EXHIBIT 10.4
LEASE AGREEMENT
between
MORTENSON PROPERTIES, INC. (Landlord)
and
SHOWCASE CORPORATION (Tenant)
November 30, 1998
LEASE SUMMARY
1. Landlord: Mortenson Properties, Inc., a Minnesota corporation
2. Tenant: ShowCase Corporation, a Minnesota corporation
3. Premises: A portion of Building 662, 4111 41st Street N.W., Rochester, MN
4. Rentable Square Feet: 26,716
5. Usable Square Feet: 21,950
6. Commencement Date: June 26, 1999
8. Expiration Date: June 30, 2004
9. Rent Commencement
Date: June 26, 1999
10. Initial Base Rent
(Annually): $243,115.60
11. Initial Base Rent
(Monthly): $20,259.64
13. Tenant's Pro Rata
Share of the Building: 25.52%
14. Option to Renew: 1 Option for 5 years
EXHIBITS:
A - Premises
B - Legal Description
C - Estoppel and Commencement Date Certificate
D - Approved Signage
E - Rules and Regulations
F - Plans and Specifications for Tenant Improvements
Note: This Lease Summary does not, in any way, modify the terms of the lease,
but rather is for information purposes only.
BUILDING LEASE
THIS LEASE (the Lease) is made this 30th day of November, 1998, between
MORTENSON PROPERTIES, INC., a Minnesota corporation (Landlord), and SHOWCASE
CORPORATION, a Minnesota corporation (Tenant).
1. Premises: Landlord hereby leases to Tenant those certain premises
designated on the Plans attached hereto as Exhibit A and incorporated herein by
this reference (the Premises), consisting of a total of approximately 26,716
square feet of space (BOMA rentable area) on the third floor of the building
located at 4111 41st Street, N.W., Rochester, MN (hereinafter the Building),
located on the real property more particularly described on Exhibit B attached
hereto and incorporated herein by this reference, together with a non-exclusive
right, subject to the provisions hereof, to use all appurtenances thereunto,
including, but not limited to, sidewalks, drives, parking areas and any other
external areas designated by Landlord for use by tenants of the Building (the
Building and real property hereinafter collectively sometimes called the
Building Complex). For purposes of this Lease, "BOMA Rentable Area" shall mean
and refer to the measuring formula for full floor tenants defined in Building
Owners and Managers Association (BOMA) publication Z65.1-1980, a revision of
Z65.1-1972, together with all updated revisions thereof. This Lease is subject
to the terms, covenants and conditions set forth herein and Tenant and Landlord
each covenant as a material part of the consideration for this Lease to keep and
perform each and all of said terms, covenants and conditions to be kept and
performed by them.
2. Term:
(a) The initial term (the Initial Term) of this Lease shall be for a term
of five (5) years and six (6) days commencing at 12:01 a.m. on June 26, 1999
(the Commencement Date), and terminating at 12:00 midnight on June 30, 2004 (the
Expiration Date), unless sooner terminated pursuant to the terms hereof.
(b) If the Initial Term begins other than on the first day of the month,
Tenant shall pay proportionate rent at the same monthly rate set forth herein
(also in advance) for such partial month and all other terms and conditions of
this Lease shall be in force and effect during such partial month but the end of
the Initial Term hereof shall not be adjusted or extended due to any change in
the Commencement Date. Landlord and Tenant shall execute an Estoppel and
Commencement Date Certificate in the form attached hereto as Exhibit C, within
ten (10) days of the date the term commences, certifying as to the actual
commencement and expiration dates of the term, the rent commencement date, if
different, and such other matters as may be reasonably required by Landlord.
(c) Tenant may renew this Lease for one additional term of five (5) years
(the Additional Term) in the manner provided for herein. Tenant may extend the
term of this Lease provided (i) Tenant delivers written notice (a Renewal
Notice) of such extension to Landlord at least nine (9) months prior to the
expiration of the Initial Tenn and (ii) Tenant is not in default hereunder as of
the date of such notice. If Tenant elects an Additional Term, all of the terms
and conditions of this Lease shall govern the Additional Term, except that Base
Rent shall be adjusted pursuant to
Paragraph 3(b) hereof. All references to the "term" of this Lease refers to the
Initial Term and any Additional Term elected by Tenant.
3. Rent:
(a) Tenant shall pay to Landlord as Base Rent, an annual rent for the
Premises (Base Rent) during the Initial Term in the amounts set forth below:
Base Rent Schedule
Period Rate Annual Base Rent Monthly Installment
------ ---- ---------------- -------------------
June 26, 1999 to $9.10 per rentable $243,115.60 $20.259.64
December 31, 2001 square foot
January 1, 2001 to $9.60 per rentable $265,473.60 $21,372.80
Expiration Date square foot
The foregoing amounts shall be adjusted, if necessary, to reflect the actual
rentable area of the Premises.
All installments of Base Rent shall be payable in advance, on the first
(1st) day of each calendar month during the term hereof. Rent for the first and
last months of the term hereof shall be prorated based upon the number of days
during each of said months that the Lease term was in effect. One monthly
installment of Base Rent shall be due and payable on the date of execution of
this Lease by Tenant. All Base Rent shall be paid without notice, demand,
deduction or offset, at the offices of Landlord or to such other person or at
such other place as Landlord may designate in writing. Tenant shall pay to
Landlord as "Additional Rent" all other sums due under this Lease.
(b) The annual Base Rent for the Additional Term, if elected by Tenant
hereunder, shall be adjusted effective as of the first day of the Additional
Tenn to the annual "Market Rent" of the Premises. For purposes of this Lease,
"Market Rent" means the prevailing market rent for the Premises determined as
follows: For purposes of this Lease "Market Rent" shall be the amount for which
the Premises could be leased for the Additional Term in an arm's-length
transaction upon the same terms and conditions (other than Basic Rent) as are
otherwise contained in this Lease, assuming both the Landlord and Tenant are
prudent persons willing to enter into such a Lease but under no compulsion to do
so. Landlord and Tenant shall, within thirty (30) days after the date Landlord
receives a Renewal Notice from Tenant, attempt to agree between themselves as to
the Market Rent of the Premises for purposes of establishing the Base Rent for
the Additional Term. If the parties are unable to agree upon the Market Rent
within said thirty (30) days, then the Market Rent shall be determined by an
appraisal process. The appraisal process shall be completed by three reputable
real estate professionals, each of whom shall (i) have no interest in the
business of either party hereto; (ii) have at least five (5) years of experience
appraising commercial properties similar to the
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Premises; and (iii) be a member of the American Institute of Real Estate
Appraisers with the designation of "MAI." One appraiser shall be appointed by
Tenant and the second appraiser shall be appointed by Landlord. The third
appraiser shall be appointed by the first two appraisers. If, for any reason the
first two appraisers are unable to agree on the third appraiser within ten (10)
days after the appointment of the second appraiser or if either party refuses or
neglects to appoint an appraiser as herein provided within ten (10) days after
the appointment of the first appraiser, then such third appraiser or other
appraiser whose appointment was not made as previously specified shall be
appointed by the President of the Minnesota chapter of the American Institute of
Real Estate Appraisers, or such other such bodies exercising similar functions.
Such appointment shall be made within ten (10) days after the request is
submitted to the President. The appraisers shall submit their written
determinations of Market Rent within thirty (30) days after the appointment of
the third appraiser.
The determinations of all three appraisers shall be issued in sealed
envelopes and shall be opened simultaneously. If the determinations of at least
two of the appraisers are identical in amount, said amount shall be deemed to be
the Market Rent. If the determinations of all three appraisers are different in
amount, the Market Rent shall be determined as follows:
(i) If neither the highest value nor the lowest value differs from the
middle appraised market value by more than 15% of such middle appraised value,
then the Market Rent shall be deemed to be average of the three appraisals; and
(ii) If either the highest value or the lowest value differs from the
middle appraised value by more than 15% of such middle appraised value, then the
Market Rent shall be deemed to be the average of the middle appraised value and
the appraised value closest in amount to said middle value.
Upon the completion of the process, the Market Rent as determined above
shall constitute the Base Rent for the Additional Term. Each party shall bear
its own expense in connection with the appraisal process, except that the fees
for all of the appraisers shall be split equally between Landlord and Tenant.
Notwithstanding any other term or condition of this Lease to the contrary, in no
event shall the Market Rent as determined by the appraisers set forth above be
less than the Base Rent as of the expiration of the Initial Term.
4. Rent Adjustment:
(a) The following terms shall have the following meanings with respect to
the provisions of this Paragraph 4:
(1) "Building Rentable Area" shall mean all rentable space available for
lease in the Building, calculated on the basis set forth in BOMA Publication
265.1-1980. If there is a significant change in the aggregate Building Rentable
Area, of a permanent nature, as a result of an
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addition to the Building, partial destruction thereof or similar circumstance,
Landlord's Accountants (as herein defined) shall determine and make an
appropriate adjustment to the provisions herein.
(2) "Tenant's Pro Rata Share" shall mean a fraction, the numerator of which
is the BOMA Rentable Area of the Premises occupied by Tenant (i.e., 26,716
square feet) and the denominator of which is the Building Rentable Area (i.e.,
104,698.60 square feet), and is equal to 25.52%.
At such time, if ever, any space is added to or subtracted from the
Premises pursuant to the terms of this Lease, Tenant's Pro Rata Share shall be
increased or decreased accordingly.
(3) "Operating Expenses" shall mean:
A. All operating expenses of any kind or nature which are necessary,
ordinary or customarily incurred with respect to the operation and
maintenance of the Building as determined in accordance with generally
accepted accounting principles and shall include, but not be limited to:
(i) Costs of supplies, including but not limited to the cost of
"relamping" all tenant lighting as the same may be required from time
to time;
(ii) Costs incurred in connection with obtaining and providing
energy for the Building, including but not limited to costs of
propane, butane, natural gas, steam, electricity, solar energy and
fuel oils, coal or any other energy sources as well as costs for
heating, ventilation, and air conditioning services (HVAC);
(iii) Costs of water and sanitary and storm drainage services;
(iv) Costs of janitorial and security services, if any, provided
to the common areas of the Building;
(v) Costs of general maintenance and repairs, including costs
under HVAC and other mechanical maintenance contracts; and repairs and
replacements of equipment used in connection with such maintenance and
repair work;
(vi) Costs of maintenance and replacement of landscaping; and
costs of maintenance, repair, striping and seal coating of parking
areas, common areas, plazas and other areas used by tenants of the
Building, including trash and snow removal;
(vii) Insurance premiums, including fire and all-risk coverage,
together with loss of rent endorsement; public liability insurance;
and any other insurance carried by Landlord on the Building or any
component parts thereof,
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(viii) Labor costs, including wages and other payments, costs to
Landlord of workmen's compensation and disability insurance, payroll
taxes, welfare fringe benefits and all legal fees and other costs or
expenses incurred in resolving any labor disputes;
(ix) Professional building management fees in amounts consistent
with building management fees charged for similar buildings in
Rochester, Minnesota;
(x) Legal, accounting, inspection and other consultation fees
(including, without limitation, fees charged by consultants retained
by Landlord for services that are designed to produce a reduction in
Operating Expenses or reasonably to improve the operation, maintenance
or state of repair of the Building) incurred for the normal prudent
operation of the Building;
(xi) The costs of capital improvements and structural repairs and
replacements made in or to the Building or the cost of any machinery
or equipment installed in the Building in order to conform to changes,
subsequent to the Lease Commencement Date, in any applicable laws,
ordinances, rules, regulations or orders of any governmental or
quasi-governmental authority having jurisdiction over the Building
(herein, Required Capital Improvement); the costs of any capital
improvements and structural repairs and replacements designed
primarily to reduce Operating Expenses (herein, Cost Savings
Improvements); and all other capital improvements and structural
repairs and replacements (Other Capital Improvements) reasonably
necessary to permit Landlord to maintain the Building as a first class
office building. The expenditures for Other Capital Improvements,
Required Capital Improvements and Cost Savings Improvements shall be
amortized over the useful life of such capital improvement or
structural repair or replacement (as reasonably determined by
Landlord's accountants); and
(xiii) Any other expense which under generally accepted
accounting principles would be considered a normal maintenance or
operating expense.
