Document:

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                                                                    EXHIBIT 10.3

[THE ROYAL BANK OF SCOTLAND PLC LOGO]           Standard Security Guidance Notes

                                STANDARD SECURITY
                                     COMPANY

                                     COMPANY

                                STANDARD SECURITY

                                       BY
                                CRUACHEM LIMITED
                                  IN FAVOUR OF
                         THE ROYAL BANK OF SCOTLAND PLC

                 SECURITY SUBJECTS: 4 Fountain Avenue, Inchinnan

                                     DATED:

                                    RECORDED:

                                   REGISTERED:

                     SOLICITORS: MESSRS. CARRUTHERS GEMMILL,
                                 81 BATH STREET,
                                 GLASGOW. G2 2EH

May 2000                                                                     (1)
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[THE ROYAL BANK OF SCOTLAND PLC LOGO]           Standard Security Guidance Notes
                                                               1.

THIS IS AN IMPORTANT DOCUMENT. YOU SHOULD TAKE INDEPENDENT LEGAL ADVICE BEFORE
SIGNING AND SIGN ONLY IF YOU WANT TO BE LEGALLY BOUND. THIS DOCUMENT SECURES ALL
SUMS DUE OR TO BECOME DUE TO THE BANK BY THE OBLIGANT. IF YOU SIGN AND THE BANK
IS NOT PAID YOU MAY LOSE THE ASSET(S) CHARGED.

WE, CRUACHEM LIMITED, (Company Number: SC93984) incorporated under the Companies
Acts and having our Registered Office at Todd Campus West of Scotland Science
Park, Acre Road, Glasgow (hereinafter referred to as "the Obligant") hereby
undertake to pay to THE ROYAL BANK OF SCOTLAND plc (hereinafter referred to as
"the Bank", which expression includes its successors and assignees whomsoever)
on demand all sums of principal, interest and charges which are now and which
may at any time hereafter become due to the Bank by the Obligant whether solely
or jointly with any other person, corporation, firm or other body and whether as
principal or surety;

DECLARING THAT;

(1)  the interest hereinbefore referred to shall be at the rate(s) agreed
     between the Bank and the Obligant or (failing such agreement) determined by
     the Bank and shall be payable at such dates as may be so agreed or
     determined by the Bank;

(2)  if there shall be any breach of the obligations contained or referred to in
     this document the Bank shall (without prejudice to all other rights and
     powers available to it) be entitled, without notice to the Obligant, to
     withhold further banking facilities from the Obligant and to return without
     making payment thereof, Cheques, Bills of Exchange, Direct Debits and other
     like documents drawn on the Bank by the Obligant or otherwise bearing to be
     payable by the Bank to the Obligant's order;

(3)  if the Bank receives notice of any subsequent charge or other interest
     affecting all or any part of the security subjects as hereinafter defined
     the Bank may open a new account or accounts with the Obligant and, if or
     insofar as the Bank does not open a new account or accounts, it shall
     nevertheless be treated as if it had done so at the time when it received
     such notice and as and from that time all payments made by the Obligant to
     the Bank shall, notwithstanding any instructions by the Obligant to the
     contrary, be credited or treated as having been credited to the new account
     or accounts and shall not operate to reduce the amount due from the
     Obligant to the Bank at the time when it received the notice;

(4)  the sums due by the Obligant shall be conclusively ascertained by a
     statement under the hand of an official or manager of the Bank;

(5)  the Bank may (without releasing, modifying, rendering unenforceable or
     otherwise prejudicing the security and liabilities hereby constituted,
     except insofar as the Bank expressly so agrees) allow any person(s) any
     time or indulgence or enter into, renew, vary or end any arrangement,
     security or guarantee with any person(s);

(6)  if the Obligant is liable under this document for the debts of another the
     Obligant shall not in competition with or in priority to the Bank make any
     claim against that other nor take or share in or enforce any security in
     respect of such debts, until such debts have been paid to the Bank in full,
     nor shall such liability be affected by the existence of any other security
     or guarantee nor by any other security or guarantee being or becoming void
     or unenforceable; and the Bank may place to the credit of a suspense
     account for so long as it considers desirable any moneys received in
     respect of such debts without any obligation to apply them towards payment
     of such debts; and in applying moneys towards payment of such debts the
     Bank may appropriate them towards such part(s) of the debts as it thinks
     fit.

For which sums the Obligant hereby grants a Standard Security in favour of the
Bank over ALL and WHOLE the subjects known as Four Fountain Avenue, Inchinnan,
which subjects are registered under Title Number: REN 100891 in the Land
Register of Scotland which subjects hereinbefore described are herein referred
to as "the security subjects";

May 2000                                                                     (2)
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[THE ROYAL BANK OF SCOTLAND PLC LOGO]           Standard Security Guidance Notes

The Standard Conditions specified in Schedule 3 to the Conveyancing and Feudal
Reform (Scotland) Act 1970, and any lawful variation thereof operative for the
time being, shall apply;

And the Standard Conditions shall be varied to the effect that

(FIRST)   The Definitions in the said Schedule 3 shall have the effect also for
          the purposes of the following variations;

(SECOND)  The insurance to be effected in terms of Standard Condition 5(a) shall
          provide cover to the extent of the reinstatement value of the security
          subjects and not the market value thereof;

(THIRD)   All policies of insurance affording cover in respect of the security
          subjects shall be disclosed to the Bank by the debtor in order that
          they may be written or endorsed for the interests of the Bank and the
          debtor as the Bank may require and shall in other respects be deemed
          for the purpose of this Standard Security to have been effected under
          Standard Condition 5(a). All rights and claims under policies effected
          or deemed to have been effected under Standard Condition 5(a) are
          hereby assigned by the debtor to the Bank and all moneys becoming
          payable under any such policies shall be applied in making good the
          loss or damage in respect of which such moneys become payable or, if
          the Bank so requires, in or towards the discharge of the sums secured
          by this Standard Security;

(FOURTH)  It shall be an obligation on the debtor not to create or agree to
          create a subsequent security over the security subjects or any part
          thereof or convey or assign the same or any part thereof or make
          directly or indirectly any application for planning permission in
          relation to the security subjects or any part thereof or make
          application for an improvement grant or other grant in respect of the
          security subjects or any part thereof, without the prior consent in
          writing of the Bank in each case which consent if granted may be so
          granted subject to such conditions as the Bank may see fit to impose;

(FIFTH)   If the Bank shall enter into possession of the security subjects the
          Bank shall be entitled (if it thinks fit) at the expense and risk of
          the debtor to remove, store, sell or otherwise deal with any
          furniture, goods, equipment or other moveable property left in or upon
          the security subjects and not removed within fourteen days of the Bank
          entering into possession, without the Bank being liable for any loss
          or damage occasioned by the exercise of this power. The Bank shall
          however be subject to an obligation to account for the proceeds of any
          such sale after deducting all expenses incurred by the Bank in
          relation to such furniture, goods, equipment or other moveable
          property.

If the warrandice is subject to
a prior security or there is
any other qualification of
absolute warrandice insert
before the warrandice
"subject to................." and give
details.

May 2000                                                                     (3)
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[THE ROYAL BANK OF SCOTLAND PLC LOGO]           Standard Security Guidance Notes
                                                                              4.

The Obligant grants warrandice: And the Obligant consents to registration of
these presents and of the said statement for execution: IN WITNESS WHEREOF these
presents consisting of this and the preceding pages are subscribed on behalf of
the Obligant

At GLASGOW

on the  13th day of

AUGUST 2002

/s/ John Ackroyd
---------------------------
Director

/s/ Douglas Walker
---------------------------
Secretary

REGISTER on behalf of the within named THE ROYAL BANK OF SCOTLAND plc in the
REGISTER of the COUNTY of

                                                            Agents

May 2000                                                                     (4)<Page>

EXHIBIT 10.4

                                 LEASE AGREEMENT

                                 BY AND BETWEEN

                         YEW TREE INVESTMENTS LTD., LLLP

                                       AND

                               TRANSGENOMIC, INC.

          This lease agreement (hereinafter "Lease Agreement") is made and
entered into as of the 23RD day of August, 2002, by and between Yew Tree
Investments Ltd., LLLP ("Landlord"), whose address is 4875 Pearl East Cr. #300,
Boulder, CO 80301, and Transgenomic, Inc. ("Tenant"), whose address is 12325
Emmet Street, Omaha, NE 68164. In consideration of the covenants, terms,
conditions, agreements and payments as herein set forth, the Landlord and Tenant
hereby enter into the following Lease Agreement:

1.DEFINITIONS. Whenever the following words or phrases are used in this Lease
Agreement, said words or phrases shall have the following meaning:

     a. Area" shall mean the parcel of land commonly known and referred to as
5555 Airport Blvd., Lake Centre Business Park, Boulder, Colorado. The Area
includes the Leased Premises and one or more buildings. The Area may include
Common Areas.

     b. "Building" shall mean a building located in the Area.

     c. "Common Areas" shall mean all entrances, exits, driveways, curbs,
walkways, hallways, parking areas, landscaped areas, restrooms, loading and
service areas, and like areas or facilities which are located in the Area and
which are designated by the Landlord as areas or facilities available for the
nonexclusive use in common by persons designated by the Landlord.

     d. "Leased Premises" shall mean the premises herein leased to the Tenant by
the Landlord.

     e. "Tenant's Prorata Share" as to the Building in which the Leased Premises
are located shall mean an amount (expressed as a percentage) equal to the number
of square feet included in the Leased Premises divided by the total number of
leasable square feet included in said Building. The Tenant's Prorata Share as to
Common Areas shall mean an amount (expressed as a percentage) equal to the
number of square feet included in the Leased Premises divided by the total
number of leasable square feet included in all Buildings located in the Area.
The Tenant's Prorata Share for Common Areas may change from time to time as the
leasable square footage in all Buildings located in the Area is increased or
decreased. At the signing date of this Lease Agreement, Tenant's Prorata Share
of the Building and Area shall be 59.85% (33,517 square feet/56,000 square feet)

2. LEASED PREMISES. The Landlord hereby leases unto the Tenant, and the Tenant
hereby leases from the Landlord, the following described premises:

     Space 200 in Building 5555 Airport Blvd., consisting of 33,673 square feet

3. BASE TERM. The term of this Lease Agreement shall commence at 12:00 noon on
August 15, 2002, and, unless sooner terminated as herein provided for, shall end
at 12:00 noon on November 30, 2007 ("Lease Term"). Tenant shall be granted
access from August 15, 2002 until November 15, 2002 for purposes of building out
the Leased Premises. Except as specifically provided to the contrary herein, the
Leased Premises shall, upon the termination of this Lease, by virtue of the
expiration of the Lease Term or otherwise, be returned to the Landlord by the
Tenant in as good or better condition than when entered upon by the Tenant,
ordinary wear and tear excepted.

4. RENT. Tenant shall pay the following rent for the Leased Premises:

     a. BASE MONTHLY RENT. Tenant shall pay to Landlord, without notice and
without setoff, at the address of Landlord as herein set forth, the following
Base Monthly Rent ("Base Monthly Rent"), said Base Monthly Rent to be paid in
advance on the first day of each month during the term hereof. In the event that
this Lease Agreement commences on a date other than the first day of a month,
the Base Monthly Rent for the first month of the Lease Term shall be prorated
for said partial month. Below is a schedule of Base Monthly Rental payments as
agreed upon:

                                DURING LEASE TERM
<Table>
<Caption>
        For Period          To Period           A Base Monthly
        Starting            Ending              Rent of
        <S>                 <C>                 <C>              <C>
        August 15, 2002     November 15, 2002   $         0.00
        November 16, 2002   November 30, 2002   $    14,030.00
        December 1, 2002    November 30, 2003   $    28,061.00
        December 1, 2003    November 30, 2007   $     28,061.00  Plus any cost of living adjustment as
                                                                 contained herein.
</Table>

     b. LEASE TERM ADJUSTMENT. If, for any reason, other than delays caused by
the Tenant, the Leased Premises are not ready for Tenant's occupancy on August
15, 2002, the Tenant's rental obligation and other monetary expenses (i.e.
taxes, utilities, etc.) shall be abated in direct proportion to the number of
days of delay. It is hereby agreed that the premises shall be deemed ready for
occupancy on the day the Landlord receives a Temporary Certificate of Occupancy
(T.C.O) or Certificate of Occupancy (C.O.) from the appropriate authority, or on
the day the Landlord gives Tenant the

                                  Page 1 of 19
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keys to the Leased Premises if a building permit has not been applied for and/or
is not required by the appropriate authority.

