7.1. EDSR 01-13-2003 Item # 7.1.
• J,
City of
Elk -�-�
River
MEMORANDUM
TO: Economic Development Authority
FROM: Catherine Mehelich, Director of Economic Development'
DATE: January 13, 2003
SUBJECT: Consider Renewal of Business Incubator Lease
Attachments
• Business Incubator Lease, Extensions and Amendments
• Business Incubator Repayment Agreement
• Business Incubator Proposal for Third Term Lease Renewal
• • Year 2003 EDA Business Incubator Budget
• Business Incubator Marketing Materials
Issue
The lease with Larry Hickman of the Business Incubator building will expire April 14, 2003.
Staff is requesting that the EDA consider renewing the lease with Mr. Hickman so that
prospective tenants may consider sub-leasing space in the building for a period of at least
one year.
Background
Following is a summarized history of the Business Incubator lease:
1997 EDA establishes 2-year lease for 13,186 square feet (6 suites) at a rate of$1.50/sf.
1998 EDA renews lease at a rate of$1.65/sf for the period of April 1999 to April 2001.
2000 EDA renews lease at a rate of$1.85/sf for the period of April 2001 to April 2003.
2001 EDA amends lease to reduce space to 7,522 square feet (4 suites) at$1.85/sf.
2002 EDA amends lease to increase space to 9,789 square feet (6 suites) to accommodate
incubator tenant,KnowledGenetica.
Currently, KnowledGenetica is the Incubator program's only tenant. Two companies have
411 recently relocated their operations from the Incubator, Bixby Energy Systems (to Rogers,
Consider Lease Renewal of Business Incubator
January 13,2003
Page 2 of 2
. MN) and Vertical Publishing (to St. Paul,MN). New prospects for the Incubator are being
evaluated by staff and the Incubator program consultant,Harlan Jacobs. Staff is continuing
to evaluate options for relocating the Incubator program in space that would accommodate
high-tech companies which require city water and sewer and space designed for light
industrial uses. In 2001 new incubator space was proposed as part of the Cymbet expansion.
The Cymbet expansion is currently on hold due to the company's fundraising efforts.
Alternative concepts are being considered for relocation of the Incubator program.
Should the EDA decide not to continue the Business Incubator Program, approximately
$10,640 of the original$80,000 in leasehold improvements would be reimbursed from Mr.
Hickman,per the attached Repayment Agreement.
The attached Lease with Mr. Hickman suggests a base rent for the third renewal term as
"not to exceed$3.00 per square foot (Page 3). Per the attached staff proposal, staff
recommends that the EDA consider renewing the lease with Larry Hickman for 5,813
square feet (3 suites) for up to 2-years at a rate not to exceed$2.10/s£ Over the years the
city's Street/Park Department has provided maintenance/cleaning services of the Incubator
space. However, due to staff and budget issues it is recommended that maintenance services
be the responsibility of the building owner,Mr. Hickman. Recent tenants of the Incubator
have been charged$3.00/sf cash rent and$7.00/sf stock value for sublease of the Incubator
space.
• In addition, staff recommends the EDA consider an appropriate fee for the retainer of
Genesis Business Centers, Harlan Jacobs for incubator consulting services. Upon a
recommendation from the Incubator Advisory Committee in 2001, the EDA included up to
$12,000 for such services as part of the 2003 EDA Incubator budget. The EDA has paid
Mr.Jacobs a monthly fee of$500 since the inception of the Incubator program in 1997.
Action Requested
Staff requests that the EDA consider renewal of the Business Incubator lease with Mr.
Hickman for up to 2-years in accordance to the attached staff proposal. Staff also requests
the EDA's consideration of the retainer fee to Genesis Business Centers for business
recruitment and technical assistance provided to the EDA and Incubator tenants.
•
FINAL
LEASE
• (Multi-Tenant Building)
THIS LEASE, made as of the /S day of (°'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
1306.5 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, the common address of
which is 16820 Highway 10, 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.
