6.0. EDSR 02-10-1997 ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
0
MEMORANDUM
TO: Economic Development Authority iFROM: Paul T. Steinman, Director of Eco omic
Development
DATE: February 6, 1997
i
SUBJECT: Agenda Item#6
I. PURPOSE OF MEMO
The purpose of this memo is to outline a discussion of the major
parameters of the proposed Business Incubator lease with Larry
Hickman, the EDA sub-lease, and Memorandum of Understanding.
• II. O VERVIEW
Staff has been working these past months with Larry Hickman, in an
effort to agree upon a lease concept for approximately 10-15,000 square
feet of space in the Furniture and Things building on east Highway 10.
Hickman plans to vacate this space by approximately mid-February,
making it available for leasing by the EDA for use as a Business
Incubator.
Staff has been working with Larry Hickman's contractor to lay out
some possible build-out scenarios for the EDA space. This space build-
out includes construction of bathroom facilities and various walls and
corridors in order to accommodate up to 6 or 7 tenants. Hickman's
contractor is currently in the process of estimating a cost to complete
such improvements.
Staff and Harlan Jacobs have currently identified four potential
Business Incubator prospects. One of these prospects has met with the
EDA individually and provided its product presentation. Staff will be
working with additional prospects to set a time when each could
do
appear before the EDA and make their product presentation.
13065 Orono Parkway •`P. O. Box 490 • Elk River, MN 55330-1743 • (612) 441-7420 • Fax (612) 441-7425.
Equal Opportunity Housing and Equal Opportunity Employment
Business Incubator Issues
February 6, 1997
Page 2
•
III. PRIMARY ISSUES TO CONSIDER
The EDA has the following primary issues to consider at this time:
• What are the major parameters of the proposed lease?
Staff summarizes the following major parameters of the proposed
lease:
0 Space leased Approximately 13,186 square feet, of
which 11,072 square feet is leasable
and 2,114 square feet is common area.
0 Base Rent $1.50 per square foot times 13,186
square feet equals $19,779 per year
0 Term Initial term of the proposed lease is
April 1, 1997, to March 31, 1999
0 Additional Terms EDA proposes to be able to extend the
term of the lease by six years at the
same base rent.
The building, as proposed to be built out by Hickman's contractor
would include the following leasable spaces:
0 One 2,505 square foot space
0 One 1,041 square foot space
0 One 2,267 square foot space
0 One 1,561 square foot space
O One 2,137 square foot space
0 One 1,606 square foot space
0 One 346 square foot space (proposed to be used as common
area conference room for all tenants)
The current conceptus discussed with Larry Hickman wouldallow
the EDA, upon 100 percent occupancy of the above listed spaces, to
possibly lease an additional 1,782 square foot space. At the present
time Mr. Hickman proposes to utilize such space for additional
furniture sales, in addition to the approximately 10,000 square feet
of space at the front of the building.
Business Incubator Issues
February 6, 1997
Page 3
•
The major parameters of the attached sub-lease include:
0 The sub-lease incorporates all of the responsibilities of the
EDA primary lease
0 The base rent will be negotiated individually with each
tenant
0 The term of the sub-lease will not be longer than the term of
the EDA primary lease or additional renewal terms.
• What is the purpose of the Memorandum of Understanding?
In discussions with the City Attorney regarding this concept,the
suggestion was made to completely separate the real estate lease
portion of this project with the specific details of the Business
Incubator program. Staff has done this in that the EDA primary
lease and the sub-lease only deal with the issues of base rent,term,
and other standard real estate lease issues.
40 The Memorandum of Understanding, as attached to this memo, will
describe and set forth the details of the Companies participation in
the Business Incubator program. Such details include the following:
0 The stock-barter transaction
0 The member Companies reimbursement (stock) to EDA for a
percentage of the cost of leasehold improvements
0 A location commitment by the company to continue its
operations within the City of Elk River
0 A summary of company responsibilities including:
• Financial statements and employee reports to be made
available to the EDA
♦ Annual objectives of the company to be made available
to the EDA
• Regular and board meetings which are open to
attendance by EDA representatives.
