIII 

TERMINATION

This Agreement shall terminate upon any of the following events:

i.       when the Investor has purchased an aggregate of Five Million Dollars ($5,000,000) in the Cominon Stock of the Company pursuant to this Agreement;

ii.       on the date which is thirty-six (36) months after the Effective Date; or 

 

iii.       at such time that the Registration Statement is no longer in effect; or

iv.       at any time at the election of the Company upon 15 days written notice.

Any and all shares, or penalties, if any, due under this Agreement shall be immediately payable and due upon termination of this Agreement.

 

SECTION IX

SUSPENSION

This Agreement shall be suspended upon any of the following events, and shall remain suspended until such event is rectified:

i.       The trading of the Common Stock is suspended by the SEC, the Principal Market or FINRA for a period of two (2) consecutive Trading Days during the Open Period; or,

 

		ii.	The Common Stock ceases to be registered under the 1934 Act or listed or traded on the Principal Market or the Registration Statement is no longer effective (except as permitted hereunder).

 

Immediately upon the occurrence of one of the above-described events, the Company shall send written notice of such event to the Investor.

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SECTION X 

INDEMNIFICATION

In consideration of the parties mutual obligations set forth in the Registered Offering Transaction Documents, each of the parties (in such capacity, an "Indemnitor") shall defend, protect, indemnify and hold harmless the other and all of the other party's shareholders, officers, directors, employees, counsel, and direct or indirect investors and any of the foregoing person's agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "lndemnitees") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and reasonable expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by any Indemnitee as a result of, or arising out of, or relating to (i) any misrepresentation or breach of any representation or warranty made by the Indemnitor or any other certificate, instrument or document contemplated hereby or thereby; (ii) any breach of any covenant, agreement or obligation of the Indemnitor contained in the Registered Offering Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby; or (iii) any cause of action, suit or claim brought or made against such Indemnitee by a third party and arising out of or resulting from the execution, delivery, performance or enforcement of the Registered Offering Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, except insofar as any such misrepresentation, breach or any untrue statement, alleged untrue statement, omission or alleged omission is made in reliance upon and in conformity with information furnished to Indemnitor which is specifically intended for use in the preparation of any such Registration Statement, preliminary prospectus, prospectus or amendments to the prospech1s. To the extent that the foregoing undertaking by the Indemnitor may be unenforceable for any reason, the Indemnitor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The indemnity provisions contained herein shall be in addition to any cause of action or similar rights Indemnitor may have, and any liabilities the Indemnitor or the Indemnitees may be subject to.

 

SECTION XI 

MISCELLANEOUS

1.        LAW GOVERNING THIS AGREEMENT. This Agreement shall be governed by and construed in accordance with the laws of Puerto Rico without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the courts of Puerto Rico, a Commonwealth of the United States of America. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The parties executing this Agreement and other agreements referred to herein or delivered in connection herewith agree to submit to the in personam jurisdiction of such courts. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Agreement  or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Documents by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

20

 

2.          LEGAL FEES: AND MISCELLANEOUS FEES. Except as otherwise set forth in the Registered Offering Transaction Documents (including but not limited to Section 5 of the Registration Rights Agreement), each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. Any attorneys' fees and expenses incurred by either the Company or the Investor in connection with the preparation, negotiation, execution and delivery of any amendments to this Agreement or relating to the enforcement of the rights of any party, after the occurrence of any breach of the terms of this Agreement by another party or any default by another party in respect of the transactions contemplated hereunder, shall be paid on demand by the party which breached the Agreement and/or defaulted, as the case may be. The Company shall pay all stamp and other taxes and duties levied in connection with the issuance of any Securities.

3.        COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the different signatories hereto on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. This Agreement may be executed by facsimile transmission, PDF, electronic signature or other similar electronic means with the same force and effect as if such signature page were an original thereof.

4.        HEADINGS:  SINGULAR/PLURAL. The  headings  of  this Agreement  are  for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Whenever required by the context of this Agreement, the singular shall include the plural and masculine shall include the feminine.

5.          SEVERABILITY. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

 

6.       ENTIRE AGREEMENT; AMENDMENTS. This Agreement is the FINAL AGREEMENT between the Company and the Investor with respect to the terms and conditions set forth herein, and, the terms of this Agreement may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the Parties.

