Document:

Exhibit 10.1

 

EXHIBIT 10.1

LEASE AGREEMENT

FOR PREMISES LOCATED AT

1351 SOUTH SUNSET, SUITE A,

LONGMONT, COLORADO

BETWEEN

DOT HILL SYSTEMS CORP.

AS TENANT

AND

CIRCLE CAPITAL LONGMONT 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 — RESPONSIBILITY — NO HOLES IN ROOF — NO NEW EQUIPMENT ON
ROOF

	 	11.	 	 	MECHANIC’S LIENS

	 	12.	 	 	UNIFORM SIGNS; NO “FOR RENT” SIGNS

	 	13.	 	 	MAINTENANCE AND REPAIRS OF THE BUILDING; LANDLORD NOT LIABLE FOR DAMAGE TO CONTENTS

	 	14.	 	 	CONDITION UPON SURRENDER — RETURN OF KEYS

	 	15.	 	 	STORAGE OUTSIDE THE BUILDING; NO WASTE, NO NUISANCE; COMPLIANCE WITH LAWS; FUTURE RULES AND
REGULATIONS

	 	16.	 	 	LIABILITY FOR OVERLOAD

	 	17.	 	 	INSURANCE

	 	18.	 	 	FIRE REGULATIONS — TENANT RESPONSIBILITY

	 	19.	 	 	REPLACEMENT OF BUILDING — CASUALTY DAMAGE

	 	20.	 	 	ENVIRONMENTAL MATTERS

	 	21.	 	 	ENTRY BY LANDLORD

	 	22.	 	 	DEFAULT — REMEDIES BY LANDLORD

	 	23.	 	 	OMITTED

	 	24.	 	 	LEGAL PROCEEDINGS AGAINST TENANT BY THIRD PARTIES; TENANT TO PAY LANDLORD’S FEES

	 	25.	 	 	INDEMNIFICATION BY TENANT AND BY LANDLORD

	 	26.	 	 	ASSIGNMENT OR SUBLETTING

	 	27.	 	 	LANDLORD’S WARRANTY OF TITLE; QUIET ENJOYMENT

	 	28.	 	 	ADDITIONAL DEVELOPMENT OF PROPERTY — RIGHTS OF LANDLORD

	 	29.	 	 	GOVERNMENTAL ACQUISITION OF THE PREMISES

	 	30.	 	 	SUBORDINATION OF THE LEASEHOLD TO MORTGAGES

	 	31.	 	 	MEMORANDUM OF LEASE — CONFIDENTIALITY

	 	32.	 	 	NO WAIVER OF BREACH; ACCEPTANCE OF PARTIAL PAYMENTS OF RENT

	 	33.	 	 	CONTROLLING LAW; PARTIAL INVALIDITY; MODIFICATIONS OR EXTENSIONS.

	 	34.	 	 	INUREMENTS

	 	35.	 	 	TIME

 

 

	 	 	 	 	 
	 	36.	 	 	ADDRESSES; EMPLOYER IDENTIFICATION NUMBERS; METHOD OF GIVING NOTICE

	 	37.	 	 	DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS

	 	38.	 	 	ADDITIONAL PROVISIONS

	 	 	 	 	38.1           Brokers

	 	 	 	 	38.2           Parking

	 	 	 	 	38.3.          Substitute Premises (intentionally deleted)

	 	 	 	 	38.4           Transfer by Landlord

	 	 	 	 	38.5           No Merger

	 	 	 	 	38.6           Common Area Use.

	 	 	 	 	38.7           Construction

	 	 	 	 	38.8           Section And Paragraph Headings; Grammar.

	 	 	 	 	38.9           Severability

	 	 	 	 	38.10         Acceptance of Keys, Rent or Surrender

	 	 	 	 	38.11         Building Name and Size

	 	 	 	 	38.12         Diminution of View

	 	 	 	 	38.13         Lender’s Requirements

	 	 	 	 	38.14         Effectiveness

	 	 	 	 	38.15         Survival

	 	 	 	 	38.16         Authority for Action

	 	 	 	 	38.17.        Counterparts

	 	 	 	 	38.18         Option to Expand

	 	 	 	 	38.19         Option to Expand — New Construction

	 	 	 	 	38.20         Right of Refusal

	 	 	 	 	38.21         Termination Option

	 	 	 	 	38.22         Option to Extend

	 	39.	 	 	OBLIGATIONS OF INDEMNITEE

 

 

LEASE

     THIS LEASE, made and entered into this 12 day of April, 2007 (this “Lease”), by and between
CIRCLE CAPITAL LONGMONT LLC, a Delaware limited liability company, hereinafter referred to as
“Landlord,” and DOT HILL SYSTEMS CORP., a Delaware corporation hereinafter referred to as “Tenant.”

WITNESSETH:

     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 the 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 1351 South
Sunset, in the City of Longmont, County of
Boulder, State of Colorado, consisting of
approximately 58,064 rentable square feet of
space
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.2	 	 	Premises:
	 	approximately 44,331 rentable square feet
located in Suite A plus any Expansion Space or
Construction Premises as those terms are
defined herein upon exercise of the Expansion
Option or Construction Option, as applicable.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.3	 	 	Initial Term:
	 	65 whole calendar months
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.4	 	 	Commencement Date:
	 	The Commencement Date shall be the first to
occur of: (a) the date Tenant begins
operating its business from all or any portion
of the Premises; (b) the date of substantial
completion of the Tenant Improvements, and the
securing of all permits or other documentation
required by Tenant to legally operate its
business from the Premises; or (c) September
15, 2007.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.5	 	 	Expiration Date:
	 	Last day of the 65th whole calendar month
following the Commencement Date
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.6	 	 	Base Rent:	 	 

	 	 	 	 	 	 	 	 	 
	Period	 	Annually/RSF	 	Monthly
	Months 1 – 5
	 	$	8.50	*	 	$	31,401.13	*
	Months 6 – 12
	 	$	8.50	 	 	$	31,401.13	 
	Months 13 -24
	 	$	8.76	 	 	$	32,361.63	 
	Months 25 – 36
	 	$	9.02	 	 	$	33,322.14	 
	Months 37 – 48
	 	$	9.29	 	 	$	34,319.58	 
	Months 59 - 65
	 	$	9.57	 	 	$	35,353.97	 

 

			
	*	 	Subject to the Abated Rent Period defined
in Section 5.6

	 	 	 	 	 	 	 	 	 
	 

	 	 	1.7	 	 	Tenant Improvements:
	 	The Tenant Improvements shall be completed in accordance with the Work Letter
attached as Exhibit B.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.8	 	 	TI Allowance:
	 	$664,965.00 (based on $15.00 per rentable square foot of the Premises) (the “TI
Allowance”) as more particularly provided in Section 4.2 hereof

 

 

	 	 	 	 	 	 	 	 	 
	 

	 	 	1.9	 	 	Operating Expenses:
	 	Initial Estimate of Operating
Expenses: $2.81 per square foot of the Building

Initial Estimated Payment: $10,380.84 per month

Tenant’s Share: 76.35%
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.10	 	 	Deposit:
	 	$83,563.94 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.11	 	 	Permitted Use:
	 	General office use, research and development and any other lawful purpose
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.12	 	 	 	 	Intentionally Omitted
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.13	 	 	Landlord’s Notice Address:
	 	4600 South Ulster Street, Suite 590 
	 

	 	 	 	 	 	 	 	Denver, CO 80237
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Landlord’s Fax Number:
	 	(303) 565-2745 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.14	 	 	Rent Payment Address:
	 	Compass Bank
	 

	 	 	 	 	 	 	 	P.O. Box 22056
	 

	 	 	 	 	 	 	 	Tempe, AZ 85285-2056
	 

	 	 	 	 	 	 	 	Depository Account #2503608955.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.15	 	 	Landlord’s Tax I.D.:
	 	20-2662078 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.16	 	 	Tenant’s Notice Address:	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Pre-commencement Address:
	 	2200 Faraday Avenue, Suite 100 
	 

	 	 	 	 	 	 	 	Carlsbad, CA 92008
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Post-commencement Address:
	 	1351 South Sunset, Suite A 
	 

	 	 	 	 	 	 	 	Longmont, CO 80501
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Tenant’s Fax Number:
	 	760-931-5527 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.17	 	 	Tenant’s Tax I.D.:
	 	13-3460176 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.18	 	 	Landlord’s Broker:
	 	Dean Callan & Company, Inc. and Frederick Ross Company
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.19	 	 	Cooperating Broker:
	 	Studley
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.20	 	 	Parking:
	 	191 surface parking spaces at the Commencement Date (based on a ratio of 4.31
surface parking spaces per 1,000 square feet of rentable floor area leased),
subject to adjustment on the ratio set forth above in the event of any increase in
the size of the rentable floor area of the Premises pursuant to the terms of this
Lease
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.21	 	 	Attachments:
	 	[check if applicable]
	 

	 	 	 	 	 	 	 	o     Addendum
	 

	 	 	 	 	 	 	 	þ     Exhibit A-1: Building
	 

	 	 	 	 	 	 	 	þ     Exhibit A-2: Premises
	 

	 	 	 	 	 	 	 	þ     Exhibit B: Tenant Improvements — Tenant Constructs
	 

	 	 	 	 	 	 	 	þ     Exhibit C: Commencement Date Agreement
	 

	 	 	 	 	 	 	 	þ     Exhibit D: Furniture

     2. PREMISES LEASED; DESCRIPTION. Landlord hereby leases unto Tenant the Premises
which is a part of the Building, 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; together with all
appurtenances thereto, and all fixtures attached thereto, in present condition, and together with
nonexclusive reasonable access across any other land owned by Landlord as may be required for use
of the Premises by Tenant, with such access to be on such roadways, sidewalks, and other common
areas of which the Premises are a part, or of any such adjacent lands owned by Landlord, as
Landlord may from time to time designate.

     3. PRESENT CONDITION OF PROPERTY. 

          3.1 Representations of Landlord. Landlord represents the following with respect to the
Building and the Premises: (a) that the Lease is a valid and binding obligation of the Landlord,
enforceable in accordance with its terms; (b) the representations related to the condition of the
Premises as set forth in Section 8.1 including those regarding
the HVAC units,

 

 

and the Building’s
systems including roof, plumbing, electrical and mechanical shall be true and correct on the date
Landlord delivers the Premises to Tenant; and (c) Landlord has not received written notice of any
outstanding violation of applicable laws related to the Building. Other than the foregoing, Tenant
has examined and accepts the Building, improvements, and any fixtures on the Premises in its
present condition, subject to the construction of Tenant Improvements as detailed on the plans and
specifications attached as Exhibit B, attached hereto and made a part hereof by reference. Except
as specifically set forth herein, 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. Except as set forth herein and for breaches of representations
or warranties made herein, in no event shall Landlord be liable for any defect in the Premises or
its contents or for any limitation on the use of the Premises.

          3.2 Upgrades. Landlord shall perform the upgrades referenced in Section 13 of the Lease.

     4. TERM.

          4.1 Initial Term. The Initial Term of the 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 or renewals 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 construction of the Tenant Improvements
shall be accomplished in accordance with the Work Letter attached
hereto as Exhibit B and
the Commencement Date shall be as set forth in Section 1.4 hereof.

               4.2.1 Tenant Improvements Allowance. Landlord shall provide Tenant an allowance for the costs
of the Tenant Improvements up to the amount of the TI Allowance defined in Section 1.8 hereof. The
TI Allowance shall be paid by Landlord subject to and in accordance with the provisions of Exhibit
B. Tenant shall be responsible for and shall pay any costs of the Tenant Improvements in excess of
the TI Allowance in accordance with Exhibit B. The TI Allowance is to be expended solely for the
benefit of Landlord and for Tenant to hire an architect/space planner; that is, the TI 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, as well as
for an architect/space planer to provide services including space planning, overall design
coordination and construction administration. The TI Allowance shall not be used for movable
furniture, equipment, cabling, and trade fixtures not physically attached to the Premises except as
set forth below. Notwithstanding the foregoing, Tenant shall, however, have the right to use an
amount of the TI Allowance (and not in addition to the TI Allowance) not to exceed $5.00 per
rentable square foot of the Premises (“Soft Cost Allowance”) for Tenant’s moving expenses of any
kind or nature to move into the initial Premises, and the purchase and installation of
data/telecommunications cabling and equipment and furniture, including the Furniture as defined
below, fixtures and data equipment of which, although purchased from funds from the TI Allowance,
Tenant shall remain the owner. Tenant acknowledges that certain furniture is currently located in
the Premises which is owned by a prior tenant of the Premises, which furniture is described on
Exhibit D attached hereto (“Furniture”). In the event Tenant purchases all or any portion of the
Furniture from the prior tenant, the Soft Cost Allowance may be used for such purchase. All costs
of the Tenant Improvements in excess of the TI Allowance shall be at Tenant’s expense and shall be
payable in accordance with the provisions of Exhibit B. Notwithstanding anything to the contrary
contained herein or in Exhibit B, to the extent the costs of the Tenant Improvements in the initial
Premises exceed the TI Allowance (“Excess TI Costs”), Tenant shall have the right to elect to have
Landlord fund up to $221,655.00 of such Excess TI Costs and Tenant shall
pay such funded amount of the Excess TI Costs (“Funded Excess TI Costs”) to Landlord as additional
rent under the Lease in 65 equal monthly installments over the Initial Term (including the Abated
Rent Period), calculated by amortizing the Funded Excess TI Costs over 65 months, plus interest at
a rate of 8% per annum.

          4.3 Landlord Obligation for Initial Space Plan. Landlord shall, at its own cost and
expense, fund the cost of an initial space plan and one revision up to ten cents ($0.10) per
rentable square feet. Said plan shall be completed by Tenant’s architect, or Landlord’s architect,
in Tenant’s sole discretion.

          4.4 Commencement Agreement. As soon as the Term commences, Landlord and Tenant agree
to execute a commencement agreement in the form attached as Exhibit C hereto, setting forth the
Commencement Date and Expiration Date.

          4.5 Acceptance of Condition of Premises and Building. Provided that the Premises and
Building are physically vacant (but for any occupancy on behalf of Tenant), Tenant shall have from
May 1, 2007 through and including May 8, 2007 to conduct, or have conducted, an inspection of the
Premises and Building. If Tenant finds that the condition of the Premises or Building does not
comply with Landlord’s obligations, representations or warranties as per this Lease, Tenant shall
send notice to Landlord of such non-compliance by midnight on May 11, 2007. Provided Tenant had
the opportunity to inspect as set forth herein, Tenant’s failure to timely send such notice
shall be conclusive evidence that the Premises are in the condition agreed between Landlord
and Tenant. In the event that the Premises or Building are not available to Tenant for inspection
due to the occupancy of the Premises or Building by another entity or otherwise, the parties will
agree upon another time period of

 

 

identical length during which the Premises are vacant and Tenant
is able to conduct an inspection, and the provisions of this paragraph will apply similarly to such
time period.

     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 1.6, in advance without notice. Rent shall be paid without set off, abatement (except
as otherwise specifically provided in Section 5.6), or diminution, at the address set forth in
Section 1.14, or at such other place as Landlord from time to time designates in writing.

          5.2 Operating Expenses. Tenant shall pay to Landlord as additional Rent during the
Term hereof, in addition to the Base Rent, 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 1.9 hereof, which percentage is determined by dividing the approximate square
footage of the Premises by the total approximate square footage of the 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 and regulations, but excluding
any costs that Landlord is responsible for at Landlord’s sole cost and expense, without
reimbursement from Tenant, to the extent expressly so stated in this Lease. Operating Expenses
shall be calculated in accordance with generally accepted accounting principles consistently
applied. 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,  excluding any costs that Landlord is responsible for at Landlord’s
sole cost and expense, without reimbursement from Tenant, to the extent expressly so stated in this
Lease;

                    (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, but excluding any costs that Landlord is
responsible for at Landlord’s sole cost and expense, without reimbursement from Tenant, to the
extent expressly so stated in this Lease;

                    (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) Reasonable and customary management fees (not to exceed 4% of the gross rental for the
Building) and all costs incurred in the maintenance and/or cleaning of the Building or Premises
except those janitorial services separately contracted and paid for by Tenant or tenants;

                    (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; and

                    (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.