0 A description of how the company will cooperate to meet
requirements with regard to creating/retaining low to
• moderate income jobs
Business Incubator Issues
February 6, 1997
Page 4
Co•
The company requirement to provide its vendor contracts to
the EDA. These vendor contracts will be used to provide
possible opportunities to Elk River manufacturing companies
in order to create and retain jobs within our community.
• What are current financial projections and how are
leasehold improvements proposed to be paid?
As shown on the attached Business Incubator financial projections
sheet,the following expenses are anticipated in year one:
o EDA primary lease $19,779
O Signage $ 3,000
0 Leasehold Improvements $25,000
0 Genesis Business Centers $ 6,000
0 Contingency $ 5,000
Staff has also made some assumptions regarding the amount of
square feet in the space which could be leased in year one and at
what cost:
0 5,000 square feet leased in year one at $2.00 per square foot
gross (average)
Staff has also made assumptions regarding the stock-barter
transaction in that it is anticipated that the EDA would receive
$2.00 per square foot in the form of stock in the companies for each
square foot of space leased by the company, in addition to stock in
return for a percentage of the cost of leasehold improvements.
There currently are three significant figures which could vary
dependent upon further negotiations with tenants and the building
owner. These figures are as follows:
0 Rent paid to EDA Anticipated $2.00/square
foot average
0 Stock-barter transaction (for rent) Anticipated $2.00/square
foot
0 Stock-barter transaction (for leaseholds) Anticipated percent of
total leaseholds based
upon square footage
leased by Company
Business Incubator Issues
February 6, 1997
Page 5
•
0 Cost of leasehold improvements Anticipated year one
expenses of$25,000
These leasehold improvement costs are broken down as follows:
0 Construction of bathroom facilities including septic system
and drainfield
0 Construction of walls and doors to accommodate office uses
0 Separation of lights, heat zones, air exchange, installation of
electrical and phone jacks, etc.
0 Addition of a heating plant for a portion of the space to be
leased.
Larry Hickman's contractor has indicated rough costs to complete all
of the above activities in order to provide leasable space to the EDA
is approximately$30-50,000. The contractor is finalizing these costs
at this time. Hickman has indicated he would pay for all the costs of
di the leasehold improvements up front, but would require that the
111.
EDA reimburse him for such costs prior to taking occupancy of the
space. Hickman has indicated the following with regard to the cost
of construction of bathroom facilities and the septic system and
drainfield:
0 EDA to pay for these costs up front
0 Hickman to repay the EDA at the end of its lease based upon
a standard seven year depreciation schedule.
For example, if the EDA were to vacate the space at the end of its
initial two year term, Larry Hickman would reimburse the EDA for
71.43 percent of the up front costs of construction of the bathroom
facilities and septic system/drainfield.
Staff and Hickman have also discussed that another major cost is
the addition of a heating plant to serve a portion of the building
which will be leased by the EDA. Staff's position is that this
addition will retain value for the building long after the EDA would
vacate the premises and, therefore, the expense of adding a heating
plant should be that of the building owners and not the EDA.
Business Incubator Issues
February 6, 1997
Page 6
The city attorney has indicated his desire to keep the EDA up front
for leasehold improvements to a maximum 25 000. Staff
payment P $ ,
has not discussed this issue in detail with the building owner, but if
the costs are likely to exceed $25,000 up front, staff would propose
the following options:
0 Pay a portion of the costs in year one and a second portion of
these costs in year two.
0 Add the total cost of the EDA leasehold improvements to the
base rent and pay over the initial two year term of the lease.
♦ If EDA leasehold costs are $40,000,this would equate
to an additional $3.03 per square foot over the initial
two year term of the proposed lease. We would then be
Teasing the space for $4.53 per square foot.
The second option would mean that the building owner has to be
willing to carry the cost of these leasehold improvements over a
two year period. This issue has not been discussed in detail
with the building owner.
10 • What are the requirements for use of CDBG dollars in this
project?
The following major objective needs to be fulfilled with regard to the
total number of jobs created within the Business Incubator facility
throughout the lease term:
0 The creation or retention of permanent jobs where at least 51
percent of the jobs, computed on a full time equivalent basis,
involve the employment of low and moderate income persons.
• In the Business Incubator project, the aggregate
number of jobs created must be documented to show
that at least 51 percent of the jobs are held by, or are
available to, low and moderate income persons.
