LEASE

 

Phase Four Premises: May 1, 2003.

 

The term (the “Initial Term”) of this Lease shall commence on the Phase One Commencement Date and shall expire on the date that is sixty-three and one half (63 1/2) months after the Phase One Commencement Date (the “Expiration Date”).  The Expiration Date shall be subject to adjustment pursuant to the immediately following paragraph.  The Initial Term and any extension thereof are herein collectively sometimes referred to as the “Term” or “Term of this Lease.”

 

Notwithstanding the foregoing, if Landlord shall be unable to deliver possession of any of the Phases to Tenant on the date contemplated by Article 2, due to the possession or occupancy thereof by the prior tenant or subtenant, or others not lawfully entitled thereto, Landlord shall use good faith efforts to evict such occupant and to deliver possession of the Premises to Tenant as soon as reasonably practicable.  Landlord, using such good faith efforts, shall not in any way be liable for failure to deliver possession of any part of the Premises to Tenant, but, subject to the provision at the end of this sentence, the applicable Phase Commencement Date shall be postponed with respect to the Phase One Premises until the date which is one (1) month after the date on which Landlord tenders possession of the Phase One Premises or with respect to the remaining Phases, the date which is two (2) months after the date which Landlord tenders possession of the applicable portion of the Premises to Tenant and, if necessary, the Term shall be automatically extended so as to include a full sixty-three and one half (63 1/2) months (plus any partial month) following the Phase One Commencement Date; provided, however, if Landlord fails to deliver (a) the Phase One Premises on or before the Phase One Commencement Date; (b) the Phase Two Premises, on or before October 1, 2002; (c) the Phase Three Premises, on or before May 1, 2003; or (d) the Phase Four Premises, on or before November 1, 2003, then in each such event Landlord agrees that Tenant shall receive one day free rent on the square footage of the Phase which is not delivered by the date described above (for example, if the Phase Two Premises are not delivered until October 3, 2002, Tenant will receive two days of free rent on the Phase Two Premises only).  Any delay in delivery of any Phase other than Phase One shall not extend the Term.

 

The Initial Term is subject to extension as provided in Article 42 hereof.

 

ARTICLE 2

 

POSSESSION:

 

For the purpose of constructing the Tenant Improvements (as defined herein), it is the intention of the parties that Landlord deliver possession of the first floor of the Building approximately one month prior to the Phase One Commencement Date and each other Phase approximately two months prior to the respective Phase Commencement Date.

 

Landlord shall use its good faith efforts to deliver possession of each Phase to Tenant for the purpose of constructing the Tenant Improvements (as defined herein) and otherwise preparing the Phase for use by Tenant one month prior to the Phase One Commencement Date and two months prior to the other applicable Phase Commencement Date as set forth in Article 1.  The date that possession of each Phase is actually delivered to Tenant is herein referred to as the

 

2

 

“Phase Delivery Date.”  During the applicable one (1) month or two (2) month period beginning with each Phase Delivery Date (the “Phase Early Occupancy Period”) Tenant shall not be required to pay (a) Base Rent for the Phase of the Premises being delivered, or (b) any amount toward Additional Rent for the Phase of the Premises being delivered, including but not limited to insurance and/or operating expenses during the respective Phase Early Occupancy Period, provided, however, that Tenant shall pay for all utilities consumed in the Phase during the Phase Early Occupancy Period.

 

Landlord shall cooperate with Tenant to transfer direct billing, or otherwise establish Tenant as the responsible billing party for all utilities consumed for each Phase from and after the respective Phase Delivery Date, to the extent possible prior to Tenant’s occupancy of all four Phases of the Premises.  Other than as specifically stated in this Article 2, during each Phase Early Occupancy Period, Tenant shall abide with all other terms and conditions of this Lease, including without limitation, insurance obligations of Tenant.

 

ARTICLE 3

 

BASE RENT:

 

Landlord reserves, and Tenant shall pay Landlord base rental (“Base Rent”) during the Initial Term, payable in advance, in monthly installments as set forth below, commencing on the Phase One Commencement Date and continuing on the first day of each and every month thereafter for the next succeeding months during the balance of the Initial Term.

 

Months of the Term		Square Footage Schedule		Rent per Square Foot			Monthly Base Rent
01/15/02 - 07/31/02		20,000		$	9.00		$	15,000.00
08/01/02 - 01/31/03		30,000		$	9.00		$	22,500.00
02/01/03 - 04/30/03		40,000		$	9.00		$	30,000.00
05/01/03 - 12/31/03		60,000		$	9.00		$	45,000.00
01/01/04 – 12/31/04		60,000		$	10.00		$	50,000.00
01/01/05 –12/31/05		60,000		$	11.00		$	55,000.00
01/01/06 – 04/30/07		60,000		$	12.00		$	60,000.00

 

Notwithstanding the foregoing, no Base Rent shall be due or payable in respect of the first full month of the Initial Term.  This Lease is a net lease in all respects.  Except as otherwise expressly provided in this Lease, the Base Rent shall be absolutely net to Landlord and Landlord shall be under no obligation or liability to furnish or pay for any of the repairs, maintenance, real estate taxes, installments of special assessments, utilities, insurance or for any other expenses which are in any manner incurred with respect to the Premises or the business conducted thereon, all of which shall be the sole obligation and liability of the Tenant.