 

 

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”);

                    (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 the Tenant;

                    (c) Any principal and interest payments on mortgages and other mortgage related 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) Any expenses paid by Landlord to comply with those portions of the Americans with
Disabilities Act in effect on the date of this Lease and specifically related to ingress and egress
to the Building, restrooms and elevators; and

                    (g) Any expenses paid by Landlord to comply with its obligations for Hazardous Materials as
set forth in Section 20 of this Lease.

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. The Operating Expense categories may, in
Landlord’s discretion, include the following: fire alarm; HVAC; insurance; taxes; maintenance;
property management fee and security services (“Operating Expense Categories”). Other than
expenses appropriately included in one of the foregoing Operating Expense Categories, there shall
be no
other expenses included in Operating Expenses during the Term. Notwithstanding anything to the
contrary herein, for the purposes of calculating Tenant’s Share of Operating Expenses, “Controlled
Expenses” (hereafter defined) will not exceed the “Maximum Controlled Expenses” (hereafter
defined). “Controlled Expenses” means all Operating Expenses except those attributable to Taxes,
costs of insurance, including, without limitation, liability insurance, casualty insurance and
worker’s compensation insurance, costs of utilities, costs of security, and costs of compliance
with laws as provided in Section 5.2.2. If Landlord manages the Building the management fees
included within Operating Expenses are a Controlled Expense. “Maximum Controlled Expenses” shall
mean: (a) for calendar year 2007, the full amount of the actual expenses for Controlled Expenses as
determined in accordance with the foregoing provisions; (b) for calendar year 2008 and each
calendar year thereafter, the prior calendar year’s Maximum Controlled Expenses multiplied by 1.05.
The limitations described above are a limitation only on the calculation and passthrough to Tenant
of Tenant’s Share of Operating Expenses and such limitation does not prohibit Landlord from
spending amounts in excess thereof.

               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 1.9 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 1.9 of this Lease.
Landlord shall deliver to Tenant within sixty (60) days after the expiration of each calendar year
a reasonably detailed statement showing Tenant’s Share of the actual Operating Expense incurred
during such year (“Reconciliation Statement”). If Tenant’s payments under this Section during said
subsequent year exceed Tenant’s Share 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 said subsequent year were less than Tenant’s
Share as indicated on said statement, Tenant shall pay to Landlord the amount of the deficiency
within thirty (30) days after Tenant’s receipt 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 mutually agreed upon by both parties, for a determination which will be conclusive and
binding upon Landlord and Tenant. Except as set forth in 5.2.4 below, all costs incurred by Tenant
for Tenant’s Accountants shall be paid for by Tenant. Notwithstanding the pendency of any dispute,
Tenant shall continue to pay Landlord the amount of the estimated payment as set forth in Section
1.9 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.

               5.2.4 Tenant shall have the right in its sole and absolute discretion, but not the duty, to
inspect and audit Landlord’s records concerning Operating Expenses at any reasonable time upon
twenty (20) days prior written notice to determine Landlord’s compliance with the terms of Section
5.2 of this Lease. To exercise such audit right, Tenant shall deliver its written notice to
Landlord within ninety (90) days after the date of Tenant’s receipt of Landlord’s Reconciliation
Statement and such audit shall be performed by an independent non-contingency based accountant and
shall be limited to the Operating Expenses set forth on such Reconciliation Statement and shall not
relate to prior year’s Operating Expenses. If such audit determines that Landlord has overcharged
Tenant by more than five percent (5%), then Landlord shall reimburse Tenant for the reasonable
costs incurred by Tenant for such audit, otherwise the audit expenses shall be made at the sole
cost and expense of Tenant. If the audit determines that Tenant has paid more than Tenant’s Share
of Operating Expenses, Landlord shall credit Tenant’s next ensuing payments of Operating Expenses
with the overcharge until offset in full. If the audit determines that Tenant has underpaid
Tenant’s Share of Operating Expenses, Tenant shall pay such deficiency within 30 days after
completion of the audit. The results of the audit shall be kept confidential by Tenant except
for prompt delivery of a copy thereof to Landlord and except to the extent the audit must be
disclosed by Tenant in order to enforce its rights under this Lease.

          5.3 Late Charges. Tenant will pay a late charge equal to five percent (5%) of any
monthly Base Rent payment or other payment not paid when due, which payment shall be in addition to
any interest elsewhere provided for.

          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.

          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.

          5.6 Abated Rent Period. Notwithstanding anything to the contrary contained herein, so
long as there is no event of default by Tenant, Tenant may occupy the Premises without payment of
Base Rent and Additional Rent for a 5-month period commencing on the date Tenant’s obligation to
pay Base Rent and Additional Rent would otherwise commence in accordance with the Lease and
terminating five months from such date (the “Abated Rent Period”). Rents payable hereunder are
allocable to, and will be accrued by the parties during, their fiscal periods in which the same is
actually paid. No portion of the Base Rent or Additional Rent paid by Tenant during periods after
the expiration of the Abated Rent Period will be allocated to such Abated Rent Period, nor is such
Base Rent or Additional Rent intended to be allocable to the Abated Rent Period. If the Lease is
terminated by Landlord due to an event of Tenant’s default hereunder, all Rent abated hereunder
shall become immediately due from Tenant.

     6. TAXES — REAL PROPERTY — PAID BY TENANT — PROTEST. Tenant shall pay as Operating
Expenses, Tenant’s Share of all real estate taxes and assessments, 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 the 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. 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, hot
water, heat, gas, electricity, light, telephone, cable TV or other utilities used, rendered, or
supplied, upon or in connection with the Premises. Tenant shall obtain and contract directly with
the respective utility provider or janitorial service and pay all charges for any utilities
separately metered to the Premises or janitorial services separately contracted for 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 the Premises are
abandoned by Tenant or if the Lease is terminated. Upon the date the Premises are delivered to
Tenant, the HVAC units (described below), the roof, plumbing electrical and mechanical systems
serving the Premises shall be in good working order, condition and repair. The HVAC units shall
consist of individually zoned, roof-mounted heating/cooling units which shall provide an average of
5 tons of cooling per 2,000-2,500 square feet of office area.

     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. 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 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.

          8.2 Private Security Service. Landlord may, in its sole discretion, engage a private
security service, as an independent contractor, to patrol an area which includes the Premises.
Notwithstanding anything to the contrary contained in Section 5.2 of the Lease, if Landlord does so
employ a private security service, the cost thereof shall be considered an Operating Expense as
defined in Section 5.2.2 herein and Tenant’s Share thereof shall be reimbursable by Tenant
pursuant to the terms of Section 5.2.

     Landlord shall have absolutely 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 the 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 itself engage such additional security
service for the Premises as Tenant chooses, at Tenant’s sole expense.

     Nothing herein shall limit any action by Tenant against any person or entity providing private
security service, provided that Landlord shall not be party to, or liable for any judgment entered
in such an action, as a defendant, cross defendant, third-party defendant, or otherwise.

     Tenant shall have access to the Premises, and, subject to the terms of Section 8.1, shall have
electrical service, seven (7) days per week, twenty-four (24) hours per day, subject to Landlord’s
reasonable security requirements for the Building.

     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 one and one-half times the monthly Base Rent paid for the last month of
tenancy under this Lease, plus payment of all additional Rent under this Lease. Such
month-to-month tenancy may be terminated by Landlord at midnight on any day which is more than
twenty-nine (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. Notwithstanding the foregoing, Tenant shall have a right to remain in possession of
the Premises and continue to pay Rent without a written agreement as to such possession on a month
to month tenancy terminable by Tenant upon thirty (30) days prior written notice, for one period of
up to six months after the expiration of the Term hereof so

 

 

long as Tenant notifies Landlord in
writing of its intent to do so not less than six months prior to the Expiration Date of the Term
(the “Permitted Holdover”). Tenant’s occupancy for the initial three months of the Permitted
Holdover shall be on the terms of this Lease for the prior year, including payment of all
Additional Rent, and the next three months monthly Base Rent shall thereafter be at 150% of the
monthly Base Rent rate payable during the third (3rd) month of the Permitted Holdover,
plus all Additional Rent. After six months of Permitted Holdover tenancy, the Permitted Holdover
shall be of no further force and effect, and Tenant shall thereafter be deemed a month-to-month
Tenant and the Base Rent rate during such holdover tenancy shall be equivalent to one and one-half
times the monthly Base Rent paid for the last month of the Permitted Holdover, plus payment of all
additional Rent under this Lease.

     10. ALTERATION — CHANGES AND ADDITIONS — RESPONSIBILITY — NO HOLES IN ROOF — NO NEW
EQUIPMENT ON ROOF. Subject to Landlord’s consent that any alterations requested by Tenant do
not negatively affect the integrity of the Premises, which consent shall not be unreasonably
withheld, conditioned or delayed. Tenant may,
during the Term, at Tenant’s expense, erect inside partitions, add to existing electric power
service, add telephone outlets or other communication services, add light fixtures, install
additional heating and/or air conditioning or make such other changes or alterations as Tenant may
desire, provided that prior to commencement of any such work, 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. If Tenant so requests, Landlord will have the drawings and
specifications prepared for Tenant, at Tenant’s expense, utilizing Landlord’s in-house staff.
Tenant will pay Landlord’s customary hourly charges for such services, as additional Rent, to be
paid within 10 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 to Landlord’s satisfaction. Landlord, in its reasonable discretion, may refuse to
consent to the alterations because of the inadequacy of the drawings and specifications. Tenant
may not commence the alterations until Landlord’s written consent has been given. Any additions or
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 consent, which
consent shall not be unreasonably withheld, conditioned or delayed, and only by Landlord’s
approved contractor.

     If the drawings and specifications are adequate, to Landlord’s sole satisfaction, then
Landlord will not unreasonably withhold, condition or delay its consent to the alterations, except
that Landlord may withhold its consent to new or altered openings (holes) in the roof, or placement
of additional equipment on the roof, as follows. Landlord may withhold its consent to new openings
in the roof or placement of additional equipment on the roof unless Landlord, in its sole
discretion, is satisfied that the risk of increased leakage or risk of more frequent repairs or
maintenance of the roof is acceptable to Landlord. Any new or altered opening in the roof, or
placement of additional equipment thereon, shall be considered an alteration which requires the
prior written consent of Landlord. If within thirty (30) days after such plans and specifications
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 plans and specifications shall be
considered denied by Landlord. As a condition of approval for such alternations, Landlord shall
have the right to require Tenant to furnish adequate bond or other security acceptable to Landlord
for performance of and payment for the work to be performed.

     Upon Landlord’s approval of any request for alterations, Landlord shall inform Tenant in
writing if Tenant will be required at the end of this Lease to remove the proposed additions and/or
alterations. If such additions or alterations are required to be removed upon the expiration of
the Lease, such additions and alterations (excluding trade fixtures) shall be and remain the
property of Landlord. Landlord shall have the option to require Tenant to remove any or all such
fixtures and equipment and restore the Premises to the condition existing immediately prior to such
change and/or installation, normal wear and tear excepted, all at Tenant’s cost and expense. All
work done by Tenant shall conform to 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.

     If any such work done by Tenant causes damage to the structural portion, exterior finish or
roof of the Premises, then the costs of repair of such damage shall be the responsibility of
Tenant. After such repair, the on-going maintenance to structural portions, exterior finish or
roof shall be the responsibility of the Landlord, but reimbursable in the form of Operating
Expenses.

     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.

     Notwithstanding the foregoing, Landlord grants to Tenant a non-exclusive license for the term
of the Lease, without the payment of any additional rent, for the purpose of installing,
maintaining and operating, from time to time, on a portion of the roof of the Building (“Roof”)
satellite antennae and dishes, terrestrial microwave antennae and dishes, transmitters, and other
similar future types of telecommunications devices which may be a variant thereof (collectively,
hereinafter the “Satellite Antennae”), and related equipment, conduits, cables and materials to be
located on the Roof or in other parts of the Building (such equipment, conduits, cables, and
materials collectively referred to herein as the “Related Equipment”) or the Satellite Antennae
(such equipment, conduits, cables, materials, and Satellite Antennae collectively referred to
herein as the “Communications Equipment”) in accordance with the terms of this Section. Landlord
shall charge no additional rental for Tenant’s use of the Roof; provided, however, all costs and
expenses related to installation (including costs of acquiring any required permits therefor),
maintenance, operation and removal of the Related Equipment, and Communications Equipment shall be
borne by Tenant. The plans and specifications and location for the Related Equipment, and
Communications Equipment shall

 

 

be subject to approval by Landlord (which approval shall not be
unreasonably withheld, conditioned or delayed) and approval under Applicable Laws and the
applicable Declarations (as defined in Section 37). Tenant shall have a right to use that portion
of the Roof located directly above the Premises that is usable for such purpose (the “Roof Space”).
Tenant’s installation of the Communications Equipment and Related Equipment and the use thereof
shall be subject to the following provisions:

                    A. Tenant will not use the Roof for any purpose other than operation of the Related Equipment
and Communications Equipment for Tenant’s business operations and Tenant shall not have any right
to license or otherwise provide use of the Related Equipment and Communications Equipment to
others. Tenant shall install access pavers on the Roof at Tenant’s sole cost and expense (if
required beyond the access pavers installed by Landlord as shown on Landlord’s Drawings and
Specifications), and Tenant and Tenant’s agents, contractors, and employees shall have reasonable
access to the Related Equipment and Communications Equipment and agree to be accompanied at all
times by Landlord’s designated representative when access to the Roof Space, Related Equipment, or
Communications Equipment areas is necessary for installation, repair and maintenance; Landlord will
make such representative available upon reasonable prior notice, and will provide Tenant with the
name and phone number of Landlord’s representative. Tenant will make every reasonable effort to
minimize the number of service calls made to the Roof Space, Related Equipment, or Communications
Equipment areas and will enter such only for required maintenance or in case of an emergency.
Tenant must secure and maintain at all times all required approvals and permits of the Federal
Communications Commission and all other governmental bodies having jurisdiction over its business,
including its communications, operations and facilities, provided that Landlord and Tenant agree to
cooperate reasonably, at Tenant’s cost, to seek to obtain such approvals and permits from the
applicable governmental bodies. Upon at least 24 hours’ prior notice from Landlord (or in the
event of an emergency, such reasonable prior notice as necessary to give Tenant notice and
safeguard the Building and tenants therein), Tenant shall cease using the Related Equipment, and/or
Communications Equipment if Landlord has reason to believe that: (a) such installation or use
materially interferes with the operation of machinery and apparatus of the Building, such as the
elevators, or (b) the installation and use constitute a nuisance or hazard to the public or to the
occupants of the Building, or (c) the use of such Communications Equipment interferes with the use
of any tenant’s equipment or data processing machines in the Building or surrounding areas that was
installed prior to the installation of the Tenant’s Communications Equipment. Tenant shall have a
right to resume using the Related Equipment and/or Communications Equipment (as applicable) if an
independent engineer selected by Tenant confirms in writing to Landlord that such equipment is not
creating the alleged problems and provided that Tenant indemnifies Landlord against claims arising
from resumed operation. Landlord may terminate the license under this Section upon 30 days’ prior
notice to Tenant, if: (a) it is determined that such installation or use materially interferes with
the operation of machinery and apparatus of the Building, such as the elevators, and such
interference is reasonably confirmed in writing in good faith by an independent engineer selected
by Landlord, and, based on the determination of such engineer, there is no other location in the
Building Complex outside tenants’ premises where the Related Equipment and/or Communications
Equipment (as applicable) can be relocated to where this interference will no longer occur; or (b)
it is found by public authority having jurisdiction over the Building that the installation and use
constitute a nuisance or hazard to the public or to the occupants of the Building and Tenant is
unable to make modifications to the applicable equipment that satisfy the public authority’s
findings; or (c) the use of such Communications Equipment interferes with the use of any tenant’s
equipment or data processing machines in the Building Complex or surrounding areas that was
installed prior to the installation of the Tenant’s Communications Equipment, and such interference
is reasonably confirmed in writing in good faith by an independent engineer selected by Landlord,
and there is no other location in the Building Complex outside tenants’ premises where Tenant’s
Communications Equipment can be relocated to where this interference will no longer occur; or (d)
this Lease expires or is terminated.

