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8.0. EDSR 04-11-2005 Item 8 • 1./ iikj River MEMORANDUM TO: Economic Development Authority FROM: Heidi Steinmetz, Assistant Director of Economic Development DATE: April I I, 2005 SUBJECT: Consider Early Release of Sublease for Business Incubator Tenant: LapTwo Technology Corporation Attachments • Sublease, September 22,2003 • Letter from LapTwo Technology Corporation President Rob Henningsgard,April 6, 2005 Background LapTwo Technology Corporation (LapTwo) became an Incubator tenant in September of 2003, subleasing 1,041 SF of space (see the attached sublease). LapTwo has developed a product that is a management and security system for internet hospitality"hot spot" providers such as restaurants, hotels,motels, and the like. The LapTwo product, dubbed "WarmSpot," decisively solves several problems and security vulnerabilities inherent in existing competitive products from T-Mobile, Cisco, and other vendors. The product will be sold as a software package. In its first year as an Incubator tenant,LapTwo's rent rate was $10 per SF ($3 cash and$7 in stock offering). LapTwo began its second year as an Incubator tenant in September 2004, when the EDA granted LapTwo the attached twelve-month sublease extension. At that time,LapTwo's rent rate was increased to $11 per SF ($4 cash and$7 in stock offering). Issue LapTwo President,Rob Henningsgard will be in attendance at the EDA meeting to provide details regarding his attached letter,which includes a company update and notice of LapTwo's graduation from the Incubator Program. LapTwo has recently moved its operations to market rate rental space located at 554 3rd Street NW in Elk River. Staff Recommendation • Staff recommends that the EDA approve Mr. Henningsgard's request to be released of LapTwo's current sublease with the following conditions: Consider Early Release of Sublease for Business Incubator Tenant: LapTwo Technology Corporation April 11,2005 EDA Meeting Page 2 of 2 S . LapTwo must submit cash rent payment through April 11, 2005. Currently, the company has paid cash rent through January 2005. • LapTwo must submit legally acceptable stock offering certificates covering the period of September 22, 2003 through April 11, 2005. The certificates will satisfy the stock offering portion of rent for the duration of LapTwo's time as an Incubator tenant. i • COPY' LAP2 TECHNOLOGY CORPORATION • SUBLEASE 2003 THIS SUBLEASE, made this 22nd day of September 2003 by and between the City of Elk River Economic Development Authority, a Public Body Corporate and Politic (hereinafter called "Sublessor"), and Lap2 Technology Corporation., a Minnesota Corporation, (hereinafter called "Sublessee"); WITNESSETH,THAT: WHEREAS, Sublessor has leased certain space in an office/industrial complex known as the Elk River Business Incubator and located at 16820 Highway 10 in the City of Elk River, for the purpose of supporting the development and growth of high technology companies in the City of Elk River. Such space being leased by Sublessor shall be referred to herein as the "Elk River Business Incubator." WHEREAS, Sublessor is leasing the Elk River Business Incubator pursuant to the terms and conditions of that certain lease (hereinafter called "Prime Lease") dated March 18, 1997, between Larry Hickman (hereinafter called "Landlord"), as landlord, and Sublessor, as lessee, a true and correct copy of which is attached hereto as Exhibit A and made a part hereof. WHEREAS, Sublessee desires to lease the space (1,041 sq. ft., Suite 130) in the Elk River • Business Incubator designated on Exhibit B attached hereto and made a part hereof (hereinafter called the "Subleased Premises") and Sublessor desires to sublease the Subleased Premises to Subles see. NOW, THEREFORE, in consideration of the rents to be paid and the covenants to be performed by the Sublessee as hereinafter set forth, Sublessor does hereby demise and sublease the Subleased Premises to the Sublessee, and Sublessee does hereby hire and take the Subleased Premises from Sublessor upon the terms and conditions hereinafter set forth. (1) Assumption of Obligations. Except as may be herein otherwise specifically provided, Sublessee shall have all the rights and privileges and assume and agree to keep, obey and perform all of the obligations, restrictions and conditions, agreements and covenants of the Sublessor as lessee under the Prime Lease as fully and to the same extent as if the provisions of the Prime Lease were set forth herein. Sublessee hereby accepts the demise and Sublease of the Subleased Premises expressly subject to all of the terms, covenants and conditions set forth in the Prime Lease, and agrees to comply with all of the terms, covenants and provisions thereof. Any failure by Sublessee to perform such duties, liabilities and obligations under the Prime Lease shall also be a default under this Sublease. (2) Rent and Other Charges. In consideration of the aforesaid subleasing, Sublessee covenants and agrees to pay to the Sublessor, without setoff or deduction whatsoever, except as set forth herein, cash rent in the amount of$260.25 per month payable on the first day of each month • during the Term of September 22, 2003, to September 22. 2004, unless otherwise agreed to. Additional non-cash rent in the form of stock is due pursuant to the Memorandum of 1 Understanding dated September 22, 2003. In the event that the Term begins or ends on other than the first or last day of the month, rent shall be pro-rated for such partial month. Sublessor shall be responsible for payment of all rent due to the Landlord under the Prime Lease. (3) Term. Notwithstanding any provisions relating to the Term or Renewal Term contained in the Prime Lease, the Term of this Lease shall be for the period commencing on September 22, 2003 and terminating on September 22, 2004. (4) Quiet Enjoyment. Sublessor covenants that Sublessee, subject to the Prime Lease and on paying the rents and performing the covenants herein set forth, shall and may peaceably and quietly have, hold and enjoy the Subleased Premises for the Term hereof free of all claims made by persons claiming by, through or under Sublessor. Sublessor shall provide, at no cost to sublessee, all utilities described in the prime lease. (5) Exclusions. The following rights, if any, reserved to the Sublessor under the Prime Lease shall be reserved to the Sublessor, and Sublessee shall have no right therein: (a) The right to sublease, assign or sublet. (b) Any right on the part of the Sublessor under the Prime Lease to terminate the Prime Lease in the event of damage by casualty or taking by eminent domain, the default of the Landlord, or for any reason whatsoever, the exercise of which shall release sublessee hereunder • (c) Any option or right to extend the Term or any Renewal Term. (6) Maintenance. The Sublessee agrees to accept the Subleased Premises as of the commencement of the Term in their then "as is" condition and that they will take good care of the Subleased Premises, and will commit no waste, and will not do, suffer or permit to be done any injury to the same; that they will keep said Subleased Premises in at least as good order, condition and state of repair required of Sublessor under the Prime Lease, ordinary wear and tear excepted; that they will permit the Sublessor to enter onto the Subleased Premises at any and all reasonable times to inspect the same or for any other proper purpose without liability on the part of Sublessor for any loss or interruption of business occasioned thereby, and that they will not do or permit to be done any act or thing contrary to the covenants and agreements made by the Sublessor in the Prime Lease. Sublessee shall also, at their sole cost and expense, comply with all applicable local, state and federallaws, ordinances, codes and regulations, and with all rules and regulations promulgated by companies, which from time to time insure against loss or damage to, or against injuries or deaths occurring on or about, the Subleased Premises. In no event shall Sublessee allow the Subleased Premises to be used for any use which makes void or voidable any insurance in force with respect to the Subleased Premises or makes it impossible to obtain insurance, creates a public or private nuisance, or is illegal, unlawful, immoral, or is a hazardous business, trade, occupation, activity or purpose. (7) Alterations. Sublessee agrees that any alterations or improvements will be made in good and workmanlike manner and that it will not make any alterations or improvements in or to • the Subleased Premises except in compliance with Prime Lease and with all applicable laws, ordinances, codes and regulations and without obtaining the prior written consent of the Sublessor, 2 but such consent will not be unreasonably withheld or unduly delayed if Landlord grants its consent • thereto. Sublessor may require Sublessee, at the end of the term and at Sublessee's expense, to remove all alterations and improvements made by Sublessee and to repair any damage caused by such removal. (8) Liability of Sublessor; Assignment of Right of Action. Sublessor shall have no responsibility whatsoever with respect to the Subleased Premises or the condition thereof;provided, however, that the subleased premises shall be habitable. Sublessor shall not be liable for any nonperformance of or noncompliance with or breach or failure to observe any term, covenant or condition of the Prime Lease