EXHIBIT 10.39
MARFIELD, BELGARDE & XXXXX COMPANIES
MANAGED PROPERTIES
OFFICE/SERVICE BUILDING LEASE
This LEASE is made this 30th day of September, 1996, between RED CIRCLE
L.L.P. (as LANDLORD) and SUMMIT MEDICAL SYSTEMS, INC. (as TENANT).
WITNESSETH:
-----------
In consideration of the mutual covenants, promises, and agreements herein
contained, the parties agree as follows:
1. DESCRIPTION OF THE PREMISES
TENANT hereby leases from LANDLORD certain Premises (Leased Premises)
within the building (Building), to be renamed the Summit Medical building. The
Leased Premises are more specifically designated in Building Floor Plans
(Exhibit "A") which are made a part hereof. The Building is located on and for
purposes of this Lease is deemed to include the real property legally described
on the attached Exhibit "C." TENANT shall have exclusive access to the top floor
entrance and to the newly constructed lower level entrance referenced on Exhibit
"A." LANDLORD will also construct, as part of the Tenant Improvement Allowance,
a second floor exit to the outside grounds as shown on Exhibit "A." The Leased
Premises are measured from the outside of all exterior walls to the center of
tenant division and common area walls. The Leased Premises will be deemed to
initially contain:
Office, Restroom, entry and finished spaces 50,451 S.F.
Storage or service area 4,000 S.F.
--------------
Total Area 54,451 S.F.
The Leased Premises are made up of 8,809 square feet on the top floor, 34,612
square feet on the middle floor and 11,030 square feet on the lower floor.
On the later of the first day of the third Lease Year or the date LANDLORD
completes the construction thereof as required by Section 14 below (which may
not be later than the end of the third Lease Year), the Leased Premises will be
expanded to include an additional 10,549 rentable square feet, labelled
"Expansion Space" on Exhibit "A." The Expansion Space will be delivered to
Tenant on a "turnkey" basis finished as requested by TENANT, at LANDLORD's sole
expense (up to a maximum of $17.00 per rentable square foot multiplied by a
fraction, the numerator of which is the number of months remaining in the Lease
term at the time possession is tendered to TENANT and the denominator of which
is 108). Notwithstanding the foregoing, LANDLORD agrees to perform any
necessary Landlord's Work, as defined in Exhibit "E," with respect to the
Expansion Space at LANDLORD's sole
expense, without diminishing the $17.00 per rentable square foot allowance
available for Tenant Improvements. The rent and the term with respect to the
Expansion Space will commence upon LANDLORD's delivery of exclusive possession
to TENANT after LANDLORD's completion of the tenant improvements required by
TENANT and delivery to TENANT of LANDLORD's architect's certificate of
completion and a certificate of occupancy by the City of Minnetonka. Rent will
be at the same per square foot rate, as that rate changes from time to time, as
provided in Section 2. LANDLORD will provide TENANT with at least 150 days prior
written notice of the date on which LANDLORD anticipates delivering possession
of the Expansion Space to TENANT. Notwithstanding anything to the contrary
contained in this Lease, at any time before the later of (i) the date 120 days
prior to the first day of the third Lease Year or (ii) the date 30 days after
LANDLORD notifies TENANT of the anticipated date of delivery of possession of
the Expansion Space, TENANT may terminate this Lease as to the Expansion Space
by giving written notice to LANDLORD, together with the payment to LANDLORD of
$350,000.00, in which event TENANT shall have no right or obligation to add the
Expansion Space to the Leased Premises pursuant to this paragraph.
2. RENT
TENANT covenants to pay rent according to the following schedule:
Annual Gross Rent
(for initial 54,451 s.f.,
subject to reduction
per Ex. E)
(excluding utility and
From and After: Until and Including: janitorial costs):
-------------- -------------------- -------------------------
Rent Commencement Date The last day of the
first Lease Year $435,000
The first day of the second The last day of the
Lease Year second Lease Year 562,000
-2-
From and After: Until and Including: Annual Base Rent:
--------------- ------------------- ----------------
The first day of the The last day of the third $8.93 per rentable
third Lease Year Lease Year square foot (for
initial 54,451 s.f.,
plus the 10,549 s.f. of
the Expansion Space,
as and when added,
subject to reduction
per Ex. E)
(for 65,000 s.f.,
subject to reduction,
per Ex. E or
reduction (on a pro
rata basis) by reason
of termination of
the Expansion Space,
per Sec. 1):
-----------
The first day of the The last day of the fourth $644,220
fourth Lease Year Lease Year
The first day of the The last day of the fifth $644,220
fifth Lease Year Lease Year
The first day of the The last day of the sixth $644,220
sixth Lease Year Lease Year
The first day of the The last day of the seventh $682,872
seventh Lease Year Lease Year
The first day of the The last day of the eighth $682,872
eighth Lease Year Lease Year
The first day of the The last day of the ninth $682,872
ninth Lease Year Lease Year
In addition to the foregoing Base Rent, TENANT will pay rent, in accordance with
Section 5 of this Lease, for any storage space leased pursuant thereto. However,
in calculating the per square foot Base Rent for purposes of Section 1 or
Section 36, the parties will consider only the Leased Premises (and the Base
Rent payable thereon), exclusive of the storage space added pursuant to Section
5 (and the Base Rent payable thereon). TENANT shall pay annual Gross Rent or
annual Base Rent, as applicable, to LANDLORD, or to any other entity designated
by LANDLORD, without further notice, in equal monthly installments, subject to
proration in the case of the first and last months of the Lease term on the
first business day of each month during the full term hereof. Rent for partial
calendar months during the Lease term will be prorated on a per diem basis. See
Section 7 for TENANT's
-3-
Additional Rent obligations. TENANT's obligation to pay Gross Base, Base Rent
and Additional Rent is unconditional and independent of any other provision of
this Lease. TENANT agrees not to withhold Gross Base, Base Rent or Additional
Rent for any reason, except as specifically provided by this Lease. The first
month's Gross Rent will be paid by TENANT to LANDLORD as soon as the contingency
set forth in Exhibit "E" below is satisfied.
3. TERM OF LEASE
At or prior to the delivery of possession of the Leased Premises (including
any subsequent expansions thereto) to TENANT, LANDLORD will provide to TENANT a
certificate of LANDLORD's architect certifying completion of the Leased Premises
pursuant to this Lease and of the parking lot and driveway serving the Leased
Premises and a certificate of occupancy by the City of Minnetonka for the Leased
Premises. LANDLORD agrees to keep TENANT apprised of the progress of
construction so that TENANT may make plans for a smooth and swift move into the
Leased Premises. The Lease shall commence on the earlier of the date seven days
after LANDLORD delivers to TENANT the two certificates referred to in the
preceding sentence or the date TENANT opens for business in the Leased Premises
(the "Rent Commencement Date"), and expire on the last day of the ninth Lease
Year. "Lease Year," for the purposes of this Lease, shall mean the period from
and after the Rent Commencement Date until and including the day prior to the
first anniversary of the Rent Commencement Date; and each period of one year
thereafter (e.g., if the Rent Commencement Date is November 15, 1996, the first
Lease Year would end November 14, 1997 and the second Lease Year would begin
November 15, 1997 and end November 14, 1998).
4. USE OF PREMISES
TENANT agrees to use the Leased Premises for general office purposes and
other "clean and quiet" uses related to TENANT's business and no other purpose;
subject to all local, state, and federal laws regulating such use. Such use
shall not cause excessive odors, humidity, noise or vibrations which may injure
the Building, cause harm to, or disrupt other tenants. LANDLORD agrees to limit
tenants in the remainder of the Building to uses compatible with TENANT, which
uses must be "clean and quiet" and not adversely affect TENANT's parking areas.
LANDLORD will require in all other leases in the Building that the tenant not
use more than a specified allotment of parking stalls, and will ensure that such
allotment, for all such leases in the aggregate, does not exceed 3.3 parking
stalls per 1,000 square feet.
-4-
5. PARKING AND COMMON AREAS
TENANT, its employees and invitees shall have the exclusive use of the
upper parking area. TENANT shall have use of at least 3.3 parking stalls per
1,000 square feet contained in the Leased Premises, without charge (other than
Additional Rent). The exclusive spaces referred to above will count towards the
3.3 parking stalls per 1,000 square feet requirement. TENANT may erect signs
identifying TENANT's exclusive parking stalls in the upper parking area (some of
which signs may designate certain employees or TENANT's visitors). LANDLORD
shall enforce the exclusivity of TENANT's parking stalls for TENANT's benefit.
LANDLORD will designate by signs as "visitor" stalls at least 15 parking stalls
in the lower parking lot, in a location approved by TENANT. If TENANT finds that
its visitors are frequently unable to find visitor parking stalls available,
LANDLORD agrees, upon written notice by TENANT, to promptly take action to
assure visitor parking is available, either by adding additional visitor parking
stall signs and/or enforcing the use of the existing visitor parking stalls by
only visitors of the Building. TENANT shall also have the nonexclusive right to
use the common areas, loading dock, adjacent loading area, sidewalks, driveways
and parking spaces other than TENANT's exclusive spaces along with the other
tenants of the Building and their employees and invitees. The use of common
areas, and the portion of the land set aside by LANDLORD for nonexclusive use of
tenants, is subject to such reasonable rules and regulations as the LANDLORD may
impose from time to time. Overnight parking of vehicles (except for employees
then working at the Leased Premises) and the storage, at any time, of any other
property in the common areas of the Building is prohibited. To accommodate
TENANT's storage needs, LANDLORD agrees to lease to TENANT, on request by
TENANT, on a space available basis, such storage space as required by TENANT, up
to 1,000 square feet, in a location reasonably convenient to the loading dock,
at the going rental rate for storage space in the Building, not to exceed $4.50
per square foot net. Any lease by TENANT of such storage space shall expire at
the expiration or earlier termination of this Lease. Notwithstanding the "space
available" provision contained above, LANDLORD agrees to offer the storage space
depicted on Exhibit "A" to TENANT pursuant to the balance of the two preceding
sentences before leasing it to third parties. If LANDLORD identifies a
prospective tenant for the storage space depicted on Exhibit "A," LANDLORD will
first offer such space to TENANT pursuant to this Section 5. If TENANT does not
accept LANDLORD's offer within 10 business days after receipt of LANDLORD's
offer, TENANT's right of first offer with respect to such space shall terminate.
6. NET LEASE
Beginning the first day of the third Lease Year, this Lease will be a "net"
Lease, and LANDLORD shall not be required to provide any services or do any acts
in connection with the Leased Premises not specifically set forth in this Lease.
