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Sample Business ContractsHome: Sample Business Contracts:
LEASE AGREEMENT
between
RYAN 900, LLC, a Minnesota limited liability company,
as "LANDLORD"
and
RETEK INC., a Delaware corporation,
as "TENANT"
<PAGE> 2
TABLE OF CONTENTS
SECTION PAGE
------- ----
1. PREMISES................................................................. 6
2. TERM; POSSESSION......................................................... 8
3. RENT..................................................................... 12
4. SECURITY DEPOSIT......................................................... 18
5. USE AND COMPLIANCE WITH LAWS............................................. 19
6. TENANT IMPROVEMENTS & ALTERATIONS........................................ 23
7. MAINTENANCE AND REPAIRS.................................................. 25
8. UTILITIES AND SERVICES................................................... 26
9. EXCULPATION AND INDEMNIFICATION.......................................... 28
10. INSURANCE............................................................... 29
11. DAMAGE OR DESTRUCTION................................................... 31
12. CONDEMNATION............................................................ 33
13. ASSIGNMENT AND SUBLETTING............................................... 34
14. DEFAULT AND REMEDIES.................................................... 36
15. LATE CHARGE AND INTEREST................................................ 39
16. WAIVER.................................................................. 39
17. ENTRY, INSPECTION AND CLOSURE........................................... 39
18. SURRENDER AND HOLDING OVER.............................................. 40
19. ENCUMBRANCES............................................................ 41
20. ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS.......................... 42
21. NOTICES................................................................. 42
22. ATTORNEYS' FEES......................................................... 43
23. QUIET POSSESSION........................................................ 43
24. SECURITY MEASURES....................................................... 43
25. FORCE MAJEURE........................................................... 44
26. RULES AND REGULATIONS................................................... 44
27. LANDLORD'S LIABILITY.................................................... 44
28. CONSENTS AND APPROVALS.................................................. 45
29. WAIVER OF RIGHT TO JURY TRIAL........................................... 45
30. BROKERS................................................................. 45
31. ENTIRE AGREEMENT........................................................ 45
32. MISCELLANEOUS........................................................... 46
33. AUTHORITY............................................................... 46
34. LANDLORD'S ASSUMPTION OF TENANT'S LEASE................................. 45
35. PARKING................................................................. 46
36. PROJECT/BUILDING NAME................................................... 46
37. BUILDING................................................................ 47
38. CONTINGENCY FOR CITY ACTION............................................ 47
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38. CONTINGENCY FOR TEMPORARY SPACE......................................... 48
2
<PAGE> 4
BASIC LEASE INFORMATION
LEASE DATE: The date of this Lease is November 8, 1999
LANDLORD: Ryan 900, LLC, a Minnesota limited liability company
TENANT: Retek Inc., a Delaware corporation
BUILDING: The office building, containing 12 floors of rentable space above a 2-story
Target department store and a 3-level underground public parking garage, together
with a street level lobby area adjoining South 10th Street and loading dock, to
be developed by Landlord on the block bounded by Nicollet Mall, LaSalle Avenue,
South 9th Street and South 10th Street in Minneapolis, Minnesota, (the block is
referred to herein as the project) and to be known as Retek Plaza or Retek Tower
(as more fully explained in Section 36), and as currently depicted on the
Schematic Plans prepared by Ellerbe Beckett, dated October 15, 1999.
RENTABLE AREA OF BUILDING: Approximately 487,607 square feet.
PREMISES: The Premises will be delivered to Tenant in two phases. As of the Commencement
Date, the Premises will consist of floors 12, 11 and 10 of the Building. Each
floor consists of approximately 43,555 square feet of Rentable Area, for a total
of approximately 130,665 square feet of Rentable Area.
As of the later of a) the first day of the seventh (7th) full month of the Term
or b) April 1, 2002, the Premises will consist of floors 12, 11, 10, 9 and 8 of
the Building. Each floor consists of approximately 43,555 square feet of
Rentable Area, for a total of approximately 217,775 square feet of Rentable Area.
Landlord may, in its sole discretion, add to or subtract from the number of floors
to be built, provided, however, that the Premises shall always be the uppermost
floors of the Building.
TERM: 150 full calendar months (plus any partial month at the beginning of the Term)
SCHEDULED COMMENCEMENT DATE: October 1, 2001
EXPIRATION DATE: The last day of the 150th full calendar month in the Term
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BASE RENT: Months 1 - 6: $16.50 per rentable square foot per year
Months 7 - 60: $17.93 per rentable square foot per year
Months 61 - 120: $18.93 per rentable square foot per year
Months 121 - 150: $19.91 per rentable square foot per year
TENANT'S SHARE: As of the Commencement Date, Tenant's Share, as defined in
Section 3.6(a)(3), is estimated to be 26.8%; provided, however,
that Tenant's Share as of the Commencement Date is subject to
verification and adjustment as set forth in Section 1.
SECURITY DEPOSIT: $7,500,000.00
LANDLORD'S ADDRESS FOR PAYMENT OF
RENT: c/o Ryan Properties, Inc.
900 Second Avenue South, Suite 700
Minneapolis MN 55402
BUSINESS HOURS: 7:00 AM to 7:00 PM Monday through Friday
8:00 AM to 1:00 PM Saturday, holidays excepted
LANDLORD'S ADDRESS
FOR NOTICES: c/o Ryan Properties, Inc.
900 Second Avenue South, Suite 700
Minneapolis MN 55402
TENANT'S ADDRESS
FOR NOTICES: Prior to the Commencement Date:
Retek Inc.
Midwest Plaza
801 Nicollet Mall
Minneapolis MN 55402
Attn: Gregory A. Effertz
Following the Commencement Date:
The address of the Premises, when determined
Attn: Gregory A. Effertz
BROKER(S): CB Richard Ellis, Inc.
PROPERTY MANAGER: Ryan Properties, Inc.
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Exhibits:
--------
Exhibit A: Premises Floor Plans (Preliminary)
Exhibit B: Construction Rider
Exhibit C: Building Rules
Exhibit D: Scope Document
Exhibit E: Base Building/Tenant Improvement Allocations
Exhibit F: Preliminary Building Elevation
Exhibit G: Janitorial Services
The Basic Lease Information set forth above is part of the Lease. In
the event of any conflict between any provision in the Basic Lease Information
and the Lease, the Lease shall control.
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<PAGE> 7
THIS LEASE is made as of the Lease Date set forth in the Basic Lease
Information, by and between the Landlord identified in the Basic Lease
Information ("LANDLORD"), and the Tenant identified in the Basic Lease
Information ("TENANT"). Landlord and Tenant hereby agree as follows:
1. PREMISES.
1.1 Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, upon the terms and subject to the conditions of this Lease, the space
identified in the Basic Lease Information as the Premises (the "PREMISES"), in
the Building described in the Basic Lease Information (the "BUILDING"). Floor
Plans showing the approximate configuration and location of the Premises are
attached hereto as Exhibit A. The Rentable Area of the Premises and the Building
will be calculated in accordance with the American National Standard Method of
Measuring Floor Area in Office Buildings, ANSI/BOMA Z65.1-1996. Prior to the
Commencement Date, Landlord's architect who designed the Building ("ARCHITECT")
shall certify to Landlord and Tenant in writing (the "RENTABLE AREA
CERTIFICATE") the number of square feet of Rentable Area of the Premises and the
Building. Subject to any temporary closures permitted by Section 17 - Entry,
Inspection and Closure, Tenant and its agents, employees and invitees shall have
the nonexclusive right with others designated by Landlord to the free use of the
common areas in the Building, as such common areas are so designated from time
to time by Landlord, for the common areas intended and normal use.
1.2 Expansion Options. Subject to the terms and conditions set forth in
this Section 1.2, Landlord grants to Tenant options to add space ("EXPANSION
SPACE") to the Premises as follows:
(a) The maximum Expansion Space shall be three floors of the
Building, containing approximately 130,665 square feet of Rentable Area,
contiguous to the then existing Premises (except as hereinafter provided), to be
leased at Tenant's option in two options (collectively, the "EXPANSION
OPTIONS"). The first option ("FIRST EXPANSION OPTION") shall be, at Tenant's
election, with respect to either one floor of approximately 43,555 square feet
of Rentable Area or two floors each containing approximately 43,555 square feet
of Rentable Area in the Building ("FIRST EXPANSION SPACE"). The second option
("SECOND EXPANSION OPTION") shall be with respect to one floor of approximately
43,555 square feet of Rentable Area in the Building ("SECOND EXPANSION SPACE").
If Tenant does not exercise the First Expansion Option, the Second Expansion
Option Space need not be contiguous to the Premises.
(b) Tenant shall have the right to exercise its Expansion
Options as follows: Tenant shall have the right to exercise the First Expansion
Option no later than December 31, 2001. Tenant shall have the right to exercise
the Second Expansion Option no later than the last day of the fifty fourth
(54th) full month of the Term which, based upon the Scheduled Commencement Date,
would be March 31, 2006. If Tenant shall fail to exercise any Expansion Option
by the dates provided, it shall be deemed to have waived the right to exercise
the Expansion Option in question. Each Expansion Option shall be exercised by
Tenant giving written notice to Landlord of its
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election, and, as to the First Expansion Option, Tenant's determination as to
taking one or two floors.
(c) Unless accelerated as provided herein, Landlord shall
deliver the First Expansion Space to Tenant, and such space shall become a part
of the Premises, on the later of January 1, 2003, and the date Landlord delivers
the First Expansion Space to Tenant with Landlord's Work Substantially Complete.
The First Expansion Space shall be delivered to Tenant in a manner consistent
with Section 2.1 as to Landlord's construction obligations set forth in the
Construction Rider defined in Section 2.1 ("LANDLORD'S WORK"), Substantial
Completion and conditions precedent to delivery to Tenant, and with the same
Tenant Improvement Allowance provided to Tenant. Tenant shall provide Final
Tenant Improvement Plans to Landlord for the First Expansion Space no later than
August 1, 2002. Landlord shall deliver the Second Expansion Space to Tenant on
or before the first day of the 85th full month of the Term which, based upon the
Scheduled Commencement Date, would be October 1, 2008. The Second Expansion
Space shall be delivered to Tenant in its "As-Is" condition, but constructed to
at least the base building condition as specified in Exhibit D & E. If the
Second Expansion Space has not been constructed beyond the base Building
condition set forth in Exhibits D & E, the determination of Market Rate will
reflect the unimproved condition of the space. The space leased pursuant to the
Second Expansion Option shall be added to the Premises on the date of delivery
thereof by Landlord, but Tenant's obligation to pay Rent with respect thereto
shall not commence until the earlier of (i) the date which is four (4) months
after such delivery date, or (ii) the date on which Tenant commences using such
space for business purposes.
(d) Within thirty (30) days of receiving Tenant's notice
exercising the Second Expansion Option, Landlord shall give notice of Landlord's
good faith estimate of the Market Rate for the Expansion Space. The Market Rate
set forth in such notice by Landlord shall be controlling unless within thirty
(30) days after such notice Tenant shall notify Landlord that it objects to
Landlord's estimate of Market Rate, in which case the Market Rate shall be
determined in accordance with Section 3.5 of this Lease. If the Market Rate has
not been determined prior to the date when monthly Rent on the Second Expansion
Space commences, then Tenant shall pay monthly Rent based upon Landlord's
estimates until the monthly Rent has been determined at which time Landlord
shall pay to Tenant or Tenant shall pay to Landlord, as appropriate, the amount
equal to the overpayment or underpayment of Rent for such Second Expansion
Space.
(e) If at the time of exercise or at any time thereafter until
the commencement of the Term as to the Expansion Space, an Event of Default
exists under this Lease, Tenant will have no right to exercise its option as to
the relevant Expansion Space and/or to lease such Expansion Space.
(f) Within ten (10) days after request by Landlord or Tenant,
the parties will execute an amendment to this Lease, in the form prepared by
Landlord, adding to the Premises any Expansion Space which Tenant has elected to
lease, as of the date of commencement of the Term with respect to such Expansion
Space, and otherwise upon the terms and conditions of this Lease.
