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2000-06-13t s • MEETING OF THE MOUND HOUSING AND REDEVELOPMENT AUTHORITY 2020 COMMERCE BOULEVARD MOUND, MINNESOTA 55364 DATE: JUNE 13, 2000, 7:00 P.M. LOCATION: COUNCIL CHAMBERS, MOUND CITY HALL ROLL CALL: TAX INCREMENT FINANCING AGENDA: 1. APPROVE MINUTES OF MAY 23, 2000, HRA MEETING. 2. RESOLUTION AUTHORIZING CERTAIN REVISIONS TO CONTRACT FOR PRIVATE REDEVELOPMENT WITH RAY MAR PROPERTIES, INC. 3. ADJOURN • ~/C~---~ • • HRA NIINUTES -REGULAR MEETING -MAY 23, 2000 The Housing and Redevelopment Authority of the City of Mound, Hennepin County, Minnesota, met in a regular session on Tuesday, May 23, 2000, at 7:00 p.m., in the Council Chambers at 5341 Maywood Road, in said City. Those present: Chairperson Pat Meisel; HRA Board Members: Bob Brown, Mazk Hanus and Leah Weycker. Absent and excused: HRA Board Member Andrea Ahrens and City Clerk Fran Clazk. Also in attendance were HRA Director Pinky Charon, City Manager Kandis Hanson, City Attorney John Dean, James D. Prosser of Ehlers & Associates, Inc., and Secretaries Sue McCulloch and Diana Mestad. Others present: Susan & Terance Almquist, Cathy Bailey, Janice Beise, John & Kristen Beise, Marilyn Byrnes, Sue & Tom Gathers, Steve Coddon, Sally Custer, Cathi & Tom Desszighy, Dave Deters, Bruce & Patti Dodds, Henry Ebert, Mike Empson, June Estelle, John & Shirley Evans, Marty & Gene Garvais, Mike, Paul & Tom Gaudette, Patrick Griffen, Patty Guttormson, Brian & Theresa Gulrud, Bryan Haimes, Lorrie Ham, Gina Harty, Jeff & Marlene Harty, Dean Lattin, Muriel Lattin, Sharon Lock, Jo Longpre, Steven Maddock, Michael Mueller, Peter Meyer, Bill & Dorothy Netka, Dotty O'Brien, Leona Peterson, Marion Poteete, Roger Reed, Jim Regan, John Roxel, Kathy Rue, Cathy Scanlon, Loren Schmidt, Mary Steen, Betty Strong, John Taffe, Mazgazet Thorne, Tom Turner, Greg Ward, Frank Weiland, Jack Weist, Roger Westman. *Consent Agenda: All items listed under this Consent Agenda are considered to be routine by the Housing and Redevelopment Authority. There will be no separate discussion of these items unless a Councilmember or citizen so request, in which event the item will be removed from the Consent Agenda and considered in normal sequence. Chairperson Meisel called the meeting to order at 7:05 p.m. APPROVAL OF AGENDA AND CONSENT AGENDA. *1.0 INDIAN KNOLL MANOR CONSENT AGENDA. A. Monthly Bills. B. Minutes -March 25, 2000. MOTION. Hanus, Weycker, unanimously. 1.1 ACCOUNTING TTEMS. A. Accountant Reports. B. Bank Reports. MOUND HRA MINUTES -MAY 23. 2000 HRA Director reported two months of reports. She stated on March 31, 2000, the City was six months into budget and doing well. She noted the contract services were high and the capital improvement money is going for most of these services. HRA Director stated the City is progressing fine. HRA Director stated the MBIA money has not been implemented and has an account at Norwest, which is where the levy money is going in at this time. She explained the money is not restricted if the need arises to take the money out. HRA Director stated the balance at the Marquette Bank is a large balance and she would like to get a better reporting system for the future. 1.2 H.R.A. ACTION ITEMS. HRA Director stated there were no action items. She mentioned she would be working out a budget for the year 2001 next month. She stated the five-year plan would now be due in September because of an extension. 1.3 INFORMATION ITEMS. A. CBDG GRANT. HRA Director reported the CBDG Grant was missed this year. The administrators thought the $100,000 for handicapped accessible units was logical but not the best way to spend the money at this time. She stated she would continue to apply for the grant during the upcoming years. B. PHAS (advisory score). PHAS report card was favored and an award was to be presented. She stated the financial category is the lowest because there is no reserve at this time and there is no capital money to have put back into the building at this time. C. OIL TANK. HRA Director reported the oil tank in the front of the building is being worked on by the City Engineer in hopes to have it removed shortly. The City Manager stated she ordered estimates on the removal of the tank and she is waiting to receive the estimates. 