As
-5-
hereinafter further described in this Lease, TENANT is responsible for and shall
pay its utility charges, trash removal and interior of the Leased Premises
cleaning and maintenance expenses. Beginning the first day of the third Lease
Year, TENANT shall also pay its proportionate share of real estate taxes
including installments of assessments and its proportionate share of the
Building's Operating Expenses (collectively, the "Additional Rent").
7. ADDITIONAL RENT
"Additional Rent" is defined in Section 6 above. Commencing on the first
day of the third Lease Year, TENANT's proportionate share for purposes of
allocating real estate taxes and assessments and Operating Expenses will be a
fraction, the numerator of which is the number of rentable square feet in the
Leased Premises from time to time and the denominator of which is the rentable
square feet in the Building from time to time, which denominator shall never be
less than 95,000 absent casualty or condemnation, and shall be calculated by
LANDLORD's professional architect.
8. REAL ESTATE TAXES
Real estate taxes include the following:
(a) all real estate taxes payable during the Lease Term.
(b) all installments of assessments, general or special, levied
against the Building, payable with the real estate taxes
described above, except as provided below.
TENANT will not be obligated to pay any special assessments levied or pending as
of the Rent Commencement Date. The payment of any future special assessments
will be spread over the longest period possible. TENANT will be entitled to a
prompt refund of its pro rata share of any tax refund attributable to the Term,
even after the expiration or termination of this Lease. TENANT will have the
right to contest the real estate taxes or special assessments with the
appropriate governmental authority, by giving LANDLORD written notice of
TENANT's desire to contest taxes at least 60 days prior to the filing deadline
with respect to the taxes in question, unless LANDLORD elects to contest such
taxes by written notice to TENANT at least 30 days prior to such filing
deadline. Any party contesting the taxes will be entitled to reimbursement of
its costs associated with such contest before the balance is split among the
parties entitled thereto. Partial calendar years during the Lease term will be
prorated on a per diem basis.
-6-
9. OPERATING EXPENSES
Operating Expenses include the following:
(a) City water and sewer charges, except where used by tenants in
substantial amounts for production and is therefore separately metered, and the
monitoring surveillance of the fire protection system; (b) Lawn care, snow and
litter removal, and the repair, replacement and maintenance as reasonably
required for: parking lots, drives, sidewalks, landscaped areas, HVAC systems,
roofing system (excluding the structural components of the roof), garage doors
and garage door openers, and exterior panes of exterior windows and foyer glass;
(c) Electrical service for the trash room (if any) and mechanical rooms and for
exterior lighting, replacement of bulbs used for exterior lighting and trash
removal from the common area trash room serving TENANT, if any; (d) Insurance
for all risks or fire and extended coverage, loss of rents and general
liability; (e) All other maintenance, repair, replacement and miscellaneous
operating expenses except structural items (the roofing system (excluding the
structural components of the roof) not being deemed structural for this purpose)
and that which is covered by manufacturer or subcontractor warranties; (f)
Property management expenses of four percent of the Base Rents and Additional
Rents collected (except as provided in Section 39 below); (g) Such other
expenses incurred in operating the Building generally, if of a type normally
incurred in the operating of similar buildings; and (h) Maintenance of
vestibules. Notwithstanding the foregoing, all repairs, replacements or
maintenance to the HVAC systems will be capped at $0.15 per square foot per
year, with any unused amount carried over to subsequent years and with LANDLORD
entitled to recover any costs incurred in any year during the Lease term in
excess of the cap from the allowances available in subsequent years. The $0.15
amount will be adjusted annually by any annual increases or decreases in the CPI
Index (based on the percentage of change from one year to the next). "CPI Index"
shall mean the "Consumer Price Index, All Urban Consumers, U.S. City Average,
All Items, Standard Reference Base 1982-84 = 100." If the CPI is discontinued,
comparable statistics on the purchasing power of the consumer dollar as
published at the time of said discontinuation by a responsible financial
periodical of recognized authority selected by LANDLORD, shall be used for
making the above computation. If the Standard Reference Base used in computing
the CPI is changed such that the CPI for the 1982- 84 = 100 Standard Reference
Base is no longer published, the figures used in making the foregoing
adjustments shall accordingly be changed so that all increases in the CPI are
taken into account notwithstanding any change in the Standard Reference Base. In
addition, LANDLORD may charge TENANT as an Operating Expense TENANT's
proportionate share of any costs related to Hazardous Substances found on the
common areas during the Lease Term, unless such Hazardous Substances represent
Existing Contamination, LANDLORD contamination or contamination by other tenants
in the Building; provided, however, in no event may LANDLORD charge TENANT more
than $20,000.00 per
-7-
Lease Year, which amount (if not used) may not be carried over to subsequent
years nor be available to cover costs in excess of the cap from prior years.
Operating Expenses exclude:
(a) real estate taxes and special assessments which are separately
addressed in this Lease; (b) all costs incurred in connection with or directly
related to the original construction (as distinguished from operation,
maintenance, repair and replacement) of the Leased Premises and/or the Building
or any expansion or renovation thereof; (c) depreciation; (d) financing and
refinancing costs, interest on debt or amortization payments on any mortgage or
mortgages, and rental under any ground or underlying leases or lease together
with all costs incidental to the items mentioned in this item (d); (e) costs of
correcting defects covered by the warranty granted in this Lease in the design
or construction of any of the new construction with respect to the Leased
Premises or the Building or the material used in any of the new construction
with respect to the Leased Premises or the Building (including latent defects in
any of the new construction with respect to the Leased Premises or the Building
or the inadequacy of design of any of the new construction with respect to the
Leased Premises or the Building) or in the equipment or appurtenances to any of
the new construction with respect to the Leased Premises or the Building, except
that for the purposes of this section conditions (not occasioned by design or
construction defects) resulting from ordinary wear and tear and use will not be
deemed defects; (f) the cost of any repair to remedy damage caused by or
resulting from the negligence of any other tenants or occupants in the Building,
including their agents, servants, employees or invitees, if and to the extent
LANDLORD recovers the cost thereof from such parties in excess of costs and
expenses of recovery incurred by LANDLORD; (g) legal and other fees, leasing
commissions, so-called "take-over" or "buy out" obligations, advertising
expenses and other costs incurred in connection with acquisition of the
Building, or the original development or original leasing of the Building, or
future releasing of the Building, or disputes with tenants; (h) costs incurred
in renovating or otherwise improving or decorating or redecorating space for
tenants or other occupants in the Building or vacant space in the Building or
costs related thereto; (i) any items not otherwise excluded to the extent
LANDLORD is reimbursed by insurance (or would have been reimbursed by insurance
if LANDLORD carried the insurance required by this Lease) or otherwise
compensated, including direct reimbursement by any tenant, less the out-of-
pocket cost of collection; (j) a bad debt loss, rent loss or reserves for bad
debts or rent loss, or any other reserve for anticipated future expenses; (k)
any item of cost (other than management fees) which is includable in Operating
Expenses, but which represents an amount paid to an affiliate of LANDLORD or an
affiliate of any partner or shareholder of LANDLORD, to the extent the same is
in excess of the fair market value of said item or service; (1) all interest or
penalties incurred as a result of LANDLORD's failure to pay any costs as the
same become due, except resulting from the failure of TENANT to pay rent in a
timely manner; (m) management fees
-8-
in excess of 4% of the gross rents from the Building (except as provided in
Section 39 below); (n) any and all costs associated with the operation of the
business of the entity which constitutes LANDLORD (excluded items specifically
include, but are not limited to, formation of the entity, internal accounting
and legal matters, including but not limited to preparation of tax returns and
financial statements and gathering of data therefor, costs of defending any
lawsuits with any mortgagee, costs of selling, syndicating, financing,
mortgaging or hypothecating any of the LANDLORD's interests in the Building,
costs of any disputes between LANDLORD and its employees, disputes between
LANDLORD and managers of the Building, and disputes between LANDLORD and tenants
or occupants within the Building including, without limitation, TENANT); (o) the
wages, salaries, bonuses and benefits of all management personnel above the
level of any on-site building manager and the costs of preparation and handling
of accounts receivable and accounts payable; (p) any expense incurred as a
direct result of the negligence of LANDLORD, its agents, servants, or employees
or arising out of LANDLORD's negligent failure to manage the Building
consistently with the standards required by this Lease; (q) any cost or expense
incurred as a direct result of renovating, painting, decorating, carpet
shampooing, drapery cleaning or wall washing within the rentable areas of the
Building or utility work related to vacant or vacated space; (r) environmental
costs, including costs of removal and/or abatement of hazardous or toxic
substances, wastes or materials from or within the Building, fines, penalties,
and liens in excess of the cap set forth above, unless TENANT is responsible for
bringing any such items onto the Building, in which event TENANT will pay the
cost of removal; and (s) LANDLORD's maintenance and repair costs pursuant to
Section 12 of this Lease. Notwithstanding the foregoing, where this Lease
expressly allows LANDLORD to require TENANT to pay more than its proportionate
share of a particular expense (e.g., elevator-related expenses) or limits the
amount that LANDLORD may require TENANT to pay as regards a particular expense
(e.g., certain environmental-related expenses), those specific provisions will
control TENANT's allocation of those expenses.
Except with respect to HVAC-related capital expenditures, which are
specifically addressed by the $0.15 per square foot per year cap set forth above
and Hazardous Substances-related capital expenditures, which are specifically
addressed by the $20,000 per Lease Year cap set forth above, with respect to
costs which may be capitalized for income tax purposes, including capital costs
related to the elevators within the Leased Premises, LANDLORD may only charge
TENANT monthly the amount necessary to amortize TENANT's proportionate share of
such costs incurred by LANDLORD during the Lease term, at 10% per annum, over
the useful life of each item resulting in a capital expenditure. With respect to
the elevators, TENANT'S proportionate share is 100%. LANDLORD's annual
statements to TENANT shall detail any such amortized costs charged to TENANT,
indicating each item resulting in a capital expenditure, the date of the
expenditure, the useful life of such item and the calculation of TENANT's
portion of such expenditure.
-9-
Commencing with the Operating Expenses incurred and real estate taxes
payable on and after the third Lease Year and each subsequent year during the
Lease term, TENANT will pay, in equal monthly installments, payable in advance
on the first day of each calendar month, its estimated monthly proportionate
share of all such real estate taxes and Operating Expenses. As the actual amount
will not be known at the beginning of each calendar year, LANDLORD shall make a
reasonable estimate, to the best of its knowledge, of what the amount will be
for that year, and TENANT will pay its estimated proportionate share each month.
In no way should LANDLORD's estimate be construed as actual or as a guarantee.
After the actual real estate tax statement is received, LANDLORD shall have
the right to make adjustments for any difference between that which TENANT has
paid and that which it should have paid. TENANT shall then start paying its
proportionate share based upon the actual tax statement. LANDLORD shall promptly
provide TENANT with a copy of the actual tax statement after LANDLORD's receipt
thereof.
