8.1. SR 03-21-2016City of
Elk —
River
Request for Action
To
Item Number
Mayor and City Council
8.1
Agenda Section
Meeting Date
Prepared by
Consent Agenda
March 21, 2016
Amanda Othoudt, EDD
Item Description
Reviewed by
Assignment and Assumption of Tax Abatement
Cal Portner, City Administrator
and First Amendment to Abatement Agreement for
Reviewed by
Envision 3, LLC dba Sportech, Inc.
Action Requested
Approve, by motion, the Assignment and Assumption of Tax Abatement and First Amendment to the
Abatement Agreement.
Background/Discussion
On September 14, 2015, the city entered into a tax abatement agreement with Envision Company, LLC,
which was assigned by council action to Envision 3, LLC on November 16, 2015, for organizational and
tax purposes. Envision 3, LLC assumed ownership of Lots 1 and 2, Block 2, Natures Edge Business
Center Second Addition (NEBC-II), and is party to the tax abatement agreement.
Sportech recently completed construction of their assembly plant. Envision 3, LLC is under contract to
sell the property to Meritex Elk River, LLC. Upon the sale of the property, Sportech will enter into a
long-term lease with Meritex. The building will be Sportech's main assembly plant through the duration
of the lease. Sportech is responsible for all building maintenance, repairs, property taxes, and insurance.
State statute requires the property owner to pay property taxes in the event that the lessee fails to pay.
Envision and Sportech have requested the city consent to the transfer of Lots 1 and 2, Block 2, NEBC-II
and the project as defined in the abatement agreement to Meritex allowing them to act as landlord. The
mortgage allowed the sale-leaseback transaction between Envision 3 and a third party land holding
company, and the mortgage was to be released upon Sportech delivering a fully executed lease to the city.
An amendment to the abatement agreement was added to address insurance requirements for the project
and all other terms and conditions remain unchanged.
Financial Impact
None
Attachments
■ Attorney Letter dated March 16, 2016, requesting Assignment and Assumption of Tax
Abatement and Amendment to the Abatement Agreement
■ Assignment and Assumption of Tax Abatement for Envision 3, LLC and Sportech, Inc.
■ Lease Agreement between Meritex Elk River, LLC and Sportech, Inc.
■ First Amendment to the Abatement Agreement
■ Resolution Approving Assignment of Abatement and First Amendment
■ Mortgage and Security Agreement dated September 14, 2015
P a w E A E U s r
NaA f RE]
Jeffrey W. Jones
Attorney
D 612.359.7625
jjones@fwhtlaw.com
City of Elk River, Minnesota
Elk River City Hall
13065 Orono Parkway
Elk River, MN 55330-5600
Attn: City Administrator
333 South Seventh Street
E
FABYANSKE
Suite 2600
°
WESTRA
Minneapolis, MN 55402
HART &
7612.359.7600
t
F612.359.7602
THOMSON
March 17, 2016
Re: Assignment and Assumption of Tax Abatement
Dear City Administrator:
I am an attorney representing Envision 3, LLC, and Sportech, Inc., with respect to a proposed
real estate sale/leaseback transaction for the Property described below.
To clarify, Envision 3, LLC ("Envision"), is the owner of Lots 1 and 2, Block 2, Natures Edge
Business Center Second Addition, in Elk River, Minnesota (the "Property"). As you know,
Envision is a party to a (i) Tax Abatement Agreement dated September 14, 2015 (the
"Abatement Agreement"), by and between Envision and the City of Elk River ("City"); (ii)
Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Financing
Statement dated September 14, 2015 (the "Mortgage"), from the Envision, as mortgagor, in
favor of the City; and (iii) Promissory Note dated September 14, 2015 (the "Note") in favor of the
City.
Envision and Sportech built an assembly plant on the Property, which has been completed.
Envision is also under contract to sell the Property to Meritex Elk River, LLC (the "Landlord")
and upon the sale of the Property, Sportech, Inc., will be entering into a long-term Lease with
the Landlord. The Building will be Sportech's main assembly plant through at least the duration
of the Lease. Pursuant to the terms of the Lease, Sportech will be responsible for all
maintenance and repairs to the Building and will also be responsible for paying all property
taxes and insurance relating to the Property and Building.
The Mortgage contemplated this above described sale-leaseback transaction, and therefore
allowed the Mortgage to be released upon Sportech delivering a fully executed Lease to the
City. Unfortunately, the Abatement Agreement and the Note did not contain similar langague.
Therefore, Sportech, who is responsible for all obligations related to the Property under its
Lease, asks the City to (i) consent to the transfer of the Property and (ii) amend the agreements
so that Sportech will assume all obligations under the Abatement Agreement and Note upon the
transfer of the Property. This would make the agreements consistent with Sportech's
obligations under the Lease.
Very truly yours,
li4e . Jo -nes
JWJ/
Enclosures
ASSIGNMENT AND ASSUMPTION OF
TAX ABATEMENT
THIS ASSIGNMENT AND ASSUMPTION OF TAX ABATEMENT (this
"Agreement") dated as of the day of March, 2016, is made and entered into by and
among ENVISION 3, LLC, a Minnesota limited liability company (the "Assignor") and
SPORTECH, INC., a Minnesota corporation (the "Assignee").
WITNESSETH:
WHEREAS, Assignor (by previous assignment) is the Developer (i) under that
certain Tax Abatement Agreement dated September 14, 2016 (the "Abatement
Agreement"), by and between Assignor and the City of Elk River, Minnesota, a
Minnesota municipal corporation ("City"); (ii) under that certain Mortgage, Security
Agreement, Assignment of Leases and Rents, and Fixture Financing Statement dated
September 14, 2016 (the "Mortgage"), from the Assignor, as mortgagor, in favor of the
City; and (iii) under that certain Promissory Note dated September 14, 2016 (the "Note")
from the Developer in favor of the City;
WHEREAS, Assignor desires to transfer Lots 1 and 2, Block 2, Natures Edge
Business Center Second Addition, Sherburne County, located in the City (the "Property")
and the Project (as defined in the Abatement Agreement) to the Landlord and assign its
obligations, rights and interest in, to and under the Abatement Agreement to Assignee;
and
WHEREAS, Assignee and Meritex Elk River, LLC (the "Landlord") are parties to
that certain Lease Agreement of even date herewith ("Lease Agreement"), a copy of
which is attached hereto as Exhibit A and incorporated herein by reference; and
WHEREAS, Assignee is willing to accept the assignment of the Property and
assume certain obligations of Assignor under the Abatement Agreement, all as more
particularly outlined in this Assignment.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements contained herein, Assignor and Assignee hereby covenant and agree as
follows:
1. Any capitalized term used herein and not otherwise defined herein shall
have the meaning ascribed to such term in the Abatement Agreement.
2. Assignor does hereby grant, transfer, and assign to Assignee all of
Assignor's rights, title, benefits and interest in, to and under the Abatement Agreement.
3. Assignor hereby agrees to indemnify and defend Assignee, its successors
and assigns, and its and their employees, agents, members, managers and officers
(collectively, the "Assignee Indemnified Parties") against, and hold the Assignee
Indemnified Parties harmless from, any and all cost, liability, loss, damage or expense,
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including, without limitation, reasonable attorneys' fees and expenses (collectively,
"Losses and Liabilities"), arising out of or in any way related to a failure by Assignor, its
successors or assigns to keep and perform, or a default by Assignor, its successors or
assigns under, any of the covenants, obligations and agreements to be performed by the
Developer under the Abatement Agreement prior to the date hereof.
4. Assignee, as of the date hereof, hereby accepts the foregoing assignment,
and assumes and agrees to faithfully abide by, perform, and discharge each and every
term, covenant, and condition of the Abatement Agreement applicable to the
"Developer," (the "Assumed Obligations") and to be fully bound by all of the foregoing.
5. Assignor hereby warrants and represents to Assignee as follows:
(a) The Abatement Agreement has not been modified or amended and are full
force and effect as of the date hereof, and
(b) To Assignor's knowledge, there is no Event of Default in existence under
the Abatement Agreement nor is there in existence any state of facts or circumstances
which, with the giving of notice or lapse of time or both, would constitute an Event of
Default under the Abatement Agreement.
6. Assignor will not enter into any modification or amendment of the
Abatement Agreement that would adversely affect the rights and interest of Assignee
thereunder or the Assumed Obligations unless such modification or amendment is
entered into by Assignee. Assignor will not enter into any agreement terminating the
Abatement Agreement without the prior written consent of Assignee.
7. Assignor shall give and deliver a copy of any notice, demand or other
communication which Assignor gives or delivers to, or receives from, City under the
Abatement Agreement, and that relates to or may affect the rights and interest of
Assignee under the Abatement Agreement or the Assumed Obligations, to Assignee in
the manner set forth in Section 5.3 of the Abatement Agreement, addressed or delivered
personally to Assignee as follows:
Sportech, Inc.
10800 — 175th Ave NW
Elk River, MN 55330
Attn: Christopher Carlson
or at such other address as Assignee may, from time to time, designate by written notice
to Assignor given or delivered in the manner set forth in Section 5.3 of the Abatement
Agreement. Assignee shall give and deliver a copy of any notice, demand or other
communication which Assignee gives or delivers to, or receives from, City under the
Abatement Agreement, and that relates to or may affect the rights and interest of
Assignor under the Abatement Agreement, delivered personally to Assignor or given or
delivered in the manner set forth in Section 5.3 of the Abatement Agreement to Assignor
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476641vl JSB EL185-31
pursuant to the notice address set forth therein, or at such other address as Assignor may,
from time to time, designate by written notice to Assignee.
8. Assignee expressly represents, for the benefit of the City, that it is a
limited liability company duly organized and in good standing under the laws of the
Minnesota, is not in violation of any provisions of its organizational documents or (to the
best of its knowledge) the laws of the State of Minnesota, is duly authorized to transact
business within the State of Minnesota, has power to enter into this Agreement and has
duly authorized the execution, delivery and performance of this Agreement by proper
action of its governing body.
9. The Assignor acknowledges that the City's rights and remedies against the
Developer under the Abatement Agreement are unaffected by this Assignment.
10. Assignor and Assignee agree that neither this Assignment nor the
Abatement Agreement shall be amended or changed in any way without prior written
approval of the City or as specifically provided therein.
11. This Assignment shall be binding on and inure to the benefit of the parties
hereto and their successors and assigns and shall further be for the benefit and reliance of
the City.
12. This Assignment shall be governed by and construed in accordance with
the laws of the State of Minnesota.
13. This Assignment may be executed in counterparts, which counterparts
when considered together shall constitute a single, binding, valid and enforceable
agreement.
[Signature pages follow]
3
476641vl JSB EL185-31
IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered
this Assignment and Assumption of Tax Abatement as of the date first above written.
ASSIGNOR:
ENVISION 3, LLC, a Minnesota limited
liability company
11
Christopher Carlson
Its Chief Manager
ASSIGNEE:
SPORTECH, INC., a Minnesota corporation
By:
Christopher Carlson
Its
S-1
476641vl JSB EL185-31
CONSENT AND AGREEMENT
March , 2016
The undersigned, City of Elk River, Minnesota, a Minnesota municipal
corporation ("City"), hereby (i) consents, in accordance with Section 3.6 of the
Abatement Agreement, to (A) the transfer of the Property to the Landlord (as those terms
are defined in the foregoing Assignment and Assumption of Tax Abatement (the
"Assignment and Assumption") by the Assignor named therein (the "Assignor") to the
Assignee named therein (the "Assignee")), and (B) the execution and delivery by the
Assignor and the Assignee of the Assignment and Assumption, and the terms and
provisions thereof, (ii) agrees that in the event of any inconsistency between the terms
and provisions of the Assignment and Assumption and the terms and provisions of the
Abatement Agreement (as defined in the Assignment and Assumption), the terms and
provisions of the Assignment and Assumption shall control; (iii) releases Assignor from
all the Assumed Obligations as defined in the Assignment and Assumption; (iv) warrants,
represents and certifies to the Assignee as follows:
(A) To the knowledge of the undersigned, the Abatement Agreement has not
been modified or amended and are in full force and effect as of the date hereof, and
(B) To the knowledge of the undersigned, there is no Event of Default in
existence, nor is there in existence any state of facts or circumstances which, with the
giving of notice or lapse of time or both, would constitute an Event of Default under the
Abatement Agreement.
(C) If the City delivers any notice, demand or other communication to the
Developer under the Abatement Agreement that relates to or may affect the rights and
interest of the Assignee under the Abatement Agreement or the Assumed Obligations, the
City will deliver a copy of such notice, demand or communication to the Assignee in the
manner set forth in the Abatement Agreement addressed or delivered personally to the
Assignee as follows:
Sportech, Inc.
10800 — 175th Ave NW
Elk River, MN 55330
Attn: Christopher Carlson
or at such other address as the Assignee may, from time to time, designate by written
notice to City given or delivered in the manner set forth in the Abatement Agreement.
Consent -1
476641vl JSB EL185-31
IN WITNESS WHEREOF, City has caused this Consent and Agreement to be
duly executed as of the date first written above.
CITY OF ELK RIVER, MINNESOTA
By:
Its Mayor
By:
Its City Clerk
Consent -2
476641vl JSB EL185-31
EXHIBIT A
Lease Agreement
A-1
476641v1 JSB EL185-31
LEASE AGREEMENT
Between
Meritex Elk River, LLC,
A Delaware limited liability company,
as Landlord
and
Sportech, Inc.,
a Minnesota corporation,
as Tenant
Dated 2016
085714\001\4121203.v4
TABLE OF CONTENTS
ARTICLE 1 GRANT AND TERM.............................................................................................
I
ARTICLE2 RENT.....................................................................................................................1
Permitted Exceptions
ARTICLE3 USE........................................................................................................................3
Termination Value Schedule
ARTICLE4 POSSESSION.........................................................................................................4
ARTICLE5 TAXES...................................................................................................................4
ARTICLE6 INSURANCE.........................................................................................................8
ARTICLE 7 UTILITIES...........................................................................................................11
ARTICLE 8 REPAIRS..............................................................................................................I
I
ARTICLE 9 COMPLIANCE WITH APPLICABLE LAWS.....................................................12
ARTICLE 10 MECHANIC'S LIENS........................................................................................13
ARTICLE I I DEFAULTS OF TENANT..................................................................................14
ARTICLE 12 DESTRUCTION AND RESTORATION............................................................19
ARTICLE 13 CONDEMNATION............................................................................................22
ARTICLE 14 ASSIGNMENT AND SUBLETTING.................................................................25
ARTICLE 15 SUBORDINATION, NONDISTURBANCE AND ATTORNMENT ..................25
ARTICLE 16 SIGNS AND BUILDING IDENTIFICATION....................................................27
ARTICLE 17 LANDLORD'S ACCESS...................................................................................28
ARTICLE 18 CHANGES AND ALTERATIONS.....................................................................29
ARTICLE 19 SURRENDER ................................ .............30
ARTICLE 20 HAZARDOUS MATERIALS.............................................................................
31
ARTICLE 21 INTENTIONALLY DELETED..........................................................................33
ARTICLE 22 MISCELLANEOUS PROVISIONS....................................................................33
ARTICLE 23 NOTIFICATION PRIOR TO LITIGATION.......................................................38
ARTICLE 24 LANDLORD DEFAULT AND BANKRUPTCY................................................38
ARTICLE 25 OPTIONS TO EXTEND.....................................................................................39
ARTICLE 26 OPTION TO EXPAND.......................................................................................41
ARTICLE 27 CONSENT TO JURISDICTION.........................................................................47
EXHIBITS
Exhibit A
Legal Description
Exhibit B
Permitted Exceptions
Exhibit E
Termination Value Schedule
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is made as of , 2016 (the
"Commencement Date"), by and between Meritex Elk River, LLC, a Delaware limited liability
company ("Landlord") and Sportech, Inc., a Minnesota corporation ("Tenant").
ARTICLE 1
GRANT AND TERM
1.1 Grant of Leasehold. Landlord, for and in consideration of the rents herein
reserved and the covenants and agreements herein contained on the part of Tenant to be
performed, hereby leases and demises to Tenant, and Tenant, for and in consideration of the
covenants and agreements contained herein on the part of Landlord to be performed, hereby
leases from Landlord, the entirety of that certain parcel of land located in the City of Elk River,
Minnesota (the "City") legally described on Exhibit A attached hereto (the "Land"), together
with Landlord's interest in (i) all hereditaments, easements and rights appurtenant thereto, (ii) all
site work and landscaping installed or constructed upon the Land, and (iii) the building
constructed upon the Land (the "Building") containing approximately 105,000 rentable square
feet, all of the foregoing being herein collectively defined as the "Premises", all of which is
leased to Tenant subject to the encumbrances referred to in Exhibit B attached hereto (the
"Permitted Exceptions"). The term Premises includes parking, storage and loading facilities,
Landlord's interest in all drives, sidewalks and landscaping and all other improvements on the
Land.
1.2 Term. The term of this Lease shall be for a period of ten (10) years, commencing
on the Commencement Date and ending on the day before the tenth (10th) anniversary of the end
of the calendar month in which the Commencement Date occurs (the "Term"), unless the Term
shall be sooner terminated in accordance herewith, or unless the Term shall be extended in
accordance with Article 25, in which event "Term" shall mean the initial Term of this Lease as
extended. The dates upon which the Term shall commence and expire shall be referred to herein
as the "Commencement Date" and the "Expiration Date", respectively. If the
Commencement Date occurs on a day other than the first day of a calendar month and/or the
Expiration Date on a day other than the last day of a calendar month, Tenant shall pay Monthly
Rent (as herein defined) at the monthly rate set forth herein (in advance) proportionately for such
partial month, as well as Taxes (as hereinafter defined) and any other charges payable
proportionately for such partial calendar month.
ARTICLE 2
RENT
2.1 Rent Amount. Commencing on the Commencement Date and continuing on the
first business day of each calendar month during the Term to and including the first business day
of the last month of the Term, Tenant shall pay to Landlord monthly base rent in the amounts set
forth in the following schedule (the "Monthly Rent"):
1
PERIOD
ANNUAL RENT
MONTHLY RENT
First Lease Year
$525,000.00
$43,750.00
Second Lease Year
$535,500.00
$44,625.00
Third Lease Year
$546,210.00
$45,517.50
Fourth Lease Year
$557,134.20
$46,427.85
Fifth Lease Year
$568,276.88
$47,356.41
Sixth Lease Year
$579,642.42
$48,303.54
Seventh Lease Year
$591,235.27
$49,269.61
Eighth Lease Year
$603,059.98
$50,255.00
Ninth Lease Year
$615,121.18
$51,260.10
Tenth Lease Year
$627,423.60
$52,285.30
Also beginning on the Commencement Date, Tenant shall pay all other sums due under this
Lease as set forth herein ("Additional Rent"). Monthly Rent and Additional Rent are herein
collectively referred to as "Rent".
2.2 Payment of Rent. Monthly Rent shall be paid by Automatic Clearing House
(ACH) electronic payments in immediately available funds in lawful currency of the United
States of America. Monthly Rent owing to Landlord hereunder shall be paid by Tenant without
notice, demand, set-off, or abatement of any kind.
2.3 Default Rate. Rent or other amounts not paid to Landlord when due shall bear
interest from the date when due and payable under the terms hereof until the same is paid at the
rate per annum (the "Default Rate") equal to the rate of 8% per annum. If Tenant does not pay
Additional Rent when due, Tenant shall be in default as set forth in Article 11, but the Default
Rate shall not apply to such unpaid sums unless such sums are owed to Landlord, in which case
the Default Rate shall apply beginning on the date when such payment was owed to Landlord.
Neither the accrual of interest at the Default Rate, nor Tenant's payment thereof, will be deemed
to grant Tenant any extension or grace period in which to pay the Rent as and when due under
this Lease.
2.4 Net Lease. This Lease is what is commonly called a "bondable net lease", it
being understood that Tenant shall pay the Rent in addition to, and independently of, any and all
other impositions, taxes, assessments, liens, charges or expenses of any nature whatsoever in
connection with the maintenance, repair, replacement and operation of the Premises, all of which
will be paid by Tenant. Tenant shall be solely responsible for and shall pay all impositions,
Taxes (as defined in Article 5), insurance premiums, operating charges, maintenance and the
costs of all charges, Repairs (as defined in Article 8), replacements, landscaping, janitorial costs,
utilities, construction costs, and other charges, costs and expenses (capital or otherwise) which
2
arise or may be contemplated under any provisions of this Lease or as otherwise required for the
preservation and operation of the Premises during the Term, and any interest, penalties or other
charges due to Tenant's failure to timely pay any of such items. All such payments to be made
by Tenant as described in this Lease (whether to Landlord or otherwise) in addition to the
Monthly Rent shall be deemed to be Additional Rent for which Tenant is obligated under this
Lease. This Lease may not be terminated by Tenant except as provided herein.
2.5 Independent Obligations. The obligations of Tenant hereunder, including but not
limited to the obligation to pay Rent, shall be separate and independent covenants and
agreements. Nothing herein shall preclude Tenant from pursuing or realizing upon its other
remedies at law or in equity by reasons of, any default by Landlord; provided, however, Tenant
may not pursue any remedy that would permit it to terminate this Lease or that would entitle it to
a set-off or abatement of Rent of any kind.
2.6 Security Deposit. Tenant, contemporaneously with the execution of this Lease,
has deposited with Landlord the sum of $100,000, receipt of which is acknowledged hereby by
Landlord. The Security Deposit will be held by Landlord, without liability for interest, as a
security and damage deposit for the faithful performance by Tenant of all obligations under this
Lease to be performed by Tenant. The Security Deposit will not be held in an escrow account.
Landlord may intermingle such Deposit with Landlord's own funds. If an Event of Default
occurs under this Lease, then Landlord may (but will not be required to) appropriate and apply
all or such portion of said Deposit as may be necessary to compensate or repay Landlord for all
amounts, losses or damages sustained or to be sustained by Landlord due to such Event of
Default. So long as no Event of Default by Tenant has occurred in the prior twelve (12) months,
Landlord agrees to return twenty percent (20%) of the Security Deposit to Tenant on each
anniversary of the Lease term for five (5) consecutive years and thereby reducing the amount of
the Security Deposit each year. If the entire Security Deposit, or any portion thereof, is applied
by Landlord, in accordance with the provisions of this paragraph, Tenant, upon written demand
by Landlord, will immediately pay Landlord a sufficient amount of cash to restore the Security
Deposit to the amount thereof immediately prior to such application. If not previously released
to Tenant, the Security Deposit will be returned to Tenant, less any depletion thereof as the result
of the provisions of this paragraph, at the end of the Term of this Lease or any renewal thereof.
Tenant will have no right to anticipate a return of said Security Deposit by withholding any
amount required to be paid pursuant to the provisions of this Lease or otherwise.
ARTICLE 3
USE
3.1 Lawful Use. The Premises may be used and occupied for assembly,
manufacturing and warehouse purposes and for any other lawful purpose. Tenant shall not use
or permit the Premises to be used in any manner which would (i) be contrary to Applicable Laws
(as defined in Section 9.1), (ii) violate any certificate of occupancy affecting the Premises, (iii)
constitute a public or private nuisance or waste, (iv) render the insurance on the Premises or any
portion thereof void, (v) cause a material decrease in the value of the Premises, or (vi) be in
violation of any of the Permitted Exceptions. Tenant agrees that it will promptly, upon discovery
of any such prohibited use, discontinue such prohibited use. Nothing in this Lease shall be
3
construed to require Tenant to occupy the Building or keep the Building open for the operation
of its business or to continue to operate its business in the Premises.
ARTICLE 4
POSSESSION
4.1 Access and Possession. Tenant acknowledges that, upon the Commencement
Date, it will occupy the Premises. Landlord shall deliver the Premises to Tenant and Tenant
shall accept exclusive possession of the Premises on the Commencement Date. Tenant's
execution and delivery of this Lease evidences Tenant's unconditional acceptance of the
Premises to use for the purposes permitted in Article 3 hereof. Tenant will self -manage the
Premises.