     c. COST OF LIVING ADJUSTMENT. The Base Monthly Rental specified in
paragraph 4A above shall be recalculated for each Lease Year as defined
hereinafter following the first Lease Year of this Lease Agreement. The
recalculated Base Monthly Rental shall be hereinafter referred to as the
"Adjusted Monthly Rental". The Adjusted Monthly Rental for each Lease Year after
the first Lease Year shall be the greater of: (i) the amount of the previous
year's Adjusted Monthly Rental, (or the Base Monthly Rental if calculating the
Adjusted Monthly Rental for the second Lease Year), or (ii) an amount calculated
by the rent adjustment formula set forth below. In applying the rent adjustment
formula, the following definitions shall apply:

          i. "Lease Year" shall mean a period of twelve (12) consecutive full
calendar months with the first Lease Year commencing on the date of the
commencement of the term of this Lease and each succeeding Lease Year commencing
upon the anniversary date of the first Lease Year; however, if this Lease does
not commence on the first day of a month, then, the first Lease Year and each
succeeding Lease Year shall commence on the first day of the first month
following each anniversary date of this Lease;

          ii. "Bureau" shall mean the Bureau of Labor Statistics of the United
States Department of Labor or any successor agency that shall issue the Price
Index referred to in this Lease Agreement.

          iii. "Price Index" shall mean the "Consumer Price Index-All Urban
Consumers-All Items (CPI-U) U.S. City Average (1982-84=100)" issued from time to
time by the Bureau. In the event the Price Index shall hereafter be converted to
a different standard reference base or otherwise revised, the determination of
the increase in the Price Index shall be made with the use of such conversion
factor, formula or table as may be published by Prentice-Hall, Inc. or failing
such publication, by another nationally recognized publisher of similar
statistical information. In the event the Price Index shall cease to be
published, then, for the purposes of this paragraph 4C there shall be
substituted for the Price Index such other index as the Landlord and the Tenant
shall agree upon, and if they are unable to agree within sixty (60) days after
the Price Index ceases to be published, such matter shall be determined by
arbitration in accordance with the Rules of the American Arbitration
Association.

          iv. "Base Price Index" shall mean the Price Index released to the
public during the second calendar month preceding the commencement of this Lease
Agreement.

          v. "Revised Price Index" shall mean the Price Index released to the
public during the second calendar month preceding the Lease Year for which the
Base Annual Rental is to be adjusted;

          vi. "Basic Monthly Rental" shall mean the Basic Monthly Rental set
forth in subparagraph 4A above. The rent adjustment formula used to calculate
the Adjusted Monthly Rental is as follows:

               Adjusted Monthly = Revised Price Index X Base Monthly Rental
                       Rental     -----------------------------------------
                                          Base Price Index

Not withstanding the above formula, the Adjusted Monthly Rental shall not be
greater than 103% of the previous year's Adjusted Monthly Rental, or the Basic
Monthly Rental if such adjustment is for the Second Lease Year. The Adjusted
Monthly Rental as herein above provided shall continue to be payable monthly as
required in paragraph 4A above without necessity of any further notice by the
Landlord to the Tenant.

     d. TOTAL NET LEASE. The Tenant understands and agrees that this Lease
Agreement is a total net lease (a "net, net, net lease"), whereby the Tenant has
the obligation to reimburse the Landlord for a share of all costs and expenses
(taxes, assessments, other charges, insurance, trash removal, Common Area
operation and maintenance and like costs and expenses), incurred by the Landlord
as a result of the Landlord's ownership and operation of the Area.

5. SECURITY DEPOSIT. Landlord acknowledges receipt from the Tenant of the sum of
thirty six thousand and 00/100 Dollars ($36,000.00) to be retained by Landlord
without responsibility for payment of interest thereon, as security for
performance of all the terms and conditions of this Lease Agreement to be
performed by Tenant, including payment of all rent due under the terms hereof.
Deductions may be made by Landlord from the amount so retained for the
reasonable cost of repairs to the Leased Premises (ordinary wear and tear
excepted), for any rent delinquent under the terms hereof and/or for any sum
used in any manner to cure any default of Tenant under the terms of this Lease
Agreement. In the event deductions are so made, the Tenant shall, upon notice
from the Landlord, redeposit with the Landlord such amounts so expended so as to
maintain the deposit in the amount as herein provided for, and failure to so
redeposit shall be deemed a failure to pay rent under the terms hereof. Nothing
herein contained shall limit the liability of Tenant as to any damage to the
Leased Premises, and Tenant shall be responsible for the total amount of any
damage and/or loss occasioned by actions of Tenant. Landlord may deliver the
funds deposited hereunder by Tenant to any purchaser of Landlord's interest in
the Leased Premises in the event such interest shall be sold, and thereupon
Landlord shall be discharged from any further liability with respect to such
deposit.

6. USE OF PREMISES. Tenant shall use the Leased Premises for reasonable purposes
related to analytical and chemistry laboratories, biotech laboratories, clean
rooms, research & development, manufacturing, warehousing, office and
administration. Tenant shall not use the premises for other unrelated purposes
except with the written consent of Landlord. Tenant shall not allow any
accumulation of trash or debris on the Leased Premises or within any portion of
the Area. All receiving and delivery of goods and merchandise and all removal of
garbage and refuse shall be made only by way of the rear and/or other service
door provided therefore. In the event the Leased Premises shall have no such
door, then these matters shall be handled in a manner satisfactory to Landlord.
No storage of any material outside of the Leased Premises shall be allowed
unless first approved by Landlord in writing, and then in only such areas as are
designated by Landlord. Tenant shall not commit or suffer any waste on the
Leased Premises nor shall Tenant permit any nuisance to be maintained on the
Leased Premises or permit any disorderly conduct or other activity having a
tendency to annoy or disturb any occupants of any part of the Area and/or any
adjoining property.

7. LAWS AND REGULATIONS. -- TENANT RESPONSIBILITY. The Tenant shall, at its sole
cost and expense, comply with all laws and regulations of any governmental
entity, board, commission or agency having jurisdiction over the Leased
Premises, except to the extent that such regulations relate to facilities which
are under the sole control of the Landlord or shared with other tenants, in
which event Tenant agrees to pay a prorated share of expenses. Tenant agrees not
to install any

                                  Page 2 of 19
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electrical equipment that overloads any electrical paneling, circuitry or wiring
and further agrees to comply with the requirements of the insurance underwriter
or any governmental authorities having jurisdiction thereof.

8. LANDLORD'S RULES AND REGULATIONS. Upon reasonable notice to Tenant Landlord
reserves the right to adopt and promulgate reasonable rules and regulations
applicable to the Leased Premises and from time to time amend or supplement said
rules or regulations, provided that such rules and regulations do not restrict
the use of the Leased Premises by Tenant or the purpose set forth in Section 6
above. Notice of such rules and regulations and amendments and supplements
thereto shall be given to Tenant, and Tenant agrees to comply with and observe
such rules and regulations and amendments and supplements thereto provided that
the same apply uniformly to all Tenants of the Landlord in the Area.

9. PARKING. If the Landlord provides off street parking for the common use of
Tenants, employees and customers of the Area, the Tenant shall park all vehicles
of whatever type used by Tenant and/or Tenant's employees only in such areas
thereof as are designated by Landlord for this purpose, and Tenant accepts the
responsibility of seeing that Tenant's employees park only in the areas so
designated. Tenant shall, upon the request of the Landlord, provide to the
Landlord license numbers of the vehicles normally used by Tenant and its
employees. The number of parking spaces within the off-street parking area
allocated shall not be less than one parking space per 361 square feet of area
leased in the Leased Premises.

10. CONTROL OF COMMON AREAS. -- EXCLUSIVE CONTROL OF THE LANDLORD. All Common
Areas shall at all times be subject to the exclusive control and management of
Landlord, notwithstanding that Tenant and/or Tenant's employees and/or customers
may have a nonexclusive right to the use thereof. Landlord shall have the right
from time to time to establish, modify and enforce rules and regulations with
respect to the use of and Common Areas, upon reasonable notice to Tenant.

11. TAXES.

    a. REAL PROPERTY TAXES AND ASSESSMENTS. The Tenant shall pay to the
Landlord on the first day of each month, as additional rent, the Tenant's
Prorata Share of all real estate taxes and special assessments levied and
assessed against the Building in which the Leased Premises are located and the
Common Areas. If the first and last years of the Lease Term are not calendar
years, the obligations of the Tenant hereunder shall be prorated for the number
of days during the calendar year that this Lease is in effect. The monthly
payments for such taxes and assessments shall be $ 4,209.00 until the Landlord
receives the first tax statement for the referred to properties. Thereafter, the
monthly payments shall be based upon 1/12th of the prior year's taxes and
assessments. Once each year the Landlord shall determine the actual Tenant's
Prorata Share of taxes and assessments for the prior year and if the Tenant has
paid less than the Tenant's Prorata Share for the prior year the Tenant shall
pay the deficiency to the Landlord with the next payment of Base Monthly Rent,
or, if the Tenant has paid in excess of the Tenant's Prorata Share for the prior
year the Landlord shall forthwith refund said excess to the Tenant.
Additionally, upon Lease Agreement expiration or termination Landlord shall also
determine Tenant's Prorata Share of taxes and assessments for the calendar year
in which the Lease Agreement expires or terminates based on the most recent
valuation and estimate of taxes provided by Boulder County. If the Tenant has
paid less than the Tenant's prorated Prorata Share for the current year the
Tenant shall pay the deficiency, or, if the Tenant has paid in excess of the
Tenant's prorated Prorata Share for the current year the Landlord shall
forthwith refund the excess to the Tenant.

    b. PERSONAL PROPERTY TAXES. Tenant shall be responsible for, and shall pay
promptly when due, any and all taxes and/or assessments levied and/or assessed
against any furniture, fixtures, equipment and items of a similar nature
installed and/or located in or about the Leased Premises by Tenant.

    c. RENT TAX. If a special tax, charge or assessment is imposed or levied
upon the rents paid or payable hereunder or upon the right of the Landlord to
receive rents hereunder (other than to the extent that such rents are included
as a part of the Landlord's income for the purpose of an income tax), the Tenant
shall reimburse the Landlord for the amount of such tax within fifteen (15) days
after demand therefore is made upon the Tenant by the Landlord.

    d. OTHER TAXES, FEES AND CHARGES. Tenant shall pay to Landlord, on the
first day of each month, as additional rent, Tenant's Pro Rata Share of any
"Other Charges" (as hereinafter defined) levied, assessed, charged or imposed
against the Area, as a whole. Unless paid directly by Tenant to the authority
levying, assessing, charging or imposing same, Tenant shall also pay to
Landlord, on the first day of the month following payment of same by Landlord,
the entire costs of any such "Other Charges" levied, assessed, charged or
imposed against the Leased Premises, Tenant's use of same, or Tenant's conduct
of business thereon. For purposes of this provision, "Other Charges" shall mean
and refer to any and all taxes, assessments, impositions, user fees, impact
fees, utility fees, transportation fees, alternative transportation fees and
passes, infrastructure fees, system fees, license fees, and any other charge or
assessment imposed by any governmental authority or applicable subdivision on
the Area, the Leased Premises or the ownership or use of the Area or Leased
Premises, or the business conducted thereon, whether or not formally denominated
as a tax, assessment, charge or other nominal description, whether now in effect
or hereafter enacted or imposed (excluding, however, Landlord's income taxes).

    e. Representations and Warranties. Landlord represents and warrants that
there are no pending taxes or Other Charges payable under this section, or
otherwise related to the Leased Premises, as of the date of the execution of
this Lease Agreement, and that if such preexisting tax conditions are discovered
that these shall be the sole responsibility of the Landlord.

    f. Should Landlord protest and win a reduction in the real estate taxes for
the Building and Area, Tenant shall be obligated to pay its Prorata Share of the
cost of such protest, if the protest is handled by a party other than the
Landlord.

12. INSURANCE.

    a. LANDLORD'S INSURANCE. Landlord shall obtain and maintain such fire and
casualty insurance on the core and shell of the Building in which the Leased
Premises are located and the Common Areas, as well as such loss of rents,
business interruption, liability or any other insurance, as it deems
appropriate, with such companies and on such terms and conditions as are
customary and reasonable for similar properties. Such insurance shall not be
required to cover any of Tenant's inventory, furniture, furnishings, fixtures,
equipment or tenant improvements (whether or not installed on the Leased
Premises by or for Tenant and whether or not included within the tenant finish
provided by Landlord), and

                                  Page 3 of 19
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Landlord shall not be obligated to repair any damage thereto or replace any of
same, and Tenant shall have no interest in any proceeds of Landlord's insurance.

    b. TENANT'S INSURANCE. Tenant shall, at its sole cost and expense, obtain
and maintain throughout the term of this Lease Agreement, on a full replacement
cost basis, "all risk" insurance covering all of Tenant's inventory, furniture,
furnishings, fixtures, equipment and all tenant improvements or tenant finish
(whether or not installed by Landlord) and betterments located on or within the
Leased Premises. In addition, Tenant shall obtain and maintain, at its sole cost
and expense, comprehensive general public liability insurance providing coverage
from and against any loss or damage occasioned by an accident or casualty on,
about or adjacent to the Leased Premises, including protection against death,
personal injury and property damage. Such liability coverage shall be written on
an "occurrence" basis, with limits of not less than $1,000,000.00 combined
single limit coverage.