LANDLORD shall have the right to make adjustments periodically (but at
least annually) to the Operating Expenses, and adjust accordingly. When actual
Operating Expenses have been compiled, a prompt final year-end adjustment will
be made, and either a charge or credit will be issued. Partial calendar years
during the Lease term will be prorated on a per diem basis. LANDLORD agrees to
exercise due care and diligence to obtain Operating Expenses, services and
supplies at competitive and reasonable market costs with acceptable quality and
service standards.
TENANT may, at any reasonable time, upon at least ten (10) days' prior
notice to LANDLORD, cause an audit to be made of LANDLORD's books and records
and other documentation pertaining to Operating Expenses and LANDLORD's
allocation thereof among the tenants in the Building. TENANT may use
independent auditors or its own employees to perform such audit. If such audit
discloses that LANDLORD overcharged TENANT by three percent (3%) or more for any
annual period, LANDLORD will promptly pay to TENANT the reasonable cost of said
audit, in addition to the amount overcharged, plus accrued interest on the
amount overcharged at the rate of 10% per annum, which amount overcharged and
accrued interest will be paid to TENANT in any event.
TENANT may have been given projections for real estate taxes by LANDLORD's
agents. LANDLORD does not warrant that these projections are correct or that
they even approximate the amounts shown. TENANT is encouraged to call the city
assessor to verify the real estate tax projections before executing the Lease.
-10-
10. UTILITIES
TENANT is responsible and shall pay for all of its utility services.
LANDLORD may elect either to submeter TENANT for electricity or to separately
meter TENANT for electricity and require TENANT to contract with the utility
companies for service requirements and billing. If LANDLORD submeters TENANT for
electricity, TENANT will pay LANDLORD for TENANT's actual usage of electricity
at the rates charged to LANDLORD by the utility company, without markup. TENANT
is also responsible for its own telephone service. Heating and cooling will be
provided by LANDLORD to the entire Building, with TENANT paying its
proportionate share through the Operating Expenses.
LANDLORD reserves the right to protect its property and interest with
respect to utilities in any way it sees fit should TENANT not pay utility
charges.
In the event TENANT uses water and sewer in substantial amounts or for
production purposes, LANDLORD shall install at TENANT's expense a water meter to
sub-meter said water, and shall charge TENANT for said water and sewer at rates
as charged by the City. TENANT shall pay to the City any water availability
charge (WAC) and sewer availability charge (SAC) charges due to its high usage.
In addition, if any other occupant of the Building uses heating, cooling, water
or sewer in substantial amounts or for production purposes, LANDLORD shall
install a water meter to sub-meter said heating, cooling or water, and TENANT
shall not be required to pay any part of the cost of heating, cooling, water or
sewer charged with respect to such occupant or any WAC or SAC charges related to
such occupant.
LANDLORD shall, under no circumstances, be liable for: a) physical loss
arising from any failure to furnish heating, cooling, water, electricity,
telephone, or any other utility; b) any consequential damages, regardless of the
cause; (c) any loss or damages of any kind; unless resulting from LANDLORD's
willful nonperformance or negligent performance of its duties hereunder.
11. INSURANCE
TENANT shall maintain in full force and effect during the term hereof, a
policy of public liability insurance under which LANDLORD and TENANT are named
insureds. The minimum limits of liability of such insurance shall be
$1,000,000.00 combined single limit for bodily injury and property damage, and
in addition TENANT shall carry a policy of property insurance for fire and
extended coverage including an all risk endorsement and necessary coverage for
any type of water damage on TENANT's personal property, trade fixtures and
contents on a replacement cost basis. TENANT agrees to deliver a duplicate copy
of said policy, or a certificate of insurance evidencing such coverage, to
LANDLORD. Such policy
-11-
shall contain a provision requiring ten (10) days' written notice to LANDLORD
before cancellation of the policy can be effected.
LANDLORD shall carry and cause to be in full force and effect an all risks
or fire and extended coverage insurance policy on the Building and leasehold
improvements on a full replacement cost basis; but not on TENANT's personal
property, trade fixtures or contents. Such policy shall contain a provision that
the policy shall not be canceled except upon ten (10) days' written notice to
TENANT. LANDLORD will be deemed to be a self-insurer as to the deductible or any
coinsurance applicable to such insurance coverage and will pay any deductible or
coinsurance amount applicable in the event of loss or damage, which amount may
not be included as an Operating Expense.
Each insurance policy carried by either LANDLORD or TENANT covering the
Leased Premises or its contents shall provide that the insured party has
relinquished all rights to recover against the other party for loss or damage
resulting from perils insured against by the policy. LANDLORD and TENANT each
hereby waive any claim based upon liability which may arise against the other so
far as the claim relates to loss or damage to the premises or contents which is
covered by insurance or coverable under the aforementioned insurance policies,
whether maintained or not.
12. MAINTENANCE
Except as provided otherwise in this Lease, TENANT shall be wholly
responsible for the maintenance and repair of the interior of the Leased
Premises, and will keep it in as good condition as when turned over to TENANT,
reasonable wear and tear and damage by fire and the elements or other casualty
excepted.
TENANT agrees to keep the Leased Premises in a clean, orderly and sanitary
condition and will neither do nor permit to be done therein anything which is in
violation of insurance policies on the Building or that is contrary to law.
TENANT, at TENANT's option, may contract directly for janitorial services for
the Leased Premises or may require LANDLORD to provide janitorial services for
the Leased Premises, which LANDLORD will xxxx to TENANT. TENANT will neither
commit nor suffer waste to the Building or to the Leased Premises.
The maintenance and repair obligations of TENANT specifically extend to all
interior walls, interior doors, interior windows, plumbing and electrical
fixtures within the Leased Premises, except as these obligations may be covered
by manufacturer or contractor warranties. LANDLORD agrees to cooperate with and
reasonably assist TENANT in pursuing such warranties which are still in effect.
-12-
LANDLORD agrees to manage, operate and maintain the Building (including the
common areas, the grounds and all Building systems) (including repair and
replacement, as necessary) except any portion which any tenant is obligated to
maintain (which portion LANDLORD will cause to be maintained by such tenant), as
a first-class office-showroom building, in a manner and with expenditures
consistent with first-class office-showroom buildings of similar size and age in
the Minneapolis-St. Xxxx metropolitan area such as Xxxxx Plaza and Xxxxxxx Xxxx.
LANDLORD will provide inspections and maintain, repair and replace any elevator
(or part thereof) serving the Leased Premises exclusively, and will have the
right to xxxx 100% of the cost of doing so to TENANT, except for capital
expenditures which will be amortized as provided above.
LANDLORD will maintain in good condition and repair (including replacement,
if necessary) at its sole expense, all structural components and exterior
surfaces (including plate glass) of the Building and, in addition, will make all
repairs or replacements to the structures and improvements of the Leased
Premises and the Building, including without limitation, the surfaces of the
parking and outside areas, where such repairs or replacements are occasioned by
design or construction defects covered by the warranty granted in this Lease
with respect to any of the new construction with respect to the Leased Premises
or the Building or latent or inherent defects in the structures or improvements
or are covered by warranties. In addition, LANDLORD will make all replacements
to the Leased Premises or the Building which are reasonably necessary during the
Term. LANDLORD may not include any of the expenses arising under this paragraph
as an Operating Expense.
13. APPEARANCE AND ACCESS
LANDLORD and TENANT mutually agree to keep the grounds, Building, Leased
Premises and common areas in as good a condition of repair and appearance as
their respective responsibilities and rights may allow. LANDLORD shall provide
general access to TENANT and its invitees to the common areas except as
reasonable security requirements and temporary conditions may prevent, and shall
keep the common areas well maintained and free of nuisance, as required by
Section 12 above. LANDLORD may establish from time to time and TENANT will
abide by reasonable rules for parking (provided TENANT's exclusive rights to
certain parking stalls, as provided above, shall be respected by LANDLORD),
security, handling of trash and like procedures. LANDLORD may not impose any
charges for the use of the common areas (such as pay parking), except LANDLORD's
right to allocate Operating Expenses as provided in this Lease. LANDLORD will
cause the common areas to comply with the Americans with Disabilities Act and
all other laws, codes, ordinances, rules and regulations of governmental
authorities having jurisdiction (the "Laws") with respect to the common areas.
LANDLORD may not charge TENANT for any noncompliance of the common areas with
the Laws existing as of the Rent Commencement Date.
-13-
TENANT agrees to keep all of its trash containers, pallets, dumpsters,
refuse and waste within its Leased Premises and not outside or in common areas
(except in any dumpsters provided by LANDLORD) and agrees not to litter any of
the grounds or entries. TENANT is responsible for the cost of the removal of its
trash as an Operating Expense
New window coverings, if desired by TENANT, are to be installed by LANDLORD
at TENANT's expense and must be horizontal levelour-type made of metal. TENANT
may elect to use the existing window coverings in the Leased Premises without
additional cost. LANDLORD shall provide and maintain fire extinguishers as
required for TENANT's particular use by the City.
TENANT agrees not to have or keep any animals, including dogs and/or cats,
within the Leased Premises, except for "seeing eye dogs."
TENANT agrees to use chair pads under any chairs within the Leased Premises
that are placed at a desk so that wear of the carpet is minimal.
14. LANDLORD'S RESPONSIBILITY FOR CONSTRUCTION
LANDLORD agrees that prior to the commencement of the term hereof, at its
sole cost and expense (subject to the limitations in Exhibit E on LANDLORD's
responsibility for the cost of the Tenant Improvements), it will construct the
Building(s), and will also finish the Leased Premises substantially in
accordance with the Building Floor Plan (Exhibit "A") and the Construction
Schedule (Exhibit "E") attached and made a part hereof. It is understood and
agreed that minor changes from any plans or specifications which may be
necessary during construction of the Leased Premises, whether initiated by
LANDLORD or TENANT, shall not affect or invalidate this Lease, provided no
change may be made by the initiating party without the written consent of the
other, such consent not to be unreasonably withheld or delayed. If the party
from whom consent is requested does not give its written consent to or
disapproval of a change order within 5 days after request by the initiating
party, the party from whom consent is requested shall be deemed to have given
its written consent.
TENANT agrees that, upon occupancy hereof, it will inspect the Leased
Premises in order to ascertain the condition thereof; that any objections
(except for latent deficiencies not then discoverable) thereto not delivered in
writing to LANDLORD within 60 days after occupancy shall be deemed waived; and
that no representations, either express or implied, have been made regarding the
quality or condition thereof except as specifically stated below.