4.2 CONDITION OF PREMISES AT POSSESSION. TENANT
ACKNOWLEDGES THAT TENANT, AT ITS SOLE COST AND INDEPENDENTLY OF
LANDLORD, HAS CAUSED THE CONSTRUCTION OF THE BUILDING AND ALL
OTHER IMPROVEMENTS LOCATED ON THE LAND PRIOR TO THE
COMMENCEMENT DATE. TENANT IS SOLELY RESPONSIBLE FOR THE CONDITION
OF THE PREMISES. LANDLORD IS NOT MAKING AND SPECIFICALLY DISCLAIMS
ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES, INCLUDING, BUT NOT
LIMITED TO, THE PHYSICAL CONDITION OF THE PREMISES, ENVIRONMENTAL
CONDITIONS, HAZARDOUS MATERIALS, COMPLIANCE WITH APPLICABLE LAWS,
AVAILABILITY OF ACCESS, INGRESS OR EGRESS, OPERATING COST PROJECTIONS,
VALUATION, GOVERNMENTAL APPROVALS, GOVERNMENTAL REGULATIONS,
THE QUALITY OF THE CONSTRUCTION OR MATERIALS INCORPORATED INTO THE
PREMISES, AND THE MANNER, QUALITY, STATE OF REPAIR, OR LACK OF REPAIR,
OF THE PREMISES. TENANT ACCEPTS POSSESSION OF THE PREMISES ON THE
COMMENCEMENT DATE AS -IS, WHERE -IS, AND WITH ALL FAULTS.
ARTICLE 5
TAXES
5.1 Definitions.
(a) "Taxes" shall mean real estate taxes, assessments (general or special), and any
other federal, state or local governmental and quasi -governmental taxes, fees and charges,
general, special, foreseen or unforeseen, ordinary or extraordinary, and any additions to tax,
penalties or interest thereon payable with respect to the Premises or the Rent during the Term
(but not including (i) income or franchise taxes or any other taxes imposed upon or measured by
Landlord's income or profits and/or (ii) taxes in the nature of sales, use, rental, stamp, transfer or
license taxes), which may now or after the date hereof be imposed or levied upon or assessed
against or with respect to or in connection with the Premises, or any part or interest therein, or
any additions, modifications or improvements thereto. Notwithstanding anything contained in
the foregoing definition to the contrary:
fl
(i) If at any time the method of taxation then prevailing shall be altered so
that any new or additional tax, assessment, levy, imposition or charge or
any part thereof shall be imposed in place or partly in place of any Taxes
or contemplated increase therein, then all such new taxes, assessments,
levies, impositions or charges or part thereof, shall be included in Taxes.
(ii) Notwithstanding the year for which any such taxes or assessments are
levied, in the case of such taxes or assessments which may be payable in
installments, the amount of each installment, plus any interest payable
thereon, payable during any year during the Term shall be considered
Taxes assessed and levied for that year.
(iii) Taxes shall also include personal property taxes (if any) imposed upon the
furniture, fixtures, machinery, equipment, apparatus, systems or
appurtenances used in connection with the Premises or the operation
thereof.
(b) Notwithstanding anything to the contrary contained herein, Tenant will have no
obligation under this Article 5 with respect to amounts described in any one or more of the
following:
(i) (A) Taxes that are imposed on Landlord, based on, or measured by, gross
or net income or gross or net receipts, including capital gains taxes, excess
profits taxes, minimum taxes from tax preferences, alternative minimum
taxes, branch profits taxes, accumulated earnings taxes, personal holding
company taxes, succession taxes and estate taxes, and any withholding
taxes on, based on or measured by gross or net income or receipts,
(B) capital or net worth, excess profits; franchise or conduct of business,
or (C) Taxes imposed by any foreign or domestic government or taxing
authority (other than the United States or any state or local government or
taxing authority);
(ii) (A) Taxes (including Taxes imposed on the transferee in those cases
where the Tax on transfer is imposed on, or collected from, the transferee)
attributable to any (1) voluntary sale, assignment, transfer or other
disposition (including a deemed transfer or disposition) (collectively, a
"Transfer") by any entity of any interest in the Premises or any part
thereof or any interest therein, (2) any involuntary Transfer of any of the
foregoing interests resulting from any bankruptcy or other proceeding for
the relief of debtors in which any entity is a debtor, (3) any foreclosure by
a creditor of any entity, or (4) any transfer as the result of Condemnation,
and (B) any Taxes in excess of those that would have been imposed had
there not been a Transfer or other disposition by or to any entity;
(iii) Taxes imposed with respect to any period after the expiration or earlier
termination of this Lease;
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(iv) any interest, penalties or additions to Tax imposed against or payable by
Landlord or any affiliate thereof that are the result (in whole or in part) of
the failure of such entity to prepare and file any return properly and
timely; and/or
(v) Taxes that would not have been imposed but for any failure of Landlord or
any affiliate thereof to comply with certification, information,
documentation, reporting or other similar requirements (each, a
"Requirement") concerning the nationality, residence, identity or
connection with the jurisdiction imposing such Taxes, if such compliance
is required by statute or regulation of the jurisdiction imposing such Taxes
as a precondition to relief or exemption from such Taxes and Landlord or
said affiliate was eligible to comply with such Requirement; provided,
however, that the exclusion set forth in this clause (v) shall not apply if
such failure to comply is due to a failure of the Tenant to provide
reasonable assistance or response in complying with such request.
5.2 Payment of Taxes. Tenant shall pay directly to the taxing authority, not less than
fifteen (15) days before any fine, penalty, interest or cost is incurred, all Taxes payable during
the Term. In the event that the manner of collection of Taxes should require that any Taxes be
paid to the applicable taxing authority by Landlord, Tenant shall pay such Taxes to Landlord
within thirty (30) days of receipt of a copy of reasonable evidence showing the amount of Taxes
due. Tenant shall pay, at its sole cost and expense, in timely fashion to the taxing authorities, or
to Landlord if Landlord is required to pay such Taxes, that portion of the Taxes in the nature of
real estate taxes and assessments payable during the year in which the Term expires which the
number of days in said year within the Term bears to 365, and Landlord shall pay to the taxing
authorities, or to Tenant if paid by Tenant, the balance of such Taxes for said year (if any).
Tenant will pay all Taxes due and payable in the year in which the Commencement Date occurs.
The parties intend that, during the Term, Landlord has no obligation to pay Taxes, except as set
forth in this Article 5. Tenant shall accurately prepare for filing and file, unless Landlord is
required to file, in which case Tenant shall deliver to Landlord reasonably in advance of the
filing due date, all returns, reports, statements and other filings regarding Taxes for which Tenant
is required to pay hereunder.
5.3 Monthly Escrow for Taxes. If required by any Mortgagee pursuant to the terms
of a Mortgage encumbering the Premises, in lieu of Tenant paying the Taxes directly, Tenant
will pay monthly to Landlord, or to a designated third -party escrow agent, on or before the first
business day of each calendar month, one -twelfth (1/12th) of the amount of the Taxes payable by
Tenant for the calendar year in question, as reasonably estimated by Landlord. Landlord will
cause the amounts held in escrow pursuant to this Section to be paid to the appropriate taxing
authority not less than fifteen (15) days before any fine, penalty, interest or cost is incurred. To
the extent the amount in the escrow account is inadequate to pay all of the Taxes for which
Tenant is obligated hereunder, then within ten (10) days after written request from Landlord,
Tenant will pay such additional funds into the escrow account as may be necessary to pay the
next installment of Taxes in full.
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5.4 Contesting Taxes. Tenant shall have the exclusive right (except as otherwise
provided in this Section) at its own expense to contest the amount or validity, in whole or in part,
of any Taxes by appropriate proceedings diligently conducted in good faith, before or after the
Taxes are levied (including any proposed or levied special assessments and any methods and
options for payment thereof), provided that Tenant shall indemnify, defend and hold harmless
Landlord and the Premises from any charge, liability or expense incurred by Landlord in
connection with such contest, and Tenant shall not have the right to contest any Taxes levied or
imposed on Landlord (i) to the extent the proceeding would involve any liability for taxes,
assessments, fees or charges imposed on Landlord other than Taxes which Tenant is required to
pay hereunder or (ii) if the actions taken by the Tenant in contesting any Taxes would interfere
with the Premises or result in any material danger of an imminent sale, forfeiture or loss of, or
the creation of any lien against the Premises (except if Tenant shall have adequately bonded such
lien or otherwise made provision to protect the interests of Landlord in the Premises or any
interest therein). Tenant shall also have the right to select the counsel to be retained in
connection with the prosecution of any such proceedings. Tenant shall promptly notify Landlord
of any contest of the amount or validity of Taxes. If Tenant does not elect to contest the amount
or validity of such Taxes, Landlord may contest the amount or validity of any Taxes by
appropriate proceedings but, if payable by Tenant, only with Tenant's prior written approval,
which approval shall not be unreasonably withheld. With respect to any Taxes in the nature of
real estate taxes and assessments levied during the Term but payable in whole or in part after the
Expiration Date, (A) Tenant may contest the amount or validity of said Taxes by appropriate
proceedings only with the prior written approval of Landlord, which approvals shall not be
unreasonably withheld, and (B) if Tenant does not elect to contest the amount or validity of such
Taxes, Landlord may contest the amount or validity of said Taxes by appropriate proceedings
without Tenant's prior written approval. If Landlord contests such Taxes, then to the extent that
such contest is successful and Tax savings are achieved for the benefit of Tenant, Tenant shall
reimburse Landlord for Landlord's reasonable out-of-pocket expenses incurred in connection
therewith to the extent of such savings. If Landlord contests such Taxes, then to the extent that
such contest results in additional Taxes to be paid by Tenant, Landlord shall reimburse Tenant
for Tenant's additional Taxes; provided, however, under no circumstances may Landlord contest
Taxes to intentionally increase Tenant's tax burden. Upon the termination of any proceedings
conducted by Tenant or Landlord hereunder, Tenant shall pay the amount of such Taxes or part
thereof, if any, as finally determined in such proceedings, the payment of which may have been
deferred during the prosecution of such proceedings, together with any reasonable costs, fees,
including attorneys' fees, interest, penalties, fines and other liability in connection therewith.
Tenant shall be entitled to the refund of any Taxes received by Landlord which have been paid
by Tenant or which have been paid by Landlord but for which Landlord has been previously
reimbursed in full by Tenant, less any out-of-pocket costs incurred by Landlord in obtaining such
refund. Landlord shall not be required to join in any proceedings referred to in this Section
unless the provisions of any Applicable Laws at the time in effect shall require that such
proceedings be brought by or in the name of Landlord, in which event Landlord, at Tenant's
expense, shall join in such proceedings or permit the same to be brought in Landlord's name, and
shall cooperate in all respects, sign all necessary documents related thereto, and shall be
represented in any such proceedings by counsel selected by Tenant and approved by Landlord,
which approval shall not be unreasonably withheld or delayed. Tenant shall keep Landlord
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informed of the status of the proceedings, and if the proceedings are brought in the name of
Landlord, consult in good faith with Landlord regarding the conduct of the proceedings.
5.5 Receipts. If requested by Landlord, Tenant shall furnish Landlord, within thirty
(30) days after the date upon which any Taxes are payable by Tenant, official receipts of the
appropriate taxing authority, or other appropriate proof reasonably satisfactory to Landlord,
evidencing the payment of the same. If the provisions of Section 5.3 are applicable and the
Tenant is required to pay, monthly, the appropriate amount of the Taxes into an escrow account,
then if requested by Tenant, Landlord will furnish to Tenant within thirty (30) days after the date
upon which any Taxes are payable by Landlord, official receipts of the appropriate taxing
authority, or other appropriate proof reasonably satisfactory to Tenant, evidencing the payment
of the Taxes.
ARTICLE 6
INSURANCE
6.1 Property Insurance. Tenant shall obtain and continuously maintain in full force
and effect during the Term, at its sole cost and expense, property insurance insuring the Premises
for perils covered by the causes of loss -special extended coverage form ("all risk") or
comparable broad form coverage satisfactory to Landlord and in addition, vandalism and
malicious mischief, ordinance or law coverage (including demolition cost, increased cost of
construction, and loss to undamaged improvements), and boiler and machinery damages (if
applicable) and rental value insurance providing coverage for at least 6 months of Rent. Such
insurance shall be written on 100% full replacement cost basis and shall be in such form or with
such endorsements as necessary to prevent the operation of any co-insurance penalty, and with
such further coverages and provisions as may be required by a Mortgagee. The policy shall
name Landlord and Mortgagee (as hereinafter defined) holding a Mortgage (as hereinafter
defined) upon the Premises as loss payees with respect to the Premises. Such property insurance
shall be primary and not contributing to any insurance available to Landlord and Landlord's
insurance, if any, shall be in excess thereto. All insurance proceeds shall in all respects be made
available to Tenant to repair and restore the Premises in accordance with Article 12. Not more
frequently than every five (5) years, if in the reasonable opinion of the Landlord the amount of
Tenant's property insurance is found to be inadequate, Tenant will increase the insurance amount
as reasonably required by Landlord. The deductible for coverage under this Section shall not
exceed $200,000, or in such lesser amount as required by any Mortgagee. For purposes of this
lease the term (a) "Mortgage" means any first priority mortgage which now or at any time
hereafter may be placed upon the premises, and any replacements, renewals, amendments,
modifications, extensions or refinancing of any of the foregoing, (b) "Mortgagee" means (i) any
person identified as such in writing to Tenant which makes a loan to the Landlord evidenced by a
note and secured in whole or in part by a Mortgage, or (ii) is the holder of a Mortgage and a note
as a result of an assignment or purchase thereof, or (iii) is the trustee acting on behalf of a
Certificate Holder if the loan or interests in the loan are deposited with a trust which sells
certificates to investors, and (c) "Certificate Holder" means the holder of interest that evidences
an ownership interest in the assets of a trust that is holding a loan or interests in a loan secured by
a Mortgage.
6.2 Liability Insurance. During the Term, Tenant shall also obtain and continuously
maintain in full force and effect, at its sole cost and expense, commercial general liability
insurance naming Landlord and Mortgagee as additional insureds against any and all claims as
are customarily covered under a standard policy form (which must provide for claims to be made
on an occurrence basis) routinely accepted, for bodily injury, death and property damage
occurring in, or about the Premises and adjoining sidewalks arising out of the possession,
leasing, condition, use and occupancy of the Premises. Such insurance shall have a combined
single limit of not less than $2,000,000 per occurrence with $3,000,000 aggregate limit and
excess umbrella liability insurance in the amount of at least $5,000,000, or in such greater
amounts as may be required by any Mortgagee. Such liability insurance shall be primary and not
contributing to any insurance available to Landlord and Landlord's insurance, if any, shall be in
excess thereto. In no event shall the limits of such insurance be considered as limiting the
liability of Tenant under this Lease. The deductible for coverage under this Section shall not
exceed $200,000.
6.3 Workers Compensation Insurance. During the Term, Tenant shall obtain and
maintain in full force and effect, at Tenant's sole expense, workers compensation insurance in
accordance with statutory law and employer's liability insurance with a limit of not less than
$100,000 per employee and $500,000 per occurrence.
6.4 Builder's Risk Insurance. During any period of construction on the Premises,
Tenant shall maintain, at Tenant's sole expense, builder's risk insurance insuring perils covered
by the causes of loss -special extended coverage form ("all risk"), non -reporting form. The
Builder's Risk insurance shall be purchased for the value of the alterations and/or additions made
to the Premises when the work is not insured under Tenant's property insurance policy, together
with general liability and worker's compensation insurance covering all persons engaged in such
construction in amounts reasonably required by Landlord and Mortgagee.
6.5 Business Interruption Insurance. During the Term, Tenant shall also obtain and
continuously maintain in full force and effect, at its sole cost and expense, a policy of insurance
against loss or damage to business interruption specifically covering Tenant's obligation to pay
all Rent under this Lease for a period of not less than six (6) months, and containing such other
terms and provisions as may be required by a Mortgagee.
6.6 Requirements. All policies of insurance required by Sections 6.1, 6.2, 6.4 and 6.5
shall require notice to Landlord and Mortgagee at least 30 days prior to the cancellation or
modification of the policy as a condition to the policy, and in the event any such notice of
cancellation is given, Tenant shall provide Landlord and Mortgagee with a certificate of
insurance evidencing a renewal or replacement policy at least five (5) days prior to the date of
such cancellation. The policies of insurance required under Section 6.1 shall name Mortgagee as
loss payee, as its interests may appear. Each policy of insurance required by Sections 6.1 and 6.4
shall contain an endorsement that the coverage with respect to the Premises afforded under such
policy will be extended by the insurer following the stated expiration date of such policy for a
period equal to the lesser of ten (10) days following the expiration of such policy or the date
when a renewal or replacement policy is bound, and Tenant shall provide Landlord and
Mortgagee with a certificate of insurance evidencing such renewal or replacement policy at least
five (5) days prior to the expiration of such ten (10) -day period. The policies of insurance
0
required under Section 6.2 shall name Landlord and Mortgagee as additional insureds, and
evidence of the renewal or replacement policies reasonably satisfactory to Landlord and
Mortgagee shall be delivered to Landlord and Mortgagee at least ten (10) business days before
the expiration thereof. Certificates of insurance with respect to all policies required under this
Lease shall be delivered to Landlord and Mortgagee upon commencement of the Term, and as
promptly as practicable after the expiration of existing policies and within ten (10) days of
written demand by Landlord. Insurers shall be licensed to do business in the State of Minnesota
and either domiciled in the USA or qualified to do business therein as a foreign corporation. All
property insurance policies shall contain a standard, non-contributory, first mortgagee clause in
favor of Mortgagee.
Notwithstanding anything contained herein to the contrary, Landlord retains the right, at
Landlord's option, at any time during the Term, for any reason or for no reason, for Landlord, to
obtain and continuously maintain in full force and effect during the Term, all of the insurance
required under Section 6.1, 6.2, 6.4 and 6.5 above upon not less than thirty (30) days prior
written notice to Tenant. Thereafter, Tenant will have no obligation to maintain such insurance,
but Tenant will reimburse Landlord for all costs, expenses and premiums incurred in obtaining
such insurance, within ten (10) days after Landlord provides Tenant with an invoice for such
costs and expenses.
6.7 Waiver of Claims; Subrogation. Notwithstanding any other provision of this
Lease to the contrary, whenever (a) any loss, cost, damage or expense, including consequential
damage or expense, resulting from fire, explosion or any other casualty or similar occurrence is
incurred by either of the parties hereto, or anyone claiming by, through, or under it is connection
with the Premises, and (b) such party is then covered in whole or in part by insurance with
respect to such loss, cost, damage or expense or is required under this Lease to be so insured or
self insured, then the party so insured (or so required) hereby waives, releases and discharges any
claims against and releases the other party from any liability said other party may have on
account of such loss, costs, damage or expense, including consequential damage or expense, to
the extent of any amount recovered by reason of such insurance. The parties agree to furnish to
each insurance company which has or will issue policies of casualty insurance on the Building,
written notice of said waivers and to have the insurance policies property endorsed, if necessary,
to acknowledge such subrogation waivers.
6.8 Unearned Premiums. Upon expiration of the Term, any unearned premiums upon
any insurance policies or certificates thereof maintained by Tenant shall be paid to Tenant.
6.9 Blanket Policies. Nothing in this Article shall prevent Tenant from taking out
insurance of the kind and in the amount provided for in this Lease under a blanket insurance
policy or policies which may cover other properties as well as the Premises; provided, however,
that any such policy of blanket insurance of the kind provided for (i) shall specify therein either
the amounts thereof exclusively allocated to the Premises or shall contain a blanket limit equal to
or greater than the replacement value of the Premises, and (ii) shall not contain any clause which
would be contrary to the insurance requirements of this Article.
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ARTICLE 7
UTILITIES
7.1 Payment. During the Term, Tenant will pay, when due, all charges of every
nature, kind or description for utilities provided to the Premises, including all charges for water,
sewage, heat, gas, light, garbage, electricity, telephone, steam, power, or other public or private
utility services. Tenant's obligation under this Section 7.1 shall include charges which accrue
during the Term but are payable after the Term, and shall survive expiration of the Term. Any
invoice or billing attributable to utilities provided for a period beyond the Term shall be prorated
such that Tenant has liability only for such utilities provided during the Term.
7.2 Service Installation. Any charges for the underground installation of gas or other
utilities or services, and other charges relating to the extension of or change in the facilities
necessary to provide the Premises with adequate utility services shall be paid by Tenant.
ARTICLE 8
REPAIRS
8.1 Repairs to Building and Premises. Subject to the limitations of Articles 12 and 13
hereof, Tenant shall; at its sole cost and expense throughout the Term, (a) take good care of the
Premises (including any improvements now existing and/or hereafter erected or installed on the
Land); (b) keep the same in order and condition consistent with standards for buildings of
comparable type, quality, age and size in the City; and (c) make and perform all maintenance
thereof and all necessary or appropriate repairs thereto, interior and exterior, structural and
nonstructural (including without limitation to the foundations, HVAC and other systems and the
roof and other structural components of the Building), ordinary and extraordinary, foreseen and
unforeseen, of every nature, kind and description. All of the items referred to in the preceding
sentence are herein referred to as "Repairs", and when used in this Article, "Repairs" shall
include all necessary and appropriate replacements, resurfacing, renewals, alterations, additions
and betterments, whether capital improvements or otherwise, using new materials therefor, but
Tenant shall not be required to make any Repair which would be in excess of those which a
reasonable and prudent owner would make under the circumstances, given the age and condition
of the Building and standards of care and maintenance of buildings of comparable type, quality,
age and size in the City. All Repairs made by Tenant shall be, to the extent reasonably possible,
at least equal in quality to the original work performed in constructing the Building, provided
that Tenant shall have the right to repair, replace or restore the Building or portions thereof with
different exterior components, utilities, roofing, elevator systems, structural components and
mechanical, electrical and plumbing systems, so long as the general design and the structural and
functional integrity and value of the Building is maintained. In the event of any Repairs to the
items described in the preceding sentence, Tenant shall first (except in the case of an emergency
and except for routine and ordinary repairs and maintenance the cost of which is $100,000 or less
and for which plans are not customarily prepared) provide Landlord with notice and with
drawings sufficient for Landlord to review and approve the proposed Repairs, which approval
shall not be unreasonably withheld or delayed. All Repairs made by Tenant shall be made in
accordance with all Applicable Laws.
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8.2 Land and Appurtenances. During the Term, Tenant, without any cost or expense
to Landlord, shall take good care of and repair and maintain all driveways, sidewalks, curbs,
parking areas, loading areas, landscaped areas, entrances and passageways in good order and
repair, subject to reasonable wear and tear, damage by casualty and condemnation. Tenant shall
promptly remove to customary standards all accumulated snow, ice, excess water and debris
from any and all driveways, roadways, sidewalks, curbs, parking areas, loading areas, entrances
and passageways, and shall keep all portions of the Premises in a clean and orderly condition,
free of snow, ice, dirt, rubbish, excess water, debris and unlawful obstructions.
8.3 No Landlord Maintenance, Repairs or Other Obligations. Landlord shall not be
required to furnish any services or facilities or to make or pay for any Repairs or alterations of
any kind or nature in, about or to the Premises or any improvements now existing or hereafter
erected thereon whatsoever, for any reason during the Term. All responsibilities and obligations
which might otherwise be the responsibility of Landlord under any Applicable Laws now or
hereafter existing with respect to the Premises, including any responsibilities and obligations of
Landlord effective after the Commencement Date contained in the Permitted Exceptions, any
development agreements, City agreements, agreements with adjoining property owners, or other
agreements pertaining to such matters, are hereby assigned to and assumed unconditionally by
Tenant for the Term, and Tenant shall fully perform such responsibilities and obligations in
accordance with the terms hereof. Tenant agrees not to amend any of such agreements in any
manner that would (i) apply after the Expiration Date or (ii) materially and adversely affect the
value, utility or useful life of the Premises, in each case without Landlord's prior written consent,
which shall not be unreasonably withheld. During the Term, Landlord shall have no right or
obligation with respect to any matter described in this Article, unless an Event of Default by
Tenant (as described in Article 11 hereof) with respect to such matter has occurred and is
continuing, in which case Landlord shall have the right, but not the obligation, to perform such
responsibilities and obligations, including Repairs not made by Tenant. If Landlord makes such
Repairs in accordance with the preceding sentence, Tenant shall reimburse Landlord therefor
within thirty (30) days after written demand, with interest at the Default Rate from the date
incurred until repaid.
ARTICLE 9
COMPLIANCE WITH APPLICABLE LAWS
9.1 Tenant Obligations. Tenant at its sole cost and expense throughout the Term shall
comply or cause compliance with and remove and cure any violation of the Permitted Exceptions
and any and all Applicable Laws. "Applicable Laws" shall mean all applicable laws, rules,
orders, ordinances, regulations and other requirements, present or future, made by any applicable
public authority.
