8.0. EDSR 03-11-2002 \ ' Item# 8
City of
Elk
River
MEMORANDUM
TO: Economic Development Authority i
FROM: Heidi Hall, Economic Development Assistant 1W
DATE: April 8, 2002
SUBJECT: Consider Extension of SolarAttic Sublease Agreement
Attachments
• Letter Addressed to Staff from Ed Palmer, CEO of SolarAttic
• SBS Capital Fund's Investment Term Sheet for SolarAttic
• • Business Incubator Selection, Guidelines & Application
• SolarAttic Original Sublease and Amendment
• SolarAttic Sublease, 2000-2001
• SolarAttic Sublease, 2001-2002
• Business Incubator Floor Plan, l' Floor
Issue
SolarAttic, a manufacturer of swimming pool heaters that draw heat from attic areas,
has requested that the EDA extend their sublease in the Business Incubator Program
until August 31, 2002. SolarAttic has offered the EDA shares of SolarAttic stock in
exchange for 12 months of past due rent and the potential rent due from now until
August 31, 2002.
Background
• Beginning in 1997, SolarAttic spent three years as an incubator tenant, bartering
stock in lieu of cash rent.
• In 2000, the EDA granted the company's request to sublease incubator space for
cash rent from April 15, 2000 to April 14, 2001.
•
• • In 2001, the EDA provided SolarAttic with a 12-month sublease extension, in
which SolarAttic agreed to pay cash rent from April 15, 2001 to April 14, 2002.
Staff Recommendation
Staff recommends that the EDA consider the following points before granting
SolarAttic a sublease extention:
• SolarAttic owes the EDA $6,766.56 in overdue rent to cover the past 12 months.
• SolarAttic has occupied Incubator space for five years. As stated in the Elk River
Business Incubator Member Company Selection Guidelines:
The primary purpose of the Business Incubator is to provide inexpensive space and
support for higher technology, (start-up and existing)small companies whose success
would add significantly to the growth and diversification of the City of Elk River's
economic base.
The Elk River Economic Development Authority(EDA)will, as its primary
objective, select companies which appear to have the necessary fundamentals
established to assure their future growth and success.
• Staff does not feel that SolarAttic has significantly added to the growth of the
City's economic base. At this time, SolarAttic does not seem to have the
necessary fundamentals established to assure their future growth and success.
• Bixby Energy Systems, Inc. became an Incubator tenant in January of 2002. Due
to company growth, Bixby has recently contacted staff to inquire about the
availability of the Incubator space that SolarAttic currently occupies. Bixby is
specifically interested in this space since Bixby's current space is located directly
across the hall from SolarAttic's current space.
•
Update Page 1 of 2
• Hall, Heidi
From: Ed Palmer[ceo@solarattic.com]
Sent: Wednesday, April 03, 2002 12:40 PM
To: Heidi Hall
Subject: Update
Dear Heidi,
I have attached a copy of the term sheet SolarAttic just received. It is in
rough form [first draft] from SBS Capital and there are some obvious issues
that still have to be worked through before it is acceptable to SolarAttic. The
timing of funding is set for August. Possibly as early as July. I believe
SolarAttic will work out these term sheet issues with SBS Capital and connect
with funding at that time.
In the interim, I have been unable to obtain any bridge financing that would
help us deal with the cash we owe the city. Having already cut all staff and
focused on admin issues and funding, I will attempt to gain enough new sales
to cash flow some minimal mfr operations.
Sales are coming in. I.E. -- I have sold $16,300 worth of PCS1 pool heaters
• over the last 10 days. However, we do not have inventory and will struggle
to get these units produced because of poor cash flow. We cannot access
any cash from these sales until we find a way of coping with the inventory
and build issues. If we get another $10-15k in sales, I believe I can get our
bank to help. In the interim, we could use the City's assistance to help us
bridge this time gap we are facing.
I believe it would be in the City's interest to help us a little further. The
upside potential is much greater than any downside for the city. I.E. We are
already set up in the small incubator space and offer the city another
example of energy technologies being developed. No one seems to be
beating on the door to get into the incubator at this time. And, SolarAttic has
basically a small office operation in play which could be shut down IF
NEEDED.