-14-
LANDLORD warrants and represents to TENANT that:
(a) The Leased Premises, at the time of initial occupancy, shall
comply with applicable building codes and the Americans with
Disabilities Act;
(b) The Leased Premises will be completed substantially as agreed to
in this Lease;
(c) The mechanical system serving the Leased Premises will have been
checked and found to be operating satisfactorily; and
(d) The Leased Premises and the Building comply with all applicable
laws, statutes, rules, regulations and ordinances, and the Leased
Premises are properly zoned and permitted for use of the Leased
Premises as intended by TENANT, as described in Section 4 above.
LANDLORD agrees to correct all uncompleted or defective items objected to by
TENANT, at LANDLORD's sole expense, as soon as reasonably possible, but in no
event more than thirty (30) days after receipt of notice from TENANT given
within such 60-day period. Notwithstanding the foregoing, LANDLORD will, at
LANDLORD's sole expense, correct any latent defect promptly after TENANT
notifies LANDLORD of any latent defect. TENANT will not be deemed to waive any
rights TENANT may have against LANDLORD under LANDLORD's warranties, as provided
below, by taking possession of the Leased Premises. LANDLORD warrants all of the
new construction work related to the Leased Premises and the Building to be free
of defects in both design and construction for the first Lease Year. TENANT will
have no obligation to pay or reimburse LANDLORD for any costs related to any
defect described in the preceding sentence, whether directly or through the
Operating Expenses.
15. CONDEMNATION LOSS
Should all of the Leased Premises or more than 25% of the parking stalls be
taken in condemnation proceedings or by exercise of any right of eminent domain,
then either party may terminate this Lease as of the date the condemning
authority or the authority exercising its right of eminent domain takes
possession of the Leased Premises, by written notice to the other party within
thirty (30) days after the taking. If, as a result of a partial taking, the
Leased Premises is no longer reasonably useable for the purposes specified in
this Lease, in TENANT's judgment, then, in any such case, TENANT or LANDLORD may
terminate this Lease as of the date the condemning authority or the authority
exercising its right of eminent domain takes possession of the property. If
this Lease is so terminated, any rents and other
-15-
payments will be prorated as of the termination and will be proportionately
refunded to TENANT, or paid to LANDLORD, as the case may be. If this Lease is
not terminated, LANDLORD will immediately make all repairs reasonably necessary
to make the Leased Premises a complete architectural unit and tenantable and all
rent will be abated for the period of time the space is untenantable in
proportion to the square foot area untenantable. LANDLORD shall be specifically
entitled to all awards for condemnation, except in the case of awards made
specifically for loss or damage to TENANT's property or TENANT's business or
TENANT's relocation expenses.
16. TENANT ASSIGNMENT
TENANT shall not assign this Lease, and shall not sublet any part of the
Leased Premises without the prior written consent of LANDLORD. Said consent
will not be unreasonably withheld or delayed. Any such assignment or subletting
will not release TENANT from its responsibilities under this Lease, unless
expressly agreed to in writing by LANDLORD.
No consent will be required in connection with an assignment related to the
sale of all or substantially all of TENANT's business or a merger or
consolidation or an assignment to a parent, subsidiary or affiliate of TENANT.
No assignment or subletting will release TENANT of any of its obligations under
this Lease; provided, however, if the assignee has a tangible net worth of at
least $50,000,000 according to a recent audited financial statement of assignee,
the assigning TENANT will be relieved of any liability under this Lease accruing
after the assignment of this Lease.
If TENANT shall be declared bankrupt, shall have a receiver appointed of
its property, shall make an assignment for the benefit of creditors, or its
rights hereunder shall be taken under execution, it shall be construed as an
assignment of this Lease within the meaning hereof, and LANDLORD shall have the
right to terminate this Lease.
17. DEFAULT BY TENANT
It is a Default for TENANT: (a) if Gross Rent, Base Rent, Additional Rent,
or any other sum due by TENANT under this Lease shall be unpaid for a period of
ten (10) days after notice from LANDLORD that payment is required; (b) if TENANT
fails to perform any of the other terms, conditions, covenants and obligations
of this Lease to be observed or performed by TENANT for more than thirty (30)
days after LANDLORD gives TENANT written notice of such Default (it being agreed
that a Default, other than failure to pay Gross Rent, Base Rent, Additional Rent
or other sums due, which is of such a character that the cure thereof reasonably
requires longer than thirty (30) days, shall be deemed cured within said period,
if TENANT in good faith commences a cure within the thirty (30) day period and
diligently
-16-
undertakes to complete the cure with reasonably dispatch); (c) if TENANT
abandons the Leased Premises (it being agreed that the Leased Premises shall be
considered abandoned should TENANT fail to openly conduct business from the
aforementioned premises for a period of seven (7) calendar days, TENANT fails to
keep the Leased Premises locked and TENANT provides LANDLORD with no forwarding
address prior to vacating the Leased Premises); (d) if TENANT or guarantor
knowingly misrepresents any material fact in any written statement provided to
LANDLORD or at its request, pursuant to or in connection with this Lease; or (e)
if TENANT, any guarantor or general partner becomes insolvent or the subject of
a bankruptcy petition.
A Default gives LANDLORD the right (without further notice except as
hereinafter expressly provided) to: (a) immediately reenter the Leased Premises,
change the locks, and remove all persons and property; (b) at TENANT's expense,
store or sell said property for TENANT's account; (c) treat said property as
abandoned upon TENANT's failure to remove it within ten (10) days of written
demand to remove; (d) make alternations and repairs; (e) without terminating the
Lease, relet all or part of the Leased Premises, at TENANT's expense and for its
account, on such terms, for such rentals, and for such a term as LANDLORD in its
sole discretion deems advisable and/or (f) resort to any other remedy authorized
by this Lease or by statute, law or equity.
Whether or not LANDLORD reenters and/or relets the Leased Premises, TENANT
will remain liable for all periods in which this Lease is in full force and not
terminated, for the Gross Rent, Base Rent, Additional Rent and utilities due
hereunder, subject only to a credit for rentals received from a substitute
tenant over and above expenses of reletting and other sums due hereunder.
Additionally, whether or not LANDLORD has already resorted to any other above-
mentioned right, LANDLORD may elect, by giving a written notice, to terminate
the Lease effective as of any date specified in the notice. No act, including
the re-entering and/or reletting, except the giving of such notice, shall be
deemed a termination, or acceptance of surrender of the Lease. Upon said
effective date, TENANT will comply with any surrender provisions.
TENANT will be liable for (a) all expenses and damages incurred by LANDLORD
resulting, whether before or after termination, from a Default, including
without limitation reasonable attorney's fees and brokers' fees to obtain a new
tenant, reclaiming possession and alteration or repair costs to obtain a new
tenant and (b) 10% interest on any sum due under the Lease, from the date 10
days after the date due.
Whether or not LANDLORD terminates the Lease, LANDLORD may elect, by giving
written notice, to accelerate unaccrued rent and hold TENANT immediately liable
for the net present value of the excess of the Gross (if applicable) and Base
-17-
rents payable during the remainder of the Lease term over the reasonable rental
value (on a triple net basis) of the Lease Premises for such period, using a 10%
discount rate, plus LANDLORD's cost to relet the Leased Premises and to prepare
the Leased Premises for a new tenant and other reasonable expenses in obtaining
a new tenant who would pay such reasonable rental value.
18. ALTERATIONS
TENANT shall not make any alterations to the Leased Premises which affect
the structural integrity of the Building or which cost in excess of ten thousand
dollars ($10,000) without the written consent of LANDLORD, such consent not to
be unreasonably withheld or delayed. If LANDLORD does not give its written
consent within 5 days after request by TENANT, LANDLORD shall be deemed to have
given its written consent. If TENANT shall desire to make any such alterations
requiring LANDLORD's consent, it shall furnish plans and specifications of the
work to be so performed together with a construction statement containing a
complete breakdown of the cost of all labor and material included therein, and
if the cost should exceed one hundred thousand dollars ($100,000.00), together
with an escrow of cash with Title Services, Inc. in an amount equal to the
estimated cost of all such work or other security reasonably required by
LANDLORD. TENANT agrees to obtain a building permit from the city for any
alterations requiring such a permit. TENANT agrees that all such work shall be
done in a good, workmanlike manner, and in compliance with applicable building
codes and all applicable laws, including, without limitation, the Americans with
Disabilities Act, that the structural integrity of the Building shall not be
impaired, and that no filed liens shall attach to the Building or Leased
Premises by reason thereof. No such alteration(s) shall change the
office/finished area to storage/service area ratio without LANDLORD's
permission.
TENANT shall, before the expiration of the Lease, restore the Leased
Premises to its condition prior to such alteration if LANDLORD conditioned its
approval of such alteration on TENANT's agreement to remove such alteration
prior to the expiration of the term. Any such alterations shall become the
property of LANDLORD as soon as they are affixed to the Leased Premises and all
right, title and interest therein of TENANT shall immediately cease unless
otherwise stated in writing. TENANT, however, shall remain the owner of any
installed trade fixtures and shall have the right to remove such trade fixtures
at the expiration of this Lease Agreement, so long as the Leased Premises and/or
Building are materially restored to their condition prior to such installation.
TENANT agrees that, if by reason of TENANT's particular operations, the
particular use to which TENANT puts the space, or any alterations made by TENANT
(whether or not approved unconditionally by LANDLORD), applicable law,
including, without limitation, the Americans with Disabilities Act, requires
-18-
further alterations or modifications of the Leased Premises or the Building,
TENANT will make such alterations or modifications so as to promptly address
such requirements, or, if TENANT fails to do so, TENANT will reimburse LANDLORD
promptly for the cost of such alterations or modifications as LANDLORD may make
upon TENANT's default (LANDLORD having the right but not the obligation to make
such alterations or modifications under that circumstance); and that this
provision shall survive termination or expiration of the Lease.
19. SIGNS
TENANT may, at TENANT's expense, place a sign on the face of the Building
and/or on TENANT's entrance canopy, identifying the Building as "Summit
Medical," with, at TENANT's election, TENANT's logo incorporated into the
design, with LANDLORD's consent, which shall not be unreasonably withheld or
delayed. LANDLORD, at LANDLORD's expense, will install a monument sign at the
lower level parking lot entrance identifying the Building as "Summit Medical"
with, at TENANT's election, TENANT's logo. TENANT may, at TENANT's expense,
install a monument sign for TENANT's exclusive use at the upper parking lot
entrance with LANDLORD's consent, which will not be unreasonably withheld or
delayed. LANDLORD agrees to keep such signs (except any upper level parking area
signs) which involve lighting lit from one half hour before sunset until one
half hour after sunrise, 365 days per year. At TENANT's request, LANDLORD will
provide and install, at LANDLORD's expense, and TENANT shall maintain in good
repair, one standard exterior entry sign at the TENANT's front entry. The sign
described in the previous sentence will remain the property of LANDLORD.