1.4 TENANT REPRESENTATIVE REPORT. The tenant representative was absent. 1.5 MISCELLANEOUS. • 2 MOUND HRA MINUTES -MAY 23. 2000 The next Indian Knoll Manor meeting is scheduled for June 27, 2000. TAX INCREMENT FINANCING. 1.6 APPROVE MINUTES OF MAY 9. 2000. MOTION by Hanus, seconded by Weycker, to approve the minutes of May 9, 2000. The vote was unanmously in favor. Motion carried. 40. PUBLIC HEARINGS: 1.7 PUBLIC HEARING TO CONSIDER THE ESTABLISHMENT OF BUSINESS SUBSIDIES CRITERIA. PURSUANT TO MINN. STAT. SEC. 1167.993- 116 .995. Mr. James Prosser of Ehlers & Associates, Inc. presented the case. He stated the statute requires the HRA and City Council establish criteria for use of a business subsidy, specifically mentioning TIF but this would apply to any type of assistance. He stated the criteria provided has been available for review and it would take a look at the but-for test to be consistent with the goals of community and the Comprehensive Plan and the need to show the need for the assistance. The general criteria, including improvement, essentially would double the tax base, but depending on situation, there is flexibility as well. Mr. Prosser stated 50 percent of the building would be preleased. He stated there would be indication of adequate equity from the developer and any displacement of low or moderate income would be addressed, such as housing. Mr. Prosser explained subsequent to the critena, the legislation adopted new guidelines causing the criteria to be reviewed again at a later date in time when the new law has been fully absorbed. Chairperson Meisel opened the public hearing opened at 7:11 p. m. Tom Gaudette, 3006 Bluffs Drive. Mr. Gaudette was concerned about the type of city funds this criteria would involve. The City attorney stated these are not specific funds being mentioned in the criteria. He stated this is the HRA criteria which would involve funds that came into possession of the HRA, such as other grants and other sources of funding. Chairperson Meisel closed the public hearing at 7:13 p.m. MOTION by Hanus, seconded by Weycker, to accept the resolution as submitted. RESOLUTION #00- G ~ RESOLUTION ADOPTING BUSINESS SUBSIDY CRITERIA. The vote was unanimously in favor. Motion carved. 4-0. • MOUND HRA MINUTES -MAY 23, 2000 1.8 PUBLIC HEARING TO CONSIDER A PROPOSED BUSINESS SUBSIDY TO BE GRANTED BY THE HRA TO RAY MAR PROPERTIES. INC. A/K/A MOUND FAMILY HARDWARE STORE ("THE RECIPIENT"). UNDER MINN STAT. SEC. 116T.993-116.T.994. THE PROPOSED SUBSIDY INVOLVES TAX INCREMENT FINANCING ASSISTANCE TO FACILITATE DEVELOPMENT BY THE RECIPIENT OF A RETAIL CENTER INCLUDING A HARDWARE STORE IN THE CITY OF MOUND. The City Attorney stated the HRA has now adopted a business subsidy criteria. He stated to that end there is now a business subsidy agreement between the HRA and Ray Mar properties, which is the developer of the Coast to Coast and Dodds property, that would need to be approved by public hearing as well. The City Attorney stated the Article 10 of the agreement mentions the business subsidy criteria which states an amount of $250,000 and interest, will be provided to assist Ray Mar in the development of the hardware store and related facilities on the redevelopment property. He mentioned an exchange would also take place but the exchange would be a zero net exchange. The City Attorney stated the developers' obligations are first, to repay the $250,000 pursuant to a note attached to contract, and, secondly, to continue to utilize the site for at least five years for purposes set forth in the agreement. There is a mention of a modest wage and job goal obligations of .5 employees and 100 percent of wage. The City Attorney stated the provisions in the contract concerning the wage and job goal have changed by legislation and will not be included in other agreements as of August 1, 2000. The remedies of the agreement are if they fail to meet the wage and job goals, they need to pay back a portion of the tax increment received during the period of time of the agreement. HRA Board Member Weycker questioned the .5 employee consideration. The City Attorney stated this was a modest number that was put in the agreement because of law that will be changing as of August 1, 2000. HRA Board Member Weycker asked if this section is included in the City Council packet as well. The City Attorney agreed and stated by law the City Council is required to approve the agreement as well. Chairperson Meisel opened the public hearing at 7:20 p.m. Chairperson Meisel closed the public hearing at 7:21 p.m. MOTION by Weycker, seconded by Brown, to accept the resolution as submitted. RESOLUTION #00- p ~l RESOLUTION ADOPTING BUSINESS SUBSIDY AGREEMENT. The vote was unanimously in favor. Motion carried. 