9.2 Contesting Laws. As long as no Event of Default exists, upon prior written notice
to Landlord and any Mortgagee, Tenant, at its sole cost and expense, shall have the right to
contest expeditiously and in good faith the validity or application of any Applicable Laws in the
name of Tenant or Landlord, or any of said parties, by appropriate legal proceedings diligently
conducted, but only (a) if compliance therewith pending the prosecution of any such proceeding
may legally be delayed without exposing the Premises to a material risk of forfeiture, (b) if the
failure to so comply will not subject Landlord, Tenant, or Mortgagee to any liability, civil,
12
administrative or criminal, for failure to so comply therewith until the final determination of such
proceeding, (c) if Tenant prosecutes the contest with due diligence, in compliance with all
Applicable Laws and in good faith, (d) if Tenant agrees to indemnify, defend and hold harmless
Landlord and the Premises from any charge, liability or expense incurred by them in connection
with such contest, and (e) if Tenant posts a bond or other collateral reasonably acceptable to
Landlord and Mortgagee in the amount of such lien, charge, or liability which shall be applied to
the payment thereof if Tenant has not paid the lien, charge or liability upon the end of the
contest.
If necessary or proper to permit Tenant to so contest the validity or application of any
such Applicable Laws, Landlord shall execute and deliver any appropriate papers or other
documents to join in such contest; provided, however, that Tenant shall reimburse Landlord for
all of Landlord's reasonable out-of-pocket expenses in connection therewith, and provided that
Landlord shall not be required to execute any document or consent to any proceeding which
would result in the imposition of any cost, charge, expense, penalty or liability on Landlord or
Mortgagee or the Premises, except on terms' reasonably acceptable to Landlord.
9.3 City Relationship. The parties agree that due to Tenant's relationship with the
City, the Tenant shall continue to solely maintain the relationship with the City with respect to
the Premises to the fullest extent possible_ Accordingly, when Landlord receives any type of
notice from the City relating to the Premises, Landlord shall, use reasonable efforts, within
twenty-four (24) hours thereafter, to transmit a copy of such notice to Tenant. Landlord agrees
it will not communicate with the City regarding any issue relating to the Premises without giving
Tenant (i) at least two (2) business days advance notice and (ii) the opportunity to join with
Landlord in any such communication(s). Landlord agrees it will cooperate with Tenant in any
dealings with the City.
ARTICLE 10
MECHANIC'S LIENS
10.1 Tenant Obligations. Tenant shall not, directly or indirectly, create or permit to be
created any lien, levy or encumbrance on any of the Premises or on any Rent or any other sums
payable by Tenant under this Lease, other than any mortgage, lien, encumbrance or other charge
created by or resulting solely from any act or omission of Landlord. If any such lien, levy or
encumbrance shall at any time be filed against the Premises, or any portion thereof, Tenant shall,
within thirty (30) days after the date of filing the same, cause such lien, levy or encumbrance to
be (i) discharged of record or (ii) insured or bonded over in a manner which is reasonably
acceptable to Landlord and any Mortgagee. If Tenant shall fail to discharge such lien, levy or
encumbrance or to bond or insure over the same within such period, Landlord shall send Tenant
written notice of such failure, and if Tenant fails to cure such default within ten (10) days after
receipt of such notice, then Landlord may, but shall not be obligated to, discharge the same by
paying to the claimant the amount claimed to be due or by procuring the discharge of such lien as
to the Premises by deposit of a cash sum or a bond or other security, or in such other manner as
is now or may in the future be provided by present or future law for the discharge of such lien as
a lien against the Premises. Any amount paid by Landlord, together with all reasonable costs,
fees and expenses in connection therewith (including reasonable attorneys' fees), together with
interest thereon at the Default Rate, from the date paid by Landlord shall be repaid by Tenant to
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Landlord within ten (10) days after written demand therefor. NOTICE IS HEREBY GIVEN
THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE
HOLDING OR OCCUPYING ANY OF PREMISES THROUGH OR UNDER TENANT, AND
THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR
MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND
TO ANY OF THE PREMISES. LANDLORD MAY AT ANY TIME, AND AT LANDLORD'S
REQUEST TENANT SHALL PROMPTLY, POST ANY NOTICES ON THE PREMISES
REGARDING SUCH NON -LIABILITY OF LANDLORD. ADDITIONALLY, LANDLORD
SHALL HAVE THE RIGHT TO RECORD A NOTICE OF NON -RESPONSIBILITY (OR
SUCH OTHER SIMILAR DOCUMENT) IN THE OFFICIAL RECORDS OF THE COUNTY
WHERE THE PREMISES ARE LOCATED, REGARDING LANDLORD'S NON -LIABILITY
FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO
TENANT OR TO ANYONE HOLDING OR OCCUPYING ANY OF THE PREMISES
THROUGH OR UNDER TENANT.
ARTICLE 11
DEFAULTS OF TENANT
11.1 Event of Default. The occurrence of any of the following events shall constitute
an "Event of Default":
(a) Tenant shall fail to make any payment when due of Monthly Rent, Additional
Rent or other sums required to be paid by Tenant hereunder and such failure continues for ten
(10) days after the date such payment was due;
(b) If default shall be made by Tenant in keeping, observing or performing any of the
terms contained in this Lease, other than those specific obligations referred to in any other
Subsection of this Article 11, and such default shall continue for a period of thirty (30) days after
written notice thereof given by Landlord to Tenant, except in connection with a default which
cannot, with due diligence and in good faith, reasonably be cured within said thirty (30) day
period, the cure period shall be extended for such time as shall reasonably be required for cure so
long as Tenant proceeds with due diligence and in good faith to complete the cure thereof, but in
any event said cure period shall not be extended for a period longer than one hundred eighty
(180) days from the date of Landlord's notice of default;
(c) If (i) Tenant shall make any assignment for the benefit of creditors; (ii) a
voluntary petition is filed by Tenant under any law having for its purpose the adjudication of
Tenant a debtor or bankrupt or insolvent, or Tenant be the subject of an involuntary petition in
bankruptcy (and such involuntary petition is not discharged within sixty (60) days after filing);
(iii) a receiver be appointed (and not discharged, within sixty (60) days after such appointment)
for substantially all of the property of Tenant at the Premises or otherwise; (iv) any department
of the State of Minnesota or the Federal government or court or administrative agency, or any
officer thereof duly authorized, shall take possession of substantially all of the business or
property of Tenant at the Premises or otherwise (and not relinquish to Tenant said possession
within sixty (60) days); or (v) Tenant is, or declares itself to be, unable to pay its debts as they
become due; and/or
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(d) If any material warranty or representation of Tenant made in this Lease and/or
any certificate required to be delivered under the Lease shall have been incorrect in a material
respect when made and remains material when discovered, and such incorrectness shall continue
unremedied for thirty (30) business days after receipt by the Tenant of written notice from the
Landlord, which notice describes such incorrectness in reasonable detail, except in the event of
any incorrectness which cannot, with due diligence and in good faith, be remedied within said
thirty (30) day period, the cure period shall be extended for such time as shall reasonably be
required for a cure so long as Tenant proceeds with due diligence and in good faith to complete
the cure thereof, but in any event said cure period shall not be extended for a period longer than
one hundred eighty (180) days from the date of Landlord's notice of default.
11.2 Remedies. If an Event of Default occurs, Landlord shall have the rights and
remedies hereinafter set forth herein, together with all other rights and remedies available at law
or in equity, each of which shall be distinct, separate and cumulative, may be exercised in any
order, and the exercise (or attempt to exercise one remedy) is not a waiver of any other remedy:
(a) Subject to Applicable Laws, Landlord may terminate Tenant's right to possess the
Premises without terminating this Lease by giving written notice to Tenant that Tenant's right of
possession shall end on the date stated in such notice, whereupon Tenant's right to possess the
Premises or any part thereof shall cease on the date stated in such notice. Landlord may, at
Landlord's option, enter into the Premises and take and hold possession thereof, without such
entry into possession terminating this Lease constituting an acceptance of surrender, or releasing
Tenant in whole or in part from Tenant's obligation to pay all amounts hereunder for the full
stated Term. Upon such reentry, Landlord may remove all persons and property from the
Premises and such property may be removed and stored in the manner required by Applicable
Laws, at the cost of and for the account of Tenant, without Landlord becoming liable for any loss
or damage which may be occasioned thereby. Such reentry may be conducted in any manner
allowed under Applicable Laws. Upon and after entry into possession without termination of the
Lease, Landlord may, but will not be required to, re -let the Premises, or any part thereof, to
anyone other than the Tenant, for such time and upon such terms as Landlord, will determine.
Whether or not Landlord re enters the Leased Premises, upon the election by Landlord to
terminate Tenant's right to possession, Tenant will be liable to Landlord as follows:
(i) For all attorneys' fees incurred by Landlord by reason of Tenant's Default
or in connection with exercising any remedy hereunder;
(ii) For the unpaid installments of Monthly Rent, Additional Rent, or other
unpaid sums which were due prior to such termination of right to
possession, including interest, which sums will be payable immediately;
(iii) For the installments of Monthly Rent, Additional Rent, and other sums
falling due pursuant to the provisions of this Lease for the periods after
termination of Tenant's right to possession during which the Premises
remain vacant, including interest, which sums will be payable as they
become due hereunder;
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(iv) For all expenses incurred in releasing the Premises including, without
limitation, costs for leasing commissions, remodeling and fixturing, which
will be payable by Tenant as they are incurred by Landlord; and
(v) While the Premises are subject to any new lease or leases for the amount
by which the monthly installments payable under such new lease or leases
is less than the Monthly Rent and Additional Rent payable pursuant to this
Lease, which deficiencies will be payable monthly.
(b) Notwithstanding Landlord's initial election to terminate Tenant's right to
possession only, Landlord, at any time thereafter, may elect to terminate this Lease, and
Landlord may, in addition to other remedies available at law or in equity, recover from Tenant,
and Tenant agrees to pay, all direct, indirect and consequential damages suffered or incurred by
Landlord allowed by law by reason of the Event of Default, plus all expenses incurred by
Landlord as a result of the Event of Default including, without limitation, leasing commissions,
Tenant Improvement costs and attorneys' fees. Tenant acknowledges that as part of such claim,
Landlord will seek to recover from Tenant all Rent and other amounts which otherwise would
have been payable from the date of the termination of the Lease through the expiration of the
Term, subject to such adjustments and deductions as required by law. Landlord acknowledges
that if Landlord elects to terminate the Lease pursuant to this Section 112(b), then Landlord will
be obligated to use reasonable efforts to mitigate any damages suffered by Landlord which result
from the Event of Default.
Such amounts will be due to Landlord at the time Landlord makes said election.
(c) Landlord may terminate this Lease with respect to any or all of the Premises, and
no agreement accepting a surrender of any or all of the Premises shall be valid unless the same
be made in writing and executed by Landlord.
(d) Landlord may enforce the provisions of this Lease and may enforce and protect
the rights of Landlord hereunder by a suit or suits in equity or at law for the specific performance
of any covenant or agreement contained herein, and for the enforcement of any other appropriate
legal or equitable remedy, including, without limitation, injunctive relief, and for recovery of all
monies due or to become due from Tenant under any of the provisions of this Lease.
(e) Landlord may perform, at Tenant's expense, the covenants of Tenant which have
given rise to the Event of Default.
(f) Landlord may demand that Tenant, and Tenant shall upon the written demand of
Landlord, return the Premises promptly to Landlord in the manner and condition required by this
Lease, and Landlord shall not be liable for the reimbursement of Tenant for any costs and
expenses incurred by Tenant in connection therewith.
(g) Landlord may exercise any other right or remedy that may be available to it under
Applicable Laws or in equity, or proceed by appropriate court action (legal or equitable) to
enforce the terms hereof or to recover damages for the breach hereof. Separate suits may be
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brought to collect any such damages for any period or periods with respect to which Monthly
Rent shall have accrued, and such suits shall not in any manner prejudice Landlord's right to
collect any such damages for any subsequent period, or Landlord may defer any such suit until
after the expiration of the Term or any extension or renewal thereof, in which event such suit
shall be deemed not to have accrued until the expiration of the Term, as extended or renewed.
(h) Except as specifically provided herein, Tenant shall be liable for any and all
unpaid Rent due hereunder before, after or during the exercise of any of the foregoing remedies,
including all reasonable legal fees and other costs and expenses incurred by Landlord and
Mortgagee by reason of the occurrence of any Event of Default or the exercise of Landlord's
remedies with respect thereto, and including all costs and expenses incurred in connection with
the return of the Premises in the manner and condition required by this Lease.
11.3 Remedies Cumulative: No Waiver: Consents. To the extent permitted by, and
subject to the mandatory requirements of, Applicable Laws, each and every right, power and
remedy herein specifically granted to Landlord in this Lease shall be cumulative and shall be in
addition to every other right, power and remedy herein specifically given or now or hereafter
existing at law, in equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to time and as often
and in such order as may be deemed expedient by Landlord, and the exercise or the beginning of
the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise
at the same time or thereafter any right, power or remedy. No delay or omission by Landlord in
the exercise of any right, power or remedy or in the pursuit of any remedy shall impair any such
right, power or remedy or be construed to be a waiver of any default on the part of Tenant or to
be an acquiescence therein. Landlord's consent to any request made by Tenant shall not be
deemed to constitute or preclude the necessity for obtaining Landlord's consent, in the future, to
all similar requests. No express or implied waiver by Landlord of any Event of Default shall in
any way be, or be construed to be, a waiver of any future or subsequent Event of Default.
11.4 Tenant's Liability. If Landlord terminates Tenant's right to possess the Premises,
such termination of possession shall not release Tenant, in whole or in part, from Tenant's
obligation to pay the Rent and other amounts due hereunder for the full Term, as and when the
same becomes due and payable, and Landlord shall have the right, from time to time, to recover
from Tenant, and Tenant shall remain liable for, all Rent and any other sums due and payable to
Landlord during the period from the date of such notice of termination of possession to the stated
end of the Term, together with Landlord's reasonable attorneys' fees in enforcing Tenant's
obligations and Landlord's rights under this Lease. Also, in any such case, Landlord may
decorate and make repairs, alterations and additions in or to the Premises to the extent
reasonably' necessary, and in connection therewith, to the extent allowed by Applicable Laws,
Landlord may change the locks to the Premises and Tenant shall, within 30 days after written
demand, pay the cost thereof together with Landlord's reasonable expenses of reletting, together
with interest thereon calculated at the Default Rate accruing from the date the same is payable
until the same is paid. Landlord shall collect the rents from any such reletting and apply the
same first to the payment of the expense of re-entry, repair and alterations and the expenses of
reletting; including broker's commissions paid to unaffiliated third parties, and second to the
payment of Rent and other charges herein provided to be paid by Tenant, and any excess or
residue shall operate only as an offsetting credit against the total amount of Rent due and owing
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from Tenant, but the use of such offsetting credit to reduce the amount of Rent due Landlord, if
any, shall not be deemed to give Tenant any right, title or interest in or to such excess or residue
and any such excess or residue shall belong to Landlord solely. In no event shall Tenant be
entitled to a credit on its indebtedness to Landlord in excess of the aggregate which would have
been paid by Tenant for the period for which the credit to Tenant is being determined had no
Event of Default occurred. No such re-entry, repossession, decorations, repairs, alterations,
additions or reletting shall be construed as an eviction or ouster of Tenant or as an election on
Landlord's part to terminate this Lease, unless a written notice of such intention is given to
Tenant, nor shall same operate to release Tenant, in whole or in part, from any of Tenant's
obligations hereunder, and Landlord may, at any time and from time to time, sue and recover
judgment for any deficiencies from time to time remaining after the application from time to
time of the proceeds of any such reletting. In no event shall Landlord be entitled to collect Rent
or other charges from Tenant prior to the date the same is due and payable under the terms of this
Lease.
11.5 Bankruptcy.
(a) In the event a petition is filed by or against Tenant under the federal bankruptcy
laws now in effect or as amended from time to time (the "Bankruptcy Code"), Tenant, as
debtor or debtor in possession, and any trustee who may be appointed (for purposes of this
Section, collectively "Tenant"), agrees to adequately protect the Landlord's interest in the
Premises by doing each of the following after the order for relief: to timely perform each and
every obligation of Tenant under this Lease until such time as this Lease is either rejected or
assumed; (ii) to determine within sixty (60) days after filing of such petition, or within such
additional time as the bankruptcy court fixes, whether to assume or reject this Lease; (iii) to give
Landlord at least thirty (30) days prior written notice, unless a shorter notice period is agreed to
in writing by the parties, of any proceeding relating to any assumption or rejection of this Lease,
and (iv) to do all things of benefit to Landlord otherwise required by the Bankruptcy Code.
(b) If Tenant elects to reject this Lease subsequent to the filing of a petition under the
Bankruptcy Code, or if this Lease is otherwise rejected, Tenant shall immediately vacate and
surrender possession of the Premises.
(c) If Tenant elects to assume this Lease subsequent to the filing of a petition under
the Bankruptcy Code, Tenant agrees as follows unless the prior written consent of Landlord is
obtained: to cure each and every default for which cure is required for assumption under the
Bankruptcy Code within not more than ninety (90) days of assumption of this Lease; (ii) to
compensate Landlord for any loss resulting from any existing breach, including without
limitation, Landlord's reasonable costs, expenses and attorneys' fees incurred as a result of the
breach (but excluding any consequential damages), as determined by a court of competent
jurisdiction, within ninety (90) days of assumption of this Lease; (iii) in the event of an existing
breach, to provide adequate assurance of Tenant's future performance, including without
limitation: the production to Landlord and Mortgagee of written documentation establishing to
the reasonable satisfaction of Landlord and any Mortgagee that Tenant has sufficient present and
anticipated financial ability to perform each and every obligation of Tenant under this Lease and
assurances, in form reasonably acceptable to Landlord, as may be required under any applicable
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provisions of the Bankruptcy Code; (iv) the assumption will not breach any provision of this
Lease; and the assumption will be subject to all of the provisions of this Lease.
(d) If Tenant proposes to assume and assign this Lease pursuant to the provisions of
the Bankruptcy Code to any person or entity who shall have made a bona fide offer to accept an
assignment of this Lease on terms acceptable to Tenant ("Assignment Offer"), no later than
thirty (30) days after receipt by Tenant of the Assignment Offer, but in any event no later than
ten (10) days prior to the date that Tenant shall move for authority and approval to assume and
assign this Lease, Tenant shall provide Landlord with notice of such proposed assignment,
setting forth
(i) the name and address of the proposed assignee;
(ii) all the terms and conditions of such offer; and
(iii) adequate assurance to be provided to Landlord to assure the proposed
assignee's future performance under this Lease, including, without
limitation, the assurances referred to in any applicable provision of the
Bankruptcy Code,
whereupon, Landlord shall have the right and option, at any time prior to the entry of an order by
the Bankruptcy Court approving such proposed assignment, to give Tenant written notice of
Landlord's intent to accept an assignment of this Lease upon the same terms and conditions and
for the same consideration, if any, as the Assignment Offer, and upon the exercise of such
option, Tenant shall withdraw its motion to assume and assign and move to assume and assign
this Lease to the person or entity designated by Landlord.
(e) If Tenant proposes to assume and assign this Lease pursuant to the provisions of
the Bankruptcy Code, the adequate assurance to be provided Landlord to assure the assignee's
future performance under this Lease shall include, without limitation:
(i) that assignee's use of the Premises will be in compliance with the terms of
this Lease; and
assurances, in form reasonably acceptable to Landlord, as to all matters
identified in any applicable provision of the Bankruptcy Code.
ARTICLE 12
DESTRUCTION AND RESTORATION
12.1 Restoration. Except as set forth in Section 12.2, Tenant covenants and agrees that
in case of damage to or destruction of the Building occurring during the Term by fire or
otherwise, Tenant shall promptly notify Landlord and Mortgagee and promptly restore, repair,
replace and rebuild the Building as nearly as possible to its condition immediately prior to such
damage or destruction and to the standards of first class manufacturing and warehouse buildings
of then equivalent class and age in the City, using new materials, with any Tenant requested
changes or alterations (subject to Article 18 hereof) or changes required by Applicable Laws.
Such restoration, repairs, replacements, rebuilding, changes and alterations, including the cost of
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temporary repairs for the protection of the Building, or any portion thereof, pending completion
thereof are sometimes hereinafter referred to as the "Restoration". The Restoration shall be
carried on and completed in accordance with the provisions and conditions of this Section 12. 1,
Article 18 hereof and all Applicable Laws. All insurance monies payable on account of such
damage or destruction shall be paid to Tenant to complete the Restoration. Notwithstanding
anything to the contrary herein contained, if the insurance monies shall be insufficient to pay the
entire costs of the Restoration, Tenant shall pay any deficiency equal to the reasonable estimate
of the amount necessary to complete the Restoration less the amount of the available insurance
monies. Tenant's rights to said insurance monies shall survive expiration of the Term.
12.2 Substantial Damage. Notwithstanding the provisions of Section 12. 1, above:
(a) In the event of "Substantial Damage" (as herein defined and as determined
under paragraph of this Section) which occurs during the Term, Tenant shall have the options set
forth in Section 12.2.
(b) For purposes of this Lease, "Substantial Damage" shall mean destruction of the
Building or damage to the Building, or any portion or portions thereof, by fire or other casualty,
that is (i) of such a nature that the cost to complete the Restoration is reasonably estimated to
exceed 25% of the fair market value of the Building (assuming that the Building was in the
condition in which it is required to be maintained pursuant to this Lease) prior to the damage or
destruction ("Fair Market Value"), and (ii) in the reasonable good faith opinion of the Tenant,
the damage makes the Building unfit for Tenant's use and cannot be restored with due diligence
within one hundred eighty (180) days from the date of the casualty loss. Tenant will select an
architect/engineer reasonably acceptable to Landlord and Mortgagee, to determine within sixty
(60) days after the casualty loss, a reasonable estimate of the time to restore the damage and
whether the damage is Substantial Damage. If the architect/engineer makes a reasonable good
faith determination that in its opinion Substantial Damage to the Building has occurred, then
Tenant shall, within thirty (30) days after the architect/engineer provides notice of its
determination that Substantial Damage has occurred, give written notice to Landlord and
Mortgagee that Tenant has elected to either:
(i) Offer to purchase the Premises for a purchase price (the "Purchase
Price") equal to the sum of (i) the Termination Value, as set forth on
Exhibit E attached hereto and made a part hereof, (ii) all unpaid Rent and
any other amounts owing under this Lease as of the date of such purchase,
and (iii) any prepayment penalty incurred by Landlord with respect to
prepayment of the Mortgage pursuant to the terms thereof, or
(ii) Cause Restoration of the Premises so that the Premises has a value, utility,
and remaining useful life as nearly as reasonably practicable equal to the
value, utility, and remaining useful life of the Premises immediately prior
to the occurrence of the Substantial Damage (assuming that the Premises
were in the condition in which they were required to be maintained
pursuant to this Lease). Such Restoration will be performed in accordance
with plans and specifications and by a contractor reasonably acceptable to
Landlord and will be completed, subject to force majeure, within 24
20
months from the date of the damage, or 6 months prior to expiration of the
Term, whichever is earlier. If Restoration may not reasonably be expected
to be completed within such time frame, Tenant may not elect this option.
(c) If Tenant fails to make an election under Section 12.2(b) in the manner set forth
above, such failure shall be deemed Tenant's election to restore the Premises pursuant to
Section 122(b)(ii). If Tenant elects to offer to purchase the Premises for the Purchase Price
pursuant to Section 122(b)(i) above, then Landlord may accept such offer or reject such offer
(with Mortgagee's prior written approval). Landlord shall exercise this right, if at all, within
ninety (90) days from the date Landlord receives notice of Tenant's election to purchase. If
Landlord rejects Tenant's offer, Tenant may, within thirty (30) days after Landlord rejects the
offer, elect the option set forth in Section 12.2(b)(ii) above and in such case Tenant's offer to
purchase the Premises for the Purchase Price shall be deemed withdrawn and of no further force
and effect. If Tenant does not elect the option set forth in Section 12.2(b)(ii) within such thirty
(30) -day period, then this Lease shall terminate on the first day of the next month which is at
least thirty (30) days after Landlord rejects the offer and Tenant shall vacate the Premises, and
return it in the condition required by the Lease, subject to the casualty, by said date. If Landlord
rejects Tenant's offer to purchase pursuant to this Section 12.2(c), and Tenant elects to terminate
this Lease pursuant to this Section 12.2(c), then, notwithstanding any provision of this Lease to
the contrary, all insurance proceeds payable (by carrier or through self insurance) due to the
Substantial Damage shall be paid to Mortgagee and Landlord, in that order. If this Lease is so
terminated, Tenant shall pay to Landlord all Rent due as of the date that the termination is
effective, plus any prepayment penalty incurred by Landlord with respect to prepayment of the
Mortgage pursuant to the terms thereof. If Tenant's offer to purchase is accepted, closing will be
on a date selected by Landlord no less than thirty (30) days or more than sixty (60) days from
Landlord's acceptance. The purchase by Tenant shall be closed in accordance with the purchase
procedure set forth in Article 21. Notwithstanding the foregoing, no rejection of Tenant's offer
(or deemed offer) to purchase the Premises shall be effective unless such offer shall also be
rejected by Mortgagee. If Landlord has not rejected or accepted Tenant's offer by the eightieth
(80th) day after Tenant's offer, Tenant may submit a second notice to Landlord and Mortgagee
specifying, in bold face, that Landlord's silence at the end of the ninety (90) day period shall be
deemed to be acceptance of Tenant's offer.