upon Landlord's part to be kept, observed, performed or complied with, or for any delay or interruption in Landlord's performing its obligations thereunder. Sublessor hereby assigns unto Sublessee, for so long as this Sublease shall be in force and effect, any and all rights and causes of action which it may have against Landlord with respect to the Subleased Premises due to defaults by Landlord under the Prime Lease. Sublessor agrees to cooperate with and join Sublessee in claims or suits brought by Sublessee against Landlord under the Prime Lease, provided that the costs and expenses of such participation shall be borne by Sublessee. (9) Insurance; Indemnification. Sublessee shall continuously maintain public liability insurance with respect to death or injury to persons and damage to or destruction of property occurring at or about the Subleased Premises. Such policy of insurance shall be in form and amount reasonably satisfactory to Sublessor, shall name Sublessor and/or Landlord as an additional insured party and shall be delivered to Sublessor. Sublessee hereby agrees to indemnify and hold harmless Sublessor from, and shall reimburse Sublessor for, all costs and expenses, including reasonable legal • expenses, incurred by Sublessor in connection with the defense of all claims and demands of third persons, whether or not suit is brought, including but not limited to those for death, for personal injuries, or for property damage, arising out of any default of Sublessee in performing or observing any term, covenant, condition or provision of this Sublease, or out of the use or occupancy of the Subleased Premises by the Sublessee, or out of any of the acts or omissions of the Sublessee, its agents, representatives, employees, customers, guests, invitees or other persons who are doing business with Sublessee or who are at the Subleased Premises with Sublessee's consent. Sublessee, for itself and its insurers, hereby further expressly waives all claims against Sublessor for any and all damages to persons or property caused by or resulting from sublessee's negligence. Sublessee agrees that said insurance policies shall contain waiver of subrogation rights against Sublessor. (10) Termination; Surrender of Subleased Premises. This Sublease shall terminate at the end of the term hereof or upon any default arising under the Prime Lease without the necessity of any notice from either Sublessor or Sublessee to terminate the Sublease. Sublessee hereby agrees that they will peacefully and quietly vacate and surrender the Subleased Premises to the Sublessor at the expiration of the term,in as good order and repair as required under this Sublease and the Prime Lease, normal wear and tear excepted. It is further understood and agreed by and between the parties hereto that existence of this Sublease is dependent and conditioned upon the continued existence of the Prime Lease, and in the event of the cancellation or termination of said Prime Lease, this Sublease automatically shall be terminated except for the return of any prepaid rent in any form whatsoever. Sublessor shall have no liability to Sublessee due to the termination of the Prime Lease by reason of any default by Sublessee hereunder, by reason of any condemnation or destruction of the Subleased Subleased Premises, or by any other reason not within the control of • Sublessor. 3 (11) Sublease and Subletting. Sublessee may not assign this Sublease or sublet all or any • part of the Subleased Premises. Sublessee may not pledge this Sublease, or allow any liens to be placed hereon, or suffer this Sublease or any portion thereof to be attached or taken upon execution. (12) Sublessor's Right to Cure Defaults. If Sublessee shall default in the observance or performance of any of Sublessee's covenants, agreements or obligations hereunder, Sublessor may, but it is not obligated, and without limiting any other remedy which Sublessor may have by reason of such default, cure the default and charge the cost thereof to Sublessee including, without limitation, reasonable attorney's fees. Sublessee shall pay the same within ten (10) days after receipt of an invoice therefore from Sublessor, together with interest thereon at the lesser of the rate of twelve percent (12%) per annum or the maximum rate allowed by law. (13) A. Default by Sublessee. If Sublessee shall default in the payment of any installment of rent or other monies to be paid under this Sublease, or if Sublessee shall default in the observance or performance of any of Sublessee's other covenants, agreements or obligations hereunder, or if any proceeding is commenced by or against Sublessee for the purpose of subjecting the assets of Sublessee to any law relating to bankruptcy or insolvency, or for appointment of a receiver for Sublessee or for any of Sublessee's assets, or if Sublessee makes a general Sublease of Sublessee's assets for the benefit of creditors; then Sublessor, at its option, after giving sublessee ten (10) days written notice during which time sublessee may cure such default, may terminate this Sublease, may reenter the Subleased Premises and remove all persons and property therefrom, and have,regain and enjoy possession of the Subleased Premises and,in addition, Sublessor shall have all of the rights and remedies against Sublessee as are available to Landlord against Sublessor pursuant • to the Prime Lease. Sublessee hereby expressly waives service of any notice of Sublessor's intention to reenter and waives all right of restoration to possession of the Subleased Premises after reentry or after judgment for possession thereof. In case of any such termination, and in addition to any other remedies which Sublessor may have, Sublessee shall indemnify Sublessor for all damages Sublessor may incur by reason of such default, including the cost of recovering the Subleased Premises, reasonable attorney's fees and expenses incurred in enforcing any term of this Sublease, and the rent reserved in this Sublease for the remainder of the Term, all of which amounts shall be immediately due and payable to Sublessor. B. Default by Sublessor. If sublessor shall default in the observance or performance of any of sublessor's covenants, agreements, or obligations hereunder, sublessee shall have the right, after giving sublessor ten (10) days written notice, to terminate this sublease and to pursue all available remedies at law and in equity (14) Security Interest. Sublessor shall have a security interest in all exterior signs, floor coverings, or drapes, owned by Sublessee and installed on the Subleased Premises, for rent and other sums which may become due Sublessor, or upon any default, under this Sublease and the Prime Lease. Sublessee agrees and consents to such UCC filings as Sublessor may require as necessary to perfect such security interest. (15) Expenses and Attorney's Fees. In the event legal action is commenced by either party to enforce its rights hereunder, the non-prevailing party shall pay the prevailing party's reasonable attorney's fees within thirty (30) days of receipt of an invoice therefore. 4 (16) Relocation. In the event that the Landlord exercises its rights,if any under the Prime • Lease to relocate the Subleased Premises, then Sublessor shall have the same right to relocate the Subleased Premises, and sublessor shall pay sublessee's reasonable costs for such relocation. (17) Notice. Any notices or demands (not to include invoices) permitted or required hereunder shall be deemed given or made if, and shall not be deemed to have been delivered or made unless, in writing and deposited in the United States mails, registered or certified, postage prepaid, or deposited with a nationally recognized overnight courier service, addressed to Sublessor and Sublessee jointly as follows: If to Sublessor: City of Elk River Economic Development Authority Elk River City Hall Elk River, Minnesota 55330-0490 Attention: Economic Development Dept. If to Sublessee: Rob Henningsgard Lap2 Technology Corporation 942 Main Street, Suite 200 Elk River, MN 55330 which addresses may be changed from time to time by notice as above provided. Sublessee agrees to furnish Sublessor immediately upon Sublessee's receipt thereof any and all communications received by Sublessee from the Landlord under the Prime Lease. Sublessee further agrees to send to Sublessor concurrent notice of any notice or demand sent to said Landlord. (18) Relationship of the Parties. This Sublease does not and shall not create the relationship of principal and agent, or of partnership, or of joint venture,or of any other association between Sublessor and Sublessee, the sole relationship between the parties hereto being strictly Sublessor and Sublessee. (19) Severability. If any term, condition or provision of this Sublease, or the application thereof to any person or circumstance, shall, to the extent be held to be invalid or unenforceable, the remainder hereof, and the application of such term, provision, and condition to persons or circumstances other than those as to whom it shall be held invalid or unenforceable, shall not be affected thereby, and this Sublease, and all of the terms, provisions, and conditions hereof, shall, in all other respects, continue to be effective and to be complied with to the full extent permitted by law. (20) Signage. Sublessee, at Sublessee's cost and expense, may place its name on the appropriate area of the complex's sign. All such additions to existing signs or other