 

7.        NOTICES. Any notices or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic mail (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and email addresses for such communications shall be:

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If to the Company: 

	
Grow Condos, Inc. Condos, Inc., Inc.

	
 

	
722 W. Dutton Road, Eagle Point, OR

	
 

	
97524

	
 

	
Attn:

	
 

	
Email:

	
If to the Investor:

	
Tangiers Global, LLC

	
 

	
168 Dorado Beach East

	
 

	
Dorado, PR 00646

	
 

	
Email: admin@tangierscapital.com

	
 

	
 

Each party shall provide five (5) business days prior written notice to the other party of any change in address or email address.

8.        NO ASSIGNMENT. This Agreement may not be assigned.

9.        NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the parties hereto and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

10.      SURVIVAL. The representations and warranties of the Company and the Investor contained in Sections 3 and 4, the agreements and covenants set forth in Section 5, the indemnification provisions set forth in Section 10 and this Section 11, shall survive each of the Closings and the termination of this Agreement.

11.      PUBLICITY. The Company and the Investor shall consult with each other in issuing any press  releases or  otherwise making public statements with respect to  the transactions contemplated hereby and no party shall issue any such press release or otherwise make any such public statement without the prior consent of the other party, which consent shall not be unreasonably withheld or delayed, except that no prior consent shall be required if such disclosure is required by law, as detennined solely by the Company in consultation with its counsel. The Investor acknowledges that this Agreement and all or part of the Registered Offering Transaction Documents may be deemed to be "material contracts" as that tennis defined by Item 601(b)(l0) of Regulation S-K, and that the Company may therefore be required to file such documents as exhibits to reports or registration statements filed under the 1933 Act or the 1934 Act.  The Investor further agrees that the status of such documents and materials as material contracts shall be determined solely by the Company, in consultation with its counsel.

12.      EXCLUSIVITY. The Company shall not pursue an equity line transaction similar to the transactions contemplated in this Agreement with any other person or entity until the earlier of (i) the Effective Date and (ii) termination of this Agreement in accordance with Section 8.

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13.      FURTHER ASSURANCES. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

14.      NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party, as the parties mutually agree that each has had a full and fair opportunity to review this Agreement and seek the advice of counsel on it.

15.      REM  EDIES. The Investor shall have all rights and remedies set forth in this Agreement and the Registration Rights Agreement and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which the Investor has by law. Any person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any default or breach of any provision of this Agreement, including the recovery of reasonable attorneys fees and costs, and to exercise all other rights granted by law.

16.      PAYMENT SET ASIDE. To the extent that the Company makes a payment or payments to the Investor hereunder or under the Registration Rights Agreement or the Investor enforces or exercises its rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

11.17  COMMITMENT FEE. Upon the date of execution of this Agreement, the Company shall be required to issue to the Purchaser a $25,000 promissory note as a commitment fee (the "Commitment Fee Note"). The Commitment Fee Note is attached hereto as "Exhibit D".

SECTION XII

NON-DISCLOSURE OF NON-PUBLIC INFORMATION

The Company shall not disclose non-public infonnation to the Investor, its advisors, or its representatives.

Nothing in the Registered Offering Transaction Documents shall require or be deemed to require the Company to disclose non-public information to the Investor or its advisors or representatives, and the Company represents that it does not disseminate non-public infonnation to any investors who purchase stock in the Company in a public offering, to money managers or to securities analysts, provided, however, that notwithstanding anything herein to the contrary, the Company will, as hereinabove provided, immediately notify the advisors and representatives of the Investor and, if any, underwriters, of any event or the existence of any circumstance (without any obligation to disclose the specific event or circumstance) of which it becomes aware, constituting non-public information (whether or not requested of the Company specifically or generally during the course of due diligence by such persons or entities), which, if not disclosed in the prospectus included in the Registration Statement  would cause such prospectus to include a material misstatement or to omit a material fact required to be stated therein in order to make the statements, therein, in light of the circumstances in which they were made, not misleading. Nothing contained in this Section 12 shall be construed to mean that such persons or entities other than the Investor (without the written consent of the Investor prior to disclosure of such information) may not obtain non-public information in the course of conducting due diligence in accordance with the terms of this Agreement and nothing herein shall prevent any such persons or entities from notifying the Company of their opinion that based on such due diligence by such persons or entities, that the Registration Statement contains an untrue statement of material fact or omits a material fact required to be stated in the Registration Statement or necessary to make the statements contained therein, in light of the circumstances in which they were made, not misleading.