• Jobs in aggregate that are not held or filled by a low or
moderate income person may be considered to be
"available" to low and moderate income persons only if
special skills that can only be acquired with substantial
training or work experience or education beyond high
school are not a prerequisite to fill such jobs, or the
business agrees to hire unqualified persons and provide
training; and, that the recipient and the assisted
businesses take actions to ensure that low and
Business Incubator Issues
February 6, 1997
Page 7
moderate income persons receive first consideration for
filling such jobs.
Elk River and Sherburne County reside in the Minneapolis/St. Paul
MSA and the following low-moderate income limits apply:
• One person family $19,100 to $29,100
• Two person family $21,850 to $33,300
• Three person family $24,550 to $37,450
• Four person family $27,300 to $41,600
• Five person family $29,500 to $44,950
• Six person family $31,650 to $48,250
• Seven person family $33,850 to $51,600
• Eight person family $36,050 to $54,900
The job applicants current pay (prior to taking a job with a Company
in the Incubator) would have to fall within these qualifications in
order to be considered as an eligible low-moderate income person.
Staff is currently working with job service and another agency in
Monticello to research the possibility of such agencies providing a
screening of applicants who meet the low-moderate income criteria
Aik who then could fill positions available within the Incubator
Company. Staff has also been working very closely with the
Department of Trade and Economic Development to research these
requirements and understand the EDA's obligation in the use of
CDBG dollars for this project.
IV. CONCLUSION
In conclusion, it may be necessary for the EDA to hold a special
meeting sometime toward the end of February in order to formally
approve the lease document which will include details regarding
payment of costs of leasehold improvements, the sub-lease document,
and the Memorandum of Understanding. At the present time the city
attorney is reviewing these documents for final modification, and, if
necessary, would be available at a special meeting to address any
questions the EDA might have. It appears from previous
conversations that the building owner will likely want to have a lease
in place, or approved by the EDA, by approximately March 1, 1997.
This timeframe should allow for the contractor to complete all of the
leasehold improvements within the building to provide for EDA and
tenant occupancy on April 1, 1997.
•
Business Incubator Issues
February 6, 1997
Page 8
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V. ATTACHMENTS
• Business Incubator Lease
• Sub-lease
• Memorandum of Understanding
• Financial Projections
• Building Layout
Ask
1111
eda\meetings\bimm210.doc
•
OFFICE INDUSTRIAL SPACE 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 1, 1997 and expiring March 31, 1999
unless sooner terminated as set forth herein or extended as proivded 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, payable as follows:
(1) $19,779 per annum ($4,944.75 per quarter) for the period from April 1, 1997
through March 31, 1998;
• (2) $19,779 per annum ($4,944.75 per quarter) for the period from April 1, 1998
through March 31, 1999;
(H) Permitted Uses: office, manufacturing, warehouse and other uses permitted by
110 applicable zoning ordinances.
(I) Broker(s): NONE
(J) 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 (F), 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 successive
Renewal Terms of 2 years each. Such option may be exercised by Tenant at least
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 Lease except that the
Base Rent for each Renewal Term shall be as follows:
First Renewal Term: $ 19,779 per annum($ 4,944.75 per quarter)
• Second Renewal Term: $ 19,779 per annum ($ 4,944.75 per quarter)
Third Renewal Term: $ 19,779 per annum($ 4,944.75 per quarter)
2
• 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(K) 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. Tenant, its employees and all persons visiting or doing business with Tenant in the
Premises shall be bound by and shall observe the same rules and regulations as Tenant, and any
such further and other reasonable rules and regulations made hereafter by Landlord relating to
the Premises or the Building of which notice in writing shall be given to the Tenant, and all such
rules and regulations shall be deemed to be incorporated into and form a part of this Lease.
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.
• 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
3
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.
•
•
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1111 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(H) in lawful money of the United States in
equal consecutive quarterly installments in advance on the first 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 quarter's
Base Rent at the beginning of theReal Estate Taxes,
g g
term. Base Rent includes staInsurance
Premiums and Common Area Expenses.
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,
1111 gas, water, fuel, sewer charges, trash hauling and any other services or utilities used in, servicing
or assessed against the Premises, unless otherwise herein expressly provided. Tenant shall
contract in its own name and timely pay for all charges for telephone and fax services.