signs shall be designed, constructed, and installed, at Tenant's sole cost and expense, in accordance with such uniform sign criteria as may be promulgated by Landlord and Sublessor. The right to display Tenant's trade name shall terminate upon the expiration of the Sublease or sooner termination as provided herein. s 5 IN WITNESS WHEREOF, the parties hereto have fully executed this Sublease on the day and year first written above. SUBLESSOR: City of Elk River Econo .c Development Authori I A if By: "'�. . / t� .;L Ad& Witness J1 � �tongoll —114 11 Its: r- eek.: By: _40104f- //i Catherine Mehelich Its: Executive Director SUBLESSEE: Lap2 Technology� Corp ation By: (61 Witness Rob Henningsgard Its: President • • 6 Exhibit A • Prime Lease • 7 EXHIBIT A FINAL LEASE • (Multi-Tenant Building) THIS LEASE, made as of the / ? day of (1a-A-<1- 1997, by and between Larry Hickman, hereinafter called "Landlord" and City of Elk River Economic Development Authority, a Public Body Corporate and Politic, hereinafter called "Tenant." ARTICLE I. - BASIC TERMS 1.01 (A) Address of Landlord: 12888 - 187th Circle NW Elk River. MN 55330 or such other address as may from time to time be designated by Landlord in writing. (B) Address of Tenant: Elk River City Hall 13065 Orono Parkway Elk River. MN 55330 or such other address as may from time to time be designated by Tenant in writing. (C) Premises: Approximately 13.186 square feet of space in the Building as shown on Exhibit "A" attached hereto. • (D) Building: The building in which the Premises is located,o ated, the common address of which is 16820 Highway I0. consisting of approximately 28.000 square feet, together with the land, and any parking areas, walkways, landscaped areas and other improvements appurtenant thereto. The legal description of the parcel of real estate on which the Building is situated is attached hereto as Exhibit "B". (E) Term: The period of time commencing April 15. 1997 and expiring April 14. 1999 unless sooner terminated as set forth herein or extended as provided in Article III hereof. (F) Rent: All sums, moneys or payments required to be paid by Tenant to Landlord pursuant to this Lease. (3) Base Rent: 111111Pfor the TermilErper square foot), payable as follows: (I) WO per annum 111131per month) for the period from April 15. 1997 through April 14. 1998; (2) MS per annum per month) for the period from April 15. 1998 through April 14. 1999: • 1. (H) Leasehold Improvements: At the actual cost of S , not to exceed 581.253. • for the Term, payable as follows: (1) 525.000 at commencement of the Term; (2) The balance, together with interest at the rate of 8.5% per annum, in equal monthly installments commencing on April 15. 1997. (I) Permitted Uses: Office, manufacturing, warehouse and other uses permitted by applicable zoning ordinances. (J) Broker(s): NONE (K) Exhibits: A. Description of Premises B. Legal Description of Real Estate C. Plans and Specifications 1.02 Effect of Reference to Basic Terms: Each reference in this Lease to any of the Basic Terms contained in Section 1.01 shall be construed to incorporate into such reference all of the definitions set forth in Section 1.01. ARTICLE II. - GRANT AND TERM S 2.01 In consideration of the rents, covenants, agreements and conditions hereinafter provided to be paid, kept, performed and observed, Landlord leases to Tenant and Tenant hereby hires from Landlord the Premises described in Section 1.01(C). 2.02 Tenant shall have and hold the Premises for and during the Lease Term described in Section 1.01 (E), subject to the payment of the Rent and to the full and timely performance by Tenant of the covenants and conditions hereinafter set forth. 2.03 In the event Tenant takes possession of the Premises prior to the beginning of the Term hereof with Landlord's consent, all the provisions of this Lease shall be in full force and effect upon Tenant's so taking possession except that no payment of rent shall be made with respect to the period prior to the beginning of the Term hereof. ARTICLE III. - OPTION TO EXTEND 1 ERN 3.01 Tenant is hereby granted the option to extend the Term of this Lease for 3 (three) successive Renewal Tenns of 2 (two) years each. Such option may be exercised by Tenant at least 60 days prior to the expiration of the initial Term or any Renewal Term by Tenant giving written notice of the exercise of Tenant's option hereunder to the Landlord. If Tenant does not give such notice of exercise of this option, this Lease shall terminate at the end of the then a current Term or Renewal Term and this option shall also expire and be of no further force and effect. In the event that Tenant does exercise an option for a Renewal Term hereunder, Tenant's occupancy of the Premises shall be in accordance with all of the terms and conditions of this Lease except that the Base Rent for each Renewal Term shall be as follows: First Renewal Term: isztper square foot or Min per annum per month) Second Renewal Term: : per square foot or per annum per month) Third Renewal Term: Not to exceedlanper square foot organ per annum ink per month) ARTICLE III. - RESERVATIONS BY LANDLORD 4.01 Landlord excepts and reserves the roof, exterior walls and Common Areas of the Building as described in Article XVII below, and further reserves the right to place, install, maintain, carry through, repair and replace such utility lines, pipes, wires, appliances, tunneling and the Iike in, over, through and upon the Premises as may -be reasonably necessary or advisable for the servicing of the Premises or any other portions of the Building. 4.02 Notwithstanding any provision in this Lease to the contrary, it is agreed that Landlord reserves the right, without invalidating this Lease or modifying any provision thereof, at any time, and from time to time, (i) to make alterations, changes and additions to the Building, (ii) to add additional areas to the Building and/or to exclude areas therefrom, (iii) to construct additional buildings and other improvements, (iv) to remove or relocate the whole or any part of • any building, and (v) to relocate any other tenant in the Building. It is further understood that the existing layout of the Building, and any appurtenant walks, roadways, parking areas, entrances, exits, and other improvements shall not be deemed to be a warranty, representation or agreement on the part of the Landlord that same will remain exactly as presently built, it being understood and agreed that Landlord may change their number, dimensions and locations of the walks, as Landlord shall deem proper. ARTICLE IV. USE: HAZARDOUS MATERIAL 5.01 The Premises hereby leased shall be used by and/or at the sufferance of Tenant only for the purposes set forth in Section 1.01(I) above and for no other purposes. Tenant shall not use or permit the use of the Premises in any manner that will tend to create waste or a nuisance, or will tend to unreasonably disturb other tenants in the Building, and shall keep its mechanical apparatus free of noise and vibration which may be transmitted beyond the confines of the Premises. 5.02 Tenant covenants throughout the Lease Term, at Tenant's sole cost and expense, promptly to comply with all laws and ordinances and the orders, rules and regulations and requirements of all federal, state and municipal governments and appropriate departments, commissions, boards, and officers thereof, foreseen or unforeseen, ordinary as well as extraordinary, and whether or not the same requirestructural repairs or alterations, which may be applicable to the Premises, or the • use or manner of use of the requirements of all policies of public liability, fire and all other policies of insurance at any time in force with respect to the buildings and improvements on the Premises and the equipment thereof. 3 5.03 In the event any Hazardous Material (hereinafter defined) is brought or caused to be brought into or onto the Premises or the Building by Tenant, Tenant shall handle any such material in compliance with all applicable federal, state and/or local regulations. For purposes of this Section, "Hazardous Material" means and includes any hazardous, toxic or dangerous waste, substance or material defined as such in (or for purposes of) the Comprehensive Environmental Response, Compensation, and Liability Act, any so-called "Superfund" or "Superlien" law, or any federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning, any hazardous, toxic or dangerous waste, substance or material, as now or at any time hereafter in effect. Tenant shall submit to Landlord prior to the time that Hazardous Materials are brought onto the Premises and on an annual basis copies of its approved hazardous materials communication plan, OSHA monitoring plan, and permits required by the Resource Recovery and Conservation Act of 1976, if Tenant is required to prepare, file or obtain any such plans or permits. Tenant will comply with reasonable requests of Landlord regarding the handling, of Hazardous Materials on the Premises. Tenant will indemnify and hold harmless Landlord from any losses, liabilities, damages, costs or expenses (including reasonable attorneys' fees) which Landlord may suffer or incur as a result of Tenant's introduction into or onto the Premises of any Hazardous Material. This Section shall survive the expiration or sooner termination of this Lease. ARTICLE VI. - RENT 6.01 Base Rent. Tenant covenants to pay without notice, deduction, set-off or abatement to Landlord the Base Rent specified in Section 1.01(0) in lawful money of the United States in equal consecutive monthly installments in advance on the fifteenth day of each month during the Lease Term. Rent for any partial month shall be prorated on a mer diem basis. Rent shall be payable to Landlord at Landlord's address shown at Section 1.01(A) above or such other place as Landlord may designate from time to time in writing. Tenant shall pay the first full month's Base Rent at the beginning of the term. Base Rent includes Real Estate Taxes, Insurance Premiums and Common Area Expenses, and Tenant will not be required to pay any additional rent therefor or for increases thereto. 