Therefore, I offer the following solution to keep us "Alive" through August.
In exchange for past due rent and rent through August 31, 2002, SolarAttic
will provide the City with 20,000 shares of common stock and an option to
purchase 20,000 additional shares of stock for five years at 50 cents per
share. This matches current small investments and the valuation of SBS
Capital on the business and provides $10,000 worth of SolarAttic stock to the
• City at this time.
This would not provide the City with cash; but, it would help keep us 'Alive'
4/3/02
Update Page 2 of 2
long enough to work through the larger funding issues. The alternative for
• us is to simply shut down our office completely on April 15th.
There is no need for me to attend the EDA meeting unless the City wants me
to. At this time, I would ask you to present our proposal to the EDA and let
me know their decision. If the EDA wants us to shut down, let me know on
the 9th and I will begin the process.
Thanks again for all the help. I certainly appreciate the efforts of Elk River to
aide in the development of new energy technologies. That much I will carry
with me for the rest of my life.
Regards,
Ed
Edward G. Palmer, CEO
SolarAttic, Inc.
15548 95th Circle NE
Elk River, MN 55330
(763) 441-3440
• (763) 441-7174 fax
http://www.solarattic.com
Solar Without Panels!
"OWN A PIECE OF THE GLOBAL WARMING SOLUTION!"
•
4/3/02
Term Sheet
For First Round Funding
SBS Capital Fund is offering to make in investment in SolarAttic Inc.
under the terms and conditions outlined below. This offer is subject
to our due diligence and final approval process.
Amount of$2,500,000.00 in the first year with a standby offering of an additional $2,500,000 in
the second year.
Offered in exchange for participating convertible preferred stock and other considerations
described below.
Capital Stock
• SolarAttic Inc. will have 16 million, (16,000,000) shares of authorized stock, all classes including
outstanding options and warrants. Of these shares, 10,9737323 (including stock options and
warrants) are issued to prior existing stockholders. In consideration for the equity offered, SBS
Capital Fund will purchase five million (5,000,000) shares of Series A, Participating
Convertible Preferred Stock. This understanding will provide SBS Capital Fund with an
effective ownership of 31.3% of SolarAttic Inc.
•
Ownership
SBS Capital Fund is offering to provide SolarAttic Inc. with the sum of $5,000,000.00. This
funding shall be paid in as follows:
FUNDS SHARES
First tranche $1,000,000.00 1,000,000
Second tranche $1,500,000.00 1,500,000
ipThird tranche $2,500,000.00 2,500,000
• After the first tranche is made, the treasury will offer added treasury stock for sale at a minimum
of$10.00 per share unless a three quarters vote of the board of directors determines otherwise.
In further consideration for the transfer of funds to SolarAttic Inc., SBS Capital Fund shall be
provided with two non-interest bearing bonds each valued at $2,500,000.00.
The first bond will be valued at $2,500,000.00. The first bond redeemed five years after the
date of issuance. Attached to this bond will be a warrant for 3,000,000 shares to be purchased
for$.50 each. This warrant will expire one five years and one day form the date of issuance.
The second bond will be valued at $2,500,000.00. This bond will be redeemed seven years
after the date of issuance. Attached to the bond will be a warrant for 3,000,000 shares to be
purchased for $.50 each. This warrant will expire seven years and one day after the date of
issuance.
Prior existing directors of SolarAttic inc. will provide personal guarantees against default on
bond payments (in the case of insolvency) to the extend of 25% of the face value of the bonded
debt but not to exceed $650,000 by any director.
Equity Accounts
Series A Preferred Stock shall be governed by the following understandings:
Dividends:
. Series A Preferred Stock shall be granted dividends equal to any dividend provided to common
stock holders plus a guaranteed dividend of $.125 dollars per share paid quarterly beginning
the third year after issuance. Differed dividends shall accrue.