ARTICLE VIII. - QUIET ENJOYMENT
8.01 Landlord covenants that Tenant, on paying the Rents herein provided and keeping,
performing and observing the covenants, agreements and conditions herein required of Tenant,
shall peaceably and quietly hold and enjoy the Premises for the term aforesaid, subject, however,
to the terms of this Lease.
ARTICLE VIII. - 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 cash rents 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
5
(60) days after such damage, terminate this Lease as of the date of the damage. If this Lease is
illnot 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 sixty (60) day notice
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 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) During the last ninety (90) days of the Term or any extension thereof, or at any time if
Tenant has vacated the Premises, to decorate, remodel, repair, alter or otherwise
prepare the Premises for re-occupancy;
(c) 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;
(d) 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;
6
• (e) 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.
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. However, 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.
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
7
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
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.
8
• 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
reimburse Landlord for the actual documented costs 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 including ADA
requirements.
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
9
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
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.
10
• ARTICLE XX. - INSURANCE
20.01 Public Liability, Property Damage Insurance. Tenant covenants and agrees to
maintain on the Premises at all times during the term of this Lease, or any extension or renewal
thereof, a policy or policies of comprehensive public liability and property damage insurance
with not less than $1,000,000.00 combined single limits for both bodily injury and property
damage, which policy or policies shall name Landlord and its Managing Agent 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
Tenant 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
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
11
against all actions, claims, demands, costs, damages or expenses of any kind which may be
• brought or made against them or which they may pay or incur by reason of Tenant's occupancy
of the Premises or Tenant's negligent performance of or failure to perform any of its obligations
under this Lease. In case Landlord or its employees or agents shall, without fault on their part,
be made a party to any litigation commenced by or against Tenant, then Tenant shall indemnity,
defend and hold them harmless and shall pay all costs, expenses and reasonable attorney's fees
incurred or paid by them or such managing agent in connection with such litigation.
ARTICLE XXI. -DEFAULT AND REMEDIES
21.01 In the event:
(a) Tenant shall at any time fail to pay any item of Rent when due, or
(b) Tenant shall fail to keep, perform or observe any other covenant, agreement,
condition or undertaking hereunder and shall fall to remedy such default within
ten(10) days after written notice thereof has been mailed by Landlord to Tenant;
or if such default is one that will take longer than ten (10) days to remedy,
Tenant fails to commence curing such default within ten (10) days and/or fails
diligently to pursue such cure to completion; or
(c) The Premises shall be vacated by Tenant for any period for which Tenant has
• not paid its Rent;
Landlord shall have the right, without further notice to or demand, to re-enter and take exclusive
possession of the Premises, with or without force or legal process, and to refuse to allow Tenant
to enter the same or have possession thereof; to change the locks on the doors to the Premises;
take possession of any furniture or other property in or upon the Premises (Tenant hereby
waiving the benefit of all exemptions by law), sell the same at public or private sale without
notice and apply the proceeds thereof to the costs of sale, payment of damages and payment of
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
12
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.
21.05 No Reinstatement. 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
13
covenants or obligations on the part of Landlord are concerned, shall be limited to mean and
iinclude 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, except that no assignment, encumbrancee or subtenant of Tenant. 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
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.
14
• 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 an only with the broker or
brokers set forth at Item 1.01(L) above, and that Tenant knows of no other broker who negotiated
this Lease or is entitled to any commission in connection herewith. Tenant agrees to indemnity,
defend and hold harmless Landlord from and against any commissions or claims by any other
broker or brokers pertaining to Tenant's having entered into this Lease.
24.06 Applicable Law. This Lease, its interpretation and enforcement shall be governed by
the laws of the state in which the Premises are located.
24.07 Waiver of Jury. Landlord and Tenant agree that, to the extent permitted by law, each
shall and hereby does waive trial by jury in any action, proceeding or counterclaim brought by
either against the other on any matter whatsoever arising out of or in any way connected with this
Lease.
24.08 Allocation of Rent. Landlord and Tenant agree that no portion of the Base Rent paid
by Tenant during the portion of the Term of the Lease occurring after the expiration of any
period during which such rent was abated shall be allocated for income tax purposes by Landlord
• or Tenant to such rent abatement period, nor is such rent intended by the parties to be allocable
for income tax purposes to any abatement period.