6.02 Service Charge. Tenant's failure to make any monetary payment required of Tenant hereunder within ten (10) days of the due date therefor shall result in the imposition of a service charge for such late payment in the amount of five percent (5%) of the amount due. In addition, any sum not paid within thirty (30) days of the due date therefor shall bear interest at the rate of eighteen percent (18%) per annum (or such lesser percentage as may be the maximum amount permitted by law) from the date due until paid. ARTICLE VII. - U I ILITIES AND SERVICES 7.01 Landlord shall provide the following as a service for all Tenants of the Building: electricity, • gas. water, fuel, sewer charges, trash hauling and any other services or utilities used in, servicing or assessed against the Premises, unless otherwise herein expressly provided. Tenant shall contract in its own name and timely pay for all charges for telephone and fax services. • ARTICLE VIII. - QUIET ENJOYMENT 8.01 Landlord covenants that Tenant, on paying the Rents herein provided and keeping, performing and observing the covenants, agreements and conditions herein required of Tenant, shall peaceably and quietly hold and enjoy the Premises for the term aforesaid, subject, however, to the terms of this Lease. ARTICLE VIII. - SUBLETT 4G 9.01 Landlord acknowledges that Tenant will operate a "business incubator" in the Premises and will sublet portions of the Premises to other businesses. Notwithstanding any sublease, Tenant shall remain liable hereunder and shall not be released without the express written agreement of Landlord to such release. Tenant shall retain all rents payable to Tenant arising out of such subleases. ARTICLE IX. - DAMAGE OR DESTRUCTION 10.01 If the Premises or the Building or any part thereof is so damaged by fire or other casualty, cause or condition whatsoever as to be substantially untenantable and the Landlord shall determine not to restore same, Landlord may, by written notice to Tenant given within sixty (60) days after such damage, terminate this Lease as of the date of the damage. If this Lease is not • telininated as above provided and if the Premises are made partially or wholly untenantable as aforesaid, Landlord, at its expense, shall restore the same with reasonable promptness to the condition in which Landlord furnished the Premises to Tenant at the commencement of the term of this Lease as to those items that were provided at Landlord's expense without any reimbursement by Tenant. Landlord shall be under no obligation to restore any alterations, improvements or additions to the Premises made by Tenant or paid for by Tenant, including, but not limited to, any of the initial finish done or paid for by Tenant or any subsequent changes, alterations or additions made by Tenant. 10.02 If, as a result of fire or other casualty, cause or condition whatsoever the Premises are made partially or wholly untenantable and, if Landlord has not given the termination notice within sixty (60) days as above provided for and fails within one hundred twenty (120) days after such damage occurs to eliminate substantial interference with Tenant's use of the Premises or substantially to restore same, Tenant may terminate this Lease as of the end of said one hundred twenty (120) days by notice to Landlord given not later than five (5) days after expiration of said one hundred twenty (120) day period. If the Premises are rendered totally untenantable but this Lease is not terminated, all rent shall abate from the date of the fire or other relevant cause or condition until the Premises are ready for occupancy and reasonably accessible to Tenant. If a portion of the Premises is untenantable, rent shall be prorated on a diem basis and apportioned in accordance with the portion of the Premises which is usable by the Tenant until the damaged part is ready for the Tenant's occupancy. In all cases, due allowance shall be made • for reasonable delay caused by adjustment of insurance loss, strikes, labor difficulties or any cause beyond Landlord's reasonable control. For the purposes of this Lease, the Premises shall be considered tenantable so long as and to the extent that the Premises are occupied. In any 5 • event, Tenant shall be responsible for the removal or restoration, when applicable, of all its damaged property and debris from the Premises, upon request by Landlord or reimburse Landlord for the cost of removal. ARTICLE XI. - LANDLORD'S RIGHTS 11.01 Landlord reserves the following rights: (a) To change the name of the Building without notice or liability to Tenant; (b) To exhibit the Premises to others and to display "For Lease" signs on the Premise during the last six months of the Term or any extension thereof; (c) To remove abandoned or unlicensed vehicles and vehicles that are unreasonably interfering with the use of the parking lot by others and to charge the responsible tenant for the expense of removing said vehicles; (d) To take any and all measures, including making inspection, repairs, alterations, additions and improvements to the Premises or to the Building as may be necessary or desirable for safety, protection or preservation of the Premises or the Building or Landlord's interests, or as may be necessary or desirable in the operation thereof. Landlord may enter upon the Premises at any reasonable time for the purpose of exercising any or all of the foregoing rights hereby reserved without being deemed guilty of an eviction or disturbance of Tenant's use or possession and without being liable in any manner to Tenant. ARTICLE XII. - HOLDING OVER 12.01 In the event of a holding over by Tenant after expiration or termination of this Lease without the consent in writing of Landlord, Tenant shall be deemed a tenant at sufferance and shall pay rent for such occupancy at the rate equal to the last-current aggregate Base prorated for the entire holdover period. Except as otherwise meed, any holding over with the written consent of Landlord shall constitute Tenant month-to-month tenant. ARTICLE XII. - SIGNS AND ADVERTISEMENTS 13.01 Tenant shall not put upon nor permit to be put upon any part of the Building, any signs, billboards or advertisements whatever in any location or any form without the prior written consent of Landlord. 13.02 Tenant shall be permitted to put upon any part of the Premises any signs necessary for the purpose of showing a business location, or as determined necessary and appropriate to the • operation of a"business incubator". • ARTICLE XIII. - MORTGAGE AND TRANSFER: ESTOPPEL CERTIFICATES 14.01 Landlord shall have the right to transfer, mortgage, pledge or otherwise encumber, assign and convey, in whole or part, the Premises, the Building, this Lease, and all or any part of the rights now or thereafter existing and all rents and amounts payable to Landlord under the provisions hereof. Nothing herein contained shall limit or restrict any such rights, and the rights of the Tenant under this Lease shall be subject and subordinate to all instruments executed and to be executed in connection with the exercise of any such rights, including, but not limited to, the lien of any mortgage. deed of trust, or security agreement now or hereafter place upon Landlord's interest in the Premises. This paragraph shall be self-operative. Tenant covenants and agrees to execute and deliver upon demand such further instruments subordinating this Lease to the lien of any such mortgage, deed of trust or security agreement as shall be requested by the Landlord and/or mortgagee or proposed mortgagee or holder of any security agreement provided, however, that so long as Tenant is not in,default under this lease, Tenant's right to occupy the Premises shall not be affected as a result of such subordination or the exercise of any rights by any mortgagee or other successor to Landlord or Landlord's mortgagee. 14.02 Estoppel Certificates. Upon Landlord's written request, Tenant shall execute, acknowledge and deliver to Landlord a written statement certifying: (i) that none of the terms or provisions of this Lease have been changed (or if they have been changed, stating how they have been changed); (ii) that this Lease has not been cancelled or terminated; (iii) the last date of payment of the Base Rent and other charges and the time period covered by such payment; (v) • such other matters as may be reasonably required by Landlord or the holder of a mortgage, deed or trust or lien to which the property is or becomes subject. Tenant shall deliver such statement to Landlord within ten (10) days after Landlord's request. If Tenant does not provide such statement within such 10-day period, then any such statement by Tenant may be given by Landlord, and any prospective purchaser or encumbrancer, may conclusively presume and rely upon the following facts; (ii) that this Lease has not been cancelled or terminated-except as otherwise represented by Landlord, (iii) that not more than one month's Base Rent or other charges have-been.paid in advance; and.