If Landlord selects an accrual accounting basis for calculating
Operating Expenses, Operating Expenses shall be deemed to have been paid
when such expenses have accrued in accordance with generally accepted
accounting principles, provided a switch from cash to accrual accounting
shall not result in Tenant paying twice for any expenses in any year.
Landlord may incur Operating Expenses for the Building Complex as whole and
prorate such Building Complex Operating Expenses to the Building in a
reasonable manner.
B. Expressly exclude Landlord's income taxes; leasing commissions,
legal expenses, advertising and promotional expenses; interest on debt or
amortization payments on any mortgages or deeds of trust; costs of repairs
or other work occasioned by fire, windstorm or other casualty to the extent
of insurance proceeds received; and any other expense which under generally
accepted accounting principles would not be considered a normal maintenance
or operating expense, except as otherwise specifically provided herein.
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(4) "Real Estate Taxes" shall mean all real property taxes and assessments
levied against the Building by any governmental or quasi-governmental authority,
including any taxes, assessments, surcharges, or service or other fees of a
nature not presently in effect which shall hereafter be levied on the Building
as a result of the use, ownership or operation of the Building or for any other
reason, whether in lieu of or in addition to any current real estate taxes and
assessments; provided, however, that any taxes which shall be levied on the
rentals of the Building shall be determined as if the Building were Landlord's
only property and provided further, that in no event shall the term "Taxes and
Assessments", as used herein, include any federal, state or local income taxes
levied or assessed on Landlord, unless such taxes are a specific substitute for
real property taxes; such term shall, however, include gross taxes on rentals
and expenses incurred by Landlord for tax consultants and in contesting the
amount or validity of any such Taxes or Assessments (all of the foregoing are
collectively referred to herein as Taxes); provided expenses for tax consultants
and for contesting the amount or validity of such Taxes or Assessments charged
to Tenant shall not exceed the savings achieved. "Assessments" shall include any
and all so-called special assessments, license tax, business license fee,
business license tax, commercial rental tax, levy, charge or tax imposed by any
authority having the direct power to tax, including any city, county, state or
federal government, or any school, agricultural, lighting, water, drainage or
other improvement or special district thereof, against the Premises or the
Building, or against any legal or equitable interest of Landlord therein. For
the purposes of this Lease, any special assessment shall be deemed payable in
maximum number of installments as is permitted by law, whether or not actually
so paid.
(b) It is hereby agreed that Tenant shall pay to Landlord as Additional
Rent during each calendar year during the term hereof an estimate of Tenant's
Pro Rata Share of Operating Expenses for the calendar year and an estimate of
Tenant's Pro Rata Share of Real Estate Taxes for the calendar year, as
reasonably estimated by Landlord, payable monthly, at the rate of one twelfth
(1/12) thereof, on the same date and at the same place Base Rent is payable,
with an adjustment to be made between the parties at a later date as hereinafter
provided. Landlord shall deliver to Tenant, as soon as practicable following the
end of any calendar year, an estimate of the Operating Expenses and Real Estate
Taxes for the new calendar year (the Budget Sheet). Until receipt of the Budget
Sheet, Tenant shall continue to pay its monthly Tenant's Pro Rata Share of
Operating Expenses and Real Estate Taxes based upon the estimate for the
preceding calendar year. To the extent that the Budget Sheet reflects an
estimate of Tenant's Pro Rata Share of Operating Expenses and Real Estate Taxes
for the new calendar year greater than the amount actually paid to the date of
receipt of the Budget Sheet for the new calendar year, Tenant shall pay such
amount to Landlord within thirty (30) days of receipt of the Budget Sheet. Upon
receipt of the Budget Sheet, Tenant shall thereafter pay the amount of its
monthly Tenant's Pro Rata Share of Operating Expenses and Real Estate Taxes as
set forth in the Budget Sheet. As soon as practicable following the end of any
calendar year, Landlord shall submit to Tenant a statement in reasonable detail
describing the computations of the Operating Expenses and Real Estate Taxes,
setting forth the exact amount of Tenant's Pro Rata Share of Operating Expenses
and Real Estate Taxes for the calendar year just completed (the Statement), and
the difference, if any, between the actual Tenant's Pro Rata Share of Operating
Expenses and Real Estate Taxes for the calendar year just completed and the
estimated amount of Tenant's Pro Rata
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Share of Operating Expenses and Real Estate Taxes paid by Tenant to Landlord.
Notwithstanding the foregoing, Landlord's failure to deliver the Statement to
Tenant shall in no way serve as a waiver of Landlord's rights under this
Paragraph. To the extent that the actual Tenant's Pro Rata Share of Operating
Expenses and Real Estate Taxes for the period covered by the Statement is higher
than the estimated Tenant's Pro Rata Share of Operating Expenses and Real Estate
Taxes which Tenant previously paid during the calendar year just completed,
Tenant shall also pay to Landlord such balance within thirty (30) days following
receipt of the Statement from Landlord. To the extent that the actual Tenant's
Pro Rata Share of Operating Expenses and Real Estate Taxes for the period
covered by the Statement is less than the estimated Tenant's Pro Rata Share of
Operating Expenses and Real Estate Taxes which Tenant previously paid during the
calendar year just completed, Landlord shall promptly pay the excess in cash to
Tenant.
(c) If the Lease term hereunder covers a period of less than a full
calendar year during the first or last calendar years of the term hereof,
Tenant's Pro Rata Share of Operating Expenses and Real Estate Taxes for such
partial year shall be calculated by proportionately reducing the Operating
Expenses and Real Estate Taxes to reflect the number of months in such year
during which Tenant leased the Premises (the Adjusted Operating Expenses and
Adjusted Real Estate Taxes). The Adjusted Operating Expenses and Adjusted Real
Estate Taxes shall then be compared with the actual Operating Expenses and
actual Real Estate Taxes for said partial year to determine the amount, if any,
of any increases in the actual Operating Expenses and Real Estate Taxes for such
partial year over the Adjusted Operating Expenses and Adjusted Real Estate
Taxes. Tenant shall pay Tenant's Pro Rata Share of any such increases within ten
(10) days following receipt of notice thereof.
(d) Tenant shall have the right at its own expense and at a reasonable time
(after written notice to Landlord) within one hundred eighty (180) days after
receipt of the Statement to audit Landlord's books relevant to the Additional
Rent due under this Paragraph 4. If Tenant does not audit Landlord's books and
deliver the results thereof to Landlord within said one hundred eighty (180) day
period, the terms and amounts set forth in the Statement shall be deemed
conclusive and final and Tenant shall have no further right to adjustment. If
Tenant's examination reveals that an error has been made in Landlord's
determination of Tenant's Pro Rata Share of Operating Expenses and Real Estate
Taxes and Landlord agrees with such determination, then the amount of such
adjustment shall be payable by Landlord or Tenant, to the other party as the
case may be. If Tenant's examination reveals an error has been made in
Landlord's determination of Tenant's Pro Rata Share of Operating Expenses and
Real Estate Taxes, and Landlord disagrees with the results thereof, Landlord
shall have thirty (30) days to obtain an audit from an accountant of its choice
to determine Tenant's Pro Rata Share of Operating Expenses and Real Estate
Taxes. If Landlord's accountant and Tenant's accountant are unable to reconcile
their audits, both accountants shall mutually agree upon a third accountant,
whose determination of Tenant's Pro Rata Share of Operating Expenses and Real
Estate Taxes shall be conclusive. If the amount of error by Landlord is
determined to be five percent (5%) or more, the reasonable costs of the three
audits made pursuant to this subparagraph shall be paid by Landlord. In the
event the amount of error by Landlord is determined to be less than five percent
(5%), the reasonable costs of the three audits made pursuant to this
subparagraph shall be paid by Tenant.
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(e) Landlord's failure during the Lease term to prepare and deliver any
statements or bills, or Landlord's failure to make a demand under this Paragraph
or under any other provision of this Lease shall not in any way be deemed to be
a waiver of, or cause Landlord to forfeit or surrender its rights to collect any
items of Additional Rent which may have become due pursuant to this Paragraph
during the term of this Lease. Tenant's liability for all Additional Rent due
under this Lease shall survive the expiration or earlier termination of this
Lease.
(f) Notwithstanding any provision herein to the contrary, if the Building
is not fully occupied during any full or partial calendar year, Operating
Expenses shall be adjusted so that the Operating Costs shall be computed for
such year as though the Building was fully occupied during such year.
5. Character of Occupancy:
(a) The Premises are to be used for general office purposes and for no
other purpose without the prior written consent of Landlord, which consent shall
not be unreasonably withheld.
(b) Tenant shall not suffer nor permit the Premises nor any part thereof to
be used in any manner, nor anything to be done therein, nor suffer or permit
anything to be brought into or kept therein, which would in any way (i) make
void or voidable any fire or liability insurance policy then in force with
respect to the Building Complex, (ii) make unobtainable from reputable insurance
companies authorized to do business in Minnesota any fire insurance with
extended coverage, or liability, elevator, boiler or other insurance required to
be furnished by Landlord under the terms of any lease or mortgage to which this
Lease is subordinate at standard rates, (iii) cause or in Landlord's reasonable
opinion be likely to cause physical damage to the Building Complex or any part
thereof, (iv) constitute a public or private nuisance, (v) impair, in the
reasonable opinion of Landlord, the exterior appearance of the Building Complex,
(vi) discharge objectionable fumes, vapors or odors into the Building air
conditioning system or into the Building flues or vents not designed to receive
them or otherwise in such manner as may unreasonably offend other occupants of
the Building, (vii) impair or interfere with any of the Building services or
impair or interfere with the use of any of the other areas of the Building by
the other tenants or occupants of the Building Complex, any such impairment or
interference to be based upon the reasonable judgment of Landlord, (viii) create
waste in, on or around the Premises, Building, or Building Complex, or (ix) make
any noise or set up any vibration which will disturb other tenants, except in
the course of permitted repairs or alterations at times permitted by Landlord.
(c) Tenant shall not use the Premises nor permit anything to be done in or
about the Premises or Building Complex which will in any way conflict with any
law, statute, ordinance, protective covenants affecting the Building Complex or
governmental or quasi-governmental rules or regulations now in force or which
may hereafter be enacted or promulgated. Tenant shall give written notice within
five (5) days from receipt thereof to Landlord of any notice it receives of the
violation of any law or requirement of any public authority with respect to the
Premises or the use
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or occupation thereof. Landlord shall give prompt notice to Tenant of any notice
it receives relative to the violation by Tenant of any law or requirement of any
public authority with respect to the Premises or the use or occupation thereof.