4-0. • . MOUND HRA MINUTES -MAY 23. 2000 The City Attorney stated one provision of the criteria agreement, as well as the redevelopment contract, is that abut-for analysis be performed to decide if the assistance is favorable. 1.9 EVALUATION OF MAXWELL PROPERTY. Chairperson Meisel mentioned a letter from Staff giving cost estimates for environmental and soil testing has not been acquired in time for this meeting. ADJOUl~'VMENT MOTION by Brown, seconded by Weycker, to adjourn the meeting at 7:25 p.m. The vote was unanimously in favor. Motion carried. 40. Kandis Hanson, City Manager Attest: Chairperson Meisel • • N~~r ITEM # ~~' -az~ ~o moved and ~ seconded a motion The (Roll Call) vote was unanimously/ in favor with nays. ITEM # C~.~,(sy~.l~ moved and ~Jy~-iv-n , seconded a motion The (Roll Call) vote was unanimously/ ~~in favor with nays. ITEM # ~~/pruel'~'~.. moved and seconded a motion The (Roll Call) vote was unanimously/ in favor with nays. ITEM # moved and seconded a motion The (Roll Call) vote was unanimously/ in favor with nays. HRA RESOLUTION NO. RESOLUTION AUTHORIZING CERTAIN REVISIONS TO CONTRACT FOR PRIVATE REDEVELOPMENT WITH RAY MAR PROPERTIES, INC. WHEREAS, the HRA did on April 25, 2000 approve the form of a contract for private redevelopment between the HRA and Ray Mar Properties, Inc. (the "Contract"); and WHEREAS, subsequent to such approval it has become necessary to make certain modifications to the Contract; and WHEREAS, the Board has received the report and recommendations of its staff regarding such modifications, and determines the same to be necessary and appropriate and in furtherance of the proposed development. NOW THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Mound, Minnesota as follows: 1. Section 8.2 of the Contract is modified by revising the second paragraph of said section to read as follows: "In addition to the foregoing, in order to facilitate the obtaining of construction or permanent financing of the Minimum Improvements, the HRA agrees to subordinate its rights under this agreement and the Mortgage to a mortgage given , row River Bank in the nrincinal amount of X1.088.000.00." 2. Article XI is amended by adding thereto the following new Section 11.7: "Section 11.7. Lease. At Closing, and as a precondition thereto, the parties shall execute a mutually acceptable lease providing for the Redeveloper's continued occupancy of the Redeveloper Exchange Parcel pending completion and occupancy of the Minimum Improvements." 3. Exhibit C of the Contract is modified by revising paragraph 9 thereof to read as follows: "9. Use by Others. It is understood that the HRA shall have the right to make parking spaces in the Parking Lot available to other owners and tenants and to the general public. It is understood that all spaces shall be available on a first come-first served basis. It is further understood that the HRA may in its discretion place restrictions on parking such as, without limitation, time limits, times of day, and types of vehicle; provided, however, that the HRA agrees not to place restrictions on parking which unreasonably and materially interfere with the business of the Redeveloper or its tenants on the Redevelopment Property. It is further understood that the HRA may close the Parking Lot when such closure is, in the judgment of the HRA, necessary for lot repairs, maintenance. reconstruction or for civic celebrations." JBD-181586v1 MU195-7 r r In all other respects, the Contract remains unmodified. The foregoing resolution was moved by board member and seconded by board member The following board members voted in the affirmative The following board members voted in the negative Dated: Pat Meisel, Chair Attest: Secretary JBD-181586v1 MU195-7 HRA RESOLUTION NO. RESOLUTION AUTHORIZING CERTAIN REVISIONS TO CONTRACT FOR PRIVATE REDEVELOPMENT WITH