ARTICLE XIXV. - ENTIRE AGREEMENT
25.01 This Lease contains the entire agreement between the parties and no modification of
this Lease shall be binding upon the parties unless evidenced by an agreement in writing signed
by the Landlord and the Tenant after the date hereof If there be more than one Tenant named
herein, the provisions of this Lease shall be applicable to and binding upon such tenants jointly
and severally.
ARTICLE XXVI. -EXHIBITS
26.01 Reference is made to the Exhibits listed at Section 1.01 (J) 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:
15
1
• By:
Its:
LANDLORD (Larry Hickman)
By:
Its:
•
16
EXHIBIT A
.
Description of Premises
.
•
17
EXHIBIT B
0
Legal Description of Real Estate
•
•
18
EXHIBIT C
• Plans and Specifications
The landlord shall cause to be constructed and pay all costs associated with completing the Plans
and Specifications as attached to this Exhibit. Tenant shall, at the beginning of the Term,
reimburse Landlord for the costs of completing the Plans and Specifications in accordance with
this Exhibit.
These Plans and Specifications shall include, but not be limited to, construction of improvements
related to the Premises including the following:
• One male and one female bathroom facility, adequate to serve the needs associated
with Tenants intended use of Premises.
• The construction of physical improvements, i.e., walls, doors, corridors, ceilings,
windows, floor and wall coverings, electrical outlets and phone jacks, separate heat
and lights for each office space, etc.,within the Premises to serve the needs of Tenant.
Landlord's contractor shall separately estimate the cost of the bathroom facilities from the
construction of other improvements in the Premises. Attached to this Exhibit is the contractor's
detailed cost estimates and supporting documentation for these Plans and Specifications as
agreed to by the Tenant and Landlord.
411,
s:\eda\document\bilease.doc
S
19
MEMORANDUM OF UNDERSTANDING
MEMORANDUM OF UNDERSTANDING ("Agreement") is made and
entered into this day of , 19 by and between the City
of Elk River Economic Development Authority (EDA), Larry Hickman,
Genesis Business Centers, Ltd., and , a
corporation organized and existing under the laws of the State of
(the "Company").
BACKGROUND
The EDA has created the Elk River Business Incubator (ERBI) to
support the development of new high technology companies ("Member
Companies") during the early years of such Member Companies'
development.
The Company has been approved as a potential Member Company, and
the Company desires the support, services, and programs of the EDA as part
of the Elk River Business Incubator.
EDA, through its creation of the Elk River Business Incubator, is
prepared to arrange for the provision of certain services in accordance with
the terms of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual promises and covenants contained in this Agreement and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties covenant and agree as follows:
1. SERVICES OF ERBI
1.1. Rent of Available Space. At the time of execution of this
Memorandum of Understanding, the Company shall have executed a Lease
for space within the Elk River Business Incubator. The terms and conditions
of such space rental shall be strictly in accordance with the Lease,
substantially in the form of Schedule A attached hereto.
1.2. Leasehold Improvements . In order for the Company (and
additional companies) to occupy space within the Elk River Business
Incubator, the EDA has provided leasehold improvements in the form of
construction of restroom facilities, partition walls, doors, windows, carpeting,
and other improvements, at a total cost of$ . Such leasehold
improvements were constructed in order to make the Elk River Business
Incubator available to all qualified applicants, including the Company.
•
• 2. CONSIDERATION
2.1. Issuance of Stock. In consideration for the services
provided to the Company hereunder, the Company, at the time of execution of
the Company lease attached as Exhibit A hereto, shall convey and issue to
the EDA (Landlord), Larry Hickman (Building Owner), and Genesis Business
Centers, Ltd. (EDA Business Incubator Consultant), a number of shares of
the voting common stock of the Company ("Shares") as follows:
A) For the service provided in Rent of Available Space:
EDA (Landlord) Shares equal to
dollars per square foot of
space leased per year.
Larry Hickman (Building Shares equal to
Owner) dollars per square foot of
space leased per year.
Genesis Business Centers, Shares equal to
Ltd. (EDA Business dollars per square foot of
Incubator Consultant) space leased per year.