LANDLORD shall also provide one standard rear-entry sign to be installed by
LANDLORD near the rear door serving the Leased Premises. No other signage,
including no soliciting or other directional type signage, promotional material,
or identification of any type shall be placed in, on, or externally visible
from, any entry, window, outer door, or exterior surface without the written
consent of LANDLORD, which consent shall not be unreasonably withheld or
delayed. Except as provided in Section 5 above, TENANT agrees that no visitor
parking or other parking signage will be installed on any part of the parking or
common areas without the written consent of LANDLORD. Exceptions to this are
security system signs not to exceed sixty (60) square inches in size. No signs
identifying or advertising any other tenants or occupants or any party other
than TENANT shall be located on or at the Building (including on the land
associated therewith), except for Building standard entry signs or sign panels
on the lower level monument sign located beneath TENANT's name and with smaller
sized letters. LANDLORD agrees to forthwith develop a sign package for the
Building, which will include criteria and scaled drawings for all exterior
signage, excluding any sign identifying TENANT on the face of the Building. Such
signage package will be consistent with this Section 19 and will be subject to
TENANT's consent, which consent shall not be unreasonably withheld or
-19-
delayed. After TENANT approves the signage package, LANDLORD agrees that all
exterior signage for the Building will conform to such package.
LANDLORD reserves the right to remove all unauthorized signs installed by
TENANT, at the expense of TENANT.
20. ENTRY
TENANT agrees that no additional locks will be placed on any of TENANT's
doors without the written consent of LANDLORD. LANDLORD, its agents, and its
employees shall have the right to enter the Leased Premises at all reasonable
times and upon reasonable prior notice to TENANT and, at TENANT's option,
accompanied by an escort provided by TENANT, to inspect them, to make repairs,
and to maintain the Building of which the Leased Premises are part. During the
one hundred and eighty (180) days prior to the expiration of the term, LANDLORD
or its agents may exhibit the Leased Premises to prospective tenants at
reasonable times and upon reasonable prior notice to TENANT and, at TENANT's
option, accompanied by an escort provided by TENANT. LANDLORD shall also have
the right of entry as provided in Paragraph 17.
21. SUBORDINATION
It is mutually agreed that this Lease shall be subordinate to any and all
mortgages, ground leases, or other securities, including any renewals,
modifications, consolidations, replacements and extensions thereof now or
hereafter recorded against the Leased Premises by LANDLORD. TENANT's right to
quiet possession of the Leased Premises shall not be disturbed if TENANT is not
in Default beyond any applicable grace periods and so long as TENANT shall pay
the Gross, Base and Additional Rents and observe and perform all of the
provisions of this Lease, unless this Lease is otherwise terminated pursuant to
its terms. Notwithstanding the foregoing, LANDLORD shall obtain a nondisturbance
agreement reasonably satisfactory to TENANT from any current ground lessor or
mortgagee of the Leased Premises as a condition precedent to TENANT being bound
by this Lease and TENANT shall not be required to subordinate to any future
ground lessor or mortgagee unless TENANT receives a reasonably satisfactory
nondisturbance agreement from such ground lessor or mortgagee.
22. NOTICES
All notices, consents, demands and requests which may be or are required to
be given by either party to the other, shall be in writing, and sent by United
States registered or certified mail, with return receipt requested, addressed to
TENANT at the Leased Premises to the attention of Xxxxxxx X. Xxxx and to
LANDLORD in care of Marfield, Belgarde and Xxxxx Companies, 0000 Xxxxxxx
Xxxxxxxxx,
-00-
Xxxxxxxxxxx, Xxxxxxxxx 00000 or to such other addresses as TENANT or
LANDLORD may direct in writing in the future.
The date which said registered or certified mail is mailed by LANDLORD or
TENANT shall be conclusively deemed to be the date two days after the date on
which a notice, consent, demand, or request is given or made.
The above address of a party may be changed at any time or from time to
time by notice given by said party to the other party in the manner herein above
provided.
23. SHORT FORM LEASE
The parties hereto shall, at the option of either party, execute a short
form of Lease for recording purposes and, in such event, the terms thereof shall
constitute a part of this Lease as fully as though recited at length herein.
24. LANDLORD ASSIGNMENT
LANDLORD may assign its right, title and interest in this Lease, and such
assignment shall then terminate all LANDLORD's further obligations so long as
LANDLORD is not in default when such assignment is made and the assignee assumes
LANDLORD's responsibilities thereafter.
25. OCCUPANCY
LANDLORD agrees to use its best efforts to deliver possession of the Leased
Premises in the condition required by this Lease on or before November 15, 1996.
LANDLORD shall not be liable to TENANT for any loss or damage resulting if the
Leased Premises are not ready for occupancy on or before 5:00 p.m., Minneapolis
time, on November 22, 1996. If LANDLORD does not tender exclusive possession of
the Leased Premises to TENANT in the condition required by this Lease and has
not delivered to TENANT the two certificates required by Section 3 above on or
before 5:00 p.m., Minneapolis time, on November 22, 1996, LANDLORD shall pay
TENANT as liquidated damages the amount of $25,000 on November 22, 1996 and
TENANT shall not be required to take occupancy and the Rent Commencement Date
shall be the earlier of February 1, 1997 or the date TENANT opens for business
in the Leased Premises. For the purpose of enabling LANDLORD to avoid having to
pay $25,000 in liquidated damages, TENANT agrees that LANDLORD will be deemed to
have met the November 22, 1996 deadline if the only items not completed as of
such deadline (other than minor punchlist items) are the items listed on the
attached Exhibit "H," provided LANDLORD completes such items as soon as
reasonably possible thereafter and does such work at such times and subject to
such security precautions as reasonably required by TENANT to avoid disruption
-21-
of TENANT's business. If LANDLORD does not tender exclusive possession of the
Leased Premises to TENANT in the condition required by this Lease, together with
such two certificates, on or before January 15, 1997, TENANT may terminate this
Lease by written notice to LANDLORD, in which event neither party shall have any
further liability under this Lease, provided LANDLORD has paid to TENANT the
liquidated damages required above.
26. FIRE REPAIR
In the event of damage to the Leased Premises by fire, the elements or
other casualty, LANDLORD shall repair the damage with reasonable dispatch (with
all rent to xxxxx in the meantime if TENANT is forced to abandon all of the
Leased Premises).
LANDLORD will begin repairs within 30 days after the casualty and complete
the repairs within 120 days after the casualty. If LANDLORD fails to begin or
complete the repairs as required, TENANT may give LANDLORD notice to do so. If
LANDLORD has not begun the repairs or completed the repairs, as applicable,
within 30 days after TENANT's notice, TENANT may terminate this Lease by written
notice to LANDLORD given within 30 days after expiration of the 30-day period.
If this Lease is terminated because of the casualty, rents and other payments
will be prorated as of the later of the date of such casualty or the date when
TENANT ceased doing business in the Leased Premises and will be proportionately
refunded to TENANT or paid to LANDLORD, as the case may be.
If the damage renders the Leased Premises untenantable in part but TENANT
continues to occupy them in part, the Gross, Base and Additional Rent shall be
reduced in an equitable manner.
27. QUIET ENJOYMENT
TENANT, upon payment of the Gross, Base and Additional Rent herein reserved
and upon performance of all of the terms, covenants and conditions of this Lease
by it to be kept and performed, shall at all times during the term hereof or
during any extension or renewal hereof, peaceably and quietly enjoy the Leased
Premises without any disturbance from LANDLORD or from any other person claiming
through LANDLORD. Upon expiration or sooner of the term hereof, TENANT shall
surrender the Leased Premises in good condition and repair, except for
reasonable wear and tear, condemnation and casualty.
28. HOLDING OVER
If TENANT shall hold over the Leased Premises or any part thereof after the
expiration of the term hereof, or any extension thereof, such holding over shall
be
-22-
construed only to be a tenancy from day to day subject to all of the covenants,
conditions and obligations hereof except that the Base Rent shall be 125% of the
rent normally due. Nothing herein shall be construed to give TENANT any rights
to hold over and to continue in possession of the Leased Premises after
expiration of the term hereof.
29. DEPOSIT
On the Rent Commencement Date, TENANT will deposit with LANDLORD the sum of
$100,000.00. Said amount shall be held by LANDLORD as security for the faithful
performance by TENANT of all the terms, covenants, and conditions of this Lease
to be kept and performed by TENANT. The security deposit shall not bear
interest. If TENANT shall fully and faithfully perform every provision of this
Lease to be performed by it, the security deposit or any balance thereof shall
be resumed to TENANT at the expiration of the Lease term. On the date two (2)
years after the Rent Commencement Date (provided TENANT is not then in default
or has not received a default notice pertaining to a condition then uncured),
LANDLORD will refund to TENANT $51,656.00 of the security deposit, leaving
LANDLORD with a security deposit of $48,344.00. To the extent LANDLORD resorts
to the security deposit, TENANT will, on demand, replenish the same.
30. OTHER PROVISIONS
The invalidity or unenforceability of any provisions hereof shall not
affect or impair the validity of any other provision. The headings herein are
inserted only for convenience and reference and shall have no substantive
import. Where necessary, the singular imports the plural and vice-versa, and
masculine, feminine and neuter pronouns and expressions are interchangeable.
The Lease shall bind and inure to the benefit of LANDLORD and TENANT, their
respective heirs, administrators, legal representatives, successors and assigns.
During the term of the Lease, LANDLORD's acceptance of an amount which is
less than the amount due at that time, will be deemed partial payment only, not
payment in full.
This Lease shall be governed by Minnesota law.
One or more waivers of any provision by either party shall not be construed
as a waiver of subsequent breach of same. Failure to enforce or delay in
enforcing any right hereunder will not be construed as a waiver thereof. Each
party expressly (a) consents to the maintaining of any such action in any court
of competent subject matter jurisdiction, and (b) agrees that the mailing, with
postage prepaid, registered or certified mail, of any complaint or other legal
process to it, at either the address stated in this Lease for notices or any
other address where that party is then actually
-23-
residing or doing business, constitutes legally sufficient service of the same
upon that party as of the postmark date of the mailing, it being each party's
intent to waive in the event of such a mailing, any insufficiency of service of
process, lack of personal jurisdiction claim, or the like that might otherwise
arise from provisions of the law otherwise requiring a different form of
personal service.
TENANT and any guarantors agree to provide LANDLORD with a current
financial statement on or before four (4) months after the end of their fiscal
year. The financial statement shall meet generally accepted accounting
principles.