RAY MAR PROPERTIES, INC. WHEREAS, the HRA did on Apri125, 2000 approve the form of a contract for private redevelopment between the HRA and Ray Mar Properties, Inc. (the "Contract"); and WHEREAS, subsequent to such approval it has become necessary to make certain modifications to the Contract; and WHEREAS, the Board has received the report and recommendations of its staff regarding such modifications, and determines the same to be necessary and appropriate and in furtherance of the proposed development. NOW THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Mound, Minnesota as follows: 1. Section 8.2 of the Contract is modified by revising the second paragraph of said section to read as follows: "In addition to the foregoing, in order to facilitate the obtaining of construction or permanent financing of the Minimum Improvements, the HRA agrees to subordinate its rights under this agreement and the Mortgage to a mortgage given ~ , fo Crow River Bank in the nrincinal amount of $1.088.000.00." 2. Article XI is amended by adding thereto the following new Section 11.7: "Section 11.7. Lease. At Closing and as a precondition thereto, the parties shall execute a mutually acceptable lease providing for the Redeveloper's continued occupancv of the Redeveloper Exchange Parcel pending completion and occupancv of the Minimum Improvements." 3. Exhibit C of the Contract is modified by revising paragraph 9 thereof to read as follows: "9. Use by Others. It is understood that the HRA shall have the right to make parking spaces in the Parking Lot available to other owners and tenants and to the general public. It is understood that all spaces shall be available on a first come-first served basis. It is further understood that the HRA may in its discretion place restrictions on parking such as, without limitation, time limits, times of day, and types of vehicle; provided, however, that the HRA agrees not to place restrictions on parking which unreasonably and materially interfere with the business of the Redeveloper or its tenants on the Redevelopment Property. It is further understood that the HRA may close the Parking Lot when such closure is, in the judgment of the HRA, necessary for lot repairsy maintenance. reconstruction or for civic celebrations." JBD-181586v1 MU195-7 In all other respects, the Contract remains unmodified. The foregoing resolution was moved by board member and seconded by board member The following board members voted in the affirmative The following board members voted in the negative Dated: Pat Meisel, Chair Attest: Secretary JBD-181586v1 MU195-7 HRA RESOLUTION NO. RESOLUTION AUTHORIZING CERTAIN REVISIONS TO CONTRACT FOR PRIVATE REDEVELOPMENT WITH RAY MAR PROPERTIES, INC. WHEREAS, the HRA did on Apri125, 2000 approve the form of a contract for private redevelopment between the HRA and Ray Mar Properties, Inc. (the "Contract"); and WHEREAS, subsequent to such approval it has become necessary to make certain modifications to the Contract; and WHEREAS, the Board has received the report and recommendations of its staff regarding such modifications, and determines the same to be necessary and appropriate and in furtherance of the proposed development. NOW THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Mound, Minnesota as follows: 1. Section 8.2 of the Contract is modified by revising the second paragraph of said section to read as follows: "In addition to the foregoing, in order to facilitate the obtaining of construction or permanent financing of the Minimum Improvements, the HRA agrees to subordinate its rights under this agreement and the Mortgage to a mortgage given , o Crow River Bank in the nrincinal amount of $1.088.000.00." 2. Article XI is amended by adding thereto the following new Section 11.7: "Section 11.7. Lease. At Closing, and as a precondition thereto, the parties shall execute a mutually acceptable lease providing for the Redeveloper's continued occupancy of the Redeveloper Exchange Parcel pending completion and occupancy of the Minimum Improvements." 