                    B. Upon expiration or earlier termination of the Lease, Tenant will, at its sole cost and
expense, remove the Related Equipment and Communications Equipment and return the Roof Space to the
condition existing prior to such installation. Tenant will keep and maintain the Related Equipment,
and Communications Equipment in good condition and repair, at its sole expense, in a manner that
does not conflict or interfere with the use of other facilities installed in the Building or on the
Roof. Further, Tenant will not damage or permit damage to the Roof or the Building in conjunction
with the Related Equipment, and Communications Equipment. The Communications Equipment will be of
types and frequencies that do not cause interference with other equipment or operations in the
Building or surrounding areas that was installed prior to the installation of the Tenant’s
Communications Equipment.

                    C. All transmitters installed by either Landlord or Tenant must be equipped with any
transmitter isolator device necessary to minimize spurious radiation. If the Communications
Equipment causes interference, Landlord and Tenant, respectively, will take all commercially
reasonable steps necessary to eliminate the interference. Notwithstanding anything to the contrary
set forth in the default section of the Lease, if the interference is not eliminated within twelve
(12) hours after Tenant receives Landlords notice thereof, Tenant will be liable for all of
Landlord’s actual damages resulting therefrom and will temporarily disconnect and shut down the
dish (except for intermittent operation for the purpose of correcting the interference) until the
interference is eliminated. If Tenant fails to cease operations at the request of Landlord,
Landlord will be entitled to injunctive relief and the cost of obtaining such relief will be paid
by Tenant. Landlord makes no
warranty that the Roof Space is suitable for the dish or that Tenant’s Communications Equipment
shall operate properly according to Tenant’s requirements.

 

 

                    D. Landlord and its agents, employees, contractors or anyone else permitted by Landlord to be
on the Roof may from time to time repair, replace, maintain, or install additional improvements or
fixtures on the Roof provided that the same are located so as to not unreasonably interfere with
the operation of Tenant’s Communications Equipment. Landlord may permit other licensees to install
other rooftop equipment, provided that such equipment (i) does not result in blockage of the line
of sight approved for Tenant’s initial installation of its Communications Equipment or relocation
thereof pursuant to subparagraph A above, and (ii) does not interfere with the ability of Tenant’s
Communications Equipment to perform properly as reasonably determined in writing in good faith by
an independent engineer selected by Tenant. If the Communications Equipment causes interference,
Landlord will take all commercially reasonable steps necessary to eliminate the interference and if
the interference thereafter continues to interfere with Tenant’s Communications Equipment, the
operations of such installation must immediately cease until such time as the interference is
eliminated. Tenant will cooperate in any repair, replacement, maintenance and installation as
reasonably required by Landlord from time to time.

                    E. Tenant will, at Tenant’s sole cost and expense, comply with all applicable laws, or the
requirements of Landlord’s insurance underwriters relating to the installation, maintenance,
height, location, use, operation, and removal of the Related Equipment and Communications Equipment
and indemnify Landlord against any loss, cost, or expense incurred resulting from the installation,
maintenance, operation, or removal of the Related Equipment and Communications Equipment. Landlord
makes no representation that applicable laws permit the installation or operation of the Related
Equipment and Communications Equipment or that the design limitations of the site or Building will
permit installation and operation of the Related Equipment and Communications Equipment.

                    F. The insurance required to be carried by Tenant under Section 17 shall provide coverage with
respect to the ownership, operation and use of the Related Equipment and Communications Equipment.
Landlord has no responsibility or liability for damage to the Related Equipment and Communications
Equipment.

     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, immediately on 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 § 38-22-130 and § 131, 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, by
endorsement on checks, making of joint checks, or otherwise, and Landlord shall have the right to
review invoices prior to payment. 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.

     12. UNIFORM SIGNS; NO “FOR RENT” SIGNS. It is Landlord’s intent to maintain
uniformity of signage throughout the area where signs may be controlled by Landlord. 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. Landlord shall not
unreasonably withhold, condition or delay its consent to Tenant’s signage if the proposed signage:
(a) consists of Tenant’s name and corporate logo to be installed on the Building façade; (b)
complies with all applicable laws, building codes and Declarations; and (c) Landlord reasonably
determines that the signage design and installation will not damage the Building or facade. 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. In the event that Tenant occupies the entire Building, as such Building
may hereafter be expanded pursuant to the terms of this Lease, Tenant shall have the exclusive
right to all tenant building signage areas utilized on the Building. If Tenant occupies less than
the entire Building, Tenant shall be permitted to install its signage over its entry to the
Premises and its proportionate share of any monument signage for the Building, as such share is
reasonably determined by Landlord.

     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 put no signs of real estate brokers on the Premises.

     13. MAINTENANCE AND REPAIRS OF THE BUILDING; LANDLORD NOT LIABLE FOR DAMAGE TO
CONTENTS. Landlord shall be responsible, without reimbursement from Tenant, for maintenance
and repairs of the foundation, the Upgrades (defined below), and the maintenance and repair of the
structural portions of the Building. In addition, Landlord shall be responsible, subject to
reimbursement by Tenant as part of Operating Expenses, for the maintenance, repair and replacement
of the roof of the Building, gutters, downspouts and flashing, and the exterior finish (except to
the extent included in the Upgrades). Notwithstanding the forgoing, if any such maintenance or
repairs are necessitated by the acts of Tenant or its employees, agents, contractors,
sub-contractors, licensees, invitees or guests, Tenant shall reimburse Landlord for the cost of
same, as additional Rent, to be paid within ten (10) days after delivery of invoice. All other
maintenance, repairs and replacements within the Premises shall be performed by Tenant, at its own
expense, including all necessary maintenance, repairs

 

 

and replacements to pipes, plumbing systems,
electrical systems, window or other glass, doors, fixtures, interior decorations, and all other
appliances and appurtenances. Such repairs and replacements, ordinary as well as extraordinary,
shall be made promptly, as and when necessary, so that the Premises are maintained in first class
condition. All such maintenance, repairs and replacements shall be in quality and class at least
equal to the original work. On default of Tenant in making such maintenance, repairs or
replacements, Landlord may, but shall not be required to, make such repairs and replacements for
Tenant’s account, and the expense shall constitute and be collectable as additional Rent, together
with interest thereon as hereinafter provided. Notwithstanding anything to the contrary contained
herein, Landlord shall, prior to January 1, 2008, at Landlord’s sole cost and expense without
reimbursement from Tenant (a) paint the mansard metal, (b) seal, coat, and fill the cracks in the
parking lot as reasonably necessary, and (c) restripe the parking lot (collectively, the
“Upgrades”). Landlord shall solely determine the timing and scope of any work, if any, to be
performed by Landlord.

     Notwithstanding the Landlord’s obligations elsewhere set forth in this Lease, under no
circumstances shall Landlord be liable for damage to the contents of the Building or consequential
damages to Tenant. Tenant shall indemnify and save harmless Landlord of and from liability for
damages, liability or any claims against the 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 unless the same is caused by Landlord or an
entity or individual for which Landlord is legally responsible.

     14. CONDITION UPON SURRENDER — RETURN OF KEYS. Tenant shall vacate the Premises in
the same condition as when received, ordinary wear and tear 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 ends,
whether upon notice, holdover or otherwise. The 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 which are not cured by Tenant within any applicable notice and cure
period provided for herein. Upon termination of this Lease, Tenant shall deliver to Landlord keys
which operate all locks on the exterior or interior of the Premises, including, without limitation,
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. STORAGE OUTSIDE THE BUILDING; NO WASTE; NO NUISANCE; COMPLIANCE WITH LAWS; FUTURE
RULES AND REGULATIONS. Tenant shall use the Premises for the Permitted Use and for no other
purpose. Tenant shall conform to all present and future laws and ordinances of any governmental
authority having jurisdiction over the Premises, and will make no use in violation of same. No
outside storage 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.

     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.

     16. LIABILITY FOR OVERLOAD. Tenant shall be liable for the cost of any damage to the
Premises or the Building or the 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.

     17. INSURANCE.

          17.1 Landlord’s Insurance. Landlord shall keep the Building and improvements 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.

          17.2 General Liability Insurance. Tenant agrees to carry comprehensive general
liability insurance in the minimum total amount of ONE MILLION Dollars ($1,000,000.00) for each
occurrence of bodily injury and ONE MILLION Dollars ($1,000,000.00) for each occurrence of property
damage or $1,000,000 Combined Single Limits (CSL) bodily injury and property damage. Tenant also
agrees to carry Comprehensive Automobile Liability insurance with a combined single limit of not
less than $1,000,000 per occurrence for bodily injury and property damage. Tenant shall supply to
Landlord certificates of insurance as provided in Section 17.6. 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. The Landlord, its Managers and
employees, affiliates and designees shall be named as additional insured’s in all of the foregoing
insurance policies with a statement to that effect set forth in the certificates of insurance
furnished to Landlord. In the event the Tenant has multiple locations all insured under one policy,
then the Tenant shall provide to the Landlord an aggregate limit endorsement specific to the
Premises.

          17.3 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, in an amount not less than one hundred percent
(100%) of the full replacement cost of such items from time to time during the Term, providing
protection against any peril included within an “All-Risk” policy, with a deductible amount not to
exceed $10,000. 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 the
Tenant or existing prior to the Commencement Date and those tenant improvements made by the Tenant
or on the Tenant’s behalf by the Landlord.

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

          17.5 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, 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 Building 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 use reasonable efforts to obtain an appropriate waiver of
subrogation provision in the policies.

          17.6 Other Provisions Regarding Tenant’s Insurance. All insurance required of Tenant
in this Lease shall be effected under enforceable policies issued by insurers of recognized good
financial condition licensed to do business in Colorado. At least thirty (30) days prior to the
expiration date of any such policy, a certificate evidencing a new or renewal policy shall be
delivered by Tenant to Landlord. Within fifteen (15) days after the premium on any policy shall
become due and payable, Landlord shall be furnished with satisfactory evidence of its payment. 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 thirty (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.

     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.

          17.7 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 effective beginning date of this Lease.

          17.8 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.

     18. FIRE REGULATIONS — TENANT RESPONSIBILITY. It shall be Landlord’s sole and
exclusive responsibility, at Landlord’s expense without reimbursement from Tenant, to deliver the
Premises to Tenant in a condition that meets all fire regulations of any governmental unit having
jurisdiction over the Premises. It shall be Tenant’s sole and exclusive responsibility, at
Tenant’s expense, to ensure that any Tenant Improvements or other modifications to the Premises for
which Tenant is responsible meet all fire regulations of any governmental unit having jurisdiction
over the Premises. Further, Tenant shall have sole and exclusive responsibility, at Tenant’s
expense, to ensure that the Premises meets all fire regulations of any governmental unit having
jurisdiction over the Premises with respect to any particular use of the Premises by Tenant, as
opposed to the mere fact of Tenant’s occupancy of the Premises.

     19. REPLACEMENT OF BUILDING — CASUALTY DAMAGE. If the Premises are damaged or
destroyed by fire or other cause at any time after the Date of Commencement 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 the
Tenant of the Premises without diminution or change of location. Provided, however, that in case
of total destruction of the Premises by fire, or in case the Building is so badly damaged that, in
the opinion of the Landlord, it is not feasible to repair or rebuild the same, then, Landlord shall
have the right to terminate this Lease instead of rebuilding the

 

 

improvements; provided, however,
that Landlord shall give Tenant written notice of Landlord’s intention to terminate, said notice to
be served not later than thirty (30) days after the occurrence of the damage to the property. In
the event the Premises are rendered temporarily untenantable because of fire or other casualty,
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 square feet of Building floor space in the Premises. In
the event that the Premises are rendered untenantable for a period of nine (9) months or more
Tenant may at any time thereafter prior to the date that the Premises are no longer untenantable,
terminate this Lease by providing Landlord with thirty (30) days prior written notice to terminate.
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 and Tenant shall not have the right to terminate the Lease pursuant
to this Section 19.

     20. ENVIRONMENTAL MATTERS.

          20.1 Definitions.

               20.1.1 Hazardous Material. Hazardous Material means any substance:

               (a) the presence of which requires investigation, notice or remediation under any 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, without limitation, 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

               (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.

               20.1.2 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, without limitation:

               (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.

               20.1.3 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 without
limitation 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
without limitation:

 

 

               (a) Damages for personal injury, or injury to property or natural resources occurring upon or
off of the Premises, foreseeable or unforeseeable, including, without limitation, 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 without limitation any 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.

          20.2 Tenant’s Obligation to Indemnify, Defend and Hold Harmless. Tenant, its
successors, assigns and guarantors, agree to indemnify, defend, reimburse and hold harmless the
following persons 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:

               20.2.1 Landlord;

               20.2.2 any other person who acquires an interest in the Premises in any manner, including but
not limited to purchase at a foreclosure sale or otherwise; and

               20.2.3 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.

     This obligation shall include, but not be limited to, the burden and expense of the
indemnified parties in defending all claims, suits and administrative proceedings, including
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 such indemnified persons, 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 indemnified parties.

          20.3 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 subsection 1 or 2 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.

          20.4 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.

          20.5 Negative Covenants.

               20.5.1 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.

               20.5.2 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.

               20.5.3 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.

          20.6 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 and to inspect and audit Tenant’s records concerning Hazardous Materials at any
reasonable time to determine whether Tenant is complying with the terms of the 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. Tenant hereby grants to Landlord
the right to enter the Premises 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.

          20.7 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 20.2.

          20.8 Survival of Environmental Obligations. The obligations of both parties as set
forth in Section 20 and all of its subsections shall survive termination of this Lease.

          20.9 Landlord Statement of Hazardous Materials. To the best of Landlord’s knowledge,
made without independent investigation, as of the date of this Lease, the Premises does not contain
Hazardous Materials in violation of Environmental Requirements.

 

 

          20.10 Landlord’s Obligations to Indemnify and Remediate. Landlord, its successors and assigns
shall indemnify, defend and hold harmless Tenant, its officers, directors and shareholders, from
and against any and all Environmental Damages arising from the acts of Landlord, its agents or
employees which result in the presence of Hazardous Materials in violation of Environmental
Requirements upon, about or beneath the Premises or migrating to or from the Premises. To the
extent that such Hazardous Materials in violation of Environmental Requirements pre-exist upon the
Premises or arise from the acts of Landlord, its agents or employees, Landlord shall remediate such
Hazardous Materials to the extent required by Environmental Requirements.

     21. 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 to
enter the Premises and show the same to a prospective tenant during the last 180 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.

     22. DEFAULT — REMEDIES OF LANDLORD.

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

               22.1.1 Tenant fails to punctually pay 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 which sums remain unpaid for more than ten (10) days after written
notice from Landlord, provided, however Landlord shall only be required to provide such written
notice to Tenant for the first two (2) late payments in any twelve (12) consecutive calendar month
period, any other failure to pay when the same are due without notice during such twelve (12) month
period shall be deemed an event of default;

               22.1.2 Intentionally omitted;

               22.1.3 Tenant fails 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
22.1.1, and such failure shall continue for a period of thirty (30) days after written notice
thereof from Landlord to Tenant, and shall not be cured as permitted by Section 22.9;

               22.1.4 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;

               22.1.5 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.

