MSI LEASE MOUNTAIN VIEW CORPORATE CENTER OFFICE LEASE

 

 

                                                                   EXHIBIT 10.29

 

              MSI LEASE MOUNTAIN VIEW CORPORATE CENTER OFFICE LEASE

 

                  THIS LEASE, made and entered this 15th day of March,   2002, by

and   between   W9/MTN   REAL   ESTATE   LIMITED   PARTNERSHIP,    a   Delaware   limited

partnership   (hereinafter   referred   to   as   "LANDLORD"),   and   MANAGED   STORAGE

INTERNATIONAL, a Delaware corporation (hereinafter referred to as "TENANT").

 

                              W I T N E S S E T H:

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                  For and in   consideration   of the rental and of the   covenants

and   agreements   hereinafter   set   forth to be kept   and   performed   by   Tenant,

Landlord   hereby   leases to Tenant and Tenant   hereby   leases from   Landlord the

leased premises herein   described for the term, at the rental and subject to and

upon all of the terms, covenants and agreements hereinafter set forth.

 

                  1.        LEASED PREMISES.

 

                   1.1       GRANT   OF   LEASED   PREMISES;   THE   BUILDING;   AND THE

PROJECT.   Landlord hereby leases to Tenant and Tenant leases from Landlord those

certain premises set forth in Section 6.1 of the Summary   (hereinafter   referred

to as the "LEASED   PREMISES")   which Leased Premises are located in the building

described   in   Section   6.2   of   the   Summary   (hereinafter   referred   to as the

"BUILDING").   The Building is part of an office   project known as "Mountain View

Corporate Center" which contains additional office buildings located adjacent to

the   Building at 12202   Airport   Way and 12101   Airport   Way   (collectively   the

"ADJACENT BUILDINGS"). The term "PROJECT," as used in this Lease, shall mean (i)

the Building,   (ii) the Adjacent Buildings,   (iii) any outside plaza areas, land

and other improvements surrounding the Building and the Adjacent Buildings, (iv)

the   Common   Areas,   as   defined   below   in   Section   14.1,   (v)   at   Landlord's

discretion, any additional real property, areas, buildings or other improvements

added   thereto   pursuant   to the terms of Section 1.4 of this Lease and (vi) the

land upon which any of the   foregoing are situated   (the "REAL   PROPERTY").   The

legal   description   of land   comprising   the Real   Property   is set forth in the

attached   EXHIBIT A. A floor plan   showing   the size and   location of the Leased

Premises   within the Building is set forth in the attached   EXHIBIT B.   Tenant's

use and occupancy of the Leased   Premises   shall include the use, in common with

others, of the Common Areas as hereinafter   described,   but excepting   therefrom

and reserving unto Landlord the exterior faces of all exterior   walls,   the roof

and the   right to   install,   use and   maintain   where   necessary   in the   Leased

Premises all pipes,   ductwork,   conduits and utility   lines through hung ceiling

space,   partitions,   beneath   the floor or   through   other   parts of the   Leased

Premises;   provided such   installation,   use and maintenance do not unreasonably

interfere   with the use and   occupancy   of the   Leased   Premises   by   Tenant   or

diminish Tenant's access to the Leased Premises.   Landlord reserves the right to

effect such other   tenancies   in the   Project as Landlord   may elect in its sole

business judgment.

 

                  1.2        RENTABLE   AREA.   The square feet of Rentable Area for

the   Leased   Premises   are   approximately   as set   forth in   Section   6.1 of the

Summary. For purposes hereof, the "RENTABLE AREA" of the Leased Premises and the

Building   shall be   calculated by Landlord   pursuant to the Standard   Method for

Measuring Floor Area in Office Buildings,   ANSI Z65.1-1996 ("BOMA"), as modified

for the Building pursuant to Landlord's   standard rentable area measurements for

the   Building,   to include,   among other   calculations,   a portion of the common

areas   and   service   areas of the   Building.   The   Rentable   Area of the   Leased

Premises   and the   Building   are   subject to   verification   from time to time by

Landlord's   planner/designer   and such verification   shall be made in accordance

with the   provisions   of this Section 1.2.   Tenant's   architect may consult with

Landlord's planner/designer regarding such verification, except to the extent it

relates   to   the   Rentable   Area   of   the   Building;    provided,    however,   the

determination   of Landlord's   planner/designer   shall be conclusive   and binding

upon the parties. In the event that Landlord's   planner/designer determines that

the   Rentable   Area shall be   different   from that set forth in this Lease,   all

amounts,   percentages   and figures   appearing or referred to in this Lease based

upon such incorrect Rentable Area amount   (including,   without   limitation,   the

amount of the Base Rent,   Tenant's Share and Tenant   Improvement   Allowance,   if

any)   shall   be   modified   in   accordance   with   such   determination.    If   such

determination is made, it will be confirmed in writing by Landlord to Tenant.

 

                  1.3       CONDITION OF PREMISES. Tenant shall occupy the Leased

Premises in its current "AS IS" condition   without any   obligation on Landlord's

part to construct or, subject to Landlord's   distribution   of the   Refurbishment

Allowance   pursuant to Section   9.5 below,   pay for any tenant   improvements   or

refurbishment   work   in   the   Leased   Premises,    and   Tenant   shall   be   solely

responsible,   at its   sole   cost   and   expense,   for   constructing   any   and all

alterations and   refurbishment   work for the Leased Premises   pursuant to and in

accordance with the provisions of Article 9 below.

 

 

                                       -1-

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                  1.4       LANDLORD'S    USE   AND    OPERATION   OF   THE   BUILDING,

PROJECT, AND COMMON AREAS. Landlord reserves the right from time to time without

notice to Tenant: (i) to close temporarily any of the Common Areas; (ii) to make

changes to the   Common   Areas,   including,   without   limitation,   changes in the

location,   size,   shape   and   number   of   street   entrances,   driveways,   ramps,

entrances, exits, passages, stairways and other ingress and egress, direction of

traffic,   landscaped areas, loading and unloading areas, and walkways;   (iii) to

expand the Building;   (iv) to add additional   buildings and   improvements to the

Common Areas and the Project;   (v) to remove land from the Common Areas; (vi) to

designate land outside the Project to be part of the Project,   and in connection

with the   improvement of such land to add additional   buildings and common areas

to the Project; (vii) to use the Common Areas while engaged in making additional

improvements,   repairs or alterations to the Project or to any adjacent land, or

any portion thereof;   and (viii) to do and perform such other acts and make such

other   changes in, to or with respect to the Project,   Common Areas and Building

or the   expansion   thereof as Landlord   may, in the   exercise of sound   business

judgment, deem to be appropriate.

 

                  1.5       RIGHT OF FIRST   REFUSAL   FOR THE FIRST   OFFER   SPACE.

During the period (the "RIGHT OF FIRST   REFUSAL   PERIOD")   commencing   as of the

date of execution of this Lease and continuing until the last day of the twelfth

(12th)   month of the Lease   Term,   Tenant   shall have a one-time   right of first

refusal to lease the   remaining   eastern   half of the second   (2nd) floor of the

Building   contiguous   to the Leased   Premises as more   particularly   depicted on

EXHIBIT B-1 attached   hereto (the "FIRST OFFER SPACE")   which becomes   available

for lease as provided hereinbelow as determined by Landlord.

 

                  1.5.1     PROCEDURE   FOR OFFER.   With respect to the first time

Landlord   receives a bona fide proposal from a third party unrelated to Landlord

during   the Right of First   Refusal   Period to lease all or any   portion   of the

First Offer   Space,   which   proposal   Landlord   would accept or submit a counter

proposal   thereto (such   third-party   bona fide proposal   which   Landlord   would

accept, or the counter-proposal   which Landlord would submit to such third party

in response   thereto,   shall be referred to herein as the "THIRD PARTY   OFFER"),

then prior to the date that   Landlord   accepts or submits such Third Party Offer

to such third-party, Landlord shall give Tenant written notice (the "FIRST OFFER

NOTICE") that the applicable portion of the First Offer Space identified in such

third-party proposal is then available for lease by Tenant pursuant to the terms

of the Third Party Offer.   Pursuant to such First Offer Notice,   Landlord   shall

offer to lease to Tenant the First Offer Space (or portion thereof) which is the

subject of the Third   Party   Offer   upon the terms set forth in the Third   Party

Offer.

 

                  1.5.2     TENANT'S   PROCEDURE FOR ACCEPTANCE.   If Tenant wishes

to exercise   Tenant's right of first refusal with respect to the space described

in a First Offer Notice, then within three (3) business days of delivery of such

First Offer Notice to Tenant,   Tenant shall deliver   written   notice to Landlord

("TENANT'S ELECTION NOTICE") pursuant to which Tenant shall elect either to: (i)

lease the entire First Offer Space identified in the First Offer Notice upon the

terms   contained   in the Third Party   Offer;   or (ii) refuse to lease such First

Offer Space, specifying that Tenant is not interested in exercising its right of

first refusal for such First Offer Space, in which event Tenant's right of first

refusal   with   respect to the First   Offer Space   identified   in the First Offer

Notice shall terminate and be of no further force or effect,   and Landlord shall

be free to lease the First Offer Space   identified   in the First Offer Notice or

any portion   thereof,   to anyone to whom Landlord   desires on any terms Landlord

desires.   If Tenant does not notify   Landlord   of its   election of either of the

options in clauses (i) or (ii)   hereinabove   within said three (3)   business day

period,   Tenant   shall be   deemed to have   elected   the   option in clause   (ii).

