MULTI-TENANT LEASE

 

                                                                    Exhibit 10.4

 

                               MULTI-TENANT LEASE

 

     This lease is made as of the 28th day of January 2004, by and between First

Industrial, L.P., a Delaware limited partnership ("Landlord) and Zynex Medical,

Inc., a Colorado corporation, ("Tenant").

 

1.    Basic Provisions: In addition to other terms which are defined elsewhere in

     this Lease or any Exhibits, the terms defined in the following subsections

     of this Section 1 shall have the meaning set forth in such subsection

     whenever used in this Lease.

 

     1.1   Building: 52,581 square foot multi-tenant building part of the

          Building Complex commonly known as Southwest Business Center.

 

     1.2   Premises: Approximately 9,857 square feet of space located in the

          Building, including all improvements therein or to be provided by

          Landlord under the terms of this Lease, commonly known by the street

          address of 8100 Southpark Way, Unit A-9, Littleton, Colorado 80120, as

          outlined on Exhibit A attached hereto. In addition to Tenant's rights

          to use and occupy the Premises as hereinafter specified, Tenant shall

          have non-exclusive rights to the Common Areas (as defined in Section

          2.4 below) as hereinafter specified, but shall not have any rights to

          the roof, exterior walls or utility raceways of the Building or to any

          other buildings in the Building Complex.

 

     1.3   Building Complex: The Premises and the Building, the Common Areas (as

          defined below), the land upon which they are located, along with all

          other buildings and improvements thereon depicted on Exhibit B

          attached hereto and made a part hereof.

 

     1.4 Parking: Tenant's pro-rata share of unreserved vehicle parking spaces.

 

     1.5   Term: Five (5) years ("Primary Lease Term") commencing March 1, 2004

          ("Commencement Date") and ending February 28, 2009 ("Expiration

          Date").

 

     1.6   Estimated Delivery Date: March 1, 2004. [This is a nonbinding estimate

          of the date on which Landlord currently estimates it will be able to

          deliver the Premises to Tenant for the purposes of Tenant commencing

          its tenant finish work.]

 

     1.7   Base Rent:

 

             Lease Year             Rate/SF NNN         Monthly Rent

          ---------------           -----------         ------------

 

          3/1/04 -2/28/05             $4.50             $3,696.38

           3/1/05 -2/28/06             $9.25             $7,598.10

          3/1/06 -2/28/07             $9.50             $7,803.46

          3/1/07 -2/29/08             $9.75             $8,008.81

          3/1/08 -2/28/09             $10.00            $8,214.17

 

     Upon execution Tenant shall pay $6,423.48 as Base Rent and estimated Common

     Area Maintenance expenses for the period of March 1-31, 2004. For the

     Primary Lease Term Base Rent shall be payable on the first day of each

     month.

 

     1.8   Rentable Area: Approximately 52,581 square feet which is all rentable

          space available for lease in the Building Complex. Unless otherwise

          provided herein, any square footage set forth in this Lease or that

          may have been used in calculating this Rent and/or Common Area

          Operating Expenses is an approximation which Landlord and Tenant agree

          is reasonable and the Base Rent and Tenant's Share based thereon are

          not subject to revision whether or not the actual square footage is

          more or less. Notwithstanding the foregoing, if there is: (i)

          alteration to the Premises or the Building or Building Complex after

          the Commencement Date; or (ii) any change in the designated Rentable

          Area of the Building Complex, then Landlord shall have the exclusive

          discretion to recalculate Tenant's Share by substituting the revised

          approximate Rentable Area of the Premises and/or the Building Complex

          in the calculation described above. Any change in the approximate

          Rentable Area of the Premises or recalculated by Landlord shall be

          effective, for purposes of calculating Tenant's Share as of the first

          day of the next calendar month after such change.

 

     1.9   Tenant's Share of Common Area Operating Expenses: 18.75% (calculated

          by dividing 9.857 by 52.581).

 

     1.10 Security Deposit: $10,940.00.

 

     1.11 Permitted Use: General office for sales of stroke recovery systems.

 

     1.12 Guarantor. The obligations of the Tenant under this Lease are to be

          guaranteed by Thomas Sandgaard.

 

 

2.    Premises, Parking and Common Areas.

 

     2.1   Grant. Landlord hereby leases to Tenant, and Tenant hereby leases from

          Landlord, the Premises for the term, at the rent and upon all of the

          terms, covenants and conditions set forth in this Lease.

 

     2.2   Landlord Delivery. Landlord shall deliver the Premises to Tenant clean

          and free of debris on the Commencement Date and warrants to Tenant

          that the existing plumbing, electrical systems, fire sprinkler system,

          lighting, air conditioning and heating systems and loading doors, if

          any, in the Premises, other than those constructed by Tenant, shall be

          in good operating condition on the Commencement Date. If Tenant does

          not give Landlord written notice of a non-compliance with this

          warranty within thirty (30) days after the Commencement Date,

          correction of that non-compliance shall be the obligation of Tenant at

          Tenant's sole cost and expense.

 

     2.3   Acceptance of Premises. Tenant hereby acknowledges: (a) that it has

          been advised to satisfy itself with respect to the condition of the

          Premises including, but not limited to, the electrical and fire

          sprinkler systems, security, environmental aspects, and compliance

          with the Americans with Disabilities Act and applicable zoning,

          municipal, county, state and federal laws, ordinances and regulations

          and any covenants or restrictions of record (collectively, "Applicable

          Laws") and the present and future suitability of the Premises for

          Tenant's intended use; (b) that Tenant has made such investigation as

          it deems necessary with reference to such matters, is satisfied with

          reference thereto, and assumes all responsibility therefore as the

          same relate to Tenant's occupancy of the Premises and/or the terms of

          this Lease; and (c) that neither Landlord, nor any of Landlord's

          agents, has made any oral or written representations or warranties

          with respect to said matters other than as set forth in this Lease. If

           Landlord has agreed to complete finish work in the Premises, such work

          shall be completed in accordance with Exhibit C attached hereto and

          made a part hereof (the "Work Agreement"), and such work may be

          referred to herein as "Landlord's Work. Except as set forth expressly

          in the Work Agreement, Landlord shall have no obligation for

          completion of remodeling of the Premises and Tenant shall accept the

          Premises in its "AS IS" condition.