6. Services and Utilities:
(a) Landlord agrees, without charge except as provided herein, and in
accordance with standards from time to time prevailing for similar office
buildings in the Rochester area, to furnish water to the Building for use in
lavatories and drinking fountains and to the Premises; during ordinary business
hours (at least the hours of 7:00 a.m. to 7 p.m. Monday through Saturday) to
furnish such heated or cooled air to the Premises as may be reasonably required
for the comfortable use and occupancy of the Premises provided that Tenant
complies with the recommendations of Landlord's engineer or other duly
authorized representative, regarding occupancy and use of the Premises, and
during ordinary business hours to cause electric current to be supplied for
lighting the Premises and public halls.
(b) Landlord shall provide electricity for normal office purposes including
but not limited to fluorescent and incandescent lighting, including task and
task ambient lighting systems and for normal office equipment including but not
limited to duplicating (reproduction) machines, communications and audio visual
equipment, vending machines, portable computers (provided they do not require
any significant additional voltage or special electrical requirements),
executive kitchen equipment and internal communication systems (which may
include piped-in music). To the extent that electric current is utilized in
excess of the amounts indicated above, Tenant's rent shall be increased from
time to time by Landlord in such amounts to cover the cost of providing such
increased use. Landlord shall have the right, if it determines based on its own
judgment that Tenant is using electric current for purposes other than those
described above or for other than normal office use, to require Tenant to
install a check meter to determine the amount which Tenant is utilizing. The
cost of such excess usage, and check meter, including but not limited to
monitoring, installation and repair thereof, shall be paid by Tenant.
(c) If Tenant requires water in excess of that usually furnished or
supplied for use in the Premises as general office space, Tenant agrees to pay
to Landlord such amounts as Landlord determines are necessary to cover the costs
of such increased use of water, including, but not limited to, the cost of
installation, monitoring, maintenance and repair of any check meter or other
instrument necessary to measure the use of additional water.
(d) Tenant agrees that Landlord shall not be liable for failure to supply
any heating, air conditioning, elevator, electrical, lighting or other services
during any period when Landlord uses reasonable diligence to supply such
services, or during any period Landlord is required to reduce or curtail such
services pursuant to any applicable laws, rules or regulations, now or hereafter
in force or effect, it being understood and agreed to by Tenant that Landlord
may discontinue, reduce or curtail such services, or any of them at such times
as it may be necessary by reason of accident, unavailability of employees,
repairs, alterations, improvements, strikes, lockouts, riots, acts of God,
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application of applicable laws, statutes, rules and regulations, or due to any
other happening beyond the reasonable control of Landlord. In the event of any
such interruption, reduction or discontinuance of Landlord's services, Landlord
shall not be liable for damages to persons or property as a result thereof, nor
shall the occurrence of any such event in any way be construed as an eviction of
Tenant or cause or permit an abatement, reduction or setoff of rent, or operate
to release Tenant from any of Tenant's obligations hereunder; provided Landlord
shall use its best efforts to restore service if the interruption is in lines or
pipes controlled by Landlord and the cause of the interruption was caused or
controlled by Landlord.
(e) Whenever heat generating machines or equipment are used by Tenant in
the Premises which affect the temperature otherwise maintained by the air
conditioning system, Landlord reserves the right to install supplementary air
conditioning units in the Premises in the event Landlord's independent
consulting engineer determines same are necessary as a result of Tenant's use of
lights or equipment which generate heat loads in excess of those for which the
HVAC system is designed and the cost therefor, including the cost of
installation, operation and maintenance thereof, shall be paid by Tenant to
Landlord upon demand by Landlord.
(f) If Tenant has any special or additional electrical or mechanical
requirements related to its use of the Premises, any such electrical or
mechanical equipment must be located within the Premises. The foregoing shall in
no way be construed as granting to Tenant additional rights to use any such
special or additional electrical or mechanical equipment in its Premises without
the prior written consent of Landlord. Any additional cost or expense related to
or resulting from such electrical or mechanical requirements shall be the sole
obligation of Tenant.
(g) If Tenant requires HVAC service beyond the ordinary business hours set
forth above (hereafter After Hours Usage), such service must be requested from
the Building manager at least twenty-four (24) hours prior thereto. Tenant shall
reimburse Landlord, as Additional Rent, for all costs and expenses for After
Hours Usage in accordance with rates reasonably promulgated by Landlord from
time to time. Notwithstanding the foregoing, if in Landlord's reasonable
determination, Tenant's demand for After Hours Usage is or becomes excessive or
sufficiently frequent as to warrant the same, Landlord may install, at Tenant's
expense, separate meters to monitor or control Tenant's After Hours Usage, with
all costs for the installation, maintenance and repair of such meter to be paid
by Tenant.
7. Quiet Enjoyment: Subject to the provisions of this Lease, Landlord
covenants that Tenant on paying the rent and performing the covenants of this
Lease on its part to be performed shall and may peacefully and quietly have,
hold and enjoy the Premises for the term of this Lease. Landlord shall not be
responsible for the acts or omissions of any other tenant or third party not
under Landlord's control which may interfere with Tenant's use and enjoyment of
the Premises. In the event of any transfer or transfers of Landlord's interest
in the Premises or in the real property of which the Premises are a part, other
than a transfer for security purposes only, the transferor shall be
automatically relieved of any and all obligations and liabilities on the part of
Landlord accruing from and after the date of such transfer.
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8. Maintenance and Repairs:
(a) Prior to the Commencement Date of this Lease, Landlord shall, at its
expense (and without including the expense for same within the Operating
Expenses for the Building) upgrade the first level entry area and corridor with
new carpeting and wall coverings. Except as otherwise specifically provided for
herein, Landlord is under no obligation to make any other improvements or
alternations to the Building or the Premises prior to Tenant's occupancy.
(b) Notwithstanding any other provisions of this Lease, Landlord shall
repair and maintain in good condition the structural portions of the Building,
including the elevators, plumbing, air conditioning, heating and electrical
systems installed or furnished by Landlord, unless such maintenance and repairs
are caused in part or in whole by the act, neglect, fault or omission of Tenant,
its agents, servants, employees, licensees or invitees, in which case Tenant
shall pay to Landlord, on demand, the cost of such maintenance and repairs less
the amount of any insurance proceeds received by Landlord on account thereof, if
applicable. Landlord shall also maintain and keep in good order and repair the
Building roof; the curtain wall, including all glass connections at the
perimeter of the Building; all exterior doors, including any exterior plate
glass within the Building; the Building ventilating systems; elevators;
escalators; Building telephone and electrical closets; public portions of the
Building or Building Complex, including but not limited to any balconies,
landscaping, walkways, and upper floor lobbies and corridors, and interior
portions of the Building above and below grade which are not covered by leases.
Landlord, at its expense (which expense shall not be included in the Operating
Expenses for the Building), shall cause the Building to comply with the ADA.
Such obligation shall not extend to the Premises, it being the sole
responsibility of Tenant to satisfy the ADA with respect to the premises.
(c) Tenant, at Tenant's sole cost and expense, except for services
furnished by Landlord pursuant to Paragraph 6 hereof, shall maintain, in good
order, condition and repair, the Premises, including the interior surfaces of
the ceilings (if damaged or discolored due in whole or in part to the act,
neglect, omission or fault of Tenant), walls and floors, all doors, interior
glass partitions or glass surfaces (not exterior windows) and pipes, electrical
wiring, switches, fixtures and other special items, subject to the provisions of
Paragraph 14 hereof. Tenant shall provide all necessary cleaning and janitorial
services for the Premises. If Tenant fails to so maintain the Premises in good
order, condition and repair, Landlord shall give Tenant notice to do such acts
as are reasonably required to maintain the Premises. If Tenant fails to promptly
commence such work and diligently pursue it to completion, then Landlord shall
have the right, but shall not be required, to do such acts and expend such funds
at the expense of Tenant as are reasonably required to perform such work.
Landlord shall have no liability to Tenant for any damage, inconvenience or
interference with the use of the Premises by Tenant as a result of performing
any such work.
(d) Landlord and Tenant shall each do all acts required to comply with all
applicable laws, ordinances, regulations and rules of any public authority
relating to their respective maintenance obligations as set forth herein.
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9. Alterations and Additions:
(a) Tenant shall make no new alterations, additions or improvements to the
Premises or any part thereof without obtaining the prior written consent of
Landlord, which consent shall not be unreasonably withheld, delayed or denied.
Landlord may impose, as a condition to such consent, and at Tenant's sole cost,
such reasonable requirements as Landlord may deem necessary in its reasonable
judgment, including without limitation, the manner in which the work is done, a
right of approval of the contractor by whom the work is to be performed and the
times during which the work is to be accomplished, approval of all plans and
specifications and the procurement of all licenses and permits. Landlord shall
be entitled to post notices on and about the Premises with respect to Landlord's
non-liability for mechanics' liens and Tenant shall not permit such notices to
be defaced or removed. Tenant further agrees not to connect any apparatus,
machinery or device to the Building systems, including electric wires, water
pipes, fire safety, heating and mechanical systems, without the prior written
consent of Landlord, which consent shall not be unreasonably withheld, delayed
or denied.
(b) All alterations, improvements and additions to the Premises, including,
by way of illustration but not by limitation, all counters, screens, grilles,
special cabinetry work, partitions, paneling, carpeting, drapes or other window
coverings and light fixtures, shall be deemed a part of the real estate and the
property of Landlord and shall remain upon and be surrendered with the Premises
as a part thereof without molestation, disturbance or injury at the end of the
Lease term, whether by lapse of time or otherwise, unless Landlord, by notice
given to Tenant no later than fifteen (15) days prior to the end of the term,
shall elect to have Tenant remove all or any of such alterations, improvements
or additions and in such event, Tenant shall promptly remove, at its sole cost
and expense, such alterations, improvements and additions and restore the
Premises to the condition in which the Premises were prior to the making of the
same, reasonable wear and tear excepted. Any such removal, whether required or
permitted by Landlord, shall be at Tenant's sole cost and expense, and Tenant
shall restore the Premises to the condition in which the Premises were prior to
the making of the same, reasonable wear and tear excepted. All movable
partitions, machines and equipment which are installed in the Premises by or for
Tenant, without expense to Landlord, and can be removed without structural
damage to or defacement of the Building or the Premises, and all furniture,
furnishings and other articles of personal property owned by Tenant and located
in the Premises (all of which are herein called Tenant's Property) shall be and
remain the property of Tenant and may be removed by it at any time during the
term of this Lease. However, if any of Tenant's Property is removed, Tenant
shall repair or pay the cost of repairing any damage to the Building or the
Premises resulting from such removal. All additions or improvements which are to
be surrendered with the Premises shall be surrendered with the Premises, as a
part thereof, at the end of the term or the earlier termination of this Lease.
(c) If Tenant utilizes persons other than Landlord to perform any
alterations, repairs, modifications or additions to the Premises, then prior to
the commencement of any such work, Tenant shall deliver to Landlord certificates
issued by insurance companies qualified to do business in the State of Minnesota
evidencing that workmen's compensation, public liability insurance and
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property damage insurance, all in amounts, with companies and on forms
satisfactory to Landlord, are in force and maintained by all such contractors
and subcontractors engaged by Tenant to perform such work. All such policies
shall name Landlord as an additional insured and shall provide that the same may
not be canceled or modified without thirty (30) days prior written notice to
Landlord.