          22.2 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 exercise any one or more of the following remedies (and any other remedy available at
law or in equity):

               22.2.1 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. The Landlord may or may not exercise the remedies
provided in this Section 22.2.1, in its sole discretion. The exercise of the remedies provided in
this Section 22.2.1 shall not be required prior to the exercise of any other available remedy.

               22.2.2 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.

 

 

               22.2.3 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 the
Tenant under this Lease.

               22.2.4 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.

          22.3 Tenant to Surrender Peaceably. In the event Landlord elects to lawfully 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.

          22.4 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.

          22.5 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.

          22.6 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.

          22.7 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 eighteen (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.

          22.8 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.

          22.9 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.

          22.10 Landlord Default. If Landlord is in default under any of its obligations and
the default continues for thirty (30) days after written notice from Tenant (subject to extension
pursuant to 22.9), Tenant may pursue all remedies at law or in equity.

     Tenant may not offset any sum due or assertedly due from Landlord to Tenant against any sum
due from Tenant to Landlord unless expressly permitted in this Lease.

     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.

     23. INTENTIONALLY OMITTED.

     24. 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, or, in the event Landlord shall be required to commence any legal
proceedings relating to the Premises and Tenant’s occupancy thereof and Tenant’s relation thereto,
Landlord shall be allowed and 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.

     25. INDEMNIFICATION BY TENANT AND BY LANDLORD. The 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 the Tenant, its
agents, subcontractors, servants or employees, or of any other person entering upon the Premises
under express or implied invitation of Tenant, 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.

     The 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 to injuries (or death of) any person or property, if the injuries (or
death) are caused by the 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.

     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 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 any injury to (or death of) an employee of Tenant arising out of use of the
recreation facilities.

     26. ASSIGNMENT OR SUBLETTING.

          26.1 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, conditioned or delayed,
provided that: (1) Tenant complies with the provisions of Section 26.3; (2) Landlord declines to
exercise its rights under Section 26.3; (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) Tenant is not in default 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.

          26.2 Transfer includes 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 25%
or more of the stock in a corporate tenant whose stock is not publicly traded, or transfer of 25%
or more of the beneficial ownership interests in a partnership or limited liability company tenant.
Notwithstanding anything to the contrary in this Section 26, 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 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 corporation into which Tenant may be merged or consolidated or 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 hereof.

          26.3 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) Landlord shall have the right to identify a proposed Transferee to accept the Transfer
Request and Tenant shall not unreasonably withhold consent to a Transfer to the identified party,
in which event the rent and other sums due from the Transferee will be paid to Tenant directly.
Landlord has no responsibility for such Transferee’s performance of its obligations to Tenant; or

               (2) 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

               (3) Landlord may waive Landlord’s rights under (1) and (2) above, as applicable, 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 26.1. 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.

          26.4 All documents utilized by Tenant to evidence a Transfer are subject to approval by
Landlord, which will not be unreasonably withheld, conditioned or delayed. 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.

          26.5 Following any Transfer in accordance with this Section 26, 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. Tenant may
assign or sublease the Premises for a Rent less than the Rent required to be paid herein by Tenant,
provided, however, that nothing herein shall limit Tenant’s liability to Landlord for the Rent due
under this Lease.

          26.6 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 comply with the same requirements as those of a Transferee set forth in
Section 26.1(3), 26.1(4), 26.1(6) and 26.1(7), above.

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

     27. LANDLORD’S WARRANTY OF TITLE; QUIET ENJOYMENT. Subject to Tenant not being in
default under the Lease, 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 30 concerning subordination to mortgage
lenders.

     28. ADDITIONAL DEVELOPMENT OF PROPERTY — RIGHTS OF LANDLORD. Landlord does reserve,
during the Term, 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.

     29. 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 the
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 taken, then Landlord, at its
election, may replace the square footage taken with adjacent space in the Building, or may provide
land and 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 the 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.

     30. 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 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 at any time and from time to time upon not less than ten (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
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 (1) month’s Rent has been paid in advance. Further,
upon request, Tenant shall supply to Landlord a corporate resolution certifying that the party
signing this statement on behalf of Tenant is properly authorized to do so, if Tenant is a
corporation. Tenant agrees to provide Landlord within ten 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.

     Landlord shall obtain a subordination, non-disturbance agreement from Landlord’s Mortgagee
which agreement shall contain terms typically required in the industry, and will use reasonable
efforts to secure such agreement within one hundred and twenty (120) days following execution of
this Lease.

     Tenant agrees with lender and Landlord that if there is a foreclosure of any such mortgage or
deed of trust and pursuant to such foreclosure, the Public Trustee or other appropriate officer
executes and delivers a deed conveying the Premises to the lender or its designee, or in the event
Landlord conveys the Premises to the lender or its designee in lieu of foreclosure, Tenant will
attorn to such grantee of the Premises, rather than to Landlord, to perform all of Tenant’s
obligations under the Lease, and Tenant shall have no right to terminate the Lease by reason of the
foreclosure or deed given in lieu thereof. Landlord shall use reasonable efforts to obtain a
subordination, non-disturbance agreement from future mortgagees of the Premises.

     31. RECORDING — CONFIDENTIALITY. This Lease shall not be recorded. All communications
and information obtained by either party during the negotiations of this Lease, the actual terms
and conditions of the 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, including disclosure required by the
Securities and Exchange Commission, or valid order of a court or tribunal. Prior to disclosure of
any Protected Information, whether as required by law or court order or other wise, either party
shall inform the other party, in writing, the nature and reasons for such disclosure.

     32. 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 wavier of any default by Tenant.

 

 

     33. 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 be 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.

     34. INUREMENTS. The covenants and agreements herein contained shall bind and inure to
the benefit of Landlord and Tenant and their respective successors. This Lease shall be signed by
the parties in duplicate, each of which shall be a complete and effective original lease.

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

     36. ADDRESSES; EMPLOYER IDENTIFICATION NUMBERS; METHOD OF GIVING NOTICE. All Rent and
other monetary obligations due under the Lease shall be mailed to the Rent Payment Address set
forth in Section 1.14 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 three (3) days
after deposited in the United States mail, postage prepaid, certified or registered, return receipt
requested, addressed to Landlord’s Notice Address set forth in Section 1.13 of this Lease, or the
next business day when deposited with a nationally-recognized overnight courier service
with verification of delivery, addressed to Landlord’s Notice Address set forth in Section 1.13 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 three (3) days after deposited in the United
States mail, postage prepaid, certified or registered, return receipt requested, addressed to
Tenant’s Notice Address set forth in Section 1.16, or the next business day when deposited with a
nationally-recognized overnight courier service with verification of delivery, addressed to
Tenant’s Notice Address set forth in Section 1.16.

     Any written notice required hereby may also be delivered by facsimile and facsimile signatures
shall be binding as original signatures so long as the originally signed notice 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.

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

     38. ADDITIONAL PROVISIONS.

          38. 1 Brokers. Tenant represents 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 1.18 and 1.19 (collectively, the “Brokers”). Landlord shall pay the commissions due to
the Brokers pursuant to separate written agreements with the Brokers. Tenant shall indemnify and
hold Landlord harmless of and from any and all loss, costs, damages or expenses (including, without
limitation, all attorneys’ fees and disbursements) by reason of any claim of or liability to any
broker or person claiming through Tenant and arising out of or in connection with the negotiation,
execution and delivery of this Lease, other than to the Brokers. Additionally, Tenant acknowledges
and agrees that Landlord shall have no obligation for payment of any brokerage fee or similar
compensation to any person with whom Tenant 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 Brokers identified in Sections 1.18 and 1.19. In the event any claim shall be
made against Landlord by any broker, other than the Brokers, who shall claim to have negotiated
this Lease on behalf of Tenant or to have introduced Tenant to the Building or to Landlord, Tenant
shall be liable for payment of all attorneys’ fees, costs and expenses incurred by Landlord in
defending against the same, and in the event such broker shall be successful in any such action,
Tenant shall, in addition, make payment to such broker. Tenant acknowledges that Landlord is not
liable for any representations by the Brokers regarding the Premises, Building, or this Lease.

          38.2 Parking. Landlord will make available the number of parking spaces for Tenant’s
use as set forth in Section 1.20. 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. The
parking lot shall be lighted from dusk to dawn. Notwithstanding the above, the right granted to
Tenant to use such 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. Tenant has no rights to use any parking areas
except as designated by Landlord for the Building. Tenant’s failure to timely pay a parking bill,
if any, shall constitute an event of default hereunder. 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.

 

 

          38.3. Substitute Premises. Landlord shall not have the right to relocate the
Premises.

          38.4 Transfer by Landlord. The term “Landlord” means so far 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. The transferee
shall assume the obligations of Landlord hereunder from and after the date of such transfer. Any
funds in Landlord’s possession at the time of transfer in which Tenant has an interest will be
turned over to the grantee and any amount then due Tenant under this Lease will be paid to Tenant.

          38.5 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.

          38.6 Common Area Use. Landlord may use any of the common areas for the purposes of
completing or making repairs or alterations to any portion of the Building or land.

          38.7 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.

          38.8 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” and “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.

          38.9 Severability. If there is more than one party which is the Tenant, the
obligations imposed upon Tenant are joint and several.

          38.10 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.

          38.11 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.

          38.12 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.

          38.13 Lender’s Requirements. Tenant will make such modifications to this Lease as may
hereafter be required to conform to any lender’s requirements, so long as such modifications do not
increase Tenant’s obligations or materially alter its rights.

          38.14 Effectiveness. Submission of this instrument for examination or signature by
Tenant does not constitute a reservation of or option to lease and it is not effective unless and
until execution and delivery by both Landlord and Tenant.

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

          38.16 Authority for Action. Unless otherwise provided, Landlord may act through
Landlord’s Building manager or other designated representatives from time to time.

          38.17. 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 the
Lease and annexed to another counterpart of the Lease to form a completely executed original
instrument without impairing the legal effect of the signature thereon.

 

 

          38.18 Option to Expand. The Premises consist of approximately 44,331 rentable square
feet of floor area. The entire Building consists of approximately 58,064 rentable square feet.
Subject to the conditions set forth herein, Landlord shall provide Tenant an option to expand the
Premises to include contiguous space (the “Expansion Space”) up to and including the entire
Building (the “Expansion Option”). The Expansion Option shall only be exercisable by notice
delivered by Tenant to Landlord during the first eighteen (18) months of the Initial Term. The
following terms and conditions shall apply to the Expansion Option:

          A. Tenant shall give notice to Landlord of its election to exercise the Expansion Option
(“Tenant’s Expansion Notice”), identifying the square footage it desires for Expansion Space, at
any time prior to the end of the 18th month of the Initial Term. The parties shall work together
to determine the configuration, exact square footage and location of the Expansion Space in order
to assure that the remaining vacant space is in a configuration that is leasable to third parties
in Landlord’s sole but reasonable determination and that the Expansion Space is useful to
Tenant in Tenant’s sole but reasonable determination.

          B. Tenant’s right to give a Tenant’s Expansion Notice under this Expansion Option shall expire
on the last day of the 18th month of the Initial Term and thereafter Tenant shall have no rights
under this Expansion Option; provided, however, Tenant shall retain its Right of Refusal to the
Expansion Space as hereafter set forth.

          C. If Tenant timely exercises the Expansion Option, the respective Expansion Space shall be
deemed added to the Premises, Landlord shall deliver the Expansion Space to Tenant, in the
condition as required by Section 8.1 and Section 18, above, within ten (10) days after the date of
Tenant’s notice of exercise, subject to delays beyond Landlord’s reasonable control, and Tenant
shall cooperate to meet such anticipated occupancy date. The Expansion Space shall be leased for a
term coterminous with the Term and upon the terms and conditions of this Lease, except (i) Tenant’s
obligations for the Expansion Space shall commence upon Landlord’s delivery of the Expansion Space,
at the same per square foot rental rate then in effect for the Premises, subject to all subsequent
per square foot rental rate escalation increases under the Lease on the same dates
as for the Premises under the Lease; and (iii) the “Expansion Space TI Allowance” applicable to the
Expansion Space shall be prorated by $15.00 per square foot of the Expansion Space over the then
remaining Initial Term; (iv) the free rent period applicable to the Expansion Space shall be
prorated by the amount of Rent abated during the Abated Rent Period over the then remaining Initial
Term; provided, however, in no event shall Tenant be allowed to use any funds from the Expansion
Space TI Allowance to pay for moving expenses into the Expansion Space nor shall Tenant have a
right to payment of or the right to amortize any excess costs of tenant improvements for the
Expansion Space. All tenant improvements shall be subject to Landlord’s prior approval as set
forth in the Lease. The parties shall execute an amendment to the Lease evidencing the addition of
the Expansion Space. Upon the date the Expansion Space is delivered to Tenant, Tenant’s Share
shall be adjusted based on the new square feet of rentable floor area of the Premises, as expanded.

          D. Unless expressly waived by Landlord, Tenant’s right to exercise the Expansion Option is
conditioned on: (i) Tenant not being in default at the time of exercise or as of date the
Expansion Space is added to the Lease; (ii) Tenant not having subleased or vacated more than 50%
of the Premises or assigned its interest under the Lease (except to a Permitted Transferee) as of
date the Expansion Space is added to the Lease; and (iii) Tenant’s having the financial ability to
perform its obligations for the Expansion Space and the then-existing Premises, as reasonably
determined by Landlord. Tenant’s rights pursuant to this paragraph are personal and upon an
assignment of the Lease (except to a Permitted Transferee), this Expansion Option is null and void.

          38.19 Right of Refusal. Notwithstanding anything in this Lease to the contrary, at
any time during the Term (and beyond the first eighteen months of the Initial Term) Landlord,
subject to the conditions set forth herein, grants Tenant a right of refusal (the “Right of
Refusal”) to lease the Expansion Space described above on the following basis:

          A. Tenant has 5 days after being notified by Landlord (“Landlord’s Notice”) of Landlord’s
desire to lease all or a portion, as identified in Landlord’s Notice, of the Right of Refusal Space
(“Offer Space”) within which to notify Landlord of its election to exercise its Right of Refusal as
to such space. The Offer Space will be the same square footage and configuration at the time such
space is offered to Tenant as Landlord intends to offer to any third party. Tenant must take all of
Offer Space and may not elect to lease only a portion thereof.

          B. If Tenant does not timely notify Landlord, it will be conclusively presumed that Tenant has
waived its Right of Refusal, Landlord shall be free to lease the Offer Space to anyone whom it
desires and Tenant will have no further rights to the Offer Space.

          C. Right of Refusal Space will be offered to Tenant for a term coterminous with the Term and
upon the provisions and at the rental rate Landlord offers to lease the Offer Space to third
parties for a lease term comparable to the remaining Term, but in no event shall the rental rate be
less than the rental rate that Tenant is paying for the Premises. Such provisions will include,
among other things, escalations and pass-throughs. Upon exercise of the Right of Refusal, the Offer
Space will be deemed added to the Premises and Tenant will accept such space in the condition as
required by Section 8.1 and 18, above, without any remodeling or fix-up work performed by Landlord,
except as may be provided in Landlord’s Notice. After exercise of the Right of Refusal, the
parties will execute an amendment to the Lease evidencing the addition of such space.

 

 

Upon the
date the Right of Refusal Space is delivered to Tenant, Tenant’s Share shall be adjusted based on
the new square feet of rentable floor area of the Premises, as expanded.