3. Exhibit C of the Contract is modified by revising paragraph 9 thereof to read as follows: "9. Use by Others. It is understood that the HRA shall have the right to make parking spaces in the Parking Lot available to other owners and tenants and to the general public. It is understood that all spaces shall be available on a first come-first served basis. It is further understood that the HRA may in its discretion place restrictions on parking such as, without limitation, time limits, times of day, and types of vehicle; provided, however, that the HRA agrees not to place restrictions on parking which unreasonably and materially interfere with the business of the Redeveloper or its tenants on the Redevelopment Property. It is further understood that the HRA may close the Parking Lot when such closure is, in the judgment of the HRA, necessary for lot repairs, maintenance. reconstruction or for civic celebrations." JBV-islsa6~i MU195-7 In all other respects, the Contract remains unmodified. The foregoing resolution was moved by board member and seconded by board member The following board members voted in the affirmative ; The following board members voted in the negative Dated: Pat Meisel, Chair Attest: Secretary JBD-181586v1 MU195-7 • HRA RESOLUTION NO. RESOLUTION AUTHORIZING CERTAIN REVISIONS TO CONTRACT FOR PRIVATE REDEVELOPMENT WITH RAY MAR PROPERTIES, INC. • WHEREAS, the HRA did on Apri125, 2000 approve the form of a contract for private redevelopment between the HRA and Ray Maz Properties, Inc. (the "Contract"); and WHEREAS, subsequent to such approval it has become necessary to make certain modifications to the Contract; and WHEREAS, the Boazd has received the report and recommendations of its staff regazding such modifications, and determines the same to be necessary and appropriate and in furtherance of the proposed development. NOW THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Mound, Minnesota as follows: 1. Section 8.2 of the Contract is modified by revising the second pazagraph of said section to read as follows: "In addition to the foregoing, in order to facilitate the obtaining of construction or permanent financing of the Minimum Improvements, the HRA agrees to subordinate its rights under this agreement and the Mortgage to a mortgage given , to Crow River Bank in the principal amount of $1,088,000.00." 2. Exhibit C of the Contract is modified by revising pazagraph 9 thereof to read as follows: • "9. Use by Others. It is understood that the HRA shall have the right to make pazking spaces in the Parking Lot available to other owners and tenants and to the general public. It is understood that all spaces shall be available on a first come-first served basis. It is further understood that the HRA may in its discretion place restrictions on parking such as, without limitation, time limits, times of day, and types of vehicle; provided, however, that the HRA agrees not to place restrictions on pazking which unreasonably and materially interfere with the business of the Redeveloper or its tenants on the Redevelopment Property. It is further understood that the HRA may close the Parking Lot when such closure is, in the judgment of the HRA, necessary for lot repairs, maintenance, reconstruction or for civic celebrations." In all other respects, the Contract remains unmodified. The foregoing resolution was moved by board member boazd member and seconded by JBD-181586v1 ML)195-7 LEASE THIS INDENTURE made and entered into as of this day of 2000 by and between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MOUND, MINNESOTA, a Minnesota public body corporate and politic, (hereinafter referred to as "Landlord"), and RAY MAR PROPERTIES, INC.,, a Minnesota corporation (hereinafter referred to as "Tenant"). WITNESSEThT: ARTICLE I -GRANT, TERM, AND RENEWALS 1.1 DEMISED PREMISES. In consideration of the rents, covenants and agreements herein reserved and contained on the part of Tenant to be performed, Landlord does hereby lease to Tenant that portion of the land and building located at 2250 Commerce Boulevard, Mound, Minnesota and legally described in the attached Exhibit A (hereinafter referred to as the "Demised Premises"). 