(d) Tenant, at its sole cost and expense, shall cause any permitted
alterations, decorations, installations, additions or improvements in or about
the Premises to be performed in compliance with all applicable requirements of
insurance bodies having jurisdiction, and in such manner as not to interfere
with, delay, or impose any additional expense upon Landlord in the construction,
maintenance or operation of the Building, and so as to maintain harmonious labor
relations in the Building.
10. Entry by Landlord:
(a) Landlord and its agents shall have the right to enter the Premises at
all reasonable times and upon reasonable notice for the purpose of examining or
inspecting the same, to supply any services to be provided by Landlord
hereunder, to show the same to prospective purchasers of the Building, to make
such alterations, repairs, improvements or additions to the Premises or to the
Building as Landlord may deem necessary or desirable, and to show the same to
prospective tenants of the Premises. Subject to reasonable requirements
specified by Tenant in order to protect the confidentiality of Tenant's patients
and patient's medical records, Landlord and its agent may enter the Premises at
all times and without advance notice for the purpose of responding to an actual
or apparent emergency. If, during the last sixty (60) days of the term hereof,
Tenant shall have removed substantially all of its property from the Premises,
Landlord may immediately enter and alter, renovate and redecorate the Premises
without elimination or abatement of rent or incurring liability to Tenant for
any compensation.
(b) Tenant shall be entitled to two (2) sets of keys to the Premises.
11. Mechanic's Liens: Tenant shall pay or cause to be paid all costs for
work done by or on behalf of Tenant or caused to be done by or on behalf of
Tenant on the Premises of a character which will or may result in liens against
Landlord's interest in the Premises, Building or Building Complex and Tenant
will keep the Premises, Building and Building Complex free and clear of all
mechanic's liens and other liens on account of work done for or on behalf of
Tenant or persons claiming under Tenant. Tenant hereby agrees to indemnify,
defend and save Landlord harmless of and from all liability, loss, damages,
costs or expenses, including attorneys' fees, incurred in connection with any
claims of any nature whatsoever for work performed for, or materials or supplies
furnished to Tenant, including lien claims of laborers, materialmen or others.
Should any such liens be filed or recorded against the Premises, Building or
Building Complex with respect to work done for or materials supplied to or on
behalf of Tenant or should any action affecting the title thereto be commenced,
Tenant shall cause such liens to be released of record within ten (10) days
after notice thereof. If Tenant desires to contest any such claim of lien,
Tenant shall nonetheless cause such lien to be released of record by the posting
of adequate security with a court of competent
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jurisdiction as may be provided by Minnesota's mechanic lien statutes. If Tenant
shall be in default in paying any charge for which such a mechanic's lien or
suit to foreclose such a lien has been recorded or filed and shall not have
caused the lien to be released as aforesaid, Landlord may (but without being
required to do so) pay such lien or claim and any costs associated therewith,
and the amount so paid, together with reasonable attorneys' fees incurred in
connection therewith, shall be immediately due from Tenant to Landlord as
Additional Rent.
12. Damage to Property, Injury to Persons:
(a) Tenant, as a material part of the consideration to be rendered to
Landlord under this Lease, hereby waives all claims of liability that Tenant or
Tenant's legal representatives, successors or assigns may have against Landlord,
and Tenant hereby indemnifies and agrees to hold Landlord harmless from any and
all claims of liability for any injury or damage to any person or property
whatsoever: (1) occurring in, on or about the Premises or any part thereof; and
(2) occurring in, on, or about the Building Complex, when such injury or damage
is caused in part or in whole by the act, neglect, fault or omission of Tenant,
its agents, contractors, employees, licensees or invitees. Tenant further agrees
to indemnify and to hold Landlord harmless from and against any and all claims
arising from any breach or default in the performance of any obligation on
Tenant's part to be performed under the terms of this Lease, or arising from any
act or negligence of Tenant, or any of its agents, contractors, employees,
licensees or invitees. Such indemnities shall include by way of example, but not
limitation, all costs, reasonable attorneys' fees, expenses and liabilities
incurred in or about any such claim, action or proceeding.
(b) Landlord shall not be liable to Tenant for any damage by or from any
act or negligence of any co-tenant or other occupant of the Building Complex, or
by any owner or occupant of adjoining or contiguous property. Landlord shall not
be liable for any injury or damage to persons or property resulting in whole or
in part from the criminal activities of others. To the extent not covered by
normal fire and extended coverage insurance normally carried by a prudent
building owner, Tenant agrees to pay for all damage to the Building Complex, as
well as all damage to persons or property of other tenants or occupants thereof,
caused by the misuse, neglect, act, omission or negligence of Tenant or any of
its agents, contractors, employees, licensees or invitees.
(c) Neither Landlord nor its agents or employees shall be liable for any
damage to property entrusted to Landlord, its agents or employees, or employees
of the building manager, if any, nor for the loss or damage to any property
occurring by theft or otherwise, nor for any injury or damage to persons or
property resulting from fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak from any part of the Building Complex
or from the pipes, appliances or plumbing works therein or from the roof, street
or subsurface or from any other place or resulting from dampness, or any other
cause whatsoever; provided, however, nothing contained herein shall be construed
to relieve Landlord from liability for any personal injury resulting from its
gross negligence. Neither Landlord nor its agents or employees shall be liable
for interference with the lights, view or other incorporeal hereditaments, nor
shall Landlord be liable for any latent defect in the Premises or in the
Building or Building Complex. Tenant shall give prompt notice to Landlord
14
in case of fire or accidents in or about the Premises or the Building or of
defects therein or in the fixtures or equipment located therein.
(d) In case any claim, demand, action or proceeding is made or brought
against Landlord, its agents or employees, by reason of any obligation on
Tenant's part to be performed under the terms of this Lease, or arising from any
act or negligence of Tenant, its agents or employees, or which gives rise to
Tenant's obligation to indemnify Landlord, Tenant shall be responsible for all
costs and expenses, including but not limited to reasonable attorneys' fees
incurred in defending or prosecution of the same, as applicable.
13. Insurance:
(a) Landlord agrees to carry and maintain the following insurance during
the term of this Lease and any extension hereof: general public liability
insurance against claims for personal injury, including death and property
damage in or about the Premises and the Building or the Building Complex
(excluding Tenant's Property), such insurance to be in amounts sufficient to
provide reasonable protection for the Building Complex. Such insurance may
expressly exclude property paid for by tenants or paid for by Landlord for which
tenants have reimbursed Landlord located in or constituting a part of the
Building or the Building Complex. Such insurance shall afford coverage for
damages resulting from (a) fire, (b) perils covered by extended coverage
insurance, and (c) explosion of steam and pressure boilers and similar apparatus
located in the Building or the Building Complex. All such insurance shall be
procured from a responsible insurance company or companies authorized to do
business in Minnesota and may be obtained by Landlord by endorsement on its
blanket insurance policies.
(b) Tenant shall procure and maintain at its own cost at all times during
the term of this Lease and any extensions hereof, hazard, fire and extended
coverage on Tenant's property and the contents of the Premises, comprehensive
general liability insurance, including coverage for bodily injury, property
damage, personal injury (employee and contractual liability exclusions deleted),
products and completed operations, contractual liability, owner's protective
liability, host liquor legal liability and broad form property damage with the
following limits of liability: Five Million Dollars ($5,000,000.00) each
occurrence combined single limit for bodily injury, property damage and personal
injury; Five Million Dollars ($5,000,000.00) aggregate for bodily injury and
property damage for products and completed operations. All such insurance shall
be procured from a responsible insurance company or companies authorized to do
business in Minnesota, and shall be otherwise reasonably satisfactory to
Landlord. All such policies shall name Landlord as an additional insured, and
shall provide that the same may not be canceled or altered except upon thirty
(30) days prior written notice to Landlord. All insurance maintained by Tenant
shall be primary to any insurance provided by Landlord. If Tenant obtains any
general liability insurance policy on a claims-made basis, Tenant shall provide
continuous liability coverage for claims arising during the entire term of this
Lease, regardless of when such claims are made, either by obtaining an
endorsement providing for an unlimited extended reporting period in the event
such policy is canceled or not renewed for any reason whatsoever or by obtaining
new coverage with a retroactive
15
date the same as or earlier than the expiration date of the canceled or expired
policy. Tenant shall provide certificate(s) of such insurance to Landlord upon
commencement of the Lease term and at least thirty (30) days prior to any annual
renewal date thereof and upon request from time to time and such certificate(s)
shall disclose that such insurance names Landlord as an additional insured, in
addition to the other requirements set forth herein. The limits of such
insurance shall not, under any circumstances, limit the liability of Tenant
hereunder.
(c) Each party agrees to use its best efforts to include in each of its
policies insuring against loss, damage or destruction by fire or other casualty
a waiver of the insurer's right of subrogation against the other party, or if
such waiver should be unobtainable or unenforceable (i) an express agreement
that such policy shall not be invalidated if the insured waives the right of
recovery against any party responsible for a casualty covered by the policy
before the casualty; or (ii) any other form of permission for the release of the
other party. If such waiver, agreement or permission shall not be, or shall
cease to be, obtainable without additional charge or at all, the insured party
shall so notify the other party promptly after learning thereof. In such case,
if the other party shall so elect and shall pay the insurer's additional charge
therefor, such waiver, agreement or permission shall be included in the policy,
or the other party shall be named as an additional insured in the policy. Each
such policy which shall so name a party hereto as an additional insured shall
contain, if obtainable, agreements by the insurer that the policy will not be
canceled without at least thirty (30) days prior notice to both insureds and the
act or omission of one insured will not invalidate the policy as to the other
insured. Any failure by either party, if named as an additional insured,
promptly to endorse to the order of the other party, without recourse, any
instrument for the payment of money under or with respect to the policy of which
the other party is the owner or original or primary insured, shall be deemed a
default under this Lease.
(d) Each party hereby releases the other party with respect to any claim
(including a claim for negligence) which it might otherwise have against the
other party for loss, damage or destruction with respect to its property
(including the Building, Building Complex, the Premises and rental value or
business interruption) occurring during the term of this Lease to the extent to
which it is insured under a policy or policies containing a waiver of
subrogation or permission to release liability or naming the above party as an
additional insured as provided above.
(e) Any Building employee to whom property shall be entrusted by or on
behalf of Tenant shall be deemed to be acting as Tenant's agent with respect to
such property and neither Landlord, the Building Manager, if any, nor their
respective agents, shall be liable for any damage to the property of Tenant or
others entrusted to employees of the Building, nor for the loss of or damage to
any property of Tenant by theft or otherwise and Tenant shall indemnify Landlord
of and from any loss or damages, costs or actions Landlord may suffer or incur
as a result of such loss or damage to Property.