(G) Base Rent: $39,558 for the Term ($1.50 per square foot), payable as follows:
(1) $19,779 per annum ($1,648 per month) for the period from April 15, 1997
through April 14, 1998;
(2) $19,779 per annum ($1,648 per month) for the period from April 15, 1998
through April 14, 1999;
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(H) Leasehold Improvements: At the actual cost of $ , not to exceed $81,253,
• for the Term, payable as follows:
(1) $25,000 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
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 TERM
3.01 Tenant is hereby granted the option to extend the Term of this Lease for 3 (three)
successive Renewal Terms 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
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
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Lease except that the Base Rent for each Renewal Term shall be as follows:
First Renewal Term: $1.65 per square foot or $ 21,757 per annum ($ 1,813 per month)
Second Renewal Term: $1.85 per square foot or$ 24,394 per annum ($ 2,033 per month)
Third Renewal Term: Not to exceed$3.00 per square foot or$ 39,558 per annum
($3,297 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 like 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 maybe transmitted beyond the confines of the
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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 require structural 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
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t II
• 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(G) 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 per 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. - UTILITIES 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.
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• 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. - SUBLETTING
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
terminated 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 per 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
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• 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 n tice 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.
111/ 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 agreed, 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".
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• 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 terminate 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
!' notice of termination to Tenant not less than ninety (90) days prior to the date of termination
designated in the notice. In either of said events, rent at the then current rate shall be apportioned
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• 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 perform 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. - COMMON 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
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• reimburse Landlord for the actual documented costs, not to exceed $81,253, of completing such
improvements as described in the Plans and Specifications attached 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 to 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
i19.01 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
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• 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 XX. - 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 $600,000.00 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 party 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
10.
• 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
• incurred or paid by them or such managing agent in connection with such litigation.
ARTICLE XXI. - 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 be 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 (18%) 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.
12
4111 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 Captions. 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(J) 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.
14
ARTICLE XXVI. - 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.
IN WITNESS WHEREOF, the parties have signed triplicate counterparts hereof as of the
date and year hereinabove set forth.
TENANT (Elk River ,onomic Develop ent Authority)
By: ! ' 4
Its:
B • —
Its:
LANDLORD (L,. r` )
B):
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15
EXHIBIT A
Description of Premises
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ity of
ilK •
River
May 13, 1998
Mr. Larry Hickman
12888 187th Circle NW
Elk River, Minnesota 55330
Dear Mr. Hickman:
Subject: Business Incubator Lease
At its meeting on April 13, 1998, the Economic Development Authority
unanimously approved an extension of its lease in the former Furniture and
Things building for a period of two years. The term of the current lease was
scheduled to end on April 14, 1999. The action as taken by the Economic
Development Authority extends this lease from April 15, 1999, to April 14,
2001, at a renewal term lease rate of$1.65 per square foot for 13,186 square
feet of space.
I would also like take this opportunity to pass along several favorable
comments which were mentioned by EDA members regarding your
participation in this business incubator project. Itis evident that this project
would not have become a reality without your partnership and cooperation.
Please be advised also that we are planning a business incubator open house
on Thursday, June 11, 1998, from approximately 4-6 p.m. Please notify me if
you will be unable to attend the open house.
Sincerely,
Paul T. Steinman
Director of Economic Development
PTS:akh
c: Pat Klaers, City Administrator
• Hank Duitsman, EDA President
13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • TDD & Phone: (612) 441-7420 • Fax: (612)441-7425
•
April 26, 2000
Mr. Larry Hickman
12888 187th Circle NW
Elk River, Minnesota 55330
Subject: Business Incubator Lease — Second Renewal Term
Dear Mr. Hickman:
At a special meeting on April 24, 2000, the Economic Development Authority
unanimously approved an extension of its lease in the former Furniture and
Things building for a period of two years. The term of the current lease is
scheduled to end on April 14, 2001. The action as taken by the EDA extends
• this lease from April 15, 2001, to April 14, 2003, at the second renewal term
lease rate of$1.85 per square foot for 13,186 square feet of space.
The EDA will again consider renewing the lease of the business incubator in
January of 2002 for a third term that will run from April 15, 2003 to April 14,
2005.
On behalf of the Economic Development Authority, I would like to convey my
appreciation for your partnership and cooperation in the incubator program.
Although the program's success to date has been limited, it has generated a
fair amount of publicity for the City and contributed to its reputation as a
pro-business community. Hopefully the program will experience further
success in the near future.
Sincerely,
Marc D. Nevinski
Acting Director of Economic Development
•
AMENDMENT TO LEASE `
HIS AMENDMENT TO LEASE ("Amendment") is made this /374day of
, 2001 by and between the City of Elk River Economic
Develd'pment 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 $1.85 per sf or $1159.64 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 $1.85/sf prior to leasing either or both suites to
a third party.
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
documents. 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
i , .. r4LiA_
L. Hi man •- t
is Executive Director
S
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 13,186
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").