Tenant may elect to accelerate the Scheduled Commencement Date for the
fourth and fifth floors of the Premises and/or the First Expansion Space. Upon
written notice of Tenant's intent to
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accelerate the Commencement Date and the space to which such acceleration
applies, Landlord shall make a commercially reasonable effort to deliver such
space in the condition provided for in this Lease as of the date specified by
Tenant, but Landlord, acting diligently, shall have no liability for failing to
so deliver.
If Tenant exercises its occupancy acceleration right and Landlord
delivers the fourth and fifth floors of the Premises (currently scheduled for
delivery/commencement on April 1, 2002) and/or the First Expansion Space to
Tenant prior to their respective scheduled delivery/ commencement dates under
the Lease and in the condition required under this Lease, Tenant shall receive a
credit ("Rent Credit") against Rent due under this Lease for each month the
respective delivery dates are accelerated. The Rent Credit will be applied
against the first installments of Rent coming due after the respective
accelerated delivery/commencement dates. If the respective scheduled
delivery/commencement dates are accelerated for any partial month, the Rent
Credit will be prorated for such partial month on the basis of the total number
of days in that particular month. The Rent Credit will be an amount equal to
$1.67 multiplied by the number of rentable square feet of space, delivery of
which is accelerated, multiplied by the number of months (or partial months) the
respective scheduled delivery/commencement dates are accelerated.
For example, if Tenant exercises its acceleration right with respect to
two floors of the First Expansion Space (currently scheduled for delivery on
January 1, 2003) and Landlord delivers the First Expansion Space to Tenant on
October 15, 2002 (with all of the delivery conditions of Section 2.1 satisfied
such that the commencement date for the First Expansion Space is October 15,
2002), Tenant will receive a Rent Credit equal to $361,356.67, calculated as
follows: $1.67 multiplied by 87,110 (2 floors @ 43,555 RSF each) multiplied by
2.484 (the partial month happens to be a month with 31 days, and 15 divided by
31 equals 0.484 when rounded to 3 decimal points).
With respect to the fourth and fifth floors of the Premises scheduled
for delivery on April 1, 2002, only one of the floors has a carrying charge
built into the Base Rent for such space, and the carrying charge is calculated
only for a period of 3 months. Therefore, the Rent Credit for the fourth and
fifth floors is limited to one floor for a maximum of 3 months. Accordingly, by
way of example, if Tenant exercises its occupancy acceleration right with
respect to the fourth and fifth floors of the Premises (currently scheduled for
delivery/commencement on April 1, 2002), and Landlord delivers the fourth and
fifth floors of the Premises to Tenant on October 15, 2001 (with all of the
delivery conditions of Section 2.1 satisfied such that the commencement date for
the fourth and fifth floors of the Premises is October 15, 2001), Tenant will
receive a Rent Credit equal to $218,210.55, calculated as follows: $1.67
multiplied by 43,555 (the Rent Credit is only applicable to one floor)
multiplied by 3 (the maximum number of months Tenant is entitled to a Rent
Credit for this space) . If Tenant exercises the foregoing right with respect to
only one floor of the Premises scheduled for delivery/commencement on April 1,
2002, the Rent Credit will be applied to such acceleration.
2. TERM; POSSESSION.
2.1 The term of this Lease (the "TERM") shall commence on the
Commencement Date as described below and, unless sooner terminated, shall expire
on the Expiration Date set forth in the Basic Lease Information (the "EXPIRATION
DATE"). The "COMMENCEMENT DATE" shall be the
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earlier of (a) the date on which Landlord tenders possession of floors 10, 11 &
12 of the Premises to Tenant, with all of Landlord's construction obligations
"SUBSTANTIALLY COMPLETED" as provided in the Construction Rider attached as
Exhibit B (the "CONSTRUCTION RIDER"), provided, however, that Tenant shall have
been permitted access to the Premises no less than thirty days prior to the
Commencement Date for the purpose of installing furniture, fixtures and
equipment, and in no event will the Commencement Date occur until Tenant's 30
day early access period has expired, or in the event of any "TENANT DELAY," as
defined in the Construction Rider, the date on which Landlord could have done so
had there been no such Tenant Delay; or (b) the date upon which Tenant, with
Landlord's written permission, actually occupies and conducts business in any
portion of the Premises. The parties anticipate that the Commencement Date will
occur on or about the Scheduled Commencement Date set forth in the Basic Lease
Information (the "SCHEDULED COMMENCEMENT DATE"); provided, however, that, except
as otherwise provided below, Landlord shall not be liable for any claims,
damages or liabilities if the Premises are not ready for occupancy by the
Scheduled Commencement Date. When the Commencement Date has been established,
Landlord and Tenant shall at the request of either party confirm the
Commencement Date and Expiration Date in writing.
Prior to the Commencement Date, Landlord must:
(a) give Tenant at least thirty (30) days prior written notice
of the date on which Landlord expects to permit Tenant to access and enter the
Premises to install furniture, fixtures and equipment;
(b) provide Tenant access to the Premises at least 30 days
prior to the Commencement Date for the purpose of installing furniture, fixtures
and equipment;
(c) substantially complete the Building and the Landlord's
Work in accordance with the Construction Rider and the Final Plans;
(d) deliver to Tenant the Rentable Area Certificate;
(e) deliver to Tenant the Subordination, Non-Disturbance and
Attornment Agreement described in Section 19 below, executed by Landlord and its
lenders or ground lessor.
Notwithstanding the foregoing, if the Premises are Substantially
Completed prior to October 1, 2001, Tenant will not be obligated to accept
delivery of the Premises until October 1, 2001, unless Tenant otherwise agrees.
2.2 Failure to Deliver. Landlord will have a five (5) day grace
period to deliver the Premises (for both delivery dates), the First Expansion
Space and the Second Expansion Space beyond the delivery dates specified in this
Lease. For each day, beginning on the sixth day after the Scheduled Commencement
Date and any other applicable delivery dates up to, but not including, the
thirtieth (30th) day after the Scheduled Commencement Date and any other
applicable delivery dates, that Landlord is unable to deliver possession of the
Premises to Tenant with Landlord's Work Substantially Completed for any reason
other than events excused by Section 24 - Force Majuere or Tenant Delays
(collectively "Excused Delays"), Tenant's obligation to pay Base Rent shall be
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delayed one (1) day. For each day from and beyond the thirtieth (30th) day, that
Landlord is unable to deliver possession of the Premises to Tenant with the
Landlord's Work Substantially Completed for any reason other than Excused
Delays, Tenant's obligation to pay Base Rent shall be delayed two (2) days.
Except for Excused Delays, if Landlord is unable to deliver possession
of the Premises with the Landlord's Work Substantially Completed on or before
March 31, 2002, then Tenant shall have the right to terminate this Lease by
giving written notice of termination to Landlord at any time after such date,
but prior to the time Landlord has delivered to Tenant possession of the
Premises with the Landlord's Work Substantially Completed, and upon such
termination all money paid to Landlord by Tenant shall be immediately returned
to Tenant.
Except for Tenant Delays, if Landlord is unable to deliver possession
of the Premises with the Landlord's Work Substantially Completed on or before
September 30, 2002, then Tenant shall have the right to terminate this Lease by
giving written notice of termination to Landlord at any time after such date,
but prior to the time Landlord has delivered to Tenant possession of the
Premises with the Landlord's Work Substantially Completed, and upon such
termination all money paid to Landlord by Tenant shall be immediately returned
to Tenant.
2.3 Extensions of Term. Landlord grants to Tenant options to extend the
Term of this Lease for two (2) additional periods of five (5) years each
("EXTENSION TERMS"), subject to and upon the following conditions:
(a) Each Extension Term will commence as of the expiration of
the then current Term of this Lease, as the Term may have been extended.
(b) Tenant will give written notice of exercise to Landlord
not less than nine (9) months prior to the commencement of the pertinent
Extension Term, time being of the essence.
(c) Each Extension Term will be upon all of the terms and
conditions of this Lease, except that Base Rent will be equal to the greater of
1) $18.50 per square foot of Rentable Area and 2) the Market Rate for such
Extension Term. If Landlord and Tenant cannot agree upon the Market Rate for any
Extension Term, the determination of the Market Rate will be made in accordance
with the terms of Section 3.5.
(d) No Event of Default shall be in existence at either the
time of exercise or at any time prior to commencement of the Extension Term.
(e) If Tenant fails duly and timely to exercise any extension
option under this Section 2.3, all succeeding extension options will
automatically terminate.
2.4 Right of First Refusal. In addition to the rights and options
granted to Tenant under Section 1.2 of this Lease, Tenant shall have a
continuing right of first refusal ("Right of First Refusal") on all space other
than the Premises in the Building, whether previously occupied or not. The Right
of First Refusal shall be on the terms and conditions set forth herein. Landlord
represents that it has not entered, and will not enter, into a lease with any
other tenant for space
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in the Building with option rights superior to Tenant's Expansion Options and
Rights of First Refusal provided herein, nor otherwise grant any third party any
option rights to space in the Building which are prior to Tenant's rights
herein.
Landlord shall endeavor to inform Tenant in writing of any discussions
with prospective tenants that Landlord believes may lead to a bona fide offer to
lease any space in the Building. Landlord's failure to so inform Tenant shall
not constitute an Event of Default by Landlord.
(a) If, at any time during the Term, including any extensions
thereof, Landlord shall receive a bona fide written offer (the "Offer") from any
third party to lease any space in the Building that Landlord is willing to
accept, Landlord shall give notice to Tenant of its intent to enter into a lease
for such space and Tenant shall have a right of first refusal ("First Refusal
Right") with respect to such space ("Refusal Space"). The notice shall include a
copy of the Offer and shall, if not already disclosed in the Offer, specify: (i)
the location and Net Rentable Area of the Refusal Space which Landlord intends
to lease; (ii) the date on which the Refusal Space shall be available for
occupancy; (iii) the Base Rent per square foot of Net Rentable Area which
Landlord intends to charge for the Refusal Space, including all fixed and/or
indexed adjustments to said Base Rent; (iv) the proposed lease term for the
Refusal Space; and (v) all other terms which Landlord is willing to accept with
respect to the Refusal Space including any tenant improvement allowance.
(b) Tenant shall exercise its Right of First Refusal by giving
written notice thereof to Landlord within ten (10) business days after its
receipt of Landlord's notice. If the commencement date contained in the Offer is
on or before the last day of the twenty-fourth (24th) full month of the Term,
Tenant shall lease the Refusal Space on the same terms and conditions as are
contained in this Lease with respect to the initial Premises.
If the commencement date contained in the Offer is after the last day
of the twenty fourth (24th) full month of the Term, Tenant shall lease the
Refusal Space on the terms specified in the Offer. If Tenant shall exercise its
Right of First Refusal, then Landlord shall within ten (10) business days
deliver to Tenant a lease ("Refusal Lease") of the Refusal Space. If at least
five (5) years remain in the Term, (a) the term of such Refusal Lease shall
expire upon the Expiration Date of this Lease, and b) any tenant improvement
allowance or other allowance set forth in the Offer shall be prorated by
multiplying such allowance by a fraction, the numerator of which is the number
of calendar months remaining in the initial Term and the denominator of which is
the number of calendar months in the term set forth in the Offer. If less than
five (5) years remain in the Term, the term of the Refusal Lease and the tenant
improvement allowance (if any) shall be as provided in the Offer.
(c) Should Tenant fail to give notice under subparagraph (b)
above within the time provided, or if Tenant shall fail to execute and deliver
the Refusal Lease to Landlord within ten (10) business days after delivery to
Tenant of a Refusal Lease which reflects the agreed upon terms, then in either
event, Landlord shall be free to lease such space to a third party in accordance
with the terms of the Offer; provided, however, if the Landlord shall propose to
lease the space on terms more favorable to a third party than disclosed to
Tenant in the Offer, then Landlord shall give an additional notice to Tenant of
the revised terms and Tenant shall have the
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right to lease the space in accordance with the terms of the revised notice if
Tenant shall give notice exercising such right within five (5) business days
after receipt of such second notice. If Tenant shall give such notice, then
Landlord shall within ten (10) business days deliver to Tenant a Refusal Lease
having the terms specified in the revised notice and otherwise consistent with
the terms of this Lease and Tenant shall execute and deliver such Refusal Lease
within ten (10) business days after Landlord's delivery of a Refusal Lease which
reflects the agreed upon terms.