         All policies of insurance required to be carried by Tenant hereunder
shall be written by an insurance company licensed to do business in the State of
Colorado, and shall name Landlord as an additional named insured and/or loss
payee, as Landlord may direct. Each such policy shall provide that same shall
not be changed or modified without at least thirty (30) days' prior written
notice to Landlord and any mortgagee of Landlord. Certificates evidencing the
extent and effectiveness of all Tenants insurance shall be delivered to
Landlord. The limits of such insurance shall not, under any circumstances, limit
the liability of Tenant under this Lease Agreement.

         In the event that Tenant fails to maintain any of the insurance
required of it pursuant to this provision, Landlord shall have the right (but
not the obligation) at Landlord's election, to pay Tenant's premiums or to
arrange substitute insurance with an insurance company of Landlord's choosing,
in which event any premiums advanced by Landlord shall constitute additional
rent payable under this Lease Agreement and shall be payable by Tenant to
Landlord immediately upon demand for same. Landlord shall also have the right,
but no the obligation, whether or not Tenant maintains coverage to carry any
such insurance as Landlord may elect in order to provide coverage in the event
Tenant fails to properly maintain such insurance.

         The rights of Landlord hereunder shall be in addition to, and not in
lieu of any other rights or remedies available to Landlord under this Lease
Agreement or provided by law or in equity. Without limiting the foregoing, in
the event that coverage of any risk for which Tenant is responsible pursuant to
this Section 12 is ultimately provided by coverage maintained by Landlord,
whether due to Tenant's failure to provided or maintain such insurance or
otherwise, Tenant shall promptly reimburse Landlord for an amount equal to any
deductible incurred, immediately upon demand for same.

    c. TENANT'S HIGH PRESSURE STEAM BOILER INSURANCE. If Tenant makes use of
any kind of steam or other high pressure boiler or other apparatus which
presents a risk of damage to the Leased Premises or to the Building or other
improvements of which the Leased Premises are a part or to the life or limb of
persons within such premises, Tenant shall secure and maintain appropriate
boiler insurance in an amount satisfactory to Landlord. The Landlord shall be
named insured in any such policy or policies. Certificates for such insurance
shall be delivered to Landlord and shall provide that said insurance shall not
be changed, modified, reduced or canceled without thirty (30) days prior written
notice thereof being given to Landlord.

    d. TENANT'S SHARE OF LANDLORD INSURANCE. Tenant shall pay the Landlord as
additional rent Tenant's Prorata Share of the insurance secured by the Landlord
pursuant to "12A" above. Payment shall be made on the first day of each month as
additional rent. The monthly payments for such insurance shall be $ 281.00 until
changed by Landlord as a result of an increase or decrease in the cost of such
insurance.

    e. MUTUAL SUBROGATION WAIVER. Landlord and Tenant hereby grant to each
other, on behalf of any insurer providing fire and extended coverage to either
of them covering the Leased Premises, Buildings or other improvements thereon or
contents thereof, a waiver of any right of subrogation any such insurer of one
party may acquire against the other or as against the Landlord or Tenant by
virtue of payments of any loss under such insurance. Such a waiver shall be
effective so long as the Landlord and Tenant are empowered to grant such waiver
under the terms of their respective insurance policy or policies and such waiver
shall stand mutually terminated as of the date either Landlord or Tenant gives
notice to the other that the power to grant such waiver has been so terminated.

13. UTILITIES.

    a. Tenant shall be solely responsible for and promptly pay all charges for
heat, water, gas, electric, sewer service and any other utility service used or
consumed on the Leased Premises. For all utility services used or consumed on
the Leased Premises which are included in utility services to an area larger
than the Leased Premises, Landlord and Tenant shall agree upon a reasonable
formula for allocation of such costs and Tenant agrees to pay for its reasonable
share of such costs, except that Tenant shall not be responsible for any share
of such costs which are directly attributable to the unreasonable actions of
Landlord or Landlord's tenants which share or have access to the area larger
than the leased premises. Tenant shall pay monthly, commencing with the first
month of the Lease Term, as additional rent due under the terms hereof, a sum
equal to Tenant's Prorata Share of the estimated costs for said twelve (12)
month period, divided by 12. Once each year the Landlord shall determine the
actual costs of the foregoing expenses for the prior year and if the actual
costs are greater than the estimated costs, the Tenant shall pay its Tenant's
Prorata Share of the difference between the estimated costs and the actual costs
to the Landlord with the next payment of Base Monthly Rent, or, if the actual
costs are less than the estimated costs, the Landlord shall forthwith refund the
amount of the Tenant's excess payment to the Tenant. Additionally, upon Lease
expiration or termination Landlord shall also determine Tenant's Prorata Share
of the annualized actual costs of the foregoing expenses for the number of days
the Lease is in effect during the calendar year in which the Lease expires or
terminates. If the annualized actual costs are greater than the estimated costs,
the Tenant shall pay its Tenant's Prorata Share of the difference between the
estimated costs and the annualized actual costs to the Landlord, or, if the
annualized actual costs are less than the estimated costs, the Landlord shall
forthwith refund the excess payment to the Tenant. For purposes of calculating
Tenant's share of expenses under this paragraph, annualized actual costs shall
be the sum of actual costs for the year at the time of reconciliation plus the
total estimated costs prorated for the number of days from the date the last
actual cost was paid to the end of the year. For all utility services used or
consumed on the Leased Premises in which the utility service is used solely on
the Leased Premises, the Tenant shall forthwith upon taking occupancy of the
Leased Premises make arrangements with the Excel Energy Company, U.S. West or
other appropriate utility company to pay the utilities used on the Leased
Premises and to have the same billed to the Tenant at the address designated by
the Tenant. Should there be a time where the Landlord remains responsible for
utilities supplied to the Leased Premises, the Landlord shall bill the Tenant
therefore and the Tenant shall promptly reimburse the Landlord therefore. In no
event shall Landlord be liable for any interruption or failure

                                  Page 4 of 19
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in the supply of any such utility to the Leased Premises.

         In the event the utility company supplying water and/or sewer to the
Leased Premises determines that an additional service fee, impact fee, and/or
assessment, or any other type of payment or penalty is necessary due to Tenant's
use and occupancy of the Building, nature of operation and/or consumption of
utilities, said expense shall be borne solely by the Tenant. Said expense shall
be paid promptly and any repairs requested by the utility company shall be
performed by Tenant immediately and without any delay.

    b. Landlord Controls Selection. Landlord has advised Tenant that presently
Excel Energy Company of Colorado ("Utility Service Provider") is the utility
company selected by Landlord to provide electricity and gas service for the
Building. Notwithstanding the foregoing, if permitted by Law, Landlord shall
have the right at any time and from time to time during the Lease Term to either
contract for service from a different company or companies providing electricity
and/or gas service (each such company shall hereinafter be referred to as an
("Alternative Service Provider") or continue to contract for service from the
Utility Service Provider.

    c. Tenant Shall Give Landlord Access. Tenant shall cooperate with Landlord,
Utility Service Provider, and any Alternative Service Provider at all times and,
as reasonably necessary, shall allow Landlord, Utility Service Provider, and any
Alternative Service Provider reasonable access to the Building's electric lines,
feeders, risers, wiring, gas lines, and any other machinery within the Premises.

    d. Landlord Not Responsible for Interruption of Service. Landlord shall in
no way be liable or responsible for any loss, damage, or expense that Tenant may
sustain or incur by reason of any change, failure, interference, disruption, or
defect in the supply or character of the electrical and/or gas energy furnished
to the Premises, or if the quantity or character of the electric and/or gas
energy supplied by the Utility Service Provider or any Alternate Service
Provider is no longer available or suitable for Tenant's requirements, and no
such change, failure, defect, unavailability, or unsuitability shall constitute
an actual or constructive eviction, in whole or in part, or entitle Tenant to
any abatement or diminution of rent, or relieve Tenant from any of its
obligations under the Lease Agreement.

14. MAINTENANCE OBLIGATIONS OF LANDLORD. Except as herein otherwise specifically
provided for, Landlord shall keep and maintain the roof and exterior of the
Building of which the Leased Premises are a part in good repair and condition.
Tenant shall repair and pay for any damage to roof, foundation and external
walls caused by Tenant's action, negligence or fault. Landlord shall repair and
pay for any damage to roof, foundation and external walls, and resulting damage
to the Leased Premises, caused by Landlord's or other tenant's action,
negligence or fault.

15. MAINTENANCE OBLIGATIONS OF THE TENANT. Subject only to the maintenance
obligations of the Landlord as herein provided for, the Tenant shall, during the
entire Lease Term, including all extensions thereof, at the Tenant's sole cost
and expense, keep and maintain the Leased Premises in good condition and repair,
including specifically the following:

    a. ELECTRICAL SYSTEMS. Tenant agrees to maintain in good working order and
to make all required repairs and replacements to the electrical systems for the
Leased Premises. Tenant upon signing this Lease Agreement acknowledges that
Tenant has inspected the existing electrical systems and all such systems are in
good repair and working order.

    b. PLUMBING SYSTEMS. Tenant agrees to maintain in good working order and to
make all required repairs or replacements to the plumbing systems for the Leased
Premises. Tenant upon signing this Lease Agreement acknowledges that Tenant has
inspected the existing plumbing systems and all such systems are in good repair
and working order.

    c. TENANT'S RESPONSIBILITY FOR BUILDING AND AREA REPAIRS. Tenant shall be
responsible for any repairs required for any part of the Building or Area of
which the Leased Premises are a part if such repairs are necessitated by the
actions or inactions of Tenant, except that Tenant shall not be responsible for
any repairs made necessary by Landlord's negligent acts.

    d. CUTTING ROOF. Tenant must obtain in writing the Landlord's approval
prior to making any roof penetrations, which approval shall not be unreasonably
withheld in light of the intended and permitted use of the Lease Premises.
Failure by Tenant to obtain written permission to penetrate a roof shall relieve
Landlord of any roof repair obligations as set forth in Paragraph "14" hereof.
Tenant further agrees to repair upon termination of this Lease Agreement if
requested in writing by Landlord, at Tenant's sole cost and expense, all roof
penetrations made by the Tenant and to use, , a licensed contractor to make such
penetrations and repairs.

    e. GLASS AND DOORS. The repair and replacement of all glass and doors on
the Leased Premises, which do not form part of the Common Areas, shall be the
responsibility of the Tenant. Any such replacements or repairs shall be promptly
completed at the expense of the Tenant.

    f. LIABILITY FOR OVERLOAD. Tenant shall be responsible for the repair or
replacement of any damage to the Leased Premises, the Building or the Area which
result from the Tenant's movement of heavy articles therein or thereon, except
ordinary wear and tear reasonable in premises of a similar type and use. Tenant
shall not overload the floors of any part of the Leased Premises.

    g. LIABILITY FOR OVERUSE AND OVERLOAD OF OPERATING SYSTEMS. Tenant shall be
responsible for the repair, upgrade, modification, and/or replacement of any
operating systems servicing the Leased Premises and/or all or part of the
Building which is necessitated by Tenant's change or increase in use of or
non-disclosed use of all or a part of the Leased Premises. Operating systems
include, but are not limited to, electrical systems; plumbing systems (both
water and natural gas); heating, ventilating, and air conditioning systems;
telecommunications systems; computer and network systems; lighting systems, fire
sprinkler systems; security systems; and building control systems, if any.

    h. INSPECTION OF LEASED PREMISES-"AS IS" CONDITIONS. Tenant has inspected
the Leased Premises and accepts the Leased Premises in the condition that they
exist as of the date of this Lease Agreement, including, but not limited to, all
mechanical, plumbing and electrical systems and the conditions of the interior.

    i. FAILURE OF TENANT TO MAINTAIN PREMISES. Should Tenant neglect to keep
and maintain the Leased Premises as required herein, the Landlord shall have the
right, but not the obligation, to have the work done and any reasonable costs

                                  Page 5 of 19
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therefore shall be charged to Tenant as additional rental and shall become
payable by Tenant with the payment of the rental next due.