Notwithstanding   anything to the contrary contained herein, Tenant must elect to

exercise   its right of first   refusal   herein with   respect to the entire   First

Offer Space identified in the First Offer Notice and may not elect to lease only

a portion thereof. Notwithstanding anything in this Section 1.5 to the contrary,

Landlord   acknowledges   and agrees that Tenant's right of first refusal to lease

any First   Offer   Space not   previously   identified   in any First   Offer   Notice

delivered   by Landlord   to Tenant   shall not   terminate   as a result of Tenant's

election   or deemed   election   to refuse to lease any other First Offer Space so

identified in a First Offer Notice,   and shall continue until the earlier of (a)

the date such time as such space first becomes available for lease as determined

by Landlord as provided hereinabove, or (b) the expiration of the Right of First

Refusal Period.

 

                  1.5.3     CONSTRUCTION   IN FIRST OFFER SPACE.   If Tenant leases

any First Offer Space   pursuant to the terms of this Section   1.5,   Tenant shall

take such First Offer Space in its "AS IS"   condition as of the date of delivery

of such space by Landlord to Tenant,   and   Landlord   shall not be   obligated   to

provide   or pay   for   any   improvements,   remodeling   or   refurbishment   work or

services   related to the   improvement,   remodeling or refurbishment of the First

Offer Space except to the extent included in the Third Party Offer, as set forth

in Section 1.5 above; provided, however, in the event that the First Offer Space

does not   require a   corridor   extension   as a result of   Tenant's   lease of the

remaining   space on the second (2nd) floor of the   Building,   such   construction

allowance   shall be   increased   by an amount   that is equal to the   amount   that

Landlord   would have   expended to create a corridor   extension   (using   Building

standard   materials,   as determined by Landlord) for another   tenant's   lease of

such space.

 

                  1.5.4     AMENDMENT   TO   LEASE.   If   Tenant   timely    exercises

Tenant's right to lease any First Offer Space as set forth herein,   then, within

fifteen (15)   business   days   thereafter,   Landlord and Tenant shall   execute an

amendment   to this   Lease (a "FIRST   OFFER   SPACE   AMENDMENT")   to   provide   for

Tenant's   lease of the First   Offer Space upon the terms and   conditions   as set

forth in this Section 1.5.

 

                                      -2-

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                   1.5.5     SUSPENSION   OF RIGHT OF FIRST   REFUSAL   FOR THE FIRST

OFFER   SPACE.   Notwithstanding   anything in the   foregoing to the   contrary,   at

Landlord's   option,   the   right of   first   refusal   for the   First   Offer   Space

hereinabove   granted to Tenant shall not be deemed to be properly   exercised if,

as of the date Tenant   exercises   its right of first refusal for the First Offer

Space or on the scheduled commencement date for the First Offer Space, Tenant is

in default   under this Lease.   In addition,   Tenant's   right of first refusal to

lease the First Offer Space is personal to the original   Tenant   executing   this

Lease ("ORIGINAL TENANT"), and may not be assigned or exercised,   voluntarily or

involuntarily,   by or to, any person or entity other than the   Original   Tenant,

and shall only be available to and   exercisable   by the Tenant when the Original

Tenant is in actual and physical   possession of the entire Leased   Premises then

leased by Tenant as of the date Tenant   delivers to Landlord   Tenant's   Election

Notice.

 

                  1.6       NO   SEPARATE   DEMISING   PARTITION;   THE SECOND   FLOOR

WORK.   Tenant   acknowledges that Landlord shall not separately demise the Leased

Premises from the First Offer Space at any time during the period   commencing as

of the date of execution of this Lease and   continuing   until the date (the "End

Date") which is the earlier of (i) the   expiration of the Right of First Refusal

Period, or (ii) the date Tenant no longer has any right to lease any First Offer

Space   pursuant to the   provisions of Section 1.5 above,   in   consideration   for

Tenant's   agreement:   (a)   unless and until the First   Offer   Space is leased by

Tenant   pursuant   to Section   1.5 above,   not to enter   into,   conduct   business

within,   or store any property   within the First Offer Space;   (b) that Landlord

shall have no obligation to do anything to ensure Tenant's non-use thereof;   and

(c) that   Landlord   shall have the right,   at all   reasonable   times,   to police

Tenant's   non-use of the First Offer Space.   Tenant   hereby   assumes any and all

inconveniences   and risks   associated   with such lack of separate   demising   and

Tenant   hereby   agrees   that   Landlord   shall   have no   liability   to   Tenant in

connection with such lack of separate demising.   In the event Tenant enters into

any portion of the First Offer Space,   conducts   business within the First Offer

Space or stores any property within the First Offer Space,   then,   although such

space   shall not be deemed to be part of the   Leased   Premises   leased by Tenant

hereunder,   all of the   provisions   of   this   Lease   with   respect   to   Tenant's

obligations   hereunder   shall apply to Tenant's entry into,   conduct of business

within   and/or   storage of property   within,   the First Offer   Space,   including

without   limitation,   provisions   relating to compliance with requirements as to

insurance,   indemnity,   repairs and maintenance,   and compliance with Applicable

Laws, and Tenant shall pay Base Rent for the First Offer Space at the rate equal

to Five Hundred and 00/100 Dollars ($500.00) per day commencing upon such entry,

conduct of business and/or storage and continuing   until such entry,   conduct of

business and/or storage is discontinued and/or such property is removed.   Tenant

hereby   acknowledges that after the End Date, if Tenant has not leased any First

Offer Space,   Landlord shall have the right at anytime   thereafter to separately

demise the Leased Premises from the remaining First Offer Space not so leased by

Tenant and install a common   corridor (if necessary) and such other work related

thereto,   all as   described   and depicted on the floor plan   attached   hereto as

Exhibit   B-2 (such   demising   and other work   depicted   on Exhibit   B-2 shall be

referred to herein collectively as the "SECOND FLOOR WORK").   Landlord shall pay

for   the   costs   of the   Second   Floor   Work,   except   Tenant   shall   be   solely

responsible   for the costs   incurred   by Landlord   to   construct   certain of the

improvements   included   within the Second   Floor Work   pertaining   to the Leased

Premises to the extent   identified   as Tenant's   responsibility   on Exhibit B-2.

Upon the   completion of the Second Floor Work by Landlord,   Landlord shall cause

the Leased Premises and the balance of the second (2nd) floor of the Building to

be remeasured   pursuant to the BOMA standard set forth in Section 1.2 above, and

the   rentable   square   feet of the Leased   Premises   and the   Building   shall be

adjusted   based   upon such   remeasurement,   and there   shall be a   corresponding

prospective   adjustment in the Base Rent,   Tenant's Share of Operating   Expenses

and other   amounts   set forth in this   Lease   which are   determined   based   upon

rentable square feet of the Leased   Premises and/or the Building.   Tenant hereby

acknowledges   that,   notwithstanding   Tenant's   occupancy of the Leased Premises

during the   performance of the Second Floor Work, in connection   therewith:   (A)

Landlord   shall be   permitted   to perform the Second   Floor Work   during   normal

business hours,   without any obligation to pay overtime or other   premiums;   (B)

Tenant hereby accepts any and all inconveniences associated with the performance

of the Second Floor Work which may occur during   Tenant's   occupancy   including,

without   limitation,   dust,   noise, etc; (C) the performance of the Second Floor

Work shall in no way   constitute a   constructive   eviction of Tenant nor entitle

Tenant to any   abatement   of Base   Rent   payable   pursuant   to this   Lease;   (D)

Landlord shall have no   responsibility or for any reason be liable to Tenant for

any direct or indirect injury to or interference   with Tenant's business arising

from the   construction   of the Second   Floor Work;   and (E) Tenant   shall not be

entitled to any compensation or damages from Landlord for loss of the use of the

whole or any part of the Leased   Premises   or of Tenant's   personal   property or

improvements   resulting from the   construction   of the Second Floor Work, or for

any   inconvenience   or annoyance   occasioned   thereby,   except for any injury to

persons or damage to property   (but not loss of business or other   consequential

damages)   to the   extent   caused   by   Landlord's   gross   negligence   or   willful

misconduct and not insured or required to be insured by Tenant under this Lease.

 

                   2.        TERM.

 

                  2.1       BASIC TERM. The term of this Lease (the "LEASE TERM")

shall be as set forth in Section 7.1 of the   Summary   and shall   commence on the

date (the   "COMMENCEMENT   DATE") set forth in Section   7.2 of the   Summary,   and

shall terminate on the date (the "EXPIRATION   DATE") set forth in Section 7.3 of

the Summary,   unless this Lease is sooner terminated as hereinafter provided. In

the   event   that   the   Commencement   Date is a date   which   is   other   than   the

anticipated   Commencement   Date set forth in   Section   7.2(ii)   of the   Summary,

within a reasonable period of time after the date Tenant takes possession of the

Leased   Premises   Landlord   shall deliver to Tenant an Amendment to Lease in the

form attached hereto as EXHIBIT D, setting forth the   Commencement   Date and the

Expiration   Date, and Tenant shall execute and return such Amendment to Lease to

Landlord within five (5) days after Tenant's receipt thereof.   In the event that

Landlord does not deliver such   Amendment to Lease to Tenant,   the   Commencement

Date   shall be   deemed   to be the   anticipated   Commencement   Date set   forth in

Section 7.2(ii) of the Summary.