          D. Tenant’s right to exercise the Right of Refusal is conditioned on: (i) no event of default
by Tenant existing at the time it exercises the Right of Refusal or on the date that Tenant’s
occupancy of the Offer Space is scheduled to commence; (ii) Tenant not having vacated or subleased
more than 50% of the Premises or assigned its interest in the Lease, except to a Permitted
Transferee, at the time it exercises the Right of Refusal or on the date that Tenant’s occupancy of
the Offer Space is scheduled to commence; (iii) there being at least two years remaining in the
Term; and (iv) Tenant having the financial ability to perform its obligations for the Right of
Refusal Space and the then-existing Premises. This Right of Refusal is personal to Tenant and may
not be assigned, except to a Permitted Transferee. Upon an assignment of the Lease, except to a
Permitted Transferee, this Paragraph is null and void.

          E. If Landlord has entered into lease negotiations with a third party for space, Tenant will
be obligated to take all space the third party would lease under such negotiations in order to
exercise its Right of Refusal. The square footage, location and configuration of the Offer Space
shall be in Landlord’s sole and absolute discretion. This Right of Refusal is effective as to
space that is contiguous to the Premises only and Landlord has no obligation to offer space to
Tenant that is not contiguous to the Premises.

          F. 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.

          38.20 Construction Option. Landlord, subject to the conditions set forth herein,
grants to Tenant during the 1st through 36th months of the Initial Term an option to require
Landlord to construct (the “Construction Option”) an additional 30,000 square feet of expansion
space contiguous to the Premises (the “Construction Premises”), on the following basis:

          A. Tenant shall give notice to Landlord of its interest in exercising the Construction Option
(“Tenant’s Construction Notice”) at any time prior to the end of the 36th month of the Initial
Term. To the extent that Tenant’s Construction Notice is timely given, the parties shall
thereafter mutually agree upon a reasonable base building definition for the Construction Premises
which shall incorporate building standard materials and shall otherwise be architecturally
compatible with both the existing building architecture and finish (“Base Building Improvements”).

          B. After the parties’ agreement of the scope of the Base Building Improvements, Landlord shall
diligently pursue cost estimates for the Base Building Improvements and Construction Premises.
Upon Landlord’s receipt of such estimates, Landlord shall provide Tenant with (i) a reasonable
estimate of anticipated costs expected to be incurred by Landlord in the construction of the
Construction Premises (“Construction Costs Estimate”); and (ii) an estimate of the initial net
rental rate to be effective at the commencement of the term of the Lease for the Construction
Premises based on a 10% yield of all hard and soft costs incurred by Landlord (excluding land) to
construct the Base Building Improvements in the Construction Premises (the “Initial Net Base Rent
Estimate”). The Construction Costs Estimate shall include a tenant improvements allowance of up to
$35.00 per rentable square foot of the Construction Premises for completion of improvements in the
Premises beyond the Base Building Improvements (“Construction Premises Tenant Improvements”).
Tenant shall have 10 business days following receipt of Landlord’s Construction Costs Estimate and
the Initial Net Base Rent Estimate to give Landlord written notice of (i) its election to exercise
the Construction Option or (ii) its decline to exercise the Construction Option. Tenant’s failure
to give written response notice to Landlord within the 10 business day period shall be deemed that
Tenant has declined to exercise the Construction Option. In the event of Tenant’s decline notice
or deemed decline, the Construction Option shall be void and of no further force and effect.

          C. In the event that Tenant timely exercises the Construction Option in accordance with
Section B above, Landlord and Tenant shall cooperate in finalizing the plans and specifications
for the Construction Premises and Tenant and Landlord agree that the Lease shall be amended as
follows:

               (1) The then-current Lease Term shall be extended to expire on the date that is the last day
of the 120th month following the date Landlord delivers the Construction Premises to Tenant.

               (2) The net Base Rent rate initially in effect for the Construction Premises shall be equal to
the 10% yield of all actual hard and soft costs incurred by Landlord (excluding land) to construct
the Base Building Improvements and the Construction Premises Tenant Improvements as such amounts
are finally determined and shall thereafter escalate 3% on each anniversary of the delivery date of
the Construction Premises.

               (3) The net Base Rent rate for the initial Premises shall continue as set forth in this Lease
until the first annual anniversary of the delivery date of the Construction Premises, at which time
the 3% annual escalations shall thereafter occur on each anniversary of the delivery date of the
Construction Premises so as to be simultaneous with the annual Base Rent escalations of the
Construction Premises.

 

 

               (4) Upon the date the Construction Premises is delivered to Tenant, Tenant’s Share shall be
adjusted based on the new square feet of rentable floor area of the Premises, as expanded, and
square feet of rentable floor area of the Building, as expanded.

          D. Tenant’s right to exercise the Construction Option is conditioned on: (i) no Event of
Default existing at the time it exercises the Construction Option; (ii) Tenant not having vacated
or subleased any of the Premises or assigned its interest in the Lease, except to a Permitted
Transferee; (iii) Tenant providing evidence to Landlord that Tenant’s financial liquidity and net
worth are then equal to or greater than that as of the date of this Lease; (iv) Tenant providing
additional security as reasonably required by Landlord at the time Tenant exercises the
Construction Option; and (v) Tenant, as of the date of exercise of the Construction Option, being
in full occupancy of any space in the Building that is made available to Tenant by Landlord under
the same terms and conditions as those applicable to Expansion Space, as set forth herein. This
Construction
Option is personal to Tenant and may not be assigned, except to a Permitted Transferee. Upon an
assignment of the Lease, except to a Permitted Transferee, this Construction Option is null and
void.

          38.21 Termination Option. Tenant may elect to terminate this Lease (“Termination
Option”) effective on the last day of the 41st full calendar month of the Initial Term,
referred to herein as the “Early Termination Date”. To effectively exercise Tenant’s Termination
Option, Tenant shall give Landlord written notice (“Tenant’s Notice”) at least six months prior to
the Early Termination Date, and further provided that: (1) on or before the Early Termination Date,
Tenant has paid Landlord all amounts due and owing under the Lease; and (2) Tenant pays to Landlord
concurrently with Tenant’s Notice a termination fee equal to: (i) four months’ then current Base
Rent, plus (ii) 4 months’ then estimated payments of Operating Expenses as determined by Landlord,
plus (iii) the unamortized portion of Landlord’s Costs calculated by amortizing Landlord’s Costs on
a straight-line basis over the Initial Term, plus interest thereon at the rate of 8% per annum.
“Landlord’s Costs” means Landlord’s costs related to this Lease, including, but not limited to:
costs of any improvements to the Premises paid by Landlord (all improvements allowances, the TI
Allowance and other costs of improvements to the Premises paid by Landlord) and the Funded Excess
TI Costs (except to the extent previously reimbursed by Tenant to Landlord), Rent abated during the
Abated Rent Period, legal costs, and leasing commissions. Tenant’s right to exercise the
Termination Option is conditioned on: (i) no Event of Default existing at the time of exercise of
the Termination Option or on the Early Termination Date; (ii) Tenant not having exercised the
Construction Option; and (iii) Tenant not having subleased or vacated more than 25% of the Premises
or assigned its interest under the Lease as of the date of exercise of the Termination Option or on
the Early Termination Date. Upon Tenant’s exercise of the Termination Option, Tenant will deliver
possession of the Premises to Landlord on the Early Termination Date in accordance with the terms
of the Lease and all other terms and provisions will apply as if the Lease had expired according to
its terms, including Tenant’s obligation for payment of Operating Expenses attributable to periods
prior to the Early Termination Date at such time as such obligation is determined. Tenant’s right
to terminate the Lease pursuant to this Termination Option is personal to Tenant and may not be
assigned. In the event of an assignment of the Lease or a subletting or vacation of more than 25%
of the Premises or upon Tenant’s exercise of the Expansion Option or Construction Option, this
Termination Option is null and void.

          38.22 Option to Extend. Landlord grants Tenant an option (the “Option”) to extend the
term of the Lease for two, successive, additional terms of 5 years each (the “Option Term(s)”).
The Option applies to the entire 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 6 months prior to the Expiration Date (“Tenant’s Notice”). Not
later than thirty (30) days after receiving Tenant’s Notice, Landlord will notify Tenant of the
Base Rent applicable during the respective Option Term in accordance with subparagraph E below
(“Landlord’s Notice”).

          B. Tenant has 15 days after receipt of Landlord’s 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 subparagraphs 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 under the Option are personal to Tenant and may not be assigned except to a
Permitted Transferee. Tenant’s right to exercise the Option is conditioned on: (i) no Event of
Default existing at the time of exercise or at the time of commencement of the respective Option
Term; (ii) Tenant not having subleased or vacated more than 50% of the Premises or assigned its
interest under the Lease, except to Permitted Transferee, as of the commencement of the respective
Option Term; and (iii) Tenant having the financial ability to perform its obligations under the
respective Option Term. Upon an assignment of the Lease except to a Permitted Transferee, the
Option is null and void.

          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 Fair Market Value for non-renewal tenants for space in the
buildings of comparable age,

 

 

type, size, quality and location. Such market index shall include
equitable deduction and adjustments for customary leasing concessions, tenant allowances and other
leasing inducements then paid by landlords in the area to third parties for new leases.

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

     39. Obligations of Indemnitee. Notwithstanding anything herein to the contrary, any
indemnification, defense or hold harmless obligations of either party as set forth herein shall be
subject to the following with respect to claims for which a party seeks indemnification (“Claim”):
(i) the Indemnitee’s providing prompt written notice of the Claim; (ii) the Indemnitee’s allowing
the Indemnitor to defend or settle the Claim, and; (iii) the Indemnitee’s providing all reasonable
assistance to the Indemnitor in defending or settling the Claim.

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

	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	CIRCLE CAPITAL LONGMONT LLC
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Circle Capital Property Management LLC, Authorized Agent
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By
	 	/s/ Terry Fitzpatrick
 

Terry Fitzpatrick, Manager
	 	 
	 
	 	 	 	 	 	 	 	 
	TENANT:	 	DOT HILL SYSTEMS CORP., a Delaware corporation
	 
	 	 	 	 	 	 	 	 
	 

	 	By
	 	 	 	/s/ Dana W. Kammersgard	 	 
	 	 	 	 	 	 	 
	 	 	Title	 	President and CEO	 	 

 

 

EXHIBIT A-1

(Building)

LOT 1, LONGS PEAK INDUSTRIAL PARK-MINOR SUBDIVISION “D”, THE PLAT OF WHICH WAS RECORDED
NOVEMBER 3, 1982, ON FILM 1227 AS RECEPTION NO. 518348 UNDER PLAN FILE NO. P-13, F-1, #36,

CITY OF LONGMONT,

COUNTY OF BOULDER,

STATE OF COLORADO.

 

 

EXHIBIT A-2

(Premises)

 

 

EXHIBIT B

(Tenant Improvements)

WORK LETTER

April 3, 2007

DOT HILL SYSTEMS CORP.

	 	 	 	 	 
	Re:

	 	Tenant:
	 	DOT HILL SYSTEMS CORP., a Delaware corporation
	 
	 	 	 	 
	 

	 	Premises:
	 	Approximately 44,331 rentable square feet of space (the “Premises”)
	 
	 	 	 	 
	 

	 	Building:
	 	1351 South Sunset 

Gentlemen:

     Concurrently herewith, you (“Tenant”) and the undersigned (“Landlord”) have executed a Lease
(the “Lease”) covering the Premises (the provisions of the Lease are hereby incorporated by
reference as if fully set forth herein and initially capitalized words not defined have the same
meaning set forth in the Lease). In consideration of the execution of the Lease, Landlord and
Tenant mutually agree as follows:

1. Space Planning and Engineering

     1.1 Landlord has provided to Tenant the existing architectural and engineering drawings for
the base building improvements for the Building (“Landlord’s Drawings”).

     1.2 Tenant shall retain Landlord’s Building architect, Don Hostetter, or, at its
option, another architect reasonably approved by Landlord as Tenant’s architect (“Tenant’s
Architect”). Tenant shall retain an engineer reasonably approved by Landlord as Tenant’s engineer
(“Tenant’s Engineer”) to perform mechanical, electrical, plumbing, and life safety engineering; in
addition, Tenant shall retain Landlord’s designated structural engineers to provide engineering
design review pertaining to structural design issues. Tenant shall use reasonable efforts to
provide to Landlord the Tenant-approved space plans for the Premises (collectively referred to
herein as “Space Plans”) prepared by Tenant’s Architect by May 31, 2007. The Approved Space Plans
shall contain information specified in Exhibit A and shall be sufficiently complete to permit
Landlord to review such drawings for the purpose of determining conformity with the base building
specifications for the Building and for the purposes described in Section 1.3 below.

     1.3 Landlord shall have 5 business days after receipt of the Space Plans to have its engineers
(“Landlord’s Engineers”) review the Space Plans. Tenant’s Architect will advise Landlord and
Landlord’s Engineers whether the Building HVAC System and/or the electrical service will have to be
supplemented to allow installation of work shown on the Space Plans. If Landlord determines that
the Space Plans (i) are inconsistent with the base building specifications for the Building,
including the HVAC system or electrical system; (ii) do not contain all of the information
specified in Exhibit A or are not sufficiently complete to permit Landlord to review them for the
purposes set forth herein; or (iii) indicate space usages inconsistent with the Lease, Landlord
will advise Tenant and Tenant will revise the Space Plans accordingly, resubmit them to Landlord,
and the review procedure and time frames set forth above will be repeated. When approved by
Landlord and Tenant, the Space Plans will be signed or initialed by Landlord and Tenant; such
approved drawings will be deemed the “Approved Space Plans.” Landlord’s approval of the Space
Plans creates no responsibility or liability on the part of Landlord for completeness, design
sufficiency, or compliance with all Applicable Laws.

     1.4 Within sixty (60) days of the Approved Space Plans, Tenant shall use reasonable efforts to
provide Landlord with architectural working drawings prepared by Tenant’s Architect (the
“Architectural Working

 

 

Drawings”) and structural, plumbing, fire protection, mechanical, controls,
electrical and life safety engineering drawings (collectively, the “Engineering Working Drawings”)
prepared by Tenant’s Engineer, all of which shall be prepared substantially in the form provided in
Exhibit A. If reinforcement of the floor is required, Tenant shall have the right, at its sole
cost and expense, to reinforce the floor in any areas specified by Tenant’s Architect and as
designed by Tenant’s Engineer, subject to the prior written approval of Landlord. The
Architectural Working Drawings shall be coordinated by Tenant’s Architect with Landlord’s Drawings
and the Approved Space Plans. The Architectural Working Drawings and the Engineering Working
Drawings shall be approved by Tenant and shall be logical extensions of the Approved Space Plans
for the Premises. Tenant and Tenant’s Architect shall be responsible for the consistency between
the Architectural Working Drawings and the Engineering Working Drawings, conflicts with Base
Building Work and field conditions (unless such field conditions materially vary from Landlord’s
Drawings, as modified) and for the Architectural Working Drawings and the Engineering Working
Drawings complying with building code provisions. Landlord shall notify Tenant’s Architect of
changes in Landlord’s Drawings affecting the Tenant Improvements within 5 business days of an
actual change in such drawings (not just a proposed change), so as to minimize interference with or
delay to completion of Tenant’s Working Drawings. Landlord may identify items that Landlord may
require Tenant to remove upon the expiration or earlier termination of the Lease in accordance with
the Lease. If the review by Landlord or Landlord’s Engineers, if applicable, uncovers design
errors, Landlord shall give notice thereof, including any review comments, within 10 business days
after Landlord’s receipt of Tenant’s Architectural Working Drawings and the Engineering Working
Drawings. If Landlord does not reply within such period, it shall be presumed that Landlord has no
objection thereto, however, such approval shall not limit Landlord’s right to request changes in
the future in the event design errors are discovered (which request shall be made as soon as
practicable following such discovery) and Tenant shall not be obligated to make changes as to which
notice is given beyond such 10 day period unless the safety of the Tenant Improvements is affected
or that are required by Applicable Laws. If Landlord notifies Tenant of design errors pursuant to
this Section (within the time period, as applicable), Tenant shall revise the Architectural Working
Drawings and the Engineering Working Drawings accordingly, and resubmit them to Landlord only for
review of those design issues noted by Landlord after Landlord’s initial review of the Working
Drawings. Landlord shall provide written approval or comments within 3 business days of Tenant’s
resubmission and the review procedure set forth above shall be repeated. Delay caused by such
revisions shall be deemed Tenant Delay. Tenant shall simultaneously submit its Working Drawings to
Landlord for review, to Tenant’s contractor for final pricing, and for building permit review.
Revisions required by Landlord as a result of its approval shall be incorporated by Tenant into
pricing and permitting submittals and any delays shall be deemed Tenant Delay. When approved (or
deemed approved) by Landlord and Tenant, such Working Drawings shall be deemed the “Final
Drawings.”

