6.0. EDSR 03-10-1997 ITEM 6.
II,
ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
0
MEMORANDUM
TO: Economic Development Authority
FROM: Paul T. Steinman, Director of Economic
Development
DATE: March 4, 1997
SUBJECT: Approve Final Lease Agreement and
Repayment Agreement with Larry
Hickman
Issue
The issue before the EDA at this time is to review the attached Lease and
Repayment Agreement regarding the EDA's lease of the former Furniture
0 and Things building.
Background/Summary of Issues
Final Lease Agreement
The major parameters of the final lease agreement are as follows:
• EDA to lease approximately 13,186 square feet within the former
Furniture and Things building
• Net leaseable space equals approximately 11,072 square feet
• The term of the lease is from April 15, 1997 to April 14, 1999
• Base rent is $1.50 per square foot or $19,779.00 per year
• EDA has option to extend the Lease Term by six full years at the
following cost:
- First renewal term (two years) $1.65 per square foot or
$21,757.00 per year
Second renewal term (two years) $1.85 per square foot or
$24,394.00 per year
- Third renewal term (two years) not to exceed $3.00 per
square foot or $39,558.0 per year
1110
P.O. Box 490 • 13065 Orono Parkway • Elk River, MN 55330-1743 • (612) 441-7420 • Fax: (612) 441-7425
Equal Opportunity Housing and Equal Opportunity Employment
• Leasehold improvements will be completed by Larry Hickman at a
up cost not to exceed $81,253.00, and paid for by the EDA as follows:
- $25,000.00 at beginning of the Lease Term
- The balance over the initial two years, together with
interest at the rate of 8.5% per year
Repayment Agreement
The purpose of the Repayment Agreement is to secure a repayment of a
portion of the leasehold improvement costs from Larry Hickman should the
EDA terminate the lease agreement within seven years of the start of the
Lease Term.
Larry Hickman has agreed to repay a proportionate share of the total cost of
leasehold improvements, currently estimated to be $81,253.00. This
repayment would be based upon a seven year depreciation schedule, should
the EDA terminate its lease or determine not to renew the lease anytime
within the initial seven years. Staff has attached to this memo a copy of the
repayment agreement, which details on exhibit C, the actual repayment
schedule. Should the EDA decide to terminate its lease,Larry Hickman will
reimburse the EDA the following amounts:
• At the end of the initial two year term $58,038.00
• At the end of four years $34,823.00
• At the end of six years $11,608.00
The above figures may be adjusted when the actual costs are determined at
the completion of construction of the leasehold improvements. The estimate
of$81,253.00 is a maximum amount, and may be reduced by approximately
$5,000 - $7,000. The repayment agreement will be adjusted accordingly at
completion of construction of the leasehold improvements.
Action Requested
Staff recommends that the EDA approve the final Lease Agreement and the
Repayment Agreement between the EDA and Larry Hickman, and authorize
execution of such agreements.
LEASE
(Multi-Tenant Building)
THIS LEASE,made as of the day of , 1997,by and between
Larry Hickman, hereinafter called "Landlord" and City of Elk River Economic
Development Authority, a Public Body Corporate and Politic, hereinafter called "Tenant."
ARTICLE I. - BASIC TERMS
1.01 (A) Address of Landlord: 12888 - 187th Circle NW
Elk River, MN 55330
or such other address as may from time to time be designated by Landlord in writing.
(B) Address of Tenant: Elk River City Hall
13065 Orono Parkway
Elk River, MN 55330
or such other address as may from time to time be designated by Tenant in writing.
(C) Premises: Approximately 13,186 square feet of space in the Building as shown on
Exhibit "A" attached hereto.
• (D) Building: The building in which the Premises is located, 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 may be transmitted beyond the confines of the
Premises.
5.02 Tenant covenants throughout the Lease Term, at Tenant's sole cost and expense, promptly
to comply with all laws and ordinances and the orders, rules and regulations and requirements of
all federal, state and municipal governments and appropriate departments, commissions, boards,
and officers thereof, foreseen or unforeseen, ordinary as well as extraordinary, and whether or not
the same 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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• 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
111
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
5
• event, Tenant shall be responsible for the removal or restoration, when applicable, of all its
damaged property and debris from the Premises, upon request by Landlord or reimburse
Landlord for the cost of removal.
ARTICLE XI. - LANDLORD'S RIGHTS
11.01 Landlord reserves the following rights:
(a) To change the name of the Building without notice or liability to Tenant;
(b) To exhibit the Premises to others and to display "For Lease" signs on the Premise
during the last six months of the Term or any extension thereof;
(c) To remove abandoned or unlicensed vehicles and vehicles that are unreasonably
interfering with the use of the parking lot by others and to charge the responsible
tenant for the expense of removing said vehicles;
(d) To take any and all measures, including making inspection, repairs, alterations,
additions and improvements to the Premises or to the Building as may be necessary or
desirable for safety, protection or preservation of the Premises or the Building or
Landlord's interests, or as may be necessary or desirable in the operation thereof.
Landlord may enter upon the Premises at any reasonable time for the purpose of exercising any
or all of the foregoing rights hereby reserved without being deemed guilty of an eviction or
disturbance of Tenant's use or possession and without being liable in any manner to Tenant.
ARTICLE XII. - HOLDING OVER
12.01 In the event of a holding over by Tenant after expiration or termination of this Lease
without the consent in writing of Landlord, Tenant shall be deemed a tenant at sufferance and
shall pay rent for such occupancy at the rate equal to the last-current aggregate Base prorated for
the entire holdover period. Except as otherwise 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".
II/
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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
7
as of the date of the termination. No money or other consideration shall be payable by the
Landlord to the Tenant for the right of termination and the Tenant shall have no right to share in
the condemnation award or in any judgement for damages caused by the taking or the change of
grade. Nothing in this paragraph shall preclude an award being made to Tenant by the
condemning authority for loss of business or depreciation to and costs of removal of equipment
or fixtures, provided that such award shall not diminish the award otherwise available to
Landlord.
ARTICLE XVI. - LANDLORD'S INABILITY TO PERFORM
16.01 If, by reason of inability to obtain and utilize labor, materials or supplies;
circumstances directly or indirectly the result of a state of war or national or local emergency; any
laws, rules, orders, regulations or requirements of any governmental authority now or hereafter in
force; strikes or riots; accident in, damage to or the making of repairs, replacements, or
improvements to the Premises or any of the equipment thereof; or by reason of any other cause
beyond the reasonable control of Landlord, Landlord shall be unable to 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
8
• 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
• 19.01 Alterations and Additions. Tenant shall not make any alteration, improvements, or
additions to the Premises without prior written consent and approval of plans therefor by
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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
11/ 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
411 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
410 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
• 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 Economic Development Authority)
By:
Its:
By:
Its:
LANDLORD (Larry Hickman)
By:
• Its:
i
15
• EXHIBIT A
Description of Premises
•
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Plans and Specifications
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• s:\eda\document\bilease.doc
18
REPAYMENT AGREEMENT
THIS AGREEMENT made this day of , 199_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 Hickman described on Exhibit A attached hereto. That
lease agreement is dated , 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.
Larry Hickman
CITY OF ELK RIVER ECONOMIC
DEVELOPMENT AUTHORITY
By:
Its:
•
And:
Its:
•
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
i18 $63,842
$62,874 59 $24,182
19 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
4111
84 $0