 

3

 

ARTICLE 4

 

ADDITIONAL RENT; TAXES AND OPERATING EXPENSES:

 

Tenant shall pay as Additional Rent Tenant’s proportionate share of “Taxes” with respect to any calendar year which shall be defined as and comprised of: (i) real estate taxes and annual installments of special assessments due and payable against the Property, and the Building; (ii) any taxes levied or assessed, in whole or in part, in lieu of real estate taxes; (iii) any taxes on the stream of rental income (other than income taxes); (iv) all other taxes or any other federal, state or local governmental charges on the Land, the Building or this Lease levied as part of or in lieu of real estate taxes and assessments; and (v) any sales tax or similar tax assessed or payable in connection with services provided by Landlord hereunder.  Tenant shall also pay as Additional Rent any and all Taxes levied or assessed, in whole or in part, based on the value of Tenant’s personal property in the Premises.

 

Tenant shall also pay, as Additional Rent, its proportionate share of all “Operating Expenses” incurred by Landlord during any calendar year.  Subject to the exclusions and limitation expressly provided below, Operating Expenses shall include Landlord’s costs of maintaining, repairing and operating the Property and Building including, but not limited to:

 

1.              janitorial and window washing expenses;

 

2.              expenses related to operating, maintaining, repairing and replacing any part of the Building including landscaping, planters, paving, curbs, sidewalks, roadways, parking facilities (including all parking lots, garages and ramps), drainage facilities, machines, equipment and lighting facilities;

 

3.              expenses for trash and rubbish removal;

 

4.              management fees in an amount not to exceed 5% of all other “Operating Expenses”;

 

5.              insurance (which may include, but not be limited to, hazard, plate glass, boiler and machinery, liability and loss of rent insurance);

 

6.              security expenses;

 

7.              costs incurred in renting or purchasing equipment necessary or appropriate for the smooth operation of the Property or Building;

 

8.              costs of contesting the value of the Property or Building for real estate taxation purposes;

 

9.              wages, salaries and related expenses of all employees engaged in the management, operation, maintenance or security of the Property or Building (to the extent such employees are directly involved in such management, operation, maintenance

 

4

 

or security, as opposed to the management, operation, maintenance or security of other properties) and the costs of a management office servicing the building;

 

10.            the cost of all supplies and materials used in the operation and maintenance of the Property or Building;

 

11.            light bulbs and ballasts;

 

12.            the cost of maintenance and service agreements for the Building and the equipment therein;

 

13.            accounting and audit costs;

 

14.            the cost of all utilities, including, without limitation, water, electricity and gas and the cost of heating, lighting, air conditioning and ventilating the Building;

 

15.            interior and exterior maintenance expenses including expenses related to maintenance and replacement of the roofs, foundations and structural portions of the Building and the electrical, mechanical, plumbing and other systems and facilities serving the Property or Building;

 

16.            amortization, on a commercially reasonable basis, of (a) capital improvements and expenditures made to: (i) reduce operating costs, (ii) comply with requirements of Landlord’s insurance carrier that are enacted, or first interpreted to apply to the Property or the Building, after the date of this Lease, or (iii) comply with any law, rule, regulation or order of any governmental authority that is enacted, or first interpreted to apply to the Property or the Building, after the date of this Lease, and (b) other costs and expenditures which are appropriately accounted for as capital expenditures.

 

The amortized cost of capital improvements and expenditures may, at Landlord’s option, include actual or imputed interest at the rate that Landlord would reasonably be required to pay to finance the cost of the given capital improvement.  Landlord’s records regarding Operating Expenses shall be made available to Tenant, at Landlord’s place of business, during normal business hours upon request of Tenant.  If the Building does not have one hundred percent (100%) occupancy during an entire calendar year, then the variable cost component of “Operating Expenses” (i.e. the component of Operating Expenses that varies depending upon the occupancy level of the Building) shall be equitably adjusted so that the total amount of Operating Expenses equals the total amount which would have been paid or incurred by Landlord had the Building been one hundred percent (100%) occupied for the entire calendar year.  In no event shall Landlord be entitled to receive from Tenant and any other tenants in the Building an aggregate amount in excess of actual Operating Expenses as a result of the foregoing provision.

