<PAGE>
EXHIBIT 10.22
OFFICE LEASE
BETWEEN
601 SECOND AVENUE LIMITED PARTNERSHIP,
A TEXAS LIMITED PARTNERSHIP
LANDLORD
AND
CAPELLA EDUCATION COMPANY,
A MINNESOTA CORPORATION,
TENANT
225 SOUTH SIXTH STREET
MINNEAPOLIS, MINNESOTA
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section
Page
-------
----
<S>
<C>
1.
DEFINITIONS.........................................................................
1
2.
PREMISES............................................................................
4
3. RENTABLE
AREA.......................................................................
4
4. TENANT'S
LEASEHOLD
IMPROVEMENTS.....................................................
5
5.
TERM................................................................................
5
6. BASE
RENT...........................................................................
7
7. CONTRIBUTION TO
OPERATING
COSTS.....................................................
9
8. NO PERSONAL
LIABILITY...............................................................
15
9.
USE.................................................................................
16
10. ASSIGNMENT AND
SUBLETTING...........................................................
17
11.
MAINTENANCE.........................................................................
19
12. ALTERATIONS;
EQUIPMENT..............................................................
21
13. KEYS; RIGHT OF ENTRY;
RESERVED RIGHTS IN COMMON AREAS...............................
23
14. SERVICES AND
UTILITIES..............................................................
24
15. WAIVER AND
INDEMNITY................................................................
27
16.
INSURANCE...........................................................................
27
17. WAIVER OF CLAIMS AND
SUBROGATION....................................................
28
18.
DAMAGE..............................................................................
29
19.
CONDEMNATION........................................................................
29
20.
DEFAULT.............................................................................
29
21. LANDLORD'S RIGHT TO
CURE DEFAULTS; LATE PAYMENTS....................................
32
22.
WAIVER..............................................................................
32
23.
SUBORDINATION.......................................................................
33
24. RULES AND
REGULATIONS...............................................................
34
25. COVENANT OF QUIET
ENJOYMENT.........................................................
34
26. LIMITED
LIABILITY...................................................................
34
27. NO REPRESENTATIONS OR
WARRANTIES BY LANDLORD........................................
35
28.
NOTICES.............................................................................
35
29. ESTOPPEL
CERTIFICATES...............................................................
36
30. SURRENDER, HOLDING
OVER.............................................................
37
31. TENANT'S
TAXES......................................................................
37
32. NO
MERGER...........................................................................
38
33. GRAPHICS; BUILDING
DIRECTORY........................................................
38
34. LIEN FOR RENT
......................................................................
38
35.
MISCELLANEOUS.......................................................................
38
36. ADDITIONAL RIGHTS OF
TENANT.........................................................
40
</TABLE>
i
<PAGE>
LIST OF ATTACHED EXHIBITS
EXHIBIT A
FLOOR PLAN OF PREMISES
EXHIBIT B
LEGAL DESCRIPTION
EXHIBIT C
FORM OF DECLARATION OF COMMENCEMENT DATE AND RENTABLE AREA
EXHIBIT D
WORKLETTER
EXHIBIT E
RULES AND REGULATIONS OF THE PROJECT
EXHIBIT F
AIR CONDITIONING AND HEATING SERVICES
EXHIBIT G
EXTENSION OPTION
EXHIBIT H
PARKING
EXHIBIT I-1
EXPANSION OPTIONS
EXHIBIT I-2
POTENTIAL EXPANSION FLOORS
EXHIBIT J
RIGHT OF OFFER
EXHIBIT K
FORM OF CONFIDENTIALITY AGREEMENT
EXHIBIT L
STORAGE SPACE
EXHIBIT M
ASSIGNMENT LIMITATIONS
EXHIBIT N
FORM OF NON DISTURBANCE AGREEMENT
EXHIBIT O
CLEANING
SPECIFICATIONS
ii
<PAGE>
LEASE
This Lease is made as of February _23 , 2004 ("EFFECTIVE DATE"),
by
and between 601 Second Avenue Limited
Partnership, a Texas limited partnership
("LANDLORD"), and Capella Education
Company, a Minnesota corporation ("TENANT").
1. DEFINITIONS.
"AFFILIATE" of any entity means any other entity directly or
indirectly controlling or controlled by or
under direct or indirect common
control with such entity. For purposes of
this definition, "control" (including,
with correlative meanings, the terms
"controlled by" and "under common control
with") as used with respect to any entity
shall mean the possession, directly or
indirectly, of the power to direct or cause
the direction of the management or
policies of such entity, whether through
the ownership of voting securities or
by agreement or otherwise.
"ANTENNA SITE MANAGER" means SpectraSite Building Group, Inc.
"ASSIGNEE" means the assignee, mortgagee, subtenant or other
transferee under an Assignment.
"ASSIGNMENT" means (i) any assignment, transfer, mortgage or
other
encumbrance of this Lease or any interest
in this Lease, or (ii) any subletting
or renting or permitting occupancy or use
of the Premises, or any part thereof,
by any third party, whether direct or
indirect, voluntary or by operation of
law.
"BASE BUILDING SYSTEMS" means the systems of the Project
including,
without limitation, the Project's
electrical, mechanical, structural, plumbing,
heating, ventilating, air conditioning and
life safety/fire systems.
"BASE RENT" shall have the meaning set forth in Section 6.
"BUILDING" means the 18 story Park building located in the
Project.
"CAMPBELL MITHUN LEASE" means that certain Lease dated June 28,
2000, between 222 South Ninth Street
Limited Partnership, a Minnesota limited
partnership, as landlord, and Tenant, as
tenant, as amended by that certain
Amendment No. 1 To Lease Agreement dated
December 5, 2001, between ND
Properties, Inc., as landlord, and Tenant,
as tenant, and as further amended by
that certain Amendment No. 2 To Lease
Agreement dated October 28, 2002, for the
premises which Capella is currently leasing
in the Campbell Mithun Tower in
Minneapolis, Minnesota.
"COMMENCEMENT DATE" shall have the meaning set forth in Section
5.2.
"COMMON AREAS" means those portions of the Project which are
not
leased or held for lease and which are,
from time to time, made available by
Landlord for the use in common by Landlord,
Tenant, other tenants of the Project
and such other persons as Landlord may
designate including, without limitation,
the main floor lobby and other public areas
of the Project located on levels
B-1, 1 and 2, those portions of the loading
dock areas not reserved for
1
<PAGE>
the specific use of any particular tenant
of the Project, the elevators located
in the Project, the mail room for the
Project and the elevator foyers, corridors
and rest rooms on multi-tenant floors.
"DIRECT COMPETITOR OF TENANT" means any entity in the business
of
providing post secondary educational
courses to students.
"EFFECTIVE DATE" means the date on which this Lease has been
fully
executed, which date shall be inserted into
this Lease by Landlord
contemporaneously with Landlord's execution
of this Lease.
"ESTIMATED OPERATING COSTS" means Landlord's estimate of
Operating
Costs for a particular calendar year (or
fiscal year where Landlord has
exercised its option under Section
7.8).
"EVENT OF DEFAULT" shall have the meaning set forth in Section
20.
"HAZARDOUS MATERIAL" means any hazardous substance, toxic
chemical,
pollutant or other material which is or
becomes regulated by the Comprehensive
Environmental Response, Compensation and
Liability Act of 1985 or the Minnesota
Environmental Response and Liability Act or
any similar law, regulation or code
(local, state or federal), including
without limitation petroleum and petroleum
products and any material, equipment or
machinery containing asbestos,
polychlorinated biphenyls (PCB's),
chlorofluorocarbons (CFC's) or
hydrofluorocarbons (HCFC's).
"INITIAL PREMISES" means the Phase I Space, the Phase II Space
and
the Phase III Space.
"INITIAL EXTENDED TERM" shall have the meaning set forth in
Section
5.
"INITIAL SCHEDULED TERM" shall mean the six year period beginning
on
the Phase I & II Rent Commencement
Date.
"INTEREST RATE" means an annual rate equal to the lesser of (i)
two
percentage points above the reference rate
of interest published from time to
time by U.S. Bancorp (or its successors),
or if U.S. Bancorp (or its successors)
discontinues publishing such a rate, two
percentage points in excess of the
published prime rate or other equivalent
reference rate of interest of a major
commercial bank reasonably designated by
Landlord, or (ii) the maximum contract
interest rate per annum permitted by
applicable law.
"LAND" means the real estate described on Exhibit B attached
hereto.
"LEGAL REQUIREMENTS" shall have the meaning set forth in
Section
9.1.
"MORTGAGE" means any mortgage or trust deed now existing or
hereafter encumbering or otherwise
affecting the Project or any substantial part
thereof and all renewals, modifications,
consolidations, replacements or
extensions thereof.
"MORTGAGEE" shall have the meaning set forth in Section 23.
2
<PAGE>
"NORMAL BUSINESS HOURS" means the periods from 7:30 a.m. to
6:00
p.m., Monday through Friday, and 7:30 a.m.
to 1:00 p.m. on Saturday, except
during Holidays as defined in Exhibit
F.
"OPERATING COSTS" shall have the meaning set forth in Section 7,
as
adjusted pursuant to Section 7.8.
"PHASE I & II RENT COMMENCEMENT DATE" means November 1,
2004.
"PHASE III RENT COMMENCEMENT DATE" means November 1, 2005.
"PHASE I SPACE" means the 119,711 square feet of Rentable Area
which
is located on the 8th and 9th floors of the
Building and the 8th, 9th and 15th
floors of the Tower and depicted on the
floor plans which are attached hereto as
Exhibit A.
"PHASE II SPACE" means the 30,335 square feet of Rentable Area
which
is located on the 7th floor of the Building
and depicted on the floor plans
which are attached hereto as Exhibit A.
"PHASE III SPACE" means the 53,275 square feet of Rentable Area
which is located on the 6th and 7th floors
of the Tower and depicted on the
floor plans which are attached hereto as
Exhibit A.
"PREMISES" shall mean Initial Premises and any other space which
is
added to the Initial Premises pursuant to
the Expansion Options provided in
Exhibit I-1, the Right of Offer provided in
Exhibit J or in any other manner.
"PROJECT" means the Land, the Building and the Tower, the
atrium
connecting the Building and the Tower, the
subterranean parking garage, all
skyways and other improvements of Landlord
now or hereafter constructed on the
Land or on or in any appurtenant easement
or encroachment areas, except
improvements which tenants may remove
therefrom pursuant to the terms of their
respective leases.
"RENT" means Base Rent, Tenant's Additional Rent, and all other
sums
which shall become due and payable by
Tenant to Landlord hereunder.
"RENTABLE AREA" shall be determined in accordance with Section
3.
"RENTABLE AREA OF THE PROJECT" means, during any year, the
Rentable
Area of space leased or held for lease as
office space or retail space contained
in the Project for such year.
"SUCCESSOR" shall have the meaning set forth in Section 10.7.
"TENANT'S ADDITIONAL RENT" means the sum of Tenant's Pro Rata
Share
of Operating Costs (determined in
accordance with Section 7 below) plus Tenant's
Property Management Fee.
3
<PAGE>
"TENANT IMPROVEMENTS" shall have the meaning set forth in Exhibit
D.
"TENANT'S PRO RATA SHARE" is a fraction, the numerator of which
for
any year shall be the weighted average
Rentable Area of the Premises for such
year and the denominator of which shall be
the Rentable Area of the Project for
such year.
"TENANT'S PROPERTY MANAGEMENT FEE" means for any year three and
09/100 percent (3.09%) of the sum of
Tenant's Base Rent and Tenant's Pro Rata
Share of Operating Costs for such year.
"TERM" shall have the meaning set forth in Section 5.
"TOWER" means the 53 story office building located in the
Project.
2. PREMISES.
2.1
Subject to and
upon the terms, provisions and conditions hereinafter
set forth, and each in consideration of the
duties, covenants and obligations of
the other hereunder, (i) Landlord hereby
leases the Initial Premises to Tenant,
and Tenant hereby leases the Initial
Premises from Landlord, beginning on the
Commencement Date and thereafter throughout
the Lease Term, and (ii) Landlord
hereby grants Tenant a non-exclusive
license to use the Common Areas throughout
the Lease Term for their intended purpose
and in accordance with the rules and
regulations of the Project. Landlord
covenants and represents that (y) the
Initial Premises is currently vacant (other
than some personal property located
thereon which belongs to American Express
Financial Corporation), and (z)
Landlord will cause the Initial Premises to
be served by, and to be delivered in
accordance with, Base Building Systems and
conditions which meet or exceed the
standards described in Section 14 (the
"SPACE DELIVERY STANDARDS").