Anti dilution
The terms of the Series A Preferred Stock will contain standard "weighted averages" anti-
dilution protection with respect to the issuance by the company of equity securities at a price
per share less than the applicable conversion price then in effect subject to standard and
customary exceptions. The conversion rate of the series A Preferred Stock into common stock
will be adjusted appropriately to account for any stock splits, recapitalization, mergers,
combinations, and asset sales, stock dividends and similar events.
Voting Rights
On all matters submitted to the board of directors for stock holder approval, each share of
Series A Preferred Stock shall be entitled to such number of votes as is equal to 1.5 times the
number of common shares into which such shares are convertible. In addition, SolarAttic Inc.
shall not, without prior consent of the holders of at least a two-thirds majority of the then issued
and outstanding Series A Preferred Stock, voting as a separate class:
• a) Issue or create any series or class of stock with rights superior to or on a parity with the
Series A Preferred Stock or increase the rights of preferences of any series or class having
rights or preferences that are junior to the Series A Preferred Stock so as to make the rights
or preferences of such series equal to or senior to Series A Preferred Stock.
b) Issue or create any additional stock of any class of stock.
c) Pay dividends to shareholders of the capital stock of the company.
d) Repurchase or redeem, or agree to repurchase or redeem, any securities of the Company
other than from employees of the company upon termination of their employment pursuant to
prior existing agreements approved by the Board of Directors of the Company.
e) Enter into any transaction with management or any member of the Broad of Directors, except
for employment contracts approved by the Board of Directors, and transactions entered at
arms-length terms which are no less favorable to the Company than could be obtained from
unrelated third parties.
f) Effect any amendment of the company's Certificate of Incorporation or Bylaws which would
materially adversely affect the rights of Series A Preferred Stock.
g) Incur or guarantee debt in excess of$1,000,000.00.
h) Voluntarily dissolve or liquidate.
i) Effect any merger or consolidation of the company with or into another corporation or other
entity (except one in which the holders of capital stock of the Company immediately prior to
such a merger or consolidation continue to hold at least a majority of the capital stock of the
surviving entity after the merger or consolidation) or sell, lease, or otherwise dispose of all or
substantially all of a significant portion of the assets of the company.
j) Change the size of the Board of Directors or change any procedure of the company relation
to the designation nomination or electron of the Broad of Directors.
k) Amend, alter or repeal the preferences, special rights, or other powers of the Series A
Preferred Stock so as to adversely affect Series A Preferred Stock.
I) Make capital expenditures of more than $400,000 in a single expenditure or an aggregate of
$800,000 within any twelve month period.
Liquidation Preferences:
The holders of Series A Preferred Stock shall have preferences upon liquidation over all
holders of Common Stock and over the holders of any other class of series of stock that is
junior to Series A Preferred Stock for an amount equal to the greater of (1) amount paid for
such Series A Preferred Stock plus any declared or accrued but unpaid dividends, and (2) the
amount which such holder would have received if such holder's shares of Series A. Preferred
Stock were converted into Common Stick immediately prior to liquidation. Thereafter, the
• holders of Common Stock will be entitled to receive the remaining assets. For purposes of this
section, a merger, consolidation, sales of all or substantially all of the company's assets, or
other corporate reorganization shall constitute a liquidation, unless the holders of at least a
majority of the Series A Preferred Stock vote otherwise.
Board of Directors
The Board of Directors of the company shall be composed of seven members. Of these seven
members, the holders of the Series A Preferred Stock shall control three of the seven directors.
The other directors to be designated aggregate based on ownership of common stock.
Option and Vesting
SolarAttic Inc. shall vest management. This vesting shall be completed no later the third year
after signing this agreement. All management reserve stock shall be provided to appropriate
personnel in accordance with their employment contracts. The company shall repurchase stock
options from personnel leaving the company.
Registration Rights
SolarAttic Inc. shall pay all fees and registration expenses for holders of Series A Preferred
Stock. SolarAttic Inc. shall pay all costs associated with S-1 and S-3 registrations. The holders
of Series A Preferred Stock shall have the right to register as often as they wish.
Holders of Series A Preferred Stock will also be entitled to unlimited registrations on form S-33
with at least $10,000,000 in aggregate gross offering price on customary terms and conditions.
The Company shall bear all expenses related to all registrations and underwriting.