The EDA and Hickman agreed to an amendment dated September 1, 2001
of the above mentioned "second renewel 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 $1.85/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
Ash "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 $1.85 per sf or $1,509.14 per month.
2) In addition to the above term, the EDA will lease Suite 120 until May
20`h, 2003, which is thirty-six days beyond the end of the second renewal
term at $1.85 per sf or $349.50 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 DA
HL'L swirl<►�.w�:�
Larry Hic man 'moi! si„
it.e"'
Ps"Executive Director
FINAL
. REPAYMENT AGREEMENT
THIS AGREEMENT made this Ii day of /"` , 199 7 by and between
the City of Elk River Economic Development Authority ("EDA") and Larry Hickman
("Hickman").
BACKGROUND
The EDA has created the Elk River Business Incubator ("ERBI") to support
the development of new high technology companies during the early years of their
development.
The EDA has made arrangements with Hickman to lease certain space and
real property owned by Hickma described on Exhibit A attached hereto. That
lease agreement is dated /4 (s' , 1997 ("the Lease").
The EDA, Hickman, and Genesis Business Centers, Ltd., have or will also
enter into memorandum of understanding agreements with various companies who
will be subtenants of the EDA in the ERBI. In order to make the ERBI habitable
for the new high technology companies, the EDA has invested the actual amount of
$ , not to exceed $81,253, to accomplish construction of the leasehold
improvements listed on Exhibit B attached hereto.
• Hickman and the EDA agree that the leasehold improvements described on
Exhibit B will remain the property of Hickman at the end of the Lease term or any
renewal or extension thereof and Hickman and the EDA desire that Hickman
reimburse the EDA for a pro-rated portion of the cost of those improvements at the
termination of the Lease.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and agreements hereinafter contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties covenant and hereto agree as follows:
1. EDA will pay Hickman for the cost of leasehold improvements as
provided within the Lease. Such leasehold improvements are identified on Exhibit
B attached hereto.
2. EDA and Hickman agree that the actual cost of such improvements is
$ , not to exceed $81,253, based upon a description of such
improvements identified on Exhibit B.
3. So long as the EDA has performed all of its obligations under the
Lease, at the termination of the Lease or at the termination of any renewal term or
extension thereof, Hickman will reimburse the EDA for a proportionate share of the
• cost of leasehold improvements as described in Paragraph 2 hereof. The
proportionate share shall be as set forth on Exhibit C attached hereto. Such
payment shall be due and payable to the EDA within thirty (30) days after
• termination of the Lease or any extension or renewal thereof(for purposes of this
Agreement, the term "extension or renewal thereof', shall include a new lease
between the parties which encompass all or part of space previously leased from
Hickman by the EDA).
IN WITNESS WHEREOF, the parties have set their hands and seals as of
the day first above written.
La_ 'ickman
CITY OF ELK RIVER ECONOMIC
DEVELOPMENT AUTHORITY
By: �� I�4
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Exhibit C
• Repayment Schedule
Total cost of leasehold improvements: $81,253
#of months Hickman repayment #of months Hickman repayment
EDA leases to EDA: EDA leases to EDA:
from Hickman: from Hickman:
1 $80,286 42 $40,627
2 $79,318 43 $39,659
3 $78,351 44 $38,692
4 $77,384 45 $37,725
5 $76,417 46 $36,757
6 $75,449 47 $35,790
7 $74,482 48 $34,823
8 $73,515 49 $33,855
9 $72,547 50 $32,888
10 $71,580 51 $31,921
11 $70,613 52 $30,954
12 $69,645 53 $29,986
13 $68,678 54 $29,019
14 $67,711 55 $28,052
15 $66,744 56 $27,084
16 $65,776 57 $26,117
17 $64,809 58 $25,150
III 18 $63,842 59 $24,182
19 $62,874 60 $23,215
20 $61,907 61 $22,248
21 $60,940 62 $21,281
22 $59,972 63 $20,313
23 $59,005 64 $19,346
24 $58,038 65 $18,379
25 $57,071 66 $17,411
26 $56,103 67 $16,444
27 $55,136 68 $15,477
28 $54,169 69 $14,509
29 $53,201 70 $13,542
30 $52,234 71 $12,575
31 $51,267 72 $11,608
32 $50,299 73 $10,640
33 $49,332 74 $9,673
34 $48,365 75 $8,706
35 $47,398 76 $7,738
36 $46,430 77 $6,771
37 $45,463 78 $5,804
38 $44,496 79 $4,836
39 $43,528 80 $3,869
40 $42,561 81 $2,902
41 $41,594 82 $1,935
83 $967
III 84 $0
of *_,�
River
13065 Orono Parkway
Elk River,MN 55330
City of Elk River
Business Incubator
Proposal for Third Term Lease Renewal
• Term: Two (2) Years,April 15, 2003 -April 15, 2005.
o Option to end term after 1-year (April 15, 2004) with 60-day notice.