2.2
The Premises may
be contracted pursuant to Section 5.3 or expanded
pursuant to the Expansion Options provided
in Exhibit I-1 or the Right of Offer
provided in Exhibit J.
3. RENTABLE AREA.
3.1
For purposes of
this Lease, the terms "RENTABLE AREA" and "USABLE
AREA" shall be calculated substantially in
accordance with the Standard Method
for Measuring Floor Area in Office
Buildings, ANSI/BOMA Z65.1-1996.
3.2
Landlord
certifies to Tenant that the Rentable Area of the Phase I
Space, the Phase II Space and the Phase III
Space has been calculated as of the
Effective Date on the basis of the
foregoing definitions as follows: (i) 119,711
square feet for the Phase I Space; (ii)
30,355 square feet for the Phase II
Space; and (iii) 53,275 square feet for the
Phase III Space (and such amounts
shall not be adjusted as a result of minor
variations resulting from any
construction and completion of the Initial
Premises for occupancy so long as
such work is done in accordance with the
terms and provisions of this Lease).
Landlord further certifies to Tenant that
the Rentable Area of the Project as of
the Effective Date is 1,401,233 square
feet.
4
<PAGE>
4. TENANT'S LEASEHOLD
IMPROVEMENTS.
Landlord and Tenant shall each comply with the provisions of
Exhibit
D. Landlord is under no obligation to make
any alterations, decorations,
additions or improvements in or to the
Premises, nor to bear the cost of the
same, except as expressly set forth in
Exhibit D. By taking occupancy of the
Premises, Tenant shall be deemed to have
acknowledged that Landlord has
completed all of its obligations for
improvements to the Premises, except as
otherwise provided in Exhibit D. Except as
expressly set forth in Section 2, on
Exhibit D or elsewhere in this Lease,
Tenant agrees that it is taking and
accepting the Premises on the Commencement
Date and thereafter on an "as is",
"where is", and "with all faults" basis,
without warranty or representation of
any kind, including without limitation any
warranty as to the merchantability or
fitness for a particular purpose of any
portion of the Premises, subject,
however, to Landlord's obligations under
Section 11.2.
5. TERM.
5.1
Subject to and
upon the terms and conditions set forth herein, or in
any Exhibit or Addendum hereto, the initial
term of this Lease (the "INITIAL
SCHEDULED TERM") shall commence on the
Phase I & II Rent Commencement Date and
shall continue until 11:59 p.m.,
Minneapolis, Minnesota, time on the day prior
to the sixth anniversary of the Phase I
& II Rent Commencement Date unless
extended by Tenant's exercise of an
Expansion Option pursuant to Exhibit I-1 or
a Right of Offer pursuant to Exhibit J, as
the case may be (as extended, the
"INITIAL EXTENDED TERM"). For purposes of
this Lease, the "TERM" or "LEASE TERM"
means the Initial Scheduled Term of this
Lease as the same may be hereafter
extended or renewed pursuant to the
Expansion Options provided in Exhibit I-1,
the Right of Offer provided in Exhibit J,
the Extension Options provided in
Exhibit G, or in any other manner.
5.2
Landlord shall
provide Tenant with access to the Phase I Space and
the Phase II Space as soon as reasonably
possible (and in any event within
thirty (30) days) after the Effective Date
(the date Landlord provides Tenant
with access to the Phase I Space and the
Phase II Space being referred to herein
as the "COMMENCEMENT DATE") and access to
the Phase III Space on May 1, 2005, so
that Tenant may prepare the Initial
Premises for its use. Landlord shall not,
however, be liable to Tenant for any delay
in giving possession of the Initial
Premises to Tenant because of any holding
over or retention of possession by any
previous tenants or occupants of the same,
nor shall any delay impair the
validity of this Lease; provided, however,
that if Landlord fails to deliver the
Phase I Space and Phase II Space to Tenant
on or before November 1, 2004, Tenant
may, at its option, within thirty (30) days
of said date, terminate this Lease
by delivering written notice of termination
to Landlord, and upon any such
termination Landlord shall reimburse Tenant
for all out-of-pocket costs and
expenses incurred by Tenant in connection
with this Lease, including, without
limitation, design fees, construction costs
and expenses, attorneys' fees, and
consultants' fees. If Landlord fails to
deliver the Phase III Space to Tenant on
or before July 1, 2005, Tenant may, at its
option, by written notice to Landlord
given within thirty (30) days of said date,
elect to exclude the Phase III Space
from the Initial Premises, whereupon the
Phase III Space shall become part of
the Available Space under the Right of
Offer. If any delay in delivering
possession to Tenant of the Phase I and
Phase II Space or the Phase III Space,
as the case may be, actually delays the
completion of the Tenant Improvements,
the Phase I & II Rent Commencement Date
or the Phase III Rent
5
<PAGE>
Commencement Date, as applicable, will be
extended by the number of days that
completion of the Tenant Improvements has
been delayed, and if the Phase I & II
Rent Commencement Date is so extended, then
the expiration of the Initial
Scheduled Term shall be similarly extended
and any other date in this Lease
which is thereby affected will be
appropriately adjusted. Tenant agrees to be
bound by and to comply with all of the
terms and conditions of this Lease (other
than Tenant's obligation to pay Rent)
during any occupancy of the Premises by
Tenant prior to the Phase I & II Rent
Commencement Date with respect to the
Phase I Space and the Phase II Space and
prior to the Phase III Rent
Commencement Date with respect to the Phase
III Space. Notwithstanding anything
to the contrary in this Lease, Tenant shall
not be obligated to pay any Rent for
the Phase I Space or the Phase II Space
prior to the Phase I & II Rent
Commencement Date and Tenant shall not be
obligated to pay any Rent for the
Phase III Space prior to the Phase III Rent
Commencement Date.
5.3
During the
Initial Scheduled Term, Tenant shall have the one time
right (the "CONTRACTION OPTION") to
contract the Premises by surrendering
possession to Landlord of either one or two
full floors of the Premises;
provided that for purposes of such
Contraction Option, a "full floor" shall mean
all of the Rentable Area of a floor in the
Tower only or in the Building only
(so that if, for example, Tenant would like
to surrender possession of all of
the Rentable Area on the 9th floor of the
Tower and the 9th floor of the
Building, all of the space on the 9th floor
of the Tower and the 9th floor of
the Building would constitute two "full
floors"). Tenant must exercise the
Contraction Option, if at all, (i) by
delivering a written notice to Landlord
not earlier than fifteen (15) months and
not later than twelve (12) months'
prior to the date on which Tenant intends
to surrender such space (the
"CONTRACTION DATE"), which identifies the
floor or floors which will be
surrendered (the "CONTRACTION SPACE"), and
(ii) by Tenant's payment not later
than the Contraction Date, to Landlord in
immediately available good funds of a
Contraction Fee, computed as set forth in
this Section 5.3. Tenant may not
specify as the Contraction Date any date
prior to July 1, 2008, or any date that
is more than twelve (12) months after the
last day of the Initial Scheduled
Term. For purposes of designating
Contraction Space (a) if Tenant's notice
designates only one floor as Contraction
Space, such floor shall be the
uppermost floor of the Premises in the
Tower or in the Building; (b) if Tenant's
notice designates two floors as Contraction
Space, one floor shall be the
uppermost floor of the Premises in the
Tower or in the Building, and the second
floor shall be contiguous thereto (either
vertically or horizontally), provided,
however, if said uppermost floor in the
Tower or Building is not contiguous
(either vertically or horizontally) to any
other floor of the Premises, then the
second floor shall be the next uppermost
floor in the Tower or Building; (c) in
any case where Tenant is to designate as
Contraction Space a floor that is the
uppermost floor in the Premises and the
uppermost floor of the Premises in the
Tower is on the same level as the uppermost
floor of the Premises in the
Building, Tenant may designate either the
floor in the Tower or the floor in the
Building as the Contraction Space; and (d)
in determining which floor is the
uppermost floor in the Premises under this
Section 5.3, that portion of the
Premises on the 15th Floor of the Tower
shall be disregarded. The "CONTRACTION
FEE" shall be an amount equal to the sum of
(A) the unamortized portion of
Landlord's Transaction Costs as of the
Contraction Date, with respect to the
Contraction Space, plus (B) two months of
the Base Rent and Tenant's Additional
Rent (based upon the amounts which Tenant
is obligated to pay Landlord for the
month in which the Contraction Date occurs)
for the Contraction Space. For
purposes of determining the amount of the
Contraction Fee, (x) "LANDLORD'S
TRANSACTION COSTS" shall mean the total of
the brokerage fees paid to CRESA
Partners for their services in connection
with this Lease, plus the
6
<PAGE>
Improvement Allowance (as defined in
Exhibit D attached hereto) that is actually
advanced or applied as a credit against
Base Rent, (y) Landlord's Transaction
Costs shall be amortized on a fully
amortized basis together with ten percent
(10%) interest on Landlord's Transaction
Costs over the Initial Scheduled Term,
and (z) the unamortized portion of
Landlord's Transaction Costs with respect to
the Contraction Space shall be determined
by multiplying the total amount of the
unamortized portion of Landlord's
Transaction Costs as of Contraction Date, by a
fraction, the numerator of which shall be
the number of square feet of the
Rentable Area of the Contraction Space, and
the denominator of which shall be
203,321. Tenant shall also reimburse
Landlord for the reasonable costs of
removing and filling in any internal
stairways installed by Tenant which serve
the Contraction Space within thirty (30)
days after Tenant's receipt of an
invoice from Landlord for such costs based
upon the lowest of three bids for
such work which are obtained by
Landlord.
5.4
Landlord shall
promptly after the Commencement Date, the Phase I &
II Rent Commencement Date, and the Phase
III Rent Commencement Date, prepare a
declaration (substantially in the form of
Exhibit C attached hereto) confirming
such date and the date on which the Initial
Scheduled Term shall expire. Tenant
shall execute and return each such
declaration within twenty (20) days after
submission. If Tenant fails to execute and
return either declaration to Landlord
within said twenty (20) day period, Tenant
shall be conclusively deemed to have
agreed that the information in the
declaration is accurate and Tenant shall have
thereby waived any right to object to the
accuracy of such information unless
Landlord has, during said twenty (20) day
period, received a written notice from
Tenant objecting to such information and
describing in detail Tenant's reasons
for so objecting.
6. BASE RENT.
6.1
Tenant shall pay
as monthly "BASE RENT" for the Premises one-twelfth
of the product of:
(a) Nine and 75/100 Dollars ($9.75) times the number of square
feet
of
Rentable Area of the Phase I Space and the Phase II Space,
collectively, for the period beginning on November 1, 2004 and
ending on
October
31, 2005;
(b) Ten Dollars ($10.00) times the number of square feet of
Rentable
Area of
the Premises for the period beginning on November 1, 2005 and
ending on
October 31, 2006;
(c) Ten and 25/100 Dollars ($10.25) times the number of square
feet
of
Rentable Area of the Premises for the period beginning on November
1,
2006 and
ending on October 31, 2007;
(d) Ten and 50/100 Dollars ($10.50) times the number of square
feet
of
Rentable Area of the Premises for the period beginning on November
1,
2007 and
ending on October 31, 2008;
(e) Ten and 75/100 Dollars ($10.75) times the number of square
feet
of
Rentable Area of the Premises for the period beginning on November
1,
2008 and
ending on October 31, 2009;
7
<PAGE>
(f) Eleven Dollars ($11.00) times the number of square feet of
Rentable
Area of the Premises for the period beginning on November 1,
2009
and ending
on October 31, 2010.
The Base Rent shall be paid in monthly installments, in advance,
on
the first day of each and every calendar
month during the Term. If the initial
or final month of the Term of this Lease is
less than a calendar month, all Rent
including the Base Rent for such partial
month shall be prorated at the rate of
one-thirtieth of the monthly Base Rent and
all other Rent for each day within
the Term of this Lease. Tenant will pay
said Base Rent, together with Tenant's
Additional Rent and all other amounts due
under this Lease, to Landlord at the
Project, or to such other party or address
as Landlord may designate from time
to time by notice to Tenant, without demand
and without deduction, set-off,
counterclaim or abatement except as
expressly provided herein.