                                      -3-

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                  2.2       EARLY   POSSESSION.   Prior to the   Commencement   Date,

Tenant   shall have the right to enter the   Leased   Premises   for the   purpose of

completing   alterations to the Leased Premises, and Tenant agrees to observe and

perform all the provisions of this Lease with respect to such early entry except

those which require   payment of Rent;   provided,   however,   if Tenant   commences

business in any part of the Leased Premises prior to the scheduled   commencement

of the Lease   Term,   the Lease Term shall   commence   upon such   commencement   of

business operations as set forth in Section 7.2 of the Summary.

 

                  3.        RENT.

 

                  3.1       BASE RENT.   Tenant agrees to pay   Landlord,   promptly

when due,   without   notice or demand   and   without   deduction   or set-off of any

amount for any reason   whatsoever,   as "BASE RENT" for the Leased Premises,   the

annual amounts set forth in Section 8 of the Summary,   which shall be payable in

the   monthly   installment   amounts set forth in Section 8 of the   Summary.   Said

monthly installments of Base Rent shall be payable in advance on the first (1st)

day of each calendar   month during the Lease Term.   Notwithstanding   anything to

the contrary   contained herein and provided that Tenant faithfully   performs all

of the terms and   conditions   of this   Lease,   Landlord   hereby   agrees to abate

Tenant's   obligation to pay Tenant's   monthly Base Rent (the "ABATED   RENT") for

the first six (6) full months of the Lease Term (the "ABATEMENT PERIOD"),   which

total amount of Abated Rent is $75,625.02 (I.E., 6 months x $12,604.17 per month

= $75,625.02).   During the Abatement Period, Tenant shall remain responsible for

the payment of all of its other monetary   obligations   under this Lease.   In the

event of a default by Tenant under the terms of this Lease that results in early

termination   pursuant to the   provisions of Article 16 of this Lease,   then as a

part of the   recovery set forth in Article 16 of this Lease,   Landlord   shall be

entitled to recover the unamortized portion of the Abated Rent.

 

                  3.2       ADJUSTMENT OF RENT ON COMMENCEMENT OR EXPIRATION.   In

the event the Lease   Term   commences   or   expires   on a day other than the first

(1st) day of a calendar   month,   Tenant shall pay to Landlord on the first (1st)

day of the Lease Term, or on the first (1st) day of the month in which the Lease

Term expires,   a sum   determined by   multiplying   one-thirtieth   (1/30th) of the

monthly   installment   of Base Rent by the   number of days in the first   (1st) or

last calendar month of the Lease Term.

 

                  3.3       OPERATING   EXPENSES.   In   addition to paying the Base

Rent specified in Section 3.1 above, Tenant agrees to pay Landlord as additional

rent   "Tenant's   Share" of "Operating   Expenses",   as those terms are defined in

Sections 6.1 and 6.2 below.

 

                  3.4       PLACE   OF   PAYMENT.   Base   Rent,   Tenant's   Share   of

Operating   Expenses   and all other sums or charges   required by this Lease to be

paid by   Tenant to   Landlord,   all of which are   herein   sometimes   collectively

referred   to as   "RENT,"   shall be paid at the office of   Landlord   as set forth

herein,   or at such other place as Landlord may from time to time designate,   in

lawful money of the United States.

 

                  4.        SECURITY DEPOSIT.

 

                  Concurrently   with   Tenant's   execution of this Lease,   Tenant

shall deposit with Landlord a security   deposit (the "SECURITY   DEPOSIT") in the

amount set forth in Section 9 of the   Summary to be held by Landlord as security

for the faithful performance of every provision of this Lease to be performed by

Tenant.   If   Tenant   defaults   with   respect   to any   provision   of this   Lease,

including   but not   limited to the   provisions   relating to the payment of Rent,

Landlord may (but shall not be required to) use, apply or retain all or any part

of the Security Deposit for the payment of Rent or any other sum in default,   or

for the payment of any amount which   Landlord   may spend or become   obligated to

spend by reason of Tenant's default or to compensate Landlord for any other loss

or damage   which   Landlord   may   suffer by reason of   Tenant's   default.   If any

portion of the Security Deposit is so used or applied,   Tenant shall, within ten

(10) days after written demand therefor, deposit cash with Landlord in an amount

sufficient to restore the Security Deposit to its original amount,   and Tenant's

failure   to do so shall be deemed a   material   breach of this   Lease.   Except as

required by applicable law,   Landlord shall not be required to keep the Security

Deposit   separate   from its   general   funds and Tenant   shall not be entitled to

interest on the Security Deposit.   If Tenant shall fully and faithfully   perform

every provision of this Lease to be performed by it, the Security Deposit or any

balance   thereof   shall be   returned   to Tenant (or   Tenant's   assignee)   at the

expiration   of the Lease Term and after Tenant has vacated the Leased   Premises;

however,   in no event   shall   Landlord   be under any   obligation   to return   the

Security Deposit earlier than thirty (30) days after the expiration of the Lease

Term.

 

                  5.        USE.

 

                  5.1       PERMITTED USE.   Tenant shall use the Leased   Premises

solely for general office and data center use   consistent   with the character of

the Project as a first-class   office building project,   and shall not permit the

Leased   Premises to be used for any other   purpose.

 

 

                                      -4-

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                  5.2       COMPLIANCE WITH LAWS.   Tenant shall, at its sole cost

and expense,   promptly comply with all applicable   laws,   statutes,   ordinances,

rules,   regulations,   orders   and   requirements,   and   all   recorded   covenants,

conditions and restrictions   (collectively,   "APPLICABLE LAWS") in effect during

the   Lease   Term or any   part of the   Lease   Term   hereof,   regulating   Tenant's

particular   use or   occupancy   of the Leased   Premises or   imposing   any duty on

Landlord   or Tenant with regard   thereto or with regard to   alteration   thereof,

including the requirements of federal,   state, county and municipal   authorities

now in force or which   may   hereinafter   be in   force.   Tenant   shall not use or

permit the use of the   Leased   Premises   in any manner   which may tend to create

waste or a nuisance; nor which may tend to obstruct or interfere with the rights

of other tenants of the Project or injure or annoy them.

 

                  5.3       INSURANCE CANCELLATION. Tenant shall not do or permit

anything   to be   done on or   about   the   Leased   Premises   which   may in any way

increase   the existing   rate of any   insurance   policy   covering the Building or

Project   or any of its   contents   or cause   cancellation   of any such   insurance

policy.

 

                  5.4        LANDLORD'S   RULES   AND    REGULATIONS.    Tenant   shall

observe   and comply   with the Rules and   Regulations   which are in effect on the

date   hereof,   as set   forth in the   attached   EXHIBIT   C,   and such   reasonable

amendments   and additions   thereto as Landlord may from time to time   promulgate

and enforce on a non-discriminatory   basis. Landlord shall not be responsible to

Tenant   for the   non-performance   of said   rules   and   regulations   by any other

tenants of the Project.   Tenant shall not use or allow another   person or entity

to use   any   part   of the   Leased   Premises   for the   storage,   use,   treatment,

manufacture or sale of "Hazardous   Material," as that term is defined herein. As

used   herein,   the   term   "HAZARDOUS   MATERIAL"   means   any   hazardous   or toxic

substance, material or waste which is or becomes regulated by Environmental Laws

(as such term is defined in Section 5.5 below).

 

                  5.5       LANDLORD'S     REPRESENTATION     REGARDING    HAZARDOUS

MATERIALS.   Tenant   acknowledges   that   Landlord has made no   representation   or

warranty   regarding   the   condition   of the Leased   Premises,   the   Building   or

Project,   except as specifically   set forth in this Lease.   Notwithstanding   the

foregoing,   Landlord hereby represents and warrants to Tenant that to Landlord's

"actual   knowledge"   (as such term is defined   below in this Section 5.5), as of

the date of   execution   of this Lease,   and based   solely   upon the   information

contained   in the   Environmental   Report (as such term is defined   below in this

Section   5.5),   copies of which have been   delivered by Landlord to Tenant,   the

Project does not contain any   Hazardous   Materials   in   violation of   applicable

Environmental   Laws (as such   term is   defined   below   in this   Section   5.5) in

existence as of the date of execution of this Lease,   except as described in the

Environmental   Report.   Landlord shall, at its expense (which may be included in

Operating   Expenses   to the extent   permitted   in Article 6 below),   observe and

comply with all   applicable   Environmental   Laws in connection   with   Landlord's

activities in or on the Project, and in connection   therewith,   Landlord,   shall

not cause any Hazardous Materials to be brought upon, kept or used in connection

with the Project by Landlord,   its agents,   employees or contractors in a manner

or for a purpose   prohibited   by any   Environmental   Laws in existence as of the

date such   Hazardous   Material   is   brought   upon,   kept or used.   In   addition,

Landlord shall defend,   reimburse, and hold Tenant harmless from and against the

cost of remediation of any Hazardous   Materials to the extent (A) existing in or

on the Project prior to the date of this Lease   (including the period   following

the date of the Environmental   Report until the date of this Lease) in violation

of   applicable   Environmental   Laws at   such   time   (including   as a   result   of

Landlord's   utilization thereof in connection with the original   construction of

the    Building),    and/or   (B)    resulting    from     Landlord's    breach   of   its

representations   and/or covenants in this Section 5.5, and/or (C) resulting from