1.2 TERM. The term of this Lease and Tenant's obligation shall commence as of June _, 2000 and the term of the lease shall expire on December 31, 2000. ARTICLE II -RENT 2.1 RENT. The rent for the term of the Lease ($1.00) shall be payable upon the execution of this Lease by all the Parties. ARTICLE III -TAXES 3.1. TAXES. The Landlord shall be responsible for all real estate taxes and installments on special assessments which are either levied, or due, or payable during the term of this Lease. ARTICLE IV -USE OF PREMISES 4.1 TENANTS USE. During the term of this Lease, the Demised Premises shall be used solely for purposes permitted by law. JBD138734 RB160-43 4.2 COMPLIANCE WITH LAWS AND REGULATIONS. Tenant covenants and agrees that at all times during the term hereof it will maintain and conduct its business insofar as the same relates to the occupancy of the Demised Premises in such a manner and under such regulations that are in strict compliance with any and an applicable governmental and/or quasi-governmental laws, rules, regulations and orders, as well as any and all applicable provisions of insurance underwriters at the Demised Premises and the Declaration. Tenant shall indemnify Landlord, Landlord's insurer, and the property of Landlord against any and all claims or losses or actions or causes of action resulting from Tenant's failure to comply with said laws, rules, regulations and orders and underwriting provisions. 4.3 AFFIRMATIVE COVENANTS OF TENANT. Without in any way limiting or restricting other covenants of Tenant elsewhere in this Lease contained, the Tenant affirmatively covenants and agrees as follows: (a) Tenant shall neither permit or suffer and conduct, noise, odor or other nuisance in, on or about said Demised Premises to annoy or disturb any persons occupying adjacent buildings or public areas; (b) Tenant shall keep said Demised Premises clean and in the sanitary condition required by ordinance and regulations of any governmental or quasi-governmental unit having jurisdiction; ARTICLE V -MAINTENANCE AND REPAIRS 5.1 ACCEPTANCE OF PREMISES. The Tenant accepts the Demised Premises AS IS, AND WHERE IS with all faults and defects. Tenant acknowledges that the Landlord shall have no obligation of any nature to maintain, preserve or repair the Demised Premises. Should the Demised Premises become uninhabitable at any time during the term of this lease, the Lease shall immediately terminate. 5.2 SURRENDER OF PREMISES. At the expiration or termination of this Lease, Tenant shall surrender the Demised Premises in the same condition as existed on the commencement date of this Lease, damage not caused by Tenant and ordinary wear and tear excepted. Landlord shall have the burden of establishing that any damage to the Demised Premises was caused by Tenant. JBD138734 RB160-43 2 ARTICLE VI - UTII.IT~S 6,1 CHARGES, Tenant shall pay for all utility services including gas, electricity, domestic water, sewer, hot water for heating and ventilating, chilled water for cooling and ventilating the Demised Premises and all other utility services furnished the Tenant for use in the Demised Premises. ARTICLE VII -ALTERATIONS 7.1 NOTICE TO LANDLORD. Prior to the initiation of any alterations, Tenant shall give Landlord written notice thereof and specify the work to be performed in reasonable detail and include the names of the contractors and materialmen to be utilized. After receipt of said notice, Landlord shall have a reasonable period of time during which it shall make a determination, in its sole discretion, as to whether or not the proposed work would create a structural or design change at the Demised Premises, or increase the cost of demolition. Tenant shall provide Landlord upon request with any further information reasonably necessary for such determination by Landlord and Tenant shall not commence work or accept materials prior to receiving written notice of Landlord's determination. If Landlord determines that the proposed work would create a structural or design change, or increase the cost of demolition, then the same must be approved in writing by Landlord prior to the commencement of any work or the delivery of any materials therefor. ARTICLE VIII -PUBLIC LIABILITY, INDEMNITY 8.1 TENANT'S LIABILITY INSURANCE. Tenant shall during the entire term hereof keep in full force and effect a policy of liability and property damage insurance with respect to the Demised Premises, and the business operated by Tenant, in which the limits of liability shall be the same as the Policy limits which Landlord carrys on its general comprehensive public liability coverages. 