6.2
Notwithstanding
anything to the contrary in this Lease, Tenant
shall, for the period beginning on November
1, 2004, and ending on November 30,
2005, receive a credit each month against
Tenant's obligation to pay Rent for
the Premises in an amount equal to all of
the monthly rent, estimated operating
expenses (including management fees, but
excluding charges for any services in
addition to the basic services to be
provided to Capella under the Campbell
Mithun Lease) and real estate taxes which
Tenant pays for the premises which
Tenant is currently leasing (the "CAMPBELL
MITHUN PREMISES") pursuant to the
Campbell Mithun Lease as in effect on the
Effective Date for the period from
November 1, 2004, through November 30, 2005
(the "CAMPBELL MITHUN RENT"). If the
Phase I & II Rent Commencement Date
shall be extended pursuant to Section 5.2
(or Section 4 of Part III of the Work
Letter), then the period during which
Tenant is entitled to receive a credit
pursuant to the preceding sentence shall
be extended from November 30, 2005, to such
later date as will enable Tenant to
receive credit in the full amount of the
Campbell Mithun Rent. Tenant represents
to Landlord that: (a) the total monthly
amount of base rent which Tenant is
obligated to pay for the Campbell Mithun
Premises during the period of November
1, 2004, through November 30, 2005, is
$104,820.83 per month; (b) Tenant is
obligated to pay during calendar year 2004
current estimated operating expenses
(including management fees) of $57,679.52
per month and real estate taxes of
$29,778.71 per month for the Campbell
Mithun Premises which is comprised of a
total of 91,480 square feet of rentable
area; and (c) Tenant is not aware of the
monthly charges for operating expenses and
real estate taxes during calendar
year 2005 for the Campbell Mithun Premises.
Tenant shall, within ten (10) days
after being notified of any adjustment
(including any refund or abatement) in
the amount of the Campbell Mithun Rent for
calendar years 2004 and 2005, notify
Landlord of such adjustment, but if Tenant
shall fail to so notify Landlord,
such failure shall constitute an Event of
Default by Tenant only if such failure
shall continue for fifteen (15) days after
written notice of default is given by
Landlord in accordance with Section
20.1(c). Tenant hereby acknowledges that
Landlord shall be entitled to receive a
portion of any refund of estimated
operating expenses which Tenant is entitled
to receive pursuant to the Campbell
Mithun Lease for calendar years 2004 and
2005, and that Tenant shall not be
entitled to compromise the amount of any
such refund. Tenant shall, within ten
(10) days after receiving a refund of the
operating expenses which Tenant has
paid pursuant to the Campbell Mithun Lease,
pay to Landlord (i) in the case of
any refund for calendar year 2004,
one-sixth (1/6) of such refund, and (ii) in
the case of any refund for calendar year
2005, the full amount of such refund.
Landlord acknowledges that if Tenant
receives a reconciliation of operating
expenses under the Campbell Mithun
Lease
8
<PAGE>
requiring Tenant to make an additional
payment for calendar years 2004 or 2005
over and above the estimated operating
expenses theretofore paid by Tenant,
Tenant shall be entitled to an additional
credit against Rent in an amount equal
to (a) in the case of any additional
payment due for calendar year 2004,
one-sixth (1/6) of such additional payment,
and (b) in the case of any
additional payment due for calendar year
2005, the full amount of such
additional payment. Tenant shall not be
entitled to receive a credit against the
Base Rent due to Landlord under this
Section 6.2 which is greater than the total
amount of the monthly rent, operating
expenses and management fees which Tenant
actually pays for the Campbell Mithun
Premises for the period commencing on
November 1, 2004, and ending on November
30, 2005. Tenant agrees to provide
Landlord with reasonable evidence of
Tenant's payment of Campbell Mithun Rent
from time to time upon Landlord's
request.
7. CONTRIBUTION TO
OPERATING COSTS.
7.1
Tenant shall pay
to Landlord on the first day of each month
throughout the Lease Term an amount equal
to one-twelfth of Tenant's Additional
Rent (based on Estimated Operating Costs in
accordance with Section 7.5 below).
Tenant's Additional Rent shall be paid to
Landlord without deduction, set-off,
counterclaim or abatement except as
expressly provided herein and shall be
prorated for any partial month during the
Lease Term.
7.2
"OPERATING
COSTS" are hereby defined with respect to any calendar
year to include all operating expenses of
the Project, computed on an accrual
basis in accordance with generally accepted
accounting principles which shall be
consistently applied (except that taxes
shall be based on a due and payable, and
not an accrual, basis). Except as otherwise
specifically excluded herein, the
term "operating costs" as used herein shall
mean all expenses, costs and
disbursements of every kind and nature
relating to or incurred or paid in
connection with the ownership, operation,
repair and maintenance of the Project,
including but not limited to, the
following:
(a) all taxes and assessments and governmental charges whether
federal,
state, county or municipal, and whether they be by taxing
districts
or authorities presently taxing the Premises or by others,
subsequently created or otherwise, and any other taxes and
assessments
attributable to the Project or its operation or the rent payable
by
tenants of
the Project (provided that Tenant will be responsible for ad
valorem
taxes on its personal property and on the value of leasehold
improvements to the extent that same exceed the base building
improvements), together with any reasonable costs or fees incurred
in any
challenge
or contest of such taxes, assessments or other charges
(collectively, "TAXES"); provided that operating expenses shall
not
include
Landlord's general income, excess profit, franchise, transfer,
inheritance, estate or gift taxes, except to the extent assessed,
levied
or imposed
in lieu of Taxes;
(b) any other fee, charge or assessment imposed by any
governmental
entity for
fire protection, police, trash or other service or amenity;
(c) costs incurred for electricity, gas, fuel, steam, water,
sewer
or other
utilities required in connection with the operation and
maintenance of the Project;
9
<PAGE>
(d) the cost of all premiums and other charges incurred by
Landlord
with
respect to insurance on the Project for all risk property
insurance,
liability
insurance, workers' compensation insurance, boiler and
machinery
insurance,
sprinkler leakage, water damage, legal liability, burglary and
hold-up
insurance, fidelity and pilferage insurance on equipment and
materials,
rental abatement insurance, and such other insurance as is
deemed
necessary or advisable in Landlord's reasonable judgment or is
required
by any Mortgagee;
(e) costs incurred in connection with the inspection,
servicing,
maintenance and repair (including all outside contracts relating to
the
operation
and maintenance) of the Project and appurtenances thereto
including,
without limitation, janitorial and window cleaning, rubbish
removal,
exterminating, landscaping, water treatment, elevator,
electrical, plumbing, and mechanical equipment and the cost of
materials,
tools,
supplies and equipment (not of a capital nature) used in
connection
therewith;
(f) compensation provided in the form of wages, salaries and
such
other
compensation and benefits (including payroll taxes, federal,
state
and local
unemployment taxes, social security taxes, welfare, retirement,
vacation,
holiday, other paid absences and other fringe benefits) as well
as any
adjustments thereto, to the extent relating to persons not
above
the level
of the on-site Project manager who perform duties connected
with
the
operation and maintenance of the Project (but only for the portion
of
their time
allocable to work related to the Project), and further
excluding
any time reasonably allocable to leasing or other functions;
(g) expenses reimbursable to the property manager, including
the
rent of
the property manager's offices in the Project, and all other
costs
and
expenses incurred by Landlord in maintaining a property
management
office in the Project,
but excluding the costs of any marketing center or
any other
space in the Project which is used primarily for leasing space
to new
tenants;
(h) fees for professional services (including accounting and
legal
costs),
but only to the extent directly related to the operation and
management
of the Project and not involving leasing matters or matters
associated
with the operation of the business of the entity which
constitutes Landlord such as the preparation of tax returns and
internal
financial
statements;
(i) any equipment rental;
(j) operating costs relating to skyways;
(k) amortization of the cost, together with reasonable finance
charges,
of furnishing and installing capital improvements which are (a)
undertaken
by Landlord in the reasonable good faith belief that the
reduction
in Operating Costs likely to result from such capital
improvements will equal or exceed the amortized cost of such
capital
improvements; (b) required by Landlord's insurance carrier; or
(c)
required
as a result of any applicable law, rule, regulation or order of
any
governmental or quasi-governmental authority having jurisdiction
over
the
Project which first becomes effective on or after the
10
<PAGE>
Effective
Date (all such costs shall be amortized over the useful life of
the
capital improvement items with the useful life and amortization
schedule
being determined in accordance with generally accepted
accounting
principles, but in no event shall such useful life extend beyond
the
remaining
useful life of the Project); and
(l) costs of licenses, permits (not including building permits),
and
inspection
fees for the Project.
Notwithstanding anything contained in the foregoing list, out
of
pocket expenses for the following shall be
excluded from Operating Costs (unless
offset by a corresponding credit):
(i) costs
of repairs or other work occasioned by fire,
windstorm or other casualty, to the extent that such
costs are reimbursed to Landlord by insurers;
(ii) costs of
correcting any violations of any Legal
Requirements, except to the extent of what would have
been the costs of compliance in the first instance if
such compliance would have been properly included in
Operating Expenses under Section 7.2;
(iii) costs directly
or indirectly resulting from or relating
to (including repairs, restoration, security measures,
emergency or temporary services, inspection and, during
the period of such repair or restoration, any increase
in operating expenses resulting from) the exercise of
rights of eminent domain, regardless of whether paid
for by condemnation proceeds;
(iv) costs of
correcting defects in, or the inadequacy of,
the initial design or construction of the Project, or
the materials used in the initial construction of the
Project or in the Project equipment or appurtenances
thereto;
(v)
leasing commissions, attorneys' fees and other expenses
incurred in connection with negotiations or disputes
with tenants, other occupants, or prospective tenants
or other occupants of the Project;
(vi) costs
incurred in renovating or otherwise improving or
decorating or redecorating space leased to tenants of
the Project or other space leased or held for lease in
the Project;
(vii) Landlord's costs
for electricity and other services
sold to tenants or which Landlord is actually
reimbursed by tenants, other than through payment of
Operating Costs, as a separate additional charge or
rental;
(viii) depreciation and amortization, except as provided in
Section 7.2(k) above;
11
<PAGE>
(ix) costs
which under generally accepted accounting
principles, consistently applied, must be capitalized,
except as provided in Section 7.2(k) above;
(x)
all amounts paid to subsidiaries or affiliates of
Landlord for services on or to the Project, to the
extent that the costs of such services demonstrably
exceed competitive costs for such services rendered by
persons or entities of similar skill, competence and
experience;
(xi)
payments on any Mortgage or any other loan (except as
otherwise permitted with respect to certain capital
improvements as provided in Section 7.2(k) above) and
rental under any ground lease;
(xii) rentals
and other related expenses, if any, incurred
in leasing air conditioning systems, elevators or
other equipment ordinarily considered to be of a
capital nature, except equipment which is used in
providing janitorial services and which is not affixed
to the Building and except as provided in Section
7.2(k) above;
(xiii) all items and
services for which Landlord actually
receives reimbursement from Tenant (other than through
Tenant paying Tenant's Additional Rent) or for which
Tenant actually pays third parties;
(xiv) costs
incurred in advertising for the Project or other
marketing or promotional activity specifically and
primarily designed for marketing space in the Project,
but excluding the costs of amenities provided for the
benefit of existing tenants of the Project;
(xv) any
bad debt expense or bad debt reserve, whether for
rent or otherwise, or any fees or penalties charged to
Landlord as a result of not paying any amount
constituting costs or expenses when due;
(xvi) costs (and
reserves thereof) of a capital nature
irrespective of the amount thereof, including capital
improvements, capital repairs and replacements and
capital equipment, except as provided in Section
7.2(k) above;
(xvii) costs in
connection with services or other benefits of
a type which are not provided, or which are provided
at higher levels or greater amounts than, or to a
degree which is higher than furnished to Tenant, but
which are provided to other Project tenants;
(xviii) except for Tenant's Property Management Fee and as
specifically provided in Sections 7.2(f), 7.2(g) and
7.2(h) above, fees or costs for management of the
Project, including any property management fee paid to
a property management company for the
12
<PAGE>
Project, or any fees, costs or expenses associated
with any accounting, bill-paying or management
activities;
(xix) costs of
entertaining current or prospective Project
tenants, and costs incurred in advertising in respect
of or for the Project or other marketing or
promotional activity;
(xx) all
direct costs arising from the operation of the
Parking Garage including costs of operating a ticket
booth, janitorial services, striping, lamp replacement
and repair and replacement of concrete and
reinforcing; provided that Operating Costs shall
include the cost of all Taxes and insurance premiums
allocable to the
Parking Garage and any costs and
expenses that relate to the maintenance, repair and
operation of the structural elements of the Project or
Base Building Systems even if such structural elements
or Base Building Systems are located in or about the
Parking Garage;
(xxi) capital
costs for sculpture, paintings or other art
objects;
(xxii) contributions
to any political or charitable
organizations; and
(xxiii) travel, entertainment and related expenses incurred by
Landlord or its personnel, except for the reasonable
cost of out of state travel and meals, but only if
directly related to, and to the extent of, services
which are being provided to the Project.