Landlord or   Landlord's   agents,   employees or   contractors   or other tenants or

occupants of the Project (excluding Tenant, the Tenant Parties and any assignee,

sublessee,   licensee or invitee of Tenant)   bringing upon,   keeping or using any

Hazardous   Material   in   connection   with the   Project   in any manner or for any

purpose   prohibited by any   Environmental   Laws in existence as of the date such

Hazardous   Material is brought   upon,   kept or used by   Landlord   or   Landlord's

agents,   employees or contractors.   For purposes hereof,   "COSTS OF REMEDIATION"

shall mean the costs   associated with the   investigation,   assessment,   testing,

monitoring,    containment,    removal,   remediation,    response,   cleanup   and/or

abatement of any release or threatened   release of any such Hazardous   Materials

described in the immediately   preceding   sentence as is necessary to comply with

any applicable   Environmental Laws including   reasonable   attorneys' fees and/or

expert costs.   The phrase   "RELEASE OR THREATENED   RELEASE"   shall mean, for the

purposes of this definition, the spill, emission,   leaking, pumping,   injection,

deposit,   disposal,   discharge,   dispersal,   leaching or   migration   of any such

Hazardous Materials into the indoor or outdoor environment or into or out of any

portion of the Project.   As used in this Lease,   the term   "Environmental   Laws"

shall mean and include any   federal,   state or local law,   rule,   regulation   or

ordinance relating to pollution or the protection or regulation of human health,

natural resources or the environment   (collectively,   "ENVIRONMENTAL   LAWS"). As

used   in this   Section   5.5,   the   term   "ENVIRONMENTAL   REPORT"   refers   to the

following report: Phase I Environmental Report and Site Assessment,   prepared by

Brown & Caldwell   and dated   April   1999.   As used   herein,   the phrase   "ACTUAL

KNOWLEDGE"   shall   mean the actual   knowledge   of Peter   Llorente,   ("LANDLORD'S

REPRESENTATIVE"),   without   investigation or inquiry or duty of investigation or

inquiry. Landlord's Representative is making such representation and warranty on

behalf of   Landlord   and not in such   person's   individual   capacity   and,   as a

result,   Landlord   (and not such   individual)   shall be liable in the event of a

breach of this representation.

 

                                      -5-

<PAGE>

 

                  6.        OPERATING EXPENSES.

 

                  6.1       TENANT'S   OBLIGATIONS.   In   addition to the Base Rent

provided   hereinabove,   for each Expense Year during the Lease Term Tenant shall

pay to Landlord Tenant's Share of Operating Expenses allocated to the tenants of

the Building   (pursuant to Section 6.2.2.7 below) which are incurred by Landlord

on account of operation and maintenance of the Project during such Expense Year.

For purposes   hereof,   "TENANT'S   SHARE" shall mean the   percentage set forth in

Section 11 of the Summary which was   calculated by dividing the Rentable Area of

the   Leased   Premises   set forth in   Section   6.1 of the   Summary,   by the total

Rentable   Area   within the   Building   set forth in   Section   11 of the   Summary.

Landlord   reserves the right,   in its sole   discretion,   to increase or decrease

from time to time the total Rentable Area of the Building based upon   Landlord's

standard Rentable Area measurement   standards used for the Building as set forth

in Section   1.2 of this   Lease.   In the event   either the   Rentable   Area of the

Premises   and/or the total   Rentable   Area of the Building is changed,   Tenant's

Share shall be appropriately adjusted, and, as to the Expense Year in which such

change occurs,   Tenant's Share for such year shall be determined on the basis of

the number of days during such Expense Year that each such Tenant's Share was in

effect.

 

                  6.2       DEFINITIONS.

 

                  6.2.1     "EXPENSE   YEAR" shall mean each   calendar year during

the Lease Term (or partial   calendar year if the Lease Term commences or ends on

other   than the   first   [1st] or last day of a   calendar   year);   provided   that

Landlord,   upon notice to Tenant,   may change the Expense Year from time to time

to any other twelve (12) consecutive-month period, and, in the event of any such

change, Tenant's Share of Operating Expenses shall be equitably adjusted for any

Expense Year involved in any such change.

 

                  6.2.2     "OPERATING    EXPENSES",    for   purposes   hereof,   are

intended to be inclusive of all costs of operating and   maintaining the Project,

except franchise,   estate,   inheritance,   net income, gift, corporate and excess

profit   taxes of   Landlord,   interest on and capital   retirement   of   Landlord's

mortgage   loans,   and costs   charged by Landlord   directly   to specific   tenants

(including any utilities   separately   metered and charged to specific   tenants).

Landlord agrees to make reasonable   efforts to minimize   operating costs insofar

as such   efforts   are not   inconsistent   with   Landlord's   intent to operate and

maintain the Project in the first-class manner.   Operating Expenses may include,

but shall not be limited to the following:

 

                  6.2.2.1   "TAX EXPENSES", which for purposes hereof shall mean,

collectively,   any and all general and special   taxes and   impositions   of every

kind and nature whatsoever levied, assessed, or imposed upon, or with respect to

the Project, any leasehold improvements, fixtures, installations, additions, and

equipment,   whether   owned by   Landlord   or Tenant,   or either   because of or in

connection   with   Landlord's   ownership,   leasing and   operation of the Project,

including, without limitation, real estate taxes, personal property taxes, sewer

rents, water rents, general or special assessments,   duties or levies charged or

levied upon or assessed   against   the   Project   and related   personal   property,

transit   taxes,   all costs and expenses   (including   legal fees and court costs)

charged   for the   protest or   reduction   of   property   taxes or   assessments   in

connection   with the   Project,   or any tax or   excise   on rent or any   other tax

(however   described) on account of rental   received for use and occupancy of any

or all of the Project   (except   Landlord's net income   taxes),   whether any such

taxes are imposed by the United   States,   the State of   Colorado,   the County of

Boulder,   or any local governmental   municipality,   authority,   or agency or any

political subdivision of any thereof.

 

                  6.2.2.2   All costs and   expenses to   Landlord   in   maintaining

fire and extended coverage insurance,   property damage,   liability and rent loss

insurance and any other   insurance   maintained by Landlord   covering the use and

operation of the Project which is customary in   comparable   projects in the area

or which is reasonably deemed prudent by Landlord.

 

                  6.2.2.3   All costs and expenses of   repairing,   operating   and

maintaining   the   heating,   ventilating   and   air   conditioning   system   for the

Project,   including the cost of all utilities required in the operation thereof,

except those paid   directly by tenants of the Project and   including the cost of

replacements   of equipment used in connection   with such repair and   maintenance

work and all costs and expenses   incurred in making   alterations or additions to

the heating,   ventilating   and air   conditioning   system in order to comply with

governmental rules, regulations and statutes.

 

                  6.2.2.4   The   costs of   capital   improvements   and   structural

repairs   and   replacements   made in or to the   Project   in order to   conform   to

changes subsequent to completion of the original   construction of the Project in

any   applicable   laws,    ordinances,    rules,    regulations   or   orders   of   any

governmental   or   quasi-governmental   authority   having   jurisdiction   over   the

Project (herein   "REQUIRED CAPITAL   IMPROVEMENTS")   and the costs of any capital

improvements   and   structural   repairs and   replacements   designed   primarily to

reduce   Operating   Expenses   or to   reduce   the rate of   increase   in   Operating

Expenses   (herein "COST SAVINGS   IMPROVEMENTS").   The   expenditures for Required

Capital   Improvements   and Cost   Savings   Improvements   shall be   reimbursed   to

Landlord in equal installments over the useful life of such capital   improvement

or   structural   repair or   replacement   (as   reasonably   determined by Landlord)

together with interest on the balance of the unreimbursed   expenditure at a rate

equal to the floating   commercial   loan rate   announced   from time to time by US

Bank, a national banking association,   or its successor, as its prime rate, plus

2% per annum (the "PRIME   RATE") which is in effect on the date the   expenditure

was incurred by Landlord; provided, however, the amount to be reimbursed for any

Cost   Savings   Improvements   shall   be   limited   in any   year   to the   estimated

reduction or estimated savings in Operating Expenses as a result thereof.

 

                                      -6-

<PAGE>

 

                  6.2.2.5   All   costs   and   expenses   incurred   by   Landlord   in

providing   standard services and utilities to tenants of the Project,   including

office janitorial services,   window washing and utilities not separately metered

and not charged by Landlord directly to specific tenants; together with the cost

of replacement of   non-building   standard   electric light bulbs and   fluorescent

tubes and ballasts, which Landlord shall have the exclusive right to provide and

install.