(d) Tenant's Right of First Refusal shall be reinstated as to
any space in the Building leased to a third party, effective as of the
termination of such thirty party lease.
3. RENT.
3.1 Base Rent. Tenant agrees to pay to Landlord the Base Rent for the
initial Premises set forth in the Basic Lease Information, without prior notice
or demand, in equal monthly installments on the first day of each and every
calendar month during the Term, except that Base Rent for the first full
calendar month in which Base Rent is payable shall be paid upon Tenant's
execution of this Lease and Base Rent for any partial month at the beginning of
the Term shall be paid on the Commencement Date. Base Rent for any partial month
at the beginning of the Term shall be prorated based on the actual number of
days in the month.
Tenant's obligation to pay Base Rent applicable to floors 8 and 9 shall
not begin prior to the later of a) delivery of floors 8 and 9 in the condition
provided for in Section 2.1 and b) April 1, 2002.
If the Basic Lease Information provides for any change in Base Rent by
reference to years or months (without specifying particular dates), the change
will take effect on the applicable annual or monthly anniversary of the
Commencement Date.
3.2 Base Rent: First Expansion Option Space. Tenant agrees to pay to
Landlord Base Rent for the First Expansion Option Space as follows:
(a) Commencement Date through 60th month of the Term: $16.50
per rentable square foot per year.
(b) Months 61 through 120: $17.50 per rentable square foot per
year
(c) Months 121 through 150: $18.50 per rentable square foot
per year
3.3 Base Rent: Second Expansion Option Space. Tenant agrees to pay to
Landlord Base Rent for the Second Expansion Option Space at the market rate
("MARKET RATE").
3.4 Base Rent: Extension Terms. Tenant agrees to pay to Landlord Base
Rent for each Extension Term at the Market Rate.
3.5 Market Rate. Market Rate shall be defined as what an arms's-length,
non-expansion, non-renewal, non-equity tenant of comparable credit to Tenant
would, as of the
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beginning of the term in question, pay for space of comparable size, quality,
utility and location, taking into account the length of the term and all
allowances and concessions being offered in the market. The Market Rate shall be
determined as follows: Within thirty (30) days after Landlord receives notice
from Tenant of Tenant's election to exercise the Second Expansion Option or an
extension option, Landlord will give notice to Tenant of its determination of
the Market Rate for the Premises or the Second Expansion Option Space, as
applicable, and Landlord's determination will constitute the Market Rate unless
Tenant objects by notice to Landlord in writing within thirty (30) days after
Tenant's receipt of Landlord's determination. If Tenant so objects, the parties
shall meet within ten (10) days after Tenant's objection and attempt to agree on
the Market Rate. If the parties are unable to agree upon the Market Rate within
such ten (10) day period after the Tenant's objection, then at the request of
either party, the Market Rate will be determined by appraisal, made by a board
of appraisers consisting of three reputable real estate appraisers (each an
"Expert"), each of whom is a member of the American Institute of Real Estate
Appraisers with the designation of "MAI." In addition, each such Expert shall
have been active over the five (5) year period ending on the date of such
appointment in the appraisal of comparable commercial properties in the vicinity
of the Building. One Expert will be appointed by Tenant, and one Expert will be
appointed by Landlord. Both Landlord and Tenant shall appoint their Expert
within fifteen (15) days after the failure of Landlord and Tenant to agree on
the Market Rate. The third Expert will be appointed by the first two Experts. If
the first two Experts are unable to agree on a third Expert within ten (10) days
after the appointment of the second Expert, or if either party refuses or
neglects to appoint an Expert as herein provided within ten (10) days after the
appointment of the first Expert, then the third Expert or the second Expert,
whose appointment was not made as provided above, may be appointed by any judge
of the Hennepin County District Court. If determinations of at least two of the
Experts are identical in amount, that amount will be determined to be the Market
Rate. If the determinations of all three Experts are different in amount, the
highest appraised value will be averaged with the middle value (that average
being referred to as "Sum A"). The lowest appraised value will be averaged with
the middle value (that average being referred to as "Sum B"), and the Market
Rate will be determined as follows: (i) if neither Sum A nor Sum B differs from
the middle appraised value by more than 10% of the middle appraised value, then
the Market Rate will be the average of the three appraisals, (ii) if either Sum
A or Sum B (but not both) differs from the middle appraised value by more than
10% of the middle appraised value, then the Market Rate will be the average of
the middle appraised value and the appraised value closer in amount to the
middle appraised value, and (iii) if both Sum A and Sum B differ from the middle
appraised value by more than 10% of the middle appraised value, then the Market
Rate will be equal to the middle appraised value. Written notice of the Market
Rate as duly determined in accordance with this Section shall be promptly given
to Landlord and Tenant and will be binding and conclusive on them. Each party
will bear its own expenses in connection with the board proceeding, except that
the fees of the Experts will be borne equally. If, for any reason, the Market
Rate has not been determined at the time of the commencement of the Extension
Term or term with respect to the Second Expansion Option Space, then the Market
Rate will be the amount set forth in Landlord's determination, and if the
determination of the Experts as provided above indicates that a lesser or
greater amount should have been paid than that which was actually paid, a proper
adjustment will be made in a payment from Landlord to Tenant, or Tenant to
Landlord, as the case may be.
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3.6 Additional Rent: Operating Costs and Taxes.
(a) Definitions.
(1) "OPERATING COSTS" means all costs of managing,
operating, maintaining and repairing the Building, including all costs,
expenditures, fees and charges for: (A) operation, maintenance and repair of the
Building (including maintenance, repair and replacement of glass, the roof
covering or membrane, and landscaping); (B) utilities and services (including
telecommunications facilities and equipment, recycling programs and trash
removal), and associated supplies and materials; (C) compensation (including
employment taxes and fringe benefits) for persons who perform duties in
connection with the operation, management, maintenance and repair of the
Building, such compensation to be appropriately allocated for persons who also
perform duties unrelated to the Building; (D) property (including coverage for
difference in conditions if carried by Landlord), liability, rental income (not
to exceed coverage for twelve months) and other insurance relating to the
Building, and expenditures for deductible amounts paid under such insurance; (E)
licenses, permits and inspections; (F) complying with the requirements of any
law, statute, ordinance or governmental rule or regulation or any orders
pursuant thereto (collectively "LAWS"), relating to the use, operation and
maintenance of the Building and common areas; (G) amortization of capital
improvements required to comply with Laws enacted after the date of this Lease,
or which reduce Operating Costs or improve the utility, efficiency or capacity
of any Building System, with interest on the unamortized balance at the rate
paid by Landlord on funds borrowed to finance such capital improvements (or, if
Landlord finances such improvements out of Landlord's funds without borrowing,
the rate that Landlord would have paid to borrow such funds, as reasonably
determined by Landlord), over such useful life as Landlord shall reasonably
determine in accordance with Generally Accepted Accounting Principles; (H) a
reasonably sized office in the Building for the management of the Building,
including expenses of furnishing and equipping such office but not the rental
value of any space occupied for such purposes; (I) reasonable and competitive
property management fees; (J) accounting, legal and other professional services
incurred in connection with the operation of the Building and the calculation of
Operating Costs and Taxes; (K) a reasonable allowance for depreciation on
machinery and equipment used to maintain the Building and on other personal
property owned by Landlord in the Building (including window coverings and
carpeting in common areas); (L) contesting the validity or applicability of any
Laws that may affect the operation and maintenance of the Building; (M) the
Building's share of any shared or common area maintenance fees and expenses
(including costs and expenses of operating, managing and maintaining the common
areas of the project of which the Building is a part and the skyways attached to
the project); and (N) any other cost, expenditure, fee or charge, whether or not
hereinbefore described, which in accordance with generally accepted property
management practices for comparable "Class A" buildings in downtown Minneapolis
would be considered an expense of managing, operating, maintaining and repairing
the Building. Operating Costs which vary with occupancy for any calendar year
during which average occupancy of the Building is less than ninety-five percent
(95%) shall be calculated based upon the Operating Costs that would have been
incurred if the Building had an average occupancy of ninety-five percent (95%)
during the entire calendar year. In no event will Operating Costs exceed actual
costs and expenses incurred by Landlord, except as provided in the preceding
sentence for allocation purposes only.
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In addition to the foregoing, Operating Costs shall not include (i)
capital improvements (except as otherwise provided above); (ii) costs of special
services rendered to individual tenants (including Tenant) for which a special
charge is made; (iii) interest and principal payments on loans or indebtedness
secured by the Building; (iv) costs of improvements for Tenant or other tenants
of the Building; (v) costs of services or other benefits of a type which are not
available to Tenant but which are available to other tenants or occupants,
regardless of whether Landlord is reimbursed by other tenants of the Building
other than through payment of tenants' shares of increases in Operating Costs
and Taxes; (vi) leasing commissions, attorneys' fees and other expenses incurred
in connection with leasing space in the Building or enforcing such leases; (vii)
depreciation or amortization, other than as specifically enumerated in the
definition of Operating Costs above; and (viii) costs, fines or penalties
incurred due to Landlord's violation of any Law.
Operating Costs will also not include: (i) depreciation on the Building
or its components (other than depreciation of capital items which are otherwise
allowed as Operating Costs); (ii) costs of alterations of space or other
improvements made for specific tenants of the Building; (iii) finder's fees and
real estate brokers' commissions; (iv) ground lease payments, mortgage principal
or interest; (v) costs of replacements to personal property for which
depreciation costs are included as an Operating Cost; (vi) costs of excess or
additional services provided to any specific tenant in the Building which are
directly billed to such tenant; (vii) cost of repairs due to casualty or
condemnation to the extent reimbursed by third parties; (viii) any cost due to
Landlord's breach of this Lease, (ix) all costs, including legal fees incurred
by Landlord in enforcing its rights under other leases for premises in the
Building; (x) costs related to removing (including any related testing and
monitoring) asbestos or other hazardous materials (other than fluorescent or
high-intensity discharge lamps, CFC's, petroleum products and other hazardous
materials which are normally used in the operation, maintenance and repair of
comparable office buildings); (xi) costs for any employees above the rank of
general manager of the Building and reasonable allocation of the costs of
employees at or below the rank of general manager whose duties include work on
other buildings or projects; (xii) costs and expenses associated with off-site
management and accounting services for the Building; (xiii) costs incurred in
connection with the design, development and construction of the Building, and
costs of correcting defects in the design or construction of the Building, the
major building systems, equipment or appurtenances or the material used in the
construction of the Building; (xiv) tenant improvement allowances, moving
allowances, advertising and marketing costs, and other out-of-pocket costs
(including attorneys' fees or leasing agent salaries and/or commissions) for
leasing of space; (xv) bad debt loss, rent loss, or reserves for bad debt loss
or rent loss; provided that Operating Costs will in any event include the entire
cost of rental or business interruption insurance other than the incremental
cost for any additional coverage in excess of 24 months; (xvi) any amount for
any item or service paid to any affiliate of Landlord (Landlord being any
subsidiary of or any person or entity that directly or indirectly through one or
more intermediaries controls, is controlled by, or is under common control with)
Landlord or the building manager or any partner or shareholder of either of them
to the extent it exceeds the competitive cost or rate for such item or service;
(xvii) costs or expenses incurred by Landlord which represent amounts paid by
Landlord or its agents in bad faith or resulting from the gross negligence of
Landlord, its agents, servants or employees or Landlord's grossly negligent
failure to manage the Building consistent with the standards required by this
Lease; (xiii) the cost of any item or service otherwise included in Operating
Costs to the extent Landlord, the building manager, or any officer or employee
of
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either receives from suppliers of goods or services any "kick-backs", finder's
fees, expediting fees or other similar fees in connection with such item or
service; (xix) costs of operation of the business of the entity which
constitutes Landlord or preservation of Landlord's interest in the Building,
such as by way of illustration and not limitation the cost of internal
accounting (other than budgeting and accounting of Operating Costs and capital
expenditures) and legal matters, the sale or mortgaging of the Building, the
collection of rent or other legal disputes with any tenant of the Building
relating to its tenancy, or any legal disputes with any holder of a mortgage on
the Building relating to its mortgage, as distinguished from costs of
management, operation, maintenance, and repair of the Building; (xx) amounts
otherwise included in Operating Costs to the extent they are reimbursed (after
deduction of the out-of-pocket cost of collection of such reimbursement) by
insurance or by any tenant (other than pursuant to an operating cost clause in
such tenant's lease) or otherwise; (xxi) any incremental increase in the cost of
operating the common areas of the Building arising out of the permitted use of
such common areas by any vendors paying rent to Landlord or cost incurred in
connection with commercial concessions or other enterprises operated by Landlord
in the common areas; (xxii) costs of renovating or otherwise improving,
decorating, or redecorating spaces for specific tenants or other occupants of
the Building or other leasable spaces (as distinguished from renovations,
improvements and decorations to common areas or otherwise benefiting the
Building generally), and (xxiii) the cost of acquiring sculptures, paintings or
other artwork.