Operating Costs shall be "net" only and for that purpose shall
be
deemed reduced by the amount of any
insurance reimbursement, other
reimbursement, credit or the like received
or receivable by Landlord in
connection with such operating expense.
7.3
Landlord may at
its sole discretion pay any Taxes in installments
when allowed by law, in which case each
installment included in Operating Costs
shall include any interest charged
thereon.
7.4
Taxes shall be
included in Tenant's Additional Rent in monthly
installments which are computed such that
at each date an installment of Taxes
is due to the taxing authorities, the
proportion of annual taxes theretofore
included in Tenant's Additional Rental
equals the proportion of annual Taxes due
to the taxing authorities at such
installment due date, it being understood that
this may necessitate some installments to
be included in one year for Taxes
payable in the following year.
7.5
Landlord shall
from time to time give Tenant notice of Landlord's
determination of Estimated Operating Costs
for the pertinent calendar year. If
Landlord makes a redetermination of
Estimated Operating Costs at a time other
than the commencement of a calendar year,
then at the time of the next due
monthly installment of Tenant's Additional
Rent, such installment shall be
increased or reduced, as the case may be,
by the monthly difference in Tenant's
Additional Rent resulting from the
redetermination, times the number of months
elapsed in such year prior to the date on
which such next monthly installment of
Tenant's
13
<PAGE>
Additional Rent is due. Landlord agrees to
use reasonable efforts to inform
Tenant if, during any calendar year,
Landlord believes that the actual amount of
Operating Costs for such calendar year will
be significantly greater than the
most recent estimate of such Operating
Costs which Landlord has given to Tenant.
7.6
Within one
hundred twenty (120) days after the end of each calendar
year, Landlord shall submit to Tenant a
statement setting forth (i) the
Operating Costs of the Project actually
incurred for such calendar year, (ii)
Tenant's Additional Rent, based on such
Operating Costs for such year, and (iii)
the aggregate of Tenant's payments of
Tenant's Additional Rent for such year.
Within thirty (30) days after the delivery
of such statement (including any
statement delivered after the expiration or
termination of the Term of this
Lease), the party in whose favor there
exists a difference, if any, between (x)
Tenant's Additional Rent (based on
Operating costs actually incurred), and (y)
Tenant's payments of Tenant's Additional
Rent, shall pay the amount of such
difference to the other; provided that
Landlord shall have the right to offset
any amount owed by Landlord to Tenant
pursuant to this Section 7.6 against
amounts which Tenant then owes
Landlord.
If Tenant
would like more information with respect to one or more
specific
line items set forth on the annual
statement, Tenant may, within sixty (60) days
after receipt thereof, request such
additional information, and Landlord shall,
within thirty (30) days of Tenant's
request, provide Tenant with more detailed
information with respect to such line
items. Each statement furnished by
Landlord hereunder shall constitute a final
determination upon Tenant unless
Tenant shall within ninety (90) days after
delivery thereof (or, if Tenant has
requested additional information from
Landlord, then sixty (60) days after
Landlord provides such additional
information), give written notice to Landlord
that Tenant disputes the accuracy thereof,
which notice shall specify in
reasonable detail the inaccuracies of the
statement.
7.7
Tenant shall
have the right to audit Operating Costs provided such
audit is conducted pursuant to the
following terms and conditions: (a) Tenant
shall not have the right to conduct an
audit if an Event of Default by Tenant
exists; (b) such audit must be conducted by
Tenant's employees or an independent
nationally or regionally recognized
accounting or consulting firm that is not
being compensated by Tenant, Tenant's
officers, directors, shareholders,
partners or agents on a contingency fee
basis, after execution of a
Confidentiality Agreement in the form of
Exhibit K attached hereto; (c) such
audit must be commenced within ninety (90)
days after Landlord submits to Tenant
the annual statement described in Section
7.6 (or, if Tenant has requested
additional information from Landlord, then
sixty (60) days after Landlord
provides such additional information), and
once commenced, such audit shall be
completed in a diligent and expeditious
manner (and Tenant shall inform Landlord
once such audit is completed); (d) Tenant
shall supply Landlord with a copy of
the relevant portion of any audit within
fifteen (15) days after Tenant's
receipt of the same (but if Tenant shall
fail to provide such copy to Landlord,
such failure shall constitute an Event of
Default by Tenant only if such failure
shall continue for fifteen (15) days after
written notice of default is given by
Landlord in accordance with Section
20.1(c)); (e) no audit shall be conducted if
Tenant has previously conducted an audit
for the same period of time; (f) such
audit shall be conducted during normal
business hours, at a mutually agreed upon
time, at Landlord's business address or at
such other location as Landlord
normally keeps its books and records of
Operating Costs; (g) if Tenant exercises
its audit rights to audit a period of time
for which the books and records are
14
<PAGE>
held by another party that is not
affiliated with or controlled by or under
common control with Landlord, such
information must be obtained by Tenant, as
Tenant's sole cost and expense, from the
keeper of the books and records; (h)
such audit shall be at Tenant's sole cost
and expense and any out of pocket
costs or expenses incurred by Landlord in
providing Tenant with the information
required to perform such audit, including,
but not limited to, copying costs and
delivery fees shall be paid by Tenant to
Landlord upon demand; provided,
however, that Landlord shall reimburse
Tenant for its actual and reasonable out
of pocket costs of conducting such audit
(other than any fees owing to an
auditor or inspector retained on a
contingency fee basis) if it is determined
pursuant to such audit that Landlord has
overstated the actual amount of
Tenant's Additional Rent for the applicable
year by in excess of three percent
(3%); (i) any information obtained by
Tenant as a result of such audit shall be
held in strict confidence by Tenant and
shall not be disseminated further except
to Tenant's accountants, attorneys and
lenders, or in connection with the
enforcement by Tenant of its rights under
this Lease; (j) no subtenant shall
have any right to conduct an audit and no
assignee shall conduct an audit for
any period during which assignee was not in
possession of the Premises; and (k)
if it is determined pursuant to such audit
that there has been an overpayment or
underpayment of Tenant's Additional Rent,
the parties shall promptly make such
reconciliation payments and/or refunds as
are appropriate. Further,
notwithstanding the fact that Tenant has
elected to conduct such audit, Tenant
shall not have the right to withhold or
offset any part of Tenant's Additional
Rent, which Tenant shall pay to Landlord as
and when due and payable in
accordance with the terms of this
Lease.
7.8
Landlord may, at
its option, by giving thirty (30) days' written
notice to Tenant change its accounting year
hereunder from a calendar year to a
fiscal year, making such adjustments from
the end of the last calendar year to
the commencement of the first full fiscal
year as shall be appropriate pursuant
to generally accepted accounting
principles. Upon such change, references in
this Section 7 to a calendar year shall be
deemed to be references to a fiscal
year.
7.9
Notwithstanding
any other provision herein to the contrary, (i) if
at any time the entire Project is not fully
occupied, or if full services are
not provided to all areas of the Project
which are leased or available for lease
during all or any portion of a calendar
year, then those elements of Operating
Costs and Estimated Operating Costs which
vary with occupancy (or for which full
service is not provided to all areas) shall
be adjusted to equal the cost which
Landlord would have incurred if the Project
were fully occupied and all rentable
areas had received full services; and (ii)
if Tenant's use of the Premises or
any portion thereof is ever such that the
services furnished thereto are more
than are being furnished to other tenants
in the Project, then an adjustment
shall be made to Tenant's Additional Rent
to reflect the extra costs incurred by
Landlord as a result thereof.
8. NO PERSONAL
LIABILITY.
Tenant
will not be obligated to post a security deposit or letter of
credit to secure Tenant's obligations under
this Lease. No present or future
partner, shareholder, member or principal
of or in Tenant will have any personal
liability for the payment of Rent or other
amounts due under this Lease or the
performance of Tenant's other obligations
under this Lease.
15
<PAGE>
9. USE.
9.1
Tenant may use
and occupy the Premises solely for general office
purposes and for no other purpose. Tenant
shall not occupy or use the Premises
or any part thereof for any business or
purpose which is unlawful, and Tenant
shall comply, at Tenant's expense, in all
material respects with all present and
future laws, statutes, ordinances, orders,
rules, codes, regulations, decrees
and requirements of all governmental units
(including any agency, department,
commission, board, bureau or subdivision
thereof) (collectively, the "LEGAL
REQUIREMENTS") which relate directly to the
specific nature of Tenant's use or
occupancy of the Premises. Landlord shall,
at Landlord's expense (subject to the
provisions in Section 7.2(k), comply with
all present and future Legal
Requirements which relate to the use,
condition or occupancy of the Premises and
the Project for general office purposes,
including those required by the
Americans with Disabilities Act. Tenant
shall, at Tenant's expense, comply with
all requirements of the Americans with
Disabilities Act which arise as a result
of any alterations, additions, or
improvements to the Premises which are not
consistent with a build-out for general
office occupancy levels. Tenant
acknowledges that it has had a full
opportunity to make its own determination
that the configuration and nature of the
Premises are suitable for Tenant's
business, and Tenant is not relying upon
any implied-by-law warranty as to the
suitability of the Premises for Tenant's
particular business.
Notwithstanding anything to the contrary in this Lease, Tenant
shall
not use the Premises for any purpose which
would (i) adversely affect the
exterior appearance of the Project in
Landlord's reasonable judgment, (ii)
offend persons of normal sensibilities by
reason of items which are visible from
the elevators in the Project, (iii)
adversely affect ventilation in other areas
of the Project (including without
limitation, the creation of offensive odors),
(iv) create unreasonable elevator loads,
(v) cause structural loads to be
exceeded, (vi) create unreasonable noise
levels, or (vii) otherwise unreasonably
interfere with Project operations or other
tenants of the Project. In all
events, Tenant shall not engage in any
activity which is not in keeping with the
first-class standards of the Project.
Tenant also agrees that Tenant will not
(y) use any part of the Premises which may
be located on the first or second
floor of the Tower for retail banking
purposes; provided, however, such
restriction shall not prohibit Tenant from
operating an office to provide
financial aid counseling and services for
students and prospective students; or
(z) use any portion of the Premises for
health care services, telephone or
telegraph agencies, radio, television
stations, employment agencies, public
restaurants or bars, retail, wholesale or
discount shops for sale of
merchandise, retail service shops, on site
classrooms (other than in a manner
not involving significant portions of the
Premises or significant numbers of
non-employee attendees) or governmental or
quasi-governmental bureaus,
departments or agencies; provided, however,
nothing herein shall prohibit any
broadcasts or other communications to
students or prospective students via the
internet or by any other means which are
not disruptive to the Project or any
other tenants.
9.2
Tenant shall not
conduct or permit to be conducted any activity, or
place any equipment in or about the
Premises, which may be hazardous. If any
increase in the rate of fire insurance or
other insurance is due to activity or
equipment of Tenant in or about the
Premises, Tenant shall be liable for the
full amount of such increase and shall
reimburse Landlord therefor and, further,
if such activity or equipment jeopardizes
any insurance coverage, Tenant shall
immediately cause the discontinuance of
such conduct or shall remove such
equipment.