EXHIBITS
This instrument contains all of the agreements made between the parties and
may not be modified orally or in any manner other than by agreement in writing
signed by all parties to this Lease. The following exhibits are attached and
hereby made a part of this Lease:
_______________ Exhibit "A" Building Floor Plan
_______________ Exhibit "B" Intentionally Omitted
_______________ Exhibit "C" Legal Description
_______________ Exhibit "D" Intentionally Omitted
_______________ Exhibit "E" Construction
_______________ Exhibit "F" Intentionally Omitted
_______________ Exhibit "G" Material Use Rider
_______________ Exhibit "H" Permissible Post Occupancy Construction Work
_______________ Exhibit "I" New Windows
The signataries below warrant that they are duly authorized to enter into
this Lease representing the parties hereto.
31. ENVIRONMENTAL
LANDLORD has supplied to TENANT a true and complete copy of a current Phase
I environmental assessment for the Building (the "Report"). LANDLORD has made
arrangements so that TENANT may rely on the Report. LANDLORD represents and
warrants to TENANT that LANDLORD does not have and does not know of any other
environmental reports, studies or tests which have been prepared or conducted
with respect to the land on which the Building has been constructed, other than
the Report and the tests identified therein. LANDLORD represents and warrants
that, except as provided in the Report, to the best of LANDLORD's knowledge: (i)
the Building site is in compliance with all Environmental Regulations and (ii)
no Hazardous Substances have been stored, used or otherwise located on, in or
under the Leased Premises or the Building. LANDLORD agrees to indemnify, defend
and hold TENANT harmless against any
-24-
and all Environmental Damages incurred or to be incurred as a result of the
breach by LANDLORD of its representations or with respect to Existing
Contamination or LANDLORD Contamination or failure to comply with any
Environmental Regulations, including reasonable attorneys' fees. "Existing
Contamination" means contamination, if any, which exists on, in, below, or is
migrating on, under or in the direction of the Leased Premises, whether known or
unknown on the date TENANT takes possession of the Leased Premises. "LANDLORD
Contamination" means contamination at the Leased Premises which is caused by or
arises out of any act, omission, neglect or fault of LANDLORD or its agents,
employees, contractors or invitees. "Contamination" means the uncontained or
uncontrolled presence of or release of Hazardous Substances into any
environmental media from, upon, within, below, into or on the Leased Premises.
"Hazardous Substances" means any toxic or hazardous chemicals, wastes, materials
or substances, including, without limitation, lead, radon, asbestos, asbestos
containing materials, polychlorinated biphenyls, dioxin, urea-formaldehyde,
nuclear fuel or waste, radioactive materials, explosives, carcinogens, petroleum
products, or any pollutants or contaminants, as those terms are defined in any
applicable federal, state, local or other governmental law, statute, ordinance,
code, rule or regulation. "Environmental Regulations" means all laws, statutes,
ordinances, codes, rules and regulations relating to Hazardous Substances or the
protection of the environment. "Environmental Damages" means all claims,
judgments, losses, penalties, fines, liabilities, encumbrances, liens, costs and
reasonable expenses of investigation, defense or good faith settlement resulting
from violations of Environmental Regulations, and including, without limitation:
(i) damages for personal injury and injury to property or natural resources;
(ii) reasonable fees and disbursement of attorneys, consultants, contractors,
experts and laboratories; (iii) costs of any cleanup, remediation, removal,
response, abatement, containment, closure, restoration or monitoring work
required by any Environmental Regulation and other costs reasonably necessary to
restore full economic use of the Leased Premises or Building; and (iv) third-
party claims relating to the immediately preceding subsections (i) - (iii).
LANDLORD will perform any remediation required by any governmental authority in
such a manner as to have as little impact on TENANT's business being conducted
at the Leased Premises as reasonably possible. If Existing Contamination or
LANDLORD Contamination actually prevents TENANT, or its employees or customers,
from occupying any material part of the Leased Premises or the parking areas
serving the Leased Premises in a manner that materially adversely affects
TENANT's business being conducted at the Leased Premises for any period of 120
or more continuous calendar days, TENANT will have the right to terminate the
Lease by giving written notice to LANDLORD. LANDLORD's obligations and
liabilities under this Section will survive the expiration or termination of
this Lease.
-25-
32. COMMUNICATION EQUIPMENT
TENANT will be entitled to place, at TENANT's expense, a satellite dish or
dishes and other communication equipment on the roof of the Building as needed
for the conduct of TENANT's business. TENANT agrees to comply with any
screening requirements of the City and any reasonable screening requirements of
LANDLORD in connection with the installation of any such communication
equipment. TENANT agrees to use LANDLORD's roofing contractor if TENANT
penetrates the roof in connection with the installation of any such
communication equipment.
33. INTERRUPTION OF BUSINESS
If an interruption or impairment of utilities or services provided by
LANDLORD materially impairs TENANT's ability to conduct its business and TENANT
closes its business in the Leased Premises by reason thereof and such impairment
and closure continues for three (3) consecutive days, beginning after the end of
such 3-day period, all rent will xxxxx until such utilities or services are
reasonably restored to an extent to render the Leased Premises tenantable, if
LANDLORD's rent loss insurance covers such rent loss or if such utilities are
interrupted due to LANDLORD's failure to pay its utility bills. LANDLORD will
use reasonable efforts to cause such utilities or services to be restored as
soon as possible.
34. ESTOPPEL CERTIFICATES
Within 20 days after written request from either party, the other party
will execute, acknowledge and deliver a document furnished by the requesting
party, which statement may be relied upon by the requesting party and third
parties, stating (a) that this Lease is unmodified and in full force and effect
(or if modified, that this Lease is in full force and effect as modified and
stating the modifications), (b) the dates to which rent and other charges have
been paid, (c) the current Gross Rent or Base Rent and Additional Rent, as
applicable, (d) the dates on which the Term begins and ends, (e) that TENANT has
accepted the Leased Premises and is in possession, (f) that neither LANDLORD nor
TENANT is in default under this Lease, or specifying any such default, and (g)
such other and further information as may be reasonably requested.
35. LANDLORD DEFAULTS
If LANDLORD fails or neglects to keep and perform any of the covenants or
agreements in this Lease on the part of LANDLORD to be kept and performed,
TENANT may notify LANDLORD thereof and if LANDLORD does not cure such default
within thirty (30) days (or such shorter period as may be reasonable under the
circumstances, in the event of an emergency) after the date of receiving such
-26-
notice (or if the default is of such a character as to require more than thirty
(30) days to cure, LANDLORD does not commence to cure such default within thirty
(30) days and proceed with the cure with reasonable diligence), TENANT may, in
addition to all other remedies now or hereafter afforded or provided by law,
perform such covenant or agreement for or on behalf of LANDLORD or make good any
such default, and any amount or amounts which TENANT advances on LANDLORD's
behalf will be repaid by LANDLORD to TENANT on demand, together with interest
thereon at the rate of 10% per annum from the date of such advance to the
repayment thereof in full, and if LANDLORD does not repay any such amount or
amounts upon demand, TENANT may, without forfeiture of its rights under this
Lease, deduct the same, together with interest thereon as provided above, from
the next installment or installments of rent to accrue under this Lease;
provided, however, unless TENANT obtains a judgment against LANDLORD, TENANT may
not offset in any one month more than 50% of the Gross Rent or Base Rent, as
applicable, owing for such month. LANDLORD agrees that, for the purposes of
this Lease, the clearing of snow from the driveways, sidewalks and parking and
loading areas serving the Leased Premises is an emergency and that four (4)
hours is a reasonable period for LANDLORD to remove snow following notice from
TENANT.
36. EXPANSION OPTIONS
TENANT shall have options to lease all or part of the space in the Building
not then included in the Leased Premises, as provided in this Section 36.
LANDLORD agrees to offer to TENANT, some time between the beginning of the
fourth Lease Year and the end of the sixth Lease Year, all of the space in the
Building not included in the Leased Premises (provided LANDLORD need not offer
common area space unless it is otherwise offering, at that time, all of the
remainder of the space in the Building). LANDLORD need not offer all of such
space to TENANT at one time. LANDLORD agrees not to enter into any leases with
third parties for such space for a term (including extension options) in excess
of five years, except as provided below. Upon request by TENANT, LANDLORD will
notify TENANT, with respect to any leases for such space, of the expiration
dates of such leases so that TENANT will be able to anticipate when such space
will be available. LANDLORD will offer all or a portion of such space to TENANT
by written notice to TENANT, identifying the anticipated date of delivery.
TENANT will have until the later of 30 days after receipt of LANDLORD's notice
or the date 60 days prior to the beginning of the fourth Lease Year to accept
such space as part of the Leased Premises, which acceptance shall be in writing.
If TENANT accepts LANDLORD's offer of any of the remaining space in the
Building, TENANT shall lease such space for a term equal to the greater of five
(5) years or the remaining term of this Lease at such time, upon the same terms
and conditions as contained in this Lease, with Base Rent for the period before
what prior to the expansion was the expiration of the term of this Lease to be
at the same per square foot rate, as it changes from time to time, as
-27-
applies to the balance of the Leased Premises, and with Base Rent for the period
after what prior to the expansion was the expiration of the term of this Lease
to be at the same per square foot rate as applies to the balance of the Leased
Premises immediately prior to such expiration date, and the Tenant Improvement
Allowance with respect to such space shall be $17.00 per rentable square foot
for office space and $2.00 per rentable square foot for storage space (with the
allocation of office and storage space designated by TENANT), multiplied by a
fraction, the numerator of which is the number of months of the term for such
expansion space and the denominator of which is 108. Notwithstanding anything in
this Section 36 to the contrary, (a) the Base Rent for expansion option space
shall never be less than the Base Rent calculated at the per square foot rate
prescribed in Section 2 for the ninth Lease Year; and (b) if TENANT takes
delivery of an expansion option space at a time when Market Rate Rent is already
in effect and when the Lease term has less than 2 years to run, the parties will
redetermine Market Rate Rent at the time that the Lease term would otherwise
have expired. If the term for the Leased Premises prior to the exercise of an
expansion option would expire prior to the expiration of the term with respect
to the space added by exercise of an expansion option, the term for the Leased
Premises prior to the exercise of an expansion option shall be automatically
extended to coincide with the term with respect to the expansion option space,
and the Base Rent per rentable square foot shall be computed on the same basis
as for the expansion option space. The rent and the term with respect to the
expansion option space will commence upon LANDLORD's delivery of exclusive
possession to TENANT after LANDLORD's completion of the tenant improvements
required by TENANT and delivery to TENANT of LANDLORD's architect's certificate
of completion and a certificate of occupancy by the City of Minnetonka. If
TENANT accepts LANDLORD's offer with respect of any of the expansion option
space and LANDLORD is unable to deliver exclusive possession of such space to
TENANT in the condition required, together with the two required certificates,
on or before the date 180 days after LANDLORD's anticipated date of delivery set
forth in LANDLORD's offer, TENANT may terminate this Lease by giving 150 days'
prior written notice to LANDLORD within 90 days after the end of such 180-day
period, in which event neither party shall have any further obligations under
this Lease, except for LANDLORD's obligation to return the security deposit as
required herein and other obligations which expressly survive the termination or
expiration of this Lease. If TENANT does not exercise its option as to any
portion of the expansion option space within the period provided above or if
TENANT terminates its expansion option with respect to the Expansion Space
pursuant to Section 1 above, LANDLORD may offer such space to third parties for
any term desired by LANDLORD. If LANDLORD does not lease a portion of the
expansion option space (including the Expansion Space) not accepted by TENANT
within 6 months after the expiration of TENANT's period to exercise its option,
LANDLORD shall again offer such space to TENANT on the same terms and conditions
set forth above, except TENANT must exercise its option within 10 days after
LANDLORD's offer. LANDLORD shall also offer any portion of the expansion option
space
-28-
(including the Expansion Space) not accepted by TENANT which LANDLORD leases to
third parties when such space again becomes available on the same terms and
conditions set forth above, except TENANT must exercise its option within 10
days after LANDLORD's offer. Notwithstanding anything to the contrary contained
in this Section 36, the Base Rent for all of the Leased Premises will be
computed based on the Market Rate Rent, as defined in Section 38 below, if this
Lease remains in existence (other than by reason of an extension pursuant to
Section 37 below) after the end of the fourteenth Lease Year. If TENANT
exercises any expansion option, LANDLORD shall build out such space from its
then "as is" condition, at LANDLORD's expense, using the Tenant Improvement
Allowance set forth above. Any costs in excess of the Tenant Improvement
Allowance shall be for TENANT's account. Notwithstanding the foregoing, LANDLORD
agrees to perform any necessary Landlord's Work, as defined in Exhibit E, with
respect to any expansion option space at LANDLORD's sole expense, without
diminishing the Tenant Improvement Allowance established above for Tenant
Improvements.