• Space: EDA (tenant) to lease 3 suites (120, 130, & 140) for a total of 5,813 square feet.
• Rate: $2.10 per square foot or $1,017.28 per month. (12%increase from 2nd Term rate).
• Maintenance: Mr. Hickman (landlord) responsible for all building maintenance specified within
Primary Lease as well as interior common areas (conference room,restrooms, hallways, etc.)
4111 • Incubator Tenant Stock Options: To remain equally distributed between Genesis, Mr. Hickman,
and EDA.
• Repayment Agreement: Repayment schedule remains in effect. Landlord repayment balance to
EDA will be $0 on March 31, 2004.
Proposed by:
/— C)3
Catherine Mehelich, Director of Economic Development Date
Accepted by:
Larry Hickman, Building Landlord Date
•
Phone:763.441.7420
Fax:763.441.7425
www.ci.elk-river.mn.us
BUDGET WORKSHEET 1
Date: 08/14/02 1
BUSINESS INCUBATOR 2003 BUDGET Time: 4:03pm
CITY OF ELK RIVER ADOPTED AUGUST 19, 2002 Page: 1
Prior Current Year
Year Original Amended Actual Thru Estimated
111111112/31/02 Actual Budget ' Budget December Total Requested Recommended Adopted
Fun 920 EDA
Revenues
Dept Group: 600 HOUSING 6 ECONOMIC DEVELOPMENT
Dept: 620.623 BUSINESS INCUBATOR
OREV OTHER REVENUE
3629 Miscellaneous Revenue 4,998 7,000 7,000 5,782 12,000 12,000
OTHER REVENUE 4,998 7,000 7,000 5,782 12,000 12,000
TRIN TRANSFERS IN
3921 Transfers 21,618 18,200 18,200 0 22,900
TRANSFERS IN 21,618 18,200 10,200 0 22,900
BUSINESS INCUBATOR 26,616 25,200 25,200 5,782 12,000 34,900
ROUSING 6 ECONOMIC DEVELOPMENT • 26,616 25,200. 25,200 5,782 12,000 34,900
Total Revenues 26,616 25,200 25,200 5,782 12,000 34,900
Expenditures
Dept Group: 600 HOUSING 6 ECONOMIC DEVELOPMENT
Dept: 620.623 BUSINESS INCUBATOR
SUPP SUPPLIES
4219 Operating Supplies 391 2,200 2,200 254 1,000 1,000
SUPPLIES 391 2,200 2,200 254 1,000 • 1,000
.HER SERVICES 0 CHARGES
her Professional Services 6,203 6,000 6,000 3,500 7,000 13,000
4349 Advertising/Marketing 0 2,500 2,500 533
4405 Cleaning Services 0 500 500 362 500 500
4412 Building Rent 20,243 14,000 14,000 8,952 20,400 20,400 .
OTHER SERVICES 6 CHARGES 26,446 22,000 23,000 13,347 27,900 33,900
CAP CAPITAL OUTLAY
4520 Buildings 6 Structures 0 0 0 0
CAPITAL OUTLAY 0 0 0 0
BUSINESS INCUBATOR 26,837 25,200 25,200 13,601 r F 28,900 34,900
HOUSING 6 ECONOMIC DEVELOPMENT 26,037 25,200 25,200 13,601 28,900 34,900
Total Expenditures 26,837 25,200 25,200 13,601 28,900 34,900
EDA -221 0 0 -7,819 -16,900
•
i/j
City of
Elk .........,,.
River
13065 Orono Parkway
Elk River,MN 55330 Business Incubator
Overview Current Incubator Tenant
The Elk River Business Incubator Program provides KnowledGenetica Corporation -Developer of intelligent
space and support for new and existing companies software to interpret and translate written and Spo-
to refine and manufacture innovative products. ken human languages. The software has a number
Tenants have access to a variety of resources and of key applications for commercial,government,
services. Program graduates are committed to military, and personal use. For more information,
locating in the Elk River area. visit www.knowledgenetica.com.