16
14. Damage or Destruction to Building:
(a) In the event that the Premises or the Building are damaged by fire or
other insured casualty and the insurance proceeds have been made available
therefor by the holder or holders of any mortgages or deeds of trust covering
the Building, the damage shall be repaired by and at the expense of Landlord to
the extent of such insurance proceeds available therefor, provided such repairs
and restoration can, in Landlord's reasonable opinion, be made within two
hundred seventy (270) days after the occurrence of such damage without the
payment of overtime or other premiums, and until such repairs and restoration
are completed, the Base Rent shall be abated in proportion to the part of the
Premises which is unusable by Tenant in the conduct of its business, as may be
reasonably determined by Landlord, (but there shall be no abatement of Base Rent
by reason of any portion of the Premises being unusable for a period equal to
one (1) day or less). Landlord agrees to notify Tenant within forty-five (45)
days after such casualty if it estimates that it will be unable to repair and
restore the Premises within said two hundred seventy (270) day period. Such
notice shall set forth the approximate length of time Landlord estimates will be
required to complete such repairs and restoration. Except as provided in this
Paragraph 14, there shall be no abatement of rent and no liability of Landlord
by reason of any injury to or interference with Tenant's business or property
arising from the making of any such repairs, alterations or improvements in or
to the Building, Premises or fixtures, appurtenances and equipment. Tenant
understands that Landlord will not carry insurance of any kind on Tenant's
Property, including furniture and furnishings, or on any fixtures or equipment
removable by Tenant under the provisions of this Lease, or any improvement
installed in the Premises by or on behalf of Tenant, and that Landlord shall not
be obligated to repair any damage thereto or replace the same.
(b) In case the Premises or the Building throughout shall be so injured or
damaged, whether by fire or otherwise (though the Premises may not be affected,
or if affected, cannot be repaired within said two hundred seventy (270) days),
then Landlord, within sixty (60) days after the happening of such injury, may
decide not to reconstruct or rebuild the Building. Thereupon, notwithstanding
anything contained herein to the contrary, upon notice in writing to that effect
given by Landlord to Tenant within said sixty (60) days, Tenant shall pay the
rent properly apportioned up to date of such casualty, this Lease shall
terminate from the date of delivery of said written notice, and both parties
hereto shall be released and discharged from all further obligations hereunder
(except those obligations which expressly survive termination of the Lease
term). A total destruction of the Building shall automatically terminate this
Lease.
15. Condemnation:
(a) If the whole of the Premises or so much thereof as to render the
balance unusable by Tenant for the proper conduct of its business shall be taken
under power of eminent domain or transferred under threat thereof, then this
Lease, at the option of either Landlord or Tenant exercised by either party
giving notice to the other of such election within thirty (30) days after such
conveyance or taking possession, whichever is earlier, shall forthwith cease and
terminate and the rent shall be duly apportioned as of the date of such taking
or conveyance. No award for any partial
17
or entire taking shall be apportioned and Tenant hereby assigns to Landlord any
award which may be made in such taking or condemnation, together with any and
all rights of Tenant now or hereafter arising in or to the same or any part
thereof. Notwithstanding the foregoing, Tenant shall be entitled to seek,
directly from the condemning authority, an award for its removable trade
fixtures, equipment and personal property and relocation expenses, if any, to
the extent Landlord's award is not diminished. In the event of a partial taking
which does not result in a termination of this Lease, Base Rent shall be reduced
in proportion to the reduction in the size of the Premises so taken and this
Lease shall be modified accordingly. Promptly after obtaining knowledge thereof,
Landlord or Tenant, as the case may be, shall notify the other of any pending or
threatened condemnation or taking affecting the Premises or the Building.
(b) If all or any portion of the Premises shall be condemned or taken for
governmental occupancy for a limited period, this Lease shall not terminate and
Landlord shall be entitled to receive the entire amount of any such award or
payment thereof as damages, rent or otherwise. Tenant hereby assigns to Landlord
any award which may be made in such temporary taking, together with any and all
rights of Tenant now or hereafter arising in or to the same or any part thereof.
Tenant shall be entitled to receive an abatement of Base Rent in proportion to
the reduction in the size of the Premises so taken.
16. Assignment and Subletting: Tenant shall not permit any part of the
Premises to be used or occupied by any persons other than Tenant, its wholly
owned affiliated companies and their employees, nor shall Tenant permit any part
of the Premises to be used or occupied by any licensee or concessionaire or
permit any persons other than Tenant, its wholly owned affiliated companies and
their employees and invitees, to be upon the Premises. Tenant shall not
voluntarily, by operation of law, or otherwise, assign, transfer or encumber
this Lease or any interest herein nor sublet or part with possession of all or
any part of the Premises (any and all of which shall hereinafter be referred to
as Transfer) without Landlord's prior written consent, which shall be in
Landlord's sole discretion. Any Transfer without the prior written consent of
Landlord shall constitute a default hereunder and shall be void ab initio and
shall confer no rights upon any third party, notwithstanding Landlord's
acceptance of rent payments from any purported transferee. Notwithstanding the
foregoing, Tenant may, without Landlord's consent, assign this Lease to an
affiliate of Tenant (including any party to whom Tenant has sold the majority of
its assets) or the entity resulting from a merger with Tenant provided, in the
first instance Tenant remains principally liable hereunder and, in the second
instance, the new entity specifically assumes in writing for the benefit of
Landlord all of Tenants liability hereunder.
17. Estoppel Certificate: Tenant further agrees at any time and from time
to time on or before ten (10) days after written request by Landlord, to
execute, acknowledge and deliver to Landlord an estoppel certificate certifying
(to the extent it believes the same to be true) that this Lease is unmodified
and in full force and effect (or if there have been modifications, that the same
is in full force and effect as modified, and stating the modifications), that
there have been no defaults thereunder by Landlord or Tenant (or if there have
been defaults, setting forth the nature thereof), the date to which the rent and
other charges have been paid, if any, that Tenant claims no present
18
charge, lien, claim or offset against rent, the rent is not prepaid for more
than one month in advance and such other matters as may be reasonably required
by Landlord, Landlord's mortgagee, or any potential purchaser of the Building,
it being intended that any such statement delivered pursuant to this Paragraph
may be relied upon by any prospective purchaser of all or any portion of
Landlord's interest herein, or a holder of any mortgage or deed of trust
encumbering any portion of the Building Complex. Tenant's failure to deliver
such statement within such time shall be a default under this Lease.
Notwithstanding the foregoing, in the event that Tenant does not execute the
statement required by this paragraph, Tenant hereby grants to Landlord a power
of attorney coupled with an interest to act as Tenant's attorney in fact for the
purpose of executing such statement or statements required by this Paragraph.
18. Hazardous Materials: As to the Premises and the Building Complex Tenant
shall not (either with or without negligence) cause or permit, except as
specifically permitted by law, the escape, disposal or release of any hazardous
substances, or materials. Tenant shall not allow the storage or use of such
substances or materials in any manner not sanctioned by law or by the highest
standards prevailing in the industry for the storage and use of such substances
or materials, nor allow to be brought into the Premises any such materials or
substances except to use in the ordinary course of Tenant's business. Tenant
shall, prior to the Commencement Date of the Lease, deliver to Landlord a list
of all such materials and substances then expected by Tenant to be used in the
ordinary course of Tenant's business on the Leased Premises, and such evidence
of compliance with applicable laws and/or such prevailing standards pertaining
to such materials and substances on Tenant's list or thereafter present on the
Leased Premises as Landlord may reasonably request, within ten (10) days after
receipt of Landlord's written demand therefore. Without limitation, hazardous
substances and materials shall include those described in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 et. seq., the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 et. seq., any applicable state or local laws and
the regulations adopted under these acts. If Landlord and/or any lender or
governmental agency shall ever require testing to ascertain whether or not there
has been any release of hazardous materials, then the reasonable costs thereof
shall be reimbursed by Tenant to Landlord upon demand as additional charges if
such requirement applies to the Leased Premises. In all events, Tenant shall
indemnify and hold Landlord harmless in the manner elsewhere provided in this
Lease from any costs, damages, expenses, fines, or any other liability of any
type or nature arising from or related to: (i) any release of hazardous
materials on the Leased Premises occurring while Tenant is in possession, or
elsewhere if caused by Tenant or persons acting under Tenant; (ii) the release
of hazardous materials on the Leased Premises subsequent to the term of this
Lease, if such hazardous materials were placed on the Leased Premises by Tenant
or persons acting under Tenant; and (iii) the removal, cleanup, restoration, or
remediation of any hazardous materials placed on the Leased Premises by Tenant
or by those acting under Tenant's control. The within covenants shall survive
the expiration or earlier termination of the Term of this Lease.
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19. Default:
(a) The following events (herein referred to as an Event of Default) shall
constitute a default by Tenant hereunder;
(1) Tenant shall fail to pay when due any installment of Base Rent,
Additional Rent or any other amounts payable hereunder;
(2) This Lease or the estate of Tenant hereunder shall be transferred
to or shall pass to or devolve upon any other person or party in violation
of the provisions of this Lease, except as permitted herein;
(3) This Lease or the Premises or any part thereof shall be taken upon
execution or by other process of law directed against Tenant, or shall be
taken upon or subject to any attachment at the instance of any creditor or
claimant against Tenant, and said attachment shall not be discharged or
disposed of within fifteen (15) days after the levy thereof;
(4) Tenant shall file a petition in bankruptcy or insolvency or for
reorganization or arrangement under the bankruptcy laws of the United
States or under any insolvency act of any state, or shall voluntarily take
advantage of any such law or act by answer or otherwise, or shall be
dissolved or shall make an assignment for the benefit of creditors;
(5) Involuntary proceedings under any such bankruptcy law or
insolvency act or for the dissolution of Tenant shall be instituted against
Tenant, or a receiver or trustee shall be appointed of all or substantially
all of the property of Tenant, and such proceedings shall not be dismissed
or such receivership or trusteeship vacated within thirty (30) days after
such institution or appointment;
(6) Tenant shall fail to take possession of the Premises within thirty
(30) days of the Commencement Date;
(7) Tenant shall fail to perform any of the other agreements, terms,
covenants or conditions hereof on Tenant's part to be performed, and such
nonperformance shall continue for a period of fifteen (15) days after
notice thereof by Landlord to Tenant; provided, however, that if Tenant
cannot reasonably cure such nonperformance within fifteen (15) days, Tenant
shall not be in default if it commences cure within said fifteen (15) days
and diligently pursues the same to completion, with completion occurring in
all instances within sixty (60) days;
(8) Tenant shall fail to obtain a release of any mechanic's lien, as
required herein;
(9) All or any part of the personal property of Tenant is seized,
subject to levy or attachment, or similarly repossessed or removed from the
Premises.
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(b) Upon the occurrence of an event of default, Landlord shall have the
right, at its election, then or at any time thereafter and while any such event
of default shall continue, either:
(1) To give Tenant written notice of Landlord's intention to terminate
this Lease on the date such notice is given or on any later date specified
therein, whereupon, on the date specified in such notice, Tenant's right to
possession of the premises shall cease and this Lease shall thereupon be
terminated; provided however, all of Tenant's obligations, including but
not limited to, the amount of Base Rent and other obligations reserved in
this Lease for the balance of the term hereof, shall immediately be
accelerated and due and payable, discounted by an amount equal to the then
current interest rate on U.S. Treasury Bills having a maturity date which
coincides with the expiration date of the then current term of this Lease
had Tenant not defaulted.