12.3 Abatement of Rent. Rent for the portion of the Premises rendered untenantable
by casualty shall be abated on a reasonable basis from the date of casualty until the completion
of the Restoration, but only to the extent that, and for the period that Landlord is paid an amount
equal to the Monthly Rent and Additional Rent otherwise payable hereunder by Tenant's "Loss
of Rents Insurance" maintained as provided in Section 6.5 above. If any portion of the Monthly
Rent or Additional Rent required by the terms of this Lease is not paid by such Loss of Rents
Insurance, then Tenant will remain liable and obligated to make such payments to Landlord,
notwithstanding the damage, destruction or construction of the Restoration.
12.4 Negotiations. In the event of casualty, damage or destruction to the Premises
during the Term, Landlord and its Mortgagee shall control all negotiations with such insurance
carrier at Landlord's sole cost and expense; provided, however, that Tenant may participate in all
such negotiations, including being present at all meetings and participating in any conference
calls. The parties will keep each other fully advised from time to time, and upon such party's
21
request, of the status of such negotiations. In the event an Event of Default exists, or events exist
that would constitute an Event of Default with notice, the passage of time or both, Tenant shall
have no rights under this paragraph.
ARTICLE 13
CONDEMNATION
13.1 Restoration.
(a) Except in the case of a Substantial Taking as set forth in Section 13.2, Tenant
covenants and agrees that in the case of a portion of the Premises being taken or condemned as
the result of the exercise of the power of eminent domain or by purchase in lieu of the exercise of
the power of eminent domain ("Taking") occurring after the Commencement Date and before
the Expiration Date, Tenant shall restore, repair, replace and rebuild the Premises as nearly as
possible to its condition immediately prior to such Taking to the standards of equivalent
buildings in the City, with such Tenant requested changes or alterations (made in conformity
with Article 18 hereof) as may be reasonably acceptable to Landlord (to the extent that Landlord
is entitled to approve such changes or alterations) or required by Applicable Laws. Such
Restoration, as defined in Section 12. 1, including the cost of temporary repairs for the protection
of the Premises, or any portion thereof, shall be carried on and completed in accordance with the
provisions and conditions of this Section and Article 18 hereof and Applicable Laws. The
Condemnation Award shall be paid to Landlord or, if required by the Mortgagee, to the
Mortgagee, to be held in accordance with the terms of the Mortgage. Provided no Event of
Default exists, the Condemnation Award shall be released by the Landlord or Mortgagee, as
applicable, and applied to the payment of the cost of the Restoration, in accordance with the
terms of Exhibit C attached hereto and incorporated herein (which may not be modified or
amended without the prior written consent of Tenant).
(b) Notwithstanding anything to the contrary herein contained, if the condemnation
proceeds shall be insufficient to pay the entire cost of the Restoration, Tenant shall pay any
deficiency. Upon completion of the Restoration, so long as this Lease has not been terminated
by Tenant pursuant to Section 13.2, then Tenant shall be entitled to that portion of the proceeds
from a Taking representing loss of use of the Property for the balance of the Term. Any other
remaining proceeds from a Taking shall belong to Landlord. In the event of a Restoration by
Tenant, Tenant's rights to said condemnation proceeds shall survive expiration of the Term.
(c) Tenant shall have the limited right to seek in the Taking proceedings, and to
receive, any award which may be made for damages to or compensation for Tenant's trade
fixtures, equipment, personal property (none of which are a part of the Premises covered by this
Lease) and for Tenant's relocation costs in connection therewith.
(d) Tenant's right of possession under this Lease shall, upon taking of possession by
the condemning authority, terminate as to the portion of the Premises so taken, but there shall be
no diminution or abatement in Monthly Rent or in Tenant's other obligations hereunder unless
Landlord receives such Rent from rent -loss insurance purchased by Tenant.
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13.2 Substantial Taking. Notwithstanding the provisions of Section 13. 1, above:
(a) In the event of a "Substantial Taking" (as herein defined and as determined
under paragraph of this Section) which occurs during the Term, Tenant shall have the options set
forth in Section 13.2.
(b) For purposes of this Lease, "Substantial Taking" shall mean a Taking that is at
least 25% of the fair market value of the Premises prior to the Taking (assuming that the
Premises were in the condition in which they were required to be maintained pursuant to this
Lease), and that, in the reasonable good faith opinion of the Tenant, makes the Premises unfit for
Tenant's use and cannot be restored with due diligence within one hundred eighty (180) days
from the date of the architect/engineer's determination, as set forth below. Tenant will select an
architect/engineer reasonably acceptable to Landlord and Mortgagee to determine within sixty
(60) days after the Taking a reasonable estimate of the time to restore the Taking and whether the
Taking is a Substantial Taking. If the architect/engineer makes a reasonable good faith
determination that in its opinion a Substantial Taking of the Premises has occurred, then Tenant
shall within thirty (30) days after the architect/engineer provides notice of its determination that a
Substantial Taking has occurred, give written notice to Landlord and Mortgagee that Tenant has
elected to either:
(i) Offer to purchase the Premises for a purchase price (the "Purchase
Price") equal to the sum of. (i) the Termination Value, as set forth on
Exhibit E attached hereto and made a part hereof, (ii) all unpaid Rent and
any other amounts owing under this Lease as of the date of such purchase,
and (iii) any prepayment penalty incurred by Landlord with respect to
prepayment of the Mortgage pursuant to the terms thereof, or
(ii) Cause Restoration of the Premises so that the Premises has a value, utility,
and remaining useful life as nearly as reasonably practicable equal to the
value, utility, and remaining useful life of the Premises immediately prior
to the occurrence of the Substantial Taking (assuming that the Premises
were in the condition in which they were required to be maintained
pursuant to this Lease). Such Restoration will be performed in accordance
with plans and specifications and a contractor reasonably acceptable to
Landlord and will be completed, subject to force majeure, within 24
months from the date of condemnation, or 6 months prior to expiration of
the Term, whichever is earlier. If Restoration may not reasonably be
expected to be completed within such time frame, Tenant may not elect
this option.
(c) If Tenant fails to make an election under Section 13.2(b)(ii) in the manner set
forth above, such failure shall be deemed Tenant's election to restore the Premises pursuant to
Section 132(b)(ii). If Tenant elects to offer to purchase the Premises pursuant to
Section 132(b)(i) above, then Landlord may accept such offer or reject such offer (with
Mortgagee's prior written approval). Landlord shall exercise this right, if at all, within ninety
(90) days from the date Landlord receives notice of Tenant's election to purchase. If Landlord
rejects Tenant's offer, Tenant may, within thirty (30) days after Landlord rejects the offer, elect
23
the option set forth in Section 13.2(b)(ii) above and in such case Tenant's offer to purchase the
Premises for the Purchase Price shall be deemed withdrawn and of no further force or effect. If
Tenant does not elect the option set forth in Section 13.2(b)(ii) within such thirty (30) -day
period, then this Lease shall terminate on the first day of the next month which is at least thirty
(30) days after Landlord rejects the offer and Tenant shall vacate the Premises, and return it in
the condition required by the Lease, subject to the Taking, by said date. If Landlord rejects
Tenant's offer to purchase pursuant to this Section 13.2(c), and Tenant elects to terminate this
Lease pursuant to this Section 13.2(c), then, notwithstanding any provision of this Lease to the
contrary, all condemnation proceeds payable due to the Substantial Taking shall be paid to
Mortgagee and Landlord, in that order. If this Lease is so terminated, Tenant shall pay to
Landlord all Rent due as of the date that the termination is effective, plus any prepayment
penalty incurred by Landlord with respect to prepayment of the Mortgage pursuant to the terms
thereof. If Tenant's offer to purchase is accepted, closing will be on a date selected by Landlord
no less than thirty (30) days or more than sixty (60) days from Landlord's acceptance. The
purchase by Tenant shall be closed in accordance with the purchase procedure set forth in Article
21. Notwithstanding the foregoing, no rejection of Tenant's offer (or deemed offer) to purchase
the Premises shall be effective unless such offer shall also be rejected by Mortgagee. If Landlord
has not rejected or accepted Tenant's offer by the eightieth (80th) day after Tenant's offer,
Tenant may submit a second notice to Landlord and Mortgagee specifying, in bold face, that
Landlord's silence at the end of the 90 day period shall be deemed to be acceptance of Tenant's
offer.
(d) Tenant shall have the limited right to seek in the Taking proceedings, and to
receive, any award which may be made for damages to or compensation for Tenant's trade
fixtures, equipment and personal property (which is not a part of the Premises covered by this
Lease) and for Tenant's relocation costs in connection therewith.
(e) This Lease shall terminate upon taking of possession by the condemning authority
with respect to the portion of the Premises taken, and the Monthly Rent shall be equitably
adjusted based on the portion of the Premises taken. The parties agree to negotiate in good faith
regarding such adjustment.
13.3 Abatement of Rent. Rent shall be abated on a reasonable basis as to that portion
of the Premises rendered untenantable by a Taking.
13.4 Negotiations. In the event of a Taking, Landlord and its Mortgagee shall control
all negotiations with the condemning authority at Landlord's sole cost and expense; provided,
however, that Tenant may participate in all such negotiations, including being present at all
meetings and participating in any conference calls. The parties will keep each other fully
advised from time to time, and upon such party's request, of the status of such negotiations. In
the event an Event of Default exists, or events exist that would constitute an Event of Default
with notice, the passage of time or both, Tenant shall have no rights under this paragraph.
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ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 Assignment and Subletting. Provided no Event of Default exists, Tenant, at any
time and from time to time during the Term, may: (i) assign this Lease to any affiliate or
successor by merger to Tenant with the consent of Landlord, which shall not be unreasonably
withheld, conditioned or delayed; or (ii) sublet the Premises or any part thereof for a period
which does extend beyond the date one day prior to the Expiration Date with the prior written
consent of Landlord, which consent will not be unreasonably withheld, conditioned or delayed.
Provided, however, that none of the foregoing nor the assumption of this Lease under Section
14.2 shall relieve Tenant from liability for performance of any covenant or obligation hereunder,
Tenant hereby confirming that it shall remain unconditionally and primarily liable of all of its
obligations hereunder, and provided further that Tenant shall provide Landlord and Mortgagee
with an executed copy of such documents effecting such assignment and subletting within thirty
(30) days thereafter, and that, in the case of a sublease, that any sublease will be subordinate to
this Lease. Notwithstanding the foregoing, Tenant shall not assign or sublet Tenant's interest in
this Lease to any entity or person which has ever filed and has pending a petition for bankruptcy
protection. Upon and during an Event of Default Landlord may collect rents directly from any
sublessee, which rents are irrevocably assigned to Landlord.
14.2 Assumption by Assignee. If Tenant shall assign this Lease or any interest under
it, the assignee shall expressly assume in writing by instrument reasonably satisfactory to
Landlord, all of the obligations of Tenant under this Lease. Any Assignee shall attorn to the
Landlord and to any New Landlord (as defined below), as provided in Article 15.
ARTICLE 15
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
15.1 Subordination and Nondisturbance. This Lease is and shall be subject and
subordinate to the lien of any first priority Mortgage which now or at any time hereafter may be
placed upon the Premises, or any portion thereof or interest therein, and to any replacements,
renewals, amendments, modifications, extensions, assignments or refinancing of any of the
foregoing, and to each and every advance made under any Mortgage, unless the Mortgagee
requires in writing that this Lease be superior thereto. Tenant agrees at any time hereafter, and
from time to time within thirty (30) days after written demand of Landlord, to execute and
deliver to Landlord commercially reasonable documentation that may be reasonably required to
effect or confirm the subordination or superiority of this Lease to the lien of any such Mortgage.
It is agreed, nevertheless, that, so long as no Event of Default has occurred and is continuing,
neither Tenant's right to quiet enjoyment under this Lease, nor the right of Tenant to continue to
occupy the Premises and all portions thereof, and to conduct its business thereon in accordance
with the covenants, conditions, provisions, terms and agreements of this Lease, nor any other
rights of Tenant pursuant to this Lease, including without limitation, its rights to acquire the
Premises as provided in Article 21, its rights regarding insurance proceeds and condemnation
awards as provided in Articles 12 and 13, shall be interfered with or disturbed by Landlord or a
Mortgagee or anyone claiming by, through or under Landlord or a Mortgagee, and none of such
rights shall be terminated or otherwise affected by a foreclosure of a Mortgage. Any
subordination agreement or similar instrument, release or document shall expressly provide
25
language of nondisturbance so as to effectuate the provisions of this Section and the protection of
the aforesaid rights of Tenant. In addition, Landlord shall cause any Mortgagee currently
holding a Mortgage which is superior to this Lease, to agree in writing in a manner reasonably
satisfactory to Tenant not to interfere with or disturb Tenant's rights as aforesaid so long as no
Event of Default pursuant to which Landlord has rights to terminate this Lease or Tenant's
possession of the Premises is continuing. Any subordination agreement or similar instrument,
release or document shall also expressly include language whereby such Mortgagee, for itself
and its successors and assigns, and for any purchaser at a foreclosure sale under the Mortgage or
any transferee who acquires Landlord's interest in the Premises by deed in lieu of foreclosure or
otherwise (Mortgagee or such other transferee being termed herein the "New Landlord")
covenants that in the event such New Landlord succeeds to Landlord's interest in the Premises
provided no Event of Default exists, then this Lease shall continue in full force and effect, and
such New Landlord shall recognize this Lease and Tenant's rights hereunder, binding such New
Landlord to the performance of Landlord's obligations under this Lease based on occurrences
arising from and after the date such New Landlord becomes the Landlord under this Lease,
subject, however, to all limitation of the liability of the Landlord under this Lease and Tenant
shall attorn to Landlord in accordance with Section 15.2. The lien of any Mortgage shall not
cover Tenant's trade fixtures, equipment or other personal property of Tenant located in or on the
Premises. At Tenant's request, Landlord agrees to execute and deliver to Tenant's lender, from
time to time, a landlord's waiver, in form and substance reasonably acceptable to Landlord,
confirming that Landlord claims no lien, on Tenant's trade fixtures, equipment or personal
property.
15.2 Attornment. If a New Landlord shall succeed to the rights of Landlord under this
Lease or to ownership of the Premises, whether through foreclosure, or the delivery of a deed in
lieu thereof, then such New Landlord shall be bound by, and shall be deemed to have assumed,
all of Landlord's obligations hereunder based upon occurrences arising after said assumption and
Tenant shall attorn to and recognize such New Landlord as Tenant's landlord under this Lease.
Tenant shall execute and deliver a commercially reasonable instrument that such New Landlord
may reasonably request to evidence such attornment. Such New Landlord shall execute and
deliver any instrument that Tenant may reasonably request to evidence such assumption, subject
to all limitations of the Landlord's liability as set forth in Section 15.1 and elsewhere in this
Lease. Subject to the terms of Article 21 hereof, in the event of any other transfer of Landlord's
interest hereunder arising after said assumption, upon the written request of the transferee and
Landlord, such transferee shall be bound by, and shall be deemed to have assumed, all of
Landlord's obligations hereunder, and Tenant shall attorn to and recognize such transferee as
Tenant's landlord under this Lease. Tenant shall execute and deliver any instrument that such
transferee and Landlord may reasonably request to evidence such attornment.
15.3 Landlord Financing Durin.e Term. Tenant hereby consents to the mortgage lien
imposed against the Premises pursuant to the Mortgage. With respect to any refinancing of the
Mortgage or additional Landlord financing during the Term and any renewal thereof, Landlord
shall be free to encumber the Premises; provided that no Landlord financing adversely affects the
rights and privileges of Tenant under this Lease, or increases the nature, scope, or amount of any
obligations or liabilities (including any contingent liabilities) of Tenant in excess of those
existing on the date hereof. Tenant shall have no obligation to amend this Lease to facilitate
such financing (except, subject to the proviso in the immediately preceding sentence, to amend
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the definitions of "Mortgage" and "Mortgagee" in the Lease to mean the documents
evidencing the new indebtedness and the holder of such indebtedness, respectively, and, in the
case of the Mortgage, to refer to sections therein); but shall execute and deliver a subordination
and attornment agreement to any lender and to Landlord if such lender and Landlord shall in turn
deliver a nondisturbance agreement to Tenant, in each case on commercially reasonable terms
and consistent with the provisions of this Article 15.
ARTICLE 16
SIGNS AND BUILDING IDENTIFICATION
16.1 Stens. Tenant may erect any signs on the exterior or interior of the Building or
elsewhere on the Premises, provided that such sign or signs (i) do not cause any structural
damage to the Building; (ii) have been approved by Landlord, such approval not to be
unreasonably withheld, conditioned or delayed, and (iii) do not violate Applicable Laws.
Landlord shall have no right to install, construct or place any signs on any portion of the
Premises; provided, however, that Landlord may place commercially reasonable "for sale" or
"for rent" signs on the Premises during the last six (6) months of the Term, so long as such signs
comply with Applicable Laws. On the Expiration Date, Tenant will, at Tenant's sole cost,
remove all of its signs from the Premises. Tenant shall repair any damage to the Premises caused
by removal of the signs, and restore the portion of the Premises affected by the removal of the
signs to a condition required by Landlord.
16.2 Premises Designations. From and after the date hereof until the designation
provisions of this Article are terminated as provided below, Landlord shall identify the Building
and the Premises as reasonably required by Tenant from time to time. Said identifications are
referred to herein as the "Tenant Designations". If an Event of Default exists, then Tenant shall
have no right to new Tenant Designations. In the event of any claim by any third party against
the Landlord of infringement or similar improper use of the Tenant Designations, Tenant shall
indemnify, defend and hold the Landlord, harmless from and against any and all such claims
(except to the extent arising out of the negligence or willful misconduct of the Landlord).
Nothing herein shall require the Landlord to incur any expense or obligation in identifying the
Building and the Premises, and such expenses and obligations shall be the responsibility of
Tenant.
16.3 Discontinuance of Designations. Tenant may at any time during or after the Term
for any reason within its sole discretion require Landlord to discontinue the Tenant Designations
by giving written notice to Landlord requiring discontinuance of the Tenant Designations as of a
specified date, which date may not be less than ninety (90) days after the date of Tenant's notice.
16.4 Tenant Trade Name. Landlord acknowledges that no ownership or similar
interest, whether legal, beneficial or equitable, has been transferred to it with respect to the name
"Sportech, Inc.", the Tenant Designations, or any variations thereof.
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ARTICLE 17
LANDLORD'S ACCESS
17.1 Entry After Notice. Tenant agrees to permit Landlord to enter upon and inspect
the Premises at reasonable times during ordinary business hours, and upon not less than two
business days' prior notice. The aforesaid prior notice and time of entry shall not apply in the
event that, in Landlord's reasonable determination, an emergency condition exists at the
Premises which threatens immediately to create personal injury, criminal violation of law, or
property damage. Landlord may retain a set of keys for its use in entering into the Building in
the event of an emergency condition at the Premises. In all cases, the provisions of Section 17.3
shall apply.
17.2 Exhibiting the Premises. Landlord is hereby also given the right at reasonable
times during ordinary business hours, and upon prior notice of not less than one (1) business day,
to enter upon the Premises and to exhibit the same for the purpose of mortgaging, reletting
(during the last 12 months of the Term) or selling the same.
17.3 Accompanied by Tenant. In exercising its rights hereunder, Landlord shall refrain
from any acts which may materially and unreasonably interfere with Tenant's use or occupancy
of the Premises. Without limiting the generality of the foregoing, Landlord acknowledges that it
is necessary for Tenant to control access to the Premises in order to avoid unauthorized persons
from viewing Tenant's trade secrets, proprietary products, technology and/or processes.
Accordingly, except under emergency conditions while within the Premises, Landlord and its
representatives shall at all times be accompanied by a representative of Tenant, if Tenant makes
such representative available and shall comply with reasonable directions of such representative
relative to safety, security and protection of Tenant's trade secrets and other proprietary
information.
17.4 Vacant Premises. The requirements set forth in this Article 17 that Landlord
notify Tenant in advance of its intentions to enter upon the Premises and, after such notification,
to enter upon the Premises only during ordinary business hours, shall not apply if Tenant has
vacated or abandoned the entire Premises leased by Tenant.
17.5 Right of Examination of Records. Upon reasonable request and with reasonable
written notice to Tenant, Landlord or Mortgagee shall have the right to examine Tenant's books
and records relating to the use, ownership (or former ownership) and/or operation and
management of the Premises. Such examination shall not unreasonably disturb Tenant's
operations in the Premises and shall include, without limitation, review of all building plans and
specifications, construction drawings (including site, architectural, structural, HVAC, plumbing
and electrical), general contractor disbursement request packages and schedule of values for all
trades, owner purchased items to be capitalized, fees, permit costs, and depreciation schedules,
all to the extent in Tenant's possession.
17.6 Tenant's Financial Statements. Tenant will provide Landlord a copy of Tenant's
annual financial statements for the immediately preceding year within thirty (30) days following
Landlord's request. If Tenant has otherwise had audited financial statements prepared for the
year in question, Landlord will be provided with a copy of the audited financial statements;
however, if Tenant has not caused its financial statements to be audited, the financial statements
will be certified as true and correct in all material respects by the Chief Financial Officer of
Tenant. Landlord will maintain all such financial statements on a confidential basis, and will not
release or disclose such financial statements, or the information contained therein, to any third
parties without Tenant's prior written approval; provided, however, that Landlord may disclose
such financial statements or the information contained therein in any proceeding seeking to
enforce the terms of this Lease, or to the Mortgagee, or to Landlord's lenders, prospective
purchasers, accountants and attorneys.
ARTICLE 18
CHANGES AND ALTERATIONS
18.1 Tenant Alterations Permitted. As long as no Event of Default has occurred and is
continuing, at its sole cost and expense, Tenant shall have the right from time to time to make
such changes and alterations, structural or otherwise, to the Land and Building as Tenant shall
deem necessary or desirable, including without limitation Building expansions, which changes
and alterations shall be made in all cases subject to the following conditions, which Tenant
covenants to observe and perform:
(a) No change or alteration shall be undertaken until Tenant shall have procured and
paid for all required permits and authorizations of the various governmental bodies and
departments having jurisdiction of the Premises.
(b) No change or alteration shall be made, without Landlord's and Mortgagee's prior
written approval, which consent shall not be unreasonably withheld, conditioned or delayed.
(c) Tenant shall submit the construction drawings and all other plans and
specifications reasonably requested by Landlord for same to Landlord and Mortgagee. In all
cases, Tenant will provide Landlord with copies of any field drawings for such alterations, as
well as any as -built final and completed plans certified by the inspecting architect upon
completion of the work.
(d) For any change or alteration costing less than $100,000, Landlord and Mortgagee
approval is not required, but Tenant will provide Landlord notice of such change or alteration.
(e) Tenant may not demolish any structural portion of the Building without the prior
approval of Landlord and Mortgagee.
(fl All work done in connection with any change or alteration shall be done with due
diligence in a good and workmanlike manner by reputable contractors in compliance with
Article 8 regarding repairs, Article 10 regarding mechanics' liens, and all Applicable Laws.
(g) Except for Tenant's personal property and trade fixtures, unless the same are
removed by Tenant at its sole cost and expense and any damage resulting to the Premises from
such installation and removal is corrected, shall at the expiration of the Term, become the
property of Landlord without payment therefor by Landlord, and shall be surrendered to
Landlord on the expiration of the Term. Nothing herein shall be construed to prohibit Tenant
from removing from the Premises, at the expiration of the Term, all of Tenant's personal
29
property, inventory, equipment and trade fixtures, at Tenant's sole expense, provided Tenant
repairs any damage to Premises caused by such removal.