(2) "TAXES" means: all real property taxes and
general, special or district assessments or other governmental impositions, of
whatever kind, nature or origin, imposed on or by reason of the ownership or use
of the Building; service payments in lieu of taxes and taxes and assessments of
every kind and nature whatsoever levied or assessed in addition to, in lieu of
or in substitution for existing or additional real or personal property taxes on
the Building or the personal property described above; and the reasonable cost
of contesting by appropriate proceedings the amount or validity of any taxes,
assessments or charges described above. Taxes do not include: (i) any special
assessments or other charges assessed in connection with the approval and
initial development and construction of the Building or project, (ii) penalties
resulting from failure to pay Taxes when due and (iii) any income, estate,
inheritance or other transfer tax, or any excess profit, franchise or similar
taxes on Landlord's business.
(3) "TENANT'S SHARE" means the Rentable Area of the
Premises divided by the total Rentable Area of the Building, as set forth in the
Rentable Area Certificate. If the Rentable Area of the Building is changed or
the Rentable Area of the Premises is changed by Tenant's leasing of additional
space hereunder or for any other reason, Tenant's Share shall be adjusted
accordingly.
(b) Additional Rent.
(1) Tenant shall pay Landlord as "ADDITIONAL RENT"
for each calendar year or portion thereof during the Term Tenant's Share of the
sum of (x) Operating Costs incurred for such period, and (y) Taxes payable for
such period.
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(2) Prior to the beginning of each calendar year,
Landlord shall notify Tenant of Landlord's commercially reasonable estimate of
Operating Costs, Taxes and Tenant's Additional Rent for the following calendar
year. Commencing on the first day of January of each calendar year and
continuing on the first day of every month thereafter in such year, Tenant shall
pay to Landlord one-twelfth (1/12th) of the estimated Additional Rent. If
Landlord thereafter estimates that Operating Costs or Taxes for such year will
vary from Landlord's prior estimate, Landlord may, no more than once in any
calendar year, by notice to Tenant, revise the estimate for such year and
Additional Rent shall thereafter be payable based on the revised estimate. For
the initial partial calendar year of the Term, Tenant shall pay Landlord's
estimate of Tenant's Additional Rent for such period in equal monthly
installments beginning on the first day of the first month of the Term.
(3) Tenant may, upon written notice to Landlord
delivered within thirty (30) days of Tenant's receipt of Landlord's estimate of
Operating Costs and Taxes, elect to pay Taxes separately of Operating Costs. In
the event Tenant elects to pay Taxes separately of Operating Costs, Tenant shall
pay to Landlord Tenant's Share of Taxes no later than the latter of (i) the
tenth day following receipt of written notice of the amount of Taxes then due or
(ii) thirty (30) days prior to the date Taxes are due and payable to the taxing
authority.
(4) As soon as reasonably practicable after the end
of each calendar year, but in no event later than May 1st, Landlord shall
furnish Tenant a statement with respect to such year, showing Operating Costs,
Taxes and Additional Rent for the year, and the total payments made by Tenant
with respect thereto. Unless Tenant raises any objections to Landlord's
statement within one hundred eighty (180) days after receipt of the same, such
statement shall conclusively be deemed correct and Tenant shall have no right
thereafter to dispute such statement or any item therein or the computation of
Additional Rent based thereon. If Tenant does object to such statement, then
Landlord shall permit Tenant reasonable access to Landlord's books and records
pertaining to Operating Costs, Taxes and Additional Rent for the year for the
purpose of verification of the figures shown on the statement. Within the one
hundred eighty (180) day period, Tenant may, upon ten (10) days advance, written
notice, audit, inspect and copy the books and records of Landlord with respect
to any costs or item which is passed through to Tenant. Any such audit or
inspection performed by a third party contracted by Tenant shall be performed
only on a non-contingent fee basis. Landlord must cooperate with Tenant in
providing Tenant reasonable access to its books and records during normal
business hours for this purpose. If the results of the audit shows an overcharge
to Tenant of the actual amount owned by Tenant, Landlord must, within thirty
(30) days of completion of such audit, credit or refund to Tenant, at Landlord's
election, any overcharge discovered by the audit. If the overcharge exceeds the
actual Operating Costs by 3% Landlord must pay the reasonable costs of such
audit. If such audit discloses an undercharge to Tenant, Tenant must pay
Landlord the amount of such undercharge within thirty (30) days of completion of
such audit. The parties shall negotiate in good faith to resolve any disputes.
Any objection of Tenant to Landlord's statement and resolution of any dispute
shall not postpone the time for payment of any amounts due Tenant or Landlord
based on Landlord's statement, nor shall any failure of Landlord to deliver
Landlord's statement in a timely manner relieve Tenant of Tenant's obligation to
pay any amounts due Landlord based on Landlord's statement.
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(5) If Tenant's Additional Rent as finally determined
for any calendar year exceeds the total payments made by Tenant on account
thereof, Tenant shall pay Landlord the deficiency within thirty (30) days of
Tenant's receipt of Landlord's statement. If the total payments made by Tenant
on account thereof exceed Tenant's Additional Rent as finally determined for
such year, Tenant's excess payment shall be credited toward the Rent next due
from Tenant under this Lease. For any partial calendar year at the beginning or
end of the Term, Additional Rent shall be prorated on the basis of a 365-day
year by computing Tenant's Share of Operating Costs and Taxes for the entire
year and then prorating such amount for the number of days during such year
included in the Term. Notwithstanding the termination of this Lease, Landlord
shall pay to Tenant or Tenant shall pay to Landlord, as the case may be, within
ten (10) days after Tenant's receipt of Landlord's final statement for the
calendar year in which this Lease terminates, the difference between Tenant's
Additional Rent for that year, as finally determined by Landlord, and the total
amount previously paid by Tenant on account thereof.
(6) Tenant shall pay all rental, excise, sales or
transaction privilege taxes, if any, arising out of this Lease (excluding,
however, state and federal personal or corporate income taxes measured by the
income of Landlord from all sources) imposed by any taxing authority upon
Landlord or upon Landlord's receipt of any rent payable by Tenant pursuant to
the terms of this Lease ("RENTAL TAX"). Tenant shall pay any Rental Tax to
Landlord in addition to and at the same time as Base Rent is payable under this
Lease. No such Rental Tax is imposed as of the date of execution of this Lease.
3.7 Payment of Rent. All amounts payable or reimbursable by Tenant
under this Lease, including late charges and interest (collectively, "RENT"),
shall constitute Rent and shall be payable and recoverable as Rent in the manner
provided in this Lease. All sums payable to Landlord on demand under the terms
of this Lease shall be payable within five (5) business days after notice from
Landlord of the amounts due. All Rent shall be paid without offset, recoupment
or deduction, except as may be specifically provided for in the Lease, in lawful
money of the United States of America to Landlord at Landlord's Address for
Payment of Rent as set forth in the Basic Lease Information, or to such other
person or at such other place as Landlord may from time to time designate by
written notice to Tenant.
4. SECURITY DEPOSIT. On or before January 31, 2000, Tenant shall
deposit with Landlord the amount specified in the Basic Lease Information as the
Security Deposit (the "SECURITY DEPOSIT") as security for the performance of
Tenant's obligations under this Lease. Landlord may (but shall have no
obligation to) use the Security Deposit or any portion thereof to cure any Event
of Default under this Lease or to compensate Landlord for any damage Landlord
incurs as a result of Tenant's failure to perform any of Tenant's obligations
hereunder and for which Landlord is entitled to recover under the terms of this
Lease. In such event Tenant shall pay to Landlord on demand an amount sufficient
to replenish the Security Deposit. If Tenant is not in default at the expiration
or termination of this Lease, Landlord shall, within thirty (30) days of such
expiration or termination, return to Tenant the Security Deposit or the balance
thereof then held by Landlord and not applied as provided above. Landlord may
commingle the Security Deposit with Landlord's general and other funds. Landlord
shall not be required to pay interest on the Security Deposit to Tenant.
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The initial amount of the Security Deposit shall be Seven Million Five
Hundred Thousand and 00/100 Dollars ($7,500,000.00). If Tenant's Net Worth,
consisting of Total Equity and Deferred Revenue, as determined in accordance
with Generally Accepted Accounting Principles ("NET WORTH"), for a period of
three (3) consecutive calendar years during the Term, as determined at the end
of each quarter is greater than Seventy Five Million and 00/100 Dollars
($75,000,000.00), the amount of the Security Deposit shall, effective
immediately on the first day of the fourth (4th) consecutive calendar year, be
reduced to Three Million Seven Hundred Fifty Thousand and 00/100 Dollars
($3,750,000.00). Following the twelfth consecutive month after the Security
Deposit has been reduced to Three Million Seven Hundred Fifty Thousand and
00/100 Dollars ($3,750,000.00), in which Tenant's Net Worth is, as determined at
the end of each quarter, greater than Seventy Five Million and 00/100 Dollars
($75,000,000.00), no Security Deposit shall be required, and effective
immediately on the first day of the thirteenth (13th) consecutive month, the
Security Deposit, if any, will be refunded or, if in the form of a Letter of
Credit, the Letter of Credit will be released.
During such time as Tenant's Net Worth is greater than Seventy Five
Million and 00/100 Dollars ($75,000,000.00), no Security Deposit shall be
required. If as of the end of any fiscal quarter Tenant's Net Worth is less than
Seventy Five Million and 00/100 Dollars ($75,000,000.00), Tenant shall promptly,
but in any event within thirty (30) days, deposit with Landlord the amount
provided for in this Section 4. The Security Deposit may be in the form of an
unconditional and irrevocable letter of credit issued by a national bank
reasonably acceptable to Landlord. Landlord may draw upon the letter of credit
if it is not extended or replaced at least thirty (30) days prior to its
expiration date. Landlord will accept Tenant's unaudited financial statement on
January 31, 2000, to establish Tenant's Net Worth as of that date.
5. USE AND COMPLIANCE WITH LAWS.
5.1 Use. The Premises shall be used and occupied for general business
office purposes, including, but not limited to, software development, training
and other related legal uses including, but not limited to, cafeteria,
entertainment room, fitness center, showers and locker rooms and for no other
use or purpose without Landlord's prior written consent, which consent will not
be unreasonably withheld, conditioned or delayed. Landlord's consent may be
reasonably withheld, conditioned or delayed for reasons including, but not
limited to, the unusual demands of any particular use on the Building Systems,
consistency of the use with the character of the Building, and any conflict of
the use with other tenants. Tenant shall comply with all present and future Laws
relating to Tenant's particular use or occupancy of the Premises (and make any
repairs, alterations or improvements as required to comply with all such Laws),
and shall observe the "Building Rules" (as defined in Section 26 - Rules and
Regulations). Landlord shall comply with all present and future Laws relating to
the Building generally. Tenant shall not do, bring, keep or sell anything in or
about the Premises that is prohibited by, or that will cause a cancellation of
or an increase in the existing premium for, any insurance policy covering the
Property or any part thereof. Tenant shall not permit the Premises to be
occupied or used in any manner that will constitute waste or a nuisance, or
disturb the quiet enjoyment of or otherwise disturb other tenants in the
Building. Tenant shall not, without the prior consent of Landlord (which consent
shall not be unreasonably withheld, conditioned or delayed), (i) bring into the
Building or the Premises anything that may
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cause substantial noise, odor or vibration, overload the floors in the Premises
or the Building or any of the heating, ventilating and air-conditioning
("HVAC"), mechanical, elevator, plumbing, electrical, fire protection, life
safety, security or other systems in the Building ("BUILDING SYSTEMS"), or
jeopardize the structural integrity of the Building or any part thereof; (ii)
except as may otherwise be provided in the Lease, connect to the utility systems
of the Building any apparatus, machinery or other equipment other than typical
office equipment; or (iii) except as may otherwise be provided in the Lease,
connect to any electrical circuit in the Premises any equipment or other load
with aggregate electrical power requirements in excess of 80% of the rated
capacity of the circuit.