(2) To re-enter and take possession of the Premises or any part
thereof and repossess the same as Landlord's former estate and expel Tenant
and those claiming through or under Tenant, and remove the effects of both
or either, using such force for such purposes as may be reasonably
necessary, without being liable for prosecution thereof, without being
deemed guilty of any manner of trespass and without prejudice to any
remedies for arrears of rent or preceding breach of covenants or
conditions. Should Landlord elect to re-enter the Premises as provided in
this Paragraph 19(b)(2) or should Landlord take possession pursuant to
legal proceedings or pursuant to any notice provided for by law, Landlord
may, from time to time, without terminating this Lease, relet the Premises
or any part thereof in Landlord's or Tenant's name, but for the account of
Tenant, for such term or terms (which may be greater or less than the
period which would otherwise have constituted the balance of the term of
this Lease) and on such conditions and upon such other terms (which may
include concessions of free rent and alteration and repair of the Premises)
as Landlord, in its discretion, may determine, and Landlord may collect and
receive the rents therefor. Landlord shall in no way be responsible or
liable for any failure to relet the Premises or any part thereof or for any
failure to collect any rent due upon such reletting. No such re-entry or
taking possession of the Premises by Landlord shall be construed as an
election on Landlord's part to terminate this Lease unless a written notice
of such intention be given to Tenant. No notice from Landlord hereunder or
under a forcible entry and detainer statute or similar law shall constitute
an election by Landlord to terminate this Lease unless such notice
specifically so states. Landlord reserves the right following any such
re-entry and/or reletting, to exercise its right to terminate this Lease by
giving Tenant such written notice, in which event, this Lease will
terminate as specified in said notice.
(c) In the event that Landlord does not elect to terminate this Lease as
permitted in Paragraph 19(b)(1) hereof, but on the contrary, elects to take
possession as provided in Paragraph 19(b)(2), Tenant shall pay to Landlord (i)
the rent and other sums as herein provided, which would be payable hereunder if
such repossession had not occurred, less (ii) the net proceeds, if any, of any
reletting of the Premises after deducting all Landlord's expenses in connection
with such reletting, including but without limitation, all repossession costs,
brokerage commissions, legal expenses, attorneys' fees, expenses of employees,
alteration and repair costs and expenses of preparation for such reletting. If,
in connection with any reletting, the new lease term extends beyond the existing
term, or the premises covered thereby include other premises not part of the
Premises, a fair
21
apportionment of the rent received from such reletting and the expenses incurred
in connection therewith as provided aforesaid will be made in determining the
net proceeds from such reletting. Tenant shall pay such rent and other sums to
Landlord monthly on the days on which the rent would have been payable hereunder
if possession had not been retaken.
(d) In the event this Lease is terminated, Landlord shall be entitled to
recover forthwith against Tenant as damages for loss of the bargain and not as a
penalty, an aggregate sum which, at the time of such termination of this Lease,
represents the excess, if any, of the aggregate of the rent and all other sums
payable by Tenant hereunder that would have accrued for the balance of the term
over the aggregate rental value of the Premises (such rental value to be
computed on the basis of a tenant paying not only a rent to Landlord for the use
and occupation of the Premises, but also such other charges as are required to
be paid by Tenant under the terms of this Lease) for the balance of such term,
both discounted to present worth at the rate of eight percent (8%) per annum.
Alternatively, at Landlord's option, Tenant shall remain liable to Landlord for
damages in an amount equal to the rent and other sums arising under the Lease
for the balance of the term had the lease not been terminated, less the net
proceeds, if any, from any subsequent reletting, after deducting all expenses
associated therewith and as enumerated above. Landlord shall be entitled to
receipt of such amounts from Tenant monthly on the days on which such sums would
have otherwise been payable.
(e) Suit or suits for the recovery of the amounts and damages set forth
above may be brought by Landlord, from time to time, at Landlord's election and
nothing herein shall be deemed to require Landlord to await the date whereon
this Lease or the term hereof would have expired had there been no such default
by Tenant or no such termination, as the case may be.
(f) After an event of default by Tenant, Landlord may sue for or otherwise
collect all rents, issues and profits payable under all subleases on the
Premises, including those past due and unpaid.
(g) After an event of default by Tenant, Landlord may without terminating
this Lease, enter upon the Premises, with force if necessary, without being
liable for prosecution of any claim for damages, without being deemed guilty of
any manner of trespass and without prejudice to any other remedies, and do
whatever Tenant is obligated to do under the terms of this Lease. Tenant agrees
to reimburse Landlord on demand for any expenses which Landlord may incur in
effecting compliance with the Tenant's obligations under this Lease; further,
Tenant agrees that Landlord shall not be liable for any damages resulting to
Tenant from effecting compliance with Tenant's obligations under this
subparagraph caused by the negligence of Landlord or otherwise.
(h) No failure by Landlord to insist upon the strict performance of any
agreement, term, covenant or condition hereof or to exercise any right or remedy
consequent upon a breach thereof, and no acceptance of full or partial rent
during the continuance of any such breach, shall constitute a waiver of any such
breach of such agreement, term, covenant or condition. No agreement, term,
covenant or condition hereof to be performed or complied with by Tenant, and no
breach thereof, shall be waived, altered or modified except by written
instrument executed by Landlord. No waiver
22
of any breach shall affect or alter this Lease, but each and every agreement,
term, covenant and condition hereof shall continue in full force and effect with
respect to any other then existing or subsequent breach thereof. Notwithstanding
any unilateral termination of this Lease, this Lease shall continue in force and
effect as to any provisions hereof which require observance or performance of
Landlord or Tenant subsequent to termination.
(i) Nothing contained in this Paragraph shall limit or prejudice the right
of Landlord to prove and obtain as liquidated damages in any bankruptcy,
insolvency, receivership, reorganization or dissolution proceeding, an amount
equal to the maximum allowed by any statute or rule of law governing such
proceeding and in effect at the time when such damages are to be proved, whether
or not such amount be greater, equal to or less than the amounts recoverable,
either as damages or rent, referred to in any of the preceding provisions of
this Paragraph.
(j) Any rents or other amounts owing to Landlord hereunder which are not
paid within ten (10) days of the date they are due, shall thereafter bear
interest from the due date at the rate of eighteen percent (18%) per annum or
the highest rate allowed by law, whichever is lower (Interest Rate) until paid.
Similarly, any amounts paid by Landlord to cure any default of Tenant or to
perform any obligation of Tenant, shall, if not repaid by the Tenant within five
(5) days of demand by Landlord, thereafter bear interest from the date paid by
Landlord at the Interest Rate until paid. In addition to the foregoing, Tenant
shall pay to Landlord whenever any Base Rent, Additional Rent or any other sums
due hereunder remain unpaid more than ten (10) days after the due date thereof,
a late charge equal to five percent (5%) of the amount due. Further, in the
event of default by Tenant, in addition to all other rights and remedies,
Landlord shall be entitled to receive from Tenant all sums, the payment of which
may previously have been waived or abated by Landlord, or which may have been
paid by Landlord pursuant to any agreement to grant Tenant a rental abatement or
other monetary inducement or concession, including but not limited to any tenant
finish allowance or moving allowance, together with interest thereon from the
date or dates such amounts were paid by Landlord or would have been due from
Tenant but for the abatement, at the Interest Rate, until paid; it being
understood and agreed that such concession or abatement was made on the
condition and basis that Tenant duly perform all obligations and covenants under
the Lease for the entire term.
(k) Each right and remedy provided for in this Lease shall be cumulative
and shall be in addition to every other right or remedy provided for in this
Lease now or hereafter existing at law or in equity or by statute or otherwise,
including, but not limited to, suits for injunctive or declaratory relief and
specific performance. The exercise or commencement of the exercise by Landlord
of any one or more of the rights or remedies provided for in this Lease now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or subsequent exercise by Landlord of any or all other
rights or remedies provided for in this Lease, or now or hereafter existing at
law or in equity or by statute or otherwise. All costs incurred by Landlord in
connection with collecting any amounts and damages owing by Tenant pursuant to
the provisions of this Lease or to enforce any provision of this Lease,
including by way of example, but not limitation, reasonable attorneys' fees from
the date any such matter is turned over to an attorney, shall also be
recoverable by Landlord from Tenant. Landlord and Tenant agree that any action
or proceeding arising out of
23
this Lease shall be heard by a court sitting without a jury and thus hereby
waive all rights to a trial by jury.
20. As-Is-Condition: Except as provided for in Section 36 hereof, Landlord
shall have no obligation for the completion of any tenant improvements to the
Premises, and Tenant accepts the Premises in its "as is" condition on the
Commencement Date. Landlord shall not have any obligation for the repair or
replacement of any portions of the interior of the Premises, including but not
limited to carpeting, draperies, window coverings, wall coverings or painting,
which are damaged or wear out during the term hereof, regardless of the cause
therefor, except as may otherwise be specifically set forth in this Lease.
21. Removal of Tenant's Property: All movable furniture and personal
effects of Tenant not removed from the Premises upon the vacation or abandonment
thereof or upon the termination of this Lease for any cause whatsoever shall
conclusively be deemed to have been abandoned and may be appropriated, sold,
stored, destroyed or otherwise disposed of by Landlord without notice to Tenant
and without obligation to account therefor, and Tenant shall reimburse Landlord
for all expenses incurred in connection with the disposition of such property.
22. Holding Over: Should Tenant, with Landlord's written consent, hold over
after the termination of this Lease and continue to pay rent, Tenant shall
become a tenant from month to month only upon each and all of the terms herein
provided as may be applicable to such month to month tenancy and any such
holding over shall not constitute an extension of this Lease. During such
holding over, Tenant shall pay monthly rent equal to one hundred seventy-five
percent (175%) of the last monthly rental rate and the other monetary charges as
provided herein. Such tenancy shall continue until terminated by Landlord, as
provided by law, or until Tenant shall have given to Landlord at least thirty
(30) days written notice prior to the last day of the calendar month intended as
the date of termination of such month to month tenancy.
23. Parking and Common Areas: Landlord shall have the right, without
obligation, and from time to time, to change the number, size, location, shape
and arrangement of parking areas and other common areas, restrict parking of
tenants or their guests to designated areas, designate loading or handicap
loading areas, change the level or grade of parking and to charge for all
parking or any portion thereof. The parking lot located on the south side of the
Building (the South Parking Lot) is for the exclusive use of other tenants and
this Lease confers no rights to Tenant to use or occupy the South Parking Lot.
Subject to the foregoing, all other parking areas, together with easements for
parking on parcels adjacent to the parcel on which the Building is located,
access roads, courtyards and other areas, facilities or improvements furnished
by Landlord are for the general and nonexclusive use in common of all tenants of
the Building, including Tenant, and those persons invited upon the land upon
which the Building is situated and shall be subject to the exclusive control and
management of Landlord, and Landlord shall have the right, without obligation,
to establish, modify and enforce such rules and regulations which the Landlord
may deem reasonable and/or necessary. Unless as otherwise provided, Tenant's use
of the parking areas, as herein set forth, shall be in common with other tenants
of the Building and any other parties permitted by
24
Landlord to use the parking area. The parking rights herein granted shall not be
deemed a lease but shall be construed as a license granted by Landlord to Tenant
for the term of this Lease. In addition to the general non-exclusive parking
rights granted to Tenant herein, Landlord shall specifically reserve and post
with signage six (6) parking spaces for short-term use by Tenant's visitors and
two (2) parking spaces for delivery vehicles serving Tenant, all at locations
reasonably determined from time to time by Landlord.
24. Surrender and Notice: Upon the expiration or earlier termination of
this Lease, Tenant shall promptly quit and surrender to Landlord the Premises
broom clean in good order and condition, ordinary wear and tear and loss by fire
or other casualty excepted and Tenant shall remove all of its movable furniture
and other effects and such alterations, additions and improvements as Landlord
shall require Tenant to remove pursuant to Paragraph 10 hereof. In the event
Tenant fails to so vacate the Premises on a timely basis as required, Tenant
shall be responsible to Landlord for all costs and damages, including but not
limited to, any amounts required to be paid to third parties who were to have
occupied the Premises, incurred by Landlord as a result of such failure, plus
interest thereon at the Interest Rate on all amounts not paid by Tenant within
five (5) days of demand, until paid in full.