 

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     2.4   Common Areas. The term "Common Areas" is defined as all areas and

          facilities outside the Premises and within the exterior boundary line

          of the Building Complex and interior utility raceways within the

          Premises that are provided and designated by the Landlord from time to

          time for the general non-exclusive use of Landlord, Tenant and other

          tenants of the Building Complex and their respective employees,

          suppliers, shippers, customers, contractors and invitees, including

          parking areas, utility rooms, loading and unloading areas, trash

          areas, roadways, sidewalks, walkways, parkways, driveways and

          landscaped areas. Landlord hereby grants to Tenant, for the benefit of

          Tenant and its employees, suppliers, shippers, contractors, customers

          and invitees, during the Term of this Lease the non-exclusive right to

          use, in common with others entitled to such use, the Common Areas as

          they exist from time to time, subject to any rights, powers, and

          privileges reserved by Landlord under the terms hereof or under the

          terms of any rules and regulations or restrictions governing the use

          of the Building Complex. Under no circumstances shall the right

          therein granted to use the Common Areas be deemed to include the right

          to store any property, temporarily or permanently, in the Common

          Areas. Any such storage shall be permitted only by the prior written

          consent of Landlord or Landlord's designated agent, which consent may

          be revoked at any time. In the event that any unauthorized storage

          shall occur, then Landlord shall have the right, without notice, in

          addition to such other rights and remedies that it may have, to remove

          the property and charge the cost to Tenant, which cost shall be

          immediately payable upon demand by Landlord. Landlord or such other

          person(s) as Landlord may appoint shall have the exclusive control and

          management of the Common Areas and shall have the right, from time to

          time, to establish, modify, amend and enforce reasonable rules and

          regulations with respect thereto. Landlord shall have the right, in

          Landlord's sole discretion, from time to time: (i) to make changes to

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

          location, size, shape and number of driveways, entrances, parking

          spaces, parking areas, loading and unloading areas, ingress, egress,

          direction of traffic, landscaped areas, walkways and utility raceways;

          (ii) to close temporarily any of the Common Areas for maintenance

          purposes so long as reasonable access to the Premises remains

          available; (iii) to designate other land outside the boundaries of the

          Building Complex to be a part of the Common Areas; (iv) to add

          additional building and improvements to the Common Areas; (v) to use

          the Common Areas while engaged in making additional improvements,

          repairs or alterations to the Building Complex, or any portion

          thereof; and (vi) to do and perform such other acts and make such

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

          Complex as Landlord may, in the exercise of sound business judgment

          deem to be appropriate.

 

 

     2.5   Parking. Tenant shall be entitled to use the number of unreserved

          parking spaces specified in Section 1.4 on those portions of the

          Common Areas designated from time to time by Landlord for parking.

          Tenant shall not use more parking spaces than said number. Said

          parking spaces shall be used for parking by vehicles no larger than

          full-size passenger automobiles or pick-up trucks, herein called

          "Permitted Size Vehicles." Vehicles other than Permitted Size Vehicles

          shall be parked and loaded or unloaded as directed by Landlord in the

          Rules and Regulations issued by Landlord. Tenant shall not permit or

           allow any vehicles that belong to or are controlled by Tenant or

          Tenant's employees, suppliers, shippers, customers, contractors or

          invitees to be loaded, unloaded, or parked in areas other than those

          designated by Landlord for such activities. If Tenant permits or

          allows use of the prohibited areas, then Landlord shall have the

          right, without notice, in addition to such other rights and remedies

          that it may have, to remove or tow away the vehicle involved and

          charge the cost to Tenant, which cost shall be immediately payable

          upon demand by Landlord.

 

 

3.    Term.

 

     3.1   Term. The Commencement Date, Expiration Date and Primary Lease Term of

          this Lease are as specified in Section l.5.

 

     3.2   Delivery Date. If a Delivery Date is specified in Section 1.6 and if

          Tenant totally or partially occupies the Premises after the Delivery

          Date but prior to the Commencement Date, the obligation to pay Base

          Rent shall be abated for the period of such early occupancy. All other

          terms of this Lease, however (including but not limited to the

          obligations to pay Tenant's Share of Common Area Operating Expenses

          and to carry the insurance required in the Lease) shall be in effect

          during such period.

 

     3.3   Delay In Possession. If for any reason Landlord cannot deliver

          possession of the Premises to Tenant by the Estimated Delivery Date,

          if one is specified in Section 1.6, or if no Delivery Date is

          specified, by the Commencement 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, except as otherwise

          provided herein, be obligated to pay Base Rent or perform any other

          obligation of Tenant under the terms of this Lease until Landlord

          delivers possession of the Premises to Tenant. The delay of said date

          shall be in full satisfaction of any claims Tenant might otherwise

          have as a result of such delay. If in accordance with the foregoing

           provision, the Commencement Date would occur on other than the first

          day of a calendar month, the Commencement Date shall be delayed until

          the first day of the next calendar month and the Primary Lease Term

          shall be measured from such date; provided, however, during any period

          of delayed commencement, all terms and provisions set forth in this

          Lease including, but not limited to Tenant's obligation to pay Base

          Rent and all other charges under the Lease shall commence at such

          earlier date. In order to place in writing the exact Commencement Date

          and Expiration Date of the Lease, the parties agree to execute a

          supplemental agreement to become a part hereof setting forth such

          dates as determined under the provisions of this Section 3.3.

 

     3.4   Lease Year. "Lease Year" as used in this Lease shall be defined as

          each twelve month period beginning with the Commencement Date or any

          anniversary thereof and ending on the immediately preceding day one

          year later.

 

 

4.    Rent.

 

     4.1   Base Rent. Tenant shall pay Base Rent and other rent or charges, as

          the same may be adjusted from time to time, to Landlord in lawful

           money of the United States, without offset or deduction on or before

          the day on which it is due under the terms of this Lease. Base Rent

          and all other rent and charges for the period during the term hereof

          which is for less than one full month shall be prorated based upon the

          actual number of days of the month involved. Payment of Base Rent and

          other charges shall be made to Landlord at its address stated herein

          or to such other persons or at such other addresses as Landlord may

          from time to time designate in writing to Tenant.

 

     4.2   Common Area Operating Expenses. Tenant shall pay to Landlord during

          the term hereof, in addition to the Base Rent, Tenant's Share (as

           specified in Section 1.9) of all Common Area Operating Expenses, as

          hereinafter defined, during each calendar year of the term of this

          Lease, in accordance with the following provisions:

 

          (a)   "Common Area Operating Expenses" are defined, for purposes of

               this Lease, as all costs incurred by Landlord relating to the

               ownership and operation of the Building Complex including, but

               not limited to, the following:

 

               (i)   The operation, repair and maintenance, in neat, clean, good

                    order and condition of the Common Areas, including parking

                    areas, utility rooms, loading and unloading areas, trash

                    areas, roadways, sidewalks, walkways, parkways, driveways,

                    landscaped areas, striping, bumpers, irrigation systems,

                    Common Area lighting facilities, fences and gates,

                    elevators, roofs, and exterior walls, including paint;

                    exterior signs, awnings, any tenant directories, and fire

                    detection, sprinkler systems, and all professional fees

                    incurred in connection with the operation, management and

                    maintenance of the Building Complex.

 

               (ii) The cost of water, gas, electricity and telephone to service

                    either the Building Complex and/or the Premises, to the

                    extent not separately metered.

 

                (iii) Snow, ice and debris removal service, and security services

                    and the costs of any environmental inspections.

 

               (iv) Cost of capital improvements, structural repairs and

                    replacements in or to the Building Complex, which shall be

                    amortized at a market rate of return over the useful life of

                    such item as determined by Landlord's accountants.

 

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               (v)    Real Property Taxes to be paid by Landlord for the Building

                     and the Common Areas under Section 11 hereof.

 

               (vi)   The cost of the premiums for the insurance policies

                     maintained by Landlord under Section 9 hereof.

 

               (vii) Any deductible portion of an insured loss concerning the

                     Building or the Common Areas.

 

               (viii) Any other services to be provided by Landlord that are

                     stated elsewhere in this Lease to be a Common Area

                     Operating Expense.