(h) Wherever in this Article 18 Landlord is authorized to approve changes or
alterations, Landlord shall notify Tenant in writing, within thirty (30) days after the giving by
Tenant to Landlord of a request in writing that Landlord approve one or more changes or
alteration (which request shall be accompanied by schematic drawings or such other information
as shall be necessary or as required hereby in order for Landlord to determine the acceptability of
such request), of Landlord's approval or disapproval of the requested change or alteration. In the
event no such notice of approval or disapproval is given by Landlord within said thirty (30) -day
period, then Landlord shall be deemed to have approved said changes or alterations (and
Landlord shall obtain similar deemed approval rights from Mortgagee in the Mortgage loan
documents). In the event of Landlord's disapproval of the request, Landlord shall specify in its
notification the reasons for withholding its approval.
ARTICLE 19
SURRENDER
19.1 Surrender. Upon the termination of this Lease, whether by forfeiture, lapse of
time or otherwise, or upon termination of Tenant's right to possession of the Premises, Tenant
will at once surrender and deliver up the Premises, together with all improvements thereon
(excluding such improvements as may, pursuant to Section 18.1 hereof or other provisions of this
Lease, be removed from the Premises), to Landlord, in compliance with all Applicable Laws, and
in good condition and repair, except for reasonable wear and tear and except for damage by
casualty and condemnation, as may be expressly permitted if Landlord (with Mortgagee's prior
written approval) rejects an offer to purchase from Tenant, in accordance with Articles 12 and 13
hereof. Except to the extent permitted to be removed by Tenant under Article 18, all alterations,
additions and improvements, temporary or permanent, made in or upon the Premises by Tenant
shall become Landlord's, property, and shall become subject to the Mortgage, and shall remain
upon the Premises on any such termination without compensation, allowance or credit to Tenant.
Landlord shall have no right to require Tenant to remove any alterations, additions and
improvements, or to restore the Premises to their condition prior to the making of such
alterations, additions and improvements, except to the extent that Landlord acting in accordance
with Article 18 shall require such removal as a condition to its approval, or to the extent Tenant
has failed to get required approval from Landlord under Article 18.
19.2 Removal of Tenant's Property. Upon the termination of this Lease, whether by
forfeiture, lapse of time or otherwise, or upon termination of Tenant's right to possession of the
Premises, Tenant shall remove Tenant's personal property, moveable trade fixtures and
equipment; provided, however, that Tenant shall repair all injury or damage to the Premises
(such as damage to carpet, walls, elevators, and other items) damaged as a result of removing
and moving furniture, fixtures and equipment. Tenant shall have no obligation to repair or
restore conditions which result from normal wear and use, such as discoloration of walls where
pictures or other items are removed (excluding signs), minor holes in walls from the careful and
prudent removal of shelves or other customary office furnishings or equipment, or for similar
conditions resulting from normal wear and use. If Tenant does not remove Tenant's personal
property, moveable trade fixtures and equipment from the Premises prior to the expiration or
9M
earlier termination of the Term, Landlord, may, at its option and at its cost, remove the same
(and repair any damage occasioned thereby) and dispose of the same in accordance with
Applicable Law.
19.3 Holding Over. If Tenant or any party claiming by, through or under Tenant has
not surrendered the Premises after the expiration or earlier termination of the Term as required
under this Lease, the same shall constitute a tenancy from month-to-month upon the same terms
as in this Lease (other than Monthly Rent requirements), and Tenant or anyone claiming through
or under Tenant shall pay a monthly amount as a charge for such occupancy equal to 125% of
the Rent payable by Tenant upon the Expiration Date. This Section 19.3 shall survive
termination or expiration of this Lease until the Premises have been surrendered in accordance
with Article 19.
ARTICLE 20
HAZARDOUS MATERIALS
20.1 Defined Terms:
(a) The following capitalized terms shall have the meanings set forth thereafter. The
term "Claim" shall mean and include any demand, cause of action, proceeding or suit (i)
resulting from a violation of Environmental Laws or for damages, losses, liabilities, injuries to
person or property, damages to natural resources, fines, penalties, interest, assessments,
disbursements or contributions under any Environmental Law; (ii) for the costs of site
investigations, feasibility studies, information requests, health or risk assessments or Response
actions required under any Environmental Law; (iii) resulting from the presence or Release of
Hazardous Materials on or affecting all or any portion of the Premises; (iv) resulting from
Tenant's failure to comply fully with terms and conditions of this Article 20; or (v) for enforcing
this Article 20.
(b) "Environmental Law" shall mean and include all Federal, state and local
statutes, ordinances, regulations and rules relating to environmental quality or regulation, natural
resources, health, safety, contamination and cleanup, including, but not limited to: (i) the Federal
Water Pollution Control Act (33 U.S.C. Section 1317) as amended; (ii) the Federal Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) as amended; (iii) the
Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. Section
9601 et seq.) as amended; (iv) the Toxic Substance Control Act (15 U.S.C. Section 2601) as
amended; and (v) the Clean Air Act (42 U.S.C. Section 7401), as amended.
(c) "Hazardous Materials" shall mean and include the following, including
mixtures thereof: any hazardous or toxic or harmful or flammable substance, pollutant,
contaminant, waste, material, byproduct or chemical regulated under CERCLA or any other
Environmental Law; oil and petroleum products and natural gas, natural gas liquids, liquefied
natural gas and synthetic gas usable for fuel; pesticides regulated under FIFRA or any other
Environmental Law; asbestos and asbestos -containing materials, PCBs and other substances
regulated under TSCA or any other Environmental Law; source material, special nuclear
material, byproduct material and any other radioactive materials or radioactive wastes; and
chemicals subject to the OSHA Hazard Communication Standard, 29 C.F.R. 1910.1200 et seq.
31
(d) "Manage" or "Management" means to generate, manufacture, process, treat,
store, use, reuse, refine, recycle, reclaim, blend or burn for energy recovery, incinerate,
accumulate speculatively, transport, transfer, dispose of or abandon Hazardous Materials which
Management is regulated under Environmental Laws.
(e) "Release" or "Released" shall mean any actual or threatened spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing of Hazardous Materials into the environment, as "environment" is defined in
CERCLA, which Release is regulated under Environmental Laws.
(f) "Response" or "Respond" shall mean action required under and taken in
compliance with Environmental Laws to correct, remove, remediate, cleanup, prevent, mitigate,
monitor, evaluate, investigate, assess or abate the Release of a Hazardous Material.
20.2 Hazardous Materials. During the Term, Tenant shall (a) at its sole cost and
expense, comply and cause the Premises to comply with all Environmental Laws applicable to
Tenant and/or the Premises; (b) not conduct the Management of Hazardous Materials on the
Premises except in de minimus amounts relating to the customary operation and management of
office buildings, in compliance with Environmental Laws; (c) not cause or permit the Release of
any Hazardous Materials on, to or from the Premises except in de minimus amounts relating to
the customary operation and management of office buildings, in compliance with Environmental
Laws; and (d) at its sole cost and expense, arrange for the lawful transportation and disposal of
all Hazardous Materials from the Premises.
20.3 Indemnification by Tenant. Tenant shall defend, indemnify and hold the
Landlord (and its members, managers, governors, employees, successors and assigns) harmless
from and against any and all losses, damages, costs, liabilities, expenses, attorneys fees, expert
costs, engineering costs, remediation costs or fines arising from or in any manner, directly or
indirectly, related to any breach by Tenant of any of its warranties, representations, covenants,
agreements or obligations set forth in this Article 20. The provisions of this Section 20.3 shall
survive termination or expiration of this Lease.
20.4 No Landlord Representations. Landlord makes no representations or warranties
with respect to the condition of the Land or the Premises, and Tenant hereby accepts the Land
and the Premises on an "as -is" basis, without any obligation of Landlord to take any action with
respect to compliance with Environmental Laws or Hazardous Materials, or Claims with respect
to the Land or the Premises.
20.5 Condition of Premises. The Premises is demised and let by Landlord "AS IS" in
(a) its present condition, subject to the rights of any parties in possession thereof (other than
rights, if any, granted by Landlord), the state of the title thereto existing at the time of the
commencement of the Term (other than defects in, or exceptions to, title, if any, created by
Landlord), any state of facts which an accurate surveyor physical inspection might show, all
Applicable Laws, any violations of Applicable Laws which may exist at the commencement of
the Term and the presence of any Hazardous Materials at or under the Premises or at or under
any property in the vicinity of the Premises. Tenant has occupied the Premises as owner
immediately prior to entering into this Lease, has inspected the Premises, is satisfied with the
32
results of its inspections of the Premises and is entering into this Lease solely on the basis of the
results of its own inspections and all risks incident to the matters discussed in the preceding
sentence.
ARTICLE 21
INTENTIONALLY DELETED
ARTICLE 22
MISCELLANEOUS PROVISIONS
22.1 Indemnification. Except if and to the extent that such party is released from
liability to the other party hereto pursuant to any waiver of claims or waiver of subrogation
contained in this Lease,
(a) Tenant hereby agrees to indemnify and hold Landlord harmless from and against
any and all costs, damages, claims, liabilities and expenses (including reasonable attorneys fees)
suffered by or claimed against Landlord, based on, or arising out of, or resulting from: (i)
Tenant's use and occupancy of the Premises or the business conducted by Tenant therein, (ii) any
negligent act or omission by Tenant or its employees, agents, or invitees, or (iii) any breach or
default by Tenant in the performance or observance of its covenants or obligations under this
Lease.
The indemnities set forth herein shall also inure to the benefit of Landlord and its
employees, agents, invitees, successors and assigns.
22.2 Notices. Any notice, demand, consent, approval, request or other communication
or document to be provided hereunder to a party hereto shall be (a) in writing, and (b) deemed to
have been provided (i) (1) forty-eight (48) hours after being sent as certified or registered mail in
the United States mails, postage prepaid, return receipt requested, or (2) the next business day
after having been deposited (in time for delivery by such service on such business day) with
Federal Express or another reputable national courier service, or (3) upon having been sent by
email, so long as an original copy is also sent for next business day delivery pursuant to clause
(b)(i)(2) above, in each case to the address of such party set forth hereinbelow or to such other
address in the United States of America as such party may designate from time to time by notice
to each other party hereto, or (ii) upon being given by hand or other actual delivery to such party.
If this Lease provides for notices to the Tenant to be sent to more than one address, no such
notice shall be effective unless and until it is sent to each such address. The initial addresses of
the parties shall be as follows:
Landlord: Meritex-Elk River, LLC
Attn: Daniel K. Williams & Keith W. Baker
24 University Avenue NE, Suite 200
Minneapolis, MN 55413
Email: dwilliams@meritex.com & kbaker@meritex.com
With a copy to: David E. Kirkman
Ravich Meyer Kirkman McGrath Nauman & Tansey, P.A.
33
4545 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
Email: dekirkman@ravichmeyer.com
Tenant: Sportech, Inc.
10800 175th Avenue NW
Elk River, MN 55330
Attn: Eric Stack, CFO
Email: estack@sportechinc.om
With a copy to: Jeffrey W. Jones
Fabyanske, Westra, Hart & Thomson, P.A.
333 South Seventh Street
Suite 2600
Minneapolis, MN 55402
Email: jjones@fwhtlaw.com
Each party shall have the right to provide a new or different addresses for notice or to change its
address and/or facsimile number to any other address and/or facsimile number within the United
States of America pursuant to notice given as set forth above.
22.3 Quiet Enjoyment. Landlord covenants and agrees that Tenant, upon paying the
Rent, and upon observing and keeping all of the material covenants, agreements and conditions
of this Lease on its part to be kept, observed and performed, shall lawfully and quietly hold,
occupy and enjoy the Premises (subject to the provisions of this Lease) during the Term without
hindrance or molestation from Landlord as long as no Event of Default exists.
22.4 Landlord Obligations.
(a) 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 Premises, and in the event of any transfer or conveyance of
the Premises in which the transferee/grantee agrees to assume and be liable for all obligations of
"Landlord" under this Lease, the then transferor/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, but the transferor/grantor shall remain liable for any obligations under
this Lease arising during such time such transferor/grantor held any interest in the Premises and
for any liabilities arising out of the acts or omissions of the transferor/grantor prior to such
transfer or conveyance. Such transferor/grantor shall be relieved of liability for any funds in
which Tenant has an interest which are in the hands of such transferor/grantor at the time of such
transfer if and to the extent said funds shall be turned over to the transferee/grantee, and any
amount then due and payable to Tenant by transferor/grantor under any provision of this Lease
shall be paid to Tenant as a condition to the transferor/grantor being relieved of liability for such
amount. It is intended that the covenants and obligations contained in this Lease on the part of
Landlord shall, subject to the aforesaid, be binding on Landlord, its successors and assigns, only
34
during and in respect of their respective successive periods of ownership, and such
transferee/grantee shall, by virtue of such transfer or conveyance, be deemed to have fully
assumed all responsibility and liability of Landlord as respects the performance of all covenants
and obligations on the part of Landlord contained in this Lease thereafter to be performed.
(b) Notwithstanding anything to the contrary contained in this Lease, it is expressly
understood and agreed by and between the parties hereto that the recourse of Tenant or its
successors or assigns against Landlord with respect to the alleged breach by, or on the part of,
Landlord of any representation, warranty, covenant, undertaking or agreement contained in this
Lease (collectively, "Landlord's Obligations") shall not extend to any partner, shareholder,
member, governor, manager, director, officer, member, or employee of Landlord or any of the
assets of any such persons or to any Mortgagee; and (ii) without limitation of the foregoing, no
personal liability or personal responsibility of any sort with respect to any of Landlord's
Obligations is assumed by, or shall at any time be asserted or enforceable against, any of said
persons or any of the assets of any of said persons, and Landlord's liability is limited to its
interest in the Premises (and the proceeds thereof); provided, however, notwithstanding anything
to the contrary set forth herein, any owner of any portion of the Premises shall be personally
liable for any obligations under this Lease arising during such transferor/grantor's period of
ownership and for any liabilities arising out of the acts or omissions of the transferor/grantor
prior to such transfer or conveyance up to the amount of the fair market value of the Premises at
the time of such transfer.
22.5 Estoppel Certificates. Tenant and Landlord shall, each without charge at any time
and from time to time, within twenty (20) days after written request by the other party, certify all
of the following by written instrument, duly executed, acknowledged and delivered to any
Mortgagee, assignee of a Mortgagee, proposed Mortgagee, or to any purchaser or proposed
purchaser of the Premises, the Landlord entity, the Tenant entity, or any portion thereof or
interest therein, or to any proposed assignee of Tenant's interests hereunder, or any proposed
subtenant (all pursuant to this Lease):
(a) That this Lease is unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect, as modified, and stating the
modifications).
(b) The dates to which the Monthly Rent has been paid in advance, if any.
(c) Whether or not there are then existing any breaches or defaults by such party or
the other party known by such party under any of the covenants, conditions, provisions, terms or
agreements of this Lease, and specifying such breach or default, if any, or any claims and set-
offs or defenses against the enforcement of any covenant, condition, provision, term or
agreement of this Lease upon the part of Landlord or Tenant, as the case may be, to be performed
or complied with (and, if so, specifying the same and the steps being taken to remedy the same).
(d) That Tenant has accepted the Premises and is in full and complete possession
thereof (in the case of Tenant).
(e) Such other statements or certificates as reasonably requested.
35
22.6 Memorandum of Lease. Upon the execution and delivery of this Lease, but
subject to the conditions below, the parties hereto agree to execute and deliver to each other a
memorandum of lease, in recordable form, setting forth the following:
(a) The date of this Lease.
(b) The parties to this Lease.
(c) The Term.
(d) The legal description of the Premises.
(e) Such other matters reasonably requested by Landlord or Tenant to be stated
therein, as required by law.
Notwithstanding the foregoing, Landlord will not be obligated to execute or record a
Memorandum of Lease unless and until Tenant: (i) duly executes and acknowledges a
Termination of the Memorandum of Lease, in recordable form, duly terminating and releasing
the Memorandum of Lease; and (ii) deposits the Termination with a title insurance company
designated by Landlord pursuant to the terms of a separate Escrow Instruction Letter in a form
reasonably acceptable to Landlord, which requires the title company to automatically release and
record the Termination within two (2) business days after being advised by Landlord that the
Lease has been terminated or the Term has expired.
In addition, upon the expiration, termination or cancellation of this Lease, by any means
whatsoever, Landlord may unilaterally execute and record a Termination of the Memorandum of
the Lease, which Termination will be effective immediately upon recording. Tenant hereby
grants Landlord authority to unilaterally execute such Termination if the Lease has been
terminated or expired.
22.7 Survival of Provisions. If any covenant, condition, provision, term or agreement
of this Lease shall, to any extent, be held invalid or unenforceable, the remaining covenants,
conditions, provisions, terms and agreements of this Lease shall not be affected thereby, but each
covenant, condition, provision, term or agreement of this Lease shall be valid and in force to the
fullest extent permitted by law.
22.8 Successors and Assigns. The covenants and agreements herein contained shall
bind and inure to the benefit of Landlord and its successors and assigns, and Tenant and its
permitted successors and assigns.
22.9 Captions. The caption of each article of this Lease is for convenience and
reference only and in no way defines, limits or describes the scope or intent of such article or of
this Lease.
22.10 Relationship of Parties. This Lease does not create the relationship of principal
and agent, or of lender and borrower, or of debtor and creditor, or of mortgagor and mortgagee,
or of partnership, joint venture, or of any association or relationship between Landlord and
Tenant, the sole relationship between Landlord and Tenant being that of landlord and tenant.
36
22.11 Agreements Between the Parties: Incorporation. All preliminary and
contemporaneous negotiations relating to this Lease are merged into and incorporated in this
Lease. This Lease shall not be modified or amended in any manner except by an instrument in
writing executed by the parties hereto.
22.12 Merger of Interests. There shall be no merger of this Lease or this leasehold
estate created by this Lease with any other estate or interest in the Premises or the Premises by
reason of the fact that the same person, firm, corporation or other entity may acquire, hold or
own directly or indirectly, this Lease or this Leasehold interest created by this Lease or any
interest therein, and any such other estate or interest in the Premises or any portion thereof. No
such merger shall occur unless and until all persons, firms, companies, corporations, partnerships
or other entities having an interest (including a security interest) in (1) this Lease or this
leasehold estate created hereby, including any Mortgagee, and (2) any such other estate or
interest in the Premises or any portion thereof, shall join in a written instrument expressly
effecting such merger and shall duly record the same.
22.13 Time of the Essence. Time is of the essence of this Lease, and all provisions
herein relating thereto shall be strictly construed.
22.14 Indemnity and Counsel. To the extent either party indemnifies and agrees to
defend the other under the terms of this Lease, the indemnifying party shall have the right to
select counsel to undertake such defense, which counsel shall be reasonably acceptable to the
indemnified party.
22.15 Counterparts. This Lease may be executed in counterparts, each of which when
taken together shall constitute one instrument.
22.16 Waivers. No waiver of any obligation or covenant contained in this Lease shall
be implied by any neglect of Landlord or Tenant to enforce any right, power, or remedy on
account of the violation of such condition, whether or not such violation be continued or repeated
subsequently, and no express waiver shall affect any condition other than the one specified in
such waiver and that one only for the time and in the manner specifically stated. Without
limiting the provisions of this Subsection, it is agreed that no receipt of monies by Landlord from
Tenant after the termination in any way of the Term or of Tenant's right of possession hereunder,
or after the giving of any notice, shall reinstate, continue or extend the Term or affect any notice
given to Tenant prior to the receipt of such monies.
22.17 Attorneys' Fees. Notwithstanding anything to the contrary contained in this
Lease, a party successful in establishing a breach by the other party or defending against an
alleged breach, whether in arbitration or litigation, shall be entitled to recover its reasonable legal
fees and costs and witness fees and costs.
22.18 Authority. Each party represents that all necessary action has been taken to
authorize and empower the individual(s) executing this Lease on such party's behalf to do so and
each party agrees, upon request of the other party, to provide evidence of such authority.
22.19 Commissions. Each party hereto hereby represents and warrants to the other that
in connection with the leasing of the Premises hereunder, neither Tenant nor Landlord has been
37
represented by a broker, other than Judd Welliver of CBRE, who was retained and will be paid in
full by Tenant ("Tenant's Broker"). Landlord hereby agrees to indemnify and hold Tenant
harmless from and against any and all costs, expenses and liabilities for commissions and other
compensation claimed by any broker or agent retained by Landlord or its affiliates in connection
herewith. Tenant hereby agrees to indemnify and hold Landlord harmless from and against any
and all costs, expenses and liabilities for commissions and other compensation owed to Tenant's
Broker or claimed by any broker or agent retained by Tenant or its affiliates in connection
herewith.
22.20 Amendment. No modification, waiver or amendment of this Lease or of any of its
conditions or provisions shall be binding upon Landlord or Tenant unless in writing signed by
such party.
22.21 Delay in Performance. If any provision of this Lease requires a party to perform
an obligation within a specified period of time, or constitutes a default if not performed within a
specified period of time, and if said period of time may be extended if the obligation cannot with
due diligence and in good faith be performed within said period of time, such right to an
extended period of time shall not apply to any obligation to pay money or to any obligation
which is delayed by the failure to pay money.
22.22 Governing Law. This Lease shall be governed by and construed in accordance
with the internal laws of the State of Minnesota.
ARTICLE 23
INTENTIONALLY DELETED
ARTICLE 24
LANDLORD DEFAULT AND BANKRUPTCY
24.1 Default by Landlord. If the Landlord fails to perform any of its obligations under
the provisions of the Lease, it shall be deemed to be a "Landlord Default". On the occurrence
of such Landlord Default, the Tenant shall not be entitled to exercise any right or remedy on
account thereof as hereinafter provided or which it may have under applicable law unless and
until the Tenant has given written notice thereof to the Landlord and the Landlord has failed
within thirty (30) days thereafter to cure such default; provided, however, that if such default is
not reasonably capable of being cured within such thirty (30) day period, it shall not be a
Landlord Default under the Lease if, within such thirty (30) day period, the Landlord commences
cure of such default and proceeds diligently thereafter to prosecute such cure, notwithstanding
that the completion thereof may require in excess of thirty (30) days. Anything contained in the
provisions of this Lease notwithstanding, no notice shall be required to be given, and the
Landlord shall not be entitled to any grace period in the case of any Landlord Default consisting
of the failure to pay any monetary obligation of the Landlord hereunder or under the Lease.
On the occurrence of any Landlord Default, the Tenant may, subject to the limitations in
Sections 2.4 and 2.5 above, do the following: (a) cure the Landlord Default and present to
Landlord for reimbursement invoices and other evidence of costs incurred by Tenant in
connection with such cure (which reimbursement shall be made by Landlord within ten (10) days
9
of said transmittal by Tenant), and (b) seek the judicial remedy of specific performance.
Notwithstanding the foregoing provisions of this Section 24.1, Tenant shall have no right to
offset or abate the Rent payable thereunder as a result of or relating to any such Landlord
Default. In no event will Landlord be liable to Tenant for any special or consequential damages,
nor for punitive damages, and Tenant waives and releases all claims to recover any such
damages.
24.2 Landlord acknowledges and irrevocably agrees that upon the filing by or against
Landlord of a petition under the Bankruptcy Code naming Landlord as debtor, Tenant shall be
entitled to all rights afforded a lessee under the Bankruptcy Code, including but not limited to
those rights set forth in Section 365(h) therein, and that in the event of such a bankruptcy filing,
this Lease shall constitute an "unexpired lease of real property", and all rights under this Lease of
any nature whatsoever shall be deemed to be and are, without limitation, "in or appurtenant to
the real property" as both such terms are used in Section 365(h) of the Bankruptcy Code.
ARTICLE 25
OPTIONS TO EXTEND
25.1 Extension Periods. Subject to the provisions hereinafter set forth in this Article
25 and provided no Event of Default exists, Landlord hereby grants Tenant the options to extend
the Term of the Lease with regard to all or any portion of the Building on the same terms,
conditions and provisions as contained herein, except as otherwise provided herein, (the
"Extension Options", or individually, an "Extension Option") for two (2) consecutive periods
of five (5) years each (collectively, the "Extension Periods", or individually, an "Extension
Period"). Tenant shall be under no obligation to extend the Term on all or any portion of the
Premises for any of the Extension Periods. The Term may not be extended for all or any portion
of the Premises for any Extension Period unless the Term had been so extended for the
immediately preceding Extension Period, if any. The first Extension Period shall commence on
the first day following the Expiration Date of the initial Term, and each subsequent Extension
Period shall commence on the first day following the Expiration Date of the previous Extension
Period.