16. COMMON AREA MAINTENANCE. Tenant shall be responsible for Tenant's Prorata
Share of the total costs incurred for the operation, maintenance and repair of
the Common Areas, including, but not limited to, the costs and expenses incurred
for the operation, maintenance and repair of parking areas (including restriping
and repaving); removal of snow; all utilities including water, gas, and electric
for the building; janitorial for common areas and tenant occupied space; normal
HVAC maintenance and elevator maintenance (if applicable); trash removal;
security to protect and secure the Area; common entrances, exits, and lobbies of
the Building; all common utilities, including water to maintain landscaping;
replanting in order to maintain a smart appearance of landscape areas; supplies;
depreciation on the machinery and equipment used in such operation, maintenance
and repair; the cost of personnel to implement such services; the cost of
maintaining in good working condition the HVAC system(s) for the Leased
Premises; the cost of maintaining in good working condition the elevator(s) for
the Leased Premises, if applicable; and costs to cover Landlord's management
fees paid for the management of the property. These costs shall be estimated on
an annual basis by the Landlord and shall be adjusted upwards or downwards
depending on the actual costs for the preceding twelve months. Tenant shall pay
monthly, commencing with the first month of the Lease Term, as additional rent
due under the terms hereof, a sum equal to Tenant's Prorata Share of the
estimated costs for said twelve (12) month period, divided by 12. The estimated
initial monthly costs are $ 3,227.00. Once each year the Landlord shall
determine the actual costs of the foregoing expenses for the prior year and if
the actual costs are greater than the estimated costs, the Tenant shall pay its
Tenant's Prorata Share of the difference between the estimated costs and the
actual costs to the Landlord with the next payment of Base Monthly Rent, or, if
the actual costs are less than the estimated costs, the Landlord shall forthwith
refund the amount of the Tenant's excess payment to the Tenant.

Additionally, upon Lease Agreement expiration or termination Landlord shall also
determine Tenant's Prorata Share of the annualized actual costs of the foregoing
expenses for the number of days the Lease is in effect during the calendar year
in which the Lease Agreement expires or terminates. If the annualized actual
costs are greater than the estimated costs, the Tenant shall pay its Prorata
Share of the difference between the estimated costs and the annualized actual
costs to the Landlord, or, if the annualized actual costs are less than the
estimated costs, the Landlord shall forthwith refund the excess to the Tenant.
For purposes of calculating Tenant's share of expenses under this paragraph,
annualized actual costs shall be the sum of actual costs for the year at the
time of reconciliation plus the total estimated costs prorated for the number of
days from the date the last actual cost was paid to the end of the year.

17. INSPECTION OF AND RIGHT OF ENTRY TO LEASED PREMISES--REGULAR, EMERGENCY,
RELETTING. Landlord and/or Landlord's agents and employees, shall have the right
to enter the Leased Premises upon reasonable notice and such that Tenant's
business is not unreasonably interrupted and such that Landlord shall reasonably
follow all of Tenants safety rules and procedures, at all times during regular
business hours and, at all times during emergencies, to examine the Leased
Premises, to make such repairs, alterations, improvements or additions as
Landlord deems necessary, and Landlord shall be allowed to take all materials
into and upon said Leased Premises that may be required therefore without the
same constituting an eviction of Tenant in whole or in part, and the rent
reserved shall in no way abate while such repairs, alterations, improvements or
additions are being made, by reason of loss or interruption of business of
Tenant or otherwise. During the six months prior to the expiration of the term
of this Lease Agreement or any renewal thereof, Landlord may, upon reasonable
notice and such that Tenant's business is not unreasonably interrupted, exhibit
the Leased Premises to prospective tenants and/or purchasers and may place upon
the Leased Premises the usual notices indicating that the Leased Premises are
for lease and/or sale.

18. ALTERATION-CHANGES AND ADDITIONS-RESPONSIBILITY.
Unless the Landlord's approval is first secured in writing, Tenant shall not
make any additions which are fixed to the Leased Premises. Such fixtures, unless
otherwise agreed in writing, shall become the property of the Landlord upon
termination of this Lease Agreement. Notwithstanding the foregoing, Tenant shall
be able to remove any and all of its equipment and trade fixtures which are
easily removed or are otherwise not fixed to the premises. Landlord may at its
sole option require Tenant at Tenant's cost to restore the Leased Premises to
original condition at the time of occupancy, subject to Tenant's normal wear and
tear. Notwithstanding the foregoing, Tenant shall be able to make changes to
voice and data networks which do not materially alter any fixture of the Leased
Premises without obtaining Landlord's consent. All such work shall be done in a
good and workmanlike manner and shall consist of new materials unless agreed to
otherwise by Landlord.

19. SIGN APPROVAL. Except for signs which are located inside of the Leased
Premises and which are not attached to any part of the Leased Premises, the
Landlord must approve in writing any sign to be placed in or on the interior or
exterior of the Leased Premises, regardless of size or value, which approval
shall not be unreasonably withheld. Tenant shall, during the entire Lease Term,
maintain Tenant's signs in good condition and repair at Tenant's sole cost and
expense. Tenant shall, remove all signs at the termination of this Lease
Agreement, at Tenant's sole risk and expense and shall in a workmanlike manner
properly repair any damage and close any unreasonable holes caused by the
installation and/or removal of Tenant's signs. Tenant shall give Landlord prior
notice of such removal so that a representative of Landlord shall have the
opportunity of being present when the signage is removed, or shall pre-approve
the manner and materials used to repair damage and close the holes caused by
removal.

20. RIGHT OF LANDLORD TO MAKE CHANGES AND ADDITIONS. Landlord reserves the right
at any time upon reasonable notice and such that Tenant's business is not
unreasonably interrupted, to make alterations or additions to the Building or
Area of which the Leased Premises are a part. Landlord also reserves the right
to construct other buildings and/or improvements in the Area and to make
alterations or additions thereto, all as Landlord shall determine, upon
reasonable notice and such that Tenant's business is not unreasonably
interrupted. Landlord further reserves the exclusive right to the roof of the
Building of which the Leased Premises are a part. Landlord also reserves the
right at any time to relocate, vary and adjust the size of any of the
improvements or Common Areas located in the Area upon reasonable notice and such
that Tenant's business is not unreasonably interrupted and provided that all
such changes shall be in compliance with the requirements of governmental
authorities having jurisdiction over the Area.

21. DAMAGE OR DESTRUCTION OF LEASED PREMISES. In the event the Leased Premises
and/or the Building of which the Leased Premises are a part shall be totally
destroyed by fire or other casualty or so badly damaged that, in the opinion of
Landlord, it is not feasible to repair or rebuild same, Landlord shall have the
right to terminate this Lease Agreement upon written notice to Tenant and if the
Landlord elects not to terminate the Lease Agreement, rent shall be abated until
the Leased Premises are reconstructed. If the Leased Premises are partially
damaged by fire or other casualty, , and said Leased Premises are rendered
untenable thereby, as determined by ordinary reason and prudence, an appropriate

                                  Page 6 of 19
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reduction of the rent shall be allowed for the unoccupied portion of the Leased
Premises until repair thereof shall be substantially completed. If the Landlord
elects to exercise the right herein vested in it to terminate this Lease
Agreement as a result of damage to or destruction of the Leased Premises or the
Building in which the Leased Premises are located, said election shall be made
by giving notice thereof to the Tenant within thirty (30) days after the date of
said damage or destruction.

If the Leased Premises are damaged by fire or other casualty such that Tenant
can not use the Leased Premises for the normal business purposes of Tenant under
Section 6 above, whether in part or in full, and the Landlord has not provided a
schedule for repair of the Leased Premises within forty five (45) days of such
event with further assurances that it will be able to restore the Leased
Premises, or is diligently working to restore the Leased Premises, to full
operating condition within a 360 day period of such event, then Tenant shall be
able to cancel this Lease Agreement upon written notice to the Landlord.
Notwithstanding the foregoing, Tenant may not cancel the Lease Agreement if the
damage to the Leased Premises is due in whole or in part to the act, omission,
fault or negligence of Tenant, so long the Landlord is diligently working to
restore the Leased Premises.

22. GOVERNMENTAL ACQUISITION OF PROPERTY. Upon reasonable notice to Tenant, the
Landlord shall have complete freedom of negotiation and settlement of all
matters pertaining to the acquisition of the Leased Premises, the Building, the
Area, or any part thereof, by any governmental body or other person or entity
via the exercise of the power of eminent domain, it being understood and agreed
that any financial settlement made or compensation paid respecting said land or
improvements to be so taken, whether resulting from negotiation and agreement or
legal proceedings, shall be the exclusive property of Landlord, there being no
sharing whatsoever between Landlord and Tenant of any sum so paid. In the event
of any such taking, Landlord shall have the right to terminate this Lease
Agreement on the date possession is delivered to the condemning person or
authority. Such taking of the property shall not be a breach of this Lease
Agreement by Landlord nor give rise to any claims in Tenant for damages or
compensation from Landlord. Nothing herein contained shall be construed as
depriving the Tenant of the right to retain as its sole property any
compensation paid for any tangible personal property owned by the Tenant which
is taken in any such condemnation proceeding.

Landlord shall inform Tenant immediately of the pendency of any legal action or
proceeding under this Section 22. Notwithstanding the foregoing, Tenant shall be
entitled to seek, directly from the acquiring governmental authority an award
for Tenant's fixtures which are agreed to be Tenant's property in writing by the
Landlord in accord with Section 18 above, and any award for any of Tenant's
trade fixtures, equipment, personal property and relocation expenses.

Landlord represents and warrants that there are no any such governmental actions
pending as of the effective date of this Lease Agreement, and that if such
preexisting governmental actions are later discovered that this Lease Agreement
shall be void.

23. ASSIGNMENT OR SUBLETTING. Tenant may not assign this Lease Agreement, or
sublet the Leased Premises or any part thereof, without the written consent of
Landlord. No such assignment or subletting if approved by the Landlord shall
relieve Tenant of any of its obligations hereunder, and, the performance or
nonperformance of any of the covenants herein contained by subtenants shall be
considered as the performance or the nonperformance by the Tenant.

24. WARRANTY OF TITLE. Subject to the provisions of the following three (3)
paragraphs hereof, Landlord covenants it has good right to lease the Leased
Premises in the manner described herein and that Tenant shall peaceably and
quietly have, hold, occupy and enjoy the Leased Premises during the term of the
Lease Agreement.

25. ACCESS. Landlord shall provide Tenant nonexclusive access to the Leased
Premises through and across land and/or other improvements owned by Landlord.
Landlord shall have the right, during the term of this Lease Agreement, to
designate, and to change, such nonexclusive access, upon reasonable notice and
such that any change shall not materially interfere with Tenant's ability to
conduct normal business.

26. SUBORDINATION. Subject to the provisions below, Tenant agrees that this
Lease Agreement shall be subordinate to any mortgages, trust deeds or ground
leases that may now exist or which may hereafter be placed upon said Leased
Premises and to any and all advances to be made thereunder, and to the interest
thereon, and all renewals, replacements and extensions thereof. Tenant shall
execute and deliver whatever instruments may be required for the above purposes,
and failing to do so within ten (10) days after demand in writing shall
constitute a material default under this Lease. Tenant shall in the event of the
sale or assignment of Landlord's interest in the Area or in the Building of
which the Leased Premises form a part, or in the event of any proceedings
brought for the foreclosure of or in the event of exercise of the power of sale
under any mortgage made by Landlord covering the Leased Premises, attorn to the
purchaser and recognize such purchaser as Landlord under this Lease Agreement.

If so requested by Tenant, Landlord shall use reasonable best efforts to ensure
that a letter of non-disturbance shall be obtained from any lender, and such
letter shall provide that Tenant's use, possession or enjoyment of the Premises
shall not be interfered with, nor shall the leasehold estate granted by this
Lease Agreement be affected in any other manner, in any foreclosure, deed in
lieu of foreclosure or any action or proceeding instituted under or in
connection with any mortgage, trust deed or ground lease for so long as Tenant
shall not be in default of any terms of this Lease Agreement. If Landlord is
unable to obtain a letter of non-disturbance, this shall not be a material
default under this Lease Agreement.

27. EASEMENTS. The Landlord shall have the right to grant any easement on, over,
under and above the Area for such purposes as Landlord determines, provided that
such easements do not materially interfere with Tenant's occupancy and ability
to conduct business and use of the Leased Premises, and upon reasonable notice.

28. INDEMNIFICATION AND WAIVER Except in the case of a breach or default in the
performance of any obligation under this Lease Agreement, each party shall
indemnify, defend and hold harmless the other party and nothing in this Lease
Agreement shall be construed as imposing any liability on them for any loss,
costs, expense (including reasonable attorney's fees), or any claims, suits,
actions or damages arising from the ownership, use, control or occupancy of any
portion of the Project including the Building, Common Areas and Premises unless
such loss, cost, expense, claim, suit or action is a result of or caused by the
negligent acts or omissions of such other party or its agents, servants,
employees, contractors, or invitees. Tenant shall not indemnify Landlord for
acts or failure to observe or comply with any of the rules by any other tenant
or occupant of the Building or Project that adversely affect Tenant's use and
occupancy in which Landlord has been put on notice of such adverse impact to
Tenant.