 

     (b)   Any Common Area Operating Expenses and Real Property Taxes that are

          specifically attributable to the Building or to such other building in

          the Building Complex or to the operation, repair and maintenance

          thereof shall be allocated entirely to the Building or such other

          building. However, any Common Area Operating Expenses and Real

          Property Taxes that are not specifically attributable to the Building

          or to any other building or to the operation, repair and maintenance

          thereof, shall be equitably allocated by Landlord to all buildings in

          the Building Complex.

 

     (c)   The inclusion of the improvements, facilities and services set forth

          in Section 4.2(a) shall not be deemed to impose an obligation upon

          Landlord to either have said improvements or facilities or to provide

          those services unless Landlord has agreed elsewhere in this Lease to

          provide the same or some of them.

 

     (d)   Tenant's Share of Common Area Operating Expenses shall be payable by

          Tenant within ten (10) days after a reasonably detailed statement of

          actual expenses is presented to Tenant by Landlord. At Landlord's

          option, however, an amount may be estimated by Landlord from time to

          time of Tenant's Share of annual Common Area Operating Expenses and

          the same shall be payable monthly, as Landlord shall designate, during

          each calendar year on the same day as the Base Rent is due hereunder.

          If during any particular calendar year, there is a change in the

          information on which Landlord based the estimate upon which Tenant is

          then making its estimated Operating Expense payments so that such

          estimate furnished to Tenant is no longer accurate, Landlord shall be

          permitted to revise such estimate from time to time by notifying

          Tenant and there shall be such adjustments made in the monthly amount

          of Tenant's Share on the first day of the month following the serving

          of such statement to Tenant. Landlord shall deliver to Tenant after

          the expiration of each calendar year a reasonably detailed statement

          showing Tenant's Share of the actual Common Area Operating Expenses

          incurred during the preceding year. If Tenant's payments under this

          Section 4.2(d) during said preceding calendar year exceed Tenant's

          Share as indicated on said statement, Tenant shall be credited the

          amount of such overpayment against Tenant's Share of Common Area

          Operating Expenses next becoming due. If Tenant's payments under this

          Section 4.2(d) during said preceding year were less than Tenant's

          Share as indicated on said statement, Tenant shall pay to Landlord the

          amount of the deficiency within ten (10) days after delivery by

          Landlord to Tenant of said statement. Landlord's failure to deliver

          statement of Tenant's share within one hundred and twenty (120) days

          shall not relieve Tenant of the obligation to pay sums otherwise due.

          Tenant's obligation to pay Tenant's Share of Common Area Operating

          Expenses shall survive the expiration or termination of the Lease.

 

 

5.    Security Deposit. Tenant shall deposit with Landlord upon Tenant's

     execution hereof the Security Deposit set forth in Section 1.10 as security

     for Tenant's faithful performance of Tenant's obligations under this Lease.

     If Tenant fails to pay Base Rent or other rent or charges due hereunder, or

     otherwise is in default under this Lease, Landlord may use, apply or retain

      all or any portion of said Security Deposit for the payment of any amount

     due Landlord or to reimburse or compensate Landlord for any liability,

     cost, expense, loss or damage (including attorneys' fees) which Landlord

     may suffer or incur by reason thereof. If Landlord uses or applies all or

     any portion of said Security Deposit, Tenant shall within ten (10) days

     after written request therefore deposit monies with Landlord sufficient to

     restore said Security Deposit to the full amount required by this Lease.

     Any time the Base Rent increases during the term of this Lease, Tenant

     shall, upon written request from Landlord, deposit additional monies with

     Landlord as an addition to the Security Deposit so that the total amount of

     the Security Deposit shall at all times bear the same proportion to the

     then current Base Rent as the initial Security Deposit bears to the initial

     Base Rent set forth in Section 1.7. Landlord shall not be required to keep

     all or any part of the Security Deposit separate from its general accounts.

     Landlord shall, within sixty (60) days after the expiration of the term

     hereof and after Tenant has vacated the Premises, return to Tenant (or, at

     Landlord's option, to the last assignee, if any, of Tenant's interest

     herein), that portion of the Security Deposit, or applied by Landlord. No

     part of the Security Deposit shall be considered to be held in trust, to

     bear interest or other increment for its use, or to be prepayment for any

     monies to be paid by Tenant under this Lease. At Landlord's election,

     Landlord may elect to have the Security Deposit held by Landlord's manager

     in a separate security deposit, trust, trustee or escrow account

     established and maintained by such manager with respect to certain security

     deposits of tenants within the Building Complex. Unless Tenant is so

     notified, (i) Landlord will hold the Security Deposit and be responsible

     for its return; and (ii) Tenant may request return of the Security Deposit

     by giving Landlord written notice in accordance with the provisions of the

     Lease, and Landlord's manager, if any, agrees that in the event of a

     dispute over the ownership of the Security Deposit, the manager will not

     wrongfully withhold Landlord's true name and current mailing address from

     Tenant. Landlord may deliver the funds deposited herein by Tenant to the

     purchaser of Landlord's interest in the Premises in the event such interest

     be sold, and thereupon, Landlord shall be discharged from further liability

     with respect to such deposit. If the claims of Landlord exceed said

     deposit, Tenant shall remain liable for the balance of such claims.

 

6.    Use.

 

      6.1   Permitted Use.

 

          (a)   Tenant shall use and occupy the Premises only for the Permitted

               Use set forth in Section 1.11 and for no other purpose. Tenant

               shall not use or permit the use of the Premises in a manner that

               is unlawful, creates waste or a nuisance, or that disturbs owners

               and/or occupants of, or causes damage to the Premises or

               neighboring premises or properties.

 

          (b)   Landlord hereby agrees to not unreasonably withhold or delay its

               consent to any written request by Tenant, Tenant's assignees or

               subtenants, and by prospective assignees and subtenants of

               Tenant, its assignees and subtenants, for a modification of said

               Permitted Use so long as the same will not impair the structural

               integrity of the improvements on the Premises or in the Building

               or the mechanical or electrical systems therein does not conflict

                with uses by other Tenants, is not significantly more burdensome

               to the Premises or the Building and the improvements thereon, and

               is otherwise permissible pursuant to this Section 6. If Landlord

               elects to withhold such consent, Landlord shall within five (5)

               business days after such request give a written notification of

               same, which notice shall include an explanation of Landlord's

               reasonable objections to the change in use.

 

 

7.    Hazardous Substances.

 

     7.1   Consent. The term "Hazardous Substance" as used in this Lease shall

          mean any product, substance, chemical, material or waste whose

          presence, nature, quantity and/or intensity of existence, use,

          manufacture, disposal, transportation, spill, release or effect,

          either by itself or in combination with other materials expected to be

          on the Premises, is either: (i) potentially injurious to the public

           health, safety or welfare, the environment, or the Premises; (ii)

          regulated or monitored by any governmental authority; or (iii) a basis

          for potential liability of Landlord to any governmental agency or

          third party under any applicable statute or common law theory.

          Hazardous Substance shall include, but not be limited to hydrocarbons,

          petroleum gasoline, crude oil or any products or by-products thereof.

