Document:

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Exhibit 10.59

SENIOR MANAGEMENT RETENTION AND SEVERANCE AGREEMENT

This SENIOR MANAGEMENT RETENTION AND SEVERANCE AGREEMENT (“Agreement”) is made and entered into as of the Effective Date (as defined below) by and between Inland Retail Real Estate Trust, Inc., a Maryland corporation having its principal place of business in Oak Brook, Illinois (“Company”), and Barry L. Lazarus (“Executive”).

RECITALS

A.

The Company is a real estate investment trust, as defined in Section 856 of the Code (as defined below), which owns, operates, develops and acquires primarily neighborhood retail centers and community centers in the eastern United States.

B.

Executive is currently employed by the Company as its President and Chief Executive Officer.

C.

The Company believes that the threat or occurrence of, or negotiation or other action that could lead to, a Change in Control (as defined below) could result in the departure or distraction of management personnel to the detriment of the Company.

D.

The Company and Executive are entering into this Agreement to provide certain incentives and protections to Executive against the exigencies of a Change in Control.

NOW, THEREFORE, in consideration of the foregoing premises and the promises and covenants herein, the parties hereby agree as follows:

AGREEMENT

1.

Definitions.  When used in this Agreement and initially capitalized, the following terms shall have the meanings set forth below:

(a)

“Agreement” means this Agreement as in effect from time to time.

(b)

“Agreement Term” has the meaning give to such term in Section 2 hereof.

(c)

“Base Salary” means the monthly salary amount payable to Executive as an employee of the Company as in effect from time to time.

(d)

“Business” means the development, ownership, operation or management of commercial real estate.

(e)

“Cause” means a termination of Executive’s employment by formal action of the Company’s Board of Directors for any of the following reasons:

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Exhibit 10.59

(i)

embezzlement, dishonesty, fraud or any illegal or unethical act or omission in connection with the performance of Executive’s duties under this Agreement or as an employee of the Company;

(ii)

conviction (or plea of nolo contendere) of any felony or any other crime involving moral turpitude or that materially impairs Executive’s ability to perform his duties hereunder;

(iii)

any material breach by Executive of the terms of this Agreement or any other act or omission which has the potential to injure the Company, which, if curable, remains uncured following ten (10) days written notice to Executive describing such breach;

(iv)

improper and material disclosure or use of the Company’s Proprietary Information; or

(v)

Executive’s willful failure or refusal to follow the lawful and good faith direction of the Board of Directors, which, if curable, remains uncured following ten (10) days’ written notice to Executive describing such failure or refusal.

(f)

“Change in Control” means (i) the approval by the shareholders of the Company of a plan of complete liquidation or dissolution of the Company, (ii) the consummation of a sale of all or substantially all of the assets of the Company; (iii) the consummation of any transaction as a result of which any individual or entity becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power of all voting securities of the Company then issued and outstanding; or (iv) the consummation of a merger, consolidation, reorganization, or business combination, other than a merger, consolidation, reorganization or business combination which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting securities of the Company or the surviving entity immediately after such merger, consolidation, reorganization of business combination, but in the case of (iii) or (iv) above only if at any time within twelve calendar months following such the consummation of such transaction the members of the Company’s board of directors as of the date such transaction is consummated constitute less than 50% of the post-consummation board of directors.

(g)

“Change in Control Payment” has the meaning given to such term in Section 3(a)(i) hereof.

(h)

”Code” means the Internal Revenue Code of 1986, as amended.

(i)

“Company” has the meaning given to such term in the recitals hereto. 

(j)

“Covered Termination” means the termination of Executive’s employment during the Protection Period (i) by the Company for any reason other than for Cause or (ii) by 

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Exhibit 10.59

Executive for Good Reason, or (iii) as a result of Executive’s death.  Executive shall not be considered to have suffered a Covered Termination in the event Executive’s employment terminates (i) by action of the Company for Cause, (ii) by action of Executive other than based on Good Reason, (iii) or for any reason after the Protection Period.

(k)

“Creation” has the meaning given to such term in Section 8.

(l)

“Customer” means (A) any tenant with respect to any real property of the Company or other person or entity with whom the Company is negotiating for the leasing of real property at the time the Executive’s employment terminates or at any time during the prior six calendar months and (B) any person or entity with whom the Company is negotiating the purchase, sale, leasing, financing or management of real property at the time Executive’s employment terminates or at any time during the prior six calendar months;

(m)

“Disability” means a determination by the Board of Directors of the Company in accordance with applicable law that, as a result of a physical or mental illness, the Executive is unable and has been unable to perform the essential functions of his job with or without reasonable accommodation for a period of (i) 90 consecutive days or (ii) 180 days in any one (1) year period.

(n)

“Executive” has the meaning given to such term in the recitals hereto.

(o)

“Effective Date” means October 1, 2006.

(p)

”Good Reason” means any of the following conditions (not consented to in advance by Executive or ratified subsequently by Executive), which condition(s) remain(s) in effect thirty (30) days after written notice to the Board of Directors from Executive of such conditions:

(i)

Any material decrease in Executive’s Base Salary or opportunity to earn an Annual Incentive Bonus; or 

(ii)

Any material, adverse diminution in the level of Executive’s duties or responsibilities (but not merely a change in such duties and responsibilities) as measured against Executive’s duties and responsibilities immediately prior to such change; or

(iii)

The relocation of Executive’s regular office from which he provides services to the Company to a location which is more than fifty (50) miles from Executive’s then current regular office location.

(q)

“Gross-Up Payment” has the meaning given to such term in Section 4.

(r)

“Person” means any corporation, partnership, limited liability company, trust, or other entity or individual.

(s)

“Proprietary Information” has the meaning given to such term in Section 5.

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(t)

“Protection Period” means the period commencing on the Effective Date and ending on the first anniversary of a Change in Control that occurs during the Agreement Term, provided that in the event no Change in Control occurs during the Agreement Term, the Protection Period shall be the period commencing on the Effective Date and ending at the expiration of the Agreement Term.

(u)

“Successor Entity” means any entity that acquires the Company or substantially all of its assets in a transaction constituting a Change in Control.

(v)

“Trigger Event” means either (i) the occurrence of a Change in Control with respect to the Company during the Agreement Term and while Executive is employed by the Company or (ii) a the occurrence of both (A) a Covered Termination of Executive’s employment and (B) a Change in Control with respect to the Company which occurs after, but not more than 180 days after, such Covered Termination.

2.

Term.  This Agreement shall be effective as of the Effective Date and shall continue to be effective with respect to a Change in Control that is consummated prior to the earlier of (i) the first anniversary of the Effective Date or (ii) the date that the Board of Directors of the Company notifies Executive in writing that all potential Change in Control transactions have been abandoned (“Agreement Term”).  The foregoing notwithstanding, the Agreement Term may be extended by the Board of Directors of the Company by providing written notice of such extension to Executive. 

3.

Consequences of a Change In Control.

(a)

Payments and Benefits.  

(i)

In the event of the occurrence of a Trigger Event, subject to receipt by the Company of an executed release in the form attached hereto as Exhibit A, the Company shall pay Executive $3,310,000.00 (“Change in Control Payment”) simultaneous with the closing of the transaction which gives rise to a Change in Control with respect to the Company.  The Company may satisfy any obligation to make payments hereunder in cash, in securities of the Company or any Successor Entity, or a combination thereof, but only if such securities are tradable by the pubic on a national market or exchange free of any restriction.

(ii)

In the event Executive suffers a Covered Termination following a Change in Control with respect to the Company and Executive elects continuation coverage for himself or his dependents as available under applicable law under the medical plans of the Company or any Successor Entity, the Company shall pay directly, or reimburse Executive for the cost of, the premiums for such continuation coverage for as long as Executive or his dependents are entitled to and continue such continuation coverage under applicable law.

(b)

Withholding.  The Company shall have the right to deduct and withhold from any payments made to Executive hereunder any federal, state or local income, employment or other taxes required by law to be withheld by the Company with respect to such payment or any other payment or transfer made by the Company for the benefit of Executive. 

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(c)

Offset and Termination of Rights.  The Company shall have the right to offset any and all amounts due and owing from Executive to the Company by reason of any contract, agreement, note, advance, loan or failure to return property against any obligation of the Company to pay compensation to Executive under this Agreement.  

(d)

Conditional Post-Termination Rights.  Executive acknowledges and agrees that his right to receive payments or any other consideration following a termination of his employment is expressly conditioned on Executive executing and delivering to the Company the form of release attached hereto as Exhibit A.

(e)

Additional Consideration For Payments.  It is the expectation of the parties that, in the event there is a Change in Control with respect to the Company, it would be unlikely for the Successor Entity to desire to continue Executive’s employment as its President and Chief Executive Officer, but that the Successor Entity may desire the services of Executive for a limited period following the Change in Control.  In consideration of the Agreement of the Company to make the Change in Control Payment and otherwise provide post-termination benefits to Executive, Executive hereby expressly agrees that in the event a Change in Control occurs while he is employed by the Company which obligates the Company to make the Change in Control Payment, for a period of up to 180 days, Executive shall make himself available to provide, and shall provide, such services related to the Company’s Business and its transition to a Successor Entity as the Successor Entity may reasonably request, including services on a full-time basis.  Executive shall provide such services as an independent contractor and not as an employee.  Executive’s obligation to provide such services is subject to the Successor Entity agreeing to (i) compensate Executive for such services at a rate which is comparable to Base Salary currently paid to Executive by Company (reduced proportionately to the extent the requested services are other than on a full time basis), (ii) provide Executive with such technical and administrative assistance and office space as necessary to allow Executive to perform such services and (iii) reimburse Executive for his reasonable and necessary travel and other business related expenses incurred in performing such services in accordance with the general reimbursement policy adopted by the Successor Entity and in effect from time to time.  The foregoing notwithstanding, the Executive shall not be obligated to provide the services described above unless the Successor Entity notifies Executive of its need for such services in writing prior to the Change in Control.

4.

Tax Gross-Up Obligation.  

(a)

Notwithstanding any other provision of this Agreement, if any portion of the Change in Control Payment would constitute an Excess Parachute Payment, the Company shall pay to Executive an additional amount (“Gross-Up Payment”) such that the net amount retained by Executive after deduction of any excise tax imposed under Section 4999 of the Code, and any interest charges or penalties in respect of the imposition of such excise tax (but not any federal, state or local income or employment tax) on the Change in Control Payment and any federal, state or local income, employment or excise tax on any such additional payments (including the initial Gross-Up Payment) shall be equal to the Change in Control Payment.  Payment of the Gross-Up Payment, if any, shall be made at the closing of the Transaction which gives rise to the Change in Control.  For purposes of clarity, the parties acknowledge that they 

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have each independently determined that anticipated Gross-Up payment would be roughly $1,500,000.00. 