 

                  6.2.2.6   All   costs   and   expenses   incurred   by   Landlord   in

operating,   managing,   repairing and maintaining the Project, including all sums

expended   in   connection   with the   Common   Areas for   general   maintenance   and

repairs, resurfacing,   painting,   restriping,   cleaning, sweeping and janitorial

services,   window   washing,   maintenance   and   repair of   elevators,   stairways,

sidewalks, curbs and Building and Project signs, sprinkler systems, planting and

landscaping,   lighting and other   utilities,   maintenance and repair of any fire

protection   systems,   automatic sprinkler systems,   lighting systems,   emergency

back-up utility   systems,   storm drainage systems and any other utility systems,

personnel to implement   such   services   and to police the Common   Areas,   rental

and/or   depreciation   of machinery and equipment   used in such   maintenance   and

services, police and fire protection services, trash removal services, all costs

and expenses   pertaining to snow and ice removal,   security systems,   utilities,

premiums and other costs for workers' compensation insurance, wages, withholding

taxes,   social   security   taxes,   personal   property   taxes,   fees for   required

licenses and permits, supplies, and charges for management of the Project. Costs

and   expenses   incurred   by   Landlord   in   operating,   managing,   repairing   and

maintaining   the   Project   which are   incurred   exclusively   for the   benefit of

specific   tenants   of the   Project   will be billed   accordingly   and will not be

included within the general Operating   Expenses.   If the Building,   the Adjacent

Buildings and/or other office buildings   located in the Project are not at least

ninety-five percent (95%) occupied during all or a portion of any calendar year,

Landlord   shall make an   appropriate   adjustment   to the variable   components of

Operating Expenses for such year or applicable portion thereof,   employing sound

accounting   and   management   principles,   to   determine   the amount of Operating

Expenses that would have been paid had such buildings been at least   ninety-five

percent (95%)   occupied;   and the amount so   determined   shall be deemed to have

been the amount of   Operating   Expenses   for such year,   or   applicable   portion

thereof.

 

                  6.2.2.7   The parties   acknowledge that the Building is part of

a multi-building project, and that the costs and expenses incurred in connection

with the Project (i.e., the Operating   Expenses) are determined annually for the

Project as a whole but then   allocated by Landlord   among (i) the tenants of the

Building,   (ii) the tenants of the   Adjacent   Buildings   and,   (iii) if and when

other buildings are   constructed on the Real Property and are in operation,   the

tenants of such other   buildings,   for   purposes of   determining   such   tenants'

shares of Operating   Expenses.   In making such allocation of Operating   Expenses

for purposes of   determining   Tenant's   Share of Operating   Expenses,   Operating

Expenses   shall be   allocated   as   follows:   the portion of   Operating   Expenses

allocated   to the tenants of the   Building   shall   consist of (A) all   Operating

Expenses attributable solely to the Building and (B) an equitable portion of the

Operating   Expenses   attributable to the Project as a whole and not attributable

solely to the Building or to any other   buildings of the Project.   Additionally,

Landlord shall have the right, from time to time, to equitably   allocate some or

all of the Operating Expenses among different tenants and/or different buildings

of the Project (the "COST POOLS"). Such cost pools may include, but shall not be

limited to, the office space tenants and the retail space tenants of the Project

or a building or buildings in the Project.

 

                  6.3       CALCULATION AND PAYMENT OF OPERATING EXPENSES.

 

                  6.3.1     STATEMENT OF ESTIMATED OPERATING   EXPENSES.   Prior to

that date   which is thirty   (30)   days   prior to the first day of a new   Expense

Year, Landlord shall endeavor to give Tenant a yearly expense estimate statement

(the "ESTIMATE   STATEMENT") which shall set forth Landlord's reasonable estimate

(the   "ESTIMATE")   of what the total   amount of   Operating   Expenses for the new

Expense   Year shall be. The failure of Landlord to timely   furnish the   Estimate

Statement for any Expense Year shall not preclude   Landlord   from   enforcing its

rights under this Article 6. Tenant   shall pay Tenant's   Share of the   Estimated

Expenses (defined below) with installments of Base Rent in monthly   installments

of one-twelfth   (1/12th)   thereof on the first day of each calendar month during

such year.   "ESTIMATED   EXPENSES" for any particular   year shall mean Landlord's

estimate of Operating   Expenses   for a calendar   year.   If at any time   Landlord

determines that Operating Expenses are projected to vary from the then Estimated

Expenses, Landlord may, by notice to Tenant, revise such Estimated Expenses, and

Tenant's   monthly   installments for the remainder of such year shall be adjusted

so that by the end of such   calendar   year Tenant has paid to Landlord   Tenant's

Share of the revised   Estimated   Expenses   for such year.   Until a new   Estimate

Statement is   furnished,   Tenant   shall pay monthly,   with the monthly Base Rent

installments,   an amount equal to   one-twelfth   (1/12) of Tenant's   Share of the

Estimated   Expenses set forth in the previous   Estimate   Statement   delivered by

Landlord to Tenant.

 

                                      -7-

<PAGE>

 

                  6.3.2     PAYMENT. Landlord shall endeavor to give to Tenant on

or before   the first day of April   following   the end of each   Expense   Year,   a

statement (the "STATEMENT") which shall state the Operating Expenses incurred or

accrued for such preceding Expense Year ("ACTUAL   EXPENSES"),   and the amount of

the Estimated   Expenses paid by Tenant for such preceding Expense Year and shall

indicate the amount,   if any, of the difference   between the Actual Expenses and

the   Estimated   Expenses   (the   "EXCESS") for such Expense Year. If an Excess is

present,   Tenant   shall   pay,   within   twenty   (20) days   after   receipt of said

Statement, the full amount of the Excess for such Expense Year. If any Statement

reflects that Tenant has overpaid Tenant's Share of Operating   Expenses for such

Expense Year,   Landlord shall credit Tenant the amount of the overpayment toward

Tenant's next rent   payment(s) due under this Lease.   The failure of Landlord to

timely   furnish the Statement for any Expense Year shall not prejudice   Landlord

from   enforcing   its rights under this Article 6. Even though the Lease Term has

expired and Tenant has vacated the   Premises,   when the final   determination   is

made of the Direct Expenses for the Expense Year in which this Lease terminates,

Tenant   shall pay to Landlord   the amount by which the Direct   Expenses for such

Expense   Year exceeds the   Estimated   Expense   payments   made by Tenant for such

Expense Year, or Landlord shall reimburse to Tenant any overpayment of Estimated

Expense   payments   made by Tenant   for any such   Expense   Year if such   payments

exceed the amount of Direct   Expenses for such Expense Year, as the case may be;

such payment by Landlord or Tenant,   as applicable,   shall be made within thirty

(30) days   after the   Statement   for such final   Expense   Year is   delivered   by

Landlord to Tenant.   The   provisions   of this   Section   6.3.2 shall   survive the

expiration or earlier termination of the Lease Term.

 

                  7.        UTILITIES AND SERVICES.

 

                  7.1       STANDARD TENANT SERVICES.   Landlord shall provide the

following   services on all days during the Lease Term,   unless   otherwise stated

below.

 

                  7.1.1     Subject to reasonable changes implemented by Landlord

and to all governmental   rules,   regulations and guidelines   applicable thereto,

Landlord shall provide   heating and air   conditioning   when necessary for normal

comfort   for normal   office   use in the Leased   Premises,   from   Monday   through

Friday,   during the period from 6:00 a.m. to 6:00 p.m.,   and on Saturday   during

the period from 8:00 a.m. to 3:00 p.m.,   except for the date of   observation   of

New Year's Day,   Presidents'   Day,   Memorial Day,   Independence   Day, Labor Day,

Thanksgiving   Day,   Christmas   Day and other   locally or   nationally   recognized

holidays (collectively, the "HOLIDAYS").

 

                  7.1.2     Landlord shall provide adequate electrical wiring and

facilities   and   power for   normal   general   office   use for   Building   standard

lighting and standard office equipment, as determined by Landlord.   Tenant shall

bear the cost of   replacement   of   non-Building   standard   lamps,   starters   and

ballasts for lighting fixtures within the Leased Premises.

 

                  7.1.3     Landlord   shall   provide   city water from the regular

Building outlets for drinking, lavatory and toilet purposes.

 

                  7.1.4     Landlord shall provide   janitorial   services five (5)

days per week, except the date of observation of the Holidays,   in and about the

Leased   Premises and window washing   services in a manner   consistent with other

comparable buildings in the vicinity of the Building.

 

                  7.1.5     Except   when   repairs or   inspections   are being made

thereto,   and subject to such rules and   regulations   as established by Landlord

from time to time,   Landlord   shall   provide   nonexclusive   automatic   passenger

elevator service for use by Tenant, its customers and employees at all times.

 

                  7.2       OVERSTANDARD   TENANT USE.   Tenant shall not,   without

Landlord's prior written consent, use heat-generating   machines,   machines other

than normal   fractional   horsepower   office   machines,   or equipment or lighting

other than building standard lights in the Leased Premises, which may affect the

temperature   otherwise maintained by the air conditioning system or increase the

water   normally   furnished for the Leased   Premises by Landlord   pursuant to the

terms of Section 7.1 of this Lease.   If such   consent is given,   Landlord   shall

have   the   right   to   install   supplementary   air   conditioning   units   or other

facilities   in   the   Leased   Premises,   including   supplementary   or   additional

metering   devices,   and the cost thereof,   including   the cost of   installation,

operation and   maintenance,   increased   wear and tear on existing   equipment and

other   similar   charges,   shall be paid by Tenant to   Landlord   upon   billing by

Landlord.   If Tenant   uses water or heat or air   conditioning   in excess of that

supplied   by Landlord   pursuant   to Section   7.1 of this   Lease,   or if Tenant's

consumption   of   electricity   shall   exceed three (3) watts   connected   load per

square   foot of usable   area of the Leased   Premises,   calculated   on an monthly

basis for the hours   described   in   Section   7.1.1   above,   Tenant   shall pay to

Landlord,   upon billing,   the cost of such excess   consumption,   the cost of the

installation,   operation,   and   maintenance   of equipment   which is installed in

order to supply such excess consumption,   and the cost of the increased wear and

tear on existing equipment caused by such excess   consumption;   and Landlord may

install   devices to separately   meter any increased use and in such event Tenant

shall pay the increased cost directly to Landlord, on demand, including the cost

of such additional metering devices. If Tenant desires to use heat,   ventilation

or air   conditioning   during   hours   other   than   those   for which   Landlord   is

obligated to supply such utilities   pursuant to the terms of Section 7.1 of this

Lease, Tenant shall give Landlord such prior notice, as Landlord shall from time

to time   establish as   appropriate,   of Tenant's   desired use and Landlord shall

supply such   utilities to Tenant at such hourly cost to Tenant as Landlord shall

from time to time establish.   Amounts payable by Tenant to Landlord for such use

of additional   utilities shall be deemed   additional rent hereunder and shall be

billed on a monthly basis.