          Tenant shall not engage in any activity in or about the Premises which

          constitutes a Reportable Use (as hereinafter defined) of Hazardous

          Substances without the express prior written consent of Landlord and

          compliance in a timely manner (at Tenant's sole cost and expense) with

          all Applicable Requirements (as defined in Section 7.4). "Reportable

          Use" shall mean (i) the installation or use of any above or below

          ground storage tank; (ii) the generation, possession, storage, use,

          transportation, or disposal of a Hazardous Substance that requires a

          permit from, or with respect to which a report, notice, registration

          or business plan is required to be filed with, any governmental

          authority; and (iii) the presence in, on or about the Premises of a

          Hazardous Substance with respect to which any Applicable Laws require

          that a notice be given to persons entering or occupying the Premises

          or neighboring properties. Notwithstanding the foregoing. Tenant may,

          without Landlord's prior consent but upon notice to Landlord and in

 

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          compliance with all Applicable Requirements, use any ordinary and

          customary materials reasonably required to be used by Tenant in the

          normal course of the Permitted Use, so long as such use is not a

          Reportable Use and does not expose the Premises or neighboring

          properties to any meaningful risk of contamination or damage or expose

          Landlord to any liability therefor. In addition, landlord may (but

          without any obligation to do so) condition its consent to any

          Reportable Use of any Hazardous Substance by Tenant upon Tenant's

           giving Landlord such additional assurances as Landlord, in its

          reasonable discretion, deems necessary to protect itself, the public,

          the Premises and the environment against damage, contamination or

          injury and/or liability therefor including but not limited to the

          installation (and, at Landlord's option, removal on or before Lease

          expiration or earlier termination) of reasonably necessary protective

          modifications to the Premises (such as concrete encasements) and/or

          the deposit of an additional Security Deposit under Section 5.

 

 

     7.2   Duty to Inform Landlord. If Tenant knows, or has reasonable cause to

          believe, that a Hazardous Substance has come to be located in, on,

          under or about the Premises or the Building, other than as previously

          consented to by Landlord, Tenant shall immediately give Landlord

          written notice thereof, together with a copy of any statement, report,

          notice, registration, application, permit, business plan, license,

          claim, action, or proceeding given to, or received from, any

          governmental authority or private party concerning the presence,

          spill, release, discharge of, or exposure to, such Hazardous Substance

          including but not limited to all such documents as may be involved in

          any Reportable Use involving the Premises. Tenant shall not cause or

          permit any Hazardous Substance to be spilled or released in, on, under

          or about the Premises (including, without limitation, through the

          plumbing or sanitary sewer system).

 

     7.3   Indemnification. Tenant shall indemnify, protect, defend and hold

          Landlord, its managers, members, officers, directors, agents,

          employees, lenders and ground Landlord, if any, and the Premises,

          harmless from and against any and all damages, liabilities, judgments,

          costs, claims, liens, expenses, penalties, loss of permits and

          attorneys' and consultants' fees arising out of or involving any

          Hazardous Substance brought onto the Premises by or for Tenant or by

          anyone under Tenant's control. Tenant's obligations under this Section

          7.3 shall include, but not be limited to, the effects of any

          contamination or injury to any person, property or the environment

          created or suffered by Tenant, and the cost of investigation

          (including consultants' and attorneys' fees and testing), removal,

          remediation, restoration and/or abatement thereof, or of any

          contamination therein involved, and shall survive the expiration or

          earlier termination of this Lease. No termination, cancellation or

          release agreement entered into by Landlord and Tenant shall release

          Tenant from its obligations under this Lease with respect to Hazardous

          Substances, unless specifically so agreed by Landlord in writing at

          the time of such agreement. The indemnification set forth above shall

          survive the expiration or termination of this Lease.

 

     7.4   Tenant's Compliance with Requirements. Tenant shall at Tenant's sole

          cost and expense, fully, diligently and in a timely manner, comply

          with all "Applicable Requirements," which term is used in this Lease

          to mean all laws, rules, regulations, ordinances, directives,

          covenants, easements and restrictions of record, permits, the

          requirements of any applicable fire insurance underwriter or rating

          bureau, and the recommendations of Landlord's engineers and/or

          consultants, relating in any manner to the Premises (including but not

          limited to matters pertaining to (i) industrial hygiene, (ii)

          environmental conditions on, in, under or about the Premises,

          including soil and groundwater conditions; and (iii) the use,

          generation, manufacture, production, installation, maintenance,

           removal, transportation, storage, spill, or release of any Hazardous

          Substance), now in effect or which may hereafter come into effect.

          Tenant shall, within five (5) days after receipt of Landlord's written

          request, provide Landlord with copies of all documents and

          information, including but not limited to permits, registrations,

          manifests, applications, reports and certificates, evidencing Tenant's

          compliance with any Applicable Requirements specified by Landlord, and

          shall immediately upon receipt, notify Landlord in writing (with

          copies of any documents involved) of any threatened or actual claim,

          notice, citation, warning, complaint or report pertaining to or

           involving failure by Tenant or the Premises to comply with any

          Applicable Requirements.

 

     7.5   Inspection. Landlord, Landlord's agents, employees, contractors and

          designated representatives, and the holders of any mortgages, deeds of

          trust or ground leases on the Premises ("Lenders") shall have the

          right to enter the Premises at any time in the case of an emergency,

          and otherwise at reasonable times, for the purpose of inspecting the

          condition of the Premises and for verifying compliance by Tenant with

          this Lease and all Applicable Requirements, and Landlord shall be

          entitled to employ experts and/or consultants in connection therewith

          to advise Landlord with respect to Tenant's activities, including but

          not limited to Tenant's installation, operation, use, monitoring,

          maintenance, or removal of any Hazardous Substance on or from the

          Premises. The costs and expenses of any such inspections shall be paid

          by the party requesting same, unless a Default of this Lease by Tenant

          or a violation of Applicable Requirements or a contamination, caused

          or materially contributed to by Tenant, is found to exist or to be

          imminent, or unless the inspection is requested or ordered by a

          governmental authority as the result of any such existing or imminent

          violation or contamination. In such case, Tenant shall upon request

          reimburse Landlord or Landlord's Lender, as the case may be, for the

          costs and expenses of such inspections.

 

 

8.    Maintenance, Repairs, Utility Installations, Trade Fixtures and

     Alterations.

 

     8.1   By Tenant.

 

          (a)   Subject to the provisions of Sections 8.2, 10, and 15, Tenant

               shall, at Tenant's sole cost and expense and at all times, keep

               the Premises and every part thereof in good order, condition and

               repair (whether or not such portion of the Premises requiring

               repair, or the means of repairing the same, are reasonably or

               readily accessible to Tenant, and whether or not the need for

               such repairs occurs as a result of Tenant's use, any prior use,

                the elements or the age of such portion of the Premises),

               including, without limiting the generality of the foregoing, all

               equipment or facilities specifically serving the Premises;

               whether or not the equipment or facilities are located within the

               Premises, such as plumbing, heating, air conditioning and

               ventilating system, electrical lighting facilities, boilers,

               fired or unfired pressure vessels, fire hose connections if

               within the Premises, fixtures, interior walls, interior surfaces

               of exterior walls, ceilings, floors, windows, doors serving the

               Premises, including overhead doors, dock bumpers, dock pads, dock

               levelers, etc., plate glass, and skylights, but excluding any

               items which are the responsibility of Landlord pursuant to

               Section 8.2 below. Tenant, in keeping the Premises in good order,

               condition and repair, shall exercise and perform good maintenance

               practices. Tenant's obligations shall include restorations,

               replacements or renewals when necessary to keep the Premises and

               all improvements thereon or a part thereof in good order,

               condition and state of repair. Tenant shall be responsible for

               trash removal.