B) For the service provided in construction of leasehold
improvements:
EDA (Landlord) Shares equal, in dollar
value, to % of the total
cost of leasehold
improvements.
All Shares issued to the EDA, Larry Hickman, and Genesis Business
Centers, Ltd., pursuant to this Agreement shall be subject to any restrictions
on transferability under state and federal securities laws, and shall be
entitled to all rights and privileges to which other shares of voting common
stock the Company are subject.
2.2. Adjustments Stock Issued. In the event that the
shares of voting common stock of the Company are changed into or
exchanged for a different number or kind of shares or other securities of the
Company or of another corporation by reason of any reorganization, merger,
consolidation, recapitalization, reclassification, stock, split, combination of
shares of dividends payable in capital stock, the Company shall convey and
issue to the EDA, Larry Hickman, and Genesis Business Centers, Ltd.
additional shares of the voting common stock of the Company.
•
2.3. Anti-dilution Clause.
•
2.4. Continuing Obligation. The Company shall be obligated
to issue the Shares to the EDA, Larry Hickman, and Genesis Business
Centers, Ltd. through the period equal to any additional terms of the
Company Lease, beyond that which is attached to this document as Exhibit
A.
2.5. Location Commitment; Mandatory Repurchase; Put
Options. So long as EDA is owner of any Shares of Company stock, the
Company's administrative, marketing, product development, warehouse and
manufacturing facilities shall be located within the City of Elk River. In the
event that the Company no longer maintains such facilities within the City of
Elk River, the EDA shall have the option to require the Company to
• repurchase the Shares owned by EDA within 30 days of written demand.
The repurchase price shall be the last price per share offered in any private
or public offering authorized by the Board of Directors of the Company, but
not less than twice the price used to calculate Shares provided to the EDA
under 2.1.(A) of this Agreement.
3. COMPANY RESPONSIBILITIES
3.1. Financial Statements and Employee Reports. The
Company shall provide EDA with "bookkeeper-prepared" quarterly financial
statements and all available audited financial statements (Note: EDA does
not require the Company to incur the cost of"audited" statements as a
requirement of this agreement). The Company shall also provide EDA with
detailed periodic data on all employees of the Company, including salaries,
number and names of Company employees, titles and positions of each
employee, and the names and positions of the Company's officers and Board
members.
3.2. Annual Objectives. The Company shall maintain a
written policy statement on a quarterly and annual basis defining its
objectives with respect to its growth and development, and shall provide EDA
111
with copies of such written policy statement. The Company shall also
provide to EDA periodic reports on the Company's growth and development,
as may be reasonably requested by EDA from time to time.
3.3. Regular Meetings. The Company shall conduct and hold
regular periodic meetings with the EDA Executive Director and members of
• the EDA Commission as determined appropriate for the purpose of reviewing
the Company's progress. The Company acknowledges that as part of the
services provided to it hereunder, the Company shall receive advice and
counsel from such Executive Director and EDA Commissioners. The
Company shall hold and conduct such meetings at least once every quarter
during the term of this Agreement.
3.4. Board Meetings. The Company shall provide EDA with
written notice of, and allow an EDA representative or designee to attend, all
regular and special meetings of the Company's Board of Directors and/or
Board of Advisors (collectively the `Boards"). Although an EDA
representative or designee may offer guidance or advice to the Boards, no
officer, director, agent, or employee of EDA shall be deemed a member of the
Company's Boards. Any EDA representative or designee attending the
meetings for the Company's Boards shall attend without a vote, without
compensation, and without fiduciary or legal responsibility to the Company,
its officers, directors, or stockholders. The Company shall indemnify the
EDA, including its representative or designee attending such Board
meetings, against all costs and liabilities to the same extent as the Company
so indemnifies its officers and/or directors. The EDA, or its representative or
designee, shall hold all Company information in strict confidence.
111/ 3.5. Job Openings. The Company shall keep a written
record of all persons interviewed and hired and complete the Notice to
Employee attached as Exhibit B, upon hiring for each position. The
Company acknowledges that a portion of the funds used to facilitate the Elk
River Business Incubator are provided from Federal Community
Development Block Grants and as such, the EDA and Company are required
to meet certain standards for the use of such funds. Such standards include
that the Company is required to employ, or make available, a minimum 51
percent of their job openings to those meeting the low/moderate income
guideline of the Minneapolis/St. Paul MSA.