37. EXTENSION OPTIONS
TENANT has two (2) extension options to extend the Lease term for five (5)
years each, if TENANT notifies LANDLORD in writing at least one hundred twenty
(120) days prior to the expiration of the Lease term, as the same may have been
previously extended. All extensions under this Section 37 are on an "as is"
basis. TENANT may not exercise its second extension option for the second
extension term if it has not exercised its first extension option for the first
extension term. If TENANT exercises any of its extension options, this Lease
will be in full force and effect during the Lease term, as so extended, subject
to all of the terms and conditions of this Lease, except that the annual Base
Rent will be the Market Rate Rent. Any exercise of any such option applies to
the entirety of the Leased Premises, and TENANT shall have no right to exercise
any such option as to only a part thereof. If TENANT exercises one of its
extension options pursuant to this Section 37 and LANDLORD thereafter offers
space to TENANT pursuant to Section 36 which TENANT accepts prior to what would
have been the expiration of the Lease term prior to TENANT's extension under
this Section 37, the extension pursuant to Section 36 shall apply and TENANT's
extension pursuant to this Section 37 shall be deemed rescinded, provided such
extension option pursuant to this Section 37 shall remain available at the end
of the Lease term, as so extended pursuant to Section 36.
38. MARKET RATE RENT
"Market Rate Rent" is hereby defined for all purposes of this Lease as the
annual base or net rent for the space in question as of the commencement of the
period in question, as determined by reference to comparable spaces in
comparable locations in southwest suburban Minneapolis, Minnesota, for renewing
tenants whose total leased space is similar to that of TENANT, and is understood
to be the
-29-
amount, including free rent, leasehold improvement allowances (taking into
account the value of TENANT's then existing leasehold improvements) and other
rent inducements for which a willing landlord would lease the space in question
to a willing and creditworthy tenant for the period in question, assuming the
same terms and conditions as contained in this Lease, except for the annual base
or net rent.
The Market Rate Rent shall be determined by agreement of LANDLORD and
TENANT and upon the failure of the parties to agree on the Market Rate Rent
within thirty (30) days after the date on which TENANT shall have given notice
exercising its option with respect to the space in question or the first date of
the fifteenth Lease Year (if the last sentence of Section 36 applies), it shall
be determined by three appraisers, selected as provided below, each of whom must
have at least five years experience in appraising fair rental values in
comparable buildings and knowledge of the rental real estate market in suburban
Minneapolis, Minnesota. Each party shall hire and name one disinterested,
independent M.A.I. appraiser and the two such appraisers shall pick a third.
Such appraisers shall be instructed to make such appraisal independently without
consulting each other and taking into account all relevant circumstances, and
thereafter, on the same day, all three appraisers shall submit appraisals to
LANDLORD and TENANT in writing. The appraisers are instructed to complete their
appraisals within 30 days of their appointment, and sooner if practicable. The
annual base or net rent for the period in question shall be the mean of (i) all
the appraisals in the event the highest is not more than 10% higher than the
lowest of such appraisals, or the mean of (ii) the two appraisals which are
closest in amount to each other in the event the highest is more than 10% higher
than the lowest. Upon the determination of the Market Rate Rent, the parties
shall execute an appropriate document evidencing such Market Rate Rent for the
space and period in question. Each party shall pay the costs of its own
appraiser. The cost of the third appraiser and all other costs incurred in
connection with the appraisal process shall be shared equally between LANDLORD
and TENANT.
39. TENANT'S RIGHT TO TERMINATE
INTENTIONALLY OMITTED
40. SELF MANAGEMENT
At such time as TENANT occupies 100% of the Building, TENANT may elect to
manage the Building itself on behalf of LANDLORD, in which event LANDLORD shall
be entitled to a management fee of only 1%.
-30-
41. BUILDING NAME
So long as TENANT is an occupant of the Building, the Building shall be
named the "Summit Medical" building. After Tenant has ceased to be an occupant
of the Building, LANDLORD agrees to immediately cease using the name "Summit
Medical" and to remove all signs identifying the Building by such name.
42. ASSUMPTION OF EXISTING LEASE OBLIGATIONS
LANDLORD agrees to assume TENANT's rent obligation under its two leases at
One Xxxxxxx Parkway (the "Xxxxxxx Leases," being the lease dated October 27,
1988, as amended from time to time thereafter, and the lease dated February 2,
1993, as amended from time to time thereafter), for the period beginning with
the Rent Commencement Date and ending April 30, 1997 (the "Assumption Period").
TENANT hereby warrants that it is not at present in default under the Xxxxxxx
Leases; that the present amount of gross rent (base rent and additional rent)
due under the Xxxxxxx Leases is $33,247.56 per month; that the Xxxxxxx Leases do
not provide for any increase in monthly base rent for any period between the
date hereof and April 30, 1997; and that the amount of additional rent is
scheduled to change as of January 1, 1997. Notwithstanding anything herein to
the contrary, LANDLORD is not assuming (a) TENANT's monthly obligation to pay
rent to the extent in excess of $33,247.56 per month, except for LANDLORD's pro
rata share of any additional rent billed after the end of calendar year 1996 for
calendar year 1996, plus any increase in additional rent in calendar year 1997
through April 30, 1997, and (b) any sum due under the Xxxxxxx Leases by reason
of TENANT's past, present or future default or TENANT's expansion of the space
beyond that covered by the Xxxxxxx Leases as of August 1, 1996. Furthermore, if
the landlord under the Xxxxxxx Leases (the "Xxxxxxx landlord") retroactively
adjusts additional rent, pursuant to the last paragraph of section 27B of the
Xxxxxxx Leases, LANDLORD's rights and obligations extend only to the credit or
debit attributable to the Assumption Period.
At LANDLORD's option, TENANT will assign the Xxxxxxx Leases to LANDLORD,
provided the Xxxxxxx landlord consents to the assignment, to the extent the
Xxxxxxx Leases require such consent, and provided TENANT consents to the terms
of such assignment, which consent shall not be unreasonably withheld. TENANT
will use its best efforts to obtain that consent and to do so in a timely
manner, and to cooperate with any efforts of LANDLORD to obtain that consent,
provided TENANT shall not be required to expend any monies or incur any
additional liabilities or obligations in connection therewith. In the event of
any such assignment, LANDLORD will assume TENANT's obligations, going forward,
from and after the effective date of the assignment, with respect to the Xxxxxxx
Leases, but will assume no liability for any damage occurring by reason of
TENANT's occupancy of those premises prior to that effective date.
-31-
Whether or not such an assignment occurs, LANDLORD will have the right to
negotiate with the Xxxxxxx landlord to cancel the Xxxxxxx Leases, effective
prior to April 30, 1997, and TENANT will cooperate fully with such efforts of
LANDLORD, provided TENANT shall not be required to expend any monies or incur
any additional liabilities or obligations in connection therewith. TENANT will
consent to any such proposed cancellation, provided that TENANT is relieved of
all obligations under the Xxxxxxx Leases except obligations (a) arising from
physical damage to the Xxxxxxx Leases premises occurring by reason of TENANT's
occupancy prior to the effective date, (b) arising from TENANT's failure to
vacate those premises, upon expiration, cancellation, or termination of the
Xxxxxxx Leases, in accordance with Section 7G of the Xxxxxxx Leases, and (c)
otherwise arising by reason of TENANT's occupancy prior to the effective date of
the cancellation, and provided further that TENANT is not required to pay any of
the cost of any inducement required by the Xxxxxxx landlord as a condition to
the Xxxxxxx landlord agreeing to such cancellation.
TENANT and not LANDLORD shall be entitled to the return of any security
deposit made by TENANT under the Xxxxxxx Leases at the expiration or earlier
termination of the Xxxxxxx Leases.
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed the day and year first above written.
LANDLORD TENANT
RED CIRCLE L.L.P. SUMMIT MEDICAL SYSTEMS, INC.
By_________________________ By_________________________
___________________________ ___________________________
(Please Print) (Please Print)
Its Authorized Agent Its________________________
(Please Print)
Date_______________________ Date_______________________
-32-
EXHIBIT A
[Building Floor Plan]
EXHIBIT C
Legal Description
Lots 7 and 8, Block 1; and That part of Xxx 0, Xxxxx 0, which lies Westerly of
the following described line:
Beginning at a point on the South line of said Lot 6, distant 123.00 feet
Westerly from the Southeast corner of said Lot 6; thence North 1 degree, 09
minutes, 15 seconds East, a distance of 391.08 feet to a point on the North
line of said Lot 6, distant 127.43 feet Westerly from the Northeast corner
of said Lot 6, and said line there terminating, Opus 2 Eighth Addition,
according to the plat thereof on file or of record in the office of the
Registrar of Titles in and for said County.
Together with the right of the Owner of all of Xxxx 0 xxx 0, Xxxxx 0, Xxxx 0
Xxxxxx Addition to an easement for road purposes as provided in Document No.
1086026, Files of the Registrar of Titles.