(b)

  For purposes of computing the Gross-Up Payment, Executive shall be deemed to be pay income taxes at the highest marginal rates applicable to Executive and to pay state and local income taxes at the highest marginal rate applicable to Executive at the time the Change in Control Payment is made, net of the maximum reduction in federal income taxes that may be obtained from the deduction of applicable state and local taxes.

(c)

All determinations as to whether a Gross-Up Payment is required and the amount of such payment shall be made by the Company’s independent registered public accountants responsible for certifying the financial statements of the Company for the period including the Change in Control applying the provisions of Section 280G in good faith, subject only to any final determination made by the Internal Revenue Service or court having jurisdiction over Executive’s excise tax liability.

(d)

In the event that the amount of the excise tax payable by Executive is finally determined to be less than the amount used to calculate the Gross-Up Payment, Executive shall repay to the Company the portion of the Gross-Up Payment attributable to such reduction, including the excise and federal, state and local income taxes included in such Gross-Up Payment, plus interest at the applicable federal rate under section 1274 of the Code.

(e)

In the event that the amount of the excise tax payable by Executive is finally determined to exceed the amount used to calculate the Gross-Up Payment, the Company shall make an additional Gross-Up Payment to Executive promptly following such final determination such that, taking into consideration all Gross-Up Payments made to Executive, the net amount retained by Executive after the excise tax and all related penalties and interest charges with respect to such excise tax liability equals the Change in Control Payment.

(f)

In the event of any controversy with the Internal Revenue Service or other taxing authority with regard to the excise tax liability of Executive, Executive shall allow the Company to control all processes related to the excise tax liability at the Company’s expense.  In the event the excise tax issue involves other issues on Executive’s tax return, the Company and Executive shall cooperate in good faith so as not to jeopardize the resolution of any issue.

5.

Confidentiality.  Executive acknowledges that by virtue of his employment with the Company, he has or may be exposed to or has had or may have access to confidential information of the Company regarding its or their businesses (whether or not developed by Executive), including, but not limited to, algorithms, source code, system designs, data formats, Customer lists or records, Customer information, leases, tenant rent rolls, property operating statements, employee records, shareholder records, shareholder lists, shareholder information, mark-ups, project materials, information regarding independent contractors, marketing techniques, supplier information, accounting methodology, Creations (as defined in Section 9 below) or other information which gives, or may give, the Company an advantage in the marketplace against its competitors (all of the foregoing are hereinafter referred to collectively as the “Proprietary Information” except for information which was in the public domain when 

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Exhibit 10.59

acquired or developed by the Company, or which subsequently enters the public domain other than as a result of a breach of this or any other agreement or covenant).  Executive further acknowledges that it would be possible for Executive, upon termination of his employment with the Company, to use the Proprietary Information to benefit any other Person.  Executive acknowledges that the Company has expended considerable time and resources in the development of the Proprietary Information and that the Proprietary Information has been disclosed to or learned by Executive solely in connection with Executive’s employment with the Company.  Executive acknowledges that the Proprietary Information constitutes a proprietary and exclusive interest of the Company, and, therefore, Executive agrees that during the term of his employment and for a period of three years thereafter, for whatever reason, anywhere in the world, Executive shall not directly or indirectly disclose the Proprietary Information to any person, firm, court, governmental entity or body, corporation or other entity or use the Proprietary Information in any manner, except in connection with the business and affairs of the Company or pursuant to a validly issued and enforceable court or administrative order.  In the event that any court, administrative hearing officer or the like shall request or demand disclosure of any Proprietary Information, Executive shall promptly notify the Company of the same and cooperate with the Company to obtain appropriate protective orders in respect thereof.  Executive further agrees to execute such further agreements or understandings regarding his agreement not to misuse or disclose Proprietary Information as the Company may reasonably request.

6.

Non-Solicitation.  Executive covenants and agrees that, while employed by the Company, and for a period of 12 months following his Covered Termination, he shall not:

(a)

in any manner, directly or indirectly attempt to divert, take away, solicit, or assist others in soliciting any current or prospective Customer, supplier, independent contractor or service provider of the Company or otherwise interfere with the relationship between the Company and any current or prospective Customer, service provider, supplier, independent contractor, or shareholder;

(b)

directly or indirectly solicit for employment other than on behalf of the Company, seek to induce or influence any person to leave employment with the Company, offer employment to, or employ any person who was an employee of the Company within 6 months of such solicitation or offer;

(c)

make any comment (whether or not true) to any person which could be interpreted, whether or not in fact so interpreted, as critical or disparaging of the Company or which otherwise could be reasonably expected to be detrimental to the Company or their employees or operations.

7.

Return of Materials.  Executive shall, at any time upon the request of the Company, and in any event upon the termination of his employment, for whatever reason, immediately return and surrender to the Company all originals and all copies in Executive’s possession, regardless of medium, of all rental rolls, leases, algorithms, source code, system designs, data formats, forms, records, notes, memoranda, price lists, supplier lists, brochures, project materials, sales materials, manuals, letterhead, business cards and other property belonging to the Company or 

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any of its Customers, as the case may be, created or obtained by Executive as a result of or in the course of or in connection with Executive’s employment regardless of whether such items constitute Proprietary Information.  Executive acknowledges that all such materials are, and will remain, the exclusive property of the Company.

8.

Creations and Other Matters.

(a)

Executive agrees that all materials, inventions, discoveries, improvements or the like which Executive, individually or with others, may originate, develop or reduce to practice while employed with the Company relating to the business or products of the Company, the Company’s actual or demonstrably anticipated research or development or any work performed by Executive for the Company (individually, a “Creation” and collectively, the “Creations”) shall, as between the Company and Executive, belong to and be the sole property of the Company.  Executive hereby waives any and all “moral rights,” including, but not limited to, any right to identification of authorship, right of approval on modifications or limitation on subsequent modification, that Executive may have in respect of any Creation.  Executive further agrees, without further consideration, to promptly disclose each such Creation to the Company and to such other individuals as the Company may direct.  Executive further agrees to execute and to join others in executing such applications, assignments and other documents as may be necessary or convenient to vest in the Company or any client of the Company, as appropriate, full title to each such Creation and as may be reasonably necessary or convenient to obtain United States and foreign patents or copyrights thereon to the extent the Company or any client of the Company, as appropriate, may choose.  Executive further agrees to testify in any legal or administrative proceeding relative to any such Creation whenever requested to do so by the Company, provided that the Company agrees to reimburse Executive for any reasonable expenses incurred in providing such testimony.

(b)

The foregoing covenant shall not apply to any Creation for which no equipment, supplies, facilities, or trade secret information of the Company was used and which was developed entirely on Executive’s own time, unless (i) the Creation relates to (A) the business of the Company or (B) any actual or reasonably anticipated research or development of the Company or (ii) the Creation results from any work performed by Executive for the Company.

9.

Remedies.  Executive acknowledges that in the event that his employment with the Company terminates for any reason, nothing in the foregoing restrictions will unreasonably prevent Executive from obtaining other employment and that his ability to obtain such employment without violating such restrictions is a material condition to his employment with the Company.  Executive acknowledges that compliance with the covenants set forth in Sections 5 through 8 hereof is necessary to protect the business, goodwill and Proprietary Information of the Company and its clients and that a breach of these restrictions will irreparably and continually damage the Company or its clients for which money damages may not be adequate.  Consequently, Executive agrees that, in the event that he breaches or threatens to breach any of these covenants, the Company shall be entitled to a temporary, preliminary or permanent injunction in order to prevent the continuation of such harm without any obligation to post a bond.    Nothing in this agreement, however, shall be construed to prohibit the Company from 

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Exhibit 10.59

also pursuing any other remedy, the parties having agreed that all remedies are to be cumulative.  The parties expressly agree that the Company may, in its sole discretion, choose to enforce the covenants in Sections 5 through 8 hereof in part of to enforce any of said covenants to a lesser extent than that set forth herein.

10.

Survival.  Notwithstanding any other provision of this Agreement, the Executive’s obligations in Sections 5 through 8 (to the extent provided therein) shall survive the termination of this Agreement and shall be deemed for the benefit of and enforceable in full by any Successor Entity.

11.

Revision.  The parties hereto expressly agree that in the event that any of the provisions, covenants, warranties or agreements in this Agreement are held to be in any respect an unreasonable restriction upon Executive or are otherwise invalid, for whatsoever cause, then the court so holding is hereby authorized to (a) reduce the geographic scope of said covenant, warranty or agreement pertains, the period of time in which said covenant, warranty or agreement operates or the scope of activity to which said covenant, warranty or  agreement pertains or (b) effect any other change to the extent necessary to render any of the restrictions contained in this Agreement enforceable.

12.

Company Covenant.  During the twelve (12) month period following Executive’s Covered Termination, the Company agrees not to make any comment (whether or not true) to any person which could be interpreted, whether or not in fact so interpreted, as critical or disparaging of Executive or his performance as an employee of the Company or which otherwise could be reasonably expected to be detrimental to Executive’s professional reputation. 

13.

Confidentiality.  Executive agrees that he will not disclose the terms of this Agreement to anyone other than his spouse and legal counsel, except as such disclosure may be required for legal, accounting or tax advice and reporting purposes.

14.

Dispute Resolution.  In the event of any dispute or claim relating to or arising out of this Agreement (including, but not limited to, any claims of breach of contract, wrongful termination or age, sex, race or other discrimination), Executive and the Company agree that all such disputes shall be fully and finally resolved by binding arbitration conducted by the American Arbitration Association (“AAA”) in Chicago, Illinois in accordance with the AAA’s National Rules for the Resolution of Employment Disputes.  Employee acknowledges that by accepting this arbitration provision he is waiving any right to a jury trial in the event of such dispute; provided, however, that this arbitration provision shall not apply to claims by the Company seeking injunctive or other equitable relief.  The arbitrator may, but is not required, to order that the prevailing party shall be entitled to recover from the losing party its attorneys’ fees and costs incurred in any arbitration arising out of this Agreement.

15.

Assistance in Litigation.  Executive shall, during (and after termination of) his employment, upon reasonable notice, furnish such truthful information and proper assistance to the Company as may reasonably be required by the Company in connection with any litigation in which it or any of its officers, directors or affiliated entities is, or may become a party.  If such 

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Exhibit 10.59

assistance is required after the termination of Executive’s employment, then the Company shall reimburse Executive for his reasonable and necessary expenses incurred at the request of the Company upon submission of appropriate supporting documents plus a per diem consulting fee equal to his daily pro-rata Base Salary.

16.

Interpretation.  Executive and the Company agree that this Agreement shall be interpreted in accordance with and governed by the laws of the State of Illinois.

17.

Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.  In view of the personal nature of the services to be performed under this Agreement by Executive, he shall not have the right to assign or transfer any of his rights, obligations or benefits under this Agreement, except as otherwise noted herein.