29. ACTS OR OMISSION OF OTHERS. Other than as specified in this Lease Agreement
and in the Laws of the State of

                                  Page 7 of 19
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Colorado, the Landlord, or its employees or agents, or any of them, shall not be
responsible or liable to the Tenant or to the Tenant's guests, invitees,
employees, agents or any other person or entity, for any loss or damage that may
be caused by the acts or omissions of other tenants, their guests or invitees,
occupying any other part of the Area or by persons who are trespassers on or in
the Area, or for any loss or damage caused or resulting from the bursting,
stoppage, backing up or leaking of water, gas, electricity or sewers or caused
in any other manner whatsoever, unless such loss or damage is caused by or
results from the negligent acts of the Landlord, its agents or contractors.

30. INTEREST ON PAST DUE OBLIGATIONS. Any amount due to Landlord not paid when
due shall bear interest at two (2%) percent per month from due date until paid.
Payment of such interest shall not excuse or cure any default by Tenant under
this Lease Agreement. Tenant shall be granted a grace period of ten (10) days
from the date the obligation was initially due, and if Tenant does not pay
within the grace period interest shall accrue from the date the obligation was
initially due.

31. HOLDING OVER. If Tenant shall remain in possession of the Leased Premises
after the termination of this Lease, and is not negotiating in good faith the
extend the lease term, whether by expiration of the Lease Term or otherwise,
without a written agreement as to such possession, then Tenant shall be deemed a
month-to-month Tenant. The rent rate during such holdover tenancy shall be
equivalent to one hundred and fifty percent (150%) the monthly rent paid for the
last full month of tenancy under this Lease, excluding any free rent concessions
which may have been made for the last full month of the Lease. No holding over
by Tenant shall operate to renew or extend this Lease without the written
consent of Landlord to such renewal or extension having been first obtained.
Tenant shall indemnify Landlord against loss or liability resulting from the
delay by Tenant in surrendering possession of the Leased Premises including,
without limitation, any claims made with regard to any succeeding occupancy
bounded by such holdover period.

32. MODIFICATION OR EXTENSIONS. No modification or extension of this Lease
Agreement shall be binding upon the parties hereto unless in writing and unless
signed by the parties hereto.

33. NOTICE PROCEDURE. All notices, demands and requests which may be or are
required to be given by either party to the other shall be in writing and such
that are to be given to Tenant shall be deemed to have been properly given if
served on Tenant or an employee of Tenant or sent to Tenant by United States
registered or certified mail, return receipt requested, properly sealed, stamped
and addressed to Tenant at see page 1 or at such other place as Tenant may from
time to time designate in a written notice to Landlord; and, such as are to be
given to Landlord shall be deemed to have been properly given if personally
served on Landlord or if sent to Landlord, United States registered or certified
mail, return receipt requested, properly sealed, stamped and addressed to
Landlord at 4875 Pearl East Cr. #300, Boulder, CO 80301 or at such other place
as Landlord may from time to time designate in a written notice to Tenant. Any
notice given by mailing shall be effective as of the date of receipt.

34. MEMORANDUM OF LEASE-NOTICE TO MORTGAGEE. The Landlord and Tenant agree not
to place this Lease Agreement of record, but upon the request of either party to
execute and acknowledge so the same may be recorded a short form lease
indicating the names and respective addresses of the Landlord and Tenant, the
Leased Premises, the Lease Term, the dates of the commencement and termination
of the Lease Term and options for renewal, if any, but omitting rent and other
terms of this Lease Agreement. Tenant agrees to an assignment by Landlord of
rents and of the Landlord's interest in this Lease Agreement to a mortgagee, if
the same be made by Landlord. Tenant further agrees if requested to do so by the
Landlord that it will give to said mortgagee a copy of any request for
performance by Landlord or notice of default by Landlord; and in the event
Landlord fails to cure such default, the Tenant will give said mortgagee a sixty
(60) day period in which to cure the same. Said period shall begin with the last
day on which Landlord could cure such default before Tenant has the right to
exercise any remedy by reason of such default. All notices to the mortgagee
shall be sent by United States registered or certified mail, postage prepaid,
return receipt requested.

35. CONTROLLING LAW. The Lease Agreement, and all terms hereunder shall be
construed consistent with the laws of the State of Colorado. Any dispute
resulting in litigation hereunder shall be resolved in court proceedings
instituted in Boulder County and in no other jurisdiction.

36. LANDLORD NOT A PARTNER WITH THE TENANT. Nothing contained in this Lease
Agreement shall be deemed, held or construed as creating Landlord as a partner,
agent, associate of or in joint venture with Tenant in the conduct of Tenant's
business, it being expressly understood and agreed that the relationship between
the parties hereto is and shall at all times remain that of Landlord and Tenant.

37. PARTIAL INVALIDITY. If any term, covenant or condition of this Lease
Agreement or the application thereof to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Lease Agreement or
the application of such term, covenant or condition to persons and circumstances
other than those to which it has been held invalid or unenforceable, shall not
be affected thereby, and each term, covenant and condition of this Lease
Agreement shall be valid and shall be enforced to the fullest extent permitted
by law.

38. DEFAULT-REMEDIES OF LANDLORD.
    a. The occurrence of any of the following events shall constitute a default
by Tenant under this Lease Agreement:

         i. Failure to make due and punctual payment of rent or any other
charges, assessments or amounts due or payable or required to be paid under this
Lease Agreement; or

         ii. Neglect or failure by Tenant to perform or observe, or any other
breach of, any other term, covenant or condition of this Lease Agreement; or

         iii. Adjudication of Tenant as bankrupt or insolvent, or filing by or
against Tenant of any petition in bankruptcy or for reorganization or for the
adoption of any arrangement under the Bankruptcy Code; application is made for
the appointment of receiver or conservator for Tenant's business or property; or
assignment by Tenant is made of its property for the benefit of its creditors;
or Tenant's interest in this Lease Agreement or any substantial amount of
Tenant's other real or personal property is levied or executed upon by process
of law; or

         iv. Petition or other proceeding is made by or against Tenant for its
dissolution or liquidation; or voluntary dissolution or liquidation of Tenant;
or

         v. Abandonment of the Leased Premises, by Tenant for a period of time
in excess of thirty (30) consecutive

                                  Page 8 of 19
<Page>

days.

     b. If Tenant shall default in the payment of rent or in the keeping of any
of the terms, covenants or conditions of this Lease Agreement to be kept and/or
performed by Tenant or shall otherwise commit any event of default as defined
above, Landlord may upon the expiration of any applicable cure, immediately, or
at any time thereafter, reenter the Leased Premises, remove all persons and
property therefrom, without being liable to indictment, prosecution for damage
therefore, or for forcible entry and detainer and repossess and enjoy the Leased
Premises, together with all additions thereto or alterations and improvements
thereof. Landlord may, at its option, at any time and from time to time
thereafter, relet the Leased Premises or any part thereof for the account of
Tenant or otherwise, and receive and collect the rents therefore and apply the
same first to the payment of such expenses as Landlord may have incurred in
recovering possession and for putting the same in good order and condition for
rerental, and expense, commissions and charges paid by Landlord in reletting the
Leased Premises. Any such reletting may be for the remainder of the term of this
Lease Agreement or for a longer or shorter period. In lieu of reletting such
Leased Premises, Landlord may occupy the same or cause the same to be occupied
by others. Whether or not the Leased Premises or any part thereof be relet,
Tenant shall pay the Landlord the rent and all other charges required to be paid
by Tenant up to the time of the expiration of this Lease Agreement or such
recovered possession, as the case may be and thereafter, Tenant, if required by
Landlord, shall pay to Landlord until the end of the term of this Lease
Agreement, the equivalent of the amount of all rent reserved herein and all
other charges required to be paid by Tenant, less the net amount received by
Landlord for such reletting, if any, unless waived by written notice from
Landlord to Tenant. No action by Landlord to obtain possession of the Leased
Premises and/or to recover any amount due to Landlord hereunder shall be taken
as a waiver of Landlord's right to require full and complete performance by
Tenant of all terms hereof, including payment of all amounts due hereunder or as
an election on the part of Landlord to terminate this Lease Agreement. If the
Leased Premises shall be reoccupied by Landlord, then, from and after the date
of repossession, Tenant shall be discharged of any obligations to Landlord under
the provisions hereof for the payment of rent. If the Leased Premises are
reoccupied by the Landlord pursuant hereto, and regardless of whether the Leased
Premises shall be relet or possessed by Landlord, all fixtures, additions,
furniture, and the like then on the Leased Premises may be retained by Landlord.
In the event Tenant is in default under the terms hereof and, by the sole
determination of Landlord, has abandoned the Leased Premises, Landlord shall
have the right to remove all the Tenant's property from the Leased Premises and
dispose of said property in such a manner as determined best by Landlord, at the
sole cost and expense of Tenant and without liability of Landlord for the
actions so taken and without liability on the part of Landlord for any action so
taken.

     c. In the event an assignment of Tenant's business or property shall be
made for the benefit of creditors, or, if the Tenant's leasehold interest under
the terms of this Lease Agreement shall be levied upon by execution or seized by
virtue of any writ of any court of law, or, if application be made for the
appointment of a receiver for the business or property of Tenant, or, if a
petition in bankruptcy shall be filed by or against Tenant, then and in any such
case, at Landlord's option, with or without notice, Landlord may terminate this
Lease Agreement and immediately retake possession of the Leased Premises without
the same working any forfeiture of the obligations of Tenant hereunder .

     d. In addition to all rights and remedies granted to Landlord by the terms
hereof, Landlord shall have available any and all rights and remedies available
at law or in equity, or under the statutes of the State of Colorado. No remedy
herein or otherwise conferred upon or reserved to Landlord shall be considered
exclusive of any other remedy but shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute. Further, all powers and remedies given by this Lease
Agreement to Landlord may be exercised, from time to time, and as often as
occasion may arise or as may be deemed expedient. No delay or omission of
Landlord to exercise any right or power arising from any default shall impair
any such right or power or shall be considered to be a waiver of any such
default or acquiescence thereof. The acceptance of rent by Landlord shall not be
deemed to be a waiver of any breach of any of the covenants herein contained or
of any of the rights of Landlord to any remedies herein given.

     e. If Tenant shall, for any reason, vacate the Leased Premises before the
end of the Lease Agreement and more than 30 days late in the payment of rental
payments, landlord shall have the right to accelerate rental payments and any
and all future rent payments due during the course of the Lease Term shall
become immediately payable in full to the Landlord, except that Tenant shall
have the right, in accord with the provisions of Article 23 above, to obtain a
sublessee acceptable to the Landlord for the remainder of the Lease Term, and
Landlord's consent to any qualified sublessee shall not be unreasonably
withheld. Amount received under any such sublease shall be creditable against
Tenant's obligations to pay rent and shall not remove the primary obligation of
the Tenant to pay the rent.

39. LEGAL PROCEEDINGS-RESPONSIBILITIES. In the event of proceeding at law or in
equity by either party hereto, the defaulting party shall pay all costs and
expenses, including all reasonable attorney's fees incurred by the
non-defaulting party in pursuing such remedy, if such non-defaulting party is
awarded substantially the relief requested.

40. ADMINISTRATIVE CHARGES. In the event any check, bank draft or negotiable
instrument given for any money payment hereunder shall be dishonored at any time
and from time to time, for any reason whatsoever not attributable to Landlord,
Landlord shall be entitled, in addition to any other remedy that may be
available, (1) to make an administrative charge of $100.00 or three times the
face value of the check, bank draft or negotiable instrument, whichever is
smaller, and (2) at Landlord's sole option, if Tenant's financial instrument has
been returned more than two (2) times in any consecutive twelve (12) month
period, to require Tenant to make all future rental payments in cash or cashiers
check.