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SECTION XIII 

ACKNOWLEDGEMENTS OF THE PARTIES

Notwithstanding anything in this Agreement to the contrary, the parties hereto hereby acknowledge and agree to the following: (i) the Investor makes no representations or covenants that it will not engage in trading in the securities of the Company, other than the Investor will not short or pre-sell, either directly or indirectly through its affiliates, principals or advisors, the Common Stock at any time during the Open Period; (ii) the Company shall comply with its obligations under Section 5.8 in a timely manner; (iii) the Company has not and shall not provide material non-public information to the Investor unless prior thereto the Investor shall have executed a written agreement regarding the confidentiality and use of such information; and (iv) the Company understands and confirms that the Investor will be relying on the acknowledgements set forth in clauses (i) through (iii) above if the Investor effects any transactions in the securities of the Company.

(Signature page follows}

24

 

Your signature on this Signature Page evidences your agreement to be bound by the terms and conditions of the Investment Agreement as of the date first written above.  The undersigned signatory hereby cet1iftes that he has read and understands the Investment Agreement, and the representations made by the undersigned in this Investment Agreement are true and accurate, and agrees to be bound by its terms.

 

	
 

	
TANGlERS GLOBAL, LLC

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Michael Sobeck

	
 

	
 

	
 

	
Name:

	
Michael Sobeck

	
 

	
 

	
 

	
Title:

	
Managing Member

	
 

 

	
 

	
Grow Condos, Inc. Condos, Inc., Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Wayne A. Zallen

	
 

	
 

	
 

	
Name:

	
Wayne A. Zallen

	
 

	
 

	
 

	
Title:

	
President & CEO

	
 

  

[SIGNATURE PAGE OF INVESTMENT AGREEM:ENT]

25

 

LIST OF EXHIBITS

EXHIBIT A      Registration Rights Agreement

EXHIBIT B      Put Notice

EXHIBIT C      Put Settlement Sheet

EXHIBIT D      Commitment Fee Note

 

26

EXHIBIT A

REGISTRATION RIGHTS AGREEMENT

See attached.

27

EXHIBIT B

FORM OF PUT NOTICE

Date:

RE: Put Notice Number        

Dear Mr.          

This is to inform you that as of today, GROW CONDOS, INC. CONDOS, INC., INC., a NEVADA corporation (the "Company"), hereby elects to exercise its right pursuant to the Investment Agreement to require Tangiers Global, LLC to purchase shares of its common stock. The Company hereby certifies that:

The amount of this put is $             

The Pricing Period runs from             until            

The Purchase Price is: $             

The number of Put Shares Due:           ,

The current number of shares of common stock issued and outstanding is:             

The number of shares currently available for resale on the S-1 is:             

Regards,

GROW CONDOS, INC. CONDOS, INC., INC. 

 

By:                     

Name: 

Title:

28

 

EXHIBIT C

PUT SETTLEMENT SHEET

 

Date:          

Dear Mr.           ,

 

Pursuant to the Put given by GROW CONDOS, INC. CONDOS, INC., INC. to Tangiers Global, LLC. ("TG") on 201_, we are now submitting the amount of shares of common stock for you to issue to TG.

Please have a certificate bearing no restncttve legend totaling              shares issued to TG immediately and send via DWAC to the following account:

(INSERT]

If not DWAC eligible, please send FedEx Priority Overnight to: 

[INSERT ADDRESS]

Once these shares are received by us, we will have the funds wired to the Company. 

 

Regards,

TANGIERS GLOBAL, LLC

By:                   

Name:

Title: Managing Member

 

29

EXHIBIT D

COMMITMENT FEE NOTE

 

SCHEDULE 4.3

See attached.

30

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