8.2 INDEMNIFICATION. Except for claims arising out of the willful or negligent act of the other party or its representatives, each party shall indemnify and defend the other party against all claims, expenses and liabilities incurred, including reasonable attorneys' fees, in connection with loss of life, personal injury, and/or damage to property arising out of any occurrence in, upon or at the Demised Premises, or the occupancy or use thereof by said party, or occasioned wholly or in part by any act or omission of said party, its agents, employees, contractors. This provision JBD138734 RB160-43 3 shall not be deemed as a waiver of any statutory liability limits available to Landlord. ARTICLE ~ -DESTRUCTION AND RESTORATION 9.1 DAMAGED. If a significant portion of the Demised Premises shall be damaged or damaged by any uninsured casualty, Landlord shall have the option to rebuild or to terminate this Lease by exercise of notice to Tenant given not more than 30 days from the date of such damage. 9.2 INDEMNIFICATION. Each party hereto ("Releasing Party") hereby releases the other ("Released Party") from any liability which the Released Party would, but for this paragraph, have had to the Releasing Party arising out of or in connection with any accident or occurrence or casualty: (a) which is or would be covered by a fire and extended coverage policy (with vandalism and malicious mischief endorsement attached) or by a sprinkler leakage or water damage policy in the state in which the Demised Premises is located regardless of whether or not such coverage is being carried by the Releasing Party, and (b) to the extent of recovery under any other casualty or property damage insurance being carried by the releasing Party at the time of such accident or occurrence or casualty, which accident or occurrence or casualty may have resulted in whole or in part from the act of neglect of the Released Party, its officers, agents or employees, provided, however, the release hereinabove set forth shall become inoperative and null and void if the Releasing Party contracts for the insurance required to be carried under the terms of this Lease with an insurance company which: (1) Takes the position that the existence of such release vitiates or would adversely affect any policy so insuring the Releasing Party in a substantial manner and notice thereof is given to the Released Party, or (2) Requires the payment of a higher premium by reason of the existence of such release, unless in the latter case the JBD138734 RB160-43 4 Released Party within ten (10) days after notice thereof from the Releasing Party pays such increase in premium. 9.3 NOTICE. Tenant shall give immediate written notice to Landlord of any damage caused to the demised Premises by fire or other casualty; or of any cancellation or reduction of Tenant's insurance coverage required pursuant to this Lease. ARTICLE XI -ASSIGNMENT AND SUBLETTING 10.1 CONSENT REQUIRED. Tenant may not assign this Lease and/or sublet the Demised Premises, or any part thereof. ARTICLE ~ -TENANT'S DEFAULT 11.1 EVENTS OF DEFAULT. The following events shall be deemed to be events of default by Tenant under this Lease: (a) Tenant shall fail to pay when due any payments or other charges provided herein, or any portion thereof and the same shall remain unpaid for a period of ten (10) days after the same has become due; or (b) Tenant shall do or permit to be done anything which creates a lien upon the Demised Premises; and does not cause said hen to be released within ten (10) days after written notice from Landlord; or (c) Any representation or warranty made in writing to Landlord in this Lease or in connection with the making of this Lease, by Tenant or any guarantor, shall prove at any time to have been incorrect in any material respect when made or becomes incorrect; or (d) Tenant shall have failed to comply with any other provisions of this Lease and shall not cure any failure within thirty (30) days, or such longer period of time as may be reasonably required to cure such default, after Landlord, by written notice, has informed Tenant of such noncompliance. JBD138734 RB160-43 5 11.2 LANDLORD'S REMEDIES. Upon the occurrence of any of the above events of default, Landlord may elect to either (1) terminate this Lease; or (2) terminate Tenant's right to possession only without terminating this Lease, hereinafter referred to as re-entry; (3) pursue any other remedy available at law or in equity. Landlord shall have all remedies provided in the Lease and under governing law. All of the remedies given to Landlord in this Lease or by law shall be cumulative, and the exercise of one right or remedy by landlord shall not impair its right to exercise any other right or remedy. 