18.

Notice.  Any notice provided for in this Agreement shall be in writing and shall be deemed given on the date it is delivered in person or sent via overnight delivery service with waiver of signature to the other party and addressed,

In the case of the Company, to:

Inland Retail Real Estate Trust, Inc.

400 South Dixie Highway, Suite 128

Boca Raton, FL 33432

Attention:  Chairman

With a copy to:

Inland Retail Real Estate Trust, Inc.

2905 Butterfield Road

Oak Brook, IL 60523

Attn:  General Counsel

And in the case of Executive, to:

			
	 	Barry L. Lazarus

	 
	 	 	 
	 	 	 

Or such other addresses as either party may designate by giving written notice of a change of address in the manner provided above.  Notices given by personal delivery shall be deemed given on the date of delivery.  Notices given by overnight courier service shall be deemed given upon deposit with the courier.  If notice is given to a business address, receipt by a receptionist or any other person employed at such business address shall be deemed to constitute actual delivery to the addressee.

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Exhibit 10.59

19.

Validity.  If any one or more of the provisions (or any part thereof) of this Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions (or any part thereof) shall not in any way be affected or impaired thereby.  Each term and provision of this agreement shall be valid and enforceable to the fullest extent permitted by law and any invalid, illegal or unenforceable term or provision shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid, illegal or unenforceable term or provision.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year written below.

						
	Date:

	 	 	INLAND RETAIL REAL ESTATE TRUST, INC.

	 	 	 	By:

	 
	 	 	 	Its:

	 
	 	 	 	 	 
	 	 	 	 	 
	Date:

	 	 	 

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Exhibit 10.59

EXHIBIT A

Form of Mutual Release

Date:  ________________________

In consideration of the agreement of Inland Retail Real Estate Trust, Inc. (“Company”) and the undersigned (“Executive”) to enter into that certain Senior Management Retention and Severance Agreement, dated ________________ (“Agreement”) and the mutual promises and covenants of the parties made thereunder, the parties to this Release, intending to be legally bound, do hereby agree as follows:

1.

Company’s Release of Executive.  The Company on behalf of itself and its past present and future shareholders, directors, officers, employees, agents, attorneys and assigns hereby knowingly, irrevocably, unconditionally and voluntarily releases and forever discharges Executive and each of his individual and respective heirs, representatives, executors, family members, and assigns from, and agrees not to sue or otherwise institute or cause to be instituted any legal, alternative dispute resolution or administrative proceeding concerning, any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently know or unknown, suspected or unsuspected, that it may possess arising from any omissions, acts or facts that have occurred through the date of Executive’s employment terminates (other than those arising out of the Executive’s gross negligence or willful misconduct), including without limitation:

A.

Any and all claims relating to or arising from his employment by the Company and the termination of such employment;

B.

Any and all claims under the Agreement;

C.

Any and all claims relating to or arising from Executive’s relationship with the Company as a member of the Board of Directors of the Company or any of the Company’s subsidiaries, affiliates, assigns, predecessors or successors-in-interest;

D.

Any and all claims for violation of any federal, state or municipal statute, and any and all claims for injury, including, but not limited to: breach of contract, both express and implied, breach of a covenant of good faith and fair dealing, both express or implied, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage;

E.

Any and all claims based on the violation of the federal or any state constitution;

F.

Any and all claims for attorneys’ fees and costs.

2.

Executive Release of Company.  The Executive (defined for this purpose to include as the Executive and each of his individual and respective heirs, representatives, executors, family 

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Exhibit 10.59

members and assigns) hereby knowingly, irrevocably, unconditionally and voluntarily releases and forever discharges the Company and its past, present and future shareholders, directors, officers, employees, agents, attorneys, investors, administrators, affiliates, divisions, subsidiaries, predecessors, successors and assigns from, and agrees not to sue or otherwise institute or cause to be instituted any legal, alternative dispute resolution or administrative proceeding concerning, any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently know or unknown, suspected or unsuspected, that he may possess arising from any omissions, acts or facts that have occurred through the date Executive’s employment terminates, including without limitation:

G.

Any and all claims relating to or arising from his or her employment by the Company and the termination of such employment;

H.

Any and all claims under the Agreement;

I.

Any and all claims for wrongful discharge, termination in violation of good policy, discrimination, breach of contract, both expressed or implied, covenants of good faith or fair dealing, both expressed or implied, promissory estoppel, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, unfair business practice, defamation, libel, slander, negligence, personal injury, assault, battery, invasion of privacy, false imprisonment, or conversion;

J.

Any and all claims for violation of any federal, state or municipal statute, including, without limitation, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, the Worker Adjustment and Retraining Notification Act, and all amendments to each such Act as well as the regulations issued there under;

K.

Any and all claims based on the violation of the federal or any state constitution;

L.

Any and all claims for attorneys’ fees and costs.

The Executive acknowledges that (i) he has been advised by the Company to consult a lawyer of his own choice prior to executing this release and has done so or voluntarily declined to seek such counsel, (ii) he has read this release and understands the terms and conditions hereof and the binding nature hereof, (iii) he has executed this release voluntarily and without duress or undue influence on the part of the Company, (iv) he understands that his right to receive payments under Section 3 of the Agreement is subject to and conditioned on the undersigned’s full and complete compliance with the covenants set forth in the Agreement following his termination and subject to full recoupment by the Company in the event of a violation of any such covenant and (v) this release may be revoked by Executive by written notice to the Company delivered within seven (7) days from the date it is signed by Executive and shall not be effective until the end of such seven (7) day period.

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Exhibit 10.59

3.

Exceptions.  The foregoing release shall not apply with respect to the Company’s payment obligations under Sections 3 and 4 of the Agreement or the undersigned’s rights under any “employee benefit plans” as that term is defined in the Employee Retirement Income Security Act of 1974, as amended.

4.

Definitions.  Initially capitalized terms used in this release and defined in the Agreement shall have the meanings given to such terms under the Agreement.

INLAND RETAIL REAL ESTATE TRUST, INC.

By:___________________________________

Date: ______________________________

EXECUTIVE:

____________________________________

Barry L. Lazarus

Date:  _______________________________

STATE OF

)

)ss

COUNTY OF

)

I, ________________________, a Notary Public in and for said County, in the State aforesaid, DO HEREBY CERTIFY that Barry L. Lazarus appeared before me this day in person and signed said instrument as his/her free and voluntary act for the uses and purposes therein set forth.

GIVEN under my hand and Notarial Seal this ______day of _______________, 200___.

Notary Public

Affix Notary Stamp

14Exhibit 10.1 

		
	 	1515 Arapahoe Street, #1200

Denver, CO 80202

Phone: (303) 292-3700

Fax: (303) 534-8270

MULTI-TENANT LEASE
AGREEMENT 

        This
lease (“Lease”) is entered into this  8th day of
   November  , 20 06  , by and
between   AspenBio Pharma, Inc.     
(“Landlord”) and    Mr.  Robert Baits (d\b\a — Omega
Gymnastics Training Center)    (“Tenant”). 

(1)     Premises. 

         
     (a)       
          Landlord leases to Tenant and Tenant leases from Landlord upon terms and
          conditions set forth herein approximately   16,000 (to be
          verified by architectural drawings)    square feet located at
           the North side of  1585 South Perry Street, Castle Rock, CO
          80104                ,
          commonly known as   AspenBio      
          (“Building”) and legally described as: 

Lot 1, Block 1, Brookside
Business Center, Filing No. 5, County of Douglas, State of Colorado; 

together with any improvements,
rights-of-way, easements and any other rights, if any, appurtenant thereto (collectively
“Premises”). 

(2)    Term
of Lease.  

         
     (a)       
          Term. The term of this Lease shall begin the earlier of the
          following; 2/1/2007, substantial completion of “tenant
          improvements”, receipt of certificate of occupancy, or Tenant taking
          possession of Premises    (“Commencement Date”) and
          shall extend through the end of the 62nd month , unless
          terminated sooner as provided herein (“Termination Date”). 

         
     (b)       
          Delay in Possession. Notwithstanding the Commencement Date, if for any
          reason Landlord cannot deliver possession of the Premises to Tenant on said
          date, Landlord shall not be subject to any liability therefor, nor shall such
          failure affect the validity of this Lease or the obligations of Tenant hereunder
          or extend the term hereof, but in such case, Tenant shall not be obligated to
          pay rent or perform any other obligation of Tenant under the terms of this
          Lease, except as may be otherwise provided in this Lease, until possession of
          the Premises is tendered to Tenant; provided, however, that if Landlord shall
          not have delivered possession of the Premises within sixty (60) days from the
          Commencement Date, unless such failure to deliver is due to construction delays excluding Landlord’s
failure to fund as agreed, Tenant may, at Tenant’s option, by notice in writing to
          Landlord within ten (10) days thereafter, cancel this Lease, in which event the
          parties shall be discharged from all obligations hereunder; provided further,
          however, that if such written notice of Tenant is not received by Landlord
          within said ten (10) day period, Tenant’s right to cancel this Lease
          hereunder shall terminate and be of no further force or effect. 

         
     (c)       
          Early Possession. If Tenant occupies the Premises prior to the
          Commencement Date, such occupancy shall be subject to all provisions of this
          Lease; such occupancy shall not advance the Termination Date; and Tenant shall
          pay rent for such period at the initial monthly rates set forth below. 

(3)    Rental.
Tenant agrees to pay to Landlord as Base Rent for           the full term hereof the sum
of $  600,000.00  ,           payable in advance and without
notice in monthly installments as follows:  

		Months

	Rental Rate NNN

	Monthly Rate

	 Total

	
		1 - 2  

3 - 14 

15 - 26

27 - 38

39 - 50

51 - 62
	      - 0 - 

$6.50/sq.ft.

$7.00/sq.ft.

$7.50/sq.ft.

$8.00/sq.ft.

$8.50/sq.ft.
	$     
          - 0 -  

$       8,666.67 

$       9,333.33 

$     10,000.00 

$     10,666.67 

$     11,333.33
	$     
                - 0 -

$        104,000.00

$        112,000.00

$        120,000.00

$        128,000.00

$        136,000.00
	

Said rental shall be payable on the
tenth day of each month during said term at the following address:   1585
South Perry Street, Castle Rock, CO 80104  (or at such other address as Landlord
may designate in writing from time to time) without any set-off or deduction whatsoever.
Receipt is hereby acknowledged of the sum of $ 11,666.67   as Base
Rent and Additional Rent from the Commencement Date through  the end of the
62nd month . Said payments shall be in lawful money of the United
States, which shall be legal tender in payment of all debts and dues, public or private,
at the time of payment. If the Commencement Date is on a day other than the first day of a
calendar month, Tenant shall pay to Landlord the rental for the number of days that exist
prior to the first day of the succeeding month, with a similar adjustment being made on
the Termination Date. 