 

Tenant shall pay with its monthly installment of Base Rent the amount Landlord reasonably estimates for Tenant’s proportionate share of all Additional Rent items.  When Landlord has determined the actual amounts for each such Additional Rent item, Landlord shall advise Tenant of any additional amounts due from Tenant or any credit due to Tenant.  Within thirty (30) days of Tenant’s receipt of such statement, Tenant shall pay the additional amount due

 

5

 

to Landlord, if any.  Tenant shall provide Landlord with written notice of any objection that Tenant may have to any Additional Rent item within one hundred twenty (120) days of the later to occur of (i) the end of the calendar year in which the Additional Rent items are incurred, or (ii) the date upon which Landlord provides Tenant a statement of the actual amount of any Additional Rent item; it being further agreed that in connection with the foregoing, Landlord shall make available to Tenant, at Landlord’s designated office and during normal business hours, Landlord’s books and records maintained with respect to Additional Rent for the applicable calendar year.  In the event of a failure to object within such time period, Tenant shall be deemed to waive any further right to object to such Additional Rent.  Following Landlord’s review and in the event Landlord agrees with Tenant’s objection, any overpayment shall be credited against the next Additional Rent payment due.  If the Term has expired, any overpayment shall be promptly refunded to Tenant and any underpayment shall be promptly paid to Landlord.  Landlord may from time to time adjust the monthly installment of estimated Additional Rent charges to more accurately reflect Landlord’s current estimate of such charges.  Landlord presently calculates Additional Rent based on a calendar year, and Tenant’s obligation for Operating Expenses and Taxes shall be pro rated on a calendar basis if the calendar year includes any period of time not within the Term.  Tenant’s proportionate share shall be based on that portion of the Building that has been delivered to Tenant pursuant to Article 2 hereof.

 

ARTICLE 5

 

COVENANT TO PAY RENT:

 

The covenants of Tenant to pay the Base Rent and the Additional Rent are each independent of any other covenant, condition, provision or agreement contained in this Lease.  All rents are payable to Landlord without deduction, counterclaim or set-off at:

 

Green Oak Associates

6125 Blue Circle Drive

Minnetonka, Minnesota 55343

Attention: Cyrille E. DeCosse

 

or such other address as Landlord may from time to time designate in writing.

 

ARTICLE 6

 

UTILITIES:

 

Tenant shall pay for all utilities consumed on the Premises during the Term, including, but not limited to, all charges for sewer usage or rental, garbage, disposal, refuse removal, water, electricity, gas, fuel oil, L.P. gas, telephone and/or other utility services or energy source furnished to the Building and Premises.

 

6

 

ARTICLE 7

 

CARE AND REPAIR OF THE PREMISES (“PREMISES MAINTENANCE”):

 

Tenant shall, at all times throughout the Term of this Lease and at its sole expense, keep and maintain the Premises in a clean, safe, sanitary and first class condition and in compliance with all applicable laws, codes, ordinances, rules and regulations.  Tenant’s obligations hereunder regarding the Premises shall include, but not be limited to, the maintenance and repair and replacement, if necessary, of the heating and air conditioning fixtures, equipment, and systems, the electrical system, and all lighting and plumbing fixtures and equipment located within, or exclusively serving, the Premises, fixtures, motors and machinery; all interior walls, partitions, doors and windows, including the regular painting thereof; all exterior entrances, windows, doors and docks and the replacement of all broken glass.  When used in this provision, the term “repairs” shall include replacements or renewals when necessary, and all such repairs made by the Tenant shall be equal in quality and class to the original work.  The Tenant shall keep and maintain all portions of the Premises in a clean and orderly condition, free of accumulation of dirt and rubbish.

 

If Tenant fails, refuses or neglects to maintain or repair the Premises as required in this Lease after notice shall have been given Tenant in accordance with Articles 17 and 32 of this Lease, Landlord may perform such maintenance and/or make such repairs without liability to Tenant for any loss or damage that may accrue to Tenant’s merchandise, fixtures or other property or to Tenant’s business by reason thereof, and upon completion thereof, Tenant shall pay to Landlord all reasonable costs plus 15% for overhead incurred by Landlord in making such repairs upon presentation to Tenant of a bill therefor.

 

During the term of this Lease, Landlord shall, at Landlord’s initial cost and expense but subject to Article 4 hereof, keep and maintain in good order, condition and repair, the foundation, exterior walls (except glass or other breakable materials used in structural portions), roof, foundation, and structural portions of the Building and the electrical, mechanical, plumbing and other systems and facilities serving the Building and located outside of the Premises.

 

Notwithstanding any provision herein to the contrary, Tenant and Landlord agree that during any given calendar year, Tenant shall be obligated to pay the first $15,000.00 associated with replacement of all or any portion of the heating, air conditioning and ventilation system and Landlord shall be responsible for the remainder of such replacement costs during such year.  The foregoing provision shall relate only to replacement of portions of the system and not replacement of parts associated with maintenance of the system.

 

ARTICLE 8

 

SIGNS:

 

Tenant shall have the right to erect or cause to be erected any signs, notices or advertisements upon the Premises or affix any such signage thereto which is visible from the exterior of the Building which comply with applicable law and the Opus II Declaration of Industrial Standards and Protective Covenants (“Protective Covenants”) affecting the Premises, a copy of which is attached hereto as Exhibit D.  In no event, however, shall Tenant erect any

 

7

 

signs on the roof of the Building or any which by reason of size, weight, location or otherwise, might affect the structural integrity of the Building.  Signs placed on the Premises by Tenant shall be removed by it not later than the expiration of the Term or any sooner termination thereof.  Upon removal of any such signs Tenant shall repair any damage caused by the existence of such signage or its removal.