Management and Affirmative Covenants
Affirmative Covenants
While any Series A Preferred Stock is outstanding, the company will:
a) Retain Strategic Business Services for strategic counsel. This retainer will represent an
amount of time, nor to exceed 40 hours per month. The conduct of such services will be
governed by a separate agreement. This agreement will be signed prior to or concurrent with
• funding.
b) Comply with all laws, rules and regulations
• c) Preserve, protect and maintain its corporate existence, its rights, franchises and privileges;
and all properties necessary or useful to the proper conduct of its business.
d) Submit all reports required under section 1202 (2)(1)(2) of the Internal Revenue Service
Code and the regulations promulgated thereunder.
e) Submit all reports required to comply with appropriate state and local laws and ordinances
f) Cause all key employees to execute and deliver non-competition, non-solicitation, non-hire,
nondisclosure and assignment of inventions agreements for a term of their employment with the
Company plus one year in a form reasonable and acceptable to the Board of Directors.
g) Not enter into related party transactions without the consent of a majority of the disinterested
directors.
h) Reimburse all reasonable out-of-pocket expenses of the Series A Preferred Stock Directors.
i) Executive compensation and bonus packages will be determined by a three fourths vote of
the Board of Directors.
Finance Statements and Reporting:
SolarAttic Inc. will provide al information and materials, including without limitation, all internal
• management documents reports of operations, reports of adverse developments, copies of any
management letters, communications with shareholders or directors, and press releases and
registration statements, as well as access to all senior managers as requested by holders of
Series A Preferred Stock. In addition, the company will provide the holders of Series A
Preferred Stock with unaudited monthly and quarterly and audited yearly financial statements,
as well as an annual budget.
Redemption
The management of the company agrees to repurchase SBS Capital Fund stock at the option
of SBS Capital Fund in accordance with the following schedule:
SolarAttic Inc. agrees to repurchase Series A Preferred Stock held by SBS Capital Fund for
$6.00 per share, tendered after the completion of the fifth year. Such tender decisions shall be
solely at the discretion of SBS Capital Fund.
In the event of liquidation, Class A Preferred Shares shall be redeemed at liquidation rates
ahead of any common stocks.
In the event of the sale of SolarAttic Inc., Class A Preferred Shares shall be converted to
common shares and sold at the strike price. Outstanding bonds shall be immediately
redeemed.
• Rights of First Refusal
111
Holders of Series A Preferred Stock shall have a pro rate right, based on their percentage of
fully diluted equity interest in the company, with an under-subscription right up to the total
number of shares being offered, to participate in subsequent stock issuances.
Other Provisions
In the even that any of the Founders and existing executive management propose to sell their
stock to third parties, the SBS-Capital Fund shall have the first right to purchase the securities
on substantially the same terms as the proposed sale. Series A Preferred Stock holders shall
next have said right according to the respective percentage ownership of Series A Preferred
Stock or to sell proportionate percentage pursuant to co-sale rights. Such rights shall terminate
upon a Qualified Public Offering.
Expenses
The company shall reimburse the holders of Series A Preferred Stock for reasonable legal fees
in connection with the transaction, payable at closing (and only in the extent that the
transactions contemplated by this term sheet are consummated) up to a limit of$100,000.
Conditions to Closing
Closing shall be subject to the standard and customary conditions, including the completion of
• due diligence and the delivery to the investors of a legal opinion of counsel to the Company,
regarding standard and customary matters and satisfactory to SBS Capital Fund and their legal
counsel.
During the period of Due Diligence, a period not to exceed 90 days, SBS Capital Fund and their
agents and nominees shall have an exclusive right to invest in SolarAttic Inc.. No other
investors will be allowed to conduct such proceedings as may involve a competing offer during
the time of our due diligence review.