5.2 Hazardous Materials.
(a) Definitions.
(1) "HAZARDOUS MATERIALS" shall mean any substance:
(A) that now or in the future is regulated or governed by, requires
investigation or remediation under, or is defined as a hazardous waste,
hazardous substance, pollutant or contaminant under any governmental statute,
code, ordinance, regulation, rule or order, and any amendment thereto, including
the Comprehensive Environmental Response Compensation and Liability Act, 42
U.S.C. Section 9601 et seq., and the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq., or (B) that is toxic, explosive, corrosive,
flammable, radioactive, carcinogenic, dangerous or otherwise hazardous,
including gasoline, diesel fuel, petroleum hydrocarbons, polychlorinated
biphenyls (PCBs), asbestos, radon and urea formaldehyde foam insulation.
(2) "ENVIRONMENTAL REQUIREMENTS" shall mean all
present and future Laws, orders, permits, licenses, approvals, authorizations
and other requirements of any kind applicable to Hazardous Materials.
(3) "HANDLED BY TENANT" and "HANDLING BY TENANT"
shall mean and refer to any installation, handling, generation, storage, use,
disposal, discharge, release, abatement, removal, transportation, or any other
activity of any type by Tenant or its agents, employees, contractors, licensees,
assignees, sublessees, transferees, vendors or representatives (collectively,
"REPRESENTATIVES") or its guests or customers (collectively, "VISITORS"), at or
about the Premises in connection with or involving Hazardous Materials.
(4) "HANDLED BY LANDLORD" and "HANDLING BY LANDLORD"
shall mean and refer to any installation, handling, generation, storage, use,
disposal, discharge, release, abatement, removal, transportation, or any other
activity of any type by Landlord or its agents, employees, contractors,
licensees, transferees, vendors or representatives (collectively,
"REPRESENTATIVES"), at or about the Building in connection with or involving
Hazardous Materials.
(5) "ENVIRONMENTAL LOSSES" shall mean all costs and
expenses of any kind, damages, including foreseeable and unforeseeable
consequential damages, fines and penalties incurred in connection with any
violation of and compliance with Environmental Requirements and
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all losses of any kind attributable to the diminution of value, loss of use or
adverse effects on marketability or use of any portion of the Premises or
Building.
(b) Tenant's Covenants. No Hazardous Materials shall be
Handled by Tenant at or about the Premises or Building without Landlord's prior
written consent, which consent may be granted, denied, or conditioned upon
compliance with Landlord's requirements, all in Landlord's absolute discretion.
Notwithstanding the foregoing, normal quantities and use of those Hazardous
Materials customarily used in the conduct of general office activities, such as
copier fluids and cleaning supplies ("PERMITTED HAZARDOUS MATERIALS"), may be
used and stored at the Premises without Landlord's prior written consent,
provided that Tenant's activities at or about the Premises and the Handling by
Tenant of all Hazardous Materials shall comply at all times with all
Environmental Requirements. At the expiration or termination of the Lease,
Tenant shall promptly remove from the Premises and Property all Hazardous
Materials Handled by Tenant at the Premises or the Property. Tenant shall keep
Landlord fully and promptly informed of all Handling by Tenant of Hazardous
Materials other than Permitted Hazardous Materials. Tenant shall be responsible
and liable for the compliance with all of the provisions of this Section by all
of Tenant's Representatives and Visitors, and all of Tenant's obligations under
this Section (including its indemnification obligations under paragraph (e)
below) shall survive the expiration or termination of this Lease.
Notwithstanding the foregoing, Tenant is not responsible or liable to Landlord
for the Handling by Visitors of Hazardous Materials outside of the Premises.
(c) To the best of Landlord's knowledge, the property on which
the Building is to be located does not contain Hazardous Materials.
(d) Compliance. Tenant shall at Tenant's expense promptly take
all actions required by any governmental agency or entity in connection with or
as a result of the Handling by Tenant of Hazardous Materials at or about the
Premises, including inspection and testing, performing all cleanup, removal and
remediation work required with respect to those Hazardous Materials, complying
with all closure requirements and post-closure monitoring, and filing all
required reports or plans. All of the foregoing work and all Handling by Tenant
of all Hazardous Materials shall be performed in a good, safe and workmanlike
manner by consultants qualified and licensed to undertake such work and in a
manner that will not interfere with any other tenant's quiet enjoyment of the
Building or Landlord's use, operation, leasing and sale of the Building. Tenant
shall deliver to Landlord prior to delivery to any governmental agency, or
promptly after receipt from any such agency, copies of all permits, manifests,
closure or remedial action plans, notices, and all other documents relating to
the Handling by Tenant of Hazardous Materials at or about the Premises. If any
lien attaches to the Premises or the Building in connection with or as a result
of the Handling by Tenant of Hazardous Materials, and Tenant does not cause the
same to be released, by payment, bonding or otherwise, within ten (10) days
after the attachment thereof, Landlord shall have the right but not the
obligation to cause the same to be released and any sums expended by Landlord
(plus Landlord's administrative costs) in connection therewith shall be payable
by Tenant on demand.
(d) Landlord's Rights. Landlord shall have the right, but not
the obligation, to enter the Premises at any reasonable time (i) to confirm
Tenant's compliance with the provisions of this Section 5.2, and (ii) to perform
Tenant's obligations under this Section if Tenant has failed to
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do so after reasonable notice to Tenant. Landlord shall also have the right to
engage qualified Hazardous Materials consultants to inspect the Premises and
review the Handling by Tenant of Hazardous Materials, including review of all
permits, reports, plans, and other documents regarding same. Tenant shall pay to
Landlord on demand the costs of Landlord's consultants' fees and all costs
incurred by Landlord in performing Tenant's obligations under this Section.
Landlord shall use reasonable efforts to minimize any interference with Tenant's
business caused by Landlord's entry into the Premises, but Landlord shall not be
responsible for any interference caused thereby.
(e) Tenant's Indemnification. Tenant agrees to indemnify,
defend, protect and hold harmless Landlord and its partners or members and its
or their partners, members, directors, officers, shareholders, employees and
agents from all Environmental Losses and all other claims, actions, losses,
damages, liabilities, costs and expenses of every kind, including reasonable
attorneys', experts' and consultants' fees and costs, incurred at any time and
arising from or in connection with the Handling by Tenant of Hazardous Materials
at or about the Premises or Tenant's failure to comply in full with all
Environmental Requirements with respect to the Premises.
(f) Landlord's Indemnification. Landlord agrees to indemnify,
defend, protect and hold harmless Tenant and its partners or members and its or
their partners, members, directors, officers, shareholders, employees and agents
from all Environmental Losses and all other claims, actions, losses, damages,
liabilities, costs and expenses of every kind, including reasonable attorneys',
experts' and consultants' fees and costs, incurred at any time and arising from
or in connection with the Handling by Landlord of Hazardous Materials at or
about the Building.
5.3 Americans With Disabilities Act. The parties agree that the
liabilities and obligations of Landlord and Tenant under that certain federal
statute commonly known as the Americans With Disabilities Act as well as the
regulations and accessibility guidelines promulgated thereunder as each of the
foregoing is supplemented or amended from time to time (collectively, the "ADA")
shall be apportioned as follows:
(a) If any of the common areas of the Building, including, but
not limited to, exterior and interior routes of ingress and egress, and all
rules and regulations applicable to the Premises, or the Building, fails to
comply with the ADA, such nonconformity shall be promptly made to comply by
Landlord. Landlord shall also cause manager of the Building (the "Manager") to
comply with the ADA in its operation of the Building.
(b) From and after the commencement date of the Lease, Tenant
covenants and agrees to conduct its operations within the Premises in compliance
with the ADA. If any of the Premises fails to comply with the ADA as a result of
Tenant's operations or Alterations, such nonconformity shall be promptly (within
the time allowed under the ADA) made to comply by Tenant. In the event that
Tenant elects to undertake any alterations to, for or within the Premises,
including initial build-out work, Tenant agrees to cause such alterations to be
performed in compliance with the ADA.
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6. TENANT IMPROVEMENTS & ALTERATIONS.
6.1 Landlord and Tenant shall perform their respective obligations with
respect to design and construction of any improvements to be constructed and
installed in the Premises (the "TENANT IMPROVEMENTS"), as provided in the
Construction Rider. Except for any Tenant Improvements to be constructed by
Tenant as provided in the Construction Rider, Tenant shall not make any
alterations, improvements or changes to the Premises, including installation of
any security system or telephone or data communication wiring, ("ALTERATIONS"),
without Landlord's prior written consent, which consent may not be unreasonably
withheld, conditioned or delayed. Any such Alterations shall be completed by
Tenant at Tenant's sole cost and expense: (i) with due diligence, in a good and
workmanlike manner, using new materials; (ii) in compliance with plans and
specifications approved by Landlord; (iii) in compliance with the construction
rules and regulations reasonably promulgated by Landlord from time to time; (iv)
in accordance with all applicable Laws (including all work, whether structural
or non-structural, inside or outside the Premises, required to comply fully with
all applicable Laws and necessitated by Tenant's work); and (v) subject to all
reasonable conditions which Landlord may in Landlord's reasonable discretion
impose. Such conditions may include requirements for Tenant to: (i) provide
payment or performance bonds or additional insurance (from Tenant or Tenant's
contractors, subcontractors or design professionals); (ii) use contractors or
subcontractors reasonably acceptable to Landlord; and (iii) remove all or part
of the Alterations (which Alterations required Landlord's consent) prior to or
upon expiration or termination of the Term, as designated by Landlord at the
time of granting approval. If any work outside the Premises, or any work on or
adjustment to any of the Building Systems, is required in connection with or as
a result of Tenant's work, such work shall be performed at Tenant's expense by
contractors reasonably acceptable to Landlord. Landlord's right to review and
approve (or withhold approval of) Tenant's plans, drawings, specifications,
contractor(s) and other aspects of construction work proposed by Tenant is
intended solely to protect Landlord, the Building and Landlord's interests. No
approval or consent by Landlord shall be deemed or construed to be a
representation or warranty by Landlord as to the adequacy, sufficiency, fitness
or suitability thereof or compliance thereof with applicable Laws or other
requirements. Except as otherwise provided in Landlord's consent, all
Alterations shall upon installation become part of the realty and be the
property of Landlord. If Tenant otherwise complies with this Section 6.1,
Landlord's consent is not required for non-structural alterations which do not
require a building permit or the cost of which do not exceed $0.50 per rentable
square foot of the Premises in each instance.
6.2 Before making any Alterations, Tenant shall submit to Landlord for
Landlord's prior approval reasonably detailed final plans and specifications
prepared by a licensed architect or engineer, a copy of the construction
contract, including the name of the contractor and all subcontractors proposed
by Tenant to make the Alterations and a copy of the contractor's license.
Landlord shall, within ten (10) days of Tenant's submission either (i) approve
Tenant's proposed Alterations or (ii) disapprove Tenant's proposed Alterations,
including, in reasonable detail, Landlord's reasons for such disapproval. If
Landlord does not respond to Landlord's request for approval of Alterations
within ten (10) days after receipt thereof, Landlord's approval will be deemed
given. Tenant shall reimburse Landlord upon demand for any expenses incurred by
Landlord in connection with any Alterations made by Tenant, including reasonable
fees charged by Landlord's contractors or consultants to review plans and
specifications prepared by Tenant and to
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update the existing as-built plans and specifications of the Building to reflect
the Alterations. Tenant shall obtain all applicable permits, authorizations and
governmental approvals and deliver copies of the same to Landlord before
commencement of any Alterations.