11.3 COSTS, EXPENSES AND ATTORNEYS FEES. If one party is required to seek legal counsel for collection or to commence litigation or arbitration in order to enforce the covenants and agreements in this Lease, the party prevailing in such collection, litigation or arbitration shall have the right to reimbursement from the other party of all reasonable costs, expenses and attorney's fees. ARTICLE XII -- LANDLORD DEFAULT 12.1 DEFAULT NOTICE TO LANDLORD. Should Landlord default in the performance of any of the covenants on the part of the Landlord to be kept or performed and such default shall continue for thirty (30) days after written notice to Landlord from Tenant specifying such default, or should any warranty or representation made by Landlord be untrue and remain untrue after thirty (30) days after written notice from Tenant specifying such untruth, then and only in such event, shall termination of this Lease be effected or action taken or remedy pursued. If the default or untruth is of such character so as to require more than thirty (30) days to remedy, the Landlord shall have a reasonable period in which to remedy the same, provided Landlord is proceeding diligently. ARTICLE XIII -MISCELLANEOUS PROVISIONS 13.1 COVENANT OF QUIET ENJOYMENT. Tenant, subject to the terms and provisions of this Lease, on payment of the rent and observing, keeping and performing all of the terms and provisions of this Lease on its part to be observed, kept and performed, shall lawfully, peaceably and quietly have, hold occupy and enjoy the Demised Premises during the term hereof without hindrance or objection by any persons lawfully claiming under Landlord. JBD138734 RB160-43 6 13.2 ENTIRE AGREEMENT. This Lease is executed in identical counterparts, each of which, when bearing original initials of the parties on each page and at each change in the text hereof as well as original signatures at the end of each document, shall constitute an original for all purposes. All previous agreements, whether oral or written, are superseded by and merged with this Lease. Subsequent change shall not be binding unless reduced to writing and signed by the parties hereto. 13.3 INVALIDATION OF PARTICULAR PROVISIONS. If any clause, term or provision of this Lease, or the application thereof to any person or circumstance shall to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law. It is the intention of the parties hereto that in lieu of each clause, term or provision of this Lease that is illegal invalid or unenforceable, there be added as part of this Lease a clause, term or provision similar to such illegal invalid or unenforceable clause, term or provision as may be possible and would be legal valid and enforceable. 13.4 PROVISIONS BINDING, ETC. Except as herein otherwise expressly provided, the terms hereof shall be binding upon and shall inure to the benefit of the heirs, successors, assigns and legally appointed representative, respectively, of Landlord and the Tenant. Each term and each provision of this Lease to be performed by Tenant shall be construed to be both a covenant and a condition. 13.5 RELOCATION BENEFITS AND ASSISTANCE. Tenant acknowledges that the right to occupy the Demised Premises at a nominal rent during the term of this Lease is an accommodation made by Landlord pending the construction of Tenants new building on adjacent property. In light of such accommodation, the Tenant releases the Landlord from any claim which the Tenant may have for relocation benefits or relocation assistance at the conclusion of this Lease. 13.6 NOTICES. Any notice which is required under this Lease shall be deemed "given" upon hand delivery or three (3) days after prepaid posting in the U. S. Mail whichever shall first occur. Notice shall be addressed to the addresses listed at the beginning of this Lease or to any JBD138734 RB160-43 7