25.2 Monthly Rent During: Extension Period.
(a) The Monthly Rent to be paid by Tenant during each Extension Period shall be
"Market Monthly Rent" (as defined below). Payment of all Additional Rent and other charges
required to be made by Tenant as provided in this Lease shall continue to be made during each
Extension Period. As used in this Lease, the term "Market Monthly Rent" means the greater of
either: (i) the Monthly Rent payable pursuant to this Lease for the last month of the original ten
(10) year Term, or the last month of the First Extension Period (as applicable); or (ii) annual net
rental rate per rentable square foot of the Premises that a willing tenant would pay, and a willing
landlord would accept in arms -length bona fide negotiations, for similar lease renewal space in
the Building or in comparable buildings located in the greater northwest Minneapolis, Minnesota
market area, if the same were leased to a single tenant for such Extension Period, taking into
account all pertinent factors.
39
(b) If Landlord and Tenant are unable to agree upon the Market Monthly Rent within
thirty (30) days following Tenant's Extension Notice, then the dispute shall proceed to
arbitration. The arbitration procedure shall commence when either party notifies the other party
of its election to submit the matter to arbitration. Not later than ten (10) days after the arbitration
procedure has commenced, each party shall submit to the other party a written statement of its
final position on the Market Monthly Rent for such Extension Period (the "Final Offers").
Within ten (10) days after the submission of the Final Offers, the parties shall jointly select as an
arbitrator a licensed real estate broker, who is an individual of substantial experience with
respect to office building ownership, leasing, management and marketing in the greater
northwest Minneapolis market area, which person shall not be regularly employed or have been
retained during the last two (2) years as a consultant by either party. If the parties cannot agree
on the arbitrator, the chief judge of the Sherburne County District Court shall, upon application
by either party, select an arbitrator having the above qualifications. Both parties shall have the
right to submit proposed names and criteria for the arbitrator to the chief judge. Neither party
may consult directly or indirectly with any arbitrator regarding the Market Monthly Rent prior to
appointment, or after appointment, outside the presence of the other party. The arbitrator
selected shall determine Market Monthly Rent pursuant to the criteria contained in this paragraph
and all relevant market factors. The decision of the arbitrator shall be final and binding on the
parties and may be entered in any court having jurisdiction thereof. The party whose Final Offer
was not selected by the arbitrator shall pay all costs of the arbitration.
25.3 Exercise of Options. Each Extension Option shall each be exercisable in the
following manner: Tenant shall give Landlord written notice ("Tenant's Extension Notice") of
its intention to extend the Term for all or a specified portion of the Building ("Extension
Premises") no later than six (6) months prior to the applicable Expiration Date. If Tenant's
Extension Notice is not given within the time provided as aforesaid, the current Extension
Option and all subsequent Extension Options shall be deemed to have expired and been waived
by Tenant.
25.4 Improvements. Subject to Article 26, Landlord shall not be obligated to provide
any improvements to the Extension Premises or allowances to Tenant for any improvements to
the Extension Premises during any Extension Period. The provisions of this Lease shall govern
entirely any Extension Period, except the Monthly Rent shall be as set forth above.
25.5 Existing Default. Tenant may exercise Extension Options, and an exercise
thereof shall be effective, only if, at the times of Tenant's Extension Notice, and on the
commencement date of the applicable Extension Period, this Lease to Tenant is in full force and
effect and no Event of Default is then continuing.
25.6 Documentation. At the request of either party, Landlord and Tenant will execute
and deliver a reasonably appropriate document covering extension of the Term and the new
Monthly Rent.
25.7 No Separate Interest. The rights of Tenant under this Article 25 shall not be
severed from this Lease or separately sold, assigned or transferred, and shall expire on the
expiration or earlier termination of this Lease.
.N
ARTICLE 26
OPTION TO EXPAND
26.1 Expansion Option. Subject to the provisions hereinafter set forth in this Article
26 and provided no Event of Default exists, Landlord hereby grants Tenant the one-time option
(the "Expansion Option") to expand the Building (and the Premises) by an additional area of up
to approximately 40,000 square feet (collectively, the "Expansion Area") on the Land (it being
understood and agreed that the actual size of the Expansion Area shall be subject to and
determined in accordance with any and all Applicable Laws). Tenant may exercise the
Expansion Option during the Term and any Extension Period by giving Landlord written notice
("Tenant's Expansion Notice") of its intention to expand the Premises no later than thirty-six
(36) months prior to the applicable Expiration Date.
26.2 Expansion Plans and Improvements, Landlord's Construction.
(a) In the event Tenant exercises its Expansion Option hereunder, Landlord shall
prepare or cause to be prepared, at Landlord's sole cost and expense, preliminary construction
drawings and specifications, including an estimated construction cost breakdown (which shall
include so-called "soft costs") and a proposed construction schedule (collectively, the
"Preliminary Expansion Plans") showing any and all improvements proposed to be constructed
with respect to the Expansion Area (the "Expansion Improvements"). Tenant and Landlord
will, in good faith, cooperate with each other in the preparation of the Preliminary Expansion
Plans and shall provide the other party with such additional information as may be requested in
order to prepare the Preliminary Expansion Plans in a manner which will be consistent with the
intended use by Tenant of the Expansion Improvements. The Preliminary Expansion Plans shall
be submitted to Tenant within sixty (60) days following the Tenant's Expansion Notice for
Tenant's review and approval. Tenant shall, within fifteen (15) days after receipt thereof, either
approve the Preliminary Expansion Plans or disapprove the same, advising Landlord for the
reason for such disapproval (and setting forth the aspects of the Preliminary Expansion Plans
which are not acceptable to Tenant). In the event Tenant disapproves such Preliminary
Expansion Plans, Landlord shall modify the same, taking into account the reasons given by
Tenant for such disapproval, and shall submit the revised Preliminary Expansion Plans to Tenant
within ten (10) days after receipt of Tenant's initial disapproval. In the event Tenant disapproves
of the revised Preliminary Expansion Plans, Tenant may proceed pursuant to the terms of Section
26.4.
(b) If Tenant approves the revised Preliminary Expansion Plans by written notice
thereof to Landlord, Landlord will, based on the approved Preliminary Expansion Plans, cause to
be prepared and delivered to Tenant within sixty (60) days, at Landlord's sole cost and expense,
proposed architectural and engineering plans and specifications for the Expansion Improvements
(collectively, the "Proposed Expansion Plans"). Tenant and Landlord will, in good faith,
cooperate with each other in the preparation of the Proposed Expansion Plans and shall provide
the other party with such additional information as may be requested in order to prepare the
Proposed Expansion Plans in a manner which will be consistent with the intended use by Tenant
of the Expansion Improvements. Tenant shall, within ten (10) days after receipt thereof, either
approve the Proposed Expansion Plans by written notice thereof to Landlord or disapprove the
same, advising Landlord of the reasons for any such disapproval (and setting forth the aspects of
41
the Proposed Expansion Plans which are not acceptable to Tenant). In the event Tenant
disapproves such Proposed Expansion Plans, Landlord shall modify the same, taking into
account the reasons given by Tenant for such disapproval, and shall submit the revised Proposed
Expansion Plans to Tenant within ten (10) days after receipt of Tenant's initial disapproval. In
the event Tenant disapproves of the revised Proposed Expansion Plans, Tenant may proceed
pursuant to the terms of Section 26.4.
(c) If Tenant approves the Proposed Expansion Plans by written notice thereof to
Landlord, the Proposed Expansion Plans, as so approved by Tenant, shall become the "Final
Expansion Plans". With Final Expansion Plans, Landlord shall thereafter (i) cause the
Expansion Improvements as set forth on the Final Expansion Plans to be competitively bid to at
least three (3) licensed and bonded general contractors (the "Competitive Bids"), and (ii) use
commercially reasonable efforts to obtain (or cause the general contractor to obtain) approval of
the Final Expansion Plans by all governmental authorities having jurisdiction, including any
required permits. Promptly following Landlord's receipt of such Competitive Bids, Landlord
shall provide copies of the same to Tenant for Tenant's review and approval. In the event Tenant
does not approve of the Competitive Bids, Tenant may proceed pursuant to the terms of Section
26.4.
(d) If Tenant approves of the Competitive Bids by written notice thereof to Landlord,
Landlord and Tenant shall proceed to calculate and determine Monthly Rent for the Expansion
Area by using a mutually agreed upon formula based on the then -applicable Monthly Rent under
the Lease and the Competitive Bids. If Landlord and Tenant are unable to reach an agreement on
the determination of the amount of Monthly Rent that will be payable for the Expansion Area,
Tenant may proceed pursuant to the terms of Section 26.4.
(e) Subject to the foregoing, if Landlord and Tenant reach an agreement on the
determination of the amount of Monthly Rent for the Expansion Area, Landlord shall proceed,
following receipt of any and all required approvals and permits and at Landlord's sole cost and
expense (except as hereinafter provided), with construction of the Expansion Improvements with
reasonable diligence and with at least substantially the same or a comparable quality of materials
and workmanship with which the Building was constructed), and otherwise in accordance with
this Lease and Applicable Laws. In connection with the construction of the Expansion
Improvements, Landlord and its contractors shall use commercially reasonable efforts to
undertake such steps as may be practicable to prevent interference with Tenant's use and
enjoyment of the Building. Landlord shall pay for any and all costs of the Expansion
Improvements, including, without limitation, the Preliminary Expansion Plans, the Proposed
Expansion Plans, the Final Expansion Plans and related construction costs, all of which will be
used as a basis in determining the amount of Monthly Rent to be payable for the Expansion Area
as provided above.
(f) The Expansion Improvements shall be deemed to be substantially complete on the
date on which the Expansion Improvements are sufficiently completed such that Tenant can take
occupancy of the Expansion Area and a certificate of occupancy or any other required
governmental approval is issued in connection therewith ("Substantial Completion"). Upon
Substantial Completion of the Expansion Area, a representative of Landlord and a representative
of Tenant shall together inspect the Expansion Area and generate a punchlist of defective or
42
uncompleted items relating to the completion of construction of the Expansion Improvements
(the "Punchlist"). Landlord shall, within a reasonable time after the Punchlist is prepared,
complete such incomplete work and remedy such defective work as is set forth on the Punchlist.
(g) Tenant shall have the right, prior to commencement of construction of the
Expansion Improvements, to propose or request changes in the Final Expansion Plans subject to
Landlord's approval, which approval will not be unreasonably withheld (an "Expansion Change
Order"); provided that Tenant shall not request any change that would materially alter the scope
of the Expansion Improvements or result in a delay in excess of sixty (60) calendar days in the
occurrence of Substantial Completion of the Expansion Improvements. All Expansion Change
Orders will be performed at the cost and expense of Tenant.
26.3 Expansion Area as Premises. Upon the Substantial Completion, the Expansion
Improvements shall become part of the Premises, shall automatically be governed by all of the
terms and provisions of this Lease and shall be deemed to be included in the definition of
"Premises" for all purposes, with the following exceptions and modifications:
(a) The Building shall be deemed to include the Expansion Improvements and shall
be increased by the rentable square feet of the Expansion Improvements;
(b) The term of the demise covering the Expansion Area shall be commensurate with
the then -applicable Term of the Lease, including the Extension Periods, if applicable;
(c) Monthly Rent for the Expansion Area shall be as determined by Landlord and
Tenant pursuant to Section 26.2(d) above;
(d) In addition to the Monthly Rent applicable thereto, Tenant shall pay Additional
Rent and other charges in connection with the Expansion Area; and
(e) Tenant's obligation to pay Monthly Rent, Additional Rent and other sums with
respect to the Expansion Area in accordance with the Lease shall commence on Substantial
Completion of the Expansion Improvements.
26.4 Tenant's Right to Construct Expansion Area Improvements; Expansion Area Rent
Treatment.
(a) Notwithstanding any provision in the Lease to the contrary, in the event any
condition in Section 26.2 above is not satisfied (for example, if Tenant and Landlord are unable
to agree on Preliminary Expansion Plans in accordance with Section 26.2(a)) so that Landlord
elects not to construct the Expansion Area, and Tenant desires to nonetheless proceed with
constructing the Expansion Improvements or other improvements for the Expansion Area, then
Tenant may, at Tenant's sole cost and expense, proceed with constructing the Expansion
Improvements or other improvements for the Expansion Area by:
(i) preparing or causing to be prepared preliminary design plans and/or
architectural and engineering plans for the improvements that Tenant
desires to construct for the Expansion Area (which improvements must be
for office, warehouse and manufacturing use with 32 foot clear ceilings,
43
must be constructed with substantially the same or a comparable quality
and style of materials with which the Building was constructed and may
not adversely affect the appearance, use or functionality of the Building).
Such plans must be approved by Landlord and Mortgagee, which approval
will not be unreasonably withheld, conditioned or delayed. If Landlord or
Mortgagee object to the plans, Landlord or Mortgagee will provide written
notice of such objection to Tenant within ten (10) business days after
receipt of the plans, or the plans will be deemed approved. If Landlord or
Mortgagee should timely provide written objections to the plans, the
parties agree to negotiate in good faith for a period of not less than thirty
(30) days to attempt to resolve the objections. If the parties are unable to
resolve the objections within such thirty (30) day period, then a
determination of the final version of the plans will be made by an
arbitrator pursuant to Section 26.4(c) below, initiated by written notice by
either party to the other. However, the arbitrator will not be authorized or
empowered to approve any plans calling for improvements which are not
for office, warehouse and manufacturing use with 32 foot clear ceilings,
constructed with substantially the same or comparable quality and style of
materials with which the Building was constructed, or which adversely
affect the appearance, use or functionality of the Building;
(ii) hiring a licensed and bonded general contractor to construct the
improvements in the Expansion Area; and
(iii) constructing or cause to be constructed the improvements for the
Expansion Area.
If Tenant undertakes any item related to (i) through (iii) above, then, in addition to any other
applicable requirements in the Lease, Tenant shall comply, at Tenant's sole cost, with the
following requirements:
(iv) Tenant's plans and all design and construction of improvements for the
Expansion Area shall comply with all Applicable Laws;
(v) Tenant shall obtain all required building permits and occupancy permits;
(vi) Tenant's contractors shall be licensed contractors capable of performing
qualify workmanship;
(vii) all Expansion Area work shall be done in a good and workmanlike
manner;
(viii) in addition to any insurance which may be required under the Lease,
Tenant shall secure, pay for and maintain or cause Tenant's contractors to
secure, pay for and maintain during the continuance of construction and
fixturing work within the Building, insurance in the following minimum
coverages and the following minimum limits of liability: Worker's
Compensation and Employer's Liability Insurance with limits of not less
than $500,000.00, or such higher amounts as may be required from time to
time by any employee benefit acts or other statutes applicable to the
Expansion Area work, and in any event sufficient to protect Tenant's
contractors from liability under the aforementioned acts; Comprehensive
General Liability Insurance (including Contractors' Protective Liability) in
an amount not less than $1,000,000.00 per occurrence, whether involving
bodily injury liability (or death resulting therefrom) or property damage
liability or a combination thereof with a minimum aggregate limit of
1,000,000.00 and with umbrella coverage with limits not less than
$5,000,000.00, and such insurance shall provide for explosion and
collapse, completed operations coverage and broad form blanket
contractual liability coverage and shall insure Tenant's contractors against
any and all claims for bodily injury, including death resulting therefrom,
and damage to the property of others and arising from its operations under
the contracts whether such operations are performed by Tenant's
contractors or by anyone directly or indirectly employed by any of them;
Comprehensive Automobile Liability Insurance, including the ownership,
maintenance and operation of any automotive equipment, owned, hired, or
non -owned in an amount not less than $500,000.00 for each person in one
accident, and $1,000,000.00 for injuries sustained by two or more persons
in any one accident and property damage liability in an amount not less
than $1,000,000.00 for each accident, and such insurance shall insure
Tenant's contractors against any and all claims for bodily injury, including
death resulting therefrom, and damage to the property of others arising
from its operations under the contracts, whether such operations are
performed by Tenant's contractors, or by anyone directly or indirectly
employed by any of them; and "all-risk" builder's risk insurance upon the
entire Expansion Area improvements to the full insurable value thereof,
which shall include the interests of Landlord and Tenant (and their
respective contractors and subcontractors of any tier to the extent of any
insurable interest therein) in the Expansion Area work and shall insure
against the perils of fire and extended coverage and shall include "all-risk"
builder's insurance for physical loss or damage including, without
duplication of coverage, vandalism and malicious mischief, and if portions
of the Expansion Area work are stored off the site of the Building or in
transit to said site and are not covered under said "all-risk" builder's risk
insurance, then Tenant shall effect and maintain similar property insurance
on such portions of the Expansion Area work. Any loss insured under said
"all-risk" builder's risk insurance is to be adjusted with Landlord and
Tenant and made payable to Landlord, as trustee for the insureds, as their
interests may appear;
(ix) Without limiting of the indemnification provisions contained in the Lease,
Tenant shall indemnify, protect, defend and hold harmless Landlord, the
parties listed, or required by, the Lease to be named as additional insureds,
and their respective beneficiaries, partners, directors, officers, employees
and agents, from and against all claims, liabilities, losses, damages and
E.
expenses of whatever nature arising out of or in connection with the
Expansion Area work or the entry of Tenant or Tenant's contractors into
the Building and the Premises, including without limitation, mechanic's
liens, the cost of any repairs to the Premises or Building necessitated by
activities of Tenant or Tenant's contractors, bodily injury to persons
(including, to the maximum extent provided by law, claims arising under
the Minnesota Structural Act) or damage to the property of Tenant, its
employees, agents, invitees, licensees or others. It is understood and
agreed that the foregoing indemnity shall be in addition to the insurance
requirements set forth above and shall not be in discharge of or in
substitution for same or any other indemnity or insurance provision of the
Lease.
(x) Notwithstanding anything to the contrary provided in this Section 26.4,
Tenant may not commence any construction or other on-site activities with
respect to the Expansion Improvements or other improvements unless and
until Tenant has obtained from Landlord and Mortgagee, the Landlord's
and Mortgagee's written approval of Tenant's proposed means of
financing all of the costs to be incurred by Tenant in connection with the
construction of the Expansion Improvements or other improvements under
this Section 26.4. Such approval will not be unreasonably withheld,
delayed or conditioned. Tenant will provide Landlord and Mortgagee
with written evidence of Tenant's financial ability to pay for the such
improvements in such form and containing such detail as is reasonably
acceptable to Landlord and Mortgagee. Such evidence may include,
without limitation, evidence of accounts containing available cash, letters
of credit, escrow accounts, binding financing commitments from third -
party lenders or guaranties of completion and payment from financially
responsible third parties.
(b) Notwithstanding any provision in the Lease to the contrary, in the event Tenant
proceeds under this Section 26.4 and completes construction of improvements in the Expansion
Area in accordance with the terms of this Section 26.4 (as evidenced by the issuance of a
certificate of occupancy for the Expansion Area improvements), Tenant shall have no obligations
to pay Monthly Rent, Additional Rent or any other charges whatsoever for the Expansion Area
for the remaining Term of the Lease, including any Extension Periods. The parties agree that the
foregoing provision relating to the waiver of rent payment for the Expansion Area upon Tenant's
construction of Expansion Area improvements is a material inducement for Tenant to enter into
this Lease.
(c) If any controversy or dispute between the parties hereto arises under Section
26.4(a)(i), either party may submit such controversy or dispute for arbitration to, and in
accordance with the Rules of the American Arbitration Association. All arbitration hearings will
be held in front of a single Arbitrator in Minneapolis, Minnesota. The Arbitrator must be an
architect or engineer, but may not be an affiliate of Landlord, Tenant or Mortgagee. The
Arbitrator will have the power to determine the form and content of the final plans as
contemplated under Section 26.4; provided, however, that the Arbitrator may not approve any
in
plans unless such plans call for the construction of office, warehouse and manufacturing space
with 32 foot clear ceilings, constructed with substantially the same or comparable quality and
style of materials with which the Building was constructed and which does not adversely affect
the appearance, use or functionality of the Building. The Arbitrator will prepare a written
decision within thirty (30) calendar days after the hearing. The decision and the findings of the
Arbitrator will be final, conclusive and binding upon the parties, and judgment upon the award
and enforcement of any other decision granted by the Arbitrator may be entered or obtained in
any court of competent jurisdiction upon the application of any party. The Arbitrator may also
elect to award attorneys' fees to the prevailing party in the arbitration, which the non -prevailing
party agrees to pay.
ARTICLE 27
CONSENT TO JURISDICTION
LANDLORD AND TENANT HEREBY SUBMIT TO EXCLUSIVE PERSONAL
JURISDICTION IN THE STATE OF MINNESOTA AND THE FEDERAL COURTS OF THE
UNITED STATES OF AMERICA LOCATED IN THE STATE OF MINNESOTA (AND ANY
APPELLATE COURTS TAKING APPEALS THEREFROM) WITH RESPECT TO ANY AND
ALL DISPUTES ARISING OUT OF OR RELATING TO THIS LEASE AND WAIVE ANY
AND ALL RIGHTS UNDER THE LAW TO OBJECT TO JURISDICTION WITHIN SUCH
STATE FOR THE PURPOSES OF SUCH ACTION, SUIT, PROCEEDING OR LITIGATION
WITH RESPECT TO SUCH DISPUTES. LANDLORD AND TENANT HEREBY WAIVE
AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS LEASE THAT IT IS NOT
SUBJECT TO SUCH JURISDICTION OR THAT SUCH ACTION, SUIT OR PROCEEDING
MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN THOSE COURTS OR THAT IT
IS EXEMPT OR IMMUNE FROM EXECUTION, THAT THE ACTION, SUIT OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE
OF THE ACTION,. SUIT OR PROCEEDING IS IMPROPER. IN THE EVENT ANY SUCH
ACTION, SUIT, PROCEEDING OR LITIGATION IS COMMENCED, LANDLORD AND
TENANT AGREE THAT SERVICE OF PROCESS MAYBE MADE, AND PERSONAL
JURISDICTION OVER SUCH LANDLORD AND TENANT OBTAINED, BY SERVICE OF
A COPY OF THE SUMMONS, COMPLAINT AND OTHER PLEADINGS REQUIRED TO
COMMENCE SUCH LITIGATION BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED UPON SUCH LANDLORD AND TENANT AT THE ADDRESS FOR NOTICE
TO SUCH PERSON IN THIS LEASE.
[SIGNATURE PAGE FOLLOWS]
47
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease to be duly
executed as of the day and year first above written.
LANDLORD:
MERITEX-ELK RIVER, LLC,
a Delaware limited liability company
By:
Name:
Its:
TENANT:
SPORTECH, INC.,
a Minnesota corporation
By:
Name:
Its:
EXHIBIT A
Legal Description
LOTS 1 & 2, BLOCK 2, NATURES EDGE BUSINESS CENTER SECOND ADDITION,
SHERBURNE COUNTY, MINNESOTA
Exhibit A-1
EXHIBIT B
Permitted Exceptions
[To Follow]
Exhibit B-1
EXHIBIT C
Intentionally Deleted
Exhibit C-1
EXHIBIT D
Intentionally Deleted
Exhibit D-1
EXHIBIT E
Termination Value
For purposes of Section 12.2(b) and Section 13.2(b), the "Termination Value" will mean
the GREATER of the following:
a. The sum of the following: (i) $ , which is the Purchase
Price paid by Landlord to purchase and acquire the Land, Building and Premises from
Tenant on the Commencement Date; (ii) all amounts paid by Landlord (if any) in
connection with the construction of the Expansion Area pursuant to Section 26.2 of the
Lease; and (iii) all unpaid Rent, costs, expenses, interest, late fees, legal fees and other
amounts due from Tenant under the Lease as of the date of the applicable election by
Tenant; OR
b. The "Fair Market Value" of the Land, Building and Premises as of the
date of Tenant's exercise of the relevant option under Sections 12.2(b) or 13.2(b), as
applicable, which fair market value will be determined as follows: Each party will
appoint an appraiser within fifteen (15) days after written request. If either party fails to
appoint an appraiser within this fifteen (15) day period, the sole appointed appraiser will
unilaterally establish the Fair Market Value by a written appraisal. If both parties appoint
an appraiser within this fifteen (15) day period, each appraiser so appointed by a written
appraisal will determine the Fair Market Value. If the separate Fair Market Values
determined by each appraiser are equal, then the Fair Market Value will equal such
amount. If the difference (Appraisal Difference) between the Fair Market Value
determined by each such appraiser does not exceed ten percent (10%) of the higher of the
two values, then the Fair Market Value will equal the average of such two values. If the
Appraisal Difference exceeds ten percent (10%) of the higher of such two values, such
two appraisers will together appoint a third appraiser, who will determine the Fair Market
Value by a written appraisal. All appraisals required by this Section will be prepared and
submitted to each party within thirty (30) days after the appraiser is engaged. The
average of the two (2) Fair Market Values closest in value will govern. All appraisers
appointed will be members of the American Institute of Real Estate Appraisers with MAI
designations and will have not less than ten (10) years experience appraising industrial/
warehouse commercial properties in the Minneapolis/St. Paul metropolitan area. No
person who has acted in any capacity for either party or their affiliates may be appointed
as the third appraiser. The fees and other costs of each of the first two appraisers will be
borne by the party appointing each such appraiser, with the fees and other costs of the
third appraiser being shared equally by the parties. The Fair Market Value will be
determined according to all relevant facts and circumstances, and is defined to mean the
amount at which Premises would change hands between a willing seller and a willing
buyer where neither is acting under compulsion and when both have a reasonable
knowledge of the relevant facts, and assuming that the Premises on the effective date of
the appraisal is in the condition existing immediately prior to the casualty or
Exhibit E-1
condemnation (as applicable), and further assuming that this Lease will remain in full
force and effect pursuant to its terms through the end of the Term.