 

ARTICLE 9

 

ALTERATIONS, INSTALLATION, FIXTURES;

INITIAL LANDLORD AND TENANT IMPROVEMENTS:

 

Following the completion of Tenant’s Work, thereafter, Tenant shall not make any alterations, additions, or improvements in or to the Premises or add, disturb or in any way change any of the Building’s systems, costing in excess of $10,000.00 in each instance without prior notice to Landlord, receipt of all necessary permits and governmental approval and in compliance with the Protective Covenants.  Tenant shall not make any structural alterations, additions or improvements, make any changes to the Building’s systems or make any repair, alteration or replacement to the roof of the Building without Landlord’s prior written consent, which shall not be unreasonably withheld or delayed.  Along with any request for Landlord’s consent Tenant shall furnish to Landlord the proposed plans and specifications, names and addresses of contractors, copies of contracts, necessary permits and licenses for the proposed work, and a performance bond executed by a commercial surety, or other security reasonably satisfactory to Landlord, in an amount equal to at least 125% of the cost of such alterations, changes, additions or improvements.  In the event alterations are required by any governmental agency by reason of the particular use and occupancy of the Premises by Tenant, Tenant shall make such alterations at its own cost and expense subject to Landlord’s obligations pursuant to Article 7.  Alterations or additions by either Landlord or Tenant must be built in compliance with all laws, ordinances and governmental regulations affecting the Premises and each party shall warrant to the other that all such alterations, additions, or improvements performed by either Landlord or Tenant shall be in strict compliance with all relevant laws, ordinances, governmental regulations, and insurance requirements.  The work shall comply with all insurance requirements and all applicable laws, ordinances, rules and regulations and shall be constructed in a good and workman-like manner.  All permanently affixed alterations, installations, physical additions or improvements to the Premises made by Tenant, including, without limitation, the Initial Tenant Improvements (but excluding Tenant’s signage, business equipment, furniture, trade fixtures and other personal property) shall at once become the property of Landlord and surrendered to Landlord upon the termination of this Lease.  Tenant shall be responsible for all costs related to improvements or modifications to the Premises required or necessary to comply with the Americans With Disabilities Act of 1990 (ADA), or similar statutes.

 

Landlord, by written notice to Tenant given at the time required consent is granted may require Tenant, at Tenant’s sole cost and expense, to remove upon expiration or other termination of this Lease any improvements, additions or installations installed by Tenant in the Building and repair any damage caused by the installation and removal of such improvements, additions, or installations.  The only improvements, additions or installations that Tenant shall remove, or be required to remove, shall be those specified in such notice.  Notwithstanding the foregoing provisions of this paragraph, Landlord may not require Tenant to remove any part of

 

8

 

the Initial Tenant Improvements, structural or otherwise, which are made to the Building or to the non-Building portions of the Premises.

 

Tenant agrees to defend and hold Landlord harmless from any and all claims and liabilities of any kind and description which may arise out of or be connected in any way with alterations, changes, additions or improvements made by Tenant.

 

Tenant intends to construct certain improvements to the Premises (“Initial Tenant Improvements”), which are generally described in Exhibit C hereto.  Landlord approves construction of the Initial Tenant Improvements substantially in accordance with Exhibit C, subject to Landlord’s approving the final plans and specifications therefor, which approval will not be unreasonably withheld or delayed.  Tenant shall comply with all of the provisions of this Article in constructing the Initial Tenant Improvements.  Landlord shall reimburse Tenant for a portion of the cost of the Initial Tenant Improvements as set forth below in accordance with the provisions of Exhibit C:

 

Phase		Tenant Improvement Allowance
Phase One Premises		$15.00 per rentable square foot for the Phase One Premises;
Phase Two Premises		Amount equal to the product of $.25 per rentable square foot of Phase Two Premises multiplied by the number of months remaining in the Initial Term of the Lease at the time Tenant takes occupancy of and commences payment of Base Rent related to the Phase Two Premises, minus two months;
Phase Three Premises		Amount equal to the product of $.25 per rentable square foot of Phase Three Premises multiplied by the number of months remaining in the Initial Term of the Lease at the time Tenant takes occupancy of and commences payment of Base Rent related to the Phase Three Premises, minus two months.
Phase Four Premises		Amount equal to the product of $.25 per rentable square foot of Phase Four Premises multiplied by the number of months remaining in the Initial Term of the Lease at the time Tenant takes occupancy of and commences payment of Base Rent related to the Phase Four Premises, minus two months.

 

Nothing in this Lease shall be construed as consent on the part of Landlord to subject Landlord’s estate in the Premises to any lien or liability arising out of any work performed by Tenant.  Landlord reserves the right to post notices of nonliability in, on and about the Premises in connection with any work performed by Tenant.