41 LANDLORD HAZARDOUS MATERIALS AND ENVIRONMENTAL CONSIDERATIONS.

     a. Tenant shall not be held liable, and Landlord agrees to indemnify and
hold Tenant harmless, from and against any action brought with regards to any
conditions in the Leased Premises or Common Areas which existed prior to the
commencement of the Lease Term, and which violate any and all applicable
Hazardous Materials Laws (as hereinafter defined), UST Laws (as hereinafter
defined) and environmental and occupation safety and health rules laws and
regulations ("Preexisting Violations"). Tenant shall not be held liable, and
Landlord agrees to indemnify and hold Tenant harmless, from and against any
action brought with regards to any conditions caused by Landlord in the Common
Area or Leased Premises during the Lease Term which violate any and all
applicable Hazardous Materials Laws, UST Laws and environmental and occupation
safety and health rules laws and regulations. For the avoidance of doubt, under
this Article 41 Landlord shall be responsible for the timely cure, at its
expense, of (i) Landlord's violation of Hazard Material Laws and (ii) any
Preexisting Conditions that impair the use of the Leased Premises by Tenant.

     b. Landlord covenants and agrees to provide to Tenant, upon Tenant's
reasonable request, access to any and all

                                  Page 9 of 19
<Page>

communications to or from any federal, state or local governmental authority or
agency or political subdivision relating to Hazardous Materials Laws or any UST
Laws, or violation thereof affecting the Common Area or Leased Premises and all
communications to or from any other person relation to Hazardous Materials Laws
or any UST Laws, or violation thereof affecting the Common Areas or Leased
Premises. Without limiting the foregoing, Landlord also covenants and agrees to
provide Tenant access to all reports prepared by or on behalf of Landlord with
respect to compliance by Landlord with Hazardous Materials Laws or any UST Laws
insofar as they pertain to the Common Areas or Leased Premises or the operations
conducted by Landlord thereon, as well as copies of any "Material Safety Data
Sheets" issued from time to time in connection with any Hazardous Materials
used, generated, handled, stored or disposed of on, about or from the Common
Areas or Leased Premises.

     c. Landlord covenants and agrees to, within a reasonable amount of time,
advise Tenant in writing of (i) any and all claims made or threatened by any
governmental authority, political subdivision or any private third party with
respect to any alleged violation of any applicable Hazardous Materials Laws or
of any other claim of liability arising out of or related to Hazardous
Materials; (ii) Landlord's discovery of any occurrence or condition in, on or
about the Leased Premises or Common Areas, which constitutes or may constitute a
violation of any applicable Hazardous Materials Laws or breach of any term or
condition of this Lease; (iii) any and all claims made or threatened by any
governmental authority, political subdivision or any private third party with
respect to any alleged violation of any UST Laws or of any other liability
arising out of or in connection with Landlord's installation, use or maintenance
of above ground or underground storage tanks on or under the Leased Premises;
(iv) Landlord's discovery of any occurrence of condition in, on or about the
Common Areas or Leased Premises, which constitutes a violation of any such laws;
and (v) any remedial action taken or proposed to be taken by Landlord in
response to any claim or discovery described in subparagraphs (i), (ii), (iii)
or (iv).

     d. Tenant shall have the right to join and participate in, as a party if it
so elects, any legal proceedings or actions initiated in connection with any
asserted violation of applicable Hazardous Materials by Landlord, and Landlord
shall pay all attorney's fees, cost and expenses associated therewith so long as
Tenant agrees to be represented by counsel of Landlord's choosing and that
Landlord shall control the settlement of any claim, subject to Tenant's consent
to any such settlement which consent shall not be unreasonably withheld. If
Tenant chooses to be represented by separate counsel Tenant shall pay all
attorney's fees, costs and expenses associated therewith.

     Landlord represents and warrants, to the best of its information, belief
and knowledge, that there are no Preexisting Violations of any and all Hazardous
Materials Laws, UST Laws and environmental and occupation safety and health
rules, laws and regulations as of the effective date of this Lease Agreement.

     e. Nothing in this Article 41 shall relieve either party of any liability
in contravention of any and all applicable Hazardous Materials Laws, UST Laws
and environmental and occupation safety and health rules laws and regulations
which ordinarily attach to that party by operation of law.

     f. Subject to applicable laws, all obligations of Landlord under this
Section 41 shall survive and continue after the expiration of the term of this
Lease Agreement or the earlier termination of this Lease Agreement for any
reason.

42. TENANT HAZARDOUS MATERIALS AND ENVIRONMENTAL CONSIDERATIONS.

     a. The provisions of this Article 42 shall apply only to Tenant and its
agents, employees, contractors, licensees and invitees, use, handling, storage
and disposal of Hazardous Materials on or about the Leased Premises during the
Lease Term, and any extensions of the Lease Term (Tenant's Acts).

     b. Tenant covenants and agrees that Tenant and its agents, employees,
contractors, licensees and invitees will comply with all Hazardous Materials
Laws. Without limiting the foregoing, in the event Tenant generates any
Hazardous Materials on or about the Leased Premises, Tenant covenants and agrees
that it will use, handle, store and dispose of such Hazardous Materials in full
compliance with all Hazardous Materials Laws. The generation of any Hazardous
Materials shall in no way interfere with (i) any other tenant's or adjoining
landowner's ability to use its premises, or (ii) the integrity of Landlord's
premises. All Hazardous Materials, vapors, chemicals or other pollutants shall
be handled in an environment controlled by appropriately designed and installed
air-handling or other appropriate equipment which shall be maintained and
operated at Tenant's expense at all times during the term hereof, which
equipment shall meet or exceed the stricter of standards imposed by any
applicable Hazardous Materials Laws or any applicable industry standards. Any
such air-handling or other equipment coming into contact with Hazardous
Materials shall be removed by Tenant upon termination or expiration of this
Lease if Landlord so requests.

     c. Without limiting the foregoing, in the event Tenant stores any Hazardous
Materials on the Leased Premises (or elsewhere if such Hazardous Materials were
generated on or transported from the Leased Premises), Tenant covenants and
agrees that such storage shall be in compliance with all applicable Hazardous
Materials Laws. Should it be necessary to store any Hazardous Materials outside
the Building on the Leased Premises, Tenant shall do so in a manner designed to
prevent contamination of the air, ground or water in, on or surrounding the
Leased Premises.

     d. Without limiting the foregoing, Tenant covenants and agrees that any
transportation of Hazardous Materials to or from the Leased Premises shall be
accomplished in full compliance with all applicable Hazardous Materials Laws.
Landlord shall be given full access to any and all records, bills of lading,
manifests, and other information or records maintained by Tenant in connection
with such transportation,

     e. Tenant covenants and agrees to inform Landlord at any time during the
term of this Lease Agreement of any significant changes in the scope or type of
Hazardous Materials it intends to use, generate, manufacture, handle, store or
dispose of on, about or from the Leased Premises, and of any significant changes
in the scope of activities conducted by Tenant on or in the Leased Premises.

     f. Tenant shall promptly take any and all necessary preventive and/or
remedial action in response to any spills or releases of Hazardous Materials on,
under or about the Leased Premises. Tenant shall take such preventive or
remedial action in good faith so as to minimize any impairment to the Leased
Premises and any adjoining premises. In the event Tenant undertakes any remedial
action with respect to any Hazardous Materials on, under or about the Leased
Premises, Tenant shall conduct and complete such remedial action (i) in
compliance with all applicable Hazardous Materials Laws; (ii) to the reasonable
satisfaction of Landlord; and (iii) in accordance with the lawful orders and
directives of all federal, state and local governmental authorities or political
subdivisions asserting jurisdiction over the Leased Premises.

                                  Page 10 of 19
<Page>

     g. Upon expiration or termination of this Lease Agreement and/or vacation
of the Leased Premises, Tenant covenants and agrees that it shall properly
remove and dispose of all Hazardous Materials from the Leased Premises and
thereafter provide Landlord with an environmental audit report, prepared by a
professional consultant reasonably satisfactory to Landlord and at Tenant's sole
expense, certifying that the Leased Premises and the surrounding areas have not
been subjected to environmental harm brought about by Tenant's use and occupancy
of the Leased Premises. If the initial report does not adequately certify that
the Leased Premises and surrounding areas are not subject to environmental harm,
Tenant shall, at Tenant's expense, undertake such remediation and mitigation
actions as are appropriate and reasonably acceptable to Landlord and shall
provide an updated or amended report by such professional consultant then
certifying that the Leased Premises and surrounding areas are no longer subject
to environmental harm brought by Tenant's use and occupancy of the Leased
Premises. Landlord shall grant to Tenant and its agents or contractors such
access to the Leased Premises as is reasonably necessary to accomplish such
removal and prepare such audit. If such removal is not accomplished prior to the
expiration of the Lease term, Tenant shall be obligated to pay rent to Landlord
in an amount of One Hundred Ten (110%) of the last month's rent.

     h. Landlord shall have the right to join and participate in, as a party if
it so elects, any legal proceedings or actions initiated in connection with any
asserted violation of applicable Hazardous Materials Laws or UST Laws by Tenant,
and Tenant shall pay all attorney's fees, cost and expenses associated therewith
so long as Landlord agrees to be represented by counsel of Tenant's choosing and
that Tenant shall control the settlement of any claim, subject to Landlord's
consent to any such settlement which consent shall not be unreasonably withheld.
If Landlord chooses to be represented by separate counsel Landlord shall pay all
attorney's fees, costs and expenses associated therewith.

     Tenant shall and hereby covenants and agrees to indemnify, defend and hold
Landlord harmless from and against any and all suits, actions, legal or
administrative proceedings, demands, claims, judgments, damages, penalties,
fines, costs, liabilities, expenses or losses and Tenant shall pay all
attorney's fees, cost and expenses associated therewith so long as Landlord
agrees to be represented by counsel of Tenant's choosing and that Tenant shall
control the settlement of any claim, subject to Landlord's consent to any such
settlement which consent shall not be unreasonably withheld which arise during
or after the Lease Term as caused or permitted by Tenant's Acts in connection
with (i) breach by Tenant of any of its agreements or covenants contained in
this Section entitled "Hazardous Materials and Environmental Considerations";
(ii) the presence of Hazardous Materials on the Leased Premises caused or
permitted by Tenant (or its agents, employees, contractors, licensees or
invitees); (iii) personal injury or property damage to any person or property
(including, without limitation, the Leased Premises) resulting from the use,
storage, generation, manufacture, disposal or transportation of Hazardous
Materials by Tenant (or its agents, employees, contractors, licensees or
invitees) in, on, under or from the Leased Premises; (iv) any violation or claim
of violation by Tenant (or its agents, employees, contractors, licensees or
invitees) of any Hazardous Materials Laws; (v) costs incurred in connection with
any investigation of site conditions or any cleanup, remedial, removal or
restoration work or action caused or permitted by Tenant's acts and required by
any federal, state or local governmental agency, political subdivision or court
order (or pursuant to settlement of any such proceedings); (vi) imposition of
any lien for the recovery of any costs for environmental cleanup or other
response costs caused or permitted by Tenant's Acts and related to the release
or threatened release of Hazardous Materials in, on or about the Leased
Premises. Without limiting the foregoing, if the presence of any Hazardous
Materials on the Leased Premises caused or permitted by Tenant's Acts results in
any contamination of the Leased Premises, Tenant shall promptly take all
actions, at its sole expense, as are necessary to return the Leased Premises to
the condition existing prior to the introduction of any such Hazardous Materials
to the Leased Premises; provided that Landlord's approval of such actions shall
first be obtained, which approval shall not be unreasonably withheld so long as
such actions would not potentially have any material adverse long-term or
short-term effect on the Leased Premises. Tenant understands and agrees that its
liability to Landlord shall arise upon the earlier to occur of (i) discovery of
any Hazardous Materials on, under or about the Leased Premises caused or
permitted by Tenant's Acts; or (ii) the institution of any claim asserting the
violation of any Hazardous Materials Laws or other indemnified matter caused or
permitted by Tenant's Acts, and not upon the realization of loss or damage, and
Tenant agrees to pay to Landlord from time to time, immediately upon Landlord's
request, an amount equal to such expenses, as reasonably determined by landlord.
All agreements of indemnification of Landlord by Tenant shall also accrue to the
benefit of the employees, agents, officers, directors and partners of Landlord.

     i. "Hazardous Materials" shall mean (i) any oil, flammable substances,
explosives, radioactive materials, hazardous wastes or substances, toxic wastes
or substances, or any other materials or pollutants which pose a hazard to the
Leased Premises or to persons on or about the Leased Premises or cause the
Leased Premises to be in violation of any Hazardous Materials Laws; (ii)
asbestos in any form which is or could become friable, urea formaldehyde foam
insulation, transformers, or other equipment from which contain dielectric fluid
containing levels of polychlorinated by phenyls in excess of fifty (50) parts
per million; (iii) any chemical, material or substance defined as or included in
the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous waste," "toxic
substances," "regulated substances," or words of similar import under any
applicable federal, state or local law or under the regulations adopted or
publications promulgated pursuant thereto, including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Section 9601, et seq.; the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. Section 1801, et seq.; the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. Section 6901, et seq., the Solid Waste
Disposal Act, 42 U.S.C. Section 6991, et seq.; the Federal Water Pollution
Control Act, as amended, 33 U.S.C. Section 1251, et seq.; Sections 25-15-101, et
seq., 25-16-101, et seq., 25-7-010, et seq., and 25-8-101, et seq. of the
Colorado Revised Statutes; and (iv) any other chemical, material, substances or
pollutant exposure to which is prohibited, limited or regulated by any
governmental authority or which may or could pose a hazard to the health or
safety of the occupants of the Leased Premises or the owners and/or occupants of
property adjacent to or surrounding the Leased Premises.

     j. "Hazardous Materials Laws" shall mean any federal, state or local laws,
ordinances, codes, rules, regulations, directives or policies (including, but
not limited to, those laws specified in subparagraph H, above) relating to the
environment, health or safety, any Hazardous Materials (including, without
limitation, the use, handling, transportation, production, disposal, discharge
or storage thereof) or to industrial hygiene or the environmental conditions on,
under or about the Leased Premises (including, without limitation, soil and
ground water conditions). The term "Hazardous Materials Laws" shall also be
deemed to include any future such laws, ordinances, codes, rules, regulations,
directives or policies as the same may be adopted from time to time during the
term of this Lease Agreement, and any amendments to any currently existing or
subsequently adopted Hazardous Materials Laws.

     k. Tenant covenants and agrees that it shall comply with all federal, state
and local laws, rules, regulations and/or

                                  Page 11 of 19
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ordinances governing the installation, operation and maintenance of above ground
and underground storage tanks, including, without limitation, all standards
concerning construction, installation, upgrades, operations, repairs, common
maintenance, monitoring, leak detection, inspection, testing, record keeping and
recording imposed by law (collectively "UST Laws"). Tenant further covenants and
agrees that it shall not install any above ground or underground tank on the
Leased Premises without obtaining the prior written consent of Landlord, such
consent not to be unreasonably withheld.