6.3 Tenant shall keep the Premises and the Building free and clear of
all liens arising out of any work performed, materials furnished or obligations
incurred by Tenant. If any such lien is recorded against the Premises or the
Building, and Tenant does not cause the same to be released by payment, bonding
or otherwise within thirty (30) days after the recording thereof, Landlord shall
have the right but not the obligation to cause the same to be released, and any
sums expended by Landlord (plus Landlord's administrative costs) in connection
therewith shall be payable by Tenant, as additional rent, on demand with
interest thereon from the date of expenditure by Landlord at the Interest Rate
(as defined in Section 15.2 - Interest). Tenant shall give Landlord at least ten
(10) days' notice prior to the commencement of any Alterations and cooperate
with Landlord in posting and maintaining notices of non-responsibility in
connection therewith.
6.4 Subject to the provisions of Section 5 - Use and Compliance with
Laws and the foregoing provisions of this Section, Tenant may install and
maintain furnishings, equipment, movable partitions, business equipment and
other trade fixtures ("TRADE FIXTURES") in the Premises, provided that the Trade
Fixtures do not become an integral part of the Premises or the Building. Tenant
shall promptly repair any damage to the Premises or the Building caused by any
installation or removal of such Trade Fixtures.
Landlord acknowledges that Tenant intends to install a generator for
back up power, an access control system, an Uninterrupted Power Supply,
additional stand alone or rooftop air conditioning units and rooftop antennae,
satellite or microwave antennae. Landlord agrees to make a reasonable effort to
accommodate such equipment in the design and construction of the Building,
including appropriate roof structural reinforcement and the connection of such
equipment to the Premises through Building raceways and shafts. Landlord also
acknowledges that Tenant will need the exclusive use of at least 6 - 4" risers
from the minimum point of entry into the Building to Tenant's main
telecommunications and data rooms and non-exclusive access to the vertical
shafts and horizontal raceways of the Building for purpose of installation of
electrical and communication wires and cables, pipes, ductwork, and conduit as
may reasonably be needed by Tenant to interconnect the floors of the Premises.
Any additional cost incurred by Landlord to accommodate Tenant's request shall
be a cost of Tenant Improvements as defined in the Construction Rider attached
as Exhibit B, and will be handled in accordance with the change order and
payment procedure therein.
6.5 Until such time as the Building, excluding other tenant
improvements, is complete, all contractors and subcontractors performing work at
the Premises for the Tenant Improvements and for all Alterations must be
recognized and approved by the Building Trades Council having jurisdiction over
downtown Minneapolis, Minnesota and each such contractor or subcontractor must
be bound by and a signatory to an applicable bargaining agreement and observe
area standards for wages and other terms and conditions of employment, including
fringe benefits.
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7. MAINTENANCE AND REPAIRS.
7.1 Landlord warrants that, as of the Commencement Date, the Building
and Premises shall be in good working order and in compliance with all Laws.
Landlord further warrants that the portion of the Premises scheduled to be
delivered on April 1, 2002, First Expansion Space and Second Expansion Space
will be in good working order and in compliance with all laws on the dates such
space is delivered to Tenant for possession. By taking possession of the
Premises, as delivered, Tenant agrees that the Premises are then in a good and
tenantable condition, subject to punch list items and uncompleted items of
Landlord's Work, and latent defects. During the Term, Tenant at Tenant's expense
but under the direction of Landlord, shall repair and maintain the Premises,
including the interior walls, floor coverings, ceiling (ceiling tiles and grid),
Tenant Improvements, Alterations, fire extinguishers, outlets and fixtures, and
any appliances (including dishwashers, hot water heaters and garbage disposers)
in the Premises, in a first class condition, subject to normal wear and tear and
casualty loss, and keep the Premises in a clean, safe and orderly condition.
7.2 Landlord shall maintain or cause to be maintained in reasonably
good order, condition and repair, the structural portions of the Building,
including the roof, roof membrane, foundations, floors and exterior walls and
glass of the Building, the Building Systems, and the public and common areas of
the Building, such as elevators, stairs, corridors and restrooms in a first
class condition, consistent with other comparable Class "A" buildings in
downtown Minneapolis, subject to normal wear and tear and casualty loss;
provided, however, that Tenant shall pay the cost of repairs for any damage
occasioned by Tenant's use of the Premises or the Building or any act or
omission of Tenant or Tenant's Representatives or Visitors, to the extent (if
any) not covered by Landlord's property insurance or the insurance required to
be carried by Landlord. Landlord shall be under no obligation to inspect the
Premises. Tenant shall promptly report in writing to Landlord any defective
condition known to Tenant which Landlord is required to repair.
7.3 Landlord hereby reserves the right, at any time and from time to
time, without liability to Tenant, and without constituting an eviction,
constructive or otherwise, or entitling Tenant to any abatement of rent or to
terminate this Lease or otherwise releasing Tenant from any of Tenant's
obligations under this Lease, but at all times taking commercially reasonable
steps to minimize interruption to Tenant's business and Tenant's access to the
Premises:
(a) To make alterations, additions, repairs, improvements to
or in or to decrease the size of area of, all or any part of the Building, the
fixtures and equipment therein, and the Building Systems providing, however,
that any such change shall not have a material adverse effect on Tenant's use of
or access to the Premises;
(b) To install and maintain any and all signs on the exterior
and interior of the Building;
(c) To reduce, increase, enclose or otherwise change at any
time and from time to time the size, number, location, lay-out and nature of the
common areas and other tenancies and premises in the Building and to create
additional rentable areas through use or enclosure of
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common areas providing, however, that any such change shall not have a material
adverse effect on Tenant's use of or access to the Premises; and
(d) If any governmental authority promulgates or revises any
Law or imposes mandatory or voluntary (but if voluntary, only to the extent
observed by comparable buildings in downtown Minneapolis) controls or guidelines
on Landlord or the Building relating to the use or conservation of energy or
utilities or the reduction of automobile or other emissions or reduction or
management of traffic (collectively "CONTROLS"), to comply with such Controls,
whether mandatory or voluntary (but if voluntary, only to the extent observed by
comparable buildings in downtown Minneapolis), or make any alterations to the
Building related thereto.
Notwithstanding the foregoing rights reserved to Landlord, if Tenant is unable
to operate its business in all or a portion of the Premises as a result of
Landlord exercising the foregoing rights, and such interruption or interference
continues for more than three (3) business days, Rent will, but only in
proportion to the amount of space in the Premises that is rendered unusable by
Tenant, abate beginning on the fourth (4th) day and will continue until Tenant's
use of the Premises is restored. Such abatement shall only apply in situations
such as those requiring or causing the shut down of computer systems or denying
Tenant access to or use of all or a part of the Premises.
8. UTILITIES AND SERVICES.
8.1 Description of Services. Landlord shall furnish to the Premises:
reasonable amounts of heat, ventilation and air-conditioning (as provided in
Exhibits D and E) during the Business Hours specified in the Basic Lease
Information ("BUSINESS HOURS") on weekdays and Saturdays, except the public
holidays of New Year's Day, Memorial Day, Fourth of July, Labor Day,
Thanksgiving and Christmas Day ("BUSINESS DAYS"); reasonable amounts of
electricity (as provided in Exhibits D and E); janitorial services (as outlined
on Exhibit G as minimum standards) and toilet room supplies five days a week
(except public holidays), management of the Building by qualified management
personnel in accordance with the standards observed by comparable "Class A"
buildings in downtown Minneapolis, Minnesota, window washing of the exterior and
interior surfaces of the windows in the exterior walls of the Premises, freight
elevator service (subject to scheduling by Landlord), commercially reasonable
Building security and full time personnel stationed in the lobby of the
Building. Landlord shall also provide any additional services which may be
reasonably requested by Tenant, including, without limitation, locksmithing,
lamp replacement, additional janitorial service, and additional repairs and
maintenance. Tenant shall not be required to utilize Landlord for such
additional services. Tenant shall have the right to request that Landlord shall
review with Tenant the performance and costs of vendors and contract service
providers for the Building. With respect to janitorial service, Tenant may
reject (for cause) Landlord's selected janitorial service provider, in which
case, Landlord must promptly replace the janitorial service provider with a
service provider mutually acceptable to Landlord and Tenant. Landlord shall also
provide the Building with normal fluorescent lamp replacement, window washing,
elevator service, and common area toilet room supplies. Any additional utilities
or services that Landlord may agree to provide (including lamp or tube
replacement for other than Building Standard lighting fixtures) shall be at
Tenant's sole expense.
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8.2 Payment for Additional Utilities and Services.
(a) Upon request by Tenant in accordance with the procedures
established by Landlord from time to time for furnishing HVAC service at times
other than Business Hours on Business Days, Landlord shall furnish such service
to Tenant and Tenant shall pay for such services on an hourly basis at the then
prevailing rate reasonably established for the Building by Landlord, based upon
Landlord's cost.
(b) If the temperature otherwise maintained in any portion of
the Premises by the HVAC systems of the Building is affected as a result of (i)
any lights, machines or equipment used by Tenant in the Premises, or (ii) the
occupancy of the Premises by more than one person per 150 square feet of
rentable area, after first giving Tenant written notice of such effect and
Tenant having had reasonable time to cure, Landlord shall have the right to
install any machinery or equipment reasonably necessary to restore the
temperature, including modifications to the standard air conditioning equipment.
The cost of any such equipment and modifications, including the cost of
installation and any additional cost of operation and maintenance of the same,
shall be paid by Tenant to Landlord upon demand.
(c) If Tenant's usage of electricity, water or any other
utility service exceeds the use of such utility Landlord determines to be
typical, normal and customary for the Building, after first giving Tenant
written notice of such excessive usage and Tenant having had reasonable time to
cure, Landlord may determine the amount of such excess use by any reasonable
means (including the installation at Landlord's request but at Tenant's expense
of a separate meter or other measuring device) and charge Tenant for the cost of
such excess usage. In addition, Landlord may impose a reasonable charge for the
use of any additional or unusual janitorial services required by Tenant because
of any unusual Tenant Improvements or Alterations, the carelessness of Tenant or
the nature of Tenant's business (including hours of operation).
8.3 Interruption of Services.
(a) In the event of an interruption in or failure or inability
to provide any services or utilities to the Premises or Building for any reason
(a "SERVICE FAILURE"), such Service Failure shall not, regardless of its
duration, impose upon Landlord any liability whatsoever, constitute an eviction
of Tenant, constructive or otherwise, entitle Tenant to an abatement of rent or
to terminate this Lease or otherwise release Tenant from any of Tenant's
obligations under this Lease, if the Service Failure is due to circumstances
beyond Landlord's reasonable control; provided, however, Landlord must use its
best efforts to cause such utilities or services to be restored as soon as
possible. If the Service Failure is due to circumstances within Landlord's
reasonable control, and such Service Failure continues for a period exceeding
four (4) calendar days, rent will abate beginning on the fifth (5th) calendar
day of the Service Failure and will continue until services are restored.
(b) In the event of an interruption in services or utilities
to the Premises or Building for the purpose of maintenance, repair or
replacement of Building Systems, Landlord shall make a good faith effort to
notify Tenant of such an interruption no less than five (5) business days
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in advance and obtain Tenant's consent to the time and duration of the
interruption. Such consent shall not be unreasonably delayed, conditioned or
withheld.
9. EXCULPATION AND INDEMNIFICATION.
9.1 Landlord's Indemnification of Tenant. Except to the extent covered
by the insurance required to be maintained by Tenant pursuant to Section 10.1(a)
hereof, Landlord shall indemnify, protect, defend and hold Tenant harmless from
and against any claims, actions, liabilities, damages, costs or expenses,
including reasonable attorneys' fees and costs incurred in defending against the
same ("CLAIMS") asserted by any third party against Tenant for loss, injury or
damage to any person or property, arising from (a) the willful misconduct or
negligent acts or omissions of Landlord, its agents, employees, contractors,
licensees, assignees, transferees or representatives ("LANDLORD'S
REPRESENTATIVES") or (b) any construction or other work undertaken by Landlord
on the Premises (including design defects) or (c) any breach or default under
this Lease by Landlord or (d) any loss, injury or damage to any person or
property occurring in or about the common areas of the Building during the Term,
except Claims described in this clause (d) to the extent they are caused by the
willful misconduct or negligent acts or omissions of Tenant or Tenant's
Representatives.