EXHIBIT "E"
CONSTRUCTION
------------
LANDLORD agrees to deliver the Leased Premises to TENANT on a so-
called "turn key" basis, as described in this Exhibit E. LANDLORD will provide,
construct and/or install (i) the site improvements for and other improvements to
the Building, (ii) the systems to serve the Leased Premises, and (iii) Tenant
Improvements and other TENANT related items, all in accordance with final plans
and specifications prepared by LANDLORD's architect (Design Partnership or other
architect selected by LANDLORD) and reviewed and approved by TENANT, as
described below.
LANDLORD agrees to perform all of Landlord's Work as provided in the
final plans and specifications, at LANDLORD's sole cost and expense, which shall
not be included in computing TENANT's utilization of the Tenant Improvement
Allowance. "Landlord's Work" shall mean all work required to the base Building,
Building systems and the grounds, including, without limitation, resurfacing the
parking lot, certain new sidewalks, new windows in the altered portions of the
Building as shown on the attached Exhibit "I", any necessary roof repairs, any
necessary structural repairs, certain landscaping, signage to the extent of
LANDLORD's obligation under this Lease, HVAC replacement or repair (as
necessary), HVAC cooling tower replacement, HVAC thermostats and interior system
repairs; retrofitting HVAC to an open plan, building standard lighting, ceiling
grids and ceiling tiles for areas designated for office use currently without
ceilings; one new lower level entry, new foyer and skylight on the lower level,
sheetrock (taped, sanded and ready for paint) on all exposed cinder block in the
Leased Premises (excluding option storage areas or fire stairwells),
retrofitting bathrooms, access control at freight elevator and stair and
preparation of the plans and specifications (including all work of LANDLORD's
architect for the preparation of preliminary plans and specifications, but not
the work of TENANT's architect). "Tenant Improvements" shall mean the work
required to finish the interior of the Leased Premises for TENANT's use and
occupancy. Tenant Improvements shall be in addition to Landlord's Work.
LANDLORD's architect will prepare and submit to TENANT a preliminary
floor plan for the Building. Based on the preliminary floor plan, TENANT's
architect (Xxxxxxx Xxxxxxxxxxx or other architect selected by Tenant) will
prepare and submit to LANDLORD a layout for the Leased Premises. LANDLORD's
architect will prepare preliminary plans and specifications inclusive of all
items required by the layout. TENANT and TENANT's architect will review the
preliminary plans and specifications for conformance to the layout. If TENANT or
TENANT's architect requires any changes to the preliminary plans and
specifications, LANDLORD and LANDLORD's architect will work with TENANT and
TENANT's architect until TENANT approves a set of preliminary plans and
specifications.
LANDLORD agrees to provide to TENANT a schedule of values for the
various components of the work, including copies of actual bids for the
mechanical and electrical work. If TENANT is not satisfied with the schedule of
values or the mechanical and electrical bids, LANDLORD will obtain unit pricing
bids for all items, to refine the estimates, for TENANT's approval. If TENANT is
still not satisfied with the pricing, TENANT may bid Tenant Improvements itself
and/or work with LANDLORD to amend the preliminary plans and specifications to
reduce costs. LANDLORD's pricing may include an allowance for overhead and
profit of 10%, which shall be shown as a separate line item. LANDLORD agrees to
pay for Tenant Improvements up to a maximum of $865,667 ($17.00 per square foot
for office and $2.00 per square foot for storage) (the "Tenant Improvement
Allowance"). Once TENANT is satisfied with the pricing for Tenant Improvements
and the preliminary plans and specifications for all of the work, the approved
plans and specifications will become the final plans and specifications and
LANDLORD and TENANT will sign them, as provided below. LANDLORD and TENANT agree
to sign at least two copies of a complete set of both the final plans and the
final specifications and each party will be given at least one complete signed
copy thereof. The plans and specifications will not be deemed final and approved
by LANDLORD and TENANT until LANDLORD and TENANT have signed at least two
copies, as provided above. If the pricing approved by TENANT for Tenant
Improvements is in excess of the Tenant Improvement Allowance, TENANT shall pay
to LANDLORD an amount equal to such excess within fifteen (15) days after being
invoiced therefor. If the pricing approved by TENANT for Tenant Improvements is
less than the Tenant Improvement Allowance, then TENANT's annual rent obligation
shall be reduced by an amount equal to the unused Tenant Improvement Allowance
multiplied by 14% (Example: if $100,000 of the Tenant Improvement Allowance is
not used, TENANT's annual rent would be reduced by $14,000, or $1,166.67 per
month). After TENANT has approved the pricing for Tenant Improvements, TENANT's
usage of the Tenant Improvement Allowance will be deemed fixed based on such
pricing and LANDLORD will complete the work on a "turn key" basis, regardless of
the actual costs. This Lease is contingent upon LANDLORD and TENANT agreeing on
the pricing and the final plans and specifications on or before September 30,
1996. If LANDLORD and TENANT have not agreed upon the pricing and the final
plans and specifications on or before September 30, 1996 at 12:00 noon, which
agreements will be evidenced by a letter agreement executed by LANDLORD and
TENANT fixing TENANT's utilization of the Tenant Improvement Allowance and
detailing the impact on TENANT's rental obligation, and LANDLORD and TENANT
signing the final plans and specifications as required above, this Lease shall
be automatically null and void, and neither party shall have any rights or
obligations hereunder. Notwithstanding any provision in the Lease to the
contrary, if there is unused Tenant Improvement Allowance, the parties will
calculate the actual Tenant Improvement Allowance for the office space (for
which purpose they will assume LANDLORD spent the full $2 per square foot for
storage space), per square foot of office space; that figure will replace $17
per square foot where used elsewhere in the Lease; and the Base Rent rental
rates will
reflect the amounts shown in Section 2 of the Lease, as reduced by the rent
reduction to which TENANT is entitled, as provided for earlier in this
provision. Such per square foot rent reduction shall also apply to the Expansion
Space and any expansion option space added pursuant to Section 36.
LANDLORD will perform all of the work required by the final plans and
specifications in a good and worker-like manner, using materials specified by
TENANT, in accordance with all applicable building and zoning codes and
regulations and the Laws. LANDLORD warrants that the heating, ventilating and
air conditioning unit(s) and distribution system for the Leased Premises will be
professionally engineered and adequately sized to provide comfortable heating,
ventilating and cooling year-round.
LANDLORD also agrees to pay to TENANT, upon TENANT taking occupancy of
the Leased Premises, the additional sum of $5,000 for TENANT's construction
consultant. LANDLORD hereby authorizes TENANT to have TENANT's construction
consultant oversee all construction pricing to ensure that such pricing is
accurate and competitive and to oversee construction to ensure that all work is
constructed in accordance with the final plans and specifications. In addition
to the Tenant Improvement Allowance, LANDLORD agrees to pay TENANT, upon TENANT
taking occupancy of the Leased Premises, the additional sum of $86,665 to
reimburse TENANT for other "soft costs" associated with the execution of this
Lease, including, without limitation, any brokerage fees not the obligation of
LANDLORD, moving expenses and outside design services (including TENANT's
architect).
TENANT will be provided reasonable access to the Leased Premises
during construction and the right to install any items not to be installed by
LANDLORD. LANDLORD agrees not to unreasonably withhold its consent to
reasonable changes requested by TENANT during construction, providing said
changes do not result in net additional expense to LANDLORD or increase the time
required for LANDLORD to perform its construction responsibilities. If any
TENANT-proposed changes result in net additional expense to LANDLORD, LANDLORD
will not withhold its consent to any such changes if TENANT agrees to reimburse
LANDLORD for the cost of such net additional expense. If any TENANT-proposed
changes increase the time required for LANDLORD to perform its construction
responsibilities by an amount not to exceed 45 days, LANDLORD will not withhold
its consent to any such changes if TENANT agrees to postpone the penalty that
would otherwise be imposed on November 22, 1996 at 5:00 p.m. one day for each
day of delay caused by TENANT's proposed changes. LANDLORD will clean the
Leased Premises "mop clean" before turning over possession to TENANT, with all
window surfaces washed (inside and out).
EXHIBIT "G"
MATERIAL USE RIDER
TENANT, its employees and/or invitees will not, without LANDLORD's prior
written consent, bring onto the Leased Premises, common area, or allow thereon,
any "hazardous substance" within the meaning of any federal or state statute,
"release", within the meaning of the Minnesota Environmental Response and
Liability Act, or any successor statute, thereon or within 200 feet thereof any
"hazardous substance" or natural gas or petroleum product, or refuel any vehicle
thereon or within 200 feet thereof.
LANDLORD may withhold or condition consent as it sees fit, in its absolute
discretion. Notwithstanding any termination of the Lease, TENANT will indemnify
and hold LANDLORD harmless from any cost, expense, or damage resulting from a
violation of this paragraph, and will, upon request from LANDLORD promptly
remove, at its sole expense, any material so brought or released in violation of
this paragraph. LANDLORD may, from time to time inspect the Leased Premises to
determine compliance with this paragraph, and require TENANT to certify to such
compliance. A violation of this paragraph is a breach for which LANDLORD need
not provide notice or a period to cure, and any contrary provision in this Lease
is hereby modified to so provide.
Notwithstanding the foregoing, TENANT may use immaterial amounts of
hazardous substances normally used by office tenants (e.g., white out, toner,
janitorial supplies) if used in compliance with all applicable laws and
regulations.
EACH ITEM ON THE FOLLOWING CHECKLIST MUST BE ANSWERED.
1. Will any chemicals be used or stored on the premises?
YES NO If yes, list all chemicals that are to be used or stored in the
--
premises (except as set forth in the third grammatical paragraph above)
-----------------------------------------------------------------------
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
2. Will any materials be used or stored on the premises that appear on any
local, state or federal list of "HAZARDOUS SUBSTANCES"? YES NO
--
If yes, list all items in the space provided. (except as set forth in the third
---------------------------------
grammatical paragraph above
--------------------------------------------------------------------------------
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
3. Do you have permits to handle, use or store "HAZARDOUS SUBSTANCES?"
YES NO If yes, attach copies of these permits to this exhibit.
--
4. Will any flammables be used or stored on premises? YES NO
--
If yes, list type, quantities and how the flammable will be stored._____________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
I certify that the above information is true, complete and correct.
Further, I understand and agree that no substance other than those listed above
and approved by LANDLORD may be used or stored on the Leased Premises and that
any additions to the above list must be approved in writing by LANDLORD or its
authorized agent.
TENANT:
SUMMIT MEDICAL SYSTEMS, INC.
By_________________________
___________________________
(Please Print)
Its_________________________
(Please Print)
Date_______________________
EXHIBIT "H"
1. Exercise Room
2. New Exterior Windows (south side expansion)
13. New stairway
EXHIBIT I
[Plan of New Windows]