     1.5 Changes to the Final Drawings may be made only upon prior written approval of Landlord,
which approval will not be unreasonably withheld. Landlord will respond to all written requests
for changes within three (3) business days of Landlord’s receipt. If Landlord does not
respond within such period, Landlord will be deemed to have consented to the requested changes.
Landlord’s review of the Space Plans or Tenant’s Working Drawings do not imply approval by Landlord
as to the Final Drawings’ compliance with Applicable Laws.

II. Tenant Improvements and Improvements Allowance

     2.1 Following Landlord’s approval of the Final Drawings, Tenant is responsible for the
diligent completion of all Tenant Improvements substantially in accordance with the Final Drawings
(the “Tenant Improvements”). Landlord will deliver possession of the Premises in the condition
required by Sections 8.1 and 18 of the Lease to Tenant for the purpose of completing the
Tenant Improvements within 5 business days after approval of the Final Drawings (the “Delivery
Date”). Tenant’s use and occupancy of the Premises from the Delivery Date until the Commencement
Date are subject to all of the terms and provisions of the Lease, except for Tenant’s obligation to
pay Base Rent and Tenant’s Share of Operating Expenses. At the time of submittal of Working
Drawings to Landlord, Tenant shall submit to Landlord, for approval, a list of all contractors from
whom Tenant intends to request bids, as well as the proposed Contractor Bid Package (including the
form of Contract). Tenant shall submit bid responses and its recommendation to Landlord for
approval prior to awarding the work. Tenant’s subcontractors
with respect to all mechanical, electrical, fire protection and controls work in the Premises will
be the subcontractors used by Landlord for such work in the Building or other subcontractors
approved by Landlord.

 

 

     2.2 Tenant agrees to execute a contract for design and construction services to complete the
Tenant Improvements (the “Contract”) with contractors and subcontractors reasonably satisfactory to
Landlord (collectively, “Tenant’s Contractors”). Tenant and Tenant’s Contractors will be required
to adhere to the construction requirements as mandated by law and city and county code and such
other requirements as Landlord may reasonably impose with regard to the Building (collectively,
“Requirements”). The Contract will incorporate the provisions of the Requirements. Landlord will
review the Contract for compliance with the Requirements within 3 business days thereafter; if
Landlord does not respond within such period, Landlord shall be deemed to have approved such
Contract. Following approval, Tenant will promptly commence and proceed diligently to complete the
Tenant Improvements. Tenant shall not be required to obtain performance or payment bonds unless
such bonds are paid for by Landlord and not deducted from the TI allowance.

     2.3 Landlord has no obligation to Tenant’s Contractors except for the provision of those
services which Landlord provides to other tenant finish contractors in the Building without
preference or privileges, and Landlord agrees to provide such services. Tenant’s Contractors will
be obligated to cooperate with contractors employed by Landlord who are completing work in the
Building (“Landlord’s Contractors”) and such Contractors will each conduct its respective work in
an orderly fashion and manner so as not to unreasonably interfere with the other.

     2.4 Tenant assumes full responsibility for Tenant’s Contractor’s performance of all work
including compliance with applicable laws and city and county codes, and for all Tenant’s
Contractors’ property, equipment, materials, tools or machinery placed or stored in the Premises
during the completion thereof. All such work is to be performed in a good and workmanlike manner
consistent with first class standards.

     2.5 Tenant will cause Tenant’s Contractors to: (i) conduct work so as not to unreasonably
interfere with any other construction occurring in the Building or any other tenants of the
Building; (ii) comply with the Requirements and all other rules and regulations relating to
construction activities in the Building promulgated from time to time by Landlord for the Building;
(iii) reach agreement with Landlord’s Contractors as to the terms and conditions for hoisting,
systems interfacing, and use of temporary utilities; and (iv) deliver to Landlord such evidence of
compliance with the provisions of this paragraph as Landlord may reasonably request.

     2.6 Landlord shall pay the cost of the Tenant Improvements completed in accordance with the
Final Drawings up to a total maximum in the amount of the TI Allowance as defined in Section 1.8
and 4.2.1 of the Lease, which TI Allowance shall be used for payment of all labor, materials, and
permits. In addition, Landlord shall be permitted to deduct from the TI Allowance an amount equal
to $75.00 per hour for Landlord’s hourly fee to oversee the approval and completion of Tenant’s
Improvements provided that such billed hours are of a reasonable amount given the scope of the
Tenant’s Improvements. All costs of the Tenant Improvements in excess of the TI Allowance and
those costs and expenses not allowable as expenditures from the TI Allowance shall be at Tenant’s
expense as such amounts become due and payable. Unless otherwise agreed by Landlord and Tenant in
writing and subject to delays beyond Tenant’s reasonable control, if any portion of the TI
Allowance has not been requested by Tenant on or before March 31, 2008 such amount will be
forfeited by Tenant to Landlord.

     2.7 Landlord may deduct any amounts due Landlord in accordance with Section 2.6 from the TI
Allowance. As design, engineering, and construction work is completed and Tenant receives invoices
therefor, Tenant will submit requests for payment to Landlord not more frequently than monthly,
along with appropriate lien waivers (substantially in the form satisfactory to Landlord) and such
other documentation as Landlord reasonably requires. On a monthly basis following receipt of such
documentation (with such payment being made within 20 days if all required documentation is
received by Landlord by the 5th of such month), Landlord will pay the amounts requested by delivery
to Tenant of Landlord’s check(s) payable to Tenant or, at Tenant’s request, payable to Tenant’s
Contractors. If the Tenant Improvements is completed in phases, the TI Allowance shall be
disbursed on a per-square-foot basis, based on the square footage completed in the respective phase
(ready for occupancy and use by Tenant). If the estimated costs of completing the Tenant
Improvements exceed the TI Allowance, Landlord shall
have the right to disburse the TI Allowance on a percentage basis, equal to that percentage of the
invoiced work that equals the percentage that the TI Allowance constitutes of the total estimated
costs of the Tenant Improvements.

 

 

     2.8 During completion of the Tenant Improvements and immediately thereafter, Landlord will
reasonably cooperate in the balancing of the Building HVAC system serving the Premises at Tenant’s
sole cost and expense. Tenant will pay all such expenses within 10 days after billing from
Landlord.

     2.9 Tenant will indemnify, defend and hold harmless Landlord, Landlord’s Mortgagee, Building
Manager, and Landlord’s Contractors from and against liability, costs or expenses, including
attorney’s fees on account of damage to the person or property of any third party arising out of,
or resulting from the performance of the Tenant Improvements, including, but not limited to,
mechanics’ or other liens or claims (and all costs associated therewith). Tenant will also repair
or cause to be repaired at its expense all damage caused to the Premises or the Building by
Tenant’s Contractors or its subcontractors. Further, Landlord will have the right to post and
maintain notices of non-liability at the Premises.

     2.10 Tenant agrees to submit to Landlord upon completion of all work a final set of as-built
Final Drawings (inclusive of two reverse mylars, four blueprints and one CADD disk) incorporating
changes upon completion of the Tenant Improvements.

     2.11 Notwithstanding any provision herein or in the Lease to the contrary, Tenant’s Rent
obligations other obligations and the Abated Rent Period will not be delayed or extended by any
delay in completion of the Tenant Improvements unless such delay is caused by “Landlord Delay.”
The term “Landlord Delay” means any delay in the preparation, finalization or approval of the
Approved Space Plans or Final Drawings or completion of the Tenant Improvements caused by
Landlord’s failure to perform its obligations under this Work Letter within the time limits set
forth herein. All delays other than Landlord Delay are deemed “Tenant Delay.”

     2.12 Tenant designates and authorizes Bud Thompson/ Oz Project Delivery Services to act for
Tenant in this Work Letter. Tenant has the right by written notice to Landlord to change its
designated representative.

     2.13 Landlord designates and authorizes Kory Cash to act for Landlord in this Work Letter.
Landlord has the right by written notice to Tenant to change its designated representative.

     2.14 All notices required hereunder will be in writing in accordance with provision for
notices in the Lease.

Very truly yours,

CIRCLE CAPITAL LONGMONT LLC

By: Circle Capital Property Management LLC, Authorized Agent

	 	 	 	 	 
	By: 

Title:

	 	/s/ Terry Fitzpatrick
 

Terry Fitzpatrick, Manager
	 	 
	 
	 	 	 	 
	 

	 	“Landlord”	 	 

ACCEPTED AND APPROVED this 12 day of April, 2007.

DOT HILL SYSTEMS CORP., a Delaware Corporation

	 	 	 	 	 
	By: 

Title:

	 	/s/ Hanif I. Jamal
 

CFO
	 	 
	 
	 	 	 	 
	 

	 	“Tenant”	 	 

LIST OF EXHIBITS

	 	 	 
	Exhibit A

	 	Space Plans and Architectural and Engineering Drawings Requirements

 

 

Exhibit C

Commencement Date Acknowledgment and Agreement

     This Agreement is an acknowledgment of the Commencement Date as defined in the Lease and
intended to be a part of that certain Lease Agreement for premises located at 1351 South
Sunset, Longmont, Colorado, which was executed on the ___ day of___ , 20___  between CIRCLE CAPITAL
LONGMONT LLC, a Delaware limited liability company, as Landlord and DOT HILL SYSTEMS CORP., a
Delaware corporation, as Tenant.

     Landlord and Tenant hereby agree that:

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.

	1.	 	Tenant took possession of the Premises on                     , 20___. Tenant hereby agrees to pay partial month’s Rent in the
amount of
$                     (___ days at $___
per diem).
	 
	2.	 	The Commencement Date of the Lease is hereby agreed to be the 1st day of the month of                     , 20___.
	 
	3.	 	The Expiration Date of the Lease Agreement is hereby agreed to be the last day of month of                     , 20___.

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

     Agreed and executed this                      day of                     20___.

LANDLORD:

CIRCLE CAPITAL LONGMONT LLC

	 	 	 	 	 	 	 
	By:	 	Circle Capital Property Management LLC,	 	 
	 
	 	 	 	 	 	 
	 	 	 	Authorized Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 

Terry Fitzpatrick, Manager
	 	 

TENANT:

DOT HILL SYSTEMS CORP., a Delaware corporation

	 	 	 	 	 
	By:
	 	 	 	 
	Its:Unassociated Document

    Exhibit
      4(b)7

    CERTIFICATE
      OF AUTHORIZATION

    

    MULTIMEDIA
      COMMUNICATION SERVICE

    

    TELECOMUNICAÇÕES
      DE SÃO PAULO S/A - TELESP

    

    ANATEL

    

    ANNEX
      II

    

    ENTRY
      PVST / SPV NR. 001/2003 - ANATEL

    

    CERTIFICATE
      OF AUTHORIZATION TO EXPLORE MULTIMEDIA COMMUNICATION SERVICE, OF COLLECTIVE
      INTEREST, EXECUTED BY AND BETWEEN "AGÊNCIA NACIONAL DE TELECOMUNICAÇÕES -
      ANATEL" AND "TELECOMUNICAÇÕES DE SÃO PAULO S/A - TELESP"

     

    

    By
      this
      instrument, on one side "AGÊNCIA NACIONAL DE TELECOMUNICAÇÕES - ANATEL"
      hereinafter referred to as ANATEL, an agency that part of the UNION (FEDERAL
      GOVERNMENT), as per the terms of Law Nr. 9.472, of July 16th., 1997, General
      Law
      of Telecommunications - LGT, with "CNPJ/MF" (National File of Legal
      Entities/Ministry of Finance) Nr. 02.030.715/0001-2, in this act represented
      by
      its President, Mr. LUIZ GUILHERME SCHYMURA DE OLIVEIRA, Brazilian, married,
      an
      engineer, bearer of Identity Card RG Nr. 04 971 252-4/IFP-RJ and of "CPF/MF"
      (Individual Taxpayers File/Ministry of Finance) Nr. 810.878.107/87, jointly
      with
      the Councilman LUIZ TITO CERASOLI, Brazilian, divorced, an engineer, bearer
      of
      identity Card RG Nr. 38.592/D-CREA/RJ and of CPF/MF Nr. 297.487.047-34, and,
      on
      the other side, "TELECOMUNICAÇÕES DE SÃO PAULO S/A - TELESP", with CNPJ/MF Nr.
      02.558.157/0001-62, in this act represented by its President, Mr. FERNANDO
      XAVIER FERREIRA, Brazilian, married, an engineer, bearer of Identity Card RG
      Nr.
      585.363-SSP/PR and of CPF/MF Nr. 142.144.239-68, and by its Vice-President,
      Mr.
      EDUARDO NAVARRO DE CARVALHO, Brazilian, married, an engineer, bearer of Identity
      Card RG Nr. 44.174-CREA-MG and of PCF/MF Nr. 531.710.556-00, hereinafter
      referred to as the AUTHORIZED PARTY, execute this CERTIFICATE OF AUTHORIZATION,
      Act, Nr. 33.791, Anatel Process Nr. 53500.002065/2002, that shall be regulated
      by the following rules and conditions: 

    

    Chapter
      I
      - On the Authorized Service, the Service Rendering Area and of the Value of
      the
      Authorization

    

    
      	
              1.1.

            	
              This
                Certificate of Authorization ratifies, under the terms of the above
                mentioned Law, the authorization issued to the company TELECOMUNICAÇÕES DE
                SÃO PAULO S/A - TELESP, identified above, for the rendering of the
                Multimedia Communication Services, of collective interest, under
                private
                regimen and without exclusivity, hereinafter referred to as
                SCM.

            

    

    

    
      	 	
              1.1.1.

            	
              SCM
                is a fixed telecommunication service that allows the offer, in domestic
                and international range and to subscribers within a service rendering
                area, of transmitting, issuing and receiving capacity for multimedia
                information using any means.

            

    

    

    
      	 	 	
              1.1.1.1.

            	
              By
                subscriber we mean a natural person or legal entity that has a contractual
                bond with the AUTHORIZED PARTY, for the use of
                SCM.

            

    

    

    
      	
              1.2.

            	
              This
                Certificate does not grant to the AUTHORIZED PARTY neither an advantage
                or
                right to exclusivity, nor any privilege in the exploitation of the
                SCM.

            

    

    

    
      	1.3.	
              The
                Authorization object of this Certificate has as service rendering
                area the
                sectors 31, 32 and 34, in Region III of Annex II, in the General
                Plan for
                Grants, and is granted for an undetermined period of
                time.

            

    

     

    
      	1.4.	
              The
                value of the Authorization for exploration of SCM is R$9,000.00 (nine
                thousand reais).