 

          (b)   Tenant shall, at Tenant's sole cost and expense, procure and

               maintain a contract, with copies to Landlord, customary form and

               substance for and with a contractor specializing and experienced

               in the inspection, maintenance and service of the heating, air

               conditioning and ventilation system for the Premises. However,

               Landlord reserves the right, upon notice to Tenant, to procure

               and maintain the preventative maintenance contract for the

               heating, air conditioning and ventilating systems, and if

                Landlord so elects, Tenant shall reimburse Landlord, upon demand,

               for the cost thereof.

 

          (c)   If Tenant fails to perform Tenant's obligations under this

               Section 8.1, Landlord may enter upon the Premises after ten (10)

               days' prior written notice to Tenant (except in the case of an

               emergency, in which case no notice shall be required), perform

               such obligations on Tenant's behalf, and put the Premises in good

                order, condition and repair.

 

     8.2   By Landlord. Subject to the provisions of Sections 2.2, 4.2, 6, 8.1,

          10 and 15, and except for damage caused by any negligent or

          intentional act or omission of Tenant, its agents, employees,

           suppliers or invitees, in which event Tenant shall repair the damage,

          Landlord, subject to reimbursement pursuant to Section 4.2, shall keep

          in good order, condition and repair the foundations, exterior walls,

          structural condition of interior bearing walls, exterior roof, fire

          sprinkler and/or standpipe and hose (if located in the Common Areas)

          or other automatic fire extinguishing systems including fire alarm

          and/or smoke detention systems and equipment, fire hydrants, parking

          lots, walkways, parkways, driveways, landscaping, fences, signs, main

          sanitary sewer lines and utility systems serving the Common Areas and

          all parts thereof as well as providing the services for which there is

          a Common Area Operating Expense pursuant to Section 4.2. Landlord

          shall not be obligated to paint the exterior or interior surfaces of

          exterior walls nor shall Landlord be obligated to maintain, repair or

          replace windows, doors or plate glass of the Premises. Tenant shall

          have no right to make repairs to the Building or Building Complex at

          Landlord's expense.

 

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     8.3   Utility Installations, Trade Fixtures, Alterations.

 

     (a)   Definitions, Consent Required. The term "Utility Installations" is

          used in this Lease to refer to all air lines, power panels, electrical

          distribution, security, fire protection systems, communications

          systems, lighting fixtures, heating, ventilating and air conditioning

          equipment, plumbing, and fencing in, on, or about the Premises. The

          term "Trade Fixtures" shall mean Tenant's machinery and equipment

          which can be removed without doing material damage to the Premises.

          The term "Alterations" shall mean any modification of the improvements

          on the Premises after the Delivery Date, other than Utility

          Installations or Trade Fixtures. "Tenant-Owned Alterations and/or

          Utility Installations" are defined as Alterations and/or Utility

          Installations made by Tenant that are not yet owned by Landlord

          pursuant to Section 8.4(a). Tenant shall not make nor cause to be made

          any Alterations or Utility Installations in, on, under or about the

          Premises without Landlord's prior written consent. Tenant may,

          however, make non-structural Utility Installations to the interior of

          the Premises (excluding the roof) without Landlord's consent but upon

          notice to Landlord, so long as they are not visible from the outside

          of the Premises, do not involve puncturing, relocating or removing the

          roof or any existing walls or changing or interfering with the fire

          sprinkler or fire detection systems and the cumulative cost thereof

          during the term of this Lease as extended does not exceed two thousand

          five hundred dollars ($2,500.00.)

 

     (b)   Consent, Any Alterations or Utility Installations that Tenant shall

          desire to make and which require the consent of the Landlord shall be

          presented to Landlord in written form with detailed plans. All

          consents given by Landlord, whether by virtue of Section 8.3(a) or by

          subsequent specific consent, shall be deemed conditioned upon: (i)

          Tenant acquiring all applicable permits required by governmental

          authorities; (ii) the furnishing of copies of such permits together

          with a copy of the plans and specifications for the Alteration or

          Utility Installation to Landlord prior to commencement of the work

          thereon; and (iii) the compliance by Tenant with all conditions of

          said permits in a prompt and expeditious manner. Any Alterations or

          Utility Installations by Tenant during the term of this Lease shall be

          done in a good and workmanlike manner, with good and sufficient

          materials, and be in compliance with all Applicable Requirements.

          Tenant shall promptly upon completion thereof furnish Landlord with

          as-built plans and specifications therefor. Landlord may, (but without

          obligation to do so) condition its consent to any requested Alteration

          or Utility Installation that costs two thousand five hundred dollars

          ($2,500.00) or more upon Tenant providing Landlord with a lien and

          completion bond in an amount equal to one and one-half times the

          estimated cost of such Alteration or Utility Installation.

 

     (c)   Lien Protection. Tenant shall pay when due all claims for labor or

          materials furnished or alleged to have been furnished to or for Tenant

           at or for use on the Premises, which claims are or may be secured by

          any mechanic's or materialmen's lien against the Premises or any

          interest therein. Tenant shall give Landlord not less than ten (10)

          days' notice prior to the commencement of any work in, on, or about

          the Premises, and Landlord shall have the right to post notices of

          non-responsibility in or on the Premises as provided by law. If Tenant

          shall, in good faith, contest the validity of any such lien, claim or

          demand, then Tenant shall, at its sole expense, defend and protect

          itself, Landlord and the Premises against the same and shall pay and

          satisfy any such adverse judgment that may be rendered thereon before

          the enforcement thereof against the Landlord or the Premises. If

          Landlord shall require, Tenant shall furnish to Landlord a surety bond

          satisfactory to Landlord in an amount equal to one and one-half times

           the amount of such contested lien, claim or demand, indemnifying

          Landlord against liability for the same, as required by law for the

          holding of the Premises free from the effect of such lien or claim. In

          addition, Landlord may require Tenant to pay Landlord's attorneys'

          fees and costs in participating in such action if Landlord shall

          decide it is to its best interest to do so.

 

8.4   Ownership, Removal, Surrender, and Restoration.

 

     (a)   Ownership. Subject to Landlord's right to require their removal and to

          cause Tenant to become the owner thereof as hereinafter provided in

          this Section 8.4, all Alterations and Utility Installations made to

          the Premises by Tenant shall be the property of and owned by Tenant,

          but considered a part of the Premises. Landlord may, at any time and

          at its option, elect in writing to Tenant to be the owner of all or

          any specified part of the Tenant-Owned Alterations and Utility

          Installations. Unless otherwise instructed per Section 8.4(b) hereof,

          a11 Tenant-Owned Alterations and Utility Installations shall, at the

          expiration or earlier termination of this Lease, become the property

           of Landlord and remain upon the Premises and be surrendered with the

          Premises by Tenant.