3.6. Vendor Contracts. The Company shall make available to
the EDA Executive Director, all vendor contracts. Such vendor contracts will
be used to provide opportunities to local manufacturing companies in order to
create and retain jobs in our community. The Company is strongly
encouraged to utilize local businesses in its manufacturing and production of
goods, however the Company is allowed to make the final decision on its own
vendors at all times.
4. INDEMNIFICATION. The Company shall indemnify and
• hold harmless the EDA from any loss, damage, expense, liability, or claim,
including without limitation attorneys' fees and expenses of litigation, to
which such parties may become subject arising out of: (a) any failure of the
Company to perform any of its covenants, agreements or undertaking
contained in this Agreement, the lease of space, or in any other agreement
executed in connection with the transactions contemplated herein; or (b) any
other action or inaction of the Company, its directors, officers, employees, or
designees, which action or inaction is not a result of any fault on the part of
the EDA.
5. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
A. The EDA agrees that during the term of this Agreement
and for a period of two (2) years immediately thereafter, it shall not, other
than to EDA Commissioners, and in a non-public format, disclose to any
individual, firm, corporation, partnership, or other business entity, or use for
its own financial gain or benefit, any Confidential Information (defined
below), that it obtained during the term of this Agreement. "Confidential
Information" shall mean any and all information (other than trade secrets)
relating to the Company's business provided to the EDA during the term of
this Agreement or to which the EDA had access or which it compiled during
the term of this Agreement, not generally known to the public, and with
respect to which (i) the Company has clearly indicated to the EDA that such
information is confidential and proprietary, or (ii) the Company has provided
written notice to the EDA confirming that such information is confidential
and proprietary. The Company agrees and acknowledges that it will not be
required by this Agreement to disclose to the EDA (and neither desire access
• to or disclosure of), any trade secrets of the Company or any third party.
B. Section 5A. shall not apply to any information:
(i) Generally known in the trade or to the public
through no fault of the EDA; or
(ii) Disclosed to the EDA by any party having
legitimate possession thereof and the unrestricted right to
make such disclosure; or
(iii) Hereafter published in any publication for public
distribution or filed as public information with any
governmental authority; or
(iv) Required to be disclosed by applicable law or legal
process with the exception of the Open Meeting Laws
governing public boards and commissions; or
(v) Within the Parties legitimate possession prior to
the Company's disclosure.
6. TERMS AND TERMINATION.
6.1. Term. The term of this Agreement shall be for a period
• equal to the term of the Lease attached herein as Exhibit A. Either party
may terminate this Agreement with or without cause by providing written
notice to the other party ninety (90) days prior to termination. The
provisions in this Agreement calling for performance by any party after
termination shall continue in full force and effect.
• 6.2. Termination by the EDA for Cause. The EDA may
immediately terminate this Agreement, without providing any prior notice to
the Company, for cause, defined as follows:
A. The Company materially breaches any of the terms or
conditions of this Agreement, the Lease, or, and any other
agreement between the parties in connection with the subject
matter hereof, if such breach continues for ten (10) days after
the EDA has provided the Company with written notice of the
breach; or
B. The Company intentionally engages in conduct or
activities materially damaging to the EDA.
6.3. Termination by Company for Cause. The Company may
immediately terminate this Agreement, without providing any prior notice to
the EDA for cause, defined as follows:
A. The EDA materially breaches any of the terms or
conditions of this Agreement, the Lease, or, and any other
• agreement in connection with the subject matter hereof, if such
breach continues for ten (10) days after the Company has
provided the EDA with written notice of the breach; or
B. The Parties intentionally engage in conduct or activities
materially damaging to the Company.
7. GOVERNING LAW. This Agreement shall be governed,
construed, and enforced in accordance with the substantive laws, but not the
conflicts, of the State of Minnesota.