            

    

     

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    Chapter
      II
      - On the Applicable Legislation

    

    2.1. This
      Authorization is regulated, without prejudice of any other standards that form
      the Brazilian Legal System, by Law 9.472/97 and by the regulations derived
      from
      it. The AUTHORIZED PARTY shall follow the conditions established in the laws,
      regulations, standards and plans applicable to the service, among which there
      are:

     

    a) Decree
      Nr.
      2.617, of June 5th., 1998;

    

    b) Regulation
      of Telecommunication Services, approved by Resolution Nr. 73, of November 25th.,
      1998;

     

    c) Regulation
      for Checking the Control and Transfer of Control in Companies that Render
      Telecommunication Services, approved by the Resolution Nr. 101, of February
      4th., 1999;

     

    
      	 	
              d)

            	
              Regulation
                of the Multimedia Communication Service, approved by Resolution Nr.
                272,
                of August 9th., 2001;

            

    

    

    
      	 	
              e)

            	
              Rule
                Nr. 006, of January 24th., 2002;

            

    

    

    
      	 	
              f)

            	
              Regulation
                on the Use of the Radiofrequencies Spectrum, approved by Resolution
                Nr.
                259, of April 19th., 2000;

            

    

    

    
      	 	
              g)

            	
              General
                Regulation for Interconnection, approved by Resolution Nr. 40, of
                July
                23rd., 1998;

            

    

    

    
      	 	
              h)

            	
              Regulation
                on Service Contracting Procedures and Purchase of Equipment or Materials
                by the Telecommunication Service Rendering Companies, approved by
                resolution Nr. 155, of August 16th.,
                1999.

            

    

    

    2.1.1. The
      other
      normative instruments applicable to the services, replaced by SCM, remain in
      force until being duly substituted, as per the terms of article 214 of the
      General law of Telecommunication - LGT, in the points where they do not enter
      in
      conflict with the SCM Regulation.

     

    Chapter
      III - On the Rights and Conditions of the AUTHORIZED PARTY

    

    
      	
              3.1.

            	
              The
                AUTHORIZED PARTY has the right to freely explore the services object
                of
                this Certificate, rendered under private regimen and for collective
                interest, and should follow the rights and conditions established
                in
                Chapters II and III of Title II in the Regulation of Telecommunication
                Services and in the specific regulation of the
                service.

            

    

    

    
      	
              3.2.

            	
              The
                AUTHORIZED PARTY may not entail the offer of the SCM to the purchase
                of
                any other service or facility, offered through it or through its
                allied,
                controlled or controlling companies, nor may it condition advantages
                to
                the subscriber, to the purchase of other applications or of SCM additional
                services, even when performed by third
                parties.

            

    

    

    3.2.1. The
      AUTHORIZED PARTY may, at its sole decision, grant discounts, make promotions,
      seasonal discounts and price reductions in periods of low demand, among others,
      provided it make them in a non discriminatory manner and following objective
      criteria.

     

    
      	3.3.	
              The
                AUTHORIZED PARTY may not prohibit, neither by agreement nor by any
                other
                mean, the subscribe to be served by other networks or telecommunication
                services.

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	3.4.	
              The
                AUTHORIZED PARTY may not transmit, issue and receive information
                of any
                nature that may be configured as the rendering of Radio broadcasting
                Service or Cable TV Service, Multichannel Multipoint Signal Distribution
                Service (MMDS) or Television and Audio Signals distribution Service
                by
                satellite (DTH), and may not supply video and audio signals in an
                unrestricted and simultaneous form to the subscribers, under the
                conditions provided in the regulation of said
                services.

            

    

     

    
      	3.4.1.	
              When
                rendering SCM service the company may supply video and audio signal
                transport, in a non permanent manner and either by a specific agreement
                or
                by the payment per event, such as transmission of Executive TV,
                videoconferences, transport of signals from program producing or
                distributing companies to the companies that render Radio broadcasting
                Services or Cable TV, MMDS and DTH services and program transmission
                among
                radio broadcasting stations.

            

    

     

    
      	 	
              3.4.2.

            	
              When
                rendering SCM service, the transported signal shall not be received
                directly and freely by the public in general, as for the Radio
                broadcasting Service, and it shall not be distributed simultaneously
                to
                the subscribers, as for the Cable TV, MMDS and DTH
                services.

            

    

    

    
      	3.5.	
              When
                rendering the SCM service the company is not allowed to offer services
                with the characteristics of Commuted Fixed Telephony Service destined
                to
                the public in general (STFC), specially the routing of phone traffic
                through the SCM network simultaneously originated and ended in the
                STFC
                networks.

            

    

     

    
      	
              3.6.

            	
              The
                AUTHORIZED PARTY shall follow the quality parameters established
                in the
                regulation and in the agreement executed with the subscriber, relatively
                to the rendering of the service and to the operation of the
                network.

            

    

    

    
      	
              3.7.

            	
              The
                AUTHORIZED PARTY shall supply ANATEL, whenever requested, technical,
                operational or economical data, specially those relative to the number
                of
                subscribers and to the coverage area and to the values earned by
                the
                AUTHORIZED PARTY in respect to the parameters that indicate quality,
                and
                shall also allow ANATEL's representatives full access to its facilities
                or
                to the documentation, whenever
                requested.

            

    

    

    3.7.1. ANATEL
      shall give confidential treatment, as the case may be, to the information
      supplied, under the terms of Article 39 of Law 9472 and of Article 64 of the
      Regulation of National Telecommunication Agency, as approved by the Decree
      2.338/97.

     

    
      	3.8.	
              Upon
                contracting the services and purchasing equipment and materials connected
                to the service of object of this Certificate, the AUTHORIZED PARTY
                promises to consider the offer of independent suppliers, including
                domestic ones, and to base its decisions relative to the different
                offers
                submitted upon the compliance of objective criteria for price, terms
                of
                delivery and technical specifications established in the appropriate
                regulation.

            

    

     

    3.8.1. In
      the
      contracting in question, the procedures of the Regulation on Service Contracting
      and Purchase of Equipment and Materials by the Telecommunication Services
      Rendering Companies shall apply, as approved by ANATEL Resolution Nr. 155,
      of
      August 5th., 1999.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
      	 	
              3.8.2.

            	
              The
                values spent by the AUTHORIZED PARTY with foreign entities, for the
                rendering of management services, including technical assistance,
                may not
                exceed 0.2% (zero point 2 per cent) per year of the annual revenue
                of the
                now authorized services, net of taxes and
                contributions.

            

    

    

    
      	3.9.	
              The
                AUTHORIZED PARTY promises to pay the charges derived from the exploration
                of SCM, among others, the Installation and Operation Inspection Fees,
                the
                Fund for Technological development of Telecommunication and the Fund
                for
                the Universalization of Telecommunication Services, as per the regulation
                terms.

            

    

     

    
      	
              3.10.

            	
              In
                case of adaptation, under the terms of article 68 of the Multimedia
                Communication Service Regulation, the AUTHORIZED PARTY shall comply
                with
                its promises made with the users before the execution of this Certificate,
                following the conditions of the agreements executed and the obligations
                established in this Certificate, and in case of conflict the provisions
                favorable to the users shall
                prevail.

            

    

    

    3.10.1. The
      AUTHORIZED PARTY shall specially comply with the maintenance of the substitute
      service rendering agreement, in its term of validity.

     

    3.11. The
      AUTHORIZED PARTY promises to assure the compliance of the social function of
      the
      service object of this Certificate, as well as of the charges derived from
      it.

    

    Chapter
      IV
      - On the Rights and Obligations of the Subscribers

    

    4.1. The
      SCM
      subscriber has the right, without prejudice of the terms established in the
      applicable legislation:

     

    
      
        I.
          to
          access
          the service, by contracting the AUTHORIZED PARTY;

      

    

    

    
      
        II.
          to
          a non
          discriminatory treatment relative to the access conditions and use of the
          service;

      

    

    

    
      
        III.
          to
          appropriate information on the conditions of the service rendering, in
          its
          different applications, additional contracted facilities and respective
          prices;

      

    

    

    
      IV.  to
        inviolability and to communication secrecy, respecting always the hypothesis
        and
        constitutional and legal conditions relative to telecommunication access
        to
        secrecy data;

    

    

    V. to
      the
      previous notice of any and all alteration in the conditions of the service
      rendering, that may affect the subscriber, directly or indirectly;

     

    VI. to
      the
      cancellation or interruption of the service rendered, at any time, without
      any
      additional charge;

     

    VII. to
      the non
      suspension of the service without his/her request, except in the case of a
      debt
      directly derived from the use thereof or from the non compliance of the
      obligations appearing in article 4th. of Law 9.472 of 1997;

     

    VIII. to
      previous knowledge of the conditions for the suspension and termination of
      the
      service;

     

    IX. to
      respect
      to his/her privacy in the collection documents and in the use of its personal
      data by the AUTHORIZED PARTY;

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    X. of
      an
      efficient and immediate answer by the AUTHORIZED PARTY to his/her
      complaints;

     

    XI. to
      the
      sending of the complaints or statements against the AUTHORIZED PARTY to ANATEL
      or to the Consumer Defense Entities;

     

    XII. to
      compensation for damages caused by the infringement of his/her
      rights;

     

    XII. to
      the
      substitution of his/her access code, as the case may be, under the terms of
      the
      regulation.

     

    XIV. not
      to be
      forced or induced to purchase properties or equipment that are not of his/her
      interest, and not to be compelled to submit to any condition, except in respect
      to a technical question, for the receiving of the services, under the terms
      of
      the regulation;

     

    XV. to
      have
      the integrity of the rights relative to the rendering of services restored,
      after the payment of delinquent debts, or as per the agreement executed with
      the
      AUTHORIZED PARTY, with immediate exclusion of the information connected to
      failure of payment;

     

    XVI. to
      have
      the access to commodities or requested utilities, temporarily or permanently,
      partially or totally blocked;

     

    XVII to
      the
      continuity of the service as per the contractual term;

     

    XVIII
      to
      receive the collection documents with the details of the charged
      values.

     

    4.1.1. In
      case of
      adaptation of the terms of article 68 of the Regulation of Multimedia
      Communication Service, the subscriber has the right, without prejudice of the
      others already listed:

    

    
      	 	 	
              I.

            	
              to
                the maintenance of the of the substitute service rendering agreement,
                in
                its term of validity;

            

    

    

    
      	 	 	
              II.

            	
              to
                the option to terminate the substitute service rendering agreement
                and the
                contracting of a new service;

            

    

    

    4.2. The
      SCMN
      subscriber has the following obligations, among others:

    

    I. to
      use the
      service, the equipment and the telecommunication networks in the correct
      manner;

     

    
      	 	
              II.

            	
              to
                preserve the AUTHORIZED PARTY's properties and those to be used by
                the
                public in general;

            

    

    

    
      	 	
              III.

            	
              to
                make the payment relative to the service rendered, following the
                provisions established in the Service
                Regulation.

            

    

    

    
      	 	
              IV.

            	
              to
                provide appropriate and necessary place and substructure for the
                correct
                installation and operation of the AUTHORIZED PARTY's equipment, as
                the
                case may be;

            

    

    

    
      	 	
              V.

            	
              to
                connect to the AUTHORIZED PARTY's network only the terminals that
                have
                certification issued or accepted by
                ANATEL.

            

    

    

    Chapter
      V
      - On ANATEL's Privileges.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    5.1. ANATEL
      may
      impose special conditions for the rendering of the SCM, under the terms of
      article 128 of the LGT.

     

    
      	
              5.2.

            	
              ANATEL
                may determine that the AUTHORIZED PARTY should cease, immediately,
                the
                transmission of telecommunications from any station, that may be
                causing
                interference harmful to the telecommunication services regularly
                installed, until the cause of the interference is totally
                eliminated.

            

    

    

    
      	
              5.3.

            	
              ANATEL
                may perform researches relative to the satisfaction of subscribers
                in
                respect to the services rendered by the AUTHORIZED PARTY, disclosing
                the
                results to the society.

            

    

    

    Chapter
      VI
      - On the Conditions for Exploring the Service

    

    6.1. The
      AUTHORIZED PARTY shall start the commercial exploration of the service within
      eighteen months, counted from the date of publication of the decision
      authorizing the rendering of service, in the Federal Official Gazette -
      "D.O.U."

     

    6.1.1. The
      term
      established in this clause may be extended only once, for twelve months at
      the
      most, if the reasons submitted for this are considered as relevant by
      ANATEL.

     

    
      	 	
              6.1.2.

            	
              The
                term to start the commercial operation of the service, when it depends
                of
                its own radio electrical system, shall be counted from the date of
                publication, in the Federal Official Gazette (D.O.U.) of the decision
                authorizing the use of
                radiofrequency.

            

    

    

    
      	 	
              6.1.3.

            	
              In
                case of adaptation, as per the terms of Article 68 of the Multimedia
                Communication Service Regulation, the AUTHORIZED PARTY shall follow
                the
                rules below:

            

    

    

    
      	 	 	
              6.1.3.1.

            	
              The
                AUTHORIZED PARTY that has started the commercial exploration of the
                service may not interrupt it as a function of the
                adaptation.

            

    

    

    
      	 	 	
              6.1.3.2.

            	
              The
                AUTHORIZED PARTY that, upon the publication of the respective Act
                of
                Adaptation, has not started the commercial exploration of the service,
                shall do it within the term provided in the Certificate of Authorization
                of the service that is being
                adapted.

            

    

    

    
      	 	 	
              6.1.3.3.

            	
              The
                adaptation shall be made assuring, as the case may be, the right
                of use of
                radiofrequency for the remaining term of the former certificate of
                authorization, maintaining the possibility of
                extension.

            

    

    

    6.2. The
      conditions for the granting of authorization and coordination of use of
      radiofrequency are established in the Regulation for the Use of Radiofrequency
      Spectrum, approved by Resolution Nr. 259, of April 19th., 2001.

     

    
      	
              6.3.

            	
              The
                AUTHORIZED PARTY shall, within a maximum term of one hundred and
                eighty
                days counted from the authorization, deliver to ANATEL a summary
                of the
                Installation Project, as a condition to issue the authorization to
                install
                the system.

            

    

    

    6.3.1. The
      Installation Project shall be compatible with the Basic Project, annexed to
      this
      Certificate of Authorization.

     

    
      	 	
              6.3.2.

            	
              The
                summary of the Installation Project shall be attached to this Certificate
                of Authorization, being considered as a complement of the Basic
                Project.

            

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    
      	 	
              6.3.3.

            	
              In
                the case of adaptation, as per the terms of article 68 of the Multimedia
                Communication Service Regulation, the AUTHORIZED PARTY shall, within
                a
                maximum period of one hundred and eighty days from the date of publication
                of the Adaptation Act, submit to ANATEL a summary of the Installation
                Project, as provided in Annex III of the SCM
                Regulation.

            

    

    

    6.4. The
      AUTHORIZED PARTY, as such, will not have a vested right in respect to the
      maintenance of the existing conditions on the date of execution of this
      Certificate, and has to obey the new conditions that may be created by law
      or by
      the regulations to be issued by ANATEL, within the terms established in the
      regulation.

     

    
      	
              6.5.

            	
              The
                AUTHORIZED PARTY shall, upon the installation of the
                station:

            

    

    

    I. observe
      the municipal regulations and other legal requirements, in respect to buildings,
      towers and antennas, and to the installation of physical lines in public
      areas;

     

    
      	 	
              II.

            	
              assure
                that the installation of its stations follows the pertinent
                regulation;

            

    

    

    
      	 	
              III.

            	
              obtain
                the necessary consignation of the radiofrequency, if it does not
                use only
                confined media or third party's
                media.

            

    

    

    6.6. The
      AUTHORIZED PARTY is responsible, before the subscriber and ANATEL, for the
      exploration and execution of the service.

     

    6.6.1. The
      AUTHORIZED PARTY shall be fully responsible for the exploration and execution
      of
      the service before the subscriber, including in respect to the correct operation
      of the service supporting network, even if it is owned by third parties, it
      being assured, in this case, the right of return.

     

    
      	 	
              6.6.2.

            	
              The
                AUTHORIZED PARTY's responsibility before the Agency shall include,
                also,
                the correct operation of the service supporting network, including
                in the
                cases when it is owned by third
                parties.

            

    

    

    6.7. The
      interested parties are assured of the use of SCM supporting networks to provide
      additional value services (SVA), in a non discriminatory form and at fair prices
      and reasonable conditions.