25. Subordination and Attornment:
(a) This Lease, and all rights of Tenant hereunder, are and shall be
subject and subordinate in all respects to all present and future ground leases,
overriding leases and underlying leases and/or grants of term of the real
property and/or the Building or the Building Complex now or hereafter existing
and to all deeds of trust, mortgages and building loan agreements, including
leasehold mortgages and building loan agreements, which may now or hereafter
affect the Building or the Building Complex or any of such leases, whether or
not such deeds of trust or mortgages shall also cover other lands or buildings,
to each and every advance made or hereafter to be made under such deeds of trust
or mortgages, and to all renewals, modifications, replacements and extension of
such leases, deeds of trust and mortgages. The provisions of this Paragraph
shall be self-operative and no further instrument of subordination shall be
required. However, in confirmation of such subordination, Tenant shall promptly
execute and deliver to Landlord (or such other party so designated by Landlord)
at Tenant's own cost and expense, within ten (10) days after request from
Landlord, an instrument, in recordable form if required, that Landlord, the
lessor of any such lease or the holder of any such deed of trust or mortgage or
any of their respective successors in interest or assigns may request evidencing
such subordination. Failure by Tenant to comply with the requirements of this
Paragraph shall be a default hereunder. Notwithstanding the foregoing, in the
event that Tenant does not execute such documents as may be required to confirm
the subordination set forth in this Paragraph or fails to state its objections
in writing to the form of subordination within said ten (10) day period and
within seven (7) days after a second request by Landlord, Tenant hereby grants
to Landlord the right to execute whatever documents are necessary to evidence
such subordination. The leases to which this Lease is, at the time referred to,
subject and subordinate pursuant to this Paragraph are hereinafter
25
sometimes called "superior leases" and the deeds of trust or mortgages to which
this Lease is, at the time referred to, subject and subordinate are hereinafter
sometimes called "superior deeds of trust" or "superior mortgages." The lessor
of a superior lease or the beneficiary of a superior deed of trust or superior
mortgage or their successors in interest or assigns are hereinafter sometimes
collectively referred to as a "superior party." Notwithstanding the foregoing,
Tenant may condition its execution of a subordination instrument upon such
superior party granting to Tenant a non-disturbance agreement in the form then
being used by such superior party for such purposes, providing that Tenant,
notwithstanding a default by Landlord, shall be entitled to remain in possession
of the Premises in accordance with the terms of this Lease for so long as Tenant
shall not be in default of any term, condition or covenant of this Lease.
Further, Tenant shall attorn to such superior party.
(b) Tenant shall take no steps to terminate this Lease without giving
written notice to such superior party, and a reasonable opportunity to cure
(without such superior party being obligated to cure), any default on the part
of Landlord under this Lease.
(c) If holder of any superior mortgage or a ground lease, or anyone
claiming by, through or under such holder, shall become the lessee under the
ground lease as a result of foreclosure of such superior mortgage, or by reason
of an assignment of the lessee's interest under the ground lease and the giving
of a deed to the Building or the Building Complex in lieu of foreclosure, there
shall be no obligation on the part of such person succeeding to the interest of
the lessee under the ground lease to comply with, observe or perform any
obligations as sublessor, tenant or landlord under any superior lease.
(d) If, in connection with the procurement, continuation or renewal of any
financing for which the Building or the Building Complex or of which the
interest of the lessee therein under a superior lease represents collateral in
whole or in part, a lender shall request reasonable modifications of this Lease
as a condition of such financing, Tenant will not unreasonably withhold its
consent thereto provided that such modifications do not increase the obligations
of Tenant under this Lease or adversely affect any rights of Tenant or decrease
the obligations of Landlord under this Lease.
26. Payments after Termination: No payments of money by Tenant to Landlord
after the termination of this Lease, in any manner, or after giving of any
notice (other than a demand for payment of money) by Landlord to Tenant, shall
reinstate, continue or extend the term of this Lease or affect any notice given
to Tenant prior to the payment of such money, it being agreed that after the
service of notice of the commencement of a suit or other final judgment granting
Landlord possession of the Premises, Landlord may receive and collect any sums
of rent due or any other sums of money due under the terms of this Lease or
otherwise exercise its rights and remedies hereunder. The payment of such sums
of money, whether as rent or otherwise, shall not waive said notice or in any
manner affect any pending suit or judgment theretofore obtained.
26
27. Authorities for Action and Notice:
(a) Except as otherwise provided herein, Landlord may, for any matter
pertaining to this Lease, act by and through its building manager or any other
person designated in writing from time to time.
(b) All notices or demands required or permitted to be given to Landlord
hereunder shall be in writing, and shall be deemed duly served when received, if
hand delivered, or five (5) days after deposited in the United States mail, with
proper postage prepaid, certified or registered, return receipt requested,
addressed to Landlord at 700 Meadow Lane North, Minneapolis, MN 55422, Attn:
Director of Asset Management.
All notices or demands required to be given to Tenant hereunder shall be in
writing, and shall be deemed duly served when received, if hand delivered, or
five (5) days after deposited in the United States mail, with proper postage
prepaid, certified or registered, return receipt requested, addressed to Tenant
subsequent to the Lease Commencement Date at the Premises, Attn: Chief Financial
Officer. Prior to the Lease Commencement Date, notices to the Tenant shall be
addressed to Tenant at 4131 Highway 52 North, Suite G-111, Rochester, Minnesota,
55901-3144, Attn: Chief Financial Officer.
Either party shall have the right to designate in writing, served as above
provided, a different address to which notice is to be provided.
(c) All notices given hereunder by either party shall also be given to New
York Life Insurance Company, Attention: Mortgage Finance Department, 51 Madison
Avenue, New York, New York, 10010.
28. Liability of Landlord: Landlord's liability under this Lease shall be
limited to Landlord's estate and interest in the Building (or to the proceeds
thereof) and no other property or other assets of Landlord shall be subject to
levy, execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this Lease, the relationship of Landlord and
Tenant hereunder or Tenant's use and occupancy of the Premises. Nothing
contained in this Paragraph shall be construed to permit Tenant to offset
against rents due a successor landlord, a judgment (or other judicial process)
requiring the payment of money by reason of any default of a prior landlord,
except as otherwise specifically set forth herein.
29. Brokerage: Tenant represents and warrants that it has dealt only with
Hamilton Real Estate (Hamilton) in the negotiation of this Lease. Landlord shall
pay any leasing commission or similar fee owing to Hamilton as a result of this
Lease. Tenant hereby agrees to indemnify and hold the Landlord harmless of and
from any and all loss, costs, damages or expenses (including, without
limitation, all attorneys' fees and disbursements) by reason of any claim of or
liability to any other representative, broker or person claiming through Tenant
and arising out of or in connection with the negotiation, execution and delivery
of this Lease. Additionally, Tenant acknowledges and agrees
27
that Landlord shall have no obligation for payment of any other representative
fee, brokerage fee or similar compensation to any person with whom Tenant has
dealt or may In the future deal with respect to leasing of any additional or
expansion space in the Building or renewals or extensions of this Lease. In the
event any claim shall be made against Landlord by any other broker per person
who shall claim to have negotiated this Lease on behalf of Tenant or to have
introduced Tenant to the Building or to Landlord, Tenant shall be liable for
payment of all reasonable attorneys' fees, costs and expenses incurred by
Landlord in defending against the same, and in the event such broker shall be
successful in any such action, Tenant shall, in addition, make payment to such
broker. Landlord similarly indemnifies and agrees to hold Tenant harmless for
brokerage claims asserted by other parties claiming through Landlord.
30. Rights Reserved to Landlord:
(a) Except to the extent otherwise provided in this Lease, including those
rights granted to Tenant in Section 6(f) hereof, all portions of the Building
are reserved to Landlord except the Premises and the inside surfaces of all
walls, windows and doors bounding in the Premises, but including exterior
building walls, core corridor walls and doors and any core corridor entrance.
Landlord also reserves any space in or adjacent to the Premises used for shafts,
stacks, pipes, conduits, fan rooms, ducts, electric or other utilities, sinks or
other building facilities, and the use thereof, as well as the right to access
thereto through the Premises for the purposes of operation, maintenance and
repair, upon written notice of not less than twenty-four (24) hours, except in
the event of emergencies or apparent emergencies, when no prior notice shall be
required.
(b) Landlord shall have the following rights without liability to Tenant
for damage or injury to property, person or business (all claims for damage
being hereto waived and released), and without effecting an eviction or
disturbance of Tenant's use or possession of the Premises or giving rise to any
claim for setoffs or abatement of rent:
(1) To enter the Premises as more fully provided in this Lease.
(2) To install and maintain signs on the exterior and interior of the
Building, except within the Premises, provided the signs do not block
either completely or partially the exterior windows of the Premises.
(3) To have pass keys to the Premises.
(4) To decorate, remodel, repair, alter or otherwise prepare the
Premises for re-occupancy during the last six (6) months of the term hereof
if, during or prior to such time, Tenant has vacated the Premises, or at
any time after Tenant abandons the Premises.
(5) To have access to all mail chutes according to the rules of the
United States Postal Service.
28
(6) To do or permit to be done any work in or about the exterior of
the Building or any adjacent or nearby building, land, street or alley,
provided such work shall not prevent Tenant's access to the Premises or
unreasonably restrict such access.
(7) To grant to anyone the exclusive right to conduct any business or
render any service in the Building, provided such exclusive right shall not
operate to exclude Tenant from the use expressly permitted by this Lease.
31. Force Majeure Clause: Wherever there is provided in this Lease a time
limitation for performance by Landlord of any obligation, including but not
limited to obligations related to construction, repair, maintenance or service,
the time provided for shall be extended for as long as and to the extent that
delay in compliance with such limitation is due to an act of God, governmental
control or other factors beyond the reasonable control of Landlord.
32. Signage: Except for the signage specifically approved in writing by
Landlord, no sign, advertisement or notice shall be inscribed, painted or
affixed on any part of the inside or outside of the Building and there shall be
no obligation or duty on Landlord to allow any sign, advertisement or notice to
be inscribed, painted or affixed on any part of the inside or outside of the
Building. A directory in a conspicuous place, with the names of Tenant shall be
provided by Landlord. Any necessary revision to such directory shall be made by
Landlord, at Tenant's expense, within a reasonable time after written notice
from Tenant of the change making the revision necessary. Notwithstanding the
foregoing, subject to Landlord's reasonable written approval with respect to
size, shape, color, content and appearance, Tenant may, at its expense, install
and maintain identifying signage outside of the interior space comprising the
Premises. Landlord shall have the right to remove all nonpermitted signs without
notice to Tenant and at the expense of Tenant. In addition to the forgoing,
conditioned upon Landlord obtaining approval for same from all applicable
governmented authorities, Landlord shall make available one-sixth (1/6) of the
available area of space on the Building's existing pylon sign to Tenant for
Tenant's use, at Tenant's expense and subject in all respects to Landlord's
reasonable requirements regarding the use, contents and appearance of the pylon
signs.
33. Attorneys' Fees: In the event of any dispute hereunder, or any default
in the performance of any term or condition of this Lease, the prevailing party
shall be entitled to recover all costs and expenses associated therewith,
including reasonable attorneys' fees.