8. BINDING ARBITRATION.
• 9. SEVERABILITY. If any provision or covenant of this
Agreement should be held by any court to be invalid or unenforceable, either
in whole or in part, such invalidity or unenforceability shall not affect the
validity of enforceability of the remaining provisions or covenants of this
Agreement, all of which shall remain in full force and effect. Should any
covenant contained herein be held by any court of competent jurisdiction to
be overly broad and unenforceable, the parties agree that any such court may
enforce so much of such covenant or restriction as is otherwise enforceable.
10. NOTICES. All communications provided for hereunder shall be
in writing and shall be deemed to be given when delivered in person or
deposited in the United States Mail, First Class, Certified Mail, Return
Receipt Requested, with proper postage prepaid, and addressed to the party
and at the address specified below.
11. ENTIRE AGREEMENT. This Agreement and the Schedules
attached hereto represent the complete and mutual understanding of the
parties with respect to the subject matter hereof, and supersede and cancel
all previous and contemporaneous written and oral agreements and
communications with respect to the subject matter hereof, except for the
Lease herein attached as Exhibit A.
IN WITNESS WHEREOF, the parties have set their hands and seals
as of the day first above written.
CITY OF ELK RIVER EDA: THE COMPANY:
II/ By By
Typed Name Typed Name
Title Title
Date Date
By By
Typed Name Typed Name
Title Title
Date Date
LARRY HICKMAN
By
Typed Name
Title
Date
GENESIS BUSINESS CENTERS, LTD.
By
Typed Name
Title
• Date
eda\document\biagrmt.doc
NOTICE TO EMPLOYEE
The development of this project and the creation of these jobs are-being assisted
•with Community Development Block Grant (CDBG) funds provided to us from ,
(City/County)
which it receives from the MN Department of Trade and Economic Development. A
requirement of this assistance is that we collect data on employees. Therefore, we ask
that you answer the questions below. This information will not be disclosed or released
by this office without your consent, except to the and to the
(City/County
Department of Trade and Economic Development (DTED) .
Are you . . . Male Female Female Head of Household Handicapped
Are you White (not Hispanic)
Black (not Hispanic)
American Indian or Alaskan Native
Hispanic
Asian or Pacific Islander
A. TAKEN BY:
What is the number of adults and children living in your household including
yourself?
For the past year what was the total family income (before taxes). for all members of
your household? Please check the appropriate response across from the family
size you listed above.
LOW-INCOME LMI NON-LMI
1 .member: $ or less, $ - _ S. or more
412 members: $ or less, $ - $ or more
3 members: $ or less, $ - $ or more
4 members: — $ or less, $ - $ or more
5 members: — $ or less, $ - $ or more
6 members: — $ or less, $ - $ or more
7 members: — $ or less, $ - $ or more
8 members: — $ or less, $ - $ or more
If requested, I would agree to make my financial records available to the
or DIED for verification of the above information.
(City/Co) .
I certify that the information above is, to the best of my knowledge and belief, a
true, correct and complete statement of my financial condition as of the date stated
herein.
Signature Date
Warning: Section 1001 of Title 18 of the United States Code (Criminal Code and
Criminal Procedure) shall apply to the foregoing certification, Title 18 provides,
among other things, that whoever, knowingly and willingly makes or uses a document or
writing containing any false, fictitious or fraudulent statement or entry, in any manner
within the jurisdiction of any department or agency of the United States, shall be fined
more than $10,000 or imprisoned not more than five years, or both.
Prospective Employee Stop Here
_' r
This Page to be Completed by Company
• and Grantee
B. AVAILABLE TO:.
To be completed by company only:
I certify that , was hired for on
(employee) (job title)
(date)
Total annual hours for this position are
Hourly wage is
Benefits: (circle yes or no)
• health yes no
• dental yes no
• life insurance . yes no
• retirement yes no
Total annual hours for this position are
The jobs available meets that of the general LMI population based on the
following criteria:
• Skill level
• Education and experience
• Training provided by the employer
• • Advertising, recruitment, and other outreach efforts
I, , certify that this position meets the above
(Company owner or CEO)
criteria.
C. GRANTEE CERTIFICATION:
To be completed by the Grantee:
I acknowledge that I have reviewed the above information and it meets the
following criteria:
❑ "Taken By" an LMI person (See Section A)
❑ "Available To" an LMI person (See Section B)
❑ Non-LMI
Project Director Date
For Retained Positions complete Sections A and C.
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