 

     (b)   Removal. Unless otherwise agreed in writing, Landlord may require that

          any or all Tenant-Owned Alterations or Utility Installations be

          removed by the expiration or earlier termination of this Lease,

          notwithstanding that their installation may have been consented to by

          Landlord. Landlord may require the removal at any time of all or any

          part of any Alterations or Utility Installations made without the

          required consent of Landlord.

 

     (c)   Surrender/Restoration. Tenant shall surrender the Premises by the end

          of the last day of the Lease term or any earlier termination date,

           clean and free of debris and in good operating order, condition and

          state of repair, ordinary wear and tear excepted. Ordinary wear and

          tear shall not include any damage or deterioration that would have

          been prevented by good maintenance practice or by Tenant performing

          all of its obligations under this Lease. Except as otherwise agreed or

          specified herein, the Premises, as surrendered, shall include the

          Alterations and Utility Installations. The obligation of Tenant shall

          include the repair of any damage occasioned by the installation,

          maintenance or removal of Tenant's Trade Fixtures, furnishings,

          equipment, and Tenant-Owned Alterations and Utility Installations, as

          well as the removal of any storage tank installed by or for Tenant,

          and the removal, replacement, or remediation of any soil, material or

          ground water contaminated by Tenant, all as may then be required by

          Applicable Requirements and/or good practice. Tenant's Trade Fixtures

          shall remain the property of Tenant and shall be removed by Tenant

          subject to its obligation to repair and restore the Premises per this

          Lease. Any Trade Fixtures, Alterations and/or Utility Installations

          not removed upon the expiration of this Lease shall be deemed

          abandoned and may be disposed of by Landlord, as Landlord may

          determine appropriate, without further notice to Tenant. Tenant shall

          pay Landlord all expenses incurred in connection with such items

          including, but not limited to, the costs of repairing any damage to

          the Premises caused by removal of such items. Tenant's obligation

          hereunder shall survive the expiration or other termination of the

          Lease.

 

 

9.    Insurance; Indemnity

 

     9.1   Payment of Premiums. The cost of the premiums for the insurance

          policies maintained by Landlord under this Section 9 shall be a Common

          Area Operating Expense pursuant to Section 4.2 hereof. Premiums for

          policy periods commencing prior to, or extending beyond, the term of

          this Lease shall be prorated to coincide with the corresponding

          Commencement Date or Expiration Date.

 

     9.2   Liability Insurance.

 

          (a)   Carried by Tenant. Tenant shall obtain and keep in force during

               the term of this Lease a commercial general liability policy of

               insurance protecting Tenant, Landlord and any Lender(s) whose

               names have been provided to Tenant in writing (as additional

               insured) against claims for bodily injury, personal injury and

               property damage based upon, involving or arising out of the

               ownership, use, occupancy or maintenance of the Premises and all

               areas appurtenant thereto. Such insurance shall be on an

               occurrence basis providing single limit coverage in an amount not

                less than two million dollars ($2,000,000) per occurrence with an

               "Additional Insured-Managers or Landlords of Premises"

               endorsement and contain the "Amendment at the Pollution

               Exclusion" endorsement for damage caused by heat, smoke or fumes

               from a hostile fire. The policy shall not contain any

               intra-insured exclusions as between insured persons or

               organizations, but shall include coverage for liability assumed

               under this Lease as an "insured contract" for the performance of

               Tenant's indemnity obligations under this Lease. The limits of

               said insurance required by this Lease or as carried by Tenant

               shall not, however, limit the liability of Tenant nor relieve

               Tenant of any obligation hereunder. All insurance to be carried

               by Tenant shall be primary to and not contributory with any

               similar insurance carried by Landlord, whose insurance shall be

               considered excess insurance only. In addition, Tenant shall

               maintain workers' compensation insurance as is required by state

               law.

 

          (b)   Carried By Landlord. Subject to reimbursement of premiums as

               described in Section 9.1, Landlord shall also maintain liability

               insurance described in Section 9.2(a) above, in addition to and

               not in lieu of, the insurance required to be maintained by

               Tenant. Tenant shall not be named as an additional insured

               therein.

 

                                        5

<PAGE>

 

 

     9.3   Property Insurance. Subject to reimbursement of premiums as described

          in Section 9.1, Landlord shall maintain property damage insurance on

          such portions of the Building Complex from time to time which Landlord

          has the obligation to maintain and repair under this Lease, above

          foundation walls, insuring against loss or damage by fire or other

          casualty covered by a so-called "special form" policy, in such

          amounts, and from companies and on such terms and conditions as

          Landlord deems appropriate from time to time. Tenant-Owned Alterations

          and Utility Installations, Trade Fixtures and Tenant's' personal

          property shall be insured by Tenant pursuant to Section 9.4. Landlord

          may also obtain and keep in force during the term of this Lease a

          policy or policies in the name of Landlord, with loss payable to

          Landlord and any Lender(s), insuring the loss of the full rental and

          other charges payable by all Tenants of the Building to Landlord for

          one year (including all Real Property Taxes, insurance costs, all

          Common Area Operating Expenses and any scheduled rental increases).

          Tenant shall pay for any increase in the premiums for the property

          insurance of the Building and for the Common Areas or other buildings

          in the Building Complex if said increase is caused by Tenant's acts,

          omissions, use or occupancy of the Premises.

 

     9.4   Tenant's Property Insurance. Subject to the requirements of Section

          9.5, Tenant at its cost shall either by separate policy or, at

          Landlord's option, by endorsement to a policy already carried,

          maintain insurance coverage on all of Tenant's personal property,

          Trade Fixtures and Tenant-Owned Alterations and Utility Installations

          in, on, or about the Premises similar in coverage to that carried by

          Landlord as the Insuring Party under Section 9.3. Such insurance shall

          be full replacement cost coverage with a deductible not to exceed

           $1,000 per occurrence. The proceeds from any such insurance shall be

          used by Tenant for the replacement of personal property and the

          restoration of Trade Fixtures and Tenant-Owned Alterations and Utility

          Installations. Upon request from Landlord, Tenant shall provide

          Landlord with written evidence that such insurance is in force.

          Insurance required of Tenant hereunder shall be in companies duly

          licensed to transact business in the state where the Premises are

          located, and maintaining during the policy term a "General

          Policyholders Rating" of at least B+, V, or such other rating as may

          be required by a Lender, as set forth in the most current issue of

          "Best's Insurance Guide." Tenant shall not do or permit to be done

          anything which shall invalidate the insurance policies referred to in

          this Section 9. Tenant shall cause to be delivered to Landlord, within

          seven (7) days after the earlier of the Delivery Date or the

          Commencement Date evidence of the existence and amounts of, the

          insurance required under Section 9.2(a) and 9.4. No such policy shall

          be cancelable or subject to modification except after thirty (30)

          days' prior written notice to Landlord. Tenant shall at least thirty

          (30) days prior to the expiration of such policies, furnish Landlord

          with evidence of renewals or "insurance binders" evidencing renewal

           thereof, or Landlord may order such insurance and charge the cost

          thereof to Tenant, which amount shall be payable by Tenant to Landlord

          upon demand.