SolarAttic Inc. SBS Capital Fund
Edward G Palmer George V. Bower
signature signature
Chief Executive Officer Principal
idate date
S
•
•
\II/4
.00
City of
Elk
ver
Elk River Business Incubator
Member Company Selection
Guidelines & Application
City of Elk River, Minnesota
• 13065 Orono Parkway, P.O. Box 490
Elk River, MN 55330
(763) 441-7420
•
ELK RIVER BUSINESS INCUBATOR
MEMBER COMPANY SELECTION GUIDELINES
The primary purpose of the Business Incubator is to provide inexpensive space and
support for higher technology, (start-up and existing) small companies whose success
would add significantly to the growth and diversification of the City of Elk River's
economic base.
The Elk River Economic Development Authority (EDA) will, as its primary objective,
select companies which appear to have the necessary fundamentals established to assure
their future growth and success.
I. Basic Entry Guidelines
The following basic entry guidelines will be used to determine the eligibility of
applicants to the Business Incubator:
• 1. Retail/service businesses will not be considered.
2. Businesses which compete exclusively in the local market with other
similar local businesses will not be considered.
3. Manufacturing/assembly businesses will be screened to assure the facility
is able to accommodate their intended process and byproducts.
4. Companies marketing new products/technology in the energy field are
encouraged to apply.
5. Companies must be involved in product manufacturing/assembly or be
high technology-service related.
6. The principals must have substantial technical and/or managerial skills,
or demonstrated experience and education in the product field.
7. Companies must clearly demonstrate a need for incubator services.
II. Specific Application Guidelines
Evidence of the following specific guidelines is to be provided at the time of
application to the Business Incubator:
1. Companies will be required to give hiring preference to persons meeting
certain eligibility requirements.
2. Companies will be required to allow opportunities for local businesses
• to manufacture products for the company.
• 3. Existing companies will be considered for incubator occupancy if either
(a) it is deemed that circumstances clearly indicate that a move to the
incubator will help retain and/or create jobs in Elk River that would
otherwise be lost, and if those circumstances are considered to be the
result of factors other than poor management or inadequate technical
skills, or (b) the aim is to begin a research and/or production effort that
is new and for which there is inadequate space in the company's present
facility.
4. Companies must be able to demonstrate credible projections which
show significant job creation and growth.
5. Companies must have a prepared and legally acceptable stock "offering
statement" prior to entry into the business incubator.
6. Companies must agree to a stock "barter" transaction whereby the
EDA, building owner, and business incubator consultant would be
provided company stock in lieu of services rendered
7. Upon acceptance, member companies must agree to retain operations of
the company within the City of Elk River for a specified period of time.
8. Companies are required to have a completed business plan and a
working product prototype prior to acceptance into the incubator.
Considerations which enhance a companies eligibility for admittance to the Business
• Incubator:
1. Companies are considered to have the potential of creating significant
employment opportunities in Elk River in the near future, provided
that such business projections are deemed to be realistic.
2. Companies are involved in higher technology or energy technology
related products.
eda\bincapp.doc
•
• ELK RIVER BUSINESS INCUBATOR
APPLICATION FORM
Name of Business:
Name of Principal:
Address:
Phone: Fax:
Ownership structure: Sole Proprietorship n
Partnership ❑
Corporation ❑
Business is primarily involved in: Research and Development
Product Manufacturing/Assembly
Other ❑
• Principal product(s):
Activities to be undertaken in the incubator facility:
Projected number of employees (including principal) at incubator operation:
Full Time Part Time
Initially
• After 6 months
At the end of 1 Year
• At the end of 3 Years
The Business has the following characteristics:
Advances Technology _U
Projects Fast to Moderate Growth
Medical Related Product/Technology n
Energy Related Product/Technology
If Business is a sole proprietorship, indicate principals net worth:
$0 - $24,999
$25,000 - $74,999 n
$75,000 - $99,999 ❑
$100,000 - $200,000 n
Greater than $200,000 ❑
List the amount of equity you have received to date in the form of stock
ownership and/or direct investment:
$0 - $24,999 ❑ $300,000 - $400,000 U
$25,000 - $74,999 n $400,000 - $500,000 ❑
$75,000 - $99,999 $500,000 - $1,000,000 ❑
$100,000 - $200,000 ❑ $1,000,000 - $1,500,000 ❑
• $200,000 - $300,000 ❑ $1,500,000 + up ❑
List the amount of equity you will require from outside sources over the period
of:
one year in the Business Incubator $
two years in the Business Incubator $
The Business is currently in operation: Yes n No n
Current Location of Business
Number of Years In Operation
Current Number of Employees
Most Recent Annual Sales
The Business will require approximately square feet of space in the
Business Incubator, with the following special needs/requirements:
•
• Please attach the following information:
• Business Plan, including financial projections, current sales figures (if any),
Profit and Loss Statement, and Balance Sheet.