Exhibit E-2
Agreement 2016-07
FIRST AMENDMENT TO TAX ABATEMENT AGREEMENT
THIS FIRST AMENDMENT TO TAX ABATEMENT AGREEMENT, made as of
the 31St day of March, 2016, between the CITY OF ELK RIVER, MINNESOTA, a municipal
corporation under the laws of the State of Minnesota (the "City"), and SPORTECH, INC., a
Minnesota corporation organized under the laws of Minnesota (the "Developer"),
WITNESSETH:
WHEREAS, the City has entered into a Tax Abatement Agreement dated September 14,
2016 (the "Abatement Agreement"), with Envision Company, LLC, a Minnesota limited liability
company, which was previously assigned to the Developer, and in connection therewith received
a Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Financing
Statement dated September 14, 2016 (the "Mortgage") from Envision Company, LLC in favor of
the City; and
WHEREAS, the Mortgage have been satisfied and terminated in accordance with the
terms thereof and the parties have determined a need to modify the Abatement Agreement to
incorporate requirements for insurance for the Project which were previously addressed in the
Mortgage; and
NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained,
the parties hereto covenant and agree as follows:
Section 1. A new Section 3.8 of the Tax Abatement Agreement is added as
follows:
Section 3.8. Insurance.
(a) Developer shall obtain, maintain and keep in full force and effect (and upon
request of City shall furnish to City copies of) policies of insurance as described in, and meeting
the requirements set forth in, Exhibit A attached hereto, and upon request of City shall furnish to
City proof of payment of all premiums for such insurance. At least ten (10) days prior to the
termination of any such coverage, Developer shall provide City with evidence satisfactory to
City that such coverage will be renewed or replaced upon termination with insurance that
complies with the provisions of this Section. Developer, at its sole cost and expense, from time
to time when City shall so request, will provide City with evidence, in a form acceptable to City,
of the full insurable replacement cost of the Tax Abatement Property and the Project. All
property (including boiler and machinery) and liability insurance policies maintained by
Developer pursuant to this Section (i) shall include effective waivers by the insurer of all claims
for insurance premiums against City, (ii) shall provide that any losses shall be payable
notwithstanding (a) any act of negligence by Developer or City, (b) any foreclosure or other
proceedings or notice of foreclosure sale relating to the Tax Abatement Property, or (c) any
release from liability or waiver of subrogation rights granted by the insured, and (iii) shall be
endorsed to show the City as additional insured. All insurance policies maintained by Developer
pursuant to the foregoing provisions shall respond on a primary basis relative to any other
insurance carried by City in the event of loss. Insurance terms not otherwise defined herein shall
be interpreted consistent with insurance industry usage.
Section 2. Except as modified by this First Amendment to Tax Abatement
Agreement, all of the terms and conditions of the Tax Abatement Agreement remain unchanged.
476682v1 EL185-31 2
IN WITNESS WHEREOF, the City and the Developer have caused this First Amendment to
Tax Abatement Agreement to be duly executed in their respective names, all as of the date first
above written.
CITY OF ELK RIVER, MINNESOTA
By
Its: Mayor
By
Its: City Clerk
[Signature page to First Amendment to Tax Abatement Agreement]
476682v1 EL185-31 S -I
SPORTECH, INC.
Its
[Signature Page to First Amendment to Tax Abatement Agreement]
476682v1 EL185-31 S_2
EXHIBIT A
INSURANCE REQUIREMENTS
L PROPERTY INSURANCE
An ORIGINAL (or evidence acceptable to City of) Special Form (or so-called All Risk)
Hazard Insurance POLICY naming Developer as an insured, reflecting coverage of 100% of the
replacement cost, and written by a carrier approved by City with a current A.M. Best Company
rating of at least A:VII (which is authorized to do business in the State of Minnesota), that
includes:
City's Loss Payable Endorsement naming the City of Elk River, Minnesota, in
Elk River, Minnesota
30 -day notice to City in the event of cancellation or non -renewal by either party
or material adverse change
Replacement Cost Measure of Recovery
Stipulated Value/Agreed Amount Endorsement (No Coinsurance)
Boiler and Machinery Coverage (including business income, extra expense
coverage)
Flood Insurance
One (1) year's business interruption, leasehold interest and/or rent loss insurance
in an amount acceptable to City
Extra expense coverage in an amount acceptable to City
"Contingent Liability from Operation of Building Laws" coverage, "Demolition
Costs" coverage, "Increased Cost of Construction" coverage, and "Increased
Time to Rebuild" Coverage, with such additional limits for such coverages as
City may reasonably require
No exclusion for "Collapse"
Earthquake Coverage
Deductible not to exceed $5,000
IL LIABILITY INSURANCE
An ORIGINAL (or evidence acceptable to City of) Commercial General Liability
Insurance POLICY (Insurance Services Offices policy form title) naming Developer as an
insured, providing coverage on an "occurrence" rather than a "claims made" basis, and written
by a carrier approved by City with a current A.M. Best Company rating of at least A:VII (which
is authorized to do business in the State of Minnesota), that includes:
Combined general liability policy limit of at least $2,000,000.00 each occurrence,
applying to liability for Bodily Injury, Personal Injury and Property Damage,
which combined limit may be satisfied by the limit afforded under the
Commercial General Liability Policy, or by such Policy in combination with the
limits afforded by an Umbrella or Excess Liability Policy (or policies); provided,
that the coverage afforded under any such Umbrella or Excess Liability Policy is
476682v1 EL185-31 A-1
at least as broad in all material respects as that afforded by the underlying
Commercial General Liability Policy
Coverage for Bodily Injury, Property Damage, Personal Injury, Contractual
Liability, Independent Contractors and Products -Completed Operations Liability
Automobile Liability insurance covering liability for Bodily Injury and Property
Damage arising out of the ownership, use, maintenance or operation of all owned,
nonowned and hired automobiles and other motor vehicles utilized by Developer
in connection with the Project, which coverage may be provided under a separate
policy
Deductible not to exceed $5,000
Additional Insured Endorsement naming the City of Elk River, Minnesota and a
Severability of Interest provision
30 -day notice to City in the event of cancellation or non -renewal by either party
or material adverse change
III. WORKER'S COMPENSATION
An ORIGINAL CERTIFICATE of Worker's Compensation coverage in the statutory amount,
naming Developer as an insured, written by a carrier approved by City.
476682v1 EL185-31 A-2
Extract of Minutes of Meeting of the
City Council of the City of Elk River, Sherburne County, Minnesota
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Elk
River, Minnesota, was duly held in the City Hall in the City of Elk River, on March 21, 2016,
commencing at or after P.M.
The following members were present:
and the following were absent:
Member
introduced the following resolution and moved its adoption:
RESOLUTION NO. 16 -
RESOLUTION APPROVING AN ASSIGNMENT AND ASSUMPTION OF TAX
ABATEMENT AGREEMENT AND AN AMENDMENT TO TAX
ABATEMENT AGREEMENT
BE IT RESOLVED By the City Council (the "City Council') of the City of Elk River,
Sherburne County, Minnesota (the "City') as follows:
Section 1. Background; Findings.
(a) The City has entered into a Tax Abatement Agreement dated September 14, 2016
(the "Abatement Agreement"), with Envision Company, LLC, a Minnesota limited liability
company, which was previously assigned to Envision 3, LLC, a Minnesota limited liability company
(the "Assignor"), and in connection therewith received a Mortgage, Security Agreement,
Assignment of Leases and Rents, and Fixture Financing Statement dated September 14, 2016 (the
"Mortgage") from the Assignor in favor of the City and a Promissory Note dated September 14,
2016 (the "Note").
476680v1 JSB EL185-31
(b) The Assignor has requested that the City consent to (i) the transfer of Lots 1 and 2,
Block 2, Natures Edge Business Center Second Addition, Sherburne County, located in the City
(the "Property") and the Project (as defined in the Abatement Agreement) to Meritex Elk River,
LLC (the "Landlord"), (ii) the satisfaction of the Mortgage and the termination of the Note in
accordance with the terms thereof, (iii) an amendment to the Abatement Agreement to address
insurance for the Project pursuant to a First Amendment to Abatement Agreement by and between
the City and the Assignee (the "Amendment"), and (iv) the assignment of the Assignor's rights and
obligations under the Abatement Agreement to Sportech, Inc., (the "Assignee") pursuant to an
Assignment and Assumption of Tax Abatement by and between the Assignor and the Assignee (the
"Assignment and Assumption Agreement").
Section 2. Approval of Transfer and Agreements.
(a) The City hereby consents to the transfer the Property and the Project to the
Landlord, the satisfaction of the Mortgage and the termination of the Note in accordance with the
terms thereof, the Amendment, and the assignment of the Assignor's rights and obligations under
the Abatement Agreement to the Assignee pursuant to the Assignment and Assumption
Agreement.
(b) The Assignment and Assumption Agreement and the Amendment are hereby
approved in substantially the forms submitted to the City, together with any related documents
necessary in connection therewith, including without limitation all documents referenced in or
attached to the Abatement Agreement (collectively, the "Development Documents") and the
Mayor and the City Clerk are hereby authorized and directed to execute the Development
Documents on behalf of the City and to carry out, on behalf of the City, the City's obligations
thereunder.
(c) The approval hereby given to the Development Documents includes approval of
such additional details therein as may be necessary and appropriate and such modifications thereof,
deletions therefrom and additions thereto as may be necessary and appropriate and approved by
legal counsel to the City and by the officers authorized herein to execute said documents prior to
their execution; and said officers are hereby authorized to approve said changes on behalf of the
City. The execution of any instrument by the appropriate officers of the City herein authorized
shall be conclusive evidence of the approval of such document in accordance with the terms hereof.
In the event of absence or disability of the officers, any of the documents authorized by this
Resolution to be executed may be executed without further act or authorization of the Council by
any duly designated acting official, or by such other officer or officers of the Council as, in the
opinion of the City Attorney, may act in their behalf.
476680v1 JSB EL185-31
The motion for the adoption of the foregoing resolution was duly seconded by Member
and upon vote being taken thereon, the following voted in favor thereof -
and the following voted against:
whereupon said resolution was declared duly passed and adopted.
Approved by the City Council of the City of Elk River this 215` day of March, 2016.
Mayor
ATTEST:
City Clerk
476680v1 JSB EL185-31
STATE OF MINNESOTA )
COUNTY OF SHERBURNE ) SS.
CITY OF ELK RIVER )
I, the undersigned, being the duly qualified and acting City Clerk of the City of Elk River,
Minnesota, do hereby certify that I have carefully compared the attached and foregoing extract of
minutes of a regular meeting of the City Council held on March 21, 2016, with the original thereof on file
in my office and the same is a full, true and complete transcript therefrom insofar as the same relates to
the approval of an assignment of tax abatement.
WITNESS My hand as City Clerk on this day of March, 2016.
City Clerk
City of Elk River, Minnesota
476680v1 JSB EL185-31
NO.ib-LLS AT Lf
PATO REGISTRY TAX OF SAID
Ak-
Coon i�.c�1ClitC,r7Fre ai#.frE� r
() Pf`1(X - PN C\t.L N CL^ 1
Deputy diTo fTreesurer
THIS INSTRUMENT WAS PREPARED BY,
AND WHEN RECORDED SHOULD BE
RETURNED TO:
Kennedy & Graven, Chartered
470 U.S. Bank Plaza
200 South 6th Street
Minneapolis, MN 55402
MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS
AND FIXTURE FINANCING STATEMENT
Office of the County Recorder
Sherburne County, MN
Doc. No. 810101
Certified, Filed, and/or recorded on
September 23, 2015 12:50 PM
Michelle Ashe, County Recorder
By Deputy
Fees: $46.00
i
r
810101
THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND
RENTS AND FIXTURE FINANCING STATEMENT (this "Mortgage") is made as of
September 14, 2015, by Envision Company, LLC, a Minnesota limited liability company
("Developer"), having its principal offices at 10800 — 175th Ave NW, Elk River, Minnesota
55330, in favor of the City of Elk River, a Minnesota municipal corporation (the "City").
RECITALS
WHEREAS, the City has agreed to convey the land described in Exhibit A attached
hereto and all mineral rights, hereditaments, easements and appurtenances thereto (collectively,
the "Land") to Developer pursuant to the Agreement of Purchase and Sale between Developer
and City, dated as of Q !1� , 2015 (the "Purchase Agreement", which term shall include
any amendment, modification, supplement, extension, renewal, replacement or restatement
thereof) in exchange for a promissory note in the principal amount of ONE MILLION TWO
HUNDRED EIGHTY-EIGHT THOUSAND FIVE HUNDRED EIGHTY -NINETY AND
001100 DOLLARS ($1,28$,589.00), dated the same date as this Mortgage, without interest
thereon, with principal being due and payable as set forth therein and with all principal, if not
sooner paid, being due and payable on the Maturity Date, as defined below (the "Purchase Price
Note", which term shall include any amendment, modification, supplement, extension, renewal,
replacement or restatement thereof) evidencing Developer's obligation to pay the Purchase Price,
as defined in the Purchase Agreement (the "Loan").
467184v1 CBR EL185-31
WHEREAS, the Developer intends to construct an approximately 105,000. square foot
manufacturing facility to be located on the Land (the "Project") and lease the Project to Sportech,
Inc., a Minnesota corporation and affiliate of the Developer ("Sportech").
WHEREAS, the City is requiring that the Mortgage secure the Purchase Price Note. The
Purchase Price Note, the Purchase Agreement and the Tax Abatement Agreement by and
between the Developer and the City, dated as of September 14, 2015 (the "Abatement
Agreement"), are hereby incorporated by reference, and, together with this Mortgage, as any of
the same may be amended, modified, supplemented, extended, renewed, replaced or restated, are
sometimes collectively referred to as the "Abatement Documents".
WHEREAS, the obligations secured by this Mortgage (the "Obligations") are as follows:
(i) the principal amount of $1,288,589.00 of the Purchase Price Note; plus
(ii) all other amounts advanced by City in protection of the Mortgaged
Property or this Mortgage.
WHEREAS, the Obligations shall mature on or before February 1, 2037 (the "Maturity
Date").
WHEREAS, the maximum principal indebtedness secured hereby is $1,288,589.00 plus
amounts which may be advanced by City in protection of the Mortgaged Property or this
Mortgage.
NOW, THEREFORE, Developer, in consideration of City making the Loan, and to
secure the Loan and payment and performance of the Obligations, hereby grants, bargains, sells,
conveys and mortgages to City, its successors and assigns, forever, with power of sale, and
grants to City, its successors and assigns, a security interest in, the following, all of which is
called the "Mortgaged Property":
A. LAND AND IMPROVEMENTS
The Land and all improvements and structures thereon (the "Improvements"); and
B. FIXTURES AND PERSONAL PROPERTY
All fixtures (the "Fixtures"), and all machinery, equipment and personal property
(collectively the "Personal Property") now or hereafter located on, in or under the Land and the
Improvements, or usable in connection with the Land or the Improvements, and which are owned
by Developer or in which Developer has an interest, including any construction and building
materials stored on and to be included in the Improvements, plus any repairs, replacements and
betterments to any of the foregoing and the proceeds and products thereof; and
C. LEASES AND RENTS
All rights of Developer with respect to tenants or occupants now or hereafter occupying
any part of the Land or the Improvements, if any, including all leases and licenses and rights in
467184v1 CBR ELI 85-31
connection therewith, whether oral or written (collectively the "Leases"), and all rents, income,
both from services and occupation, royalties, revenues and payments, including prepayments and
security deposits (collectively the "Rents"), which are now or hereafter due or to be paid in
connection with the Land, the Improvements, the Fixtures or the Personal Property; and
D. AFTER ACQUIRED PROPERTY AND PROCEEDS
All after acquired property similar to the property herein described and conveyed which
may be subsequently acquired by Developer and used in connection with the Land, the
Improvements, the Fixtures, the Personal Property and other property; and all cash and non-cash
proceeds and products of all of the foregoing property.
TO HAVE AND TO HOLD the same, and all estate therein, together with all the rights,
privileges and appurtenances thereunto belonging, to the use and benefit of City, its successors
and assigns, forever.
PROVIDED NEVERTHELESS, should Developer pay and perform all the Obligations,
then these presents will be of no further force and effect, and this Mortgage shall be satisfied by
City, at the expense of Developer.
This Mortgage constitutes an assignment of rents and profits within the meaning of
Minnesota Statutes, §§ 559.17 and 576.01, and is intended to comply fully with the provisions
thereof, and to afford City, to the fullest extent allowed by law, the rights and remedies of a
mortgage City or secured City pursuant thereto.
This Mortgage also constitutes a security agreement within the meaning of the Uniform
Commercial Code as in effect in the State of Minnesota (the "UCC"), with respect to all property
described herein as to which a security interest may be granted and/or perfected pursuant to the
UCC, and is intended to afford City, to the fullest extent allowed by law, the rights and remedies
of a secured party under the UCC.
DEVELOPER FURTHER agrees as follows:
ARTICLE I
AGREEMENTS
Section 1.1 Performance of Obligations; Incorporation by Reference. Developer shall
pay and perform the Obligations. Time is of the essence hereof. All of the covenants,
obligations, agreements, warranties and representations of Developer contained in the Abatement
Documents and all of the terms and provisions thereof, are hereby incorporated herein and made
a part hereof by reference as if fully set forth herein.
Section 1.2 Further Assurances. If City requests, Developer shall sign and deliver and
cause to be recorded as City shall direct any further mortgages, instruments of further assurance,
certificates and other documents as City reasonably may consider necessary or desirable in order
to perfect, continue and preserve the Obligations and City's rights, title, estate, liens and interests
under the Abatement Documents. Developer further agrees to pay to City, upon demand, all
467184v1 CBR ELI 85-31
costs and expenses incurred by City in connection with the preparation, execution, recording,
filing and refiling of any such documents, including attorneys' fees and title insurance costs.
Section 1.3 Sale, Transfer_, Encumbrance. City acknowledges that Developer intends
to sell the Mortgaged Property to a third -party before the maturity of the Purchase Price Note,
who would lease the land and buildings located thereon to Sportech pursuant to a lease of no less
than ten (10) years. Notwithstanding the foregoing, prior to the Release Date (as defined below),
if Developer sells, conveys, transfers or otherwise disposes of or encumbers any part of its
interest in the Mortgaged Property, whether voluntarily, involuntarily or by operation of law,
other than in a sale that includes a leaseback to Sportech as previously provided herein, City
shall have the option, upon ten (10) days written notice to Developer, to declare the Obligations
immediately due and payable if Developer fails to correct such action and/or remove such
encumbrance.
Section 1.4 Insurance. Developer shall obtain, maintain and keep in full force and
effect (and upon request of City shall furnish to City copies of) policies of insurance as described
in, and meeting the requirements set forth in, Exhibit C attached hereto, and upon request of
City shall furnish to City proof of payment of all premiums for such insurance. At least ten (10)
days prior to the termination of any such coverage, Developer shall provide City with evidence
satisfactory to City that such coverage will be renewed or replaced upon termination with
insurance that complies with the provisions of this Section. Developer, at its sole cost and
expense, from time to time when City shall so request, will provide City with evidence, in a form
acceptable to City, of the full insurable replacement cost of the Mortgaged Property. All
property (including boiler and machinery) and liability insurance policies maintained by
Developer pursuant to this Section shall (i) include effective waivers by the insurer of all claims
for insurance premiums against City, and (ii) provide that any losses shall be payable
notwithstanding (a) any act of negligence by Developer or City, (b) any foreclosure or other
proceedings or notice of foreclosure sale relating to the Mortgaged Property, or (c) any release
from liability or waiver of subrogation rights granted by the insured. All insurance policies
maintained by Developer pursuant to the foregoing provisions shall respond on a primary basis
relative to any other insurance carried by City in the event of loss. Insurance terms not otherwise
defined herein shall be interpreted consistent with insurance industry usage.
Section 1.5 Taxes, Liens and Claims, Utilities. Developer, at least five (5) days before
any penalty attaches thereto, shall pay and discharge, or cause to be paid and discharged, all
taxes, assessments and governmental charges and levies (collectively "Impositions") imposed
upon or against the Mortgaged Property or the Rents, or upon or against the Obligations, or upon
or against the interest of City in the Mortgaged Property or the Obligations, except Impositions
measured by the income of City. Developer shall provide evidence of such payment at City's
request. Developer shall keep the Mortgaged Property free and clear of all liens, encumbrances,
easements, covenants, conditions, restrictions and reservations (collectively "Liens") except
those listed on Exhibit B attached hereto (the "Permitted Encumbrances"). Developer shall pay
or cause to be paid when due all charges or fees for utilities and services supplied to the
Mortgaged Property. Notwithstanding anything to the contrary contained in this Section,
Developer shall not be required to pay or discharge any Imposition or Lien so long as Developer
shall in good faith, and after giving notice to City, contest the same by appropriate legal
proceedings. If Developer contests any Imposition or Lien against the Mortgaged Property,
4
467184v I CBR ELI 85-3 l
Developer shall provide such security to City as City shall reasonably require against loss or
impairment of Developer's ownership of or City's lien on the Mortgaged Property and shall in
any event pay such Imposition or Lien before loss or impairment occurs.
Section 1.6 Maintenance and Repair; Compliance_ with Laws. Developer shall cause
the Mortgaged Property to be operated, maintained and repaired in safe and good repair, working
order and condition, reasonable wear and tear excepted; shall not commit or permit waste
thereof, except as provided in any Loan Document, shall not remove, demolish or substantially
alter the design or structural character of any Improvements without the prior written consent of
City; shall complete or cause to be completed forthwith any improvements which are now or
may hereafter be under construction upon the Land; shall comply or cause compliance with all
laws, statutes, ordinances and codes, and governmental rules, regulations and requirements,
applicable to the Mortgaged Property or the manner of using or operating the same, and with any
covenants, conditions, restrictions and reservations affecting the title to the Mortgaged Property,
and with the terms of all insurance policies relating to the Mortgaged Property; and shall obtain
and maintain in full force and effect all consents, permits and licenses necessary for the use and
operation of the Mortgaged Property.
Section 1.7 Leases.
(a) Notwithstanding Section 1.3 hereof, Developer shall not enter into any
Lease without City's prior written consent, other than the lease to Sportech to which the City
hereby consents, and shall furnish to City, upon execution, including the lease to Sportech, a
complete and fully executed copy of any Lease authorized by the City. Developer shall provide
City with a copy of each proposed Lease requiring the consent of City and with any information
requested by City regarding the proposed tenant thereunder. City may declare each Lease to be
prior or subordinate to this Mortgage, at City's option.
(b) Developer shall, at its cost and expense, perform each obligation to be
performed by the landlord under any Lease; not borrow against, pledge or further assign any
rents or other payments due thereunder; not permit the prepayment of any rents or other
payments due for more than thirty (30) days in advance; and not permit any tenant thereunder to
assign its Lease or sublet the premises covered by its Lease, unless required to do so by the terms
thereof and then only if such assignment does not work to relieve the tenant of any liability for
performance of its obligations thereunder.
(c) if any tenant under any Lease shall default under its Lease, Developer
shall, in the ordinary course of business, exercise sound business judgment with respect to such
default, but may discount, compromise, forgive or waive claims or discharge such tenant from its
obligations under its Lease or terminate or accept a surrender of the Lease.