(iv) that Landlord is not in default under the Lease. In such event, Tenant shall be stopped from denying the truth of such facts. ARTICLE XIV. - EMINENT DOMAIN 15.01 If the Premises or such substantial part thereof as reasonably renders the remainder unfit for the intended uses shall be taken by any competent authority under the power of eminent domain or be acquired for any public or quasi-public use or purpose, the Term of this Lease shall cease and teinjinate upon the date when the possession of said Premises or the part thereof so taken shall be required for such use or purpose and without apportionment of the award and Tenant shall not have a claim against Landlord for the value of any unexpired term of this Lease. If any condemnation proceeding shall be instituted in which it is sought to take any part of the Building or to change the grade of any street or alley adjacent to the Building and such taking or change of grade makes it necessary or desirable to remodel the Building to conform to the changed grade, Landlord shall have the right to terminate this Lease after having given written 0. notice of termination to Tenant not less than ninety (90) days prior to the date of to iiination designated in the notice. In either of said events, rent at the then current rate shall be apportioned 7 • as of the date of the termination. No money or other consideration shall be payable by the Landlord to the Tenant for the right of termination and the Tenant shall have no right to share in the condemnation award or in any judgement for damages caused by the taking or the change of grade. Nothing in this paragraph shall preclude an award being made to Tenant by the condemning authority for loss of business or depreciation to and costs of removal of equipment or fixtures, provided that such award shall not diminish the award otherwise available to Landlord. • ARTICLE XVI. - LANDLORD'S INABILITY TO PERFORM 16.01 If, by reason of inability to obtain and utilize labor, materials or supplies; circumstances directly or indirectly the result of a state of war or national or local emergency; any laws, rules, orders, regulations or requirements of any governmental authority now or hereafter in force; strikes or riots; accident in, damage to or the making of repairs, replacements, or improvements to the Premises or any of the equipment thereof; or by reason of any other cause beyond the reasonable control of Landlord, Landlord shall be unable to perfoim or shall be delayed in the performance of any covenant to supply any service, such nonperformance or delay in performance shall not render Landlord liable in any respect for damages to either person or property, constitute a total or partial eviction, constructive or otherwise, work an abatement of rent of relieve Tenant from the fulfillment of any covenant or agreement contained in this Lease. • ARTICLE XVI. - COM-1\./ION AREA 17.01 The term "Common Area" means all the areas and facilities of the Building not intended for renting and, instead, designed for the common use and benefit of Landlord and all or substantially all of the tenants, their employees, agents, customers and invitees. The Common Area includes, but is not limited to, all parking lots, rail spurs, truck courts, landscaped and vacant areas, driveways, walks and curbs with facilities appurtenant to each as such areas may exist from time to time. Landlord shall operate and maintain the Common Area at its own cost. Landlord hereby grants to Tenant the non-exclusive revocable use of the Common Area by Tenant, Tenant's employees, agents, customers and invitees, which use shall be subject at all times to such reasonable, uniform and non-discriminatory rules and regulations as may from time to time be established by Landlord. 17.02 Tenant shall not use any part of the Building exterior to the Premises for outside storage. No trash, crates, pallets, or refuse shall be permitted anywhere outside the Building by Tenant except in enclosed metal containers to be located as directed by Landlord. Tenant shall not park any trucks or trailers, loaded or empty, except in front of the docks on the concrete apron provided for such purposes. Tenant shall not park or permit parking of vehicles overnight anywhere about the Building's parking areas without the prior written consent of Landlord. ARTICLE XVII. - COMPLETION AND ACCEPTANCE OF PREMISES. MAINTENANCE • AND CARE 18.01 Completion and Acceptance. Landlord will complete the Premises in accordance with the Plans and Specifications attached hereto as Exhibit "C". Tenant acknowledges that it will reimburse Landlord for the actual documented costs, not to exceed 581.253. of completing such • improvements as described in the Plans and Specifications artached as Exhibit C. Tenant will examine the Premises before taking possession hereunder. Unless Tenant furnishes Landlord with a notice in writing specifying any defect in the construction of the Premises within ten (10) days after taking possession, such taking of possession shall be conclusive evidence that at the time thereof the Premises were in good order and satisfactory condition and that all of the work to be completed by Landlord as specified on Exhibit C has been satisfactorily completed. Any leasehold improvements to be completed by Tenant as specified on Exhibit C or as otherwise allowed during the Term of this Lease shall be performed by Tenant in a good workmanlike manner and in accordance with all laws and regulations of applicable governing bodies. 18.02 Maintenance and Repair by Tenant. Tenant shall be responsible for all maintenance and repair to the Premises of whatsoever kind or nature that is not hereinafter set forth specifically as the obligation of Landlord. Tenant shall take good care of the Premises and fixtures, and keep them in good repair and free from filth, overloading, danger of fire or any pest or nuisance, and repair any damage or breakage done by Tenant or Tenant's agents, employees or invitees, including damage done to the Building by Tenant's equipment or installations. At the end of the term of this Lease or any extensions of renewal hereof, Tenant shall quit and surrender the Premises broom clean in as good condition as when received by Tenant, normal wear and tear excepted. In the event Tenant fails to maintain the Premises as provided for herein, Landlord shall have the right but not the obligation, to perform such maintenance as is required of Tenant in which event Tenant shall promptly reimburse Landlord for its costs in providing such • maintenance or repairs. 18.03 Maintenance and Repair by Landlord. During the term of this Lease, Landlord shall keep and maintain the roof, exterior walls, including glass and plate glass, gutters and downspouts of the Building and Premises in good condition and repair. Landlord shall be under no obligation and shall not be liable for any failure to make repairs that are Landlord's responsibility herein until and unless Tenant notifies Landlord in writing of the necessity therefor, in which event Landlord shall have a reasonable time thereafter to make such repairs. Landlord reserves the right td the exclusive use of the roof and exterior walls of the Building which Landlord is so obligated to maintain and repair. If any portion of the Premises which Landlord is obligated to maintain or repair is damaged by the negligence of Tenant, its agents, employees or invitees, then repairs necessitated by such damage shall be paid for by Tenant. Landlord shall furnish and pay for the upkeep, maintenance, repair and periodic servicing of the heating, ventilation and air conditioning system servicing the Premises. 18.04 Americans With Disabilities Act (ADA) Compliance. Landlord agrees to provide access from the parking lot through and including the main entrance to the Premises which complies with all applicable requirements of ADA. Tenant shall be responsible for complying with ADA requirements within the Premises. ARTICLE XVIII. - ALTERATIONS AND ADDITIONS. MECHANIC'S LIENS • 19.01 Alterations and Additions. Tenant shall not make any alteration, improvements, or additions to the Premises without prior written consent and approval of plans therefor by 9 • Landlord. Alterations, improvements or additions so made by either of the parties upon the Premises, moveable furniture and equipment placed in the Premises at the expense of Tenant, shall be and become the property of Landlord and shall remain upon and be surrendered with the Premises as part thereof at the termination of this Lease without disturbance, molestation, injury, or damage, unless Landlord elects to require Tenant to remove such alterations or improvements from the Premises. In the event damage to the Premises or the Building shall be caused by moving said furniture and equipment in or out of the Premises, said damage shall be promptly repaired at the cost of Tenant. 19.02 Mechanic's Liens. Tenant shall not cause nor permit any mechanic's liens or other liens to be placed upon the Premises or the Building and in case of the filing of any such lien claim therefor, Tenant shall promptly discharge same; provided however, that Tenant shall have the right to contest the validity or amount of any such lien upon its prior posting of security with Landlord, which security, in Landlord's sole reasonable judgment, must be adequate to pay and discharge any such liens in full plus Landlord's reasonable estimated of its legal fees. Tenant agrees to pay all legal fees and other costs incurred by Landlord because of any mechanic's or other liens attributable to Tenant being placed upon the Premises or the Building. ARTICLE X.