16
<PAGE>
9.3
Tenant shall not
install, use, generate, store or dispose of in or
about the Premises any Hazardous Material
without Landlord's prior written
approval of each Hazardous Material, except
that Tenant may use immaterial
quantities of Hazardous Materials
customarily used in the ordinary course of
office business operations so long as
Tenant uses such Hazardous Materials
strictly in accordance with all Legal
Requirements. Tenant shall reimburse
Landlord upon demand for any costs which
Landlord incurs as a result of Tenant's
installation, use, generation, storage or
disposal of any Hazardous Materials
and Tenant shall indemnify, defend and hold
Landlord and any Mortgagee harmless
from and against any claim, damage, loss,
liability or expense (including,
without limitation, the fees and
disbursements of any attorneys or consultants
incurred by Landlord) arising out of
Tenant's installation, use, generation,
storage, or disposal of any Hazardous
Materials, regardless of whether Landlord
has approved the activity.
9.4
Tenant shall not
allow the use of any tobacco products in any
portion of the Premises or the Project,
except at such outdoor areas which
Landlord agrees to reasonably designate for
smokers from time to time. Tenant
shall not permit its directors, officers,
partners, employees, agents,
contractors or invitees to carry, possess
or store a firearm in or about the
Project except strictly in accordance with
Legal Requirements.
9.5
Landlord shall
not lease any part of the first or second floors of
the Project to a Direct Competitor of
Tenant.
10. ASSIGNMENT AND
SUBLETTING.
10.1
There shall be no
Assignment by Tenant without in each such case
obtaining the prior written consent of
Landlord except as provided in Section
10.7, which consent shall not be
unreasonably withheld or delayed. No Assignment
by Tenant shall relieve Tenant of any
obligation under this Lease, and Tenant
shall remain fully liable hereunder. Any
attempted Assignment by Tenant in
violation of the terms and covenants of
this Section 10 shall be void. Any
consent by Landlord to a particular
Assignment shall not constitute Landlord's
consent to any other or subsequent
Assignment, and any proposed Assignment by a
subtenant of Tenant shall be subject to the
provisions of this Section 10 as if
it were a proposed Assignment by Tenant.
The provisions of this Section 10.1 are
subject to the provisions of Section
10.10.
10.2
It is expressly agreed
by Tenant that it shall be reasonable for
Landlord and Landlord shall be entitled to
withhold its consent to any proposed
assignment of this Lease or a sublease of
all or a portion of the Premises if
any one of the following applies:
(a) the assignee or subtenant is an entity described on or
engaged
in a
business described on Exhibit M attached hereto;
(b) in Landlord's reasonable business judgment, the assignee or
subtenant
is of a character or reputation or engaged in a business which
is not
consistent with the quality and reputation of the Project; or
(c) in the case of an assignment of this Lease (as opposed to a
sublease)
only, the net worth of the assignee as of the date the notice
of
the
proposed Assignment is given pursuant to Section 10.3 or as of
the
consummation of the Assignment and any
17
<PAGE>
transactions related thereto, is or will be less than the tangible
net
worth of
Tenant as of the date of this Lease.
Tenant
acknowledges and agrees that the right of Landlord to withhold
its
consent reasonably with respect to proposed
Assignments under this Section 10 is
for the mutual benefit of Landlord and
Tenant, preserves the benefit of this
Lease for Tenant in those circumstances, as
contemplated hereby, where such
benefit is appropriate to be preserved, and
is appropriate and reasonable, given
the respective interests of Landlord and
Tenant in the Project. Landlord may
impose reasonable conditions in respect of
any consent to an Assignment.
10.3
If Tenant desires at
any time to make an Assignment, Tenant shall
give Landlord written notice of such desire
at least thirty (30) days in advance
of the date on which Tenant desires to make
such Assignment and shall submit in
writing to Landlord (i) the name of the
proposed Assignee, (ii) the nature of
the proposed Assignee's business to be
carried on the Premises, (iii) a copy of
the proposed Assignment agreement and any
other agreements to be entered into
concurrently with such Assignment,
including full disclosure of the rent to be
paid and all other financial terms, and
(iv) such financial information as
Landlord may reasonably request concerning
the proposed Assignee. Neither the
furnishing of such information nor the
payment of attorneys' fees pursuant to
Section 10.9 shall limit any of Landlord's
rights or alternatives under this
Section 10.
10.4 Each subtenant or assignee shall
fully observe all covenants of this
Lease, including without limitation, the
provisions of Section 9 of this Lease,
and no consent by Landlord to an Assignment
shall be deemed in any manner to be
a consent to a use not permitted under
Section 9.
10.5
Whether or not
Landlord has consented to the applicable Assignment,
fifty percent (50%) of the amount by which
the consideration (after deducting
from such consideration the amount of any
leasehold improvement costs, marketing
costs and any brokerage fees paid by Tenant
in connection with such Assignment)
received by Tenant pursuant to any
Assignment (other than an Assignment under
Section 10.7) exceeds, in any month, the
Base Rent and Tenant's Additional Rent
then required to be paid with respect to
such space, shall be payable by Tenant
directly to Landlord as additional rent
hereunder on or before the first day of
each such month.
10.6
Landlord shall have
the right to transfer and assign, in whole or in
part, all of its rights and obligations
hereunder or in the Project or in all
other property referred to herein, and upon
any such transfer (any such
transferee to have the benefit of, and be
subject to, the provisions of Sections
26 and 27 hereof), and the express written
agreement of the transferee to
assume, perform and be bound by all of the
terms and conditions of this Lease
applicable to Landlord as if such
transferee was an original party to this
Lease, the transferor shall have no further
liability hereunder with respect to
the rights and obligations so assigned and
transferred other than liability for
payment of the Improvement Allowance and
any liability, claim, offset or defense
which such transferee is not subject to or
for which such transferee is not
liable to Tenant.
18
<PAGE>
10.7
Notwithstanding
anything to the contrary in this Section 10, upon
written notice to Landlord (which notice
shall be accompanied by the information
which Tenant is required to provide under
Section 10.3, to the extent
applicable), but without the need for any
consent of Landlord and without
applicability of Sections 10.2, 10.5 or
10.10, Tenant may make an Assignment to
any Affiliate, or to any entity (a
"SUCCESSOR") resulting from the merger of or
consolidation with Tenant, or to any person
or entity which acquires all or a
majority of the stock of Tenant or
substantially all of the assets of Tenant as
a going concern (any of such events is
referred to as a "PERMITTED TRANSFER");
provided that any such Successor agrees to
assume the obligations and
liabilities of Tenant hereunder pursuant to
an agreement executed for the
benefit of and in form reasonably
acceptable to Landlord.
10.8
Notwithstanding
anything to the contrary in this Section 10 and
except as provided in Section 10.7, no
Assignment by Tenant shall become
effective until Tenant and any proposed
assignee or subtenant have executed and
delivered to Landlord an agreement by which
such assignee or subtenant agrees to
assume the obligations and liabilities of
Tenant hereunder pursuant to an
agreement executed for the benefit of and
in form reasonably acceptable to
Landlord.
10.9
Tenant shall be
obligated to promptly reimburse Landlord for any
reasonable attorneys' fees incurred by
Landlord in reviewing and preparing any
documents associated with any such proposed
Assignment.
10.10
Notwithstanding anything to the contrary in this Section 10, if
Tenant in good faith desires at any time to
make (or to seek an opportunity to
make) a Third-Party Assignment, Tenant
shall give advance written notice to
Landlord (an "ASSIGNMENT NOTICE") in
accordance with this Section 10.10. For
purposes hereof, a "THIRD-PARTY ASSIGNMENT"
means a complete assignment of this
Lease or a sublease of all or substantially
all of the Premises for all or
substantially all of the then remaining
Term, other than any Assignment (a) to
an Affiliate of Tenant, or (b) made in
connection with a Permitted Transfer. The
Assignment Notice shall specify the
earliest date (the "TARGET DATE") upon which
Tenant may make a Third-Party Assignment;
the Target Date may not be earlier
than six (6) months from the date the
Assignment Notice is given to Landlord.
Following receipt of an Assignment Notice,
Landlord shall have the option, which
may be exercised in Landlord's sole
discretion by giving written notice to
Tenant within thirty (30) days after
Landlord's receipt of the Assignment
Notice, to terminate this Lease effective
as of the Termination Date to be
specified by Tenant as herein provided. If
within thirty (30) days after
Landlord's receipt of the Assignment Notice
Landlord shall by written notice to
Tenant elect to terminate the Lease, Tenant
may at any time thereafter send a
supplemental written notice to Landlord (a
"TERMINATION DATE NOTICE") specifying
the date upon which this Lease shall
terminate (the "TERMINATION DATE");
provided, however, that Tenant may not
specify as the Termination Date any date
that is (i) earlier than the Target Date,
(ii) later than six months after the
Target Date, and (iii) less than sixty (60)
days after the date the Termination
Date Notice is given by Tenant to Landlord.
If Tenant shall fail to give a
Termination Date Notice, the Termination
Date shall be the date that is six
months after the Target Date. If Landlord
fails to notify Tenant in writing of
such election within the thirty (30) day
period after Landlord's receipt of the
Assignment Notice, (x) Landlord shall be
deemed to have waived its right to
terminate this Lease under this Section
10.10, (y) Tenant need not give a
Termination Date Notice and no Termination
Date shall be established pursuant to
this Section
19
<PAGE>
10.10, and (z) the provisions of this
Section 10.10 shall be of no further force
or effect; provided, however, that if
Tenant shall send an Assignment Notice to
Landlord and Landlord does not within
thirty (30) days of receipt thereof give
written notice terminating this Lease, and
if Tenant does not make a Third-Party
Assignment within twenty-four (24) months
of the date of such Assignment Notice,
then Landlord's rights under this Section
10.10 shall be reinstated, and
Landlord and Tenant shall have the same
rights and obligations under this
Section 10.10 just as though such
Assignment Notice had never been given by
Tenant. If Landlord exercises its option to
terminate this Lease by giving
written notice to Tenant within the thirty
(30) day period after Landlord's
receipt of the Assignment Notice, the Term
of this Lease shall end on the
Termination Date and Tenant shall have no
obligation to pay any Rent for the
period after the Termination Date.
11. MAINTENANCE.
11.1
Without limiting
Landlord's obligation to provide routine janitorial
services as set forth in Section 14, and
subject to Section 11.3, Tenant agrees
to maintain, at Tenant's sole cost and
expense and in accordance with the
standards of a first class office building
in downtown Minneapolis, all
leasehold improvements, fixtures and
equipment installed in the Premises; to use
the Premises in a prudent and orderly
manner; to suffer no waste or injury to
the Premises or any improvements or
fixtures therein; and at the expiration or
other termination of this Lease, to
surrender the same with all improvements in
the same order and condition in which they
were on the Commencement Date, or in
such better condition as they may
thereafter be put, except for (i) Landlord's
maintenance requirements, (ii) ordinary
wear and tear, (iii) damage by insured
casualty, and (iv) any other alterations or
improvements permitted under this
Lease which under the terms of this Lease
Tenant is not required to remove at
the expiration or earlier termination of
the Term. Subject to Section 17, any
cost of repairs or improvements to the
Project, to the Premises or to any Common
Areas which are occasioned by any act or
omission or default of Tenant, its
officers, employees, agents or invitees, or
which arise because of Legal
Requirements and the particular nature of
Tenant's use and occupancy of the
Premises or because of any leasehold
improvements or alterations to the Premises
which are made by or on behalf of Tenant,
shall be paid for by Tenant, as
additional rent hereunder, immediately upon
billing.
11.2 Landlord agrees, throughout the
Lease Term, to maintain the Project
and the Common Areas in a manner consistent
with other first class office
projects in the central business district
of downtown Minneapolis. Unless
otherwise stipulated herein, including but
not limited to Section 9.1, Landlord
shall not be required to make any
improvements to or repairs of any kind or
character to the Premises during the Term
of this Lease, except such repairs to
the structure of the Project and the Base
Building Systems as may be deemed
necessary by Landlord: (i) for normal
maintenance operations, (ii) to keep the
Project compliant with the Space Delivery
Standards pursuant to Section 14, and
(iii) to maintain the Project in a manner
consistent with other first class
office projects in the central business
district of downtown Minneapolis.