9.2 Tenant's Indemnification of Landlord. Tenant shall indemnify,
protect, defend and hold Landlord and Landlord's authorized representatives
harmless from and against Claims arising from (a) the acts or omissions of
Tenant or Tenant's Representatives in or about the Building, or (b) any
construction or other work undertaken by Tenant on the Premises (including any
design defects), or (c) any breach or default under this Lease by Tenant, or (d)
any loss, injury or damage, howsoever and by whomsoever caused, to any person or
property, occurring in or about the Premises during the Term, excepting only
Claims described in this clause (d) to the extent they are caused by the willful
misconduct of Landlord or Landlord's Representatives, and if such Claims result
from Landlord's negligence, this indemnification is limited to Tenant's
liability insurance coverage limits set forth in Section 10.1(a).
9.3 Damage to Tenant and Tenant's Property. Landlord shall not be
liable to Tenant for any loss, injury or other damage to Tenant or to Tenant's
property in or about the Premises or the Building from any cause (including
defects in the Building or in any equipment in the Building; fire, explosion or
other casualty; bursting, rupture, leakage or overflow of any plumbing or other
pipes or lines, sprinklers, tanks, drains, drinking fountains or washstands in,
above, or about the Premises or the Building; or acts of other tenants in the
Building). Tenant hereby waives all claims against Landlord for any such loss,
injury or damage and the cost and expense of defending against claims relating
thereto, including any loss, injury or damage caused by Landlord's negligence
(active or passive) except for Landlord's willful misconduct. Notwithstanding
any other provision of this Lease to the contrary, in no event shall Landlord be
liable to Tenant for any punitive or consequential damages or damages for loss
of business by Tenant, except as may be attributable to Landlord's willful
misconduct.
9.4 Survival. The obligations of the parties under this Section 9 shall
survive the expiration or termination of this Lease.
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10. INSURANCE.
10.1 Tenant's Insurance.
(a) Liability Insurance. Tenant shall maintain in full force
throughout the Term, commercial general liability insurance providing coverage
on an occurrence form basis with limits of not less than Five Million Dollars
($5,000,000.00) each occurrence for bodily injury and property damage combined,
Five Million Dollars ($5,000,000.00) annual general aggregate, and Five Million
Dollars ($5,000,000.00) products and completed operations annual aggregate.
Tenant's liability insurance policy or policies shall: (i) include premises and
operations liability coverage, products and completed operations liability
coverage, broad form property damage coverage including completed operations,
blanket contractual liability coverage including, to the maximum extent
possible, coverage for the indemnification obligations of Tenant under this
Lease, and personal and advertising injury coverage; (ii) provide that the
insurance company has the duty to defend all insureds under the policy; (iii)
provide that defense costs are paid in addition to and do not deplete any of the
policy limits; (iv) cover liabilities arising out of or incurred in connection
with Tenant's use or occupancy of the Premises; and (v) extend coverage to cover
liability for the actions of Tenant's Representatives and Visitors. Each policy
of liability insurance required by this Section shall: (i) contain a cross
liability endorsement or separation of insureds clause; (ii) provide that any
waiver of subrogation rights or release prior to a loss does not void coverage;
(iii) provide that it is primary to and not contributing with, any policy of
insurance carried by Landlord covering the same loss; (iv) provide that any
failure to comply with the reporting provisions shall not affect coverage
provided to Landlord, its partners, property managers and Mortgagees; and (v)
name Landlord and the Property Manager identified in the Basic Lease Information
(the "PROPERTY MANAGER"), and such other parties in interest as Landlord may
from time to time reasonably designate to Tenant in writing, as additional
insureds. Such additional insureds shall be provided at least the same extent of
coverage as is provided to Tenant under such policies. All endorsements
effecting such additional insured status shall be at least as broad as
additional insured endorsement form number CG 20 11 11 85 promulgated by the
Insurance Services Office.
(b) Property Insurance. Tenant shall at all times maintain in
effect with respect to any Alterations and Tenant's Trade Fixtures and personal
property, commercial property insurance providing coverage, on an "all risk" or
"special form" basis, in an amount equal to at least 90% of the full replacement
cost of the covered property. Tenant may elect to self-insure its Alterations,
Trade Fixtures and personal property. Tenant may carry such insurance under a
blanket policy, provided that such policy provides coverage equivalent to a
separate policy. During the Term, the proceeds from any such policies of
insurance shall be used for the repair or replacement of the Alterations, Trade
Fixtures and personal property so insured. Landlord shall be provided coverage
under such insurance to the extent of its insurable interest in the Alterations
and, if requested by Landlord, both Landlord and Tenant shall sign all documents
reasonably necessary or proper in connection with the settlement of any claim or
loss under such insurance. Landlord will have no obligation to carry insurance
on any Alterations or on Tenant's Trade Fixtures or personal property.
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Tenant's right to self-insure for the property insurance required by
this Section 10 shall be subject to the following requirements of this
paragraph. For purposes of this paragraph, "SELF-INSURANCE" shall mean that
Tenant is acting as though it were the insurance company providing the insurance
required under the provisions of this Section 10 and Tenant shall pay any
amounts due in lieu of insurance proceeds as required under the provisions of
this Lease, which amounts shall be treated as insurance proceeds for all
purposes under this Lease. To the extent of any self-insurance maintained by
Tenant, Tenant's obligations with respect to the retained risk shall be defined
as though Tenant were the insurer under a policy meeting the requirements of
this Section 10. All amounts which Tenant pays or is required to pay and all
losses or damages resulting from the risks for which Tenant has elected to
self-insure shall be subject to the waiver of subrogation provisions in Section
10.3 below and shall not limit Tenant's indemnification obligations as otherwise
set forth in this Lease.
(c) Requirements For All Policies. Each policy of insurance
required under this Section 10.1 shall: (i) be in a form, and written by an
insurer, reasonably acceptable to Landlord, (ii) be maintained at Tenant's sole
cost and expense, and (iii) require at least thirty (30) days' written notice to
Landlord prior to any cancellation, nonrenewal, modification affecting coverage
form or modification of insurance coverage. Insurance companies issuing such
policies shall have rating classifications of "A" or better and financial size
category ratings of "VII" or better according to the latest edition of the A.M.
Best Key Rating Guide. All insurance companies issuing such policies shall be
admitted carriers licensed to do business in the state where the Property is
located. Any deductible amount under such insurance shall not exceed $5,000.
Tenant shall provide to Landlord, upon request, evidence that the insurance
required to be carried by Tenant pursuant to this Section, including any
endorsement effecting the additional insured status, is in full force and effect
and that premiums therefor have been paid.
(d) Updating Coverage. Tenant shall increase the amounts of
commercial general liability insurance as required by any Mortgagee, and, not
more frequently than once every five (5) years, as reasonably recommended by
Landlord's insurance broker for comparable Class A buildings in downtown
Minneapolis, if, in the opinion of either of them, the amount of insurance then
required under this Lease is not adequate. Any limits set forth in this Lease on
the amount or type of coverage required by Tenant's insurance shall not limit
the liability of Tenant under this Lease.
(e) Certificates of Insurance. Prior to occupancy of the
Premises by Tenant, and not less than thirty (30) days prior to expiration of
any policy thereafter, Tenant shall furnish to Landlord a certificate of
insurance reflecting that the insurance required by this Section is in force,
accompanied by an endorsement showing the required additional insureds
satisfactory to Landlord in substance and form. Notwithstanding the requirements
of this paragraph, Tenant shall at Landlord's request provide to Landlord a
certified copy of each insurance policy required to be in force at any time
pursuant to the requirements of this Lease or its Exhibits.
10.2 Landlord's Insurance. During the Term Landlord shall maintain in
effect insurance on the Building with responsible insurers, on an "all risk" or
"special form" basis, insuring the Building and the Tenant Improvements provided
herein in an amount equal to 100% (to the extent such coverages are available at
a commercially reasonable cost, but in no event less than 95%) of
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the replacement cost thereof, excluding land, foundations, footings and
underground installations and commercial general liability insurance providing
coverage on an occurrence form basis with limits of not less than Five Million
Dollars ($5,000,000.00) each occurrence for bodily injury and property damage
combined and Five Million Dollars ($5,000,000.00) annual general aggregate.
Landlord may, but shall not be obligated to, carry insurance against additional
perils and/or in greater amounts.
10.3 Mutual Waiver of Right of Recovery & Waiver of Subrogation.
Landlord and Tenant each hereby waive any right of recovery against each other
and the partners, managers, members, shareholders, officers, directors and
authorized representatives of each other for any loss or damage that is covered
by any policy of property insurance maintained by either party (or required by
this Lease to be maintained) with respect to the Premises or the Building or any
operation therein, regardless of cause, including negligence (active or passive)
of the party benefiting from the waiver. If any such policy of insurance
relating to this Lease or to the Premises or the Building does not permit the
foregoing waiver or if the coverage under any such policy would be invalidated
as a result of such waiver, the party maintaining such policy shall obtain from
the insurer under such policy a waiver of all right of recovery by way of
subrogation against either party in connection with any claim, loss or damage
covered by such policy.
11. DAMAGE OR DESTRUCTION.
11.1 Landlord's Duty to Repair.
(a) If all or a substantial part of the Premises are rendered
untenantable or inaccessible by damage to all or any part of the Building from
fire or other casualty then, unless either party is entitled to and elects to
terminate this Lease pursuant to Sections 11.2 - Landlord's Right to Terminate
and 11.3 - Tenant's Right to Terminate, Landlord shall, at its expense, use
reasonable efforts to repair and restore the Premises and/or the Building, as
the case may be, to substantially their former condition to the extent permitted
by then applicable Laws; provided, however, that in no event shall Landlord have
any obligation for repair or restoration beyond the extent of insurance proceeds
received by Landlord for such repair or restoration, or for any of Tenant's
personal property, Trade Fixtures or Alterations.
(b) If Landlord is required or elects to repair damage to the
Premises and/or the Property, this Lease shall continue in effect, but Tenant's
Base Rent and Additional Rent shall be abated with regard to any portion of the
Premises that Tenant is prevented from using by reason of such damage or its
repair from the date of the casualty until substantial completion of Landlord's
repair of the affected portion of the Premises as required under this Lease. In
no event shall Landlord be liable to Tenant by reason of any injury to or
interference with Tenant's business or property arising from fire or other
casualty or by reason of any repairs to any part of the Property necessitated by
such casualty.
11.2 Landlord's Right to Terminate. Landlord may elect to terminate
this Lease following damage by fire or other casualty under the following
circumstances:
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(a) If, in the reasonable judgment of Landlord, the Premises
and the Building cannot be substantially repaired and restored under applicable
Laws within eighteen (18) months from the start of construction, excluding any
construction performed to clean up the Building and place it in a safe condition
pending commencement of restoration work;
(b) If, in the reasonable judgment of Landlord, adequate
proceeds are not, for any reason other than Landlord's failure to maintain the
insurance required by Section 10.2, made available to Landlord from Landlord's
insurance policies (and/or from Landlord's funds made available for such
purpose, at Landlord's sole option) to make the required repairs;
(c) If the Building is damaged or destroyed to the extent
that, in the reasonable judgment of Landlord, the cost to repair and restore the
Building would exceed fifty percent (50%) of the full replacement cost of the
Building, whether or not the Premises are at all damaged or destroyed;
(d) If the fire or other casualty occurs during the last two
years of the Term and Tenant does not exercise its right, if any, to extend the
Term within 60 days after the casualty; or
(e) If the damage occurs after December 31, 2011 and also
affects other portions of the project, and if the owner(s) of such portion(s) of
the project elect not to restore such portion(s).