     Tenant shall provide to Landlord, upon reasonable request, access to any
and all records required to be maintained pursuant to law, including, without
limitation, registrations, monitoring records, inventory reconciliation record,
chemical and physical analyses, tank tests and reports required to be provided
to any governmental agency or political subdivision.

     At all times during and following installation of any above ground or
underground storage tanks, Tenant shall comply with all financial responsibility
requirements of the Environmental Protection Agency, the Colorado Department of
Health or any other federal, state or local governmental body with jurisdiction
over the Leased Premises, which compliance shall including, but need not be
limited to, maintaining adequate insurance for the benefit of both Landlord and
Tenant.

     Upon termination of this Lease Agreement (unless by purchase of the Leased
Premises by Tenant) and/or vacation of the Leased Premises, Tenant covenants and
agrees that it shall properly remove all above ground and underground storage
tanks from the Leased Premises, unless other methods of insuring compliance with
all applicable UST Laws are recommended by a professional consultant and
accepted by Landlord, and thereafter provide Landlord with an environmental
audit report, prepared by a professional consultant reasonably satisfactory to
Landlord and at Tenant's sole expense, certifying that the Leased Premises and
the surrounding areas have not been subjected to environmental harm caused by,
arising out of, or in connection with Tenant's installation, use, maintenance or
removal of above ground and underground storage tanks on or from the Leased
Premises. Landlord shall grant to Tenant and its agents or contractors such
access to the Leased Premises as is reasonably necessary to accomplish such
removal and prepare such audit. If such removal is not accomplished prior to the
expiration of the Lease term, Tenant shall be obligated to pay rent to Landlord
in an amount of One Hundred Ten (110%) of the last month's rent.

     Tenant shall indemnify, defend and hold Landlord harmless from any and all
claims, judgments, damages, penalties, fines, costs, liabilities or losses which
arise during or after the Lease Term as a result of breach by Tenant under this
Section 42 k. and Tenant shall pay all attorney's fees, cost and expenses
associated therewith so long as Landlord agrees to be represented by counsel of
Tenant's choosing and that Tenant shall control the settlement of any claim,
subject to Landlord's consent to any such settlement which consent shall not be
unreasonably withheld. This indemnification of Landlord by Tenant includes,
without limitation, any costs incurred in connection with any investigation of
site conditions or any cleanup, remedial, removal or restoration work required
by any federal, state or local governmental agency or political subdivision
arising out of or in connection with the use or existence of above ground or
underground storage tanks on the Leased Premises. Without limiting the
foregoing, if the presence of above ground or underground storage tanks on the
Leased Premises installed, used or operated by Tenant results in any
contamination of the Leased Premises not due to a Preexisting Violation, Tenant
shall promptly take all actions at its sole expense, as are necessary to return
the Leased Premises to the condition required by the relevant governmental
authorities with regards to such contamination; provided that Landlord's
approval of such actions shall first be obtained, which approval shall not be
unreasonably withheld. All agreements of indemnification of Landlord by Tenant
shall also accrue to the benefit of the employees, agents, officers, directors
and/or partners of Landlord.

     l. Tenant covenants and agrees that it shall allow Landlord's employees or
agents upon reasonable notice and such that Tenant's business is not
unreasonably interrupted rights of access to inspect the Leased Premises and the
surrounding area to conduct such tests as Landlord deems necessary (at
Landlord's expense) and to otherwise confirm that Tenant is in full compliance
with all applicable Hazardous Materials Laws and/or UST Laws. If any such test
discloses that Tenant is not in compliance with any such laws, Tenant shall, in
addition to all other obligations hereunder, reimburse Landlord for the cost of
conducting such tests.

     m. Tenant covenants and agrees to provide to Landlord, upon reasonable
notice and such that Tenant's business is not materially interfered with, access
to any and all communications to or from any federal, state or local
governmental authority or agency or political subdivision relating to Hazardous
Materials Laws or any UST Laws, or violation thereof affecting the Leased
Premises and all communications to or from any other person relation to
Hazardous Materials Laws or any UST Laws, or violation thereof affecting the
Leased Premises. Without limiting the foregoing, Tenant also covenants and
agrees to provide Landlord reports prepared by or on behalf of Tenant with
respect to compliance by Tenant with Hazardous Materials Laws or any UST Laws
insofar as they pertain to the Leased Premises or the operations conducted by
Tenant thereon, as well any "Material Safety Data Sheets" issued from time to
time in connection with any Hazardous Materials used, generated, handled, stored
or disposed of on, about or from the Leased Premises.

     n. Tenant covenants and agrees to immediately advise Landlord in writing of
(i) any and all claims made or threatened by any governmental authority,
political subdivision or any private third party with respect to any alleged
violation of any applicable Hazardous Materials Laws or of any other claim of
liability arising out of or related to Hazardous Materials; (ii) Tenant's
discovery of any occurrence or condition in, on or about the Leased Premises,
which constitutes or may constitute a violation of any applicable Hazardous
Materials Laws or breach of any term or condition of this Lease; (iii) any and
all claims made or threatened by any governmental authority, political
subdivision or any private third party with respect to any alleged violation of
any UST Laws or of any other liability arising out of or in connection with
Tenant's installation, use or maintenance of above ground or underground storage
tanks on or under the Leased Premises; (iv) Tenant's discovery of any occurrence
of condition in, on or about the Leased Premises, which constitutes a violation
of any such laws; and (v) any remedial action taken or proposed to be taken by
Tenant in response to any claim or discovery described in subparagraphs (i),
(ii), (iii) or (iv).

     o. If Tenant fails to comply with any of its foregoing obligations with
respect to Hazardous Materials, Landlord may, in its reasonable discretion,
cause the removal (or other cleanup or remediation acceptable to Landlord) of
any Hazardous Materials from the Leased Premises. The cost of any such removal,
remediation and other cleanup, including, without limitation, transportation and
storage costs, costs of consultants and professionals, and any other costs or
expenses in any way associated with such removal, remediation or cleanup (and
compliance of any applicable Hazardous Materials Laws in connection with same)
shall constitute additional rent under this Lease Agreement, and such costs and
expenses shall become due and payable upon demand by Landlord. Tenant shall
provide Landlord, or its agents, contractors and employees, upon reasonable
notice and such that Tenant's business is not unreasonably interrupted access to
the Leased Premises for the purpose of removing or otherwise cleaning up any
Hazardous Materials upon demand.

                                  Page 12 of 19
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Landlord, however, shall have no affirmative obligation to remove, remediate or
otherwise cleanup any Hazardous Materials or otherwise deal with any Hazardous
Materials in, on or about the Leased Premises, and this Lease Agreement shall
not be construed as creating any such obligation.

     p. Nothing in this Article 42 shall relieve either party of any liability
in contravention of any applicable environmental and occupation safety and
health rules laws and regulations which ordinarily attach to that party by
operation of law.

     r. Subject to applicable laws, all obligations of Tenant under this Section
42 shall survive and continue after the expiration of the term of this Lease
Agreement or the earlier termination of this Lease Agreement for any reason.

41. ENTIRE AGREEMENT. It is expressly understood and agree by and between the
parties hereto that this Lease Agreement sets forth all the promises,
agreements, conditions, and understandings between Landlord and/or its agents
and Tenant relative to the Leased Premises and that there are no promises,
agreements, conditions, or understandings either oral or written, between them
other than that are herein set forth.

42. ESTOPPEL CERTIFICATES. Within no more than 5 days after receipt of written
request, the Tenant shall furnish to the owner a certificate, duly acknowledged,
certifying, to the extent true:

          A. That this Lease Agreement is in full force and effect.
          B. That the Tenant knows of no default hereunder on the part of the
          owner, or if it has reason to believe that such a default exists, the
          nature thereof in reasonable detail.
          C. The amount of the rent being paid and the last date to which rent
          has been paid.
          D. That this Lease Agreement has not been modified, or if it has been
          modified, the terms and dates of such modifications.
          E. That the term of this Lease Agreement has commenced.
          F. The commencement and expiration dates.
          G. Whether all work to be performed by the owner has been completed.
          H. Whether the renewal term option has been exercised if applicable.
          I. Whether there exist any claims or deductions from, or defenses to,
          the payment of rent.
          J. Such other matters as may be reasonably requested by owner.

43. FINANCIAL STATEMENTS. Landlord acknowledges that Tenant is a publicly traded
company and that Tenant's certified financial statements are a matter of public
record and are readily available.

44. QUIET ENJOYMENT. Subject to the provisions of the Lease, Landlord covenants
that, Tenant upon payment of rent and performing the other covenants of this
Lease Agreement, shall and may peacefully hold and quietly have hold and enjoy
the Leased Premises for the Term of this Lease Agreement. In the event of any
transfer or transfers of Landlord's interest in the Leased Premises or any real
property which is pertinent to the Leased Premises or Common Areas, Landlord's
obligations and covenants under this section shall likewise attach to any
successor in interest to this Lease Agreement.

45. BROKERS. Tenant represents and warrants that it has dealt only with The
Colorado Group, Inc. (the "Broker") in the negotiation of this Lease Agreement.
Landlord shall make payment of the commission according to the terms of a
separate agreement with the Broker. Tenant hereby agrees to indemnify and hold
Landlord harmless of an from any and all loss, costs, damages or expenses
(including, without limitation, all attorney's fees and disbursements) by reason
of any claim of, or liability to, any other broker or person claiming through
Tenant and arising out of this Lease Agreement. 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 deal with in the future with respect to leasing of any additional
or expansion space in the Building or any renewals or extensions of this Lease
Agreement unless specifically provided for by separate written agreement with
Landlord. In the event any claim shall be made against Landlord by any other
broker who shall claim to have negotiated this Lease Agreement on behalf of
Tenant or to have introduced Tenant to the Building or to Landlord, Tenant
hereby indemnifies Landlord, and Tenant shall be liable for the payment of all
reasonable attorney's 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, upon demand, make payment to such broker.

46. ADDITIONAL TERMS AND CONDITIONS. In addition to all rights and remedies
granted to Tenant by the terms hereof, Tenant shall have available any and all
rights and remedies available at law or in equity, or under the statutes of the
State of Colorado. No remedy herein or otherwise conferred upon or reserved to
Tenant shall be considered exclusive of any other remedy but shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute. Further, all powers and
remedies given by this Lease Agreement to Tenant may be exercised, from time to
time, and as often as occasion may arise or as may be deemed expedient. No delay
or omission of Tenant to exercise any right or power arising from any default
shall impair any such right or power or shall be considered to be a waiver of
any such default or acquiescence thereof. The payment of rent or continued
occupancy by Tenant shall not be deemed to be a waiver of any breach of any of
the covenants herein contained or of any of the rights of Tenant to any remedies
herein given

47. LEASE AGREEMENT EXHIBITS ATTACHED. This Lease Agreement includes the
following Lease Agreement Exhibits which are incorporated herein and made a part
of this Lease Agreement:

     Exhibit "A" - Landlord and Tenant's Construction Obligations
     Exhibit "B" - Space Plan
     Exhibit "C" - Additional Terms and Conditions not contained in Paragraph 48
                   above
     Exhibit "D" - Option to Extend

48. MISCELLANEOUS. All marginal notations and paragraph headings are for
purposes of reference and shall not affect the true meaning and intent of the
terms hereof. Throughout this Lease Agreement, wherever the words "Landlord" and
"Tenant" are used they shall include and imply to the singular, plural, persons
both male and female, companies, partnerships and corporations, and in reading
said Lease Agreement, 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 Agreement.

                                  Page 13 of 19
<Page>

IN WITNESS WHEREOF, the parties have executed this Lease Agreement as of the
date hereof.

LANDLORD: YEW TREE INVESTMENTS LTD., LLLP

By:     /s/ Gerald P. Lee
   ------------------------------------
   Gerald P. Lee, Partner

TENANT: TRANSGENOMIC, INC.