Since its inception in 1997, eight companies have Incubator Graduates
entered the incubator to further develop their Cymbet Corporation -Manufacturer of a solid-state
products and grow their business. In 1999 the first battery technology that is integrated into the circuit
graduate of the program established a partnership boards of various electronic devices and infinitely
Ix
0 with an Elk River manufacturer to produce its rechargeable via radio waves. For more information,
O
aproduct for national distribution. visit www.cymbet.com.
ca
Vi Benefits Bixby Energy Systems- Developer of a Biomass Stove
Z Incubator tenants enjoy lease rates substantially Y System that represents Multi-fuel (Corn,Biomass or
H below market levels. Rent may be paid with a mix of
H Wood Pellets) technology. For more information,
W cash and stock. Tenants also have access to several
z visit www.bixbyenergy.com.
— sources of equity from the Anoka/Sherburne Capital
in
m Fund, the Elk River Investment Club, and the
m Initiative Foundation. Business consulting services Former Incubator Tenants
are also available through Genesis Business Centers. • SolarAttic
• ProtectorCare, Inc.
Additionally, entrepreneurs may take advantage of • Watermark Submersibles, Inc.
advising sessions where successful local business • MAS Technologies
owners share their experiences and offer input on • Vertical Publishing
business development. Such sessions have proven
especially valuable in the areas of sales and
marketing.
Phone:763.441.7420 The Light Industrial Hub of the Northwest Metro
Fax:763.441.7425
www.ci.elk-river.mn.us
A,/
Oty•lk
River
ELK RIVER BUSINESS INCUBATOR PROGRAM
Fact Sheet
History
• Started 1997
• EDA leased 13,186-SF (6-suites) of former Furniture&Things building,located on East Hwy 10
EDA has accepted a total of 8 companies into the program,including:
• Solar Attic— March 1997
• ProtectorCare, Inc. - Feb. 1998
• Watermark Submersibles, Inc. -March 1998
• MAS Technologies -May 1998
• Cymbet (formerly Integrated Power Solutions) -Aug. 2000 (Graduate)
• Vertical Publishing— July 2000
• KnowledGenetica Corporation— May 2002, Current Tenant
• Bixby Energy Systems, Inc.— Dec. 2001 (Graduate)
Partnerships— (see attached advertisement)
Needs of early stage high-tech companies:
I. Capital—includes location requirements for operations of company
a. Anoka-Sherburne County Capital Fund/Anoka Investment Club
- Up to $50,000 total
b. Elk River Investment Club (contact Dick Gongoll 763-241-3607)
- Up to $25,000
c. Initiative Foundation (Central MN Region) www.ifound.org
- $25,000 - $50,000
II. Space
a. Elk River Business Incubator
Currently leasing 9,789-SF (5 suites)
Source: Federal Community Development Block Grant provided as loan to Tescom
Repayment of loan/grant to City is used to fund the Business Incubator Program in
supplement to the portion of cash rent received from tenants.
b. EDA in turn subleases to early stage high technology companies for up to 2-years
Rent structure consists of 30% cash rent&70%rent in stock value.
•
Elk River Business Incubator Fact Sheet
Last updated: January 10,2003
Page2of2
•
II.b. Continued...
Cash rent goes to EDA
Stock is divided between:
1/3 EDA
1/3 Building Owner/Landlord
1/3 Incubator Consultant, Harlan Jacobs, Genesis Business Centers
III. Technical Assistance
a. Genesis Business Centers, Harlan Jacobs
- Recruite &pre-qualify incubator prospects
- Assist tenants to establish relationship with equity funders
- Aid in process for applications to venture capital funders
b. Example—Cymbet (see attached article)
Secured$4.5-million in overseas investments
•
•
The Anoka Sherburne CountyCapital fundandtheCity of Elk Hiuer
• Conrafulafe Genesis Business Centers,
Winner of a1001 Tekne Award.
The Partners
y:- 0 •
Genesis Business Centers
:� ea-;-t
Genesis is a private economic develop-
ment company which provides assistance
` `4.4.7.: -'' _ to Minnesota's best and brightest seed
• . ..- .. stage technology companies.
''',4*'4. i ?„ ° _ ►Anoka Sherburne County Capital Fund
• The ASCCF is a for-profit fund created
,. * 4, by the Anoka County Economic
f-41{.1'''
: 'd'° k .4. n Development Partnership which does
?R_ - ` " economic development work in and for
Anoka County.The Fund makes equity
r -, ...".0""t,;,, investments in emerging technology
I companies that are or will locate in Anoka
�ta ' "' or Sherburne counties.