 

9

 

ARTICLE 10

 

PREPAID RENT:

 

Base Rent and Additional Rent due and payable hereunder shall be paid in advance pursuant to the following schedule:

 

Rent Due Date:				Payment Due
1.		Upon execution of the Lease:		$390,000.00;
2.		June 1, 2002		$177,500.00;
3.		January 1, 2003		$165,000.00; and
4.		March 1, 2003		$310,000.00;

 

provided, however, Landlord agrees that it shall not require rent be prepaid as set forth in Items 3 and 4 above, if on the date that each such payment is due Tenant delivers a statement, certified by Tenant’s independent public accounting firm, providing that Tenant has a book value equal to or greater than $5,000,000 and Tenant’s net revenues over the proceeding?? 12 months are equal to or greater than $10,000,000; provided, however, in connection with the third payment due hereunder, if on or before March 1, 2003, Tenant delivers the foregoing statement, Landlord agrees to refund to Tenant the unused portion of the prepaid rent payment made on January 1, 2003.  All prepaid Base Rent and Additional Rent amounts shall be applied to the immediately succeeding month’s rent otherwise due hereunder, and each month thereafter, until applied in full, provided however, in the event of a default hereunder, Landlord may apply the prepaid rent in any manner Landlord chooses.  Notwithstanding any provision herein to the contrary, all prepaid rent shall be deemed earned upon receipt thereof, and except as provided above, in no event shall Landlord be obligated to return any of the foregoing payments.

 

ARTICLE 11

 

USE:

 

The Premises shall be used and occupied by Tenant solely for general office purposes.  Subject to Landlord’s obligations hereunder, Tenant shall comply with all applicable laws, ordinances and governmental regulations affecting the Building and Premises.  The Premises shall not be used in such manner that, in accordance with any requirement of law or of any public authority, Landlord shall be obliged on account of the purpose or manner of said use to make any addition or alteration to or in the Building.  Tenant shall occupy the Premises, conduct its business and control its agents, employees, invitees and visitors in such a way as is lawful, does not result in waste, and will not permit or create any nuisance; and Tenant’s use of the Premises shall conform to the Protective Covenants affecting the Premises.  Landlord shall not permit the storage of any type of equipment, property or materials on the Premises other than those used exclusively by Landlord in exercising it rights or performing its obligations hereunder and shall not allow any obstacles, automobiles, containers or other materials to be placed in the parking lot area of the Premises without the prior written consent of Tenant.

 

10

 

ARTICLE 12

 

ACCESS TO THE PREMISES:

 

The Tenant agrees to permit the Landlord and the authorized representatives of the Landlord to enter the Premises at all times during Tenant’s usual business hours, upon reasonable prior notice thereof to Tenant, for the purpose of inspecting the same and making any necessary repairs to the Premises and performing any work therein that may be necessary to comply with any laws, ordinances, rules, regulations or requirements of any public authority or of the Board of Fire Underwriters or any similar body or that the Landlord may deem necessary to prevent waste or deterioration in connection with the Premises.  Nothing herein shall imply any duty upon the part of the Landlord to do any such work which, under any provision of this Lease, the Tenant may be required to perform and the performance thereof by the Landlord shall not constitute a waiver of the Tenant’s default in failing to perform the same.  The Landlord may, during the progress of any work in the Premises, keep and store upon the Premises all necessary materials, tools and equipment and, except in an emergency, shall coordinate all staging, scheduling and access with Tenant prior to entry.  The Landlord shall not in any event be liable for inconvenience, annoyance, disturbance, loss of business, or other damage of the Tenant by reason of making repairs or the performance of any work in the Premises, or on account of bringing materials, supplies and equipment into or through the Premises during the course thereof and the obligations of the Tenant under this Lease shall not thereby be affected in any manner whatsoever; provided, however, that Landlord shall use reasonable efforts to minimize any disturbance or interference with Tenant’s business.

 

Landlord reserves the right to enter the Premises at any time in the event of an emergency and at reasonable hours upon reasonable prior notice to Tenant to exhibit the Premises to prospective purchasers, lenders and to the display “For Lease” or similar signs on the grounds of the Building and to exhibit the Premises to prospective tenants during the last year of the Term of this Lease, as the same may have been extended, all without hindrance or molestation by Tenant.

 

ARTICLE 13

 

EMINENT DOMAIN:

 

In the event of any eminent domain or condemnation proceeding or private sale in lieu thereof in respect to the Premises during the term thereof, the following provisions shall apply:

 

a.              If the whole of the Premises shall be acquired or condemned by eminent domain for any public or quasi-public use or purpose, then the term of this Lease shall cease and terminate as of the date possession shall be taken in such proceeding and all rentals shall be paid up to that date.

 

b.              If any part constituting less than the whole of the Premises shall be acquired or condemned as aforesaid, and in the event that such partial taking or condemnation shall materially affect the Premises so as to render the Premises unsuitable for the business of the Tenant, in the reasonable opinion of Tenant, then the term of this

 

11

 

Lease shall cease and terminate as of the date possession shall be taken by the condemning authority and rent shall be paid to the date of such termination.