11.3
Notwithstanding any
provisions of this Lease to the contrary, all
repairs, alterations or additions to the
Base Building Systems (as opposed to
those involving only Tenant's leasehold
improvements), and all repairs,
alterations or additions to Tenant's
leasehold improvements which affect the
Base Building Systems or the structural
elements of the Project,
20
<PAGE>
made by, for or on behalf of Tenant shall
be made by Landlord or a contractor
approved in writing by Landlord, which
approval shall not be unreasonably
withheld or delayed. Tenant shall promptly
reimburse Landlord for any reasonable
out of pocket costs incurred by Landlord in
having the plans and specifications
for any such alterations or additions
reviewed by Landlord's architects or
engineers.
11.4
If Tenant experiences
any damage, interruption or disturbance to the
Premises, Tenant's operations, or Tenant's
equipment as a result of any
electro-magnetic fields, Tenant shall
promptly notify Landlord thereof and
Landlord shall, at Tenant's written request
and at Tenant's expense, but subject
to the rights of other tenants of the
Project, take such actions as may be
reasonably necessary or desirable to
minimize or eliminate such condition.
11.5
Landlord represents
and warrants that the Premises and the Project
are substantially in compliance with
applicable Legal Requirements.
11.6
Landlord represents
and warrants that the Premises and the Project
are free of Hazardous Materials, except for
those Hazardous Materials which are
contained in construction materials that
are customarily incorporated at the
time of installation in or from time to
time typically used in the operation of
first class office buildings or such
quantities of Hazardous Materials as are
customarily used in the ordinary course of
office business operations and in
accordance with all Legal Requirements.
11.7
Landlord agrees, at
Tenant's request, to make a representative of
Landlord available to help Tenant identify
any cabling or wiring within the
Premises that serves any other tenants of
the Project.
12. ALTERATIONS; EQUIPMENT.
12.1
Tenant will not make
or permit anyone to make any alterations,
decorations, additions or improvements,
structural or otherwise, in or to the
Premises or the Project, or place safes,
vaults or other heavy furniture or
equipment within the Premises, without
first obtaining the prior written consent
of Landlord; provided, however, such
consent shall not be required for (i) the
Tenant Improvements provided in Exhibit D
(which are subject to the consent
requirements contained in Exhibit D), (ii)
any recarpeting or redecorating, or
(iii) any alterations, additions or
improvements to the Premises that do not
result in a cost to Tenant greater than
Fifty Thousand and No/100 Dollars
($50,000) and that do not affect the
structural elements of the Project or the
Base Building Systems. Tenant shall
nonetheless provide Landlord with reasonable
advance notice as to alterations,
decorations, additions and improvements which
Tenant is permitted to make under this
Lease without the need for Landlord
consent (which notice from Tenant may be
given orally, or by any other means
that are practical under the circumstances,
and need not be given in accordance
with the provisions of Section 28, or for
any work that is insignificant). An
alteration, addition or improvement shall
be deemed to affect the structural
elements of the Project if such alteration,
addition or improvement includes any
cuts into the Project structure or the
Project walls or floors including,
without limitation, the installation of any
escalators or stairways. Landlord's
consent may be conditioned upon such
requirements as Landlord may reasonably
impose, including without limitation, the
right to approve the plans and
specifications for the alterations and the
contractor who will perform such
21
<PAGE>
alterations. In addition, Landlord shall
have the right to require Tenant, prior
to the commencement of any alteration,
addition or improvement requiring
Landlord's consent, to deliver such
security against mechanics' liens as
Landlord may reasonably require, but only
if the financial strength of Tenant is
at such time significantly less than the
financial strength of Tenant as of the
Effective Date.
12.2
If any mechanic's lien
is filed against any part of the Project for
work claimed to have been done for, or
materials claimed to have been furnished
to, Tenant, such mechanic's lien shall be
discharged by Tenant within twenty
(20) days after receipt of written notice
from Landlord, at Tenant's sole cost
and expense, by the payment thereof or by
making any deposit required by law or
by posting a bond with such surety, in such
amount and in such form as Landlord
deems proper. Tenant shall immediately
notify Landlord of any mechanic's lien or
other lien filed against the Project or any
part thereof by a contractor or
subcontractor of Tenant or otherwise by
reason of work claimed to have been done
for or materials claimed to have been
furnished to Tenant. If Tenant fails to
remove such lien or post such bond within
the twenty (20) day period following
the filing thereof, Landlord may, upon not
less than twenty (20) days' written
notice to Tenant, at its sole discretion
and without waiving its rights and
remedies based on such breach by Tenant and
without releasing Tenant from any of
its obligations, cause such lien to be
released by any means it shall deem
proper, including payment in satisfaction
of the claim giving rise to such lien.
Tenant shall, in such event, pay to
Landlord at once, upon notice by Landlord,
any sum paid by Landlord to remove such
lien, together with interest at the
Interest Rate from the date of such payment
by Landlord. Landlord shall have the
right at all times to post and keep posted
on the Premises any notices permitted
or required by Legal Requirements, or that
Landlord shall deem proper for the
protection of Landlord, the Premises, the
Project and any other party having an
interest therein, from liens. All material
suppliers, contractors, artisans,
mechanics, laborers and other parties
hereafter contracting with Tenant for the
furnishing of any labor, services,
materials, supplies or equipment with respect
to any portion of the Premises are hereby
charged with notice that they must
look solely to Tenant for payment of the
same and Tenant's purchase orders,
contracts and subcontracts in connection
therewith must clearly state this
requirement.
12.3
All alterations,
decorations, additions or improvements shall be
made in accordance with all Legal
Requirements and insurance guidelines and
shall be performed in a good and
workmanlike manner by contractors included on
Landlord's list of approved contractors.
Tenant shall deliver to Landlord a copy
of the "as-built" plans and specifications
(in both drawn and CAD disc format)
for all alterations or physical additions
so made in or to the Premises. Upon
completion of any alterations, decorations,
additions or improvements, Tenant
shall cause its architects and contractors
to certify that no asbestos
containing materials or other Hazardous
Materials are present in such
alterations, additions or improvements
except for such Hazardous Materials which
are present in natural substances and
typical construction materials used in
first-class office buildings in
Minneapolis, Minnesota. Tenant shall use
commercially reasonable efforts in the
construction or installation of Tenant's
alterations or fixtures to not cause any
disturbance of tenants adjacent to
Tenant or to Landlord, including any labor
disturbance. If a labor disturbance
occurs, Landlord may prevent any persons
giving rise to the disturbance from
entering the Project. Any core drilling and
other activities that may cause
significant noise or vibrations will be
performed after normal business hours.
22
<PAGE>
12.4
Upon completion of any
such alterations, decorations, additions or
improvements, Tenant shall deliver to
Landlord evidence of payment, contractors'
affidavits and full and final lien waivers
for all labor, services, or materials
performed or supplied in connection with
such alteration, decoration, addition
or improvement. Tenant shall indemnify,
defend (at Landlord's request and with
counsel approved by Landlord) and hold
Landlord harmless from and against all
losses, costs, damages, claims,
liabilities, causes of action and expenses
(including attorneys' fees and
disbursements, whether suit is commenced or not)
arising out of or relating to any
alterations, decorations, additions or
improvements that Tenant or any of its
contractors make to the Premises,
including any occasioned by the filing of
any mechanic's, material supplier's,
construction or other liens or claims (and
all costs or expenses associated
therewith) asserted, filed or arising out
of any such work. Without limiting the
generality of the foregoing, Tenant shall
repair or cause to be repaired at its
expense all damage caused by any of its
contractors, subcontractors or their
employees or agents. Tenant shall reimburse
Landlord for any costs incurred by
Landlord to repair any damage caused by any
of Tenant's contractors or any costs
incurred by Landlord in requiring any of
Tenant's contractors to comply with the
rules and regulations of the Project as in
effect from time to time. Tenant
shall also reimburse Landlord upon demand
for any costs Landlord may incur to
have an engineer review all mechanical,
structural, electrical, plumbing and
life safety systems installed by any of
Tenant's contractors.
12.5
All alterations,
decorations, additions or improvements in or to the
Premises or the Project made by Tenant (not
including any of Tenant's trade
fixtures) shall become the property of
Landlord upon the expiration or
termination of this Lease and shall remain
upon and be surrendered with the
Premises as a part thereof without
disturbance or injury, unless, prior to the
installation thereof, Landlord requires, in
a written notice delivered to
Tenant, unusual trade fixtures not
consistent with a general office use
build-out to be removed by Tenant at
Tenant's sole cost and expense, in which
event Tenant shall remove the same prior to
the expiration or termination of
this Lease and shall repair any damage
caused thereby. Notwithstanding any
provision to the contrary in this Section
12.5, any internal staircases and
vaults installed by or at the request of
Tenant shall be removed by Tenant at
its expense prior to the expiration or
termination of this Lease and Tenant
shall repair any damages caused thereby.
Tenant shall not, however, be required
to remove any of the existing leasehold
improvements in the Initial Premises.
12.6
Tenant shall not place
or maintain any sign, advertisement or notice
on any part of the outside of the Premises
or any area which is readily visible
from outside the Premises unless approved
in writing by Landlord (which approval
will not be unreasonably withheld or
delayed); except for suite identification
signage and signage which states that
Tenant bans guns on the Premises.
12.7
Tenant agrees
specifically that no food, soft drink or other vending
machine will be installed within the
Premises without the prior written consent
of Landlord, except that Tenant may install
vending machines for the sole and
exclusive use by Tenant and Tenant's
employees in an area designated by Tenant
and approved by Landlord, provided such
machines do not contain any CFC's.
12.8
Tenant shall not
install any fixtures or equipment which consume
more than the amount of electricity
specified in Section 14 without first
obtaining the prior written consent of
23
<PAGE>
Landlord. If Tenant requires electrical
capacity in excess of that specified in
Section 14, Tenant shall pay to Landlord
the cost of the excess electrical usage
plus all costs of installation, operation
(including electrical metering) and
maintenance of any and all electrical,
ventilation or air conditioning
modifications which Landlord determines to
be necessary. Equipment belonging to
Tenant which causes noise or vibration that
may be transmitted to the structure
of the Project or to any space therein to
such a degree as to be objectionable
to Landlord or to any tenant in the Project
shall be installed and maintained by
Tenant, at Tenant's expense, on vibration
eliminators or other devices
sufficient to eliminate noise and
vibration. Landlord shall have the right at
any time to limit the weight and prescribe
the position of safes and other heavy
equipment or fixtures.
13. KEYS; RIGHT OF ENTRY;
RESERVED RIGHTS IN COMMON AREAS.
13.1
Subject to the other
terms and conditions of this Lease, Landlord
will provide Tenant with access to the
Premises, twenty-four (24) hours a day,
seven (7) days per week. Landlord shall
manage the Project's card access system,
but Tenant shall be responsible for
managing its own card access system for the
Premises. Landlord shall provide audit
reports on a semi-annual basis and
additional ad-hoc requests each year
without charge. Landlord shall furnish
Tenant with cards for after-hours access to
the Project for all of Tenant's
employees and students upon an order signed
by Tenant and at Tenant's expense.
All keys and cards furnished by Landlord
shall remain the property of Landlord.
No additional locks shall be allowed on any
door of the Premises without
Landlord's prior written consent, and
Tenant shall not make or permit to be made
any duplicate keys, except those furnished
by Landlord. Upon the expiration or
termination of this Lease, Tenant shall
immediately surrender to Landlord all
keys to any locks on or within the Premises
and all access cards provided by
Landlord, and give to Landlord an
explanation of the combination of all locks
for safes, safe cabinets and vault doors,
if any, in the Premises. Tenant shall
pay for any locks or access reader card
systems installed in the Premises and
the cost of replacing any lost or damaged
keys or access cards. Tenant shall
also provide Landlord with a keying
schedule for the Premises.