(4)    Security
Deposit. Concurrently with the execution of this           Lease, Tenant
has deposited with Landlord and will keep on deposit at all times           during the
primary term of this Lease (and any extension thereof), the sum of $  20,000.00    (“Security
Deposit”)           the receipt of which is hereby acknowledged, as security for the
faithful           performance of all the terms, conditions and covenants of this Lease.
The           Security Deposit shall be held in a separate interest bearing checking
account.           If, at any time during the primary term of this Lease (or any
extension           thereof), Tenant shall be in default in the performance of any of the
provisions           of this Lease, Landlord shall have the right but not the obligation
to use the           Security Deposit, or as much thereof as Landlord may deem necessary,
to cure,           correct or remedy any such default. Tenant, upon written notification
thereof,           shall pay to Landlord any and all such expenditure or expenditures so
that           Landlord will at all times have the full amount of the Security Deposit as
          security. The Security Deposit and application thereof shall not be considered
          as liquidated damages in the event of breach but only as an application toward
          actual damages. Within thirty (30) calendar days from the termination of this
          Lease in any manner, if Tenant is not in default and if lease termination
occurs           after December 31, 2011, except by termination under Sections 19 (a) or
20, the           Security Deposit or so much thereof as has not been lawfully expended
by           Landlord, shall be returned to Tenant, along with interest earned. In the
event           of a sale of the Premises by Landlord and upon transfer of the Security
Deposit           to the new owner, Landlord shall be released by Tenant from all
liability for           the return of the Security Deposit. The new owner shall place the
Security           Deposit into a separate interest bearing checking account. The
provisions hereof           shall apply to every transfer or assignment made of the
Security Deposit to a           new owner.  

Page 1 

(5)    Use
of Premises. Tenant shall have the right to use and           occupy the
Premises for   gymnastics training. Any other lawful           use shall
be permitted only with the prior written consent of Landlord, which           consent
shall not be unreasonably withheld. Throughout the primary term of this           Lease
(and any extension thereof), Tenant, at Tenant’s sole cost and           expense,
covenants to promptly comply with all laws and ordinances and the           orders,
rules, regulations and requirements of all federal, state and municipal
          governments and appropriate departments, commissions, boards and officers
          thereof. Tenant accepts the Premises subject to all zoning ordinances and
          regulations pertaining to the Premises, without responsibility or warranty by
          Landlord, and further Tenant accepts the Premises subject to easements,
          rights-of-way, restrictive covenants and reservations of record.  

(6)    Additional
Rent/Proportionate Share. Landlord and Tenant           acknowledge that
the Premises constitutes a portion of the Building which           contains other
occupants. From time to time, Landlord shall require Tenant to           pay Tenant’s
“Proportionate Share” of certain costs and expenses           to Landlord as
further set forth in paragraphs (7), (8) and (14) of this Lease.           The current
estimate for Additional Rental is $2.25/sq.ft. which is subject to           change. For
the purposes of this Lease, Tenant’s “Proportionate           Share” shall
be 39.9%, as may be revised pending finalization of size in           (1) (a). Unless
otherwise provided in this Lease, such required payments shall           be in addition
to the Base Rent. Landlord, on an annual basis, shall provide a           breakdown of
the CAM charges and settle with Tenant any outstanding payments or           receipts and
set the estimated CAM charge for the following year.  

(7)    Payment
of Taxes and Assessments.  

         
     (a)       
          Payment of Taxes. Tenant agrees to pay, before any fine, penalty,
          interest or cost may be added thereto, all license and franchise taxes of
          Tenant, all general and special real estate and personal property taxes,
          assessments, and charges levied and other governmental charges (collectively
          “Taxes”) which are assessed, imposed or become a lien upon the
          Premises or the contents, or become payable during the primary term of this
          Lease (or any extension thereof); provided, however, that if by law any such
          Taxes are payable or may, at the option of the taxpayer, be paid in installments
          (whether or not interest shall accrue on the unpaid principal balance of such
          Taxes), Tenant may pay the same (and any accrued interest on the unpaid balance
          of such Taxes) in installments as the same respectively become due, and before
          any fine, penalty, interest or cost may be added thereto for the nonpayment of
          any such installment and interest. Any Taxes falling due during the year of
          commencement or termination of the term of this Lease shall be apportioned
          between Landlord and Tenant as of the Commencement Date or Termination Date. 

         
     (b)       
          Proof of Payment. Tenant shall furnish to Landlord within thirty (30)
          calendar days after the date any Taxes are due and payable by Tenant, official
          receipts from the appropriate taxing authority or other proof satisfactory to
          Landlord evidencing the payment thereof. Tenant shall have the right to protest
          any Taxes, and Landlord agrees to cooperate in said protest without expense to
          Landlord. 

         
     (c)       
          Advance of Payment. Landlord shall have the right but not the obligation
          to advance funds necessary for the payment of any Taxes. Any such advance shall
          in no way affect any other remedy available to Landlord pursuant to the terms of
          this Lease. 

         
     (d)       
          New Form of Tax. In any case wherein an income or any other form of tax
          shall be levied, assessed or imposed as a separate and clearly identifiable tax
          by the United States, the State of Colorado or any political subdivision of
          either, upon the income arising from the rent provided hereunder for the use and
          occupancy of the Premises in lieu of or as a substitute for a tax upon the
          Premises or any form as a substitute for any other tax or imposition hereunder
          required to be paid by Tenant, Tenant and not Landlord shall be required and
          hereby agrees to pay the same. 

         
     (e)       
          Proportionate Share. In the event the Premises is not separately assessed
          by the appropriate taxing authority or authorities, in lieu of Tenant paying the
          general and special property taxes as described above, Landlord agrees to pay,
          before they become delinquent, all such general and special real property taxes
          lawfully levied where assessed against the Building and all appurtenances
          thereto, including but not limited to parking areas, driveways, and alleys
          around the Building. Tenant shall pay to Landlord, upon demand, Tenant’s
          Proportionate Share of all such Taxes paid by Landlord. 

(8)    Insurance.
During the primary term of this Lease (and any           extension thereof), Tenant shall
carry and maintain the following types of           insurance in the amounts specified,
at Tenant’s sole cost and expense, and           for the mutual benefit of Landlord
and Tenant:  

         
     (a)       
          Landlord’s Obligation. Landlord agrees to maintain insurance
          covering the Building insuring against the perils of fire, lightning, extended
          coverage, vandalism and malicious mischief, extended by special extended
          coverage endorsement to insure against all other risks of direct physical loss.
          Such insurance shall be for the sole benefit of Landlord and under
          Landlord’s control. Tenant agrees to pay Tenant’s Proportionate Share
          of such insurance cost upon demand after presentation to Tenant of
          Landlord’s statement setting forth the amount due. 

         
     (b)       
          Tenant’s Obligation. Tenant agrees to maintain insurance on all
          alterations, additions, partitions and improvements erected by and on behalf of
          Tenant on or about the Premises in an amount not less than eighty percent (80%)
          (or such greater percentage as may be necessary to comply with the provisions of
          any co-insurance clause of the policy) of the replacement cost thereof as such
          term is defined in the insurance policy. Subject to the provisions of paragraph
          (18) below, in the event the Premises shall be destroyed during the primary term
          of this Lease (or any extension thereof), Tenant shall restore the Premises to
          the same condition as existed immediately prior to such casualty or as close to
          such condition as is reasonably practicable. 

         
     (c)       
          Liability Insurance. Tenant shall at all times keep in force a
          comprehensive general combined liability insurance policy providing protection
          of at least $1,000,000 combined single limit (with no deductible) against claim
          and liability for personal injury, bodily injury, death and property damage
          arising from the use, ownership, maintenance, disuse or condition of the
          Premises, any improvements located on or appurtenant to the Premises,
          improvements or adjoining areas or ways. Landlord shall be named and protected
          under the terms and conditions of said policy as Landlord of the Premises. 

         
     (d)       
          Workmen’s Compensation. Tenant shall also purchase Workmen’s
          Compensation Insurance in compliance with all state, federal and other
          governmental laws, rules and regulations. 

         
     (e)       
          Personal Property. Tenant shall be responsible for insuring any and all
          personal property that may be owned by Tenant. Any insurance that may be
          purchased pursuant to this paragraph and any proceeds that may be payable as a
          result of a loss under any such insurance shall in no way reduce, alter,
          diminish or modify any provisions of this Lease and specifically the indemnity
          provisions hereof. 

         
     (f)       
          Waiver of Subrogation. The parties agree that all insurance policies
          obtained pursuant to this Lease shall include a clause or endorsement which
          shall waive the right of subrogation on the part of the insurance carrier
          against both Landlord and Tenant. Landlord and Tenant hereby release the other
          from any and all liability or responsibility to the other or anyone claiming
          through or under them by way of subrogation. 

Page 2 

         
     (g)       
          Miscellaneous. All insurance by virtue of this Lease shall be written
          with an insurance company licensed to do business within the State of Colorado
          and approved by Landlord (which approval shall not be unreasonably withheld),
          with such policies to be nonassessable. Tenant shall provide Landlord with the
          original insurance policies or a Certificate of Insurance (with proof of payment
          thereon), which shall provide that the insuring company shall give notice in
          writing to Landlord within thirty (30) calendar days prior to cancellation,
          termination or, in the event of a material change in such insurance, for any
          reason whatsoever. An endorsement shall provide that any proceeds (except
          liability insurance proceeds) of any loss shall be payable to Landlord and
          Tenant as their respective interests may appear, except that in the event
          Landlord purchases the All-Risk insurance, then any loss shall be payable to
          Landlord. 

(9)    Assignment
and Subletting. This Lease or any interest           herein may not be
assigned by Tenant, voluntarily or involuntarily, by operation           of law or
otherwise, and all or any part of the Premises shall not be subleased           by Tenant
without the prior written consent of Landlord, which consent shall not           be
unreasonably withheld. A merger, consolidation, sale of substantially all of
          the assets or sale of a substantial amount of the stock of Tenant or a transfer
          of a substantial partnership interest of Tenant, shall constitute an assignment
          of this Lease for the purposes of this paragraph. Any consent to assignment or
          subletting given by Landlord shall not constitute a waiver of necessity for
such           consent to a subsequent assignment or subletting. Short term agreements
(written           or verbal) made by Tenant to others, excluding students for use of
space must be           covered by Tenant’s insurance or be required to have
insurance that lists           Aspen Bio Pharma, Inc. as additional loss payee. It is the
sole responsibility           of the Tenant to verify this insurance. Notwithstanding any
assignment or           sublease, Tenant shall remain fully liable under the terms and
conditions of           this Lease and shall not be released from performing any of the
terms, covenants           and conditions hereof including the Personal Guaranty, unless
released by           Landlord. Any assignee or subtenant (in addition to Tenant) shall
be personally           responsible for all payments, conditions, covenants and
agreements in this           Lease. Any assignment or subletting in violation of this
paragraph shall be null           and void.  