 

In the event of a partial taking or condemnation of the Premises which shall not materially affect the Premises so as to render the Premises unsuitable for the business of the Tenant, in the reasonable opinion of the Tenant, this Lease shall continue in full force and effect but with a proportionate abatement of the Base Rent and Additional Rent based on the portion, if any, of the Premises taken.  Landlord reserves the right, at its option, to restore the Building and the Premises to substantially the same condition as they were prior to such condemnation.  In such event, Landlord shall give written notice to Tenant, within thirty (30) days following the date possession shall be taken by the condemning authority, of Landlord’s intention to restore.  Upon Landlord’s notice of election to restore, Landlord shall commence restoration and shall restore the Building and the Premises with reasonable promptness, subject to delays beyond Landlord’s control and delays in the making of condemnation or sale proceeds adjustments by Landlord.  Tenant shall have no right to terminate this Lease except as herein provided.  Upon completion of such restoration, the rent shall be adjusted based upon the portion, if any, of the Premises restored.

 

c.              In the event of any condemnation or taking as aforesaid, whether whole or partial, the Tenant shall not be entitled to any part of the award paid for such condemnation of the Premises, and Landlord is to receive the full amount of such award; Tenant hereby expressly waiving any right to claim to any part thereof.

 

d.              Although all damages in the event of any condemnation of the Premises shall belong to the Landlord, whether such damages are awarded as compensation for diminution in value of the leasehold or to the fee of the Premises, Tenant shall have the right to claim and recover from the condemning authority, but not from Landlord, such compensation as may be separately awarded or recoverable by Tenant in Tenant’s own right on account of any and all damage to Tenant’s business by reason of the condemnation and for or on account of any cost or loss to which Tenant might be put in removing Tenant’s merchandise, furniture, fixtures and equipment.  However, Tenant shall have no claim against Landlord or make any claim with the condemning authority for the loss of its leasehold estate, any unexpired term or loss of any possible renewal or extension of said Lease or loss of any possible value of said Lease, any unexpired term renewal or extension of said Lease.

 

ARTICLE 14

 

DAMAGE OR DESTRUCTION:

 

In the event of any damage or destruction too the Premises by fire or other cause during the term hereof, the following provisions shall apply:

 

12

 

a.              If the Building is damaged by fire or any other cause to such extent that the cost of restoration, as reasonably estimated by Landlord, will equal or exceed fifty percent (50%) of the replacement value of the Building (exclusive of foundations) just prior to the occurrence of the damage, then Landlord may, no later than the sixtieth (60th) day following the damage, give Tenant written notice of Landlord’s election to terminate this Lease.

 

b.              If the Premises are not suitable as a result of said damage for the purposes for which they are demised hereunder or if, in the reasonable opinion of Tenant, restoration cannot be completed within one hundred eighty (180) days following the casualty, then Tenant may, no later than the sixtieth (60th) day following the damage, give Landlord a written notice of election to terminate this Lease.

 

c.              If during the last year of the Initial Term or Option Term (unless in the case of the Initial Term or first Option Term this Lease has been, or is within twenty (20) days after the date of damage, extended for the next Option Term) the Building shall be destroyed or so damaged by fire or other insured casualty as to render more than fifty percent (50%) thereof untenantable, either Landlord or Tenant may, at its option, by written notice to the other party given within thirty (30) days after such damage or destruction, terminate this Lease effective a date not more than thirty (30) days after the date of such notice.

 

d.              If the cost of restoration as reasonably estimated by Landlord shall amount to less than fifty percent (50%) of said replacement value of the Building, or if, despite the cost, neither Landlord nor Tenant elects to terminate this Lease, Landlord shall restore the Building and the Premises with reasonable promptness, subject to delays beyond Landlord’s control and delays in the making of insurance adjustments by Landlord.  Landlord shall not be responsible for restoring or repairing leasehold improvements of the Tenant, except to the extent recovered insurance proceeds are sufficient to do so.

 

e.              In the event any of the elections to terminate are appropriately exercised, this Lease shall be deemed to terminate on the date of the receipt of the notice of election and all rents shall be paid up to that date.  Tenant shall have no claim against Landlord for the value of any unexpired term of this Lease.

 

f.               In any case where damage to the Building shall materially affect the Premises so as to render them unsuitable in whole or in part for the purposes for which they are demised hereunder, then, unless such destruction was wholly or partially caused by the gross negligence of Tenant, its employees, contractors or licensees, a portion of the Base Rent and Additional Rent based upon the amount of the extent which the Premises is rendered unsuitable shall be abated until repaired or restored.  If the destruction or damage was wholly or partially caused by gross negligence of Tenant as aforesaid and if Landlord shall elect to rebuild, the Base Rent and additional rent shall not abate and the Tenant shall remain liable for the same; provided, however, Tenant shall receive a credit for any proceeds of rent loss insurance actually paid to Landlord, less the reasonable cost and expenses,

 

13

 

including, without limitation, reasonable attorneys fees, incurred by Landlord in collecting the same.