13.2
Tenant shall permit
Landlord and Landlord's representatives and
agents, to enter into and upon any part of
the Premises, at all reasonable hours
to examine, inspect and protect the
Premises, and to make such alterations,
renovations, restorations and/or repairs as
Landlord shall deem necessary or
desirable for the Premises, for any other
premises in the Project, or the
Project itself (including access to
adjacent roof surfaces and to distribution
systems above the ceiling of the Premises),
to post notices of
non-responsibility, to provide janitorial
services, to perform maintenance work
requested by Tenant or to provide other
services required to be performed by
Landlord hereunder, or to exhibit the
Premises to prospective tenants during the
last twelve (12) months of the Term, or to
prospective purchasers, mortgagees,
investors or lenders at any time. Landlord
shall give reasonable advance oral
notice prior to entry except for janitorial
service and emergencies and to
perform repairs requested by Tenant.
Landlord shall use reasonable efforts to
not unreasonably interfere with the conduct
of Tenant's business, but Landlord
shall in no event be liable to Tenant for
any damages in connection with such
entry or installation; provided, however,
if any of the services to be provided
by Landlord under this Lease are
interrupted for three (3) consecutive business
days for any reason as a result of such
entry or installation, and Tenant's use
or enjoyment of the Premises is materially
affected
24
<PAGE>
thereby, then all Rent shall abate on a per
diem basis with respect to those
portions of the Premises which Tenant is
not using from and after said third day
until such services are restored.
13.3
Subject to the
provisions of Section 35.15, Landlord reserves the
right to (i) impose such security
restrictions in the Common Areas as it deems
appropriate; (ii) close temporarily or
restrict the use of any of the Common
Areas for maintenance or repair purposes;
(iii) use the Common Areas while
engaged in making additional improvements,
repairs or alterations to the Project
or any portion thereof; and (iv) use on an
occasional or temporary basis or
allow the occasional, temporary use by
others of the atrium and the first and
second floors of the Project, for civic,
charitable, cultural, business and
other events.
14. SERVICES AND UTILITIES.
Landlord shall use reasonable efforts to furnish (as part of
the
Operating Costs of the Project) Tenant,
while Tenant occupies the Premises, the
following services at levels commensurate
with the general standards followed by
landlords of first-class office buildings
in Minneapolis, Minnesota:
(a) Hot and cold domestic water for restrooms and cold domestic
water at
those points of supply provided for general use of other
tenants
in the
Project.
(b) During Normal Business Hours, and subject to curtailment as
required
by Legal Requirements, central heat and air conditioning in
season, at
such temperatures and in such amounts as are in keeping with
the
standards described in Exhibit F hereto and otherwise in
accordance
with the
standards of a first class office building. Landlord agrees to
provide
the Premises with heating and air conditioning during other
than
Normal
Business Hours at Tenant's request. The charge for such after
hours
services initially shall be
at the rate of $35.00 per hour (or partial
hour), for
the first floor or partial floor within the Building or Tower,
and $5.00
per hour (or partial hour) for each additional floor or partial
floor in
the Building or Tower, which amounts may be increased by
Landlord
from time
to time, but shall not be greater than the reasonable cost to
Landlord
in providing such after hours services (for purposes of
computing
the charge
for after hours services, each floor in Tower and each floor in
the
Building shall be treated as separate floors, so that if Tenant
requests
after hours services on a floor in the Tower and on the same
floor in
the Building, Tenant's request shall be treated as a request
for
two
floors). Tenant shall be charged for a minimum of one hour of
service
in
connection with each such request. Tenant shall give Landlord
notice by
telephone
for the need for such heating and air conditioning during other
than
Normal Business Hours no later than noon of the business day
with
respect to
services for the evening of such business day, and no later
than noon
of the immediately preceding business day with respect to
services
for Holidays or weekends.
(c) Routine electric lighting service for all public areas and
special
service areas of the Project.
(d) Janitor service on a five (5) day week basis (except for
Holidays
as described in Exhibit F hereto) which shall be provided after
9:00 p.m.
and prior to 7:30 a.m. on
25
<PAGE>
Mondays
through Fridays pursuant to the cleaning specifications
attached
hereto as
Exhibit O; provided, however, if Tenant's floor coverings or
other
improvements cost more to clean than typical floor coverings or
improvements, Tenant shall pay, as additional rent, the additional
costs,
if any,
attributable thereto. Landlord represents to Tenant that (i)
its
security
service provider currently performs criminal background checks
through
the Minnesota Bureau of Criminal Apprehension and the Federal
Bureau of
Investigation for each of its security personnel servicing the
Premises,
and (ii) its janitorial service provider currently performs
background
checks through the Minnesota Bureau of Criminal Apprehension
for its
personnel servicing the Premises.
(e) Equipment and personnel to limit access to the Project
after
Normal
Business Hours; provided, however, Landlord will provide Tenant
with
access to the Premises, twenty-four (24) hours a day, seven (7)
days
per
week.
(f) Sufficient electrical capacity for (i) convenience outlets
and
equipment
such as personal computers, photocopying machines and other
machines
of similar low voltage (120/208 volts) requirements; provided,
however,
total rated power consumption of 120/208 volt power shall not
exceed two
and one-quarter (2.25) watts per square foot of Usable Area (as
defined in
Section 3.1); and (ii) fluorescent light fixtures and equipment
of high
voltage (277/480 volts) requirements; provided, however, total
rated
power consumption of 277/480 volt power shall not exceed three
and
four
tenths (3.40) watts per square foot of Usable Area. If any
electrical, telephone switching or other equipment requires air
conditioning or electrical usage in excess of the foregoing
limitations or
requires
modifications to a base building electrical panel, the same
shall
be
installed or performed at Tenant's expense and Tenant shall pay
all
operating
costs relating thereto, including metering.
(g) All building standard fluorescent bulb replacement in all
areas
and all
building standard incandescent bulb replacement in public
areas,
toilet and
rest room areas and stairwells, together with base building
starters
and ballasts as replacement is needed for such lighting.
(h) Non-exclusive passenger elevator service to the Premises
twenty-four (24) hours per day and non-exclusive freight elevator
service
during
Normal Business Hours.
(i) Base building telephone risers in accordance with
Landlord's
rules and
regulations with respect to telephone service as they may exist
from time
to time. Landlord shall have the right to impose reasonable
charges
for the use by third party telecommunications providers of the
Base
building telephone risers.
(j) Uniformed guards and/or equipment on a twenty-four (24)
hour-per-day, seven (7) day-per-week basis to maintain security for
the
Project.
To the extent the services described in (a), (b), (c), (f) and
(h)
require electricity, gas or water supplied
by public utilities, Landlord's
covenants thereunder shall only impose on
Landlord the obligation to use its
reasonable efforts to cause the applicable
public utilities to furnish the same.
Failure by Landlord to furnish the services
described in this Section 14 to any
26
<PAGE>
extent, or any cessation thereof, shall not
render Landlord liable in any
respect for damages to either person or
property, nor be construed as an
eviction of Tenant, nor, except as
explicitly provided below, work an abatement
of any Rent, nor relieve Tenant from
fulfillment of any covenant or agreement
hereof. Landlord agrees, however, to use
diligent efforts to promptly repair any
Base Building Systems and to restore any
services described in this Section 14
which are interrupted during Normal
Business Hours.
If any of the services to be provided by Landlord under this
Section
14 are interrupted for:
(x) three (3)
consecutive business days for any reason within
Landlord's reasonable control (as opposed to generally
prevailing circumstances); or
(y) seven (7)
consecutive days for any reason not within
Landlord's control (including generally prevailing
circumstances);
and, in either event, if Tenant's use or
enjoyment of the Premises is materially
affected thereby, then if Tenant has
promptly notified Landlord in writing of
such interruption, all Rent shall abate on
a per diem basis with respect to
those portions of the Premises which Tenant
is not using from and after said
third day (or seventh day, as the case may
be) until such services are restored.
Landlord reserves the right to require telecommunication
connections
and services to be made only pursuant to
agreements between Landlord and
telecommunications providers which are
satisfactory to Landlord in its
reasonable discretion, provided that any
such agreement shall permit Tenant to
obtain the telecommunication services
Tenant needs at competitive rates and on
competitive conditions. Tenant shall
conserve heat, air conditioning, water and
electricity and shall use due care in the
use of the Premises and of the public
areas in the Project. All thermostats
within the Premises shall be under the
sole control of Landlord, and Tenant shall
not, nor shall it permit any of its
employees, agents, representatives or
invitees, to open, change or tamper with
any thermostats.
15. WAIVER AND INDEMNITY.
15.1
Except as expressly
provided to the contrary in this Lease, Landlord
and Landlord's Affiliates and each of their
partners, directors, officers,
shareholders and employees shall not be
liable to Tenant, or those claiming by,
through or under Tenant, for any damage or
claims, however caused, arising from
loss or damage to books, records, computer
or other electronic equipment, data
or media, files, artwork, money,
securities, negotiable instruments or papers,
or any other personal property in the
Project, the interruption in the use of
any cellular or wireless communication
devices or the interruption in the use of
the Premises, any fire, robbery, theft,
assault, or any other casualty, any
leakage or bursting of pipes or water
vessels or any roof or wall leakage or
other water damage, in any part or portion
of the Premises or the Project.
15.2
Subject to the
provisions of Section 17 which shall control if they
conflict with the provisions of this
Section 15.2, Tenant shall indemnify,
defend (at Landlord's request and with
counsel reasonably approved by Landlord)
and hold Landlord and Landlord's Affiliates
(and each of their partners,
directors, officers, shareholders and
employees) harmless from and against every
demand, claim, cause of action, judgment
and expense, including, but not limited
27
<PAGE>
to, reasonable attorneys' fees and
disbursements of counsel, whether suit is
initiated or not, and all loss and damage
arising from or related to any bodily
or personal injury, death or property
damage occurring in the Premises, except
to the extent caused by the gross
negligence or willful misconduct of Landlord
or Landlord's Affiliates or any of their
representatives, agents, contractors or
employees.
15.3
Subject to the
provisions of Section 17 which shall control if they
conflict with the provisions of this
Section 15.3, Landlord shall indemnify,
defend (at Tenant's request and with
counsel reasonably approved by Tenant) and
hold Tenant and Tenant's Affiliates (and
each of their governors, members,
partners, directors, officers, shareholders
and employees) harmless from and
against every demand, claim, cause of
action, judgment and expense, including,
but not limited to, reasonable attorneys'
fees and disbursements of counsel,
whether suit is initiated or not, and all
loss or damage arising from or related
to any bodily or personal injury, death or
property damage occurring in those
portions of the Project which are not
leased to Tenant or other tenants, except
to the extent caused by the gross
negligence or willful misconduct of Tenant,
Tenant's Affiliates or any of their
representatives, agents, contractors or
employees.
16. INSURANCE.
16.1
Landlord shall
maintain all risk property insurance on the Project
and the leasehold improvements in the
Premises with coverage limits for such
leasehold improvements of $25.00 dollars
per square foot of Rentable Area for
such leasehold improvements. Said insurance
shall be maintained with an
insurance company authorized to do business
in Minnesota, in amounts desired by
Landlord and at the expense of Landlord
(but with the same to be included in the
Operating Costs described in Section 7.2)
and payments for losses thereunder
shall be made solely to Landlord. If the
annual premiums to be paid by Landlord
shall exceed standard rates because of
Tenant's operations within or the
contents of the Premises, Tenant shall
promptly pay the excess amount of the
premium upon request by Landlord. Tenant
shall maintain all risk property
insurance on all of its personal property,
including removable trade fixtures,
located in the Premises and on the value of
any of Tenant's leasehold
improvements in excess of the coverage
limits to be maintained by Landlord as
described above, subject to commercially
reasonable deductibles. Prior to the
Commencement Date and prior to the
expiration of then-existing policies, Tenant
shall deliver to Landlord certificates
evidencing maintenance of the insurance
required herein.
16.2
Landlord shall
maintain a policy of commercial liability insurance
with the premium thereon fully paid on or
before the due date, issued by and
binding upon an insurance company
authorized to do business in Minnesota, such
insurance to afford minimum protection
(which may be effected by primary and/or
excess coverage) of not less than
$5,000,000 combined single limit. Tenant shall
maintain a policy of commercial liability
insurance with the premium thereon
fully paid on or before the due date,
issued by and binding upon an insurance
company acceptable to Landlord that is
authorized to do business in Minnesota,
such insurance to afford minimum protection
(which may be effected by primary
and/or excess coverage) of not less than
$5,000,000 combined single limit.