     

    6.7.1. ANATEL
      shall establish the rules to assure the perfect use of the SCM networks to
      support the SVA provision, establishing also the terms for the relationship
      between the providers of these services and SCM renderers, as provide in § 2nd.
      article 61 of Law 9,472, of 1997.

     

    6.8. The
      AUTHORIZED PARTY has the right to use the networks or the elements of networks
      owned by other renderers of telecommunication services of collective interest,
      in a non discriminatory manner, and at fair and reasonable prices and
      conditions.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    6.8.1. The
      AUTHORIZED PARTY shall allow the use of its networks or of elements of said
      networks by other collective interest telecommunication providers, in a non
      discriminatory way, and at fair and reasonable prices and
      conditions.

    

    6.9. The
      remuneration for the use of networks shall be freely agreed between the
      AUTHORIZED PARTY and the other collective interest telecommunication service
      rendering companies.

     

    6.10. In
      the
      rendering of SCM the use of equipment without certification issued or accepted
      by the Agency is prohibited, when said certification is required by
      regulation.

     

    6.11. The
      following are parameters of quality for SCM, without prejudice of any others
      that may be defined b y ANATEL:

     

    I. the
      supply
      of signal transport respecting the characteristics established in the
      regulation;

     

    
      	 	
              II.

            	
              the
                availability of the service in the contracted index
                values;

            

    

    

    
      	 	
              III.

            	
              the
                issue of electromagnetic signals in the levels established in
                regulation;

            

    

    

    
      	 	
              IV.

            	
              the
                disclosure of information to the subscribers, in an unambiguous and
                complete manner, with a reasonable antecedence, in respect to the
                changes
                of prices and conditions for the use of the
                service;

            

    

    

    
      	 	
              V.

            	
              the
                speed in complying with the requests and complains of the
                subscribers;

            

    

    

    
      	 	
              VI.

            	
              the
                number of complains against the AUTHORIZED
                PARTY;

            

    

    

    
      	 	
              VII.

            	
              the
                supply of the necessary information to obtain the indicators relative
                to
                the quality of the service, of the facility and of the financial
                economical data, in such a way to allow the evaluation of the quality
                in
                the service rendered.

            

    

    

    6.12. The
      following data shall appear in the agreement for the rendering of the service
      to
      the subscriber:

     

    
      	 	
              I.

            	
              the
                rights and obligations of the AUTHORIZED
                PARTY;

            

    

    

    
      	 	
              II.

            	
              the
                rights and obligations of the
                subscribers;

            

    

    

    
      	 	
              III.

            	
              the
                number of the Subscriber Service Center, and the electronic address
                of the
                AUTHORIZED PARTY in Internet, where the user may find information
                on the
                service, including specifications for the connection of telecommunication
                terminals to the support networks;

            

    

    

    
      	 	
              IV.

            	
              ANATEL
                address and the electronic address of its library, where persons
                may find
                the full copy of the service
                regulation;

            

    

    

    
      	 	
              V.

            	
              the
                phone number of ANATEL Service
                Center;

            

    

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    
      	 	
              VI.

            	
              the
                quality parameters of the service, as mentioned in item 6.11 of this
                Certificate of Authorization.

            

    

     

    6.13. The
      AUTHORIZED PARTY shall maintain a phone service center for its subscribers,
      with
      direct free of charge call in a 24 hours a day 7 days a week
      regimen.

     

    6.14. In
      case of
      interruption or degradation of the service quality, the AUTHORIZED PARTY shall
      discount from the signature the value proportional to the number of hours or
      fraction of hours longer than 30 minutes.

     

    6.14.1. The
      need
      for interruption or degradation of the service due to maintenance, expansion
      of
      the network or similar reasons shall be fully informed to the subscribers that
      may be affected, through a one week minimum previous notice, and the subscribers
      have to receive a discount in the subscription as 1/30 (one thirtieth) per
      day
      or fraction longer than four hours.

     

    
      	 	
              6.14.2.

            	
              The
                interruption of degradation of the service for a period longer than
                three
                consecutive days and that reach more than ten per cent of the subscribers
                shall be informed to Anatel with a summary of the reasons that have
                caused
                it and the actions developed for the normalization of the service
                and the
                prevention of the new
                interruptions.

            

    

    

    
      	 	
              6.14.3.

            	
              The
                AUTHORIZED PARTY shall not be forced to offer a discount if the
                interruption or degradation of the service occurs due to unforeseen
                case
                or event of force majeure, with the AUTHORIZED PARTY having to prove
                the
                fact.

            

    

    

    6.15. The
      AUTHORIZED PARTY, as per the terms of article 135 of the LGT promises to provide
      preferred access to the authorized service to the following
      entities:

     

    
      	 	
              I.

            	
              Essential
                Entities of the Federal Government;

            

    

    

    
      	II.  	
              Ministry
                of Defense:

            

    

    a) Brazilian
      Army

    b) Brazilian
      Navy;

    c) Brazilian
      Air Force;

    III. Ministry
      of Justice

    IV. Federal
      Police Department;

    V. Military
      Police and Fire Departments.

    

    6.15.1. The
      written obligation described in item 6.15 shall apply to any entities or
      agencies that may undertake, fully or partially, the functions of the entities
      named in it.

     

    Chapter
      VII - On the Provisions relative to the Interconnection.

    

    7.1. Whenever
      requested, there shall be made the interconnection among the SCM supporting
      networks and among these networks and the networks of other telecommunication
      services of collective interest, as per the terms of Law 9.472, of 1997, and
      of
      the General Regulation of Interconnection approved by Resolution Nr. 40, of
      July
      23rd., 1998.

     

    Chapter
      VIII - On the Entailment of the General Standards for the Protection of the
      Economic Order.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    8.1. The
      AUTHORIZED PARTY promises to render the now authorized service strictly as
      per
      the standards that prohibit the abuse of economic power, without harming the
      free competition, not increasing arbitrarily the profits or performing in an
      abuse manner the dominant position in the market.

    

    8.1.1. Considering
      the concrete situation or complain based upon the abusive prices, imposition
      of
      abusive contractual conditions, discriminatory treatment or practices with
      the
      purpose to eliminate unfairly the competition, ANATEL may, after the analysis,
      assuring the right to previous and full defense to the AUTHORIZED PARTY,
      determine the implementation of the appropriate measures, without prejudice
      to
      the complaining party to submit the case before any other appropriate
      governmental entities.

     

    Chapter
      IX
      - On the Forms of Compensation for the Service Rendered

    

    9.1. The
      AUTHORIZED PARTY shall establish the prices relative to the rendering of SCM,
      in
      a fair and non discriminatory manner, with ANATEL being responsible for
      eliminating abusive commercial practices and the abuse of economic
      power.

     

    
      	
              9.2.

            	
              The
                AUTHORIZED PARTY shall, as per the Regulation of Telecommunication
                Services, serve with priority the President of the Republic, his
                protocol
                representatives, his entourage and supporting personnel, as well
                the
                foreign Heads of State, when in official visits or trips through
                the
                Brazilian territory, making available, against remuneration, the
                necessary
                means for the appropriate communication of said
                authorities.

            

    

    

    
      	
              9.3.

            	
              The
                AUTHORIZED PARTY shall assure the free of charge access by its subscribers
                to the emergency services, as mentioned in the
                regulation.

            

    

    

    
      	
              9.4.

            	
              The
                AUTHORIZED PARTY shall place at disposal of the authorities and agents
                of
                civil defense, in case of public calamity, all means, systems and
                availabilities that may be requested, in order to grant them full
                support
                or to support the affected population, as per the
                regulation.

            

    

    

    
      	
              9.5.

            	
              The
                obligations mentioned in items 6.15, 9.4 and 13.4.1 of this Certificate
                are of collective interest, under the terms of Article 135 of the
                LGT, and
                are undertaken fully by the AUTHORIZED PARTY, that shall absorb the
                correspondent costs through the appropriate exploration of the service,
                without any compensation or reimbursement by
                ANATEL.

            

    

    

    Chapter
      X
      - On the Transference

    

    10.1. The
      transfer of the authorization to explore SCM and the authorization to use the
      radiofrequency associated to it requires previous approval by ANATEL, as per
      the
      regulamentary requirements.

     

    
      	
              10.2.

            	
              The
                transfer of the authorization may only be made after three years,
                counted
                from the effective beginning of the commercial operation of the
                service.

            

    

    

    10.2.1. In
      case of
      adaptation under the terms of article 68 of the Multimedia Communication Service
      Regulation, the time of operation before this adaptation shall be computed,
      for
      the purposes of the terms of item 10.2.

     

    10.3. For
      the
      transfer of the SCM authorization, the interested party shall:

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    I. comply
      with the requirements compatible with the service to be rendered, in respect
      to
      the technical qualification, financial-economical qualification, legal
      qualification and tax regularity, submitting the documentation listed in Annex
      I
      of the Multimedia Communication Service Regulation;

    
      	 	
              II.

            	
              submit
                the statement executed by its legal representative, promising to
                comply
                with all clauses of the certificate of authorization in force, surrogating
                itself in the rights and obligations of the original authorized
                party.

            

    

    

    10.4. The
      transfer of the authorization among controlled and controlling companies and
      in
      the cases derived from scission, shall be performed by ANATEL at any moment,
      upon request from the interested parties and following the terms of clause
      10.3.

     

    
      	
              10.5.

            	
              The
                transfer of the authorization to explore SCM will be subject to the
                collection of the public price by
                ANATEL.

            

    

    

    
      	
              10.6.

            	
              The
                transfer of the corporate control of the AUTHORIZED PARTY will be
                subject
                to later approval by ANATEL, for the maintenance of authorization
                conditions or of other conditions provided in the regulation, with
                the
                AUTHORIZED PARTY sending to the Agency, within sixty days counted
                from the
                date of registration in the appropriate entity, a request with its
                prior
                corporate composition, the operation made and the picture resulting
                from
                the operation, besides the documentation provided in the SCM
                regulation.

            

    

    

    10.6.1. The
      corporate or control changes that need the approval by ANATEL shall include,
      in
      the legal instrument that formalizes it, a clause determining that said
      alteration is conditioned to the approval by the Agency.

     

    10.7. The
      transfer of authorization or of the corporate control of the AUTHORIZED PARTY
      shall not be admitted if it is harmful to competition or if offers risk to
      the
      execution of the undertaken obligations, following the general standards
      relative to the protection of economic order and, specially the terms of article
      7th. of Law 9.472, of 1997.

     

    
      	
              10.8.

            	
              The
                transformation of the corporate type and changes in the corporate
                name of
                the AUTHORIZED PARTY and of its direct and indirect partners, shall
                be
                informed to the Agency within twenty days after the registration
                of the
                fact in the appropriate entity.

            

    

    

    
      	
              10.9.

            	
              The
                agreements of the partners that regulate the transfer of quota parts
                and
                of shares, as well as the performance of the right to vote by the
                AUTHORIZED PARTY and its direct and indirect partners, shall be sent
                to
                the Agency up to fifteen days after the registration in the appropriate
                entity.

            

    

    

    Chapter
      XI
      - On the Provisions on the Inspection

    

    11.1. The
      AUTHORIZED PARTY is subjected to ANATEL inspection, following the legal and
      regulatory provisions and, when requested, it shall render accounts allowing
      the
      free access to its technical resources and accountant files.

     

    
      	
              11.2.

            	
              The
                AUTHORIZED PARTY may appoint a representative to follow the inspection
                agents in their visits, inspections and
                activities.

            

    

    

    Chapter
      XII - On the Sanctions

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

    

    
      	
              12.1.

            	
              The
                non compliance of the legal and regulatory provisions, as well as
                the
                compliance of conditions and undertakings connected to the authorization,
                shall subject the AUTHORIZED PARTY to the sanctions provided in the
                regulation, assuring the right to previous and full
                defense.

            

    

    

    
      	
              12.2.

            	
              Without
                prejudice of any other situations established in the regulation,
                the
                following are considered as serious
                infractions:

            

    

    I. not
      start
      the exploration of the service within the term established in this
      Certificate;

    

    
      	 	
              II.

            	
              the
                non payment of fees or charges falling on the
                services;

            

    

    

    
      	 	
              III.

            	
              to
                offer the service with the characteristics of the Commuted Fixed
                Phone
                Service destined to the public use in general (STFC), specially the
                sending of phone traffic through the SCM network simultaneously originated
                and terminated in the STFC networks;

            

    

    

    
      	 	
              IV.

            	
              to
                offer the service with the characteristics of Radio broadcasting
                Service
                or Cable TV Service, Multichannel Multipoint Signal Distribution
                Service
                (MMDS) or Subscription TV and Audio Signals Distribution Service
                by
                Satellite (DTH).

            

    

    

    Chapter
      XIII - On the Extinction of the Authorization

    

    13.1. The
      Authorization shall terminate, as well as this Certificate of Authorization,
      by
      the termination, deterioration, decay, forfeit or cancellation, as per the
      terms
      of Law 9.472, of 1997.

     

    
      	
              13.2.

            	
              In
                case of loss of the conditions indispensable to the issue or maintenance
                of the authorization, the Agency may extinguish it by a cancellation,
                assuring to the interested party, in this case, during the administrative
                process, the right to the adversary system and to full
                defense.

            

    

    

    
      	13.3.  	
              The
                statement of extinction of the Authorization will not eliminate the
                application of penalties due to the infringements practiced by the
                AUTHORIZED PARTY, as per the terms of the regulation and of this
                Certificate of Authorization.

            

    

    

    
      	
              13.4.

            	
              The
                definite interruption of the services shall only occur after a minimum
                of
                one hundred and eighty (180) days previous notice sent to the
                subscriber.

            

    

    

    13.4.1. In
      the
      case of the entities mentioned in item 6.15, except for the cases of force
      majeure and of non compliance of the obligations by the subscriber, the
      definitive interruption of the services shall only occur with a minimum sixty
      (60) months previous notice. 

     

    
      	 	 	
              13.4.1.1.

            	
              The
                suspension in the rendering of the service to the entities mentioned
                in
                item 13.4.1. may cause, besides the application of appropriate sanctions,
                the request by ANATEL to declaration as public utility by the Executive
                Power, of the assets and equipment that are necessary for the continuation
                of the service rendering, it being established, for the purposes
                of
                previous compensation the value corresponding to the revenue earning
                in
                the last 12 (twelve) months against the rendering of the
                service.

            

    

    

    Chapter
      XIV - On the Enforcement, Efficiency and Jurisdiction

    

    14.1. This
      Certificate shall remain valid and efficient after the publication of its
      summary in the Federal Official Gazette.

     

    
      	
              14.2.

            	
              In
                order to eliminate eventual future issues relative to this Certificate
                of
                Authorization, efforts shall be made to obtain an amicable solution,
                with
                the parties going to the judicial settlement only in case of impossibility
                of the amicable 

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

      
         

        
          	
                   

                	
                  solution
                    and, in this case, the appropriate Court of the Judiciary District
                    of the
                    Federal Justice in the City of Brasilia, Federal district, shall
                    be the
                    competent one.

                

        

         

      

    

    Being
      so
      agreed in respect to the provisions and conditions of this Certificate, the
      Parties execute it in three equal copies before the named witnesses, who sign
      it
      also, for all legal and juridical effects.

    

    Brasília
      Federal district, April 17, 2003.

    

    For
      ANATEL
      - Agência National de Telecomunicações

    /s/
      Luiz
      Guilherme Schymura de Oliveira, President

    /s/
      Luiz
      Tito Cerasoli, Councilman

    

    For
      the
      AUTHORIZED PARTY - Telecomunicações de São Paulo S.A. - TELESP

    /s/
      Fernando Xavier Ferreira, President

    /s/
      Eduardo Navarro de Carvalho,. Vice-President.

    

    WITNESSES:

    (signed)
      Dirceu Baraviera

    (signed)
      Newton Julio Mantoni.

    
      
        
        

      

      
        13

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