If any of the circumstances described in subparagraphs (a), (b), (c) or
(d) of this Section 11.2 occur or arise, Landlord shall give Tenant notice
within ninety (90) days after the date of the casualty, specifying whether
Landlord elects to terminate this Lease as provided above and, if not,
Landlord's estimate of the time required to complete Landlord's repair
obligations under this Lease.
11.3 Tenant's Right to Terminate. If all or a substantial part of the
Premises are rendered untenantable or inaccessible by damage to all or any part
of the Property from fire or other casualty, and Landlord does not elect to
terminate as provided above, then Tenant may elect to terminate this Lease if
Landlord's estimate (certified by Landlord's Architect or Contractor) of the
time required to complete Landlord's repair obligations under this Lease is
greater than eighteen (18) months or if such damage occurs in the last two (2)
years of the Term, in which event Tenant may elect to terminate this Lease by
giving Landlord notice of such election to terminate within sixty (60) days
after Landlord's notice to Tenant pursuant to Section 11.2 - Landlord's Right to
Terminate.
12. CONDEMNATION.
12.1 Definitions.
(a) "AWARD" shall mean all compensation, sums, or anything of
value awarded, paid or received on a total or partial Condemnation.
(b) "CONDEMNATION" shall mean (i) a permanent taking (or a
temporary taking for a period extending beyond the end of the Term) pursuant to
the exercise of the power of condemnation or eminent domain by any public or
quasi-public authority, private corporation or
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individual having such power ("CONDEMNOR"), whether by legal proceedings or
otherwise, or (ii) a voluntary sale or transfer by Landlord to any such
authority, either under threat of condemnation or while legal proceedings for
condemnation are pending.
(c) "DATE OF CONDEMNATION" shall mean the earlier of the date
that title to the property taken is vested in the Condemnor or the date the
Condemnor has the right to possession of the property being condemned.
12.2 Effect on Lease.
(a) If the Premises are totally taken by Condemnation, this
Lease shall terminate as of the Date of Condemnation. If a portion but not all
of the Premises is taken by Condemnation, this Lease shall remain in effect;
provided, however, that if the portion of the Premises remaining after the
Condemnation will be unsuitable for Tenant's continued use, then upon notice to
Landlord within thirty (30) days after Landlord notifies Tenant of the
Condemnation, Tenant may terminate this Lease effective as of the Date of
Condemnation.
(b) If twenty-five percent (25%) or more of the Building is
taken by Condemnation, or if as a result of any Condemnation the Building is no
longer reasonably suitable for use as an office building, whether or not any
portion of the Premises is taken, Landlord or Tenant may elect to terminate this
Lease, effective as of the Date of Condemnation, by notice to Tenant within
thirty (30) days after the Date of Condemnation.
(c) If all or a portion of the Premises is temporarily taken
by a Condemnor for a period of more than one year, then upon notice to Landlord
within 60 days after Landlord notifies Tenant of the Condemnation, Tenant may
terminate this Lease effective as of the Date of Condemnation.
12.3 Restoration. If this Lease is not terminated as provided in
Section 12.2 - Effect on Lease, Landlord, at its expense, shall diligently
proceed to repair and restore the Premises to substantially its former condition
(to the extent permitted by then applicable Laws) and/or repair and restore the
Building to an architecturally complete office building; provided, however, that
Landlord's obligations to so repair and restore shall be limited to the amount
of any Award received by Landlord and not required to be paid to any Mortgagee
(as defined in Section 19.2 below). In no event shall Landlord have any
obligation to repair or replace any improvements in the Premises beyond the
amount of any Award received by Landlord for such repair or to repair or replace
any of Tenant's personal property, Trade Fixtures, or Alterations.
12.4 Abatement and Reduction of Rent. If any portion of the Premises is
taken in a Condemnation or is rendered permanently untenantable by repairs
necessitated by the Condemnation, and this Lease is not terminated, the Base
Rent and Additional Rent payable under this Lease shall be proportionally
reduced as of the Date of Condemnation based upon the percentage of rentable
square feet in the Premises so taken or rendered permanently untenantable. In
addition, if this Lease remains in effect following a Condemnation and Landlord
proceeds to repair and restore the Premises, the Base Rent and Additional Rent
payable under this Lease shall
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be abated during the period of such repair or restoration to the extent such
repairs prevent Tenant's use of the Premises.
12.5 Awards. Any award made shall be paid to Landlord, and Tenant
hereby assigns to Landlord, and waives all interest in or claim to, any such
award, including any claim for the value of the unexpired Term; provided,
however, that Tenant shall be entitled to receive, or to prosecute a separate
claim for, an award for a temporary taking of the Premises or a portion thereof
by a Condemnor where this Lease is not terminated (to the extent such award
relates to the unexpired Term), or an award or portion thereof separately
designated for relocation expenses or the interruption of or damage to Tenant's
business or as compensation for Tenant's personal property, Trade Fixtures or
Alterations.
13. ASSIGNMENT AND SUBLETTING.
13.1 Landlord's Consent Required. Tenant shall not assign this Lease or
any interest therein, or sublet or license or permit the use or occupancy of the
Premises or any part thereof by or for the benefit of anyone other than Tenant,
or in any other manner transfer all or any part of Tenant's interest under this
Lease (each and all a "TRANSFER"), without the prior written consent of
Landlord, which consent (subject to the other provisions of this Section 13)
shall not be unreasonably withheld, conditioned or delayed. Notwithstanding any
provision in this Lease to the contrary, Tenant shall not mortgage, pledge,
hypothecate or otherwise encumber this Lease or all or any part of Tenant's
interest under this Lease. Notwithstanding the foregoing, Landlord's consent
shall not be required with respect to (i) an assignment of this Lease to any
entity which controls, is controlled by or is under common control with Tenant,
or which acquires substantially all of the assets or capital stock of Tenant, or
(ii) a sublease of one floor or less of the Premises, or (iii) the occupancy of
space in the Premises by business partners, customers, contractors or
consultants of Tenant.
13.2 Reasonable Consent.
(a) Prior to any proposed Transfer, Tenant shall submit in
writing to Landlord (i) the name and legal composition of the proposed assignee,
subtenant, user or other transferee (each a "PROPOSED TRANSFEREE"); (ii) the
nature of the business proposed to be carried on in the Premises; (iii) a
current balance sheet, income statements for the last two years and such other
reasonable financial and other information concerning the Proposed Transferee as
Landlord may request; and (iv) a copy of the proposed assignment, sublease or
other agreement governing the proposed Transfer. Within fifteen (15) calendar
days after Landlord receives all such information it shall notify Tenant whether
it approves or disapproves such Transfer.
(b) Tenant acknowledges and agrees that, among other
circumstances for which Landlord could reasonably withhold consent to a proposed
Transfer, it shall be reasonable for Landlord to withhold consent where (i) the
Proposed Transferee does not intend itself to occupy the majority portion of the
Premises assigned or sublet, (ii) Landlord reasonably disapproves of the
Proposed Transferee's business operating ability or history, reputation or
creditworthiness or the character of the business to be conducted by the
Proposed Transferee at the Premises, (iii) the proposed Transfer would violate
any "exclusive" rights of any tenants in the Building, (iv) Landlord
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or Landlord's agent has shown space in the Building to the Proposed Transferee
or responded to any inquiries from the Proposed Transferee or the Proposed
Transferee's agent concerning availability of space in the Building, at any time
within the preceding nine months, and Landlord has reasonably comparable space
available for lease in the Building at the proposed time of Transfer or (v) the
Proposed Transferee is an existing tenant in the Building and Landlord has
reasonably comparable space available for lease in the Building. If Tenant
publicly offers or advertises to the general public all or any portion of the
Premises for assignment or sublease such public offers may not state a rental
less than that then sought by Landlord for a direct lease (non-sublease) of
comparable space in the Building. The foregoing restriction does not prohibit
Tenant from distributing marketing material to real estate brokers or potential
subtenants which contain a stated rental that is less than that sought by
Landlord.
13.3 Excess Consideration. If Landlord consents to the Transfer, Tenant
shall pay to Landlord as additional rent, within ten (10) days after receipt by
Tenant, one-half of any consideration paid by any transferee (the "TRANSFEREE")
for the Transfer, including, in the case of a sublease, the excess of the rent
and other consideration payable by the subtenant over the amount of Base Rent
and Additional Rent payable hereunder applicable to the subleased space. Tenant
shall, however, be permitted to first recover from such consideration its
reasonable transactions costs, including, but not limited to, costs for
brokerage fees, attorney's fees, architectural fees, and improvement costs. This
section shall not be applicable in the event of an assignment of this Lease to
any entity which controls, is controlled by or is under common control with
Tenant, or which acquires substantially all of the assets or capital stock of
Tenant.
13.4 No Release Of Tenant. No consent by Landlord to any Transfer shall
relieve Tenant of any obligation to be performed by Tenant under this Lease,
whether occurring before or after such consent, assignment, subletting or other
Transfer. Each Transferee shall be jointly and severally liable with Tenant (and
Tenant shall be jointly and severally liable with each Transferee) for the
payment of Rent (or, in the case of a sublease, rent in the amount set forth in
the sublease) and for the performance of all other terms and provisions of this
Lease. The consent by Landlord to any Transfer shall not relieve Tenant or any
such Transferee from the obligation to obtain Landlord's express prior written
consent to any subsequent Transfer by Tenant or any Transferee. The acceptance
of Rent by Landlord from any other person (whether or not such person is an
occupant of the Premises) shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any Transfer.
13.5 Effectiveness of Transfer. Prior to the date on which any
permitted Transfer (whether or not requiring Landlord's consent) becomes
effective, Tenant shall deliver to Landlord a counterpart of the fully executed
Transfer document and Landlord's standard form of Consent to Assignment or
Consent to Sublease executed by Tenant and the Transferee in which each of
Tenant and the Transferee confirms its obligations pursuant to this Lease.
Failure or refusal of a Transferee to execute any such instrument shall not
release or discharge the Transferee from liability as provided herein. The
voluntary, involuntary or other surrender of this Lease by Tenant, or a mutual
cancellation by Landlord and Tenant, shall not work a merger, and any such
surrender or cancellation shall, at the option of Landlord, either terminate all
or any existing subleases or operate as an assignment to Landlord of any or all
of such subleases.
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13.6 Assignment of Sublease Rents. Tenant hereby absolutely and
irrevocably assigns to Landlord any and all rights to receive rent and other
consideration from any sublease and agrees that Landlord, as assignee or as
attorney-in-fact for Tenant for purposes hereof, or a receiver for Tenant
appointed on Landlord's application may (but shall not be obligated to) collect
such rents and other consideration and apply the same toward Tenant's
obligations to Landlord under this Lease; provided, however, that Landlord
grants to Tenant at all times prior to occurrence of an Event of Default by
Tenant a revocable license to collect such rents (which license shall
automatically and without notice be and be deemed to have been revoked and
terminated immediately upon any Event of Default).
14. DEFAULT AND REMEDIES.
14.1 Events of Default. The occurrence of any of the following shall
constitute an "EVENT OF DEFAULT" by Tenant:
(a) Tenant fails to make either any payment of Rent when due,
or any payment required to replenish the security deposit within the time
provided in Section 4 above, if payment of either or both in full is not
received by Landlord within three (3) business days after written notice that it
is due.
(b) Tenant abandons the Premises and Tenant is not using
commercially reasonable efforts to assign or sublease the Premises.
(c) Tenant fails to timely deliver any subordination document,
estoppel certificate or financial statement requested by Landlord within the
applicable time period specified in Sections 19 - Encumbrances - and 20 -
Estoppel Certificates and Financial Statements - below.
(d) Tenant assigns this Lease or sublets any portion of the
Premises without obtaining the consent of Landlord if such consent is required .
(e) Tenant ceases doing business as a going concern; makes an
assignment for the benefit of creditors; is adjudicated an insolvent, files a
petition (or files an answer admitting the material allegations of a petition)
seeking relief under any state or federal bankruptcy or other statute, law or
regulation affecting creditors' rights; all or substantially all of Tenant's
assets are subject to judicial seizure or attachment and are not released within
60 days, or Tenant consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for Tenant or for all or any substantial part of Tenant's
assets.
(f |