         
     (a)       
          TRANSFER OF LANDLORD’S INTEREST:  In the event of any sale or
          exchange of the Premises by Landlord and assignment by Landlord of this Lease,
          Landlord shall be and is hereby entirely freed and released of all liability
          under any and all of its covenants and obligations contained in or derived from
          this Lease arising out of any act, occurrence or omission relating to the
          Premises or this Lease occurring after the consummation of such sale or exchange
          and assignment, provided such purchaser or assignee shall expressly assume said
          covenants and obligations of Landlord. 

(10)     Utilities.  

         
     (a)       
          Service Connections. Landlord, at Landlord’s sole cost and expense,
          shall provide service connections for water, electricity and gas to the Premises
          as the same exists as of the Commencement Date of this Lease. Tenant shall
          promptly pay all charges incurred for any utility services used on or from the
          Premises, and any maintenance charges for utilities, and shall furnish all
          replacement electric light bulbs, tubes, and ballasts. In the event Tenant shall
          require service connection in addition to those existing on the Commencement
          Date of this Lease, Tenant, at Tenant’s sole cost and expense, may install
          or cause to be installed such service connections upon receiving Landlord’s
          prior written consent and subject to the provisions of this Lease. Unless caused
          by the gross negligence or willful misconduct of the Landlord, or the failure of
          Landlord to fulfill its obligation under this Lease, Landlord shall not be
          liable for any loss or damage caused by an interruption or failure of utility
          services serving the Premises. 

         
     (b)       
          Proration of Charges. In the event it is either necessary or desirable
          that only one bill be rendered for a utility serving the Building, including but
          not limited to, water, sewer, electricity or gas, Landlord shall pay said bill
          and then prorate such charges to all tenants in the Building, based upon
          Tenant’s Proportionate Share of the Building. In the event it becomes
          apparent to Landlord that any Tenant is using a disproportionate share of any
          utility, Landlord may, at Landlord sole discretion, adjust each Tenant’s
          share of said charges. 

         
     (c)       
          Utilities. The utilities (natural gas and electric) to the Premises are
          not separately metered. An estimate, based upon the Tenant’s current use
          and the increase in utility costs including the increase in the relative size of
          the leased space at the Property upon Tenant’s occupancy, will be agreed to
          by Landlord and Tenant within three months of Lease Commencement. The Tenant
          will reimburse Landlord upon receipt of an invoice for such utilities in
          addition to its obligation to pay Base Rental and Additional Rental. 

     (11)    
          Inspection of Premises. [Deleted as inapplicable] 

     (12)    
          Indemnity Provisions. Tenant and Landlord agree to
          exonerate, hold harmless, protect and indemnify each other from and against any
          and all losses, damages, claims, suits or actions, judgments and costs which may
          arise during the primary term of this Lease (or any extension thereof) for
          personal injury, loss of life or loss or damage to any property sustained in or
          about the Premises or the Building resulting from, or arising, directly or
          indirectly, out of the use or occupancy of the Premises; and from and against
          all costs, counsel fees, expenses and liabilities incurred in any such claims,
          the investigation thereof or the defense of any action or proceeding brought
          thereon; and from and against any judgments, orders, decrees or liens resulting
          from such matters and any fines levied by any authority for violation of any
          law, regulation or ordinance by virtue of the ownership and/or use of the
          Building and the Premises. Landlord shall not be liable for any loss or damage
          to persons or property resulting from fire, explosion, falling plaster, steam,
          gas, electricity, water or rain which may leak from any part of the Premises or
          from the pipes, appliances or plumbing works therein or from the roof, street or
          subsurface or from any other places resulting from dampness or any other cause
          whatsoever, except personal injury caused by or due to the gross negligence of
          Landlord. Landlord shall not be liable for interference with the gas and/or
          electrical service, heating/air conditioning, or for any defect, latent or
          otherwise, in the Premises. Tenant shall give prompt notice to Landlord in case
          of fire or other casualty or accidents in the Premises. Tenant shall not permit
          any mechanic’s or materialmen’s liens to be filed against the Premises
          and hereby indemnifies and holds Landlord harmless from and against any
          liability, damage, expense or cost which may be incurred by Landlord in
          connection with any mechanic’s or materialmen’s liens which may be
          filed against the Premises as a result of the provisions of this Lease. This
          indemnity shall specifically include attorneys’ fees and any costs incurred
          by Landlord to enforce this indemnity. 

(13)     Maintenance.  

         
     (a)       
          Landlord’s Obligations. Throughout the primary term of this Lease
          (and any extension thereof), Landlord, at Landlord’s sole cost and expense,
          shall maintain, repair and keep the Premises in good, substantial and sufficient
          conditions, repair and order, the foundations, bearing and exterior walls,
          flooring, subflooring, roof and all other structural parts of the Premises
          (“Structural Repairs”). Landlord’s liability hereunder shall be
          limited to the cost of such Structural Repairs. Provided, however, Landlord
          shall not be responsible for any Structural Repairs caused by reason of
          Tenant’s use and occupancy or by the negligence of Tenant. Landlord shall
          not be liable for any failure to maintain such Structural Repairs, unless
          Landlord fails to commence and diligently pursue such Structural Repairs within
          a reasonable time after receiving written notice from Tenant advising Landlord
          that such Structural Repairs are required hereunder and specifying such
          Structural Repairs. Landlord shall not be liable for any delay in performing any
          of Landlord’s stated obligations resulting from delays in insurance
          adjustments, or from labor problems, material shortage, or any other event
          beyond Landlord’s control. 

Page 3 

         
     (b)       
          Tenant’s Obligations. Tenant, at Tenant’s sole cost and
          expense, shall maintain, repair and keep the Premises in good, substantial and
          sufficient condition, repair and order, including but not limited to all plate
          glass, glass and show windows, doors, all connections with steam, water,
          electric, gas mains and sewers, air conditioning and air cooling systems,
          ventilating, heating apparatus (including unit heaters), electrical and lighting
          facilities and equipment, fixtures, interior walls, ceilings, and skylights
          located within the Premises. Landlord, at Landlord’s option, may require
          Tenant to enter into a preventative maintenance agreement in order to insure
          Tenant’s obligations hereunder. In the event Tenant fails to maintain the
          Premises or fails to commence the necessary repairs or replacements or
          diligently pursue the completion of the repairs or replacements after notified
          by landlord, Landlord, in addition to all of the remedies available under this
          Lease (and without waiving any other remedies) may make the repairs, the cost of
          which shall become due and payable as additional rental ten (10) calendar days
          after written notice to Tenant. Tenant shall not permit, commit or suffer waste,
          impairment or deterioration of the Premises or the Building, reasonable wear
          expected. . 

(14)     Common
Areas.  

         
     (a)       
          Use of Common Areas. Tenant shall have the nonexclusive right to use, in
          common with the other parties occupying the Building, the parking areas,
          driveways and alleys adjacent to the Building, common grounds, walkways, water
          closets, sprinklers, and other areas appurtenant to the Building in common use
          (“Common Areas”), subject to reasonable rules and regulations of
          Landlord (in Landlord’s sole discretion) may from time to time prescribe.
          Such reasonable regulations may include (but without limitation) the right to
          bill any Tenant for excessive use of or damage to the Common Areas and the right
          to close from time to time, if necessary, all or any portion of the Common Areas
          to such extent as may be legally sufficient, in the opinion of Landlord’s
          counsel, to prevent a dedication thereof or the accrual of rights of any party
          or of the public therein, or to close temporarily all or any portion of the
          Common Areas for such purposes. Landlord will not unreasonably close any common
          area that may cause damage to Tenant’s ability to conduct business. 

         
     (b)       
          Management of Common Areas. During the primary term of this Lease (and
          any extension thereof), Landlord shall operate, manage, and maintain the Common
          Areas so that they are clean and free from accumulations of debris, rubbish and
          garbage coming from outside the Building. The manner in which the Common Areas
          shall be so maintained and the expenditures of such maintenance shall be at the
          sole discretion of Landlord. Tenant shall be liable for Tenant’s
          Proportionate Share of the cost and expense of the care for the grounds around
          the Building, including but not limited to the mowing of grass, care of shrubs,
          general landscaping, snow removal, and maintenance of parking areas, striping,
          patching and repaving driveways and alleys. Tenant shall reimburse Landlord,
          upon demand, Tenant’s Proportionate Share of such costs and expenses. 

         
     (c)       
          Trash. Internally generated trash or rubbish will be handled according to
          Building Regulations. In the event Tenant fails to provide proper removal of
          such trash or rubbish or in the event Landlord determines, in Landlord’s
          sole discretion, that Tenant’s activities upon the Premises are generating
          a disproportionate share of trash or rubbish, Tenant shall reimburse Landlord,
          upon demand, for the amount of such costs and expenses if Landlord elects to
          remove such trash or rubbish. 

         
     (d)       
          Service Fee. Other than normal recurring services, any repairs or
          maintenance performed, as requested by Tenant, supervised, or coordinated by
          Landlord shall be subject to a service fee equal to ten percent (10%) of the
          total bill for such work performed. This service fee will be added to the
          vendor’s total invoice price prior to any Tenant prorations for said bill. 

     (15)    
          Occupational Safety and Health Act. Tenant shall fully
          comply with all federal, state and local codes, statutes, laws and ordinances
          (“Law”). Tenant shall be responsible to make any and all repairs and
          alterations to the structural and nonstructural components of the Premises
          (subject to the terms and provisions of this Lease) to any appurtenances
          situated upon the Premises that may be required of the Landlord as a result of
          the Law in effect at the time of mutual execution of this Lease or which
          hereafter shall be enacted. 

     (16)    
          ADA Compliance. 

         
     (a)       
          Disclosure. Tenant hereby acknowledges that the Premises and Tenant may
          be subject to the Americans With Disabilities Act (the “ADA”), a
          Federal law. Among other requirements of the ADA that could apply to the
          Premises, Title III of the ADA requires owners and tenants of “public
          accommodations” to remove barriers to allow access by disabled persons and
          provide auxiliary aids and services for hearing, vision or speech impaired
          persons by certain dates. All costs incurred by Tenant or Landlord during the
          primary term of this Lease (and any extension thereof) to ensure Tenant’s
          compliance with the ADA, including necessary alterations in or about the
          Premises or modifications to the access to the building and the Premises, shall
          be at Tenant’s sole cost and expense unless Landlord has agreed, in
          writing, to pay for a portion of said costs. 

         
     (b)       
          Investigation. Tenant further acknowledges that, prior to executing this
          Lease, Tenant may investigate the ADA and the regulations thereunder to
          determine if the ADA law and regulations would apply to Tenant and/or to the
          Premises in which Tenant is interested in occupying. Tenant shall be
          responsible, at Tenant’s expense, for conducting its own independent
          investigation of all ADA issues prior to the Commencement Date of this Lease and
          during the primary term of this Lease (and any extension thereof). 