`{. INSURANCE 20.01 Public Liability. Property Damage Insurance. Tenant covenants and agrees to • maintain on the Premises at all times during the term of this Lease, or any extension or renewal thereof, a policy or policies of comprehensive public liability and property damage insurance with not less than 5600,000.00 combined single limits for both bodily injury and property damage, which policy or policies shall name Landlord as additional insureds. 20.02 Fire and Extended Coverage Insurance - Waiver of Subrogation. Landlord shall maintain in effect with an insurance company authorized to conduct business in the State of Minnesota policies of insurance covering the Leased Premises providing protection (excluding excavation, footings and foundations) against all casualties included under standard insurance industry, practices within the classification of "Fire and Extended Coverage", each of such casualties being hereinafter referred to as an "Insured Casualty." At Landlord's option such policy may include rental interruption insurance. Tenant shall maintain in effect with an insurance company authorized to conduct business in the State of Minnesota and which has been approved by Landlord insurance covering Tenant's trade fixtures, furnishings and equipment and leasehold improvements made to the Leased Premises by Tenant providing protection to the extent of the replacement value of the same against the Insured Casualties. Landlord and Tenant hereby grant to each other, on behalf of any insurer providing fire and extended coverage to either of them covering the Leased Premises, improvements thereon, or contents thereof, a waiver of any right of subrogation any such insurer of one party may acquire against the other by virtue of payment of any loss under such insurance. Neither parry shall have any interest in the proceeds of insurance obtained by the other party. Without Landlord's consent, Tenant shall not • knowingly do anything in or about the Leased Premises which will in any way tend to increase insurance rates or invalidate any policy on the Leased Premises or the building. If Tenant inadvertently engages in any such activity, Tenant shall, upon notice thereof, cease such activity unless Landlord consents thereto. If Landlord shall consent to such use, Tenant agrees to pay as additional rental any increase in premiums for insurance against loss by fire or extended coverage • risks resulting from the business carried on in the Leased Premises by Tenant. 20.03 Indemnification of Landlord. Tenant shall indemnify and defend Landlord, its employees and agents and save them harmless from and against any and all loss (including loss of rents payable by Tenant or other tenants) and against all claims, actions, damages, liability and expenses in connection with loss of life, bodily and personal injury or damage to the Building arising from any occurrence in, upon or at the Premises or any part thereof, occasioned wholly or in part by any act or omission of Tenant, its agents, contractors, employees, servants, licenses, concessionaires or invitees or by anyone permitted to be on the Premises by Tenant. Tenant assumes all risks of and Landlord shall not be liable for injury to person or damage to property resulting from the condition of the Premises or from the bursting or leaking of any and all pipes, utility lines, connections, or air conditioning or heating equipment in, on or about the Premises, or from water, rain or snow which may leak into, issue or flow from any part of the Building. Tenant agrees, at all times, to indemnify and hold Landlord, its employees and agents harmless against all actions, claims, demands, costs, damages or expenses of any kind which may be brought or made against them or which they may pay or incur by reason of Tenant's occupancy of the Premises or Tenant's negligent performance of or failure to perform any of its obligations under this Lease. In case Landlord or its employees or agents shall, without fault on their part, be made a party to any litigation commenced by or against Tenant, then Tenant shall indemnity, defend and hold them harmless and shall pay all costs, expenses and reasonable attorney's fees iincurred or paid by them or such managing agent in connection with such litigation. ARTICLE CC. - DEFAULT AND REMEDIES 21.01 In the event: (a) Tenant shall at any time fail to pay any item of Rent when due, or (b) Tenant shall fail to keep, perform or observe any other covenant, agreement, condition or undertaking hereunder and shall fall to remedy such default within ten (10) days after written notice thereof has been mailed by Landlord to Tenant; or if such default is one that will take longer than ten (10) days to remedy, Tenant fails to commence curing such default within ten (10) days and/or fails diligently to pursue such cure to completion; or (c) The Premises shall be vacated by Tenant for any period for which Tenant has not paid its.Rent; Landlord shall have the right, without further notice to or demand, to re-enter and take exclusive possession of the Premises, with or without force or legal process, and to refuse to allow Tenant to enter the same or have possession thereof; to change the locks on the doors to the Premises; • take possession of any furniture or other property in or upon the Premises (Tenant hereby waiving the benefit of all exemptions by law), sell the same at public or private sale without notice and apply the proceeds thereof to the costs of sale, payment of damages and payment of 11 • the rent due under this Lease; all without being liable to Tenant for any damages or to any prosecution therefor; and (i) As agent of Tenant to relet the Premises or any part thereof for the balance of the Lease term or for a shorter or longer term and receive the rents therefor, applying them first to the payment of the expense of such reletting and, second, to the payment of damages suffered to the Premises and rents due and to become due under this Lease, Tenant remaining liable for and hereby agreeing to pay Landlord any deficiency; or (ii) To cancel and terminate the remaining term of this Lease, re-enter and take possession of the Premises free of this Lease and thereafter this Lease shall be null and void and the rents in such case shall be apportioned and paid on and up to the date of such entry. Thereafter both parties shall b released and relieved from and of any and all obligations thereafter to accrue hereunder. Tenant shall be liable for all loss and damage resulting from such breach or default; or (iii) To treat such default as an anticipatory breach of this Lease and, as liquidated damages for such default, be entitled to the difference, if • any, between the sum which, at the time of such termination for anticipatory breach represents the then present worth (computed at seven percent per year) of the excess aggregate rents and additional rents payable hereunder that would have accrued over the balance of the Lease term (including extensions) that the Lease would have run had it not been prematurely terminated. 21.02 Landlord's Rights to Cure. Landlord may, but shall not be obligated to, cure any default by Tenant (specifically including, but not by way of limitation, Tenant's failure to obtain insurance, make repairs, or satisfy lien claims) and whenever Landlord so elects, all costs and expenses paid by Landlord in curing such default, including without limitation reasonable attorney's fees, shall be so much Additional Rent due on demand, together with interest at the highest rate then payable by Tenant in the state in which the Premises are located, or in the absence of such a maximum rate at the rate of eighteen percent (13%) per annum, from the date of the advance to the date of repayment by Tenant to Landlord. 21.03 Remedies Cumulative. All rights and remedies provided in this Lease for Landlord's protection shall be cumulative and in addition to any other rights and remedies provided by law. Landlord shall be entitled to recover from Tenant its reasonable attorneys' fees incurred in enforcing its rights hereunder. 