 

g.              Tenant will reimburse Landlord for the portion of any loss which is deductible under Landlord’s policy of casualty insurance (up to the maximum deductible under such policy provided for in this Lease), which amount shall not exceed $5,000, unless such loss is the result of Landlord’s gross negligence or willful acts or omissions.

 

ARTICLE 15

 

CASUALTY INSURANCE:

 

a.              Tenant shall keep all of its machinery, equipment, furniture, fixtures, leasehold improvements and other property under the care, custody, or control of Tenant and business interests which may be located in, upon, or about the Premises insured for the benefit of Tenant in an amount equal to one hundred percent (100%) of the full insurable value thereof on a replacement cost basis against loss or damage by fire and such other risk or risks of a similar or dissimilar nature as are now, or may in the future be, customarily covered under so-called “all risk” fire and extended coverage insurance, including, but without limiting the generality of the foregoing, windstorms, hail, explosions, vandalism, theft, malicious mischief, civil commotion, and such other coverage as Tenant may deem appropriate or necessary.  Tenant agrees that such policy or policies of insurance shall permit releases of liability as provided herein and/or waiver of subrogation clause as to Landlord.

 

Tenant hereby waives and releases all claims, liabilities and causes of action against Landlord and its agents, servants and employees for loss or damage to, or destruction of, any of the machinery, equipment, furniture, fixtures, leasehold improvements and other property, whether that of Tenant or of others in, upon or about the Premises resulting from fire, explosion or the other perils included in standard extended coverage insurance notwithstanding that such loss, claim, expense or damage may have been caused by the negligence (but not gross negligence or willful acts) of Landlord, its agents or employees, and Tenant agrees to look to the insurance coverage only in the event of such loss.  Landlord hereby waives and releases all claims, liabilities and causes of action against Tenant and its agents, servants and employees for loss or damage to, or destruction of all or a portion of the Premises resulting from fire, explosion or other perils included in standard extended coverage insurance notwithstanding that such loss, claim, expense or damage may have been caused by the negligence (but not gross negligence or willful acts) of Tenant, its agents or employees, and Landlord agrees to look to the insurance coverage only in the event of such loss.

 

b.              If Tenant installs any electrical equipment that overloads the power lines to the Building or its wiring, Tenant shall, at its own expense, make whatever changes

 

14

 

are necessary to comply with the requirements of the insurance underwriter, insurance rating bureau and governmental authorities having jurisdiction.

 

ARTICLE 16

 

PUBLIC LIABILITY INSURANCE:

 

Tenant shall, during the term hereof, keep in full force and effect, at its expense, a policy or policies of public liability insurance with respect to the Premises and the business of Tenant in amounts no less than $2,000,000.00 per occurrence naming the Landlord and any mortgagees designated by Landlord as additional insureds.  The insurance shall include contractual liability coverage specifically insuring Tenant’s indemnity obligations hereunder, shall cover the entire Premises, including sidewalks and parking lot areas within the Premises, and shall be issued by insurance companies licensed to do business in Minnesota with a Best’s Insurance Rating of A+V or better.  The policies shall provide for at least thirty (30) days’ prior written notice to Landlord and any mortgagees named therein, in the event of cancellation or any material change.  Copies or certificates of the policy or policies shall be delivered to Landlord prior to the commencement of the Term and copies or certificates of renewal of the policy or policies shall be delivered to Landlord no later than thirty (30) days prior to the expiration date of the policy or policies then in force.

 

ARTICLE 17

 

DEFAULT OF TENANT/LANDLORD:

 

a.              In the event of any failure of Tenant to pay any rental due hereunder within ten (10) days of when due, or any failure to perform any other terms, conditions or covenants of this Lease to be observed or performed by Tenant for more than thirty (30) days after written notice of such failure shall have been given to Tenant (or such longer period as may be reasonably required if such failure is not reasonably capable of being cured within thirty (30) days so long as Tenant is diligently and in good faith proceeding to cure the same), or any report required to be furnished to Landlord pursuant to the terms of this Lease is false or misleading in any material respect, or if Tenant shall become bankrupt or insolvent or file any debtor proceedings or any person shall take or have against Tenant in any court pursuant to any statute either of the United States or of any state a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Tenant’s property and such proceeding is not dismissed within sixty (60) days of filing, or if Tenant makes an assignment for the benefit of creditors, or petitions for or enters into an arrangement, or if Tenant shall suffer this Lease to be taken under any writ of execution, then in any such event Tenant shall be in default hereunder, and Landlord, in addition to their rights of remedies it may have, shall have the right to reenter the property in accordance with applicable law and remove all persons and property from the Premises and such property may be removed and stored in a public warehouse or elsewhere at the cost of, and for the account of Tenant, all without being guilty of

 

15

 

trespass or becoming liable for any loss or damage which may be occasioned thereby.