     (17)    
          Hazardous Materials. Tenant shall not (either with or
          without negligence) cause the escape, disposal or release of any biologically or
          chemically active or other hazardous substances or materials (“Hazardous
          Materials”). Tenant shall not allow the storage or use of such Hazardous
          Materials in any manner not sanctioned by law or by the highest standards
          prevailing in the industry for the storage and use of Hazardous Materials, nor
          allow to be brought into the Premises any Hazardous Materials except to use in
          the ordinary course of Tenant’s business, and then only after written
          notice is given to Landlord of the identity of such Hazardous Materials. Without
          limitation, Hazardous Materials shall include those described in the
          Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
          amended, 42 USC Section 9601 et seq., the Resource Conservation and Recovery
          Act, as amended, 42 USC Section 6901 et seq., and applicable state or local laws
          and the regulations adopted under these acts. If any lender or governmental
          agency shall ever require testing to ascertain whether or not there has been any
          release of Hazardous Materials, then the reasonable cost of testing and
          resulting cleanup thereof shall be reimbursed by Tenant to Landlord upon demand
          as additional charges if such requirement applies to the Premises, provided that
          such testing proves that Tenant released such Hazardous Materials on the
          Premises. In addition, Tenant shall execute affidavits, representations and the
          like from time to time at Landlord’s request concerning Tenant’s best
          knowledge and belief regarding the presence of Hazardous Materials on the
          Premises. In all events, Tenant shall indemnify Landlord in the manner elsewhere
          provided in this Lease from any release of Hazardous Materials on the Premises
          occurring while Tenant is in possession, or elsewhere if caused by Tenant or
          persons acting under Tenant. 

Page 4 

     (18)    
          Alterations to Premises. Tenant shall have the right, at
          Tenant’s sole cost and expense, to make changes or alterations to the
          Building or the Premises; provided, however, that in all cases any such changes
          or alterations shall be made subject to the following conditions, which Tenant
          agrees to observe and perform: 

         
     (a)       
          No Structural Changes. No change or alteration shall at any time be made
          which shall impair the structural soundness or diminish the value of any
          improvements on the Premises or disturb or interfere with the quiet enjoyment of
          any other tenants. 

         
     (b)       
          Consent of Landlord. No change or alteration shall be made involving an
          expenditure in excess of $5,000.00 without the prior written consent of
          Landlord. 

         
     (c)       
          Consent of Lender. Before commencing any aforesaid change or alteration,
          if required, Tenant shall procure and deliver to Landlord written consent of the
          holder or holders of any mortgage or deed of trust (“Mortgage”)
          covering the Premises, if required by said encumbrance or encumbrances. 

         
     (d)       
          Permits. No change or alteration shall be undertaken until Tenant shall
          have procured and paid for all required municipal and other governmental permits
          and authorizations of the various municipal departments and governmental
          subdivisions having jurisdiction. All plans and specifications relating to any
          change or alteration shall be submitted to Landlord for Landlord’s
          approval, which shall not be unreasonably withheld. 

         
     (e)       
          Governmental Compliance. All work done in connection with any change or
          alteration shall be done in a good and workmanlike manner and in compliance with
          all building and zoning laws, and with other laws, ordinances, orders, rules,
          regulations and requirements of all federal, state and municipal governments and
          the appropriate departments, commissions, boards and offices thereof. 

         
     (f)       
          Workmen’s Compensation Insurance. At all times when any change or
          alteration is in progress, Tenant shall be responsible to verify or maintain, at
          Tenant’s sole cost and expense, Workmen’s Compensation insurance in
          accordance with the law or laws now or hereafter enacted governing all persons
          employed in connection with the change or alteration and general liability
          insurance for the mutual benefit of Landlord and Tenant, expressly covering the
          additional hazards due to the change or alteration. 

         
     (g)       
          Security Against Liens. Following commencement of the lease, prior to the
          construction of any improvements, the repair or restoration of any improvements,
          or any work to be done upon the Premises which shall exceed $5,000.00, Tenant
          shall furnish to Landlord a bond or insurance protecting against mechanic’s
          and materialmen’s liens in an amount equal to the work which is to be
          performed at the Premises, together with a performance and completion bond in an
          amount equal to the proposed cost of any improvements and labor. Landlord
          retains the right at any time and from time to time to enter upon the Premises
          in order to inspect the progress of any alterations being made by Tenant and to
          post any signs or notices disclaiming Landlord’s responsibility or
          liability for the payment of any mechanic’s or materialmen’s fees, or
          anyone furnishing labor or services to the Premises. Tenant shall not permit any
          party to file any lien or claim against Landlord or Landlord’s interest in
          the Premises on account of any such improvement or alteration for work done or
          supplies furnished at the insistence of Tenant. In the event a lien or claim is
          filed against the Premises, Tenant shall immediately cure and pay the amount of
          such lien or claim (including any costs) or in good faith diligently pursue the
          defense of any such lien or claim provided that Tenant shall first post with
          Landlord adequate security (in Landlord’s sole judgment) covering one
          hundred twenty-five percent (125%) of the amount of such lien or claim, unless
          landlord consents in writing otherwise. 

     (19)    
          Condemnation. 

         
     (a)       
          Complete Taking. If, during the primary term of this Lease (or any
          extension thereof), substantially all of the Premises shall be taken as a result
          of the exercise of the power of eminent domain, this Lease shall terminate as of
          the date of vesting of title of the Premises or delivery of possession,
          whichever shall first occur, pursuant to such proceeding. For the purpose of
          this paragraph, “substantially all of the Premises” shall be deemed to
          have been taken if a taking under any such proceeding shall involve such an
          area, whether the area be improved with building or be utilized for a parking
          area or other use, that Tenant cannot reasonably operate in the remainder of the
          Premises the business being conducted on the Premises at the time of such
          proceeding. 

         
     (b)       
          Partial Taking. If, during the primary term of this Lease (or any
          extension thereof), less than substantially all of the Premises (deemed to be
          greater than 25% of Premisis) shall be taken in any such proceeding, this Lease
          shall not terminate. The rent thereafter due and payable by Tenant shall be
          reduced in such proportion as the nature, value and extent of the part so taken
          bears to the whole of the Premises. Landlord shall, from the proceeds of the
          condemnation, restore the Premises for the use of Tenant. 

         
     (c)       
          Award. Any award granted for either partial or complete taking regarding
          the Premises shall be the property of Landlord. Tenant shall be entitled to such
          portion of the award attributable to leasehold improvements or other property of
          Tenant taken by the condemning authority. Matters which cannot be resolved
          between the parties shall be submitted to arbitration pursuant to the paragraphs
          immediately following. 

         
     (d)       
          Arbitration. If Landlord and Tenant are unable to agree as to any
          provision contained in this paragraph (19), such question or questions shall be
          submitted to arbitration. Such arbitration shall be submitted to one arbitrator
          mutually selected, if possible. If the parties are unable to agree upon one such
          arbitrator within fifteen (15) calendar days after the taking, the arbitration
          shall be by three arbitrators to be selected as set forth below. The arbitration
          shall be in accordance with the commercial arbitration rules of the American
          Arbitration Association then in effect or in accordance with the commercial
          arbitration rules of a similar organization, if the American Arbitration
          Association is no longer in existence. 

        One
arbitrator shall be selected by either party hereto and written notice of such appointment
shall be given to the other party hereto. Within fifteen (15) calendar days after the
receipt of such notice of appointment, the other party hereto shall appoint one arbitrator
and give written notice of such appointment to the party hereto first appointing one
arbitrator. The two arbitrators so appointed shall, within fifteen (15) calendar days
after the appointment of the second arbitrator, appoint a third arbitrator, who shall
serve as chairman of the board of arbitration. A hearing shall be held on the questions
and controversies to be arbitrated as soon as practicable but no later than thirty (30)
calendar days after the full board of arbitrators has been selected, and upon written
notice thereof given by the chairman of said board to both parties hereto. At such
hearing, both parties shall have the right to be present to be heard. After such hearing,
the board shall render its written decision on the arbitrated questions and controversies. 

        The
decision of one arbitrator, if mutually selected, or the decision of a majority of the
three arbitrators, if it is necessary to employ same, shall be binding and conclusive upon
the parties hereto. All fees and expenses of arbitration (exclusive of attorneys’
fees) shall be shared equally by the parties hereto. 

        In
the event either party hereto, after receipt of written notice of the appointment of the
first arbitrator by the other party hereto, shall fail or refuse to appoint the second
arbitrator or to give written notice of such appointment within the period of fifteen (15)
calendar days as aforesaid, such appointment shall be made for the defaulting party, on
the application of the other party, by a judge of the court in and for the county in which
the Premises is located and which court has unlimited monetary jurisdiction in civil
cases. Likewise, if the first two arbitrators selected and appointed in accordance with
this provision shall fail to agree upon and appoint said third arbitrator within fifteen
(15) calendar days after the second arbitrator shall have been appointed by a party
hereto, or by said judge for said party, said third arbitrator shall be named and
appointed by another judge of said court having jurisdiction as stated above on the
application of either party hereto; provided, however, that if the second arbitrator be
appointed by a judge of said court, the appointment of said third arbitrator shall not be
made by the same judge. 

Page 5 

     (20)    
          Destruction of Premises. If any of the Premises or Building shall
          be destroyed or damaged (“Damage”) in whole or in part by fire or as a
          result of, directly or indirectly, war or act of God or occurring for any reason
          whatsoever, Landlord shall promptly repair, replace and rebuild the same
          (“Restoration”) at least to the extent of the value and as nearly as
          practicable to the character of the Building or Premises existing immediately
          prior to the Damage. There shall be no rental abatement. In the event the
          Premises are encumbered by a Mortgage and the holder of the Mortgage requires
          that all or a portion of the proceeds of the insurance be paid to said holder,
          then Landlord may declare this Lease null and void and all parties relieved from
          further obligation hereunder from the date of said Damage. If the Building or
          Premises are Damaged from any cause whatsoever during the last eighteen- (18)
          month period of this Lease, Landlord may declare this Lease null and void and
          all parties shall be relieved from further obligation hereunder from the date of
          said Damage, provided that all insurance proceeds shall become the property of
          Landlord. However, if an option to extend the term of this Lease is granted
          herein, [if Tenant exercises said option within twenty (20) calendar days from
          the date of said Damage and if said option is for a period of time longer than
          eighteen (18) months], then the Restoration of the building or improvements
          shall be in conformance with the above and this Lease shall remain in full force
          and effect. All insurance proceeds paid as a result of a casualty shall be the
          sole and exclusive property of Landlord. 