34. Miscellaneous:
(a) The rules and regulations attached hereto as Exhibit D, as well as such
rules and regulations as may hereafter be adopted by Landlord for the safety,
care and cleanliness of the Premises and the Building and the preservation of
good order thereon, are hereby expressly made a part hereof, and Tenant agrees
to obey all such rules and regulations. The violation of any of such rules and
regulations by Tenant shall be deemed a breach of this Lease by Tenant affording
Landlord
29
all the remedies set forth herein. Landlord shall not be responsible to Tenant
for the nonperformance by any other tenant or occupant of the Building of any of
said rules and regulations.
(b) The term "Landlord" as used in this Lease, so far as covenants or
obligations on the part of Landlord are concerned, shall be limited to mean and
include only the owner or owners of the Building at the time in question, and in
the event of any transfer or transfers of the title thereto, Landlord herein
named (and in the case of any subsequent transfers or conveyances, the then
grantor) shall be automatically released from and after the date of such
transfer or conveyance of all liability in respect to the performance of any
covenants or obligations on the part of Landlord contained in this Lease
thereafter to be performed and relating to events occurring thereafter; provided
that any funds in the hands of Landlord or the then grantor at the time of such
transfer in which Tenant has an interest shall be turned over to the grantee,
and any amount then due and payable to Tenant by Landlord or the then grantor
under any provisions of this Lease shall be paid to Tenant.
(c) As used in this Lease, the term "ordinary business hours" shall mean
the hours from 7:00 a.m. to 7:00 p.m., Monday through Saturday, except for New
Year's Day, Presidents' Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving, Christmas, and any other national or state holiday as may be
established from time to time (Holidays).
(d) This Lease shall be construed as though the covenants herein between
Landlord and Tenant are independent and not dependent and Tenant shall not be
entitled to any setoff of the rent or other amounts owing hereunder against
Landlord, if Landlord fails to perform its obligations set forth herein, except
as herein specifically set forth; provided, however, the foregoing shall in no
way impair the right of Tenant to commence a separate action against Landlord
for any violation by Landlord of the provisions hereof so long as notice is
first given to Landlord and any holder of a mortgage or deed of trust covering
the Building Complex or any portion thereof whose address Tenant has been
notified in writing and so long as an opportunity has been granted to Landlord
and such holder to correct such violation as provided in Paragraph 41 (h)
hereof.
(e) If any clause or provision of this Lease is illegal, invalid or
unenforceable under present or future laws effective during the term of this
Lease, then and in that event, it is the intention of the parties hereto that
the remainder of this Lease shall not be affected thereby, and it is also the
intention of the parties to this Lease that in lieu of each clause or provision
of this Lease that is illegal, invalid or unenforceable, there shall be added as
a part of this Lease a clause or provision as similar in terms to such illegal,
invalid or unenforceable clause or provision as may be possible and be legal,
valid and enforceable, provided such addition does not increase or decrease the
obligations of or derogate from the rights or powers of either Landlord or
Tenant.
(f) The captions of each paragraph are added as a matter of convenience
only and shall be considered of no effect in the construction of any provision
or provisions of this Lease.
(g) Except as herein specifically set forth, all terms, conditions and
covenants to be observed and performed by the parties hereto shall be applicable
to and binding upon their respective
30
heirs, administrators, executors, successors and assigns. The terms, conditions
and covenants hereof shall also be considered to be covenants running with the
land.
(h) Except as otherwise specifically provided herein, in the event Landlord
shall fail to perform any of the agreements, terms, covenants or conditions
hereof on Landlord's part to be performed, and such non-performance shall
continue for a period of twenty (20) days after written notice thereof, from
Tenant to Landlord, or if such performance cannot be reasonably had within such
twenty (20) day period, and Landlord shall not in good faith have commenced such
performance within such twenty (20) day period and proceed therewith to
completion within a reasonable period of time, it shall be considered a default
of Landlord under this Lease. Tenant shall give written notice to Landlord in
the matter herein set forth and shall afford Landlord a reasonable opportunity
to cure any such default. In addition, Tenant shall send notice of such default
by certified or registered mail, with proper postage prepaid, to the holder of
any mortgages or deeds of trust covering the Building Complex or any portion
thereof of whose address Tenant has been notified in writing and shall afford
such holder a reasonable opportunity to cure any alleged default on Landlord's
behalf.
(i) No act or thing done by Landlord or Landlord's agent during the term
hereof, including but not limited to any agreement to accept surrender of the
Premises or to amend or modify this Lease, shall be deemed to be binding upon
Landlord unless such act or things shall be by an officer of Landlord or a party
designated in writing by Landlord as so authorized to act. The delivery of keys
to Landlord, or Landlord's agent, employees or officers shall not operate as a
termination of this Lease or a surrender of the Premises. No payment by Tenant
or receipt by Landlord of a lesser amount than the monthly rent herein
stipulated shall be deemed to be other than on account of the earliest
stipulated rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such rent or pursue any other remedy
available to Landlord.
(j) Landlord, during the entire term of this Lease, shall have the right to
change the number and name of the Building at any time without liability to
Tenant.
(k) Tenant acknowledges and agrees that it has not relied upon any
statements, representations, agreements or warranties, except such as are
expressed in this Lease.
(l) Notwithstanding anything to the contrary contained herein, Landlord's
liability under this Lease shall be limited to its interests in this building.
(m) Time is of the essence hereof.
(n) Tenant and Landlord and the party executing this Lease on behalf of
each of them represent to each other that such party is authorized to do so by
requisite action of the board of
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directors or partners, as the case may be, and agree upon request to deliver to
each other a resolution or similar document to that effect.
(o) This Lease shall be governed by and construed in accordance with the
laws of the State of Minnesota.
(p) This Lease, together with the exhibits attached hereto, contains the
entire agreement of the parties and may not be amended or modified in any manner
except by an instrument in writing signed by both parties.
(q) This Lease may not be recorded. The parties shall execute a Memorandum
of Lease to be placed of record.
35. Loading Dock: Tenant shall have the nonexclusive right to use the
loading dock (the Loading Dock) located on the second floor of the Building and
in space leased by the Landlord to the Mayo Foundation (Mayo). Tenant's use of
the Loading Dock shall be limited to moving in and out of the Building and
periodically receiving large items, but it is expressly acknowledged by Tenant
that the Loading Dock shall not be used on a daily basis by Tenant. Tenant shall
also comply with such reasonable rules and procedures for the use and available
hours of the Loading Dock as Mayo may imposes from time to time.
36. Tenant Improvements; Planning Allowance and Tenant Improvement
Allowance: Lessor shall construct certain tenant improvements (the Tenant
Improvements) to the Leased Premises pursuant to plans and specifications (the
Plans) agreed to by Lessor and Tenant and which will be attached hereto as
Exhibit E and incorporated herein by reference. Lessor and Tenant shall approve
the Plans and attach the Plans as Exhibit E on or before November 24, 1998 (the
Plan Approval Date). Provided that the Plans are approved on or before the Plan
Approval Date, Lessor shall substantially complete the Tenant Improvements prior
to the Commencement Date, subject to force majeure delays and delays caused by
the actions of Tenant. For purposes of this Lease, the date the Tenant
Improvements are "substantially complete" shall mean the date when a certificate
of occupancy has been issued for the Leased Premises by the City of Rochester.
As part of the approval of the Plans, Lessor and Tenant shall agree as to
the costs of the Tenant Improvements (the Construction Cost) include the agreed
Construction Cost as part of the Plans. Upon the substantial completion of the
Tenant Improvements and prior to Tenant taking possession of the Leased
Premises, Tenant shall pay to Lessor the Construction Cost of the Tenant
Improvements. Notwithstanding the foregoing, provided (i) Tenant is not in
default under the terms and conditions of the Lease and (ii) Tenant has accepted
the Tenant Improvements. Lessor shall grant Tenant a tenant improvement
allowance (the Tenant Improvement Allowance) in an amount not to exceed
$329,250.00 to be applied against the amounts owed to the Lessor for the
Construction Cost. Notwithstanding any other term or condition of this Lease to
the contrary, Tenant shall have no right to apply the Tenant Improvement
Allowance to any other costs or expenses not included within the Construction
Cost without the Lessor's prior written consent.
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Tenant may, at its option, make modifications to the Plans (Construction
Changes). Each Construction Change shall be documented by a written change order
(a Change Order) executed by Lessor and Tenant at the time the Construction
Change is ordered. Each Change Order, in addition to specifying the nature of
the Construction Change, shall specify any extension to the completion date of
the Tenant Improvements necessitated by the Construction Change and the
Commencement Date and the Expiration Date shall be so extended. Additionally,
each Change Order shall specify the cost of completing each Construction Change
and the corresponding increase (or decrease, if applicable) to the total
Construction Cost of the Tenant Improvements. Except as otherwise provided for
herein, Lessor is not obligated to make any other tenant improvements or
alterations to the Leased Premises and Tenant shall take possession of the
Leased Premises in an "as-is" condition.
Provided Tenant is not in default under the terms and conditions of this
Lease, Landlord grants to Tenant a space planning allowance (the "Space Planning
Allowance") in an amount not to exceed $2,500.00 to be used exclusively to pay
the costs of Tenant's space planning fees with respect to the Tenant
Improvements. Provided Tenant is not in default hereunder and upon presentation
to Landlord of reasonable evidence of the costs incurred by Tenant for space
planning services, Landlord will reimburse Tenant for such costs in an amount to
exceed the Space Planning Allowance.
37. Right of First Refusal for Expansion Space: If, at any time during the
Term, any space in the Building becomes available for lease (excluding space
which is subject to renewal options by the tenant thereof), which space Landlord
intends to make available for lease ("Available Space"), then Landlord shall
notify Tenant in writing (the "Availability Notice") of the existence of the
Available Space and the terms and conditions upon which Landlord intends to
offer the lease of the Available Space to third parties. Tenant shall have
twenty (20) days after receipt of the Availability Notice to accept Landlord's
offer in writing and upon such acceptance, Tenant shall be obligated to lease
the Available Space upon the same terms and conditions as are contained in
Availability Notice. If Tenant does not accept Landlord's offer in writing
within said twenty (20) days period, then Landlord may negotiate with third
parties for the lease of the Available Space upon such terms and conditions as
Landlord can obtain. Subsequently, if Landlord receives a bona fide offer from a
third party for the lease of the Available Space, which offer Landlord desires
to accept (an "Offer"), then Landlord shall deliver a true and correct copy of
the Offer to Tenant. Delivery of the Offer by Landlord to Tenant (the "Offer
Notice") shall constitute an offer on the part of Landlord to lease the
Available Space to Tenant pursuant to the same terms and conditions as are
contained in the Offer. Tenant shall have twenty (20) days after receipt of the
Offer Notice to accept Landlord's offer in writing and upon such acceptance,
Tenant shall be obligated to lease the Available Space upon the same terms and
conditions as are contained in the Offer Notice. If Tenant does not accept
Landlord's offer in writing within said twenty (20) day period, then all of
Tenant's rights contained in this Section 37 with respect to the Available Space
shall lapse and terminate and Landlord may then lease the Available Space to
third parties upon such terms and conditions as Landlord can obtain.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease the day
and year first above written.
LANDLORD:
MORTENSON PROPERTIES, INC.
By: /s/ Peter Conzemius
--------------------------------
Peter Conzemius
Its: Treasurer
TENANT:
SHOWCASE CORPORATION
By: /s/ Craig W. Allen
--------------------------------
Its: CFO
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