►City of Elk River
The light industrial manufacturing hub
i . a , .*ir of the northwest;Elk River is 8 miles
.. -
.' A north of the I-404 beltline.The city's
0 .'I'r. ' ' „, t affordable land,Energy City status,and
financial assistance has proven appealing
Cymbet Demonstrates the Power of Partnering to firms in all stages of growth--from
incubator to international;from garage
startup to regional rollout.Elk River has
ltimately,batteries in hearing aids,cell approached the City of Elk River about the more than 200 acres available.
phones,and PDAs will disappear from Incubator Program,a collaboration between
the consumer's consciousness and the city and Genesis. Clients Served
become an integral part of the product. Genesis helped Mark launch his firm ►The ASCCF has invested in StepMate,
Cymbet's goal is to develop a unique manu- with an initial bridge loan of$400,000 in Cymbet Corporation,Micro Surfaces,
facturing process to produce these ultra seed capital.A significant portion of this Northstar Phototonics,and Vertical
Publishing as a result of the Genesis
thin,solid state batteries which will be infi- investment came from the ASCCF and the program in Elk River.In addition,the
nitely rechargeable through wireless means. Elk River Investment Club,a unique local ASCCF has made 25 investments in
Brian Shiffman,Cymbet's vice president business network. companies located in Anoka County
of business development explains,"We did a Harlan Jacobs,president of Genesis says,
thorough site selection for a location that "We took Cymbet overseas to Helsinki, For More Information
could support our high-tech research and Finland and Tel Aviv,Israel to secure a total ►Harlan T.Jacobs,President .z
CC0ESIS
manufacturing firm.We chose Elk River, of$4.5 million in venture capital funding. Fli 4 1
BUSINESS CEHTEFS.LTO. lxn�,,,r;P�1
Minnesota because we were impressed with This allowed the company to finalize its www.GenesisCenters.com
the financial assistance from the Elk River technology transfer agreement with the (763) 782-8576
Investment Club,the Anoka-Sherburne Oak Ridge National Laboratory." ►Roger Jensen,President
County Capital Fund,and Genesis Business Cymbet recently expanded from the incu- ASCCF
Centers." bator into it's own headquarters.Cymbet's Anoka Sherburne County Capital Fund
• Genesis Business Centers and the ASCCF Shiffman notes,"Now,that we've moved wwwacedp.org
excel at identifying and assisting emerging into our new facility,we're thankful for (763)786-0869
►Cathy Mehelich,Director ,
technology companies as they strive to go Elk River's hometown flavor,the business City of Elk River,EDA cty of
from laboratory to marketplace. community's camaraderie and the city's www.ci-elk-river.mn.us Elk
Cymbet's founder Mark Jenson first development expertise." (763)441-7420 River
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Aspirations
i
Overlooked by local VCs, Cymbet finds wad to launch new battery technology
BY STEPHEN DUPONT
he next time you pick up a pack of batteries at Target, and medical devices,such as hearing aids.
take a long hard look. That's because your concept of The company was co-founded slightly
more than a year ago by Mark Jenson and
batteries may never be the same—that is if an Elk River, Harlan Jacobs. Jenson is an engineer who
Minn., start-up is successful in T
developing a new type of battery spent more than 20 years of his career with
Honeywell International, with stints at
based on thin-f lm technology. Intel, FSI, Honeywell spin-off, Nonvolatile
o The company is Cymbet Corporation, a smallest batteries, and, more importantly, Electronics, Inc. (NUE) (wwwnve.cem), and •
nine-person enterprise that is leveraging the chemistryof its batteries will allow For Union Semiconductor Technology Corp.
$4.5 million recently raised from overseas nearly indefinite recharging(actually, about Jacobs is president of Genesis Business
investors on its fast crack path to commer- 70,000 recharging cycles). Centers (wwwgenesiscenters.com), who has
• c•
ializing thin-film battery technology. About a year away from actually mann- been instrumental in launching a number of
= Cymbet's batteries, if the concept holds facturing its first commercially viable prod local start-ups through his incubator pro-
true, will come with several twists—they uct, Cymbet anticipates that its batteries gram [see "Nurturing the Fire Within,
will be manufactured to nearly microscopic will be used in a variety of applications,such MinnesotaBusiness,April 2000].
sizes offering double the power of today's as smart cards and paper, wireless devices, Jenson was initially introduced to the
24
1
Spotting an opportunity in an emerging field of thin-film technology, founder Mark Jenson (left) and chairman Victor Weiss �.
d41)take "no" for an answer. They traveled 7,000 miles around the world to find the capital they needed to found Cymbet.