     (21)    
          Default Provisions. The occurrence of any one or more of
          the following events shall constitute a default and breach of this Lease by
          Tenant: 

         
     (a)       
          Failure to Pay Rent. Tenant failing to pay the rental herein reserved or
          failing to make any other payments required to be made by Tenant when due, where
          such failure shall continue for a period of five (5) calendar days following
          written notice from Landlord to Tenant. 

         
     (b)       
          Failure to Keep Covenants. Tenant failing to perform or keep any of the
          other terms, covenants and conditions herein contained for which Tenant is
          responsible, and such failure continuing and not being cured for a period of
          thirty (30) calendar days after written notice or if such default is a default
          which cannot be cured within a 15-calendar-day period, then Tenant’s
          failing to commence to correct the same within said 15-calendar-day period and
          thereafter failing to prosecute the same to completion with reasonable
          diligence. 

         
     (c)       
          Abandonment. Tenant abandoning the Premises. 

         
     (d)       
          Bankruptcy. Tenant or guarantor being adjudicated a bankrupt or insolvent
          or Tenant filing in any court a petition for bankruptcy or for reorganization or
          for the adoption of an arrangement under the Bankruptcy Act (as now or in the
          future amended) or the filing of an involuntary bankruptcy against Tenant
          [unless said involuntary bankruptcy is terminated within thirty (30) calendar
          days from the date of said filing], or Tenant filing in any court for the
          appointment of a receiver or trustee of all or a portion of Tenant’s
          property or there being appointed a receiver or trustee for all or a portion of
          Tenant’s property, unless said receiver or trustee is terminated within
          thirty (30) calendar days from the date of said appointment. 

         
     (e)       
          Assignment for Benefit of Creditors. Tenant making any general assignment
          or general arrangement of Tenant’s property for the benefit of
          Tenant’s creditors. 

(22)     Remedies.
In the event of an occurrence of default as set                forth above, Landlord
shall have the right to:  

    
     (a)        Terminate
Lease.                Terminate this Lease and end the term hereof by giving to
Tenant written notice                of  such termination, in which event Landlord shall
be entitled to recover from Tenant at the time of such termination the present value of
the excess, if any, of the amount of rent reserved in this Lease for the then balance of
the term hereof over the then reasonable rental value of the Premises for the same
period. The present value shall be determined by discounting all future excess rent
amounts at a rate of eight percent (8%) per annum. It is understood and agreed that the
“reasonable rental value” shall be the amount of rental which Landlord can
obtain as rent for the remaining balance of the initial term or renewal term, whichever
is applicable; or 

         
     (b)       
          Sue Monthly for Rents. Without resuming possession of the Premises or
          terminating this Lease to sue monthly for and recover all rents, other required
          payments due under this Lease, and other sums including damages and legal fees
          at any time and from time to time accruing hereunder; or 

         
     (c)       
          Repossess Premises. Upon written notice to all interested parties,
          reenter and take possession of the Premises or any part thereof and repossess
          the same as of Landlord’s former estate and expel Tenant and those claiming
          through or under Tenant and remove the effects of either or both (forcibly, if
          necessary) without being deemed guilty in any manner of trespass and without
          prejudice to any remedies for rent delinquencies or preceding lease defaults, in
          which event Landlord may from time to time without terminating this Lease relet
          the Premises or any part thereof for such term or terms and at such rental or
          rentals and upon such other terms and conditions as Landlord may deem advisable,
          with the right to make alterations and repairs to the Premises, and such reentry
          or taking of possession of the Premises by Landlord shall not be construed as an
          election on Landlord’s part to terminate this Lease unless a written notice
          of termination is given to Tenant or unless the termination thereof is decreed
          by a court of competent jurisdiction. In the event of Landlord’s election
          to proceed under this provision, then such repossession shall not relieve Tenant
          of Tenant’s obligation and liability under this Lease, all of which shall
          survive such repossession, and Tenant shall pay to Landlord as current
          liquidated damages the basic rental and additional rental and other sums
          hereinabove provided which would be payable hereunder if such repossession had
          not occurred, less the net proceeds (if any) of any reletting of the Premises
          after deducting all of Landlord’s expenses in connection with such
          reletting, including but without limitation all repossession costs, brokerage
          commissions, legal expenses, attorneys’ fees, expenses of employees,
          alteration costs, and expenses of preparation of such reletting. Tenant shall
          pay such current damages to Landlord on the days on which the basic rental would
          have been payable hereunder if possession had not been retaken, and Landlord
          shall be entitled to receive the same from Tenant on each such day. 

         
     (d)       
          Security in Personal Property. As additional security for Tenant’s
          performance of Tenant’s obligations under this Lease, Tenant hereby grants
          to Landlord a security interest in and to all improvements, equipment and other
          personal property of Tenant situated in the Premises. If Tenant is in default
          under this Lease, such personal property shall not be removed from the Premises
          (except to the extent that such property is replaced by an item of equal or
          greater value) without the prior written consent of Landlord. In the event of a
          default, the parties agree that Landlord may exercise any rights available to
          Landlord under the Uniform Commercial Code adopted in the State of Colorado,
          including but not limited to the right to sell the personal property for the
          best price that can be obtained at a public or private sale and, from the
          proceeds of such sale pay all sums due Landlord, plus reimburse Landlord for all
          costs and expenses, including reasonable attorneys’ fees, arising out of
          the execution of the provisions of this paragraph. This remedy shall not limit
          any other remedy that may be available to Landlord under this Lease or in law or
          in equity. Tenant acknowledges Landlord’s right and intention to execute a
          UCC-1 financing statement and perfect such filing as Landlord deems appropriate.
          Landlord agrees to subordinate upon request, liens on Tenant’s personal
          property as may be required by a commercial lending institution. 

         
     (e)       
          Personal Guarantee Remedy. Landlord reserves the right under all defaults to
          enforce the personal guarantee provisions. 

Page 6 

     (23)    
          Default by Landlord. Landlord shall not be in default
          unless Landlord fails to perform obligations required of Landlord within a
          reasonable time, but in no event later than thirty (30) calendar days after
          written notice by Tenant to Landlord and to the holder of any first mortgage or
          deed of trust covering the Premises whose name and address shall have
          theretofore been furnished to Tenant in writing, specifying wherein Landlord has
          failed to perform such obligation; provided, however, that if the nature of
          Landlord’s obligation is such that more than thirty (30) calendar days are
          required for performance, then Landlord shall not be in default if Landlord
          commences performance within such thirty (30) calendar day period and thereafter
          diligently prosecutes the same to completion. 

     (24)    
          Late Charges. Tenant hereby acknowledges that late payment
          by Tenant to Landlord of rent, of additional rent, or other sums due hereunder
          will cause Landlord to incur costs not contemplated by this Lease, the exact
          amount of which will be extremely difficult to ascertain. Such costs include,
          but are not limited to, processing and accounting charges, and late charges
          which may be imposed on Landlord by the terms of any mortgage or trust deed
          covering the Premises. Accordingly, if any installment of rent, additional rent,
          or any other sums due from Tenant shall not be received by Landlord or
          Landlord’s designee within five (5) calendar days after such amount shall
          be due, then, without any requirement for notice to Tenant, Tenant shall pay to
          Landlord a late charge equal to two percent (2%) of such overdue amount. The
          parties hereby agree that such late charge represents a fair and reasonable
          estimate of the costs Landlord will incur by reason of late payment by Tenant.
          Acceptance of such late charge by Landlord shall in no event constitute a waiver
          of Tenant’s default with respect to such overdue amount, nor prevent
          Landlord from exercising any of the other rights and remedies granted hereunder.
          In the event that a late charge is payable hereunder, whether or not collected,
          for three (3) consecutive installments of any of the aforesaid monetary
          obligations of Tenant, then the rent shall automatically become due and payable
          quarterly in advance, rather than monthly, notwithstanding paragraph (3) or any
          other provision of this Lease to the contrary. 

     (25)    
          Holdover. Notwithstanding any rule or law to the contrary,
          in the event Tenant remains in possession of the Premises or any part thereof
          subsequent to the expiration of the term hereof and such holding over shall be
          with the consent of Landlord, such possession and occupancy shall conclusively
          be deemed to be a tenancy from month-to-month only, at a rental of 150% of the
          existing rate at the end of the term hereof and, further, such possession shall
          be subject to all of the other terms and conditions (except any option to renew
          or option to purchase) contained in this Lease. 

     (26)    
          Subordination and Estoppel Letter. This Lease is subject
          and subordinate to all Mortgages which now or hereafter may affect the Premises,
          and Tenant shall execute and deliver upon demand of Landlord any and all
          instruments desired by Landlord subordinating this Lease in the manner required
          by Landlord to any new or existing Mortgage. Should Tenant fail to execute and
          deliver any such documents or instruments within ten (10) calendar days after
          receipt thereof, Tenant irrevocably constitutes and appoints Landlord as
          Tenant’s special attorney-in-fact for the purpose solely of executing and
          delivering any such documents or instruments pursuant to this paragraph. Any
          holder of a Mortgage may rely upon the terms and conditions of this paragraph.
          Further, Tenant shall at any time and from time to time, upon not less than ten
          (10) calendar days’ prior written notice from Landlord, execute,
          acknowledge and deliver to Landlord a statement in writing certifying that this
          Lease is unmodified and in full force and effect (or, if modified, stating the
          nature of such modification and certifying that this Lease as so modified is in
          full force and effect) and the dates to which rental and other charges are paid
          in advance, if any, and acknowledging that there are not, to Tenant’s
          knowledge, any uncured defaults on the part of Landlord hereunder, or specifying
          such defaults, if any are claimed. Tenant shall attorn to any buyer at any
          foreclosure sale or to any grantee or transferee designated in any deed given in
          lieu of foreclosure. Any subordination agreement to be executed by Tenant shall
          provide that as long as Tenant is current and not in default, the holder of the
          Mortgage shall not disturb the tenancy of Tenant. 

     (27)    
          Surrender of Premises. Upon the Termination Date of this
          Lease, Tenant shall peaceably and quietly leave and surrender the Premises in as
          good condition as existed on the Commencement Date, ordinary wear and tear
          excepted. Tenant shall surrender and deliver the Premises broom clean and free
          of Tenant’s property. Provided Tenant is not in default, Tenant shall have
          the right to remove all of Tenant’s fixtures, equipment, machinery and
          other personal property, provided that upon such removal the Premises are
          delivered in the same condition as existed at the time of the Commencement Date.
          Further, in the event Tenant does not remove any of Tenant’s own fixtures,
          equipment or personal property or any additions or alterations made to the
          Premises during the primary term of this Lease (and any extension thereof),
          Landlord may require Tenant to remove any such improvements, alterations,
          fixtures and equipment and restore the Premises to the condition as existed on
          the Commencement Date as outlined in Exhibit B or retain the same. 