 

b.              Should Landlord elect to re-enter the Demised Premises as herein provided, or should it take possession of the Premises pursuant to legal proceedings or pursuant to any notice provided for by law, it may either terminate this Lease or it may from time to time, without terminating this Lease, make such reasonable alterations and repairs as may be required in order to relet the Premises and relet the Premises or any part thereof upon such term or terms (which may be for a term extending beyond the term of this Lease) and at such rental or rentals and upon such other terms and conditions as Landlord in its reasonable business discretion may deem advisable.  Upon each such subletting all rentals received by the Landlord from such reletting shall be applied first to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord; second, to the payment of any costs and expenses of such reletting, including reasonable brokerage fees and reasonable attorney’s fees and reasonable out-of-pocket costs of such alterations and repairs; third, to the payment of the rent due and unpaid payment of future rent as the same may become due and payable hereunder.  If such rentals received from such reletting during any month is less than that to be paid during that month by Tenant hereunder, Tenant, upon demand, shall pay any such deficiency to Landlord.  No such re-entry or taking possession of the Premises by Landlord shall be construed as an election on its part to terminate this Lease unless a written notice of such intention be given to Tenant, or unless the termination thereof be decreed by a court of competent jurisdiction.  Notwithstanding any such reletting without termination, Landlord may at any time after such re-entry and reletting elect to terminate this Lease for any such breach.  In addition to any other remedies it may have, it may recover from Tenant all damages it may incur by reason of such breach, including the cost of recovering the Premises, reasonable attorney’s fees, and including, upon termination hereof, the present worth at the time of such termination of the excess, if any, of the amount of rent and charges equivalent to rent reserved in this Lease for the remainder of the stated term over the then reasonable rental value of the Premises for the remainder of the stated term, all of which amounts shall be immediately due and payable from Tenant to Landlord.

 

c.              Landlord may, at its option, instead of exercising any other rights or remedies available to it in this Lease or otherwise by law, statute or equity, spend such money as is reasonably necessary to cure any default of Tenant herein and the amount so spent and costs incurred, including attorney’s fees, in curing such default, shall be paid by Tenant as Additional Rent upon demand.

 

d.              In the event suit shall be brought for recovery of possession of the Premises, for the recovery of rent or any other amount due under the provisions of this Lease, or because of the breach of any other covenant herein contained on the part of Tenant to be kept or performed and a judgment is entered in favor of Landlord, Tenant shall pay to Landlord all expenses incurred therefor, including reasonable

 

16

 

attorney’s fees, together with interest on all such expenses at the rate of twelve percent (12%) per annum from the date incurred to the date paid.

 

e.              Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Tenant being evicted or dispossessed for any cause, or in the event of Landlord obtaining possession of the Premises by reason of the violation by Tenant of any of the covenants or conditions of this Lease, or otherwise.  Tenant also waives any demand for possession of the Premises and any demand for payment of rent and any notice of intent to re-enter the Premises, or of intent to terminate this Lease, other than the notices above provided in this Article, and waives any and every other notice or demand prescribed by any applicable statutes or laws.

 

f.               Should Landlord be in default under its obligations under this Lease, Landlord shall have reasonable and adequate time in which to cure the same after written notice to Landlord by Tenant, provided Landlord, within thirty (30) days after receipt of such notice from Tenant, diligently and in good faith commences, and thereafter continues, to cure such default.

 

If Landlord defaults in the performance of any of its covenants hereunder beyond any applicable notice and/or cure period, Tenant may, but without obligation, cure the default and bring an action to recover the reasonable costs and related expenses thereof together with interest thereon from the date of advance by Tenant at the rate of twelve percent (12%) per annum; provided, however, in no event shall Tenant have right to deduct or set off the amount thereof against the Base Rent, Additional Rent or any other charges to be paid by Tenant hereunder.

 

g.              No remedy herein or elsewhere in this Lease or otherwise by law, statute or equity, conferred upon or reserved to Landlord or Tenant shall be exclusive of any other remedy, but shall be cumulative and may be exercised from time to time and as often as the occasion may arise.

 

ARTICLE 18

 

COVENANTS TO HOLD HARMLESS:

 

Tenant shall hold harmless Landlord from any liability for damages resulting from a breach by Tenant of its obligations under this Lease and, except to the extent the liability for damage or loss is caused by the negligence or willful misconduct of Landlord, its agents or employees, from any liability for damages to any person or property in or upon the Premises and the Premises, including the person and the property of Tenant and its employees and all persons in the Building at its or their invitation or sufferance, and from all damages resulting from Tenant’s failure to perform the covenants of this Lease.  All property kept, maintained or stored on the Premises shall be so kept, maintained or stored at the sole risk of Tenant.  Tenant agrees to pay all sums of money in respect of any labor, service, materials, supplies or equipment furnished or alleged to have been furnished to Tenant in or about the Premises, and not furnished on order of Landlord, which may be secured by any Mechanic’s, Materialmen’s or other lien to

 

17