•nsaamrm, �:s.n+..e..�g'm.ze7x�.^wa'Y �`-„'A"a'.-=•a°4_.., .�, r.�.. .., ' ...... ... ....� _...
dynamic world of thin-film technology dur- another important step—bringing in sea- Where most people are nearing retire-
ing his employment with NVE (OTC: soned business managers up front. That ment,Weiss, who entered the Cymbet pic-
NVEC) [see "Bucking the Odds,” decision led to two long-time acquaintances ture in April 2000,couldn't resist the oppor-
MinnesotaBusiness, December 1997] during of Jacobs', Victor Weiss, a former Bemis tunity forne more challenge. A chemical
the late 1980s. But it wasn't until leaving executive who serves as Cymbet's chairman, engineer by training,whose career included
Plymouth-based Union Semiconductor and Brian Shiffman,a Control Data veteran a stop at Du Pont,Weiss spent the majority
Technology Corp., a company that Jenson who serves as vice president of business of his career rising through the ranks of
and several other Honeywell engineers development. Bemis Corp.
founded in early 1999, that Jenson came up
with a business idea based on the technology.
Through various conversations with his
network of supporters,Jenson learned about -
battery technologies being developed at Oak 7-,,,,,,,:#7—.. • p,(,� '0 (]a fl"*C1
Ridge National Laboratory (www.ornl gov) - ,
located in Oak Ridge,Tenn., a federal gov- rti
institution that offers
ernment research ,
opportunities to license its technolo In GOOD NEWS ■
reflecting on his experiences at NVE and
Union Semiconductor, Jenson realized that YOU'LL KNOW E H A C TL Y . H O W
while thin-film battery technology had great
.f,-,i'
potential, the real challenge lies in establish- a M U C H. M 0 N E Y Y 0 U H A U E
in nufacturing processes to actually pro- `
dmmercially viable thin-film batteries.
In early 2000,Jenson, armed with a busi- B fl D NEWS ■ r'
ness plan,officially hung his shingle out on a
new business that he called Integrated Power YOU'LL KNOW. E H fl C T L Y HOW _ '
Solutions,Inc.,which would later be renamed
Cymbet. At the heaof the new company's
rt MUCH MONEY YOU HOVE-
business plan: 15 battery chemistry patents i
licensed from Oak Ridge National1,,,,!,,,,, - :, 1 s
laboratory,matched with seven patents pend-
.
ing for manufacturing improvements.
Sparking a Connection iv '
.i
enson's experiences with NVE and Union ; With marquette tom,you'll have all the information �r i
JSemiconductor proved invaluable when ' you need to keep your'business running smoothly. Our web fl
Jenson hooked up with Harlan Jacobs and
site is easy and very convenient. Plus, it can save you time j._.
the incubator that Jacobs' company man- ;
and mons With marquette.corn you can get instant balance :
ages with the City of Elk River. y
As Jacobs describes it,he was floored by reports,transfer funds, originate ACH transactions and z,stop , 1
the commercial potential of the technology
payments. Sign up now for marquett.e.com's Business Web
that Jenson had identified. Jacobs, who iti:himself has experience in the thin-film _ Banking_ For more information, visit us on the web at
industry as the former CFO of FilmTec W�,,,,,�,•mar uette.com anytime, anyda We'll be.. o en for
q y , yp '`
Corporation, immediately helped Jenson 1.5.',
raise about $300,000 through a combina- n` business. Marquette.com. Nonstop bankng.
tion of investments from the Anoka-
urne County Capital Fund and the
"ver Investment Club, which consists � "
t
Marquette Banks ,,,I.::-...:,,,-;.,;-,2:-, j
of a group of private angel investors. The :i, �
caveat for accepting this funding—the new ':,..i.-,',:;,,,,,A..".'.14',7::,,',..;.:,..,„.,'„,
„:
business must remain in Elk River. Y ” ' -. l; 4 , 7?
