Exhibit 99.2
LEASE
THIS LEASE
(“Lease”) is made as of
May 27, 2005 between DANE INDUSTRIES, INC. , a Minnesota
corporation (“Landlord”), and AULT INCORPORATED
, a Minnesota corporation (“Tenant”).
In consideration of the following
mutual covenants and promises, the parties agree as
follows:
1.
Property : Landlord does lease
to Tenant, and Tenant agrees to lease from Landlord approximately
13,313 square feet of office space (“Leased Property”)
on the first and second floors of the building (the
“Building”) located in the City of Brooklyn Park,
Hennepin County, Minnesota and commonly known as 7105 Northland
Terrace, Brooklyn Park, MN 55428, legally described on
attached Exhibit A (“Land”), together with all related
improvements including the areas to be used for non-exclusive use
by Tenant and Landlord on the Land and in the Building including
parking lots, drives, toilets, entry ways, corridors, elevators and
similar facilities, subject to reasonable rules adopted by Landlord
(“Improvements”).
2.
Rent : Tenant agrees to pay Landlord,
beginning on the above date (“Commencement Date”), rent
for each and every period of 12 months commencing during the term
of this Lease equal to $226,321.00. Such annual Rent shall be
payable in equal monthly installments of 1/12th each due and
payable in advance on the first day of each and every calendar
month during the term of this Lease. If the first month is a
partial calendar month, rent shall be prorated and the first lease
year shall end on the last day of the same month in 2006 that the
Commencement Date occurs. If any installment of Rent is not
paid when due on the first business day of a month, the unpaid
installment shall bear interest at the Wall Street Journal
prime rate plus four percent (4%) per year until paid and Tenant
shall pay Landlord an administrative fee of $225.00.
3.
Term : The term (“Term”) of this
lease shall be for an initial period of approximately two (2) years
and three (3) months, which term shall commence on the Commencement
Date and shall end on July 31, 2007.
4.
Improvements
: Landlord makes no warranties
or representations concerning the condition of the Improvements,
the Land, or any equipment or fixtures located on the
Land.
5.
Maintenance and Repairs by
Tenant : Tenant
shall keep the Leased Property in a clean and sanitary condition,
replace all light bulbs and ballasts, remove and properly dispose
of all trash and waste generated by Tenant and keep the plumbing
lines free of obstruction. Tenant shall provide janitorial or
cleaning service to the Leased Property.
6.
Maintenance and Repairs by
Landlord : EXCEPT
for repairs which are Tenant’s responsibility as specified in
Paragraph 5, Landlord agrees at its expense to keep and maintain
the Improvements and Land, in good order and repair, including,
without limitation, routine maintenance and replacement of all
structural or load-bearing elements, roofs, exterior walls and
foundations, and repair, maintenance and replacement of all
heating, ventilating and air
conditioning systems, windows, interior walls,
doors, electrical systems and equipment, plumbing and all other
components of the Improvements, mowing lawns, care of plantings,
walkways, removal of snow from walkways, driveways, parking areas
and adjacent public sidewalks, maintenance of utility lines and
exterior lighting on the Land, and all other repair, maintenance
and replacement required to keep the Improvements and Land in good
condition. All such repair, maintenance and replacement shall
keep the Improvements and Land in a state of repair and, except for
the Leased Property, in a clean and sanitary condition.
7.
Utilities : Landlord shall, at its expense,
provide utilities currently serving the Leased Property including
light, heat, water, gas and sewer charges. Tenant agrees to
not waste any such utilities and shall not increase the use of such
utilities beyond normal office use. Landlord shall not be
responsible for interruption in utility service so long as Landlord
works diligently to get such service restored. If Landlord is
unable to provide any of the utility services required to be
maintained by Landlord pursuant to this Lease, and in the event
such inability renders the whole or a portion of the Leased
Property untenantable, inaccessible or unsuitable for the purposes
intended hereunder for a period of three (3) consecutive days after
receipt by Landlord of notice of untenantability, inaccessibility
or unsuitability from Tenant, rent for the portion of the Leased
Property rendered untenantable, inaccessible or unsuitable for the
purposes intended hereunder shall abate pro rata from and after
such third consecutive day until the services are restored to such
a condition that the portion of the Leased Property affected is
again rendered tenantable, accessible and suitable. However,
there shall be no such abatement of rent if the Landlord’s
inability to provide such services is caused by misuse or neglect
of Tenant or by inability to secure energy supplied to be provided
by public or private utilities or suppliers which is generally
applicable in the vicinity of the Improvements.
8.
Taxes and Assessments
: Landlord shall pay all (1)
ad valorem or property taxes, and other taxes levied against the
Leased Property, which become due and payable during the Term of
this Lease, and (2) all installments of special assessments payable
during the term of this Lease.
9.
Tenant’s
Improvements :
Within forty-five (45) days of the Commencement Date or as soon
thereafter as is reasonably possible, Landlord, at its expense,
shall perform and pay for the tenant improvements described on
attached Exhibit B (the “Tenant Improvements”).