By:     /s/ Mitchell L. Murphy
   ------------------------------------
   Mitchell L. Murphy
   V.P., Secretary & Treasurer

                                  Page 14 of 19
<Page>

                                   Exhibit "A"
                 Landlord and Tenant's Construction Obligations

1. Landlord Construction Obligations
          Landlord agrees to provide Tenant with ($10.00/SF) for improvement to
the Leased Premises. Landlord shall pay such funds for allowable construction
costs completed in the Leased Premises within ten (10) business days of Tenant
providing written submission for payment with evidence of completed
construction, to include Lien Waivers, in the amount up to, in the Leased
Premises. No furnishings, fixtures, or equipment in place in the premises shall
be paid for under the Landlord allowance.

Tenant's plans for tenant finish shall be submitted to Landlord in writing.
Landlord shall provide a response thereto within five (5) business days after
receipt of the written submission. In the event no response is received by
Tenant from Landlord within five (5) business days after receipt by Landlord of
the written plans, Landlord will be deemed to have approved the proposed tenant
finish plans as submitted.

Tenant agrees to use a City of Boulder licensed General Contractor for all
Tenant Improvements during any remodeling and/or improvements to the Leased
Premises.

2. Tenant Construction Obligations
          Tenant shall perform all improvements to the Leased premises at its
sole cost and expense, except as provided in Item 1 above and Item 6 below.
Landlord shall review and approve plans prior to construction. Landlord's
approval of said plans shall not be unreasonably withheld or delayed. Tenant and
Tenant's contractor shall abide by all applicable government and other governing
authorities rules and regulations.

3. Mechanic's Liens
          A. The Tenant agrees to pay or cause to be paid promptly all bills and
charges for material, labor, or otherwise in connection with or arising out of
any alterations, additions, or changes made by the Tenant or its agents or
subtenants to the Leased Premises; and the Tenant agrees to hold the Landlord
free and harmless against all such liens and claims of liens for labor and
materials, or either of them, filed against the Leased Premises, property, or
any part thereof, and from and against any expense and liability in connection
therewith. The Tenant shall, however, have the right to contest any mechanic's
liens or claims filed against the Leased Premises, provided the Tenant shall
diligently prosecute any such contest and at all times effectively stay or
prevent any sale of the Leased Premises under execution or otherwise, and pay or
otherwise satisfy any final judgment adjudging or enforcing such contested lien
and thereafter procure record satisfaction or release thereof. The Tenant also
agrees in any such contest, at the Tenant's cost and expense, to defend the same
on behalf of the Landlord.

          B. The Tenant hereby agrees to discharge (either by payment or by
filing the necessary bond or otherwise) any mechanic's, materialman's, or other
liens against the Leased Premises arising out of any payment due or alleged to
be due for any work, labor, services, materials, or supplies claimed to have
been furnished at the Tenant's request in, on, or about the Leased Premises, and
to indemnify the Landlord against any lien or claim of lien attached to or upon
the Leased Premises or any part thereof by reason of any act or omission on the
Tenant's part; but nothing contained in this Lease Agreement, however, is
intended to or shall be construed to prevent the Tenant from contesting, at its
own expense, any lien, encumbrance, charge, or claim of any kind asserted
against the Leased Premises; and the Tenant shall not be deemed to be in default
hereof during the pendency of any such contest brought and maintained in good
faith.

4. If Tenant deems necessary then Tenant shall be allowed to install, at its
sole cost and expense, and at its option to remove at the end of the Lease
Agreement the following improvements:
          a). Separate HVAC systems for use in any clean room or lab room which
          may require the use of such systems.
          b). Clean rooms and cold rooms.
          c). Individual wet labs, biotech labs, chemistry labs.
          d). Fume and ventilation hoods..
          e). Chemical and Waste storage which shall be located on the outside
          of the building, on the north side of the east wing of the building,
          including wall or roof penetration pertinent to pipelines therefore.
          f). Casework.
          g). Tank farm and solvent handling system which shall be located on
          the outside of the building, on the north side of the east wing of the
          building, , including wall or roof penetration pertinent to pipelines
          therefore .
          h). All work shall be done to current local building codes and by
          licensed contractors.
          i). Tenant shall provide to Landlord drawings of any possible Tenant
          Improvements which shall follow this Letter of Intent.

5. Tenant at its sole cost shall provide separate gas and electric metering to
the Leased Premises such metering to be obtained direct from the utility by
Tenant.

6. Landlord shall provide at its sole cost any demising wall(s) that may be
necessary to separate the Leased Premises from other portions of the building.
Landlord shall also repaint the interior office and lab areas of the Leased
Premises and re-carpet the office areas of the Leased Premises. Both paint and
carpet shall be at Landlords sole cost and shall be mutually agreed upon by both
Landlord and Tenant. Landlord shall also repair any and all water damage to the
building which includes but is not limited to all walls, counters, floors,
carpets and fixtures, windows, roof, sidewalks, and parking lots.

                                  Page 15 of 19
<Page>

                                  Page 16 of 19
<Page>

                                   Exhibit "B"
                                   Space Plan

                                  Page 17 of 19
<Page>

                                   Exhibit "C"
       Additional Terms and Conditions not contained in Paragraph 48 above

1. Any equipment or trade fixtures that the Tenant may install during the term
of their Lease Agreement will not become part of the building, and may be
removed by the Tenant upon the vacating of the premises. A list of such items
shall be provided to Landlord, which list may be amended from time to time
during the Lease Term.

2. Landlord  shall leave any  equipment  or delivery  systems  left by previous
tenant.

3. Subject to the terms and conditions of this Section, at any time after
Landlord learns that any premises ("Additional Space") within the Building in
which the Leased Premises are located will become available for lease to Tenant,
and prior to offering the Additional Space for lease to any other prospective
tenant, Landlord shall so notify Tenant, in writing. Such notice shall not be
unreasonable in light of prevailing market conditions for similar space and
shall advise Tenant that Landlord intends to offer the Additional Space, on the
market, shall describe the amount and location of the space that is available
(and attach a floor plan showing the location of such space within the
Building), shall state the rental rate at which Landlord intends to offer the
space, shall state the date on which the space will be available and the term of
the proposed lease, and shall set forth any tenant finish allowance or other
special conditions, concessions or provisions pursuant to which Landlord intends
to lease the Additional Space. Upon Tenant's notice of intent to negotiate a
lease for the Additional Space, the parties shall into mutual good faith
negotiations for a lease for the Additional Space for a period of not less than
10 days, and if the parties can not reach an agreement, Landlord shall be free
to negotiate a lease for the Additional Space with any other interested parties
without again offering the Additional Space to Tenant.

If Tenant exercises its right to accept the Additional Space, the lease of such
Additional Space shall, at Landlord's election, be evidenced by a new lease
incorporating the appropriate terms and conditions, or by amendment of this
Lease Agreement, incorporating the appropriate terms and conditions, or by
memorandum of lease setting forth the terms of the notice of offer and otherwise
incorporating the terms and conditions of this Lease Agreement. Any such
document may be attached to Landlord's written notice and must be executed by
Tenant and returned to Landlord within ten (10) business days following receipt
of such notice by Tenant.

In no event shall Landlord be required to lease the Additional Space to Tenant
if this Lease Agreement is not then in full force and effect, or if Tenant is in
default under the terms of this Lease Agreement, either at the time of exercise
of the right or at the time of commencement of the lease of the Additional
Space. Additionally, Tenant's rights under this section are expressly
conditioned upon Landlord's review and approval of Tenant's most recent
financial statement, provided, however, that such approval by Landlord shall not
be unreasonably withheld.

4. This Lease Agreement shall be contingent upon Tenant obtaining approval form
the City of Boulder for the Intended use. Said approval must occur no later than
August 30, 2002, otherwise Landlord reserves the right to terminate this Lease
Agreement if so desired.

                                  Page 18 of 19
<Page>

                                   Exhibit "D"
                                Option to Extend

1. OPTION TO EXTEND. The Tenant shall have two (2) options to extend the Lease
Agreement an additional five (5) years each. In the event Tenant desires to
exercise the option to extend, Tenant shall provide written notice of such
exercise to Landlord no later than twelve (12) months prior to the expiration of
the base term or any option term.

See below for Option Term Rent. In the event of such exercise, this Lease
Agreement shall be automatically extended for the additional term.
Notwithstanding the foregoing, this option shall be void and of no force or
effect if the Tenant is in default hereunder either as of the date of the
Tenant's exercise of said option or as of the date of the commencement of the
option or additional term.

2. RENT DURING OPTION PERIODS. Tenant shall pay the following rent for the
Leased Premises

                                 During Option Term

<Table>
<Caption>
        For Period         To Period               A Base Monthly
        Starting           Ending                  Rent of
        ---------          ------                  --------
        <S>                <C>                     <C>
        November 1, 2007   November 1, 2012        The base rental rate for
                                                   this renewal term shall be
                                                   5% of the Fare Market Rental
                                                   Value (See below*) and in no
                                                   event shall the base rental
                                                   rate during this renewal
                                                   period be less than $11.26
                                                   per rentable share foot net
                                                   net net, nor greater than
                                                   $13.00 per rentable share
                                                   foot net net net.

        November 1, 2012   November 1, 2017        The base rental rate for this
                                                   renewal term shall be 95% of
                                                   the Fare Market Rental Value
                                                   (See below*) and in no event
                                                   shall the base rental rate
                                                   during this renewal period be
                                                   less than the rental rate at
                                                   the conclusion of the first
                                                   renewal option, nor greater
                                                   than $15.50 per rentable
                                                   share foot net net net.
</Table>

* Landlord and Tenant will attempt to agree upon a Fair Market Rental Value of
the Leased Premises (expressed on a dollar per square foot basis) as determined
by comparison to parcels of similar size property located in or near the City of
Boulder, Colorado, having comparable development, use and density capability and
such other characteristics as may be deemed relevant by a subject appraiser
whose selection is outlined herein.

Landlord shall select an independent MAI real estate appraiser with at least ten
(10) years' experience in appraising commercial real property in the City of
Boulder, Colorado (a "Qualified Appraiser"). The Qualified Appraiser selected by
the Landlord shall be referred to as the "Landlords Appraiser". Within thirty
(30) days of being selected by the Landlord, the Landlord's appraiser shall
determine the Fair Market Rental Value of the Leased Premises in accordance with
the appraisal standards set forth above and shall immediately give the Landlord
and the Tenant written notification of his determination.

If the Tenant agrees with the Landlord's Appraiser's determination by
multiplying the Fair Market Rental Value, then the Base Monthly Rent shall be
determined by multiplying the Fair Market Rental Value by 33,673 and the new
Base Monthly Rental shall become effective beginning with the first month of the
Option Term. If the Tenant does not agree with the Landlord's Appraiser's
determination of Fair Market Rental Value, the Tenant shall have the right to
select its own Qualified Appraiser its own Qualified Appraiser to determine the
Fair Market Rental Value. If the Tenant does elect to appoint a Qualified
Appraiser, (the Tenant's Appraiser"), the Tenant shall select the Tenant's
Appraiser within thirty (30) business days after receiving the Landlord's
Appraiser's Determination of Fair Market Rental Value. The Tenant's Appraiser
shall make his own determination if the Fair Market Rental Value in accordance
with the provisions set forth above, within thirty (30) business days of being
selected by the Tenant and shall immediately give the Landlord and the Tenant
written notice of his determination.

If the Fair Market Rental Value as determined by the Landlord's Appraiser and
the Tenant's Appraiser, respectively, differ by an amount which is equal to or
less than five percent (5%) of the Fair Market Rental Value determined by the
Landlord's Appraiser, then the arithmetic mean of the two Fair Market Rental
Values shall constitute the fair Market Rental Value used to calculate the new
Base Monthly Rental which will be in effect for the Option Term. If the Fair
Market Rental Value determined by the Landlord's Appraiser and the Tenant's
Appraiser's determination of the Fair Market Rental Value differ by more than
five percent (5%), the Landlord's Appraiser and the Tenant's Appraiser shall
agree upon and select a third Qualified appraiser who shall be independent of
and have no prior or existing affiliation or relationship with either the
Landlord or the Tenant (the "Independent Appraiser"). Within ten (10) business
days of being appointed, the Independent Appraiser shall, after exercising his
best professional judgement, choose either the Landlord's Appraiser's or the
Tenant's Appraiser's determination of the Fair Market Rental Value which the
judgement, best represents the Fair Market Rental Value at that point in time.
Upon making such a selection, the Independent Appraiser shall immediately give
the Landlord and the Tenant written notice of this selection of the Fair Market
Rental Value. The Fair Market Rental Value selected by the Independent Appraiser
shall be used to calculate the new Base Monthly Rental which will be in effect
during the Extension Option, and such selection by the Independent appraiser
shall be binding and conclusive upon the Landlord and the Tenant.

The Landlord and Tenant shall share all Appraisal fees required hereunder
equally.

                                  Page 19 of 19

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