21.04 No Waiver. No waiver by Landlord of a breach or default by Tenant under the terms • and conditions of this Lease shall be construed to be a waiver of any subsequent breach or default, nor of any other term or condition of this Lease, and the failure of Landlord to assert any breach or to declare a default by Tenant shall not be construed to constitute unremedied.. • 21.05 No Reinstatement. Except as otherwise provided by applicable laws, no receipt of money by Landlord from Tenant after the expiration or termination of this Lease or after the service of any notice or after the commencement of any suit, or after final judgment for possession of the Premises shall reinstate, continue or extend the Term of this Lease or affect any such notice, demand or suit. 21.06 Default Under Other Leases. A default under this Lease shall, at Landlord's option, be deemed a default under any other leases between Landlord and Tenant for space in the Building. Likewise, a default under any other such lease between Landlord and Tenant shall, at Landlord's option, be deemed a default under this Lease. ARTICLE XXII. - DEFINITION OF LANDLORD 22.01 Landlord Means Owner. The term "Landlord" as used in this Lease, so far as covenants or obligations on the part of Landlord are concerned, shall be limited to mean and include only the owner or owners at the time in question of the fee of the Premises, and in the event of any transfer or transfers of the title to such fee, Landlord herein named (and in case of any subsequent transfers or conveyances, the then grantor) shall be automatically freed and relieved, from and after the date of such transfer or conveyance, of all liability as respects the performance of any covenants or obligations on the part of Landlord contained in this Lease thereafter to be performed; provided that any funds in the hands of such Landlord or the then • grantor at the time of such transfer, in which Tenant has an interest, shall be turned over to the grantee, and any amount then due and payable to Tenant by Landlord or the then grantor under any provisions of this Lease, shall be paid to Tenant when and as provided by the terms of this Lease. ARTICLE XXIII. -NOTICES 23.01 Except as otherwise herein provided, whenever by the terms of this Lease notice shall or may be given either to Landlord or to Tenant, such notice shall be in writing and shall be deemed to have been properly served if hand-delivered or sent by certified mail, return receipt requested, postage prepaid, at the addresses set forth at Sections 1.01(A) and (B) above. The date of such hand-delivery or mailing shall be deemed the date of service. ARTICLE XXIV. - MISCELLANEOUS 24.01 Persons Bound. The agreements, covenants and conditions of this Lease shall be binding upon and inure to the benefits of the heirs, legal representatives, successors and assigns of each of the parties hereto. If there be more than one Tenant herein named, the provisions of this Lease shall be applicable to and binding upon such Tenants jointly and severally, as well as their heirs, legal representatives, successors and assigns. • 24.02 Partial Invalidity. If any term, covenant, condition or provision of this Lease or the application thereof to any person or circumstance shall, to any extent be invalid, unenforceable or violate a party's legal rights, then such term, covenant, condition or provision shall be deemed to 13 • be null and void and unenforceable, however, all other provisions of this Lease, or the application of such term or provision to persons or circumstances other than those to which are held invalid, unenforceable or violative of legal rights, shall not be affected thereby, and each and every other term, condition, covenant and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law. 24.03 Cartions. The headings and captions used throughout this Lease are for convenience and reference only and shall in no way be held to explain, modify, amplify, or aid in the interpretation, construction or meaning of any provisions in this Lease. The words "Landlord" and "Tenant" wherever used in this Lease shall be construed to mean plural where necessary, and the necessary grammatical changes required to make the provisions hereof apply either to corporation, partnerships, or individuals, men or women, shall in all cases be assumed as though in each case fully expressed. 24.04 No Option. Submission of this instrument for examination does not constitute a reservation of nor option for the Premises. The instrument does not become effective as a lease or otherwise until execution and delivery by both Landlord and Tenant. 24.05 Brokers. Tenant represents that it has dealt directly with and only with the broker or brokers set forth at Item 1.01(S) above, and that Tenant knows of no other broker.who negotiated this Lease or is entitled to any commission in connection herewith. Tenant agrees to indemnity, • defend and hold harmless Landlord from and against any commissions or claims by any other broker or brokers pertaining to Tenant's having entered into this Lease. 24.06 Applicable Law. This Lease, its interpretation and enforcement shall be governed by the laws of the state in which the Premises are located. 24.07 Waiver of Jury. Landlord and Tenant agree that, to the extent permitted by law, each shall and hereby does waive trial by jury in any action, proceeding or counterclaim brought by either against the other on any matter whatsoever arising out of or in any way connected with this Lease. 24.08 Allocation of Rent. Landlord and Tenant agree that no portion of the Base Rent paid by Tenant during the portion of the Term of the Lease occurring after the expiration of any period during which such rent was abated shall be allocated for income tax purposes by Landlord or Tenant to such rent abatement period, nor is such rent intended by the parties to be allocable for income tax purposes to any abatement period. ARTICLE XIXV. - ENTIRE AGREEMENT 25.01 This Lease contains the entire agreement between the parties and no modification of this Lease shall be binding upon the parties unless evidenced by an agreement in writing signed • by the Landlord and the Tenant after the date hereof. If there be more than one Tenant named herein, the provisions of this Lease shall be applicable to and binding upon such tenants jointly and severally. • ARTICLE SVT. - EXHIBITS 26.01 Reference is made to the Exhibits listed at Section 1.01 (K) above, which exhibits are attached hereto and incorporated herein by reference. N WITNESS WHEREOF, the parties have signed triplicate counte r.,arts hereof as of the date and year hereinabove set forth. TENANT (Elk River onomic Development Authority) A l f By: Ar Its: Yit— Bv- Its: A- ,-.L LANDLORD (L 1 ic:" •an) �---- • — • • • • • Its S 15 AMENDMENT TO LEASE HIS AMENDMENT TO LEASE ("_amendment") is made this /3 day of 2001 by and between the City of Elk River Economic • Develap ent Authority- ("EDA") and Larry Hickman ("Hickman'). A. The EDA and Hickman entered into a lease agreement ("lease") dated March 18, 1997, included as Attachment I, for the period of April 15, 1997 to April 14, 1999 for 13,186 sf of space at 16820 Highway 10, Elk River, Minnesota for the purpose of establishing a business incubator. The lease was renewed under the provisions stated therein for the period of April 15, 1999 to April. 14, 2001 ("first renewal term"). The lease was again renewed under the same provisions for the period of April 15, 2001 to April 14, 2003 ("second renewal term"). B. On the above date the EDA and Hickman entered into this agreement to amend the lease according to the following terms: 1) The EDA will lease 7522 sf, identified as Suites 130, 140, 230, 240 and commons area, and illustrated in Attachment II, for the remainder of the second renewal term at imper sf or-per month. 2) The EDA is released from its obligation to lease suites 110 and 120, as • identified in Attachment II, for the remainder of the second renewal term. Hickman agrees to offer the EDA the first right of refusal to lease suites 110 and/or 120 at sitsf prior to leasing either or both suites to a third parry. 3) The terms as amended shall take effect the 15th day of September, 2001. C. All provisions of the original lease regarding the second renewal term, the Repayment Agreement, and the Memorandum of Understanding will retain' their full force and effect, except when and where amended by this or other dochments. This amendment shall not preclude the EDA from renewing the lease under the conditions of the third renewal term, include suites 110 and 120 if available, as stated in the original lease. City of Elk River EDA itzz k A. /L.0-4 L. Hi .mar. si' t N • is Executive Director AMENDMENT TO LEASE THIS AMENDMENT TO LEASE ("Amendment") is made this 20th day of • May , 2002 by and between the City of Elk River Economic Development Authority ("EDA") and Larry Hickman ("Hickman"). A. The EDA and Hickman entered into a lease agreement ("lease") dated March 18, 1997 for the period of April 15, 1997 to April 14, 1999 for 13,136 sf of space at 16820 Highway 10, Elk River, Minnesota for the purpose of establishing a business incubator. The lease was renewed under the provisions stated therein for the period of April 15, 1999 to April 14, 2001 ("first renewal term"). The lease was again renewed under the same provisions for the period of April 15, 2001 to April 14, 2003 ("second renewal term"). The EDA and Hickman agreed to an amendment dated September 1, 2001 of the above mentioned "second renew-el term" which released the EDA from its obligation to lease suites 110 and 120. Hickman agreed to offer the EDA the first right of refusal to lease suites 110 and/or 120 at'sf prior to leasing either or both suites to a third party. B. On this day of May 20, 2002 the EDA and Hickman agree to amend the "second renewal term" according to the following terms: • 1) The EDA will lease 9,789 sf, identified as Suites 120, 130, 140, 230, 240 (as identified in Attachment I) and commons area for the remainder of the second renewal term at_per sf or111111111iiper month. 2) In addition to the above term, the EDA will lease Suite 120 until May 206, 2003, which is thirty-six days beyond the end of the second renewal term at aper sf or per month. 