 

     9.5   Waiver. Tenant and Landlord each hereby release and relieve the other,

          and waive their entire right to recover damages (whether in contract

          or in tort) against the other, for loss or damage to their property or

          for any business interruption arising out of or incident to the perils

          to the extent such loss or damage or business interruption is

          coverable by a standard or special form policy regardless of whether

          such insurance is carried or not, or if so carried, payable to or

          protects Landlord or Tenant or both. The effect of such releases and

          waivers of the right to recover damages shall not be limited by the

          amount of insurance carried or required, or by any deductibles

          applicable thereto. Landlord and Tenant agree to have their respective

          insurance companies issuing property damage insurance waive any right

          to subrogation that such companies may have against Landlord or

          Tenant, as the case may be, so long as the insurance is not

          invalidated thereby.

 

     9.6   Indemnity. Except for Landlord's willful misconduct, Tenant shall

          indemnify, protect, defend and hold harmless the Premises, Landlord

          and its agents, employees, Landlord's master or ground Landlord,

          members, partners and Lenders, from and against any and all claims,

          loss of rents and/or damages, costs, liens, judgments, penalties, loss

          of permits, attorneys' and consultants' fees, expenses and/or

          liabilities arising out of, involving, or in connection with, the

          occupancy of the Premises by Tenant, the conduct of Tenant's business,

          any act, omission or neglect of Tenant, its agents, contractors,

          employees or invitees, and out of any Default or Breach by Tenant in

          the performance in a timely manner of any obligation on Tenant's part

          to be performed under this Lease. The foregoing shall include, but not

          be limited to, the defense or pursuit of any claim or any action or

          proceeding involved therein, and whether or not (in the case of claims

          made against Landlord) litigated and/or reduced to judgment. In case

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

          of the foregoing matters, Tenant upon notice from Landlord shall

          defend the same at Tenant's expense by counsel reasonably satisfactory

          to Landlord and Landlord shall cooperate with Tenant in such defense.

          Landlord need not have first paid any such claim in order to be so

          indemnified. The provisions of this Section shall survive the

          expiration or termination of this Lease.

 

     9.7   Exemption of Landlord from Liability. Landlord shall not be liable for

          injury or damage to the person or goods, wares, merchandise or other

          property of Tenant, Tenant's employees, contractors, invitees,

          customers, or any other person in or about the Premises, whether such

          damage or injury is caused by or results from fire, steam,

          electricity, gas, water or rain or from the breakage, leakage,

          obstruction or other defects of pipes, fire sprinklers, wires,

          appliances, plumbing, air conditioning or lighting fixtures, or from

          any other cause, whether said injury or damage results from conditions

          arising upon the Premises or upon other portions of the Building of

          which the Premises are a part, from other sources or places, and

          regardless of whether the cause of such damage or injury or the means

          of repairing the same is accessible or not. Landlord shall not be

          liable for any damages arising from any act or neglect of any other

          Tenant of Landlord nor from the failure by Landlord to enforce the

          provisions of any other lease in the Building Complex. Notwithstanding

          Landlord's negligence or breach of this Lease, Landlord shall under no

          circumstances be liable for injury to Tenant's business or for any

          loss of income or profit therefrom, or for any consequential damages

          of Tenant. Notwithstanding anything to the contrary contained herein,

          Landlord's liability under this Lease shall be limited to its interest

          in the Building Complex.

 

 

10.   Damage or Destruction.

 

     10.1 Total Damage. If the Premises or the Building shall be so damaged by

          fire or other casualty as to render the Premises wholly untenantable

          and if such damage shall be so great that a competent architect, in

          good standing, selected by Landlord shall certify in writing to

          Landlord and Tenant within ninety (90) days of said casualty that the

          Premises, with the exercise of reasonable diligence, cannot be made

          fit for occupancy within one hundred eighty (180) working days from

          the happening thereof, then this Lease shall cease and terminate from

          the date of the occurrence of such damage and Tenant shall thereupon

          surrender to Landlord the Premises and all interest therein hereunder

          and Landlord may reenter and take possession of the Premises and

          remove Tenant therefrom. Tenant shall pay rent, duly apportioned, up

          to the time of such termination of this Lease. If, however, the damage

          shall be such that said architect shall certify within said ninety

          (90) day period that the Premises can be made tenantable within said

          one hundred eighty (180) day period, then, except as hereinafter

          provided, Landlord shall repair the damage so done (to the extent of

          the Building Standard tenant finish allowance then provided by

          Landlord to tenants in the Building) with all reasonable speed.

 

     10.2 Partial Damage. If the Premises shall be slightly damaged by fire or

          other casualty, but not so as to render the same wholly untenantable

          or to require a repair period in excess of one hundred eighty (180)

           days, then, Landlord, after receiving notice in writing of the

          occurrence of the casualty, except as hereafter provided, shall cause

          the same to be repaired to the extent of the base tenant finish per

          the then-current standard allowance provided by Landlord to tenants in

          the Building with reasonable promptness. If the estimated repair

          period as established in accordance with the provisions of

          subparagraph 10.1 above exceeds one hundred eighty (180) days, then

          the provisions of subparagraph 10.1 shall control notwithstanding the

          fact that the Premises are not wholly untenantable.

 

     10.3 Building Damage. In case the Building throughout shall be so injured

          or damaged, whether by fire or otherwise (though said Premises may not

          be affected, or if affected, can be repaired within said one hundred

          eighty (180) days), that, within ninety (90) days after the happening

          of such injury, Landlord shall decide not to reconstruct or rebuild

          said Building, then, notwithstanding anything contained herein to the

          contrary, upon notice in writing to that effect given by Landlord to

          Tenant within said ninety (90) days, Tenant shall pay the rent,

          properly apportioned up to such date, this Lease shall terminate from

          the date of delivery of said written notice, and both parties hereto

          shall be freed and discharged of all further obligations hereunder.

 

     10.4 Rent Abatement. Provided that the casualty is not the fault of Tenant,

          Tenant's agents, servants, or employees. Tenant's

 

                                        6

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          rent shall abate during any such period of Landlord's repair and

          restoration, but only to the extent of any recovery by Landlord under

          its rental insurance related to the Premises in the same proportion

          that the part of the Premises rendered untenantable bears to the

          whole.

 

     10.5 Tenant's Obligation. In the event the Lease is not terminated, Tenant

          shall, at its expense, replace or fully repair Tenant's personal

          property and Alterations and/or Utility Installations installed by

          Tenant in the Premises existing on the date of the occurrence of the

          casualty and Tenant shall fully cooperate with Landlord in removing

          Tenant's personal property and any debris from the Premises to

          facilitate making of repairs.

 

 

11.   Real Property Taxes.

 

     11.1 Payment of Taxes. Landlord shall pay the Real Property Taxes, as

          defined in Section 11.2, applicable to the Building Complex, and

          except as otherwise provided in Section 11.3, any such amounts shall

          be included in the calculation of Common Area Operating Expenses in

          accordance with the provisions of Section 4.2.