> �t�M,a?fS ,,y >k>.,c�tltf�b{i t"'iy 1 s, {a a ,.5 B{'di.r °{ qi e
With Jacobs' guidance, Jenson took x ,! F Member l� ,..7'a ue77_,.. nlc. q DDh§v
*Dtherterms and coniluions Tay�pply , K ,-F;
1
. ';Company: : 1"•.-'., Headquarters g.•Revenue/VC'Fundin ;`Inception.' _:_ Employees:r
411 Cymbet Corporation Elk River None/$4.5M 1999 7
0
L' Most recently, Weiss was chairman of k
"What most impressed me was ,,f
• MacTac Engineered Products, a subsidiary '� at
E of Bemis, which included the joint inven- Mark Jenson himself. He's like i •
T
tion and development of the battery.tester a poster child for entrepreneurs."
cj that comes with some of today's leading
m
consumer batteries. By the way, Weiss —Harlan Jacobs, founder,
claims credit for the new name,a collection,
he says, of prefixes and suffixes that mean
Genesis Business Centers
' nothing, but nonetheless, didn't resemble .
any other company's name.
"Mark recognized that he didn't have the will be critical to attracting and retaining the Collaborative and NetSuds—which has
managerial experience to take this company employees and establishing a new culture been hit or miss. (NetSuds was helpful in
to where he and Harlan envision. That's that reflects the passion, vision, and entre- connecting the company to a Silicon Valley
where our experience comes in,"adds Weiss, preneurial spirit of the core executive team. chipmaker.) Instead, the company had to go
"we've been through this before." "We need to be very picky in this early nearly 7,000 miles to Finland and Israel to
c "What most impressed me was Mark stage,"says Shiffman,"we need team players. obtain start-up financing.
N Jenson himself," Jacobs says. "He's like a who want to learn, take risks (not gambles), "We decided to invest in Cymbet because
poster child for entrepreneurs. He works and who have the confidence to work in a of its exciting technology and its strong
. hard. He's a delight to work with. And, start-up setting." management group," says Zwi Vromen, a
most importantly, he's open-minded and Jacobs also began the hunt for venture spokesperson for the Millennium Materials
willing to call on the resources he needs to capital. Unfortunately, the new company Fund. The focus of the Millennium
make his vision become a reality." met stiff resistance from local venture capital Materials Fund, based in Israel,is to invest
It's this experience that Shiffman believes firms. Jenson even tried networking through in projects which may later feed technology
•
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}
•iiisleader' ' .. Description: :,-1,,,,:•.•;,..:41..„,•,....--,--... ° : Illeb' •ite "" � Y.
www.cymbet.com
' m
Vlar nson, founder and CEO Developer of thin-film, rechargeable batteries
B
ao
or products to its key investors,a who's who recent$4.5 million round of financing, the Other upcoming milestones include gen-
list of European industrial giants, including determination of Jenson, Weiss, and crating its first sale,which Shiffman believes c
Bayer, Siemens, Henkel, DSM, Bekaert, Shiffman will cast all doubt aside. willoccur within the year, and establishing w
and Schott.The fund's policy is to invest in With an eye toward raising upwards of profitability within three years. Meanwhile,
new materials aiming at the microelectron- $50 million or more to begin manufactur anticipating the next phase in the company's
ic, communication, and life science Indus- ing, the most immediate milestone that evolution,Cymbet has moved from its start
tries worldwide. needs to be achieved within the next six up digs at the Genesis incubator in Elk c
In addition,Cymbet also received financ months is proving to its current investors River to another building within the city
ing from Merchant Venture Investments that the company actually can manufacture that accommodate its manufacturing plans.
(MVI),an international equity pool of more one of •its batteries. Key to achieving this "Cymbet has worked exactly how a start-
than 400 individuals investing jointly in milestone is establishing a partnership with up should,"says Jacobs."They started small
buy-outs and development situations. MVI a company that will serve as the beta for in the incubator,and as they've grown, they
has offices in Finland, Germany, Italy, Cymbet's battery technology, based on an sought larger space in the community that
Norway,Singapore,and Switzerland. actual application of the technology.To add has supported them the most."
credibility, Shiffman says the company will
Hitting the Milestones base its processes on ISO 9000 certification
WitteIle the rise of Cymbet may sound guidelines. Stephen Dupont(sdupont@ctynch.com)is a fre- .
a Cinderella story in the making, This is where the Millennium Funds' quent contributor to MinnesotaBusiness. M_
the fact is the next year may be the compa- investment in Cymbet may pay off. The Magazine. He is partner/director of media
ny's most critical. With venture capital participation of companies such as Bayer, relations at Carmichael Lynch Spong, but does
comes the demand of hitting important Siemens, and Boeing may lead to a connec- not write about his clients. c
mil e markers. And lest you think tion that will allow Cymbet to breath life o
CM is basking in the glow of its most into its technology.
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