• Personal financial statements
Signature:
Printed name:
• Company name:
Date:
eda\bincapp.doc
•
FINAL
SOLARATTIC
SUBLEASE
THIS SUBLEASE, made this 31st day of March, 1997, by and between the City of Elk
River Economic Development Authority, a Public Body Corporate and Politic (hereinafter called
"Sublessor"), and SolarAttic, Inc., 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 (3,546 sq. ft. 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 Sublessee.
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
\\elkriver\sys\shrdoc\eda\document\bisolar.doc 1
set forth herein, rent in the amount of$472.80 per month payable on the fifteenth day of each
month during the Term of April 15, 1997, to April 14, 1998, and $591.00 per month during the
term of April 15, 1998, to April 14, 1999. 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
April 15, 1997, and terminating on April 14, 1999.
(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 federal laws, 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. Sublessor and sublessee agree that
\\elkriver\sys\shrdoc\eda\document\bisolar.doc 2
• the assembly and sale of attic based solar energy systems shall not be deemed a default of the
terms and conditions of this sublease.
(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, 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
\\elkriver\sys\shrdoc\eda\document\bisolar.doc 3
• 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.
(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,
111 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
\\ell:river\sys\shrdoc\eda\document\bisolandoc 4
illamounts 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 to execute 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.
(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
P.O. Box 490
Elk River, Minnesota 55330-0490
Attention: Paul Steinman
If to Sublessee: Ed Palmer, President
SolarAttic, Inc.
15548 95th Circle NE
Elk River, MN 55330-7228
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
e:\shrdoc\eda\document\bisolar.doc 5
• further agrees to send to Sublessor concurrent notice of any notice or demand sent to said
Landlord.
(17) 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.
(18) 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.
IN WITNESS WHEREOF, the parties hereto have fully executed this Sublease on the
day and year first written above.
SUBLESSOR:
• City of Elk River Economic Development
Authority
By:(e4t(,-kf \r\
. n: s
Its: P/Lai-aiR--5T--
Its:
. ,;2%4-..A.1 .--k
SUBLESSEE:
SolarAttic, Inc.
pi,
4:10
— -" By: a
WitnessF )3Ilqi
Its: 3
•
e:\shrdoc\eda\document\bisolar.doc 6
FINAL
• First Amendment to:
SolarAttic
Memorandum of Understanding
This First Amendment to SolarAttic Memorandum of Understanding (the
"First Amendment"), is made and entered into this/fay of/UVO4
by and between the City of Elk River Economic Development Authority (EDA),
Larry Hickman (Hickman), Genesis Business Centers, LTD. (Genesis), and
SolarAttic, Inc., a corporation organized and existing under the laws of the State of
Minnesota (the "Company")
Whereas, the parties hereto entered into that certain SolarAttic
Memorandum of Understanding dated March 31, 1997 (the "Agreement") regarding
the company's participation as a member company in the Elk River Business
Incubator ("ERBI") and as a recipient of certain services in connection therewith;
Whereas, the Agreement included a sublease of certain premises (the
"Premises") within the ERBI wherein the Company was the tenant for a lease term
expiring April 14, 1999;
Whereas, the parties wish to enter into this First Amendment in order to
extend the term of the occupancy of the Company at the ERBI for an additional one
year;
Now, therefore, in consideration of the foregoing and of the mutual promises
and covenants contained in this First Amendment and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
I. Extension of Lease. The Company shall enter into the Lease Term
Extension Agreement attached hereto as Exhibit A.