(d) If Developer fails to perform any obligations of Developer under the
Project Lease or any other Lease or if City becomes aware of or is notified by the Tenant or any
other tenant of a failure on the part of Developer to so perform, City may, but shall not be
obligated to, without waiving or releasing Developer from any obligation in this Agreement or
any of the other Abatement Documents, remedy such failure, and Developer agrees to repay
upon demand all sums incurred by City in remedying any such failure, together with interest
467184v CBR ELI 85-31
thereon from the date incurred at a rate equal to the "Prime Rate" as set forth from time to time
in The Wall Street Journal (the "Default Rate").
Section 1.8 Indemnity. Developer shall indemnify City and its directors, officers,
agents and employees (collectively the "Indemnified Parties") against, and hold the Indemnified
Parties harmless from, all losses, damages, suits, claims, judgments, penalties, fines, liabilities,
costs and expenses by reason of, or on account of, or in connection with the construction,
reconstruction or alteration of the Mortgaged Property, or any accident, injury, death or damage
to any person or property occurring in, on or about the Mortgaged Property or any street, drive,
sidewalk, curb or passageway adjacent thereto. The indemnity contained in this Section shall
include costs of defense of any such claim asserted against an Indemnified Party, including
attorneys' fees. The indemnity contained in this Section shall survive payment and performance
of the Obligations and satisfaction and release of this Mortgage and any foreclosure thereof or
acquisition of title by deed in lieu of foreclosure.
Section 1.9 Release. Notwithstanding anything contained in this Mortgage to the
contrary, the parties agree that this Mortgage shall be satisfied and released upon the following
events (the "Release Date"):
(a) Upon Developer obtaining a certificate of occupancy for the Project; and
(b) Developer delivering to the City a proposed form of lease between a third -
party purchaser and Sportech with a duration of at least ten (10) years.
Upon receipt of items (a) and (b) above, the Mayor and City Clerk shall execute
and deliver a Satisfaction of Mortgage in recordable form to a title company selected by the
Developer with instructions to record such Satisfaction of Mortgage upon receipt of an executed
copy of such ten (10) year lease.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Developer makes the following representations and warranties:
Section 2.1 Ownership Liens, Compliance with Laws. Developer owns the
Mortgaged Property free from all Liens, except the Permitted Encumbrances. All applicable
zoning, environmental, land use, subdivision, building, fire, safety and health laws, statutes,
ordinances, codes, rules, regulations and requirements affecting the Mortgaged Property permit
the current use and occupancy thereof, and Developer has obtained all consents, permits and
licenses required for such use. Developer has examined and is familiar with all applicable
covenants, conditions, restrictions and reservations, and with all applicable laws, statutes,
ordinances, codes and governmental rules, regulations and requirements affecting the Mortgaged
Property, and the Mortgaged Property complies with all of the foregoing.
Section 2.2 Use. The Mortgaged Property is not homestead property nor is it
agricultural property or in agricultural use.
6
4671841 CBR ELI 85-] 1
Section 2.3 Utilities, Services. The Mortgaged Property is serviced by all necessary
public utilities, and all such utilities are or shall be operational and have sufficient capacity.
There is no contract or agreement providing for services to or maintenance of the Mortgaged
Property which cannot be cancelled upon 30 days' or less notice.
ARTICLE III
CASUALTY; CONDEMNATION
Section 3.1 Casualty, Repair, Proof of Loss. If any portion of the Mortgaged Property
shall be damaged or destroyed by any cause (a "Casualty"), Developer shall:
(a) give immediate notice to the City; and
(b) promptly commence and diligently pursue to completion (in accordance
with plans and specifications approved by City) the restoration, repair and rebuilding of the
Mortgaged Property as nearly as possible to its value, condition and character immediately prior
to the Casualty; and
(c) if the Casualty is covered by insurance, immediately make proof of loss
and collect all insurance proceeds, all such proceeds to be payable to City or as City shall direct.
If an Event of Default shall be in existence, or if Developer shall fail to provide notice to City of
filing proof of loss, or if Developer shall not be diligently proceeding, in City's reasonable
opinion, to collect such insurance proceeds, then City may, but is not obligated to, make proof of
loss, and is authorized, but is not obligated, to settle any claim with respect thereto, and to collect
the proceeds thereof. Developer shall not accept any settlement of an insurance claim, the result
of which shall be a payment which is $10,000 or more less than the full amount of the claim,
without the prior written consent of City.
Section 3.2 Use of Insurance Proceeds. City shall make the net insurance proceeds
received by it (after reimbursement of City's out -of pocket costs of collecting and disbursing the
same) available to Developer to pay the cost of restoration, repair and rebuilding of the
Mortgaged Property, subject to the following conditions:
(a) There shall be no Event of Default in existence at the time of any
disbursement of the insurance proceeds.
(b) City shall have determined, in its reasonable discretion, that the cost of
restoration, repair and rebuilding is and will be equal to or less than the amount of insurance
proceeds and other funds deposited by Developer with City.
(c) City shall have determined, in its reasonable discretion, that the
restoration, repair and rebuilding can be completed in accordance with plans and specifications
approved by City (such approval not to be unreasonably withheld), in accordance with codes and
ordinances and in accordance with the terms, and within the time requirements in order to
prevent termination, of any Lease, and in any event not less than six (6) months prior to the
Maturity Date.
7
4671841 CBR EL185-31
(d) All funds shall be disbursed, at City's option, in accordance with City's
customary disbursement procedures for construction loans.
(e) The Casualty shall have occurred more than twelve (12) months prior to
the Maturity Date.
(f) No tenant shall have the right to terminate any Lease as a result of the
Casualty.
If any of these conditions shall not be satisfied, then City shall have the right to use the
insurance proceeds to prepay the Purchase Price Note. If any insurance proceeds shall remain
after completion of the restoration, repair and rebuilding of the Mortgaged Property, they shall be
disbursed to Developer, or at the City's discretion, used to prepay the Purchase Price Note.
Section 3.3 Condemnation. if any portion of the Mortgaged Property shall be taken,
condemned or acquired pursuant to exercise of the power of eminent domain or threat thereof (a
"Condemnation"), Developer shall:
(a) give immediate notice thereof to City, and send a copy of each document
received by Developer in connection with the Condemnation to City promptly after receipt; and
(b) diligently pursue any negotiation and prosecute any proceeding in
connection with the Condemnation at Developer's expense. If an Event of Default shall be in
existence, or if Developer, in City's reasonable opinion, shall not be diligently negotiating or
prosecuting the claim, City is authorized, but not required, to negotiate and prosecute the claim
and appear at any hearing for itself and on behalf of Developer and to compromise or settle all
compensation for the Condemnation. City shall not be liable to Developer for any failure by
City to collect or to exercise diligence in collecting any such compensation. Developer shall not
compromise or settle any claim resulting from the Condemnation if such settlement shall result
in payment of $10,000 or more less than City's reasonable estimate of the damages therefrom.
All awards shall be paid to City.
Section 3.4 Use of Condemnation Proceeds. City shall make the net proceeds of any
Condemnation received by it (after reimbursement of City's out-of-pocket costs of collecting and
disbursing the same) available to Developer for restoration, repair and rebuilding of the
Mortgaged Property, subject to the following conditions:
(a) There shall be no Event of Default in existence at the time of any
disbursement of the condemnation proceeds.
(b) City shall have determined, in its reasonable discretion, that the cost of
restoration, repair and rebuilding is and will be equal to or less than the amount of condemnation
proceeds and other funds deposited by Developer with City.
(c) City shall have determined, in its reasonable discretion, that the
restoration, repair and rebuilding can be completed in accordance with plans and specifications
approved by City (such approval not to be unreasonably withheld), in accordance with codes and
ordinances and in accordance with the terms, and within the time requirements in order to
8
4671841 CBR ELI 85-3 t
prevent termination of any Lease, and in any event not less than six (6) months prior to the
Maturity Date.
(d) All funds shall be disbursed, at City's option, in accordance with City's
customary disbursement procedures for construction loans.
(e) The Condemnation shall have occurred more than twelve (12) months
prior to the Maturity Date.
(f) No tenant shall have the right to terminate any Lease as a result of the
Condemnation.
If any of these conditions shall not be satisfied, then City shall have the right to use the
condemnation proceeds to prepay the Purchase Price Note. If any condemnation proceeds shall
remain after completion of the restoration, repair and rebuilding of the Mortgaged Property, they
shall be disbursed to Developer, or at City's discretion, used to prepay the Purchase Price Note.
ARTICLE IV
DEFAULTS AND REMEDIES
Section 4.1 Events of Default. A Developer Event of Default, as defined in the
Abatement Agreement, shall constitute an "Event of Default" hereunder.
Section 4.2 Remedies. Upon the occurrence of an Event of Default, all of the
Obligations, at the option of City, shall be accelerated and become immediately due and payable
upon notice to Developer. In either event, the Obligations shall be due and payable without
presentment, demand or further notice of any kind. Except as provided in Section 4.2 of the
Abatement Agreement, City shall have the right to proceed to protect and enforce its rights by
one or more of the following remedies:
(a) City SHALL HAVE THE RIGHT TO SELL THE MORTGAGED
PROPERTY AT PUBLIC AUCTION AND CONVEY THE SAME TO THE PURCHASER IN
FEE SIMPLE, as provided by law, Developer to remain liable for any deficiency. Said sale may
be as one tract or otherwise, at the sole option of City. In the event of any sale of the Mortgaged
Property pursuant to any judgment or decree of any court or at public auction or otherwise in
connection with the enforcement of any of the terms of this Mortgage, City, its successors or
assigns, may become the purchaser, and for the purpose of malting settlement for or payment of
the purchase price, shall be entitled to deliver over and use the Purchase Price Note, together
with all other sums, with interest, if any, advanced or secured hereby and unpaid hereunder, in
order that there may be credited as paid on the purchase price the total amount of the Obligations
then due, including principal of the Purchase Price Note and all other sums, with interest, if any,
advanced or secured hereby and unpaid hereunder or under any of the other Abatement
Documents.
(b) City SHALL HAVE THE RIGHT TO OBTAIN THE APPOINTMENT
OF A RECEIVER at any time after the occurrence of an Event of Default. City may apply for
the appointment of a receiver to the district court for the county where the Mortgaged Property or
467184v1 CBR F -f.185.31
any part thereof is located, by an action separate from any foreclosure of this Mortgage pursuant
to Minnesota Statutes Chapter 580 or pursuant to Minnesota Statutes Chapter 581, or as a part of
the foreclosure action under said Chapter 581 (it being agreed that the existence of a foreclosure
pursuant to said Chapter 580 or a foreclosure action pursuant to said Chapter 581 is not a
prerequisite to any action for a receiver hereunder). City shall be entitled to the appointment of a
receiver without regard to waste, adequacy of the security or solvency of Developer. The
receiver, who shall be an experienced property manager, shall collect (until the Obligations are
fully paid and satisfied and, in the case of a foreclosure sale, during the entire redemption period)
the Rents, and shall manage the Mortgaged Property, execute Leases within or beyond the period
of the receivership if approved by the court and apply all rents, profits and other income
collected by him in the following order:
(i) to the payment of all reasonable fees of the receiver, if any,
approved by the court;
(ii) to the repayment of tenant security deposits, with interest thereon,
as required by Minnesota Statutes, Section 504.20;
(iii) to the payment when due of delinquent or current real estate taxes
or special assessments with respect to the Mortgaged Property, or the periodic escrow for
the payment of the same;
(iv) to the payment when due of premiums for insurance of the type
required by this Mortgage, or the periodic escrow for the payment of the same;
(v) to the payment for the keeping of the covenants required of a lessor
or licensor pursuant to Minnesota Statutes, Section 504.18, subdivision 1;
(vi) to the payment of all expenses for normal maintenance of the
Mortgaged Property; and
(vii) the balance to City (a) if received prior to the commencement of a
foreclosure, to be applied to the Obligations, in such order as City may elect and (b) if
received after the commencement of a foreclosure, to be applied to the amount required
to be paid to effect a reinstatement prior to foreclosure sale, or, after a foreclosure sale to
any deficiency and thereafter to the amount required to be paid to effect a redemption, all
pursuant to Minnesota Statutes, Sections 580.30, 580.23 and 581.10, with any excess to
be paid to Developer. Provided, that if this Mortgage is not reinstated nor the Mortgaged
Property redeemed as provided by said Sections 580.30, 580.23 or 581.10, the entire
amount paid to City pursuant hereto shall be the property of City together with all or any
part of the Mortgaged Property acquired through foreclosure.
City shall have the right, at any time and without limitation, as provided in Minnesota
Statutes, Section 582.03, to advance money to the receiver to pay any part or all of the items
which the receiver should otherwise pay if cash were available from the Mortgaged Property and
sums so advanced, with interest at the Default Rate, shall be secured hereby, or if advanced
during the period of redemption shall be part of the sum required to be paid to redeem from the
sale.
10
467184vl CBR EL185-31
(c) City SHALL HAVE THE RIGHT TO ENTER AND TAKE
POSSESSION of the Mortgaged Property and manage and operate the same in conformity with
all applicable laws and take any action which, in City's judgment, is necessary or proper to
conserve the value of the Mortgaged Property.
(d) City SHALL HAVE ALL OF THE RIGHTS AND REMEDIES
PROVIDED IN THE UNIFORM COMMERCIAL CODE including the right to proceed under
the Uniform Commercial Code provisions governing default as to any Personal Property
separately from the real estate included within the Mortgaged Property, or to proceed as to all of
the Mortgaged Property in accordance with its rights and remedies in respect of said real estate.
If City should elect to proceed separately as to such Personal Property, Developer agrees to make
such Personal Property available to City at a place or places acceptable to City, and if any
notification of intended disposition of any of such Personal Property is required by law, such
notification shall be deemed reasonably and properly given if given at least ten (10) days before
such disposition in the manner hereinafter provided.
(e) City SHALL HAVE THE RIGHT TO FILE PROOF OF CLAIM and
other documents as may be necessary or advisable in order to have its claims allowed in any
receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceedings affecting Developer, its creditors or its property, for the entire amount
due and payable by Developer in respect of the Obligations at the date of the institution of such
proceedings, and for any additional amounts which may become due and payable by Developer
after such date.
Each remedy herein specifically given shall be in addition to every other right now or
hereafter given or existing at law or in equity, and each and every right may be exercised from
time to time and as often and in such order as may be deemed expedient by City and the exercise
or the beginning of the exercise of one right shall not be deemed a waiver of the right to exercise
at the same time or thereafter any other right. City shall have all rights and remedies available
under the law in effect now and/or at the time such rights and remedies are sought to be
enforced, whether or not they are available under the law in effect on the date hereof.
Section 4.3 Expenses of Exercising Rights Powers and Remedies. The reasonable
expenses (including any receiver's fees, attorneys' fees, appraisers' fees, environmental
engineers' and/or consultants' fees, costs incurred for documentary and expert evidence,
stenographers' charges, publication costs, costs (which may be estimated as to items to be
expended after entry of the decree of foreclosure) of procuring all abstracts of title, continuations
of abstracts of title, title searches and examinations, title insurance policies and commitments
and extensions therefor, Torrens duplicate certificates of title, UCC and chattel lien searches, and
similar data and assurances with respect to title as City may deem reasonably necessary either to
prosecute any foreclosure action or to evidence to bidders at any sale which may be had pursuant
to any foreclosure decree the true condition of the title to or the value of the Mortgaged Property,
and agent's compensation) incurred by City after the occurrence of any Event of Default and/or
in pursuing the rights, powers and remedies contained in this Mortgage shall be immediately due
and payable by Developer, with interest thereon from the date incurred at the Default Rate, and
shall be added to the indebtedness secured by this Mortgage.
467184v1 CBR ELI 85-31
Section 4.4 Restoration of Position. In case City shall have proceeded to enforce any
right under this Mortgage by foreclosure, sale, entry or otherwise, and such proceedings shall
have been discontinued or abandoned for any reason or shall have been determined adversely,
then, and in every such case, Developer and City shall be restored to their former positions and
rights hereunder with respect to the Mortgaged Property subject to the lien hereof.
Section 4.5 Marshallin;. Developer, for itself and on behalf of all persons, parties and
entities which may claim under Developer, hereby waives all requirements of law relating to the
marshalling of assets, if any, which would be applicable in connection with the enforcement by
City of its remedies for an Event of Default hereunder, absent this waiver. City shall not be
required to sell or realize upon any portion of the Mortgaged Property before selling or realizing
upon any other portion thereof.
Section 4.6 Waivers. No waiver of any provision hereof shall be implied from the
conduct of the parties. Any such waiver must be in writing and must be signed by the party
against which such waiver is sought to be enforced. The waiver or release of any breach of the
provisions set forth herein to be kept and performed shall not be a waiver or release of any
preceding or subsequent breach of the same or any other provision. No receipt of partial
payment after acceleration of any of the Obligations shall waive the acceleration. No payment
by Developer or receipt by City of a lesser amount than the full amount secured hereby shall be
deemed to be other than on account of the sums due and payable hereunder, nor shall any
endorsement or statement on any check or any letter accompanying any check or payment be
deemed an accord and satisfaction, and City may accept any check or payment without prejudice
to City's right to recover the balance of such sums or to pursue any other remedy provided in this
Mortgage. The consent by City to any matter or event requiring such consent shall not constitute
a waiver of the necessity for such consent to any subsequent matter or event.
Section 4.7 City's Right to Cure Defaults. if Developer shall fail to comply with any
of the terms of the Abatement Documents with respect to the procuring of insurance, the
payment of taxes, assessments and other charges, the keeping of the Mortgaged Property in
repair, or any other term contained herein or in any of the other Abatement Documents, City may
make advances to perform the same without releasing Developer from any of the Obligations.
Developer agrees to repay upon demand all sums so advanced and all sums expended by City in
connection with such performance, including without limitation attorneys' fees, with interest at
the Default Rate from the dates such advances are made, and all sums so advanced and/or
expenses incurred, with interest, shall be secured hereby, but no such advance and/or incurring of
expense by City, shall be deemed to relieve Developer from any default hereunder or under any
of the other Abatement Documents, or to release Developer from any of the Obligations.
Section 4.8 Suits and Proceed_in . City shall have the power and authority, upon
prior notice to Developer, to institute and maintain any suits and proceedings as City may deem
advisable to (i) prevent any impairment of the Mortgaged Property by any act which may be
unlawful or by any violation of this Mortgage, (ii) preserve or protect its interest in the
Mortgaged Property, or (iii) restrain the enforcement of or compliance with any legislation or
other governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if,
in the sole opinion of City, the enforcement of or compliance with such enactment, rule or order
might impair the security hereunder or be prejudicial to City's interest.
12
4671841 CHR EL185-31
ARTICLE V
MISCELLANEOUS
Section 5.1 Binding Effect, Survival, Number, Gentler. This Mortgage shall be
binding on and inure to the benefit of the parties hereto, and their respective heirs, legal
representatives, successors and assigns. All agreements, representations and warranties
contained herein or otherwise heretofore made by Developer to City shall survive the execution,
delivery and foreclosure hereof. The singular of all terms used herein shall include the plural, the
plural shall include the singular, and the use of any gender herein shall include all other genders,
where the context so requires or permits.
Section 5.2 Severability. The unenforceability or invalidity of any provision of this
Mortgage as to any person or circumstance shall not render that provision unenforceable or
invalid as to any other person or circumstance.
Section 5.3 Notices. Any notice or other communication to any party in connection
with this Mortgage shall be in writing and shall be sent by manual delivery, telegram, telex,
facsimile transmission, overnight courier or United States mail (postage prepaid) addressed to
such party at the address specified below, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be measured from the
date of delivery thereof if manually delivered, from the date of sending thereof if sent by
telegram, telex or facsimile transmission, from the first Business Day (as defined in the Purchase
Agreement) after the date of sending if sent by overnight courier, or from four days after the date
of mailing if mailed. Notices shall be given to or made upon the respective parties hereto at their
respective addresses set forth below:
If to Developer: Envision Company, LLC
10800 — 175th Ave NW
Elk River, MN 55330
Attn: Chris Carlson
Fax No.
If to City: City of Elk River
13065 Orono Parkway
Elk River, MN 55330
Attn: City Administrator
Fax No. 763-635-1090
Either party may change its address for notices by a notice given not less than five (5) Business
Days prior to the effective date of the change.
Section 5.4 Applicable Law. This Mortgage and the other Abatement Documents
shall be construed and enforceable in accordance with, and be governed by, the laws of the State
of Minnesota, without giving effect to conflict of laws or principles thereof. Whenever possible,
each provision of this Mortgage and any other statement, instrument or transaction contemplated
hereby or relating hereto, shall be interpreted in such manner as to be effective and valid under
13
467184v1 CBR Et. 185.31
such applicable law, but, if any provision of this Mortgage or any other statement, instrument or
transaction contemplated hereby or relating hereto shall be held to be prohibited or invalid under
such applicable law, such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the remaining provisions of
this Mortgage or any other statement, instrument or transaction contemplated hereby or relating
hereto.
Section 5.5 Waiver of Jural. Developer and City each irrevocably waives any
and all right to trial by jury in any legal proceeding arising out of or relating to this Mortgage or
any of the other Abatement Documents or the transactions contemplated hereby or thereby.
Section 5.6 Effect. This Mortgage is in addition and not in substitution for any other
guarantees, covenants, obligations or other rights now or hereafter held by City from any other
person or entity in connection with the Obligations.
Section 5.7 Assignability. City shall have the right to assign this Mortgage, in whole
or in part, or sell participation interests herein, to any person obtaining an interest in the
Obligations.
Section 5.8 Headings. Headings of the Sections of this Mortgage are inserted for
convenience only and shall not be deemed to constitute a part hereof.
Section 5.9 Fixture Filing. This instrument shall be deemed to be a Fixture Filing
within the meaning of the Minnesota Uniform Commercial Code, and for such purpose, the
following information is given:
Name and address of Debtor:
Name and address of
Secured Party:
Envision Company, LLC
10800 — 175th Ave NW
Elk River, MN 55330
Attn: City Administrator
City of Elk River
13065 Orono Parkway
Elk River, MN 55330
Attn: City Administrator
Description of the types (or
items) of property covered
by this Fixture Filing: See granting clause on pages 2 and 3 hereof.
Description of real estate
to which the collateral is
attached or upon which it
is or will be located: See Exhibit A hereto.
Some of the above-described collateral is or is to become fixtures upon the above-
described real estate, and this Fixture Filing is to be filed for record in the public real estate
14
467184v1 CBR EL185-31
records. This Mortgage secures an obligation incurred for the construction of an improvement
on land and is a construction mortgage within the meaning of Minnesota Statutes, Section 336.9-
313.
15
467184v1 CBR ELI 85-31
IN WITNESS WHEREOF, Developer has executed this Mortgage as of the date first
written above.
ENVISI4 P ,
a Minnes a ite 1• il' company
By:
Its:
STATE OF MINNESOTA )
) ss.
COUNTY OF SHERBURNE)
The foregoing irLstrument was acknowledged before me this _ day of
, 2015, by (�_ the (',l*F N of Envision
Company, LLC, a Minnesota— limited liability company on behalf of said limited liability
company. A 6X r`ts 1 g C,+r C Vq
Notary Public I
SUSAN KENTNER
NOTARY �UBl1G • 1�iNNi"SQ�A
G,gthMISS10Np1RES 01I3il17
16
467184v CBR ELI 85-31
EXHIBIT A
LEGAL DESCRIPTION
Lots I and 2, Block 2, Natures Edge Business Center Second Addition, Sherburne County,
Minnesota.
17
467164vf CBR EL195-31
EXHIBIT B
PERMITTED ENCUMBRANCES
1. [Mortgage to Bremer Bank].
2. Covenants, conditions, restrictions and easements in the document recorded January 9,
2003 as Document No. 492130 of Official Records, but deleting any covenant, condition
or restriction indicating a preference, limitation or discrimination based on race, color,
religion, sex, handicap, familial status, national origin, sexual orientation, marital status,
ancestry, source of income or disability, to the extent such covenants, conditions or
restrictions violate Title 42, Section 3604 (c), of the United States Codes or any State
Statute or Local Ordinance. Lawful restrictions under state and federal law on the age of
occupants in senior housing or housing for older persons shall not be construed as
restrictions based on familial status.
3. Electric Transmission Line Easement in favor of United Power Association as created in
Document No. 218302.
4. The terms and provisions contained in the document entitled "Declaration of Easements"
recorded December 23, 2014 as Document No. 797345 of Official Records.
5. The terms and provisions contained in the document entitled "Grant of Temporary
Easement" recorded January 8, 2015 as Document No. 797928 of Official Records.
6. Rights of the abutting property owners to the uninterrupted use of wetlands, which
overflows a portion of the premises.
7. Drainage and Utility easements as shown on the recorded plat.
18
4671842 CBR EL185.31