Landlord and Landlord's property manager
shall be named as additional insureds
on Tenant's liability policy. Prior to the
Commencement Date and prior to the
expiration of then-existing policies,
Tenant shall deliver to Landlord a
certificate of insurance in form
satisfactory to Landlord evidencing maintenance
of the insurance required
28
<PAGE>
herein together with a copy of the
endorsement to Tenant's commercial liability
policy which adds Landlord and Landlord's
property manager as additional
insureds. Upon Landlord's request, Tenant
shall also promptly deliver to
Landlord a certified copy of the insurance
policy which Tenant is required to
maintain hereunder.
17. WAIVER OF CLAIMS AND
SUBROGATION.
Notwithstanding anything to the contrary in this Lease, Landlord
and
Tenant each hereby waives any and all
rights of recovery, claim, action or cause
of action, against the other and their
Affiliates and each of their partners,
shareholders, officers, employees and
contractors for any loss or damage that
may occur to the Premises or the Project,
or any improvements thereto, or any
personal property of such party therein, by
reason of fire, the elements, or any
other cause which could be insured against
under the terms of the all risk
property insurance policies referred to in
Section 16 hereof (whether or not
actually insured) or which is actually
insured against by the party in question,
regardless of cause or origin, including
negligence of the other party hereto or
its Affiliates or any of their partners,
shareholders, officers, employees and
contractors, and covenants that to the
extent of such waiver no insurer shall
hold any right of subrogation against the
other party hereto. In addition,
Tenant hereby waives all rights of recovery
with respect to property damage
against all other tenants of the Project
that have, prior to any loss by Tenant,
executed a reciprocal waiver of recovery
rights for the benefit of Tenant.
18. DAMAGE.
In the event of a fire or other casualty in the Premises,
Tenant
shall immediately give notice thereof to
Landlord. If the Premises shall be
damaged by fire or other casualty so as to
render the Premises untenantable in
whole or in part, the Rent provided for
herein shall abate thereafter as to the
portion of the Premises rendered
untenantable until the earlier of (a) such time
as the Premises are made tenantable, or (b)
five (5) business days after
Landlord substantially completes the
restoration of the Premises. If damage by
fire or other casualty results in the
Premises being untenantable in whole or in
substantial part for a period reasonably
estimated by a responsible contractor
selected by Landlord to be one (1) year or
longer after Landlord's insurance
settlement, and if Landlord shall decide
not to rebuild, then either party may
terminate this Lease upon such date as
written notice is provided to the other
party and all Rent owed up to the time of
such destruction or termination shall
be paid by Tenant. Landlord shall give
Tenant written notice of its decisions,
estimates or elections under this Section
18 within sixty (60) days after any
such damage or destruction. If this Lease
is not terminated, Landlord shall
commence and prosecute with all due
diligence restoration of the Premises.
Notwithstanding anything contained in this
Section 18 to the contrary, Landlord
shall only be obligated to restore the
Premises to the extent of the insurance
proceeds actually received, but if the
insurance proceeds actually received do
not permit Landlord to restore the
Premises, Landlord shall so notify Tenant and
either Landlord or Tenant may terminate
this Lease by written notice given
within sixty (60) days after Landlord's
notice. If Landlord restores the
Premises or the Project in accordance with
the provisions of this Section 18,
then Tenant shall not have any right to
terminate this Lease because of such
damage pursuant to (i) any common law
rights, (ii) Minnesota Statutes Section
504B.131 as now in effect or as it may be
hereafter amended or supplemented, or
(iii) any comparable right established by a
similar statute.
29
<PAGE>
19. CONDEMNATION.
If (a) any material portion of the Premises shall be
permanently
taken or condemned, this Lease shall, upon
written notice from either party,
terminate as of the date of such
condemnation or taking, or (b) more than
fifteen percent (15%) of the Building or
the Tower, or such lesser portion as is
necessary for the commercially reasonable
operation of the Project, shall be
permanently taken or condemned, this Lease
shall, upon written notice from
Landlord or Tenant, terminate as of the
date of such taking. If not terminated
as provided above, this Lease shall
continue in full force and effect and Rent
shall be partially abated based on the
number of square feet of Rentable Area
taken. All proceeds payable on account of
any interest in the Premises and/or
the Project to either or both parties to
this Lease from any taking or
condemnation of the Premises shall belong
to and be paid to Landlord. Nothing
contained herein shall prevent Tenant from
seeking and retaining a separate
award from the condemning authority in any
proceeding involving a taking or a
sale in lieu of a taking, for Tenant's
trade fixtures, equipment or relocation
expenses.
20. DEFAULT.
20.1
Any one of the
following events shall constitute an event of default
("EVENT OF DEFAULT") by Tenant:
(a) Tenant shall fail to pay any installment of Rent within five
(5)
days after
receiving written notice of such failure from Landlord;
(b) Tenant shall fail to execute and deliver a subordination
instrument
or an estoppel certificate within twenty (20) days after a
request
therefor, as required respectively by Sections 23 and 29, if
such
failure
continues for more than ten (10) days after Tenant has received
written
notice of such failure from Landlord;
(c) Tenant shall violate or fail to perform any of the other
conditions, covenants or agreements herein made by Tenant and such
default
shall
continue for fifteen (15) days after written notice from
Landlord;
provided,
however, that if the nature of such default is such that Tenant
can cure
the default, but Tenant can not reasonably cure such default
within
fifteen (15) days, then the Event of Default shall be suspended
if
Tenant
promptly commences to cure the default and thereafter
diligently
and
continuously prosecutes the curing of the default to completion,
but
only if
the continuation of such default does not create material risk
to
the
Project or substantial interference to other tenants of the
Project;
(d) If (1) the interest of Tenant under this Lease shall be
levied
upon under
execution or other legal process, (2) any petition shall be
filed by
or against Tenant to declare Tenant bankrupt or to delay,
reduce
or modify Tenant's debts or
obligations, (3) Tenant shall be declared
insolvent
according to law, or (4) any assignment of Tenant's property
shall be
made for the benefit of creditors, or a receiver or trustee is
appointed
for Tenant or its property (provided that no such levy,
execution,
legal process or petition filed against Tenant shall constitute
a breach
of this Lease if Tenant shall vigorously
30
<PAGE>
contest
the same by appropriate proceedings and shall remove or vacate
the
same
within thirty (30) days from the date of its creation, service
or
filing);
or
(e) If Tenant is a partnership or other entity and Tenant shall
be
dissolved
or otherwise liquidated, except in connection with a merger,
consolidation or other reorganization resulting in the continuation
of
Tenant's
business substantially as previously conducted and such merger,
consolidation or other reorganization is an Assignment to which
Landlord
has given
its consent in accordance with Section 10.
20.2
If an Event of Default
shall have occurred and be continuing:
(a) Landlord may terminate this Lease and forthwith repossess
the
Premises
and be entitled to recover forthwith as damages a sum of money
equal to
the total of (i) the cost of recovering the Premises (including
attorneys'
fees, disbursements of counsel and any costs of suit), (ii) the
unpaid
Rent earned at the time of termination, plus interest thereon
at
the
Interest Rate, (iii) the present value (discounted at the then
current
reference
rate of interest published from time to time by U.S. Bancorp,
or
its
successors) of the balance of the Rent for the remainder of the
Term
less the
present value (discounted at the same rate) of the amount
Tenant
reasonably
demonstrates that Landlord would in all likelihood receive from
leasing
the Premises to another tenant for said period, taking into
account
the cost of reletting, the then-current market conditions, the
time the
Premises was vacant and other similar costs, and (iv) any other
sum of
money and damages owed by Tenant to Landlord.
(b) Landlord may terminate Tenant's right of possession (but
not
this
Lease) and may repossess the Premises or any portion thereof by
eviction
action or otherwise by process of law, without thereby
releasing
Tenant
from any liability hereunder and without demand or notice of
any
kind to
Tenant and without terminating this Lease, in which event
Landlord
may, but
shall be under no obligation to do so, relet the same for the
account of
Tenant for such rent and upon such terms as shall be
satisfactory to
Landlord. For the purpose of such reletting Landlord is
authorized
to decorate or to make any repairs, changes, alterations or
additions
to the Premises as may be reasonably necessary or desirable in
Landlord's
judgment, and (i) if Landlord does not relet the Premises, or
(ii) if
the same are relet and the amounts received from such reletting
(after
first deducting therefrom, for retention by Landlord, the
unpaid
Rent due
hereunder earned but unpaid at the time of reletting plus
interest
thereon at the Interest Rate, the cost of recovering possession
(including
attorneys' fees, disbursements of counsel and any costs of
suit), all
of the costs and expenses of such decorations, repairs,
changes,
alterations and additions, the expense of such reletting and
the
cost of
collection of the rent accruing therefrom), are not equal to or
greater
than the Rent provided for in this Lease to be paid, then (y)
Tenant
shall pay to Landlord as damages if the Premises are not relet,
a
sum equal
to the amount of the Rent reserved in this Lease for such
period
or
periods, plus the cost of recovering possession of the Premises
(including
attorneys' fees and any costs of suit), the unpaid Rent earned
at the
time of repossession plus interest thereon at the Interest
Rate,
and the
costs incurred in any attempt by Landlord to relet the
Premises,
or (z) if
the Premises have been relet, the Tenant shall satisfy and pay
any such
deficiency. Any such payments due Landlord shall be made upon
demand
therefor from time to time
31
<PAGE>
and Tenant
agrees that Landlord may file suit to recover any sums falling
due under
the terms of this Section 20 from time to time. No delivery to
or
recovery by Landlord of any portion due Landlord hereunder shall be
any
defense in
any action to recover any amount not theretofore reduced to
judgment
in favor of Landlord, nor shall such reletting be construed as
an
election
on the part of Landlord to terminate this Lease unless a
written
notice of
such intention be given to Tenant by Landlord. Notwithstanding
any such
reletting without termination, Landlord may at any time
thereafter
elect to terminate this Lease for such previous breach.
20.3
In the event of a
breach by either party of any of the agreements,
conditions, covenants or terms hereof, the
non breaching party shall have the
right of injunction to restrain the same
and the right to invoke any remedy
allowed by law or in equity whether or not
other remedies, indemnities or
reimbursements are provided in this Lease.
The rights and remedies given to
Landlord and Tenant in this Lease are
distinct, separate and cumulative
remedies, and no one of them, whether or
not exercised by Landlord or Tenant,
shall be deemed to be in exclusion of any
of the others.
20.4
Intentionally
omitted.
20.5
If either party hereto
initiates litigation to enforce the
provisions of this Lease against the other
party, the prevailing party in such
litigation shall be entitled to
reimbursement from the non-prevailing party of
all reasonable and documented costs and
expenses, including reasonable
attorneys' fees, paid or incurred by the
prevailing party in connection with
such litigation. For purposes of this
Section 20, the term "prevailing party"
shall be defined to mean the party whose
position in such litigation is
substantially upheld.
20.6
Any one of the
following events shall constitute an Event of Default
by Landlord:
(a) Landlord's failure to pay any amount which is properly due
and
payable to
Tenant within ten (10) business days' after written notice from
Tenant
that the same was not paid when due; or
(b) Landlord's failure to perform any of Landlord's obligations
under this
Lease, within thirty (30) days after Landlord has received
written
notice of such failure from Tenant; provided, however, that if
the
nature of
such default is such that Landlord can cure the default, but
not
within
thirty (30) days, then such default shall not constitute an
Event
of Default
so long as Landlord commences cure within thirty (30) days and
thereafter
diligently and continuously prosecutes the curing of the
default to
completion, but only if continuation of the default does not
create
substantial interference to Tenant's enjoyment of the Premises.
21. LANDLORD'S RIGHT TO CURE
DEFAULTS; LATE PAYMENTS.
If Tenant defaults in the making of any payment, or in the doing
of
any act herein required to be made or done
by Tenant, or does or suffers any act
prohibited herein, then Landlord may, but
shall not be required to, make such
payment or do such act, or correct any
damage caused by such prohibited act and
enter the Premises as appropriate in
connection
32
<PAGE>
therewith. Tenant shall reimburse Landlord
on demand for all costs and expenses
incurred by Landlord in curing any such
default plus a charge of ten percent
(10%) to cover Landlord's overhead in
curing any non-monetary default, together
with interest thereon at the Interest Rate
from the date such sums are incurred
by Land