II. Consideration. The parties hereby agree that the rent payable as
provided in the Lease Term Extension Agreement attached hereto as
Exhibit A is equal to approximately twenty percent (20%) of the rental
• value of the Premises. As further consideration for the services
provided to the Company hereunder, the Company, at the time of the
execution of the Lease Term Extension Agreement attached hereto as
ANAL
• Exhibit A, shall convey and issue to the EDA (in its capacity as sub-
landlord), Hickman (in his capacity as building owner) and Genesis (in
its capacity as business incubator consultant), the number of shares of
voting common stock of the Company currently valued at $5 per share
as follows:
Shares Received
EDA 1,418
Hickman 2,128
Genesis 1,418
Total Number of Shares 4,964
III. Continuing Validity of Agreement. Except as amended by this First
Amendment, all of the terms and conditions of this Agreement remain
in full force and effect.
IN WITNESS WHEREOF, the parties have set their hands and seals as of
the date first-above written.
CITY !' E VER A THE WMPAY
• By �' � By a
Typedme ckcn� N• i Typed Name fd 1h 4.40°Title I-Qvli -- Title Pr. ,n 0,4 *- ccs
Date ' 4°1 Date - j7/fy
B �y ! _
Typed Name fi ►�-w,a,,-
Title EX $•.:.J'-
Date 3 • I, • `lq
LARK
By /1 -
Typ Nan A4(17rW al
Title OevXJ1 to/L-/
Date 6A2 /9 ?
GE • S :U.I . _S-' NTERS, LTD.
B Ar, mss.
T -.e Tam- iii .I
Tim (A7
Date s-P/Mink
1111
f:\shrdoc\eda\document\lamdsola.doc
FINAL
• Exhibit A
Lease Term Extension Agreement
This Lease Term Extension Agreement is made this /1 day off 04124 ,
1899, by and between the City of Elk River Economic Development Authority, a
Public Body Corporate and Politic (hereinafter called "Sublessor") and SolarAttic,
Inc., a Minnesota Corporation (hereinafter called "Sublessee");
WITNESSETH, that:
Whereas, Sublessor and Sublessee entered into sublease for a certain space
in the Elk River Business Incubator pursuant to a sublease dated March 31, 1997,
(the "Sublease"); and,
Whereas, Sublessee desires to extend the term of the Sublease for the period
beginning April 15, 1999, and ending April 14, 2000, and Sublessor desires to agree
to such extension;
• Now, therefore, in consideration of the rents to be paid and the agreements
hereinafter set forth, Sublessor agrees to this lease term extension.
I. Extension of Term. The term of the Sublease shall be extended to
include the period from April 15, 1999, through and including April 14,
2000.
II. Rent. The rent for the extended sublease term shall be $664.88 per
month.
III. Continuing validity of Sublease. Except as specifically modified in this
lease extension agreement, all of the terms and conditions of the
sublease shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have set their hand and seals as of the
date first-above written.
SUBLESSOR SUBLESSEE
CITY OF LK RIVER SOLA , INC.
ECONe`Vi C �E LOPMENT AUTHORITY By 15/17/19 1x ✓
By f �' 17/9 9
• Its
and na..�-'ts-�—
Its Ex :--
f:\shrdoc\eda\document\lamdsola.doc
SOLARATTIC
RENEGOCIATED SUBLEASE 2000-2001
THIS SUBLEASE, made this 3I day of ivriti4 , 2000 by and between the City
of Elk River Economic Development Authority, a Public Body Corporate and Politic (hereinafter
called "Sublessor"), and SolarAttic, Inc., 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 conditionsof 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 (3,546 sq. ft. 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 Sublessee.
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
perfomi such duties, liabilities and obligations under the Prime Lease shall also be a default
111/
under this Sublease.
(2) Rent and Other Charges. In consideration of the aforesaid subleasing, Sublessee
s:\eda\busnsinc\solaratt'eas2000.doc 1
• covenants and agrees to pay to the Sublessor, without setoff or deduction whatsoever, except as
set forth herein, rent in the amount of $1329.75 per month payable on the fifteenth day of each
month during the Term of April 15, 2000, to April 14, 2001. One half the monthly rent amount
of $1329.75 shall be deferred each month during the period of April 15, 2000 to August 14,
2000. The deferred total for the aforementioned period shall be paid in full on August 15, 2000
in the amount of $2659.52. Thereafter the rent shall be paid in full on a monthly basis in the
amount of$1329.75 until the expiration of the lease or until the Sublesee vacates the premises. 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
April 15, 2000, and terminating on April 14, 2001.