 

                                      -8-

<PAGE>

                  7.3       SEPARATE   METERING.    Notwithstanding   the   foregoing

provisions of this Section 7 to the contrary,   Landlord   shall have the right to

cause, at Tenant's expense, which expense may be deducted from the Refurbishment

Allowance   provided by Landlord in Section   9.5 below,   all   electricity,   water

and/or   other   utilities   to be   separately   metered   for the   Leased   Premises,

including supplementary or additional metering devices, and Tenant shall pay for

the cost of all such   utilities   so   separately   metered,   or which   are   billed

directly to Tenant, within ten (10) days after invoice, in which event Operating

Expenses for each   Expense   Year shall be equitably   reduced to exclude all such

utilities   provided   to   Tenant   and other   tenants   in the   Building.   Landlord

estimates that the cost of installing the   supplementary or additional   metering

devices to separately meter the data center portion of the Leased Premises to be

approximately $2,500.00.

 

                  7.4       ADDITIONAL   SERVICES.   Landlord   shall   also have the

exclusive   right,   but not the   obligation,   to provide any additional   services

which may be required by Tenant,   including,   without limitation,   locksmithing,

non-Building   standard   lamp   replacement,   additional   janitorial   service   and

additional   repairs and maintenance,   provided that Tenant shall pay to Landlord

upon billing,   the sum of all costs to Landlord of such additional services plus

an   administration   fee. Charges for any service for which Tenant is required to

pay from time to time hereunder,   shall be deemed   additional rent hereunder and

shall be billed on a monthly basis.

 

                  7.5       INTERRUPTION   OF   SERVICES.   Landlord   shall   not   be

liable   for any   damage,   loss or   expense   incurred   by Tenant by reason of any

interruption   or failure of the utilities   and   services.   Landlord may, upon at

least   forty-eight   (48) hours' prior   written   notice to Tenant   (except in the

event of an emergency),   cut off and discontinue utilities and service when such

discontinuance   is necessary in order to make repairs or alterations;   provided,

however,   Landlord shall provide Tenant with five (5) days' prior written notice

with respect to any scheduled (non-emergency)   interruption of utilities serving

the Data Center portion of the Premises. No such action shall be construed as an

eviction or   disturbance of possession by Landlord or relieve Tenant from paying

Rent or performing any of its obligations under this Lease.

 

                  8.        MAINTENANCE, REPAIRS AND ALTERATIONS.

 

                  8.1       TENANT'S    REPAIRS.    Subject   to   Landlord's   repair

obligations in Section 8.2 below,   Tenant shall,   at Tenant's own expense,   keep

the Leased   Premises,   including   all   improvements,   fixtures   and   furnishings

therein, in good order, repair and condition at all times during the Lease Term.

In addition, Tenant shall, at Tenant's own expense but under the supervision and

subject to the prior approval of Landlord,   and within any reasonable   period of

time   specified by Landlord,   promptly and   adequately   repair all damage to the

Leased   Premises   and   replace or repair   all   damaged   or broken   fixtures   and

appurtenances;   provided however, that, at Landlord's option, or if Tenant fails

to make such   repairs,   Landlord   may,   but need   not,   make   such   repairs   and

replacements,   and Tenant   shall pay   Landlord   the cost   thereof,   including   a

percentage   of the cost   thereof (to be uniformly   established   for the Project)

sufficient to reimburse Landlord for all overhead, general conditions,   fees and

other costs or expenses   arising from Landlord's   involvement   with such repairs

and replacements   forthwith upon being billed for same.   Landlord may, but shall

not be required to, enter the Leased   Premises at all   reasonable   times to make

such repairs, alterations,   improvements and additions to the Leased Premises or

at the Building or to any   equipment   located in the Building as Landlord   shall

desire or deem necessary or as Landlord may be required to do by governmental or

quasi-governmental authority or court order or decree.

 

                  8.2       LANDLORD'S REPAIRS. Anything contained in Section 8.1

above to the contrary   notwithstanding,   Landlord   shall repair and maintain the

structural   portions of the   Building,   including the basic   plumbing,   heating,

ventilating,   air conditioning and electrical   systems installed or furnished by

Landlord (but not including any non-base building facilities   installed by or on

behalf of Tenant); provided, however, to the extent such maintenance and repairs

are caused in part or in whole by the act, neglect,   fault of or omission of any

duty by Tenant, its agents, servants, employees or invitees, Tenant shall pay to

Landlord   as   additional   rent,   the   reasonable   cost of such   maintenance   and

repairs.   Landlord shall not be liable for any failure to make any such repairs,

or to   perform   any   maintenance   unless   such   failure   shall   persist   for   an

unreasonable   time   after   written   notice   of   the   need   of   such   repairs   or

maintenance is given to Landlord by Tenant.   There shall be no abatement of rent

and no   liability   of Landlord by reason of any injury to or   interference   with

Tenant's   business   arising   from the   making   of any   repairs,   alterations   or

improvements   in or to   any   portion   of the   Project,   Building   or the   Leased

Premises or in or to   fixtures,   appurtenances   and   equipment   therein.   Tenant

hereby waives and releases any right to make repairs at Landlord's expense under

any law, statute or ordinance now or hereafter in effect.

 

                  8.3       NOTIFICATION   TO LANDLORD.   Tenant agrees to promptly

notify   Landlord   or its   representative   of any   accidents   or   defects   in the

Building or Project of which Tenant becomes aware,   including   defects in pipes,

electrical wiring and HVAC equipment. In addition, Tenant shall provide Landlord

with prompt   notification   of any matter or condition   which may cause injury or

damage to the Building or the Project or any person or property therein.

 

                  8.4       CONDITION    UPON    EXPIRATION   OF   LEASE.    Upon   the

expiration of the Lease Term, or any sooner   termination of this Lease,   subject

to   Section   9.2   below,   Tenant   shall   remove   all   of its   personal   property

including,   without   limitation,   any wiring or cabling   installed in the Leased

Premises on or behalf of Tenant,   and any alterations and improvements   required

to be removed and surrender the Leased Premises in good condition, ordinary wear

and tear excepted. Tenant shall repair, at its expense, any damage to the Leased

Premises   occasioned by its removal of any article of personal   property,   trade

fixtures,   furnishings,   signs,   and   improvements   including but not limited to

repairing the floor, patching holes and painting walls.

 

                  9.        ALTERATIONS AND ADDITIONS.

 

                                      -9-

<PAGE>

                  9.1       LANDLORD'S   CONSENT   REQUIRED.   Tenant shall not make

any   alterations   or additions   to the Leased   Premises   (sometimes   referred to

herein collectively as "ALTERATIONS") without first procuring Landlord's written

consent, which consent shall not be unreasonably withheld. In no event, however,

shall   Tenant   alter the   exterior of the Leased   Premises or make any change or

alteration   which would impair the   structural   soundness of the Building.   Upon

obtaining   such consent,   Tenant shall cause the work to be done promptly and in

good and workmanlike   manner and in accordance with the plans and specifications

submitted to and approved by Landlord.   Landlord's consent notwithstanding,   all

work   shall be   performed   in   accordance   with   applicable   building   codes and

governmental regulations.   All work done and materials supplied shall be done or

supplied only by contractors   approved by Landlord,   and Landlord shall have the

right to grant such approval   conditionally or to withdraw the same at any time.

Landlord's   approval   thereunder shall create no   responsibility or liability on

the part of Landlord for the   completeness,   design,   sufficiency   or compliance

with all laws,   rules and   regulations of   governmental   agencies or authorities

regarding the alterations.

 

                  9.2       SURRENDER   AT END OF TERM.   Any   Alterations   made by

Tenant on the Leased   Premises,   except Tenant's trade   fixtures,   shall at once

when made become   property of Landlord and remain upon and be   surrendered   with

the Leased   Premises at the   expiration   of the Lease Term;   provided,   however,

Landlord may, by written notice delivered to Tenant concurrently with Landlord's

approval of the final   working   drawings   for any   Alterations,   identify   those

Alterations   which   Landlord will require   Tenant to remove at the expiration or

earlier   termination   of this Lease.   Landlord may also require Tenant to remove

Alterations   which Landlord did not have the   opportunity to approve as provided

in   Section   9.1   above.   If   Landlord    requires   Tenant   to   remove   any   such

Alterations,   Tenant,   at its sole   cost   and   expense,   agrees   to   remove   the

identified   Alterations   on or before the   expiration or earlier   termination of

this   Lease and repair any damage to the   Premises   caused by such   removal.   If

Tenant fails to complete such removal   and/or to repair any damage caused by the

removal of any   Alterations,   Landlord may do so and may charge the cost thereof

to Tenant.