3) The terms as amended shall take effect the 20th day of May, 2002. B. All provisions of the original lease regarding the second renewal term, the Repayment Agreement, and the Memorandum of Understanding will retain their full force and effect, except when and where amended by this or other documents. This amendment shall not preclude the EDA from renewing the lease under the conditions of the third renewal term, including suites 110 and 120 if available, as stated in the original lease. City of Elk River EDA Ct ( /7,1-" A/ iLry Hickman- s I re{ elent d‘)./ s Executive Director • EXHIBIT A Description of Premises 16 . , • , . • • 0 1I I . 411=1111.111112i111161.1111111=6111021122-. . . ,,,WHIIIIIIIIIHI t • . . . . . a • fl , . ....... . <3 7 ':1 • . .7.- . - • ... ,; ,1:i fii,:::. . 2 ,,-i .., a a a a 5 a rs, ... ..........,;.., — t --7 I . . Asa ILI 1 III il ...._.,:.:' :. • , 1 •,,,..i., , - --1, 0) •,5-7t i r- .7 . . —.. . . . ..'r:.1.,'.:.:;::!7:1 •.. z. .7. . • -..,....:....:-.::-.• .-. • . . • ... . •-- ti'•,:" AIMIMUIC"IlltlirL; • • • A . . . ,•i','-'4:;••••', . ; (t) X • 0 . . I.,.. ... ti ,. ... 11 - s . . . . ..4... r- cz --- . . 1 . 0 --i ... . g g 1.; JY•4- I :.:•:., ..•:;*,L..:',..:7:! . • .•. >...4i. t..i1;•14 . El-•*••••••-• i ••••••-.... .... i =-'''-;•;''..',i';'" . f") • . ..,.. .• .. . . . • Ig•-1' :2*-9- • ..- . . . t : , 1 i I) . . • .. . . . • . .. .. • n\il • . ,.. . . • . . 1 . 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In 0 o a Z r. `t .ri l 1 , "� C,1 N 'i- . I .\, r ////i. .0 CII O I f— _- - .. r 1/1/7/ D N j I/ — --- - '�. J L-) / 1 CI //{ __ / 7/ 1T: !I . ... • I -_7 � .. I mAll.A4 4.4'. f • ; _ i C7 fr - .....=.,-----•...7.-7.,:- ...==•_-.mz•-•- \ SI Z I — — i // I ! • - -" /////,5...'2.7/ 1 / .--' 1// • li. 7--\J < i Y is" ..‘s\ .-016, 0 F � / // __ ‘----.) EXHIBIT C Plans and Specifications • • s:\eda\document\bilcase.doc 18 EXHIBIT C PLANS AND SPECIFICATIONS (5,c3.; ) U • D G7 N N N N N iV N N — f1l C n 1 — C . 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SUBLEASE EXTENSION • THIS SUBLEASE EXTENSION is made this 13th day of September_, 2004 by and between the City of Elk River Economic Development Authority ("EDA") and LapTwo Technology Corporation ("LapTwo"). A. The EDA and LapTwo entered into a sublease agreement("Sublease") dated September 22, 2003, included as Attachment I, for the period of September 22, 2003 to September 22, 2004 for 1,041 square feet of space in Suite 130 at 16820 Highway 10,Elk River, Minnesota. The EDA authorized a 12-month sublease extension ("Extension") between the EDA and LapTwo on September 13, 2004 for the period of September 23, 2004 to September 22, 2005. B. An amended cash rent rate of$4.00 per square foot and$7.00 per square foot stock rent rate is hereby incorporated into this Extension. C. All provisions of the original Sublease including the Memorandum of Understanding, included as Attachment II, will retain their full force and effect. This Extension and the Sublease shall be construed so as to avoid conflicts; however, in the event of any conflict the provisions of this • Extension shall control. As amended hereby, the Sublease is hereby ratified and affirmed in all respects. City •f Elk River s / 44110 Rob Henningsgard ' ' is P.l' s President LapTwo Technology Corporation 70,E !/ Its Executive Director • • . 1Alm , 0 LapTwo Technologies, LLC 554 3rd Street NW Elk River, MN 55330-1416 763-633-9434 .www.lcpiwo.com 6 April 2005 Heidi Steinmetz Elk River Economic Development Authority 13065 Orono Parkway Elk River, MN 55330 RE: LapTwo's Graduation from the Incubator Program Greetings Heidi, I'm writing on two topics today. First, I'm pleased to inform you that LapTwo is graduating from the incubator program. In the past two years, we've successfully developed completely new implementations of • the computer networking protocols which drive the internet. We're now working to apply this unique software to create special networking products for several different commercial markets. In an attachment to this letter, I've provided you with brief executive summaries of each of these products. As of January, we have also opened a subsidiary service business called "TopNotch Computer Service", devoted to maintaining computers and networks for individuals and businesses. On March 21st, we moved this business into a store-like office space at 554 3rd St NW, next door to the Elk River post office. With the move came the hiring of a full- time computer maintenance professional to run the store. So this business has added a full-time, W2 employee to the company. The company's plan is to develop TopNotch Computer Service into a branded chain of computer service stores, headquartered in Elk River. For a variety of reasons, the move of the new computer service business necessitated the move of our corporate office into the same building. The proximity allows us to share our high-speed internet connection, phone system, and file servers between the businesses, as well as facilitating the development of the specialized management software and systems needed by the new support business. • page one of two R Henningsgard-LapTwo/H Steinmetz-Elk River EDA/6APR05/2 of 2 IIIBecause of our move into the new office space, our need for space in • the Elk River Business Incubator is at an end. As you know, our current sublease agreement does not expire until September 2005. To reduce the cash outflow burden on LapTwo, and to free up the incubator space for any potential new candidate startup businesses, I respectfully request that the EDA release LapTwo from the remaining months of the lease. LapTwo will, of course, faithfully complete its stock-for-space issue and settle the cash payment obligations due under the lease as of today, and also those which will continue until September if the EDA's response to this early termination request is denied. We will continue to maintain the headquarters of LapTwo in Elk River for the foreseeable future. On behalf of LapTwo, its employees, and its investors, I want to thank the Elk River Economic Development Authority, its director Catherine Mehelich, assistant director Heidi Steinmetz, and consultant Harlan Jacobs for recommending and accepting LapTwo into Elk River's business incubator program. As you have all observed, starting a new business with new product concepts is a challenging task. Our participation in the incubator program has facilitated this startup task in a number of ways, both financial and otherwise. While our startup challenges continue, we will soon the effects of our new products in the marketplace and, hopefully, grow LapTwo into another successful Elk River High Technology employer and taxpayer. Sincerely, Robert C. Henningsgard President LapTwo Technologies, LLC 410 III I . AIM 0 LapTwo Technologies, LLC 554 3rd Street NW Elk River, MN 55330-1416 763-633-9434 .www.lcpiwo.com 7 April 2005 Heidi Steinmetz Elk River Economic Development Authority 13065 Orono Parkway Elk River, MN 55330 RE: LapTwo's Product Developments Introduction The products developed by LapTwo are all based on its custom-designed core of networking software. This LapTwo network software is itself completely immune to attack by viruses or worms designed to infect ID Windows or Linux-based systems. While this new design is able to extend some protections to client machines attached to the network, its principal benefits affect the server actually running the LapTwo management software. This means that the server computers running each of the LapTwo products described below cannot be attacked or disabled by any known means, rendering them far more stable, reliable, and supportable than systems running Windows or Linux-based networking. AdDirector AdDirector is combination hardware/software product designed for use by computer retailers such as Best Buy, CompUSA, Circuit City, and so on. The system allows the computer retailer's headquarters to instantly post sales information such as price and rebate specials directly to the screens of the exact computer systems to which they apply. The system requires no in-store maintenance beyond a one-minute setup procedure for each new computer put on display. HIPAA-Filter HIPAA-Filter is an internet access control system which actively prevents AdWare and SpyWare from broadcasting any data from office networks holding sensitive personal data (such as medical or financial records) . The control system blocks all outbound data transmissions except for those destined to internet sites in a client-approved "white list". This allows office personnel to access the internet sites and services needed for legitimate work functions, while prohibiting data IIItransmission to any sites not in the "white list". HIPAA-Filter (continued) • In addition to the blocking functions, the system monitors all local area network traffic, detecting and reporting the presence of any unwanted or destructive software such as viruses or worms, and identifying which system(s) are so infected. WarmSpot WarmSpot is an internet hospitality control system for small businesses such as coffee shops, restaurants, motels, and the like. It provides the venue owner a simple, inexpensive way to provide internet connectivity to customers, while preventing unauthorized outsiders from using the connection. In addition to connection control, the WarmSpot package provides several types of client-to-client isolation. This isolation prevents virus infections on one client's computer from attacking the computers of other clients. The system also meters the sending of outbound email letters, rendering the email connection completely useful to the average user, but impossibly slow for anyone attempting to use the connection to send spam email. .