 

     11.2 Real Property Tax Definition. As used herein, the term "Real Property

          Taxes" shall include any form of real estate tax or assessment,

          general, special, ordinary or extraordinary, and any license fee,

          commercial rental tax, improvement bond or bonds, levy or tax (other

          than inheritance, personal income or estate taxes) imposed upon the

          Building Complex by any authority having the direct or indirect power

          to tax, including any city, state or federal government, or any

          school, agricultural, sanitary, fire, street, drainage, or other

          improvement district thereof, levied against any legal or equitable

          interest of Landlord in the Building Complex or any portion thereof,

          Landlord's right to rent or other income therefrom, and/or Landlord's

          business of leasing the Premises. The term "Real Property Taxes" shall

          also include any tax, fee, levy, assessment or charge, or any increase

          therein, imposed by reason of events occurring, or changes in

          Applicable Law taking effect, during the term of this Lease, including

          but not limited to a change in the ownership of the Building Complex

          or in the improvements thereon, the execution of this Lease, or any

          modification, amendment or transfer thereof, and whether or not

           contemplated by the Parties, and any reasonable expenses incurred by

          Landlord in contesting such taxes or assessment of the Building

          Complex. In calculating Real Property Taxes for any calendar year, the

          Real Property Taxes for any real estate tax year shall be included in

          the calculation of Real Property Taxes for such calendar year based

          upon the number of days which such calendar year and tax year have in

          common.

 

     11.3 Additional Improvements. Common Area Operating Expenses shall not

          include Real Property Taxes specified in the tax assessor's records

          and work sheets as being caused by additional improvements placed upon

          the Building Complex by other tenants or by Landlord for the exclusive

          enjoyment of such other tenants. Notwithstanding Section 11.1 hereof,

          Tenant shall, however, pay to Landlord at the time Common Area

          Operating Expenses are payable under Section 4.2, the entirety of any

          increase in Real Property Taxes if assessed solely by reason of

          Alterations, Trade Fixtures or Utility Installations placed upon the

          Premises by Tenant or at Tenant's request.

 

     11.4 Joint Assessment. If the Building is not separately assessed, Real

          Property Taxes allocated to the Building shall be an equitable

          proportion of the Real Property Taxes for all of the land and

          improvements included within the tax parcel assessed, such proportion

          to be determined by Landlord from the respective valuations assigned

          in the assessor's work sheets or such other information as may be

          reasonably available. Landlord's reasonable determination thereof, in

           good faith, shall be conclusive.

 

     11.5 Tenant's Taxes. Tenant shall pay prior to delinquency all taxes

          assessed against and levied upon Tenant-Owned Alterations and Utility

          Installations, Trade Fixtures, furnishings, equipment and all personal

          property of Tenant contained in the Premises or stored within the

          Building Complex. When possible, Tenant shall cause its Tenant-Owned

          Alterations and Utility Installations, Trade Fixtures, furnishings,

           equipment and all other personal property to be assessed and billed

          separately from the real property of Landlord. If any of Tenant's said

          property shall be assessed with Landlord's real property, Tenant shall

          pay Landlord the taxes attributable to Tenant's property within ten

          (10) days after receipt of a written statement setting forth the taxes

          applicable to Tenant's property. In addition, Tenant shall pay all

          taxes, including, without limitation, workers' compensation, general

          license or franchise taxes and rent taxes, if any, which may be

          required for the conduct of Tenant's business.

 

12.   Utilities. Tenant shall pay directly for all utilities and services

     supplied to the Premises, including but not limited to electricity,

     telephone, security, gas and cleaning of the Premises, together with any

     taxes thereon. If any such utilities or services are not separately metered

     to the Premises or separately billed to the Premises, Tenant shall pay to

     Landlord a reasonable proportion to be determined by Landlord of all such

     charges jointly metered or billed with other premises in the Building, in

     the manner and within the time periods set forth in Section 4.2(d). In

     addition, Tenant shall reimburse Landlord for the reasonable costs incurred

     by Landlord in providing services which are shared by more than one tenant

     after ordinary business hours, including, without limitation, the costs for

     materials, additional wear and tear on equipment, utility charges and labor

     (including fringe benefits and overhead costs). Computation for Landlord's

     costs for providing such services will be made by Landlord's engineer,

     based on such engineer's survey of Tenant's excess usage.

 

 

13.   Assignment and Subletting.

 

     13.1 Landlord's Consent Required.

 

          (a)   Tenant shall not voluntarily or by operation of law assign,

               transfer, mortgage or otherwise transfer or encumber

               (collectively, "assign") or sublet a11 or any part of Tenant's

               interest in this Lease or in the Premises without Landlord's

               prior written consent, which consent will not unreasonably be

               withheld provided that (i) Tenant has complied with the

               provisions of this subparagraph and Landlord has declined to

               exercise its rights thereunder; (ii) the proposed subtenant or

               assignee is engaged in a business in the Premises which will be

               used in a manner which is in keeping with the then standards of

               the Building Complex and does not conflict with any exclusive use

               rights granted to any other tenant; (iii) the proposed subtenant

               or assignee has reasonable financial worth in light of the

               responsibilities involved and Tenant shall have provided Landlord

               with reasonable evidence thereof; (iv) Tenant is not in default

                hereunder at the time it makes its request for such consent; (v)

               the proposed subtenant or assignee is not a governmental or

               quasi-governmental agency; (vi) the proposed subtenant or

               assignee is not a tenant under or is not currently negotiating a

               lease with Landlord in any building owned by Landlord in the

               Denver metropolitan area (including in the Building Complex); or

               (vii) the rent under such sublease or assignment is not less than

               the rent to be paid by Tenant for such space under the Lease and

               is not less than eighty-five percent (85%) of the rental rate

               then being offered by Landlord for similar space in the Building

               Complex. Notwithstanding anything contained in Section 13 to the

               contrary, in the event Tenant requests Landlord's consent to

               sublet all or a portion of the Premises or to assign its interest

                in this Lease, Landlord shall have the right to (x) consent to

               such sublease or assignment in its reasonable discretion as

               described in the preceding sentences; (y) refuse to grant such

               consent in Landlord's reasonable discretion based upon the

               criteria described above; or (z) refuse to grant such consent and

               terminate this Lease as to the portion of the Premises with

               respect to which such consent was requested; provided, however,

               if Landlord refuses to grant such consent and elects to terminate

               the Lease as to such portion of the Premises, Tenant shall have

               the right within fifteen (15) days after Landlord's exercise of

                its right to terminate to withdraw Tenant's request for such

               consent and remain in possession of the Premises under the terms

               and conditions hereof. In the event the Lease is terminated as

               set forth herein, such termination shall be effective as of the

               date set forth in a written notice from Landlord to Tenant, which

               date shall in no event be more than thirty (30) days following

               such notice. Tenant hereby agrees that in the event it desires to

               sublease all or any portion of the Premises or assign this Lease

               to any party, in whole or in part, Tenant shall notify Landlord

               not less than sixty (60) days prior to the date Tenant desires to

               sublease such portion of the Premises or assign this Lease

               ("Tenant's Notice"). Tenant's Notice shall set forth a

               description of the Premises to be so sublet or assigned and the

                terms and conditions on which Tenant desires to sublet the

               Premises or assign this Lease. Landlord shall have forty-five

               (45) days following receipt of Tenant's Notice to exercise

               Landlord's rights pursuant to (x), (y) and (z) above. If Landlord

               consents to such sublease or assignment, and if for any reason

               Tenant is unable to sublet said portion of the Premises or assign

               the applicable portion of its interest in this Lease on the terms

               and conditions contained in Tenant's Notice within one hundred

               and twenty (120) days following its original notice to Landlord,

               Tenant agrees to re-offer the Premises to Landlord in accordance

               with the provisions hereof prior to subleasing or