     (28)    
          Notices. All notices, demands and requests required to be
          given by either party to the other shall be in writing and shall either be hand
          delivered, facsimile transmitted, or sent by certified or registered mail,
          return receipt requested, postage prepaid, addressed to the parties at the
          addresses set forth below or at such other addresses as the parties may
          designate in writing delivered pursuant to this provision. Any notice when given
          as provided herein shall be deemed to have been delivered on the date personally
          served or faxed or two (2) calendar days subsequent to the date that said notice
          was deposited with the United States Postal Service. 

			
	Landlord:

         

         

         

         

  Tenant:

         

         

         

         
		AspenBio Pharma, Inc.

Attention: Jeff McGonegal

1585 South Perry Street

Castle Rock, CO  80104

Fax: 303/ 798-8332

Mr. Robert Baits

d/b/a Omega Gymnastics Training Center

1585 South Perry Street

North Entrance

Castle Rock, CO  80104

     (29)    
          Time of the Essence. Time is of the essence hereof. 

Page 7 

     (30)    
          Quiet Enjoyment/Peaceful Possession. Upon Tenant’s
          paying the rental herein reserved and upon performing all of the terms and
          conditions of this Lease on Tenant’s part to be performed, Tenant shall at
          all times during the primary term of this Lease (and any extension thereof)
          peacefully and quietly have, hold and enjoy the Premises. 

     (31)    
          Signs. Tenant shall not place or permit to be placed in or
          upon the Premises or Building, where visible from outside the Premises or any
          part of the Building, any signs, notices, drapes, shutters, blinds or displays
          of any type without the prior written consent of Landlord. Landlord reserves the
          right, in Landlord’s sole discretion, to place and locate on the roof,
          exterior of the Building, and in any area of the Building not leased to Tenant
          such signs, notices, displays and similar items as Landlord deems appropriate in
          the proper operation of the Building. 

     (32)    
          Miscellaneous. 

         
     (a)       
          Choice of Law. This Lease is entered into in the State of Colorado and
          shall be construed in accordance with the laws thereof. 

         
     (b)       
          Headings and Captions. The headings and captions used in this Lease are
          for the reference only and shall not be used in the construction or
          interpretation of this Lease. 

         
     (c)       
          Inurement. The covenants and agreements contained herein shall be binding
          upon and inure to the benefit of the parties hereto, their heirs, personal
          representatives, administrators, successors and assigns. 

         
     (d)       
          Construction of Terms. Words of any gender used in this Lease shall be
          held to include any other gender, and words in the singular shall be held to
          include the plural, as the identity of Landlord or Tenant requires. 

         
     (e)       
          Entire Agreement. This Lease together with any exhibits attached hereto
          constitute the entire agreement between Landlord and Tenant relative to the
          Premises and may be altered, amended or revoked only by an instrument in writing
          signed by both Landlord and Tenant. The parties agree that all prior or
          contemporaneous oral agreements between and among themselves and their agents or
          representatives relative to the leasing of the Premises are merged in or revoked
          by this Lease. 

         
     (f)       
          Rules and Regulations. Landlord may adopt rules and regulations from time
          to time for the Building and may amend such rules and regulations, in
          Landlord’s sole discretion, without prior notice to Tenant. 

     (33)    
          No Waiver. No waiver by Landlord of any provisions hereof
          shall be deemed a waiver of any other provision hereof or of any subsequent
          breach by Tenant of the same or any other provision. Landlord’s consent to
          or approval of any act shall not be deemed to render unnecessary the obtaining
          of Landlord’s consent to or approval of any subsequent act by Tenant. The
          acceptance of rental hereunder by Landlord shall not be a waiver of any
          preceding breach by Tenant of any provision hereof, other than the failure of
          Tenant to pay the particular rental so accepted, regardless of Landlord’s
          knowledge of such preceding breach at the time of acceptance of such rent. 

     (34)    
          Attorneys’ Fees. In case suit shall be brought to
          enforce any provisions of this Lease, the prevailing party shall be awarded (in
          addition to the relief granted) all reasonable attorneys’ fees and costs
          resulting from such litigation. 

     (35)    
          Interest on Past-Due Obligations. Any amount due to
          Landlord not paid when due shall bear interest at the rate of two percent (2%)
          per month from the date due; provided, however, that any such payment of
          interest shall not excuse or correct any default by Tenant under this Lease. 

     (36)    
          Memorandum of Lease. Either party, upon request from the
          other party, shall execute in recordable form a short form Memorandum of Lease,
          which Memorandum of Lease shall contain only the names of the parties, the
          Commencement Date and Termination Date of this Lease (and any options which may
          be granted hereunder), and the legal description of the Premises. 

     (37)    
          Legal and/or Other Counsel. Tenant and Landlord acknowledge
          that either the Leasing Broker or the Listing Broker has advised the parties
          that this document has important legal consequences and that Tenant and Landlord
          have consulted or have had adequate opportunity to consult legal, tax or other
          counsel in connection with the execution of this Lease, zoning of the Premises,
          tax implications, and all other aspects relative to the transaction contemplated
          hereby. 

     (38)    
          Severability. If any sentence, paragraph or section of this
          Lease is held to be illegal or invalid, this shall not affect in any manner
          those other portions of the Lease not illegal or invalid and this Lease shall
          continue in full force and effect as to those provisions. 

     (39)    
          Facsimile Transmittals. The parties agree that a facsimile
          transmittal of this Lease shall be considered as an originally executed document
          and shall be binding upon the parties hereto. The parties further agree that the
          exact, originally executed Lease which was transmitted by facsimile shall be
          delivered to the appropriate party via U.S. Mail, messenger, or other acceptable
          delivery service within seven (7) calendar days from the date of said facsimile
          transmittal. 

     (40)    
          Additional Provisions. 

         
     (a)       
          Personal Guaranty. The attached Personal Guaranty as Exhibit
          “A” is incorporated herein by this reference. 

	 	(b) 	Premises
Improvements. The Tenant shall have the right to complete the           following
improvements to the Premises:
Demise the warehouse portion of the Premises
         
  Construct 2 restrooms           
 Demise entry area and provide 3 offices with
carpet and paint
  Provide HVAC to office area  
       Architectural, Engineering and
Permitting associated with the above.  

Page 8 

	 	
Landlord
and Tenant shall cooperate to reach agreement as soon as possible on a final Premises
Plan outlining the above requested improvements that will be made in the
Premises. Said final Premises Plan will be attached hereto as Exhibit “B”.
Landlord will provide to Tenant an Improvement allowance of $120,000
towards the direct out of pocket costs of these improvements, including all costs
associated with the architectural and engineering drawings for the Premises Plan.
The Premises Improvement allowance is considered in determining the Minimum
Rental Rate outlined in Paragraph 3. In the event the total cost to complete the
Tenant Improvements and architectural/engineering costs are less than $120,000, the
Tenant may apply the remaining allowance monies to making other improvements
to the Premises, with Landlord’s written approval of said improvements. Further,
Tenant agrees to use a Contractor that is approved by Landlord to complete the
improvements. Landlord agrees to provide up to $10,000.00 as “Additional Tenant
Improvement Allowance” which Tenant at its discretion may choose to use or not use,
in addition to the Tenant Improvement Allowance outlined above, such amount to be payable
monthly as Additional Rent, in addition to the Base Rent and amortized over the Primary
Lease Term at nine percent (9.0%) interest per annum (the “Additional Allowance”). 

	 	
Further,
the Tenant shall have the right to, conditional upon the Landlord’s approval of the
Contractor to complete the work, will grant the Tenant permission to saw-cut and remove
the concrete as agreed to in writing by Landlord and Tenant. The cost for this work will
be the sole responsibility of the Tenant. When the Tenant vacates the Premises, the
underlying soil must be compacted and the concrete repaired and returned to its original
quality at Tenant’s sole cost and expense. 

    
     (d)        Renewal
Option. The Tenant shall be granted the right to renew the lease           for one
period of three (3) years at the then current market rate with 180 days           written
notice to Landlord of Tenant’s desire to renew said Lease.  

    
     (e)        Landlord’s
Access to Leased Space. Landlord shall at all times be           provided with a key
and any access codes to tenant’s space for purpose of           accessing utility
panels and rooms. Landlord shall be responsible for any damage           or loss
attributable to such entry.  

     (41)    
          Acceptance and Counterparts. This Lease shall terminate
          unless accepted in writing by all parties, as evidenced by their signatures
          below, on or before    November 15,
          2006                  (“Acceptance
          Deadline”). A copy of this document may be executed by each party,
          separately, and when each party has executed a copy thereof, such copies taken
          together shall be deemed to be a full and complete Lease between the parties. 

        IN
WITNESS WHEREOF, the parties have executed this Lease Agreement the day and year first
written above. 

		
	Mr. Robert Baits 

Tenant 

/s/ Robert Baits 

                             

Date of Tenant's Signature:  November 8, 2006 
	ASPENBIO PHARMA, INC.

Landlord

By /s/ Jeffrey McGonegal

Date of Landlord's Signature:   November 8, 2006

END OF LEASE 

Broker Acknowledgments. The
undersigned Broker(s) acknowledges receipt of the Security Deposit specified in paragraph
(4) and agrees to transfer said Security Deposit to Landlord upon mutual execution of this
Lease. 

	Broker Relationship. 	
The Listing Broker is  |X|   Landlord's Agent   |_|   a Transaction-Broker in
this transaction.
The Leasing Broker is  |X|  Tenant's Agent   |_|   Landlord's Agent |_| a
Transaction-Broker in this transaction. 

Broker Compensation Disclosure.
 The
Listing Broker is to be paid by:  |_| Tenant  |X| Landlord  |_| Other___________________

The Leasing Broker is to be paid by:  |_| Tenant  |_|
Landlord  |X| Listing Broker  |_| Other_____________________  

			
	Leasing Brokerage Firm's Name:

                              

                         Date:

                              

                              

                              

                      Address:

                              

                 Telephone No:

                              

                       Fax No:

                              
		METRO BROKERS – Cox \ McCurdy & Associates, Inc.

_______________________________________

 November 8, 2006

_______________________________________

\s\ Ben Cox

_______________________________________

                                             Broker

_______________________________________

_______________________________________

_______________________________________

Page 9 

			
	Listing Brokerage Firm's Name:

                              

                         Date:

                              

                              

                              

                              

                              

                      Address:

                              

                              

                 Telephone No:

                              

                       Fax No:

                              
		FULLER REAL ESTATE

_______________________________________

    November 8, 2006

_______________________________________

    /s/ Craig E. Myles

_______________________________________

    Craig E. Myles                                      Broker

    /s/ Tyler Smith 

_______________________________________

    Tyler Smith                                                Broker

1515 Arapahoe Street, Suite 1200

Denver, CO  80202

_______________________________________

(303) 292-3700

_______________________________________

(303) 534-8270

_______________________________________

Page 10

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