 

                   9.3       PAYMENT FOR WORK. All costs of any such work shall be

paid   promptly   by Tenant   so as to avoid the   assertion   of any   mechanic's   or

materialman's lien. Tenant shall discharge, by bonding,   payment or other means,

any   mechanic's   lien filed   against the Leased   Premises,   the   Building or the

Project within thirty (30) days after the receipt of notice   thereof,   and shall

promptly   inform   Landlord   of any such   notice.   If the lien is not   discharged

within said thirty (30) day period,   Landlord shall have the right,   but not the

obligation,   to discharge   said lien by payment,   bonding or otherwise,   and the

costs and   expenses to Landlord of   obtaining   such   discharge   shall be paid to

Landlord by Tenant on demand as   additional   rent.   Whether or not Tenant orders

any work   directly   from   Landlord,   Tenant   shall pay to Landlord a   reasonable

percentage   of the cost of such work (such   reasonable   percentage,   which shall

vary   depending   upon   whether   or not   Tenant   orders   the work   directly   from

Landlord,   to be   established   on a uniform basis for the Building,   shall in no

event   exceed   ten   percent   (10%)   of the   cost of   such   work)   sufficient   to

compensate Landlord for all overhead,   general conditions,   fees and other costs

and expenses arising from Landlord's   involvement with such work.

 

                  9.4       PROTECTION   AGAINST   LIENS.   At   least   five (5) days

prior to the   commencement   of any work on the   Leased   Premises,   Tenant   shall

notify   Landlord of the names and addresses of the persons   supplying   labor and

materials for the proposed   work so Landlord may avail itself of the   provisions

of statutes such as Section 38-22-105 of the Colorado Revised   Statutes.   During

the   progress   of   any   such   work   on   the   Leased   Premises,   Landlord   or its

representatives   shall have the right to go upon and inspect the Leased Premises

at all   reasonable   times,   and   shall   have the   right to post and keep   posted

thereon   notices such as those provided for by CRS Section   38-22-105 or to take

any further   action which   Landlord may deem to be proper for the   protection of

Landlord's interest in the Leased Premises.

 

                  9.5       REFURBISHMENT   ALLOWANCE.   At   any   time   during   the

period (the "REFURBISHMENT   ALLOWANCE AVAILABILITY PERIOD") commencing as of the

date of execution of this Lease and continuing until the last day of the twelfth

(12th) month of the Lease Term, and provided Tenant is not then in default under

this Lease, Tenant shall be entitled to a one-time refurbishment   allowance (the

"REFURBISHMENT   ALLOWANCE"),   in an   amount   up to,   but not   exceeding,   Thirty

Thousand Dollars ($30,000.00),   to pay for the costs actually incurred by Tenant

relating to alterations   and   refurbishment   of the   improvements   in the Leased

Premises,    which   shall   be    permanently    affixed   to   the   Leased    Premises

(collectively, the "REFURBISHING WORK"). In no event shall Landlord be obligated

to make   disbursements   pursuant   to this   Section 9.5 in a total   amount   which

exceeds the Refurbishment Allowance or after the expiration of the Refurbishment

Allowance    Availability   Period.   The   construction   and   installation   of   the

Refurbishing   Work   shall be made in   accordance   with the terms of Article 9 of

this Lease.   Disbursements   from the Refurbishment   Allowance shall be made once

per month on a progress   payment   basis as costs are   incurred by Tenant for the

Refurbishing   Work, and within thirty (30) days following   Tenant's   delivery to

Landlord of (i) a request for payment   showing the work completed and the actual

costs incurred by Tenant in connection therewith (which request shall be made by

Tenant no more than once per month),   (ii) invoices   evidencing   such costs from

all of the contractors and   subcontractors   performing such work, (iii) executed

mechanics' lien releases from all such contractors and subcontractors performing

such work,   and (iv) all other   information   reasonably   requested   by Landlord;

provided,    however,   that   Landlord   shall   be   entitled   to   deduct   from   the

Refurbishment Allowance a logistical coordination fee in an amount equal to five

percent   (5%) of the   Refurbishment   Allowance,   which fee shall be for services

relating to the coordination of construction of the Refurbishing Work; provided,

further, no logistical coordination fee shall be deducted from the Refurbishment

Allowance for Refurbishment Work pertaining to the installation of Tenant's card

key/security access system or the voice/data cabling installed within the Leased

Premises.   In the event that   Refurbishment   Allowance is not fully   utilized by

Tenant within the Refurbishment   Allowance Availability Period, then such unused

amounts   shall revert to Landlord   and Tenant shall have no further   rights with

respect thereto.

                                      -10-

<PAGE>

 

                  10.       INSURANCE.

 

                  10.1      TENANT'S COMPLIANCE WITH LANDLORD'S FIRE AND CASUALTY

INSURANCE.   Tenant shall, at Tenant's expense,   comply as to the Leased Premises

with all   insurance   company   requirements   pertaining   to the use of the Leased

Premises.   If Tenant's conduct or use of the Leased Premises causes any increase

in the premium for such insurance policies, then Tenant shall reimburse Landlord

for any such increase. Tenant, at Tenant's expense, shall comply with all rules,

orders,   regulations   or   requirements   of the   American   Insurance   Association

(formerly the National Board of Fire Underwriters) and with any similar body.

 

                  10.2      TENANT'S    INSURANCE.    Tenant   shall    maintain   the

following coverages in the following amounts.

 

                  10.2.1    Commercial   General Liability   Insurance covering the

insured   against claims of bodily injury,   personal   injury and property   damage

arising out of Tenant's   operations,   assumed   liabilities   or use of the Leased

Premises,   including   a Broad   Form   Commercial   General   Liability   endorsement

covering the insuring   provisions of this Lease and the performance by Tenant of

the indemnity   agreements set forth in Article 11 of this Lease, (and with owned

and non-owned   automobile   liability coverage,   and liquor liability coverage in

the event alcoholic   beverages are served on the Leased   Premises) for limits of

liability not less than:

 

     Bodily Injury and                          $3,000,000 each occurrence

     Property Damage Liability                  $3,000,000 annual aggregate

 

     Personal Injury Liability                  $3,000,000 each occurrence

                                               $3,000,000 annual aggregate

                                               0% Insured's participation

 

                  10.2.2    Physical   Damage   Insurance   covering   (i) all office

furniture, trade fixtures, office equipment,   merchandise and all other items of

Tenant's property on the Leased Premises installed by, for, or at the expense of

Tenant,   (ii)   all   improvements   existing   in   the   Leased   Premises   as of the

Commencement Date,   including any tenant   improvements which Landlord permits to

be installed   above the ceiling of the Leased Premises or below the floor of the

Leased Premises (collectively,   the "TENANT IMPROVEMENTS"),   and (iii) all other

improvements,   alterations and additions to the Leased   Premises,   including any

improvements,   alterations or additions   installed at Tenant's request above the

ceiling of the Leased Premises or below the floor of the Leased   Premises.   Such

insurance   shall be written on an "all risks" of physical   loss or damage basis,

for the full   replacement   cost value new without   deduction for depreciation of

the   covered   items and in   amounts   that meet any   co-insurance   clauses of the

policies of   insurance   and shall   include a vandalism   and   malicious   mischief

endorsement,    sprinkler   leakage   coverage   and   earthquake   sprinkler   leakage

coverage.

 

                  10.2.3    Workers' compensation insurance as required by law.

 

                  10.2.4    Loss-of-income,      business      interruption      and

extra-expense   insurance in such amounts as will reimburse Tenant for direct and

indirect loss of earnings attributable to all perils commonly insured against by

prudent   tenants or   attributable   to prevention of loss of access to the Leased

Premises or to the Building as a result of such perils.

 

                  10.2.5    Tenant shall carry comprehensive automobile liability

insurance   having a combined   single limit of not less than Two Million   Dollars

($2,000,000.00)   per occurrence and insuring Tenant against liability for claims

arising out of ownership,   maintenance   or use of any owned,   hired or non-owned

automobiles.

 

                  10.2.6    FORM OF POLICIES.   The minimum   limits of policies of

insurance   required   of Tenant   under   this   Lease   shall in no event   limit the

liability of Tenant under this Lease.   Such insurance   shall: (i) name Landlord,

Landlord's lenders,   the lessors of a ground or underlying lease with respect to

the Real Property and any other party   Landlord so   specifies,   as an additional

insured;   (ii)   specifically   cover the   liability   assumed by Tenant under this

Lease,   including,   but not limited to, Tenant's obligations under Article 11 of

this Lease;   (iii) be issued by an insurance company having a rating of not less

than A-X in Best's Insurance Guide or which is otherwise   acceptable to Landlord

and licensed to do business in the state in which the Real   Property is located;

(iv) be primary   insurance   as to all claims   thereunder   and   provide   that any

insurance   carried   by   Landlord   is   excess   and is   non-contributing   with any

insurance   requirement of Tenant;   (v) provide that said insurance   shall not be

canceled or coverage changed unless thirty (30) days' prior written notice shall

have been given to Landlord and any mortgagee or ground or underlying   lessor of

Landlord; (vi) contain a cross-liability endorsement or severability of interest

clause acceptable to Landlord;   and (vii) with respect to the insurance required

in Sections 10.2.1, 10.2.2, 10.2.4 and 10.2.5 above, have deductible amounts not

exceeding    $5,000.00.    Tenant   shall    deliver   said   policy   or   policies   or

certificates thereof to Landlord on or before the Lease Commencement Date and at

least thirty (30) days before the expiration dates thereof. If Tenant shall fail

to procure such insurance,   or to deliver such policies or   certificate,   within

such time periods,   Landlord may, at its option, in addition to all of its other

rights and remedies under this Lease,   and without regard to any notice and cure

periods set forth in Section   16.1,   procure   such   policies   for the account of

Tenant, and the cost thereof shall be paid to Landlord as additional rent within

ten (10) days after delivery of bills therefor.