(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 federal laws, ordinances, codes and regulations, and with all rules
and regulations promulgated by companies which from time to time insure against loss or
s:\eda\busnsinc\solaratt\leas2000.doc 2
• 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. Sublessor and sublessee agree that the
assembly and sale of attic based solar energy systems shall not be deemed a default of the terms
and conditions of this sublease.
(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, 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
s:\eda\busnsinc\solaratt\leas2000.doc 3
• 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.
Additionally, the Sublessee may for any reason terminate the lease with a thirty (30) day notice to
the Sublessor. The Sublessor may also terminate the lease for any reason with a ninety (90) day
notice to the Sublessee._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.
(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.
s:\eda\busnsinc\solarattleas2000.doc 4
• 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 Tenn, 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 to execute 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.
(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 Attention: Marc Nevinski
P.O. Box 490
Elk River, Minnesota 55330-0490
If to Sublessee: Ed Palmer, President
• SolarAttic, Inc.
15548 95th Circle NE
Elk River, MN 55330-7228
s:\eda\busnsinc\solaratt\leas2000.doc 5
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.
(17) 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.
(18) 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.
• IN WITNESS WHEREOF, the parties hereto have fully executed this Sublease on the day
and year first written above.
SUBLESSOR:
City of Elk River Economic Development
Author
By:
Witness
Its:
By:
y
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s:\eda\busnsinc\solarat leas2000.doc 6
FINAL
• SOLARATTIC
SUBLEASE 2001-2002
THIS SUBLEASE, made this iii day ofT , 2001 by and between the City
of Elk River Economic Development Authority, a Public Body Corporate and Politic (hereinafter
called "Sublessor"), and SolarAttic, Inc., 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 (1041 sq. ft. in the Elk River Business
Incubator designated as suite 140 on Exhibit B attached hereto and made a part hereof
(hereinafter called the "Subleased Premises") and Sublessor desires to sublease the Subleased
Premises to Sublessee.)
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
s:\eda\busnsinc\solaratt\solar attic lease 2001.doc 1
• covenants and agrees to pay to the Sublessor, without setoff or deduction whatsoever, except as
set forth herein, rent in the amount of$563.88 per month payable on the fifteenth day of each
month during the Term of April 15, 2001, to April 14, 2002. 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
April 15, 2001, and terminating on April 14, 2002.
(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 federal laws, 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. Sublessor and sublessee agree that the
assembly and sale of attic based solar energy systems shall not be deemed a default of the terms
s:\eda\busnsinc\solaratt\solar attic lease 2001.doc 2
• and conditions of this sublease.
(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, 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.
s:\eda\busnsinc\solaratt\solar attic lease 2001.doc 3
• Additionally, the Sublessee may for any reason terminate the lease with a thirty(30) day notice to
the Sublessor. The Sublessor may also terminate the lease for any reason with a forty five (45)
day notice to the Sublessee. 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.
(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
s:\eda\busnsinc\solaratt\solar attic lease 2001.doc 4
• 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 to execute 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.
(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 Attention: Marc Nevinski
P.O. Box 490
Elk River, Minnesota 55330-0490
If to Sublessee: Ed Palmer, President
SolarAttic, Inc.
15548 95th Circle NE
Elk River, MN 55330-7228
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
s:\eda\busnsinc\solaratt\solar attic lease 2001.doc 5
• further agrees to send to Sublessor concurrent notice of any notice or demand sent to said
Landlord.
(17) 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.
(18) 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.
IN WITNESS WHEREOF, the parties hereto have fully executed this Sublease on the day
and year first written above.
SUBLESSOR:
City of Elk River Economic Development
O
Authority
By: '72�(�.
By
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SUBLESSEE:
SolarAttic, Inc.
By:
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sAedathusnsinc\solaratt\solar
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