Until such Tenant Improvements are completed, Tenant may continue
to occupy all portions of the Building and Land currently occupied
by Tenant, except that Tenant shall cooperate with Landlord and
Landlord’s contractor and subcontractors so as to provide
access to all necessary areas of the Building to permit the Tenant
Improvements to be constructed and except that Tenant shall limit
it occupancy of warehouse space to no more than 13,000 square feet
so that Landlord may promptly after the Commencement Date occupy
the balance of the warehouse space. Within forty-five (45)
days after substantial completion of the Tenant Improvements,
Tenant shall move all personal property and equipment to the Leased
Property and otherwise vacate the portions of the Building except
the Leased Property and common areas. Tenant shall not make
any improvements to the Leased Property in an amount in excess of
$5,000.00 without first obtaining the written consent of
Landlord. Landlord may condition written consent of future
improvements upon the type and nature of the proposed improvements,
Tenant’s ability to pay for the improvements and the affect
of the improvements on the marketability and value of the Leased
Property.
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Unless otherwise agreed, at the
expiration or termination of the Lease, all improvements made by
Tenant shall become the property of Landlord.
10.
Insurance : Tenant agrees during the Term of this
Lease to:
(a)
Provide, keep in force and pay all
costs incurred for public liability and property damage insurance
with limits of not less than $1,000,000 for injury and death to any
one person, and $1,000,000 for injury or death in any one accident
or occurrence including property damage, insuring Landlord and
Tenant.
(b)
Provide, keep in force and pay all
costs incurred to maintain fire and all risk insurance on
Tenant’s property located on the Land.
Landlord agrees during the Term of
this Lease to:
(a)
provide, keep in force and pay all
costs incurred to maintain fire and all risk insurance in an
insurance company or companies authorized to do business in the
State of Minnesota in an amount equal to the full insurable value
of the Improvements and other improvements owned by Landlord on the
Land, and in any event for the full replacement cost.
(b)
At Landlord’s option, provide,
keep in force and pay all costs incurred to maintain rental
abatement or loss of income insurance from the Leased Property
during a twelve (12) month period.
All policies required by this
paragraph shall be carried in companies reasonably acceptable to
Landlord.
All such policies carried by Tenant
shall not be subject to cancellation or material modification
except after thirty (30) days written notice to Landlord and, if
requested, Landlord’s mortgagee and each policy shall so
provide.
Tenant shall not do anything in or
about the Leased Property that will impair or invalidate any
obligation of any policy of insurance on the Leased Property or the
Improvements.
11.
Damage or Destruction of Leased
Property : If the
Leased Property is totally or partially destroyed by any cause so
as to be totally or partially unusable, Rent shall abate and
Landlord shall to the extent insurance proceeds are available
restore the Leased Property to substantially the same condition as
before damage as speedily as practicable, but in all events within
six (6) months. On completion, Rent shall recommence.
However, if the damage is so extensive that it cannot be reasonably
repaired and restored within six (6) months from the date of
casualty, then Landlord or Tenant may elect to cancel this Lease by
the giving of written notice within thirty (30) days from the date
of such casualty. The provisions of this paragraph with
respect to rebuilding and application of insurance proceeds are
subject to any requirements or consents by mortgage holders as
specified in mortgages of record as of the date of casualty.
Landlord shall have no obligation to restore or rebuild the
Leased Property if the cost of rebuilding or reconstruction exceeds
the amount of available insurance proceeds.
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12.
Compliance with Laws,
Use : Tenant shall
use the Leased Property solely for engineering labs, research and
development, office and all related activities in the conduct of
its business and no other use, and shall at its own cost and
expense secure and maintain all necessary licenses and permits
required for such use. Tenant shall at all times comply with
all laws and ordinances and all lawful rules and regulations issued
by any legally constituted authority, and with the applicable
orders, regulations and requirements of any board of fire
underwriters (including all modifications and improvements
required), and observe all plat and deed restrictions of
record. Without limiting the generality of this section,
Tenant will not generate, store, bury, discharge or release on or
from the Leased Property reportable quantities of any hazardous
substances or waste giving rise to penalty or liability under the
Resources Conservation Recovery Act 42 U.S.C. § 6901 et
seq. , the Comprehensive Environmental Response,
Compensation and Liability Act 42 U.S.C. § 901 et
seq. , or any other federal or state law. Tenant
agrees to indemnify Landlord and its successors and assigns from
any breach of these conditions and from all loss, damage or
expense, including attorney’s fees arising out of or incurred
by Landlord as a result of such breach. The date of
indemnification and any clean-up or remedial action resulting from
a breach by Tenant of the covenants contained in this section shall
survive the expiration or termination of this Lease and remain the
obligation of Tenant.
13.
Waste; No Liens
: Tenant agrees not to do or
suffer any waste to the Leased Property, or cause, suffer or permit
any liens to attach to or to exist against the Leased Property by
reason of any act or omission of Tenant or persons claiming through
Tenant or by reason of its failure to perform any act required of
it under this Lease. Tenant shall not permit the Leased
Property to be used for any illegal purpose. However, Tenant
shall not be required to discharge any lien against the Leased
Property so long as Tenant has given Landlord notice of its intent
to contest such lien and Tenant is in good faith contesting the
validity or amount of the lien and has given to Landlord such
security as Landlord has reasonably requested to assure payment of
such lien and to prevent the sale, foreclosure or forfeiture of any
part of the Leased Property by reason of non-payment. On
final determination of the lien or claim of lien Tenant will
immediately pay any judgment rendered, and all costs and charges,
and shall cause the lien to be released or satisfied. Tenant
shall hold harmless Landlord from any cost or expense, including
attorney’s fees, arising out of or incurred by Landlord as a
result of such lien or claimed lien.
Tenant shall not use or occupy the
Leased Property, or knowingly permit it to be used or occupied in a
manner:
(a)
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