 

                                       -11-

<PAGE>

 

                  10.3      SUBROGATION.   Landlord and Tenant agree to have their

respective   insurance   companies   issuing   property   damage   insurance waive any

rights of subrogation   that such companies may have against   Landlord or Tenant,

as the case may be.   Landlord and Tenant   hereby waive any right that either may

have   against   the other on   account   of any loss or damage to their   respective

property   to the   extent   such loss or damage is   insurable   under   policies   of

insurance for fire and all risk   coverage,   theft,   public   liability,   or other

similar insurance.

 

                  10.4      ADDITIONAL INSURANCE OBLIGATIONS.   Tenant shall carry

and maintain   during the entire Lease Term,   at Tenant's   sole cost and expense,

increased amounts of the insurance   required to be carried by Tenant pursuant to

this Article 10, and such other   reasonable   types of insurance   coverage and in

such reasonable   amounts   covering the Leased   Premises and Tenant's   operations

therein, as may be reasonably requested by Landlord.

 

                  11.       INDEMNITY.

 

                  11.1      INDEMNIFICATION OF LANDLORD.   Subject to Section 10.3

above and Sections 11.3 and 11.4 below, Tenant shall indemnify, protect and hold

Landlord harmless from and against any and all losses,   claimscosts,   attorney's

fees, expenses and liabilities (collectively, "CLAIMS") from (i) Tenant's use of

the Leased Premises or the conduct of its business or from any activity, work or

thing done,   permitted   or   suffered by Tenant in or about the Leased   Premises,

(ii) any breach or default in the performance of any obligation on Tenant's part

to be   performed   under the terms of this   Lease,   and/or   (iii)   negligence   or

willful misconduct of Tenant or any of its agents, contractors or employees; and

in case any action or   proceeding be brought   against   Landlord by reason of any

such   Claims,   Tenant,   upon   notice   from   Landlord,   shall   defend the same at

Tenant's   expense by counsel   reasonably   satisfactory   to Landlord.   Subject to

Section 11.3 below, Tenant, as a material part of the consideration to Landlord,

hereby   assumes all risks of damage to property or injury to persons in, upon or

about the Leased Premises.

 

                   11.2      LIMITATION   OF   LIABILITY.   Subject to   Section   11.3

below,   Landlord shall not be liable for injury or damage which may be sustained

by the person,   goods, wares,   merchandise or property of Tenant, its employees,

invitees   or   customers,   or any other   person in or about the   Leased   Premises

caused by or resulting from fire, steam,   electricity,   gas or water,   which may

leak or flow from or into any part of the   Leased   Premises,   or from   breakage,

leakage,   obstruction   or   other   defects   of   the   pipes,   sprinklers,    wires,

appliances, plumbing, air conditioning or lighting fixtures of the same, whether

the said   damage or injury   results   from   conditions   arising   upon the   Leased

Premises or upon other portions of the Building of which the Leased Premises are

a part,   or from other   sources.   Landlord   shall not be liable for any   damages

arising   from any act or   neglect   of any other   tenant of the   Building   or the

Project.

 

                  11.3      LANDLORD'S   INDEMNITY.   Notwithstanding   anything   in

this Article 11 to the contrary,   the foregoing   assumption of risk, release and

indemnity   by   Tenant in   Sections   11.1 and 11.2   above   shall not apply to any

Claims to the extent   resulting   from the   negligence   or willful   misconduct of

Landlord or its agents,   contractors or employees,   and not insured (or required

to be insured) by Tenant under this Lease (collectively, the "EXCLUDED CLAIMS"),

and subject to Section 11.4 below, Landlord shall indemnify, protect, defend and

hold harmless Tenant from and against any such Excluded Claims,   but only to the

extent Landlord's liability is not waived and released by Tenant pursuant to the

terms of Section 10.3 above.

 

                  11.4      NO CONSEQUENTIAL   DAMAGES.   Notwithstanding   anything

herein to the contrary,   neither Landlord's nor Tenant's   indemnity   hereinabove

shall,   in any event,   extend to loss of   profits,   loss of   business   and other

consequential damages incurred by the other party and in no event shall Landlord

or Tenant be liable to the other party for lost profits, loss of business or any

other such   consequential   damages   (except as provided   in Sections   16.3.3 and

22.12 below).

 

                                      -12-

<PAGE>

 

                  12.       DAMAGE, DESTRUCTION AND BUSINESS INTERRUPTION.

 

                  12.1      REPAIR   OF DAMAGE TO   LEASED   PREMISES   BY   LANDLORD.

Tenant   shall   promptly   notify   Landlord   of any damage to the Leased   Premises

resulting from fire or any other casualty.   If the Leased Premises or any Common

Areas of the   Building   or   Project   serving or   providing   access to the Leased

Premises shall be damaged by fire or other casualty, Landlord shall promptly and

diligently,   subject to   reasonable   delays for   insurance   adjustment   or other

matters beyond Landlord's   reasonable control, and subject to all other terms of

this Article 12,   restore the structural   components of the Leased   Premises and

such Common Areas. Such restoration shall be to substantially the same condition

of the   structural   components of the Leased   Premises and Common Areas prior to

the casualty, except for modifications required by zoning and building codes and

other   laws or by the holder of a mortgage   on the   Project,   or the lessor of a

ground   or   underlying   lease   with   respect   to   the   Project,    or   any   other

modifications to the Common Areas deemed desirable by Landlord,   provided access

to the Leased   Premises   and any common   restrooms   serving the Leased   Premises

shall not be materially   impaired.   Notwithstanding   any other provision of this

Lease,   upon the occurrence of any damage to the Leased   Premises,   Tenant shall

assign to   Landlord   (or to any party   designated   by   Landlord)   all   insurance

proceeds payable to Tenant under Tenant's   insurance required under Section 10.2

above pertaining to all tenant   improvements and fixtures in the Leased Premises

(but not Tenant's   personal   property),   and Landlord shall repair any injury or

damage to the tenant   improvements   installed   in the Leased   Premises and shall

return such tenant   improvements to their original   condition;   provided that if

the cost of such repair by Landlord   exceeds   the amount of   insurance   proceeds

received by Landlord from Tenant's insurance carrier, as assigned by Tenant, the

cost of such   repairs   shall be paid by Tenant to Landlord   prior to   Landlord's

repair of the damage. In connection with such repairs and   replacements,   Tenant

shall,   prior to the   commencement   of   construction,   submit to   Landlord,   for

Landlord's review and approval,   all plans,   specifications and working drawings

relating   thereto,   and Landlord   shall select the   contractors   to perform such

improvement   work.   Landlord   shall   not be   liable   for   any   inconvenience   or

annoyance to Tenant or its visitors, or injury to Tenant's business resulting in

any way from such damage or the repair thereof;   provided however,   that if such

fire or other   casualty   shall have damaged the Leased   Premises or Common Areas

necessary   to   Tenant's   occupancy,   and if such damage is not the result of the

negligence or willful misconduct of Tenant or Tenant's   employees,   contractors,

licensees, or invitees, Landlord shall allow Tenant a proportionate abatement of

Base Rent and Tenant's proportionate share of Operating Expenses during the time

and to the extent the Leased   Premises are unfit for   occupancy for the purposes

permitted   under this   Lease,   and not   occupied   and used by Tenant as a result

thereof.

 

                  12.2      LANDLORD'S   OPTION   TO   REPAIR.   Notwithstanding   the

terms of Section 12.1 of this Lease,   Landlord   may elect not to rebuild   and/or

restore   the Leased   Premises,   the   Building   and/or the   Project   and   instead

terminate this Lease by notifying Tenant in writing of such   termination   within

sixty (60) days after   Landlord   becomes   aware of such   damage,   such notice to

include a   termination   date giving   Tenant up to ninety (90) days to vacate the

Leased   Premises,   but Landlord may so elect only if the Building and/or Project

shall be damaged by fire or other   casualty or cause,   whether or not the Leased

Premises are affected,   and one or more of the following   conditions is present:

(i) repairs cannot   reasonably be completed within one hundred twenty (120) days

of the date of damage   (when   such   repairs   are made   without   the   payment   of

overtime or other   premiums);   (ii) the holder of any mortgage on the Project or

ground or   underlying   lessor with respect to the Project shall require that the

insurance   proceeds or any portion   thereof be used to retire the mortgage debt,

or shall terminate the ground or underlying   lease, as the case may be; or (iii)

the damage is not fully covered by Landlord's   insurance policies.   In addition,

in the event that the Leased Premises,   the Building or the Project is destroyed

or damaged to any substantial   extent during the last twenty-four (24) months of

the Lease Term,   then   notwithstanding   anything   contained   in this Article 12,

Landlord   shall have the option to terminate this Lease by giving written notice

to Tenant of the exercise of such option within thirty (30) days after   Landlord

becomes   aware of such   damage or   destruction,   in which event this Lease shall

cease and terminate as of the date of such notice.   Upon an